Rivera-Ramos v Welsh

[*1] Rivera-Ramos v Welsh 2006 NY Slip Op 50036(U) [10 Misc 3d 1071(A)] Decided on January 4, 2006 Supreme Court, Bronx County Renwick, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 4, 2006
Supreme Court, Bronx County

Minette Rivera-Ramos, Plaintiff,

against

Charmaine Welsh, Defendant.



14576/2005

Dianne T. Renwick, J.

Prospective purchaser of real property, Minette Rivera-Ramos, commenced this action against the prospective vendor, Charmaine Welsh, seeking specific performance of a sales contract. Defendant-vendor now moves for a dismissal of the action on the ground that she properly rescinded the contract when plaintiff-purchaser failed to appear at the scheduled closing date. Plaintiff-purchaser cross moves for summary judgment on the ground that defendant-vendor's action of unilaterally rescinding the contract constituted a breach of the contract.

Factual Background

Pre-Execution Conduct of the Parties

This litigation arises out of a contract of sale of the residential one-family residence located at 2245 Homer Avenue, Bronx, New York. Apparently, the premises are occupied by the owner-vendor and an "illegal" tenant. During negotiations and prior to execution of the contract, plaintiff, prospective purchaser, expressed to the defendant-owner her desire to have the premises completely empty before the closing date, including the removal of the illegal tenant. In response, counsel for the owner sent a letter to counsel for the prospective buyer that his client was amenable to amending the contract to reflect that the entire premises are delivered completely vacant at closing and that the seller's only caveat was that the contract indicates that the closing shall not occur prior to March 31, 2005.

Executed Contract of Sale of Property [*2]

The parties executed the contract on February 16, 2005, agreeing to a closing date of April 5, 2005, and a purchase price of $305,000.00. The buyer then deposited $15, 250.00 in escrow with the seller's attorney. In addition, under the "2nd Rider to Contract," the parties stipulated that: Seller shall deliver the premises vacant and broom clean at the closing of title, or at seller's option, within seven (7 days) after closing of title, providing seller shall deposit with the Seller's attorney at the closing of title, the sum of $2,500.00 to be held in escrow by him to insure compliance with the above. If Seller does not vacate and surrender possession of the above described Premises to Purchaser by the date of closing, then the escrow agent shall pay to Purchaser the sum of $150.00 per day for each and every day thereafter until possession is delivered to Purchaser, by way of diminution of the Purchase Price.

With regard to defaults and remedies, the parties stipulated in paragraph twenty three (23) of the sales contract that: (a) If Purchaser defaults hereunder, Seller's sole remedy shall be to receive and retain the Down payment as liquidated damages, it being agreed that Seller's damages in case of Purchaser's default might be impossible to ascertain and that the Down payment constitutes a fair and reasonable amount of damages under the circumstances and is not a penalty.(a) If Seller defaults hereunder, Purchaser shall have such remedies as Purchaser shall be entitled to at law or in equity, including, but not limited to, specific performance.

Post-Execution, Pre-Closing Conduct of the Parties

While the contract sets the date of closing for April 5, 2005, apparently, the parties orally agreed to schedule the closing date for March 31, 2005. Plaintiff-buyer reports that on March 29, 2005, two days before the closing date, she visited the premises and observed that the "illegal tenant was still living there." Her attorney communicated the information to the seller's attorney, who responded that the tenant would vacate by March 31, 2005. On the evening before closing, plaintiff-buyer again visited the premises and found the tenant was still living there. The tenant allegedly told plaintiff-vendor that he was unaware that he was required to leave and was, therefore, not prepared to vacate the premises any time soon. As a result, counsel for plaintiff-buyer faxed a letter to counsel for defendant-seller regarding the client's observations and requesting assurances that the premises would be vacated by closing day (next day). In addition, the letter explained that the closing would be cancelled if the "illegal" tenant was still in the premises by closing date.

