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Jesup Avenue Contract Dispute Faces Legal Analysis:

Did Questions of Fact Preclude Summary Judgment?

Our Courts often face cross-motions for summary judgment by both parties to a dispute with each claiming that the material facts are not in dispute and they are entitled to judgment as a matter of law. As a recent case illustrates, that scenario may lead to neither of the parties being granted the relief sought because the Court nevertheless finds irreconcilable questions of material fact that preclude judgment as a matter of law.

Abuacar Jawara and Aicha Triore alleged that, in May 2018, Benedict Araka agreed to sell them the premises he owned at 1536 Jesup Avenue in the Bronx. Pursuant to that agreement, they tendered a $10,000 deposit to Araka’s attorney. But Araka refused to deliver the deed to the Jesup Avenue property. So they sued for specific performance and also interposed a claim for money damages, which they alleged resulted from having to extend their mortgage commitment and in reapplying for a new mortgage. And also sought $7,500 in legal fees. The parties cross-moved for summary judgment.

Before going granular on the facts, a tutorial in real property contact law:

Absent a violation of law or some transgression of public policy people are free to enter into contracts, making whatever agreement they wish no matter how unwise they may seem to others. Consequently, when a contract dispute arises, it is the Court’s role to enforce rather than reform the agreement. In order to do so, the Court must construe the agreement in accordance with the intent of the parties, the best evidence of which is the very contract itself and the terms used.

Thus, when the parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms. Moreover, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms. Accordingly, Courts should refrain from interpreting agreements in a manner which implies something not specifically included by the parties. And Courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing. That approach serves to provide stability to commercial transactions by safeguarding against fraudulent claims, perjury, death of witnesses and infirmity of memory.

Provided a writing is clear and complete, evidence as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing. Whether a contract is ambiguous is a matter of law for the Court to decide. A contract is unambiguous if the language it uses has definite and precise meaning, unattended by danger of misconception in purport of the agreement itself, and concerning which there is no reasonable basis for a difference of opinion. So if the contract is not reasonably susceptible to multiple meanings, it is unambiguous and the Court is not free to alter it, even if such alteration reflects personal notions of fairness and equity. And silence or the omission of terms within a contract are not tantamount to ambiguity. Instead, the question of whether an ambiguity exists must be determined from the face of an agreement without regard to extrinsic evidence. And an unambiguous contract or a provision contained should be given its plain and ordinary meaning.

The parole evidence rule forbids proof of extrinsic evidence to contradict or vary the terms of a written instrument. But it has no application in a suit brought where there are claims of fraud in the execution of an agreement or to rescind a contract on the ground of fraud.

And generally, parties to the sale of real property, like signatories of any agreement, are free to tailor their contract to meet their particular needs and to include or exclude those provisions which they choose. Absent some indicia of fraud or other circumstances warranting equitable intervention, it is the duty of the Court to enforce rather than reform the bargain struck.

Pursuant to the General Obligations Law, contracts devising real property are void unless they are in writing. Ordinarily, the law allows a party to a real estate contract a reasonable time to perform his portion of a contract even if a date for such performance, also known as the closing, has been previously agreed. However, common to many real estate agreements are provisions which make time an essence in the performance of a contract. Such provision, also known as a “hell or high water” clause, makes the performance of a contract or a certain provision, by a specified date, absolute and unconditional. When such a provision is made part of a contract each party must tender performance on the date specified to the detriment of default, unless the time for performance is mutually extended.

In the absence of fraud or other wrongful act, a party who signs a written contract is presumed to know and have assented to the contents. When a party to a written contract accepts it as a contract he is bound by the stipulations and conditions expressed in it whether he reads them or not. Ignorance through negligence or inexcusable trustfulness will not relieve a party from his contract obligations. He who signs or accepts a written contract, in the absence of fraud or other wrongful act on the part of another contracting party, is conclusively presumed to know its contents and to assent to them and there can be no evidence for the jury as to his understanding of its terms.

The essential elements in an action for breach of contract are the existence of a contract, the plaintiff’s performance pursuant to the contract, the defendant’s breach of his or her contractual obligations, and damages resulting from the breach.

