Opinion
Index No. EF20222741
09-13-2024
TODD MCCHESNEY, Plaintiff, v. KATHARYN PEEBLES, DAVID REED AMISH, AND LIVINGSTON LAKE CLUB, INC., Defendants.
Counsel: Ryan P. Pezzulo, Esq. Trainor. Pezzulo & DeSanto PLLC Attorneys for Plaintiff, Todd McChesney Mark E. Cerasano. Esq. Bartlett, Pontiff, Stewart & Rhodes, PC Attorneys for Defendant, Katharyn Peebles Brienna L. Christiano. Esq. Barclay Damon, LLP Attorneys for Defendant, David Reed Amish Stuart F. Klein, Esq. Bond, Schoeneck & King, PLLC Attorneys for Defendant, Livingston Lake Club, Inc.
Unpublished Opinion
Counsel: Ryan P. Pezzulo, Esq.
Trainor. Pezzulo & DeSanto PLLC
Attorneys for Plaintiff, Todd McChesney
Mark E. Cerasano. Esq.
Bartlett, Pontiff, Stewart & Rhodes, PC
Attorneys for Defendant, Katharyn Peebles
Brienna L. Christiano. Esq.
Barclay Damon, LLP
Attorneys for Defendant, David Reed Amish
Stuart F. Klein, Esq.
Bond, Schoeneck & King, PLLC
Attorneys for Defendant, Livingston Lake Club, Inc.
DECISION & ORDER
HON. RICHARD A. KUPFERMAN, JUSTICE SUPREME COURT
In this partition action commenced pursuant to Article 9 of the Real Property Actions and Proceedings Law, the Plaintiff seeks a judgment directing the listing and sale of an improved parcel of real property located in the Town of Day ("Property"). Defendants Peebles and Amish each own an undivided 1/3 interest in the Property' which they acquired by deeds dated February' 9. 1995 and August 26, 2009. respectively. The Plaintiff claims a 1/3 undivided interest in the Property under an executor's deed dated June 9. 2022.
The Plaintiff alleges that he attempted to sell his interest in the Property to Defendants Peebles and Amish, however, they were unwilling to purchase it for the asking price of $133,333. Instead. Peebles and Amish countered with $18.000. The Plaintiff further alleges that he offered to sell his interest to the other members of the Defendant Livingston Lake Club, Inc. ("Lake Club"), however, none of the other members were interested. He now' seeks a judgment directing that the Property be listed for sale and sold with the proceeds apportioned between the parties according to their interests.
The Property is subject to the terms of the Constitution and By-Laws ("By-Laws") of the Lake Club. The By-Laws contain provisions regarding the Property's transferability. Sales must be approved by two-thirds of the principal members. The Lake Club also has a right of first refusal. Notwithstanding, the Lake Club has tolerated the individual parties' attempt to resolve their dispute through the terms of a private agreement from 1979 entered into among their predecessors in title ("Family Agreement"). The Plaintiff and Defendant Peebles essentially agree that the Family Agreement "binds the owners of the subject property" (Verified Petition, at Paragraph 15) and that paragraph 8 of that agreement governs the terms of any such sale (Plaintiff s Affidavit [8-14-24], at Paragraphs 7 & 11; Peebles Affidavit [7-16-24]. at Paragraphs 8-17 & Exhibits G & L).
As relevant here, paragraph 8 of the Family Agreement provides, as follows:
1. "Each Party shall have the right to offer for sale his or her interest in the Bond and Camp."
2. The selling party must provide the other parties to the agreement with "the first opportunity to purchase such interest." "Any such purchase shall be completed within 6 months from the date of the written notice of sale."
3. "If neither of the non-selling Parties shall communicate in writing to the selling Party within thirty (30) days of receipt of such notice their desire to purchase the selling Party's interest, the selling Party shall give the then current club members an opportunity to purchase the seller's interest under this agreement, prior to the selling Party's offering his or her interest to any non-club member third party."
