Opinion
Index No. 656111/2021
07-12-2023
Max Protetch, Plaintiff, v. JOCAR Realty Co., Inc., STATE5SR LLC, and Russ R. Chinnici, Defendants.
Luke A. McGrath, Esq. of Dunnington Bartholow & Miller LLP appeared in this action as counsel for defendants. Jocar Realty Co., Inc., State5SR LLC and Russ R. Chinnici, and John Newhouse, Esq. of NewHouse & Shey LLP is plaintiff's counsel.
Unpublished Opinion
Luke A. McGrath, Esq. of Dunnington Bartholow & Miller LLP appeared in this action as counsel for defendants.
Jocar Realty Co., Inc., State5SR LLC and Russ R. Chinnici, and John Newhouse, Esq. of NewHouse & Shey LLP is plaintiff's counsel.
Verna L. Saunders, J.
HON. VERNA L. SAUNDERS, JSC.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 were read on this motion to/for DISMISSAL.
In this declaratory judgment action, pursuant to Real Property Actions and Proceedings Law Article 15, plaintiff seeks to compel defendants to complete the sale of real property pursuant to an option provision of a purchase agreement. Defendants move to dismiss plaintiff's complaint, pursuant to CPLR 3211(a)(1), where documentary evidence clearly establishes a defense as a matter of law; CPLR 3211(a)(5), where the claims are time-barred; and CPLR 3211(a)(7), for failure to state a cause of action.
On February 19, 1993, plaintiff, Max Protetch, and defendant, JOCAR Realty Co., Inc. ("JOCAR"), entered into a purchase agreement ("purchase agreement") for two residential condominium units, Unit 5SF and Unit 5SR, at 262 Mott Street, New York, NY. On June 4, 1993, the Purchase Agreement was modified because Unit 5SR ("unit") was occupied by a residential tenant (Richard Keene), pursuant to Article 7C of the Multiple Dwelling Law. Since JOCAR could not deliver the unit vacant, the purchase agreement was modified to state in relevant part:
Paragraph 26 of the Purchase Agreement states: This Purchase Agreement, together with the Plan, as the Plan may be amended from time to time, constitutes the entire agreement between the parties as to the subject matter hereof and supersedes all prior understandings and agreements.
Paragraph 7 of the Rider to the Purchase Agreement states: Upon the Closing, the Seller shall deliver the Units to the Purchaser vacant, free of all occupants or tenants, and the rights of any tenants or other persons in and to the Units.
Paragraph 8A of the Rider to the Purchase Agreement states: As Seller is unable to deliver vacant possession of Unit 5SR at the closing hereof, the Purchaser shall only purchase Unit 5SF and the purchase price hereunder shall be reduced to $153,123.15; the percentage interest in the common elements shall be reduced to.012429%; the amount of the purchase price to be financed shall be $141,500.00; and the Purchaser shall have the option to purchase Unit 5SR at the time the seller shall be able to deliver vacant possession ["Option"] thereof on all of the same terms and conditions as contained herein, except for the following terms and conditions:
a. The purchase price for Unit 5SR shall be $176,876.85; and
b. The amount of the purchase price to be financed shall be $141,500.00; and
c. The percentage interest in the common elements shall be.014357. (NYSCEF Doc No. 5 at 25-26 [emphasis added], Purchase Agreement).
On April 12, 2006, JOCAR purported to convey fee title to Unit 5SR to one of its principals, defendant, Joseph A. Chinnici. No consideration was paid for the conveyance. Upon his death, the unit was conveyed to defendant STATE5SR, also for no consideration.
During this time, Keene had continued to live in the Unit but died in September 2021. On September 16, 2021, plaintiff's attorney notified defendants that plaintiff elected to exercise the option and demanded STATE5SR, as the purported fee owner, to close the sale to plaintiff pursuant to the terms of the purchase agreement. Defendants refused and this lawsuit ensued.
Defendants now move to dismiss plaintiff's complaint on the grounds that the purchase agreement option is barred by New York's rule against perpetuities, pursuant to Estates, Powers and Trusts Law (EPTL) § 9-1.1 and is time barred by CPLR 213.
It is well established that on a motion to dismiss pursuant to CPLR 3211(a)(7), "the court must afford the pleadings a liberal construction, accept the allegations of the complaint as true and provide plaintiff... the benefit of every possible favorable inference" (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 N.Y.3d 582, 591 [2005] [internal quotation marks and citation omitted]; see Goshen v Mutual Life Ins. Co. Of NY, 98 N.Y.2d 314, 326 [2002]; Leon v Martinez, 84 N.Y.2d 83, 87-80 [1994]). The court's "sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law, a motion for dismissal will fail" (Polonetsky v Better Homes Depot, Inc., 97 N.Y.2d 46, 54 [2001], quoting Guggenheimer v Ginzburg, 43 N.Y.2d 268, 275 [1977]; see also Sokoloff v Harriman Estates Dev. Corp., 96 N.Y.2d 409, 414 [2001]).
