Opinion
7080/08.
Decided March 18, 2009.
RICHARD R. DuVALL, ESQ., McCABE MACK, LLP, Attorneys for NANCY NEWCOMB, Poughkeepsie, New York.
MICHAEL J. MATSLER, ESQ., RIDER, WEINER FRANKEL, P.C., Co-Counsel for Executor, DR. LEWIS J. SIMS, Newburgh, New York.
STEPHEN C.F. DIAMOND, ESQ., TEAHAN CONSTANTINO, ESQS., Co-Counsel for Executor, DR. LEWIS J. SIMS, Millbrook, New York.
This application by Nancy Newcomb for an order and judgment in her favor in the amount of $7,500.00, plus $3,750.00 for each month after January, 2009 for which Lewis J. Sims has allegedly failed to pay the applicant pursuant to the annexed stipulation of settlement and settlement agreement, plus interest, and further why an order should not issue awarding her actual and reasonable legal fees pursuant to the parties' stipulation of settlement and settlement agreement is resolved as follows.
BACKGROUND
On February 22, 2008, Nancy Newcomb ("Newcomb") appeared before the court through counsel, and Lewis Sims ("Sims") appeared in person and with counsel. Members of the Sims family (Lewis' wife Rita and sons Todd and Greg) were also present. The parties placed a stipulation of settlement on the record before the court appointed referee, retired Surrogate of Nassau County, the Hon. C. Raymond Radigan. The undersigned was also present to hear and approve the terms of settlement.
The controversy at that time related to an accounting presented by Sims and subsequent objections to it interposed by Newcomb. The thrust of Newcomb's objections was summarized by the referee when he stated:
"Basically, the objections had to do with the continuation of the holding of the King's Court apartment units. It was the position of Nancy that that should have been sold and liquidated." (Transcript at 5, lines 12-16).
The referee then stated:
"We can represent to the court that the terms and conditions of the stipulation of settlement were discussed with Nancy over the telephone, and she consented to the stipulation of settlement as I will describe it." (Transcript at 8, lines 15-19).
The essence of the settlement was to provide annual payments of $45,000.00 payable to Newcomb for the balance of her life. It was represented that she was 67 at the time of the settlement. The annual payment would be at a rate of $3,750.00 per month. The parties further agreed that Newcomb's attorney would be paid the lump sum of $75,000.00 for services rendered to her. In return, Newcomb surrendered all rights she had in all proceedings against all fiduciaries and beneficiaries as of the date of the agreement.
Counsel for Sims indicated that Newcomb would receive a mortgage on King's Court as security for the obligation, that Sims would provide a personal guarantee, that it was the intention to sell King's Court in all likelihood to Todd and Greg Sims, and that alternative options would be explored in the form of either a bond or other insurance company instrument or possibly an annuity or its equivalent which would continue to provide Newcomb with the financial assurance envisioned by the parties' agreement. (Transcript at 12.)
Newcomb's counsel indicated he had the authority to enter into the settlement. (Transcript at 15.)
The undersigned undertook an allocution of Sims and his family members. Counsel for Newcomb reiterated his authority to enter into the settlement on her behalf. (Transcript at 24.) The parties then indicated that a written stipulation of settlement memorializing the parties' understanding and intent would be prepared with the expectation that the court would "so order" it. (Transcript at 25.)
