Opinion
01425204.
Decided February 16, 2005.
Motion pursuant to CPLR 3212 by the plaintiff Asthma Ahmad for, inter alia, summary judgment and for the imposition of sanctions pursuant to 22 NYCRR § 130-1.1.
Cross motion pursuant to CPLR 3212 by the defendants Atefeh Pahlavan, Mohsen Pahlavan and Ted Gosman, Esq., for summary judgment dismissing the amended verified complaint and an order directing the release of certain escrowed funds to the defendants Pahlavan.
On May 6, 2004, the plaintiff Asma Ahmed as purchaser entered into a written contract of sale with the defendant-sellers, Atefeh and Mohsen Pahlavan, for the purchase of a one-family residence located in East Hills, New York (Pltff's Exh., "A").
Upon executing the contract, the plaintiff made a $60,000.00 deposit as a down payment, which sum was held by the defendants' counsel (codefendant Ted Gosman), in escrow.
Notably, and pursuant to 16[b] of the contract of sale, the contract and the purchaser's obligations thereunder were contingent upon, among other things, the delivery by "Seller to Purchase of a valid and subsisting Certificate of Occupancy * * * covering the building(s) and all other improvements located on the property * * *."
The contract itself scheduled the closing for July 15, 2004, although it appears that shortly after the contract was executed, the plaintiff allegedly apprised the defendant that she had changed her mind about purchasing the property (Defs' Exh., "B").
In response, the defendants apparently agreed to an arrangement under which the plaintiff would have the right to assign the contract of sale to a third party (M. Paz Letter [June, 2, 2004]).
Moreover, in early June, the defendants offered to accommodate the plaintiff by agreeing to cancel the contract in exchange for which the plaintiff would forfeit $20,000.00 of the $60,000.00 down payment (Defs' Exh., "C"). Neither proposal was accepted or implemented, however, since the plaintiff ultimately confirmed that he intended to proceed with the transaction (Defs' Exh., "D").
In early July, defense counsel allegedly spoke to plaintiff's counsel and expressed concerns about whether the plaintiffs truly intended to go through with the sale (Pahlavan Aff., ¶¶ 15-16). In response, plaintiff's counsel allegedly recommended that defense counsel issue a "time of the essence" closing letter.
Purportedly in accord with the foregoing recommendation, defense counsel authored a letter dated July 12, 2004, which scheduled the closing for August 16, 2004. The letter provided, inter alia, that "time is of the essence" and that failure to proceed with the closing would result in forfeiture of the plaintiff's down payment (Def's Exh., "G"). The defendants' letter also included a blank signature line at the bottom for the plaintiff to execute and return.
Negotiations proceeded through July of 2004, at which point the plaintiff's title company uncovered a potential objection relating to a "breeze way" at the premises which had apparently been converted to living space without the requisite permits and/or certificate of occupancy ( see, Pltff's Exh.,"E" [July 16 Letter of Code Enforcement Officer, Village of East Hills]). According to plaintiff's counsel, on July 19, 2004, his title company faxed to defense counsel, a copy of a letter by a Town Code enforcement officer describing the problem (Ahmad Aff., at 4).
By facsimile dated July 21, 2004, plaintiff's counsel apprised defense counsel of the potential defect and requested that it be remedied (Defs' Exh., "H").
Thereafter, by letter dated August 4, 2004, plaintiff's counsel wrote to defense counsel acknowledging that "[b]y your letter of July 12, 2004 he closing of this transaction was made 'Time of the Essence'". Counsel further advised that his "client has every intention of proceeding with the above-referenced transaction and will tender the balance of the purchase funds * * * as demanded by you in the aforesaid "'Time of the Essence Letter'" (Ptff's Exh., "A"). The letter went to state, however, that the plaintiff would not accept title without a proper C of O (Pltff's Exh., "F").
According to the defendants, upon receipt of the plaintiff's facsimile concerning the breeze way, they contacted an architect, who on August 7, 2004 drew plans and submitted an application to the Village for a C of O (A. Pahlavan Aff., ¶ 18). However, the defendants contend that the building inspector was apparently out of town on business and was not scheduled to return until after the August 16 closing a date (A. Pahlavan Aff., ¶ 19). In total, they claimed to have expended over $1500.00 in making and expediting the permit application (A. Pahlavan Aff., ¶ 18).
By letter dated August 12, 2004, defense counsel referencing the plaintiff's August 4 letter faxed the plaintiff's counsel that the C of O would probably not be forthcoming by the August 16 closing date since the Inspector was out of Town. Counsel also noted that pursuant to Contract ¶ 21[b] (and Rider ¶ 43), he was entitled to a brief adjournment to secure the C of O, which would take only a few additional days (Defs' Exh., "K"), but plaintiff's counsel replied by facsimile that the closing was to occur as scheduled on August 16, 2004 (Def's Exh., "J").
On August 12, 2004, defense counsel replied to plaintiff's facsimile and announced that he was now withdrawing his prior "time of the essence" declaration, but nevertheless intended to make "every effort to expeditiously remedy the title objection * * *."
