Copland v. Nathaniel

164 Misc. 2d 507, 624 N.Y.S.2d 514, 1995 N.Y. Misc. LEXIS 114
CourtNew York Supreme Court
DecidedFebruary 1, 1995
StatusPublished
Cited by3 cases

This text of 164 Misc. 2d 507 (Copland v. Nathaniel) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Copland v. Nathaniel, 164 Misc. 2d 507, 624 N.Y.S.2d 514, 1995 N.Y. Misc. LEXIS 114 (N.Y. Super. Ct. 1995).

Opinion

OPINION OF THE COURT

Joan B. Lefkowitz, J.

This case raises very interesting questions concerning application of caveat emptor to the sale of real property that had previously been subjected to chlordane application.

FACTUAL BACKGROUND

In June 1973 the subject real property, on which is located a one-family residence, was treated for termites, presumably by application of chlordane. A 10-year guaranty to the homeowner was issued by the termite company, Central Termite Control, which was assigned by the homeowner (Elizabeth Gutterman) to the new homeowners (Drs. Vermund and Vargas) on sale of the property in June 1982. On May 3, 1989 Drs. Vermund and Vargas conveyed the subject property to the defendants. At that time the defendants were not given the out-of-date termite guaranty nor were they aware of it or of any termite condition. Defendants first learned about the guaranty after commencement of the action. Prior to the purchase, defendants caused the property to be inspected by Parkway Inspection Services, Inc. (Parkway). That company made a report, dated February 22, 1989, which stated: "4-APPEARANCE OF PREVIOUS TERMITE CONTROL? NO”.

[509]*509The property consists of a one-family residence with four bedrooms, a two-car garage and basement. The record does not reveal the amount of land on which the building is located. The defendants, both of whom are physicians, resided at the premises for over three years, with their children, until the property was sold to plaintiffs. Defendants aver that they never caused chlordane to be used on the premises. Indeed, its use as a popular chemical for termite control was outlawed in April 1988 before defendants purchased the subject property.

In the spring of 1992 the defendants listed the property for sale. Simultaneously therewith they hired another company, Garrie Pest Control (Garrie), to do an inspection. By report dated April 7, 1992 Garrie said: "evidence of previously TREATED INFESTATION WAS NOTED UNDER KITCHEN DOOR FRAME. NO EVIDENCE OF ACTIVE INFESTATION WAS FOUND. PERIODIC TERMITE INSPECTIONS ARE RECOMMENDED AS RE-INFESTATION CAN AND SOMETIMES DOES OCCUR.”

On April 13, 1992 plaintiff made an offer to purchase the property for $325,000 subject to a satisfactory engineering, radon and termite inspection. Plaintiffs hired an engineer who provided them with a written report on April 16, 1992 wherein termite damage was found. On May 4, 1992 plaintiffs had Garrie recertify their report to Mr. Copland and plaintiffs’ lender. Also, on May 22, 1992 plaintiffs had Parkway reinspect the premises, which was done with the same finding as it previously made regarding no evidence of termite control.

On April 17, 1992, the parties, represented by counsel, executed a contract of sale. The standard contract provided: [In summary, that the purchaser inspected the premises and agreed to purchase it "as is”; all prior understandings were merged in the contract and no one was relying on any statement not contained in the contract; the seller had not made any representations other than those expressed in the contract and is relieved of all responsibility as to the present or future physical condition of the property; and acceptance of the deed shall constitute full compliance except as to matters that specifically survive the closing.]

On July 2, 1992 the sale was consummated and defendants delivered to plaintiff the usual bargain and sale deed with covenants against grantor’s acts.

In May or June 1993 plaintiffs retained a toxicologist who conducted tests in and around the residence and found chlordane present on the property. He recommended that plaintiffs [510]*510move out of the premises, which they did. In August 1993 the Westchester County Health Department reported on tests it performed at the premises in May 1993, that the level of chlordane found at the property did not constitute a health concern.

