Opinion
17108-02.
Decided October 12, 2004.
Steven G. Leventhal, P.C., Roslyn, New York, counsel for plaintiff.
Law Offices of David J. Sutton, PLLC, Garden City, New York, counsel for defendants.
Defendants, James Gurrieri and Kathleen Gurrieri (collectively "the Gurrieris"), move for leave to serve an amended answer raising the affirmative defense of Statute of Frauds (Motion Seq. 4); the Gurrieris move for summary judgment dismissing the action (Motion Seq. 2); and Plaintiff, Robert Gottlieb ("Gottlieb"), cross-moves for summary judgment (Motion Seq. 3). These three motions are consolidated for decision.
BACKGROUND
Gottlieb was the proposed seller of a one family house. The Gurrieris were prospective purchasers. Gottlieb and the Gurrieris had agreed upon a price for the house and most of the other terms of this transaction.
On or about August 23, 2001, Gottlieb's attorney, William A. Ackerman, Esq. ("Ackerman"), prepared a proposed contract of sale and mailed it to the Gurrieris' attorney, Thomas Benigno ("Benigno").
Benigno received the contract, made several changes in the contract without obtaining Ackerman's approval or consent to the changes, had the contract signed by the Gurrieris and returned the signed contracts to Ackerman together with a check for the deposit due on contract.
Upon receipt of the contract, Ackerman called Benigno and advised him that some of the changes were unacceptable to Gottlieb. During a later telephone conversation between Ackerman and Benigno, on August 29, 2001, Benigno advised Ackerman that the Gurrieris had stopped payment on the down-payment check.
Two major issues arose affecting this deal. They were Gottlieb's refusal to provide a certificate of occupancy and certificates of completion for the structures and improvements as existed on the property and issues regarding the conditions of the electrical system in the house.
The Gurrieris had an engineer inspect the premises. The engineer indicated that there were significant problems with the electrical system. These problems included junction boxes in the basement that were not properly covered; open, loose and abandoned wiring in the basement; wiring in the garage that was not in a conduit; and wiring in the basement and attic that was not properly secured. The Gurrieris claim that the contract was contingent upon Gottlieb agreeing to correct the problems with the electrical system.
After the Gurrieris stopped payment of the initial down-payment check, the parties and their attorneys continued to negotiate to try to resolve these issues. By September 5, 2001, the parties and their attorneys seemingly reached an agreement as to all terms to the contract. The proposed additional terms needed for the contract were incorporated into a letter from Benigno to Ackerman dated September 5, 2001. The letter provided that (1) Gottlieb would not be required to provide certificates of completion for the balcony outside the bedroom, the fireplace, the outdoor shed and any interior renovations within the original structure; (2) Gottlieb would secure or remove all unnecessary wiring, put covers on all junction boxes in accordance with the electrical code and would ". . . secure the proper working order of the electricity in the house free of violation;" and (3) the closing date was changed to October 15, 2001.
The letter was to be countersigned by Ackerman indicating Gotllieb's consent to these changes and returned to Benigno with two fully executed copies of the contract.
Upon receipt of the letter, Ackerman called Benigno and advised him that he was striking the words "free of violations" from one of the Paragraphs in the September 5, 2001 letter because this phrase was confusing and redundant. Ackerman claimed that Gottlieb's obligations regarding violations were covered in paragraph 10 of the printed form contract which required Gottlieb to comply with any notices of violations issued by any governmental agencies as of the date of closing. Paragraph 10 also obligated Gottlieb to convey title free from any notices of violation.
Ackerman claims that Benigno agreed to permit Ackerman to strike the words "free of violations" from the September 5, 2001 letter. Therefore, Ackerman struck these words, co-signed the letter and returned in to Benigno together with 2 fully executed copies of the contract.
During the time that the parties and their attorneys were negotiating these modifications to the contract, the Gurrieris had delivered to Ackerman a replacement check for the deposit due on contract. When Ackerman returned the signed contracts and the co-signed letters of September 5, 2001 to Benigno, he advised his office bookkeeper to deposit the check for the down-payment into an interest bearing escrow account in accordance with the terms of the contract.
The check was not deposited until September 12, 2001. On September 18, 2001, Ackerman was advised that down payment check had been returned with indication that the Gurrieris had stopped payment.
Ackerman states that on the morning of September 18, 2001, he received an e-mail from Ms. Caccioppoli of his office indicating that the Gurrieris were no longer interested in purchasing Gottlieb's house. The e-mail indicates that the events of September 11, 2001 had caused the Gurrieris to change their minds. The e-mail does not mention Ackerman's deleting the terms "free of violations" from the September 5, 2001 letter as a basis for cancelling the contract.
Regardless of the reason, Gurrieri never purchased Gottlieb's house.
Gottlieb commenced this action alleging that Gurrieri had entered into a contract to purchase the house and had defaulted on the contract. Gottlieb seeks to recover the sum of $145,000.00, the deposit due on contract, as liquidated damages from Gurrieri's breach of the contract.
