Opinion
962 CA 19-00337
11-08-2019
Ann MASON, Plaintiff-Respondent, v. Eric D. CARUANA, Defendant-Appellant, et al., Defendants.
THE ZOGHLIN GROUP, PLLC, ROCHESTER (JACOB H. ZOGHLIN OF COUNSEL), FOR DEFENDANT–APPELLANT. DAVIDSON FINK LLP, ROCHESTER (RICHARD N. FRANCO OF COUNSEL), FOR PLAINTIFF–RESPONDENT.
THE ZOGHLIN GROUP, PLLC, ROCHESTER (JACOB H. ZOGHLIN OF COUNSEL), FOR DEFENDANT–APPELLANT.
DAVIDSON FINK LLP, ROCHESTER (RICHARD N. FRANCO OF COUNSEL), FOR PLAINTIFF–RESPONDENT.
PRESENT: SMITH, J.P., PERADOTTO, LINDLEY, DEJOSEPH, AND CURRAN, JJ.
MEMORANDUM AND ORDER It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiff commenced this action seeking to foreclose on a purchase money mortgage. The original note and mortgage was between plaintiff's now-deceased husband (decedent) and Eric D. Caruana (defendant), but decedent assigned those instruments to himself and plaintiff, jointly. It is undisputed that decedent operated a gas station on the property for decades before he sold it to defendant and, at the time the property was sold, decedent was in the process of remediating the property from contamination caused by the underground tanks. Decedent and defendant executed a "completion agreement," which provided, in pertinent part, that decedent's "responsibility to take remedial action as concerns Spill # 0170200 ... shall terminate at such time as the [New York State Department of Environmental Conservation (DEC) ] determines that no further continuation of action as set forth in the Corrective Action Plan is necessary." It is undisputed that a "no further ... action" letter was issued by the DEC in April 2007.
Years later, when defendant sought to sell the property, he learned that there was still contamination on the property that needed to be remediated. Defendant ceased making payments on the mortgage in order to use that money for "site investigation and remediation." After plaintiff commenced this action, defendant answered and asserted various counterclaims against plaintiff, including counterclaims under the Oil Spill Law (Navigation Law article 12). Defendant thereafter moved for partial summary judgment under the Navigation Law counterclaims, contending that plaintiff was liable as both an owner and a discharger. Supreme Court denied the motion, and we now affirm. We agree with defendant that plaintiff, as the assignee of a mortgagee, stands in the shoes of decedent and took the mortgage " ‘subject to the equities attending the original transaction’ " ( Whitney Lane Holdings, LLC v. Don Realty, LLC, 130 A.D.3d 1218, 1219, 14 N.Y.S.3d 516 [3d Dept. 2015] ; see Deutsche Bank Trust Co. Ams. v. Vitellas, 131 A.D.3d 52, 63–64, 13 N.Y.S.3d 163 [2d Dept. 2015] ; Losner v. Cashline, L.P., 303 A.D.2d 647, 648, 757 N.Y.S.2d 91 [2d Dept. 2003] ). Plaintiff, as assignee, cannot stand in any better position than decedent, as assignor (see Durham Commercial Capital Corp. v. Wadsworth Golf Constr. Co. of the Midwest, Inc., 160 A.D.3d 1442, 1444, 76 N.Y.S.3d 693 [4th Dept. 2018], lv denied 32 N.Y.3d 907, 2018 WL 5259875 [2018] ). Contrary to plaintiff's contention, decedent's role as owner/discharger cannot be distinguished from his role as lender (see generally Davis v. Weg, 104 A.D.2d 617, 618–620, 479 N.Y.S.2d 553 [2d Dept. 1984] ; Kelly v. Lamontagne, 71 A.D.2d 1016, 1016, 420 N.Y.S.2d 411 [2d Dept. 1979] ; Umansky v. Seaboard Indus., 45 A.D.2d 1051, 1052, 358 N.Y.S.2d 22 [2d Dept. 1974] ; Granick v. Mobach, 13 A.D.2d 534, 213 N.Y.S.2d 240 [2d Dept. 1961], revg 208 N.Y.S.2d 698 [Sup. Ct., Westchester County 1960] ), and we therefore reject plaintiff's contention that she is the assignee only with respect to decedent's role as a lender. We thus conclude that plaintiff, as the assignee of a discharger, cannot assert the innocent lender exemption to liability established in Navigation Law § 181(4)(b)(i) (see § 181[4][c] ), and we agree with defendant that he can assert any defenses and claims against plaintiff that he could have asserted against decedent, but only as an "offset to the amount of [plaintiff's foreclosure] demand" ( Granick, 13 A.D.2d at 534, 213 N.Y.S.2d 240 ; see Davis, 104 A.D.2d at 620, 479 N.Y.S.2d 553 ).
We nevertheless conclude that the court properly denied defendant's motion inasmuch as there are triable issues of fact whether his Navigation Law counterclaims against plaintiff, as assignee of decedent, are precluded by the completion agreement. It is well settled that parties may allocate responsibility and liability for environmental conditions on a property between themselves (see 101 Fleet Place Assoc. v. New York Tel. Co., 197 A.D.2d 27, 30, 609 N.Y.S.2d 896 [1st Dept. 1994], appeal dismissed 83 N.Y.2d 962, 616 N.Y.S.2d 13, 639 N.E.2d 752 [1994] ), but the language of such an agreement must be strictly construed and must evidence a " ‘clear and unmistakable intent’ " to release that liability ( Olin Corp. v. Consolidated Aluminum Corp., 5 F.3d 10, 16 [2d Cir.1993] ; see Buffalo Color Corp. v. AlliedSignal, Inc., 139 F. Supp. 2d 409, 420 [W.D. N.Y.2001] ; see also Umbra U.S.A. v. Niagara Frontier Transp. Auth., 262 A.D.2d 980, 981, 693 N.Y.S.2d 371 [4th Dept. 1999] ). Defendant, as movant, failed to establish as a matter of law that, by executing the completion agreement, he did not release decedent, and plaintiff as decedent's assignee, "from any and all obligations and liability arising from ... environmental conditions on the property," or that he did not "waive[ ] any and all future claims relating to the ... environmental conditions on the property, including those claims ... pursuant to Navigation Law § [ ] 181" ( Marist Coll. v. Chazen Envtl. Servs., Inc., 84 A.D.3d 1180, 1181, 923 N.Y.S.2d 859 [2d Dept. 2011] ; see also Umbra U.S.A., 262 A.D.2d at 981, 693 N.Y.S.2d 371 ).
Contrary to defendant's contention, we conclude that the court did not abuse its discretion in accepting plaintiff's late responding papers in the absence of any prejudice to defendant (see Associates First Capital v. Crabill, 51 A.D.3d 1186, 1188, 857 N.Y.S.2d 799 [3d Dept. 2008], lv denied 11 N.Y.3d 702, 864 N.Y.S.2d 389, 894 N.E.2d 653 [2008] ). We do not consider defendant's contention, raised for the first time in his reply brief, that the mortgage foreclosure proceeding should be dismissed because plaintiff allegedly failed to comply with the Fair Debt Collection Practices Act (see generally Turner v. Canale, 15 A.D.3d 960, 961, 790 N.Y.S.2d 347 [4th Dept. 2005], lv denied 5 N.Y.3d 702, 799 N.Y.S.2d 773, 832 N.E.2d 1189 [2005] ). Furthermore, based on our determination, we do not address defendant's remaining contentions.