This Court tried this action without a jury on January 24, 2006. The following constitutes this Court's findings of fact and conclusion of law.

In this action, plaintiff law firm as assignee of James Sanna asserts two causes of action against defendants for breach of contract. In both causes of action, plaintiff law firm alleges that defendants were contractually obligated to pay the transfer tax on the sale of Mr. Sanna's cooperative apartment to defendants.

In a decision and order, entered April 20, 2005, the Appellate Term, First Department, reinstated the complaint against defendants finding that the assignment was valid and did not fall within the narrow scope of the champerty doctrine.

The Court (Judge Eileen N. Nadelson) in a decision and order, dated July 22, 2005, denied plaintiff's summary judgment motion finding that based on the "closing documentation and performance of the parties" factual issues exist as to the responsibility for payment of the tax.

The undisputed facts are that James Sanna retained plaintiff law firm to represent him in the sale of his cooperative apartment, that defendants purchased the cooperative apartment at the agreed upon sales price of $1.2 million, that there is a transfer tax of one percent levied on sales over $1 million, that Mr. Sanna paid the transfer tax in the amount of $12,225, and [*2]that Mr. Sanna assigned his contractual rights to recover this sum to plaintiff law firm, the assignment of which was upheld as valid by the Appellate Term, First Department.

At trial, plaintiff called Marcie Waterman Murray to testify on its behalf. Ms. Waterman testified that she was the attorney representing Mr. Sanna in the sale of his cooperative apartment, that she represented Mr. Sanna in the negotiations, and that she drafted the sales contract, dated April 4, 2002. She testified that negotiations were difficult and very protracted. Indeed, she testified that this transaction had three riders and a side letter, which was very unusual.

Ms. Waterman testified that paragraph 11.2.4 of the sales contract provides that at closing defendants as purchaser "shall pay" "a transfer tax which by law is primarily imposed on the purchaser" (P1). She referred to this tax as the "mansion tax" because it applied to sales of $1 million or more. Notwithstanding this provision, Ms. Waterman testified that she erroneously advised Mr. Sanna, the seller and her client, prior to executing the sales contract that he was responsible for the transfer tax in a March 14, 2002 facsimile (P8). She further testified that the HUD-1 Uniform Settlement Statement, dated June 11, 2002, has the seller paying the transfer tax of $12,225 (Defendant's B), even though in a facsimile, dated June 7, 2002, Ms. Waterman advised defendants' attorney that defendant needed to bring several checks, one of which was for $12,225 (P2). Ms. Waterman testified that she did not realize her error until after the June 11, 2002 closing. Upon discovery of her error, Ms. Waterman testified that she advised Mr. Sanna of the mistake and reimbursed him $12,225. Plaintiff did not call Mr. Sanna to testify.

On cross-examination, Ms. Waterman conceded that transfer taxes are negotiated between the buyer and seller, and that the seller can pay the transfer tax.

Defendant Steven Hochberg testified that he did not trust the seller, that the negotiations involved the transfer tax, and that the seller would pay the transfer tax. As for the transfer tax issue, Mr. Hochberg testified that he wanted a 6% reduction in the sales price. What he got according to his testimony was the seller reducing the sales price by 3% and the seller assuming the liability for the transfer tax. On cross-examination, Mr. Hochberg maintained that the transfer tax was to be paid by the seller, Mr. Sanna.

On rebuttal, Ms. Waterman testified that the HUD-1 Settlement Statement was prepared not by her but by defendants' attorney.

The trial testimony and evidence establish that the April 4, 2002 sales contract and the June 7, 2002 facsimile have defendants responsible for paying the transfer tax pursuant to paragraph 11.2.4 of the parties' sales contract. On the other hand, defendant Hochberg adamantly testified that he was not responsible for paying the transfer tax at issue. In that regard, the HUD-1 Settlement Statement establishes that that tax was to be paid by Mr. Sanna, the seller. That document, however, is given very limited evidentiary weight given that it was prepared by defendants' attorney. For the reasons that follow, this Court finds that the factual issues in this action are resolved in favor of plaintiff and against defendants.

Here, paragraph 11.2.4 of the parties' sales contract provides that the purchaser, defendants herein, "shall pay" "a transfer tax which by law is primarily imposed on the purchaser." Article 31 of the Tax Law, entitled "Real Estate Transfer Tax" provides in section 1404 that the "real estate transfer tax shall be paid by the grantor," who in this action is the seller, Mr. Sanna.

Section 1402-a, however, provides for an additional tax levy of one percent on sales of residential cooperative apartment units of $1 million or more. That section is clearly the tax provision that is implicated in this transaction. Section 1402-a(b) unequivocally provides that the additional tax imposed shall be paid by the grantee, who in this action is defendant buyers, unless the grantee is exempt from such tax in which case the tax is to be paid by the grantor. Section 1405 sets forth the exemptions, none of which are applicable in this action. More importantly, section 1402-a(b) does not set forth any provision whereby this "additional tax" may be subject to negotiations between the parties. Indeed, that section utilizes the term "shall," rather than "may." In any event, were it interpreted as a negotiable term, defendants have failed to proffer any documentary proof that the grantor and not the grantee would assume the liability for this transfer tax.

Accordingly, this Court awards judgment in favor of plaintiff law firm,and against defendants Steven Hochberg and Hillary Lane Hochberg, in the amount of $12,225, with interest from June 15, 2002.

This memorandum opinion constitutes the decision and order of this Court. A copy of this decision and order and the parties' respective exhibits have been mailed to the parties.

Dated:

HON. JEFFREY K. OING, C.C.J.