Court Opinion

ID: 9810204
Source: CourtListenerOpinion
Date Created: 2023-08-31 21:43:26.416394+00
Date Added: 2024-06-11T13:39:28.638652
License: Public Domain

Order and judgment (one paper), Supreme Court, New York County (Saliann Scarpulla, J.), entered February 28, 2014, declaring that plaintiffs are entitled to receive defendants Navani and Sahi’s down payment for the subject condominium unit in the amount of $365,000 and that after payment of the down payment amount to plaintiffs the contract is null and void, and dismissing defendants’ counterclaim for specific performance, affirmed, without costs.
Plaintiffs are the sellers, and defendants Navani and Sahi the purchasers, under a purchase and sale agreement relating to a condominium apartment. Plaintiffs seek a declaratory judgment that defendants breached the agreement by failing to close despite plaintiffs’ full performance. Defendants seek specific performance on the basis that their refusal to schedule a closing was justified by plaintiffs’ failure to satisfy a condition precedent to closing. The dispute relates to the apparently uncontested facts that, before the parties executed the contract, the board of managers had determined that the firestopping throughout the building, including in all of the individual apartments, was inadequate and that, at the time the contract was executed, the board was still in the midst of a significant project to complete the firestopping.
Defendants claim that they did not learn of the firestopping *402situation until July 27, 2012, more than a month after they signed the contract. On August 12, 2012, defendants’ lawyer sent a letter to plaintiffs’ counsel stating that “based on the life-safety and other issues surrounding 416 Washington Street and the fact that such substantive issues were never properly disclosed to them beforehand, my clients . . . have made the decision not to go forward with their prospective purchase of Unit 5E.” The letter also demanded the return of defendants’ contract deposit. Over the next two months, the parties apparently had some discussions about resolving the impasse, while the escrow agent continued to hold the deposit. Finally, by letter dated October 17, 2012, plaintiffs’ counsel advised defendants’ counsel that “ [i] t is clear from our conversations and your clients’ actions that the above referred to Purchaser is no longer interested in proceeding to closing and purchasing the Unit. If the Purchasers are prepared to close please contact me immediately and we can proceed accordingly.” By letter dated October 26, 2012, defendants’ counsel responded, stating: “This letter will serve to confirm that my clients . . . are prepared to purchase the above reference [sic] unit from your clients.
“We are ready to set a closing date as soon as: 1) we receive the information set forth in my e-mail (attached) to the Managing Agent; 2) we complete a re-inspection of the Unit (at my clients’ expense, of course, and after authorization from your client; [sic] and 3) after the updated title search has been received and reviewed.” The email referenced in the letter and attached thereto included a request for, inter alia, “confirmation and evidence that the firestopping work has been completed on Unit 5E . . . including permits, paid invoices, and municipal sign off (if any).” Plaintiffs’ counsel responded to the letter the very same day, stating: “Although you have indicated that your clients . . . are prepared to purchase the above Unit, this is to confirm that I have advised you that I do not know under what agreement you are prepared to close, as your clients breached the Contract of Sale dated June 18, 2012. While our clients are amenable to negotiate a new Contract of Sale for the premises, at the present time no agreement has been reached for the sale of the premises in question. Your indication that my partner’s October 17, 2012 correspondence somehow undoes your clients’ breach of Contract, it is rejected [sic]. My partner’s correspondence indicates that our client would be willing to close this matter but certainly not under the terms of the conditions [sic] of the Contract of Sale dated June 18, 2012.
*403“If your clients wish to negotiate the terms of a new Contract of Sale, as my partner’s October 17, 2012 letter indicates, our clients will be willing to entertain same.”
Defendants’ counsel responded by insisting that plaintiffs breached the contract by failing to ensure that the unit was adequately protected from fire. However, he acknowledged that his clients had since been told that the firestopping had been completed, and reiterated their willingness to set a closing date upon receipt of the information and documentation demanded in the email appended to the October 26, 2012 letter. Plaintiffs’ counsel replied in a letter in which he rejected the notion that completion of the firestopping project was a condition precedent to plaintiffs’ performance.
