Estates Design & Constr. Corp. v Jackson Assoc. of Nassau, Inc.
Annotate this CaseDecided on November 3, 2005
Supreme Court, Nassau County
Estates Design & Construction Corp., Plaintiff,
against
Jackson Associates of Nassau, Inc., Defendant,
1669-04
COUNSEL FOR PLAINTIFF
Dollinger, Gonski & Grossman, Esqs.
One Old Country Road
Carle Place, New York 11514
COUNSEL FOR DEFENDANT
Miller, Rosado & Algios, LLP
200 Old Country Road - Suite 590
Mineola, New York 11501
Leonard B. Austin, J.
Defendant, Jackson Associates of Nassau, Inc., ("Jackson"), moves for summary
judgment dismissing the complaint and for summary judgment on its third and fourth counterclaims.
BACKGROUND
Jackson is the owner of real property located 405 East Broadway, Long Beach, New York ("the Property"). The Jackson Hotel ("Hotel") is presently located on The Property.
Jackson entered into a contract ("Contract") dated December 4, 2002 pursuant to which it agreed to sell the Property to the Plaintiff, Estates Design & Construction Corp. ("Estates").
Estates was purchasing the Property and other property adjacent to it. Estates planned to convert Hotel into residential condominium units.
The Contract provided for the payment of a deposit on contract of $150,000; $100,000 payable on contract of which $50,000 was to be paid to Jackson and $50,000 was to be deposited with Jackson's attorney to be held in escrow pending closing; and $50,000 was to be paid to Jackson's attorney ninety (90) days after the execution of the contract. The last $50,000 was to be held in escrow by Jackson's attorney pending closing.
Paragraph 29 of the Contract provided that if Estates defaulted under the terms of the Contract, the deposit paid on contract would be retained by Jackson as liquidated damages.
The $100,000 due on the execution of the contract was paid. The additional $50,000 due ninety (90) days after the execution of the Contract was never paid.
The conversion of Hotel to condominium units would create a non-conforming use. Paragraph 31(a) provided that the closing was contingent upon Estates obtaining a variance from the Board of Zoning Appeals of the City of Long Beach ("BZA") authorizing it to convert the existing Hotel into not more than fifty (50) two bedroom, two bathroom condominiums in the existing building. The Contract provided that any plan which was submitted to the Long Beach Building Department or BZA would provide for not less than 1 ½ off-street parking spaces for each dwelling unit.
Paragraph 31(a) also provided that the application for a building or alteration permit or a variance would not deviate in any way from the description contained in the Contract or Schedule B of the Contract without first obtaining written consent of [*2]Jackson.[FN1] Violation of this term would be deemed a default under the Contract entitling Jackson to pursue any remedies provided by the Contract or by statute.
Paragraph 31(b) of the Contract provided that the closing was contingent upon Estates obtaining approval of the BZA of the conversion of the Property to condominium use. The Contract required Estates to prepare and submit to the Long Beach Building Department within sixty (60) days of the date of the contract an application for a building
permit. The application was to be made in the name of Jackson.
If the Building Department refused to issue a building permit, Estates was required within thirty (30) days of the denial of the building permit to make application for a variance with the BZA. Estates was to provide to Jackson's attorney true and complete copies of the application made to the BZA. Estates was also required to provide Jackson's attorneys with any modifications made to the application filed with the BZA with five (5) days of their submission.
If the BZA granted the variance, then the closing was to take place within sixty (60) days of the issuance of the variance.
If the BZA denied the application for the variance, either party had the right to cancel the Contract by giving the other party with fifteen (15) days written notice of its intent to do so.
Paragraph 22 of the Contract provides that it may not be cancelled or modified except in writing.
Jolanda Fischer ("Fischer"), the principal of Jackson, signed the application for a building permit. The application indicated that the proposed work involved the renovation of the Hotel to make forty (40) condominium apartments and to construct a parking area on adjoining property. The application for a building permit did not mention the number of parking spaces planned for the Hotel or the development of the adjoining property.
Fischer also signed the application for a variance that was submitted to the BZA.
Neither the application for a building permit nor the application for a variance submitted to the BZA contain any information about the number of parking spaces in the plans for the renovation of the Hotel.
Estates' plan for the renovation of the Hotel was prepared by Newman Design Group and were never shown or given to Fischer or her attorney before they were filed with the Long Beach Building Department. The application for a building permit was prepared by Ebrahim Shokrian ("Shokrian"), a principal of Estates and then submitted to the Building Department. The plans provided for a total of 46 off-street parking spaces.