In yet another facsimile dated August 13, 2004, defense counsel again informed plaintiff's counsel that he was withdrawing his prior declaration that "time was of the essence" (Def's Exh., "M").
By letter dated August 13, 2004, plaintiff's counsel rejected defense counsel's attempt to withdraw his time of the essence designation and further advised that the plaintiffs would not accept title without the C of O (Def's Exh., "N").
By facsimile/letter dated August 14, 2004, defense counsel replied, arguing, inter alia, that: (1) the plaintiff had "anticipatorily" breached the contract by attempting to cancel it in May and June; (2) the "time of the essence" letter was actually written at the request of the plaintiff and was never executed or returned by plaintiff's counsel; (3) the contract/rider authorized a reasonable adjournment to clear the defect; and (4) if the Co of O was not ready by August 16, the closing could still take place, with funds being held in escrow pending receipt of that document (Def's Exh., "O").
Plaintiff's counsel asserts that on the day of the closing, he appeared at the stipulated time at defense counsel's office with a title closer and a representative of the proposed lender, and was informed by defense counsel that the C of O was "being typed" and would be forthcoming shortly (Castellano Aff., at 2). After allegedly waiting four hours, the C of O was not produced and the closing was aborted.
Thereafter, by letter dated August 16, 2004 (the day of the closing and citing a time of 4:30 pm), defense counsel advised that the C of O would not be available for the closing, but if the plaintiff agreed to proceed without it, funds would be held in escrow and the defendants would defendants would offer a $5,000.00 credit towards the purchase price, which was "good for today only" (Def's Exh "P").
By letter dated August 17, 2004, plaintiff's counsel responded, by recounting the previous days' events and advising that since the C of O was not produced for the closing, the plaintiff was therefore cancelling the contract and demanding the return of their down payment (Pltff's Exh., "D").
Subsequently, on August 23, 2004, defense counsel contacted plaintiff's counsel and advised that he was now in possession of the C of O and was interested in scheduling a closing an offer rejected by plaintiff's counsel, who again demanded return of the down payment.
When the defendants declined to return the plaintiff's down payment, the plaintiff Asma Ahmad commenced the within action for recovery of the down payment and stated consequential damages.
The defendants have answered, interposed several affirmative defenses and included counterclaims alleging, in sum, that the plaintiff was in breach of the contract.
Upon the instant notices, the parties move and cross for summary judgment on their respective claims.
The plaintiff contends that the defendants themselves declared that time was of the essence and thereafter failed to appear at the closing with marketable title, thereby establishing that they were in breach of the contract.
"When a contract for the sale of real property does not state that time is of the essence, either party is entitled to a reasonable adjournment of the closing date" ( Bardel v. Tsoukas, 303 AD2d 344 see, Baltic v. Rossi, 289 AD2d 430). However, after the closing date prescribed in the contract has passed, either party may "declare time of the essence by giving a clear, distinct, and unequivocal notice along with a reasonable time for the other party to act" ( Bardel v. Tsoukas; Baltic v. Rossi, supra see, Guippone v. Gaias, 13 AD3d 339 ; Rozenfeld v. Triangle Holdings, Inc., 11 AD3d 668).
"Once time is of the essence, it is of the essence for both parties" ( Stefanelli v. Vitale, 223 AD2d 361, 362) and "each party must tender performance on [the] law day unless the time for performance is extended by mutual agreement" ( Grace v. Nappa, 46 NY2d 560, 565 ; Milad v. Marcisak, 307 AD2d 281, 282 ; Zelmanovitch v. Ramos, 299 AD2d 353). Further, excluding circumstances where an anticipatory breach has occurred ( Moray v. DBAG, Inc., 305 AD2d 472, 473), "a purchaser who seeks specific performance of a real estate contract must demonstrate that he or she was ready, willing, and able to perform the contract ( Moutafis v. Osborne, 7 AD3d 686 see, Gammal v. La Casita Milta, Inc., 5 AD3d 630). In order for a seller of real property to be found in default for failure to provide insurable or marketable title, the purchaser "must first tender performance * * * and demand good title" ( Ilemar Corp. v. Krochmal, 44 NY2d 702, 703; Roman v. Watson, 297 AD2d 319).
Initially, the Court rejects the theory that the plaintiff anticipatorially breached the contract merely because at some point shortly after the contract was executed, she expressed a desire to cancel it (Ans., ¶ 27). Whether she did not do so at some earlier juncture is immaterial, inasmuch as the contract was not cancelled and the parties thereafter chose to proceed with the transaction ( see, Hegner v. Reed, 2 AD3d 683, 884-685).
Nor is it material that the plaintiff's counsel allegedly recommended that the defense counsel issue the time of the essence letter (Ans., ¶ 28). It is undisputed that defense counsel, of his own volition and for his own benefit, executed and delivered the letter, which is unequivocal and clear in its declaration that time was of the essence ( Dub v. 47 East 74th Street Corp., 204 AD2d 145).
