Opinion
13936/04.
Decided January 17, 2008.
Plaintiff: Wachtel Masyr, LLP.
Defendant: Arshack, Hajek Lehrman, PLLC.
Upon the foregoing papers, plaintiff James Haddad (plaintiff) moves, pursuant to CPLR 3212, for summary judgment on his claim seeking specific performance of the contract of sale between plaintiff and Jack Portuesi a/k/a Jack G. Portuese (Mr. Portuesi) dated March 2003, and directing the sale of the subject real property located at 2068 East 1st Street, Brooklyn, New York to plaintiff for the contract price of $775,000.00. Defendant Gary Portuesi, as guardian of Jack Portuesi a/k/a Jack G. Portuese (defendant) cross-moves for summary judgment dismissing plaintiff's complaint.
On March 12, 2001, plaintiff purchased the homes located at 2072 and 2074 East 1st Street, Brooklyn, New York. On August 23, 2002, plaintiff received a post card from non-party Fillmore Realty indicating that the home located at 2068 East 1st Street, Brooklyn, New York (the premises) had been listed for sale. At the time, the premises was owned by Mr. Portuese. According to plaintiff, he was interested in the premises inasmuch as it was located next door to his 2072 East 1st Street property. Thus, the purchase of the premises would enable him to extend his home at 2072 1st Street and would provide for an expanded garden and play area for his children.
Both of these homes required extensive renovations. Accordingly, plaintiff continued to live at his residence located at 2002 East 2nd Street, Brooklyn, New York until March 2005.
Accordingly, plaintiff dialed the telephone number listed on the post card and spoke to Mila Berlin, who was the listing broker for the premises. When Ms. Berlin informed plaintiff that the listing price for the premises was $999,000.00, plaintiff offered to pay $599.000.00 for the premises. Shortly thereafter, Ms. Berlin informed plaintiff that his offer was rejected by the owner of the premises. Several more conversations ensued between plaintiff and Ms. Berlin and ultimately, plaintiff learned that the seller was willing to accept $900,000.00 for the house. In response, plaintiff raised his offer to $700,000.00. This offer was also rejected.
Subsequently, Fillmore Realty conducted several open houses at the premises in order to attract potential buyers. Plaintiff attended one these open houses, whereat he met Mr. Portuesi. In his sworn affidavit, plaintiff describes the meeting as follows:
"During that meeting I had extensive and detailed conversations with Mr. Portuesi about the premises. In those conversations, Mr. Portuesi was alert and responded to my questions in a manner that suggested to me that he understood each and every question posed to him. Indeed, there was no indication that Mr. Portuesi was in any way incompetent as he spoke clearly and intelligently about the house and its mechanical workings, including extensive details about the heating, hot water, electrical and gas systems. Mr. Portuesi further commented very intelligently about the structure and quality of the construction going on at my home next door."
In January 2003, plaintiff learned that a house directly across the street from the premises had sold at a public auction for $780,000.00. Thereafter, plaintiff conveyed this information to Ms. Berlin, noted the similarities between that house and the premises, and offered to purchase the premises for $750,000.00. Shortly thereafter, Ms. Berlin informed plaintiff that the seller rejected his offer but would accept $800,000.00 for the sale of the premises. For several days thereafter, plaintiff continued to negotiate for the purchase of the premises through Ms. Berlin until an offer of $775,000.00 was orally accepted. The closing date for the sale of the premises was scheduled for April 15, 2004.
According to plaintiff, the closing was put off for this extended period of time so as to allow Mr. Portuesi time to travel abroad and to find a new place to live upon his return to the United States.
After the purchase price and closing date were agreed upon, plaintiff's attorneys and Mr. Portuesi's attorney, Paul Vaygen, Esq. were responsible for formalizing the terms of the sale into a written contract. In or about March 2003, a written agreement was prepared and executed by plaintiff and Mr. Portuesi. In accordance with the contract, plaintiff paid a deposit in the amount of $77,500.00, which was held in escrow by Mr. Portuesi's attorney pending closing. In addition, a memorandum of contract was recorded with the Office of the City Register of the City of New York.
