Opinion
# 2013-032-002 Claim No. 109722
06-04-2013
LASSITER PROPERTIES, INC. v. THE STATE OF NEW YORK
Synopsis
Case information
UID: 2013-032-002 Claimant(s): LASSITER PROPERTIES, INC. Claimant short name: LASSITER Footnote (claimant name) : Defendant(s): THE STATE OF NEW YORK Footnote (defendant name) : Third-party claimant (s): Third-party defendant (s): Claim number(s): 109722 Motion number(s): Cross-motion number(s): Judge: JUDITH A. HARD Muller, Mannix & Hobbs, PLLC Claimant's attorney: By: Gary C. Hobbs, Esq. Hon. Eric T. Schneiderman, NYS Attorney General, Defendant's attorney: By: Michael A. Sims and Michele A. Walls, Assistant Attorneys General, Of Counsel Third-party defendant's attorney: Signature date: June 4, 2013 City: Albany Comments: Official citation: Appellate results: See also (multicaptioned case) Decision
SUMMARY The underlying facts and procedural history of this case are more fully set forth in Lassiter v State of New York, UID No., 2010-042-500 [Ct Cl, Siegel, J., March 15, 2010], affd84 AD3d 1559 [3d Dept 2011]). Originally at issue were timber rights reserved to the Oval Wood Dish Corporation, claimant's predecessor-in-interest, in a 1925 transfer of the underlying lands to F.L. Carlisle and Company, Inc. (Carlisle). Judge Siegel's decision, as affirmed by the Appellate Division, determined that those 1925 timber rights were extinguished in 1953 as a result of flooding in the creation of the Carry Falls Dam and Carry Falls Reservoir. The sole issues remaining before this Court are whether a new oral contract was entered into between defendant and claimant in 1988 which gave rise to perpetual timber rights for claimant and whether defendant breached this contract by subsequently denying claimant access to the alleged timber rights.
See also Lassiter v State of New York, UID No. 2003-018-198 [Ct Cl, Fitzpatrick, J., January 29, 2003] affd 22 AD3d 895 [3d Dept 2005]; Lassiter v State of New York, UID No. 2006-028-583 [Ct Cl, Sise, PJ., October 2, 2006].
The Court finds that the 1988 transactions between claimant and defendant did not create a new contract by which claimant was granted timber rights and, consequently, there was no breach of contract by defendant. The claim is hereby dismissed.
FACTS
At trial on this matter, claimant relied heavily upon the testimony of Robert Bathrick, the former Division Director of the New York State Division of Lands and Forest, and William Liscinski, a former President of Lassiter Properties, Inc., along with 112 Exhibits including portions of several depositions, Mr. Bathrick's Contract Diary, various deeds, appraisals, memoranda and letters prepared by the State. Defendant presented the testimony of John Keating, the former Superintendent of the Bureau of Real Property at the Department of Environmental Conservation (DEC). The pertinent testimony and documentary evidence established the following.
Claimant is a Georgia company in the business of purchasing, selling and managing timber lands and timber products. In the fall of 1988, claimant entered into an agreement with Diamond International (Diamond) to purchase 95,682 acres across multiple tracts of land in the Adirondacks, together with 1,877 acres of timber rights on land owned at that time by Niagara Mohawk (NiMo) (T: 125-129). According to claimant, the purchase agreement was made with the belief that Diamond owned the timber rights as the successor-in-interest to the Oval Wood Dish Corporation which had retained them in the 1925 sale of the underlying land to Carlisle. Immediately after claimant reached its agreement with Diamond, defendant expressed an interest in purchasing some of the Diamond property from claimant. Defendant, using the Nature Conservancy as its agent, entered into negotiations with claimant's chief executive officer, Henry Lassiter, and Mr. Liscinski, his chief negotiator, for the purchase of land (T: 186-187). It is clear from the evidence that the parties to the negotiation believed claimant owned the timber rights on the NiMo property and that one of claimant's goals was to maintain the right to harvest timber from that property (T: 193-194). As a result of the negotiations, claimant agreed to convey to the State, through the Nature Conservancy, fee simple title to approximately 15,000 acres at $242 per acre, 40,000 acres of conservation easements, with certain hunting and timber rights reserved at $175 per acre, and 249 acres of the timber rights on NiMo lands at $84.70 per acre, for a total purchase price of $10.8 million (T: 212, 240-241, 262).
