Opinion
INDEX NO. 607697/2018
09-04-2019
ROOSEVELT PROPERTIES, INC., Plaintiff, v. PETER PEKICH d/b/a MEDCOR HOLDING CO., THE COUNTY OF NASSAU, APEX MORTGAGE CORP., HARRISON VICKERS AND WATERMAN LLC, RECORD & RETURN TITLE AGENCY INC. and OLD REPUBLIC NATIONAL TITLE INSURANCE, Defendants. OLD REPUBLIC NATIONAL TITLE INSURANCE, Third-Party Plaintiff, v. KENNETH B. MOCK, Third-Party Defendant.
NYSCEF DOC. NO. 109 SHORT FORM ORDER
Present: HON. TIMOTHY S. DRISCOLL Justice Supreme Court Motion Seq. No. 5
Submission Date: 7/18/19
Papers Read on these Motions:
Affidavit in Support with Exhibits...................................................................................x
Memorandum of Law in Support.....................................................................................x
Affirmation in Opposition with Exhibits.........................................................................x
Reply Memorandum of Law.............................................................................................x
This matter is before the court on third-party defendant Kenneth B. Mock, Esq.'s ("Mock") motion to dismiss. For the following reasons, Mock's motion is granted.
BACKGROUND
A. Relief Sought
Mock moves to dismiss the Third Party Complaint pursuant to CPLR §§ 3211(a)(1), (5), (7), and 3016(b). Defendant-Third-Party Plaintiff Old Republic National Title Insurance Company ("Old Republic") opposes Mock's motion.
B. The Parties' History
The parties' history is set forth in detail in the Court's prior Order dated February 5, 2019 (the "Prior Order"). The Amended Verified Complaint, Mock Aff. at Exh. B, alleges as follows:
Roosevelt Properties is a domestic business corporation with a principal place of business in Nassau County and is the owner of record of commercial premises located at 509 Babylon Turnpike, Freeport, New York (the "Property"). Roosevelt Properties uses the Property to store equipment and conduct its business as a construction trade supplier of excavation, foundation, and drilling support services. Roosevelt Properties also owns property located at 501 Babylon Turnpike, Freeport, New York (School District 9, Section 55, Block 281, Lots 193 to 195) (the "Adjacent Property"), which consists of an empty series of lots adjacent to the Property.
Peter Pekich d/b/a Medcor Holding Co. ("Pekich") is an individual residing in Nassau. Apex Mortgage Corp. ("Apex") is a foreign company conducting business in New York State as a commercial lender or real property owner. Harrison Vickers and Waterman ("HVW") is a domestic limited liability company conducting business in New York State as a commercial lender or real property owner. Record & Return Title Agency Inc. ("Record & Return") is a domestic company conducting business in New York State as a title company. Old Republic is a domestic company conducting business in New York State as an insurance company. The County of Nassau, through its treasurer, issues tax deeds for unpaid taxes pursuant to applicable law.
In May 2013, Apex sold the Property and the Adjacent Property to Roosevelt Properties pursuant to a written contract. Title closed on July 15, 2013, for total consideration of $395,000.00. HVW extended funds to Roosevelt Properties to acquire the Property and the Adjacent Property from Apex, and Roosevelt Properties retained Record & Return and Old Republic in connection with the closing. However, Roosevelt Properties' interest in the Property and the Adjacent Property was not properly recorded in the deed between Apex as grantor and Roosevelt Properties as grantee.
Record & Return and Old Republic entered into a contract with Roosevelt Properties to "research the [Property and Adjacent Property], obtain abstract of title, attend a closing and record a deed to 501 Babylon Turnpike, Freeport, New York and 509 Babylon Turnpike, Freeport, New York, and to provide title insurance for same." Am. Compl. ¶ 86. Record & Return and Old Republic failed to acknowledge or understand that the Property and Adjacent Property "were and are dealt with as one property by the various municipalities having jurisdiction over same." Am. Compl. ¶ 87.
