| Sutphin Mgt. Corp. v REP 755 Real Estate, LLC |
| 2010 NY Slip Op 03901 [73 AD3d 738] |
| May 4, 2010 |
| Appellate Division, Second Department |
| Sutphin Management Corp., Appellant-Respondent, v REP755 Real Estate, LLC, et al., Respondents-Appellants, and CVS Albany, LLC, et al.,Respondents. 777 Realty, LLC, et al., Additional CounterclaimDefendants-Respondents. |
—[*1] Rosenberg Calica & Birney LLP, Garden City, N.Y. (Robert M. Calica and Robert J.Howard of counsel), for respondents-appellants.
In an action, inter alia, for specific performance of a contract for the sale of real property, theplaintiff appeals from so much of an order of the Supreme Court, Nassau County (Austin, J.),entered August 19, 2008, as modified by a so-ordered stipulation also entered August 19, 2008,as granted those branches of the motion of the defendants REP 775 Real Estate, LLC, REP 775Holdings, LLC, REP 777 Real Estate, LLC, REP 777 Holdings, LLC, REP 1211 Real Estate,LLC, REP 1211 Holdings, LLC, and REP Realty, LLC, which were for summary judgmentdismissing the complaint insofar as asserted against them and for summary judgment on theirthird counterclaim declaring that all of its right, title, and interest in the subject real property wasterminated, that it has no further interest in, or claim under the contract to any interest in, thesubject real property or in a lease entered into between the additional counterclaim defendant777 Realty, LLC, and the defendant CVS Albany, LLC, that all interests of the additionalcounterclaim defendants 777 Realty, LLC, and Robin Eshaghpour under that lease were duly andunconditionally assigned to the defendants REP 775 Real Estate, LLC, REP 775 Holdings, LLC,REP 777 Real Estate, LLC, REP 777 Holdings, LLC, REP 1211 Real Estate, LLC, REP 1211Holdings, LLC, and REP Realty, LLC, and that those defendants are the successor landlordsunder the lease, and to cancel a notice of pendency dated January 9, 2008, filed in connectionwith the subject real property, and the defendants REP 775 Real Estate, LLC, REP 775 Holdings,LLC, REP 777 Real Estate, LLC, REP 777 Holdings, LLC, REP 1211 Real Estate, LLC, REP1211 Holdings, LLC, and REP Realty, LLC, cross-appeal, as limited by their brief, from somuch of the same order, as modified by the so-ordered stipulation, as granted those branches ofthe cross motion of the plaintiff and the additional counterclaim defendants which were pursuantto CPLR 3211 (a) (7) to dismiss the first and second counterclaims for failure to state a cause ofaction.
Ordered that the order is affirmed insofar as appealed and cross-appealed from, without[*2]costs or disbursements, and the matter is remitted to theSupreme Court, Nassau County, for the entry of an appropriate declaratory judgment inaccordance herewith.
The defendant REP 755 Real Estate and its related entities (hereinafter the seller) are theowners of two parcels of real property in Bethpage (hereinafter the subject property). OnDecember 21, 2005, the plaintiff Sutphin Management Corp. (hereinafter the buyer) entered intoa contract of sale (hereinafter the contract) with the seller to purchase the subject property. Thebuyer's purpose in purchasing the subject property was to have its affiliate, the additionalcounterclaim-defendant 777 Realty, Inc. (hereinafter 777 Realty), lease it to the defendant CVSCorporation or a related company for construction of a pharmacy and retail store. Subsequent tothe execution of the contract, 777 Realty entered into such a lease (hereinafter the CVS lease)with the defendant CVS, Albany, LLC (hereinafter, together with CVS Corporation, CVS).
The contract provided that closing would occur within 90 days following the expiration of astated due diligence period, which was in or about May 2006. On August 24, 2006, when theclosing had not yet occurred, the buyer and seller agreed, by "Letter Agreement," to extend theclosing date until January 31, 2007, with time of the essence. The letter agreement, however,gave the buyer an option to extend the closing date to February 28, 2007, upon notice andpayment of the sum of $50,000. Under the terms of the letter agreement, if the buyer failed toclose, it would be deemed to be in material breach of the contract, resulting in the buyer'ssurrender of the CVS lease, and the assignment thereof to the seller. On March 13, 2007, whenthe closing had still not occurred, and the option had not been exercised, the buyer and the sellerentered into a "Second Letter Agreement," whereby they agreed to extend the closing date untilJune 30, 2007, with time of the essence. The second letter agreement, however, gave the buyeran option to extend the closing date until July 31, 2007, upon notice and payment of the sum of$75,000. The second letter agreement included a material breach provision similar to that setforth in the initial letter agreement. As June 30, 2007, approached, the buyer and the sellerdiscussed extending the closing date further, but no agreement with respect to that issue wasfinalized during that period.
On June 30, 2007, the seller's attorney appeared at a title company's office, ostensibly for theclosing, but the buyer did not appear. On September 5, 2007, the seller informed the buyer that itwas in default, having failed to appear at the closing, and the seller requested the return of all duediligence materials. On September 18, 2007, the parties prepared a memorandum of "a synopsisof the terms agreed to between" them. The memorandum was signed by representatives from thebuyer and seller; a representative from CVS also signed it, but only as a "witness." Thememorandum, inter alia, provided that the closing "shall occur on or before November 15,2007." Thereafter, a "Third Letter Agreement" was drafted, which provided for a closing date ofNovember 15, 2007, with time of the essence. The parties, however, never executed thatdocument.
