Opinion
No. 16249/2011.
2012-03-1
Bruce GOMEZ, Plaintiff, v. FIDELITY NATIONAL TITLE INSURANCE COMPANY OF NEW YORK and Fidelity National Title Insurance Company, Defendants.
Dennis Marc Reisman, Esq., Great Neck, for the Plaintiff. The Fidelity National law Group, by Eric Rosenberg, Esq., New York, for the Defendants.
Dennis Marc Reisman, Esq., Great Neck, for the Plaintiff. The Fidelity National law Group, by Eric Rosenberg, Esq., New York, for the Defendants.
CHARLES J. MARKEY, J.
+--------------------------------------------+ ¦Notice of Motion—Affidavits–Exhibits ¦1¦ +------------------------------------------+-¦ ¦Notice of Cross Motion—Affidavits–Exhibits¦2¦ +--------------------------------------------+
This case raises the interesting issue of the viability of a complaint seeking actual and consequential damages based on a title defect.
Plaintiff Bruce Gomez owns property known as 60–07 39th Avenue, Woodside, in Queens County, New York (“the subject property”). On or about June 1, 2001, defendant Fidelity National Title Insurance Company of New York, the predecessor of defendant Fidelity National Title Insurance Company, (collectively Fidelity) issued a title insurance policy (the policy”) to the plaintiff, insuring him against defects in title up to the limit of $175,000.
Paragraph 7(a) of the policy provides:
This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the insured claimant who has suffered loss or damage by reason of matters insured against by this policy and only to the extent herein described.
(a) The liability of the Company under this policy shall not exceed the least of:
(I) the Amount of Insurance stated in Schedule A; or,
(ii) the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy.
Among the “Exceptions from Coverage” listed on Schedule B to the policy was “Building on premises to the west stands up to 1 inch on the subject premises.”
In or about March, 2008, the plaintiff began construction involving the addition of two new stories to an existing building. In or about June, 2008, after the plaintiff had begun the new construction, the plaintiff discovered a defect in his title which allegedly prevented the completion of the project. The defect consisted of an encroachment by several inches of a neighbor's structure onto the subject property, not just the one inch mentioned in the title insurance policy. The plaintiff presented a claim to the title insurer in the amount of $175,000, but Fidelity refused to pay more than $6,000.
On or about August 13, 2010, the defendants' attorney sent an appraisal to the plaintiff's attorney, concluding that, as of September 21, 2008, the value of the subject property without the encroachment amounted to $609,000 and that the value of the subject property with the encroachment amounted to $603,000. The value differential amounted to approximately 1%. The plaintiff alleges that the insurer's offer to pay only $6,000 amounted to a breach of the insurance policy. The plaintiff's appraiser estimated the value of the subject property if the attempted new construction had been successfully completed as amounting to $1,150,000 as of August 30, 2010. The cost of the new construction would have amounted to $206,000. The plaintiff computes his damages as amounting to $341,000 ($1,150,000 minus $603,000 minus $206,000 = $341,000).
Upon the foregoing papers, defendants Fidelity National Title Insurance Company of New York and Fidelity National Title Insurance Company move, pursuant to CPLR 3211(a)(1) and (7), to dismiss the complaint. Plaintiff's cross motion is construed by this Court as seeking summary judgment resolving certain issues in this case in his favor.
