Mason v Pembroke NY LLC

2024 NY Slip Op 30018(U)

January 2, 2024

Supreme Court, Kings County

Docket Number: Index No. 534783/2022

Judge: Debra Silber

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF KINGS : PART 9 

 x

OMAR MASON, 

Plaintiff, 

- against -

PEMBROKE NY LLC,

Defendant. 

 x 

DECISION/ORDER

Index No. 534783/2022

Motion Seq. No. 1 & 2

Recitation, as required by CPLR 2219(a), of the papers considered in the review of defendant’s

motion for summary judgment and plaintiff’s cross motion for summary judgment 

 

Papers NYSCEF Doc.

Notice of Motion, Affirmation and Exhibits Annexed......................... 13-23 

Notice of Cross Motion Affirmations, Affidavits and Exhibits.............. 25-37

Affirmations and Affidavits in Opposition and Exhibits........................ 38

Reply Affirmations................................................................................ 39 

Upon the foregoing cited papers, the Decision/Order on these motions is as

follows:

This is an action for breach of contract with regard to a two-family property located 

at 31 Montauk Avenue, Brooklyn, NY (Block 3976 Lot 22). The complaint avers that a 

contract of sale was executed by plaintiff (purchaser) on or about March 12, 2022, and then 

wasn’t signed by the seller until on or about June 9, 2022. Plaintiff is the proposed 

purchaser, and defendant the seller. A copy of the contract is annexed to the complaint. 

The sale price is $900,000, and a $31,500 deposit was paid, which is presumably still held 

in escrow by the seller’s attorneys, Vaysbaum & Kazakevich PC, as escrowee. The 

mortgage contingency clause permits purchaser to finance up to $720,000. The closing 

date is stated (Par 15) to be “60 days from receipt of executed contract by purchaser’s 

attorney” [P15], which would have been around mid-August of 2022. This action was 

commenced on November 28, 2022. 

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The complaint alleges that the plaintiff could not obtain a mortgage commitment, 

and his attorney notified defendant’s attorneys of his cancellation of the contract on or 

about November 7, 2022, but defendant’s attorneys refused to return the downpayment.

The first cause of action alleges that the defendant has breached the contract by refusing 

to return the down payment. The second cause of action asserts that the escrowee is in 

breach of the escrowee’s obligations, however, the escrowee law firm is not a party 

defendant. The third cause of action seeks to “impress a vendee’s lien against the 

property.” The wherefore clause asks for a judgment cancelling the contract and ordering 

the return of the down payment with interest from November 7, 2022, and “impressing a 

lien against the property until plaintiff is paid.”

Defendant answered the complaint and asserted counterclaims for breach of 

contract, negligence, and fraudulent inducement. The breach of contract claim asserts that 

plaintiff applied for a mortgage of $883,698, which was much more than the sum permitted 

in the contract, and thus he breached the contract. The negligence claim asserts that the 

seller (defendant) between April 2022 and October 2022, “performed costly repairs, 

improvements, construction, and renovations on the Property as a precondition of the sale 

of the Property by Defendant to Plaintiff.” However, defendant claims that “Plaintiff failed 

to timely notify Defendant of the fact that Plaintiff applied for a mortgage loan in the amount, 

materially greater than the amount set forth in the Mortgage Contingency Clause. 

Additionally, Plaintiff failed to timely notify Defendant that his mortgage loan application 

was rescinded by the potential lender: Defendant was notified by Plaintiff of the subject

rescission on or about per the letter submitted to Defendant’s counsel, November 4, 2022, 

however the reason for denial was known to plaintiff as of August 8, 2022, per the recession 

[sic] letter” [Doc 3 ¶49]. The counterclaim continues “In the absence of the 

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agreement/arrangement between the parties, Defendant would not have performed said 

repairs, improvements, construction, and renovations on the Property. As a result,

Defendant incurred financial damages. By reason of the foregoing, Defendant seeks 

indemnification and judgment for financial damages based upon Plaintiff’s active 

negligence, carelessness, and recklessness, as set forth above, in the amount to be 

determined at trial.” The fraudulent inducement counterclaim asserts that, among other 

things, “Plaintiff fraudulently induced Defendant into entering the Contract based on false 

representations that Plaintiff had sufficient funds when, in fact, the opposite was true. Had 

Plaintiff disclosed it financial conditions/standing, Defendant would not have entered into a 

contract and would not have performed costly and time-consuming construction work on 

the Property.” Defendant’s wherefore clause seeks a judgment dismissing the complaint 

and “granting defendant’s counterclaims.” Plaintiff replied to the counterclaims. The case 

is not as yet on the trial calendar.