CPLR 3211(a)(1) provides, in part, that "[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that... a defense is founded upon documentary evidence..." "In order to prevail on a motion to dismiss based on documentary evidence..., the documents relied upon must definitively dispose of plaintiff's claim" (Bronxville Knolls v Webster Town Ctr. Partnership, 221 A.D.2d 248, 248 [1st Dept 1995]). Such a motion "may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (McCully v Jersey Partners, Inc., 60 A.D.3d 562, 562 [1st Dept 2009] [internal quotation marks, emphasis and citation omitted]; see Goshen, 98 N.Y.2d at 326).
EPTL 9-1.1(a), commonly referred to as the rule against perpetuities, sets forth the suspension of alienation rule and deems void any estate in which the conveying instrument suspends the absolute power of alienation for longer than lives in being at the creation of the estate, plus 21 years (see EPTL 9-1.1[a][2]). As explained by the Court of Appeals in Symphony Space, Inc. v Pergola Props., Inc. (88 N.Y.2d 466, 483 [1996]), "[u]nder the statutory rule against remote vesting, an interest is invalid 'unless it must vest, if at all, not later than twenty-one years after one or more lives in being' (EPTL 9-1.1[b] [emphasis added]). That is, an interest is void from the outset if it may vest too remotely."
Since there is no dispute as to the authenticity of the purchase agreement and plaintiff and defendants have stipulated that the purchase agreement with rider represents the complete agreement between the parties, the contract qualifies as "documentary evidence" for the purposes of CPLR 3211(a)(1) (Fontanetta v John Doe 1, 73 A.D.3d 78, 84-85 [2d Dept 2010] ["...judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially 'undeniable,' would qualify as 'documentary evidence' in the proper case."]).
Under the terms of the purchase agreement, the option vests and must be exercised at the time defendants are able to deliver vacant possession of the unit. Plaintiff argues that, "[s]ince the Unit was occupied by Richard Keene at the time the Option was created and Keene was the apparent holder of the possessory interest to be extinguished in order for Jocar to be able to obtain and convey vacant possession, it is indisputable that Richard Keene is a 'life in being' for the purpose of applying EPTL 9-1.1 to the Option" (NYSCEF Doc No. 11 at 12, plaintiff's memorandum of law in opposition). However, plaintiff does not cite to any case law that would allow the court to simply re-write the contractual terms of the purchase agreement to include Keene as a measuring life (Reiss v Financial Performance Corp., 97 N.Y.2d 195, 199 [2001] ["courts may not by construction add or excise terms, nor distort the meaning of those used and thereby 'make a new contract for the parties under the guise of interpreting the writing'"] [internal citations omitted]). Indeed, an option such as the one in question, containing no limitation in duration, demonstrates the parties' intent that it last indefinitely, and EPTL 9-1.3, the "saving statute", does not permit "an extensive rewriting of the option agreement so as to make it conform to the permissible period" (Symphony Space, Inc. 88 N.Y.2d at 482; see Buffalo Seminary v McCarthy, 86 A.D.2d 435, 446 [4th Dept 1982], affd 58 N.Y.2d 867 [1983]).
Plaintiff's reliance on Morrison v Piper (77 N.Y.2d 165, 167 [1990]) is misplaced. In Morrison, which concerned a right of first refusal provision in a deed, the Court of Appeals found that the language of the deed, which stated, "[Maier] and [Morrison] agree and covenant that during their life each shall have a right of first refusal to purchase the property conveyed and the property retained, respectively" had "an important limitation" wherein two measuring lives were identified (id. at 171). That is simply not the case here. Moreover, Morrison was heavily cited in Symphony Space, Inc. when the Court was analyzing EPTL 9-1.3, and it clearly stated that the statute "does not authorize courts to rewrite instruments that unequivocally allow interests to vest outside the perpetuities period" (Symphony Space, Inc. 88 N.Y.2d at 482).
Where an option agreement "contains no limitation on duration nor words suggesting that the parties intended the extent of its life to be anything other than indefinite," the agreement violates the rule against remoteness in vesting (Buffalo Seminary, 86 A.D.2d at 444). Without a measuring life or any temporal limitation, the option violates the New York state rule against perpetuities. EPTL 9-1.3 (d) provides that where vesting requires "any specified contingency, it shall be presumed that the creator of such estate intended such contingency to occur, if at all, within twenty-one years from the effective date of the instrument creating such estate." Here, the option was contingent on the vacancy of the Unit, an event that was not certain to occur within 21 years of the purchase agreement (cf. Rozina v Casa 74th Dev. LLC, 89 A.D.3d 508, 509 [1st Dept 2011]). Indeed, vacancy of the unit did not occur within the statutory period of the rule against perpetuities. As such, no option exists or is available to the plaintiff. Having decided that the complaint in this matter is dismissed, the court need not address the other grounds for dismissal raised by defendants. Based upon the foregoing, it is
ORDERED and ADJUDGED that defendants JOCAR Realty Co., Inc., STATE5SR LLC and RUSS R. CHINNICI's motion to dismiss is granted; and it is further
ORDERED that, within twenty (20) days after this decision and order is uploaded to NYSCEF, counsel for defendants shall serve a copy of this decision and order, with notice of entry, upon plaintiff.
This constitutes the decision and order of this court.