JOSEPH P. GALLAGHER, JR. AND KELLYANN E. GALLAGHER, PLAINTIFFS-APPELLANTS,
DOMINIC RUZZINE, JR., ANDREA RUZZINE, TIMOTHY R. MALCHOW, LORA L. MALCHOW, ROBITAILLE RELOCATION CENTER, INC., SARAH ROBITAILLE, REALTY USA.COM AND GERALDINE BROSKY, DEFENDANTS-RESPONDENTS.
I. MYERS, PLLC, WILLIAMSVILLE (JAMES I. MYERS OF COUNSEL),
WIRKUS YOUNG, P.C., BUFFALO (SCOTT R. ORNDOFF OF COUNSEL),
FOR DEFENDANTS-RESPONDENTS DOMINIC RUZZINE, JR. AND ANDREA
PHILLIPS LYTLE LLP, BUFFALO (JENNIFER A. BECKAGE OF COUNSEL),
FOR DEFENDANTS-RESPONDENTS TIMOTHY R. MALCHOW AND LORA L.
BARCLAY DAMON, LLP, BUFFALO (JAMES P. MILBRAND OF COUNSEL),
FOR DEFENDANTS-RESPONDENTS ROBITAILLE RELOCATION CENTER, INC.
AND SARAH BROSKY.
PRESENT: WHALEN, P.J., CENTRA, LINDLEY, DEJOSEPH, AND
from an order of the Supreme Court, Erie County (Diane Y.
Devlin, J.), entered January 6, 2016. The order, among other
things, granted the motions of defendants for summary
judgment and dismissed the complaint.
hereby ORDERED that the order so appealed from is unanimously
affirmed without costs.
In 1999, defendants Timothy R. Malchow and Lora L. Malchow
purchased a home in Amherst. In or around June 2005, the
Malchows hired Siracuse Engineers, LLP, who inspected the
foundation of the residence. The inspection report was
prepared by Peter Grace, P.E. (hereafter, Grace report), and
Grace stated therein that he "did not observe any
evidence of current or past history of vertical movement of
the soils at the level of the basement foundations, "
and that he would be "very surprised if after many years
of stable conditions, differential settlements would be
encountered in the future." The Malchows sold the
residence to defendants Dominic Ruzzine, Jr. and Andrea
Ruzzine in December 2005. The Malchows provided the Ruzzines
with the Grace report and the property condition disclosure
statement, which both the Malchows and the Ruzzines had
signed. The property condition disclosure statement recited,
inter alia, that: (1) there were some basement water seepage
issues; (2) there were some drainage problems on the
property, i.e., "slight accumulation after heavy rain in
back of lot"; and (3) "basement cracks [were]
their time at the subject residence, the Ruzzines discovered
a crack in the basement wall and had it repaired on November
6, 2009. When they decided to sell the residence, the
Ruzzines retained defendants Robitaille Relocation Center,
Inc., and Sarah Robitaille (Robitaille defendants) to act as
purchased the property from the Ruzzines in January 2010,
with defendants Realty USA.com and Geraldine Brosky
(collectively, Realty USA) acting as plaintiffs' realtor.
Prior to the transaction, the Ruzzines did not disclose the
Grace report to plaintiffs, but plaintiffs and the Ruzzines
executed a property condition disclosure statement reciting
that there were no problems with water seepage into the
basement and that there were no known material defects on the
subject property. In addition, plaintiffs hired a home
inspector, who concluded that there were no concerns with the
did not notice any "signs of damage" until February
or March 2010, about a month after moving in. Cracks appeared
repeatedly in the walls on the first and second floors, there
was evidence of past repairs, and water began leaking into
the basement. In August 2010, the house "popped, "
waking plaintiffs during the night. The cracks in the
basement walls "separated and shifted, " extending
into the interior of the walls, and plaintiffs had trouble
getting any doors and windows to close. A toilet fell off its
flange and flooded the bathroom; the garage door cable broke;
a fireplace pulled away from a wall; and the front porch
pulled away from the house.
thereafter commenced this action seeking damages for fraud,
breach of contract, gross negligence, and breach of fiduciary
and statutory duties. The Malchows, the Ruzzines, the
Robitaille defendants, and Realty USA made separate motions
for summary judgment dismissing the complaint insofar as
asserted against them, and Supreme Court granted the motions.
conclude that the court properly granted the motion of the
Malchows with respect to the cause of action for fraud
asserted against them. "[I]t is well settled that, [t]o
establish a cause of action for fraud, plaintiff[s] must
demonstrate that defendant[s] knowingly misrepresented a
material fact upon which plaintiff[s] justifiably relied and
which caused plaintiff[s] to sustain damages"
(Sample v Yokel, 94 A.D.3d 1413, 1415 [internal
quotation marks omitted]). The Malchows established as a
matter of law that, as the prior seller, they did not have a
relationship with plaintiffs, did not make any statements or
representations to plaintiffs and therefore did not and could
not induce any reliance on the part of plaintiffs. Plaintiffs
failed to raise an issue of fact (see generally Zuckerman
v City of New York, 49 N.Y.2d 557, 562). Furthermore, we
conclude, contrary to plaintiffs' contention, that the
Malchows established as a matter of law that they did not aid
and assist the Ruzzines in perpetrating a fraud upon
plaintiffs. "The elements of a cause of action alleging
aiding and abetting fraud are an underlying fraud, [the]
defendants' knowledge of this fraud, and [the]
defendants' substantial assistance in the achievement of
the fraud" (Ginsburg Dev. Cos., LLC v Carbone,
134 A.D.3d 890, 894 [internal quotation marks omitted]).
Here, there is no record evidence that the Malchows had
"actual knowledge" of any purported fraud between
the Ruzzines and plaintiffs, and there is no evidence that
the Malchows provided any substantial assistance in the
achievement of any fraud (Decana Inc. v Contogouris,
55 A.D.3d 325, 326, lv dismissed 11 N.Y.3d 920).
further conclude that the court properly granted the motion
of the Ruzzines with respect to the causes of action asserted
against them for fraud and breach of contract. "Although
New York traditionally adheres to the doctrine of caveat
emptor in an arm's length real property transfer..., Real
Property Law article 14 codifies a seller's disclosure
obligations for certain residential real property transfers,
including the transaction between the parties in this case...
The mechanism for disclosure is the [property condition
disclosure statement], the particulars of which are mandated
by statute... Disclosure is based on the seller's actual
knowledge of a defect or condition affecting the property at
the time the seller signs the disclosure... While false
representation in a disclosure statement may constitute
active concealment in the context of fraudulent
nondisclosure..., to maintain such a cause of action, the
buyer must show, in effect, that the seller thwarted the
buyer's efforts to fulfill the buyer's
responsibilities fixed by the doctrine of caveat emptor"
(Klafehn v Morrison, 75 A.D.3d 808, 810 [internal
quotation marks omitted]). Furthermore, "[t]he mere fact
that [a] defendant undertook previous repair work on the
house is not tantamount to concealment of a defective
condition" (Hecker v Paschke, 133 A.D.3d 713,
717). Here, while there was evidence that the Ruzzines were
aware that there was dampness in the basement, there was also
evidence that they repaired the crack in the basement
foundation that was causing the dampness, thereby
establishing their entitlement to judgment on the fraud cause
of action as a matter of law (see Klafehn, 75 A.D.3d
at 810). In addition, although the Ruzzines' property