The Appellate Division, Second Department has upheld a purchaser’s claim for a refund of a $560,000 downpayment made toward a real estate purchase, in Mineroff v. Lonergan.  The contract at issue contained a clause in which the sellers represented that the house was “free and clear of any mold or evidence of existing mold remediation….”  After the parties went into contract, the purchasers’ inspection revealed that there was mold in several rooms.  The purchasers canceled the contract and demanded a refund of the downpayment, but the sellers refused and commenced their own action claiming a right to retain the downpayment as liquidated damages, based on the theories that the mold clause only applied to “toxic” mold and that, if there was a mold problem, they were deprived of the right to “cure.”  After the Supreme Court had granted summary judgment to the purchasers, the sellers appealed.  The Appellate Division rejected both of the sellers’ arguments, finding that the contract required the premises to be free from “any” mold, not just toxic mold, and that the mold problem was an incurable one, because the contract prohibited not only mold, but mold remediation.

The Appellate Division, Second Department has upheld certain developers’ right to proceed on a claim for a refund of over $775,000 in “fees” they paid to the Town of Riverhead toward an 87-lot subdivision that was later abandoned, in Harriman Estates v. Town of Riverhead.  The fees at issue included a park fee, an engineering review fee, and a water fee, none of which, the developers claimed, were expended toward the subdivision before it was abandoned.  The Town argued that the developers were not entitled to a refund of any of the fees regardless of whether the subdivision was developed.   The Supreme Court had denied the Town’s motion to dismiss and motion for summary judgment.  On appeal from the denial of summary judgment, the Appellate Division affirmed.  The Appellate Division explained that a “fee charged by a municipality … must be reasonably necessary to the accomplishment of the statutory command” and “cannot be charged to generate revenue or to offset the cost of other governmental functions.”  In this case, the Appellate Division concluded that the Town failed to prove on its motion “that the fees charged were reasonably necessary to cover costs associated with the developers’ subdivision project….”

In separate decisions, the Supreme Court, Suffolk County has rejected a school district’s attempt to set aside a jury verdict or limit the amount of interest to be paid on the verdict to a construction manager who claimed the district breached a contract, in East Hampton Union Free School District v. Sandpebble Builders, Inc., Index No. 2007/1113.  The jury had rendered a verdict and awarded $755,767.41 in breach of contract damages to the construction manager on May 26, 2016.  The District then filed two motions challenging the verdict.  The first motion sought to set aside the verdict in its entirety, based on an argument that the evidence at trial purportedly demonstrated that the claims were not timely filed.  The court denied this motion because there was “viable, if not conclusive evidence” supporting the jury’s verdict that the claims were timely.  The second motion sought to limit the amount of interest that would be imposed on the verdict from the usual 9% to 4.6% (pre-verdict) and 2.8% (post-verdict).  The court denied this motion after finding that 9% is a “presumptively fair and reasonable” rate by law, and the district had not persuaded the court to depart from that rate.   Based on this decision, the interest awarded to Sandpebble (for a ten-year period) nearly doubled the amount of the jury’s verdict.

The Supreme Court, Suffolk County has upheld a challenge to the East Hampton Village Zoning Board of Appeals’ attempt to impose an unreasonable condition on the granting of an area variance, in Lee Avenue Lot 1 LLC v. ZBA of Village of East Hampton, Index No. 5690/2015.   The case involved the issue of how far can a zoning board go in imposing conditions on variances.  The zoning board had granted a variance but tried to condition the variance on the owner addressing issues over a separate scenic easement area that was not involved in the underlying application.  Although a zoning board  may impose reasonable conditions on variances that “are directly related to and incidental to the proposed use of the property,” the court concluded in this case that the “condition imposed is totally unrelated to the variances granted, and is not aimed at minimizing the adverse impact to an area that might result from the grant of the variances requested by the petitioner.”  The condition was therefore “vacated and annulled.”

The firm is pleased to welcome Amanda Star Frazer to the firm’s civil litigation practice group.  After practicing title litigation, real estate litigation, and commercial litigation in Florida, Amanda has returned to the South Fork to serve her home community.

