When you start reading Blanco v Polanco 2014 NY Slip Op 02735 Decided on April 23, 2014 Appellate Division, Second Department it seems to be a simple case. Buyers purchase a house, and don’t do an inspection. They get a punch list, and then discover that the upstairs apartment does not have a Certificate of Occupancy. Whose fault is it? After reading that the AD gives out some more facts, in the manner of a well told story.
"In September 2008, the plaintiffs, Karyll Blanco and Suamy Blanco, Jr. (hereinafter together the buyers), purchased a two-family home from the defendant Your First Home, LLC (hereinafter the seller). At the closing, the seller agreed to make certain repairs set forth on a punch list within 10 business days. Shortly after the closing, the buyers took occupancy of the premises.
According to the buyers, the seller never completed the punch list. Further, according to the buyers, after they moved into the premises, they discovered mold in various areas and found that water accumulated in the basement whenever it rained. Additionally, the buyers allege that when they tried to rent the apartment on the second floor of the house, they were informed that they could not do so because the house did not have a certificate of occupancy (hereinafter CO), and later learned that there were numerous "outstanding requirements" that needed to be satisfied before one could be obtained.
The buyers commenced this action against, among others, the seller and the attorney [*2]who represented the buyers in the transaction, the defendant Jose Polanco (hereinafter the appellant), alleging that they, and the other defendants in the action, colluded to defraud them in connection with the purchase of the premises by, inter alia, dissuading them from obtaining an inspection, representing that any repairs and construction required on the premises would be performed and paid for by the seller before or immediately after the closing, misrepresenting the condition of the premises, and misrepresenting that the apartment on the second floor could be rented immediately upon closing and that the premises had a CO. The buyers sought to recover damages from the appellant for, inter alia, legal malpractice, fraud, breach of fiduciary duty, negligence, unjust enrichment, and conspiracy to commit fraud.’
"The appellant established his prima facie entitlement to judgment as a matter of law dismissing so much of the third cause of action as sought to recover damages for legal malpractice. However, in opposition to the appellant’s prima facie showing, the buyers raised a triable issue of fact. The buyers submitted evidence that the appellant had his nonattorney assistant pose as him and counsel the buyers throughout the transaction. The buyers also supplied proof that the appellant hastened them to sign the contract of sale without reading it and failed to advise them that by signing the contract, they were agreeing to purchase the premises "as is" and waiving their opportunity to conduct an inspection. The buyers also presented proof that, at the same time, the appellant reassured them that the seller would make needed repairs and advised them that they should trust the seller’s opinion that a professional inspection was not necessary. Additionally, the buyers presented proof that the appellant failed to ask the seller to fulfill its obligation under the contract of sale to provide a CO or "a letter from the building department . . . to the effect that no CO is required. "
"In response, the buyers raised triable issues of fact by submitting their own affidavits, wherein they stated that the appellant made the above-mentioned misrepresentations. Further, the buyers submitted a report from the New York City Department of Buildings indicating that subsequent alterations may have been made to the premises, triggering the need for a CO and that various "outstanding requirements" needed to be satisfied before a CO could be obtained. Moreover, the buyers presented evidence that while they intended for their relative to live in the apartment, the relative paid rent and they purchased the premises relying on the rental income from the apartment to pay their mortgage."
"In opposition to the appellant’s prima facie showing, the buyers submitted evidence showing that the appellant had a relationship with the seller, pursuant to which he received over 100 referrals from the seller. Additionally, the buyers submitted evidence that when they were in the seller’s office, they were introduced to a nonattorney imposter posing as the appellant who told them that he was the appellant. The buyers also submitted evidence that while in the seller’s office, one of the seller’s employees told them that they did not need to get an inspection. The buyers also submitted evidence that the imposter told them to heed the seller’s opinion in this regard and advised them to sign a contract of sale without obtaining an inspection. When viewed as a whole, it may be inferred from this evidence that the appellant and the seller may have colluded to defraud the buyers in connection with the purchase of the premises."