The last recorded deed indicates that the defendant sold the property to someone 

else on April 19, 2023 for $950.000. Further, defendant had not taken title to the property 

until February 8, 2022, just weeks before the contract of sale at issue here was executed

by plaintiff.

The first of the motions now before the court, motion sequence #1, filed by

defendant, seeks summary judgment in defendant’s favor, “declaring Plaintiff to be in 

default of the subject contract and declaring that Defendant is entitled to payment/retention 

of the contract downpayment in the amount of $31,500.00 as liquidated damages, (ii) 

dismissing Plaintiff’s Complaint, (iii) awarding Defendant attorney’s fees in the amount to 

be determined at the hearing on the amount to be awarded, (iv) pursuant to CPLR 603 

severing Defendant’s counterclaims for negligence and fraudulent inducement.”

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The cross motion (MS#2), filed by plaintiff, seeks an order granting plaintiff summary 

judgment “(1) to release the down payment of Plaintiff in the amount of THIRTY-ONE

THOUSAND FIVE HUNDRED DOLLARS, ($31,500) (2) cancelling the contract of sale for 

real property between the parties, (3) impressing a lien against the premise until Plaintiff is 

paid the Down Payment together with costs.

In support of the defendant’s motion, defendant provides an affirmation of counsel, 

an affidavit from the managing member of defendant, Erik Moseyev, a copy of seller’s 

deed, the contract of sale, a document described as “Doc 19, time of an essences letter”

which is completely unreadable, a letter dated 11/14/22 from plaintiff’s current attorney to 

defendant’s attorneys [Doc 20], which rejects the time of the essence letter, and avers that 

defendant breached the contract and should return the down payment, the 11/4/22 letter 

[Doc 21] to plaintiff that his mortgage application was denied, and the pleadings. 

Mr. Moseyev states in his affidavit that the time is of the essence letter scheduled 

the closing for 11/15/22, that it was rejected by plaintiff’s attorney, that the letter denying 

plaintiff’s mortgage application indicates in the attachment that he had applied for a 

mortgage of $883,698, and that the mortgage contingency clause only permitted plaintiff 

to apply for up to $720,000. He claims that the plaintiff’s failure to apply for a mortgage 

permitted by the contract was a willful default under the contract which entitles the seller to 

keep the down payment as and for his liquidated damages. He also notes that the contract 

provides for attorneys’ fees to the prevailing party should there be a dispute. Finally, he 

says that “Defendant extended substantial amounts of money towards improvement of the 

Property, per Plaintiff's directions. Plaintiff failed to timely notify Defendant that his 

mortgage loan application was rescinded” [Doc 16 ¶13]. He continues “In the absence of 

the agreement/arrangement between the parties, Defendant would not have performed 

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said repairs, improvements, construction and renovations on the Property” [id. ¶15].

Defendant’s attorney provides an affirmation which cites numerous cases in support of 

defendant’s claim that the plaintiff breached the contract.

Paragraph 28 of “Purchaser’s Rider” at Page 30 of Doc 1 states in its entirety that 

“Seller shall, at Seller's expense, renovate and rebuild the Premises, including installation 

of the systems and appliances reference in Par. 2 of the Contract, at no less a standard 

than what would commonly be referred to as "high-end" appliances. Seller shall, prior to 

any construction, consult with and receive instruction from, and written approval from, 

Purchaser.”

Counsel for defendant does not provide any additional evidence. It is not known 

why the seller was going to renovate and rebuild the premises, or how long that took, or 

who asked for more time to close, seller or buyer. There is no explanation offered for 

seller’s delay in signing the contract for three months after plaintiff signed it. The only thing 

that is provided is the contract, signed by plaintiff in March of 2022, and the letter from 

purchaser’s attorney dated in November of 2022, notifying defendant’s attorney that the 

plaintiff’s mortgage application had been denied and he elected to cancel the contract. The 

“Statement of Credit Denial, Termination, or Change” is dated 11/3/22 and states that 

plaintiff applied for a loan of $883,698, and that his application was denied because he had

“insufficient funds to close.”