4. "The selling price of any Party's interest in the Bond and Camp shall be their pro rata share of the face value of the Bond and their pro rata share of the value of the real property and capital improvements as determined by three appraisers pursuant to Article Seventh. Section 3 of the Constitution and Bylaws as amended through October 7, 1977. unless a price shall be agreed upon by all of the involved Parties to this agreement."
5. "Any offer to sell may be withdrawn at any time unless otherwise agreed upon by the buyer and seller."
Under the By-Laws, the "Bond" is essentially a membership interest in the Lake Club. The Property (with its improvements) is referred to as a "Camp."
Both Plaintiff and Defendant Peebles have interpreted this language in paragraph 8 as a "right of first refusal" (Plaintiff's Affidavit [8-14-24], at Paragraph 11; Peebles Affidavit [7-16-24], at Paragraphs 10 & 11).
Plaintiff asserts that he provided Defendants Peebles and Amish, by certified mail on or about September 6. 2022. a written "offer to sell" his interest in the Property pursuant to the Family Agreement (Verified Petition, at Paragraphs 26-27; Plaintiffs Affidavit [8-14-24], at Paragraph 13; see also Peebles Affidavit [7-16-24], at Paragraph 12 & Exhibit F). The "offer to sell, reads in pertinent part, as follows:
"Pursuant to [the Family Agreement], the [Plaintiff] ... hereby offers to sell to [Defendants Peebles and Amish] his 1/3 undivided interest to the [Property] under the following terms and conditions:
1. Pursuant to paragraph 8 of the [Family Agreement] '... Each such prospective purchasing Party shall be entitled to purchase a pro rata share of the selling Party's share, or if only one other Party shall desire to purchase the selling Party's interest, he or she shall be required to purchase the selling Party's entire interest. . .The selling price of any Party's interest in the Bond and their pro rata share of the value of the real property and capital improvements as determined by three appraisers pursuant to Article Seventh, Section 3 of the Constitution and bylaws as amended through October 7, 1977...'
. . .
4. Should [Defendants Peebles and Amish] both refuse to purchase the said interest of the [Plaintiff], the same will be offered to current members of Livingston Lake Club. Inc. at the same terms and conditions as herein set forth, in conformity' with the [Family Agreement]
5. The above-referenced Article Seventh. Section 3 of the Club Constitution relates to a sale of a campsite, not the transfer of a fractional interest of a campsite to a member of the club, and is not relevant here.
5. [sic] Based on the current appraisal of the capital improvements on the subject parcel completed August 5. 2022, the [Plaintiff] offers to sell to [Defendants Peebles and Amish| his 1/3 interest for the sum of S133,333.
. . .
7. This offer is good until 30 days of receipt of this notice, pursuant to paragraph 8 of [the Family Agreement]" (Exhibit H to the Petition [emphasis added]).
Defendants Peebles and Amish (through Peebles) responded to the "offer to sell" on or about September 9, 2022, by providing a counteroffer to purchase the Plaintiffs interest for $18,000 (Verified Petition, at Paragraph 28; Plaintiffs Affidavit [8-14-24], at Paragraph 14; Peebles Affidavit [7-16-24], at Paragraph 13). Defendant Peebles has attached a copy of her email response, which provides, in part, as follows:
"Thank you for sending your offer to sell the one-third share of the Northwest Pines cottage. We find the offering price to be out of bounds. Instead, we are counter-offering to purchase the one-third share at a price of $18,000. You would furnish me with a deed suitable for filing as well as the associated forms and credits mentioned in your Offer paragraph 6.
This counter offer is good through September 15th, 2022. ..." (Exhibit G to Peebles Affidavit [emphasis added]).
The Plaintiff has not disputed the authenticity of this email or any of the other correspondence submitted by Defendant Peebles in support of her motion.