But a breach of contract by one party relieves the other from its obligations and renders the contract unenforceable by the one who has breached. And once the closing was aborted, it is not necessary for plaintiff to entertain further proposals from defendant, for if defendant had failed to satisfy a material element of the contract, he was already in default. Under the foregoing circumstances, the non-breaching party is discharged from performing any further obligations under the contract and can terminate the contract, sue for damages, or continue the contract. When a party materially breaches a contract, the non-breaching party must choose between two remedies: it can elect to terminate or continue the contract. If it chooses the latter course, it loses its right to terminate the contract because of the default. Stated differently, a party may unilaterally terminate a contract where the other party has breached and the breach is material. And a party who has breached an agreement is not entitled to specific performance.

Now to the facts:

In support of his motion, Araka submitted an affidavit in which he stated that, in 2018, Jawara and Triore wanted to purchase the Jesup Avenue property that he owned, for $499,999. Pursuant to their agreement, the sale was conditioned on Jawara/Triore making a $10,000 down payment. Initially, the agreement, executed only by Jawara/Triore was provided to Katherine Bradshaw, Akara’s attorney, along with a check for $10,000 from Citibank dated May 7, 2018. The check was made payable to Bradshaw. Because the parties were not in agreement with the terms in the contract, both the contract signed only by Jawara/Triore and the check were sent back to them. But they then contacted Bradshaw and indicated that they would agree to the terms in the agreement proposed by Akara’s attorney, who by then was Silvia Metrena.

Jawara/Triore then sent the agreement, already signed by them, to Metrena, who asked Akara to sign the contact while she waited for the down payment. Bradshaw notified Jawara/Triore that they needed to reissue the check for the down payment and that it should be made payable to Metrena. Akara stated that Jawara/Triore deposited the original down payment into their account and never provided a new check after the contract was fully executed.

Akara submitted a document titled Residential Contract of Sale dated April 2018. The agreement was between Akara, as seller, and Jawara/Triore, as buyers, and was for the sale of the Jesup Avenue property. Paragraph 3, titled Purchase Price, indicated that the purchase price is $499,990 and that the purchase price is payable … on the signing of this contract, by Purchaser’s check payable to the Seller … subject to collection, the receipt of which is hereby acknowledged, and not to be held in escrow (the down payment): $10,000.00 … [and] by allowance for the principal amount unpaid on the existing mortgage on the date hereof, payment of which Purchaser shall assume by joinder in the deed … $489,990.

Paragraph 8, titled Mortgage Contingency, required that Jawara/Triore obtain a mortgage for $474,905. Paragraph 28 stated that “[a]ll prior understandings, agreements, representations and warranties, oral or written, between Seller and Purchaser are merged in this contract; it completely expresses their full agreement and has been entered into after full investigation, neither party relying upon any statement made by anyone else that is not set forth in contract … [and that] neither this contract nor any provision thereof may be waived, changed or cancelled except in writing.”

As part of the exhibit containing the contract, Araka submitted a copy of a certified check from Citibank in the amount of $10,000. The check was dated May 7, 2018 and was payable to Bradshaw. Also made part of that exhibit was a receipt from the United States Post Office, which was dated June 25, 2018, which indicated that the contract and the check were mailed to Jawara/Triore’s counsel.

Akara also submitted a copy of the agreement, which with the exception that it was fully executed by all parties, including Akara, was identical to agreement submitted by Jawara/Triore.

Akara submitted an email chain between Jawara/Triore’s counsel and Bradshaw. The first email, dated March 14, 2019, was sent by their counsel to Bradshaw and requested that Bradshaw return the check sent to Bradshaw in order for them to obtain a new check that could be tendered to Metrena. The second email, also dated March 14, 2019, was a response by Bradshaw indicating that she would send the check to their counsel’s office. And attached was a letter from Bradshaw, dated March 14, 2019, sent to Jawara/Triore’s counsel along with a copy of the Citibank check for $10,000. The letter indicated that the check was being returned to their counsel.

Jawara testified at his deposition that in connection with the contract he sent Bradshaw a bank check for $10,000. The check was thereafter returned to his lawyer, who gave it back to Jawara, who then deposited the check into his account. The check was never reissued nor was he ever told to reissue the check.

Triore testified at her deposition with regard to the purchase of the Jesup Avenue property that she and Jawara, her husband, provided a certified check from Citibank for the down payment. The check was returned and never reissued.

Based on the foregoing, the Court found that Akara failed to establish prima facie entitlement to summary judgment, because he never as required terminated the agreement in writing.

