Tesoriero v Hyland Med. Bldg. Assoc.

[*1] Tesoriero v Hyland Med. Bldg. Assoc. 2006 NY Slip Op 52207(U) [13 Misc 3d 1241(A)] Decided on November 2, 2006 Supreme Court, Richmond County Gigante, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through November 28, 2006; it will not be published in the printed Official Reports.

Decided on November 2, 2006
Supreme Court, Richmond County

Tesoriero v. Hyland Medical Building Associates



13003/2000

Robert J. Gigante, J.

This is an action seeking specific performance to enforce a contract of sale of real property. This court issued a lengthy decision and order on September 15, 2005 setting forth the background of this case and the contentions of the parties, which need not be repeated here. A non-jury trial was conducted April 25, April 26, and July 10, 2006. As framed by all of the prior proceedings had herein, and argument of counsel at the non-jury trial, the primary issue for resolution is whether defendant complied with the subject clause in the contract of sale, which required it to "procure a variance for a structure with 100 percent professional offices." At the time of execution of the contract of sale, the office building at issue was permitted to have 50 percent medical and 50 percent professional use. After the execution of the contract between the parties, it turns out that others were interested in the property. One individual offered plaintiff a sum of money to walk away from his agreement to purchase the premises. Another individual sued, claiming to have had a prior binding agreement with the defendant to purchase the property, but his lawsuit was not successful. At this point it is to be noted that after plaintiff first became aware that a variance was not secured by defendant, he offered to waive the variance requirement "if you (defendant) apply for the variance and are rejected." There is no evidence that defendant accepted this proposal; the original proposal was from defendant's then-attorney, Gregg Fonti, who merely asked if plaintiff was willing to proceed with the purchase without the variance. Since the offer and counter-offer were not identical, i.e. they were not "mirror images" of one another under the common law rule (see generally, Lorbrook Corp. v. G & T Industries Inc., 162 AD2d 69, 74), no change was agreed upon. Thus, the original contract language remains the standard upon which a determination is to be made. Sellers retained the services of an architectural firm, Rampulla and Associates, for the purposes of securing the variance. Philip Rampulla, of that firm, testified on defendant's behalf. He is an urban planner, previously employed by the New York City Department of Housing Preservation and Development. He handles the firm's land use matters, including zoning variances and permits. He estimated that he handled approximately 75 matters before the Board of Standards and Appeals. He was familiar with the subject property inasmuch as he handled a previous application in 1991 or 1992 to change the permitted use from 100 percent medical to 100 percent professional. Ultimately, a 50/50 usage split was approved. With regard to the current application for a use variance, he attended a pre application conference based on his understanding of the usual practice that such conferences are recommended. The Chairman of the Board of Standards and Appeals, James Chin, told Mr. Rampulla that additional on-site parking was required before any variance would be approved. The subject property wasn't large enough to sustain the additional parking, but the requirement could be satisfied by available parking within 600 feet, and under the same ownership as 4300 Hylan Boulevard. No owners with empty lots within 600 feet who were willing to sell, could be found. Based on his experience, Mr. Rampulla advised one of the defendant/owners that a variance could not be obtained. Defendant also called Paul Bonfilio, a licenced architect as a witness. He is the former chairman and commissioner of the Board of Standards and Appeals, and former director of Land Use in the Office of the Borough President. Among other things, he opined that an applicant would be justified in relying on the information received at a pre application conference, [*2]notwithstanding its' non-binding character. He also stated that current zoning, R3-1, is restrictive, making approval for 100 percent office space in already non-conforming office space difficult. He supported Mr. Rampulla's conclusions that a variance could not be realistically obtained, i.e. that it "would not have a chance." Plaintiff's expert, Adam Rothkrug, is an attorney practicing in the field of zoning law. Approximately 40 to 50 percent of his work relates to Staten Island properties. As an attorney representing someone seeking a use variance for this building to 100 percent professional, he would have argued that parking requirements should be less for professional offices than for medical offices, due to traffic studies indicating that medical offices generate higher number of vehicular trips than do professional offices. Mr. Rothkrug conceded that he was not too "enamoured" with the pre-application meeting process, first, because it was non-binding and second, he was told in one instance that his application looked good, only to be denied by the Board of Standards and Appeals. It was his opinion that a full application, with evidence that real parking needs would be reduced, should have been filed. Discussion The clause requiring the seller to obtain a use variance is closely akin to the more commonly used mortgage contingency clause. Thus, case law in that area is very instructive and authoritative. Although the law does not require a party to fulfill a condition of the contract that is incapable of fulfillment, and is not that party's fault, there must be a