EMF General Contracting Corp. v. Bisbee

6 A.D.3d 45, 774 N.Y.S.2d 39, 2004 N.Y. App. Div. LEXIS 3454
Appellate Division of the Supreme Court of the State of New York·Decided March 25, 2004·Published·Cited by 67 cases

Opinion

OPINION OF THE COURT

Saxe, J.

In this action for specific performance of a contract to purchase real estate, we address the issue of whether a two-year delay between the signing of the contract and plaintiff’s attempt to enforce it, along with a steep increase in the market value of the property by the time of trial, warrants a denial of specific performance. Contrary to the finding of the trial court, our review of the record reflects that plaintiff EMF General Contracting Corp. (EMF) established not only its right to relief based upon defendant’s breach of the contract, but also its right to specific performance of the contract covering the two parcels of property located on Carpenter Avenue in the Bronx, for the contract price of $7,500 per lot.

[47] Facts

Plaintiff EMF, a construction company, entered into a contract on March 3, 1998, to purchase two vacant parcels of property (Lots 16 and 116) located on Carpenter Avenue in Bronx County from defendant Michael Bisbee and nonparty Benjamin Rosenberg* for a purchase price of $7,500 per lot. EMF’s president, Frank Porco, was an experienced builder, and most of his business was conducted in Bronx County. Michael Bisbee was a registered mortgage broker for over 17 years, and was familiar with the process of property valuation, and with the purchase and sale of property. Bisbee stated that in 1989, he had entered into a partnership with Harry Cohen, Benjamin Rosenberg, Maurice Morris and Harvey Rodney to purchase Lots 16 and 116, along with the adjacent Lot 17, on which was located a two-story residential dwelling. Each partner allegedly had a Vsth interest in the three lots. However, Rosenberg was named as the record owner on the deed to Lot 16, Harry Cohen was the record owner of Lot 116, and Bisbee and Maurice Morris were named as co-owners on the deed to Lot 17. Over time, because Bisbee’s partners owed him money, an understanding arose that Bisbee would take ownership of Cohen’s Lot 116.

Bisbee claimed that he entered into the contract at issue seeking a quick sale, as there were unpaid tax liens on several parcels, including the parcels for sale, and he needed money to pay off the liens. No “time of the essence” provision was included in the contract, however.

Pursuant to the contract, EMF gave defendant Bisbee a $1,500 down payment which Bisbee’s attorney deposited into an escrow account; a closing was scheduled to take place on or about April 30, 1998. However, the scheduled closing did not occur, due to concerns brought to light by the survey and title report.

First, a boundary line issue arose when the survey of Lots 16, 17 and 116 revealed that a driveway on Lot 17 encroached upon Lot 116, which problem was reflected in the title report. EMF tried to resolve the boundary dispute by sending a proposed boundary line agreement to the adjacent parcel co-owners, i.e., Bisbee and Maurice Morris, on June 2, 1998. However, while Bisbee was willing to sign the agreement, he did not obtain the consent of co-owner Morris. Nor was Morris responsive when EMF’s attorney contacted his attorney directly on the issue.

[48] Another problem, pointed out in a letter Porco sent on March 11, 1998, was that Porco could not carry out his contractual obligation to construct a driveway on Lot 17 until a three-to-four-inch yard drain was installed; otherwise, due to possible water runoff problems, standing water would crack the driveway, creating possible violations, and potential difficulties with neighboring lot owners. However, Porco’s March 11, 1998 letter reporting this problem did not indicate any desire to postpone the closing due to this concern.

Finally, an issue regarding ownership of the lots was raised by the title report, which indicated that at the time the parties had entered into the contract, the record owners of Lots 16 and 116 were Benjamin Rosenberg and Harry Cohen, respectively, not Bisbee. However, the lot ownership issue was resolvable, since Bisbee had actually received Harry Cohen’s deed to Lot 116 in February 1998, although it was not recorded until May 1998 (after issuance of the title report), and since, in March 1999, Bis-bee bought out Rosenberg’s interest in Lot 16.

Plaintiffs attempts to resolve the boundary problem began on June 2, 1998, when plaintiff’s counsel faxed to defendant’s counsel the proposed boundary agreement, to no avail. In the months that followed, plaintiffs counsel periodically telephoned defendant’s counsel in an effort to ascertain whether the agreement would be executed. After some time, EMF’s attorney was informed of the name of the attorney for the co-owner of the encroaching lot, and he then contacted that attorney directly to ask whether the co-owner would be willing to sign the proposed boundary agreement, forwarding a copy of the document on July 7, 1999. However, the co-owner’s attorney never responded.

No further steps were taken by plaintiff until the spring of 2000, when EMF’s president notified its attorney that it would be willing to accept title to Lots 16 and 116 despite the encroachment affecting Lot 116. EMF’s attorney made several telephone calls in an attempt to reach Bisbee’s attorney, Lovitch, ultimately informing Lovitch that EMF wished to schedule a closing notwithstanding the encroachment problem. Lovitch responded that he would confer with his client, but then sent a letter dated March 31, 2000, returning the escrowed down payment and stating that in view of the two-year delay, the sellers no longer wished to proceed to closing.

EMF sent a “time of the essence” letter dated April 4, 2000, demanding specific performance and selecting April 22, 2000 as a closing date. Bisbee did not appear at the closing. Plaintiff [49] then commenced this action for specific performance, money damages (in the alternative), and reimbursement of legal fees, costs and expenses.

By appraisal dated January 13, 2003, Bisbee’s appraiser valued Lots 16 and 116 at $85,000 each.

DISCUSSION

Abandonment

Initially, we agree with the trial court that the contract remained in full force and effect for the two-year period in question. The trial court properly rejected defendant’s contention that the contract was terminated by a letter dated August 3, 1998. As the court observed, even if the letter was sent, it failed to terminate the contract, since it does not reflect the taking of the necessary steps required by the contract to terminate it, such as the return of the down payment and the use of certified mail. Further, the trial court was also correct in its implicit rejection of defendant’s position that his attorney’s March 31, 2000 letter properly constituted a “reiteration” of the contract’s cancellation.

The parties’ contract therefore remained in effect absent a showing that the contract was dissolved due to the parties’ abandonment of it.

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EMF General Contracting Corp. v. Bisbee, 6 A.D.3d 45, 774 N.Y.S.2d 39, 2004 N.Y. App. Div. LEXIS 3454 (N.Y. Ct. App. 2004).

6 A.D.3d 45 (EMF General Contracting Corp. v. Bisbee) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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