[*1]
| ASM Fin. Funding Corp. v K-Sher Corp. |
| 2008 NY Slip Op 51911(U) [21 Misc 3d 1102(A)] |
| Decided on September 18, 2008 |
| Supreme Court, Nassau County |
| Austin, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Nassau County
ASM Financial Funding
Corp., Plaintiff,
against
K-Sher Corp., Defendant.
|
16574/2007
COUNSEL FOR PLAINTIFF
Jack L. Glasser, P.C.
88-28 Sutphin Boulevard
Jamaica, New York 11435
COUNSEL FOR DEFENDANT
Dollinger, Gonski & Grossman
One Old Country Road, Suite 102
P.O. Box 9010
Carle Place, New York 11514
Leonard B. Austin, J.
Defendant, K-Sher Corp. ("K-Sher"), moves to dismiss the verified complaint of
Plaintiff, ASM Financial Funding Corp. ("ASM") in its entirety, pursuant to CPLR 3211(a)(1)
and (7) and 3016(b) and to vacate ASM's notice of pendency pursuant to CPLR 6501.
BACKGROUND
On March
10, 2005, K-Sher leased a portion of its property located at 14 Brooklyn Ave., Valley Stream,
New York to ASM.
[*2]
A.Option Agreements
On March 3, 2006, K-Sher and ASM entered into an option agreement
("Option") for ASM to purchase the property and/or to purchase all of the stock in K-Sher Corp.
Prior to the Option, K-Sher had entered into a similar option ("Prior Option") with Sara IV, LLC
("Sara IV") on May 3, 2005.
K-Sher alleges that Sara IV was in default of the Prior Option at the time it entered
into the ASM Option.
ASM alleges that Vassilios Kefalas ("Kefalas"), president of K-Sher, represented that
the title to the property was clear before ASM signed the agreement. However, in the Option,
K-Sher disclosed, and ASM acknowledged, the existence of the Prior Option with Sara IV. At
the time the Option was exercised, K-Sher "made no representation as to the legal status or
current effectiveness of the Prior Option, except to note that the Prospective Seller [K-Sher]
believes that the proposed buyer thereunder has violated the terms of the Prior Option in many
respects, most significantly by refusing to close thereon." A copy of the Prior Option was
annexed as Exhibit "A" to the Option. Paragraph 1 of the Option also stated that K-Sher's
principal maintained that the property and company was "free and clear of all mortgages,
liabilities, debts, financial obligations, encumbrances or claims on title except for the separate
option agreement previously granted by K-Sher Corp. as the Prospective Seller to Sara IV, LLC."
In the Option, ASM & K-Sher expressly took into account the possibility that Sara
IV would attempt to enforce the Prior Option. Paragraph 7(b) of the Option provides:
In the event that, after the execution hereof, and prior to closing hereunder, Sara IV,
LLC attempts to continue to maintain its entitlement to, and to close on, the Prior Option, then
the parties hereto will defend against same and shall split any and all costs of defense using
counsel approved by each side, provided however, that if, prior to a closing hereunder, the
defense is successful, this Option shall be exercised in normal course, but that if the defense is
not successful and the Prior Option is closed on, then the $500,000 price of this Option will be
returned to [ASM].
There is no dispute that ASM was required to make two payments totaling $500,000
by May 17, 2006, in order to exercise the Option. ASM was then obligated to pay the remaining
purchase price for the property ($1,400,000) as follows: (a) ASM was to assume the liability of
the current mortgage (approximately $770,000); and (b) K-Sher would "take back" a two year
promissory note/mortgage for the balance, in the amount of $630,000 from ASM payable at two
percent over the Citibank prime rate. At the time of the execution of the Option, ASM made the
first payment of $300,000.
