Yazdan v Kerendian

[*1] Yazdan v Kerendian 2013 NY Slip Op 51593(U) Decided on September 24, 2013 Supreme Court, Queens County McDonald, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 24, 2013
Supreme Court, Queens County

Danny Yazdan and JACOB BROMAN, Plaintiffs,

against

Janshid Kerendian, Defendants.



22272/2011

Robert J. McDonald, J.

The following papers numbered 1 to 16 were read on this motion by the defendant, JANSHID KERENDIAN, for an order pursuant to CPLR 3212 granting summary judgment to the defendant dismissing the plaintiff's cause of action for specific performance:

Papers Numbered

Notice of Motion-Affidavits-Exhibits...................1 - 6

Affirmation in Opposition-Affidavits...................7 - 12

Reply affirmation.....................................13 - 16

This is an action brought by the plaintiffs DANNY YAZDAN and JACOB BROMAN for breach of contract and specific performance of a purported contract entered into between the parties on October 6, 2010. The contract in question entitled "MEMORANDUM OF UNDERSTANDING"(MOU)was entered into by Janshid Kerendian as seller and Danny Yazdan and Jacob Broman as purchasers. The subjects of the contract are three commercial properties located next to each other at 168-36 Jamaica Avenue, 168-38 Jamaica Avenue and 168-40 Jamaica Avenue. The MOU states:

"the purpose of the Memorandum of Understanding in as few words as possible outlines [*2]the terms of the contract. This memorandum of understanding shall set forth the terms of the Parties Agreement, to which terms the parties shall be bound upon the execution and delivery of a final Contract." The parties and their attorneys shall work together in good faith to consummate a Contract on the terms set forth herein. The purchaser shall be allowed unrestricted access to all three buildings for the removal of any liens and violations and works related thereto."

The purchase price for the three properties was stated in the memorandum to be $2,2000,000.00. The closing of 168-36 and 168-38 was to take place within 120 days of the date of the memorandum or after all violations were cleared. The closing on 168-40 was to take place within one year of the date of the memorandum or when the purchaser removed all violations. The purchaser was to be given access to the premises in order to clear violations on all three properties.

At the time the memorandum was entered into the property at 136-40 Jamaica Avenue was the subject of a foreclosure action brought by Greenpoint Mortgage Funding against Janshid Kerendian. The MOU called for the plaintiffs to advance the sum of $630,000 to purchase the mortgage on 168-40 Jamaica Avenue and stop the foreclosure sale. As the plaintiffs were advancing $630,000, the purchasers were to receive a credit for said sum against the price of 168-36 and 168-38. The plaintiffs would then be liable for the sum of $930,000 at the closing of all three properties. The memorandum was executed by Danny Yazdan, Jacob Broman and was also signed by the defendant's brother, Jahansah Kerendian over a signature plate which contained the printed name of defendant Janshid Kerendian.

Defendant now moves to dismiss the plaintiffs' cause of action for specific performance stating that the memorandum is void as it was signed by Jahansah Kerendian an individual who counsel claims had neither ownership rights in the subject premises nor authority to transfer rights in accordance with the terms of the memorandum. Further counsel argues that the memorandum is not legally binding because it is merely an outline of the terms of a contract and does not contain all the essential terms required to make it a binding contract. In addition, counsel argues that the plaintiffs did not remove the liens and violations on the subject premises as agreed in the memorandum.

The defendant Janshid Kerendian a/k/a Jamshid Kerendian submits an affidavit dated October 15, 2012 stating that he has lived in Los Angeles for the past 12 years. He states that he is the owner of the three properties involved in this proceeding. He states that when he was informed by his brother that the plaintiffs were interested in purchasing the premises he instructed his brother Jahansah Kerendian to negotiate the sale of the properties. He states however, that at no time did he sign the memorandum of understanding or even review it prior to it being signed by his brother. He states that he did not give authority to anyone to sign the memorandum on his behalf. He states that the MOU was promulgated only to establish the terms that were to be incorporated in a final contract of sale. He states that a final contract was never drafted. In addition, he states that "at no time was a Power of Attorney executed giving my brother or anyone else authority to act as my attorney-in-fact for the sale of this property." He [*3]states that he believes that the plaintiffs abandoned their desire to seek the purchase of the property after continued negotiations failed. He states that he never received a request from the plaintiffs to close, nor did he receive a time is of the essence notice from the plaintiffs.

