Opinion
October 17, 1995
Appeal from the Supreme Court, New York County (Martin Schoenfeld, J.).
The IAS Court erred when it concluded that the underlying municipal contract was "illusory" because it lacked mutuality of obligation due to the City of New York's cancellation option. As we recently stated in L.J.B. Corp. v. City of New York ( 182 A.D.2d 485, 487, lv denied 80 N.Y.2d 755), "[t]he municipality's reservation of an option to cancel a sale prior to closing has been upheld as in furtherance of the public interest" ( see also, Orelli v. Ambro, 41 N.Y.2d 952). Further, there is no proof that the City acted in bad faith or took undue advantage of plaintiffs nor is there any evidence of unconscionability on the part of the defendants ( L.J.B. Corp. v. City of New York, supra, at 487; Min-Lee Assocs. v. City of New York, 28 A.D.2d 553, affd 27 N.Y.2d 790).
We reject plaintiffs' contention that the assignment of rights to buy the property from plaintiff Alfred Ohebshalom to plaintiff Water Street Development Corp. constituted a novation, thereby excluding the Special Terms and Conditions of the sale. A novation will not discharge obligations created under a prior agreement unless it was so intended, and this question may be determined from the writings and conduct of the parties ( Blair Co. v. Carlos Otto V., 5 A.D.2d 276, 280; Goldbard v. Empire State Mut. Life Ins. Co., 5 A.D.2d 230, 234; Sheehy v. Andreotti, 199 A.D.2d 148, 150) or, in certain cases, from the documents exclusively ( Goldbard v. Empire State Mut. Life Ins. Co., supra, at 234).
In the matter at bar, the assignment incorporated the Special Terms by reference in the Standard Terms, and as a result, was not at variance with the original agreement. There being no variances, there can be no novation.
With regard to plaintiffs' contention that the City was barred from declaring plaintiffs in breach, while it is undisputedly the rule that one who frustrates another's performance cannot hold that party in breach ( Long Is. Sav. Bank v. Gelodal Briarwood Corp., 190 A.D.2d 64, 67; Ellenberg Morgan Corp. v. Hard Rock Cafe Assocs., 116 A.D.2d 266, 271; 3A Corbin, Contracts § 767), nothing of that nature occurred here. The documentation and inspections clearly, and repeatedly, apprised plaintiffs of the condition of the premises and the need for plans to be prepared under such circumstances, suitable to the Landmarks Preservation Commission, was an accepted risk in entering the venture. The City, therefore, was not barred from declaring plaintiffs in breach.
With regard to the question of insurability of title, the successful bidder's failure to either tender performance or give the City reasonable time to cure the objection was tantamount to an anticipatory breach that warranted the City's declaration of default against the bidder and retention of the down payment as liquidated damages ( Cohen v. Kranz, 12 N.Y.2d 242, 246; Oxford Funding Corp. v. James H. Northrup, Inc., 130 A.D.2d 722, lv denied 70 N.Y.2d 613). In addition, plaintiffs' reliance on Gargano v. Rubin ( 200 A.D.2d 554) is without merit as there was no issue presented with respect to the seller's ability to cure the objection within a reasonable time.
Lastly, in the face of a valid contract, plaintiffs' request for damages on a quasi-contract theory is untenable ( Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 388-389; Blanchard v. Blanchard, 201 N.Y. 134, 138; Haythe Curley v. Harkins, 214 A.D.2d 361, 362), and their claim for out-of-pocket expenses is barred inasmuch as such expenditures were afore-seeable risk of the venture ( Ashland Mgt. v. Janien, 82 N.Y.2d 395, 403; Restatement [Second] of Contracts §§ 351, 352).
Concur — Rubin, J.P., Ross, Nardelli, Williams and Tom, JJ.