Pinhas v Comperchio

[*1] Pinhas v Comperchio 2006 NY Slip Op 52691(U) [24 Misc 3d 1219(A)] Decided on September 7, 2006 Supreme Court, Kings County Saitta, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 7, 2006
Supreme Court, Kings County

Haim Pinhas and MARGALIT LANIADO, Plaintiffs,

against

Pauline Comperchio and MARK CARUSO, and CARUSO, CARUSO & BRANDA, P.C., Defendants.



6098/05

Wayne P. Saitta, J.

Defendants, PAULINE COMPERCHIO, MARK CARUSO, CARUSO, CARUSO & BRANDA, P.C., (hereinafter "DEFENDANTS" ), move for an Order pursuant to C.P.L.R. § 3212 (a), for an Order: (a) Granting summary judgment and dismissing the Complaint of the Plaintiffs, HAIM PINHAS and MARGALIT LANIADO (hereinafter "PLAINTIFFS" or "PINHAS & LANIADO") upon the ground that the causes of action asserted by Plaintiffs against Defendants have no merit; and/or(b) Declaring that the PLAINTIFFS are in default of the contract of sale between the parties herein dated April 8th, 2004; and/or(c) Directing that Summary Judgment be entered in favor of the Defendant, PAULINE COMPERCHIO's (hereinafter "COMPERCHIO") counterclaims in this matter; and/or(d) Awarding the Defendant, COMPERCHIO , the contract deposit in the sum of $57,500.00 and the $3,600.00 paid to reimburse the Defendant for expenses incurred by her due to the Plaintiffs' extension of the closing date in the contract of Sale; and/or

(E) for such other and further relief as may be just, proper and equitable.

Plaintiffs, PINHAS & LANIADO cross-move for: (1) an Order dismissing COMPERCHIO's motion for summary judgement; (2) granting Plaintiff summary judgment for return of the moneys paid by Plaintiffs, rescinding the contract and awarding $50,000.00 in consequential damages. [*2]

Upon reviewing DEFENDANTS' Notice of Motion For Summary Judgment; the Affirmation in Support of Mark J. Caruso, Esq. and the Affidavit in Support of PAULINE COMPERCHIO all dated March 30th, 2006 and all exhibits annexed thereto; Plaintiffs' Notice of Cross- Motion, Noel W. Hauser's, Esq., Affirmation In Opposition to Defendants' Motion and in Support of Plaintiffs' Cross-Motion dated May 23rd, 2006 and exhibits annexed thereto; Plaintiff, HAIM PINHAS' Affidavit dated May 18th, 2006; Rita Levy's Affidavit dated May 18th, 2006; Affirmation in Reply and in Opposition to Plaintiffs' Cross Motion For Summary Judgment of Mark Caruso, Esq. and the Affidavit in Reply and in Opposition to Plaintiffs' Cross Motion for Summary Judgment of PAULINE COMPERCHIO both dated June 26th, 2006 and the exhibits annexed thereto; Hauser's Affirmation in Further Support dated July 5th, 2006 an the exhibits annexed thereto; the court file, all the proceedings had herein after oral argument of counsel and after due deliberation COMPERCHIO's motion is granted and Plaintiffs' cross-motion is denied for the reasons set forth below.

BACKGROUND

The instant action arises out an alleged breach of a Contract of Sale for the purchase of the real property located at 1938 East 14th Street Brooklyn, New York, County of Kings (hereinafter "property") between seller, PAULINE COMPERCHIO, and buyers HAIM PINHAS and MARGALIT LANIADO.

On or about April 8th, 2004 the parties entered into a Contract of Sale to convey the property to the Plaintiffs. PINHAS and LANIADO made a down payment in the amount of $52,500.00 which was kept in an interest-bearing escrow of seller's attorney, MARK CARUSO, Esq.

In the Contract of Sale, COMPERCHIO represented that the property was a legal two-family dwelling. A Certificate of Occupancy search conducted on or about March 31st, 2004 indicated an ambiguity as to whether the property was a one-family dwelling or a one- family dwelling that had been converted into a two-family dwelling.

On April 13th, 2004, COMPERCHIO's counsel Caruso sent a copy of the Certificate of Occupancy search to Plaintiffs' counsel, Gregg X. Fonti, Esq. On April 19th, 2004 Caruso faxed a letter to Fonti asking him to confirm PINHAS and LANIADO's acceptance of the property despite the fact that the Building Department records list the property as a one-family dwelling. Fonti signed the letter in acknowledgment and sent it back to Caruso. Thereafter, on or about April 20th, 2004, Caruso sent Fonti a revised page of the Rider to the Contract of Sale reflecting the parties consent of same.