DISCUSSION
A. Motion to Amend
A party should be granted leave to amended pleading in the absence of prejudice or surprise resulting from delay. CPLR 3025(b). See, Fahey v. County of Ontario, 44 NY2d 934 (1978); and Northbay Construction Co., Inc. v. Bauco Constriction Corp., 275 AD2d 310 (2nd Dept., 2000). The party opposing the service of the amended pleading must demonstrate actual prejudice will occur if the court permits the service of an amended pleading. Edenwald Constractin Co., Inc. v. City of New York, 60 NY2d 957 (1983); and Holchendler v. We Transport, Inc., 292 AD2d 568 (2nd Dept., 2002); and O'Neal v. Cohen, 186 AD2d 639 (2nd Dept., 1992).
The determination as to whether to permit or deny a motion to amend a pleading is one addressed to the discretion of the court. Liendo v. Long Island Jewish Med. Ctr., 273 AD2d 445 (2nd Dept., 2000); and Henderson v. Gulati, 270 AD2d 308 (2nd Dept., 2000).
The party seeking leave to serve an amended pleading must make an evidentiary showing establishing the merit of the proposed amendment. Joyce v. McKenna Associates, Inc. 2 A.D.3d 592 (2nd Dept., 2003); and Morgan v. Prospect Park Associates Holdings, L.P., 251 AD2d 306 (2nd Dept., 1998). The merit of the proposed amendment must be established by one with actual knowledge of the facts and circumstances surrounding the proposed amendment. Id.; and Frost v. Monter, 202 AD2d 632 (2nd Dept., 1994).
The court will not consider the merit of the proposed amendment unless the proposed amendment is insufficient as a matter of law or totally devoid of merit. Sunrise Plaza Associates, L.P. v. International Summit Equities Corp., 288 AD2d 300 (2nd Dept., 2001); and Norman v. Ferrara, 107 AD2d 739 (2nd Dept., 1985); See also, Siegel New York Practiced § 237.
Defendants move to amend their answer to assert the Statute of Frauds as an affirmative defense. General Obligations Law § 5-703(2) requires that all contracts for the sale of real property be in writing signed either by the party to be charged or the agent of the party to be charged. The Statute of Frauds must be pled as an affirmative defense. CPLR 3018(b). The failure to plead the Statute of Frauds as an affirmative defense is deemed a waiver of the affirmative defense. CPLR 3211(e).
The Gurrieris assert that the written contract and the letter of September 5, 2001, when taken together, are insufficient to constitute a written agreement as required by the Statute of Frauds. They assert that Ackerman's deletion of the terms "free of violations" in the September 5, 2001 letter was not consented to by Benigno and, thus, constitutes a counter-offer which required a written acceptance by the Gurrieris. Neither the Gurrieris nor Benigno accepted this proposed change.
The Gurrieris assert that their prior counsel inadvertently failed to plead this affirmative defense and that Gottlieb has not been and will not be prejudiced by the assertion of this affirmative defense.
Gottlieb asserts that all the facts regarding this affirmative defense were known when Gurrieri served their answer. Gurrieri's new counsel waited over one year from substitution to make this motion.
Delay or lateness alone is not a basis for denying leave to serve an amended pleading. Mason v. Flagler Park Estates, 298 AD2d 562 (2nd Dept., 2002); and Jordan v. Aviles, 289 AD2d 532 (2nd Dept., 2001).
Gottlieb has failed to demonstrate any prejudice will occur as a result of the delay or lateness of the proposed amendment. The proposed amendment is not insufficient as a matter of law or totally devoid of merit. Therefore, Defendants should be granted leave to serve an amended answer asserting the affirmative defense of Statute of Frauds.
B. Summary Judgment — Standard
Summary judgment is a drastic remedy which will be granted only when the movant established that there are no triable issues of fact. Andre v. Pomeroy, 35 NY2d 361 (1974). See also, Mosheyev v. Polevsky, 283 AD2d 469 (2nd Dept., 2001); and Akseizer v. Kramer, 265 AD2d 365 (2nd Dept., 1999).
The party seeking summary judgment must make a prima facie showing of entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York 49 NY2d 557 (1980). See also, Aiello v. Garcia, 224 AD2d 467 (2nd Dept., 1996).
Once the movant has established a prima facie entitlement to judgment as a matter of law, the party opposing the motion must come forward with proof in evidentiary form establishing the existence of triable issues of fact or must demonstrate an acceptable excuse for its failure to do so. Zuckerman v. City of New York, supra; Davenport v. County of Nassau, 279 AD2d 497 (2nd Dept., 2001); and Bras v. Atlas Construction Corp., 166 AD2d 401 (2nd Dept., 1991).
The function of the court in deciding a motion for summary judgment is to determine if triable issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M., 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). A motion for summary judgment should be denied if the Court has any doubt as to the existence of a triable issue of fact. Freese v. Schwartz, 203 AD2d 513 (2nd Dept., 1994); and Miceli v. Purex Corp., 84 AD2d 562 (2nd Dept., 1984).
