| #1 Funding Ctr., Inc. v H & G Operating Corp. |
| 2008 NY Slip Op 01462 [48 AD3d 908] |
| February 21, 2008 |
| Appellate Division, Third Department |
| #1 Funding Center, Inc., Appellant, v H & G OperatingCorporation et al., Respondents. |
—[*1] Stoloff & Silver, L.L.P., Monticello (Richard A. Stoloff of counsel), forrespondents.
Peters, J.P. Appeals (1) from an order of the Supreme Court (Sackett, J.), entered June 16,2006 in Sullivan County, which granted defendants' motion for summary judgment dismissingthe complaint, and (2) from the judgment entered thereon.
In January 2005, the parties entered into an option agreement for the purchase of the businessassets and real property owned by defendant H & G Operating Corporation, defendant Laur-Ell,Ltd. and defendant Estate of Mannie Halbert, as sole shareholder of the aforementioned corporateentities, on terms memorialized in an asset sale agreement. This agreement, as incorporated intothe option agreement, provided for a purchase price of $8.1 million and a time of the essenceclosing date of March 3, 2005. As a result of three modification agreements subsequentlyexecuted by the parties, the option agreement, as finally amended, provided that the closing onthe sale would take place on "May 31, 2005 at 10:00 [a.m.], time being of the essence." Theparties failed to close on May 31, 2005 or any time thereafter and, by letter dated June 30, 2005,plaintiff was notified that it was in default. Pursuant to the terms of the asset sale agreement andrider, defendants subsequently demanded and received, without objection by plaintiff, the$610,000 in deposits from plaintiff that had been held in escrow.
In March 2006, plaintiff filed a notice of pendency and commenced the instant action seekingspecific performance or, in the alternative, monetary damages in the amount of $9.5 million.Defendants thereafter moved for summary judgment dismissing the complaint and for an [*2]order pursuant to CPLR 6514 cancelling the notice of pendency andawarding costs and expenses. Supreme Court granted the motion, dismissing the complaint andcancelling the notice of pendency. Concluding that plaintiff commenced the action and filed thenotice of pendency in bad faith, the court also found that defendants were entitled to costs andexpenses, as well as reasonable counsel fees. Pursuant to Supreme Court's directive, defendantsfiled a bill of costs and affidavit of expenses, which was approved by the court "withoutopposition" by plaintiff. The ensuing judgment awarded defendants costs and expenses in theamount of $213,641.97 and legal fees in the amount of $34,809. Plaintiff now appeals from boththe June 2006 order and the judgment entered thereon.
To maintain an action for specific performance or for damages for nonperformance of acontract, plaintiff 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 otherparty amounting to an anticipatory breach of the contract or establishing that such party would beunable to perform' " (Lower v Village ofWatkins Glen, 17 AD3d 829, 831 [2005], quoting Madison Invs. v CohoesAssoc., 176 AD2d 1021, 1021-1022 [1991], lv dismissed 79 NY2d 1040 [1992][citations omitted]). In support of their motion for summary judgment, defendants submitted,among other things, the option agreement, as finally amended by the third modificationagreement, as well as the rider to the asset sale agreement, all of which provided a time of theessence closing date negotiated by the parties for May 31, 2005. Defendants also submittedaffidavits of counsel and a coexecutor of the estate, both of whom averred that defendants wereready, willing and able to close on the sale, but that plaintiff failed to close on the time of theessence date because it did not have sufficient funds necessary to purchase the subject property.Based upon these submissions, defendants met their initial burden of making a prima facieshowing of entitlement to summary judgment dismissing the complaint (see Realty Equities, Inc. v Walbaum,Inc., 18 AD3d 531, 531 [2005]; see generally Alvarez v Prospect Hosp., 68NY2d 320, 325 [1986]).