The Plaintiff ignored and rejected the counteroffer in his responsive email dated September 11. 2022, which reads as follows: "Per the terms of the [Family Agreement], my Offer to Sell expires 30 days from receipt, in case you change your mind. Thanks" (Exhibit G to Peebles Affidavit). On October 6, 2022. the Plaintiff notified the Lake Club of his interest in offering his 1 /3 interest to the members of the club (Exhibit H to Peebles Affidavit). In an email dated October 17, 2022, the Lake Club advised the Plaintiff that it would circulate any correspondence he desired to share with the members (Exhibit I to Peebles Affidavit). By letter dated October 21, 2022, addressed to the members of the Lake Club, the Plaintiff formally offered to sell his 1/3 interest in the Property for $133,333 (Exhibit J to the Peebles Affidavit).
By email to the Plaintiff dated November 12, 2022. the president of the Lake Club informed the Plaintiff that except for Peebles and Amish, the other members he asked about the sale were not interested in the Plaintiffs offer (Exhibit K to Peebles Affidavit). By email to the Plaintiff dated November 25. 2022. Defendant Peebles again reaffirmed her interest in purchasing the Plaintiffs interest in the Property' pursuant to paragraph 8 of the Family Agreement (Exhibit L to Peebles Affidavit). She proposed that if he was "still interested in selling the property." they could "either come up with an agreed upon price or obtain additional appraisals to come up with a price (Exhibit L to Peebles Affidavit).
In December 2022. the Plaintiff commenced this partition action by filing a notice of petition and verified petition. Shortly thereafter, the Defendants appeared through counsel; stipulated to treat the petition as a complaint; and served verified answers to the pleading. Defendant Peebles also asserted a counterclaim and cross claim, seeking a judgment declaring the rights and obligations of the parties and an award of attorney's fees against the Plaintiff pursuant to paragraph 11 of the Family Agreement.
The Court has engaged in several attempts to resolve this dispute. The Court has also provided the parties with the opportunity to conduct discovery, although they have conducted minimal discovery to promote their settlement negotiations. Ultimately, Defendant Peebles offered to pay $100,000 to the Plaintiff to purchase his interest without any objection from the co-Defendants. She further brought money orders totaling this amount to a court conference. The Plaintiff, however, has rejected the offer and demanded $133,333 for his interest.
Defendant Peebles now' seeks summary judgment dismissing the Plaintiffs pleading, a judicial declaration confirming her right of first refusal under the Family Agreement, and attorney's fees. Essentially, Defendant Peebles asserts that she expressed a desire to purchase the Property w ithin 30 days of receiving the notice of sale and that the Plaintiff frustrated her ability to complete the sale within the applicable six-month period.
Standard of Review
"Summary judgment is a drastic remedy and should not be granted unless there are no triable issues" (Michaelis v State of New York, 135 A.D.2d 1005, 1006 [3d Dept 1987]). The movant bears the initial burden of demonstrating "entitlement to judgment as a matter of law by proffering evidentiary proof in admissible form" (DiBartolomeo v St. Peter's Hosp, of the City of Albany, 73 A.D.3d 1326, 1326 [3d Dept 2010]; see CPLR. 3212 [b]). If the moving party meets this initial burden, the burden then shifts to the party opposing the motion to raise a triable issue of fact (see DiBartolomeo. 73 A.D.3d at 1326). "The evidence must be viewed in the light most favorable to the nonmovant, and that party must be given the benefit of every favorable inference (Parris-Kofi v Redneck, Inc.. 204 A.D.3d 1180, 1181 [3d Dept 2022]).
Analysis
A co-owner of real property "may maintain an action for the partition of the property, and for a sale if it appears that a partition cannot be made without great prejudice to the owners" (RPAPL § 901). RPAPL Article 9 sets forth the procedure for a trial and the granting of an interlocutory judgment (RPAPL §§ 907: 915). Where partition "cannot be made without great prejudice to the owners, the interlocutory judgment, except as otherwise expressly prescribed in [RPAPL Article 9], shall direct that the property ... be sold at public auction" (RPAPL § 915; see RPAPL § 231 [directing that a sale of real property "shall be at public auction to the highest bidder"]; Lauriello v Gallotta, 70 A.D.3d 1009 [2d Dept 2010] [holding that the trial court erred in authorizing the property' to be sold in the market]).
