DEDICATED TO LEGAL EXCELLENCE SINCE 1908 Vol. 28 No. 7April 2013website: www.scba.org

SUFFOLK LAWYERTH

E

THE OFFICIAL PUBLICATION OF THE SUFFOLK COUNTY BAR ASSOCIATION

_________________By Scott M. Karson

The 75th Midyear Meeting of theAmerican Bar Association was held Feb.7-11, 2013, at the Hilton Anatole Hotel, inDallas, Texas. I attended the meeting asthe Suffolk County Bar Association dele-gate to the ABA.The ABA’s policy-making body, the

550-member House of Delegates, met onMonday, Feb. 11, 2013, with Robert M.Carlson of Montana presiding as Chair ofthe House.Welcoming remarks to the House were

delivered by United States Senator KayBailey Hutchison of Texas, who wel-comed the House to Dallas and thankedthe House for its leadership in maintaining

the integrity of theprofession and ensur-ing the quality ofjudges. She reflectedon her travels abroadand stated that thereis no democracywithout the rule oflaw and an indepen-dent judiciary.Following Senator

Hutchison, Mr. Carlson,as Chair of the House,spoke about Law Day 2013. This year’stheme Realizing the Dream: Equality forAll, connects Law Day to the 150thAnniversary of Abraham Lincoln’sissuance of the Emancipation Proclamationand the 50th Anniversary of Martin LutherKing’s I Have a Dream speech. Mr.Carlson encouraged state and local barsacross the country to participate in LawDay activities and hopes that all membersof the House will encourage this importantparticipation.The Honorable Myron T. Steele,

President of the Conference of ChiefJustices, began his remarks by acknowl-edging the victims of the courthouseshooting that had occurred in his State of

PRESIDENT’S MESSAGEBAR EVENTS

SCBA President’sreminders and a roundup______________By Art Shulman

As this column was being edited for submission, thesad news was delivered that Steve Ceparano, belovedhusband of Dorothy Ceparano, our Academy of LawExecutive Director, had died. During the past few weeks,with Dorothy ever at his side, Steve had endured greatpain, underwent surgery and struggled to recover. To Dorothy, their daughterDonna, grandchildren Samantha, Mandy and Alana, Dorothy’s supportive andcaring brother-in-law and sister-in-law, and your extended family, my deepestsympathy.During the course of my term as president in addition to attending numerous

New York State Bar and other local bar association functions and meetings withother bar association leaders, I have attended many of the SCBA’s committeemeetings to learn firsthand the needs of our membership and have worked close-ly with my Executive Committee and Board of Directors in addressing the con-cerns of our membership.As increased competition and new regulations imposedupon attorneys are constantly making it harder to practice law, the ExecutiveCommittee, Board of Directors and I welcome suggestions from our member-ship. The leadership of the SCBA is committed to making the lives of our mem-bership easier and more productive.We owe our gratitude to our colleagues in the Criminal Bar Association for

their joint participation with the SCBA regarding the establishment of the newTraffic and Parking Violations Agency (TPVA) and in sponsoring a joint CLElunch and learn with our Academy of Law on March 20 at the SCBA prior tothe scheduled April 1 implementation of the TPVA. This CLE will be extreme-ly helpful in preparing our members for dealing with the new procedures being

ABA gathers in Dallas for 2013 Midyear Meeting

(Continued on page 22)

(Continued on page 8)

PhotobyArtShulm

an

The Surrogates Court Committee held a meeting with Academy of Law program cred-it on March 12 on “Tips for allocating a fiduciary’s’ legal fees against a distribute ben-eficiary in a contested matter” led by speaker John P. Graffeo, Esq.