At the closing, Roosevelt Properties was presented with a Deed containing both addresses of the property sold by Apex: 501 and 509 Babylon Turnpike, Freeport, New York. However, Record & Return and/or Old Republic unilaterally deleted the address of 501 Babylon Turnpike from the Deed executed by Apex, then filed and recorded the Deed without advising the parties that the address of the Adjacent Property was deleted from the Deed. The Schedule "A" description of the property appended to the recorded deed was prepared by Record & Return and/or Old Republic and failed to include the Adjacent Property.
On December 16, 2016, Pekich commenced a summary proceeding against Roosevelt Properties in the matter of Peter Pekich d/b/a Medcor Holding Co. v. Max Bowen and Roosevelt Properties, Inc., Nassau County District Court Index No. LT-003507-17/NA (the "Summary Proceeding"). Pekich alleged that Roosevelt Properties' rights of possession with respect to the Adjacent Property were terminated upon the alleged execution of a tax deed dated August 10, 2016 by the Nassau County Treasurer (the "Tax Deed"). Pekich did not properly notice interested parties, as is required by applicable local law, thus rendering the Tax Deed invalid. While Pekich claims he served a Notice to Redeem upon Plaintiff by certified mail, return receipt requested, in January 2016, the notice was mailed to the Adjacent Property and returned as undeliverable. Pekich failed to send additional or properly addressed notices. The records of the Clerk of Nassau County and the Town of Hempstead list Roosevelt Properties' address of 501 Babylon Turnpike "as being included in the address of 509 Babylon Turnpike, Freeport, New York." Am. Compl. ¶ 28. However, Roosevelt Properties was not served with a Notice to Redeem at the Property.
The Amended Complaint asserts the following eleven causes of action: 1) declaratory judgment, 2) permanent injunction, 3) quiet title, 4) breach of contract against Apex, 5) deed reformation/correction against Apex, 6) breach of contract against Record & Return and Old Republic, 7) negligence against Record & Return and Old Republic, 8) scrivener's error/deed reformation, 9) tortious interference against Record & Return and Old Republic, 10) reformation of title policy against Record & Return and Old Republic, and 11) indemnification/estoppel against Record & Return and Old Republic.
Old Republic's Third-Party Complaint, Mock Aff. at Exh. A, alleges as follows:
Old Republic is a Minnesota corporation authorized to issue insurance binders and policies of title insurance in New York. Mock is an attorney admitted to practice in the State of New York and maintains an office in Hempstead, New York. On or about May 13, 2013, Mock represented Roosevelt Properties in connection with its purchase of the Property and another parcel of real property commonly known as 111 Park Avenue, Roosevelt, New York (the "111 Property"). Old Republic believes that in or about May 2013, Mock applied to Record & Return for a title examination of only the Property and the 111 Property and a Certificate of Title and Commitment. Pursuant to Mock's application, a Certificate of Title and Commitment for only the Property and the 111 Property was issued by Record & Return on May 3, 2013 and provided to Mock. Old Republic believes that Mock reviewed the Certificate of Title and Commitment and did not advise Record & Return of any omissions or errors, and specifically did not advise Record & Return of any omission or error in failing to include any parcels of real property other than the Property and the 111 Property.
On or about June 15, 2013, a title closing was held at which Mock represented Roosevelt Properties in its purchase of only the Property and the 111 Property from Apex as grantor of the Property and Dorcas Bowen and Dushaun Gordon as grantors of the 111 Property. That same date, Apex executed, acknowledged, and delivered the Deed conveying title only to the Property, in favor of Roosevelt, which Deed was recorded in the office of the Nassau County Clerk on August 9, 2013. Old Republic believes that Mock was present at the title closing on June 15, 2013, and Mock authorized the further release of the Deed to Record & Return to be delivered to the Nassau County Clerk for recording and indexing against the Property. All actions taken by Record & Return, in its capacity as agent for Old Republic, and actions taken, if any, by Old Republic with respect to the preparation of the Certificate of Title and Commitment and the Deed were done at the behest of and with the approval of Mock and according to information provided by Mock.
