Ross v Wu

[*1] Ross v Wu 2004 NY Slip Op 51950(U) [22 Misc 3d 1103(A)] Decided on April 21, 2004 Supreme Court, New York County Madden, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 21, 2004
Supreme Court, New York County

Dean Ross, Plaintiff,

against

Sam Wu, JANE WU, K.Y.W. ENTERPRISE CORP., WILLIAM CHIU, Defendant.



115340/01

Joan A. Madden, J.

After a non-jury trial of this action, the court makes the following findings of fact and conclusions of law.

In this action for breach of contract, plaintiff Dean Ross (Ross) sues for specific performance and damages in connection with an alleged binder for the sale of properties located at 106 Irvington Street and 145 Allen Street in the County of New York . Defendants Jane Wu (J. Wu) and Sam Wu (Wu),[FN1] assert a counterclaim for damages stemming from the filing of certain lis pendens regarding the two properties. Ross discontinued as to the 145 Allen Street property at the conclusion of the evidentiary stage of the trial and, as this was the only property in which defendant J. Wu had an interest, necessarily discontinued his claims against her.

The following facts are undisputed.

In issue is an agreement signed by Ross and Wu on June 23, 2000 which provided for the sale of 106 Irvington Street for $800,000. The agreement consists of 10 typewritten paragraphs, with handwritten entries and insertions bearing the initials of the parties. According to the agreement, Ross was to pay $2,000 down, and $12,500 to William Chiu (W. Chiu), who was instrumental in bringing the parties together. W. Chiu, while employed full time elsewhere, had an unspecified relationship with Wu who paid him to perform certain administrative and clerical work, as well as translation services.

Paragraph 6 of the agreement provided that upon a signed contract, the buyer, Ross, was to pay $50,000 into the escrow account of Peter Chui (P. Chiu) who at the time was the attorney for Wu. After the 10th typewritten paragraph, there is a handwritten entry which provides that the buyer shall deposit $50,000 in P. Chiu's account. The difference between the handwritten entry and paragraph 6, is that the handwritten does not provide a time for the $50,000 payment.

It is also undisputed that on June 27, 2000, Wu and Ross had a meeting at Ross's apartment where the terms of the sale of the 106 Irvington Street property were discussed as well as the sale of the 145 Allen Street property. After the meeting, P. Chiu sent Ross's attorney, David Galanter (Galanter), a final contract with certain changes which Galanter returned with certain changes. Among the changes inserted by Wu was the name of the seller, which was changed from Wu to K.Y.W. Enterprise Corp. (KYW), the owner of the property. Ross changed [*2]the name of the purchaser, from Ross to Hands on Management. Additionally, the evidence indicated that there was a scheduled closing for July 27, 2000 at the office of P. Chiu which did not take place. It is also undisputed that Ross paid Wu $2,000 at signing the June 23rd agreement, but did not deposit the $50,000 into P. Chiu's escrow account nor did he offer to do so, and that Ross did not at any time send written demand that time was of the essence.

The parties dispute whether at the June 27th meeting, language was added to the agreement giving Ross an option to purchase 145 Allen Street for $1,200,000. At trial, the parties produced two different versions of the June 23rd agreement each with original signatures; one was taken by Wu and the other by Ross. The handwritten paragraph with the option is included in Ross's agreement but is absent from Wu's. Ross testified that he and Wu initialed this language as they had previously done with insertions, and Wu in his testimony denied that he initialed any such language and alleges that this language in Ross's agreement is forged. However, as Ross discontinued as to the Allen Street property, the issue regarding the validity of the option need not be determined.

The parties also dispute the reason why the July 27th meeting and the signing of the formal contract did not take place. Ross testified that after he learned that Wu discharged P. Chiu as his attorney, he did not go to P. Chiu's office for the meeting. Wu testified that on July 27th, he was in P. Chiu's office waiting for Ross who did not appear. However, Ross testified that after the 27th, he attempted to reach Wu by telephone and that W. Chiu answered and told him that Wu said he had received an offer $100,000 higher than Ross's offer, and that Wu was not going to sell to Ross. The evidence did not indicate any further contact between the parties as to sale.

