CLARKE v. SPINO (2026)

DECISION & ORDER

In an action, inter alia, for specific performance of a contract for the sale of real property, to recover damages for breach of contract, and for related declaratory relief, the plaintiffs appeal from (1) an order of the Supreme Court, Westchester County (Nancy Quinn Koba, J.), dated February 27, 2024, and (2) an order of the same court dated July 16, 2024.  The order dated February 27, 2024, insofar as appealed from, granted those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the causes of action sounding in specific performance, breach of contract, negligence, and breach of the covenant of good faith and fair dealing, and, in effect, for a judgment declaring that the plaintiffs are not entitled to a return of a down payment and directing the defendant Peter Spino, Jr., to release the down payment from escrow to the defendants Frank Newman and Elizabeth Newman.  The order dated July 16, 2024, insofar as appealed from, denied those branches of the plaintiffs' motion which were for leave to reargue and renew their opposition to those branches of the defendants' prior motion which were pursuant to CPLR 3211(a) to dismiss the causes of action sounding in specific performance, breach of contract, negligence, and breach of the covenant of good faith and fair dealing, and, in effect, for a judgment declaring that the plaintiffs are not entitled to a return of the down payment and directing the defendant Peter Spino, Jr., to release the down payment from escrow to the defendants Frank Newman and Elizabeth Newman.

ORDERED that the order dated February 27, 2024, is affirmed insofar as appealed from, and the matter is remitted to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, making an appropriate declaration in accordance herewith;  and it is further,

ORDERED that the appeal from so much of the order dated July 16, 2024, as denied that branch of the plaintiffs' motion which was for leave to reargue is dismissed, as no appeal lies from an order denying reargument;  and it is further,

ORDERED that the order dated July 16, 2024, is affirmed insofar as reviewed;  and it is further,

ORDERED that one bill of costs is awarded to the defendants.

The plaintiffs entered into a contract dated April 13, 2023, to purchase real property from the defendants Frank Newman and Elizabeth Newman (hereinafter together the sellers).  The contract called for a purchase price of $5,390,000.  Pursuant to the contract, the plaintiffs made a down payment of $269,500, which was deposited into an escrow account of the sellers' attorney, the defendant Peter Spino, Jr. The sale was contingent on the sellers' lender approving it as a short sale.  The contract set a closing date of June 29, 2023, but provided that the sellers had until August 11, 2023, to obtain the short sale approval from their lender.  The plaintiffs further agreed to close the transaction “within any deadlines provided for in such approvals by the short sale Lender.”

On July 24, 2023, the sellers received approval for the short sale from the lender.  The approval required that the closing “must occur on or before [August 15, 2023].  TIME IS OF THE ESSENCE,” but allowed for the closing date to be extended if written approval was received from the lender.  The closing date was subsequently extended to August 31, 2023, with time of the essence, in a second short sale approval from the sellers' lender dated August 21, 2023.  On August 11, 2023, Spino sent the plaintiffs' counsel a time-of-the-essence letter, advising that if the plaintiffs failed to close by August 31, 2023, Spino would release the down payment to the sellers.  The plaintiffs rejected the time-of-the-essence letter and objected to the release of the down payment.

The plaintiffs commenced this action, inter alia, for specific performance of the contract, to recover damages for breach of contract, and for a judgment declaring that they are entitled to a return of the down payment.  The plaintiffs alleged that the sellers had failed to obtain short sale approval by August 11, 2023, since the conditional short sale letter dated July 24, 2023, was a counteroffer from the lender, which the plaintiffs were not obliged to accept, and by failing to sign the approval letter accepting its terms and conditions, the sellers did not obtain a timely short sale approval as required by the contract.  As such, according to the plaintiffs, the sellers' time-of-the-essence letter was defective inasmuch as the sellers were not ready, willing, and able to close due to, inter alia, their failure to meet the short sale approval condition in the contract.

