Lusker v. Tannen

• Decision Date: 30 November 1982
• Citation: Lusker v. Tannen, 90 A.D.2d 118, 456 N.Y.S.2d 354 (N.Y. App. Div. 1982)
• Parties: Ronald LUSKER, Plaintiff-Appellant, v. Jack TANNEN, Jack Biblio and 63-4th Avenue Realty Corp., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 354

456 N.Y.S.2d 354

90 A.D.2d 118

Ronald LUSKER, Plaintiff-Appellant, v. Jack TANNEN, Jack Biblio and 63-4th Avenue Realty Corp. Defendants-Respondents.

Supreme Court, Appellate Division First Department.

Nov. 30, 1982.

Kevin J. Plunkett, White Plains, of counsel (Plunkett & Jaffe, P.C., White Plains, attorneys), for plaintiff-appellant.

Morrell I. Berkowitz, New York City, of counsel (Rudes & Lax, New York City, attorneys), for defendants-respondents.

Before SULLIVAN, J.P., and MARKEWICH, BLOOM and KASSAL, JJ.

SULLIVAN, Justice Presiding:

On June 27, 1980, plaintiff entered into a written contract with defendants Tannen and Biblo, the owners of all of the issued and outstanding shares of common stock of 63 4th Avenue Realty Corporation, for the purchase of their stock. The corporation's sole asset was the real property located at 63 4th Avenue, New York, New York.

Plaintiff paid $25,000 upon execution of the contract ^*, which provided for the payment of an additional $25,000 at closing and the delivery of two notes in the aggregate sum of $225,000, representing the balance of the purchase price, payment of which was to be guaranteed by the corporation. The notes were to be paid in equal monthly installments over ten years when the principal then remaining was to be paid in a lump sum. As collateral, the corporation was to execute a first mortgage on the property located at 63 4th Avenue. The contract designated September 1, 1980 as the date for closing.

The contract contained the following provision:

Default by BUYER. If on the date set for the closing or on any adjourned date mutually agreed to, the SELLERS are ready, willing and able to carry out and perform this Agreement, and the BUYER refuses or is unwilling to perform his obligations, then in such event the amount paid on account of the purchase price... shall be retained by the SELLERS as liquidated damages, and this Agreement shall thereupon become void, and neither party shall have any further rights against the other.

The contract also provided that "[t]his [a]greement may not be modified except by an instrument in writing duly executed by the parties."

The closing did not take place as scheduled. Instead, according to plaintiff, some time in August of 1980, the sellers' attorney consented to an adjournment, sine die, so that plaintiff could obtain the necessary financing to complete the transaction. While denying that plaintiff ever requested an adjournment from him either before or after September 1, 1980, the sellers' attorney concedes that he had a conversation with plaintiff in mid-September in which he advised plaintiff of his clients' fears about plaintiff's inability to service the mortgage, but added that he would try to persuade his clients to close in accordance with the terms of the contract. Similar conversations are alleged to have taken place in October and November 1980, in the course of which the sellers' attorney again stated that he would try to convince his clients to close. During the period before and after September 1, 1980, the sellers' attorney never demanded, either orally or in writing, that plaintiff proceed to a closing.

According to plaintiff, it was not until December 11, 1980, after he had finally obtained the financing commitment he had sought and when he attempted to set a closing date, that the sellers' attorney advised him that the sellers had finally decided not to close with him. Plaintiff thereupon commenced this action for specific performance against the sellers, naming 63 4th Avenue Realty Corp. as a party defendant. He also filed a lis pendens against the real property.

On plaintiff's motion for a preliminary injunction restraining the sellers from transferring or selling the real property and the corporate stock during the pendency of the action, Special Term, finding the sole question to be whether an adjournment of the contract closing date had been granted, referred the matter for a hearing. After the hearing the referee reported that "[t]he testimony was conflicting, and subject to misunderstanding" but she found the writing controlling in any event, since the contract barred any modification thereof except by a writing signed by the parties. Accordingly, the referee recommended a resolution of the issue in defendants' favor. Special Term confirmed the report, denied the motion for a preliminary injunction, granted defendants' companion motion to dismiss the complaint, cancelled the lis pendens, and continued the undertaking which plaintiff had furnished in connection with the grant of a temporary restraining order. This appeal followed.