A party, however, does not have an absolute right to relief in a partition action or to obtain an interlocutory judgment (see Ripp v Ripp, 38 A.D.2d 65, 68-69 [2d Dept 19711, affd 32 N.Y.2d 755 [1973]; see also Stressler v Stressler, 193 A.D.2d 728 [2d Dept 1993]). Partition, for example. "is not warranted where ... tenants in common expressly agree not to partition the property until the nonselling party has the opportunity to purchase the sellers' interest" (Bessen v Glatt, 170 A.D.2d 924, 925 [3d Dept 1991]; see Tramontano v Catalano, 23 A.D.2d 894, 895 [2d Dept 1965]). In addition, a partition action is equitable in nature and therefore may be precluded by the equities presented (see Stressler, 193 A.D.2d at 728 [affirming the dismissal of a partition action based on the equities presented]; 24 NY Jur Cotenancy and Partition § 130 [NY Jur 2d, West Group 2024] [citing cases]).
Here, the Court disagrees with the Plaintiff s assertion that Defendants Peebles and Amish failed to properly exercise their right of first refusal, and that the Property may now be partitioned or sold to a third party without first affording them the opportunity to purchase it. First and foremost, the Plaintiffs offer did not allow any room for negotiations over the purchase price ($133,333) and was therefore inconsistent with paragraph 8 of the Family Agreement, which requires the parties to either mutually' agree on the price or, alternatively, use three appraisers to determine the price.
The written offer itself contained very limited language, including a specific price unilaterally set by the Plaintiff (albeit based on his own appraisal), without any invitation to negotiate over this term or otherwise set the price using three appraisers (rather than just one), as required by the Family Agreement. The Plaintiffs subsequent conduct further reflects his unwillingness to negotiate over the price. Among other things, the Plaintiff ignored Peebles' counteroffer and her subsequent suggestion for them to "obtain additional appraisals to come up with a price." He further presented the other members with the same 'take it or leave it- deal, without evidencing any willingness to negotiate over the price. As such, given that Plaintiff was insisting upon a nonnegotiable purchase price of $133,333. Defendants Peebles and Amish did not have to accept the offer and could have refused it w ithout extinguishing their right of first refusal
To the extent that the Plaintiff asserts that Defendant Peebles should have submitted a counter appraisal, the offer did not request a counter appraisal or indicate a willingness to consider one. Again, the record indicates that the Plaintiff ignored Peebles' counteroffer and her subsequent suggestion to obtain additional appraisals. In addition, the Plaintiffs offer asserted that Article Seventh, Section 3 of the By-Laws (which sets forth the appraisal procedure) was "not relevant", even though paragraph 8 of the Family Agreement expressly references this provision as the method to set the selling price in the absence of a mutual agreement on the price.
Second, even assuming for the sake of argument that the "offer to self could be read more broadly, the undisputed evidence reveals that Defendants Peebles and Amish expressed a "desire to purchase" the Plaintiffs interest within 30 days of their receipt of the notice of sale, as demonstrated by Defendant Peebles" September 9 email (counteroffer) to the Plaintiff. Defendants Peebles and Amish therefore had six months to complete the sale through further negotiations or the appraisal process.
The Court further agrees with Defendant Peebles that the Plaintiff s conduct excused her performance to complete the sale within six months. Among other things, the Plaintiff did not engage in any negotiations over the price; ignored the counteroffer; offered his interest to the other members; and then commenced this action prior to the expiration of the six-month deadline to complete the sale. Even when viewed in the light most favorable to the Plaintiff (as the nonmoving party), such conduct was at the very least tantamount to a withdrawal of the "offer to sell" or, alternatively, a termination of the transaction, as the Plaintiff s conduct manifested a clear intent not to pursue the negotiations any further with Defendants Peebles and Amish even though the six-month deadline to complete the sale had not yet expired (see Family Agreement, paragraph 8 [providing that "Any offer to sell may be withdrawn at any time unless otherwise agreed upon by the buyer and seller."]). As the "offer to sell" was at the very least withdrawn or the transaction terminated based on Plaintiff s conduct. Defendants Peebles and Amish continue to possess a right of first refusal notwithstanding the parties' failure to complete the transfer within the applicable six-month period.
