Opinion
2011/2273.
Decided July 19, 2011.
Kenneth M. Stenger, Esq., Vergilis, Stenger, Roberts, Davis Diamond, LLP, Attorneys for Plaintiff, Wappingers Falls, NY.
Michael G. Hayes, Esq., Daniels and Porco, LLP, Attorneys for Defendant, Pawling, NY.
Defendant Heidi Walker moves for an order pursuant to CPLR 3212 granting summary judgment dismissing the complaint. Defendant also seeks an order vacating the Notice of Pendency filed pursuant to CPLR 6514.
Plaintiff Thomas O. Boucher, Jr. cross-moves for an order denying defendant's motion and granting plaintiff summary judgment pursuant to CPLR 3212. Alternatively, plaintiff requests leave pursuant to CPLR 3025 to conform his Complaint to evidence adduced on the parties' respective motions by adding a fourth cause of action seeking money damages in lieu of specific performance. To the extent that such relief is granted, plaintiff also seeks summary judgment on his fourth cause of action and an award of money damages in an amount to be determined by this Court. The following submissions were read: Order to Show Cause — Affidavit of Heidi Walker — Affidavit of Jessica Vinall, Esq. — Affidavit of Lisa Bobko — Affidavit of Michael Hayes, Esq. — Annexed Exhibits 1-7
Defendant's Memorandum of Law in Support of Motion for
Summary Judgment 8
Notice of Cross Motion — Affirmation of Kenneth M. Stenger, Esq. —
Affidavit of Thomas O. Boucher, Jr. — Affidavit of Allan B.
Rappleyea, Esq. — Annexed Exhibits 9-13
Supplemental Affirmation of Kenneth M. Stenger, Esq. — Annexed
Exhibits 14
Memorandum of Law in Support of Plaintiff's Motion and in
Opposition to Defendant's Motion for Summary Judgment 15
Defendant's Reply Memorandum of Law 16
Reply Memorandum of Law on Behalf of the Plaintiff 17
Upon the foregoing papers it is hereby ORDERED that defendant's motion for summary judgment dismissing the complaint against her and vacating the Notice of Pendency is denied. It is further ORDERED that plaintiff's cross-motion for an order granting plaintiff summary judgment awarding him specific performance is granted on condition that plaintiff pay the already agreed upon sale price of $1,500,000 as well as the New York State Transfer Tax and any additional sums needed to clear the property's title of any and all encumbrances. All other requested relief is denied.
The instant contract action arises out of the execution of a real property binder agreement and subsequent dispute over its enforceability. The binder embodied defendant Heidi Walker's agreement to sell three parcels of land known as "Field Pointe Farm" to plaintiff Thomas O. Boucher, Jr. for $1,500,000. The farm consisting of approximately 85 acres of land, a residence, a horse stable with indoor riding arena, and other outbuildings is located on Ward Road in the Town of Pleasant Valley, Dutchess County, New York. In addition, some of defendant's farm equipment was included in the sale.
"Generally, a binder agreement can be enforced as a contract where it identifies the parties, describes the subject property, recites the essential terms and is signed by the party to be charged." ( Ramos v. Lido Home Sales Corp., 148 AD2d 598 (2nd Dept., 1989) citing Birnhak v. Vaccaro, 47 AD2d 915). As long as a writing "embodies all of the essential terms of the agreement", it is enforceable even if a further, "more formal contract" is anticipated. ( 160 Chambers St. Realty Corp. v. Register of New York, 226 AD2d 606, 607 (2nd Dept., 1996) citing Tymon v. Linoki, 16 NY2d 293; Pelletreau v. Brennan, 113 A.D. 806; Peerless Realty Corp. v. Roemer, 154 N.Y.S.2d 70.)
There are numerous Second Department cases in which binders or similar memoranda were found enforceable even where they only identified the parties, property, and price or terms of payment. (See, Birnhak et al. v. Vacarro, 47 AD2d 915 (2nd Dept., 1975); Jill Real Estate, Inc. v. Smyles, 150 AD2d 640 (2nd Dept., 1989); Cohen v. Swenson, 140 AD2d 407 (2nd Dept., 1988); and Mattikow v. United Jersey Mortg. Co., 104 AD2d 973 (2nd Dept., 1984).) Further, "when a contract is unambiguous and clear on its face, the intent of the parties is to be found within the four corners of the writing" ( Harper v. Bard, 147 AD2d 614, 615 (2nd Dept., 1989) citing Teitelbaum Holdings v. Gold, 48 NY2d 51; Carvel Corp. v. Rait, 117 AD2d 485.) "Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing." ( W.W.W. Assocs. v. Giancontieri, 77 NY2d 157, 162 (1990) citing Mercury Bay Boating Club, Inc. v. San Diego Yacht Club, 76 NY2d 256, 269-270.)
