| Stenda Realty, LLC v Kornman |
| 2009 NY Slip Op 08809 [67 AD3d 996] |
| November 24, 2009 |
| Appellate Division, Second Department |
| Stenda Realty, LLC, Respondent, v Peter C. Kornman etal., Appellants. |
—[*1]
In an action to recover damages for breach of a contract for the sale of real property, and fora judgment declaring that the defendants breached the contract and that the plaintiff is entitled toreceive and retain, as liquidated damages, the down payment given pursuant to that contract, thedefendants appeal from an order of the Supreme Court, Suffolk County (Cohalan, J.), dated July11, 2008, which granted the plaintiff's motion for summary judgment and denied their crossmotion, inter alia, for summary judgment dismissing the first cause of action and declaring thatthey did not breach the contract and that the plaintiff is not entitled to receive and retain, asliquidated damages, the down payment given pursuant to the contract.
Ordered that the order is affirmed, with costs, and the matter is remitted to the SupremeCourt, Suffolk County, for the entry of a judgment, inter alia, declaring that the defendants are inbreach of the contract and that the plaintiff is entitled to receive and retain, as liquidateddamages, the down payment given pursuant to that contract.
The defendants Peter Kornman and Mary Kornman (hereinafter the buyers) contracted topurchase waterfront residential real property located in the hamlet of Orient in the Town ofSouthold, from the plaintiff, Stenda Realty, LLC (hereinafter the seller). The premises werecompletely upland and bounded by a bulkhead at the high water line. The contract of salerequired the seller to tender insurable title, and provided that title was to be conveyed subject tocertain permitted exceptions. The contract further provided that, in the event of the buyers'default, the seller was to receive and retain, as liquidated damages, the sum of $243,250,representing the down payment which the buyers deposited into escrow pursuant to the contract.A description of the premises was appended to the contract, which showed it to be approximatelyone half of an acre in size.
After the contract was executed, Lawyers Title Insurance Corporation (hereinafter the titleinsurer), committed itself to issue title insurance referable to the premises, subject to certainexceptions. At issue here are the "underwater exceptions" articulated in the title insurance policy,which provided that [*2]no title was to be insured as to any landlying below the present high water line of Orient Harbor, and that title would be insured subjectto both the riparian rights of others over the harbor and the rights of various government entitiespertaining to the land under water. The buyers negotiated with the title insurer, which refused toremove the exceptions entirely, but modified them to make clear that they applied only to landbelow the present high water line.
Based on the title insurance exceptions and their discovery that the parcel was actuallysmaller than one half of an acre, the buyers rejected the seller's time-of-the-essence letter, andrequested return of their down payment. The buyers failed to appear at the subsequent closing, atwhich the seller's counsel was prepared to tender title.
The seller commenced this action against the buyers, alleging breach of contract, andseeking a declaration that the buyers were in breach of the contract and that it is entitled toreceive and retain the down payment as liquidated damages pursuant to the contract.
The seller moved for summary judgment, and the buyer cross-moved, inter alia, for summaryjudgment. The Supreme Court granted the seller's motion, and denied the buyers' cross motion.The buyers appeal and we affirm.
The seller made a prima facie showing of entitlement to judgment as a matter of law bydemonstrating that it was ready, willing, and able to perform on the law day, while the buyersfailed to appear and proceed with the closing (see Pinhas v Comperchio, 50 AD3d 1117 [2008]; Engelhardt v McGinnis, 2 AD3d572, 573 [2003]). In opposition, the buyers failed to raise a triable issue of fact. Inparticular, they argued to the Supreme Court that there was a mutual mistake regarding the sizeof the subject parcel, and that the seller breached its obligation to tender insurable title. TheSupreme Court correctly determined that those arguments were without merit.
The discrepancy concerning the size of the parcel did not entitle the buyers to rescind thecontract based on mutual mistake. The seller demonstrated, and the buyers concede, that theseller sent the buyers' attorney an accurate survey prior to the execution of the contract. Thisknowledge of the accurate dimensions is imputed to the buyers, regardless of whether theirattorney actually communicated such facts to them prior to execution of the contract (seeCenter v Hampton Affiliates, 66 NY2d 782, 784 [1985]; Christopher S. v DouglastonClub, 275 AD2d 768, 769 [2000]). Accordingly, there was no mutual mistake of fact at thetime the contract was entered into (cf. Matter of Gould v Board of Educ. of Sewanhaka Cent.High School Dist., 81 NY2d 446, 453 [1993]; D'Agostino v Harding, 217 AD2d835, 837 [1995]; D'Antoni v Goff, 52 AD2d 973, 974 [1976]).
Generally, when a seller contracts to deliver title that a reputable insurance company wouldinsure, the seller breaches the contract when the title company refuses to insure titleunconditionally and without exception (see Laba v Carey, 29 NY2d 302, 307 [1971])."The rule is not, however, absolute, but rather is one to be tempered by the exigencies of theparticular contract. Thus, it is said that the title company's approval must be unequivocal unlessthe exceptions are those contemplated by the contract" (Laba v Carey, 29 NY2d at307-308; see Rozen v 7 Calf Creek, LLC, 52 AD3d 590, 592 [2008]; Lisenenkov v Kaszirer, 41 AD3d282, 283-284 [2007]; Stathakis v Poon, 295 AD2d 496, 497 [2002]; Patten ofN.Y. Corp. v Geoffrion, 193 AD2d 1007, 1008 [1993]; Costa v District Nursing Assn. ofN. Westchester, 175 AD2d 274, 275 [1991]; Kopp v Barnes, 10 AD2d 532, 534-535[1960]).
Here, the seller demonstrated, prima facie, that it attempted to tender insurable title inaccordance with the contract. It is undisputed that the contract contemplated conveyance of theupland parcel only, bounded by the high water line. The seller further demonstrated that theunderwater exceptions articulated in the policy of title insurance, as modified, applied only to theadjoining underwater land below the current high water line, and did not apply to the parcelwhich was to be conveyed. The buyers failed to raise a triable issue of fact that the underwaterexceptions applied to any portion of the subject parcel (see Zuckerman v City of NewYork, 49 NY2d 557, 562 [1980]).
Since the buyers failed to appear at the scheduled closing and tender performance (see[*3]Laba v Carey, 29 NY2d 302 [1971]; Stathakis vPoon, 295 AD2d 496 [2002]), they breached the contract, and the seller is entitled to receiveand retain the down payment as liquidated damages.
The buyers' remaining contentions either are without merit, or need not be reached in light ofour determination.
Since this is, in part, a declaratory judgment action, the matter must be remitted to theSupreme Court, Suffolk County, for the entry of a judgment, inter alia, declaring that the buyersbreached the contract and that the seller is entitled to receive and retain the down payment asliquidated damages (see Lanza v Wagner, 11 NY2d 317, 332 [1962], appealdismissed 371 US 74 [1962], cert denied 371 US 901 [1962]). Rivera, J.P., Florio,Miller and Hall, JJ., concur. [Prior Case History: 2008 NY Slip Op 32279(U).]