Paragraph 4 sets the term of the Option as, "exercisable once at any time from March 1, 2006
to July 1, 2006 for a closing on sixty (60) days prior written notice... (time being of the essence as
to exercise and closing as to the Prospective Buyer)." In the event of a default, including the
failure to close, except if the failure to close was due to an act or omission of K-Sher, K-Sher
would retain the $500,000 option price as liquidated damages.
B.Sara IV Litigation
On March 8, 2006, following ASM's payment of $300,0000, Sara IV filed a lis
pendens or a notice of pendency against the property and a summons and verified [*3]complaint (Nassau County Index No. 004039/06) seeking specific
performance of the Prior Option. On April 3, 2006, K-Sher moved to dismiss Sara IV's complaint
and to vacate the notice of pendency.[FN1]
By Order, dated August 21, 2006, Hon. Ira B. Warshawsky, IAS Justice presiding,
granted K-Sher's motion to dismiss Sara IV's complaint. Sara IV's motion to reargue was denied
by Order dated November 14, 2006. Neither of Justice Warshawsky's orders was appealed.
ASM alleges that, as a result of Sara IV's filing the notice of pendency and commencing its
action, "it [was] impossible for defendant [K-Sher] to convey theproperty to plaintiff within sixty
(60) days" after the second payment was due on May 17, 2006.
C.Correspondence Between the Parties
By letter, dated May 4, 2006, K-Sher's president, Kefalas, wrote to ASM with respect
to the second payment of $200,000 that was due on or before May 17, 2006.
Subsequent correspondence, from K-Sher, dated May 12, 2006, referenced a
telephone message left by ASM in which its principal, Andrew Mackey ("Mackey"), claimed that
the second payment was not due. In that letter, K-Sher expressed its position to ASM as to why
the payment was due notwithstanding the filing of the lis pendens by Sara IV.
Similar correspondence, dated May 19, 2006, was sent by K-Sher regarding ASM's
duty to make the second payment. The May 19th letter references ASM's undated letter, received
by email on May 17, 2006, in which ASM again raised the claim that the lis pendens
precluded the requirement that the second payment be made. In this correspondence, K-Sher
offered to extend the due date of the payment to May 24, 2006.
On May 22, 2006, Mackey emailed K-Sher stating "[w]e have more than enough
money to pay you, but there are legal responsibilities here." The email continued by telling
K-Sher not to "make this much noise with a on going (sic) case." After indicating that
K-Sher will "lose everything", Mackey assured that the payment would be made. Attached to that
email was a letter from Cargill Hiller McCoy ("CHM"), located in Panama City, Mexico, which
is entitled "Confirmation of Funding Facility STRICTLY CONFIDENTIAL." According to this
document, addressed to Mackey — not ASM, Dr. J. Harris, CEO and Senior Trust
Administrator, and Prof. Dr. Micheline Kestrich-Buhlmann, Legal Department/Compliance
wrote that "(w)e are please (sic) to inform you that we have approved in principal the full
underwriting for your new European bank setup that is nearing completion, based on you
fulfilling your previous obligations in regards (sic) to the Private Placement Contract."
The letter continued, "both the funds and securities are available IMMEDIATELY upon the
conclusion of an acceptable placement contract and the release of previous obligations." The
funds and securities referred to are the cash reserves and securities of CHM. The letter did not
define or explain the terms "acceptable placement contract" or "release of previous obligations".
On May 24, 2006, ASM sent another email to Kefalas indicating that, after [*4]speaking with its attorney, ASM would make the second payment
and to "give us a few weeks and you will have your money."
K-Sher then responded that it had serious doubts about ASM's ability to fund the
option as the letter from CHM provided that financing was contingent upon ASM's "release of
previous obligations." K-Sher then extended ASM's time to make the second option payment
until the close of business on Friday, May 25, 2006. The payment was not made.
By letter, dated June 5, 2006, K-Sher wrote to ASM, stating that the Option was
terminated due to ASM's default in failing to make the second option payment.
