| Sicignano v Dixey |
| 2015 NY Slip Op 00054 [124 AD3d 1301] |
| January 2, 2015 |
| Appellate Division, Fourth Department |
[*1]
| Henry Sicignano, III, Appellant, v Laramie N. Dixey etal., Respondents. |
Duke, Holzman, Photiadis & Gresens, LLP, Buffalo (Charles C. Ritter, Jr., ofcounsel), for plaintiff-appellant.
Hogan Willig, PLLC, Amherst (Diane R. Tiveron of counsel), fordefendants-respondents.
Appeal from an order of the Supreme Court, Erie County (Diane Y. Devlin, J.),entered June 26, 2013. The order, insofar as appealed from, granted defendants' crossmotion for summary judgment, dismissed plaintiff's amended complaint and granteddefendants judgment against plaintiff for their reasonable attorneys' fees and costs.
It is hereby ordered that the order insofar as appealed from is unanimously reversedon the law without costs, the cross motion is denied, the amended complaint is reinstated,and the award of attorneys' fees and costs to defendants is vacated.
Memorandum: In June 2009, plaintiff executed a contract to purchase a home ownedby defendants. On the property condition disclosure statement, which was attached to thecontract, defendants answered "no" to question No. 30 ("Are there any flooding, drainageor grading problems that resulted in standing water on any portion of the Property?") andquestion No. 31 ("Does the basement have seepage that results in standing water?").Several months after plaintiff took possession of the property, he allegedly began toexperience "huge water problems," including "severe flooding, standing water, [andsump] pumps that r[a]n for five or six days" at a time. Plaintiff thereafter commenced thisaction seeking damages for violation of article 14 of the Real Property Law, fraud, andbreach of contract in connection with the transaction. We agree with plaintiff thatSupreme Court erred in granting defendants' cross motion for summary judgmentdismissing the amended complaint and, thus, in awarding them attorneys' fees andcosts.
Real Property Law § 462 (1) requires sellers of residential real propertyto "complete and sign a property condition disclosure statement" and to provide suchstatement to a prospective buyer "prior to the signing by the buyer of a binding contractof sale." Real Property Law § 462 sets forth the disclosure form, whichinstructs the seller to complete the form based upon his or her "ACTUALKNOWLEDGE," and contains the seller's certification that "THE INFORMATION INTHIS PROPERTY CONDITION DISCLOSURE STATEMENT IS TRUE ANDCOMPLETE TO THE SELLER'S ACTUAL KNOWLEDGE AS OF THE DATESIGNED BY THE SELLER." Where a seller provides a property condition disclosurestatement and "willful[ly] fail[s] to perform the requirements" set forth in article 14 ofthe Real Property Law "[such] seller shall be liable for the actual damages suffered by thebuyer in addition to any other existing equitable or statutory remedy" (Real Property Law§ 465 [2]).
Here, even assuming, arguendo, that defendants met their initial burden on that partof the cross motion with respect to the cause of action asserted pursuant to the RealProperty Law by denying actual knowledge of any flooding or seepage resulting instanding water, we conclude that plaintiff raised an issue of fact in opposition (seegenerally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Plaintiffsubmitted, inter alia, defendants' responses to his interrogatories [*2]and their deposition testimony, and defendants admittedtherein that the basement had flooded on two occasions during their ownership of theproperty. Although defendants blamed those two incidents on power failures rather thana property defect, the fact remains that they experienced at least two instances of standingwater in the basement despite their representations to the contrary (see Meyers v Rosen, 69 AD3d1095, 1099 [2010];Calvente v Levy, 12 Misc 3d 38, 39-40 [2006]). Plaintiff also submittedaffidavits from 13 neighbors, all of whom averred that there were "chronic drainageproblems and flooding" at the property and that, at times, the flooding was so severe thatwater pumped from the property's basement flooded the adjacent roadway. The neighborsspecifically averred that they had "observed such flooding at the [p]roperty when it wasowned by [defendants]." Although defendants speculated that the neighbors wereconfusing defendants with the prior owners of the property, there is no evidence tosupport that assertion and, in any event, issues of credibility may not be resolved uponsummary judgment (see Rew vCounty of Niagara, 115 AD3d 1316, 1318 [2014]). We therefore conclude thatplaintiff raised an issue of fact with respect to defendants' actual knowledge of floodingon the property (see Pettis vHaag, 84 AD3d 1553, 1555 [2011]; Meyers, 69 AD3d at 1097).