On February 1, 1994 plaintiff instituted this action. The complaint contains six causes of action for: (1) rescission based on mutual mistake, (2) rescission based on fraud, (3) damages for fraud, (4) rescission based on constructive fraud, (5) damages for constructive fraud and (6) breach of contract for sale of an uninhabitable residence. The answer consists of general denials, 23 affirmative defenses and 8 counterclaims for damages for defamation and prima facie tort.

In April 1994 plaintiffs commenced remediation of the property by having contaminated soil removed. They claim that the expense of removal has been $50,000 to date.

Defendants move for summary judgment dismissing the complaint upon the grounds, inter alia, caveat emptor, merger, no breach of warranty of habitability is implied on sale of a previously lived-in home, lack of confidential relationship, absence of mutual mistake and, factually, that no chlordane problem exists as evidenced by the Westchester County Department of Health report and an expert’s report and affidavit submitted in support of the motion. Plaintiffs argue that triable issues exist with respect to defendants’ knowledge that requires discovery; also because of differing opinions on the extent of the chlordane problem; and by reason of paragraph 11 (a) of the contract which survived delivery of the deed.

FIRST CAUSE OF ACTION

The first cause of action seeks rescission based on mutual mistake, that the parties were unaware of the chlordane problem.

Rescission premised on mutual mistake is a viable remedy where the parties have not greatly altered their positions. (D’Antoni v Goff, 52 AD2d 973 [3d Dept 1976]; 21 NY Jur 2d, Contracts, § 121; Annotation, Rescission — Mutual Mistake— Realty, 50 ALR3d 1188.) The mistake must be material and fundamental so as to defeat the object of the contract. (Callanan v Keeseville, Ausable Chasm & Lake Champlain R. R. Co., 199 NY 268, 284 [1910]; Clanton v Smith, 170 AD2d 643 [2d Dept 1991], lv denied 78 NY2d 852 [1991]; Babylon Assocs. [511]*511v County of Suffolk, 101 AD2d 207, 215 [2d Dept 1984].) Rescission for mutual mistake in real property transactions may occur where the status quo is restorable. (Valentine v Richardt, 126 NY 272, 277 [1891]; 91 NY Jur 2d, Real Property Sales and Exchanges, § 138.) The requirement of restoration of the status quo may sometimes be relaxed. (Jones Chems. v City of Binghamton, 26 AD2d 710, 711 [3d Dept 1966], affd 20 NY2d 808 [1967] [unilateral mistake]; K.M.L. Labs. v Hopper, 830 F Supp 159, 164 [ED NY 1993].) Where the precontract status quo cannot be restored but rescission is otherwise appropriate, the court may grant whatever relief it can in equity, with adjustments if necessary. (Ungewitter v Toch, 31 AD2d 583 [3d Dept 1968], affd 26 NY2d 687 [1970]; 91 NY Jur 2d, Real Property Sales and Exchanges, § 150; CPLR 3017 [a]; 3 Weinstein-Korn-Miller, NY Civ Prac ¡ 3017.06.) The deed merger rule does not bar rescission based on mutual mistake. (Larsen v Potter, 174 AD2d 801 [3d Dept 1991].)

Nonetheless, whether a mutual or unilateral mistake fundamental to the purpose of the contract has been made is determined by an objective test. (First Regional Sec. v Vilella, 84 Misc 2d 790 [Civ Ct, NY County 1975], affd 88 Misc 2d 81 [App Term, 1st Dept 1976]; see, Ryan v Boucher, 144 AD2d 144 [3d Dept 1988].)

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Estate of Ginor v. Landsberg
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Bluebook (online)
164 Misc. 2d 507, 624 N.Y.S.2d 514, 1995 N.Y. Misc. LEXIS 114, Counsel Stack Legal Research, https://law.counselstack.com/opinion/copland-v-nathaniel-nysupct-1995.