### 5506-40 Linden Blvd Brooklyn LLC v Linden 40LLC 2024 NY Slip Op 31760(U) May 21, 2024 Supreme Court, Kings County Docket Number: Index No. 512113/2022 Judge: LeonRuchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op30001(U), are republished from various New York State and local governmentsources, including the New

York State Unified Court System's eCourtsService. This opinion is uncorrected and not selected for official publication.

### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

1 of 8 SUPREME COURT OF THE STATE OF NEWYORK 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 defendantshave moved pursuant to CPLR

### §3211 seekingto 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 agreedto purchase properties from the defendants located at 40 LindenBoulevard, 

### 58 Linden Boulevard, 

### 95 Linden Boulevard, 130 Martense Street, ~45 Lefferts Boulevardand 777 St. Marks Avenue all in.Brooklyn. 

### ParagraphJO(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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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

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### ("DHCR") aridre-registeredthe sameprior to 

### July 1, 2014; to Seller's knowledge, the rents set forth on Schedule B annexed hereto do not exceedthe 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 misrepresentedthe allowable rent fo.t seven apartments in four Of thebuildings out of threehundred 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 & 

### MTransportation Corporation, 21:9 AD3d 

### 1449, 

### 19E NYS3d

## i45 [2dDept., 2023]). Further, ali the allegations 

### in. the complaint

### .are deeimed true and all reasonable 

### inferences may 

### be 

### drawn in 

### favorof the plaintiff (Archival Inc.• 2



### [* 2]

### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

3 of 8 v. 177 RealtyCorp., 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 NYS2d 33 (1st Dept
., 1988] 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
3



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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

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### first 

### time_μpon delivery 

### of 

### the deed at closi"iig" arid is

### nt,tbound by 

### the 180 di?,y 

### survival 

### period. However, 

### this entireargument is 

### premisedupon 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
..andthus cannot dismiss 

### the 

### case based

### uponthat priordetermination. "Res j

### iJ.dicia.ta- is

### a.-doctrinethat 

### comprises both.-claim ._preclusion ~nd 

### issue p:t;'_.eclusi;on whii:;:h is. .also

### known as collateral 

### .estoppel (see, Paramount Pictures 

### Corporationv. 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. -.claimwets 

### 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 178 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 shonldbe
.4



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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

5 of 8 the end ofthematter 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 complainteven

### if theportion seeking review is not being amended. To the extent this can bedeemed 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 ormisrepresentedrent roll
can be considered an encumbrance since it reduces the value of the property. That determination did riot fully consider the definition ofan incUmbrance. It is true, as explainedin 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 Lawand Practice of Real Property, §.22:2.2, Chapter 22. Marketable Title, D: Encumbrances [June 2022 Update]). Thatdefinition does not mean that anything which can affect·the value of the property is an: encumbrance. Ratherr an encumbrance "is any right to orinterest in.the land subsisting in another, to thediminution: of its value, althoughconsistent with the power to pass the fee by the conveyance. The term includes whatever charges obstruct, burden,
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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

6 of 8 or impairthe use of the lano, depreciate its value, or impede itstransfer, such as a lien, a servitude, oran easement" (id), Thus, ah encumbrance affects title and is ''specifically usedto 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, Inre Windsor 

### Park Nurs:ing Home, 18 M.isc3d 

### 964, 850 NYS2d 342 (Supreme Court Queens County2008]) • 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 CompanyInc., 82 NY2d 564, 606 NYS2d 132 [1993]). Likewise, building code violations which may affect the physical condition and the economic value ofthe property are not encumbrances 

# 'TM' StocktonMortgage, Inc. v. Tope, 233 Cal.App4th 437, 183 Cal.Rptr3d 186 [3dDist. 2014], Mccrae v. Giteles, 253 So2d 260 [Fla. Dist. Ct. App. 3d Dist. 1971], Monti v. Tangora, 99 Ill.App3ct·575, 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 ofAppeals 2004] the court held ah improper subdivision ciid nOt constitute an encumbrancebecause an encumbrance concerns issues of ownership and an impropersubdivision pertains to the value of the property. Finally, other 'issueswhich can reduce the value
6



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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

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### of the propertya:re also not encumbrances. For example, the existence of hazardous materials

## is not an encumbrarn;~e (U.S; v.. AlliedChemical Corp., [587 F.Supp 1205 [N.D. Cal. 

### 1984]). Moreover, wetlands designation is not an encumbrance (Bear Fritz LandCo. 

### 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 inwhich 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 withinthattime frame. Therefore, the
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### FILED: KINGS COUNTY CLERK 05/21/2024 02:03 PM INDEX NO. 512113/2022 NYSCEF DOC. NO. 158 RECEIVED NYSCEF: 05/21/2024

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### plaintiff it> constrained frompursuing this action. Consequently, the 

### motionseekingto 

### dismiss the second amended complaint is granted in its entirety. So ordered.

DATED: May 21, 2024 Brooklyn N.Y.ENTER:


### lion. LeonRuthelsman JSC



### 8



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