The application for a building permit was denied by the Building Department, at least, because of inadequate off-street parking. The denial of the building permit [*3]indicates that the Long Beach zoning ordinances require 1.75 off-street parking spaces per unit. Estates would have to provide 70 off-street parking spaces if it was going to renovate Hotel into forty (40) condominium units. Additionally, the Long Beach zoning ordinances permitted only 25% or eighteen (18) of the off-street parking spaces to be off-site. The plans, as read by the Long Beach Building Department, showed that twenty-eight (28) of the off-street parking spaces for the Hotel were off-site.
When the Building Department refused to issue a building permit, Shokrian filed an application for a variance with the BZA. The public hearing on the variance was held on March 27, 2003. The only people who spoke on behalf of the application for a
variance were the applicants' attorney, Shokrian, the architect, and the real estate broker who had brokered the deal. Eleven people spoke in opposition to the application. The BZA also received a series of petitions signed by forty-five (45) people opposing the application and a letter from another person opposing the application.
In anticipation of a denial of a variance, Shokrian filed a second application for a building permit dated April 21, 2003, which was signed by Fischer. That application provided for construction of a parking area with eighty-two (82) parking spaces.
By decision dated June 4, 2003, the BZA denied the application for a variance. The BZA decision found that the plans, as submitted, provided for no on-site off-street parking and only twenty-eight (28) off-street, off-site parking spaces.[FN2] In denying the application for the variance, the BZA specifically found:
"8. Based on the record, it is clear that the applicants' request would lead to an adverse and negative impact on the surrounding neighborhood. The area is densely populated, with a shortage of parking spots already in
existence. Adding fifty (50) condo units with only forty six (46) off-street parking spaces would further exacerbate this problem. The variances sought are substantial, under these circumstances."
For this reason, the variance was denied.
The second application for a building permit was denied on June 4, 2003 based upon a preliminary zoning review by a plans examiner.
By letter dated June 10, 2003, counsel for Estates indicated that, since the variance had not been obtained, Estates was cancelling the contract. As a result, Estates requested a refund of the deposit due on contract.
By letter dated June 10, 2003, counsel for Jackson advised counsel for Estates that Estates was in default under the terms of the contract. The letter listed numerous "material misrepresentations" by Estates relating to the parking. More specifically, Jackson's attorney alleged that Estates had violated the provisions of Paragraph 31(a) [*4]of the Contract in which it had represented that it had contracted to acquire properties, "...adequate to create off-street parking facilities sufficient to satisfy the location requirements of the Property Conservation Department and the Board of Zoning Appeals of the City of Long Beach providing parking spaces equal to not less than one and one-half parking spaces for each dwelling unit."
The letter also stated that the plan for off-site parking submitted by Estates in connection with its application for a building permit and a variance deviated significantly from the provisions of the Long Beach zoning ordinances.
Jackson's attorney also claimed that Estates was in default because it failed to provide Jackson's attorney with copies of the applications submitted to the Building Department and the BZA and failure to serve upon Jackson's attorney copies of all
written communications received from the BZA within five (5) days of receipt as violations of the contract.
In view of Estates' default, Jackson advised Estates that it was retaining the $50,000 being held in escrow as liquidated damages and demanded immediate payment of the additional $50,000 of the down-payment that was to have been paid ninety (90) days after the execution of the contract.
When Jackson refused to refund the deposit paid on contract and Estates refused to pay the additional $50,000, this action was commenced by Estates seeking to recover the deposit paid on contract.
Estates alleged that the denial of the building permit and variance was a result of a series of factors including the height of the building, the percentage of the lot covered by the structure, insufficient front, side and back yards, insufficient play area for children, insufficient square footage for the number of units proposed and inadequate off-street parking. Estates also alleges that the building permit and variance could have been denied on the basis of any of these factors, even if adequate parking had been included in the plan. Since it was unable to obtain a building permit or a variance, it was entitled to cancel the contract and obtain a refund of the deposit paid on contract.
Jackson answered and counterclaimed. The third counterclaim alleges that Estates violated a material provision of the Contract when it submitted a plan for a
building permit and variance which did not contain a minimum of sixty (60) off-street parking spaces for Hotel (40 units x 1.5 spaces per unit).
The fourth counterclaim alleges that Estates violated the contract by failing to provide Jackson's attorney with true and complete copies of the application for a variance and all correspondence received from BZA within five (5) days of receipt.
As a result of these violations of the contract, Jackson claims that it is entitled to retain the deposit paid on contract and receive payment of the additional $50,000 due
as part of the deposit. Jackson seeks summary judgment on the third and fourth causes of action.
DISCUSSION[*5]
A.Legal Standard
Summary judgment is a drastic remedy which will be granted only when the movant establishes that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974); and Moseyed v. Pilevsky, 283 AD2d 469 (2nd Dept. 2001).
