Court Opinion

ID: 5763366
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:18:25.584163+00
Date Added: 2024-06-11T08:41:36.060086
License: Public Domain

McGuire, J.,
dissents in part as follows: I agree with the ma*307jority that Supreme Court correctly concluded that Stern, the successful bidder at the auction, is responsible for taxes that were assessed on the property after the auction but before the closing. I disagree, however, that we should affirm that aspect of Supreme Court’s order that, in effect, directed Stern to pay interest on the amount of his bid for the period between the auction and the closing. Rather, I would modify the order to the extent of remanding the matter to Supreme Court for a hearing on the issue of whether Stern should pay interest and, if so, the amount of that interest.
Stern purchased a tract of land at an auction held on June 8, 1999. The tract was sold by a Referee pursuant to a judgment of tax foreclosure and sale. Stern and the Referee entered into a memorandum of sale on the date of the auction that stated the terms of sale. One of the terms is that “[t]he Referee is not required to send any notice to the purchaser; if purchaser neglects to call at the time and place . . . specified to receive his deed, he will be charged with interest thereafter on the whole amount of his purchase, unless the Referee shall deem it proper to extend the time for the completion of said purchase” (emphasis added).
Following the auction, Stern learned that the State had undertaken environmental remediation efforts on the tract; a gas station had previously operated there and the soil was contaminated with petroleum. According to Stern, he wanted to wait to close on the property until the State both had completed its remediation efforts and determined whether to seek reimbursement from him for all or part of the costs of the cleanup. Apparently, one of Stern’s primary concerns was that he could not obtain title insurance against liabilities associated with the environmental cleanup efforts until those efforts were complete. Stern’s claim that he wanted to forestall the closing for these reasons is corroborated by a June 16, 2005 letter by the former counsel to plaintiff, the company prosecuting the tax foreclosure action. In the letter, counsel stated that he had informed plaintiff and the Referee of Stern’s concerns regarding the cleanup efforts on the tract. Counsel also stated that he “advised [Stern] that he may at his option wait for the determination by [the] State” and that Stern “told [counsel] [that] [Stern] will wait for the final outcome by the State . . . and close the sale at the time when the cleanup ha[s] been completed and [the] State decide[s] whether it would pursue [Stern] for reimbursement of any part of the fines or lien[s] imposed against the property.”
According to the Referee,
*308“[she] did not grant any extensions to close based upon an environmental oil spill. Instead, the former counsel to the Plaintiff gave the successful bidder the option to wait until there was some sort of resolution regarding the oil spill prior to closing. This problem was not disclosed until after the public auction sale. At that time the successful bidder could have elected not to proceed with the terms of sale and his deposit would have been returned under these particular set of circumstances. Instead, the successful bidder elected to negotiate a settlement associated with the costs of the clean-up.
“It was never contemplated that this issue would take several years to be resolved. No closing was ever scheduled by the Referee, or any attempt to close by the Plaintiffs counsel or counsel for the successful bidder until April, 2007, until it appeared that the spillage problem was resolved to the successful bidder’s satisfaction. By letter dated April 20, 2007, the referee sent a letter declaring time was of the essence to close.”
While the Referee’s April 20 letter stated that Stern was to comply with the terms of sale contained in the memorandum of sale and complete the sale within 30 days, she subsequently extended Stern’s time to close pending his receipt of a response to his letter to plaintiffs counsel objecting to paying interest on the amount of the bid. By a subsequent letter, the Referee stated that Stern’s time to close had expired and that she was not consenting to extend the time to close to resolve Stern’s objection to her directive that he pay at the closing tax obligations that were assessed after the auction. She went on to state that Stern and plaintiff should amicably resolve the tax issue and schedule a mutually agreeable date for the closing.
After Supreme Court denied Stern’s motion to compel the Referee to deliver the deed to the tract to him free of any charges for interest and taxes assessed after the auction, and granted plaintiff’s cross motion to compel the Referee to complete the sale pursuant to the terms of sale, the parties entered into a stipulation. The stipulation provided that (1) the closing would occur and Stern would pay the balance of the amount due on his bid, and (2) Stern would place in escrow the amount of the interest and taxes assessed after the auction pending the resolution of his appeal from the order.
