Court Adjudicates Seller’s Claim for Liquidated Damages
P.W. Developers commenced a declaratory judgment action against R.C. arising out of a purchase agreement and a rider pursuant to which the R.C. agreed to purchase from P.W.D. residential unit 000 and garage unit 0 located at 88 Cuttermill Road, in Great, Neck New York for a total purchase price of $545,000.00, with a down payment of $54,500.00 deposited with the parties’ escrow agent, leaving a balance of $490.500 due to be paid at the closing. P.W.D moved for summary judgment granting the relief sought in the complaint.
The purchase agreement provided that in the event of R.C.’s default for failing to close P.W.D shall “retain the Downpayment [sic] as liquidated damages”. And the rider to the purchase agreement also provided that if R.C. defaulted under the purchase agreement, the “[PWD]shall retain the Downpayment [sic] as liquidated damages”.
And the rider to the purchase agreement further provided that R.C., having inspected the unit and the building, was thoroughly acquainted with their condition, and “agrees to purchase the Unit ‘AS IS, WHERE IS’ and in its present condition, subject to reasonable use, wear, tear, and natural deterioration between now and Closing.”.
The rider to the purchase agreement also provided that the parties “acknowledge and agree that this is an all cash transaction and is not subject to or contingent upon [R.C.] obtaining financing or a mortgage in connection with the purchase.” While the rider gave R.C. the option to seek financing in connection with the purchase of the unit, the rider specifically stated that, “provided however, that [R.C.s] obligation to close on the purchase shall in no way be contingent upon [R.C.’s] ability to obtain such financing.” And the rider further provided that the “[P/W.D.]shall, at no cost to [P.W.D.] reasonably cooperate with [R.C.] in good faith in the event [R.C.] seeks to obtain a mortgage.”
The purchase agreement provided for an initial “on or about February 15, 2022, at 10:00 AM” closing date. On March 4, 2022, P.W.D. sent R.C.’s counsel a first “time of the essence” closing notice, stating that P.W.D. was ready, willing, and able to close on the sale of the unit on Friday, March 18, 2022, time being of the essence. The 1st TOE closing notice provided that if R.C. failed to close on or before March 18, 2022, then R.C. would be considered in default under the contract. On March 11, 2022, R.C.’s counsel sent a letter rejecting P.W.D.’s 1st TOE closing notice.
On March 30, 2022, P.W.D. sent R.C.’s counsel a second time of the essence closing notice, stating P.W.D. was ready, willing, and able to close on the sale of the unit on Thursday April 14, 2022, time being of the essence. The 2nd TOE closing notice provided that if R.C. failed to close on or before April 14, 2022, then R.C. would be considered in default under the contract. On March 31, 2022, R.C.’s counsel sent a letter rejecting P.W.D.’s 2nd TOE closing notice.
P.W.D contended that it should be granted summary judgment on its first cause of action for a declaratory judgment declaring that the purchase agreement was terminated and directing that the parties’ release R.C.’s down payment to it as liquidated damages due to R.C.’s default by failing to close on March 18, 2022, and on April 14, 2022.
The Court found that P.W.D. established its prima facie entitlement to summary judgment by submitting the terms of the parties’ real estate sale contract and evidence unequivocally demonstrating that R.C. defaulted in failing to close on March 18, 2022, and on April 14, 2022. As R.C. advised by letter prior to the time of the essence closing dates set forth in the 1st TOE notice and 2nd TOE notice that she would not be appearing at the closings, she breached the contract and forfeited her down payment, without the necessity of a tender on the part of P.W.D.
The Court found that the conclusory and unsubstantiated contentions raised in the R.C.’s motion opposition papers as to whether P.W.D “reasonably cooperated” with his efforts to obtain a mortgage were insufficient to raise a triable issue of fact in opposition to the summary judgment motion. The parties’ agreement specifically provided that the transaction was to be a cash transaction, that R.C. was purchasing the subject property “AS IS”, and that R.C.’s obligation to close on the purchase was “in no way” contingent on her ability to obtain financing. R.C. failed to raise a triable issue of fact in opposition to P.W.D.’s ‘s prima facie showing. The Court awarded P.W.D. summary judgment on its first cause of action for declaratory judgment as against R.C.
P.W.D.’s second cause of action was for attorneys’ fees. The Court found that P.W.D. was entitled to “reasonable attorney’s fees” to be paid by R.C. under the terms of the rider, which provided as follows:
“Seller and Purchaser agree that, in the event of any litigation arising between the parties in connection with this Contract, the losing party shall be responsible for payment of the reasonable attorneys’ fees of the successful party (at trial and appellate levels).”
P.W.D successfully obtained summary judgment against R.C–so the Court found that it was entitled to reasonable attorneys’ fees, to be determined at an attorney inquest hearing that would be conducted by the Court.