The Honorable John H. Rouse of the Supreme Court, Suffolk County has dismissed a purchaser’s action to recover a $1,000,000 downpayment in Matrix Investment Group LLC v. Two Trees Farm Development LLC.  The plaintiff had deposited the downpayment toward the purchase of property in Bridgehampton, but in exchange for extensions of the closing date, the plaintiff agreed to release the downpayment from escrow and make it “nonrefundable.”  After the plaintiff’s principal died, it refused to close and sought a refund anyway, arguing that defendant’s retention of the downpayment would constitute “unjust enrichment” and that the death of the plaintiff’s principal rendered the transaction impossible to perform.  Justice Rouse disagreed, explaining that New York law routinely enforces a seller’s retention of a downpayment as liquidated damages and that even if the purchaser’s principal was a “key man” to its operations, the “Plaintiff did not bargain for the Defendant to be the insurer of the risks that might attend his death.”

In an action involving the scope of an easement, and related claims of nuisance and interference with the right-of-way, the Supreme Court, Suffolk County (Hon. Ralph T. Gazzillo) has issued a decision following a non-jury trial in favor of the defendant on all claims.   The action, entitled Martin v. Robins, Suffolk Index No. 22818/2004, centered around the meaning and extent of a written easement dating back to 1969.  The plaintiff claimed to benefit from an expansive interpretation of the easement, while the defendant argued in favor of a limited interpretation based on the extent of the driveway that existed when the easement was created.  The court’s 17-page decision detailed the reasons why the court sided with the defendant and dismissed each and every claim advanced by the plaintiffs.

The Supreme Court, Suffolk County has dismissed a $26 million specific performance action in Suites in Boca, LLC v. Sandbar North LLC, Index No. 604212/2016.  The case involved the basic question of whether the signature on a contract, without actual delivery, creates a binding agreement?  The contract at issue had been signed but not delivered to the prospective purchaser before the seller rejected the $26 million offer in favor of another buyer.   The prospective purchaser sued for specific performance anyway, and placed a notice of pendency on the property to stop the sale to the other buyer.  The Honorable Joseph Farneti of the Supreme Court reviewed the terms of the contract itself, which specifically provided that delivery was a pre-condition to the formation of a binding contract, before concluding that “no binding agreement was created between plaintiff and defendants.”  Justice Farneti explained the rule of law succinctly as follows:  “Where the parties have agreed that delivery is essential to the making of a contract, there is no agreement without it.”  He therefore dismissed the action, canceled the notice of pendency, and set the matter down for a hearing on the issue of an award of costs and expenses to the defendant for the “wrongful filing of the notice of pendency….”

The Supreme Court, Suffolk County has dismissed a neighbor’s challenge to the Town of East Hampton’s decision to buy and preserve a waterfront parcel in Levin v. Town Board, Index No. 21518/15.  The case involves the use of the Town’s “Community Preservation Fund,” or “CPF,” which is a dedicated fund used by the five East End towns to preserve open space.  The Levin case was a rare example of a neighbor who, rather than supporting the preservation effort, opposed it and argued that the acquisition of the property would negatively impact the enjoyment of his adjacent parcel.  The Honorable Daniel Martin of the Supreme Court rejected the challenge and found the neighbor’s concerns speculative and in disregard of the “… intent of the [CPF] program which is motivated by the greater good of the entire town and the Peconic Bay region.”  The case appears to be the first of its kind where a neighbor directly challenged a Town’s compliance with the mandates of the CPF program, as set forth in section 64-e of the N.Y. Town Law.  In this case, Justice Martin reviewed those requirements before concluding that the Town followed “all the mandates of 64-e of the Town Law concerning the CPF….”

The Appellate Division, Second Department has upheld a Village of Southampton Zoning Board decision in Wambold v. Village of Southampton ZBA.  The case involved the often misunderstood zoning issue of whether an accessory dwelling is a nonconforming use or a nonconforming structure.   The Village ZBA had concluded that the accessory dwelling was a nonconforming structure, which could be expanded through an area variance, but a neighbor challenged the decision on the ground that it was a nonconforming use, which could only be expanded through a use variance.  After the Supreme Court upheld the ZBA’s decision, the neighbor appealed.  The Appellate Division affirmed and agreed that only an area variance was required, because the owners “were not seeking to change the essential use of the property.”