The 249 acres of timber rights were located on portions of six separate lots: Lots 31, 42, 43 in Township 8 and Lots 8, 16 and 56 in Township 9 (T: 259-261, 554, 556-557; Exhibits 31, 32). The parties' representatives believed that claimant was retaining the remaining timber rights purchased from Diamond, which included 763 acres of timber rights on Lots 19, 20, 41 and 44 (T: 156, 292-296). As part of its agreement with defendant, claimant reserved a permanent 33-foot wide easement across land purchased in fee by defendant to allow claimant to travel to Lots 41 and 44 (T: 234; Exhibit 31), and a right to construct and maintain logging roads in the conservation easement area for the express purpose of accessing timber rights on Lots 19 and 20 (T: 247-250; Exhibit 33). According to claimant, the State further agreed to, and did issue permits for timber harvesting activities, and referred to claimant's timber rights in later memoranda (Exhibits 24, 76, 77).
In November 1998, the State entered into a contract with NiMo's subsidiary to acquire title to Lots 19, 20, 41 and 44 (Exhibit 67). The Adirondack Park Agency issued a permit approving the purchase which stated that claimant claimed the right to harvest timber (Exhibit 71). That permit was included in the State's abstract of title for the purchase of the lots (Exhibit 75, sheet 128). Discussions regarding the validity of claimant's timber rights ensued and culminated in a determination by the State that the subject timber rights had been terminated. At trial, the Court received into evidence the depositions of Konrad Langlie (Exhibits 106, 107), an Assistant Attorney General in 2000, whose primary responsibility included reviewing abstracts and preparing closing papers for the Department of Environmental Conservation. Mr. Langlie testified that upon reviewing the 1988 file, he determined that the Attorney General's Office had improperly certified title to the timber rights in 1988 based upon the title examiner's mistaken impression that the State was purchasing fee title to the 249 acres (Exhibit 107, p 35). Mr. Langlie advised claimant by letter dated October 27, 2000 that the timber rights did not exist and demanded that claimant stop harvesting timber from the subject property (Exhibit 78). The State took title to the subject property on November 8, 2000.
LAW
"The elements of a cause of action for breach of contract are (1) formation of a contract between plaintiff and defendant; (2) performance by plaintiff; (3) defendant's failure to perform; and (4) resulting damage" (Clearmont Prop., LLC v Eisner, 58 AD3d 1052 [3d Dept 2009] citing Hecht v Components Intl., Inc., 22 Misc 3d 360, 364 [2008][citations omitted]; see alsoBrighton Inv., Ltd. v Har-Zvi, 88 AD3d 1220 [3d Dept 2011]; Palmetto Partners, L.P. v AJW Qualified Partners, LLC, 83 AD3d 804 [2d Dept 2011]). A contract unsupported by consideration is invalid. "[I]f the promisor loses nothing and the promisee acquires nothing by an arrangement then there is no valid consideration" (Granite Partners, L.P. v Bear Stearns & Co. Inc., 58 F Supp 2d 228, 252 [SDNY 1999] [citations omitted]). Without the element of an existing contract, a cause of action for breach of contract cannot stand (Moulton Paving, LLC v Town of Poughkeepsie, 98 AD3d 1009 [2d Dept 2012]). "Without a clear demonstration of damages, there can be no claim for breach of contract" (Milan Music, Inc. v Emmel Communications Booking, Inc., 37 AD3d 206 [1st Dept 2007]; citing Gordon v Dino De Laurentiis Corp., 141 AD2d 435, 436 [1st Dept 1988]).
