[*1]Decided on October 14, 2009

Jahanara Ali against Amelia P. Buno, et al., etc.

1094 2008



For the Plaintiff: Viscardi, Basner & Bigelow, P.C., by Craig K. Tyson, Esq., 148-45 Hillside Ave., Jamaica, NY 11435

For the Defendants: Davidov & Davidov, P.C., by Ilana F. Davidov, Esq., 108-18 Queens Blvd., Suite 704, Forest Hills, NY 11375

Charles J. Markey, J.

Defendant Buno, as seller, and plaintiff, as purchaser, entered into a contractof sale dated July 11, 2007, for real property known as 85-45 167th Street, Jamaica, New Yorkwith a purchase price of $726,750.00. Upon execution of the contract, plaintiff deposited the sumof $38,250.00, with Davidov and Davidov, defendant-escrowee, the seller's attorney. Thecontract was conditioned upon plaintiff obtaining a mortgage commitment in the amount of$535,000.00 from a lending institution within 45 days from the date of contract. This clause gaveplaintiff the option to cancel the contract if she was unable to procure a mortgage commitmentafter a "prompt" application, in which event plaintiff was entitled to recover the down payment.The contract also provided that if plaintiff failed to give notice of cancellation, or accepted amortgage commitment which did not comply with the contract terms, then plaintiff would bedeemed to have waived her right to cancel and receive a refund of the down payment.

The mortgage contingency clause also gave defendant Buno the option to cancel the contractif she did not receive a copy of a commitment from an institutional lender accepted by plaintiffby the commitment date, after first giving notice to cancel to plaintiff within 5 days after [*2]the commitment date and plaintiff's failure to deliver a commitmentto defendant Buno within 10 business days thereafter. The contract set the closing date on orabout August 1, 2007 and prohibited modification or cancellation of its terms, except in writing.

On the 43rd day after the contract date, counsel for plaintiff notified defendant Buno, byletter dated August 23, 2007 to defendant Davidov and Davidov, that plaintiff had been unable toobtain a mortgage commitment within the time specified in the contract, and requested anextension of the contingency clause to September 20, 2007, because the mortgage companyrequired more time. By letters dated August 29, 2007 and September 5, 2007, defendant Davidovand Davidov responded, in effect, that defendant Buno required more information prior todeciding whether to grant the request for an extension. Plaintiff's counsel advised defendantDavidov and Davidov, by letter dated September 6, 2007, that a commitment "should beforthcoming" and if defendant Buno did not wish to extend the commitment period, Buno shouldreturn the contract deposit. Defendant Davidov and Davidov informed plaintiff's counsel, byletter dated September 7, 2007, that defendant Buno denied the request for an extension, andwould not return the down payment in the absence of proof of compliance with the terms of thecontract of sale.

Thereafter, by letter dated September 12, 2007, plaintiff's counsel notified defendants thathis client's mortgage application had been denied, and demanded the return of her contractdeposit. He enclosed a letter dated September 11, 2007 from Kevin F. Padar, the seniorvice-president of National City Mortgage (National), addressed to plaintiff, indicating thatplaintiff's application for a mortgage loan, in the amount of $535,000.00 to finance the purchaseof the property, had been denied based upon plaintiff's "past credit history."

In response, defendant Davidov and Davidov sent a letter dated September 21, 2007, toplaintiff's counsel rejecting the September 12, 2007 notice of cancellation. It asserted thatplaintiff did not include a copy of her mortgage application and thus the notice was insufficientto cancel the contract. Defendant Davidov and Davidov advised that its client believed plaintiffhad applied for a mortgage in an amount greater than that authorized by the contract, andmisrepresented she lacked knowledge of circumstances which would adversely affect her creditrating. Defendant, Davidov and Davidov further advised that its client was setting an October 5,2007 closing date, with time of the essence, and that failure to close on that date would result inwilful breach of contract. The letter also advised the breach would entitle defendant Buno toliquidated damages in the amount of 10% of the purchase price, thereby permitting her to retainthe down payment and apply it to the liquidated damages, and to sue for the balance of theliquidated damages, plus interest, costs and disbursements, and reasonable attorneys' fees.Plaintiff did not appear at the closing and defendants refused to return the down payment asliquidated damages, claiming the contract was breached due to plaintiff's default. Thereafter,defendant Buno allegedly sold the subject property to a nonparty in February 2008, for the sumof $650,000.00.

Plaintiff commenced this action seeking to recover the down payment and an award of [*3]incidental and consequential damages, costs and attorneys' fees.

Defendants served a joint answer, with defendant Davidov and Davidov appearing pro se,and on behalf of defendant Buno. In the answer, defendants deny the material allegations of thecomplaint and assert various affirmative defenses, and defendant Buno interposes eightcounterclaims for breach of contract. Defendant Buno alleges that plaintiff breached the contractof sale by 1) failing to make a prompt and good faith application for a mortgage commitment, 2)applying for a mortgage loan in an amount greater than the amount authorized in the contract ofsale, 3) failing to make any mortgage loan application, 4) misrepresenting that she was creditworthy, and 5) failing to appear at the closing on October 5, 2007. Defendant Buno also allegesthat plaintiff committed an anticipatory breach of contract, by attempting to cancel the contract.Defendant Buno further alleges that she has suffered damages as a consequence of plaintiff'sbreach, and seeks to retain the down payment pursuant to a liquidated damages clause in thecontract of sale, and in addition, to be awarded the sum of $38,250.00 constituting the remainingbalance due under the liquidated damages clause, plus interest, costs and disbursements andattorneys' fees, or alternatively, to be awarded actual damages.

