| Klafehn v Morrison |
| 2010 NY Slip Op 06030 [75 AD3d 808] |
| July 8, 2010 |
| Appellate Division, Third Department |
| James Klafehn, Respondent, v Maria C. Morrison et al.,Appellants. |
—[*1] The Crossmore Law Office, Ithaca (Edward Y. Crossmore of counsel), forrespondent.
Egan Jr., J. Appeal from an order of the Supreme Court (Mulvey, J.), entered October 29,2009 in Tompkins County, which partially denied defendants' motion for summary judgmentdismissing the complaint.
Defendants, together with their late or former spouses, purchased a four-unit apartmentbuilding in the City of Ithaca, Tompkins County in 1973. In 1998, a tenant in the basementapartment reported that the toilet was leaking and the floor was "rickety." In return for anabatement of his rent, the tenant tore up a portion of the bathroom floor, finding rotten wood andan accumulation of a "black ooze" under the toilet. The tenant consulted with the owners whoarranged for a contractor to pump out the ooze-like material, and the tenant then replaced therotten lumber and reinstalled the toilet with a new wax seal. In late 2007, defendants listed theproperty for sale. After learning of the property through a broker, plaintiff toured the buildingwith a realtor and noticed that the bathroom floor in the basement was, in his words, "soft." In aninformation packet concerning the property, plaintiff was provided with a property conditiondisclosure statement (hereinafter PCDS), signed by defendants in October 2007, in which theydisclosed that the building suffered from seasonal dampness in the basement; they disclosed noother defects.
Thereafter, plaintiff and defendants entered into a contract of sale. Prior to the closing, [*2]plaintiff retained a professional inspector to render an opinionconcerning the condition of the building and, in December 2007, plaintiff and the inspectortogether toured the property. During this tour, plaintiff pointed out to the inspector the soft spotsin the bathroom floor that he had noticed during his first tour. Thereafter, the inspector providedplaintiff with a written report in which he observed that the basement apartment's "bathroomsubfloor gives/is soft when walked on" and that a sanitary waste line was leaking. This reportcautioned that both of these conditions indicated the presence of hazardous or damaged materialsand that repairs were recommended. Notwithstanding this information, plaintiff did not broacheither his own or the inspector's observations with defendants and proceeded with the closing,which occurred in February 2008.
In June 2008, after the basement tenant had moved out, plaintiff went to the building withthe intention of replacing the floor in the bathroom. When he started to remove the flooring,plaintiff found an accumulation of a water and sludge mixture, decayed floor joists andperforated iron waste lines. Plaintiff then commenced this action against defendants alleging thatthey had fraudulently misrepresented the condition of the property based on their failure todisclose the condition of the waste water discharge lines. After joinder of issue, defendantsmoved for summary judgment dismissing the complaint in its entirety. Supreme Court deniedthat part of defendants' motion seeking dismissal of the first cause of action alleging fraud in theinducement.[FN*]Defendants now appeal.
To establish a cause of action for fraud, plaintiff must demonstrate that defendantsknowingly misrepresented a material fact upon which plaintiff justifiably relied and whichcaused plaintiff to sustain damages (seeDube-Forman v D'Agostino, 61 AD3d 1255, 1257 [2009]; Cetnar v Kinowski,263 AD2d 842, 843-844 [1999], lv dismissed 94 NY2d 872 [2000]). Although NewYork traditionally adheres to the doctrine of caveat emptor in an arm's length real propertytransfer (see Meyers v Rosen, 69AD3d 1095, 1096 [2010]), Real Property Law article 14 codifies a seller's disclosureobligations for certain residential real property transfers, including the transaction between theparties in this case (see Real Property Law § 461 [5]). "The mechanism fordisclosure is the PCDS form, the particulars of which are mandated by statute" (Meyers vRosen, 69 AD3d at 1096; see Real Property Law § 462 [2]). Disclosure isbased on the seller's "actual knowledge" of a defect or condition affecting the property at thetime the seller signs the disclosure (see Real Property Law § 461 [3]; § 462[2]; Meyers v Rosen, 69 AD3d at 1096). While false representation in a disclosurestatement may constitute active concealment in the context of fraudulent nondisclosure (see Anderson v Meador, 56 AD3d1030, 1035 [2008]; Simone vHomecheck Real Estate Servs., Inc., 42 AD3d 518, 520-521 [2007]), to maintain such acause of action, "the buyer must show, in effect, that the seller thwarted the buyer's efforts tofulfill the buyer's responsibilities fixed by the doctrine of caveat emptor" (Simone vHomecheck Real Estate Servs., Inc., 42 AD3d at 520; see Meyers v Rosen, 69 AD3dat 1099).
Here, while there was evidence that defendants were aware that there was a leakage problemin the basement apartment in 1998, there was also evidence that they or their spouses arranged tomake repairs that corrected the condition, and that thereafter there were no further complaints,establishing defendants' prima facie entitlement to summary judgment (see Stoian v [*3]Reed, 66 AD3d 1278, 1280 [2009]). We disagree withSupreme Court's conclusion that plaintiff raised triable issues of fact sufficient to avoid summaryjudgment in defendants' favor dismissing plaintiff's first cause of action (see generallyZuckerman v City of New York, 49 NY2d 557, 562 [1980]; Stoian v Reed, 66 AD3dat 1280). Simply, there is no evidence that a toilet leak, thought to have been repaired some nineyears prior to plaintiff's purchase of the property, would give defendants actual notice ofdeteriorated pipes underneath the basement floor. Further, there is no evidence that thedisclosure of "seasonal dampness" constituted active concealment, such that defendantsinterfered with or thwarted plaintiff's efforts to fulfill his responsibilities fixed by the doctrine ofcaveat emptor (see Stoian v Reed, 66 AD3d at 1280). Indeed, plaintiff's ownobservations of the condition of this floor, combined with his inspector's report—all madeor received preclosing—should have raised a red flag prompting further inquiry andundermines his claims that he reasonably relied on defendants' representations and thatdefendants actively concealed the defects (see Marsh v Hasbrouck, 37 AD3d 1010, 1012 [2007], lvdismissed 9 NY3d 886 [2007]; Berger-Vespa v Rondack Bldg. Inspectors, 293AD2d 838, 840-841 [2002]; DonDero v Gardner, 267 AD2d 830, 831 [1999]). As such,plaintiff's claim of fraudulent inducement is precluded and must be dismissed.
Cardona, P.J., Mercure, Malone Jr. and Kavanagh, JJ., concur. Ordered that the order ismodified, on the law, with costs to defendants, by reversing so much thereof as partially denieddefendants' motion for summary judgment; motion granted in its entirety and complaintdismissed; and, as so modified, affirmed.
Footnote *: Supreme Court dismissedplaintiff's second cause of action asserting a breach of contract as barred by the merger doctrine(see Arnold v Wilkins, 61 AD3d1236, 1236-1237 [2009]).