Defendant Buno, as seller, and plaintiff, as purchaser, entered into a contract of sale dated July 11, 2007, for real property known as 85-45 167th Street, Jamaica, New York with a purchase price of $726,750.00. Upon execution of the contract, plaintiff deposited the sum of $38,250.00, with Davidov and Davidov, defendant-escrowee, the seller's attorney. The contract was conditioned upon plaintiff obtaining a mortgage commitment in the amount of $535,000.00 from a lending institution within 45 days from the date of contract. This clause gave plaintiff the option to cancel the contract if she was unable to procure a mortgage commitment after a "prompt" application, in which event plaintiff was entitled to recover the down payment. The contract also provided that if plaintiff failed to give notice of cancellation, or accepted a mortgage commitment which did not comply with the contract terms, then plaintiff would be deemed to have waived her right to cancel and receive a refund of the down payment.

The mortgage contingency clause also gave defendant Buno the option to cancel the contract if she did not receive a copy of a commitment from an institutional lender accepted by plaintiff by the commitment date, after first giving notice to cancel to plaintiff within 5 days after [*2]the commitment date and plaintiff's failure to deliver a commitment to defendant Buno within 10 business days thereafter. The contract set the closing date on or about August 1, 2007 and prohibited modification or cancellation of its terms, except in writing.

On the 43rd day after the contract date, counsel for plaintiff notified defendant Buno, by letter dated August 23, 2007 to defendant Davidov and Davidov, that plaintiff had been unable to obtain a mortgage commitment within the time specified in the contract, and requested an extension of the contingency clause to September 20, 2007, because the mortgage company required more time. By letters dated August 29, 2007 and September 5, 2007, defendant Davidov and Davidov responded, in effect, that defendant Buno required more information prior to deciding whether to grant the request for an extension. Plaintiff's counsel advised defendant Davidov and Davidov, by letter dated September 6, 2007, that a commitment "should be forthcoming" and if defendant Buno did not wish to extend the commitment period, Buno should return the contract deposit. Defendant Davidov and Davidov informed plaintiff's counsel, by letter dated September 7, 2007, that defendant Buno denied the request for an extension, and would not return the down payment in the absence of proof of compliance with the terms of the contract of sale.

Thereafter, by letter dated September 12, 2007, plaintiff's counsel notified defendants that his client's mortgage application had been denied, and demanded the return of her contract deposit. He enclosed a letter dated September 11, 2007 from Kevin F. Padar, the senior vice-president of National City Mortgage (National), addressed to plaintiff, indicating that plaintiff's application for a mortgage loan, in the amount of $535,000.00 to finance the purchase of the property, had been denied based upon plaintiff's "past credit history."

In response, defendant Davidov and Davidov sent a letter dated September 21, 2007, to plaintiff's counsel rejecting the September 12, 2007 notice of cancellation. It asserted that plaintiff did not include a copy of her mortgage application and thus the notice was insufficient to cancel the contract. Defendant Davidov and Davidov advised that its client believed plaintiff had applied for a mortgage in an amount greater than that authorized by the contract, and misrepresented she lacked knowledge of circumstances which would adversely affect her credit rating. Defendant, Davidov and Davidov further advised that its client was setting an October 5, 2007 closing date, with time of the essence, and that failure to close on that date would result in wilful breach of contract. The letter also advised the breach would entitle defendant Buno to liquidated damages in the amount of 10% of the purchase price, thereby permitting her to retain the down payment and apply it to the liquidated damages, and to sue for the balance of the liquidated damages, plus interest, costs and disbursements, and reasonable attorneys' fees. Plaintiff did not appear at the closing and defendants refused to return the down payment as liquidated damages, claiming the contract was breached due to plaintiff's default. Thereafter, defendant Buno allegedly sold the subject property to a nonparty in February 2008, for the sum of $650,000.00.

Plaintiff commenced this action seeking to recover the down payment and an award of [*3]incidental and consequential damages, costs and attorneys' fees.

Defendants served a joint answer, with defendant Davidov and Davidov appearing pro se, and on behalf of defendant Buno. In the answer, defendants deny the material allegations of the complaint and assert various affirmative defenses, and defendant Buno interposes eight counterclaims for breach of contract. Defendant Buno alleges that plaintiff breached the contract of sale by 1) failing to make a prompt and good faith application for a mortgage commitment, 2) applying for a mortgage loan in an amount greater than the amount authorized in the contract of sale, 3) failing to make any mortgage loan application, 4) misrepresenting that she was credit worthy, and 5) failing to appear at the closing on October 5, 2007. Defendant Buno also alleges that plaintiff committed an anticipatory breach of contract, by attempting to cancel the contract. Defendant Buno further alleges that she has suffered damages as a consequence of plaintiff's breach, and seeks to retain the down payment pursuant to a liquidated damages clause in the contract of sale, and in addition, to be awarded the sum of $38,250.00 constituting the remaining balance due under the liquidated damages clause, plus interest, costs and disbursements and attorneys' fees, or alternatively, to be awarded actual damages.

