Opinion
650220/10.
Decided October 18, 2010.
Lawrence C. Glynn, Esq. of Caruso Glynn LLC for Plaintiff.
Jason Casano and Jack Hassid, Esq., Law Office of Jack Hassid, Esq., for Defendant Andrea Jones.
In this action seeking recision of a contract to purchase a certain condominium unit and the return of the down payment, defendant Andrea Jones ("Jones" or "seller") moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint as against her and for judgment in her favor on her first and second counterclaims. Alternatively, Jones moves, pursuant to CPLR 3211(a)(7) and 3016(b), to dismiss the cause of action against her for fraud.
Plaintiff, Jason Casano ("Casano" or "buyer") cross-moves pursuant to CPLR 3212 for summary judgment for recision of the contract of sale and the return of his down payment. In addition, he moves, pursuant to CPLR 3211(a)(7), to dismiss Jones's first and second counterclaims.
BACKGROUND
On July 15, 2008, Jones, the owner of Unit 23G in the Downtown Club Condominium, entered into a contract of sale with Casano whereby Casano agreed to purchase Unit 23G for $700,000. Both parties were represented by counsel. Casano deposited a ten percent down payment, $70,000, into escrow. The closing, originally scheduled for August 26, 2008, was adjourned to October 7, 2008, time being of the essence. Affidavit of Andrea Jones in Support of Motion for Summary Judgment ("Jones Aff."), Ex. E.
On October 3, 2008, the parties agreed to adjourn the closing to October 21, 2008, on the condition that Casano would deposit an additional $10,000 in escrow and that he would reimburse Jones in the amount of $1,563.13 for the additional interest, common charges and real estate taxes she would incur as a result of the extended closing date. Jones Aff., Ex. F.
On October 21, 2008, Jones appeared ready, willing and able to close title. Casano's father appeared at the closing and he informed the seller that Casano refused to perform under the contract because Casano alleged that he had been misled by Jones and her agents regarding his ability to build a sleeping loft in the studio apartment.
CONTENTIONS
Casano contends that in mid-June 2008, he saw a real estate advertisement for Unit 23G that described the apartment as having seventeen foot ceilings and which stated that it would be "easy to create a room above." Affidavit of Jason Casano ("Casano Aff.")., Ex. B. He claims that the height of the ceilings and the ease of building a room above "was the sole basis for [his] decision to purchase the apartment." Casano Aff, ¶ 8. Casano states that his attorney reviewed the by-laws, declaration and amendments and that there was nothing in those documents that prohibited construction of a loft. Casano Aff., ¶ 10. However, he avers that a few days before the scheduled closing, a representative from defendant Empire State Properties, Inc., a broker that was involved in sale but who did not represent Jones, informed Casano's father that Casano could only build an 8' x 8' storage space in the unit, not a loft room above. Casano Aff., ¶ 12. Casano states that his father was told that neither the defendant Board of Managers nor the sponsor, defendant New 19 West LLC, would authorize the construction of another room within the unit and that the other lofts in the Downtown Club that Casano saw in pictures were illegally constructed. Casano Aff., ¶ 13.
Casano commenced this lawsuit alleging, in the first cause of action, that he was fraudulently induced into signing the contract of sale because the advertising materials specifically stated that due to the 17-foot ceilings, a loft could be constructed within the apartment; that the defendants repeatedly promised that a loft could be legally constructed within the unit; that the promise was the basis for his agreement to purchase the apartment; that he relied on defendants' knowledge regarding the legality of loft construction to his detriment and that he has been damaged thereby.
Casano claims that Jones knew that he was purchasing the unit only because he understood that he would be able to construct a loft and that Jones actively concealed the information that the Board of Managers and/or sponsor would not permit such construction.
