Thursday, October 4, 2012

SELLING A HOME IN TODAY'S MARKET

The legal discussion in "184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011":
"Defendant moves to dismiss the complaint pursuant to CPLR 3211 (a) (1), based upon documentary evidence, CPLR 3211 (a) (5), as precluded by the statute of frauds, and CPLR 3211 (a) (7), for failure to state a cause of action.
On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction (see, CPLR 3026). We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Under CPLR 3211 (a) (1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. (Leon v Martinez, 84 NY2d 83, 87-88 [1994]) (internal quotations and citations omitted).
In support of its motion to dismiss pursuant to CPLR 3211 (a) (1), defendant submits the Agreement, which defendant claims conclusively establishes that the Agreement, by its terms, was not intended to be valid and enforceable until executed by both parties. Defendant also claims the email communications between the parties, wherein defendant's counsel informed plaintiff's counsel that he would forward the Agreement to Wexler for approval, and Wexler, knowing that plaintiff had executed the Agreement and wired the funds into an escrow account, clearly stated that she wished to review the Agreement once more before executing it, evidence a lack of finality in the negotiation of terms and that the Agreement remained subject to review by defendant.
"[I]f the parties to an agreement do not intend it to be binding upon them until it is reduced to writing and signed by both of them, they are not bound and may not be held liable until it has been written out and signed. Moreover, when the parties' intent to be bound by a contractual obligation is determinable by written agreements, the question is one of law. A question of fact arises as to the parties' intent to enter into an enforceable obligation only where the intent must be determined by disputed evidence or inferences outside the written words of the instrument"(ADCO Elec. Corp. v HRH Const., LLC, 63 AD3d 653, 654 [2d Dept 2009] [internal quotations and citations omitted]; see Scheck v Francis, 26 NY2d 466, 470 [1970]; Peter F. Gaito Architecture, LLC v Simone Dev. Corp., 46 AD3d 530 [2d Dept 2007]; Feldman v Miller, 168 AD2d 597, 598 [2d Dept 1990]; Yenom Corp. v 155 Wooster St. Inc., 23 AD3d 259, 259-260 [1st Dept 2005]).
Here, there is no disputed question of fact. Section 28 of the Agreement evinces the parties' clear intent not to be bound until the execution of the Agreement by both parties and disproves plaintiffs' central claim that an enforceable obligation had arisen. It is undisputed that defendant did not execute the Agreement. It is also undisputed that plaintiff did execute the Agreement, thereby accepting the explicit language in section 28 barring enforcement of the Agreement until duly executed by both parties. Moreover, the emails of both defendant's president and its counsel unambiguously state their intent to review the Agreement further prior to executing it. As the Agreement was ultimately not executed by defendant, and the clear terms of the Agreement itself established that only execution by both parties would render the contract binding and enforceable, and the defendant's president had explicitly stated that execution remained contingent upon further review, Wexler's vague, general statements that "I am confident all will be fine" and "We'll be good," are insufficient to raise a question of fact as to whether a meeting of the minds took place.
In opposition to defendant's motion, plaintiff argues that the statute of frauds does not require dismissal of the complaint, citing a number of inapposite cases (see generally Denton v Clove Valley Rod & Gun Club, Inc., 95 AD2d 844 [2d Dept 1983]; St. Paul Indus. Park, Inc. v New York State Urban Dev. Corp., 63 AD2d 822 [4th Dept 1978], Korin Group v Emar Bldg. Corp., 291 AD2d 270 [1st Dept 2002]; Municipal Consultants & Publishers, Inc. v Town of Ramapo, 47 NY2d 144 [1979]; Church of God of Prospect Plaza v Fourth Church of Christ, Scientist, of Brooklyn, 76 AD2d 712 [2d Dept 1980]). Denton merely recognized that, in some circumstances, an unsigned contract combined with other writings, can constitute a written memorandum capable of satisfying the statute of frauds. However, there is no indication that the unsigned contract in Denton contained the language present here of the condition precedent to enforceability that both parties have executed the agreement. In both St. Paul Indus. Park, Inc. and Korin Group, summary judgment was denied upon a finding of factual disputes relating to a claim of equitable estoppel. Again, there is no mention of the unequivocal contractual provision present here. None of these cited cases are contrary to the fundamental rule that, when parties unambiguously express their intent to only be bound by a duly executed, written contract, no binding contract will arise or can be inferred until the contract is executed by both parties. In both Municipal Consultants & Publishers, Inc. and Church of God of Prospect Plaza, the courts expressly acknowledge this well-settled principle. Apropos of the instant suit, in Municipal Consultants & Publishers, Inc., the court stated: "[w]here all the substantial terms of a contract have been agreed on, and there is nothing left for future settlement, the fact, alone, that it was the understanding that the contract should be formally drawn up and put in writing, did not leave the transaction incomplete and without binding force, in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed" (47 NY2d at 149 (emphasis added); see also Church of God of Prospect Plaza, 76 AD2d at 716). Here, section 28 of the Agreement contained the same explicit, positive language contemplated in the above cases: that the Agreement was not to have binding effect until it was executed by both parties.