After plaintiffs formally demanded that the escrow agent release the contract deposit to them, and upon defendants’ counter-demand that he continue to hold the deposit in escrow, plaintiffs commenced this declaratory judgment action. Defendants filed a lis pendens and asserted a counterclaim for breach of contract and specific performance. The counterclaim was based on the lack of firestopping in the unit, which, as alleged by defendants, violated the New York City Building Code and rendered the unit unsuitable for legal occupancy. Defendants did not identify any particular provision of the contract that plaintiffs had breached.
Before any discovery had been conducted, plaintiffs moved for summary judgment. They argued that the contract explicitly provided that the unit was being sold as is, that it contained no representations as to the unit’s condition other than what was expressly set forth therein, and that it expressly provided that they had no obligation to restore, alter or repair the premises. Plaintiffs contended that, even after they offered to close despite the purported cancellation in August 2012, defendants’ insistence on confirmation that the firestopping had been completed constituted an effort to impose a new condition on the purchase that was not contained in the contract that had been executed by the parties.
In opposition, defendants invoked, for the first time, paragraph 6 (c) (ii) of the contract, and asserted that plaintiffs had breached the contract by not complying with it. That paragraph provided: “It is a condition of Purchaser’s obligation to close title hereunder that. . . [a]ny written notice to Seller from the Condominium (or its duly authorized representative) that the Unit is in violation of the Declaration, By-Laws or rules and regulations of the Condominium shall have been cured. If the cost of compliance . . . exceeds an aggregate of $50,000.00, *404Seller may cancel the contract unless Purchaser chooses to accept a credit of $50,000.00 and close subject to the violations.”
Defendants argued that plaintiffs breached the clause because the condominium’s bylaws and rules and regulations required that “all valid laws, zoning ordinances and regulations of all governmental bodies having jurisdiction thereof shall be observed,” and 1968 Building Code of City of New York (Administrative Code of City of NY) § 27-345 expressly required the unit to be properly firestopped.
The IAS court granted plaintiffs’ motion and declared that plaintiffs were entitled to payment of the contract deposit. The court held that defendants repudiated the contract in August 2012 when they informed plaintiffs that they did not intend to perform under the contract because of the firestopping issue. Defendants offered no evidence that the unit or the building was in violation of the New York City Building Code, and, in any event, information about the lack of firestopping had been available to defendants, and they had decided, nonetheless, to accept the unit as is. The court further stated that since time had not been declared to be of the essence, plaintiffs were entitled to an opportunity to cure the firestopping situation before defendants summarily declared the contract cancelled. Finally, the court held that defendants’ conditional acceptance of plaintiffs’ offer in October 2012 to schedule a closing “can not be considered a retraction of the repudiation.”
On appeal, defendants argue that they did not repudiate the contract because, given plaintiffs’ purported breach of paragraph 6 (c) (ii), which required them to clear the unit of all violations of the condominium’s governing documents, they had no obligation to perform. Even if they did repudiate the contract, they posit, they effectively retracted the repudiation when they conditionally accepted plaintiffs’ October 2012 offer to schedule a closing. They claim that their insistence on receiving certain information, including proof that the firestopping work had been completed, did not constitute an imposition of new terms, but rather an exercise of rights that were already guaranteed by the contract. Finally, defendants assert that, at the very least, the court should have denied summary judgment without prejudice to renewal of the motion upon the completion of discovery.
Plaintiffs argue that defendants repudiated the contract because they presented no evidence that, as required by paragraph 6 (c) (ii), the condominium had notified them of any violations of its governing documents. Further, they contend that defendants failed to retract their repudiation because they *405conditioned the scheduling of a closing on the receipt of information to which they were not entitled.
Defendants’ appeal is entirely dependent upon the soundness of their position that plaintiffs were contractually obligated to complete the firestopping work in the unit. To answer that question it is necessary to consider the language in the contract, for that is what controls the parties’ rights and responsibilities. We are guided by the standard rules of contractual interpretation, which provide that “a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” (Greenfield v Philles Records, 98 NY2d 562, 569 [2002]). Further, “courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing” (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004] [internal quotation marks omitted]).
