Opinion
565-P-2005/C.
Decided February 3, 2011.
Michael M. Lippman, Esq., for Richard Trupin and Ann Beth Trupin, co-executors, petitioners.
In this SCPA 1809 proceeding, the executors move for summary judgment on their petition seeking to disallow the respondent's claim for the return of a $100,000 down payment held in escrow by the petitioners' attorney pursuant to a contract of sale for realty. The respondent opposes the motion and cross-moves for summary judgment on her claim for the return of the down payment.
On or about September 5, 2007, the parties entered into a contract for the respondent to purchase from the estate two parcels of realty located in the Bronx, an improved lot and an adjacent vacant lot. The respondent made a $100,000 down payment on the $1,625,000 purchase price. The contract had a mortgage contingency clause pursuant to which the respondent had a period of time during which she could cancel the contract if she could not obtain a mortgage commitment.
It is conceded that the respondent had difficulty obtaining a mortgage for both lots. It appears the respondent was advised by mortgage brokers to seek a "stated income loan," whereby lenders require little or no verification, because they were of the opinion that the respondent would not qualify for conventional financing due to her circumstances, including that she had a large mortgage on a different property and was self-employed. After such loans became increasingly difficult to obtain due to the downturn in the economy, the parties replaced the original contract by executing a separate undated contract for each lot containing a proposed closing date of April 18, 2008. This was done because the parties believed that two mortgages in smaller amounts would be easier to obtain than one large mortgage. In these undated contracts, which appear to have been signed in early February, 2008, the respective purchase prices are $975,000 for the improved lot and $650,000 for the vacant lot. The parties applied the entire $100,000 down payment to the improved lot, and no down payment was required in the new contract for the unimproved lot. Accordingly, the parties' submissions focus on the new contract for the improved lot.
The pertinent provisions of the February 2008 contract for the improved lot are found in paragraph 8. Paragraph 8 (a) provides that the obligation of the respondent to buy the property was conditioned upon the issuance of a written commitment for a mortgage loan in the sum of $875,000 from an institutional lender, on or before 60 days after a fully executed copy of the contract was given to the respondent or the respondent's attorney in the manner provided in paragraph 8 (j) or 25 (the "commitment date"). Paragraph 8 (b) sets forth the respondent's obligations, including making a prompt application for a loan, furnishing accurate and complete information, pursuing the application with diligence and cooperating in good faith with the institutional lender(s). Paragraph 8 (d) allows the respondent to cancel the contract if all institutional lenders to whom applications were made deny the applications in writing prior to the commitment date, and paragraph 8 (e) permits the respondent to "cancel this contract by giving Notice to Seller within 5 business days after the Commitment Date . . ." if no mortgage commitment issued on or before the commitment date. Pursuant to paragraph 8 (f), the down payment was to be returned if the contract was properly cancelled, and pursuant to paragraph 8 (g), forfeited if it was not cancelled and the respondent failed to close. Paragraph 8 (j) states that the respondent is deemed to have received a fully executed copy of the contract on the third business day following the date it was mailed to her while paragraph 25, as amended by paragraph 35 of the rider, provides for any notice to be in writing and either delivered "personally, by fax transmission, or sent by overnight courier or certified mail, return receipt requested."
In a letter dated March 2, 2008, Brian Leibowitz, one of the mortgage brokers working with the respondent, notified the respondent that his company could not find a suitable loan for her due to the changes in the economy. On April 21, 2008, the petitioners' counsel mailed the respondent's counsel a letter establishing a "time of the essence" closing date of May 23, 2008 ("law date"). On the law date, the respondent's counsel wrote a letter stating, in relevant part:
"Reference is made to your letter of April 21, 2008 . . . Please be advised that [my client] has been unable to obtain the mortgage required under the contracts and therefore elects to cancel and have the down payment refunded."
The petitioners annex transcripts of the depositions of three mortgage brokers who attempted to obtain mortgages for the respondent between the fall of 2007 and July, 2008, including that of Brian Leibowitz, who signed the March 2, 2008 mortgage denial letter. One of the brokers stated that the respondent did not respond to five or ten calls at an undisclosed time when his company was "ready to move forward" (Eisenman transcript at 11), while another broker testified that she never saw the replacement contracts since she had worked on obtaining a mortgage for the original contract, but at some point, the respondent instructed her to try to find a mortgage for only the value of the improved lot (Franciosa transcript at 8-12). Mr. Leibowitz testified that the respondent cooperated with him (Leibowitz transcript at 36).