The buyer commenced this action seeking, inter alia, specific performance of the contractand, in connection therewith, it filed a notice of pendency in connection with the subjectproperty. The seller counterclaimed, seeking damages for the wrongful commencement of theaction and the wrongful filing of the notice of pendency (hereinafter the first counterclaim), andto recover damages for tortious interference by Robin Eshaghpour, the principal of both thebuyer and 777 Realty, with the seller's rights to the CVS lease by filing the notice of pendency(hereinafter the second counterclaim). The seller also sought a judgment declaring that all right,title, and interest of the buyer, as purchaser under the contract, was duly terminated, that thebuyer had no further interest in, or claim under the contract to any interest in, the subjectproperty or the CVS lease, that all interests of the additional counterclaim-defendants 777Realty, LLC, and Robin Eshaghpour under the CVS lease were duly and unconditionallyassigned to it, and that it is the successor landlord under the CVS lease (hereinafter the thirdcounterclaim).
The seller moved for summary judgment dismissing the complaint insofar as asserted againstit and on its third counterclaim, and to cancel the notice of pendency. The buyer opposed themotion and cross-moved to dismiss the seller's first and second counterclaims on the ground thatthose counterclaims failed to state a cause of action. In an order entered August 19, 2008, asmodified by a so-ordered stipulation also entered August 19, 2008, the Supreme Court awardedsummary judgment to the seller dismissing the complaint insofar as asserted against it and on thethird counterclaim for declaratory relief, [*3]and granted thatbranch of the seller's motion which was to cancel the notice of pendency. The Supreme Courtalso granted those branches of the cross motion which were to dismiss the first and secondcounterclaims. We affirm the order insofar as appealed and cross-appealed from.
The seller made a prima facie showing of its entitlement to judgment as a matter of law bydemonstrating that the buyer was not ready, willing, and able to close on the law date (see ADC Orange, Inc. v Coyote Acres,Inc., 20 AD3d 493, 495 [2005], affd as mod 7 NY3d 484 [2006]; Ferrone vTupper, 304 AD2d 524, 525 [2003]; Goller Place Corp. v Cacase, 251 AD2d 287,288 [1998]; see generally Alvarez v Prospect Hosp., 68 NY2d 320 [1986]). Contrary tothe buyer's contention, the law date was June 30, 2007. Although the parties executed amemorandum of "a synopsis of the terms agreed to between" them, which included a provisionextending the law date to November 15, 2007, the parties' course of dealing, that is, thepreviously executed formal "Letter Agreements," as well as the proposed but unexecuted "ThirdLetter Agreement," demonstrates that the memorandum was not considered a formal agreement(see EDP Med. Computer Sys. v Sears, Roebuck & Co., 149 AD2d 563, 564-565 [1989];1-1 Corbin on Contracts § 1.9; Restatement [Second] of Contracts § 27). Inopposition to the seller's showing, the buyer failed to raise a triable issue of fact. Accordingly,the Supreme Court properly awarded summary judgment to the seller dismissing the complaintand on its third counterclaim for declaratory relief, and properly granted that branch of theseller's motion which was to cancel the notice of pendency (see CPLR 6514 [a]; Capece v Robbins, 46 AD3d 589,590 [2007]).
Contrary to the seller's contention, the Supreme Court properly granted that branch of thecross motion of the buyer and the additional counterclaim defendants which was to dismiss thefirst counterclaim. Although, under some circumstances, a seller could properly seek damages,via a counterclaim, in connection with the commencement of an action for specific performanceof a contract for the sale of real property and the filing of a notice of pendency (see Shkolnik v Krutoy, 65 AD3d1214, 1216 [2009]), the allegations here are insufficient to make out a claim that the buyeracted in bad faith (id.; cf. Josefsson v Keller, 141 AD2d 700, 701 [1988]).
The Supreme Court also properly granted that branch of the cross motion of the buyer andthe additional counterclaim defendants which was to dismiss the second counterclaim (see Beecher v Feldstein, 8 AD3d597, 598 [2004]; M.J. & K. Co. v Matthew Bender & Co., 220 AD2d 488, 490[1995]).
The buyer's remaining contention is without merit.
Since the third counterclaim sought a declaratory judgment, the matter must be remitted tothe Supreme Court, Nassau County, for the entry of a judgment, inter alia, declaring that all ofthe buyer's right, title, and interest in the subject real property was terminated, that the buyer hasno further interest in, or claim under the contract to any interest in, the subject property or in theCVS lease, that all interests of the additional counterclaim defendants under the CVS lease wereduly and unconditionally assigned to the seller, and that the seller is the successor landlord underthe CVS lease (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371US 74 [1962], cert denied 371 US 901 [1962]). Rivera, J.P., Santucci, Eng andChambers, JJ., concur. [Prior Case History: 20 Misc 3d 1135(A), 2008 NY Slip Op51736(U).]