Opinion
14903/08.
Decided December 15, 2008.
Plaintiffs Larry Weiss and Deborah Weiss (collectively "Weiss") move for summary judgment. Defendant Andrew Feldman ("Feldman") cross-moves for summary judgment.
Plaintiff — Pinks, Arbeit Nemeth.
Defendant — Andrew Feldman, P.C.
BACKGROUND
On June 28, 2007, Weiss closed on the purchase of a one-family home in Plainview from Alan and Alyson Gaspin (collectively "Gaspin").
Feldman is the attorney who represented Gaspin.
Gaspin had built a deck on the property for which they had not obtained the required approval from the Town of Oyster Bay. Prior to closing Gaspin applied for a building permit to obtain a Certificate of Occupancy "legalizing" the deck.
Prior to the closing, Gaspin, Weiss and their attorneys were advised that Gaspin would be required to obtain a variance for the deck. In order to obtain a variance, Gaspin was required to make an application for a variance to the Town of Oyster Bay Zoning Board of Appeals ("ZBA"). The application for a variance could not be completed and the variance could not be obtained before the date of the scheduled closing or before any reasonable adjournment of the closing.
As a result, Weiss and Gaspin entered into an escrow agreement pursuant to which Feldman was to hold the sum of $5000 in escrow. Paragraph 2 of the escrow agreement states:
".2. That, ANDREW FELDMAN, ESQ, shall release said sum of $5000
to Sellers upon receipt by THOMAS L. COSTA, ESQ., Purchasers' attorney, of the valid Certificate of Occupancy or Certificate of Competition for the DECK from the Town of Oyster Bay, after payment of all costs associated with the procurement of said Certificate of Occupancy and conforming deck. If same is not accomplished within 180 days from the date hereof, the Escrow Agent shall be authorized and is directed to release said sum to the Purchasers in full satisfaction of Seller's obligations herein."
The hearing on the request for a variance before the Town of Oyster Bay Zoning Board of Appeals on January 24, 2008. The Zoning Board of Appeals approved the application. A Certificate of Occupancy for the deck was issued on February 5, 2008.
Weiss moves for summary judgment. They argue that Gaspin did not obtain the Certificate of Occupancy for the deck within 180 days. Therefore they are entitled to the escrow money.
Feldman cross-moves for summary judgment. He argues Gaspin's failure to obtain the Certificate of Occupancy within 180 days of the closing was beyond Gaspin's control. Even though Gaspin did everything they possibly could to obtain the Certificate of Occupancy within 180 days of closing, they could not obtain it because the ZBA did not schedule the hearing on their application for a variance until after the 180 period had run. He further argues Feldman's attorney extended Gaspin's time to obtain the Certificate of Occupancy. Finally, he argues Feldman is only entitled to the amount of the escrow less any costs or expenses Gaspin incurred in the obtaining the Certificate of Occupancy.
DISCUSSION
While the parties to this action move and cross-move for summary judgment, they do not address the more fundamental issue of whether Gaspin are necessary parties to the action.
CPLR 1001(a) requires a person be joined as a party in an action if joinder would permit relief between the already named parties to be more complete or where the judgment will in some way inequitably affect a person who has not been named as a party. City of New York v. Long Island Airport Limousine Serv. Corp., 48 NY2d 469 (1979); and Siegel, New York Practice 4th § 132. The failure to join a necessary party may be raised by the parties or the court at any time. Sawicki v. County of Suffolk , 4 AD3d 465 (2nd Dept. 2004); and 3-10 New York Civil Practice: CPLR ¶ 1001.03.
The purchasers, sellers and escrow agent are necessary parties to an action brought to adjudicate the parties rights to funds being held in escrow in connection with the sale of real property. Mariaux v. Turtle Bay Towers Corp., 301 AD2d 460 (1st Dept. 2003); and Baker v. Stasi, 10 Misc 3d 1071 (A) (District Ct. Nassau Co. 2006). Since Gaspin are parties to the escrow agreement and may have a right to receive some or all of the money Feldman is holding in escrow, they are necessary parties to this action.For practical purposes, Feldman is a stakeholder regarding the escrow fund. See, 55 NY Jur2d Escrows § 44. Feldman has no interest in the money other than to pay it over to the party or parties legally entitled thereto. Farago v. Burke, 262 NY 229 (1933); Iannizzi v. Seckin , 5 AD3d 555 (2nd Dept., 2004); Takayama v. Schaefer, 240 AD2d 21 (2nd Dept., 1998); and 55 NY Jur2d Escrows § 22.