The Court further disagrees that the counteroffer of $ 18,000 was tantamount to a refusal to purchase the property. Paragraph 8 of the Family Agreement permitted the parties to negotiate the price without appraisers and, if the Plaintiff thought the price was too low, the Family Agreement provided him with the right to either attempt to negotiate a higher purchase price or insist on the appraisal process. The Plaintiff, moreover, could have insisted on further assurances from Defendants Peebles and Amish about their good faith desire to purchase his interest.
Further, the Court disagrees that material issues of fact exist regarding the By-Laws, their enforceability, and the effect of both the Family Agreement and the By-Laws with respect to the alienation of the Property. While the enforceability of certain provisions in the By-Law is uncertain, those issues are irrelevant given that Defendants Peebles and Amish have sought to exercise their right of first refusal and the Lake Club has not objected to such a sale. Moreover, the time limitations in the Family Agreement for the exercise of the right of first refusal do not unreasonably restrain the Plaintiffs right to sell his interest in the Property (see Bessen. 170 A.D.2d at 925-926; Tramontano. 23 A.D.2d at 894-895). The Court also disagrees that the Plaintiff "cannot otherwise dispose of his property interest but-for a partition action" (Plaintiffs Memorandum of Law. at Page 10). The record is clear that Defendant Peebles offered to purchase the Plaintiffs interest for $100,000 and that the Plaintiff rejected the offer.
To the extent that the Plaintiff s counsel baldly implies that the right of first refusal may not be enforceable for some other undisclosed reason, such speculation is insufficient to create an issue of tact (see CPLR. 3212 [b]). In any event, the Plaintiff previously sought to avail himself of the benefits of paragraph 8 of the Family Agreement and does not himself dispute the enforceability of the right of first refusal. Based on the Plaintiffs prior conduct and his representations in this litigation, the Court considers the right of first refusal to be enforceable as between the Plaintiff and Defendants Peebles and Amish.
Further, the Plaintiff contends that summary judgment is premature because discovery is not yet completed. Under CPLR. 3212(f), the Court may deny a summary judgment motion as premature if a non-moving party has not been provided an opportunity to engage in discovery to ascertain facts unavailable to him or her. This section reads, as follows: "Facts unavailable to opposing party. Should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just" (CPLR 3212 [f]).
Here, the basis relied upon by Defendant Peebles in support of her motion (namely, the right of first refusal) centers around the correspondence sent and received by the Plaintiff, who obviously had these communications available to him prior to this motion. In addition, contrary to the bald allegations of the Plaintiff s counsel, the facts supporting this defense have not been controverted. The Court further disagrees that additional discovery should be conducted from the parties' appraisers prior to ruling on the motion. The Family Agreement does not provide for such a procedure. Rather, the appraisers must select a third appraiser to resolve their differing opinions, which has not yet occurred.
Similarly, the Court disagrees that depositions must be conducted to ascertain the meaning of the Family Agreement. None of the parties participated in the drafting of the Family Agreement. Nor has the Plaintiff identified anyone with personal knowledge who could testify regarding its original intent and meaning. In any event, the Plaintiff and Defendant Peebles have both represented that the Family Agreement is enforceable and provides a method to set the price using three appraisers if the parties cannot agree on the price, as in this case. There is therefore no need for any further discovery on this issue.
In sum, the Court finds that this partition action was premature and that it would not be appropriate or equitable to proceed with this litigation any further until the Plaintiff first exhausts his remedies under paragraph 8 of the Family Agreement. Specifically, absent an agreement between the parties to the contrary, he must re-serve a certified "offer to self' and negotiate over price in good faith or otherwise invoke the three-appraiser method for determining the price. Given the history' of the negotiations, the parties would be well-advised to proceed with setting the price by having each side select an appraiser and then having those two appraisers select a third appraiser to resolve the dispute over the value of the Plaintiff s interest.