During March and early April 2004, plaintiff's attorneys made several attempts to contact Mr. Portuesi's counsel to confirm the April 15, 2004 closing date. On April 8, 2004, Mr. Portuesi's attorney informed plaintiff's counsel that Mr. Portuesi refused to close on the sale of the premises in accordance with the contract. According to plaintiff's affidavit, he was ready, willing, and able to close on the purchase and sale of the premises pursuant to the contract on April 15, 2004 and he remains so to this day.
By summons and complaint dated April 30, 2004, plaintiff commenced the instant action seeking specific performance of the contract of sale as well as damages for breach of contract. Around this same time, defendant was admitted to Sea Crest Health Care Center in Brooklyn for untreated and uncontrolled diabetes, a gangrenous foot, and chronic schizophrenia which was exacerbated by his failure to take prescribed medication. Also in 2004, Mr. Portuesi's nephew Gary Portuesi (defendant) commenced a proceeding under Article 81 of the Mental Hygiene Law seeking to have his uncle declared an incapacitated person in need of a guardian. In a decision dated March 23, 2005, Hon. Michelle Weston Patterson of this court found that Mr. Portuesi was an incapacitated person under the Mental Hygiene Law and appointed defendant as his guardian. Among other things, Justice Patterson's order directed that as Mr. Portuesi's guardian, defendant should "take all steps necessary in the pending [instant] litigation to return [defendant] to his home, provided that it is feasible." The instant motions are now before the court.
Plaintiff moves for summary judgment against defendant under his specific performance cause of action. In support of this motion, plaintiff points to the undisputed fact that Mr. Portuesi executed a contract of sale for the premises for an agreed upon price of $775,000.00. Plaintiff further argues that there is no evidence to support defendant's claim that Mr. Portuesi was incompetent to authorize the underlying transaction at the time he signed the contract. To the contrary, plaintiff maintains that evidence conclusively demonstrates that Mr. Portuesi fully comprehended and understood the nature of the underlying transaction at the time the premises was placed on the market, during negotiations of the sale price of the premises, and at the time he executed the contract. In support of this argument, plaintiff submits his own aforementioned affidavit in which he avers that:
-Between August 2002 and March 2003, plaintiff and Mr. Portuesi (acting through Ms. Berlin) engaged in extensive back and forth negotiations for the sale of the premises.
-During an open house function prior to the sale of the premises, plaintiff met Mr. Portuesi and had an extensive and detailed conversation with him during which defendant spoke clearly and intelligently about the house and in no way exhibited any signs of incompetency.
-That at no time prior to and including the date when the parties signed the contract was it apparent nor was plaintiff aware that Mr. Portuesi was suffering under any mental illness or incompetency.
-That there is no evidence that defendant was taken advantage of inasmuch as the selling price for the premises was in line with prior sales in the neighborhood and plaintiff was represented by a real estate broker during negotiations and by an attorney when the contract was executed.
Plaintiff also points to the deposition testimony of Mr. Portuesi's attorney Paul Vaygen, who testified that he met with Mr. Portuesi and reviewed the contract prior to execution. Specifically, plaintiff notes that Mr. Vaygen testified that he believed that Mr. Portuesi understood the terms of the contract and that there was no indication that he was mentally incompetent at the time the contract was executed. In addition, plaintiff points to Ms. Berlin's deposition testimony as regards Mr. Portuesi's conduct. In particular, Ms. Berlin testified that she observed Mr. Vaygen explain the terms of the contract to Mr. Portuesi prior to execution and that Mr. Portuesi asked several relevant and rational questions about the contract terms.
Plaintiff further notes that following the execution of the contract, Mr. Portuesi traveled by himself to Australia where he spent several months. According to plaintiff, the fact that Mr. Portuesi was able to secure the necessary travel documents, airplane tickets, etc . . . for this trip indicates that Mr. Portuesi was capable of understanding the contract that he signed shortly before his journey.
Finally, plaintiff maintains that he is entitled to the remedy of specific performance inasmuch as he is ready, willing, and able to perform under the contract and he has no adequate remedy at law. In this regard, plaintiff points out that the subject premises has unique value to him inasmuch as it directly adjoins property he currently owns and would allow him to expand his current home and allow for a play area for his children.