In seeking specific performance, Ross relies on the June 23rd agreement, arguing that it is a legally enforceable contract for the sale of real property, as it contains all the essential elements of such a contract. Wu asserts that the agreement violates the Statute of Frauds and is not enforceable as it does not identify the entities involved, and, as a more formal agreement was contemplated by the parties, the June 23rd agreement is less than a complete and entire agreement in and of itself. Wu further argues that regardless of whether the agreement is enforceable, Ross is not entitled to specific performance as he failed to perform his obligation under the contract to deposit the $50,000 in the escrow account of Wu's attorney, and Ross was not ready, willing and able to perform as he did not have the funds available to pay the $800,00 cash purchase price. Ross counters that he was excused from performing such obligations due to Wu's anticipatory breach based on Wu's discharge of his attorney, the statements by W. Chiu that Wu had a higher offer and did not intend to sell to him, and on Wu's failure to accept or return his telephone calls.

"In order to satisfy the Statute of Frauds (General Obligations Law, §5-703, sub 2), a memorandum signed by the party to be charged, must designate the parties, identify and describe the subject matter, and state all of the essential terms of a complete agreement." Sheenhan v. Cullotta, 99 AD2d 544, 545 (2nd Dept 1984). At the outset, it is noted that the property in issue is a four-story mixed use building with commercial and residential tenants, and the sale necessarily involved a complex real estate transaction. While the June 23th agreement identifies the property, and states the price and method of payment, it clearly and unequivocally contemplates the execution of a formal mutually binding agreement. Furthermore, although it designates Wu as the seller, the property was owned by KYW and the name of the seller was changed in the formal [*3]contract. Similarly, while Ross was designated the purchaser in the June 23rd agreement, in the formal contract the purchaser was changed to Hands on Management. These changes, when considered with the deposit of only $2,000 out of a $800,000 purchase price, together with the required payment of $50,000 which was to be placed in Wu's attorney's escrow account at the latest upon the signing of a formal contract, clearly demonstrate that the parties did not intend the June 23rd agreement to evidence the entire contract. See RAJ Acquisition Corp. v. Atamanuk, 272 AD2d 164 (1st Dept 2000); Behar v. Mawardi, 268 AD2d 400, 401 (2nd Dept 2000). Furthermore, the June 23rd agreement failed to identify KYW as the corporate owner and Wu did not sign the agreement in his capacity on behalf of the corporation. See RAJ Acquisition Corp. v. Atamanuk, supra; Bridgeview Development Corp. v. Hooda Realty Inc., 145 AD2d 457 (2nd Dept 1988).

In any event, even if the June 23rd agreement satisfied the Statute of Frauds, Ross was not excused from performing his obligations under the agreement. Where, as here, the agreement did not contain a clause making "time of the essence," even if Wu discharged his attorney prior to the time of the July 27th meeting as Ross alleges, which would have rendered the meeting futile, neither this conduct nor Wu's subsequent failure to respond to Ross's telephone calls, constitutes a breach by Wu which would have excused Ross's performance. Pettrizzo v. Pinks, 154 AD2d 521 (2nd Dept 1989), app den 76 NY2d 702 (1990). In the absence of a "time of the essence" clause, Ross was legally required to set a new date for closing and make time of the essence by giving "clear, distinct, and unequivocal notice to that effect giving the other party [Wu] a reasonable time to act," and by informing Wu that if he did not perform by that date he would be considered in default. Moray v. DBAG, Inc., 305 AD2d 472 (2nd Dept 2003). This is true irrespective of W. Chiu's authority or lack of authority to bind Wu. Thus, Ross's argument that he was excused from performing by Wu's repudiation of the agreement when W. Chiu told Ross that Wu was not going to sell to him because there was a $100,000 higher offer, is without merit. This Court likewise rejects Ross's assertion that Wu is bound by W. Chiu's statements as to the higher offer. While W. Chiu performed administrative, clerical and translation work for Wu, there is insufficient evidence to show that W. Chiu was authorized to act on behalf of Wu or KYW.