The party moving for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York, 49 NY2d 557 (1980).
Once the party moving for summary judgment has established a prima facie entitlement to judgment as a matter of law, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact
or must establish an acceptable excuse for its failure to do so. Id.; Davenport v. County of Nassau, 279 AD2d 497 (2nd Dept. 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept. 1991).
When deciding a motion for summary judgment, the court must determine if trial issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). The motion must be denied if the court has any doubt as to the existence of
triable issues of fact. Freese V. Schwartz, 203 AD2d 513 (2nd Dept. 1994); and Groger v. Morrison-Knudson Co., Inc., 184 AD2d 620 (2nd Dept. 1992).
When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the party opposing the motion and must give that party all of the favorable inferences which can be drawn from the evidence. Negri v. Stop & Shop, Inc., 65 NY2d 625 (1985); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept. 2001).
A party establishes a prima facie case for breach of contract by establishing the existence of the contract, the consideration, performance, breach and damages resulting from the breach. Furia v. Furia, 116 AD2d 694 (2nd Dept. 1986); and Sylmark Holdings Ltd. V. Silicone Zone International, Ltd., 5 Misc 3d 285 (Sup.Ct. N.Y.Co. 2004).
B.Issues of Fact
While the parties concede the existence of a contract supported by consideration, Estates asserts that there are questions of fact regarding whether Jackson waived compliance with the provisions of the contract relating to the number of parking spaces and whether Jackson is estopped from asserting non-compliance. Estates further asserts that there are questions of fact as to whether the breach was material. Finally, Estates asserts that its performance is excused due to mutual mistake.
1.Waiver
"Waiver is the voluntary abandonment or relinquishment of a known right, which, except for such waiver, the party would have enjoyed." P & D Cards and Gifts, Inc. v. [*6]Matejka, 150 AD2d 660, 662 (2nd Dept. 1989). See, Bono v. Cucinella, 298 AD2d 483 (2nd Dept. 2002); and Dice v. Inwood Hills Condominium, 237 AD2d 403 (1st Dept. 1997). Waiver may be accomplished by express agreement or by conduct which evidences an intent not to exercise the known right. Id., Hadden v. Consolidated Edison Co. of New York, Inc., 45 NY2d 466 (1978).
The provision of a contract which prohibits its modification or cancellation except in writing may be waived orally. Rose v. Spa Realty Assocs., 42 NY2d 338 (1977); and Beatty v. Guggenheim Exploration Co., 225 NY 380 (1919).
Estates asserts that Jackson waived compliance with the off-street parking requirement of the Contract in Fischer's handwritten note dated June 10, 2003 which states, "Both parties are in compliance with the contract as of today, except the payment of 50,000 dollars by Estate Design & Const. which can be rectified by the payments of dated 6/10/03. (sic)"
Thereafter, Fischer added to her handwritten statement:
"Dear Arthur [Arthur B. Welsher, Jackson's attorney] This is to confirm our conversation today. Although you strongly advised me against giving Ebrahim Shokrian this letter, I am doing it at my own decision."
S/Jolanda Fischer
Estates' reliance upon this letter as evidence of waiver is misplaced. Estates did not make the payment of $50,000 by June 10, 2003. Thus, it did not cure this default notwithstanding what amounts to an extension of time to pay the last $50,000 due on the contract. Its default, under any circumstances, remains uncured.[FN3]
This letter was never delivered to Shokrian. It was given to Leo Zucker, Jackson's real estate broker, who faxed it to Arthur Welsher. Fischer's handwritten statement came to light during the course of discovery when it was produced by Zucker, at his deposition conducted on April 1, 2005. Non-delivery of this letter is reflected by
the letter of Brendan P. Twomey, Estates' attorney, who, in his letter of June 10, 2003, purporting to cancel the contract states:
"I have been advised by my client that you were forwarding a correspondence
confirming that upon replacement of the stale check the parties would be deemed to be in compliance with the terms and conditions of the contract before the close of business. Unfortunately, I have not received such a
correspondence."
[*7]
In actuality, Twomey received a fax from Welsher dated June 10, 2003 indicating that no such agreement had been reached and further indicating that any purported changes to the Contract would have to be submitted to Welsher before they would be considered by Fischer. Twomey's fax notes that Estates had been declared in default as a result of its failure to timely remit the balance of the down payment in accordance with the terms of the Contract.
Welsher's actions are inconsistent with a claim of waiver. The fax was followed by Welsher's letter of June 10, 2003 which declared Estates in default because of its failure to comply with off-street parking provisions of the Contract.
