| Gorgoglione v Gillenson |
| 2008 NY Slip Op 00205 [47 AD3d 472] |
| January 15, 2008 |
| Appellate Division, First Department |
| Daniel Gorgoglione, Appellant, v Amy Gillenson,Respondent, et al., Defendant. |
—[*1] Cantor, Epstein & Degenshein, LLP, New York City (Dale J. Degenshein of counsel), forrespondent.
Order, Supreme Court, New York County (Walter B. Tolub, J.), entered March 2, 2007,which, to the extent appealed from, upon renewal and reargument, denied plaintiff's motion forsummary judgment on his first cause of action seeking a declaration of his entitlement to thereturn of his $85,000 deposit on the purchase price for a cooperative apartment, and granteddefendant Gillenson's cross motion for summary judgment on her counterclaim seeking adeclaration of her entitlement to such deposit, unanimously reversed, on the law, with costs,plaintiff's motion granted, Gillenson's cross motion denied, it is declared that Gorgoglione isentitled to the deposit and any interest accrued thereon, and Gillenson's counterclaim dismissed.
Plaintiff Gorgoglione and defendant Gillenson entered into a written agreement, datedDecember 30, 2004, for the sale of Gillenson's cooperative apartment to Gorgoglione for apurchase price of $850,000, $85,000 of which was paid into escrow as a deposit upon execution.The agreement provided that the sale was contingent on the unconditional consent of thecooperative corporation (the co-op). The agreement also provided that Gorgoglione's obligationto purchase was contingent on the issuance to him, by January 25, 2005, of a loan commitment inthe amount of "$425,000 for a term of 30 years or such lesser amount or shorter term as appliedfor or acceptable to [him]" (the Financing Terms). Gorgoglione initially obtained a loancommitment in the amount of $425,000, but rejected it and then obtained a second commitment,dated January 19, 2005, for a loan in the amount of $552,000. Thereafter, the co-op, by letterdated January 28, 2005, denied the parties' request for its consent to the transaction.
Upon the co-op's denial of consent, Gorgoglione gave notice that he was cancelling thetransaction and requested that the escrow agent return his $85,000 deposit to him. However, byletter dated February 1, 2005, Gillenson took the position that she was entitled to the deposit onthe ground that Gorgoglione breached his contractual obligations by rejecting the $425,000 loancommitment and applying for a loan in an amount greater than contemplated by the agreement's[*2]Financing Terms. This action ensued. In the order appealedfrom, the motion court rendered summary judgment determining that Gillenson is entitled to thedeposit. We now reverse.
Gillenson, relying on the Second Department cases of Post v Mengoni (198 AD2d487 [1993]) and Silva v Celella (153 AD2d 847 [1989]), argues that Gorgoglione'srejection of the $425,000 loan commitment and his application for a loan in a greater amountconstituted a breach of his obligation under paragraph 18.2 of the agreement "diligently and ingood faith . . . [to] apply for a loan on the Financing Terms . . . [andto] accept a Loan Commitment Letter meeting the Financing Terms." We need not determinewhether this contention is correct because it is undisputed that Gorgoglione succeeded inobtaining a loan commitment in the higher amount he requested ($552,000), which commitmentconformed to the Financing Terms in all other respects. Since Gorgoglione obtained thefinancing he deemed necessary and, but for the co-op's refusal of consent, would have beenprepared to close on the sale, any deviation of his application from the agreement's FinancingTerms does not provide grounds for declaring him in default, as it was not a cause of the failureof the transaction. Significantly, Gillenson has presented no evidence that the co-op's refusal ofconsent was in any way related to the amount of the loan commitment, which was well within theco-op's guidelines allowing up to 75% financing. Where a purchaser applies for financing onterms different from those contemplated by the financing contingency clause in the contract ofsale, but the transaction fails for reasons unrelated to the financing terms for which the purchaserapplied, the financing terms applied for are not deemed to have put the purchaser in breach of hisor her obligation to make a good faith effort to obtain financing, and, assuming all otherobligations have been fulfilled, the purchaser is entitled to the return of any deposit (see Markovitz v Kachian, 28 AD3d358 [2006], citing Katz v Simon, 216 AD2d 270 [1995]; see also Marx vShustek, 226 AD2d 351 [1996]).
In any event, to the extent Gillenson argues that, notwithstanding the foregoingconsiderations, paragraph 18.3 of the agreement entitles her to hold Gorgoglione liable for breachbased on the nonconforming loan commitment, this argument has been waived. Althoughparagraph 18.3 gave Gillenson a right to cancel the agreement based on a failure to produce aloan by January 25, 2005, the provision required Gillenson to exercise that right "within 5 daysafter" January 25, 2005, i.e., on or before January 30, 2005. Since Gillenson failed to act in thisregard within the time frame provided, she waived any right to the deposit based on thenonconforming loan commitment. As was expressly stated in paragraph 18.3 of the agreement:"Failure by either Purchaser or Seller to deliver notice of Cancellation as required by this ¶18.3 shall constitute a waiver of the right to cancel under this ¶ 18.3."Concur—Tom, J.P., Friedman, Gonzalez, Sweeny and Kavanagh, JJ.