MONAGHAN AS TRUSTEE OF MONAGHAN QUALIFIED PERSONAL RESIDENCE TRUST v. COLE (2019)

During the parties' negotiations over the transfer of a cooperative apartment owned by the Monaghan Qualified Personal Residence Trust to defendant, plaintiff trustee was in litigation against the cooperative corporation, alleging that the board wrongfully conditioned its consent to his transfer of the unit upon his purchase of additional shares.  The contract of sale executed by the parties provided that plaintiff had “not entered into, shall not enter into, and has no actual knowledge of any agreement (other than the Lease) affecting title to the Unit or its use and/or occupancy after Closing, or which would be binding on or adversely affect Purchaser after Closing (e.g., a sublease or alteration agreement)” (paragraph 4.1.7), and that plaintiff had advised defendant, and defendant acknowledged, that plaintiff was in a dispute with the cooperative about the number of shares allocable to his unit, that defendant acknowledged that plaintiff had no obligation to resolve the dispute, and that plaintiff “may, in [his] sole and absolute discretion, settle the dispute on any terms [plaintiff] finds acceptable, and [defendant's] consent is not required in connection with any such settlement” (paragraph 34 of the contract rider).

Defendant's argument that, in view of the above-quoted provisions, plaintiff's absolute discretion to resolve his dispute with the cooperative may not be construed to permit a settlement imposing terms that would bind or adversely affect defendant after closing is unsustainable in the face of paragraph 31 of the contract rider.  Paragraph 31 provides, in pertinent part, “To the extent that there may be any conflict or inconsistency between provisions of this Rider [and] any provisions of the main body of this Contract of Sale ․, the provisions of this Rider shall govern.”  The parties expressly agreed that the rider would override any inconsistent provisions in the contract (see Pandey v. Pierce, 158 A.D.3d 460, 70 N.Y.S.3d 498 [1st Dept. 2018] ).

Defendant's argument that plaintiff abused his discretion, which could not be exercised to “frustrate the purpose of the agreement,” is also unavailing.  The settlement did not frustrate the purpose of the contract, which was the sale of the apartment to defendant.  Moreover, the discretion afforded plaintiff under the rider was bounded only by the Side Letter, which defendant does not contend was breached by plaintiff (cf.  C & E 608 Fifth Ave. Holding, Inc. v. Swiss Ctr., Inc., 54 A.D.3d 587, 587, 863 N.Y.S.2d 655 [1st Dept. 2008] [defendant did not have “unfettered” discretion] ), and plaintiff's dispute and pending settlement with the cooperative was out in the open at all relevant times (cf.  Richbell Info. Servs. v. Jupiter Partners, 309 A.D.2d 288, 294, 765 N.Y.S.2d 575 [1st Dept. 2003] [defendants entered into “secret” agreement designed to insure plaintiffs' default and allow defendants to purchase plaintiffs' interest in joint venture at “collusive foreclosure” prices] ).

On plaintiff's motion, the attorney affirmation properly served as the vehicle for the submission of admissible evidence on which the court relied (see Zuckerman v. City of New York, 49 N.Y.2d 557, 563, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980];  Melniker v. Melniker, 170 A.D.3d 448, 96 N.Y.S.3d 57, 2019 N.Y. Slip Op 01650, *1 [1st Dept, Mar. 7, 2019] ).  Defendant does not challenge the admissibility of that evidence.

Defendant argues that the court erred in considering plaintiff's reply affidavit because it contained new material.  However, the representations in the affidavit were contained in earlier submissions.  In particular, the contract (at paragraph 4.1.6) and the Purchaser's Rider (at paragraph 58), both annexed to plaintiff's initial motion papers, state that, to plaintiff's knowledge, all alterations were in compliance with applicable law and no Building Department violations had been issued.  In opposition, defendant submitted no evidence to raise an issue of fact as to the validity of these contractual representations.

We have considered defendant's remaining arguments and find them unavailing.