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Morris Builders, L.P. v. Fidelity National Title Insurance Co.

United States District Court, S.D. New York

November 1, 2017

MORRIS BUILDERS, L.P. a/k/a MORRIS INDUSTRIAL BUILDERS, L.P., Plaintiff,
v.
FIDELITY NATIONAL TITLE INSURANCE COMPANY, FIRST AMERICAN TITLE INSURANCE COMPANY, and COMMONWEALTH LAND TITLE INSURANCE COMPANY, Defendants.

          OPINION AND ORDER

          Vincent L. Briccetti United States District Judge

         Plaintiff Morris Builders, L.P. a/k/a Morris Industrial Builders, L.P., brings this action against defendants Fidelity National Title Insurance Company (“Fidelity”), First American Title Insurance Company (“First American”), and Commonwealth Land Title Insurance Company (“Commonwealth”), asserting claims for declaratory relief and breach of contract.

         Now pending is plaintiff's motion for leave to amend the complaint and to add a new party plaintiff, pursuant to Rules 15(a)(2) and 21. (Doc. #23).

         For the following reasons, the motion is GRANTED.

         The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

         BACKGROUND

         For the purpose of deciding the pending motion, the Court accepts as true all well pleaded factual allegations in the proposed amended complaint, as summarized below.

         Plaintiff is a real estate development company that recently became the owner of a parcel of land located on Austin Avenue in Yonkers, New York (the “Austin Avenue site”).

         Defendants Fidelity, First American, and Commonwealth are insurance companies that issue title insurance policies.

         In 1985, plaintiff along with the County of Westchester (the “County”), the City of Yonkers (“Yonkers”), the County of Westchester Industrial Development Agency (“WIDA”), and the City of Yonkers Industrial Development Agency (“YIDA”), entered into a five-party agreement (the “five-party agreement”), which (i) “acknowledged” that the County owned twenty-five acres of the Austin Avenue site, and (ii) provided that WIDA would lease the entire Austin Avenue site to plaintiff under a long-term development lease. (Proposed Am. Compl. ¶ 11). Simultaneously, WIDA and plaintiff executed the lease agreement for the Austin Avenue site, which was subsequently amended on June 18, 2017.

         In 1989, defendants[1] issued to plaintiff title insurance policies covering the long-term development lease.

         In 2011, plaintiff discovered what it considers a title defect-namely that portions of the Austin Avenue site covered by the five-party agreement, leased to plaintiff, and insured by defendants, were actually dedicated public parkland owned by Yonkers. On September 26, 2011, plaintiff put defendants on notice of the title defect, indicating plaintiff would file an action to quiet title, and requesting indemnification for costs associated with that action. Defendants responded that they would take “curative measures.” (Proposed Am. Compl. ¶ 27).

         On August 15, 2012, plaintiff entered into a sublease agreement with Target Corporation (“Target”) as tenant to develop a Target retail store (the “Target sublease”). Under the Target sublease, plaintiff agreed to lease to Target a portion of the land plaintiff leased from WIDA.

         This parcel of land (“Lot 4”) contained the previously discovered title defect that was insured by defendants and from which plaintiff had been evicted because of the title defect.

         On March 18, 2014, plaintiff commenced a federal action (the “prior action”) against the County, WIDA, Yonkers, and YIDA for, inter alia, breach of contract and to quiet title. On June 21, 2016, the parties entered a settlement agreement. Pursuant to that settlement, on June 30, 2016, plaintiff purchased the Austin Avenue site in fee simple through a corrective deed with Yonkers.

         The same day it purchased the Austin Avenue site, plaintiff assigned the Target sublease to Morris Westchester Retail Associates, LLC (“MWR”), plaintiff's “subsidiary/affiliate” (Proposed Am. Compl. ¶ 45), and transferred to MWR the title to Lot 4. Plaintiff alleges MWR was created for the purpose of holding the lease to Lot 4 and acting as landlord to Target.

         On January 3, 2017, after this action was commenced, Target notified plaintiff and MWR that it would terminate the Target sublease. On January 30, plaintiff paid a $250, 000 break-up fee to Target on behalf of MWR. Target terminated the Target sublease on April 12. Plaintiff alleges Target terminated the Target sublease “because of the title defects, the failure of Defendants to cure, ...


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