genuine effort to fulfill the condition (Buffardi v. Parillo, 168 AD2d 812, 814, citing Cone v. Daus, 120 AD2d 788, 790). As long as the party makes such genuine effort and acts in good faith, performance may be excused (Id.). There is no evidence whatsoever that defendant acted in bad faith in its attempts to secure a variance. Consequently, the narrow issue for determination is whether defendant's actions constituted a genuine effort to do so. Whether that issue is one of law (see, Price v. Bartkowiak, 715 F. Supp. 76, 79) or fact (see, Case v. Forloine, 266 Ill. App. 3d 120, 125), the court's function is to interpret the contract so as to result in a "realization of reasonable expectations" (Price v. Bartkowiak, supra). With this criteria in mind, the court is satisfied that Mr. Rampulla's attendance at a pre- application conference, at which he was told that a formal application would be rejected unless there was more on-site parking, was a sufficient effort. Mr. Rampulla was experienced in these matters, and there was no available parking within the required 600 foot zone. The case of Saltzman v. McCombs, 71 Nev. 93, 281 P.2d 394, is instructive. In Saltzman, the purchasers' ability to procure a loan was a condition to their obligation to purchase a home. They inquired at a local Federal Housing Authority office as to the procedures necessary to obtain a loan. They were informed that an application would be useless because the husband's employment record, income, and obligations precluded a loan under FHA regulations. The court held that the record demonstrated that had a formal application been made, it would have been rejected. The court also excused performance on the buyers' part for that reason. Similar conclusions were made in other cases in which good faith inquiries were made but rebuffed (see, Case v. Forloine, 203 Ill. Dec. 256; Century 21 Acadia Realty and Development Co. v. Brough, 393 So. 2d 287; Management, Inc. v. Masterson's Inc., 616 P. 2d 356). There should be an attempt by the court to reconcile the differing opinions of Mr. Rampulla and Mr. Bonfilio on the one hand and Mr. Rothkrug on the other. It must be remembered that Mr. Rampulla and Mr. Bonfilio are professional land use planners, and as such are more likely to defer to statements and representations made to them by government officials. They are more likely to take what such officials say at face value. Mr. Rothkrug, on the other hand, is an attorney, and as such may be less likely to defer to such authority. His professional skills compel him to make a case, to [*3]cajol, to argue facts, to persuade others to reach a certain conclusion notwithstanding preconceived notions. All are professionals and appear very good at what they do; it's just that they have different perspectives and approaches to the same problem. It is not the court's function under these circumstances to determine whose opinions are correct. The court's role is to decide whether defendant's efforts to obtain a variance were real, bona fide, and sufficient to satisfy the parties' expectations, as expressed in the language of the contract. In the view of the court, they were. Defendant was entitled to rely on Mr. Rampulla's experience in zoning and land use applications, and his prior experience with this very property. There was no reason, at the salient times, to believe that a formal application would be approved. With due respect to Mr. Rothkrug's impressive legal background, his opinion that a formal application may have been approved with the proper proofs, is speculative; and from the perspective of the defendants, it is hindsight. Defendant reached a practical dead end in pursuing a variance; in the view of this court, they were not required to reach a legal dead end in order to satisfy its duty to make a "genuine effort." It is a well settled principle that the law does not require parties to perform futile acts (see, e.g. Barber v. Jacobs, 58 Conn. App 330, 337), and it was reasonable for defendant to consider further action to be futile. The court is cognizant that this decision was reached upon defendant's defense that in essence it fulfilled, to the best of its' ability, its' obligation to satisfy the condition of securing a variance. Upon failing to do so, after good faith efforts, it was not required to go forward with its obligation to convey title, as per the written agreement. In so ruling, the court bypassed a threshold question as to whether plaintiff was ready, willing, and able to complete the purchase of the premises. Had the court reached that question directly, it would have determined that plaintiff was not financially able to complete the transaction. A representative of Victory State Bank, where application was made, stated that no signed mortgage commitment existed, and such testimony was uncontroverted. Without a mortgage commitment, plaintiff did not have sufficient funds to satisfy the purchase price of $1.2 million. Some $700,000 of the money he expected to use was not his, but in the name of his parents. Another $600,000 was legally owned by a mortgage company called Falcon Worldwide Capital, which plaintiff apparently considered his own, but nothing in the record indicates a legal commitment of $600,000 from that company to plaintiff, personally and individually. For these reasons, the complaint, to the extent it seeks specific performance of the subject contract of sale for 4300 Hylan Boulevard, Staten Island, New York, and to direct defendant to convey title thereto to plaintiff, is dismissed. Plaintiff shall be entitled to a return of the contract deposit, plus interest earned thereon, plus plaintiff's net costs of examining title, if any, plus the net cost of any survey incurred by plaintiff, if any. This is the decision, order, and judgment of the court.

Supreme Court
Justice Gigante