Pastor v. DeGaetano

128 A.D.3d 218, 8 N.Y.S.3d 79
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 21, 2015
Docket652396/13 14030
StatusPublished
Cited by7 cases

This text of 128 A.D.3d 218 (Pastor v. DeGaetano) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pastor v. DeGaetano, 128 A.D.3d 218, 8 N.Y.S.3d 79 (N.Y. Ct. App. 2015).

Opinion

OPINION OF THE COURT

Acosta, J.

The primary question raised by this appeal is whether a buyer can be forced to conclude a purchase of real property where the seller has not definitively resolved a third-party cooperative’s challenge to the buyer’s right of exclusive use over a portion of the property. We find that, because questions of fact remain as to whether the seller obtained unequivocal assurances that the co-op’s board of directors would not interfere with the buyer’s right of exclusivity, the seller has not demonstrated that it was ready, willing, and able to close the sale. In addition, there are questions of fact as to whether the seller breached the implied covenant of good faith and fair dealing.

*220 Therefore, the seller is not entitled to summary judgment permitting it to retain the buyer’s down payment.

I. Facts and Background

On March 21, 2012, plaintiff entered into a contract of sale to purchase the shares allocated to a penthouse apartment from defendants-respondents — executors of the Estate of Monique Uzielli (hereinafter the Estate) — for $27.5 million, paying a 10% deposit of $2.75 million. The parties intended to close the sale after obtaining the unconditional consent of the board of directors of the cooperative corporation (the board or the co-op). A crucial element of the transaction related to plaintiff’s exclusive use of the apartment’s terrace, a right emanating from the proprietary lease. 1 Soon after the contract of sale was signed, however, the board attempted to eliminate plaintiff’s right, as the prospective owner of the penthouse, to use the terrace exclusively, as provided by the co-op’s governing documents.

By letter dated May 17, 2012, the board’s managing agent informed plaintiff that “[i]t is important to note that the upper roof [above the penthouse] accessible by the stairs on the terrace may be used by shareholders at any time as a common area of the building.” The stairs referenced in the letter had previously been used only for maintenance purposes; the other shareholders in the building had never been granted access to the roof as a common area, presumably because the only way they could reach the rooftop would be by traversing the penthouse terrace and, consequently, impeding the owner’s exclusive use thereof. 2 Notably, the stairs are not depicted in the penthouse floor plan that was annexed to the contract of sale (the contract plan).

*221 The board’s position “came as a complete shock” to plaintiff. Although the board notified the parties in June 2012 that it approved the sale (without imposing any conditions), it again sought to interfere with plaintiff’s right of exclusivity when, in an August 2012 email, the Board proposed a “conditional consent agreement” to be signed by plaintiff and the Estate. The proposed agreement stated that the plan of the penthouse was “either missing or lost”; that “[t]he entire Penthouse Roof is a common area”; that “the Cooperative and its shareholders have the right to use . . . the [maintenance stairway] in their sole discretion for the purpose of obtaining access to the Penthouse Roof”; and that “[s]uch parties, further, have the right to use a pathway . . . leading from the internal Building stairs to the [maintenance stairs].”

The Estate was similarly troubled by the board’s position. According to plaintiff’s affidavit, plaintiff and the Estate refused to sign the conditional consent agreement, and one of the Estate’s executors advised plaintiff not to sign it.

The Estate commenced an action against the co-op and its managing agent in September 2012 (the separate action), seeking an order, inter alia, directing the co-op to provide a copy of the plan of the penthouse, requiring the board to withdraw the conditional consent agreement, directing the board to acknowledge that its consent to the sale was unconditional, and declaring that the roof cannot become a common area and “that the Terrace is for the exclusive use and enjoyment of the lessee of the Penthouse and that the residents of the Building and others may not use it as a pathway to the Upper Roof.”

Although the separate action was ultimately resolved when the co-op provided multiple floor plans and withdrew its requirement that the parties sign the conditional consent agreement, the Estate never obtained the declaratory judgments it originally sought.

In its complaint, the Estate alleged that access to the roof above the penthouse “was ‘strictly prohibited’ to other shareholders and residents of the Building” and only used for authorized maintenance “[d]uring the entirety of the 53 year period” in which Ms. Uzielli owned the apartment. The Estate further argued that “ [permitting residents of the Building to regularly access the Upper Roof via the Terrace staircase destroys an obvious and critical component of the value of the Penthouse and also violates the right to the exclusive use and enjoyment granted . . . under the terms of the [Proprietary] Lease,” and *222 that the board’s attempt to “convert the Upper Roof to a common area . . . threatened] the Buyer that the private and exclusive use of the Terrace will be terminated, thereby irreparably harming the value of the Penthouse and potentially inducing the Buyer to cancel the Contract of Sale.”

The co-op and its managing agent answered the separate action complaint in December 2012. The Estate moved for partial summary judgment, and the court issued an order on May 23, 2013, directing the co-op to provide the Estate with a copy of “a floor plan [at] issue in the motion.”

On May 28, 2013, the co-op’s attorney provided the Estate with “the floor plan for the Penthouse Unit” (the May plan) and stated that the board had “waived the conditional consent clause of the buyer.” Later that day, the Estate forwarded the May plan to plaintiff and notified him of the board’s waiver. This did not resolve the exclusivity issue to plaintiff’s satisfaction, however.

By letter dated May 29, plaintiff’s counsel informed the Estate that plaintiff was electing to cancel the contract and request return of the deposit because, he asserted, the May plan was not substantially similar to the contract plan. Plaintiff determined that the plans were not substantially similar, as required by paragraph 52 of the rider, because the May plan showed a “large stairway extending into the southeast terrace of the [penthouse].” This was the same maintenance stairway that the board referenced in its May 2012 letter, when it initially stated its intention to treat the rooftop as a common area accessible via the maintenance stairs on the penthouse terrace.

In an apparent attempt to allay plaintiff’s concerns and proceed with the sale, the Estate again moved for partial summary judgment in the separate action and obtained from the co-op a new floor plan (the June plan), which omitted the maintenance staircase. On the record, at a hearing on June 6, 2013 (so ordered on June 11), the court ruled that the June plan was substantially similar to the contract plan. 3

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Cite This Page — Counsel Stack

Bluebook (online)
128 A.D.3d 218, 8 N.Y.S.3d 79, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pastor-v-degaetano-nyappdiv-2015.