The defendants moved, among other things, pursuant to CPLR 3211(a)(1) and (7) to dismiss the causes of action sounding in specific performance, breach of contract, negligence, and breach of the covenant of good faith and fair dealing, and, in effect, for a judgment declaring that the plaintiffs are not entitled to a return of the down payment and directing Spino to release the down payment from escrow to the sellers as liquidated damages pursuant to the terms of the contract based upon the plaintiffs' own breach thereof.  In an order dated February 27, 2024, the Supreme Court, inter alia, granted those branches of the defendants' motion.  Thereafter, the plaintiffs moved, among other things, for leave to renew their opposition to those branches of the defendants' prior motion, contending that the sellers' alleged failure to obtain short sale approval as required by the contract was evidenced by the commencement of a foreclosure action on February 2, 2024, by the sellers' lender against the sellers.  In an order dated July 16, 2024, the court, inter alia, denied that branch of the plaintiffs' motion.  The plaintiffs appeal from both orders.

“A motion pursuant to CPLR 3211(a)(1) to dismiss the complaint on the ground that the action is barred by documentary evidence may only be granted where the documentary evidence utterly refutes the factual allegations in the complaint, thereby conclusively establishing a defense as a matter of law” (Aguilar v. Wishner, 244 AD3d 1033, 1034).  “To qualify as documentary evidence, the evidence must be unambiguous, authentic, and undeniable, such as judicial records and documents reflecting out-of-court transactions, including mortgage agreements, deeds, contracts, and any other papers, the contents of which essentially are undeniable” (id.).  Letters, emails, affidavits, and deposition testimony do not meet the requirements for documentary evidence (see MJ Lilly Assoc., LLC v. Ovis Creative, LLC, 221 AD3d 805, 806;  Porat v. Rybina, 177 AD3d 632, 633;  Shah v. Mitra, 171 AD3d 971, 973).

“The essential elements of a cause of action to recover damages for breach of contract are (1) the existence of an enforceable contract, (2) the plaintiff's performance pursuant to that contract, (3) the defendant's breach of the contract, and (4) damages resulting from that breach” (All Nations Steel Corp. v. KSK Constr.  Group, LLC, 240 AD3d 835, 837 [internal quotation marks omitted] ).  “An anticipatory breach of contract occurs on the part of one of the parties to the instrument when he [or she] positively repudiates the contract by acts or statements indicating that he [or she] will not or cannot substantially perform essential terms thereof” (A.D.E. Sys., Inc. v. Energy Labs, Inc., 183 AD3d 791, 793 [internal quotation marks omitted];  see Princes Point LLC v. Muss Dev. L.L.C., 30 NY3d 127, 133;  Lamarche Food Prods.  Corp. v. 438 Union, LLC, 178 AD3d 910, 912).  “A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises” (Bank of N.Y. Mellon v. Bey, 191 AD3d 627, 628 [alteration and internal quotation marks omitted] ).  “Express conditions must be literally performed;  substantial performance will not suffice” (MHR Capital Partners LP v. Presstek, Inc., 12 NY3d 640, 645;  see Bank of N.Y. Mellon v. Bey, 191 AD3d at 628).

“The elements of a cause of action for specific performance of a contract [for the sale of real property] are that the plaintiff substantially performed its contractual obligations and was [ready,] willing and able to perform its remaining obligations, that defendant was able to convey the property, and that there was no adequate remedy at law” (Treasure Is. of Asbury Park Self–Storage, LLC v MBAR Realty, LLC, 216 AD3d 1200, 1203 [internal quotation marks omitted];  see Brisk v. Bloch, 165 AD3d 745, 747).  “A party seeking specific performance of a contract for the sale of real property is required to establish not only that he or she was ready, willing, and able to close on the scheduled closing date, but also that the other party was in default” (Latora v. Ferreira, 102 AD3d 838, 839).  “[C]onclusory assertions that the plaintiff was ready, willing, and able to perform, are insufficient to satisfy this burden” (Aliperti v. Laurel Links, Ltd., 27 AD3d 675, 676).

“Where parties enter into a contract for the sale of real property, and time is not made of the essence in the original contract, one party may subsequently give notice to that effect, and avail [himself or herself] of forfeiture on default.  The notice must be clear, distinct and unequivocal and must fix a reasonable time within which to perform.  It must inform the other party that if [he or she] does not perform by that date, [he or she] will be considered in default” (LG723, LLC v. Royal Dev., Inc., 216 AD3d 931, 933 [internal quotation marks omitted] ).  “It does not matter that the date is unilaterally set, and ‘[w]hat constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case’ ” (Lashley v. BDL Real Estate Dev. Corp., 212 AD3d 800, 801 [citations omitted], quoting Ben Zev v. Merman, 73 N.Y.2d 781, 783).