Fischer's handwritten note does not waive compliance with the off-street parking provisions of the Contract. At best, it grants Estates the ability to cure its default in payment of the deposit due on contract provided that the payment is made by June 10, 2003, which it never did.
Estates further asserts that Jackson waived this provision or elected its remedy by continuing with the contract when it learned that the plan contained only forty six (46) parking spaces. Fischer learned about the number of parking spaces when she received a letter dated March 3, 2003 from the Long Beach Building Department denying the building permit. This letter specifically stated that one of the reasons the building permit was denied was that Long Beach Building Code required a minimum of seventy (70) off-street parking spaces for the proposed renovation of the Hotel and the plan provided only twenty-eight (28) spaces.
Estates claims that Jackson waived compliance or elected its remedy when it did not declare Estates in default when it first learned that the plan submitted for approval did not comply with Paragraph 31(a).
The proposed use of the Property by Estates required the issuance of a variance. Paragraph 31(b) of the Contract requires Estates to make application for a building permit and, if such permit is denied, to make application with the BZA for a variance.
When interpreting the provisions of a contract, the Court is to give "... practical interpretation to the language employed and the parties reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd, 79 NY2d 1016 (1992).
A court should not read a contract in a way which would render any provisions meaningless. Rodrigues v. N & S Building Contractors, Inc., -N.Y.3d -, 2005 WL
2663500 (2005); and Helmsley-Spear, Inc. v. New York Blood Center, Inc., 257 AD2d 64 (1st Dept. 1999).
The interpretation proposed by Estates would render meaningless the provisions of the contract which obligates it to apply for a variance from the BZA if a building permit was denied.
The parties to the Contract understood that the use proposed by Estates was non-conforming. The parties clearly understood the contract specifically provided that Estates would be required to apply for a variance. If Jackson had not given Estates the [*8]opportunity to make application to the BZA for a variance, then the provision of the Contract which provided for such an application would be without meaning.
Paragraph 31(a) of the Contract requires Fischer to cooperate with Estates by executing the documents required to obtain a variance and to testify at the variance
hearing. Fischer's compliance with the express terms of the Contract cannot be construed as a waiver.
Estates also asserts that Jackson's failure to declare it in default when it learned that the plans did not conform with the parking requirements constitutes an election of remedies. When a party breaches an executory contract, the other party to the agreement has the choice of treating the contract as breached and to immediately sue for breach of contract or to continue to treat the contract as valid. See, Emigrant Industrial Savings Bank v. Willow Builders, Inc., 290 NY 133 (1943); and Inter-Power
of New York, Inc. v. Niagara Mohawk Power Corp., 259 AD2d 932 (3rd Dept. 1999). Estates claims that Jackson had those two choices when it learned that the plans did not provide for the required number of off-street parking spaces. Estates claims that when Jackson permitted Estates to submit a non-conforming application to the BZA, Jackson elected to treat the contract as continuing. The contract was contingent upon Estates obtaining BZA approval, which did not occur. Estates has failed to raise any factual questions regarding Jackson's right to retain the deposit as liquidation damages.
The Contract obligated Estates to apply for approval for the conversion of Hotel from first the building department and, if the building department failed to approve, appeal to the BZA. Paragraphs 6 and 31(d) of the Contract make the closing contingent upon Estates obtaining a variance. Had Estates obtained the variance from the BZA even though the plan contained fewer parking spaces than the contract required, Estates would have been required to purchase the Property. The contract was not breached until the BZA denied Estates' request for a variance on the grounds that the proposal did not have adequate parking. See, Hegner v. Reed, 2 AD3d 683 (2nd Dept. 2003).
While the issue of waiver is generally a question of fact (See, Jefpaul Garage Corp. v. Presbyterian Hosp. in the City of New York, 61 NY2d 442 [1984]; and Bono v. Cucinella, supra), Estates has failed to place before this Court any evidence which directly or inferentially establishes an intent to waive the provisions of contract which
required Estates to submit plans which provided for 1 ½ parking spaces per unit.
2.Estoppel
In order to establish an estoppel, Estates had to establish a reasonable and detrimental reliance upon Jackson's actions. See, Annenberg v. Calvo, 7 AD3d 263 (1st Dept. 2004); and Fuchs v. New York Blood Center, Inc., 275 AD2d 240 (1st Dept. 2000); and Martini v. Lafayette Studios Corp., 273 AD2d 112 (1st Dept. 2000). The evidence in this case is to the contrary. Estates did not rely upon anything done or said by Jackson in preparing or submitting plans that did not conform to the contract or the Long Beach building code. Jackson did not learn that Estates had prepared and submitted [*9]non-conforming plans until after those plans had been submitted to the building department. The plans were never provided to Jackson's attorney despite a contractual requirement that a "...full and complete written and documented application for the aforesaid variance" be provided to Jackson's attorney within thirty (30) days of its
submission to the BZA. There are no facts from which the trier of fact could determine the existence of an estoppel.