Defendants allege that thereafter, Caruso made numerous attempts to schedule a closing date for the transaction. On or about August 16th, 2004, Caruso faxed to Fonti a letter declaring "time of the essence" and setting a closing date for August 31st, 2004. At Plaintiffs' request, COMPERCHIO agreed to adjourn the closing date for the consideration of the release of $10,000.00 from the contract deposit being held in escrow.

On November 12th, 2004, Caruso sent the Plaintiffs' counsel a second "time of the essence" letter setting the closing for December 15th, 2004.

On December 10th, 2004, PINHAS and LANIADO requested an adjournment to January 31st, 2005. COMPERCHIO consented to the adjournment in consideration of Plaintiffs agreeing to an additional $5,000.00 to be deposited in the escrow account and agreeing to raise the purchase price [*3]by paying an additional $10,000.00.

On January 27th, 2005, PINHAS and LANIADO requested another adjournment to February 28th, 2005, as well as permission to assign the contract.

COMPERCHIO consented to the right to assign and to the adjournment via letter dated January 27th, 2005 with the condition that no future adjournments would be given.

The letter also advised PINHAS and LANIADO that if they did not complete the transaction on February 28th, 2005, they would be held in default, the contract would be terminated and the deposit would be retained. COMPERCHIO also conditioned the extension on the buyers paying an additional $3,600.00 for expenses incurred by COMPERCHIO in connection with the extensions.

The letter further provided that:

"[PINHAS and LANIADO] shall be permitted the right tho assign the contract without the [COMPERCHIO's] consent provided my office receives notice of the proposed assignment at least five (5) business days before the actual assignment of the contract is made, said notice to provide me with the name, address and social security number of the assignee as well as the name, address and telephone number of the assignee's attorney."

On the date of the closing, February 28th, 2005, Caruso appeared as counsel for the seller, and Noel Hauser, Esq. appeared as counsel for the buyers. A court reporter was present at the closing and a representative from Fonti and Fonti Title Company was also present at the closing.

A review of the transcript of the closing shows that the agent from the title company stated that the company was prepared to insure the title of the property. It also shows that Caruso provided tender to PINHAS and LANIADO by stating specifically: "Mr. Hauser, I'm going to tender these documents and ask you to establish that you have the funds at the table ready to close the transaction."

The transcript also shows that Hauser requested the Certificate of Occupancy and inquired whether the property was empty and whether there were two separate apartments contained within the property. During the closing Hauser argued that COMPERCHIO had not made a valid tender because she did not provide the Certificate of Occupancy and therefore, the buyers, PINHAS and LANIADO were not required to offer tender. At that juncture, Caruso called for the production of the certified checks to complete the transaction and Hauser stated that he was not prepared to produce the checks. No other objections were raised by Hauser at this juncture.

On that same date of the closing, February 28th, 2006, Plaintiffs filed a Summons and Complaint seeking damages and to rescind the contract, alleging that COMPERCHIO breached the Contract of Sale because she "refused to allow any prospective assignee to inspect the property, thereby frustrating and violating Plaintiffs' rights and expectancies."

On April 11th, 2005, COMPERCHIO joined issue by serving a Verified Answer with Counterclaims. COMPERCHIO's counterclaims allege breach of contract of the April 8th, 2004 Contract of Sale and specifically seek an award of the contract deposit in the sum of $57,500.00 as liquidated damages and the $3,600.00 pursuant to the January 27th, 2005 letter for a total sum of $61,100.00.

ANALYSIS

I.COURT GRANTS DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

It is well established that a moving party for summary judgment must make a prima facie [*4]showing of entitlement as a matter of law, offering sufficient evidence to demonstrate the absence of any material issues of fact. Winegrad v. New York Univ. Med. Center, 64 NY2d 851, 853 (1985); Zuckerman v. City of New York, 49 NY2d 557, 562 (1980).

Once there is a prima facie showing, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish material issues of fact which require a trial of action, or tender an acceptable excuse for failure to do so. Zuckerman v. City of New York, 49 NY2d 557 (1980); Alvarez v. Prospect Hosp., 68 NY2d 320, (1986). However, where the moving party fails to make a prima facie showing, the motion must be denied regardless of the sufficiency of the opposing party's papers.

Defendants contend that the particular facts and circumstances of the instant matter establish the prima facie showing required for the Court to grant summary judgment as they demonstrate that Plaintiffs, not Defendants, are in default of the contract.