Jones argues that the complaint, as against her, must be dismissed as a matter of law because: 1) the contract of sale does not contain any representations or warranties regarding Casano's ability to erect a sleeping loft in the unit (Jones Aff., Ex. B); 2) the contract contains a general merger clause stating that it is the entire agreement between the parties and that it supersedes any and all previous agreements and understandings (Jones Aff., Ex. B, ¶ 24); and 3) Section 10 of the contract is a specific merger clause that states, in pertinent part:
10. No Other Representations: Purchaser has examined and is satisfied with the Declarations, By-laws and rules and regulations of the Condominium, as amended, or has waived the examination thereof. Purchaser has inspected the unit, its fixtures, appliances and equipment and the personal property, if any, included in this sale, as well as the Common Elements of the Condominium, and knows the condition thereof and, . . ., agrees to accept the same "as is" . . . and does not rely on any representations made by any broker or by seller or by anyone acting or purporting to act on behalf of Seller as to any matters which might influence or affect the decision to execute this Contract or to buy the Unit, or said personal property, except those representations and warranties which are specifically set forth in this contract.
Jones Aff., Ex. B, ¶ 10.
Jones contends that Section 5.2 of the by-laws provides that all structural alterations in the residential units must be approved by the Board of Managers and comply with all applicable building laws (Reply Affirmation of Jack Hassid in Support of Motion for Summary Judgment and in Opposition to Cross-motion, Ex. A) and, because Casano acknowledged, in Section 10, that he reviewed the by-laws, he knew before he signed the contract that the addition of a sleeping loft required the approval of the Board of Managers and compliance with all applicable building laws.
In addition, Jones contends that the broker's advertisements that Casano purportedly relied upon contain a standard disclaimer that states:
All information furnished regarding property for sale, rental or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other conditions, prior to sale, lease or financing or withdrawal without notice. For exact dimensions, you must hire your own architect or engineer.
Casano Exs. A and B.
DISCUSSION A. Summary Judgment
Summary judgment will be granted if it is clear that no triable issue of fact exists. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). The burden is on the moving party to make a prima facie showing of entitlement to summary judgment as a matter of law. Zuckerman v. City of New York, 49 NY2d 557, 562 (1980); Friends of Animals v. Associated Fur Mfrs., 46 NY2d 1065, 1067 (1979). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of a triable issue of fact. Alvarez, 68 NY2d at 324; Zuckerman, 49 NY2d at 562. Mere conclusions, unsubstantiated allegations or expressions of hope are insufficient to defeat a summary judgment motion. Zuckerman, 49 NY2d at 562.
Here, Jones has made a prima facie showing that she is entitled to judgment as a matter of law by producing: 1) the contract of sale that includes, in Section 10, a specific merger clause stating that buyer has read the declarations, by-laws and rules and regulations of the condominium, that he inspected the unit and that he is not relying on any representations or warranties except those that are specifically set forth in the contract; 2) the advertisements which include disclaimers regarding the reliability of the information contained therein; and 3) proof that Casano failed to close title as required by the contract.
Casano has failed to come forward with any admissible evidence to establish a triable issue of fact. Indeed, it is well settled in this state that a specific disclaimer, such as the one that is contained Section 10 of the Jones-Casano contract of sale, is a complete bar to the fraud claim against Jones.
In Wittenberg v. Robinov, 9 NY2d 261, 262 (1961), the purchaser of a building brought a fraud claim against the seller alleging that, before the sale, the seller had misrepresented the operating expenses of the subject building. In that case, the contract of sale stated:
It is further understood and agreed that the seller has made no representation as to physical condition or services and that seller shall not be liable and bound in any manner by express or implied warranties, guarantees, promises, statements, representations or information pertaining to said premises, made or furnished by any real estate broker, agent, employee, servant or such other person representing or purporting to represent the seller, unless such warranties, guarantees, promises, statements and/or representations of information are expressly and specifically set forth herein.
The quoted contractual language is set forth in Wittenberg v. Robinov, 9 AD2d 290, 291 (1st Dep't 1959).
In Wittenberg, the Court of Appeals held that the specific disclaimer language was sufficient to preclude any claim for fraud by the buyer against the seller. See also Fabozzi v. Coppa , 5 AD3d 722 , 723 (2d Dep't 2004); Cohan v. Sicular, 214 AD2d 637, 638 (2d Dep't 1995) (a specific disclaimer destroys allegations that agreements were executed in reliance on contrary oral representations); Goldberg v. KZ 72nd, 171 AD2d 525, 527 (1st Dep't 1991); Alacrity Servs., LLC v. GAB Robins N. Am., Inc., Index No. 604058/2003, 2005 WL 6214755 (Sup Ct, NY County 2005).