The relevant language of the terms of sale with respect to Stern’s obligation to pay interest on the amount of his bid states that “[t]he Referee is not required to send any notice to the purchaser; if purchaser neglects to call at the time and place . . . specified to receive his deed, he will be charged with interest thereafter on the whole amount of his purchase, unless the *309Referee shall deem it proper to extend the time for the completion of said purchase” (emphasis added). Based on the evidence in the record, an issue of fact exists regarding whether the Referee extended the time for the completion of the purchase. Stern averred that the Referee extended the time for closing the sale by acquiescing in his request that the closing be conducted after the State’s cleanup efforts were completed and the State determined whether it would seek from Stern reimbursement for the costs of those efforts. Stern’s position is buttressed by the letter of plaintiffs former counsel indicating that the Referee was aware of Stern’s concerns regarding the state of the tract and that both plaintiff and Stern were content to conduct the closing after the State completed its work on the tract and made a decision regarding whether to seek reimbursement from Stern. Notably, the Referee never scheduled a closing date and, prior to April 2007, did not seek to compel the parties to conduct the closing. The Referee’s averment that she “did not grant any extensions to close based upon an environmental oil spill” does not require the rejection of Stern’s contention that the Referee acquiesced in his request that the closing be conducted after the State’s remediation efforts were completed and it had determined whether to seek reimbursement from Stern.
In concluding that a hearing is not warranted on the issue of whether the Referee extended the time to conduct the closing, the majority finds that the closing was scheduled for July 8, 1999 and that Stern “failed to close” on that date. To be sure, the terms of sale provide that the balance of the purchase price was supposed to be tendered to the Referee at her office on July 8, 1999. However, nothing in the record sheds any light on why a closing was not conducted on that date and the Referee averred that “[n]o closing was ever scheduled by [her]” and no “attempt [was made] to close by the Plaintiff’s counsel or counsel for the successful bidder until April, 2007.” Indeed, plaintiff does not even suggest that a closing was scheduled for July 8, 1999. Thus, whether July 8, 1999 was a closing date, and if so, whether the Referee “deem[ed] it proper to extend the time” for conducting the closing are factual issues that cannot be resolved on this record.
The majority’s assertion that, “upon Stern’s failure to close on July 8, 1999, the Referee had the option to cancel the transaction and conduct another sale or grant an adjournment subject to Stern’s payment of interest” is manifestly wrong. The plain meaning of the terms of sale show that the Referee had a third option under the agreement, one that would relieve Stern of the obligation to pay interest: “deem it proper to extend the time” *310to conduct the closing. For this reason, contrary to the majority’s claim, Stern is not committed to the proposition that the Referee waived interest “simply by granting his request for an adjournment.”
According to the majority, “[ujnder a proper construction” of the interest provision, “interest would be waived where the closing is adjourned at the Referee’s instance.” The majority thus improperly rewrites the relevant clause of the interest provision. Although the clause specifies that the purchaser will be charged interest “unless the Referee shall deem it proper to extend the time for the completion of [the] purchase,” the majority’s “proper construction” reads it as if it stated “unless the Referee shall have adjourned the completion of the purchase.” This is error (see Matter of Salvano v Merrill Lynch, Pierce, Fenner & Smith, 85 NY2d 173, 182 [1995] [“The court’s role is limited to interpretation and enforcement of the terms agreed to by the parties; it does not include the rewriting of their contract and the imposition of additional terms”]).
Supreme Court relied on CPLR 5001 (a) to support its conclusion that Stern should pay interest on the amount of his bid for the period between the auction and the closing. CPLR 5001, however, is wholly inapplicable to the issue of whether Stern must pay interest. That statute dictates when a court may award interest on a verdict or decision on a cause of action. Here, however, interest is not being sought on a verdict or decision but on the amount of Stern’s bid. Thus, the issue of interest on the amount of the bid must be resolved by reference to the contract between the parties.
Accordingly, I would remand the matter for a hearing on the issue of whether “the Referee . . . deem[ed] it proper to extend the time for the completion of [the] purchase” and, if not, the amount of interest that has accrued under the terms of sale. [See 19 Misc 3d 240.]