Plaintiff served a reply denying the material allegations of the counterclaims.

At the outset, the court notes that defendants failed to utilize exhibit tabs in their motion papers. Such failure adds to the difficulties faced by the court when considering the merits of a motion (see Damadian MRI in Garden City, P.C. v Progressive Cas. Ins. Co., 196 Misc 2d 245 [2003]). The court directs the parties, in any future motion practice, to utilize such tabs (cf. Lee v Marino, 36 AD3d 454 [2007]).

It is well established that the proponent of a summary judgment motion "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact," (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). If the proponent succeeds, the burden shifts to the party opposing the motion, who then must show the existence of material issues of fact by producing evidentiary proof in admissible form, in support of its position (see Zuckerman v City of New York, 49 NY2d 557 [1980], supra).

With respect to that branch of the motion by defendant Davidov and Davidov, it is well settled that, in the event of a dispute, escrow funds may not be released until the conditions of the escrow agreement are fully performed and it is "clear that no factual issues or viable claims exist under the closely scrutinized terms of the escrow agreement" (E.S.P. Adj. Servs. v ASTA Group, 125 AD2d 849, 850 [1986]). Plaintiff's complaint fails to allege that defendant Davidov and Davidov has released the escrow funds, or acted in bad faith, in willful disregard of the terms of the contract, or with gross negligence. Hence, a cause of action is not stated as against defendant Davidov and Davidov, as escrowee (see Macho Assets, Inc. v Spring Corp., 128 AD2d 680 [1987]). [*4]

With respect to that branch of the motion by defendant Buno, she asserts she was ready, willing and able to convey title to plaintiff pursuant to the terms of the contract of sale, on October 5, 2007, and that plaintiff failed to appear for the scheduled closing, thereby defaulting under the contract. She offers, among other things, affidavits of defendant Buno and Ilana F. Davidov, Esq., a copy of the pleadings, the contract of sale, various correspondence, including the letter dated September 21, 2007, and a transcript of statements made by Ilana F. Davidov and Heidi Gliboff, a title closer from Juris Abstract Corporation, on the record at the law offices of Davidov and Davidov on October 5, 2007.

While the original contract did not include a provision that time was of the essence, the September 21, 2007 letter, sent by defendant Buno's counsel to plaintiff's counsel provided unequivocal notice that the closing date was October 5, 2007, where time was of the essence and that plaintiff's failure to comply would be considered a default (see Guippone v Gaias, 13 AD3d 339 [2004]; Moray v DBAG, Inc., 305 AD2d 472 [2003]). Under the facts and circumstances presented, such letter gave plaintiff a reasonable time in which to perform her obligations under the contract (see Guippone v Gaias, 13 AD3d 339, 340 [2004], supra; Lake Hills Swim Club v Samson Dev. Corp., 213 AD2d 701, 702 [1995]; Mohen v Mooney, 162 AD2d 664, 665 [1990]). Defendant Buno has shown that she was ready, willing and able to convey title to plaintiff pursuant to the terms of the contract of sale on October 5, 2007, and that when plaintiff failed to appear for the scheduled closing, plaintiff was in default (see Pinhas v Comperchio, 50 AD3d 1117 [2008]; Engelhardt v McGinnis, 2 AD3d 572 [2003]).

Plaintiff opposes the motion, asserting that she properly exercised her right to cancel the contract pursuant to the mortgage contingency clause and therefore, was excused from performing under the contract on the law date selected by defendant Buno. She relies upon the September 12, 2007 letter of her counsel, and the September 11, 2007 letter of Mr. Padar in support of her defense.