Where, as here, a defendant moves, pursuant to CPLR 3211(a)(1), to dismiss an action asserting the existence of a defense founded upon documentary evidence, the documentary evidence “must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim” (Trade Source v. Westchester Wood Works, Inc., 290 A.D.2d 437 [2nd Dept.2002], quoting Teitler v. Pollack & Sons, 288 A.D.2d 302 [2nd Dept.2001]; see, 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 [2002];Fontanetta v. Doe, 73 AD3d 78 [2nd Dept.2010]; Allstate Ins. Co. v. Raguzin, 12 AD3d 468 [2nd Dept.2004]; Tougher Indus. v. Northern Westchester Joint Water Works, 304 A.D.2d 822 [2nd Dept.2003] ); Berger v. Temple Beth–El of Great Neck, 303 A.D.2d 346, 347 [2nd Dept.2003]; Vanderminden v. Vanderminden, 226 A.D.2d 1037 [3rd Dept.1996]; Fernandez v. Cigna Prop. & Cas. Ins. Co., 188 A.D.2d 700, 702 [3rd Dept.1992]; Douge v. New York Life Ins. Co., 2012 WL 611369, 2012 N.Y. Slip Op 50319(U) [Sup Ct Queens County 2012] [decision by the undersigned]; Minovici v. Belkin BV, 34 Misc.3d 1025(A), 2012 WL 19425, 2012 N.Y. Slip Op. 500001, slip op. at 1 [Sup Ct Dutchess County 2012] ).
Affidavits submitted by a defendant in support of the motion, however, do not constitute documentary evidence ( see, HSBC Bank, USA v. Pugkhem, 88 AD3d 649, 651 [2nd Dept.2011]; Berger v. Temple Beth–El of Great Neck, 303 A.D.2d 346,supra; Deer Consumer Products, Inc. v. Little, 32 Misc.3d 1243(A), 2011 WL 4346674, 2011 N.Y. Slip Op. 51691(U) [Sup Ct New York County 2011]; see, Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3211:10, at 20).
In determining a motion brought pursuant to CPLR 3211(a)(7), the court generally must afford the complaint a liberal construction, accept as true its allegations, accord the plaintiff the benefit of every favorable inference, and determine only whether the facts alleged fit within any cognizable legal theory ( see, Posner v. Lewis, 18 NY3d 566, 2012 WL 538213, 2012 N.Y. Slip Op. 01323 [2012];Roni LLC v. Arfa, 18 NY3d 846 [2011];1455 Washington Ave. Assocs. v. Rose & Kiernan, 260 A.D.2d 770, 770–771 [3rd Dept.1999]; Esposito–Hilder v. SFX Broadcasting Inc., 236 A.D.2d 186 [3rd Dept.1997] ).
Although the pleaded facts will be presumed to be true and accorded a favorable inference, allegations consisting of bare legal conclusions and factual claims that are either inherently incredible or flatly contradicted by documentary evidence will not be entitled to such consideration ( see, Morone v. Morone, 50 N.Y.2d 481 [1980];Berman v. Christ Apostolic Church Intern. Miracle Center, Inc., 87 AD3d 1094, 1096 [2nd Dept.2011]; Nisari v. Ramjohn, 85 AD3d 987, 989 [2nd Dept.2011]; Mesiti v. Mongiello, 84 AD3d 1547, 1549 [3rd Dept.2011]; In re Loukoumi, Inc., 285 A.D.2d 595, 596 [2nd Dept.2001]; Doria v. Masucci, 230 A.D.2d 764 [2nd Dept.1996]; Marraccini v. Bertelsmann Music Group Inc., 221 A.D.2d 95, 98 [3rd Dept.1996], quoting Roberts v. Pollack, 92 A.D.2d 440, 444 [1st Dept.1983]; Morone v. Morone, 50 N.Y.2d 481 [1980];accord, Fleyshman v. Suckle & Schlesinger, PLLC, 91 AD3d 591 [2nd Dept.2012]; Ullmann v. Norma Kamali, Inc., 207 A.D.2d 691 [1st Dept.1994]; Fisher v. Maxwell Communications Corp., 205 A.D.2d 356 [1st Dept.1994] ).
In considering a motion to dismiss for failure to state a cause of action ( see,CPLR 3211[a][7] ), the pleadings must be liberally construed ( see,CPLR 3026). The sole criterion in determining the motion to dismiss is whether or not, from the complaint's four corners, factual allegations are discerned that, considered as a whole, manifest any cause of action cognizable at law (Leon v. Martinez, 84 N.Y.2d 83, 87–88 [1994];Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275 [1977];Rochdale Village, Inc. v. Zimmerman, 2 AD3d 827 [2nd Dept.2003]; see also, Bovino v. Village of Wappingers Falls, 215 A.D.2d 619 [2nd Dept.1995] ).
