Opinion
No. 231739.
2012-12-18
UNCLE SAM AUCTIONS AND REALTY, INC. and North Greenbush Associates, LLC, Plaintiff, v. Carl FIACCO, Defendants.
Goldman Attorneys PLLC, by Paul J. Goldman, Esq., Albany, for Defendant. Paul F. Dwyer, Esq., Loudonville, for Plaintiffs.
Goldman Attorneys PLLC, by Paul J. Goldman, Esq., Albany, for Defendant. Paul F. Dwyer, Esq., Loudonville, for Plaintiffs.
MICHAEL C. LYNCH, J.
This action involves the disposition of a buyer's premium and deposit paid on a contract for the purchase and sale of real property.Now, both defendant Carl Fiacco, the purchaser, and plaintiff Uncle Sam Auctions (hereinafter the broker), the representative for the plaintiff seller, North Greenbush Associates, LLC (hereinafter, the seller), seek summary judgment in their favor.
At issue in this case is a contract for the purchase and sale of commercial property located at 375 North Greenbush Road (hereinafter, the real property) that adjoins commercial property commonly known as “Yonder Farms” (hereinafter, the adjoining property).It is undisputed that the real property included a driveway, measuring approximately 252 feet long by 15 feet wide, maintained by and for the benefit of the owners of the adjoining property.The adjoining property owner also placed and used a dumpster on the real property at the end of the driveway and had a drainage pipe diverting stormwater onto the real property.
On April 29, 2009, the broker held an auction to sell the real property. After defendant offered the winning bid, he and the seller entered into a Purchase and Sale Contract, also dated April 29, 2009 (hereinafter, the Agreement). Pursuant to the terms of the Agreement, defendant provided two checks to the broker in the amounts of $15,000.00 and $35,000.00 and, in early May 2009, paid $33,000.00 for a total deposit in the amount of $35,000.00 and brokers premium in the amount of $48,000.00.
The purchase and sale agreement provided that the closing was to occur on or before May 28, 2009 and that “time was of the essence” .Sometime in May 2009, defendant retained a surveyor who visited the property on May 20, 2009.While performing the survey, he discovered the driveway used and maintained by the adjoining property owner and “[a]ccordingly, [he] indicated the Overlap on [his] survey and advised [defendant] of the potential impact on marketability” (Exhibit C: Dunn Affidavit ¶ 6).According to the defendant, “after [his] receipt of the Survey [dated May 26, 2009] I brought the existence of the Encroachment to the attention of the Plaintiffs”.
The property did not close on or before May 28, 2009.The record indicates that the purchaser and seller continued to attempt to complete the transaction during the summer of 2009. By correspondence dated August 5, 2009, defendant's attorney wrote to the seller's attorney to advise that “purchaser declares “Time is of the Essence” for closing on August 20, 2009, ... at that time purchaser will be ready to tender proceeds for the purchase according to the terms of the contract. If he seller cannot correct the outstanding title issues and convey marketable title to the Purchaser at that time and place, then the Purchaser will declare the Seller in breach of contract and pursue all legal remedies, including damages” (Exhibit G).By correspondence dated August 25, 2009, the seller's attorney wrote to the purchaser's attorney to advise:
The contract for sale in the above-referenced matter established a closing date on or before May 28, 2009, time being of the essence. At that date seller was in a position to close. Purchaser's failure to close on or before May 28, 2009, rendered purchaser in default. Seller now, before pursuing alternate remedies, calls for a closing on August 31, 2009 ...”. (Plaintiff's Exhibit M).
By correspondence also dated August 25, 2009, the purchaser's attorney wrote to the plaintiff/seller's attorney:
I am in receipt of your letter ... purporting to schedule a closing for August 31, 2009. In light of the fact that your client still cannot deliver clean title, and in further view of the fact that we already made time of the essence as of August 20, 2009, your letter is irrelevant. Your client is already in default. Please let this letter serve as my client's demand that all money deposited with your agent [the plaintiff/seller], be returned to my client immediately ...
