Bregman v. Meehan

• Decision Date: 25 July 1984
• Docket Number: V-E
• Citation: 479 N.Y.S.2d 422,125 Misc.2d 332
• Parties: Paul BREGMAN and Susan Bregman, Plaintiffs, v. Veronica Ann MEEHAN, Defendant
• Court: New York Supreme Court

Page 422

479 N.Y.S.2d 422

125 Misc.2d 332

Paul BREGMAN and Susan Bregman, Plaintiffs, v. Veronica Ann MEEHAN, Defendant.

Supreme Court, Special Term Nassau County, V-E.

July 25, 1984.

Stuart A. Hammerman, P.C., New York City, for plaintiffs.

Ganz, Hollinger & Towe, New York City, for defendant.

MEMORANDUM

BEATRICE S. BURSTEIN, Judge.

Liability having been previously determined by Order dated November 14, 1983 (Vitale, J.) and affirmed by decision of the Appellate Division dated July 2, 1984, the only issue before this Court on the bench trial of this action was the remedy to be awarded plaintiffs, who seek specific performance of a contract for the sale of residential real property and damages.

Based upon the credible testimony and other admitted evidence, and pursuant to CPLR 4213, the Court finds and concludes as follows.

Plaintiffs, a young couple who are about to have their first child, resided in a rented apartment. They searched for a home for a considerable period of time, concentrating almost exclusively in three towns located in one area of Long Island, close to both their places of employment and their families and within a school district they considered suitable. On February 5, 1983, some three months after plaintiffs first viewed defendant's home, and six weeks after defendant first considered selling the property to plaintiffs, they entered into a contract of sale. The parties were represented by counsel of their own choosing, who apparently had assisted in the negotiation of the agreement. Plaintiffs' original offer of $175,000 later was raised to $185,000. Defendant rejected this too, but then accepted plaintiffs' offer of $200,000.

The contract of sale, by its first amendment, provides for a payment of the purchase price of $200,000 in three units. Plaintiffs were to pay a deposit of $20,000 to defendant upon signing the contract, which sum was to be held in escrow; they were to pay $120,000 at the closing scheduled for August 1, 1983; and defendant was to extend to them a $60,000 purchase money note and mortgage. The terms of the purchase money note, as set forth in the "FIRST AMENDMENT to CONTRACT DATED FEBRUARY 5, 1983", in relevant part were as follows:

"The note shall bear interest at the rate of 12% per annum calculated on a 30 year basis. The principal is due and payable 15 years from the date of making. Purchasers shall have the right to prepay the note without penalty, but partial payments shall be in multiples of $1,000.

"The purchase money note and mortgage shall be drawn on the standard form of New York Board of Title Underwriters by the attorney for Seller. Purchasers shall pay the mortgage recording tax, recording fees and the attorney's fee of $75.00 for its preparation."

Plaintiffs deposited the $20,000 at the signing of the contract of sale. The contract was conditioned upon plaintiffs obtaining, within 60 days of February 5, 1983, a mortgage commitment in an amount not less than $100,000 "at the prevailing rate of interest for a term of not less than 30 years.". Plaintiffs received such a commitment from a local private lender within the 60 days.

Plaintiffs advised their landlord they would be vacating their rented residence on August 1, 1983. Thereafter, some time in mid-April defendant advised plaintiffs by telephone that she did not intend to proceed to the closing which had been scheduled for August 1, 1983, although her then attorney advised her of her obligation to do so. This was followed by a formal letter dated April 26, 1983 from her counsel to plaintiffs' counsel, also advising plaintiffs that defendant would not sell the premises.

Defendant, a single parent since 1974, had resided in this home for 15 years, and raised her children there. Her refusal to proceed with the sale was based upon her personal misgivings--she did not want to move, the children and other family members told her she had made a "terrible" mistake and she was displeased with her obligation to give plaintiffs a purchase money mortgage, which she admittedly had discussed with her counsel before signing the contract. During that pre-contract period, personal events and household break-downs had upset defendant. However, there was no testimony to give rise to the slightest inference that she was incapable of contracting or was subject to any legally cognizable duress. She simply did not want to sell.

By letters dated July 14 and July 29, 1983 to defendant's counsel, plaintiff's counsel sought written confirmation as to whether or not defendant would attend the closing scheduled for August 1, 1983. Defendant did not reply. Plaintiffs then proceeded to the closing with their attorney, and representatives from the mortgage and title company. They waited three hours but defendant did not appear.