The petitioners, relying upon the brokers' depositions, contend that the respondent materially breached paragraph 8 (b) of the February, 2008 contract for the improved lot by failing to pursue a mortgage application with diligence and failing to cooperate in good faith with the lenders to obtain a mortgage commitment. They also contend that the respondent failed to provide them with the mortgage denial letter within the time provided in either paragraph 8 (d) or (e), and the fact that, thereafter, one of the executors assisted the respondent in her attempts to obtain a mortgage is irrelevant. In support, they rely on Regal Realty Serv., LLC v 2590 Frisby, LLC ( 62 AD3d 498), wherein the Appellate Division, First Department upheld the seller's right to retain the down payment despite the seller's alleged efforts to help the buyer find financing after the expiration of the mortgage contingency period.
The respondent, citing, inter alia, Dazzo v Kilcullen ( 56 AD3d 415), contends that the petitioners failed to prove that the 60-day mortgage contingency period provided for in the February, 2008 contract for the improved lot ever commenced. She notes that, under paragraph 8 (a), the "commitment date" period of 60 days does not commence until an executed copy of the contract was delivered to the respondent as provided in paragraph 8 (j) or paragraph 25, and here, the petitioners failed to state on what date, if ever, a fully executed contract was delivered as required by those paragraphs. Consequently, the respondent asserts that her May 23, 2008 letter electing to cancel the contract was timely under either paragraph 8 (d) or (e) because it was made before the "commitment date," as the petitioners failed to prove that they ever took the necessary steps to fix a "Commitment Date." The respondent, citing, inter alia, Rose v Spa Realty Assoc. ( 42 NY2d 338) also argues that the petitioners should be estopped from enforcing the time period stated in the February 2008 contract given that they did not enforce the original 2007 contract, one of them was the moving force and continued to assist her in the attempts to obtain a mortgage after the law date, and they were aware by that time that she had been unable to obtain a mortgage and that a mortgage was never obtained despite her efforts and those of one of the petitioners.
Summary judgment cannot be granted unless it clearly appears that no material issues of fact exist (see Phillips v Joseph Kantor Co., 31 NY2d 307; Glick Dolleck, Inc. v Tri-Pac Export Corp., 22 NY2d 439). The movants must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form to demonstrate the absence of any material issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320; Friends of Animals, Inc. v Associated Fur Mfrs. Inc., 46 NY2d 1065). When the movants have made out a prima facie case, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact (see Zuckerman v City of New York, 49 NY2d 557). Summary judgment is a drastic remedy which requires that the party opposing the motion be accorded every favorable inference and issues of credibility may not be determined on the motion but must await the trial (see F. Garofalo Elec. Co., Inc. v New York Univ., 300 AD2d 186).
Here, the respondent correctly notes that the petitioners failed to set forth the date, or even the month, that they delivered a fully executed copy of the contract in any manner that was permissible under the contract to start the period to calculate the "commitment date." On the other hand, the respondent did not present any proof, in admissible form or otherwise, to establish either the date that she received a fully executed copy of the contract in any manner permissible under the contract or that no such delivery was ever made.
Where a contract provides that the calculation of the "commitment date" starts from the date that a duly executed copy of the contract was delivered by the seller in a manner permissible under the contract, and neither the seller nor the purchaser presents proof, in admissible form, to establish either the date that such delivery was made or that no such delivery was ever made, neither party is entitled to summary judgment on the issue of whether the purchaser's cancellation of the contract was timely (Dazzo v Kilcullen, 56 AD3d at 415). Thus, both the motion and cross motion must be denied with respect to the issue of the timeliness of the cancellation.
The court also finds that issues of fact preclude granting summary judgment in favor of either side on the other issues raised. The petitioners' contention that the respondent did not proceed in good faith to obtain a mortgage is disputed by the deposition testimony of at least one of the brokers. Furthermore, it is not clear whether the deposition testimony of another broker concerning respondent's failure to return his telephone calls refers to a period before or after the "law date" set by the petitioners. Obviously, if this testimony refers to a period after the "law date," it does not establish the respondent's lack of good faith prior to the "commitment date." The petitioners correctly assert that Regal Realty Serv., LLC v 2590 Frisby, LLC ( 62 AD3d at 498) clearly stands for the proposition that the seller's assistance in helping the purchaser in attempting to obtain a mortgage after the respondent's time to cancel the contract for failure to obtain a mortgage expired did not, under the facts of that case, extend the purchaser's time to cancel beyond the time provided in the contract. Nonetheless, this issue is not even reached herein unless it is established that the reespondent's time to cancel the contract had, in fact, expired. Under these circumstances, the court will not preclude the respondent from seeking to establish at trial that sufficient factual differences exist between the instant case and Regal Realty Serv., LLC v 2590 Frisby, LLC ( 62 AD3d at 498) to ultimately warrant the conclusion that equity demands a different result in this case.
Accordingly, for the reasons stated herein, this decision constitutes the order of the court denying both the motion and cross motion for summary judgment. All counsel are directed to appear for a conference at the calendar call of March 14, 2011. The parties are also directed to either appear or be available by telephone. The Chief Clerk is to mail a copy of this decision and order to all counsel.
Proceed accordingly.