Vernum v Freyer 2021 NY Slip Op 50120(U) [70 Misc 3d 1218(A)] Decided on February 11, 2021 Supreme Court, Warren County Muller, J. describes a curious representation and ends with a split decision.
“Defendant is a licensed attorney in New York who focuses her practice primarily on real estate transactions. In May 2017 she was retained by plaintiff, as executrix of the estate of Clay A. Beaudet (hereinafter Clay), to represent her in the sale of two parcels of land located at 9 Rhode Island Avenue and 0 Rhode Island Avenue in the Town of Queensbury, Warren County. 9 Rhode Island Avenue is .14 acres in size and improved by a single-family dwelling. 0 Rhode Island Avenue — which is located immediately adjacent to 9 Rhode Island Avenue — is .21 acres in size and unimproved. At the time of this initial retainer, plaintiff had contracted to sell both parcels of land to DKC Holdings, Inc. (hereinafter DKC). These contracts were subsequently cancelled, however, when certain title issues were discovered and DKC was unwilling to await their resolution.
Specifically, defendant discovered that Clay never held title to 0 Rhode Island Avenue. Both 9 Rhode Island Avenue and 0 Rhode Island Avenue were previously owned by Dorothy Skellie (hereinafter Dorothy) and her husband, Ernest Skellie (hereinafter Ernest), as tenants by the entirety. Ernest died in 1998, leaving his interest in the property to Dorothy, who then married Clay. In 2006, Dorothy executed a warranty deed conveying 9 Rhode Island Avenue from herself to herself and Clay as tenants by the entirety. She did not, however, convey title to 0 Rhode Island Avenue, which she continued to own individually until dying intestate in 2013. [*2]Upon her death, Clay acquired an ownership interest in 0 Rhode Island Avenue as Dorothy’s surviving spouse. Defendant advised that an investigation was necessary, however, to determine whether Dorothy had other heirs who might also have an interest in the property.”
“The Court finds that the documentary evidence succeeds in refuting plaintiff’s first cause of action. It is clear that—until defendant discovered the title issues with respect to 0 Rhode Island Avenue—plaintiff believed the property was owned by her father. Indeed, she paid the property taxes on 0 Rhode Island Avenue in 2016 as the executrix of his estate. It is likewise clear that plaintiff wanted defendant to contact Bernard and in fact assisted defendant in [*3]contacting him to ensure that she could close on the sale of 0 Rhode Island Avenue simultaneous with the sale of 9 Rhode Island Avenue, as intended. In this regard, it bears noting that plaintiff signed the January 2018 sales contract for 0 Rhode Island Avenue as “seller.” At the time of signing, she was aware of the title issues relative to the property and was actively assisting defendant in resolving them. The record thus demonstrates that plaintiff was fully aware of and consented to defendant’s simultaneous representation of her in the sale of 9 Rhode Island Avenue, and her and Bernard in the sale of 0 Rhode Island Avenue.
That being said, the Court declines to find that this documentary evidence refutes plaintiff’s second cause of action. At the outset, it appears that the mortgage was intended to cover 9 Rhode Island Avenue, but erroneously included a description of 0 Rhode Island Avenue. Indeed, the mortgage expressly states that the property covered is improved by a one or two-family residence—and 0 Rhode Island Avenue is unimproved. Further, the mortgagee clearly believed that the mortgage covered 9 Rhode Island Avenue, as it paid the property taxes on 9 Rhode Island Avenue from escrowed funds and included the address of the property in its payoff letter. Finally, a mortgagee would unlikely accept a vacant parcel like 0 Rhode Island Avenue as security for a $62,997.71 loan. The problem, however, is that the mortgage was no longer valid at the time the properties were sold. As such, the mortgage should not have been paid from the proceeds of any sale—be it the sale of 9 Rhode Island Avenue or the sale of 0 Rhode Island Avenue.”
“Having found that defendant established her entitlement to dismissal of the first cause of action based upon documentary evidence, the Court focuses solely upon whether she is entitled to dismissal of the second cause of action on the grounds of failure to state a claim. In this regard, it is impossible to say whether the outcome in the underlying matter would have been more favorable to plaintiff had the mortgage not been paid from the proceeds of sale for 9 Rhode Island Avenue. To the extent that the purchasers were related and their title agent, Maple Abstract, required the mortgage to be paid off and satisfied as a condition to issuance of the title policies,[FN2] it is possible that the sales would have fallen through had defendant not paid the mortgage off. Plaintiff would thus have remained responsible for the properties and their concomitant costs until another buyer came along. If the sales had somehow gone forward notwithstanding plaintiff’s refusal to pay off the mortgage and she had walked away with the $48,162.95, then litigation of some sort surely would have resulted. While it does not appear that Clay’s estate would have born any liability for the amount due and owing under the loan,[FN3] his estate would likely have been named in the litigation—thus resulting in legal fees for [*5]plaintiff.
In any event, mindful that plaintiff must be accorded the benefit of every favorable inference, the Court finds that defendant has failed to establish her entitlement to dismissal of the second cause of action on the grounds of failure to state a cause of action.”