3.Material Breach
Estates' assertion that its submission of plans which did not conform to the contract was not a material breach is unavailing. A material term is a provision of a contract that deals with a significant issues. See, Black's Law Dictionary, 7th Ed., p. 991.
A clear and unequivocal agreement should be enforced in accordance with its terms. South Road Assocs., LLC v. International Business Machines Corp., 4 NY3d 272 (2005); and Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002). Paragraph 31(a) of the Contract obligated Estates to submit an application that did not vary or deviate in any way from the contract. Any deviation without Jackson's consent would constitute a default entitling Jackson to such remedies as are provided for by the contract. Estates undeniably submitted a plan for both the building permit and a variance which did not contain the required number of parking spaces. This is a breach of a material term of the contract entitling Jackson to retain the deposit as liquidated damages. See, JMD Holding Corp. v. Congress Financial Corp., 4 NY3d 373 (2005); and Hegner v. Reed, supra.
4.Mutual Mistake
Estates asserts that the Contract provisions which provided for 1 ½ parking spaces per unit result from a mutual mistake. The parties agree that this provision was included in the contract based upon the parties' erroneous belief that the Long Beach Building Code required 1 ½ off-street parking spaces per unit. The Long Beach Building Code required 1 3/4 spaces per unit. See, Long Beach Zoning Code of Ordinances 9-105.11(k).
Estates is correct that this creates a mutual mistake of law. Under such circumstances, the court will relieve a party from its contractual obligations resulting
from a mutual mistake of law only where there has been a mistake of law coupled with fraud or inequitable, unfair or deceptive behavior. Greene v. Smith, 160 NY 533 (1899); and Trotter v. Brevoort, 60 App.Div. 562 (2nd Dept. 1901). The court will not relieve a party from a mistake if the mistake could have been discovered. See, Danann Realty Corp. v. Harris, 5 NY2d 317 (1959); and Barrett v. Huff, 6 AD3d 1164 (4th Dept. 2004); and Goldberg v. Colonial Life Ins. Co. of America, 284 App.Div. 678 (2nd Dept. 1954).
The parking requirements of the Long Beach Zoning Code are public record. The parking requirements, whether they were 1 ½ spaces or 1 3/4 spaces per unit, could have been determined by reviewing the Code. Furthermore, the mistake as to the off-street requirements of the Long Beach Zoning Code are irrelevant since the plan [*10]submitted by Estates plans did not even comply with the erroneous 1 ½ space requirement of the Contract.
C.Conclusion
There are no issues of material fact. Estates violated the contract by submitting a plan which did not comply with the off-street parking provisions of the Contract. Jackson did not consent in writing to Estates submission of the non-conforming plan prior to its submission. Paragraph 29 provides that if Estates defaults, Jackson may retain the deposit due on contract as liquidated damages. See, Micciche v. Homes by Timber, Inc., 18 AD3d 833 (2nd Dept. 2005); and Hegner v. Reed, supra.
Since the parties concede that the $50,000 due ninety (90) days after the execution of contract was not paid, Jackson is entitled to enter a judgment against Estates for this sum.
Accordingly, it is,
ORDERED, that Defendant's motion seeking summary judgment dismissing the complaint is granted. The complaint is hereby dismissed; and it is further,
ORDERED, that Defendant's motion for summary judgment on its third and fourth counterclaims is granted. It is hereby determined and declared that Defendant is entitled to retain the deposit paid on contract; and it is further,
ORDERED, that the County Clerk, Nassau County is directed to enter a judgment in favor of the Defendant and against the Plaintiff in the sum of $50,000 together with interest from June 10, 2003, together with costs and disbursements as taxed by the Clerk.
This constitutes the decision and Order of the Court.
Dated: Mineola, NY _____________________________
November 3, 2005 Hon. LEONARD B. AUSTIN, J.S.C.
XXX
Footnotes
Footnote 1:Schedule B to the contract is a copy of a Long Beach City Court Information alleging violations of Long Beach City Ordinances relating to Hotel.
Footnote 2:Eighteen (18) of the off-site off-street parking spaces were allocated to the ten unit condominium complex Estates planned to build on one of the adjacent properties.
Footnote 3:It is noted that although Plaintiff failed to pay the final $50,000 required under the Contract, Defendant has not asserted this as a ground for recovery on this motion.
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