S&G Sues NYEG to Enforce Written $3.39m Agreement to Sell 9.29 Acres in North Hempstead

Was Alleged Oral Modification of Contract of Sale Barred By the Statue of Frauds?

By written contract dated December 10, 2008, Alan Gestetner agreed to purchase and New York Golf Enterprises, Inc. agreed to sell 9.29 acres of property located in New Hempstead for the purchase price of $3,460,000. At the time the contract was entered into, the 9.29 acres were part of an undivided tax lot totaling approximately 160 acres on which NYGE operated a golf course. The contract called for the payment of $250,000 upon signing and an additional down payment of $750,000 due upon subdivision approval. It was undisputed that Gestetner did not tender payment of either the initial $250,000 down payment or the additional $750,000 down payment. It was also undisputed that on December 15, 2008, and again on December 19, 2008, nonparty Cheon Cho, who executed the contract as the president of NYGE, accepted two payments from Gestetner, each in the amount of $25,000.

S&G Golden Estates, LLC (a Gestetner-formed entity) sued NYGE for specific performance of the contract, alleging in the complaint “no downpayment was made at the time of signing, because the parties orally agreed that [NYGE] would accept periodic payments of $25,000 towards the initial downpayment amount until subdivision approval of the approximately nine-acre parcel, at which time any unpaid portion of the $250,000 downpayment would be paid, along with the $750,000 additional downpayment due upon subdivision approval.” In its answer, NYGE asserted the affirmative defense of the statute of frauds. Following a nonjury trial, Supreme Court determined that S&G was entitled to specific performance and entered a judgment directing specific performance of the contract. NYGE appealed.

In reviewing a determination made after a nonjury trial, the authority of the appellate court is as broad as that of the trial court and may render the judgment it finds warranted by the facts, taking into consideration that, in a close case, the trial court had the advantage of seeing and hearing the witnesses.

The statute of frauds prohibits the enforcement of a  conveyance of real property without a written contract. While the statute of frauds empowers courts of equity to compel specific performance of agreements in cases of part performance, the claimed partial performance must be unequivocally referable to the agreement. Unequivocally referable conduct is conduct that is inconsistent with any other explanation. It is insufficient that the oral agreement gives significance to a plaintiff’s actions. Rather, the actions alone must be unintelligible or at least extraordinary, explainable only with reference to the oral agreement. Significantly, the doctrine of part performance is based on principles of equity, in particular, recognition of the fact that the purpose of the Statute of Frauds is to prevent frauds, not to enable a party to perpetrate a fraud by using the statute as a sword rather than a shield.

Here, S&G failed to show partial performance of the alleged oral modification to the contract so as to excuse the absence of a writing under the statute of frauds. Contrary to S&G’s contention, NYGE’s conduct in proceeding with the application for subdivision approval did not constitute part performance since that conduct was consistent with the written terms of the contract and was not unequivocally referable to the modification S&G sought to impose.