On June 6, 2006, Mackey sent an email indicating "[w]e are in the process of
sending you your money." According to the email, ASM was sending $300,000, which was
$100,000 more than originally due for the second option payment, within the next ten days. The
email closed by promising "we will compensate you for your consideration." Attached to the
June 6th email, is a copy of another "STRICTLY CONFIDENTIAL" letter from CHM, addressed
to Mackey, as Chief Executive Officer of The Edge Financial Services Corporation, declaring
that CHM was in possession of over a billion dollars worth of gemstones as collateral for the
financing to be provided to Mackey "to underpin your bank." In closing, CHM wrote that "the
securities are available IMMEDIATELY upon the conclusion of an acceptable placement
contract and the release of previous obligations." Again, these terms were not defined.
On June, 8 2006, K-Sher reminded ASM that it was in default of the Option by
reason of its failure to make the second payment.
By letter dated, June 12, 2006, ASM's counsel, Nina Smalls-Toogood, Esq.
("Toogood"), wrote directly to Kefalas as a response to K-Sher's default letter. Toogood stated
that ASM was "ready, willing & able to complete and satisfy [its] obligation for the Option." In
Toogood's opinion, ASM did not deliberately fail to make the second option payment and until
the status of the Prior Option was decided, ASM could not go forward and exercise its option.
Once the litigation pertaining to the Prior Option was dismissed, ASM "[was] ready and willing
to move forward and close on their option." She also noted that the property could not be
transferred due to the notice of pendency.
By correspondence, dated June 27, 2006, K-Sher indicated that, in light of ASM's
failure to honor the Option, it would no longer be requesting contribution for the legal fees for
the litigation against Sara IV.
On July 11, 2006, ASM wrote to Kefalas that it was "ready willing & able to
complete and satisfy [its] obligation for the Option." Mackey stated that ASM had been ready to
fulfill its obligations as of the first week in May; however, it received a "pendency order" in
March 2006 "showing that the property could no longer change hands." According to Mackey,
the "order was for all to cease and desist any transactions until their case was ruled upon and
resolved." In Mackey's opinion, K-Sher was unable to complete this transaction and, therefore,
ASM was forced to also seek legal action against K-Sher for breach of contract and fraud.
D.The Complaint
[*5]ASM filed its summons and complaint on
September 18, 2007.
As its first cause of action, ASM seeks reformation of the Option to reflect the true intention
of the parties based upon mutual mistake. ASM asserts that the mutual mistake was based upon
the understanding that the second payment was not due until the lawsuit by Sara IV was
dismissed. ASM claims that the "signed writing between the parties does not accurately express
the true agreement of the parties at that time."
ASM also claims that the agreement was entered into under a mutual mistake, and
"that it was plaintiff's understanding at the time of the exaction of the agreement that no
additional option payment would be necessary during the pendency of the litigation that affected
title to the property" (Complaint ¶ 16). ASM alleges that "it was not logical" for it to make
the additional payment "when it was an illegal impossibility (sic) at that time for the
defendant to deliver clear title" (Complaint ¶ 18).
For its second cause of action, ASM claims fraudulent misrepresentation. ASM alleges that
K-Sher made representations and warranties at the time of the execution of the Option which
were materially false and fraudulent. ASM alleges that when K-Sher entered into the Option
agreement with ASM, it knew or should have known that Sara IV was going to file a notice of
pendency and that K-Sher never disclosed this fact. (Complaint ¶¶ 23, 24). As a
result, ASM believed that Sara IV would not make a claim over the property.
ASM's third cause of action, demanding specific performance, alleges that ASM duly
performed its obligations under the Option but K-Sher failed to deliver clear title to the premises.
ASM's fourth cause of action claims that K-Sher breached its contract with ASM by
failing and/or being unable to deliver clear title to the property. ASM seeks the return of its good
faith deposit of $300.000.
On October 9, 2007, ASM filed a lis pendens against the property.