The plaintiff/seller did not return the deposits. Instead, plaintiff commenced this action to resolve the disposition of the deposit and broker's premium.
Pursuant to the Purchase and Sale Agreement, the “Buyer's Premium” at issue in this case was a, “commission paid by the buyer to the broker ... equal to 12% of the bid price ... for the property ... separate from any other sale commission due Broker from Seller, and ... deemed earned by Broker when this contract is signed by the parties” (¶ 5). In the event of a default by the seller, the Agreement provides that the seller would
be liable to and pay Broker for all commissions and expenses due Broker from this sale including the Buyer's Premium (when applicable). Payment in full is due to Broker on the contract closing date, or date of default, whichever occurs first.
(Para 13[A] ). In the event of the purchaser's default, the purchaser would be required to pay the buyer's premium. Further, the seller could, under certain circumstances, accept the downpayment paid to the broker as liquidated damages (13[B] ).
Now, each party to the contract contends that the other party defaulted. More specifically, the seller argues that the purchaser failed to close on or before the “time is of the essence” date established by the contract. The defendant claims that the seller was not able to convey marketable title on or before the “time of the essence date” established by the contract or the later, “time is of the essence date”, established to permit the seller an opportunity to cure the title defects.
A party seeking to obtain damages for non performance of a contract must “demonstrate ‘that a tender of his or her own performance was made, unless tender was waived or the necessity for such a tender was obviated by acts of the other party amounting to an anticipatory breach of the contract or establishing that such party would be unable to perform” ‘ (No.1 Funding Ctr., Inc. v. H & G Operating Corp., 48 AD3d 908 [2008] ).Here, pursuant to the agreement, the seller agreed to
“transfer a good and marketable title to the property to Buyer, free and clear of all liens and encumbrances (except any assumed or taken subject to by Buyer); subject to such easements, rights of way, restrictions, rights, privileges, zoning and environmental protection laws, or other conditions of title as may then exist which do not render the title unmarketable ... Seller shall have a reasonable time to cure/remove any title objection raised by Buyer or Buyer's attorney or title insurance agent
(¶ 10).
Generally,
“The test of the marketability of a title is whether there is an objection thereto such as would interfere with a sale or with the market value of the property' * * * A marketable title is a title free from reasonable doubt, but not from every doubt' * * *. We have said that a purchaser ought not to be compelled to take property, the possession or title of which he may be obliged to defend by litigation. He should have a title that will enable him to hold his land free from probable claim by another, and one which, if he wishes to sell, would be reasonably free from any doubt which would interfere with its market value' “
(Voorheesville Rod & Gun Club v. E.W. Tompkins Co., 82 N.Y.2d 564, 571 [1993] [cit. om.] ). An encroachment may render title unmarketable if it is “substantial enough to seriously interfere with the use and enjoyment of the premises” (see, e.g. Warren's Weed New York Real Property, Ch. 91, § 91.38 [citing Ungrich v. Shaff, 119 A.D. 843 (1907) ] ). There are otherwise no, “hard and fast rules” with regard to whether an encroachment renders title unmarketable ( Id.).
Here, in addition to the survey showing the encroachments by the adjoining land owner, defendant submits an affidavit by the general manager of a title agency who avers, inter alia, that his agency was asked to prepare a title insurance commitment covering the real property and that, upon his review of the survey, the driveway constituted a “substantial encroachment”. He explains that without the cooperation of the adjoining property owner, the seller would not have been able to convey title free and clear of the title exceptions set forth in the policy (Conrad Affidavit, Exhibit D to Fiacco Affidavit).Defendant also submits an affidavit by a former contract vendee on the property who avers that in 2008, he cancelled his agreement to purchase the property because the adjoining landowner refused to sign a release that would extinguish his claim to the property.
