In An RPAPL 881 Proceeding, Appellate Division Finds That A Licensor May Be Entitled To Recover Damages When Licensee Fails to Provide Proof of Sufficient Insurance[1]
The adequacy of the insurance required to be provided by a property owner seeking to obtain a license to enter onto an adjacent property in order to perform construction work on his or her own property is one of the most important issues in negotiating a license. The Appellate Division has now indicated that the failure to provide proof of sufficient insurance may allow the adjacent property owner to obtain money damages, including attorney’s fees in a proceeding commenced pursuant to RPAPL 881 to obtain a license to perform the construction work.
In Matter of 269-273 14th St NY Corp. v. Stein[2], the Petitioner (“Licensee”) commenced a proceeding under RPAPL 881[3] to obtain a license to temporarily enter premises owned by the adjacent neighbor (“Licensor”) “for the purpose of demolishing existing buildings and constructing a new building on the adjacent property.”[4] In March 2018, the license was granted upon the condition, among others, that Licensee maintain insurance to protect the Licensor.
Licensee commenced a related action against Licensor “to recover damages for delay in negotiating an access agreement relating to the license and for bad faith conduct preventing the petitioner from performing its work”[5] Licensor asserted counterclaims alleging that Licensee caused damages to their property.[6]
In the RPAPL 881 proceeding, Licensor sought to suspend Licensee’s license “for failure to provide proof of required insurance coverage.” [7] Licensee moved to reinstate and extend the term of the license. The Supreme Court denied Licensor’s application for damages as a result of its failure to timely provide proof of sufficient insurance coverage.[8] However, the Appellate Division found that Licensor “may have incurred damages, including attorneys’ fees, which are permitted as damages under RPAPL 881, as a result of the petitioner’s failure to timely provide proof of sufficient insurance coverage.”[9] The Appellate Division remanded the case back to the Supreme Court to address Licensor’s claim “for an award of damages and attorneys’ fees”.[10]
The important takeaway from this case is that a licensee seeking a license must provide proof of sufficient insurance to protect the licensor. Failure to do so promptly may result in damages incurred by the licensor, including, but not necessarily limited to, attorneys fees.
Whether you are the property owner seeking the license or the adjoining property owner and whether you seek to negotiate a voluntary license or pursue a RPAPL § 881 proceeding, Jaspan Schlesinger Narendran LLP can help you address the many issues related to construction on boundary lines and the issuance of temporary licenses to perform such work. If you need assistance, please contact Christopher E. Vatter at cvatter@jaspanllp.com or Laurel R. Kretzing at lkretzing@jaspanllp.com.
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Christopher E. Vatter is a partner in Jaspan Schlesinger Narendran LLP’ s Municipal and Litigation Practice Groups, where he represents both private and municipal clients. Mr. Vatter focuses his practice in the areas of complex commercial litigation, municipal law, personal injury defense, construction law and banking litigation.
Laurel R. Kretzing is a partner in Jaspan Schlesinger Narendran LLP’ s Municipal and Litigation Practice Groups, where she represents both private and municipal clients in a broad range of matters including personal injury defense, litigated real estate matters, construction matters and civil rights and municipal litigation.
[1] The material in this blog is meant only to provide general information and is not a substitute nor is it legal advice to you.
[2] 2023 N.Y. App. Div. LEXIS 5776 (2d Dep’t 2023).
[3] “RPAPL § 881 provides that ‘[w]hen an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license.’” Normanus Realty LLC v. 154 E. 62 LLC, 2023 N.Y. Misc. LEXIS 22715, *4 (Sup. Ct. N.Y. Cty. 2023).
[4] Matter of 269-273 14th St NY Corp. v. Stein, 2023 N.Y. App. Div. LEXIS 5776, *2.
[5] Id. at *2-3 (“The appeal from so much of the order as granted the petitioner’s [Licensee’s] motion to reinstate the license and denied that branch of Phung’s [Licensor’s] cross-motion which was to revoke the license nunc pro tunc is dismissed as academic because the license expired on December 26, 2020”).
[6] Id.
[7] Id. at *3.
[8] Id.
[9] Id. at *4.
[10] Id. at *5.