Epstein v. Samaroo

(Supreme Court of the State of New York, Kings County, June 22, 2007)

We represented: Plaintiff-Buyer

Michael Ambrosio, J.S.C.:

DECISION and ORDER In this action for specific performance of a contract fro the sale of real property located at 190 Wilson Avenue, Brooklyn, New York, the plaintiff-buyer, Herman Epstein moves to enforce a judgment of the court (Douglass, J. ¹) entered on September 11, 2006 which ordered the defendant-seller, Chandra Samaroo to complete the contract of sale and convey her interest in the property to the plaintiff-buyer within forty-five days of service of notice of entry of the judgment. Plaintiff-buyer also moves for an abatement of the purchase price due to a fire which damaged the premises before the parties could close. The defendant-seller cross-moves for an order setting the purchase price for the property at $598,000 or alternatively, determining the contract is unenforceable pursuant to the Statute of Frauds (GOL §5-703).

The contract entered into by the parties on May 19, 2004 contained the following provision with respect to the purchase price:

The purchase price is Five Hundred and Ninety-Eight Thousand Dollars ($598,000.00), payable as follows: Twenty-Five Thousand Dollars ($25,000) upon the signing of this Contract, payable to the order of Seller, to be held in escrow by Seller's attorney in a non-interest bearing account; Five Hundred and Seventy-Three Thousand Dollars ($573,000.00), in cash or check payable to the order of Seller on delivery of the deed…

The contract also contained a Rider with the following clauses:

PURCHASE PRICE ADJUSTMENTS

Notwithstanding anything to the contrary contained in this Rider or the Contract, if title is marketable and Purchaser accepts same from Seller as herein provided, then Purchaser and Seller agree that the purchase price shall be Four Hundred and Seventy-Five Thousand Dollars ($475,000.00).

D. RIDER CONTROL

If any of the provisions of this Rider to the Contract of Sale shall conflict with any of the other provisions, printed or typewritten, on the Contract of Sale such conflict shall be resolved in every instance in favor of the provisions of this Rider.

The Contract, including the Rider was appended to all of the parties' pleadings and prior motions. The defendant-seller canceled the Contract claiming the plaintiff-buyer breached the mortgage contingency clause of the contract by failing to timely obtain a mortgage commitment by a bank in accordance with the terms of the Contract thus giving rise to this action by the plaintiff-buyer for specific performance. On May 16, 2006, Judge Douglass conducted a non-jury trial on the issue. In that proceeding, Judge Douglass implicitly, if not explicitly found the purchase price of the subject property to be $475,000 in accordance with the terms of the Rider of the Contract. For example, the following colloquy occurred between the court and counsel:

THE COURT: The contract price was $475, I think,
MR BRUNO: DEFENDANT-SELLER'S COUNSEL): Yes, that was the amount.
THE COURT: And they claim they have a commitment to the bank for how much money?
MR BRUNO: 448.
THE COURT: You are saying there is an issue of fact about whether they had $37,000.
MR. ITKOWITZ: (PLAINTIFF-BUYER'S COUNSEL): He still has 25 in his escrow account.
THE COURT: They just need $12,000 to close; is that not right?
MR BRUNO: No. Judge.
THE COURT: My arithmetic may be off.
MR BRUNO: The contract price is $598,000.
THE COURT: Everybody agrees to that?
MR. ITKOWITZ: Your honor, if you go to the rider ?
THE COURT: Just tell me whether you agree or don't agree.
MR. ITKOWITZ: No. It was 475.
THE COURT: That's a big difference then. Let me see the contract. Mr. Bruno, it looks like the purchase price is 475. Am I right, or am I wrong?
MR BRUNO: That's the amount to my client, yes, sir.
THE COURT: So 475. And the mortgage commitment is what?
MR BRUNO: 448. Less whatever permissible closing costs there are, plus title costs.
THE COURT: So that means they need $27,000. What was the down payment?
MR BRUNO: Twenty-five Judge.
THE COURT: So they owe $2,000; is that right?
MR BRUNO: They still have to come to closing with the 598 contract price, even if there is a credit.
THE COURT: The contract is 475. I am not following what you are saying. Notwithstanding anything, the purchaser accepts 475. Do we have the same folder?
MR BRUNO: Yes, Judge.
…
THE COURT: I'm not having a trial as to whether somebody had $2,000.
MR BRUNO: I don't know what math you are using.
THE COURT: The contract is 475. The bank is going to bring 448.
…
THE COURT: We are talking about small amounts of money. I don't understand.
(Trial Transcripts, May 16, 2006, p. 3-5). [emphasis added]