When evidentiary material is considered, the criterion is whether or not the proponent of the pleading has a cause of action, not whether he has stated one (Guggenheimer v. Ginzburg, 43 N.Y.2d at 275,supra ). This determination entails an inquiry into whether or not a material fact claimed by the pleader is a fact at all and whether a significant dispute exists regarding it ( see, Guggenheimer v. Ginzburg, 43 N.Y.2d at 275,supra; Gershon v. Goldberg, 30 AD3d 372 [2nd Dept.2006]; Hispanic AIDS Forum v. Estate of Bruno, 16 AD3d 294, 295 [1st Dept.2005]; Sesti v. North Bellmore Union Free Sch. Dist., 304 A.D.2d 551, 551–552 [2nd Dept.2003]; Mohan v. Hollander, 303 A.D.2d 473, 474 [2nd Dept.2003]; Doria v. Masucci, 230 A.D.2d 764, 765 [2nd Dept.1996]; Rattenni v. Cerreta, 285 A.D.2d 636, 637 [2nd Dept.2001]; Kantrowitz & Goldhamer, P.C. v. Geller, 265 A.D.2d 529 [2nd Dept.1999]; Mayer v. Sanders, 264 A.D.2d 827, 828 [2nd Dept.1999]; Sotomayor v. Kaufman, Malchman, Kirby & Squire, LLP, 252 A.D.2d 554 [2nd Dept.1998]; Kevin Kerveng Tung, P.C. v. JP Morgan Chase & Co., 34 Misc.3d 1209(A), 2011 WL 6989895, 2011 N.Y. Slip Op 52461(U) [Sup Ct Queens County 2011] [Grays, J.] ).
The First Cause of Action
The plaintiff's first cause of action is for breach of contract. The plaintiff seeks to recover (1) for the diminution in market value of his property caused by the encroachment [hereinafter “actual damages”] and (2) for the expenses he incurred when he undertook the unsuccessful new construction [hereinafter “consequential damages”].
In regard to actual damages, the plaintiff argues that the title insurer must pay him the difference between the expected value of the property with the addition he intended to construct (less the cost of construction) and the value of the property with the title defect. Defendant Fidelity argues that the proper measure of indemnity is the difference between the value of the subject property without the title defect and the value of the subject property with the title defect at the time the plaintiff discovered the defect.
The defendant insurer's argument is cogent, and the first cause of action of plaintiff's complaint is based on premises that are contrary to law. The first cause of action must be dismissed, pursuant to CPLR 3211(a)(1) and (7), because the documentary evidence establishes that defendant Fidelity did not breach the policy of insurance when it offered to pay the plaintiff $6,000 on its claim.
“[A]n insured is entitled to be reimbursed for his actual loss, up to the limit of the policy” (L. Smirlock Realty Corp. v. Title Guar. Co., 97 A.D.2d 208, 219 [2nd Dept.1983], modified on other grounds, 63 N.Y.2d 955 [1984] ). “Where there is a partial loss of title and where the partial loss cannot readily be rectified, such as where an encumbrance cannot be removed, the standard ordinarily will be ... the value of the property without the defect in title less its value with the defect.” (L. Smirlock Realty Corp. v. Title Guarantee Co., 97 A.D.2d at 226,supra ).
The majority rule is that an insured's loss is to be determined as of the date that he discovers the defect in his title ( see, L. Smirlock Realty Corp. v. Title Guarantee Co. 97 A.D.2d at 228,supra ). “Probably the majority of cases have utilized the date the title defect was discovered as the date on which to assess the value of the property interest with and without the title defect and to determine the amount the insured should recover” (1 Title Ins. Law § 10:16).