Arthur Shulman

Scott M. Karson

FOCUS ON

TRUSTS &ESTATES

SPECIAL EDITION

INSIDE…APRIL 2013FOCUS ON

TRUSTS & ESTATES

Litigation material examined..........7Estate planning with ART................5Wills, trusts and estates....................6Applying the 3/2 rule.......................8______________________________

Zydeco at Installation Dinner ........10Meet your SCBA colleague .............3Days and nights in Bronx ..............14SCBA photo album...................12-13Brehon Society to honor Spota........2______________________________

Legal Articles

ADR ...............................................17Bench Briefs ....................................4Consumer Bankruptcy ...................16Court Notes ......................................4Health and Hospital (Fouassier) ....17Health and Hospital (Kutner) ........19Land Title.......................................18Landlord Tenant .............................19Legal Research and Writing ..........15Practice Management.....................11Pro Bono ........................................16Real Estate .....................................18Technology.......................................9Vehicle and Traffic.........................13Who’s Your Expert.........................20Worker’s Compensation.................21______________________________

Among Us ........................................7Calendar: SCBA ..............................2

Academy Happenings2013 Matrimonial Law SeriesCross Examination: A primer for the FamilyLawyerMonday, April 1Bar CenterEthical Practice ManagementLunch ‘n LearnMonday, April 8, noonBar CenterEast End Bridgehampton National BankElder Law Program by George RoachWednesday, April 17, 6 to 9 p.m.Bar CenterMockery of a Real Estate ClosingLunch ‘n LearnWednesday, April 24, noonBar CenterCall the Academy for further information on theseprograms.Annual MeetingMay 6, at 6 p.m.Bar CenterInstallation Dinner DanceFriday, June 7, at 6 p.m.Cold Spring Country Club, HuntingtonThe dinner will be an occasion to honor and installthe new SCBA President Dennis R. Chase, Officers,and Directors. $135 pp.

THE SUFFOLK LAWYER — APRIL 201318

____________________By Lance R. Pomerantz

A recent case out of the ThirdDepartment1 hints at a hidden risk for buy-ers who use engineers, expediters, archi-tects or other “helpers” to assist with theirreal estate matters.

The facts of GibeaultIn 2007, the County of Saratoga hired

an engineering firm, Malcolm Pirnie, Inc.,(“Pirnie”) for the purpose of “assisting theCounty in acquiring easements … fromreal property owners to install [a] water …line.” Once the easements were purchasedfrom the record title-holders, the countyassigned the easements to the SaratogaCounty Water Authority. Constructionand installation of the water line com-menced in 2008. Before and during con-struction, Gibeault, an adjacent propertyowner, asserted ownership to a portion ofthe property over which the authorityclaimed that it had valid easements. Afterinstallation was complete, Gibeault“filed”ii a correction deed purporting tochange his description. The changeddescription would result in certain of theauthority’s easements traversing theGibeault property.3

The claims of the partiesThe authority brought an RPAPL Article

15 action seeking a declaration that it hadunfettered access to the easements, as wellas an injunction and damages. Gibeaultcounterclaimed, asserting ownership ofthe disputed property, along with othercauses of action. The authority then assert-ed a third-party action against Pirnie,

claiming it was negligent in themanner in which it obtained theeasements. Pirnie sought dis-missal and the Supreme Courtdenied the motion. The ThirdDepartment panel affirmed.In support of its motion,

Pirnie pointed out that SupremeCourt had expressly found that asearch of the public records andan examination of the chains oftitle to the subject propertywould not have revealed the Gibeault titleclaims. In response, the authority asserted

“that the Gibeaults put MalcolmPirnie on notice of their claims ofownership of the subject property andMalcolm Pirnie did not do enoughoutside the search of the public docu-ments to ascertain the proper bound-ary lines” (emphasis supplied).

The panel held that the assertion was suf-ficient to support a prima facie claim of neg-ligence. In addition, Pirnie submitted anaffidavit from a surveyor that outlined thesteps that should be taken-in addition tosearching the public records-when ease-ments are acquired from landowners. Thesurveyor concluded that those steps werecompleted in this instance. Nevertheless, theThird Department found that Gibeault hadproffered sufficient facts to support the infer-ence that “Malcolm Pirnie did not doenough to ascertain the appropriate bound-ary lines as a result of the Gibeaults’ claims.”