Applying these principles here, the defendants' documentary submissions utterly refuted the plaintiffs' allegations that the plaintiffs were ready, willing, and able to close on the property while the sellers were not;  that the sellers failed to satisfy the condition precedent of securing short sale approval from their lender as required by the contract;  that the sellers' time-of-the-essence demand was defective;  and that the plaintiffs were entitled to the return of the down payment.  Accordingly, the Supreme Court properly granted, pursuant to CPLR 3211(a)(1), those branches of the defendants' motion which were to dismiss the causes of action sounding in specific performance and breach of contract (see Chic Realty 712, LLC v. GSA Holding Corp., 220 AD3d 914;  Mahmood v. County of Suffolk, 166 AD3d 751).

“On a motion to dismiss pursuant to CPLR 3211(a)(7), the complaint is to be afforded a liberal construction, the facts alleged are presumed to be true, the plaintiff is afforded the benefit of every favorable inference, and the court is to determine only whether the facts as alleged fit within any cognizable legal theory” (Granizo v Krystal Fruits & Vegetables, Inc., 238 AD3d 719, 720 [internal quotation marks omitted];  see Congregation Erech Shai Bais Yosef, Inc. v Werzberger, 242 AD3d 945, 947).  Applying these principles here, the Supreme Court properly directed dismissal of the cause of action alleging negligence (see Macho Assets v. Spring Corp., 128 A.D.2d 680, 682) and the cause of action alleging breach of the covenant of good faith and fair dealing as duplicative of the breach of contract cause of action (see Jobble, Inc. v. CF Alerts Corp, 242 AD3d 842, 845).

“[U]pon a motion to dismiss for failure to state a cause of action, a court may reach the merits of a properly pleaded cause of action for a declaratory judgment where no questions of fact are presented [by the controversy]” (Neuman v. City of New York, 186 AD3d 1523, 1525 [internal quotation marks omitted] ).  “Under such circumstances, the motion to dismiss the cause of action for failure to state a cause of action ‘should be treated as one seeking a declaration in [the] defendant's favor and treated accordingly’ ” (id., quoting Siegel & Connors, N.Y. Prac § 440 [6th ed 2018 Update];  see Lanza v. Wagner, 11 N.Y.2d 317, 334).

As a general rule, for a plaintiff to prevail on a cause of action for the return of a down payment on a contract for the sale of real property, the evidence must demonstrate that the seller was not ready, willing, and able to perform on the law day (see Perelmuter v. LRM Bldrs., LLC, 230 AD3d 1165, 1167).  Similarly, “[w]here a seller seeks to hold a purchaser in breach of contract [and retain the down payment], the seller must establish that [he or she] was ready, willing, and able to perform on the time-of-the-essence closing date, and that the purchaser failed to demonstrate a lawful excuse for [his or her] failure to close” (id. at 1166–1167 [internal quotation marks omitted];  see Sweeney v. Stark, 216 AD3d 1193, 1197;  Martocci v. Schneider, 119 AD3d 746, 748).  Applying these principles here, the Supreme Court properly determined, as a matter of law, that the defendants were entitled to a judgment declaring that the plaintiffs are not entitled to a return of the down payment and directing Spino to release the down payment from escrow to the sellers as liquidated damages under the terms of the contract (see Martocci v. Schneider, 119 AD3d 746).

The Supreme Court providently exercised its discretion in denying leave to renew, as the plaintiffs identified no new facts or change in the law that would change the prior determination in the order dated February 27, 2024 (see CPLR 2221[e][2];  U.S. Bank N.A. v. Clark, 245 AD3d 755).

Since this is, in part, a declaratory judgment action, we remit the matter to the Supreme Court, Westchester County, for the entry of a judgment, inter alia, declaring that the plaintiffs are not entitled to a return of the down payment and directing Spino to release the down payment from escrow to the sellers as liquidated damages under the terms of the contract (see Lanza v. Wagner, 11 N.Y.2d at 334).

LASALLE, P.J., CHRISTOPHER, LANDICINO and MCCORMACK, JJ., concur.