Daly v. Kochanowicz , 67 AD3d 78 , 95 (2d Dep'October 18, 2010, 2009), a case relied on by Casano, is not to the contrary. In that case the court found that a fraud cause of action would not lie because the contract contained a specific disclaimer wherein the buyer acknowledged that he was entering into the contract of sale based on his own inspection of the premises and that he was not relying on any "information, data, statements or representations, written or oral" made by the seller or its representative. See also Rigney v. McCabe , 43 AD3d 896 (2d Dep't 2007).
Here, the contract of sale does not contain any representations or warranties regarding Casano's ability to build a sleeping loft. Rather, pursuant to the by-laws, Casano's ability to construct a sleeping loft was dependent on approval of the Board of Managers and compliance with all applicable laws. In Section 10 of the sales contract, Casano acknowledged that he either examined all the governing documents prior to signing the contract or waived examining them. He also disclaimed reliance on any representations made by Jones, or anyone acting on her behalf, other than those that were set forth in the contract of sale. Accordingly, the specific merger clause in the contract of sale bars Casano's fraud claim against Jones as a matter of law.
Moreover, even if summary judgment based on the specific merger clause were not warranted, the fraud cause of action as against Jones is deficient as it fails to plead fraud with particularity. The elements of a cause of action for fraud are "representation of a material existing fact, falsity, scienter, deception and injury." New York Univ. v. Continental Ins. Co., 87 NY2d 308, 318 (1995) (quotation marks and citations omitted). With regard to reliance, the pleader must establish not only that he or she actually relied on the alleged misrepresentation, but that the reliance was justifiable. McMorrow v. Dime Sav. Bank of Williamsburgh , 48 AD3d 646, 647-648 (2d Dep't 2008). Additionally, CPLR 3016(b) provides that, in pleading a cause of action for fraud, the circumstances constituting the alleged wrong must be stated in detail and, where the complaint alleges oral misrepresentations, the identities of the persons making the statements and the dates on which they were made must be set forth. Liling v. Segal, 220 AD2d 724, 726 (2d Dep't 1995).
Here, Casano's cause of action for fraud fails to identify any statement made specifically by Jones and it completely fails to identify the dates upon which any of the defendants made the alleged misrepresentations.
Moreover, in Section 10 of the sales contract, Casano acknowledges that he was not relying on any representations when he signed the contract. Section 10 also establishes that, even if he did rely on Jones's alleged oral statements, that reliance was not justifiable because his attorney reviewed the by-laws. The by-laws clearly state that any structural alterations to the units must be approved by the Board of Managers and must comply with all applicable state and local building laws.
Jones's Counterclaims
Jones's first counterclaim is for a declaratory judgment that she is entitled to retain the $70,000 plus the accrued interest thereon.
It is well settled that a buyer who defaults on a real estate contract without lawful excuse cannot recover his/her down payment. Lawrence v. Miller, 86 NY 131, 134-135 (1881); see also Maxton Builders v. LoGalbo, 68 NY2d 373, 382 (1986); Rivera v. Konkol , 48 AD3d 347 , 348 (1st Dep't 2008); Uzan v. 845 UN Limited Partnership , 10 AD3d 230 , 236-238 (1st Dep't 2004). Here, Casano failed to close title on the condominium unit. Casano presented no justification for failing to close. See, supra . Based on this default Jones is entitled to retain the down payment and all accrued interest thereon.
Jones is also entitled to judgment on her second counterclaim for $11,563.16 for the additional $10,000 required deposit and additional mortgage interest, common charges and real estate taxes. Casano's attorney expressly agreed to pay an additional $10,000 down payment plus $1,563,16 in additional costs in exchange for a two-week adjournment of the closing. Jones Aff., Ex. F.
Accordingly, it is
ORDERED that the branch of defendant Andrea Jones's motion seeking summary judgment dismissing the complaint against her is granted; and it is further
ORDERED and ADJUDGED that the branch of defendant Andrea Jones motion requesting summary judgment in her favor on her first and second counterclaims is granted; and it is further
ORDERED that the branch of defendant Jason Casano's cross motion for summary judgment is denied; and it is further
ORDERED that the branch of defendant Jason Casano's motion seeking to dismiss defendant Andrea Jones's counterclaims is denied; and it is further
ORDERED that the remainder of the action shall continue.
SETTLE JUDGMENT