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MD3 Holdings, LLC v. Buerkle

Supreme Court, Appellate Division, Fourth Department, New York.
Mar 16, 2018
159 A.D.3d 1483 (N.Y. App. Div. 2018)

Opinion

1421 CA 17–01123

03-16-2018

MD3 HOLDINGS, LLC, Plaintiff–Respondent, v. August BUERKLE, Defendant–Appellant.

MICHAEL J. KAWA, SYRACUSE, FOR DEFENDANT–APPELLANT. HARRIS BEACH PLLC, SYRACUSE (DAVID M. CAPRIOTTI OF COUNSEL), FOR PLAINTIFF–RESPONDENT.


MICHAEL J. KAWA, SYRACUSE, FOR DEFENDANT–APPELLANT.

HARRIS BEACH PLLC, SYRACUSE (DAVID M. CAPRIOTTI OF COUNSEL), FOR PLAINTIFF–RESPONDENT.

PRESENT: WHALEN, P.J., SMITH, LINDLEY, NEMOYER, AND TROUTMAN, JJ.

MEMORANDUM AND ORDER

Memorandum:Defendant contracted to purchase plaintiff's commercial building in the Town of DeWitt, Onondaga County. The contract included a standard mortgage contingency provision, and a bank subsequently issued defendant a conditional mortgage commitment letter. After receiving the mortgage commitment letter, however, defendant provided the bank with additional projections from his accountant that cast doubt upon the financial viability of the planned use of the building. Upon reviewing the accountant's analysis, the bank determined that "[defendant's] project will be reliant upon the speculative acquisition of an acceptable tenant," and it revoked the mortgage commitment. Without financing, the sale could not close.

Plaintiff then commenced this breach of contract action, alleging that defendant wrongfully induced the bank to revoke the mortgage commitment. Supreme Court, inter alia, granted plaintiff's ensuing motion for summary judgment on the complaint. Defendant now contends that the court erred in granting plaintiff's motion. We agree.

"When a mortgage commitment letter is revoked by the lender after the contingency period, in contrast to the failure to obtain a commitment letter in the first instance, the contractual provision relating to failure to obtain an initial commitment is inoperable, and the question becomes whether the revocation was attributable to any bad faith on the part of the purchaser" ( Anderson v. Meador, 56 A.D.3d 1030, 1038, 869 N.Y.S.2d 233 [3d Dept. 2008] ; see Blair v. O'Donnell, 85 A.D.3d 954, 955, 925 N.Y.S.2d 639 [2d Dept. 2011] ). Thus, where a mortgage commitment is revoked in the absence of bad faith on the part of the purchaser, performance of the contract is excused and the purchaser avoids the "unenviable position of either having to proceed to closing [without financing], or to risk forfeiture of the down payment" ( Kapur v. Stiefel, 264 A.D.2d 602, 603, 695 N.Y.S.2d 330 [1st Dept. 1999] ). Notably, the fact that a mortgage commitment was revoked based on new information supplied by the purchaser does not, by itself, establish that he or she acted in bad faith (see Anderson, 56 A.D.3d at 1038, 869 N.Y.S.2d 233 ; Kapur, 264 A.D.2d at 603, 695 N.Y.S.2d 330 ; Creighton v. Milbauer, 191 A.D.2d 162, 163–167, 594 N.Y.S.2d 185 [1st Dept. 1993] ). Here, plaintiff failed to establish as a matter of law that "the lender's revocation of the mortgage commitment was attributable to bad faith on the part of [defendant]" ( Blair, 85 A.D.3d at 955, 925 N.Y.S.2d 639 ), rather than to defendant's efforts to honor his duty of fair dealing to the bank by providing it with further information regarding the proposed transaction (see Anderson, 56 A.D.3d at 1038, 869 N.Y.S.2d 233 ; Kapur, 264 A.D.2d at 603, 695 N.Y.S.2d 330 ; see also Garber v. Giordano, 16 A.D.3d 454, 455, 791 N.Y.S.2d 175 [2d Dept. 2005] ).

It is hereby ORDERED that the order insofar as appealed from is unanimously reversed on the law without costs, the motion is denied and the third and fourth ordering paragraphs are vacated.


Summaries of

MD3 Holdings, LLC v. Buerkle

Supreme Court, Appellate Division, Fourth Department, New York.
Mar 16, 2018
159 A.D.3d 1483 (N.Y. App. Div. 2018)
Case details for

MD3 Holdings, LLC v. Buerkle

Case Details

Full title:MD3 HOLDINGS, LLC, Plaintiff–Respondent, v. August BUERKLE…

Court:Supreme Court, Appellate Division, Fourth Department, New York.

Date published: Mar 16, 2018

Citations

159 A.D.3d 1483 (N.Y. App. Div. 2018)
2018 N.Y. Slip Op. 1836
72 N.Y.S.3d 310

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