DISCUSSION
There is no dispute that in 1988, defendant acknowledged that Lassiter owned 1,877 acres of perpetual timber rights it had purchased from Diamond. In fact, defendant concedes that it made a mistake as to claimant's title to those timber rights when it purchased 249 acres of those rights as part of the $10 million deal. Neither is there any dispute that, in the course of negotiations leading up to the deal, claimant chose to retain timber rights on lots 19, 20, 41 and 44. Defendant granted claimant an easement to access the timber rights and a stream crossing permit in order to do so. The evidence presented at trial establishes that the parties acted in the belief that claimant had title to timber rights on the subject property. However, the parties understanding in this regard does not give rise to a valid claim by claimant to the timber rights it purportedly retained as part of the alleged contract.
Assuming arguendo that the verbal agreement and series of transactions between the parties that occurred in 1988 constituted a valid and enforceable contract, that contract was for the sale of land, easements and timber rights to defendant. It was not an agreement by which the defendant was to convey timber rights to claimant and neither party understood it as so. In exchange for land, conservation easements and 249 acres of timber rights, defendant agreed to pay in excess of $10 million in monetary compensation. Claimant's decision not to sell certain rights is not consideration for the transactions that took place. Moreover, proof that the parties believed claimant had obtained timber rights from Diamond or even defendant's overt acknowledgment of the existence of those rights, does not create or grant rights to claimant over a third party's property.
That defendant ultimately acquired the fee does not change the analysis. Claimant cites numerous cases in which a grantor purporting to convey property at a time when it did not actually own the property worked to estop the grantor from denying the sale in the event the grantor later came to own the property (Village of Tarrytown v Woodland Lake Estates, Inc., 97 AD2d 338, 342 [2d Dept 1983] ["As a grantor purporting to convey property at a time when it did not own the property, but later reacquiring title to the property, Woodland is estopped from asserting against its grantees and their successors the claim that it did not have title to the roadbeds when it conveyed them to these abutting landowners"] appeal dismissed 63 NY2d 771 [1984]; see also Batchis v Dlugasch, 128 Misc 148, 149 [Sup Ct 1926] [where a seller has no title to goods at the time it enters into a contract to sell them, the contract is not void]). Claimant's reliance on these cases is misplaced because the facts of the instant action are distinguishable. Defendant did not present itself as a grantor of timber rights and did not purport to convey them. Defendant was simply a purchaser in the transaction, a grantee of timber rights in exchange for monetary compensation. Nothing in the 1988 agreements purported to convey timber rights from defendant to Lassiter, and therefore, the State's later purchase of the underlying property cannot give rise to an obligation to recognize those rights now.
In sum, claimant conveyed certain lands, easements and timber rights to defendant and defendant paid claimant in excess of $10 million. Claimant's attempt to bootstrap the creation or maintenance of timber rights to this deal must fail. According to the law of this case, the timber rights at issue were extinguished over thirty years prior to the 1988 transaction. Defendant's failure to discover this fact in 1988, and its mistake in clearing title and paying for 249 acres of timber rights that did not exist, does not give rise to timber rights for claimant over parcels which were not at issue in the transactions. Claimant did not suffer any damages from the 1988 deal, as it received valuable consideration for what it conveyed, along with $21,090.00 for timber rights it did not have the right to convey. Inasmuch as there was no agreement for the sale of timber rights on lots 19, 20, 41 and 44, other questions regarding the enforceability of the alleged contract need not be addressed here.
Upon review of all the evidence, including the observation of the witnesses and an assessment of their demeanor, the Court finds that claimant failed to establish its case by a preponderance of the credible evidence, despite the able efforts of claimant's counsel. All motions upon which the Court reserved decision are denied. All objections upon which the Court reserved determination at trial are now overruled. The claim is in all respects dismissed.
Let judgment be entered accordingly.
June 4, 2013
Albany, New York
JUDITH A. HARD
Judge of the Court of Claims