| Er-Loom Realty, LLC v Prelosh Realty, LLC |
| 2010 NY Slip Op 07582 [77 AD3d 546] |
| October 26, 2010 |
| Appellate Division, First Department |
| Er-Loom Realty, LLC, et al., Respondents, v Prelosh Realty,LLC, et al., Appellants. |
—[*1] DelBello Donnellan Weingarten Wise & Weiderkehr, LLP, White Plains (Patrick M. Reilly ofcounsel), for respondents.
Judgment, Supreme Court, Bronx County (Kenneth L. Thompson, Jr., J.), entered on or aboutMay 14, 2009, inter alia, awarding plaintiff specific performance of a contract to sell real estate andrelated relief and denying defendants' cross motion for summary judgment dismissing the complaint,unanimously affirmed, without costs.
Plaintiff limited liability companies are the contract vendees of the two apartment buildings at issuein this action. Each company was formed by Prela Rukaj for the purpose of acquiring one of thebuildings. Each defendant, also a limited liability company, is the contract vendor for one of thebuildings. Prela's mother, Lena Rukaj, and the estate of his late father, Toma Rukaj, are the solemembers of each defendant. In September 2001, Toma and Prela reached an understanding that Tomawould refinance the properties with 30-year mortgages and Prela would then purchase the properties inan installment sale with payments to be made when the mortgage payments came due. The partiescontemplated that the sale would be structured to provide defendants with a net monthly payment of$16,500 after plaintiffs paid each mortgage installment. Prela, who took over management of theproperties in September 2001, formed plaintiffs in 2002. In July 2002, defendants obtained the desiredrefinancing and the parties' attorneys began to prepare contracts of sale. The sale price was initially setat $4.25 million for both buildings, payable in monthly installments of $29,661 calculated to cover themortgage payments and provide defendants with the contemplated $16,500 monthly net payments. InSeptember 2002, two months before the contract was signed, plaintiffs began making the mortgage andinstallment payments. Following discussions with Prela's siblings, the purchase price was increased to$5 million payable in monthly installments of $17,000. The purchase agreement was executed at theoffice of defendants' counsel on December 18, 2002 by Prela on behalf of plaintiffs and Toma on behalfof defendants. The agreement, which was handwritten, incorporated two previously preparedtypewritten agreements. The parties' attorneys, Lena and other family members were present when theagreement was signed. Consistent with the parties' understanding, the handwritten agreementincorporated the typewritten agreements' payment schedules and price riders, which provided for netpayments to defendants of $17,000 as set forth [*2]above. Theagreement provided that the purchase price would be secured by a wraparound mortgage if the existingmortgagee consented, or by personal guarantees if the mortgagee did not consent. After signing theagreement, Prela continued making the monthly purchase price installment payments. This action forspecific performance and money damages was commenced after defendants repudiated the agreementin April 2004.
In granting plaintiffs summary judgment, the motion court properly rejected defendants' claim thatthe transaction was not approved by majority votes of defendants' members pursuant to LimitedLiability Company Law § 402. Defendants' acceptance of the benefits of the agreement in theform of the monthly installment payments constituted a ratification that undermines their argument thatthe transaction was unauthorized (see PhilipsS. Beach, LLC v ZC Specialty Ins. Co., 55 AD3d 493 [2008], lv denied 12 NY3d713 [2009]). We are not persuaded by defendants' argument that the installment payments were madewith their money in light of the unrefuted evidence that the cash flow from the buildings was insufficientto cover the operating expenses and the monthly payments. Their argument that the agreement wascancelled by its own terms is also unavailing. Here, defendants relied on language in the typewrittenagreements that provided for cancellation of the sale on notice upon failure to obtain the mortgagee'sconsent to the transaction. That language was superseded by the handwritten agreement to the extent itprovided for the giving of personal guarantees in the absence of the mortgagee's consent. Thehandwritten agreement presumably expressed the latest intention of the parties, and would controlwherever it conflicts with the previously prepared typewritten agreement (cf. Home Fed. Sav. Bankv Sayegh, 250 AD2d 646, 647 [1998]).
Defendants have also failed to raise a triable issue of fact as to whether Toma had the mentalcapacity to enter into a binding contract on behalf of defendants. A party's competence to enter into acontract is presumed, and the party asserting incapacity bears the burden of proof (Feiden vFeiden, 151 AD2d 889, 890 [1989]). In this instance, defendants did not make a prima facieshowing that any physical or mental condition rendered Toma incompetent to comprehend andunderstand the nature of the transactions underlying the agreement (see e.g. Whitehead v Town House Equities, Ltd., 8 AD3d 367, 369[2004]). Concur—Gonzalez, P.J., Friedman, DeGrasse, Manzanet-Daniels and RomÁn,JJ. [Prior Case History: 24 Misc 3d 1231(A), 2009 NY Slip Op 51689(U).]