Harris v Hosten

[*1] Harris v Hosten 2007 NY Slip Op 52122(U) [17 Misc 3d 1123(A)] Decided on October 24, 2007 Supreme Court, Kings County Rothenberg, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 24, 2007
Supreme Court, Kings County

Symonous Harris, Plaintiff,

against

David O. Hosten and Merlyn Hosten, et al., Defendants.



10093/05

Karen B. Rothenberg, J.

Upon the foregoing papers, plaintiff Symonous Harris (Harris) moves for an order (a) restoring this matter to the Central Compliance Part calendar; (b) for renewal, on the ground that new evidence has become available which was not disclosed by defendants David and Merlyn Hosten (the Hostens); and for reargument, on the ground that the court [FN1], in its underlying order, overlooked and rendered a determination in conflict with the correct law; and (2) the Hostens cross-move (a) for leave to reargue so much of the court's order as denied the Hosten's prior motion to vacate the notice of pendency or, in the alternative, vacating the notice of pendency filed by Harris.

BACKGROUND

In her underlying motion, Harris sought specific performance of a contract, which she entered into with the Hostens on August 4, 2004, for the sale of property located at 1331-1333 Flatbush Avenue (the property), located in Brooklyn, New York, the purchase price for which was $875,500. At the time of the contract's execution, plaintiff issued a down payment in the amount of $50,000.00, which was placed in escrow.

Among its various conditions, the subject contract contained, in paragraph 8, a mortgage contingency provision whereby Harris agreed to obtain financing in the amount of $700,400, within 45 "firm, unconditional" days after her receipt of two (signed) contracts. As is typical in such situations, the form contract provided that "(i)f such commitment is not issued on or before the [*2]Commitment Date, then . . . Purchaser or Seller may cancel this contract by giving notice to the other in which case, this contract shall be deemed canceled . . . ."

As a result of plaintiff's inability to obtain financing within the 45 day period, the closing, scheduled for September 30, 2004, was rescheduled. Thereafter, on October 19, 2004, the contract was canceled at the Hosten's request, and plaintiff's down payment was returned. However, after plaintiff communicated an interest in proceeding, the contract was reinstated, and the closing date was extended to December 15, 2004. There was another extension to January 15, 2005, and a further attempt to schedule a closing for February 1, 2005.

Subsequent to February 1, 2005, the Hostens met with a representative from the IRS about certain tax liens, in an amount that exceeded the amount of the agreed-upon purchase price, that had been filed against them and/or the property. Claiming that they were informed that the property could not be sold for less than market value or without the consent of the IRS, defendants, by an attorney's letter dated February 22, 2005, informed counsel for plaintiff that the contract was canceled and the down payment of $50,000.00 was again returned. The Hostens stated, as a reason, their inability to convey clear title, free of various tax liens which totaled approximately $1,511,000.00, as well as an outstanding mortgage in the approximate amount of $475,000.00.

In response to a third cancellation letter, dated March 1, 2005, counsel for plaintiff returned the check for the down payment and advised that plaintiff was "considering her options." Thereafter, plaintiff commenced a lawsuit seeking specific performance. Following joinder of issue, the Hostens moved for an order granting summary judgment, contending that under paragraph 21(b)[FN2] of the contract, they had a right to cancel the contract, and did so. By decision, order and judgment dated August 22, 2006, the court rejected plaintiff's contention that the Hostens were obligated, under the terms of the contract, to discharge the liens, of which plaintiff conceded she had knowledge, and found that under the unambiguous provisions of paragraph 21(b) of the contract, the Hostens demonstrated their entitlement to judgment. Accordingly, it dismissed plaintiff's complaint which sought specific performance, and directed that the parties appear for a conference for the purpose of determining plaintiff's reimbursable expenses.

Thereafter, in November of 2006, plaintiff moved to renew or reargue the summary judgment motion, and the Hostens cross-moved to vacate the notice of pendency. By order dated April 26, 2007, the court (a) denied the motion and cross motion because the case had been dismissed in the Central Compliance Part on November 11, 2006, and (b) granted leave to remake the motion and [*3]cross motion, provided that the new motion included a request to restore the action. Plaintiff's papers include an application for the latter relief which is unopposed by defendants. Accordingly, this court, prior to determining the instant motion and cross motion on their merits, restores the instant matter to the calendar, nunc pro tunc.

CONTENTIONS

In support of her motion to renew, plaintiff alleges that subsequent to the filing of the underlying motion for summary judgment, defendants conveyed other property owned by them, paid a sum of money to the United States Treasury Department, and made payments in satisfaction of certain judgments or liens, thus demonstrating an ability to convey the premises with clear title. She claims that such information was not available to her at the time she made the original motion.