Why is this worrisome?Clearly, Pirnie thought it had taken all

reasonable steps to determinethe location of the easementsand the identities of the ownersfrom whom easements wouldneed to be obtained.The opinion is silent as to

whether the county hadobtained title insurance on theeasements. For the sake of dis-cussion, let’s assume that it had.If it is ultimately found thatPirnie “did not do enough out-

side the search of the public documents“to ascertain the proper boundary lines orownership interests, could the insuredhave a viable claim under the policy?The answer to that question hinges, in

large part, on the applicability ofExclusion From Coverage 3(b) in the2006 ALTA Owners Policy. That provisionexcludes from coverage

Defects, liens, encumbrances, adverseclaims, or other matters … not Knownto the Company, not recorded in thePublic Records at Date of Policy, butKnown to the Insured Claimant andnot disclosed in writing to theCompany by the Insured Claimant….

Since Pirnie was engaged for theexpress purpose of “assisting the county inacquiring easements,” its knowledge ofadverse claims might well be imputed tothe county.iv As such, Gibeault’s off-record assertions could plausibly be con-strued to be “adverse claims, or other mat-ters … not recorded … but known to theInsured…” and, hence, excluded frompolicy coverage. In addition, if Pirnie has

an affirmative duty to do more than a pub-lic records search and comply with localsurveying practices, might that duty alsobe imputed to the buyer, with the sameexclusionary effect?

Better safe than sorryProposed buyers frequently engage the

services of various “helpers” in connec-tion with the acquisition of real estate.The engagement should spell out thehelper’s obligation to promptly and accu-rately report all matters it discovers thatmight impair title. Early and completedisclosure will permit counsel to workwith the title insurer in crafting a policythat delivers the coverage the buyerexpects to receive.

Note: Lance R. Pomerantz is a sole prac-titioner who provides expert testimony,consultation and research in land title dis-putes. He is also the publisher of the wide-ly read land title newsletter ConstructiveNotice. For more information, please visitwww.LandTitleLaw.com.

1 Saratoga County Water Authority v.Gibeault, 2013 NY Slip Op 1120 (3rd Dept.,February 21, 2013).2 The opinion uses the word “filed.” Morelikely, the deed was recorded, rather than filed.3 It is unclear whether the “correction deed”was a true correction deed from the originalgrantor, or a unilateral one, from Gibeault toGibeault, which would actually be ineffectiveto change the description. For purposes of thelawsuit, however, it was sufficient to create acloud on the Authority’s title.4 The opinion does not characterize the parties’precise legal relationship.

Choose your helpers wisely

Lance R. Pomerantz

________________ By Andrew M. Lieb

An Industrial Development Agency(IDA) is a public benefit corporationwhose purpose is to facilitate economicdevelopment in specific localities. An IDAattempts to attract, retain and expand busi-nesses within their jurisdiction through theprovision of financial incentives to privateentities. The incentive categories availableto an IDA that may be utilized to attractbusinesses include property tax abate-ments, mortgage recording tax exclusions,and state / local sales tax exemptions.Additionally, an IDA can offer financingthrough tax exempt bonds. These financialcategories are coupled with an IDA’s abil-ity to help a business navigate the nuancesof local government from PlanningBoards to the County’s Health Departmentwhen getting a project underway. Interestingly, IDAs do not just attract

new businesses with these great incentives,but they also support projects to expandand / or renovate a business’s current oper-ations or to purchase / build a new or addi-tional location within the IDA’s jurisdic-tion. Moreover, these incentives are notrestricted to businesses that own their ownbuildings and they are instead, also avail-able to businesses that lease their spaces. Don’t IDAs sound like the type of thing

that your clients would really like you toleverage for them? Also, in the macro, Suffolk County needs

