| Blair v O'Donnell |
| 2011 NY Slip Op 05442 [85 AD3d 954] |
| June 21, 2011 |
| Appellate Division, Second Department |
| James Blair et al., Respondents, v Richard O'Donnell et al.,Appellants. |
—[*1] Rayano & Garabedian, P.C., Central Islip, N.Y. (Janine M. Rayano and Richard M. Santos ofcounsel), for respondents.
In an action, inter alia, to recover a down payment pursuant to a contract for the purchase ofreal property, the defendants appeal, as limited by their brief, from so much of an order of theSupreme Court, Westchester County (Smith, J.), entered June 15, 2010, as granted thosebranches of the plaintiffs' cross motion which were for summary judgment on the complaint anddismissing the defendants' counterclaims, and set the matter down for an inquest ondisbursements and an attorney's fee, and denied those branches of the defendants' cross motionwhich were for summary judgment dismissing the complaint and on their counterclaim to retainthe down payment.
Ordered that the order is modified, on the law, by deleting the provisions thereof grantingthat branch of the plaintiffs' cross motion which was for summary judgment on so much of thecomplaint as sought an award of disbursements and an attorney's fee, and setting the matter downfor an inquest on disbursements and an attorney's fee, and substituting therefor a provisiondenying that branch of the plaintiffs' cross motion; as so modified, the order is affirmed insofar asappealed from, with costs payable to the plaintiffs, and, upon searching the record, summaryjudgment is awarded to the defendants dismissing so much of the complaint as sought an awardof disbursements and an attorney's fee.
The plaintiffs entered into a contract for the purchase of certain real property in WestchesterCounty, New York, and deposited the sum of $55,000 in escrow with the defendant Robert G.O'Donnell, as attorney for the defendants Richard O'Donnell and Lee Ann O'Donnell (hereinaftertogether the sellers). The contract contained a mortgage contingency clause requiring theplaintiffs to notify the sellers by a certain date if they could not obtain financing. The plaintiffsapplied for mortgage financing and obtained a commitment from a lender, conditioned uponobtaining clear title to the property; they timely transmitted this commitment to the sellers by thedate provided in the contract.
The plaintiffs also commissioned a survey of the property as required by a title insurancecompany. When this survey was completed, it showed certain encroachments on the [*2]property which led the lender to revoke the previously-issuedmortgage commitment. The mortgage contingency date having passed, the defendants refused theplaintiffs' request to cancel the contract and indicated the sellers' intention to retain the downpayment as liquidated damages.
"A mortgage contingency clause is construed to create a condition precedent to the contractof sale" (see Creighton v Milbauer, 191 AD2d 162, 165 [1993]; see Kapur vStiefel, 264 AD2d 602, 603 [1999]; Cone v Daus, 120 AD2d 788, 789 [1986]). Thepurchaser is entitled to return of the down payment where the mortgage contingency clauseunequivocally provides for its return upon the purchaser's inability to obtain a mortgagecommitment within the contingency period (see Singh v Dyckman, 202 AD2d 412[1994]). However, when the lender revokes the mortgage commitment after the contingencyperiod has elapsed, the contractual provision relating to failure to obtain an initial commitment isinoperable, and the question becomes whether the lender's revocation was attributable to any badfaith on the part of the purchaser (seeApplied Behavior Analysis, Inc. v Greater N.J. Annual Conference of United MethodistChurch, 67 AD3d 714, 716 [2009]; Anderson v Meador, 56 AD3d 1030, 1038 [2008]; Kapur vStiefel, 264 AD2d at 603; Creighton v Milbauer, 191 AD2d at 166).
Here, the defendants failed to establish their prima facie entitlement to judgment as a matterof law on their counterclaim to retain the down payment with evidence demonstrating that thelender's revocation of the mortgage commitment was attributable to bad faith on the part of theplaintiffs (see Anderson v Meador, 56 AD3d at 1038; Kapur v Stiefel, 264 AD2dat 603; Creighton v Milbauer, 191 AD2d at 166-167; cf. Balkhiyev v Sanders, 71 AD3d 611, 612 [2010]; AppliedBehavior Analysis, Inc. v Greater N. J. Annual Conference of United Methodist Church, 67AD3d at 716). Moreover, since the contract contained no provision that would apply in the eventthat a mortgage commitment, even if timely issued, was later withdrawn, the defendants failed toestablish their prima facie entitlement to judgment as a matter of law based upon any term of theparties' contract allowing them to retain the down payment under these circumstances (seeKapur v Stiefel, 264 AD2d at 603; Creighton v Milbauer, 191 AD2d at 163-164).Accordingly, the Supreme Court properly denied that branch of the defendants' cross motionwhich was for summary judgment on their counterclaim to retain the down payment (seeAlvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).
The plaintiffs established their entitlement to judgment as a matter of law on their claim forreturn of the down payment with evidence that they acted in good faith in connection withobtaining mortgage financing (see Cone v Daus, 120 AD2d at 790; cf. Garber v Giordano, 16 AD3d454, 455 [2005]). In opposition, the defendants submitted only speculative and conclusoryassertions as to whether the plaintiffs acted in bad faith in connection with the revocation of themortgage commitment. They thereby failed to raise a triable issue of fact (see Lunning v 10Bleecker St. Owners Corp., 160 AD2d 178 [1990]; Cone v Daus, 120 AD2d at 790;cf. Kapur v Stiefel, 264 AD2d 602 [1999]; Zwirn v Goodman, 206 AD2d 360,362 [1994]; Katz v Simon, 216 AD2d 270, 271-272 [1995]). Thus, the Supreme Courtproperly granted that branch of the plaintiffs' cross motion which was for summary judgment onso much of the complaint as sought to recover the down payment.
However, the plaintiffs failed to establish their entitlement to an award of disbursements andan attorney's fee. Under the general rule, legal fees and disbursements are incidents of litigation,and the prevailing party may not collect them from the unsuccessful party unless an award isauthorized by agreement between the parties, statute, or court rule (see Matter of A.G. ShipMaintenance Corp. v Lezak, 69 NY2d 1, 5 [1986]; Khanal v Sheldon, 55 AD3d 684, 686 [2008]). Here, the parties'contract did not provide for recovery of such items in the event of a breach. Accordingly, theSupreme Court should have denied that branch of the plaintiffs' motion which was for summaryjudgment on so much of the complaint as sought an award of disbursements and an attorney's fee,and should not have set the matter down for an inquest on disbursements and an attorney's fee.Further, under the circumstances of this case, we award summary judgment to the defendantsdismissing this claim of the plaintiffs pursuant to our authority to search the record and awardsummary judgment to the nonmoving party with respect to an issue that was the subject of themotion before the Supreme Court (seeSand v City of New York, 83 AD3d 923, 926 [2011]).
The defendants' remaining contentions are without merit. Angiolillo, J.P., Balkin, Dickersonand Cohen, JJ., concur.