With respect to the fraud cause of action, it is well settled that, "[t]o establish a causeof action for fraud, plaintiff must demonstrate that defendants knowingly misrepresenteda material fact upon which plaintiff justifiably relied and which caused plaintiff to sustaindamages" (Klafehn vMorrison, 75 AD3d 808, 810 [2010]; see Mikulski v Battaglia, 112 AD3d 1355, 1356 [2013];Pettis, 84 AD3d at 1554). "[F]alse representation in a [property condition]disclosure statement may constitute active concealment in the context of fraudulentnondisclosure" (Klafehn, 75 AD3d at 810; see Sample v Yokel, 94 AD3d 1413, 1415 [2012];Pettis, 84 AD3d at 1554-1555). For the reasons set forth above, we conclude thatplaintiff raised an issue of fact with respect to whether defendants knowinglymisrepresented a material fact, i.e., the property's history of flooding and standing water,on the property condition disclosure statement (see Mikulski, 112 AD3d at1356-1357; Pettis, 84 AD3d at 1555; Jablonski v Rapalje, 14 AD3d 484, 486 [2005]). Welikewise conclude that plaintiff raised an issue of fact with respect to whether hejustifiably relied on defendants' alleged misrepresentations (see Jablonski, 14AD3d at 487-488; Bethka v Jensen, 250 AD2d 887, 888 [1998]). Plaintifftestified that he toured the property, including the basement, on two separate occasions,and that he saw no evidence of water infiltration or water damage. Plaintiff hired a homeinspector, who noted a "grading issue" on the property, but did not identify any waterissues in the basement or drainage issues on the property (see Pettis, 84 AD3d at1555; Jablonski, 14 AD3d at 488; cf. Klafehn, 75 AD3d at 809-811; Daly v Kochanowicz, 67 AD3d78, 84 [2009]). Although defendants assert that the dry wells on the property were"readily observable" and thus should have placed plaintiff on notice of water issues,defendant Laramie N. Dixey testified that he learned about the dry wells only because theprior owner took him around the property and showed him the location of the wells.Plaintiff testified that he first learned of the dry wells from a plumber he hired to addressthe flooding on the property, and that "[u]nless you're looking for [the dry wells], youwould never find them." Further, the fact that plaintiff previously lived in the generalvicinity of the property does not establish as a matter of law that he knew or should haveknown of the property's history of flooding.
Finally, we agree with plaintiff that the court erred in dismissing his cause of actionfor breach of contract. Although the provisions of a contract for the sale of real propertyare generally merged in the deed and therefore extinguished upon the closing of title (see Franklin Park Plaza, LLC v V & J Natl. Enters., LLC, 57 AD3d 1450, 1451-1452 [2008];Goldsmith v Knapp, 223 AD2d 671, 673 [1996]), that rule does not apply" 'where the parties have expressed their intention that [a] provision shall survivedelivery of the deed' " (NVR, Inc. v Edwards, 21 AD3d 1309, 1310 [2005]; see Matter of Mattar v Heckl,77 AD3d 1390, 1391 [2010]; Franklin Park Plaza, LLC, 57 AD3d at 1452).Here, the contract provides that "[a]ny claim arising from failure to comply withParagraph[ ] 5 [of the contract]," which encompasses defendants' representations in theproperty condition disclosure statement, "shall survive for 2 years after the Closing orcancellation of this Contract" (see generally Bibbo v 31-30, LLC, 105 AD3d 791, 792[2013]; Franklin Park Plaza, LLC, 57 AD3d at 1452). In any event, we note that"the merger doctrine [is] inapplicable where, as here, there exists a cause of action basedupon fraud" (Berger-Vespa v Rondack Bldg. Inspectors, 293 AD2d 838, 840[2002]; see Gilpin v OswegoBldrs., Inc., 87 AD3d 1396, 1399 [2011]; Woodworth v Delgrand, 174AD2d 1011, 1011 [1991]). Present—Scudder, P.J., Peradotto, Lindley, Sconiersand Valentino, JJ.