Scott E. Mollen
Scott E. Mollen ()

Breach of Contract—Cost of Clearing Title Issues Exceeded a Contractual Cost Limitation—Purchaser Had Option to Either Close and Take Title As Is or Cancel the Contract and Obtain a Refund of Its Down Payment—Purchaser’s Action for Specific Performance With an Abatement of the Purchase Price Dismissed

A plaintiff purchaser moved for leave to amend its complaint and for partial summary judgment granting specific performance of a contract of sale, requiring the defendant seller to transfer his 71.34 percent interest in the subject real property to the purchaser. The seller opposed the purchaser’s motion and cross-moved for summary judgment dismissing the complaint. The court granted the seller’s motion for summary judgment and dismissed the complaint.

On or about Dec. 7, 2010, the parties entered into the contract, pursuant to which the seller agreed to sell the property for $1.65 million. The purchaser paid an initial deposit of $82,500. The closing date was scheduled for Feb. 25, 2011.

At the time of contract, the seller owned 71.34 percent of the property. The seller’s brothers owned the remaining interests. The purchaser’s title insurer (title company) issued a title report which confirmed the foregoing. To “clear title,” the title company required the seller to probate his father’s will to place the mother in the chain of title, since the father had owned the property prior to the mother. The title company also required the brothers to execute the deed as grantors.

The seller filed a petition to probate his father’s will. A guardian ad litem had been appointed to protect the interests of the seller’s “two incapacitated brothers.” The guardian ad litem’s report was not finalized until June 4, 2012. On Feb. 25, 2012, one brother passed away in Poland. That brother’s will left all of his property to his common-law wife in Poland. The title company required that such brother’s estate be probated in Poland and that the seller “commence an ancillary proceeding in New York to obtain court approval of the property’s sale.”

The seller asserted that his estate attorney advised him that “to commence the ancillary proceeding and obtain a court order authorizing the sale of the property” would cost approximately $35,000. The seller advised the purchaser of the “costs, both orally and in writing.” By letter dated June 27, 2013 (2013 letter), the seller explained to the purchaser that the cost to have the sale approved by the Surrogate’s Court would be approximately $35,000 and pursuant to the contract, the seller was not obligated to bring any action or proceeding or to incur any expense in excess of a stated maximum expense (i.e., $5,000). The 2013 letter enclosed a copy of the appraisal, indicating that the property’s value was $2.1 million. The 2013 letter further stated that the Surrogate’s Court will have to approve the sale, and that court will require that the purchase price “be equal or close to a current appraised value.” The 2013 letter asked whether the purchaser “is willing to increase their offer to the current appraised value.”

After receiving the 2013 letter, the purchaser commenced the instant action. The purchaser moved for summary judgment on its claim for specific performance, seeking a transfer of the seller’s “undisputed 71.34 percent interest in the property and a proportional abatement in the purchase price.” The purchaser argued that “it has been ready, willing and able to close for five years, having obtained a mortgage commitment from [a lender].” The purchaser further asserted that the seller “breached the contract by demanding an increase of the purchase price to the appraised value and misleading it about the family’s estate problems.”

The seller countered that the purchaser failed to schedule a “law closing date,” that there was no provision in the contract that time was of the essence and the closing date had been waived by mutual consent to permit the seller to cure the title defects. The seller also argued that the contract capped his maximum expenditure of money to cure title defects at $5,000. The seller contended that the purchaser had the option to either cancel the contract and obtain a refund of the down payment or take title “as is.” The purchaser asserted that the 2013 letter was a repudiation of the contract and therefore, the purchaser had no obligation to set a “law closing date” or tender performance. The purchaser also alleged that the seller “misrepresented his authority to transfer 100 percent of the property to [the purchaser] and his inability to convey 100 percent of the property was self-created due to his failure to obtain his brother’s signature.”

The seller further argued that the 2013 letter did “not indicate a refusal to close” and that “as a layman, he did not know that his mother, father, and subsequently, his brother’s estate would all need to be cleared for title and the complexity of such a process.” He also asserted that his brothers were in agreement to sell the property at the agreed upon price.

The court granted summary judgment for the seller and dismissed the complaint. The contract specifically provided that if the seller cannot convey title in accordance with the contract, the purchaser’s remedies are either “to cancel the sale and receive a refund of its down payment and title costs” or “take the property subject to the title defects, with a maximum credit of the maximum expense amount, which in this case was $5,000.” Here, the seller advised the purchaser that “the cost to clear title would surpass $5,000 seven times over and, accordingly,…[the seller] was under no obligation to pursue the requisite legal proceedings to clear title.” Nothing in the 2013 letter indicated that the seller refused to close.

The court further found that the seller did not deliberately mislead the purchaser. The evidence indicated that the seller “intended to convey full title to the property with his brothers’ consent and made good-faith efforts to clear title, such as commencing legal action to probate his father’s will.” The court noted that “the untimely death of [the brother] in Poland was an unexpected event that significantly complicated the process of conveying full title of the property to [the purchaser].” Moreover, the purchaser was not without recourse. However, instead of electing a remedy contemplated by the contract, the purchaser commenced the instant action. The court held that under the circumstances, it was the purchaser who “breached the contract by failing to cancel the contract or take the property subject to the title defects.” Accordingly, the court granted summary judgment to the seller and dismissed the complaint.