Plaintiff failed to appear for the closing on March 31, 2005. The next day, April 1, 2005, counsel for defendant-seller sent a letter to counsel for plaintiff-buyer, along with a check for the down payment, advising plaintiff-buyer that defendant-seller was "no longer interested in pursuing the transaction [and that] the contract is hereby rescinded with no further obligation on either party." In response, counsel for plaintiff-purchaser wrote to opposing counsel that his [*3]"client remains committed to purchasing the premises and if your client does not consent to, and finalize the sale on or before April 11, 2005- which is the date the bank commitment expires, we instead will seek specific performance."This action then ensued.

Discussion

The issue that arises from the aforementioned factual scenario is which party has breached the contract. Plaintiff-buyer claims that defendant-seller's action of unilaterally cancelling the contract constituted a breach of the contract. Plaintiff-buyer further claims that defendant-seller's default on the contract entitled plaintiff to the remedy of specific performance as permitted by the terms of the contract. Defendant-seller, however, argues that plaintiff's refusal to appear at the scheduled closing date was an anticipatory breach, which entitled defendant-seller to rescind the contract.

Contrary to defendant-seller's allegations, plaintiff-buyer's failure to appear at the orally-agreed March 31, 2005, closing date did not constitute an anticipatory breach. An anticipatory repudiation occurs when a party disclaims the duty to perform under the contract prior to the time designated for its performance and before it has received all the due consideration. Wester v. Casein Co. of America, 206 NY 506, 513-14 (1912). See also, NY Jur. 2d, Contracts. To constitute an anticipatory repudiation there must be a clear manifestation of intent communicated in advance of the time for performance that when the time for performance arrives, the required performance will not be rendered." Record Club of America v. United Artists Records, 643 F. Supp. 925, 936 (S.D.N.Y.1986). In other words, anticipatory repudiation occurs when "there is an 'overt communication of intention' not to perform." Tenavision, Inc. v. Neuman, 45 NY2d 145, 150 (1978). For these principles to operate, "the expression of intention not to perform must be positive and unequivocal." Record Club of America, 643 F. Supp. at 936, citing Tenavision v. Neuman, supra , 45 NY2d at 150; see also 4 Arthur L. Corbin, Contracts § 973 (1951); 11 Samuel Williston, Contracts § 1322 (3d ed. 1968) ("positive and unconditional").

This Court finds that plaintiff-buyer's action does not meet the required yard stick of an anticipatory breach. Plaintiff-buyer's communication to defendant-buyer that it was not attending the closing because the illegal tenant remained in the premises was not an unequivocal notice to defendant of an intention not to go through with the contract of sale. Instead, plaintiff, unsure of whether or not the defendant-seller could deliver a vacant premises, sought an adjournment of closing, in light of the failure to receive an assurance that the "illegal tenant" was vacating the premises. Nor can plaintiff-buyer's action be viewed as a misreading of the contract to avoid complying with its terms as the explicit provision in the contract requires the seller to "deliver the premises vacant," (unless defendant exercised the seven day option that required a deposit of $2,500.00). In fact, during negotiations prior to the execution of the contract, plaintiff expressed its concern about the illegal tenant and defendant provided assurances that the entire premises would be delivered completely vacant at closing. Under the circumstances, it was unreasonable for defendant-seller to assume that plaintiff-buyer was acting in bad faith and that she had no intention to perform.

Nor can defendant-seller establish that the March 31, 2005 closing date, orally agreed upon, was made with "time of the essence" as to that date. Time can be made of the essence in one of two ways. The first of these is by mutual agreement; a provision in the contract may state [*4]that time is of the essence. See Swezey v. Marra, 143 AD2d 827 (2nd Dept. 1988); Ellis v. Slovak, 133 AD2d 990 (3rd Dept. 1987). The other way by which time may be made of the essence is unilaterally by one of the parties. After the date specified in the contract has passed without a closing, one party may send a letter to the other party, making time of the essence as to a particular date, provided certain requirements are met, namely giving opposing party reasonable time within which to close. See Sohayegh v. Oberlander, 155 AD2d 438; Zahl v. Greenfield, 162 AD2d 449 (2nd Dept. 1990). Absent time of the essence, courts have consistently followed the rule that the parties are entitled to a reasonable adjournment based upon the facts of the particular case. See e.g., Pettizzo v. Pinks, 154 AD2d 521 (2nd Dept. 1989); Tarlo v. Robinson, 118 AD2d 561 (2nd Dept. 1986).