When deciding a motion for summary judgment, the court must view the evidence in a light most favorable to the non-moving party and must give the non-moving party the benefit of all reasonable inferences which can be drawn from the evidence. Negri v. Stop Shop, Inc., 65 NY2d 625 (1985); and Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 (2nd Dept., 2001). However, mere conclusions of law or fact are insufficient to defeat a motion for summary judgment. Banco Popular North America v. Victory Tax Mgt., Inc., 1 N.Y.3d 381 (2004).
C. Defendants' Motion for Summary Judgment
The Gurrieris move for summary judgment on three grounds: (1) Ackerman's change of the September 5, 2001 letter constitutes a counter-offer which was not accepted by them resulting in the parties never having a valid and binding contract; (2) Benigno did not have the authority to bind them to the change in the September 5, 2001 letter made by Ackerman; and (3) Benigno's oral assent to the change did not comply with the Statute of Frauds.
Gottlieb counters by asserting that the modification was consented to by Benigno on behalf of the Gurrieris or that this modification was to a provision which was not a material or essential terms of the contract.
In order to comply with the provisions of the Statute of Frauds General Obligations Law § 5-703(2) a contract for the sale of real estate must be in writing signed by the party to be charged. In this case, the September 5, 2001 letter was signed by the attorneys for the parties and not the parties.
An attorney cannot bind a client to a contract to purchase real estate unless the client has authorized the attorney in writing to enter into the contract. Chan v. Bay Ridge Park Hill Realty Co., 213 AD2d 467 (2nd Dept., 1995); and DeMartin v. Farina, 205 AD2d 659 (2nd Dept., 1994). Unwritten apparent authority is not sufficient to satisfy the Statute of Frauds. Urgo v. Patel, 297 AD2d 376 (2nd Dept., 2002).
In this case, the September 5, 2001 letter is signed by the attorneys for the parties and not the parties themselves. There is no indication that Benigno had written authorization from Gurrieri permitting him enter into this contract. Therefore, even if Benigno assented to Ackerman's request to strike the phrase "free of violations" from the September 5, 2001 letter, the terms of that agreement would not become binding unless and until it was signed by the Gurrieris or Benigno, if he had written authority to execute the agreement on their behalf. Since the Gurrieris did not sign this agreement and since Benigno did not have written authorization from the Gurrieris to consent to such a change, the September 5, 2001 letter does not comply with the provisions of the Statute of Frauds. See, Gold v. Vitucci, 168 AD2d 607 (2nd Dept., 1990).
A contract for the purchase of real estate cannot be modified orally. Samuels v. Kurland, 6 Misc 2d 814 (Sup.Ct., Nassau Co.), aff'd., 5 AD2d 686 (2nd Dept., 1957). See also, Peet v. Locke, 28 Misc 2d 824 (Sup.Ct., Ontario Co., 1961). In this case, Ackerman claims to have obtained Benigno's oral consent to strike the phrase "free of violations."
The September 5, 2001 letter is an integral part of the proposed contract. The representations and conditions contained in that letter establish specific conditions of the sale and require Gottlieb to take certain action relating to the electrical wiring prior to closing. These are material terms of the contract. Therefore, any modification must be in writing signed by the party to be charged. GOL § 5-703(2). See also, DeMartin v. Farina, supra.
In order to have a valid contract, there must be a meeting of the minds of the parties to an agreement regarding the essential terms of the agreement.Unilateral changes made by a party to a proposed real estate contract constitutes a counter-offer which may be rejected or accepted by the other party. Kling Real Estate Ltd. v. DePalma, 306 AD2d 445 (2nd Dept., 2003); and Harper v. Rodriguez, 272 AD2d 372 (2nd Dept., 2000). See also, May v. Wilcox, 182 AD2d 939 (3rd Dept., 1992). In this circumstance, the striking of the phrase "free of violations" constituted a counter-offer which was rejected by the Gurrieris.
The dispute as to whether Benigno did or did not assent to Ackerman's striking these terms does not create a question of fact requiring a trial. Even if Benigno did consent to the change, to comply with the Statute of Frauds, the change had to be signed by the party to be charged or by that person's lawful agent. It was not.
Since the parties never entered into a binding contract, Defendant's motion for summary judgment must be granted.
D. Plaintiff's Motion for Summary Judgment
Plaintiff seeks summary judgment asserting that he is entitled to recover as liquidated damages the deposit due on contract. However, Gottlieb's claim to recover the deposit due on contract is contingent upon there having been a valid contract. Since the Court has concluded that the parties never entered into a valid contract, Gottlieb's complaint must be dismissed.
Accordingly, it is,
ORDERED, that Defendants' motion for leave to serve an amended answer is granted; and it is further,
ORDERED, that Defendants' motion for summary judgment is granted and the action is hereby dismissed; and it is further,
ORDERED, that Plaintiff's cross-motion for summary judgment is denied.
This constitutes the decision and Order of the Court.