Defendant Buno argues that the attempt by plaintiff to cancel the contract was ineffective because plaintiff failed to provide a copy of the mortgage application in connection with the service of her notice to cancel, and in any event, plaintiff must be deemed to have waived her right to cancel pursuant to the mortgage contingency clause.^[FN1]

Paragraph 8(b) of the contract of sale requires plaintiff to make a prompt mortgage application, furnish accurate and complete information regarding herself and members of her family, as required, pay all fees, points and charges required in connection with the application and loan, pursue the application with due diligence and cooperate in good faith with the institutional lender to obtain a commitment. Paragraph 30(c) of the rider provides that "[i]n the [*5]event that Purchaser's mortgage application is denied, Purchaser shall provide Seller with copies of Purchaser's mortgage application and rejection letter from the lender." Paragraph 31 of the rider governs the method by which the purchaser may elect to cancel the contract, and in relevant part, states: "[i]n the event that Purchaser is unable to obtain a mortgage commitment and elects to cancel this contract as provided herein, Purchaser shall provide Seller with a copy of the written mortgage denial."

Paragraph 31 of the rider makes no mention that plaintiff must provide a copy of the mortgage application in connection with the service of her notice to cancel. Defendant Buno would have this court graft the additional requirement found in paragraph 30(c) of the rider, requiring plaintiff to provide a copy of the mortgage application, onto the notice to cancel provision. This interpretation, however, is contrary to the plain words utilized in the contract. If the contracting parties had intended to include such requirement, they could have used language to give effect to that interpretation (see Collard v Incorporated Vil. of Flower Hill, 52 NY2d 594, 603 [1981]; Ting v Dean, 156 AD2d 358, 359 [1989]; Silva v Celella, 153 AD2d 847 [1989]). If defendant Buno had wanted to be provided a copy of the mortgage application no later than by the service of the notice to cancel, as drafter of the contract, then she, should have so specified, and her failure to include a time limitation may not operate to plaintiff's detriment (see Slamow v Delcol, 174 AD2d 725 [1991], affd 79 NY2d 1016 [1991]). "A court may not rewrite into a contract conditions the parties did not insert by adding or excising terms under the guise of construction, nor may it construe the language in such a way as would distort the contract's apparent meaning (citations omitted)" (see Slamow v Delcol, 174 AD2d at 727).

To the extent defendant Buno argues plaintiff waived her right to cancel, defendant Buno asserts plaintiff made an application for a mortgage in an amount greater than the $535,000.00 amount permitted under section 8(a) of the contract. Defendant Buno cites to a "Uniform Residential Loan Application" form (Uniform form), produced by plaintiff in connection with her amended response to defendants' first demand for production of documents, as evidence plaintiff sought a mortgage loan in the amount of $650,250.00.

Paragraph 31 of the rider to the contract, in relevant part, provides, "[i]n the event Purchaser shall apply for a mortgage in a sum greater than the amount stated in Paragraph 8 Mortgage Contingency' of this Contract, and said application is denied, said mortgage contingency clause shall be deemed waived." Thus, for there to be a finding that plaintiff waived her right to cancel, defendant Buno must show 1) plaintiff applied for a mortgage loan in an amount greater than $535,000.00 and 2) such application was denied. In this instance, a question of fact exists as to whether the Uniform form constituted the application which resulted in the denial of a mortgage commitment by National. The form makes no reference to National, but instead refers to an interviewer named "Jrl Equities Inc.," which defendant Buno herself claims is a mortgage brokerage company.^[FN2] Furthermore, the affidavits of Deatra Austin, a [*6]paralegal employed by defendant Davidov and Davidov, and Vincent Koo, a real estate broker, do not conclusively demonstrate that the Uniform form was the application ruled upon by National when denying plaintiff a mortgage commitment. The letter dated September 11, 2007 from Mr. Padar indicates that the loan application was for the amount of $535,000.00. Plaintiff avers she informed the employees of National she desired a mortgage loan in the amount of $535,000.00, gave them accurate and complete information regarding her assets and income, and "never wrote any higher amount on any application." To the extent defendant Buno alternatively asserts plaintiff failed to make any mortgage application to National, the letter dated December 16, 2008 from D. (Michael) Mulwani, district manager for National, to Ms. Davidov raises a question of fact regarding such assertion.

Under such circumstances, a question of fact exists as to whether plaintiff waived her right to cancel the contract.

To the extent plaintiff seeks an award of attorneys' fees, the rule is well settled in this state that the successful party in litigation may not recover attorney's fees, except where authorized by the parties' agreement, statutory provision or court rule (see Hunt v Sharp, 85 NY2d 883 [1995]; Chapel v Mitchell, 84 NY2d 345, 348-349 [1994]; Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21 [1979]). Plaintiff has failed to demonstrate a basis for her claim for an award of attorneys' fees.

Accordingly, the motion by defendants is granted only to the extent of granting summary judgment dismissing the complaint asserted against defendant Davidov and Davidov and dismissing that portion of the complaint asserted against defendant Buno which seeks an award of attorneys' fees.

Dated: October 14, 2009

J.S.C.