Plaintiff and defendant, through their respective real estate agents, engaged in negotiations for the sale of the property during mid-January of 2011. (See, Affidavit of Lisa Bobko, pages 1-2.) On January 29, 2011, defendant's agent offered to sell the property and farm equipment to plaintiff for $1,500,000. ( Id. at 2.) Plaintiff expressed interest in the offer and had his agent draft a binder agreement setting out the basic terms of the deal. ( Id. at 3.) The two-page binder identified plaintiff as the buyer and defendant as the seller; it described the land by listing each parcel's tax lot identification number, acreage, and structures; it described the farm equipment by listing each item; it stated the sales price of $1,500,000 and listed terms of payment; it provided a closing date of "on or about 3/15/2011"; and it contained various other terms as well. (See, Binder, Defendant's Exhibit "C".) Of note, under paragraph 8 of the binder, which is entitled "The Contract", it states: "This agreement is to be binding and remain in full force unless or until the same is replaced or superseded by a further and more complete agreement between the parties hereto" ( Id.)
After reviewing the binder, plaintiff signed and returned it to his agent. (See, Affidavit of Thomas O. Boucher, Jr., page 2.) Plaintiff's agent then forwarded the binder to defendant's agent, who in turn forwarded it to Attorney Jessica L. Vinall, defendant's attorney at the time. (See, Affidavit of Jessica L. Vinall, Esq., page 2.) On February 14, 2011, Attorney Vinall reviewed the binder with defendant. ( Id. at 3.) Upon review, defendant made two handwritten changes to the binder; the first corrected defendant's physical address and the second changed a term of the agreement. ( Id. at 4.) Defendant initialed next to her modification and signed the binder. ( Id.) Defendant's agent faxed the fully executed binder to plaintiff's agent later that day. ( Id. at 5.)
Following the execution of the binder, Attorney Allan B. Rappleyea, plaintiff's attorney for the transaction, began negotiating with Attorney Vinall in an attempt to reach a superseding contract. (See, Affidavit of Allan B. Rappleyea, Esq., page 1.) On February 22, 2011, Attorney Vinall sent Attorney Rappleyea a proposed superseding contract of sale. (See, Vinall Aff., page 9.) Attorney Rappleyea exchanged a proposed rider on the following day. ( Id.) The exchange led to further negotiations over various additional terms. ( Id. at 10.)
On February 23, 2011, defendant realized that the sale price of $1,500,000 would be insufficient to satisfy the mortgages on the property and pay her closing costs. (See, Affidavit of Heidi Walker, page 8.) This realization came 9 days after defendant executed the binder and one day after Attorney Vinall sent Attorney Rappleyea the first proposed superseding contract. ( Id.) Defendant estimated a shortfall of approximately $105,584.69. (See, Affidavit of Michael G. Hayes, Esq., page 6.) In addition to her mortgage responsibilities, this figure accounts for defendant's anticipated real property taxes, transfer taxes, reasonable attorney's fees, abstract pick-up fees, and 5.5% broker's commission of $82,500.00. ( Id.) Following the realization of the shortfall, Attorney Vinall informed Attorney Rappleyea that the agreement would need to be made subject to defendant's ability to secure a short sale from her mortgagees. (See, Rappleyea Aff., page 4.)
Negotiations between Attorney Vinall and Attorney Rappleyea continued until March 21, 2011. ( Id. at 5.) On that day, Attorney Vinall informed Attorney Rappleyea that defendant had asked Attorney Vinall to hold off on proceeding because Attorney Michael G. Hayes, defendant's new attorney, would be handling the matter. ( Id.) Attorney Hayes took the position that the binder was unenforceable and on March 23, 2011 he communicated defendant's desire to terminate negotiations with plaintiff. (See, Hayes Letter, Defendant's Exhibit "P".)