In Smirlock, the Appellate Division cited with approval Overholtzer v. Northern Counties Title Insurance Co. (116 Cal.App.2d 113, 130, 253 P.2d 116, 125 [1953] ). In Overholtzer, the court stated: “It seems quite apparent to us that liability should be measured by diminution in the value of the property caused by the defect in title as of the date of the discovery of the defect, measured by the use to which the property is then being devoted.” (italics added).
The plaintiff's reliance on Sun Plaza Enterprises, Corp. v. Tax Commission of City of New York (304 A.D.2d 763 [2nd Dept.2003], lv. to appeal dismissed,3 NY3d 689 [2004] ) is misguided because that case was a tax certiorari proceeding. The plaintiff has offered the court no good reason which would cause it to depart from the majority rule in determining actual loss.
In regard to consequential damages, the policy issued to the plaintiff provided in relevant part: “This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the insured claimant” (italics added).The phrase “actual monetary loss or damage” used in a policy of title insurance has been construed to exclude consequential damages ( see, First American Bank v. First American Transp. Title Ins. Co., 585 F3d 833 [5th Cir.2009] ). Relying on definitions in Black's Law Dictionary, the Court of Appeals for the Fifth Circuit concluded: “A plain reading of actual loss or damage' does not include consequential loss' or consequential damage.' “ (First American Bank v. First American Transp. Title Ins. Co., 585 F3d at 839).
Moreover, the policy issued by Fidelity contains a limitation of liability to the lesser of (1) $175,000 or (2) “the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy.” Limitation (2) shows that consequential damages were not within the contemplation of the parties ( see, Goedtel v. Jacobs, 2010 WL 2220600 [Superior Court of New Jersey, Law Division 2010] [“The clear limitation on damages to the lesser of actual loss or the purchase price does not favor an inference that the parties contemplated consequential damages.”] ).
The damages recoverable under the policy issued by Fidelity by its terms cannot exceed loss in market value. “Consequential damages certainly are appropriately awarded in this second situation where an insurer has breached its contract. In the first situation, however, where a covered loss occurs and the issue is what amount the insurer must pay to perform its contract to indemnify, policy terms govern” (Title Ins. Law § 10:18, “Consequential Damages—In contract”).
The Second Cause of Action
The second cause of action is brought to recover for the defendant insurer's alleged bad faith in handling the plaintiff's claim. “As in all contracts, implicit in contracts of insurance is a covenant of good faith and fair dealing, such that a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims.'.” (Bi–Economy Market, Inc. v. Harleysville Ins. Co. of New York, 10 NY3d 187, 194 [2008],quoting New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318 [1995] ). The second cause of action should be dismissed, pursuant to CPLR 3211(a)(1) and (7), because the documentary evidence in this case establishes that defendant Fidelity did not violate the implied covenant of good faith and fair dealing when it offered to pay the plaintiff $6,000 on its claim.
The Third Cause of Action
The third cause of action is based on General Business Law section 349. The third cause of action should be dismissed, pursuant to CPLR 3211(a)(1) and (7), because private contractual disputes unique to the parties and not involving a wrong directed at the public are not within the scope of General Business Law section 349 ( see, Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 [1995];Kaufman v. Medical Liability Mut. Ins. Co., –––– AD3d, 2012 WL 399230, 2012 N.Y. Slip Op 00882 [3rd Dept.2012]; Wellsburg Truck & Auto Sales, Inc. v. Peoples State Bank of Wyalusing, 80 AD3d 942, 943 [3rd Dept.2011] ). See the discussion of General Business Law section 349 in Wilner v. Allstate Ins. Co., 71 AD3d 155, 159–168 [2nd Dept.2010] [sustaining claims under the Section].
In sum, the motion by defendants Fidelity National Title Insurance Company of New York and Fidelity National Title Insurance Company for an order, pursuant to CPLR 3211(a)(1) and (7), dismissing the complaint against them is granted. The cross motion by plaintiff Bruce Gomez is denied. The complaint is dismissed.
The foregoing constitutes the decision, order, and opinion of the Court.