Contrary to defendants' argument and Special Term's dictum, the referee never found that the sellers' attorney had not consented to an adjournment. In reviewing the evidence the referee merely recounted the attorney's testimo that he neither received nor granted a request for an adjournment. Without resolving the issue, the referee recommended that, irrespective of what the parties might have discussed, the closing could not be adjourned without an agreement in writing, and it was this view that Special Term adopted in finding plaintiff to be in default as of September 1, 1980, and in dismissing the complaint. This was error. We find that unresolved issues of fact bar a summary resolution of whether plaintiff was in default on September 1, 1980.

In holding that the contract itself prohibits any oral modification or extension of the closing date, Special Term relied upon Section 15-301(1) of the General Obligations Law ^**, which bars, by oral executory agreement, the modification of a written contract expressly proscribing oral modification. Over the years, however, the courts have recognized, as qualifications to the doctrine of no oral modifications of written agreements barring the same, partial performance (see Alcon v. Kenton Realty, 2 A.D.2d 454, 156 N.Y.S.2d 439; also, McKinley v. Hessen, 202 N.Y. 24, 95 N.E. 32; Canda v. Totter, 157 N.Y. 281, 51 N.E. 989), and equitable estoppel (see Imperator Realty Co. v. Tull, 228 N.Y. 447, 453, 127 N.E. 263; Thomson v. Poor, 147 N.Y. 402, 409-410, 42 N.E. 13; Gray v. Met Contr. Corp., 4 A.D.2d 495, 497, 167 N.Y.S.2d 498).

In Rose v. Spa Realty Assoc., 42 N.Y.2d 338, 397 N.Y.S.2d 922, 366 N.E.2d 1279, the Court of Appeals had occasion to delineate the distinction between these two exceptions:

Where there is partial performance of the oral modification sought to be enforced, the likelihood that false claims would go undetected is similarly diminished. Here, too, the court may consider not only past oral exchanges, but also the conduct of the parties. But only if the partial performance be unequivocally referable to the oral modification is the requirement of a writing under section 15-301 avoided (citations omitted).

There is, however, another qualification to the mandates of section 15-301. Analytically distinct from the doctrine of partial performance, there is the principle of equitable estoppel. Once a party to a written agreement has induced another's significant and substantial reliance upon an oral modification, the first party may be estopped from invoking the statute to bar proof of that oral modification (citations omitted). Comparable to the requirement that partial performance be unequivocally referable to the oral modification, so, too, conduct relied upon to establish estoppel must not otherwise be compatible with the agreement as written [citations omitted]. (Id at 343-344, 397 N.Y.S.2d 922, 366 N.E.2d 1279.)

In our view the allegations contained in plaintiff's affidavit submitted in support of his cross-motion to reject the referee's report ¹ and for summary judgment present factual issues, the resolution of which might make one or both of these exceptions applicable. As evidence that an adjurnment had indeed been granted, plaintiff alleges that from time to time subsequent to September 1, 1980, the contract closing date, and until well into November 1980, he entered onto the premises at 63 4th Avenue with the permission and consent of the sellers to perform work, to take measurements, to participate in on-site conferences with an architect he had retained in the Spring of 1980 for the design of a restaurant and a delicatessen which he had planned to construct on the premises, and to show the premises to prospective tenants.

More specifically, plaintiff states that on September 4, 1980 a Consolidated Edison representative, at his request and with defendant Biblo's permission, inspected the premises for the purpose of installing gas service; that in October 1980, plaintiff and his plumber and various workmen entered the premises to install a gas sleeve in the basement at which time one of the sellers, Biblo, who was present, upon being advised of the reason for their presence, indicated that he had no objection since the building would soon be plaintiff's; and, that subsequent to September 1980, plaintiff ran advertisements in both the New York Times and The Village Voice for the rental of space at the premises, as a result of which over...