Plaintiffs then moved from the premises they had rented for $545 per month (which their landlord had let to others) to larger premises which rented at $950 per month. This cost plaintiffs $150 for moving costs and $950 for a broker's fee. The parties stipulated that plaintiffs' additional rental costs would be $4860 per year, although the Court notes that at the time of trial a year had not yet expired since plaintiffs moved on August 1, 1983. Plaintiff Paul Bregman testified that he estimates the yearly cost of operating the new home at $26,500 which equals an average of about $2200 per month.

Plaintiffs incurred other costs as a result of defendant's failure to proceed with the sale. They spent $175 for a house inspection. They claim they have incurred costs relating to the transfer of title, including $150 to $200 for a survey and disbursements; approximately $150 for a cancellation fee; a 1% origination fee; $3000 for mortgage points; $1000 for attorney's fees; and a filing fee of $40 or $50. Plaintiffs have not been billed for any of these title costs, nor have they had any informal requests for payment since title did not close. However, plaintiff Paul Bregman "believes" they are still liable to pay the mortgage points, origination fee and attorney's fees.

The representative of plaintiffs' lender testified that if plaintiffs were now to take title the lender would require a new credit update. The total cost of this would be $177 ($150 plus $27). Plaintiffs also claim they have expended or owe $8823 for attorneys' fees in this action.

Plaintiffs' expert witness, a broker, testified that the fair market value of the property was $200,000 on February 5, 1983, the date the parties entered the contract of sale; $220,000 on April 26, 1983, the date of defendant's counsel's letter advising plaintiffs that defendant would not proceed; $240,000 on August 1, 1983, the date set for closing; and $275,000 on the date of trial.

There was also testimony regarding changing mortgage rates. A representative of plaintiffs' lender testified at trial that the prevailing rate of interest on the date set for the closing, August 1, 1983, was 12 3/4%, while the prevailing rate at the time of trial was 13 1/2%. The parties stipulated at trial that the total additional interest plaintiffs would have to pay during the course of the 30 year life of a $100,000 mortgage at 13 1/2% interest as opposed to a mortgage at 12 3/4% was $21,139.20.

Defendant's expert on mortgage rates testified as to average mortgage rates on a nationwide basis, but admitted that rates fluctuate from area to area. While defendant claims her expert's figures allow the Court "to get a feeling for the trend in interest rates", plaintiffs will be required to get a particular mortgage in this particular area, not participate in a trend. Therefore, defendant's figures, based on national averages only, are not as exact as those of plaintiffs' lender's representative, which were based upon the specific rate a particular lender is actually willing to give plaintiffs. Defendant offered no admissible testimony as to rates being charged by local institutions. Therefore, the Court accepts the interest rates offered by plaintiffs, and rounds the total differential off to $21,140.

The Court now turns its attention to plaintiffs' claim that they are entitled to specific performance of the contract. Initially, the Court finds plaintiffs were ready, willing and able to purchase the property on the date scheduled for closing, thereby making the remedy of specific performance available to them. Huntington Mining Holdings, Inc. v. Cottontail Plaza, Inc., 96 A.D.2d 526, 465 N.Y.S.2d 40 (2d Dept.1983). However, it is implicit in Justice Vitale's order, granting plaintiffs summary judgment on the issue of liability and directing a trial on the issue of plaintiffs' appropriate remedy, that specific performance could not be determined in this action as a matter of law. Therefore, whether such relief should be granted is within the sound discretion of this Court. DaSilva v. Musso, 53 N.Y.2d 543, 547, 444 N.Y.S.2d 50, 428 N.E.2d 382 (1981); Hammer v. Michael, 243 N.Y. 445, 449, 153 N.E. 305 (1926); Phalen v. United States Trust Co., 186 N.Y. 178, 182, 78 N.E. 943 (1906). Nevertheless, that discretion is not unlimited. Therefore, unless the Court finds that granting a decree of specific performance in this action would be a drastic or harsh remedy, or work injustice, the Court must direct specific performance. DaSilva v. Musso, 53 N.Y.2d 543, 444 N.Y.S.2d 50, 428 N.E.2d 382 (1981), supra.

Plaintiffs have shown that the house they agreed to purchase was specifically chosen for various valid reasons. Three months elapsed between the time plaintiffs first spoke with defendant and the date they entered into the contract of sale with her. Defendant was fully represented by counsel previously known to her. She has not shown she was subject to undue duress or was in any way fraudulently induced into entering the contract. The claim that others thought her promise to take a purchase money mortgage was a bad bargain is not a sufficient ground to deny specific...