Marler v A & S Lake Shore Leasing, Inc.

[*1] Marler v A & S Lake Shore Leasing, Inc. 2017 NY Slip Op 50972(U) Decided on June 7, 2017 Supreme Court, Warren County Muller, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 7, 2017
Supreme Court, Warren County

Henry Marler and MARLER FAMILY PROPERTIES, LLC, Plaintiffs,

against

A & S Lake Shore Leasing, Inc. and FRED ALEXY, Defendants.



62369



For Plaintiffs:

Bartlett, Pontiff, Stewart & Rhodes, P.C., Glens Falls (John D. Wright of counsel), for plaintiffs.

1 Washington St, Glens Falls, NY 12801

(518) 792-2117

For Defendants:

Stafford, Carr & McNally, P.C., Lake George (Bruce G. Carr and Thomas R. Knapp of counsel), for defendants

175 Ottawa St, Lake George, NY 12845

(518) 668-5412
Robert J. Muller, J.

On August 18, 2015, defendant A & S Lakeshore Leasing, Inc. (hereinafter A & S), the seller, and plaintiff Henry Marler, the buyer, entered into a contract for the sale of certain commercial property located at 28-30 Elm Street in the City of Glens Falls, Warren County. Defendant Fred Alexy is the principal officer of A & S and signed the contract on its behalf. Pursuant to the terms of the contract, Marler had to complete all inspections by August 31, 2015 and obtain a mortgage loan commitment by October 19, 2015. The closing was to take place on December 28, 2015.

A structural inspection of the property was done on August 12, 2015, prior to execution of the contract. Marler then obtained a mortgage loan commitment from NBT Bank by letter dated September 28, 2015 (hereinafter the commitment letter). The parties agreed that the property would be conveyed to plaintiff Marler Family Properties, LLC and, as such, the [*2]commitment letter listed Marler Family Properties as the borrower and Marler himself as guarantor.[FN1] The commitment letter stated, in pertinent part:

"ENVIRONMENTAL MATTERS: As a precondition to loan closing, NBT [Bank], at a minimum, will require an EA Quick Loan Check Report be completed. Further requirements may be necessary as determined by NBT Bank."

In accordance with this precondition, NBT Bank arranged for an environmental site inspection to be performed by LCS, Inc. on October 15, 2015. LCS then issued its report that same day, stating as follows: "One suspect fill port was noted on the southeast exterior of the subject structure. No petroleum odors were detected when the cap was removed. The nature of such is unknown and may be associated with an [underground storage tank]." LCS concluded that it could not "assess whether the subject property [was] acceptable as collateral until additional information [was] obtained regarding the nature of the pipe . . . ." Upon receipt of the report, NBT Bank advised Marler that it would require soil testing on the property as a condition of financing. Marler's real estate agent, David Strainer, then relayed this information to A & S' real estate broker, Mark Levack.

Levack met with Alexy "a week or less" after learning of the fill port. Alexy, who operates a business out of the subject premises and is in the building "every day," was not previously aware of the fill port because it was "covered up by a dumpster." Indeed, Marler's structural inspection also failed to find the fill port. Upon learning of the fill port, Alexy conducted some additional investigation and discovered that it was attached to an underground storage tank and, further, that the tank had fuel oil in it. As a result, he had one of his employees look into emptying the tank.

On October 22, 2015, Strainer forwarded an email to Levack from Timothy E. Robinson, Vice President & Commercial Relationship Manager of NBT Bank, indicating that "[o]nce [defendant] determine[s it] will close the tank . . . the Bank would . . . want to see clean soil samples as close to the tank as possible." Levack was then advised by Alexy on November 3, 2015 that the tank had been emptied and he passed this information along to Strainer that same day. Levack began gathering estimates for the taking of soil samples in mid-November. Soon thereafter, however, Alexy decided not to go forward with the contract and, on December 5, 2015, counsel for A & S and Alexy (hereinafter referred to collectively as defendants) sent a letter to counsel for Marler and Marler Family Properties (hereinafter referred to collectively as plaintiffs) advising that the contract was null and void. Counsel for defendants relied upon paragraph 10 of the contract, stating as follows:

"Under the terms of the contract, once the buyer has notified the seller of the existence of a problem discovered during the investigation, the contract is deemed canceled, null and void. In the alternative, the buyer may opt to forestall termination of the contract for a period of 10 days allowing the parties to enter into a written agreement concerning resolution of the defect found. [My] client is not willing to enter into any agreement relative to this storage tank. Therefore, [my] client considers the contract to be canceled, [*3]null and void. "

Plaintiffs subsequently commenced this action for specific performance on January 27, 2016, also seeking reasonable attorneys' fees in connection with the action. Issue was joined and the parties have now completed discovery and depositions. Presently before the Court is plaintiffs' motion for summary judgment granting the relief requested in the complaint and defendants' cross motion for summary judgment dismissing the complaint. The motion and cross motion will be addressed in seriatim.