A prima facie showing of entitlement to summary judgment is established where a seller demonstrates that they were ready, willing and able to perform on the law day. See, Engelhardt v. McGinnis, 2 AD3d 572, 769 NYS2d 297 (2nd Dept. 2003).

Here, COMPERCHIO was ready, willing and able to consummate the sale of the property and was able to deliver marketable title to the PINHAS and LANIADO at the February 28th, 2005 closing. The transcript of the closing clearly shows that a representative of the title company stated that he was prepared to insure the title of the property and that Caruso provided tender by stating: "Mr. Hauser, I'm going to tender these documents..." Also, the title report annexed to the motion clearly indicates that there were no objections or impairments to title that would prohibit COMPERCHIO from delivering marketable title to the Plaintiffs.

Based on the foregoing the court finds that COMPERCHIO was ready willing and able to perform on the Contract of Sale on February 28th, 2005. As such, COMPERCHIO has made a prima facie showing that she was in compliance with the contract and that PINHAS and LANIADO did not provide tender at the closing.

Plaintiffs contend that COMPERCHIO did not fulfill the contract because the property is neither a legal one-family, nor a two-family dwelling. In support of this argument, PINHAS and LANIADO submit a letter by an architect, Alfred Bartolomeo, stating that the second kitchen may be deemed a summer kitchen or it could be considered evidence of a second unit which could be illegal. For the purpose of determining Defendants' motion for summary judgment the court accepts as true Plaintiffs' allegation that the building was originally built as a one family dwelling but has been converted to a two unit dwelling without obtaining a new certificate of occupancy.

The Contract of Sale originally contained a representation that the property was a two-family dwelling. Thereafter, a title report by Municipal Data Services, Inc. indicated that New York City records list it as a one-family dwelling.

However, COMPERCHIO was not required under the Contract of Sale to provide a Certificate of Occupancy. Specifically, paragraph 16 of the Contract of Sale requiring COMPERCHIO deliver a Certificate of Occupancy to the buyer was deleted by the parties.

Also, paragraph 5 of the Rider states that COMPERCHIO is not required to obtain any certificates or permits, for stairs, basement kitchens, bathrooms. COMPERCHIO did not have an obligation to provide a Certificate of Occupancy or permits for the basement kitchen at the closing or at any other juncture. Therefore, PINHAS and LANIADO's refusal to close without a Certificate [*5]of Occupancy was without merit.

Moreover, it is undisputed that PINHAS and LANIADO were on notice of the ambiguity regarding whether the property was a one-family dwelling, or a one- family dwelling that had been converted into a two-family dwelling, and nonetheless agreed to purchase it "as is." On April 13th, 2004, Caruso sent a copy of the Certificate of Occupancy search showing that the building was listed as a one-family to Plaintiffs' counsel, Gregg X. Fonti, Esq.. On April 19th, 2004 Fonti signed a letter acknowledging the search and waiving any objections to the fact the property was not listed as a two-family dwelling. Thereafter, on or about April 20th, 2004, Caruso sent Fonti a revised page of the Rider to the Contract of Sale.

PINHAS and LANIADO argue that Fonti acted without their knowledge or authority when he waived the issues of the discrepancy in the Certificate of Occupancy. However, the Contract of Sale contains an Attorney Authorization clause which authorizes their attorney's to "execute any and all instruments in writing having reference to this Agreement including... Modification thereof and the extension of time for the performance of any term or condition of this Agreement." As such, even assuming arguendo that Fonti acted without the consent of PINHAS and LANIADO, COMPERCHIO had a right to rely on Fonti's representations. Any disputes that PINHAS and LANIADO have with Fonti is between themselves and Fonti. COMPERCHIO should not be penalized for any disagreement between PINHAS and LANIADO, and their counsel.

Further, in PINHAS' Affidavit in Opposition he admits that he inspected the property and saw that there were two apartment units in the property. As such, PINHAS and LANIADO were on notice of the second kitchen and that the property had two units.

As discussed above, paragraph 5 of the Rider provides that PINHAS and LANIADO accepted the property "as is" and that COMPERCHIO is not required to obtain any permits or certificates for the basement kitchen.

Next, PINHAS and LANIADO argue that the ambiguity as to the number of units within the property resulted in their inability to secure mortgage financing. It is true that paragraph 6 of the Rider conditioned the purchase of the property upon "a conventional mortgage loan commitment." However, the Rider further states that "in the event that a commitment for such loan is not secured from a lending institution with-in forty-five (45) days from the date of this contract, then and in that event either party may cancel this Agreement upon written notice to the other's attorney by Certified Mail-Return Receipt Requested." PINHAS and LANIADO never exercised their right to cancel the Contract of Sale due to their inability to secure a loan.