Judge Douglass ultimately granted plaintiff-buyer's application for specific performance while obviously applying $475,000 as the purchase price. Indeed, his decision clearly hinged on the fact that defendant-seller's claim that the plaintiff-buyer was not ready, willing and able to close was without merit since the mortgage commitment ($448,000) coupled with the down payment ($25,000) left a de minimis amount to complete the purchase of the property for $475,000. Accordingly, Judge Douglass's decision with respect to the purchase price of $475,000 is the law of the case and as a court of concurrent jurisdiction this court cannot look behind its determination.

The defendant-seller's application to deem the Rider unenforceable is also denied. The defendant-seller failed to raise a Statute of Frauds defense in her answer, on any pre-judgment motions or at trial before Judge Douglass when there was colloquy concerning which purchase price controlled, the Contract price or the Rider price. Defendant-seller has essentially waived the defenses he has now belatedly asserted post-judgment by failing to timely assert them either in his answer, a motion prior to trial, or at trial (see, 23/23 Commonwealth Corp. v General Motors Corp., 257 AD2d 367 [1st Dept; 1991]).

Turning to the issue of abatement of the purchase price due to a fire which damaged the premises, the Uniform Vendor and Purchaser Risk Act (GOL §5-1311) provides as follows:

1. Any contract for the purchase and sale or exchange of realty shall be interpreted, unless the contract expressly provides otherwise, as including an agreement that the parties shall have the following rights and duties: a. When neither the legal title nor the possession of the subject matter of the contract has been transferred to the purchaser: (1) if all or a material part thereof is destroyed without fault of the purchaser… , the vendor cannot enforce the contract, and the purchaser is entitled to recover any portion of the price that he has paid;… (2) if an immaterial part thereof is destroyed without fault of the purchaser… , neither the vendor nor the purchaser is thereby deprived of the right to enforce the contract; but there shall be, to the extent of the destruction… , an abatement of the purchase price.

In this case, the Contract contains a provision in the event a fire prior to closing:

6. If all or part of the Premises is destroyed or damaged by fire… prior to Closing, Purchaser shall have the option to either: (a) complete the Closing, but in such event, the net proceeds of any insurance coverage shall be paid to Purchaser as compensation for the loss of value caused to the Premises by such casualty; or (b) refuse to accept title of Premises and in such case Seller shall return the full deposit within five (5) days of such notification…

It is undisputed that the defendant-seller did not have insurance on the property at the time of the fire nor was she obligated to maintain insurance pursuant to the contract of sale. That being the case, paragraph 6 of the contract is not operative under the circumstances and the plaintiff-buyer may avail himself of relief pursuant to GOL §5-1311. That said, there is a great disparity between the parties concerning the extent of the damage caused by the fire. The Plaintiff-buyer claims it will costs $281,957.27 to repair the damage (see aff. Abraham Follman) while the defendant-seller claims it will only cost approximately $20,000 to restore the premises. A hearing will be required to determine the reasonable cost to repair the damage. Obviously, if the court agrees with plaintiff-buyer's adjuster, that would constitute a "material" destruction of the property under GOL §5-1311 in which case plaintiff-buyer would need to establish whether he is still entitled to common-law abatement since the statute appears to only provide for abatement in the event of an "immaterial" destruction of the premises.

The parties are directed to contact chambers within 15 days from the date of this decision to schedule the hearing. In all other respects the parties' respective motions and cross-motions are denied.

This constitutes the Decision and Order of the Court.

^[1]This case was reassigned to this court after Judge Douglass retired.