5506-40 Linden Blvd Brooklyn LLC v Linden 40 LLC

2024 NY Slip Op 31760(U)

May 21, 2024

Supreme Court, Kings County

Docket Number: Index No. 512113/2022

Judge: Leon Ruchelsman

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
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SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF KINGS: CIVIL TERM: COMMERCIAL 8 

------------ · ... --------- ---~ -------- -- X 

5506-40 LINDEN BLVD BROOKLYN LLC, 5507-58 

LINDEN BLVD BROOKLYN LLC,. 5508-9S LINDEN 

BLVD BROOKLYN LLC, 5509-130 MARTENSE 

STREET BROOKLYN LLC, 5510-345 LEFFERTS 

BLVD. BROOKLYN LLC, and 5511-777 ST. MARKS 

AVENUE BROOKLYN LLC, 

Plaintiffs, 

- against -

Decis·iori and Order 

Index No. 512113/2022 

LINDEN 40 LLC, LINDEN 58 LLC, LINDEN 95 LLC, 

MARTENSE 130. LLC, LEFFERTS BLVD 345 LLC, 

777 ST. MARKS REALTY, LLC, and EDWARD 

LIFSHITZ; 

Defendants, 

--·- ·--· --- . -· -·--·· -·---· ·---- ··---·- . ----.--- ... -x. 

PRESENT: HON, LEON RUCHELSMAN 

May 21, 2024 

Motion Seq. #4 

The defendants have moved pursuant to CPLR §3211 seeking to 

dismiss the second ani.ended complaint. The plaintiff has opposed 

the motion. Papers were submitteci by the parties and arguments 

held. After reviewing all the arguments this court now makes the 

following determination. 

As recorded in the prior order, on June 26, 2015 the parties 

entered into a purchase and sale agreement w:hereby the plainti.ffs 

agreed to purchase properties from the defendants located at 40 

Linden Boulevard, 58 Linden Boulevard, 95 Linden Boulevard, 130 

Martense Street, ~45 Lefferts Boulevard and 777 St. Marks Avenue 

all in .Brooklyn. Paragraph JO (al Of the agreement states. that 

the '\Seller represents that it o.r its predecessors have 

registered c!,ll residential apartment units located at the 

Premises with The Division of Housing, Community a:nq. Renewctl 

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("DHCR") arid re-registered the same prior to July 1, 2014; to 

Seller's knowledge, the rents set forth on Schedule B annexed 

hereto do not exceed the maximum legal rent which may be 

collected from any tenants of the Premises pursuant to the 

Leases'' (see, contract of Sale, S[30(a) [NYSCEF Doc. No. 16]). 

The plaintiffs commenced this lawsuit alleging the 

defendants rnisrepresented the correct rents for various 

apartments. Specifically, the amended complaint alleges that the 

defendants misrepresented the allowable rent fo.t seven apartments 

in four Of the buildings out of three hundred ancl. eighty 

apartments. The prior decisions dismissed the fraud cause of 

action and also dismissed all causes 0£ action as to def~ndant 

Lifshitz. The plaintiff filed a second amended complaint and the 

defendants have how moved seeking to dismiss it as well. As 

noted, the motion is opposed. 

Conclusions of Law 

It is well sett:Led that upon a motibh to dismiss the court 

must deterrrtine, accepting the allegations of the complaint as 

true, whether the party can succeed upon any reasonable view of 

those facts (Perez. v. Y & M Transportation Corporation, 21:9 AD3d 

1449, 19E NYS3d i45 [2d Dept., 2023]). Further, ali the 

allegations in. the complaint .are deeimed true and all reasonable 

inferences may be drawn in favor of the plaintiff (Archival Inc .• 

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v. 177 Realty Corp., 220 AD3d 909, 198 NYS2d 567 [2d Dept., 

2023]). Whether the complaint will later survive a motion for 

summary judgment, or whether the plciintiff will ultimately be 

able to prove its claims, of course, plays no part in the 

determination of a pre~discovery CPLR §3211. motion to d.:i..smiss 

(see, Lam v. Weiss, 219 A.D3d 713, 195 NYS3d 488 [2d Dept., 

2023]). 