In support of plaintiff’s cross-motion, plaintiff provides an affirmation of counsel, an 

affidavit from plaintiff, Exhibits A to J, which plaintiff’s counsel couldn’t bother to properly 

label, and a reply affirmation. Defendant only submitted an affirmation in opposition, with 

no further exhibits. Exhibit A is yet another copy of the contract of sale. Exhibit B is a 

readable copy of the Time is of the Essence Letter dated October 13, 2022. It was sent to 

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plaintiff’s transaction attorney, not his attorney in this litigation, and states that the contract 

of sale is dated June 9, 2022, and the closing was supposed to be on or about August 9, 

2022. The court again notes that plaintiff signed the contract on March 12, 2022, but it is 

not clear why defendant delayed in counter-signing it. Exhibit C is the email dated 11/7/22 

from plaintiff’s prior attorney to defendant’s attorney which transmitted the letter dated 

11/4/22 denying plaintiff’s mortgage application. Exhibit D is an email from plaintiff’s prior 

attorney to defendant’s attorney rejecting the time is of the essence letter. Exhibit E is 

another copy of the mortgage denial. Exhibit F is the letter from plaintiff’s current attorney 

to defendant’s attorney dated November 14, notifying her that he has been retained and 

also rejecting the time is of the essence letter. Exhibit G is the summons and complaint.

Exhibit H is plaintiff’s reply to defendant’s counterclaims, as is Exhibit I. Exhibit J is a 

printout from a website, from something called an “FHA Handbook.” It explains that a 

borrower under the FHA program is permitted to apply for a mortgage of up to 96.5% of 

the purchase price.

Plaintiff’s affidavit [Doc 27] states that the rider to the contract permitted him to apply 

for “an FHA or other government insured mortgage” and that he had applied for an FHA 

loan of 96.5% of the purchase price, which is one of the FHA products, and that by 

permitting him to apply for an FHA loan, defendant permitted him to apply for a mortgage 

of $883,698, which was “perfect fully permissible under the contract.” Plaintiff’s counsel 

provides the same opinion in his affirmation in support. He avers that plaintiff’s cancellation 

of the contract was in full compliance with the terms of the contract. He does not provide 

any case law in support of his claim that the Rider which permitted plaintiff to apply for an 

FHA mortgage meant that plaintiff was not limited to the cap on the financed amount in the 

mortgage contingency clause. He states, “practitioners of real estate law all know that FHA 

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loan are never for 80% of the purchase price.” He also argues that since the contract had 

an attorneys’ fees clause, that plaintiff is entitled to the return of his down payment and 

attorneys’ fees.

Discussion

In a real estate transaction such as this, the sending of the signed contract by the 

buyer, along with the down payment check, is considered under NY law to be an offer. The 

offer must be accepted by the signing of the contract by the seller. Here, the seller signed 

and returned the contract on or about June 9, 2022, accepting the plaintiff’s offer and 

forming a binding contract.

The mortgage contingency clause, at paragraph 8 of the form contract, states, in 

pertinent part, as follows:

“The obligations of Purchaser hereunder are conditioned upon 

issuance, on or before 30 days from date purchaser’s attorney receives a 

fully executed contracts of sale (the “Commitment Date”), of a written 

commitment from any Institutional Lender pursuant to which such 

Institutional Lender agrees to make a first mortgage loan, other than a 

VA, FHA or other governmentally insured loan, to purchaser, at 

Purchaser’s sole cost and expense, of $720,000.00 or such lesser sum 

as Purchaser shall be willing to accept, at the prevailing rate of interest . . 