In support of her motion to reargue, plaintiff asserts that the court misconstrued Paragraph 21(b) of the contract. She argues that the terms of the contract, read in its entirety, obligated defendants to convey the subject property free of all liens and encumbrances. She challenges the court's reliance on out-of-state authority (King v Knibb, 442 A2 1143 [R.I. 1982]) in finding that the terms of the agreement did not require affirmative action on the Hosten's part to extinguish outstanding defects. She further contends that the matter was not ripe for summary judgment because discovery had not yet been conducted. Finally, she claims that she is entitled to summary judgment as a matter of right, arguing that defendants did not exercise a good-faith attempt to clear title, and that their inability to convey marketable title was self-created. Characterizing the Hosten's actions as bad faith that resulted from a reckless or intentional default under the contract, plaintiff claims entitlement to damages equal to the value of the bargain.

In opposition to plaintiff's motion, and in support of their cross motion, defendants assail plaintiff's contention that they entered into the contract with the intent to defraud plaintiff knowing of the existing liens. They assert that plaintiff's allegation that certain funds were available to defendants approximately 18 months following the closing date provides no proof that they were in a position to satisfy the subject liens during the pendency of the contract. They further argue that plaintiff fails to refute the court's determination that the provisions of Paragraph 21(b) permitted the sellers, at their sole election, to remove the subject encumbrances, or cancel the contract.

DISCUSSION

CPLR 2221 (d) provides that a motion for leave to reargue "shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion." (CPLR §2221 [d]; Foley v Roche, 68 AD2d 558 [1979]). CPLR 2221 (e) provides that a motion for leave to renew "shall be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination" (see Orange and Rockland Utilities, Inc. v Assessor of Town of Haverstraw, 304 AD2d 668 [2003]). It is well settled that such a motion is addressed to the sound discretion of the court (Eveready Insurance Co. v Farrell, 304 AD2d 830 [2003]). [*4]

As stated by the court in the underlying decision, it is well settled that courts must "enforce the intent of the parties as expressed by the plain language of their contracts" (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]). In this vein, the court found that under the agreed-upon language contained in paragraph 21(b) of the contract of sale, the Hostens reserved an unconditional right to cancel said contract, based upon the existence of tax liens, and plaintiff was so bound by the terms of the agreement.

Indeed, under certain circumstances, the language contained in the subject paragraph confers upon a vendor of real property a contractual right to cancellation. Such circumstances were found to exist in He v Ho (23 AD3d 524 [2005]), relied upon by defendants in their cross motion and opposition. In that case, the parties' contract for sale of the subject premises contained a provision which permitted the seller to (a) adjourn the closing for up to 60-day intervals, during which time the sellers would endeavor to "remove, remedy, discharge or comply with such Defects," or (b) to cancel the contract "at Seller's sole election" either instead of or after 60-day extensions of the closing. The first option was initially undertaken, during which time, the sellers attempted to evict a tenant from the premises but were unable to do so for an extended period of time, despite the commencement of holdover proceedings. The purchaser refused to accept title that was subject to the tenancy. Under such circumstances, the Appellate Division found that the Supreme Court properly determined that the sellers were within their contractual right to elect to cancel the contract and to direct the return of the purchaser's down payment.

However, movant is correct in asserting, on the instant motion, that in New York, a vendor is "under a duty to take affirmative action to convey a marketable title according to the contract" (Barnett v Star Mechanical Corp., 171 AD2d 142, 145-146 [1991]); see also Green Point Sav. Bank v Litas Investing Co., 124 AD2d 555, 557 [1986], lv denied 70 NY2d 693 [1987]; Pamerqua Realty Corp. v Dollar Serv. Corp., 93 AD2d 249 [1983]; Mokar Props. Corp. v Hall, 6 AD2d 536, 539 [1958]), and indeed, the court's holding in He, where the vendor was found to have made reasonable efforts to evict the tenant, does not depart from this principle. Moreover, it is well settled that "a seller of real property may not, after contracting to sell, voluntarily encumber the property to the purchaser's disadvantage, and then shield itself from performance by claiming an inability to convey clear title due to such encumbrances" (Green Point Sav. Bank, 124 AD2d at 557). In the instant case, the determination of the circumstances surrounding the imposition of the tax liens and whether defendants took affirmative action to convey marketable title in accordance with the contract, cannot be reached in the absence of discovery. Accordingly, based upon a finding that there was, in fact, a misapprehension of the law, the court (1) grants plaintiff's motion to reargue to the extent of vacating the decision, order and judgment dated August 22, 2006, and reinstates the complaint, and (2) denies, without prejudice, defendants' cross motion. The parties are directed to appear in the Central Compliance Part on November 28, 2007 for a discovery conference.

The foregoing constitutes the decision and order of the court. [*5]

E N T E R

J. S. C. Footnotes

Footnote 1:All underlying orders referred to in this matter were rendered by Justice Howard A. Ruditzky.

Footnote 2:Said paragraph 21(b) provided, in relevant part, that: (i) [i]f at the date of Closing, Seller is unable to transfer title to Purchaser in accordance with this contract, . . . whether by reason of liens, encumbrances or other objections to title or otherwise (herein collectively called "Defects"), . . . and if purchaser shall be unwilling to waive same and close title without abatement of the purchase price, then, except as herein set forth, Seller shall have the right, at Seller's sole election, either to take such action as Seller may deem advisable to remove, remedy, discharge or comply with such Defects or to cancel this contract . . . .