Haven Associates v. Donro Realty Corp.

Decision Date16 June 1986
Citation503 N.Y.S.2d 826,121 A.D.2d 504
PartiesHAVEN ASSOCIATES, etc., Appellant-Respondent, v. DONRO REALTY CORP., Respondent-Appellant, et al., Defendants.
CourtNew York Supreme Court — Appellate Division

Flower & Plotka, Bay Shore (Edward Flower, of counsel), for appellant-respondent.

Donner, Hariton & Berka, P.C., Bay Shore (Aaron B. Donner, of counsel), for respondent-appellant.

Before GIBBONS, J.P., and BRACKEN, WEINSTEIN and NIEHOFF, JJ.

MEMORANDUM BY THE COURT.

In an action to foreclose two mortgages, the plaintiff appeals as limited by its brief, from so much of a judgment of the Supreme Court, Suffolk County (Sherman, J.), entered March 15, 1984, as, after a nonjury trial, awarded judgment in the principal sums of $379,953 and $74,200 in favor of the defendant Donro Realty Corp. on its first and second counterclaims against the plaintiff, and the defendant Donro Realty Corp. cross-appeals, on the ground of inadequacy, from so much of the same judgment as awarded it the principal sum of only $379,953 on its first counterclaim.

Judgment modified, on the law and the facts by reducing the amount awarded in the fourth decretal paragraph thereof on the defendant Donro Realty Corp.'s first counterclaim from the principal sum of $379,953 to $232,667.61, and by deleting the principal sum of $74,200 awarded to said defendant on its second counterclaim and dismissing that second counterclaim. As so modified, judgment affirmed insofar as appealed and cross-appealed from, without costs or disbursements, and matter remitted to the Supreme Court, Suffolk County, for the entry of an appropriate amended judgment in accordance herewith.

This action was tried by the court without a jury. After trial, the court, pursuant to statute (CPLR 4213[b] ), issued a decision containing its findings of fact and conclusions of law. We are now called upon to review those findings and conclusions to the extent they relate to the grant of judgment in favor of the defendant on its two counterclaims in the principal sums of $379,953 and $74,200, respectively.

By contract of sale dated March 9, 1973, the defendant Donro Realty Corp. (hereinafter Donro) agreed to purchase and the plaintiff Haven Associates (hereinafter Haven) agreed to sell certain land, consisting of sections 2, 3 and 4 of a development designated as "Haven Hills" upon the understanding that the land consisted of 139 building plots upon which Donro could erect one-family houses. The contract of sale expressly referred to a previous agreement between Haven and the Suffolk County Sewer Agency, the County of Suffolk, the Town of Brookhaven, and the Brookhaven Planning Board, dated August 9, 1971, pursuant to which Haven was enabled to connect up to 100 houses at the development to a temporary consolidated cesspool, with the permission of the Department of Environmental Control (hereinafter DEC). The contract of sale between Donro and Haven provided that Haven was to have obtained permission from the DEC for the connection of those 100 houses to the temporary cesspool within five months from the date of closing. The contract further provided that, within one year of "the date of title" Haven would have made all arrangements with the DEC necessary to permit Donro "to obtain additional permits and C.O.'s * * * for the balance of its property".

The closing took place on April 10, 1973. On that date, Donro issued two separate purchase money mortgages to Haven, the first to secure an indebtedness of $807,920, and the second to secure an indebtedness of $194,600. It was provided in various riders to these mortgages that within either one year or one year and 20 days Donro would be able to obtain all necessary permits and certificates of occupancy for the balance of the houses to be erected on the 139 lots. Donro's responsibilities in connection with the development of sewage collection and treatment facilities, as set forth in these documents, was limited to the construction of "sewer laterals and main and house laterals".

On April 10, 1973, Donro also executed a document designated as an "assignment and assumption" agreement wherein Donro assumed all of Haven's obligations under the 1971 agreement with the Suffolk County Sewer Agency, except "the obligation to construct the waste water treatment plant referred to in said Agreement".

After the closing, Donro proceeded to sell various lots at the Haven Hills development and to construct houses thereon. Haven, for its part, had obtained the approval of the DEC so as to allow up to 100 of these houses to be serviced by the communal cesspool. Haven had used 23 of those available connections to service houses it had previously built on section 1 of Haven Hills, leaving 77 available hookups for the houses to be erected by Donro on sections 2, 3 and 4. The record establishes that 60 of the 139 lots owned by Donro, located in the southern part of section 3 and all of section 4, could not be connected to the temporary cesspool, because of topographical factors, without a pump station. Donro's president testified that he complained to Haven's president that due to Haven's failure to build a pump station the southern lots were unavailable for sale, and that, consequently, Donro was experiencing financial difficulty. The president of Haven allegedly promised, in January of 1975, to complete the pump station in return for the release of certain funds being held in escrow. Although these funds were released from escrow, Haven never built the pump station or any other part of a permanent sewage treatment plant capable of serving all the lots on the property purchased by Donro. Donro ultimately abandoned the project. Haven subsequently commenced this action to foreclose on the two purchase money mortgages, and Donro counterclaimed for damages.

The trial court found correctly that it was Haven's contractual obligation to install a permanent sewage disposal system capable of servicing all of the 139 lots purchased by Donro, and that this obligation necessarily entailed the construction of a pump station. Any ambiguity that may have existed as to whose responsibility it was to construct the pump station, which Haven claims is not part of a "treatment" plant, was properly resolved against Haven. Most importantly, the uncontroverted testimony of Donro's president indicated that Haven's president acknowledged his obligation to construct the pump station. The trial court therefore correctly found that Haven had willfully and knowingly breached its contract. We therefore conclude, as did the trial court, that Donro is entitled to damages in compensation for Haven's breach. It is with regard to the calculation of damages that we differ with the trial court.

On the issue of damages, Haven argues that 77 lots in the northern portions of section 3 and all of section 2 were available for development because the houses to be erected thereon could be serviced by the communal cesspool. Haven further argues that since Donro sold and delivered only 46 lots in total, the absence of a permanent sewage treatment plant capable of servicing 139 lots did not actually cause any damage. We cannot agree with this argument. Donro expected to receive, by May 1, 1974, at the latest, 139 lots available for sale, and, as a result of Haven's breach, received only 77. Thus, 62 lots were never available for sale. After a year's delay with still no construction on the sewage treatment facility, Donro was justified in treating the contract as abandoned...

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    ...consented to the included issue of Goldberg's intervening cause. Nor does the statement in Haven Associates v. Donro Realty Corp., 121 A.D.2d 504, 503 N.Y.S.2d 826, 830 (2d Dep't 1986), that "[i]t was [plaintiff's] burden to show that [defendant's] breach contributed in a substantial measur......
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    ..."with mathematical precision," but may be "an approximation." Ashland Mgt. v. Janien, 82 N.Y.2d at 403. See Haven Assoc. v. Donro Realty Corp., 121 A.D.2d 504, 509 (2d Dep't 1986). The contractual obligation here is not a simple payment, where the obligor-payor would not be liable for the o......
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    ...development” of the leased properties. Nycal, 106 Fed.Cl. at 253. 4. Nycal cites a New York case, Haven Associates. v. Donro Realty Corp., 121 A.D.2d 504, 503 N.Y.S.2d 826 (1986), for the proposition that the burden of proving intervening cause in a lost-profits case falls on the defendant.......
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