. . for a term of at least 15/30 years and on other customary commitment 

terms, whether or not conditional upon any factors other than an 

appraisal satisfactory to the Institutional Lender. . . . If such commitment 

is not issued on or before the Commitment Date, then, unless Purchaser 

has accepted a commitment that does not comply with the requirements 

set forth above, Purchaser or Seller may cancel this contract by giving 

Notice to Seller within 5 business days after the Commitment Date, in 

which case this contract shall be deemed canceled and thereafter neither 

party shall have any further rights against, or obligations or liabilities to, 

the other by reason of this contract, except that Downpayment promptly 

refunded to Purchaser and except as set forth in Paragraph 27

[regarding the broker]. If Purchaser fails to give notice of cancellation or 

if the Purchaser shall accept a commitment that does not comply with the 

terms set forth above, then Purchaser shall be deemed to have waived 

Purchaser’s right to cancel this contract and to receive a refund of the 

Downpayment by reason of the contingency contained in this 

paragraph.” [emphasis added].

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Paragraph R3 of the “Purchaser’s Rider” states in its entirety “Paragraph 8 of the 

Contract is modified to permit an FHA or other government insured mortgage.”

The “commitment date” under this contract, pursuant to its terms, was 30 days after 

the seller’s attorney sent the signed contract back to the purchaser’s attorney, which was

on or about July 9, 2022, or the next business day if it fell on a weekend. There is nothing 

in the record to indicate that the plaintiff cancelled the contract pursuant to its terms. The 

earliest communication provided from plaintiff’s attorney to defendant’s attorney was in 

November of 2022. Therefore, the purchaser waived his right to cancel the contract. The 

attempt in the Purchaser’s Rider to include a savings clause is unavailing, the court notes. 

It states, at paragraph R2, that “Notwithstanding anything in the Contract or Riders to the 

contrary, if, through no fault of Purchasers, the Institutional Lender either denies 

Purchasers’ loan application or, having issued a Commitment Letter, rescinds said 

commitment to loan, Purchasers shall be entitled, on written notice to Seller along with 

Lender’s written denial or recission, to cancel the Contract and receive a refund of the 

Contract Deposit.” [emphasis added]. Here, the requirement that the denial or rescission

be “through no fault of purchaser” prevents the court from considering that this clause 

somehow supersedes paragraph 8 of the form contract.

It is black letter law in the Second Department that a purchaser who applies for a 

mortgage for a far greater amount than the amount set forth in the contract does not have 

grounds to cancel the contract (NY Ctr. for Esthetic & Laser Dentistry v VSLP United LLC, 

159 AD3d 567 [1st Dept 2018], citing Post v Mengoni, 198 AD2d 487 [2d Dept 1993]; Silva 

v Celella, 153 AD2d 847 [2d Dept 1989]). Further, plaintiff here never made a good faith 

effort to obtain the permitted financing, as he never sought a loan in the amount 

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contemplated in the contract. Thus, by applying for a mortgage in an amount significantly 

greater than that stated in the contract, the buyer breached the contract, as a matter of law 

(Kweku v Thomas, 144 AD3d 1109, 1111 [2d Dept 2016] citing HSM Real Estate, Inc. v 

Dragon, 94 AD3d 702, 941 NYS2d 512 [2d Dept 2012]; Humbert v Allen, 89 AD3d 804, 

807, 932 NYS2d 155 [2d Dept 2011]).

There is nothing in the record which indicates that plaintiff was granted an extension 

of time in which to obtain financing, nor is there anything which indicates that the provision 

in the purchaser’s rider which removed the form contract’s bar on applying for an FHA 

mortgage somehow changed the amount specified in the contract that the purchaser was 

limited to financing. 

Accordingly, the court finds that the plaintiff purchaser breached the contract by 

failing to comply with the terms of the mortgage contingency clause, as modified by the 

rider. Moreover, pursuant to the express terms of the mortgage contingency clause, plaintiff

waived his right to cancel the contract and to receive a refund of the down payment,

because he also failed to give the seller notice of cancellation of the contract within five 

business days after the commitment date, on or about July 9, 2022.