Plaintiff served a reply denying the material allegations of the counterclaims.

At the outset, the court notes that defendants failed to utilize exhibit tabs in their motionpapers. Such failure adds to the difficulties faced by the court when considering the merits of amotion (see Damadian MRI in Garden City, P.C. v Progressive Cas. Ins. Co., 196 Misc2d 245 [2003]). The court directs the parties, in any future motion practice, to utilize such tabs(cf. Lee v Marino, 36 AD3d454 [2007]).

It is well established that the proponent of a summary judgment motion "must make a primafacie showing of entitlement to judgment as a matter of law, tendering sufficient evidence todemonstrate the absence of any material issues of fact," (Alvarez v Prospect Hosp., 68NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985];Zuckerman v City of New York, 49 NY2d 557 [1980]). If the proponent succeeds, theburden shifts to the party opposing the motion, who then must show the existence of materialissues of fact by producing evidentiary proof in admissible form, in support of its position(see Zuckerman v City of New York, 49 NY2d 557 [1980], supra).

With respect to that branch of the motion by defendant Davidov and Davidov, it is wellsettled that, in the event of a dispute, escrow funds may not be released until the conditions ofthe escrow agreement are fully performed and it is "clear that no factual issues or viable claimsexist under the closely scrutinized terms of the escrow agreement" (E.S.P. Adj. Servs. vASTA Group, 125 AD2d 849, 850 [1986]). Plaintiff's complaint fails to allege thatdefendant Davidov and Davidov has released the escrow funds, or acted in bad faith, in willfuldisregard of the terms of the contract, or with gross negligence. Hence, a cause of action is notstated as against defendant Davidov and Davidov, as escrowee (see Macho Assets, Inc. vSpring Corp., 128 AD2d 680 [1987]).[*4]

With respect to that branch of the motion by defendantBuno, she asserts she was ready, willing and able to convey title to plaintiff pursuant to the termsof the contract of sale, on October 5, 2007, and that plaintiff failed to appear for the scheduledclosing, thereby defaulting under the contract. She offers, among other things, affidavits ofdefendant Buno and Ilana F. Davidov, Esq., a copy of the pleadings, the contract of sale, variouscorrespondence, including the letter dated September 21, 2007, and a transcript of statementsmade by Ilana F. Davidov and Heidi Gliboff, a title closer from Juris Abstract Corporation, onthe record at the law offices of Davidov and Davidov on October 5, 2007.

While the original contract did not include a provision that time was of the essence, theSeptember 21, 2007 letter, sent by defendant Buno's counsel to plaintiff's counsel providedunequivocal notice that the closing date was October 5, 2007, where time was of the essence andthat plaintiff's failure to comply would be considered a default (see Guippone v Gaias, 13 AD3d339 [2004]; Moray v DBAG, Inc., 305 AD2d 472 [2003]). Under the facts andcircumstances presented, such letter gave plaintiff a reasonable time in which to perform herobligations under the contract (seeGuippone v Gaias, 13 AD3d 339, 340 [2004], supra; Lake Hills Swim Clubv Samson Dev. Corp., 213 AD2d 701, 702 [1995]; Mohen v Mooney, 162 AD2d664, 665 [1990]). Defendant Buno has shown that she was ready, willing and able to convey titleto plaintiff pursuant to the terms of the contract of sale on October 5, 2007, and that whenplaintiff failed to appear for the scheduled closing, plaintiff was in default (see Pinhas v Comperchio, 50 AD3d1117 [2008]; Engelhardt vMcGinnis, 2 AD3d 572 [2003]).

Plaintiff opposes the motion, asserting that she properly exercised her right to cancel thecontract pursuant to the mortgage contingency clause and therefore, was excused fromperforming under the contract on the law date selected by defendant Buno. She relies upon theSeptember 12, 2007 letter of her counsel, and the September 11, 2007 letter of Mr. Padar insupport of her defense.

Defendant Buno argues that the attempt by plaintiff to cancel the contract was ineffectivebecause plaintiff failed to provide a copy of the mortgage application in connection with theservice of her notice to cancel, and in any event, plaintiff must be deemed to have waived herright to cancel pursuant to the mortgage contingency clause.^[FN1]

Paragraph 8(b) of the contract of sale requires plaintiff to make a prompt mortgageapplication, furnish accurate and complete information regarding herself and members of herfamily, as required, pay all fees, points and charges required in connection with the applicationand loan, pursue the application with due diligence and cooperate in good faith with theinstitutional lender to obtain a commitment. Paragraph 30(c) of the rider provides that "[i]n the[*5]event that Purchaser's mortgage application is denied,Purchaser shall provide Seller with copies of Purchaser's mortgage application and rejectionletter from the lender." Paragraph 31 of the rider governs the method by which the purchasermay elect to cancel the contract, and in relevant part, states: "[i]n the event that Purchaser isunable to obtain a mortgage commitment and elects to cancel this contract as provided herein,Purchaser shall provide Seller with a copy of the written mortgage denial."

