Opinion
23390/11
03-27-2012
Wilfredo Rodriguez and JUSTINA RODRIGUEZ, Plaintiffs, v. Florencio McPherson and MARTIN VASQUEZ, Defendants.
Amy S. Nord, Esq. Attorney for Plaintiff Edward Harold King, Esq. Attorney for Defendant McPherson
Amy S. Nord, Esq. Attorney for Plaintiff
Edward Harold King, Esq. Attorney for Defendant McPherson
Johnny L. Baynes, J.
Defendant, FLORENCIO MCPHERSON moves for an Order pursuant to CPLR § 3212 for Summary Judgment in favor of Defendant dismissing the Complaint and in favor of Defendant's counterclaim, and for an Order and Judgment of turnover of $44,000 with any attendant interest now held by the Clerk of Court, Kings County.
Plaintiffs, WILFREDO RODRIGUEZ and JUSTINA RODRIGUEZ, Cross-Move for Summary Judgment denying Defendant's Motion, for Summary Judgment in favor of Plaintiffs declaring that the Defendant FLORENCIO MCPHERSON breached the Contract of Sale for the purchase of real property entered into between the parties on May 20, 2008, and for return of the contract down payment of $44,000.
The undisputed facts are as follows: On the 20th day of May, 2008, Plaintiffs WILFREDO RODRIGUEZ and JUSTINA RODRIGUEZ (hereinafter "Purchasers" or "Plaintiffs") entered into a contract for the purchase of real property owned by Defendant FLORENCIO MCPHERSON, (hereinafter "Defendant" or "Seller") and located at 2789 Atlantic Avenue, Brooklyn, NY. (Hereinafter "the Contract"). Pursuant to the terms of the Contract, plaintiffs paid the contract deposit of $44,000.The down payment was made payable to the Seller's attorney, Edward Harold King, Esq. (hereinafter "King").
Thereafter, King commenced an interpleader action under Supreme Court, Kings County, Index No. 27605/08, which resulted in said down payment being paid into Court where it is currently being held by the Country Clerk.
Paragraph 8 of the Contract provides for a Mortgage Commitment Contingency (hereinafter "Mortgage Contingency" or "Mortgage Contingency Clause") and states in pertinent part:
(a) The obligation of Purchaser to purchase under this contract is conditioned upon the issuance on or before 45 days after a fully executed copy of this contract is given to Purchaser or Purchaser's attorney in the manner set forth in paragraph 25 or subparagraph 8(j) (the "Commitment Date") of a written commitment from an Institutional Lender pursuant to which such Institutional Lender agrees to make a first conventional mortgage loan, other than a VA FHA or other governmentally insured loan to Purchaser, at Purchaser's sole cost and expense of $396,000.00 a term of at least 15/25/30 years (or such lesser sum or shorter term as Purchaser shall be willing to accept) at the prevailing fixed or adjustable rate of interest and or other customary commitment terms (the "Commitment")....Paragraph 23 of the Contract provides:
(d) If all Institutional lenders to whom applications were made deny such application in writing prior to the Commitment Date, Purchaser may cancel this contract by giving Notice thereof to Seller, with a copy of such denials, provided that the Purchaser has complied with all of its obligations under this paragraph 8.
(e) If no commitment is issued by an Institutional Lender on or before the Commitment Date, then ... Purchaser may cancel this contract by giving Notice to Seller within 5 business days after Commitment Date, provided that such notice includes the name and address of the Institutional Lender(s) to whom application was made and the Purchaser has complied with all the obligations under this paragraph 8.
(f) If this contract is cancelled by Purchaser pursuant to subparagraph 8(d) or (e), neither party shall thereinafter have any further rights against, or obligations or liabilities to the other by reason of this
contract, except that the Down payment shall be promptly refunded to Purchaser and except as set forth in paragraph 23.
(a) If Purchaser defaults hereunder, Seller's sole remedy shall be to receive and retain the Down Payment as liquidated damages, it being agreed that Seller's damages in case of Purchaser's default might be impossible to ascertain and that the Down Payment constitutes a fair and reasonable amount of damages under the circumstances and is not a penalty.
(b) If Seller defaults hereunder, Purchaser shall have such remedies as Purchaser shall be entitled to at law or in equity, including but not limited to specific performance.
There is no dispute that the Mortgage Contingency Clause permitted plaintiff to cancel the Contract without cost to themselves. There is also no dispute that Plaintiffs failed to obtain a Mortgage to purchase the subject premises. The dispute between the parties arises over whether the Mortgage Contingency was effectively exercised so as to terminate the relationship between the parties, without cost, as provided in Paragraph 8(f), set forth above.
By letter dated July 21, 2008, King notified Plaintiff's then counsel, Martin Vasquez (hereinafter "Vasquez") that the initial forty five (45) day period for plaintiff to obtain a mortgage had expired on July 16. 2008, and set a closing date of August 5, 2008, which King described as the "60th day". The letter requested that Vasquez advise if he would be ready to close on that date.