Old Republic asserts one claim against Mock for negligent misrepresentation. Old Republic alleges that Mock's instructions and representations to Record & Return with respect to the Property and Adjacent Property, and the Certificate of Title and Commitment were misrepresentations knowingly made by Mock notwithstanding his duty and obligation to provide accurate information.
In its Prior Order, the Court determined the motions to dismiss the Amended Complaint filed by Record and Return and Old Republic. The Court granted the motions to dismiss the breach of contract claim and tortious interference with contract claim, and denied the motions to dismiss the negligence claim, claim to reform the Deed and Title Policy, and indemnification claim. The Court concluded, in relevant part, that Record & Return did not establish that the three-year statute of limitations for negligence claims expired, as the Amended Complaint alleges that injury did not occur until Pekich asserted his alleged interest in the Adjacent Property in 2016.
1. Mock Affidavit
Mock affirms that he is an attorney in good standing duly admitted to practice in New York State. The Adjacent Property and the Property were used as one contiguous property, with the Property being used as a business enterprise and the Adjacent Property being used as the driveway and parking lot for the business enterprise. Public records of the Nassau County Clerk and Town of Hempstead list the Adjacent Property as being included in the address of the Property. A copy of the Contract of Sale for the Adjacent Property and the Property describes the premises being conveyed to Roosevelt as 501-509 Babylon Turnpike. See Mock Aff. at Exh. D. A copy of the Contract of Sale was provided to Old Republic and Record & Return.
HVW, a commercial lender, extended funds to Roosevelt Properties to purchase the Property and Adjacent Property. In connection with that transaction, HVW's principal, James Giordano, applied to Record & Return for a title examination and certificate of title and commitment. A copy of Record & Return's confirmation page for the subject application shows that Giordano was the "source" for the title examination. See Mock Aff. at Exh. E. Old Republic's allegation that Mock ordered the title examination and title insurance from Record & Return is patently false and contradicted by Record & Return's business records.
At the closing of title on or about July 15, 2013, Roosevelt Properties executed one Deed conveying both the Adjacent Property and the Property. See Mock Aff. at Exh. F. The executed RP-5217-PDF Real Property Transfer Report and New York State Department of Taxation and Finance Form TP-584, see Mock Aff. at Exh. G, reflect that Roosevelt Properties intended to acquire the Adjacent Property and the Property. After the closing, it appears that Old Republic and/or Record & Return unilaterally deleted the Adjacent Property from the Deed and then filed and recorded the Deed without advising anyone that the Adjacent Property was deleted from the Deed. See Mock Aff. at Exh. H. Mock never instructed Old Republic and/or Record & Return to change or alter the Deed in any fashion. Old Republic and/or Record & Return never advised Mock that they were going to alter the Deed.
C. The Parties' Positions
Mock argues that Old Republic's negligent misrepresentation claim is time barred by the three-year statute of limitations, as the claim accrued no later than June 15, 2013 - the date of the closing - which is the last date that Mock allegedly communicated with Record & Return. Old Republic did not commence the Third-Party Action until nearly six years later.
Additionally, Mock argues that Old Republic fails to state a claim for negligent misrepresentation. There is no privity of contract between Mock and Old Republic, and there is no relationship between Mock and Old Republic so close as to approach that of privity. Moreover, Mock's request for a title examination is not the type of unique or specialized expertise which would support a cause of action for negligent misrepresentation. Further, the mere allegation that Mock knew that Record & Return would rely upon a purported application submitted by Mock fails to state a cause of action. Old Republic also fails to allege that Mock provided it with any incorrect information, and Old Republic's allegations regarding communications between Mock and Record & Return are conclusory. Indeed, Record & Return's confirmation page for the request for title examination (the "Confirmation") confirms that the title examination was ordered by Giordano, a principal of HVW. Old Republic also ignores that Old Republic and/or Record & Return undoubtedly received a copy of the Contract of Sale, which explicitly included the Adjacent Property. The Third-Party Complaint is based entirely on purported omissions and does not allege any affirmative misrepresentation by Mock to Old Republic and/or Record & Return. Finally, it was unreasonable for Old Republic and/or Record & Return to rely on Mock's alleged application, which was inconsistent with the Contract of Sale and public records.
