.............................. 5CA,J SHORT FORM ORDER MOD SUPREME COURT - STATE OF NEW YORK Present: HON. UTE WOLFF LALLY. Justice TRIAL/lAS, PART 10 NASSAU COUNTY HOME SALES REALTY, INC. YOSEF LUSHE and YVETTE ZUBLI, against- Plaintiff (s), MOTION DATE: 10/27/06 INDEX NO. : 8184/06 SEQ. NO. X X X UNITY BANK, Defendant (s) The following papers read on this motion to dismiss: Notice of Motion/ Order to Show Cause.......... Answering Affidavits. Replying Affidavits. Supplemental Affidavits: Upon the foregoing papers, it is ordered that this motion by defendant for an order pursuant to CPLR 3212 (as converted by a prior order of this court dated September 19, 2006 from a motion for an order pursuant to CPLR 3211 (a) (1) (5) and (7) dismissing plaintiffs complaint to a motion for summary judgment in accordance with CPLR 3211 (c)) is granted. The balance of the motion seeking the imposition of sanctions is denied. This is an action seeking to recover money damages for the alleged breach of contract arising out of the sale of a mortgage and promissory note. The loan documents provided that "the princ ipal debt has had added to it, i. e., capi t al i zed, the measure of the real estate taxes advances to cure tax arrears for years 2002 and 2003 for $83, 168. 58. " The plaintiffs paid the aforesaid sum of $83, 168. 58. Plaintiffs allege the premises were subsequently sold and additional real estate taxes in the sum of $38, 749. 56 for
Home v Unity - 2 - Index No. 8184/06 2002 and 2003 showed open on record as being unpaid. Plaintiffs allege they were forced to pay the sum of $38, 749. 56 and seek reimbursement from the defendant claiming that the representation that the tax arrears were " cured" was false. On April 2, 2004, Unity entered in to a non-recourse sales agreement (hereinafter referred to as the " Sales Agreement" ) with plaintiff Home Sales Realty Inc. ("HSR" ), whereby Unity sold and HSR purchased Unity s interests under a certain Promissory Note, along with related Guaranty and Collateral Interests. The Sales Agreement provided, amongst other things, that HSR could assign its rights (under the Sales Agreement) to any person or entity, provided that the following condition precedent was met: "The Assignee from Buyer shall sign an agreement with Seller that reaffirms that Assignee has read, understands and will obey each and every provision of this Non-Recourse Sales Agreement. Following execution of the Sales Agreement, HSR advised Unity of its intent to assign its interests to plaintiffs Yosef Lushe and Yvette Zubli (r ferred to hereinafter as Assignees ). Gn June 1-2004, in accordance with the aforesaid condition precedent, the Assignees executed an Agreement of Assignees to Unity Bank as to duties under non-recourse sales agreement (referred to hereinafter as the "Assignment Agreement" ). Under the Assignment Agreement, HSR assigned all of its rights, title and interest under the Sales Agreement. Moreover, the Assignees represented, warranted and agreed. to be bound by the terms of the Sales Agreement, and acknowledged that " the release and indemnification provisions contained in Article VIII of the Sales Agreement would survive the closing. " Unity made no warranties and/or representations, express or implied. The Sales Agreement provides " the asset sold under this agreement is sold on an as is and with all faults basis. 2 of the Sales Agreement, including 2 (f) make reference to the outstanding loan indebtedness and state that " the principal debt has added to it the measure of the real estate taxes advances to cure tax arrears for years 2002 and 2003 for $83, 168. 58. " The Assignment Agreement contained the identical statement to the effect that the principal debt has added to it the measure of the real estate taxes advances to cure tax arrears for years 2002 and 2003 for $83, 168. 58. Nowhere in either agreement did Unity make any representation to the effect that there was no additional liability for tax arrears for the years in question.