The Court also disagrees that the defendants' time of the essence declaration was never accepted or subject to unilateral withdrawal.
Although the letter itself contained a signature line which was never returned in executed form, the parties' course of conduct, and indeed the written correspondence which followed the issuance of the letter leave not doubt that an agreement was struck with respect to the "time of the essence" nature of the proposed closing date. Indeed, the plaintiff's August 4 letter which has not been addressed in the defendants' opposition papers clearly adopted and accepted the "time of the essence" declaration.
The Court does not agree that the defendants lacked adequate or reasonable time to secure the outstanding C of O ( e.g., Hegeman v. Bedford, 5 AD3d 632 ; Woodwork Display Co. v. Plagakis, 137 AD2d 809, 812-813; Perillo v. De Martini, 54 AD2d 691 cf. , Klein v. Opert, 218 AD2d 784).
It is settled that "[w]hat constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case" ( Zev v. Merman, 73 NY2d 781, 783 see e.g., Savasta v. 470 Newport Associates, 82 NY2d 763, 765). Notably, and "[i]ncluded within a court's determination of reasonableness are the nature and object of the contract, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either one, as well as the specific number of days provided for performance ( Zev v. Merman, supra; Oregon Mountain, Inc. v. Soules, 6 AD3d 1193; Hegeman v. Bedford, supra).
Here, while the defendants apparently received notice of the breeze way defect on July 19, 2004, shortly after the time of the essence letter was sent, the plaintiff asserts and the record confirms that the defendants waited some 22 days until August 10, 2004 before filing a formal application with the Village for the C of O (Pltff's Reply, Exh., "M"). Moreover, after the application was submitted, the permit was granted on August 16 and available on August 23 some 13 days after the application was originally submitted. These facts support the conclusion that the defendants had ample time to secure the permit within the time period they themselves designated as determinative had they acted with dispatch.
The Court notes that there is no indication in the record that the defendants promptly requested an adjournment upon notice of the title problem in July prior to the plaintiff's August 4 facsimile confirming the August 16 "time of the essence" closing date. Under these circumstances, the plaintiff "was not obliged to grant a further a adjournment" or "entertain further proposals from defendant[s]" ( Grace v. Nappa, supra, at 567; Sohayegh v. Oberlander, 155 AD2d 436, 438).
The defendants' reliance upon Klein v. Opert, supra ( 218 AD2d 784), is misplaced since the factual circumstances presented there are distinguishable.
In Klien, the defendant delivered a "time of the essence" letter to the plaintiff setting a law date with which he knew the plaintiff could not comply. Here, in contrast, it is the authors of the letter who are attempting to avoid a law date which they themselves designated in their own letter. Further, there is no evidence that the plaintiff was aware of the title defect prior to the title company's July 19 facsimile; or that they acted in bad faith by disclosing it when they did.The defendants' reliance upon contract paragraphs 21 and 43 of the contract and rider paragraph 43, is misplaced. The Court reads these provisions as inapplicable to a closing date scheduled by the defendants themselves in which they have expressly declared that time shall be of the essence a declaration which applies to "both parties" ( Stefanelli v. Vitale, supra, at 362), and which requires that "each party must tender performance on [the] law day unless the time for performance is extended by mutual agreement" ( Grace v. Nappa, supra, at 565; Milad v. Marcisak, supra; Dub v. 47 East 74th Street Corp., supra). In light of Court's determination with respect to the plaintiff's claims neither the defendants' related affirmative defenses nor their counterclaims raise triable issues of fact sufficient to defeat the plaintiff's motion.
Accordingly, since the plaintiff's submissions demonstrate that she was ready, willing, and able to perform the contract on the law date ( see, Ilemar Corp. v. Krochmal, supra), and that the defendants were not the plaintiff could "declare defendant in default and demand return of the contract deposit" (Dub v. 47 East 74th Street Corp., supra), as asserted in the first cause of action.
With respect to the $5,297.00 in consequential damages sought in the second cause of action, the matter shall be set down for inquest at which proof may be adduced with respect to the damage amount claimed.
Under the circumstances, and upon a review of the record and the parties' submissions, the Court declines to assess sanctions against the defendants pursuant to 22 NYCRR § 130-1.1.
Accordingly, it is
ORDERED, that the plaintiff's motion pursuant to CPLR 3212 for summary judgment and/or the imposition of sanctions pursuant to 22 NYCRR § 130-1.1, is granted to the extent that the defendants are directed to forthwith return the plaintiff's down payment and it is further,
ORDERED, the matter shall be set down for inquest at which proof may be adduced with respect to the additional damages allegedly sustained by plaintiffs, and it is further,
ORDERED, that the defendants' cross motion pursuant to CPLR 3212 for summary judgment directing the release of the down payment presently held in escrow by codefendant Ted Gosman, is denied and their cross claims are dismissed.
The foregoing constitutes the decision and order of the Court.