However, according to Akara’s affidavit, after initially refusing to execute the first agreement, and because Jawara/Triore would not assent to his terms, he executed the second agreement. But the deposition testimony established that Jawara/Triore never provided the $10,000 required by the contract, such that they breached the agreement between the parties. The evidence established that Jawara/Triore provided a down payment in furtherance of the first agreement, but never in furtherance of the second agreement, the only agreement signed by Akara and thus demonstrated that Jawara/Triore breached the terms of the agreement.

Turning to Akara’s motion for summary judgment:

A breach of contract by one party relieves the other from obligations and renders the contract unenforceable by the one who breached. Under the foregoing circumstances, the non-breaching party is discharged from performing any further obligations under the contract and can terminate the contract, sue for damages, or continue the contract. Here, because Jawara/Triore breached the agreement between the parties, Akara was not obligated to perform and had the right to terminate the agreement.

While Akara contended that the agreement was terminated, he was bound by the terms of the agreement between the parties, which required that any cancellation of the agreement be in writing. Paragraph 28 stated that “[n]either this contract nor any provision thereof may be waived, changed or cancelled except in writing.” Nothing submitted by Akara established that he or his attorneys ever terminated second agreement after Jawara/Triore failed to tender the requisite $10,000 down payment. Akara failed to establish that subsequent to the breach, he properly, as defined by the second agreement, terminated the contract. He failed to establish prima facie entitlement to summary judgment. His motion was denied.

Jawara and Triore submitted substantially identical affidavits. Triorere stated that she and Jawara became interested in purchasing the Jesup Avenue property. They met with Araka and initially entered into an agreement to rent a portion of the building and then buy the entire building for not more than $500,000. Araka gave them a lease to rent the first floor and basement at a rate of $1,800 per month. And they would repair the first floor and basement at their expense. They subsequently requested that they be sold the property. Jawara and Triore executed the contract and, as required by the agreement, provided a down payment by certified check. Despite Araka’s attempt to obstruct the process, by impeding an inspection, Jawara and Triore procured a mortgage commitment, which was forwarded to Araka’s attorney along with a title report. Because Araka’s then counsel refused to communicate and agree on a closing date, their counsel scheduled a closing, which neither Araka nor his counsel attended. Despite Araka’s assertion that he intended to consummate the sale of the property, he failed to close on the sale.

Jawara/Triore submitted copies of the second agreement and of the certified Citibank check for $10,000. They also submitted a document dated August 13, 2019 from Intercontinental Capital Group that apprised Jawara that, with regard to a loan application to purchase the Jesup Avenue property, he was conditionally approved for a loan in the amount of $474,990. In order to receive the loan, the document indicated that Jawara had to comply with 19 conditions, including providing “a copy of deposit on contract check in the amount of $10,000 along with acceptable bank statement reflecting the withdrawal of the check.”

Based on the foregoing, the Court found that Jawara/Triore established prima facie entitlement to summary judgment on their breach of contract and specific performance claims. Significantly, their affidavits established that they performed all of the obligations under second agreement—namely that they provided a $10,000 check for the down payment required by paragraph 3 of the agreement and procured a mortgage for $474,990 as required by paragraphs 3 and 8. Their affidavits also established that, despite the foregoing, Araka refused to attend the closing and refused to sell them the house. The essential elements in an action for breach of contract are the existence of a contract, the plaintiff’s performance pursuant to the contract, the defendant’s breach of his or her contractual obligations, and damages resulting from the breach, Jawara/Triore established that Araka breached the terms of the agreement and established prima facie entitlement to summary judgment.

But upon the evidence submitted by Araka in support of his motion for summary judgement, the Court found that Jawara/Triore breached second agreement—and obviated Araka’s need to perform. Thus, Araka raised a material issue of fact on the issue of Jawara/Triore’s breach, precluding summary judgment.

Araka in his affidavit stated that Jawara/Triore never provided a check for $10,000 — the down payment required by the second agreement—after that agreement was fully executed. And both Jawara and Triore were deposed and testified that that was what transpired. Both testified that, after the first check was returned, they never had one reissued. That was a material breach of the second agreement, which obviated Araka’s need to perform. That meant that not only did Araka no longer have to make an effort to sell the Jesup Avenue property to Jawara/Triore, but he then had the right to cancel the agreement and walk away. A party may unilaterally terminate a contract where the other party has breached and the breach is material. Araka’s evidence presented a complete defense to the complaint, because a party who has breached an agreement is not entitled to specific performance. But questions of fact precluded summary judgment.

 

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