Furthermore, in his Affidavit in Opposition, PINHAS admits that despite of his inability to secure a mortgage, he "nevertheless wished to complete the purchase and accordingly, on December 10th, 2004 agreed to an increase in the purchase price by $10,000.00." As such, PINHAS and LANIADO cannot assert their inability to secure a mortgage as a defense at this juncture. They had ample opportunity to cancel the contract under the mortgage contingency clause, but they chose instead to proceed with the purchase of the property.

Lastly, PINHAS and LANIADO argue that COMPERCHIO breached the Contract of Sale by refusing to allow any prospective assignee to inspect the property, thereby frustrating and violating Plaintiffs' rights to assign, even though she had agreed to permit PINHAS and LANIADO to assign the contract without the her consent. In support of their contention, PINHAS and LANIADO provide the Affidavit of Rita Levy a licensed real estate broker and principal of Five [*6]Boros Real Estate, Inc.. In her Affidavit, Levy states that PINHAS and LANIADO hired her to locate a purchaser willing to assume their obligations and consummate the purchase of the property for $1,050,000.00. As a result, she advertised the property and located several prospects. She alleges that she was unable to show the property because COMPERCHIO refused access.

However, PINHAS and LANIADO never raised this issue of access during the closing date, nor at any time prior to the closing. There is no indication that COMPERCHIO or her attorney CARUSO were placed on notice of this alleged default on the Contract of Sale in a manner that would allow them to cure the defect prior to arriving at the time of the essence closing date.

Further, the court finds that Rita Levy's Affidavit is conclusory and merely contains vague statements alluding to COMPERCHIO's alleged unwillingness to show the property without stating specifically dates of refusal by COMPERCHIO, dates of communication with Caruso, or the names of any prospective assignees.

None of the objections raised by Plaintiffs, even accepting as true the contention that the property was converted to a two-family use without permits, establish a default under the contract by defendant.

It is well settled that in order to defeat a motion for summary judgment, the opponent must produce evidentiary proof in admissible form, sufficient to require a trial of material questions of fact, or alternatively demonstrate an acceptable excuse for his failure to meet the requirement of tendering the same (New York National Bank v. Harris, 182 AD2d 680 [2nd Dept. 1992]). Here, PINHAS and LANIADO have failed to meet this burden. Based on the undisputed facts, Plaintiffs have not shown a valid reason for their refusal to close and are in default of the Contract of Sale.

II.DAMAGES

COMPERCHIO seeks an Order granting an award of the contract deposit in the sum of $57,500.00 and an additional $3,600.00 as reimbursement for expenses incurred by COMPERCHIO in connection to the extensions for the closing date pursuant to the letter of January 27th, 2005 for a total sum of $61,100.00.

On April 8th, 2004, $52,500.00 was placed in an interest bearing escrow account as the down-payment for the Contract of Sale. On or about August 31st, 2004, $10,000.00 were released to COMPERCHIO from the deposit being held in escrow leaving a balance of $42,500.00. On or about December 15th, 2004, an additional $5,000.00 was deposited in the escrow account by PINHAS and LANIADO for a new balance of $47,500.00.

Paragraph 23, Defaults and Remedies of the Contract of Sale provides:

"If the Purchaser defaults hereunder Seller's soleremedy shall be to receive and retain the down-payment as liquidated damages, it being agreed that Sellers damages in case of purchasers 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."

Based on the liquidated damages clause of the Contract of Sale, COMPERCHIO cannot recover the additional $3,600.00 for expenses incurred for the extension in the closing.

As such the COMPERCHIO is entitled to the remaining balance of contract down-payment being held in escrow ($47,500.00) plus whatever interest accrued since April 8th 2004. The court denies COMPERCHIO's request for the additional $3,600.00. [*7]

By reason of the foregoing, Defendants' motion for summary judgment on Defendants' counterclaims and dismissing the Summons and Complaint filed herein is granted pursuant to C.P.L.R. § 3212 (a) and Plaintiffs' cross motion for summary motion is denied. PAULINE COMPERCHIO is entitled to the release the balance of the deposit amount left in the escrow account held by MARK CARUSO, Esq. together with whatever interest accrued in the escrow account from April 8th, 2004. Settled Order on Notice.

E N T E R,

______________________________

Honorable Wayne P. Saitta, J.S.C.