Court Opinion

ID: 4087283
Source: CourtListenerOpinion
Date Created: 2016-10-08 00:13:16.678332+00
Date Added: 2024-06-11T14:35:10.766769
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

812
CA 11-00179
PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, AND SCONIERS, JJ.

USHCP REAL ESTATE DEVELOPMENT, INC.,
PLAINTIFF-APPELLANT-RESPONDENT,

                    V                             MEMORANDUM AND ORDER

ANDREW MITRANO,
DEFENDANT-RESPONDENT-APPELLANT.

EDWIN R. SCHULMAN, ROCHESTER (MICHAEL A. ROSENHOUSE OF COUNSEL), FOR
PLAINTIFF-APPELLANT-RESPONDENT.

WILLIAM J. MACDONALD, ROCHESTER, FOR DEFENDANT-RESPONDENT-APPELLANT.

     Appeal and cross appeal from an order of the Supreme Court,
Monroe County (John J. Ark, J.), entered August 27, 2010. The order
denied plaintiff’s motion for summary judgment and denied defendant’s
cross motion for summary judgment.

     It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by granting that part of plaintiff’s
motion for partial summary judgment on liability and as modified the
order is affirmed without costs and the matter is remitted to Supreme
Court, Monroe County, for an inquest on damages.

     Memorandum: In this action for breach of an express warranty,
plaintiff appeals and defendant cross-appeals from an order denying
plaintiff’s motion for summary judgment and defendant’s cross motion
for summary judgment dismissing the complaint. This action arises out
of defendant’s assignment of a promissory note and mortgage to
plaintiff. As part of the assignment, defendant expressly warranted
that the principal balance of the note was $378,092.87. The amount of
the warranty was set forth not only in the assignment, but also in an
allonge and a “Lost Note Affidavit” signed by defendant. Shortly
after closing, defendant notified plaintiff’s attorney that, in
calculating the principal balance of the note, defendant neglected to
provide a credit to the mortgagor in the amount of $5,000 based on a
prepayment he had made. Plaintiff thereafter commenced this action
seeking damages in the amount of $24,920.22, the difference between
the principal balance of the note initially warranted by defendant and
the revised principal balance subsequently alleged by defendant to be
due, following closing.

     We conclude that Supreme Court erred in denying plaintiff’s
motion to the extent that it seeks partial summary judgment on
                                 -2-                           812
                                                         CA 11-00179

liability and we therefore modify the order accordingly. On the
record before us, there is no dispute that defendant expressly
warranted that the principal balance of the note was more than the
amount actually due thereunder. Plaintiff also established that its
sole shareholder relied on defendant’s representations concerning the
principal balance due as part of the parties’ agreement. Indeed, in
the “Lost Note Affidavit” provided to plaintiff prior to closing,
defendant stated that he understood that plaintiff, in purchasing the
note and mortgage, was relying on the facts asserted in the affidavit
with respect to the principal balance due, i.e., the amount warranted
by defendant before the closing. Plaintiff therefore established all
elements of a cause of action for breach of express warranty (see CBS
Inc. v Ziff-Davis Publ. Co., 75 NY2d 496, 503-504), and in response
defendant failed to raise an issue of fact (see generally Zuckerman v
City of New York, 49 NY2d 557, 562).

     Defendant contends that plaintiff is not entitled to recover
based on defendant’s breach of express warranty because plaintiff
could have determined the correct amount due on the note if it had
exercised due diligence during the parties’ negotiations. We reject
that contention. As the Court of Appeals has explained, a warranty
“ ‘is intended precisely to relieve the promisee of any duty to
ascertain the [warranted] fact for [itself]; it amounts to a promise
to indemnify the promisee for any loss if the fact warranted proves
untrue, for obviously the promisor cannot control what is already in
the past’ ” (CBS Inc., 75 NY2d at 503). Thus, even assuming,
arguendo, that plaintiff could have discovered prior to closing that
the principal balance was less than the amount warranted, we conclude
that the potential for such a discovery is not a defense to this
action.

     With respect to damages, we conclude that plaintiff established
as a matter of law that the mortgagor made $45,000 in prepayments on
the mortgage, as well as scheduled payments of $5,170.08 every month
prior to assignment of the promissory note and mortgage, with the
exception of July 2009, when he made a partial payment of $1,400.
Plaintiff’s sole shareholder stated in his affidavit that those
payments were reflected in records provided to him by defendant, and
defendant failed to raise an issue of fact with respect thereto.
Indeed, defendant disputed only the principal amount due as calculated
by plaintiff but did not specifically challenge any of plaintiff’s
assertions regarding payments made by the mortgagor. We further
conclude, however, that plaintiff failed to establish as a matter of
law that, based on the schedule of payments set forth above, the
principal balance of the note at closing was $24,920.22 less than the
amount warranted by defendant, as alleged in the complaint. It is
unclear from the record how that amount was calculated by plaintiff,
and we therefore remit the matter to Supreme Court for an inquest on
that narrow issue (see generally Puntillo Assoc. v Land, 222 AD2d 425,
426).

Entered:   June 17, 2011                        Patricia L. Morgan
                                                Clerk of the Court