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SAEWITZ v. SHERMAN

May 12, 1998

MAX PAUL SAEWITZ and LYNN JACQUELINE SAEWITZ, Plaintiffs, against EDWARD N. EPSTEIN and JEANNE SHERMAN, Defendants.


The opinion of the court was delivered by: MCAVOY

MEMORANDUM-DECISION & ORDER

 McAvoy, Chief District Judge:

 This action arises from two contract disputes between plaintiffs and defendants involving a lease and an option to purchase defendants' real property located in Woodstock, New York (the "property").

 Plaintiffs, the lessees and optionees, commenced the present action in New York Supreme Court, Ulster County, seeking, inter alia, the return of the following: (1) $ 30,000 paid to the defendants as consideration for an option to purchase the property; (2) $ 7,600 for costs incurred to survey the property; (3) $ 1,200 for costs incurred for a title examination; (4) $ 5,000 for legal fees (5) $ 4,000 representing the security deposit for the lease of the property; (6) $ 24,000 in rental payments; and (7) $ 4,511.54 for costs incurred to repair damage to the property caused by a winter storm.

 Defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. This Court has jurisdiction under 28 U.S.C. § 1332. In their Answer, defendants contest all of plaintiffs' claims. Defendants also assert a counterclaim for unpaid rent of $ 23,006 due under the lease and other expenses.

 A two-day bench trial commenced in Binghamton, New York on December 22, 1997. At the close of plaintiffs' proof, the defendants moved pursuant to FED. R. CIV. P. 50 for judgment as a matter of law on a number of plaintiffs' claims. The Court granted defendants' motion with respect to plaintiffs' claims of defamation and prima facie tort. Defendants' motion was otherwise denied.

 The Court now makes the following findings of fact and conclusions of law.

 I. FINDINGS OF FACT

 (A) The Option Agreement and the Lease Agreement

 1. Defendants are owners of approximately 93 acres of real property located in Woodstock, New York.

 2. On November 24, 1994, plaintiffs and defendants entered into a written agreement (the "Option Agreement") whereby the defendants granted the plaintiffs an option to purchase the property.

 3. Pursuant to the terms of the Option Agreement, plaintiffs paid to defendants the sum of thirty thousand dollars ($ 30,000) as consideration for the option.

 4. Pursuant to paragraph 2 of the Option Agreement, the $ 30,000 option consideration was non-refundable unless (a) the defendants failed to deliver marketable title to the property, and/or (b) the defendants' defaulted.

 5. Pursuant to paragraph 6 of the Option Agreement, plaintiffs could exercise the option by giving written notice to the defendants, signed by the plaintiffs or their authorized agent, on or before August 15, 1995.

 6. Pursuant to paragraph 7 of the Option Agreement, Title to the property had to close on or before November 23, 1995.

 7. Pursuant to paragraph 13 of the Option Agreement, the defendants agreed to give and the plaintiffs agreed to accept such marketable title as The Title Service Company, Fair Street, Kingston, New York, agent for Fidelity National Title Company, would approve and insure, at standard rates, free and clear of all liens and encumbrances, except as otherwise provided in the Option Agreement.

 8. On November 24, 1994 and simultaneous with the execution of the Option Agreement, the plaintiffs entered into a Lease Agreement with the defendants for the one-year lease of the property.

 9. Pursuant to the terms of the Lease Agreement, the plaintiffs were to pay rent of $ 4000 per month, payable on the first day of each month for the length of the lease term, with aggregate lease payments of $ 48,000.

 10. Pursuant to paragraph 33(a) and (b) of the Lease Agreement, the plaintiffs were required to pay for all repairs during the lease term, with the exception of structural repairs and replacements and repairs caused by acts of god.

 (B) The Winter Storm

 11. Plaintiff took occupancy of the property under the lease in the end of November 1994.

 12. On or about December 24, 1994, a storm swept across the property. The storm caused exterior damage to the property. Specifically, various trees were felled, with one large tree leaning on the house; a gutter was shorn of the edge of the roof; shingles from the roof and the roof peak were damaged; an exterior stone window box and table were destroyed; several exterior lights were broken; and the tennis net was destroyed. Additionally, the storm felled several electrical poles causing the loss of electricity to the main residence.

 13. The storm did not cause any interior damage to either the main or guest houses.

 14. Within two days of the storm, electricity was restored through temporary means by connecting electrical cables to the guest house and running them along the surface of the property to the main house. Defendants also made arrangements for the removal of the large trees which had been felled, including the one tree leaning against the house. Small debris also was removed from the property at this time.

 15. On December 26, 1996, defendants visited the property to determine the extent of the storm damage.

 16. At this time, plaintiffs and defendants agreed that plaintiffs would make arrangements to hire an electrician from Miami to repair the electrical service, provided that plaintiffs' electrician submitted work estimates prior to commencing any repair work.

 17. While repairing the electricity, the Miami electrician punctured an underground gas line.

 (C) The Rose Easement

 18. Richard Riseley represented plaintiffs in connection with the negotiation and execution of the Option Agreement and the Lease Agreement.

 19. In early April of 1995, plaintiffs had the property surveyed by Robert Hall. Hall notified Riseley that an easement had been established over the property as a result of a lawsuit between defendants and Harrison and Eva Rose (the "Rose easement"). At no time had either defendants or their lawyer revealed the existence of the Rose easement to Riseley.

 20. Prior to the execution of the Option Agreement, plaintiffs had the Title Service Company conduct a title search of the property. The title search, however, did not reveal the Rose easement.

 21. After the surveyor notified Riseley of the Rose easement, Riseley immediately telephoned defendants' lawyer, Gerry Wapner. Wapner acknowledged to Riseley that his law firm had ...


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