The clause of the contract that defendants assert was breached by plaintiffs is paragraph 6 (c) (ii). That clause is very clear and specific as to what it required of plaintiffs. It obligated them to clear the unit of “[a]ny written notice to Seller from the Condominium (or its duly authorized representative) that the Unit is in violation of the Declaration, By-Laws or rules and regulations of the Condominium” (emphasis added). Defendants claim that the clause was breached because the condominium’s rules and regulations required that “all valid laws, zoning ordinances and regulations of all governmental bodies having jurisdiction thereof shall be observed” by each unit owner. They further assert that included among those laws and regulations is 1968 Building Code of City of New York (Administrative Code of City of NY) § 27-345, which requires firestopping of “[c]oncealed spaces.”
Defendants’ argument has several flaws. First, defendants fail to demonstrate that the condominium delivered a written notice to plaintiffs that they were in breach of the condominium’s governing documents for any reason. Instead, they rely on a letter dated January 23, 2012, five months before the agreement was executed, in which the condominium’s board of managers updated all of the condominium’s unit owners on the condominium’s finances and on certain anticipated and ongoing construction work. A section entitled “Fire stopping” stated, in pertinent part: “The fire stopping work in the corridors is largely complete. The next, and hopefully final phase, is to fire stop all units. In order to do so, Bone Levine must inspect and perform scopes in all units to determine the work to be done. *406We must do the fire stopping work to address code violations and deficient conditions.”* This letter cannot possibly constitute the type of notice contemplated by paragraph 6 (c) (ii). First, it was not delivered to plaintiffs for the purpose of informing them that they had breached the declaration, bylaws or rules and regulations of the condominium, but rather to inform them of the status of the firestopping, as well as various other condominium matters. Significantly, it did not instruct plaintiffs to cure any such breach, as one would ordinarily expect such a notice to do. Contrary to the dissent’s position, paragraph 6 (c) (ii) clearly refers to violations that the condominium expected plaintiffs to cure, not those that the condominium agreed to address itself. This is confirmed by the provision allowing plaintiffs to cancel the contract (or give defendants a credit) if the cost to them of curing exceeded $50,000. Moreover, the letter did not state, as the contract clause required, that the subject unit itself was in violation of the Building Code. It alluded generally to code violations, but it is impossible to tell whether the unit itself had been the subject of a notice of violation issued by the Department of Buildings. Indeed, it can be presumed that, had such a notice of violation been issued, defendants would have presented a copy of the notice, which is a matter of public record, in connection with this motion. To interpret the letter as the “written notice” described in paragraph 6 (c) (ii) would contravene the rules of contract construction outlined above. Accordingly, defendants cannot establish that plaintiffs had not fulfilled a condition precedent to their own performance.
Second, defendants point to no provision in the contract that justifies their initial purported reason for canceling the contract, which was that it threatened the safety of themselves and their children. Nor do they claim that plaintiffs somehow prevented them from learning of the firestopping issue. To the contrary, the contract itself referred expressly to a July 19, 2011 notice from the board of managers that discussed the status of the then ongoing firestopping project. This was sufficient to place defendants on notice of a potential issue that might have given them pause to execute an agreement in which they acknowledged they were accepting the unit as is.
Because defendants had no right to insist that the firestopping issue be resolved as a condition to closing, their “retraction” of the purported repudiation was ineffective. In order to be effective, a retraction of a contract repudiation must be *407bona fide (see Bykowsky v Eskenazi, 2 AD3d 115 [1st Dept 2003]). Defendants’ acceptance of plaintiffs’ offer to schedule a closing was not bona fide, because it was conditioned on plaintiffs’ provision of documents and information establishing to defendants’ satisfaction that the firestopping had been completed. We disagree with the dissent that the letter from defendants’ counsel conditionally retracting the repudiation creates an issue of fact as to whether it was bona fide. That letter unquestionably adhered to defendants’ position, which had supported the initial repudiation, that plaintiffs had a contractual obligation to ensure proper firestopping in the apartment before delivering the deed. The clear implication of the letter was that, if plaintiffs could not establish to defendants’ complete satisfaction that the firestopping work had been performed, defendants would once again refuse to close. As stated above, this position was untenable, and clearly, contrary to the dissent’s view, sought to insert an additional material term or condition into the contract. Again, nothing in the contract required plaintiffs to perform any firestopping, and plaintiffs were entitled to view defendants’ continued insistence on proof that they had done so as a justified refusal to perform under the agreement.
Concur — Gonzalez, P.J., Mazzarelli, Manzanet-Daniels and Clark, JJ.

 Defendants claim that they never saw this letter while performing their due diligence.