to attract more businesses to our county sothat there are more jobs and resources forour local citizens. While our economy is

thankfully rebounding, a drivethrough many of our downtownsand community centers willreveal a plethora of vacant com-mercial buildings that need to befilled with businesses and jobs.Further, the best tool that ourcounty has to attract businesses isour network of local IDAs. InSuffolk County, we not only havea County IDA, but also localIDAs for many of our towns suchas Brookhaven, Riverhead,Babylon and Islip. While this may soundredundant, the Suffolk County IDA general-ly respects the jurisdiction of establishedTown IDAs and does not interfere with theTown IDAs when working with businessesin their jurisdiction and instead, fills a nec-essary void for the many towns in our coun-ty that do not operate their own IDA. Thiswas one of the many great facts that yourauthor learned when the leadership of theBrookhaven IDA was kind enough to serveas a guest speaker at a recent Real PropertyCommittee meeting to the Suffolk Bar.Additionally, the Brookhaven IDA

explained how the sales tax exemption,discussed above, could be applied evenwhen a business does not seek to move,expand or modify its operations. You see,while a sales tax exception is important toavoid a great deal of costs for constructionmaterials, it is also applicable for the pur-chase of new equipment, particularly forthe research and development that is need-ed for a business in the technology sector. Therefore, it is quite troubling that in

Governor Cuomo’s 2013-2014State Budget, he proposed tolimit the categories of businessto which IDAs can offer StateSales Tax benefits. Currently,there are certain restrictions forretail projects, but those restric-tions and others are generallydealt with by giving a lot of dis-cretion to the local IDA.Furthermore, the Governor’sBudget also limited the busi-nesses that could receive State

Sales Tax abatements to those that are eli-gible to receive New York’s Excelsior JobsTax Credits. Additionally, IDA projectsinvolving State Sales Tax abatementswould require the approval of the RegionalEconomic Development Council andEmpire State Development. Even then, theabatement would be received in the formof a tax refund at a later date, instead of asa tax abatement at the time of the purchase.This is a great curtailment of both thelocalized model for IDAs in strengtheningtheir own communities and to the tools thatthese local IDAs can use to accomplishthis difficult task. Currently, IDAs are effective because

they not only understand the matrix oftheir communities, but they also can createrealistic requirements that are tailoredthereto without the stringent requirementsthat are proposed by the governor, such asthe minimum new jobs requirements thatthe Excelsior Program requires. To illus-trate, in the category of “Back OfficeOperations” a company would need, under

the Excelsior Program, to create one hun-dred and 150 net new jobs to qualify.Where in Suffolk County are businessesregularly creating 150 net new jobs? Thereare very few places that can even sustainsuch a project. These restrictions on an IDA’s tools to

create economic development are trou-bling in a climate where we need the IDAsto be the most effective. Instead of reduc-ing the tools available to an IDA, perhapsthe governor should propose to offer IDAsadditional tools to consolidate the localdevelopment process in streamlininggrowth in our communities or perhaps thegovernor should provide IDAs with grantsfor start-up businesses or perhaps the gov-ernor should provide IDAs greater influ-ence over our State University system tomatch talent with business needs. Whilethese suggestions are just provided asillustrations, the point is that we need ourIDAs and we need them to be the strongestwhen our local economies are the weakest. If you believe that the tools available to

IDAs should be strengthened in a time whereour communities need to draw businesses tocreate jobs, contact your local State Senatorand Assemblyperson to voice your opinion.

Note: Andrew M. Lieb is the ManagingAttorney at Lieb at Law, P.C., a law firmwith offices in Center Moriches andManhasset. Mr. Lieb serves as Co-Chair tothe Real Property Committee of the SuffolkBar Association and served as this year’sSpecial Section Editor for Real Property inThe Suffolk Lawyer.

Dear Governor Cuomo - strengthen our IDAs

LAND TITLE

REAL ESTATE

Andrew M. Lieb