In opposition to plaintiff's motion and in support of his own motion for summary judgment dismissing the complaint, defendant argues that the evidence before the court conclusively demonstrates that Mr. Portuesi was not mentally competent to enter into the contract. In support of this argument, defendant points to the undisputed fact that Mr. Portuesi has suffered from chronic schizophrenia since the mid-1960's. Defendant also submits his own sworn affidavit, along with the deposition testimony of Mr. Portuesi's sister, Laura Marchetta and sister-in-law, Maria Portuesi. Taken together, this testimony indicates that, after Mr. Portuesi's mother died in 1999, Mr. Portuesi's stopped taking the medication he was prescribed for his schizophrenia, ceased socializing and/or speaking with family members, and his mental and physical condition deteriorated.
Defendant also submits an affirmation by Ram Pardeshi, M.D., a psychiatrist who began treating Mr. Portuesi on May 6, 2004. According to Dr. Pardeshi, based upon his experience with Mr. Portuesi's illness and his familiarity with his medical and personal history, "as long as Mr. Portuesi was not taking medication and not receiving treatment for his condition, he would not have had the mental capacity to make decisions affecting his life, including the ability to competently enter into a legal contract."
In opposition to defendant's cross motion, plaintiff argues that none of the testimony submitted by defendant is relevant to the critical question of whether Mr. Portuesi was capable of comprehending and understanding the nature of the underlying transaction at the time he executed the contract. In this regard, plaintiff notes that defendant, Laura Marchetta, and Maria Portuesi concede that their contact with Mr. Portuesi during the relevant time period was extremely limited. Furthermore, plaintiff maintains that Dr. Pardeshi's affirmation is of no probative value inasmuch as he did not begin to treat Mr. Portuesi until May 2004, some 14 months after the contract was executed.
In reply to plaintiff's opposition papers, defendant maintains that Dr. Pardeshi's affirmation is clearly probative as respects the question of whether Mr. Portuesi was competent to enter into the contract. In particular, plaintiff notes that Dr. Portuesi treated plaintiff for a year, and as such, had intimate knowledge of Mr. Portuesi's medical history and what effect Mr. Portuesi's failure to take his medication would have on his mental capacity.
The competence of a contracting party "is presumed and the party asserting incapacity bears the burden of proving incompetence" ( Feiden v Feiden, 151 AD2d 889, 890). Furthermore, the mere fact that a contracting party is suffering from a neurological disease, impairment, or disorder such as Alzheimer's disease, dementia, or organic brain syndrome is insufficient to prove that the party lacked the capacity to enter into the contract. Instead, it must be demonstrated that, because of the affliction, the individual was incompetent at the time of the challenged transaction ( Matter of Mildred M.J., 43 AD3d 1391; Matter of Lee, 294 AD2d 366, 367; Gala v Magarinos, 245 AD2d 336). Moreover, an individual is only deemed to be incompetent to authorize a transaction if his or her mind was so affected as to render him or her wholly and absolutely incompetent to comprehend and understand the nature of the transaction ( Matter of Mildred M.J., 43 AD3d at 1391; Whitehead v Town House Equities, LTD., 8 AD3d 367, 369; Gala, 245 AD2d at 336; Feiden, 151 AD2d at 890).
Here, plaintiff has submitted admissible evidence in the form of his own sworn affidavit, as well as the deposition testimony of Mr. Portuesi's attorney (Mr. Vaygen) and real estate broker (Ms. Berlin) which indicates that Mr. Portuesi appeared to understand and comprehend the nature and ramifications of the contract for the sale of the premises at the time of execution. In particular, this evidence indicates that Mr. Portuesi listened to his attorney explain the terms and conditions of the contract and that Mr. Portuesi asked relevant questions regarding the contract before he signed the document. Plaintiff's evidence further indicates that Mr. Portuesi appeared to understand the nature and ramifications of his actions when the premises was placed on the market and during negotiations over the sales price. Specifically, plaintiff avers in his affidavit that he spoke with Mr. Portuesi during an open house and Mr. Portuesi was able to engage in a detailed discussion about the premises. In addition, plaintiff's evidence indicates that there was back and forth negotiation over the sale price of the house and that the agreed-upon price was a fair one. Finally, plaintiff, Ms. Berlin, and Mr. Vaygen have all given sworn testimony that they were unaware that Mr. Portuesi was mentally ill or otherwise impaired either prior to or at the time the contract was executed. Accordingly, the burden shifts to defendant to submit sufficient evidence to raise a triable issue of fact regarding Mr. Portuesi's competence at the time he entered into the contract.