Section 'l43© of the Purchase arid Sale agreement states that 

defendant ''representations and warranties shall survive Closing 

for a period of one hurid:ted eighty (180) days (the "Survival 

Period")" (see, Purchase arid Sale Agreement, §43© [NYSCEF Doc. 

No. 16]). The plaintiff ,does not dispute the efficacy of tliat 

clause bμt rather argues the claims a:te riot based upon the 

Purchase and Sale Agreement but rather they ar~ based on 

warranties in the deed which provides for delivery of the 

property free of any encumbrances. Indeed, the plaintiff cites 

to West 90th owners Corporation v. Schlechter, l37 AD2d 456i 525 

NYS2 d 33 (1st Dept . , 19 88] which held that "a deed with such a 

covenant constitutes, in a sense, rwt only a reaffirmation of the 

earlier contractual representation, but it also repr:esents a new 

and different commitment'' (id) . Therefore, "the covenant 

construed in Real Property Law §253(6) is an agreement of 

indemnification ... of a type not contained in the contract of 

sale, Thus., plciintiff' s right to indemnification arose for the 

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first time _μpon delivery of the deed at closi"iig" arid is nt,t bound 

by the 180 di?,y survival period. 

However, this entire argument is premised upon the court's 

e.arlier det~rmination that rnisrepr.eseritatioi"Ls concerning' the .terit 

roll constitute encumbrances. The plaintiff asserts that because 

o.f co:Liater-al estoppel or res judicata or- law ,of the. case·, the 

defend.ants are barred f.r·om re.-litig_ating that issue .. and thus 

cannot dismiss the case based upon that prior determination. 

"Res j iJ.dicia.ta- is a. -doctrine that comprises both. -claim 

._preclusion ~nd issue p:t;'_.eclusi;on whii:;:h is. .also known as collateral 

.estoppel (see, Paramount Pictures Corporation v. Allianz Risk 

Transfer AG_, ·31 NY3d 64, 73 .-NYS3d 472 [20.18] ). . "To esta~l-ish 

claim preclusion, a party must show.: (1) .a final judgment on the 

merits, (2") identity o"r .priv'ity of parties, and (3") identity o·f· 

-claims.· in the two ·actions;, ( id) . In this q1s-e the p:tior · 

determination deriying tJ1e motion to dismiss the indemhif icatich. 

-.claim wets not a firial :}udgement o·n .the -.m:_erit;;; and ·th,μs cl.a.im 

preclu_s,ion is i.n:applicable. Collateral estOpJ?el or issue 

preclu;sion gener"a1ly prevents a party frqm re.litigating an issue 

in a subseqμ.~nt c;J..ction that w-as cl.early raicsed and. decided. 

against that party (Simmons v. Trans Express Inc., 37 NY3d.. 107, 

i4·8 NYS3d 17 8 2021]) .. Further, "'t.he doct.-rihe of· the 'law -of the 

case' is-a rule of practice, a:n articulation of sound poliqy 

that, when an issue is once j_udicially deti?rmined, that shonld be 

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the end of the matter as far as Judges and courts of co-ordinate 

jurisdiction are concerned1 " (Strujah v. Glehcord Building Corp., 

137 AD3d 1252, 29 NYS3d 398 [2d Dept., 2016]) . 

Of course, these doctrines do not prohibit any party from 

seeking to reargue any determination of the court. No;r can they 

prever:rt resolving issues that are raised pursuant t.o an amended 

complaint even if the portion seeking review is not being 

amended. To the extent this can be deemed a motion to reargue 

the court will permit such arguments. This i.s espec,ially true 

where the court finds such arguments compelling. 