Paragraph 31 of the rider makes no mention that plaintiff must provide a copy of themortgage application in connection with the service of her notice to cancel. Defendant Bunowould have this court graft the additional requirement found in paragraph 30(c) of the rider,requiring plaintiff to provide a copy of the mortgage application, onto the notice to cancelprovision. This interpretation, however, is contrary to the plain words utilized in the contract. Ifthe contracting parties had intended to include such requirement, they could have used languageto give effect to that interpretation (see Collard v Incorporated Vil. of Flower Hill, 52NY2d 594, 603 [1981]; Ting v Dean, 156 AD2d 358, 359 [1989]; Silva vCelella, 153 AD2d 847 [1989]). If defendant Buno had wanted to be provided a copy of themortgage application no later than by the service of the notice to cancel, as drafter of thecontract, then she, should have so specified, and her failure to include a time limitation may notoperate to plaintiff's detriment (see Slamow v Delcol, 174 AD2d 725 [1991],affd 79 NY2d 1016 [1991]). "A court may not rewrite into a contract conditions theparties did not insert by adding or excising terms under the guise of construction, nor may itconstrue the language in such a way as would distort the contract's apparent meaning (citationsomitted)" (see Slamow v Delcol, 174 AD2d at 727).

To the extent defendant Buno argues plaintiff waived her right to cancel, defendant Bunoasserts plaintiff made an application for a mortgage in an amount greater than the $535,000.00amount permitted under section 8(a) of the contract. Defendant Buno cites to a "UniformResidential Loan Application" form (Uniform form), produced by plaintiff in connection withher amended response to defendants' first demand for production of documents, as evidenceplaintiff sought a mortgage loan in the amount of $650,250.00.

Paragraph 31 of the rider to the contract, in relevant part, provides, "[i]n the event Purchasershall apply for a mortgage in a sum greater than the amount stated in Paragraph 8 MortgageContingency' of this Contract, and said application is denied, said mortgage contingency clauseshall be deemed waived." Thus, for there to be a finding that plaintiff waived her right to cancel,defendant Buno must show 1) plaintiff applied for a mortgage loan in an amount greater than$535,000.00 and 2) such application was denied. In this instance, a question of factexists as to whether the Uniform form constituted the application which resulted in the denial ofa mortgage commitment by National. The form makes no reference to National, but insteadrefers to an interviewer named "Jrl Equities Inc.," which defendant Buno herself claims is amortgage brokerage company.^[FN2] Furthermore, the affidavits of Deatra Austin, a[*6]paralegal employed by defendant Davidov and Davidov, andVincent Koo, a real estate broker, do not conclusively demonstrate that the Uniform form wasthe application ruled upon by National when denying plaintiff a mortgage commitment. Theletter dated September 11, 2007 from Mr. Padar indicates that the loan application was for theamount of $535,000.00. Plaintiff avers she informed the employees of National she desired amortgage loan in the amount of $535,000.00, gave them accurate and complete informationregarding her assets and income, and "never wrote any higher amount on any application." Tothe extent defendant Buno alternatively asserts plaintiff failed to make any mortgage applicationto National, the letter dated December 16, 2008 from D. (Michael) Mulwani, district manager forNational, to Ms. Davidov raises a question of fact regarding such assertion.

Under such circumstances, a question of fact exists as to whether plaintiff waived her rightto cancel the contract.

To the extent plaintiff seeks an award of attorneys' fees, the rule is well settled in this statethat the successful party in litigation may not recover attorney's fees, except where authorized bythe parties' agreement, statutory provision or court rule (see Hunt v Sharp, 85 NY2d 883[1995]; Chapel v Mitchell, 84 NY2d 345, 348-349 [1994]; Mighty Midgets vCentennial Ins. Co., 47 NY2d 12, 21 [1979]). Plaintiff has failed to demonstrate a basis forher claim for an award of attorneys' fees.

Accordingly, the motion by defendants is granted only to the extent of granting summaryjudgment dismissing the complaint asserted against defendant Davidov and Davidov anddismissing that portion of the complaint asserted against defendant Buno which seeks an awardof attorneys' fees.

Dated: October 14, 2009

J.S.C.

Footnote 1:The Court notes defendants do not claim that plaintiff's notice to cancel was untimely served,and never objected to the September 12, 2007 notice upon that basis (cf. Vafa v Cramer,212 AD2d 593 [1995]).

Footnote 2:The contract, at paragraph 8(c),allows for submission of a mortgage application to a mortgage broker registered pursuant toArticle 12-D of the New York Banking Law in full compliance with the mortgage contingencyclause, so long as the mortgage broker promptly submits the application to the institutionallender.