Old Republic argues that the Third-Party Action is not time barred, as the law of the case set forth in the Prior Order provides that Plaintiff's injury did not occur until Pekich asserted his alleged interest in the Adjacent Property in 2016. Additionally, no privity of contract is required for liability based upon negligent misrepresentation. Here, Old Republic alleges that due to Mock's negligence, the application for a Title Report and Commitment to Insure contained inaccurate information. Even assuming that Mock did not personally apply for the Title Report and Commitment to Insure, the same documentary evidence shows that Mock was also an intended recipient of the Title Report and Commitment to Insure and, ultimately, the Title Insurance Policy issued by Record & Return as Old Republic's agent.
Old Republic contends that the Confirmation shows that the application for a title search for the Property and the 111 Park Property was submitted by Giordano with copies of the Title Report to be circulated to Mock as the purchaser's attorney. Notably, the Confirmation identified the real property to be examined only by the street address of 509 Babylon Turnpike, Freeport, and no other identifying information was provided. If Plaintiff's claim is accurate, Mock should have contacted Record & Return to ensure that the Property was not the only title to be examined and that an additional parcel was also involved. Mock, however, does not claim that he contacted Record & Return at all to provide the correct information regarding the Adjacent Property, or that he contacted Record & Return or Old Republic 1) upon his receipt of the Title Report and Commitment to Insure, 2) upon his receipt of any amendments to the Title Report, 3) at the closing when the Deed containing only the description of the Property was circulated and executed, or 4) when the title insurance policy was issued. The Confirmation also shows that Mock would have received all information provided by Record & Return, including the initial Title Report and Commitment. When Mock failed to observe and report the omission of the Adjacent Property from the Title Report and Commitment to Insure, and when he failed to observe and report the same omission in the Deed, Mock not only breached his duty to his client, but also breached a similar duty owed to Old Republic and its agent, Record & Return. Mock's failure to provide accurate and complete information satisfies the elements of a claim for negligent misrepresentation.
Old Republic argues that Mock's reliance on the Contract and transfer documents filed to record the Deed is misplaced. The Contract is unsigned, does not annex a metes and bounds description, and identifies the property to be conveyed by a street address. Where there is a discrepancy between the street address and the legal description of a parcel of real property, the legal description controls. While the Contract attempted to identify the property to be purchased by a tax map identifier, the information was unclear. The Property - and not the Adjacent Property - is clearly identified on the Deed by the tax map identifier, metes and bounds description, and savings clause. Mock's claims are belied by the real property transfer tax form, which does not designate the size of the parcel conveyed but references the identical tax map identifier stated for the Property only. Even assuming that the Deed contained both addresses, the legal description of the Property would control and limit Plaintiff's ownership to only the Property and not the Adjacent Property.
Old Republic argues that the Deed and transfer documents raise triable issues of fact to be determined at trial, not by motion practice. Further, Mock raises triable issues of fact by citing Roosevelt Properties' allegation that Roosevelt Properties retained Old Republic and/or Record & Return to run title searches and issue a title insurance policy and simultaneously claiming that Roosevelt Properties' lender was the applicant for the title report and policy. The Confirmation provides that the source was Giordano of Carida Capital Group LLC, and fails to mention Roosevelt Properties' lender, HVC. Additionally, the question of whether Old Republic reasonably relied upon information provided by Mock or uncorrected by Mock should be resolved by the trier of fact. While Mock repeats Plaintiff's conclusory allegation that Old Republic and/or Record & Return altered the Deed, it is equally plausible that the Deed was altered, if at all, by the Nassau County Clerk, as the Deed included a metes and bounds description for only the Property and not the Adjacent Property.
