Tuesday, February 14, 2012

Ready, Willing, Able

Pesa v. Yoma Development Group, Inc.
Court of Appeals

REAL PROPERTY LAW. CONTRACTS. REPUDIATION BY SELLER. DAMAGES. BUYER’S BURDEN OF PROOF. “READY, WILLING AND ABLE” TO CLOSE STANDARD. APPLICABILITY. RECONCILIATION OF CONFLICT BETWEEN DEPARTMENTS. Plaintiffs (buyers) brought an action for specific performance and to recover down payments on three mortgage contingency contracts after the seller: (1) failed to build houses on the properties and provide certificates of occupancy, as required by the contracts; and (2) allegedly repudiated the contracts by assigning them to an affiliated company (defendant). After plaintiffs’ cause of action for specific performance was dismissed, both parties moved summary judgment. The Supreme Court denied the defendant’s motion, but granted partial summary judgment on liability in favor of the plaintiffs, without regard to whether they were “ready, willing and able” to close title, on the ground that the seller had anticipatorily breached the contracts by transferring title to its affiliate (defendant). The Second Department affirmed, holding that “a purchaser seeking damages for the seller’s anticipatory breach of a contract for the sale of real property is not required to establish, as an element of the claim, that it was ready, willing and able to close, though such a showing would be required if the buyers were seeking specific performance.” The Court of Appeals modifies by denying the plaintiffs’ motion as well. The issue of whether a buyer must prove having been “ready, willing and able” where the claim is for legal damages, in contrast to specific performance, has divided the departments; the Second Department has held, as here, that such proof is not required, while the Third and Fourth Departments have held that it is. The Court of Appeals reconciles the conflict by holding that the rule followed by the Third and Fourth Departments is the correct one. Although the plaintiffs in this instance submitted evidence of their financial condition, it was insufficient to eliminate as an issue of fact whether they were “ready, willing and able” to close. Further, a transfer between affiliated companies, as here, does not, in and of itself, constitute a repudiation, thus leaving as a question of fact whether the defendant’s termination of the contracts of sale constituted an anticipatory breach or repudiation. Pesa v. Yoma Development Group, Inc. Decided 2/9/12.

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