KNIC LLC v. Zachary W. Carter, in his capacity as Corporation Counsel of the City of New York and Escrow Agent, Nominal Defendant. (2021)

Order, Supreme Court, Bronx County (Ruben Franco, J.), entered December 20, 2016, which, to the extent appealed from as limited by the briefs, dismissed the breach of contract and declaratory judgment causes of action, unanimously affirmed, with costs.

The clear and unambiguous language of section 2.01 of the parties’ escrow agreement required plaintiffs to provide evidence to defendant of “the availability of debt financing satisfactory to [defendant] in its sole but reasonable discretion consisting of (i) a Senior Mortgage loan in the amount of at least Twenty–Five Million Dollars ($25,000,000), in the form of an executed and binding commitment from a lender and (ii) subordinate mortgage loans ․ in the form of one or more executed and binding loan agreements from one or more lenders.”  Plaintiffs’ contention that they had only to show the availability of financing fails to give meaning to the language that specified that only “executed and binding commitment[s]” from lenders would be acceptable (see Nomura Home Equity Loan, Inc., Series 2006–FM2 v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 581, 69 N.Y.S.3d 520, 92 N.E.3d 743 [2017]).  The term sheet on which plaintiffs rely does not satisfy this requirement.  Thus, the claim that defendant breached the escrow agreement by directing the escrow agent not to release the lease was correctly dismissed.  As the declaratory judgment claim is essentially duplicative of the contract claim, it too was correctly dismissed, and there is no need for a declaration in defendant's favor (see Siller v. Third Brevoort Corp., 145 A.D.3d 595, 596, 44 N.Y.S.3d 40 [1st Dept. 2016], lv denied 30 N.Y.3d 905, 2017 WL 5492766 [2017]).

We reject plaintiffs’ alternative argument that the escrow agreement should be voided because they entered into it under economic duress.  Although defendant said that it would not perform under the pre-development agreement and turn over the lease unless plaintiffs entered into the escrow agreement, and plaintiffs could not obtain the lease from another source, as it was tied to unique real estate, plaintiffs cannot claim economic duress, because there were legal remedies available to them (see CRG at Arnot Mall, Inc. v. Feehan, 177 A.D.3d 1135, 1138, 112 N.Y.S.3d 828 [3d Dept. 2019]).  They were put on notice of defendant's new demands on April 25, 2014, five months before the pre-development agreement's closing deadline, and could have filed a lawsuit for specific performance or breach of contract.  Moreover, by failing to repudiate the escrow agreement promptly, plaintiffs ratified or affirmed it (see Beltway 7 & Props., Ltd. v. Blackrock Realty Advisers, Inc., 167 A.D.3d 100, 108, 90 N.Y.S.3d 3 [1st Dept. 2018], lv denied 32 N.Y.3d 916, 2019 WL 740446 [2019];  Bank Leumi Trust Co. of N.Y. v. D'Evori Intl., 163 A.D.2d 26, 30–31, 558 N.Y.S.2d 909 [1st Dept. 1990]).

We have considered plaintiffs’ other arguments and find them unavailing.