On reply, Mock contends that Old Republic's "law of the case" argument with respect to the statute of limitations is meritless, as there has been no prior judicial determination that Old Republic's claim for negligent misrepresentation accrued in December 2016, and it is well-established that a claim based on negligent misrepresentation accrues on the date of the alleged misrepresentation - here, June 15, 2013. The Prior Order made no determination regarding the accrual date for Old Republic's negligent misrepresentation claim against Mock, as the Third Party Action was not even commenced at the time of the Prior Order and the issue was not before the Court. Further, Old Republic cannot and has not alleged any special or privity-like relationship with Mock. The mere fact that Mock acted as the closing attorney for a borrower-purchaser on a transaction in which Record & Return was retained to search title and issue a title commitment does not create the requisite level of trust and confidence to infer that Mock possessed unique or specialized expertise. Old Republic also fails to allege that Mock imparted any incorrect information which Old Republic and/or Record & Return relied upon. Finally, given Record & Return's contractual obligations to examine title and publicly available property records, Old Republic cannot reasonably claim that it relied solely upon Mock's alleged negligent omissions. Old Republic has not submitted an affidavit and thus fails to remedy any of the pleading deficiencies in its Third Party Complaint.
RULING OF THE COURT
A. Motion to Dismiss
On a motion to dismiss pursuant to CPLR § 3211(a)(7), the court is required to "accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 141 (2017), quoting Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994). Dismissal is warranted where the non-movant "fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery." Connaughton, 29 N.Y.3d at142, citing, inter alia, Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc., 115 A.D.3d 128, 134 (1st Dept. 2014).
B. Negligent Misrepresentation
A negligent misrepresentation claim requires that the plaintiff allege: "1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; 2) that the information was incorrect [or withheld]; and 3) reasonable reliance on the information [or omission]." High Tides, LLC v. DeMichele, 88 A.D.3d 954, 959 (2d Dept. 2011), quoting Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 180 (2011). Claims for negligent misrepresentation must be plead with particularity pursuant to CPLR § 3016(b). Ferro Fabricators, Inc. v. 1807-1811 Park Ave. Development Corp., 127 A.D.3d 479, 479 (1st Dept. 2015).
A special relationship may be established by individuals who have "unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified." Mandarin Trading Ltd., 16 N.Y.3d at 180, quoting Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996). A special relationship, however, does not arise from an ordinary arm's length business transaction between two parties. High Tides, LLC v, 88 A.D.3d at 959-60.
C. Application of the Principles to the Instant Action
Mock's motion to dismiss is granted. The Court concludes that the Third-Party Complaint fails to allege a special or privity-like relationship between Old Republic and Mock sufficient to state a claim for negligent misrepresentation. Old Republic has merely alleged the existence of an ordinary business transaction between Mock as the purchaser's attorney and Old Republic and/or Record & Return as the title insurer. Indeed, Mock's alleged contact with Record & Return is limited to his application for title examination, review of the Certificate of Title and Commitment, and authorization of the release of the Deed to Record & Return. See Mock Aff. at Exh. A, ¶¶ 4-11. Compare Goldfine v. DeEsso, 309 A.D.2d 895, 896 (2d Dept. 2003) (lenders failed to allege facts establishing actual privity or a relationship approaching privity with attorney who represented the borrowers and/or acted as closing attorney for the title insurance company's agent in a series of real estate transactions) with Remediation Capital Funding LLC v. Noto, 147 A.D.3d 469, 471 (1st Dept. 2017) (lender sufficiently pled a privity-like relationship by alleging that the borrower's attorney prepared an opinion letter at the lender's request, provided the letter to the lender, and understood that the lender would rely upon the opinion letter in making the subject loan). The Court need not determine whether Old Republic's claim is barred by the statute of limitations in light of its finding that the Third Party Complaint fails to state a claim for negligent misrepresentation.
CONCLUSION
Third-Party Defendant Kenneth Mock's motion to dismiss the Third-Party Complaint is granted. The parties are reminded of the conference scheduled for September 17, 2019 at 9:30 a.m.
All matters not decided herein are hereby denied.
This constitutes the decision and order of the Court. DATED: Mineola, NY
September 4, 2019
ENTER
/s/_________
HON. TIMOTHY S. DRISCOLL
J.S.C.