A Settlement Agreement was subsequently prepared and signed by multiple parties, including Sims and Newcomb. The obligation to pay Newcomb monthly installments of $3,750.00 is confirmed, along with Sims' personal guarantee to make up any deficiency in any installment. The parties further agreed in paragraph 2(e) in relevant part as follows:
"(e)The obligation to make the Annual Payment to Newcomb shall be secured by a mortgage on all of the real property referred to generally as Kings Court Apartments located at 42 Cannon Street, Poughkeepsie, New York and/or such other real estate such that the total amount so secured shall be equal to an amount no less than the present value of the Annual Payments to be paid to Newcomb for the duration of Newcomb's life expectancy measured from March 2008 as determined actuarially by an enrolled actuary who shall be a member of the American Academy of Actuaries, based on a rate of return of five (5) percent; which present value shall be adjusted annually to reflect the declining amount necessary to secure the remaining Annual Payments due, as set forth on the schedule annexed hereto as Exhibit B". Nothing herein shall be deemed to modify Newcomb's right to continue receiving Annual Payments for as long as she lives notwithstanding her living beyond her life expectancy as measured from March 2008. Said mortgage or mortgages shall be duly executed and delivered within five (5) days of the entry of the So-Ordered of this Settlement Agreement . . ."
Sims was required to execute and deliver his personal guarantee for the payments to Newcomb in paragraph 2(f) of the agreement. The record indicates he has done so as of September 4, 2008.
Paragraph 2(g) then provides:
"(g)Newcomb agrees to allow a substitution of the mortgages conveyed as collateral under subparagraph (e) above to the extent that a mortgage or mortgages are provided which collectively equal an amount no less than the present value of the remaining Annual Payments due Newcomb hereunder as set forth in the attached Schedule Exhibit B'; or otherwise by the pledging of liquid assets secured by a Control and Pledge Agreement pursuant to the Uniform Commercial Code, Article 9 against funds owned by Lewis Sims in his personal capacity; or as the parties may otherwise mutually agree, which shall end upon the death of Newcomb or the expiration of her life expectancy period as measured actuarially hereunder measured from March 2008 whichever first occurs, and Newcomb or her lawful representatives shall thereupon promptly execute and deliver a satisfaction of such mortgages or release of such pledge in recordable form."
The Settlement Agreement at paragraph 14 provides for an award of reasonable counsel fees to the prevailing party in the event of a breach of the agreement, as well as interest on any monetary award.
The parties thereafter executed an Agreement which refers to the Stipulation of Settlement in open court on February 22, 2008, as well as their Settlement Agreement. They agreed, among other things, to amend paragraph 7 of the Settlement Agreement to provide as follows:
"7 Sale of Kings Court Apartments: The sale of Kings Court Apartments is integral to the funding of the settlement herein. The parties agree that they shall engage McGrath Company to provide an appraisal of the current fair market value of Kings Court Apartments, and that Todd Sims and Gregory Sims (or an entity of which they are the principal owners) shall have a right to first refusal to purchase Kings Court at such fair market value. The purchase price shall be all cash." (pg. 3.)
The parties further authorized Sims to proceed with the sale of King's Court Apartments according to the provisions of the amended paragraph 7 set forth above (Agreement at 3). The Agreement was "so ordered" by the undersigned on August 21, 2008.
The record indicates that a closing of title for the sale of King's Court was scheduled for Friday, September 12, 2008.
The record also indicates that a dispute between Newcomb and Sims developed after the Agreement was "so ordered". Newcomb rejected Sims' offer to give her a second mortgage on Kings Court, as well as a junior mortgage on a second parcel of commercial real estate in proximity to King's Court located at 48 Cannon Street. A second offer to provide an additional mortgage on another commercial parcel located at 699 Main Street, or in the alternative, have Sims purchase at his cost a term life insurance policy to Newcomb's benefit, was also rejected.
SUPREME COURT
On September 10, 2008, two days before the scheduled closing of title, Newcomb commenced an action grounded in equity in Dutchess County Supreme Court against Lewis J. Sims, individually and as Executor of the Last Will and Testament of Samuel Siegel, and as Executor of the Last Will and Testament of Ann Siegel, and as Trustee under the Last Will and Testament of Samuel Siegel (Index No. 7080/2008). The relief requested is, among other things, a judgment declaring Newcomb to have an equitable mortgage on the King's Court Apartments property superior to any other except one in the approximate amount of $60,000.00 in favor of Michael Siegel. A notice of pendency affecting the King's Court Apartments property at 42 Cannon Street was filed simultaneously with the commencement of the action.