"If documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR 3211 (a) (7) is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action" (Peter F. Gaito Architecture, LLC, 46 AD3d at 530). Moreover, it has been held that where, as here, the written communications indicate that "the parties expressly contemplated the subsequent execution of a more complete and formal contract of sale," and no contract was executed, a meeting of the minds has not taken place and the exchange of correspondence will not satisfy the statute of frauds (Nesbitt v Penalver, 40 AD3d 596, 598 [2d Dept 2007]). Accordingly, defendant's motion pursuant to CPLR 3211 (a) (1), (5) and (7) is granted.
Defendant also moves, pursuant to CPLR 6514, to cancel the notice of pendency. CPLR 6501 provides that a notice of pendency may be filed where "the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property, except in a summary proceeding brought to recover the possession of real property." The instant action seeks specific performance of an alleged agreement to transfer title to real property. Thus, filing a notice of pendency was appropriate under the circumstances. Under CPLR 6514 (a), the court must direct the cancellation of a notice of pendency "if service of a summons has not been completed within the time limited by section 6512; or if the action has been settled, discontinued or abated; or if the time to appeal from a final judgment against the plaintiff has expired; or if enforcement of a final judgment against the plaintiff has not been stayed pursuant to section 5519." As this court has granted defendant's motion to dismiss the complaint, the notice of pendency must be cancelled pursuant to CPLR 6514 (a) upon the expiration of thirty days from service of a copy of this Order unless an appeal is taken and cancellation is stayed pursuant to CPLR 5519 (see Greven v Muir,128 AD2d 753 [2d Dept 1987]; Yenom Corp., 23 AD3d at 260; Zafarani v Gluck, 10 Misc 3d 1073(A), 2006 WL 140716 at *4 [Sup Ct, Kings 2006], aff'd 40 AD3d 1082 [2d Dept 2007]).
Defendant contends that immediate cancellation of the notice of pendency is appropriate, irrespective of the time to appeal, under CPLR 6514 (b), which permits the court, in its discretion, to cancel a notice of pendency, "if the plaintiff has not commenced or prosecuted the action in good faith." However, although this court has found that the documentary evidence established that no contract was formed, in light of the fact that defendant continued to hold plaintiff's deposit at the time the action was commenced, it cannot be said that the action was brought in bad faith. At the time plaintiff filed the complaint, defendant had not refunded from the escrow account the deposit of $1,840,000 made by plaintiff in its attempt to purchase the Property. Thus, plaintiff maintained a legitimate hope that the contract might yet be performed and the filing of the lis pendens was not inappropriate. At the least, plaintiff had a right to seek recovery of its deposit. Accordingly, defendant's motion pursuant to CPLR 6514 (b) must be denied.
Defendant's request for costs pursuant to CPLR 6514 (c) is similarly denied as it has not been demonstrated that the notice of pendency was wrongly filed in this action (Shkolnik v Krutoy, 65 AD3d 1214, 1216 [2d Dept 2009]; No.1 Funding Ctr, Inc. v H & G Operating Corp., 48 AD3d 908, 911 [3d Dept 2008] ("The purpose of CPLR 6514(c) is to reimburse a party for costs and expenses incurred as a result of a wrongful filing of a notice of pendency"); cf. Josefsson v Keller, 141 AD2d 700 [2d Dept 1988]).
Defendant's motion seeking the award of sanctions in the form of attorneys' fees, costs and disbursements, pursuant to 22 NYCRR 130-1.1, upon plaintiff's allegedly frivolous conduct in commencing and refusing to discontinue this action is also denied. "Conduct during litigation is frivolous and subject to sanction and/or the award of costs under 22 NYCRR 130-1.1 if it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law or . . . it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another'" (Miller v Cruise Fantasies, Ltd., 74 AD3d 919, 920-921 [2d Dept 2010], quoting Astrada v Archer, 71 AD3d 803, 807 [2d Dept 2010]). Although plaintiff's complaint has been dismissed, the circumstances here do not support a finding that the plaintiff's conduct in initiating suit was frivolous or that it brought the action solely to harass the defendant. Defendant's request for sanctions is denied."

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