Here, defendant-seller makes no attempt to establish that the parties intended the orally-agreed March 31, 2005 date to be of the essence. Even if there had been such oral understanding, it would have been ineffective because of the contractual provision that the contract may not be modified orally, and the contract specified a closing date of April 5, 2005. See Elli v. Slovake, 133 AD2d. 990 (3rd Dept. 1987). Thus, despite plaintiff's failure to appear at the orally-agreed date of March 31, 2005, plaintiff had an additional week to perform under the terms of the contract.

Since it cannot establish that plaintiff-buyer's conduct- failing to appear at the orally agreed upon closing date of March 31, 2005 was either an anticipatory breach or a violation of "time of the essence" closing, plaintiff-buyer was entitled to a reasonable adjournment of the closing date. Under the circumstances the ineluctable conclusion is that defendant-seller's reaction, of returning the down payment and voiding the contract, was a wrongful unilateral repudiation of the parties' sales contract. Cf. Petrizzo v. Pinks, 154 AD2d 521 (2d Dept, 1989) (1990) ( Even though the date fixed for closing in the contract had passed, a letter from an attorney stating that the contract is cancelled will constitute a breach of the contract where no time of the essence was involved). The prudent action defendant-seller should have taken was to either assure plaintiff that the premises would be delivered vacant at closing date or that defendant was exercising the seven day option . Repudiation, however, was not an option. By doing so, defendant-seller's action constituted a material breach of the contract. Id. See also Benalaya v. Campbell, 204 AD2d 671 (2nd Dept.1994).

Moreover, defendant-seller is not entitled to a dismissal of the action based on an alleged accord and satisfaction under the circumstances of this case. The return of the buyer's down payment was made by check of the seller's attorney, which was deposited by the opposing counsel in the buyer's escrow account and was never personally received by the prospective buyer. The law is abundantly clear that such action "constituted nothing more than the return of the buyer's own property." Paynter v. Vishnia, 114 AD2d 404 (2nd Dept. 1985), citing Merrill Lynch Realty/Carll Burr, Inc. v. Skinner, 63 NY2d 590 (1984); see also Coneys v. Game, 141 AD2d 795 (2nd Dept.,1988); Lotito v. Mazzeo, 132 AD2d 650, 651 (2nd Dept. 2987).

It remains then only to consider whether defendant-seller's breach of the sales contract entitles plaintiff-buyer to the remedy of specific performance. Fundamental rules of contract construction and enforcement require that this Court limit the buyer to the remedies specifically delineated in the sales contract. 101123 LLC v. Solis Realty, LLC, __ AD2d __, 801 NYS2d 31 (1st Dept. 2005). See also Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, [*5]475 (2004). As noted above, in the subject contract of sale, it is clearly set forth that, if defendant-seller defaulted, plaintiff-purchaser "shall have such remedies as [p]urchaser be entitled at law or in equity, including but not limited to specific performance." Thus, specific performance is an appropriate remedy in this case.

Conclusion

For the foregoing reasons, it is hereby

ORDERED that defendant's motion to dismiss the complaint is denied; it is further

ORDERED that plaintiff's cross motion is granted; and it is further

ORDERED that a judgment is directed in favor of plaintiff with respect to her causes of action for specific performance and damages to the extent that defendant is directed to appear for a closing of the subject premises at a date and time to be scheduled by plaintiff, no sooner than 30 days after the service upon defendant of a copy of the judgment to be entered hereon, together with notice of entry.

This constitutes the Decision and Order of the Court.

Dated: January 4, 2006__________________________

Bronx, New York Hon. Dianne T. Renwick, J.S.C.