The contract further specifies that, where, as here, there is a default by the buyer, 

the seller is entitled to retain the down payment as liquidated damages. The rider also 

provides that the prevailing party is entitled to attorneys’ fees. Defendant is therefore also 

entitled to reasonable attorneys’ fees incurred in connection with this litigation. Generally, 

"[a]n attorney's fee is merely an incident of litigation and is not recoverable absent a 

specific contractual provision or statutory authority" (Levine v Infidelity, Inc., 2 AD3d 691, 

692 [2d Dept 2003]). Here, paragraph R19 of the “purchaser’s rider” to the subject contract 

of sale states, “Notwithstanding anything to the contrary contained herein this Contract, if 

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at any time either Seller or Purchaser shall institute any action or proceeding against the 

other relating to the provisions of this Contract or any default hereunder, then the 

unsuccessful party in such action or proceeding agrees to reimburse the successful party 

for the reasonable expenses for attorneys' fees, paralegal fees and disbursements incurred 

therein by the successful party. Such reimbursement shall include all legal expenses 

incurred prior to trial, at trial and at all levels of appeal and post-judgment proceedings. 

This Paragraph shall survive the Closing or termination of this Contract.”

Inasmuch as the court has awarded defendant seller summary judgment dismissing 

plaintiffs' complaint and summary judgment on its counterclaim for breach of contract and 

a declaratory judgment against plaintiff, defendant may recover reasonable attorney's fees

incurred in defending against the within action pursuant to the express terms of the subject 

contract.

For these reasons, the defendant’s motion (MS#1) for summary judgment 

dismissing the complaint, and for summary judgment in its favor on the counterclaim for 

breach of contract and a declaratory judgment and attorneys’ fees against plaintiff is

granted. However, the branch of the motion which seeks to sever the counterclaims for 

negligence and fraudulent inducement is denied, and those claims are dismissed. When 

both parties have moved for summary judgment, the court is permitted to search the record 

and address those claims not included in the motion. The retention of the deposit is 

provided for in the contract as seller’s liquidated damages. This means the amount of 

damages the seller would be entitled to if plaintiff breached could not be ascertained, so it 

was agreed that if plaintiff breached the contract, retention of the down payment, plus 

attorneys’ fees if the matter went to court, would be its damages. Additional damages for 

fixing up the property, which clearly enabled the defendant to sell it almost immediately 

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after plaintiff’s breach, and for a higher price than plaintiff had agreed to pay, are not 

permitted in addition to defendant’s liquidated damages.

Conclusions of Law

Accordingly, 

It is hereby ORDERED, ADJUDGED AND DECLARED that defendant is entitled to 

summary judgment on its first counterclaim for breach of contract. The plaintiff breached 

the subject contract and defendant is entitled to payment/retention of the contract 

downpayment in the amount of $31,500.00 as liquidated damages, and the contract of sale 

is declared to be null and void and of no further force or effect; and it is further

ORDERED that Vaysbaum & Kazakevich PC., as escrowee shall disburse the funds

held in escrow of $31,500 to defendant promptly; and it is further

ORDERED that plaintiff’s complaint is dismissed; and it is further

ORDERED that defendant is entitled to an award of attorney’s fees and costs; and 

it is further

ORDERED that unless there is filed a stipulation of settlement between the parties 

as is permitted by CPLR 4317, this matter is referred to a Special Referee pursuant to a

Referee Referral Order issued simultaneously herewith, to hear and determine the

defendant’s claim for attorneys’ fees. Defendant’s attorney is to provide the Special 

Referee with copies of her firm’s billing and time records, together with a summary and 

breakdown of the categories of legal services provided, and the hours attributed to each 

category of services; and it is further

ORDERED that counsel for the defendant shall, within 30 days from the date of this 

order, serve a copy of this order with notice of entry, together with a completed Information 

Sheet, upon the Special Referee Clerk in the General Clerk's Office (Room 482), who is 

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directed to place this matter on the calendar of the Special Referee's Part (Part 82) for the 

earliest convenient date; and it is further 

ORDERED that failure to comply with the immediately preceding paragraph will 

result in the dismissal of the defendant’s claim in its answer with counterclaims, for 

attorneys’ fees, unless good cause is shown; and it is further

ORDERED that other than the defendant’s claim for attorneys’ fees and costs, the 

defendant’s counterclaims, for negligence and fraudulent inducement, are dismissed; and 

it is further

ORDERED that plaintiff’s motion (MS #2) for summary judgment declaring that the 

contract is cancelled, and that he is entitled to the return of the down payment and a 

common law vendee's lien against the property must be denied in light of the above 

determinations.

This constitutes the decision and order of the court.

Dated: January 2, 2024

 E N T E R :

 

 

 Hon. Debra Silber, J.S.C.

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