Jahansah Kerendian submits an affidavit dated September 8, 2012, stating that when he was approached by the plaintiffs regarding the sale of the property, in the Fall of 2010, he notified them that his brother Jamshid was the owner of the properties. He states that even though the signature plate on the memorandum has his brothers name on it, he is the one who actually signed the MOU. He states that he did not sign as a representative of his brother but only as a means to lay the groundwork for a final contract to be signed. He stated that the memorandum was not to be considered binding until his brother signed the document. Further, he states that at no time did the plaintiffs make any efforts to have violations removed from the properties in the course of a year that negotiations continued to take place. He states that the plaintiffs did purchase the note on the property located at 168-40 Jamaica Avenue and then attempted to renegotiate the purchase price to be included in the final contract.

Defendant's counsel, Terence J. Worms, Esq., states in his affirmation that in October 2010, the plaintiffs purchased a judgment issued on a defaulted mortgage on 168-40 Jamaica Avenue for $550,000 and then continued to negotiate the purchase price of the subject premises. He states that throughout 2011, other than purchasing the mortgage, plaintiffs did not commit to any of the proposed obligations in the memorandum and never requested or proffered a final contract. Further, counsel argues that the defendant did not sign the memorandum being sued on and that his brother signed the contract without any legal authority to bind the defendant. He states that Jahansah had no ownership rights in the properties when he signed the memorandum, was not an agent for his brother, did not have express, implied or apparent authority to act for his brother, and was not authorized to enter agreement on behalf of the defendant. Counsel claims that the evidence shows that the intention of the memorandum was only to commence negotiations that would ultimately consummate in a final contract of sale for the three subject premises. In addition, counsel contends that the MOU, by its terms, is not binding because it states that it is merely an outline of the terms and only binds the parties upon execution of a final contract.

Further defendant's counsel contends that there was uncertainty in the terms of the memorandum with respect to which party was responsible for removing the liens and violations, an essential term of the memorandum. Counsel states that the plaintiffs made no effort to remove violations from any of the properties as required under the terms of the memorandum and therefore are not entitled to specific performance (citing ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484 [2006]). Further, counsel argues that the element regarding a purchase money mortgage for $300,000 is lacking the essential terms regarding terms of repayment and interest rate (citing L.K. Sta. Group, LLC v Quantek Media, LLC, 62 AD3d 487 [1st Dept. 2009]). Lastly counsel argues that the terms of the contact have been destroyed by plaintiffs when the property located at 168-40 Jamaica Avenue was sold to a third party in December 2011 and plaintiffs received the value of the note which they held on the property. [*4]

In opposition, plaintiff's counsel, Harry Zubli, Esq., contends that the motion for summary judgment dismissing the plaintiff's complaint should be denied as the written MOU contains all of the material terms of a contract and defendant who sold 160-40 to a third party and who is in contract to sell the remaining properties to another entity is in breach of the contract. Moreover, plaintiffs have produced a copy of a document entitled "Limited Power of Attorney" signed by Jamshid Kerendian before a notary in California on October 4, 2010, two days prior to the execution of the memorandum, in which Jamshid states that he appoints his brother, Jahansah Kerendian as his attorney in fact with full power to act as his agent and lawful attorney for the purpose of selling the three properties which are the subject of the memorandum. Plaintiffs' counsel claims that pursuant to the power of attorney, defendant expressly authorized his brother Jahansah to enter into a contract for the sale and transfer of the properties. Plaintiff alleges that they were provided with a copy of the power of attorney and relied on the fact that Jahansah was the legal agent of his brother with legal authority to negotiate the terms of the agreement and with authority to sign the memorandum on behalf of the defendant.

Further plaintiff claims that at a minimum additional discovery and depositions are required in order to determine the facts and circumstances surrounding the execution of the power of attorney and the execution of the memorandum. Counsel alleges that the defendant exhibited bad faith in entering into a contract with a third party on September 28, 2011 to sell the three properties for a higher price while this memorandum remained in effect (see Queens Supreme Court Index No. 27930/11, entitled 52 BD Inc v Janshid Kerendian and Jahansah Kerendian). In addition. counsel argues that the defendant is in default under the agreement in failing to provide access to the properties to the plaintiffs so that the plaintiffs could clear the violations affecting the properties as was their obligation under the memorandum.