Plaintiffs' Motion for Summary Judgment

To be entitled to specific performance, plaintiffs have "the burden of establishing, as a matter of law, that [they are] ready, willing and able to perform under the parties' [contract] and that [defendants are] unwilling to convey the property" (Mills v Chauvin, 103 AD3d 1041, 1042 [2013]; see ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, 490 [2006]; Tomhannock, LLC v Roustabout Resources, LLC, 149 AD3d 1219, 1220 [2017]).

The Court finds that plaintiffs have succeeded in establishing their entitlement to specific performance as a matter of law. Paragraph 6 of the contract provides, in pertinent part:

"Buyer and Seller agree that this contract is binding on Buyer only if Buyer is able to obtain a . . . commercial mortgage loan in the sum of $297,000.00 . . . . Buyer agrees to apply for the mortgage loan within six (6) business days after Seller has accepted ths contract. Buyer agrees to apply for such a mortgage loan and to put forth all best efforts to obtain the mortgage loan. If Buyer does not obtain a mortgage loan commitment and provide a copy thereof to Seller in accordance with [p]aragraph 24 of this contract by October 19, 2015 (the "Commitment Date"), then at any time after the Commitment Date and prior to Buyer providing a copy of Buyer's mortgage loan commitment to Seller, either Buyer or Seller may terminate this contract by written notice to the other in accordance with [p]aragraph 24 of this contract."

Paragraph 10 of the contract then provides as follows:

"This Agreement is contingent upon [a] determination, by a New York State licensed home inspector . . . , registered architect or licensed engineer, . . . that the premises is free from any substantial structural, mechanical, plumbing ,. . . , roof covering, mold (mildew is not classified as a mold), water or sewer defects. . . ."Buyer may have a qualified individual test the ground and buildings on the property for mold (mildew is not classified as mold), the presence of underground fuel tanks, and contamination from any hazardous materials whose presence or discharge on the property is in violation of any applicable laws or regulations."All tests and/or inspections contemplated pursuant to this [p]aragraph 10 shall be completed on or before August 31, 2015 and at Buyer's expense, and shall be deemed [*4]waived unless Buyer provides written notice of the failure of any of these tests and/or inspections, which notice is to be sent in accordance with [p]aragraph 24 of this Agreement, no later than August 31, 2015. If Buyer so notifies and further supplies written confirmation by a copy of the test results and/or inspection report(s), or letter(s) from the inspector, then this entire Agreement shall be deemed canceled, null and void and all deposits made hereunder shall be returned to Buyer . . . ."

Plaintiffs have demonstrated that a mortgage loan commitment was obtained by October 19, 2015, as required under paragraph 6 of the contract. They have further demonstrated that a structural inspection of the property was done by August 31, 2015, as required under paragraph 10. While the environmental inspection was not done until October 15, 2015, it is undisputed that neither of the parties ever declared that time was of the essence and, as such, this brief delay is inconsequential. Indeed, unless there is a declaration that time is of the essence, "the law will allow the vendor and vendee a reasonable time to perform their respective obligations, regardless of whether they specify a particular date for the [obligation to be fulfilled]" (Grace v Nappa, 46 NY2d 560, 565 [1979]; see ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d at 489). Finally, plaintiffs have demonstrated that they are prepared to proceed with the soil testing so as to secure their financing in accordance with the terms of the commitment letter. Significantly, defendants were provided with a copy of this commitment letter in accordance with paragraph 6 of the contract and never objected to its terms.

The Court further finds that defendants have failed to raise a triable issue of fact relative to plaintiffs' specific performance cause of action. Defendants contend that the contract is null and void based upon the notification it received from plaintiffs — under the terms of paragraph 10 of the contract — that the property had failed the environmental inspection. This contention, however, is without merit. Paragraph 10 expressly provides that written notice of the failure of any tests and/or inspections must be sent in accordance with paragraph 24 of the contract, which paragraph provides as follows:

"All notices contemplated by this Agreement shall be in writing, delivered by (a) first class mail postage prepaid postmarked no later than the required date; (b) by electronic transmission by 11:59 p.m. on such required date; or (c) by personal delivery by 11:59 p.m. on such required date. Such notice shall be effective on the date it is sent. Any notices shall be sent to the other party's attorney if known, if not then to the other party by serving the first named Buyer or Seller, as the case may be, at the address set forth for such party. A courtesy copy of all correspondence shall be sent to both brokers."

There is nothing in the record to suggest that written notice was ever sent by plaintiffs to counsel for defendants — or anyone else at his law firm — advising of the failure of the environmental inspection.[FN2] Indeed, plaintiffs never adopted the position that the environmental inspection failed. Rather, they adopted the position that further investigation was necessary, which position is amply supported by the several email exchanges between Levack and Strainer trying to arrange for the necessary soil testing. Without the requisite written notice, defendants simply cannot invoke the provisions of paragraph 10 to declare the contract null and void (see [*5]Eichengrun v Matarazzo, 136 AD3d 1184, 1185 [2016]; see also Kramer v Brown, 131 AD2d 816, 817-818 [1987]).

