Matter of Cornerstone Realty Group LLC v County of Greene
Annotate this CaseDecided on June 6, 2005
Supreme Court, Greene County
In the Matter of the Application of Cornerstone Realty Group, LLC, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules,
against
The County of Greene and Association of Property Owners of Sleepy Hollow Lake, Inc., Respondents.
05-0021
Finkelstein & Partners, LLP
Attorneys for Petitioner
(Joseph P. Rones, Esq. of Counsel)
McNamee, Lochner, Titus & Williams, P.C.
Attorneys for Respondent Association of Property Owners of Sleepy Hollow Lake Inc.
(John J. Privitera, Esq. of Counsel)
Office of the County Attorney
411 Main Street
Catskill, NY 12414
(Carol D. Stevens, Esq.)
George J. Pulver, J.
Petitioner commenced the instant article 78 proceeding to challenge a resolution of the Greene County Legislature and for a declaration that a contract entered into between the respondents on July 19, 2002 was still valid and binding. Respondents have moved to dismiss the first cause of action of the petition on the ground that it is barred by the applicable statute of [*2]limitations, to convert the second cause of action to an action for a declaratory judgment and then dismiss such cause of action for failure to state a cause of action and to cancel the notice of pendency filed herein.
The instant proceeding involves a large real estate development known as Sleepy Hollow Lake. Many of the lots in the development were never built upon and significant numbers of owners have defaulted in the payment of real property taxes. Greene County has now taken title to in excess of 400 lots through foreclosure of its tax liens. As a result, the County is required to pay the amount of tax which should have been collected on these lots each year to the local municipalities and school districts. In an attempt to reduce this expense and generate additional tax revenues, the County entered into an agreement with the Association of Property Owners, (APO), to promote the rapid construction of houses in the development. Petitioner was made a third party beneficiary of such agreement and was granted exclusive development rights, including the right to purchase buildable lots within the subdivision for the nominal sum of only $375.00 per lot. In order to promote rapid construction of homes, the contract provided that it would terminate automatically and immediately upon petitioner's failure to complete construction of 20 houses by December 2003, less than 18 months later.
Petitioner failed to meet this condition. Petitioner contends that its default under the contract should be excused because the County delayed completing sales to adjoining owners to combine lots and failed to provide insurable title to the lots until seven months after the contracts were executed, that the weather prevented construction and that there was significant delay in receiving approval of the offering plan from the Office of the Attorney General. However, the record indicates that as of the end of March, 2004, Cornerstone had only completed construction of two homes, two other homes may have been constructed by private parties, and six others had plans for construction. It is thus clear that as of December, 2003, petitioner was not even close to complying with the condition that 20 homes be completed.
Petitioner also contends that time was not of the essence in the contract, that the time for performance was ambiguous and that the County continued to convey property pursuant to the contract after its purported termination.
The petition seeks a determination that a resolution of the Greene County Legislature is void and of no force and effect. The petition does not contain any factual allegations with respect to such resolution nor does it even identify the resolution by date or subject. Respondent County argues that petitioner is referring to a resolution dated July 21, 2004 which stated that the APO had not fulfilled its obligations under the original contract and approved a new contract which excluded the petitioner. Petitioner, by memorandum of law, has indicated that it is challenging a resolution dated November 17, 2004 which stated that the County then had no contract to market or sell the lots and resolved that the County would offer all of the lots in the development in a bulk sale. Petitioner has also shown that the County rescinded the July 21, 2004 resolution in its entirety on November 17, 2004. Therefore it is evident that the petition does not challenge the July 21, 2004 resolution.
Pursuant to CPLR §217 (1) an article 78 proceeding must be commenced within four months after the determination became final and binding. The statute of limitations began to run upon filing of the resolution on or about November 17, 2004 (see Matter of Ryan v City Council of City of Yonkers, 143 AD2d 916, 917 [1988]). The instant proceeding was commenced on [*3]January 11, 2005, less than four months later. As such, the challenge to the resolution is clearly timely. The motion to dismiss based upon the statute of limitations shall therefore be denied.
The petition challenges the resolution under article 78 on the ground that it is inconsistent
with and in violation of the contract with the APO. The petition also seeks a declaration that the
2002 contract with the APO is still valid and binding. A determination of the contractual rights
and responsibilities of the parties is not the proper subject of an article 78 proceeding.