In opposition to defendants' motion, plaintiff alleged that issues of fact exist as to whetherdefendants had orally agreed to adjourn the May 31, 2005 time of the essence closing date, citingto an affidavit of its president alleging as much and to certain letters exchanged by the partiessubsequent to the law date. " '[W]hen a provision that time is to be of the essence is inserted in areal property contract, the date established . . . takes on especial significance,' and'each party must tender performance on . . . [that] day unless the time forperformance is extended by mutual agreement' " (Mosdos Oraysa, Inc. v Sausto, 13 AD3d 838, 840 [2004], lvdismissed and denied 5 NY3d 749 [2005], quoting Grace v Nappa, 46 NY2d 560,565 [1979]; see Milad v Marcisak, 307 AD2d 281, 281-282 [2003]). Here, while therecord reveals that plaintiff requested an extension of the closing by letter dated June 1, 2005 (theday following the time of the essence date) and defendants thereafter indicated a potentialwillingness to do so upon certain conditions, it is undisputed that a mutual written agreement toextend the closing date was never consummated between the parties. Notably, the asset saleagreement, option agreement, and all subsequent modification agreements each contain a clauserequiring that any modification thereof be in writing and signed by the parties. Therefore, in theabsence of such a writing, any alleged oral modification to the time of the essence provision, inlight of the contractual proscription against oral modification contained in the parties' writtenagreements, is barred by the statute of frauds (see General Obligations Law §15-301 [1]; Rose v Spa Realty Assoc., 42 [*3]NY2d 338,343 [1977]; see also Moutafis vOsborne, 7 AD3d 686, 687 [2004]).[FN*]
Having found that plaintiff failed to raise a question of fact as to whether the parties agreedto postpone the May 31, 2005 closing date, we conclude that Supreme Court properly awardedsummary judgment dismissing the complaint because plaintiff did not demonstrate that it wasready, willing and able to close on this law date (see ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484, 490[2006]; Mercer v Phillips, 252 AD2d 900, 901 [1998]). Indeed, plaintiff's presidentconceded that its lenders had "backed out" only days before the May 31, 2005 scheduled closingdate (see First Frontier Pro Rodeo Circuit Finals v PRCA First Frontier Circuit, 291AD2d 645, 645-646 [2002]), and plaintiff submitted no documentation or other evidenceestablishing that it had the funds necessary to purchase the property on the date of the closing(see Huntington Min. Holdings v Cottontail Plaza, 60 NY2d 997, 998 [1983]; Provostv Off Campus Apts. Co., II, 211 AD2d 850, 851 [1995]). Consequently, since the contractexpressly provided that time is of the essence, plaintiff's failure to close on the May 31, 2005 datedesignated by the contract constituted a default (see Sherman v Real Source Charities, Inc., 41 AD3d 946, 948[2007]; Mosdos Oraysa, Inc. v Sausto, 13 AD3d at 840), entitling defendants to retain allmoneys it received from plaintiff pursuant to the contract (see Collar City Partnership I vRedemption Church of Christ of Apostolic Faith, 235 AD2d 665, 666 [1997], lvdenied 90 NY2d 803 [1997]; seealso Verolla v Beechwood Carmen Bldg. Corp., 43 AD3d 913, 914 [2007]).
Plaintiff also contends that Supreme Court erroneously awarded counsel fees to defendants inthe absence of a contractual provision, statute or court rule permitting such an award. "Under thegeneral rule, [counsel] fees are incidents of litigation and a prevailing party may not collect themfrom the loser unless an award is authorized by agreement between the parties, statute or courtrule" (Hooper Assoc. v AGS Computers, 74 NY2d 487, 491 [1989] [citations omitted];see U.S. Underwriters Ins. Co. v CityClub Hotel, LLC, 3 NY3d 592, 597 [2004]; Evergreen Bank, N.A. v Zerteck, Inc., 28 AD3d 925, 925 [2006]).Here, Supreme Court awarded counsel fees pursuant to CPLR 6514 (c), which provides that"[t]he court, in an order cancelling a notice of pendency under this section, may direct theplaintiff to pay any costs and expenses occasioned by the filing and cancellation, inaddition to any costs of the action" (emphasis added). This provision permits an award forcounsel fees which flow from the wrongful filing and cancellation of such notice (seeJosefsson v Keller, 141 AD2d 700, 701 [1988]) and, therefore, Supreme Court acted withinits statutory authority to include such reasonable fees within its award. Plaintiff's final contention,that the deposit moneys constituted liquidated damages and defendants' retention thereofprecluded a concurrent award for expenses and costs, is without merit. The purpose of CPLR6514 (c) is to reimburse a party for costs and expenses incurred as a result of a wrongful filing ofa notice of pendency, and such costs and [*4]expenses are "inaddition to" (CPLR 6514 [c]), and separate and distinct from, any damages sustained by a partyarising from the underlying claims in the action (see Tucker v Mashomack Fish & GamePreserve Club, 199 AD2d 957, 958-959 [1993]).
Defendant's remaining contentions, to the extent not addressed herein, are found to beunpreserved or lacking in merit.
Carpinello, Rose, Kane and Malone Jr., JJ., concur. Ordered that the order and judgment areaffirmed, with costs.
Footnote *: While plaintiff argues thatdefendants should be equitably estopped from raising the statute of frauds as a defense, plaintifffailed to preserve this argument for our review by not raising it before Supreme Court (see Prince v 209 Sand & Gravel, LLC,37 AD3d 1024, 1026 [2007]; Chock 34th St. Operating v Chock Full O'Nuts Corp.,173 AD2d 214, 216 [1991]; Pastore v Zlatniski, 122 AD2d 840, 841 [1986]).