Peters v. Smolian

Appeal from a judgment of the Supreme Court, Suffolk County (Thomas F. Whelan, J.), dated July 15, 2015, upon an order of that court dated June 25, 2015. The order, inter alia, denied that branch of the plaintiffs’ motion which was for summary judgment on so much of the first cause of action as sought a declaration that certain rights of first refusal held by the defendants Jonathan Smolian, Randy Smolian, and Darielle Smolian for two parcels of real property were void under the “stranger to the deed” rule, denied that branch of the plaintiffs’ motion which was for summary judgment on so much of the second cause of action as sought a declaration that the rights of first refusal required those defendants to match the terms of a contract of sale providing that the subject parcels be maintained as open space on the ground that the issue was not justiciable, and, in effect, upon searching the record, awarded summary judgment to the defendants Jonathan Smolian, Randy Smolian, and Darielle Smolian declaring that the stranger to the deed rule is not applicable and, thus, does not invalidate or render unenforceable the preemptive right of first refusal in favor of them that is contained in certain deeds, and that the plaintiffs are not free to convey the subject property without regard to that right of first refusal. The judgment, insofar as appealed from, is in favor of the defendants Randy Smolian, Jonathan Smolian, and Darielle Smolian, and against the plaintiffs, declaring that the stranger to the deed rule is not applicable and, thus, does not invalidate or render unenforceable the preemptive right of first refusal in favor of them that is contained in certain deeds and that the plaintiffs are not free to convey the subject premises without regard to that right of first refusal, and dismissing the second cause of action on the ground that there was no justiciable controversy.

Ordered that the judgment is affirmed insofar as appealed from, with costs.

In 1992 and 1997, respectively, the defendant Richard

The plaintiffs commenced this declaratory judgment action against Richard and the defendants in December 2014. In the first cause of action, the plaintiffs sought, inter alia, a declaration that the rights of first refusal in favor of the defendants were not valid under the “stranger to the deed” rule. In the second cause of action, the plaintiffs sought a declaration, in the alternative, inter alia, that the rights of first refusal required the defendants to match all of the “terms and conditions” of the contemplated sale to the Town, including the requirement that the subject parcels would be preserved as open space in accordance with the restrictions contained in Town Law § 64-e. Prior to discovery, the plaintiffs moved for summary judgment on their complaint. The defendants opposed the motion, arguing that they held valid rights of first refusal and that they were not obligated to match the Town’s intended use of the subject parcels in order to exercise those rights. In an order dated June 25, 2015, the Supreme Court, inter alia, denied that branch of the plaintiffs’ motion which was for summary judgment on so much of the first cause of action as sought a declaration that the rights of first refusal held by the defendants were void under the stranger to the deed

The Supreme Court properly denied that branch of the plaintiffs’ motion which was for summary judgment declaring that the rights of first refusal held by the defendants were not valid under the stranger to the deed rule. “[T]he long-accepted rule in this State holds that a deed with a reservation or exception by the grantor in favor of a third party, a so-called ‘stranger to the deed’, does not create a valid interest in favor of that third party” (Dichter v Devers, 68 AD3d 805 , 807 [2009], quoting Matter of Estate of Thomson v Wade, 69 NY2d 570 , 573-574 [1987]; see Tuscarora Club of Millbrook, N.Y. v Brown, 215 NY 543 [1915]). Contrary to the plaintiffs’ contention, a right of first refusal does not constitute a “reservation” falling within the ambit of that rule. A “reservation” is “always of something issuing, or coming out of, the thing or property granted, and not a part of the thing itself” (Borst v Empie, 5 NY 33 , 38 [1851]; see Craig v Wells, 11 NY 315 , 320 [1854]; Las-Daub Realty Corp. v Fain, 214 App Div 8 [1925]; 5-51 Warren’s Weed, New York Real Property § 51.01 [5th ed 2015]). In practice, a “reservation” refers to an interest that touches the land, such as a right to use, occupy, profit from, or enjoy the land being conveyed (see e.g. Loch Sheldrake Assoc. v Evans, 306 NY 297 [1954]; Tuscarora Club of Millbrook, N.Y. v Brown, 215 NY 543 [1915]; Borst v Empie, 5 NY 33 [1851]; Dichter v Devers, 68 AD3d 805 [2009]; Adirondack Park Agency v Bucci, 2 AD3d 1293 [2003]; Sganga v Grand, 1 AD3d 342 [2003]; Lechtenstein v P.E.F. Enters., 189 AD2d 858 [1993]; De Bourbon v Engelberg, 162 AD2d 872 [1990]; Matter of Bartholomew v Horan, 37 AD2d 643 [1971]). A right of first refusal, on the

The Supreme Court also properly denied that branch of the plaintiffs’ motion which was for summary judgment declaring that the defendants are required to preserve the subject parcels as open space in accordance with the contract of sale with the Town in order to exercise their rights of first refusal, on the ground that the controversy at issue was not justiciable. Pursuant to CPLR 3001, “[t]he supreme court may render a declaratory judgment. . . as to the rights and other legal relations of the parties to a justiciable controversy.” “To constitute a ‘justiciable controversy,’ there must be a real dispute between adverse parties, involving substantial legal interests for which a declaration of rights will have some practical effect” (Chanos v MADAC, LLC, 74 AD3d 1007 , 1008 [2010], quoting CPLR 3001; see American Ins. Assn. v Chu, 64 NY2d 379 , 383 [1985]; James v Alderton Dock Yards, 256 NY 298 , 305 [1931]; TriState Sol-Aire Corp. v County of Nassau, 156 AD2d 555 [1989]). Here, the rights of first refusal obligated the plaintiffs to provide the defendants with written notice by certified mail “stating that the [plaintiffs] ha[ve] received a bona fide offer for the Land,” after which the defendants would have 10 days “to agree to purchase the land upon the same terms and conditions as specified in the offer.” While the plaintiffs have entered into a contract for the sale of the subject parcels, they have not yet provided the defendants with the required written notice or otherwise afforded them the opportunity to purchase the subject parcels (see Cipriano v Glen Cove Lodge #1458, 1 NY3d at 59-60 ; New York Tile Wholesale Corp. v Thomas Fatato Realty Corp., 115 AD3d 829 , 831 [2014]). Absent such notice

The plaintiffs’ remaining contentions either need not be reached in light of our determination or are without merit.

Mastro, J.P., Leventhal, Maltese and Brathwaite Nelson, JJ., concur.