Counsel contends that the agreement is not merely a letter of intent but rather clearly sets forth the terms of the agreement between the parties, namely the plaintiffs obligation to purchase the specified properties from the defendant for the price set forth in the MOU. In addition plaintiff performed its obligation as set forth in the MOU by purchasing the note and mortgage on 168-40 Jamaica Avenue that was subject to the foreclosure action. Counsel argues that the MOU is enforceable as a contract as it clearly identified the parties, the subject matter, states the essential terms and is signed by the parties to be charged. Plaintiffs claim that the fact that the parties anticipated a more formal contract does not impair the effectiveness of the writing as it embodied all of the essential terms of the agreement (citing Tymon v Linoki, 16 NY2d 293 [1965]). Here, counsel claims that the parties did not intend that the agreement serve as a mere letter of intent but rather that it would serve and evidence the parties agreement for the sale of the three properties and therefore the plaintiff is entitled to specific performance of the binding contract.

Upon review and consideration of the defendant's motion, plaintiffs' affirmation in opposition and defendant's reply thereto, this court finds as follows:

The proponent of a summary judgment motion must tender evidentiary proof in [*5]admissible form eliminating any material issues of fact from the case. If the proponent succeeds, the burden shifts to the party opposing the motion, who then must show the existence of material issues of fact by producing evidentiary proof in admissible form, in support of his position (see Zuckerman v City of New York, 49 NY2d 557[1980]).

Here this court finds that the motion papers submitted by the parties raise numerous questions of fact regarding the circumstances surrounding the execution of the memorandum of understanding, the terms contained in the memorandum of understanding, the enforceability of the memorandum and the actions of the parties following the execution, such that summary judgment in favor the defendant dismissing the plaintiff's cause of action for specific performance is not warranted at this time.

First, there is a question of fact regarding whether defendant's brother Jahansah had lawful authority to enter into the memorandum of understanding as the attorney-in-fact for the defendant. Defendant argues that the MOU is void as it was signed by Jahansah who was not an owner of the properties. Defendant states in an affidavit that he never authorized his brother to enter into the MOU on his behalf. However, plaintiffs have submitted a notarized document purportedly signed by the defendant on October 4, 2010 two days prior to the execution of the memorandum in which defendant provided his brother with power of attorney to negotiate the sale of the properties in question as his agent.

Secondly, defendant argues that the MOU is not enforceable as a contract as the memorandum states that it is only an outline of the final contract. However, the courts have held that a memorandum of understanding is enforceable where it contains all of the essential elements of a real estate contract. "To create a binding contract, there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms" (Express Indus. & Terminal Corp. v New York State DOT, 93 NY2d 584 [1999]). Here, the court finds that the MOU contains all of the essential terms of the contract including the parties, the subject matter, the price, the time for closing and the method of financing the purchase. Although the exact terms of the purchase money mortgage were not expressed, "not all terms of a contract need be fixed with absolute certainty.. at some point virtually every agreement can be said to have a degree of indefiniteness." (Expres Indus., supra). However, there is a question of fact as to whether the parties evinced an intent to be bound by the MOU which was signed in 2010. Although it appears that defendant did not intend to be bound by the MOU having sold the properties to a third party subsequent to its execution, the plaintiff evinced an intent to be bound by the MOU prior to execution of a formal contract by purchasing the mortgage for 168-40 Jamaica Avenue pursuant to its obligation under the terms of the MOU. As stated above, this purchase resulted in the cancellation of a foreclosure action against the defendant's property. However, neither party made any effort since the time of the execution of the memorandum to remove the liens and violations on the building which was also required under the memorandum prior to proceeding to closing. [*6]

Accordingly, this court finds that as there are questions of fact as to whether Jahansah had authority to execute the memorandum on behalf of the defendant and whether the parties intended the MOU to merely serve as a letter of intent or whether the parties intended the memorandum to serve as evidence of the agreement to sell the properties to the plaintiff in accordance with its terms. Therefore, it is hereby

ORDERED, that the defendant's motion for summary judgment dismissing the plaintiff's complaint for specific performance is denied.

Dated: September 24, 2013

Long Island City, NY

______________________________

ROBERT J. MCDONALD

J.S.C.