The matter was transferred to the undersigned as Surrogate pursuant to CPLR § 325(e), SCPA §§ 201(3), 202, 209 and 2101 by a decision on the record, dated September 26, 2008.
Sims filed a motion to dismiss the complaint and removal of the notice of pendency at the same time as seeking the order of transfer.
The undersigned issued a decision dismissing Newcomb's complaint and directing the cancellation of the notice of pendency for reasons stated on the record on September 26, 2008. Thereafter, an order based upon that decision, dated September 29, 2008, was signed.
Newcomb successfully moved the Appellate Division, Second Department for a stay of only that portion of the order as directed the cancellation of the notice of pendency (2008 NY Slip Op 86457[U][2008].) Closing of title for the King's Court Apartments property has not occurred accordingly. Sims stopped paying the monthly installment.
DECISION
Newcomb seeks enforcement of paragraph 2(a) of the Settlement Agreement which provides for monthly payments of $3,750.00 to her, plus interest and reasonable counsel fees as set forth in paragraph 14 of the agreement. Sims opposes the application and requests counsel fees in defending it.
The oral stipulation of settlement which has been transcribed, Settlement Agreement and Agreement are contracts subject to principles of contract interpretation. Where, as here, each contract is clear and unambiguous on its face the intent of the parties must be gleaned from within the four corners of the instrument, and not from extrinsic evidence. ( Rainbow v. Swisher, 72 NY2d 106, 109.) The role of the court is to determine the intent and purpose of the parties' agreement based on an examination of the record as a whole. ( Flannery v. Flannery , 54 AD3d 804 [2d Dept. 2008]; Pellino v. Pellino, 308 AD2d 522 [2d Dept. 2003].)
In the present case, Newcomb and Sims entered into an uncomplicated settlement agreement. In fact, her attorney expressed that belief when the matter settled in open court. (Transcript at 27, lines 21-24.) Newcomb agreed to have the sale of the King's Court Apartment property go forward in return for the payment to her of a stated sum of money under specified terms. The sale was understood by both parties to be essential to their agreement in order for it to succeed. Newcomb has thwarted Sims' ability to fulfill his obligation by virtue of the extant notice of pendency.
The record indicates Sims would give Newcomb "a mortgage on all of the real property referred to generally as Kings Court Apartments . . . and/or such other real estate . . ." [Settlement Agreement, ¶ 2(e)]. The parties further acknowledged that "the sale of Kings Court Apartments is integral to the funding of the settlement". [Agreement, pg. 3].
No where either in the oral stipulation of settlement,
Settlement Agreement, or Agreement does Sims covenant to give Newcomb a first mortgage on any property. Newcomb's position is further undercut by virtue of the language in paragraph 2(g) of the Settlement Agreement whereby she consents to Sims substituting mortgages as collateral for the obligation to pay her so long as they are no less than the present value of the remaining payments due her.
The method by which Newcomb's financial security would be safeguarded is within the inherent discretion of Sims backed up by his personal guarantee.
The record supports a finding that Newcomb's action in commencing a separate lawsuit accompanied by the filing of a notice of pendency which in turn prevented the sale contemplated by the partes to finance the settlement constitutes a material breach of the agreement. Sims is justified in withholding the monthly installment payments accordingly. ( Greenspan v. Amsterdam, 145 AD2d 535, 536 [2d Dept. 1988].) Newcomb's entire application is denied. Sims, however, is entitled to recover his reasonable counsel fees under the parties' agreement. That event shall abide the outcome of Newcomb's appeal presently pending in the companion Supreme Court action.
On this application, the Court considered the order to show cause supported by an affirmation with eleven (11) exhibits, affirmation and affidavit in opposition with two (2) exhibits, and reply affirmation with two (2) exhibits.
Counsel for Sims is directed to submit a decree on notice based upon the foregoing within ten (10) days from the date of this decision.
The foregoing constitutes the decision of the Court.