Furthermore, assuming arguendo that the June 23rd agreement is enforceable, and that Wu discharged his attorney, failed to appear at the July 27th meeting and to return Ross's telephone calls, and that this conduct constituted an anticipatory breach of the contract, Ross nevertheless is not entitled to specific performance. Under such circumstances, while Ross did not have an obligation to tender performance, this did not discharge his obligation to show that he was actually ready, willing and able to perform his own contractual obligations, that is, tender the $50,000 at the latest at the signing of the contract and the $750,000 balance of the purchase price in cash. See L.I.C. Commercial Corp. v. Zirinsky, 142 AD2d 713, 715 (2nd Dept 1988), app den 73 NY2d 707 (1989); Huntington Mining Holdings, Inc. v. Cottontail Plaza, Inc., 96 AD2d 526 (2nd Dept), aff'd 60 NY2d 997(1983); Wilson v City of Long Beach, 133 AD2d 684, 685 (2nd Dept 1987), lv app den 95 NY2d 751 (2000); Zev v Merman, 134 AD2d 555, 557 (2nd Dept 1987), aff'd 73 NY2d 781 (1988).

At trial, Ross testified and presented statements that he had access to credit lines of significant amounts through his personal checking account at Fleet Bank and a bond equity credit [*4]line at Marathon Bank, and that he had access to additional funds from his brother with whom he often formed real estate partnerships, and from a bridge mortgage lender. Furthermore, Ross's brother testified that he had funds available to commit to the deal and presented certain financial statements in support of such availability; the bridge mortgage lender also testified that funds were available. However, this evidence failed to establish that these monies were dedicated to the purchase of the Irvington Street property. This evidence merely showed that Ross had access to certain of his own funds, not that he had dedicated or segregated such funds for the purchase, or that his financial circumstances were such that these funds were in fact available for this use. Similarly, that his brother or the bridge mortgage lender may have funds available, absent a specific written commitment dedicating the use of such funds to the purchase, during July, August or September of 2000, or during the relevant time period prior to the commencement of this action, such availability does not establish that the funds would have been used by his brother to form a partnership, or by the lender to grant a loan. Huntington Mining Holdings, Inc. v. Cottontail Plaza Inc., 60 NY2d 997, 998 (1983). Thus, this Court concludes that such proof failed to demonstrate by legally competent evidence that Ross had $800,000 in cash required for the purchase and was therefore ready, willing and able to perform.

Finally, as to defendants' counterclaim for damages based on the lis pendens that were filed on the two properties, during the trial of this action, defendants failed to offer proof as to liability or damages with respect to their counterclaim, and as such, the counterclaim must be dismissed. Further, on the day of summations, defendants submitted a request for an award of costs and expenses pursuant to CPLR 6514(c). However, defendants did not pursue this claim at trial and made no evidentiary showing to support such an award. See Rabinwotz v. Larkfield Building Corp., 231 AD2d 703, 704 (2nd Dept 1996); Josefsson v. Keller, 141 AD2d 700, 701 (2nd Dept 1988). Under these circumstances, defendants' request for CPLR 6514(c) relief must be denied.

Accordingly, after a non jury trial, it is

ORDERED AND ADJUDGED that judgment is awarded in favor of the defendants and against plaintiff, and the complaint is dismissed, and it is further

ORDERED AND ADJUDGED that the counterclaim is dismissed; and it is further

ORDERED AND ADJUDGED that the notices of pendency filed against the properties known as 106 Irvington Street and 145 Allen Street, are cancelled.

This constitutes the decision, order and judgment of the Court.

DATED: April 21, 2004ENTER:

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J.S.C. Footnotes

Footnote 1:Ross discontinued against defendant William Chiu at trial.