Accordingly, that portion of the petition shall be converted into an action for a declaratory
judgment. Respondent County seeks dismissal of such claim on the ground that the petition fails
to state a cause of action.
"In deciding a motion to dismiss for failure to state a cause of action, a court must
liberally construe the allegations to determine if a bona fide justiciable controversy exists (see
Matter of Schulz v New York State Legislature, 230 AD2d 578, 582). "[G]enerally the rule
in declaratory judgment actions [is] that on a motion to dismiss for failure to state a cause of
action, the only question is whether a proper case is presented for invoking the jurisdiction of the
court to make a declaratory judgment, and not whether the plaintiff is entitled to a declaration
favorable to him [or her]' (Law Research Serv., Inc. v Honeywell Inc., 31 AD2d 900,
901; see, Nasa Auto Supplies v 319 Main St. Corp., 133 AD2d 265, 266; Hallock v
State of New York, 39 AD2d 172, 174, affd. 32 NY2d 599)." (Washington
County Sewer Dist. No. 2 v White, 177 AD2d 204, 206
[1992]).
All that is required is the existence of a bona fide justiciable
controversy (Demartini v Chatham Green, 169 AD2d 689 [1991]; Halloran v
Halloran, 161 AD2d 562, 565 [1990]).
The allegations of the petition indicate the existence of a bona fide controversy with respect to whether petitioner should be excused from its failure to meet the condition subsequent of constructing 20 homes by December, 2003, whether the contract terms unequivocally effected a termination of the contract and whether conveyances after the termination date serve to revive the contract. As such, the Court should render a declaration with respect to the rights of the parties rather than dismissing the petition for failure to state a cause of action (Maurizzio v Lumbermens Mut. Cas. Co., 73 NY2d 951, 954 [1989]). Moreover, it appears that the proceeding involves only issues of law, which have been fully addressed by both sides. Under the circumstances, the Court may make a declaration with respect to the rights and obligations of the parties without giving notice pursuant to CPLR R3211 (c) that the Court intends to treat the motion as one for summary judgment (see Scattergood v Jamaica Water Securities Corp., 234 AD2d 688, 689 [1996]). In addition, given the summary nature of an article 78 proceeding, a final determination is warranted at this time.
Petitioner contends that its failure to meet the condition was caused by circumstances beyond its control, as compounded by the County's actions and failure to act. The petition references a letter which blames the failure to construct the requisite number of homes on delay by the County in sales to adjoining property owners, delay in obtaining clear title to the properties, the weather and delay in getting approval of an offering plan from the Attorney General.
If the County's actions or improper failure to act substantially interfered with or frustrated petitioner's compliance with the condition of constructing 20 homes, then the County may not [*4]rely upon the failure to comply (see Young v Whitney, 111 AD2d 1013 [1985]; see also Hidden Meadows Dev. Co. v Parmelee's Forest Products, 289 AD2d 642, 644 [2001]; Interactive Properties, Inc. v Doyle Dane Bernbach, Inc., 125 AD2d 265, 269 [1986]). The above referenced letter claimed that there was a delay of approximately 40 days in completing the sales to adjoining property owners. In determining the extent of the delay, the letter relied upon the date of the contract. However, the contract provided that the County agreed to sell to adjacent property owners for a period of 60 days from the date of written notification of the agreement by the APO to such adjacent owners. Petitioner has not shown when such notification occurred, and, as such, has not shown any delay whatsoever. Moreover, petitioner has not alleged that there were no properties available for development that were not adjacent to existing properties in private ownership. Delay associated with sales to adjoining property owners could not have hindered development of non-adjacent properties. In addition, there are no factual allegations of improper delay or inaction in obtaining clear title attributable to the County. "The petitioner has an initial burden of presenting factual allegations of an evidentiary nature or other competent evidence tending to establish his or her entitlement to the requested relief" (Matter of Rodriguez v Goord, 260 AD2d 736, 736-737 [1999]; see also Matter of Barnes v La Vallee, 39 NY2d 721 [1976]; Matter of Tebout v Goord, 290 AD2d 833 [2002]; Matter of Vandermark-Crayne v New York State Dept. of Civ. Serv., 225 AD2d 979 [1996]; Matter of Reynoso v Le Fevre, 199 AD2d 886 [1993]; Matter of Bogle v Coughlin, 173 AD2d 992 [1991]; Matter of Malik v Berlinland, 158 AD2d 836 [1990]). Petitioner's conclusory assertions of delay do not meet that burden. Clearly the weather and delay by the Attorney General can not be attributed to the County. As such, petitioner has failed to establish any improper interference by the County.