Defendants further contend that they do not wish to proceed with the contract because of "the potential liability on the seller with no assurance or guaranty of the buyer moving forward regardless of the outcome of the further investigation."[FN3] This contention is also unavailing. It was expressly agreed in paragraph 10 of the contract that Marler could have a qualified individual test the ground on the property for any contamination and the soil testing clearly falls within the purview of this paragraph. Moreover, even if the contract was deemed null and void, it is unlikely that any other potential purchaser could obtain financing without similar testing being performed.

Finally, inasmuch as defendants contend that they do not wish to proceed with the contract because the soil testing is too expensive, this contention is without merit. Paragraph 10 expressly provides that "[a]ll tests and/or inspections [are] at Buyer's expense" and, as such, defendants are not responsible for payment.

The Court next finds that plaintiffs have succeeded in establishing their entitlement to reasonable attorneys' fees as a matter of law. In this regard, paragraph 21 of the contract provides that "[i]f an action is commenced pursuant to an alleged default, the prevailing party shall be entitled to reasonable attorney fees, costs, and expenses. The Court further finds that defendants have failed to raise a triable issue of fact relative to plaintiffs' request for reasonable attorneys' fees.

Based upon the foregoing plaintiffs' motion for summary judgment is granted in its entirety.

Insofar as plaintiffs' request for reasonable attorneys' fees is concerned, counsel for plaintiffs is hereby directed to submit an affirmation of services to the Court — on notice to counsel for defendants — within thirty (30) days of the date of this Decision and Order. Counsel for defendants shall then have fifteen (15) days from the date of receipt of this affirmation to respond, following which the Court will issue a written determination regarding the amount of attorneys' fees to be awarded.

Defendants' Cross Motion for Summary Judgment

In accordance with the discussion set forth above, defendants' cross motion for summary judgment is denied in its entirety.

To the extent not specifically addressed herein, the parties' remaining contentions have been considered and are either academic or without merit.

Therefore, having considered the Affidavit of John D. Wright, Esq. with exhibits attached thereto, sworn to November 10, 2016, submitted in support of the motion; Memorandum of Law of John D. Wright, Esq., dated November 11, 2016, submitted in support of the motion; Affidavit of Thomas R. Knapp, Esq. with exhibits attached thereto, sworn to December 20, 2016, submitted in opposition to the motion and in support of the cross motion; Affidavit of Fred Alexy, sworn to December 20, 2016, submitted in opposition to the motion and in support of the [*6]cross motion; Memorandum of Law of Thomas R. Knapp, Esq., dated December 21, 2016, submitted in opposition to the motion and in support of the cross motion; Supplemental Affidavit of Thomas R. Knapp, Esq. with exhibit attached thereto, sworn to December 21, 2016, submitted in opposition to the motion and in support of the cross motion; Affidavit of John D. Wright, Esq., sworn to January 13, 2017, submitted in further support of the motion and in opposition to the cross motion; and Affidavit of Thomas R. Knapp, Esq., sworn to January 19, 2017, submitted in further support of the cross motion, and oral argument having been held on May 31, 2017 with John D. Wright, Esq. appearing on behalf of plaintiffs and Bruce G. Carr, Esq. appearing on behalf of defendants, it is hereby

ORDERED that plaintiffs' motion for summary judgment for the relief requested in the complaint is granted in its entirety; and it is further

ORDERED that, insofar as plaintiffs' request for reasonable attorneys' fees is concerned, counsel for plaintiffs shall submit an affirmation of services to the Court — on notice to counsel for defendants — within thirty (30) days of the date of this Decision and Order; and it is further

ORDERED that counsel for defendants shall have fifteen (15) days from the date of receipt of this affirmation of services to respond, following which the Court will issue a written determination regarding the amount of attorneys' fees to be awarded; and it is further

ORDERED that defendants' cross motion for summary judgment dismissing the complaint is denied in its entirety; and it is further

ORDERED that any relief not specifically addressed has nonetheless been considered and is hereby expressly denied.

The above constitutes the Decision and Order of this Court.

The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated November 10, 2016, the Notice of Motion dated December 21, 2016 and the above-referenced submissions. Counsel for plaintiffs is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry in accordance with CPLR 5513.

Dated: June 7, 2017

Lake George, New York

____________________________________

ROBERT J. MULLER, J.S.C.

ENTER: Footnotes

Footnote 1:While the record contains nothing in writing relative to this agreement, counsel for defendants conceded at oral argument that such an agreement was reached.

Footnote 2:There is likewise nothing in the record to suggest that plaintiffs ever sent written notice directly to either A & S or Alexy.

Footnote 3:At oral argument the parties agreed that, if the soil samples are not clean and plaintiff is thus unable to secure financing through NBT Bank, the contract will then be deemed null and void.