| Slezak v Stewart's Shops Corp. |
| 2015 NY Slip Op 08691 [133 AD3d 1179] |
| November 25, 2015 |
| Appellate Division, Third Department |
[*1]
| Jane Slezak, as Executor of Cecelia Slezak, Deceased,et al., Respondents, v Stewart's Shops Corp., Appellant. |
Towne, Ryan & Partners, PC, Saratoga Springs (Susan F. Bartkowski ofcounsel), for appellant.
Robert J. Krzys, Amsterdam, for respondents.
McCarthy, J.P. Appeal from an order of the Supreme Court (J. Sise, J.), enteredOctober 28, 2014 in Montgomery County, which denied defendant's motion to dismissthe complaint.
Plaintiffs commenced this action seeking rescission in connection with their sale oftwo parcels of real property to defendant. The terms of the sale were set forth in twoagreements between the parties, an option agreement and an escrow agreement, both ofwhich contained provisions related to holding funds in relationship to a potential needfor environmental remediation of the real property. Defendant moved to dismiss thecomplaint alleging that it failed to state a cause of action (see CPLR 3211 [a][7]), was precluded by documentary evidence (see CPLR 3211 [a] [1]) and wasbarred by the defense of payment (see CPLR 3211 [a] [5]). Supreme Courtdenied the motion, and defendant now appeals.
Initially, we conclude that plaintiffs have stated a cause of action, although not onefor the equitable relief that they seek. The resolution of a motion to dismiss for failure tostate a cause of action requires that we "accept the facts as alleged in the complaint astrue, accord plaintiffs the benefit of every possible favorable inference, and determineonly whether the facts as alleged fit within any cognizable legal theory" (Leon vMartinez, 84 NY2d 83, 87-88 [1994]; accord Zito v New York City Off. of Payroll Admin., 130 AD3d1326, 1328 [2015]). Liberally construed, plaintiffs' complaint alleges that defendant,as a result of depleting the escrow fund, failed to pay them the contractually requiredpurchase price for the properties, and that, therefore, [*2]they should be entitled to such properties and anyimprovements made to them. These allegations of failure to pay pursuant to the terms ofa valid contract—or valid contracts—are sufficient to establish a cause ofaction for breach of contract (see generally U.W. Marx, Inc. v Koko Contr., Inc., 124 AD3d1121, 1122 [2015], lv denied 25 NY3d 904 [2015]; Marshall vAlaliewie, 304 AD2d 1026, 1027 [2003]). Nonetheless, because these allegations ofdamages in the form of nonpayment would be entirely remedied by any successful breachof contract claim, the equitable relief of rescission is unavailable; rescission can only beinvoked "when there is lacking complete and adequate remedy at law and where thestatus quo may be substantially restored" (Rudman v Cowles Communications,30 NY2d 1, 13 [1972] [italics omitted]; see Marshall v Alaliewie, 304 AD2d at1027).
Plaintiffs' cause of action for breach of contract survives defendant's remainingcontentions. If documentary evidence contains a relevant ambiguity, such evidencecannot justify the dismissal of a cause of action (see Weston v Cornell Univ., 56 AD3d 1074, 1075 [2008];Mendelovitz v Cohen, 37AD3d 670, 671 [2007]). Although the two agreements that defendant submittedcontain provisions regarding environmental remediation, neither contains clausesadequately specifying the circumstances in which use of the escrow funds forenvironmental remediation was proper. Accordingly, the documentary evidence does notutterly establish that defendant's environmental remediation expenditures were justifiedby the relevant contracts (see Weston v Cornell Univ., 56 AD3d at 1075-1076;Mendelovitz v Cohen, 37 AD3d at 680-671).
Further, given that the adequacy of defendant's payment is entirely based on theappropriateness of the environmental remediation expenditures, the same ambiguityprevents defendant from establishing the defense of payment as a matter of law (compare Parkoff v Stavsky,109 AD3d 646, 648 [2013], lv denied 22 NY3d 864 [2014]). Finally,defendant's proof of the transfer of title did not extinguish, by merger, plaintiffs'contractual rights regarding payment in relationship to the funds held in escrow.Contractual provisions regarding the sale of real estate are not merged into a deed andextinguished if the parties demonstrated an intent that such provisions would survivetransfer of title (see Sicignano vDixey, 124 AD3d 1301, 1304 [2015]; Arnold v Wilkins, 61 AD3d 1236, 1236 [2009]). Theprovision in the option agreement regarding environmental remediation explicitly statesthat it survives the closing, and the separate escrow agreement was, as plaintiffs concede,executed at the closing (see Sicignano v Dixey, 124 AD3d at 1304). Accordingly,defendant's submissions did not establish that contractual rights related to the escrowholdings extinguished upon transfer of title. Defendant's remaining contentions arewithout merit. Plaintiffs' argument that the record is incomplete, raised for the first timeat oral argument, is unpreserved (see Matter of Citizens for St. Patrick's v City of Watervliet ZoningBd. of Appeals, 130 AD3d 1338, 1340 n 3 [2015]). Further, we do not considerplaintiffs' request for relief from certain of Supreme Court's findings given that they didnot appeal from the order.
Egan Jr., Lynch and Devine, JJ., concur. Ordered that the order is modified, on thelaw, without costs, by reversing so much thereof as denied defendant's motion to dismissthe cause of action for rescission; motion granted to that extent and said cause of actiondismissed; and, as so modified, affirmed.