Court Opinion

ID: 5487783
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:19:01.993832+00
Date Added: 2024-06-11T08:33:42.740598
License: Public Domain

Pigott, J. (concurring).
I concur in the result reached by the majority, but I disagree with its rationale because, in my view, the majority is blurring an important distinction between the measure of damages for breach of real estate contracts and the measure of damages in other sales.
Real property is and has always been treated differently from other sales, mainly because real property, by its very nature, is unique (see 1-3 Warren’s Weed, New York Real Property § 3.01 [1] [f]). There is no dispute here that the buyers breached the contract. The sellers should therefore recover the benefit of their bargain from the buyers. In this case, that may very well be $348,450, the difference between the contract price and the subsequent sale price, subject, of course, to any evidence proffered by the buyers that the sellers failed to act with due diligence to mitigate their claimed loss. Any other measure is a fiction. To flatly suggest, as the majority does, that the measure should be “fair market value” at the time of the breach would almost always mean the actual contract price, for the simple reason that a willing seller and willing buyer had established that price at arm’s length. The end result is that a seller will rarely be damaged by a purchaser’s breach for any reason.
Under the majority’s rule, it is the innocent sellers, and not the breaching buyers, who must bear the cost of the buyers’ breach. In my view, the better rule is found in the Uniform Land Transactions Act:
“If a buyer wrongfully rejects, or otherwise commits a material breach, or repudiates as to a substantial part of the contract . . . , the seller may resell the *503real estate . . . and recover any amount by which the unpaid contract price . . . exceeds the resale price, less expenses avoided because of the buyer’s breach” (Uniform Land Transactions Act [ULTA] [1975] § 2-504 [a]).1
Not only does this rule recognize the unique character of real estate transactions and provide some certainty for the non-breaching seller, it also places the risk where it properly belongs, i.e. on the breaching buyer. This rule is not one-sided, affording protection to the breaching buyer should the seller be fortunate enough to resell the property at the same or a higher price (see ULTA § 2-504 [f] [stating that the seller will not be “accountable to the buyer for any profit made on any resale”]).
The nonbreaching sellers are entitled to the benefit of their bargain, and that benefit should not be denied by the application of a rule that fails to take that basic tenet into account. The cases cited by the majority in support of the “time-of-the-breach” rule appear to apply the rule by rote (majority op at 495-499), detached from the reality of realty by failing to consider the legal consequence of an axiom that is harmful to the nonbreaching party.
The majority ultimately supports its adoption of the “time-of-the-breach” rule—which is common in contract law and in the Uniform Commercial Code2 where the parties are dealing in common activities or fungible goods—by relying primarily on a case involving a school district’s cause of action seeking the cost of replacing or repairing defective window panels that had been installed in its building (see Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256 [1998]). There, the Court, applying general, black letter law, stated that “damages for breach of contract are ordinarily ascertained as of the date of the breach” (id. at 261 [citations omitted]).
But real property, unlike window panels, is not fungible. While there are usually extensive and active markets for fungible goods, thereby making it relatively less difficult for the seller to mitigate or cover in the event of a breach, the sale of real estate is clearly different because each parcel is unique (see Alba v Kaufmann, 27 AD3d 816, 818 [3d Dept 2006]; EMF Gen. Contr. Corp. v Bisbee, 6 AD3d 45 [1st Dept 2004], lv denied 3 NY3d *504607 [2004]). As a result, the pool of buyers is plainly smaller for real estate than goods, and when a buyer breaches a real estate purchase agreement, the seller must then commence the sale process anew, which may require a reassessment of the list price and more showings of the property to new buyers, who may or may not find the property’s location, amenities or architectural style desirable. This may take a substantial amount of time and effort on the seller’s part, and the seller’s efforts may not readily succeed, because once the house has been on the market for a significant period of time, the market may have declined or prospective purchasers may be wary of the amount of time the house has been on the market, leading them to conclude that the property is tainted in some fashion. Meanwhile, under our holding today, the breaching buyer will walk away indifferent to the hardship caused to the seller by his conduct.
The majority agrees that “the resale price, in a particular case, may be very strong evidence of fair market value at the time of the breach,” especially if “the time interval between default and resale is not too long, market conditions remain substantially similar, and the contract terms are comparable” (majority op at 499 [emphasis added]). There is no dispute that the general rule is that damages are measured by the fair market value at the time of the breach; the issue here is whether that measure, in cases where the property is later sold with reasonable diligence and in good faith, is adequate or even realistic. In such a circumstance, why should the nonbreaching seller suffer the consequences of the buyer’s breach? If market conditions decline, shouldn’t the loss be laid squarely at the feet of the breaching buyer, particularly where the seller is able to make a colorable claim at trial in that regard?
The majority also holds that the trial court in this case will need to consider, among other things, whether the sellers “made sufficient efforts to mitigate” (majority op at 501), but mitigation is irrelevant under the majority’s rule since the only calculation that matters is the difference between the fair market value at the time of the breach and the contract price. Under the ULTA rule proposed by this concurrence, the seller’s mitigation is very relevant, and would constitute a valid defense by a breaching purchaser on the issue of damages once the non-breaching seller has made a prima facie case for breach of contract and entitlement to damages. Applying that rule here, there is a question of fact as to whether the sellers mitigated their damages subsequent to the buyers’ breach and whether *505the sale in March 2007 for $1,376,550 represented the fair market value of the property.
Although the majority correctly concludes that there are questions of fact, it is my view that the trial court should follow the above rule in assessing the true nature of the damages incurred by the sellers.
Chief Judge Lippman and Judges Graffeo and Rivera concur with Judge Read; Judge Pigott concurs in the result in an opinion in which Judge Smith concurs.
Order modified, without costs, by remitting to Supreme Court, Onondaga County, for further proceedings in accordance with the opinion herein, and, as so modified, affirmed.

. Although this provision also states that a buyer may also recover incidental and consequential damages, whether or not the sellers here are entitled to such damages is not before us.

. Uniform Commercial Code § 2-725.