Horrigan Development v. Drozd, 503433/2013, NYLJ 1202779527997, at *1 (Sup., KI, Decided Feb. 3, 2017), Ash, J.

Family Dispute Between Sisters—Holdover Proceeding Dismissed—Although  Sisters’ Relationship Involved Many Problems, the Sister Was Not a Mere Occupant or Licensee—Petitioner Argued That Her Biological Sister “Is Not True Family Because the Parties Have a Rocky and Tumultuous Relationship”

The petitioner commenced a holdover proceeding to acquire possession of an apartment from her biological sister, the respondent. The petitioner is the tenant of record and she alleged that the respondent is a licensee. The respondent moved to dismiss the proceeding, alleging that the court lacked jurisdiction because the respondent is the biological sister of the petitioner. The petitioner argued that the respondent “is not true family because the parties have a rocky and tumultuous relationship.”

Case law holds that “use and possession of a family home is out of the jurisdiction of [the] Civil Court.” Family members may be “blood or legal relations, but they may also be unrelated people who reside in a shared home…. Indicia of true family includes duration of relationship, emotional interdependence, and financial interdependence.” “Here, the parties are biological sisters who have resided together along with respondent’s two children…since January 2015.” Moreover, the petitioner “is the legal guardian of respondent’s two children.”

The respondent argued that “during her occupancy…she contributed to household expenses” and had lived in the apartment “as a family with petitioner.” The petitioner countered that the respondent and her children “exclude petitioner from portions of the apartment, slam doors and eat petitioner’s food without permission.” The petitioner further alleged that because of “the poor quality of their relationship, including several orders of protection, that respondent is not ‘true family’ within the definition of the family member exception.”

The court explained that “a poor relationship does not divest a party of its status as a family member.” Although the petitioner had alleged numerous facts as to the poor quality of her relationship with her sister, the petitioner had not alleged “any facts which may indicate that respondent was a mere occupant or licensee.” Accordingly, the court held that the petitioner “failed to meet her burden to prove that there was a landlord/tenant relationship between herself and respondent” and dismissed the petition.

Jit v. Johnson, 73861/16, NYLJ 1202779508651, at *1 (Civ, QU, Decided Jan. 30, 2017), Rodriguez, J.

Landlord-Tenant—Conspicuous Place Service—”Reasonable Application”—Tenant Alleged That 20 Seconds After the Process Server Rang the Bell, the Process Server Had Already Affixed the Papers to the Door and Left the Vicinity of the Apartment—Process Server Claimed He Waited One Minute and a Half

A tenant moved to dismiss a holdover summary eviction proceeding. The tenant did not dispute that a notice of petition and petition were served by “conspicuous place service.” Rather, the tenant argued that “the process server’s attempts to serve the papers by personal service did not constitute a ‘reasonable application.’”

The tenant submitted an affidavit of her sister-in-law (also named as a respondent), who alleged that “she was in the apartment watching television at the time service was made.” The sister-in-law asserted that “she heard the doorbell ring while she was in the downstairs part of the apartment …. the front door is located at the upstairs portion of the apartment.” She claimed that “[t]wenty seconds after she heard the doorbell ring she opened the door, but the process server had already affixed the papers to the door and left the vicinity of the apartment.” The process server’s affidavit alleged that “for both attempts at personal service he waited for a minute and a half after ringing the doorbell before affixing the papers to the door.”

The court stated that “[a]lthough there is a factual dispute regarding how long [process server] waited before attaching the papers to the door, a hearing would only be required if the court first makes the threshold determination that [tenant's] allegations, if true, do not constitute a reasonable application to serve by personal service.”

The court further explained:

“Before conspicuous place service may be employed, there must be a showing that ‘upon reasonable application’ admittance to the premises cannot be obtained and/or a proper person cannot be found to whom the process may be delivered”…. This is because conspicuous place service is the “least desirable” of the three methods of service permitted by RPAPL 735 (id.). …., while extraordinary methods, such as using the building intercom system in addition to ringing the bell at the door, are not required…. “the effort must have some expectation of success”…. As explained by the court in 1199 Housing Corp. v. Griffin:

[S]ervice of process is not a slapdash affair. There is every reason that service should be done carefully in landlord-tenant residential summary proceedings. The law already allows a simpler mode of service for such cases. The petitioner has an actual residence address and is not under the burden faced by other civil litigants. And, above all, saving a few minutes or some effort in a residential context is contemptible for cutting a corner or two might increase by even one whit the chance of an individual or a family joining the pool of human misery of the homeless on our streets….

The court observed that if the tenant’s assertion that “within twenty seconds of ringing the doorbell, [process server] had already affixed four sets of papers to the door and had departed” was true, “that would necessarily mean that [process server] waited less than twenty seconds before resorting to conspicuous place service.” Since this service is “the least desirable form and…the process server’s effort must have some expectation of success, the law surely requires that the process server wait for at least twenty seconds, if not more, before affixing the papers to the door and departing.”

Accordingly, the court set the matter down for a traverse hearing.

21-25 Convent Avenue Realty v. Semper, 69419/2016, NYLJ 1202779037001, at *1 (Civ., NY, Decided Jan. 30, 2017), Weisber, J.