The court held that an improper or misrepresented rent roll 

can be considered an encumbrance since it reduces the value of 

the property. That determination did riot fully consider the 

definition of an incUmbrance. It is true, as explained in the 

prior decision, that "every diminution of whatever kind or degree 

of the ownership in fee simple absolute, other than a highway 

easement, is an encu:mbrance11 (see, New York Law and Practice of 

Real Property, §.22: 2.2, Chapter 22. Marketable Title, D: 

Encumbrances [June 2022 Update]). That definition does not mean 

that anything which can affect·the value of the property is an: 

encumbrance. Ratherr an encumbrance "is any right to or interest 

in.the land subsisting in another, to the diminution: of its 

value, although consistent with the power to pass the fee by the 

conveyance. The term includes whatever charges obstruct, burden, 

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or impair the use of the lano, depreciate its value, or impede 

its transfer, such as a lien, a servitude, or an easement" (id), 

Thus, ah encumbrance affects title and is ''specifically used to 

designate a restriction on title and is defined as 'a right other 

than an ownership interest in real property. The term includes 

mortgages and other liens on real property'" {see, In re Windsor 

Park Nurs:ing Home, 18 M.isc3d 964, 850 NYS2d 342 (Supreme Court 

Queens County 2008] ) • ThU:s, a zoning ordinance, which rec_:pilates 

the use of property is not an encumbrance (Voorheesville Rod and 

Gun Club Inc. ,v. E.W. Tompkins Company Inc., 82 NY2d 564, 606 

NYS2d 132 [1993]). Likewise, building code violations which may 

affect the physical condition and the economic value of the 

property are not encumbrances 'TM' Stockton Mortgage, Inc. v. 

Tope, 233 Cal.App4th 437, 183 Cal.Rptr3d 186 [3d Dist. 2014], 

Mccrae v. Giteles, 253 So2d 260 [Fla. Dist. Ct. App. 3d Dist. 

1971], Monti v. Tangora, 99 Ill.App3ct· 57 5, 425 NE2d 597 [ 4th 

Dist'. 1981]). Moreover, a notice of pendency does not create an 

encumbrance upon property (Bank of America N.A., v. 3301 Atlahtic 

LLC, 2012 WL 2529196 [EDNY 2012]). Further, in Whaley v. First 

American Title Co. of Mid-West, 2004 WL 316978 [Tennessee Court 

of Appeals 2004] the court held ah improper subdivision ciid nOt 

constitute an encumbrance because an encumbrance concerns issues 

of ownership and an improper subdivision pertains to the value of 

the property. Finally, other 'issues which can reduce the value 

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of the property a:re also not encumbrances. For example, the 

existence of hazardous materials is not an encumbrarn;~e (U. S; v .. 

Allied Chemical Corp., [587 F. Supp 1205 [N. D. Cal. 1984]). 

Moreover, wetlands designation is not an encumbrance (Bear Fritz 

Land Co. v. Kachemak Bay Title Agency, Inc., 920 P2d 759 [Alaska 

1996], Frimberqer v. Anzellotti, 25 Conn.App. 401, 594 A2d 1029 

[1991], Truck Southt Inc. v. Patel, 339 S~C. AO, 528 SE2d 424 

[2000] ) . 

There are no cases that hold the mere misrepresentation of 

rent rolls constitutes a:h encumbrance and the court should not 

have endorsed such an expansive understanding of encumbrances. 

Inde_ed, endorsing such an expansive understanding of an 

encumbrance could result in far-reaching and unintended results. 

For example, misrepresentations about the salaries paid to 

workers, which would increase expenses and reduce the value of 

the property thereby·could also be termed an encumbrance. There 

is no precedent for sucl-i a wide interpretation of an encumbrance. 

Therefore, there can be no relief flowing £rom the deeds with 

covenants that the transfer of larid wa:s free of encumbrances. 

Therefore, the only basis in which the plaintiff can 

maintain any relief is via the p:urchase and sale agreement which 

bars any such action more than180 days after the closing. There 

is no dispute no notices of any improper rental amounts were sent 

to the defendants within that time frame. Therefore, the 

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plaintiff it> constrained from pursuing this action. 

Consequently, the motion seeking to dismiss the second 

amended complaint is granted in its entirety. 

So ordered. 

DATED: May 21, 2024 

Brooklyn N.Y. 

ENTER: 

lion. Leon Ruthelsman 

JSC 

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