Home v Unity - 3 - Index No. 8184/06 Plaintiffs acknowledged that they were given an opportunity to make such inquiries, inspections, reviews, or other investigations that they deemed necessary and appropriate to value the asset, and were relying entirely on Buyer s own inspection and evaluation of the asset and the underlying security of the asset and not relying on a representation, warranty, assurance or statement of any kind made by Seller or any agent of Seller. The Sales Agreement contains the following unambiguous provision: 2. Buyer s Release of Claim. Buyer hereby releases and forever discharges Seller, Seller s Agent (s), servants, directors, officers, employees, shareholders, attorneys, successors, assigns and affiliates, in its corporate capacity or any other capacity (all such related persons or entities herein collectively called the "Related Party ), of and from any and all causes of action, claims, demands and remedies of whatsoever kind or nature that Buyer now has, or may in the future have, against Seller and/or any Related Party in any manner-, OIl acgount of, arising out of or related to the Asset being purchased hereunder. In summary, the defendant argues that not only did it cure the tax arrears as per its prior representation, but the plaintiffs unambiguously released Unity from any and all causes of action and claims, of whatsoever kind or nature arising out of or related to the Asset being purchased under the Sales Agreement. The principle of equity is well established that a purchaser of land is chargeable with notice, by implication, of every fact affecting the title which would be discovered by an examination of the deeds or other muniment of title of his vendor, and of every fact as to which the purchaser, with reasonable prudence or diligence, ought to become acquainted. If there are sufficient facts contained in any deed or record which a prudent purchaser ought to examine to induce an inquiry in the mind of an intelligent person, he is chargeable with knowledge or notice of the facts so contained (See Bentley v Gardner 45 AD 216). A prospective mortgagee is chargeable with notice of every fact affecting the title which would be discovered by an examination of such title and any prior encumbrances with which the prospective mortgagee with
Home v Unity - 4 Index NO. 8184/06 (Exchange reasonable prudence and diligence would become acquainted Place Corp. v Tarvan Realty Inc. 44 Misc. 2d 980). In Home OWers Loan Corp. v Wood (170 Misc. 74) a city s lien was held to be superior to that of a mortgagee s in a mortgagee s foreclosure action because a mortgagee had not been diligent enough in examining a title by which it would have discovered that a city water charges would have been due. On a motion for summary judgment, the Court' s function is to decide whether there is a material factual issue to be tried, not to resolve it (Sillman v Twentieth Century- Fox Films Corp. 3 NY2d 395, 404). A prima facie showing of a right to judgment is required before summary judgment can be granted to a movant (Alvarez v Prospect Hospital 66 NY2d 320; Winegrad v New York University Medical Center 64 NY2d 851; Fox v Wyeth Laboratories, Inc., 129 AD2d 611; Royal v Brooklyn Union Gas Co., 122 AD2d 133). The defendant has made an adequate Prima Facie show of entitlement to summary judgment. Once a movant has shown a Prima Facie right to summary judgment, the burden shifts to the opposing party to show that a factual dispute exists requiring a trial, and such facts presented by the opposing party must be presented by evidentiary proof in admissible form (Friends of Animals, Inc. Associated Fur Mfgrs., Inc., 46 NY2d 1065. Conclusory statements are insufficient. Sofsky v Rosenberg, 163 AD2d 240, aff'd 76 NY2d 927; Zuckerman v City of New York 49 NY2d 557; see Indig v Finkelstein 23 NY2d 728; Werner v Nelkin, 206 AD2d 422; Fink, Weinberger, Fredman, Berman & Lowell C. v Petrides, 80 AD2d 781, app dism. 53 NY2d 1028; Jim-Mar Corp. v Aquatic Construction, Ltd. 195 AD2d 868, v app den. 82 NY2d 660). The language in the contract, " the principal debt has had added to it, i. e., capitalized, the measure of the real estate taxes advanced to cure tax arrears for years 2002 and 2003 for $83, 168. 50" (emphasis added) does not shift the burden from the plaintiffs to conduct a search of the public records to ascertain the existence of open taxes. The plaintiffs had a duty to satisfy themselves as to the quality of their bargain pursuant to the doctrine of caveat emptor, which in New York still applies to real estate transactions (See London v Dourduff 14 AD2d 803). The
Home v Unity - 5 - Index No. 8184/06 attorney for the plaintiffs analogy that "if the movant is correct, a jeweler could represent that a gem was an authentic diamond, draft a non-recourse agreement, and if the gem later is determined to be a cubic zirconia, the victim would have no remedy is misplaced, cites no case law in support of their ipse dixit statement and indicates a failure to appreciate the duty of parties in an arm s length real estate transaction to search the public record for outstanding tax liens or other encumbrances Bentley (See v Gardner 45 AD 216; Exchange Place Corp. Tarvan Realty, supra; Owner s Loan Corp. v Wood, supra). Assuming arguendo solely to give the plaintiffs the benefit of the doubt, that the defendant intentionally misstated the taxes, a claim for - which there is absolutely no proof on the record before this Court, it would not relieve the plaintiffs of their duty make a diligent search of the public record to determine the amount of outstanding taxes at the time of the transfer. Paragraph 4. 2 (E) stated that the mortgage was sold " as is " and " without all faults subject " to all existing liens, claims and encumbrances, if any. Further, ~ 6. 1 No Warranties states no representations have been made as to " vi) THE ASSET' S FREEDOM FROM LIENS AND ENCUMBRACES, IN WHOLE OR IN PART. " Also, ~ 2. 3 advised the buyers not to rely on any title insurance policies in the asset file of the defendant, but rather, " to take such actions necessary or appropriate to obtain or continue " title insurance coverage with respect to the transfer. The plaintiffs ' failure to ascertain for themselves the actual amount of real estate taxes in arrears or the existence an outstanding tax lien precludes them from proceeding with the cause of action for breach of contract. The defendants ' motion for summary judgment is granted. The complaint is dismissed. The application for sanctions is denied. This order is the decision of the Court and terminates all proceedings under index no. 10127/06. Dated: NOV 17 2006E WJ.tw NOV 2 0 2006 NASSAU COUN' CO OFFICE