Thereafter, on August 1, 2008, counsel for plaintiff advised that the purchaser had not obtained a mortgage to purchase the premises and requested an extension of the contingency period. In response, by latter dated August 6, 2008, counsel for defendant rejected the request to extend the mortgage contingency., and indicated that the closing would take place on August 25, 2008, at 11:00 a.m., and that:
If your clients fail to close the within transaction and pay the balance due in full on the date, place and time aforementioned pursuant to paragraph 23(a) of the contract, my client will retain the down payment as liquidated damages
It is undisputed that counsel for defendant heard nothing from purchaser's attorney for three weeks, the day before the scheduled closing. At that time, via telephone conversation, the two attorneys agreed that the purchaser's date to close was adjourned. This discussion was confirmed by letter dated August 25, 2008, in which a closing date of September 5, 2008, was scheduled. This letter also said the balance due on the contract would be paid at that time and that time was of the essence. The part of the letter initialed by counsel for purchasers stated:
I hereby consent to the extension of the law date from August 26, 2008, to September 5, 2008, at 2:00 p.m.
The uncontroverted fact is that on September 5, 2008, neither plaintiffs nor their counsel showed up for the closing. The contract price was never offered and the sale did not occur, despite defendant being ready, willing and able to sell the premises at the stated place and time.
By letter dated September 8, 2008, defendant demanded the contract deposit from his attorney, King, who was holding same as escrow agent.
Plaintiff argues that when the purchasers did not obtain a mortgage commitment it was the responsibility of the defendants to cancel the transaction and return the down payment. However, there is no indication that plaintiffs ever timely requested the cancellation of the contract and the return of their deposit. Rather, plaintiffs had every right to proceed with the contract absent the mortgage contingency if they wished to do so. Defendant was under no obligation to reject their offer to do so. Plaintiffs further argue that they failed to appear at closing because they did not have a mortgage commitment. Yet, they offer not the slightest explanation for failing to notify seller's attorney they intended not to appear. Nor did they, until after they failed to appear at closing, make any request for the return of the contract deposit. Plaintiffs further allege that their nonappearance at closing constituted the cancellation of the Contract of Sale. More inexplicably, plaintiffs assert that their attorney was not authorized to act on their behalf. Yet, no showing has been made that they instructed counsel to respond to the demands of defendant's counsel to set a closing date. No claim is made that counsel for purchasers failed to follow their instructions or acted outside of the scope of what an attorney normally does for his clients during the course of a real estate transaction.
Plaintiffs claim that this case is governed by the Court's decision in Hoft v Frenkel, 52 AD3d 779, 860 NYS2d 209 [2008].
CPLR 3212(b) requires that in order for the Court to grant Summary Judgment, there must be no dispute as to material fact, while viewing the evidentiary submissions of the parties in the light most favorable to the non-movant. Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]. The material facts, as stated above, are undisputed. Plaintiffs do not aver that they tried to terminate the transaction when they were unable to obtain a mortgage. But the claim that failing to appear at the scheduled closing was somehow intended to exercise the mortgage contingency clause, while creative, is not evidence of compliance with the contract of sale.
In the matter sub judice, unlike the case before the Second Department in Hoft v Frenkel, 52 AD3d, 779, 860 NYS2d 209 [2d Dept 2008], the plaintiff failed to make a prima facie showing of entitlement to the return of the contract deposit. Defendant, however, did meet his burden and proved his entitlement to same. Defendant showed that he made every effort to close the contract of sale. He has proven, and it is undisputed, that defendant was ready, willing and able to transfer the property on the date properly set for closing. He proved that plaintiffs never attempted to terminate the contract and, in fact, were granted every courtesy in allowing them, via their attorney, to adjourn the closing in order to complete the transaction. Plaintiffs waived their right to terminate the contract based on the mortgage contingency clause when they failed to rely on said clause in a timely fashion.52 AD3d at p. 780; 860 NYS2d at p. 211.
The undisputed material facts prove that plaintiff breached the contract of sale.
The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties' intent' (Franklin Apt Assoc., Inc. v Westbrook Tenants Corp., 43 AD3d 860, 861 [2007], quoting, Greenfield v Phillies Records, 98 NY2d 562, 569 [2002].
When the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretations to the language employed and the parties' reasonable expectations.' Willsey v Gjuraj, 65 AD3d 1228; 885 NYS2d 528 [2d Dept 2009]
The mortgage contingency clause between the parties is clear and unequivocal as was the clause directing all notices be served upon the attorneys for the parties. Plaintiff failed to timely exercise that mortgage contingency clause, thereafter agreeing to a closing date; and, finally, breached the agreement by failing to appear for the properly scheduled closing.
Wherefore, defendant's Motion for Summary Judgment and Turnover of Down Payment is granted in all respects. The contract deposit in the sum of $44,000 is to be turned over, along with any interest accrued, to the defendants within thirty days of the date of service of a copy of this Order with Notice of Entry. Execution of this Order stayed for Seven (7) days thereafter.
Plaintiff's Cross-Motion is denied in all respects.
The foregoing constitutes the Decision and Order of the Court.
Dated: March 27, 2012
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Hon. Johnny L. Baynes, JSC