The petition might also be read as asserting a claim of impossibility of performance. However, " the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract' (Kel Kim Corp. v Central Mkts., 70 NY2d 900, 902; see, Comprehensive Bldg. Contrs. v Pollard Excavating, 251 AD2d 951, 952; Ahlstrom Mach. v Associated Airfreight, 251 AD2d 852, 853-854)." (Lagarenne v Ingber, 273 AD2d 735, 737 [2000]; see also Rooney v Slomowitz, 11 AD3d 864, 866-867 [2004]). Petitioners have not alleged the existence of any unanticipated events.
The original contract specifically provides that the County would not guarantee clear title to all of the properties, but would attempt to obtain clear title. Moreover, it was known to petitioner that the County had obtained title to all of the properties in tax foreclosure proceedings. Under such circumstances the likelihood of title issues and accompanying delay was clear. Similarly, petitioner was or should have been aware of the requirement of approval of an offering plan by the Attorney General and the possibility that construction might be delayed by weather conditions. The contract could have provided for extensions of time based upon delays attributable to such issues, but did not. It is therefore determined that petitioner has not shown any excuse for its failure to meet the condition sufficient to warrant any legal or equitable relief from the terms of the contract, as written.
Petitioner contends that time was not of the essence in the contract, and therefor, its delay may be excused. However, the subject contract was not one for the sale of real property in which the petitioner agreed to and was bound to purchase anything. Rather, the contract provided that petitioner could purchase property under specific terms at some time in the future. The [*5]agreement was in effect an option contract, which requires strict compliance with its terms even in the absence of any "time is of the essence" language (LaPonte v Dunn, __ AD3d ___, 2005 NY Slip Op 03015 [2005]; Ittleson v Barnett, 304 AD2d 526, 528 [2003]; Boghosian v SCS Props. Inc., 299 AD2d 693, 694-695 [2002]).
Moreover, section 4 of the contract provides, inter alia, "This agreement shall terminate automatically and immediately upon *** Cornerstone's failure to build twenty (20) homes to completion in Sleepy Hollow by December, 2003." The language concerning termination is clear and unequivocal. Since no specific language is required to make time of the essence, (see Urban Archaeology Ltd. v Dencorp Invs., Inc., 12 AD3d 96, 103 [2004]), the Court finds that the terms of the contract do in fact make time of the essence. To the extent that the absence of a specific date in December creates an ambiguity, the contract must be read to require completion of the homes by the end of December, that is, December 31, 2003. Cornerstone did not build 20 homes within the allotted period. Pursuant to the express and unequivocal terms of the contract, the contract terminated automatically upon failure of the condition. No consent to terminate was required.
Petitioner also contends that the contract was somehow revived by continuing negotiations for a new contract and transfers of lots under the old agreement after its termination. However, petitioner has not alleged that the parties came to any agreement on a new contract, nor has it alleged any partial performance which was unequivocally referable to a new contract (see Antolotti v Verderame, 175 AD2d 822, 823 [1991]; Dauber v Reznik, 200 App Div 650, 652-653 [1922]). There is also no proof that the County intended to revive the expired contract by its actions. Therefore, it shall be determined and declared that the contract terminated as of December 31, 2003. As such, the resolution was neither arbitrary nor capricious nor contrary to law.
This determination terminates the proceeding and action in respondents' favor. As such, the
notice of pendency shall be cancelled.
Accordingly, it is
ORDERED and ADJUDGED, that the motion to dismiss based upon the statute of limitations is hereby denied. That portion of the petition challenging the resolution is hereby dismissed. The remainder of the proceeding is hereby converted to an action for a declaratory judgment. It is hereby determined and declared that the contract between the County of Greene and the APO is valid and binding as written, and further, that it terminated as of December 31, 2003. It is further ordered that the notice of pendency filed herein be cancelled.
This shall constitute the Decision and Judgment of the Court. All papers are returned to the attorneys for respondent County who are directed to enter this Decision and Judgment without notice and to serve petitioner and co-respondent with a copy of this Decision and Judgment with notice of entry.
SO ORDERED AND ADJUDGED!
ENTER.
Dated:June, 2005
Catskill, New York
Hon. George J. Pulver Jr.
Acting Justice of the Supreme Court
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