The counterclaims Feldman asserts in his answer establish that Gaspin are necessary parties to this action. In each of the counterclaims, Feldman seeks permission to release all or part of the money being held in escrow to Gaspin. Therefore, the counterclaims seek to adjudicate Gaspin's rights in the escrow funds even though Gaspin are not parties to the action. Since Gaspin are not parties to this action, they would not be bound by any judgment entered in this action. See, Siegel, New York Civil Practice 4th §§ 132, 458.If Gaspin are not joined as parties to this action, Feldman could be directed to pay the money he is holding in escrow to Weiss in this action and Gaspin in another action. See, Siegel, New York Practice 4th § 131.
Feldman, as the escrow holder, could have commenced an interpleader action to determine the rights of Gaspin and Weiss to the escrow funds. 55 NY Jur2d Escrows § 44. However, the escrow holder has no legal or ethical obligation to commence such an action. Id. Feldman also could have commenced a defensive interpleader by serving upon Gaspin a summons and interpleader complaint and all previously served pleadings. Geddes v. Rosen, 22 AD2d 394 (1st Dept.) aff'd. 16 NY2d 816 (1965); and CPLR 1006(b). However, Feldman is not required to commence such an action. 55 NY Jur2d Escrows § 44.
When a necessary party has not been joined and the necessary party is subject to the personal jurisdiction of the court ". . .the court shall order him summoned." CPLR 1001(b).
The papers do not reflect where Gaspin presently reside. Wherever Gaspin presently reside, they are subject to the personal jurisdiction of this court.
If Gaspin presently reside in Nassau County, they are subject to the personal jurisdiction of this Court. Uniform District Court Act § 403; and Siegel, New York Civil Practice 4th § 20.
Even if Gaspin do not presently reside in Nassau County, they are subject to the personal jurisdiction. The District Court has jurisdiction over non-residents of Nassau County if the non-resident transacts any business within the county or if they own, use or possess real property within the county. Uniform District Court Act § 404(a)(1)(3).
An escrow agreement is a contract. Takayama v. Schaefer, 240 AD2d 21 (2nd Dept. 1998). The District Court has jurisdiction over a non-resident if the non-resident transacts business in the county and the cause of action arises from that transaction. Coffman v. National Union Fire Ins. Co. Of Pittsburgh, Pa., 60 Misc 2d 81 (Nassau Dist. Ct. 1969). A single transaction is sufficient to subject the defendant to the jurisdiction of the court. Parke-Bernet Galleries, Inc. v. Franklyn, 26 NY2d 13 (1970); and La Rosa v. Levine, 47 Misc 2d 1025 (Nassau Dist. Ct. 1965); aff'd. 49 Misc 2d 932 (App.Term, 2nd Dept. 1966). Negotiation and execution of a contract within the county constitutes sufficient purposeful activity within Nassau to subject the defendant to the jurisdiction of the District Court. See, Grand River Six Nations Enterprises, Ltd. v. Pryor, 425 F.3d 128 (2nd Cir. 2005); and Home Box Office, Inc. v. Baum, 172 AD2d 222 (1st Dept. 1991).
The District Court also has personal jurisdiction over defendants when the action involves the defendant's ownership, use or possession of real property in the district and the cause of action arises from the ownership, use or possession of the property located in the district. Smithtown Gen. Hosp. v. Quinlivan, 88 Misc 2d 1031 (Suffolk Dist. Ct. 1976).
The District Court has personal jurisdiction over a defendant who was a resident or domiciliary of the district at the time of the transaction of the business alleged in the complaint who subsequently leaves the district or the state. Henry Sash and Door Co., Inc. v. Medi-Complex, Inc., 69 Misc 2d 269 (Suffolk Dist. Ct. 1972).
In this case, the court has personal jurisdiction over Gaspin on both bases. The escrow agreement appears to have been negotiated and executed in Nassau County.
The escrow agreement was entered into as part of the transaction by which Gaspin sold a one-family house to Weiss. The escrow agreement related to an application Gaspin had filed to obtain a Certificate of Occupancy for a deck that was part of the one-family house. This cause of action arises from Gaspin's ownership of real property in Nassau County.
Failure to join a necessary party may result in the dismissal of the action. CPLR 1003, CPLR 3211(a)(10). A motion to dismiss for failure to name a necessary party may be made at any time CPLR 3211(c). Dismissal for failure to join a necessary party should be used only as last resort. Siegel, New York Practice 4th § 133. Where the unnamed but necessary party is subject to the jurisdiction of the court, the court should order to the party joined. Id.
Because all the parties are not before the court, the court cannot properly decide Weiss motion for summary judgment or Feldman's cross-motion for summary judgment. Those motions are denied without prejudice.
Plaintiff is ordered to file and serve a supplemental summons and amended complaint naming Alan Gaspin and Alyson Gaspin as defendants within 60 days of the date of this order. In the event plaintiff fails to file and serve a supplemental summons and amended complaint within 60 days of the date of this order, the action is dismissed without prejudice.
This constitutes the decision and order of this Court.