Defendant has failed to meet this burden. In reviewing defendant's affidavit, as well as the deposition testimony of Mr. Portuesi's sister and sister-in-law, it is clear that these individuals had little to no contact with Mr. Portuesi between August 2002, when the premises was placed on the market, and March 2003, when Mr. Portuesi executed the contract. For example, Ms Marchetta testified that "[t]he last time I had any dealings with [Mr. Portuesi] was . . . 2000 maybe, 2000-2001, maybe 2001. 2001. Yeah." Similarly, when asked at her deposition whether she knew if a tenant at the premises paid rent in 2002, Maria Portuesi testified "[n]o, I don't know nothing about after my mother-in-law pass away, about [Mr. Portuesi's] stuff, nothing." At the same time, defendant states in his affidavit that, during this time period, Mr. Portuesi "would not socialize or even speak with members of my family including myself." Defendant also conceded that between 2002 and 2003, he only saw Mr. Portuesi "from time to time." Consequently, it is clear from their own admissions that these individuals are simply not in a position to know whether Mr. Portuesi's mind was so affected by his mental illness so as to render him wholly and absolutely incompetent to comprehend and understand the nature of the transaction that he entered into.
Turning to Dr. Pardeshi's affirmation, as stated above, case law requires that the party seeking to invalidate the contract must demonstrate that the contracting party was incompetent "at the time of the challenged transaction" ( Matter of Lee, 294 AD2d at 367; Gala, 245 AD2d at 336). Here, Dr. Pardeshi did not begin to treat Mr. Portuesi until 14 months after the challenged transaction. In the court's view, this treatment period is too far removed from the transaction date for Dr. Pardeshi's opinion regarding Mr. Pardeshi's competency at the time of the contract was signed to be of probative value ( Shallow v Carballal, 278 AD 328 app dismissed 303 NY 623; Matter of LeBovici, 171 Misc 2d 604, 609). In so ruling, the court also notes that Dr. Pardeshi's opinion is directly contradicted by the sworn testimony of three witnesses who were present when the contract was executed. Furthermore, there are no medical records which are contemporaneous with the relevant time period upon which Dr. Pardeshi may base his opinion. In short, Dr. Pardeshi's affirmation is too speculative to raise an issue of fact regarding Mr. Portuesi's competency at the time he entered into the contract.
Indeed, the only medical record regarding Mr. Portuesi which pre-dates his admission to Sea Crest Health Care Center in April/May 2004 is a brief letter from Pilgrim Psychiatric Center which indicates that Mr. Portuesi was admitted to the facility in 1966 and released in 1968.
Under the circumstances, the court finds that the contract between plaintiff and Mr. Portuesi for the sale of the premises is valid and enforceable. However, plaintiff's evidence is insufficient to demonstrate that he is entitled to specific performance of the contract at this juncture. It is well-settled law that a party seeking specific performance under a contract for the sale of real property must demonstrate that he or she is ready, willing, and able to perform under the contract. Specifically, the movant must submit documentary proof such as bank records or a mortgage commitment letter which indicates that he or she had sufficient funds to cover the purchase price of the subject premises at the scheduled closing ( Chernow v Chernow , 39 AD3d 684, 686; Fridman v Kucher, 34 AD3d 726, 728). Here, plaintiff has failed to submit any evidence indicating that he had the financial resources necessary to purchase the premises at the time of closing.
Accordingly, plaintiff's motion for summary judgment under his specific performance cause of action is denied without prejudice to renew upon the submission of proper documentary evidence. Defendant's cross motion for summary judgment dismissing the complaint is denied.
This constitutes the decision and order of the court.