“An easement providing ingress and egress over the subject property, in favor of the adjoining landowner, is an encumbrance that renders title unmarketable * * *. Such an encroachment prevents the seller from conveying and giving the possession of all the property that he was bound to convey” ‘ (Gundel v. Grady, 184 A.D.2d 548 [1992] ). In this Court's view, the undisputed existence of the encroachment, together with defendants submissions with regard to the history of the adjoining property owner's use of the property, are sufficient to demonstrate that the marketability of title was “not free from reasonable doubt”, thus, seller must raise a triable issue of fact with regard to this issue (Barrera v.. Chambers, 38 AD3d 699 [2007] ).
In response to the purchaser's motion for summary judgment and in support of its motion for summary judgment, the seller relies primarily on an affidavit by its member, Mr. Feiden, who avers that the adjoining landowner's use of the property was by “oral permission”. The flaw with this argument is that while such a claim may raise a question of fact with regard to whether the adjoining landowner's use of the property was hostile or adverse to the seller's use of the property (see, e.g. Chaner v. Calarco, 77 AD3d 1217 [2010],lv. den.16 NY3d 707 [2011] ), it does not resolve whether title was marketable on May 29, 2009 or August 20, 2012 (Brokaw v. Duffy, 165 N.Y. 391, 399 [1901] [the court may not find that property is marketable “by passing upon an objection depending on a disputed question of fact, ..., in the absence of the party in whom the outstanding right was vested”). Plaintiffs do not, for example, provide any evidentiary support for their claim that a title company would have insured title without including an exception to the encroachment that was revealed on the May 2009 survey ( Gundel, Supra ).Moreover, even if, as plaintiffs contend, defendant was aware of the encroachment before he entered into the purchase and sale agreement, such knowledge would not affect his right to title free and clear from encumbrances (Lawrence v. Mt., 234 A.D.2d 974 [1996] ).
Based on the foregoing, the Court finds that the defendant has demonstrated that plaintiff seller was unable to convey marketable title. Accordingly, because the seller could not perform under the contract, it had no authority to declare the purchaser to be in default of the contract as of May 29, 2009 (Gargano v. Rubin, 200 A.D.2d 554 [1994] ).Although the purchase and sale agreement did not include a mortgage contingency, defendant's submissions include an affidavit from a bank representative, who avers that in May 2009 the lender had determined that defendant and his brother were qualified for financing to complete the transaction in May 2009 (Exhibit H). In addition, defendant's brother submits an affidavit wherein he avers that if necessary, he was prepared to write a personal check for the funds necessary to purchase the property.
The record before the Court demonstrates that defendant was prepared to tender performance under the purchase and sale agreement and that the plaintiff seller was not able to convey marketable title.Accordingly, pursuant to the terms of the Agreement, the defendant is entitled to summary judgment in his favor dismissing the complaint and on his counterclaim seeking a return of the deposit and buyer's premium. In light of this determination, defendant's motion to amend his answer to include an affirmative defense based on collateral estoppel is denied, as academic.
Defendant also seeks an inquest to allow him to “submit evidence with regard to the substantial expenses he has incurred as a result of this wrongful litigation” (Goldman Affirmation ¶ 61). In New York, attorneys fees and expenses “are considered incidents of litigation rather than damages, and are not recoverable unless authorized by statute, court rule or the parties' written agreement” (Gage v. Monescalchi, 17 AD3d 770, 771 [2005]; see Baker Health Mgt. Sys., 98 N.Y.2d 80, 88 [2002] ). Defendant cites to no such authority and the only party entitled to recover attorneys fees under the contract was the broker. As such, the Court denies defendant's fee application.
Accordingly, based on the foregoing, it is
ORDERED AND ADJUDGED that defendant Fiacco's motion for summary judgment is granted, as set forth above; and it is further
ORDERED AND ADJUDGED that plaintiffs' motion for summary judgment is denied, all without costs.
This Memorandum constitutes the Decision and Order of the Court. This original Decision and Order is being returned to the attorney for defendant Fiacco. The below referenced original papers are being delivered to the Rensselaer County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.
SO ORDERED