Attorney's Fees
Turning to Defendant Peebles' request for summary' judgment on her counterclaim for attorneys' fees, Paragraph 11 of the Family Agreement reads, in pertinent part, as follows:
"Any Party7 found to be in breach of this agreement shall be liable to the other Parties for all legal costs including but not limited to attorney's fees and Court costs incurred by the other Parties in order to enforce this agreement. If any of the Parties initiate an unsuccessful action against another Party alleging breach of this agreement, the Party or Parties initiating the action shall pay the defense costs including but not limited to attorney's fees and Court costs incurred by the defending Party in his or her defense." (emphasis added).
For Defendant Peebles to prevail on her claim for attorney's fees on this motion, the Court would have to conclude, as a matter of law, that the Plaintiff breached the Family Agreement. The Plaintiff, however, has not been provided with any discovery responses from the Defendants, including communications between the Lake Club and Defendant Peebles. The Plaintiff has also not yet had the opportunity to depose the Defendants. In contrast to the defense discussed above (right of first refusal), the issue of a breach has not been fully developed either on this record or through discovery.
Among other things, the following issues would require additional discovery and briefing to adequately address the merits of the counterclaim for attorney's fee, including: whether the Defendants breached the agreement first: whether the Defendants engaged in a plot to acquire the Plaintiff s interest for either little or no consideration; whether the Plaintiff acted reasonably in response to his alleged fear that the Defendants may have been misusing the By-Laws and Family Agreement to unreasonably restrain his ability to sell the property for a fair price; and whether the offer to sell and the Plaintiffs subsequent conduct were based on his confusion over the sales process rather than a breach, given the poorly drafted language in the Family Agreement regarding the appraisal process and the content and brevity of the communications from Defendant Peebles.
Notably, the Defendant Peebles initially attempted to acquire the Plaintiff s interest for only $18,000. and the Lake Club allegedly "implied that it would re-take his share of the property without giving consideration for the same but allowed [him] the ability to make arrangements for selling his share to his co-tenants" (Verified Petition, at Paragraph 21).
Based on this record, the Court would therefore have to conduct a trial or entertain another summary judgment motion (after the completion of discovery) to determine whether the Plaintiff breached the agreement on the counterclaim for attorney's fees. Proceeding with additional discovery and a possible trial on this issue, however, would significantly impair the parties attempt to resolve their dispute over the price. Such a course of action therefore would not be prudent. The Court nonetheless recognizes the potential merit for Defendant Peebles' counterclaim for attorney's fees and therefore dismisses it without prejudice to her right to reassert it if the parties are again unable to agree on a purchase price and require further litigation.
Declaratory Relief
Turning to Defendant's Peebles' counterclaim for declaratory relief on a variety of other issues, including the interpretation of the By-Laws, the Court finds that those issues are either moot in light of this decision or have been withdrawn based on the relief sought by Defendant Peebles on this motion (see CPLR 3001; Long Is. Light. Co. v Allianz Underwriters Ins. Co.. 35 A.D.3d 253, 253 [1st Dept 2006] [recognizing that a declaratory judgment may not be used to obtain an advisory opinion]; Clarity Connect. Inc, v AT&T Corp., 15 A.D.3d 767, 767 [3d Dept 2005] [holding that the Court "may decline to consider [a request for declaratory] relief where other adequate remedies are available"]).
It is therefore. ORDERED, that Defendant Peebles' motion is hereby GRANTED; and it is further DECLARED and ADJUDGED that Defendants Peebles and Amish continue to have a right of first refusal; and it is further ORDERED, that the petition and the remaining portions of the counterclaim are hereby DISMISSED, without prejudice. This constitutes the Decision and Order of the Court. No costs are awarded to any party. The Court is uploading the original for filing and entry. The Court further directs the parties to serve notice of entry of this Decision and Order in accordance with the Local Protocols for Electronic Filing for Saratoga County.
So Ordered.
Enter.
Papers Considered:
NYSCEF Doc. Numbers 1-9. 21-27, 71-97. 99