Barnett v. Schwartz

47 A.D.3d 197, 848 N.Y.S.2d 663
Appellate Division of the Supreme Court of the State of New York·Decided December 11, 2007·Published·Cited by 46 cases

Opinions

OPINION OF THE COURT

Ritter, J.

The issue to be decided on this appeal is whether the defendants-attorneys committed legal malpractice in their representation of the plaintiffs in the negotiation and closing of a lease and purchase option agreement concerning certain commercial property. The plaintiffs sought the property for the purpose of manufacturing barbecue sauce. Approximately two years prior to the signing of the agreement, the subject property was classified as an inactive hazardous waste disposal site. The defendants knew that there were environmental violations concerning the property that had to be dealt with and wrote to the relevant enforcement agencies asking for details. Despite the fact that those letters were never responded to, the defendants advised the plaintiffs to enter into the agreement at issue on an “as is” basis. The defendants never informed the plaintiffs of the environmental violations or the consequence of the “as is” clause of the agreement until two years later. We find the jury’s determination that the plaintiffs were entitled to such information before entering into the agreement, and that the defendants committed malpractice by failing to advise the plaintiffs about the violations and the effect of the “as is” clause, was reached on a fair interpretation of the evidence.

The relevant evidence adduced at trial may be summarized as follows: in November 1992 the plaintiffs retained the defendant Jeffrey Schwartz and the defendant law firm to provide legal services in connection with a lease and purchase option agreement concerning certain commercial property in Freeport for the disclosed purpose of manufacturing barbecue sauce. In December 1992, upon the advice and counsel of the defendants, the plaintiffs entered into an “as is” lease for the property with an option to buy (hereinafter the agreement). Approximately two years earlier, in 1990, the New York State Department of Environmental Conservation (hereinafter the DEC) had classified the property a level 2A inactive hazardous waste disposal site due to the activities of a prior tenant, Raneo Wiping Cloth, Inc. (hereinafter Raneo). Raneo had collected rags from the printing industry soaked with solvent, ink, and oil, and leakage from storage barrels had collected in a storm drain on the property. The plaintiff Ted Barnett (hereinafter Barnett) testified that the plaintiffs were never advised and were otherwise un[200] aware of the environmental condition of the property when they signed the agreement in 1992, and would not have signed the agreement had they known. Indeed, he asserted, the plaintiffs did not learn of the status of the property as a hazardous waste site until February 1994, when informed of such by passersby. By that time, he noted, they had already invested money in the property, inter alia, for renovations. Further, he testified that, angered by the discovery, the plaintiffs sought legal advice from Schwartz, who advised them that they had no recourse as against the landlord/owner because they had signed an “as is” lease. However, Barnett asserted, Schwartz opined that the cleanup would probably take approximately six months, and advised the plaintiffs to continue paying rent and to exercise the option to purchase the property. Pursuant to the agreement, the option to purchase the property could be exercised on or before December 1, 1994. The plaintiffs stopped paying rent in late 1995. In 1996, the landlord/owner agreed to clean up the property. However, the cleanup took nearly three years and the property was not removed from the inactive hazardous waste site registry until on or about November 15, 2000. Barnett testified that the plaintiffs thereafter decided to vacate the property after Schwartz informed them that the DEC would be conducting additional periodic testing of the air quality at the property, which Barnett concluded meant that the environmental problems with the property might not have been remediated, and that the health of his workers and the future of his business might be put in jeopardy. In the period prior to vacating, the plaintiffs had additional discussions with Schwartz concerning legal action against the landlord/owner. However, Barnett asserted, Schwartz advised them that the statutes of limitation had run on various potential causes of action, and that a fraud cause of action was untenable because New York applied the doctrine of caveat emptor to real estate purchases and there had been no affirmative misrepresentations by the landlord/ owner. The plaintiffs also entered into evidence two letters written by Schwartz, both dated November 30, 1992, sent to the Nassau County Department of Health and the “Underground Ejection Control Section, US Environmental Protection Agency,” respectively, seeking any information on file concerning the property. The letters noted that former occupants of the property included, among others, the “Renco Wiping Clothe Company [sic],” and that the “Building Department in Free-port advised the purchasers that there may have been a problem [201] with a well on the premises.” The letters never got a response. Barnett denied that the plaintiffs had seen the letters or been made aware of their contents until they commenced this action in 2002. The plaintiffs also presented the testimony of a legal expert who opined, inter alia, that the defendants’ failure to have followed through on their own inquiries, which would have revealed the environmental condition of the property, was not in accord with good and accepted legal practice. The plaintiffs also presented the testimony of their daughter, Joell Barnett, an attorney. The plaintiffs’ daughter testified that she attended a meeting between Schwartz and her parents in 1996, at which Schwartz admitted that he had not undertaken adequate environmental inquiries and that he had made “a mistake.”

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Barnett v. Schwartz, 47 A.D.3d 197, 848 N.Y.S.2d 663 (N.Y. Ct. App. 2007).

47 A.D.3d 197 (Barnett v. Schwartz) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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