While Attorney Vinall and Attorney Rappleyea were engaged in negotiations, defendant had received a "back up offer" to purchase the property. (See, Vinall Letter, Plaintiff's Exhibit "1".) On February 18, 2011, 4 days after the binder was fully executed and 6 days before defendant realized her shortfall, defendant's agent showed the property to Ms. Andrea Woodner. (See, Bobko Aff., page 8.) Following the inspection, Ms. Woodner offered to purchase the property from defendant for $1,750,000. ( Id. at page 9.) On March 30, 2011, defendant and Ms. Woodner entered into contract for the sale of the property. (See, Walker to Woodner Contract, Defendant's Exhibit "R".)
In the instant matter, when the defendant signed the binder she entered into an enforceable contract for the sale of her property to plaintiff. The binder identifies the parties, describes the property, lists the sale price, and bears the signatures of both parties. The language of the binder is clear and straightforward. In paragraph 8, the binder unambiguously states: "This agreement is to be binding and remain in full force unless or until the same is replaced or superseded by a further and more complete agreement between the parties hereto" Although the binder anticipates a superseding contract, it also protects against the possibility that there would not be one. The words "unless or until" clearly indicate this. A fair reading of the binder gives no indication that any essential terms are missing. Defendant did not just sign the binder on a whim; she reviewed it with her attorney and even changed a term that she found disagreeable. Moreover, defendant's contention that plaintiff repudiated their agreement by failing to pay the down payment is incorrect. Where a writing calls for a down payment upon execution of a more formal contract, failure to pay that sum does not constitute a breach of contract if a more formal contract is never executed. ( Mattikow v. United Jersey Mortg. Co., 104 AD2d 973 (2nd Dept., 1984).) Here, the binder calls for the down payment to be paid "in cash upon signing the superseding contract of sale." (See, Binder, Defendant's Exhibit "C".) Execution of the superseding contract was a condition that was never met; therefore, plaintiff's obligation with respect to the down payment never became due.
Defendant's position that plaintiff repudiated their agreement by seeking a mortgage from First Pioneer Farm Credit is also incorrect. Generally, a mortgage contingency clause, depending on its language, is a condition for the sole benefit of the buyer or the joint benefit of the buyer and seller. (See, Coneys v. Game, 141 AD2d 795 (2nd Dept., 1988); Grossman v. Perlman, 132 AD2d 522, 523 (2nd Dept., 1987); and Lieberman v. Pettinato, 120 AD2d 646, 647-648 (2nd Dept., 1986).) "The party for whose benefit a condition is inserted in an agreement may waive the condition and accept performance as is." ( Oak Bee Corp. v. N.E. Blankman Co., 154 AD2d 3, 7 (2nd Dept., 1990) citing Satterly v. Plaisted, 52 AD2d 1074.)
In the instant case, the binder made the agreement "[s]ubject to the buyer receiving a mortgage in the amount of $1,000,000 from a conventional lending source". (See, Binder, Defendant's Exhibit "C".) This particular mortgage contingency is solely for plaintiff's benefit and does not restrict him in any way. It merely leaves him the option to cancel the agreement if he is unable to secure a conventional loan. Under the terms of the binder, plaintiff is free to obtain a mortgage from whatever source he so chooses. Accordingly, plaintiff could not have repudiated the agreement by seeking a mortgage from a nonconventional lender.
"[T]he grant or denial of specific performance is a matter of sound judicial discretion." ( Da Silva v. Musso 53 NY2d 543, 547 (1981).) "Absent any evidence of hardship upon the seller of real estate resulting from his negligent mistake, or of knowledge or reason to know of the mistake on the part of the purchaser, it is an abuse of discretion as a matter of law to deny specific performance to the purchaser and dismiss the complaint." ( Id. at 545.)
Plaintiff is aware of defendant's anticipated shortfall and the encumbrances to her property's title. (See, Boucher Aff., page 9.) In addition to paying the $1,500,000 sale price, plaintiff has agreed to pay the sum necessary to clear title of those encumbrances. ( Id.) Plaintiff also appears to have the financial means to do so. (See, Statement of Account, Plaintiff's Exhibit "D".) Therefore, on condition that plaintiff pays the $1,500,000 sale price, the New York State Transfer Tax, and any and all sums necessary to clear title to the property, specific performance is the appropriate remedy and is hereby granted.
Submit Judgment.
So Ordered.