DISCUSSION
A.Motion to Dismiss
Standard
1.CPLR 3211(a)(7)The standard of review of a motion to dismiss for
failure to state a cause of action is that the allegations in the complaint must be assumed to be
true and to "accord the plaintiff the benefit of every possible favorable inference and determine
only whether the facts as alleged fit within any cognizable legal theory." Leon v.
Martinez, 84 NY2d 83 (1994). The court must accept the facts alleged in the complaint as
true and determine whether those facts set forth a cause of action. Morad v. Morad, 27 AD3d 626
(2nd Dept. 2006).
However, "such an assumption must fail where there are conclusory allegations
lacking factual support." Elsky v. KM Ins. Brokers, 139 AD2d 691 (2nd Dept. 1988).
Bare legal conclusions which are flatly contradicted by evidence are not entitled to the
presumption of truth and are not accorded every favorable inference. Hartman v.
Morgenstern, 28 AD3d 423 (2nd Dept. 2006). In addition, where affidavits have been [*6]submitted regarding a motion to dismiss, the court may consider
allegations set forth in the affidavits to remedy any deficiencies within the pleading. See,
Nonnan v. City of New York, 9 NY3d 825 (2007).
CPLR 3211(a)(1)
A motion to dismiss under CPLR 3211(a)(1) should be granted "[w]here
documentary evidence definitively contradicts the plaintiff's factual allegations and conclusively
disposes of the plaintiff's claims." Baradino v. Ochlan, 2 AD3d 556, 557 (2nd Dept.
2003); and Prudential
Wykagyl/Rittenberg Realty v. Calabria-Maher, 1 AD3d 422 (2nd Dept. 2003). See also,
Leon v. Martinez, supra.
The question of whether a writing is ambiguous is a question of law for the court to
decide. See, Innophos, Inc. v. Rhodia,
S.A., 10 NY3d 25, 29 (2008), citing Greenfield v. Philles Records, 98 NY2d
562, 569 (2002). See also, 9394 LLC v.
Farris, 10 AD3d 708 (2nd Dept. 2004).B.The Option
The terms of option agreements must be strictly complied with in the manner
and within the time specified therein. Ittelson v. Barnett, 304 AD2d 526 (2nd Dept.
2003). Options confer upon the purchasing party, the right to purchase something at a later date
in exchange for consideration. Kaplan v. Lippman, 75 NY2d 320, 324 (1990).
C.Mutual Mistake (First Cause of Action)
"In a case of mutual mistake, the parties have reached an oral agreement and,
unknown to either, the signed writing does not express that agreement." Chimart Assocs. v.
Paul, 66 NY2d 570, 573 (1986). It is necessary to show that both parties were under the same
belief as to the facts and that the party seeking reformation show "not only that [a] mistake
exists, but exactly what was really agreed upon between the parties." George Backer Mgmt.
Corp., v. Acme Quilting Co., 42 NY2d 211, 219 (1978). The sophistication of the parties
who entered into the contract and whether the parties were represented by counsel, should be
considered in determining whether the parties were mistaken regarding a belief. Migliore v. Manzo, 28 AD3d 620,
622 (2nd Dept. 2006).
ASM's cause of action for mutual mistake should be dismissed. The pleadings and
the evidence taken together fail to support a finding that both parties shared a mistaken belief as
to their rights and obligations under the Option. While ASM alleges certain beliefs that were held
at the time of entry into the option agreement, the complaint contains no allegations that K-Sher
shared those beliefs. In addition, the complaint does not allege that the written contract does not
accurately represent the parties' intentions.
ASM alleges that it was understood that no additional payments were necessary in
the event that Sara IV litigated its claim. However, ASM has not included any allegations in its
pleadings or opposition to the dismissal motion that would suggest that K-Sher held the same
mistaken belief. In fact, ASM affirmatively alleges in ¶ 8 of the complaint that "it was
plaintiff's understanding that no additional option payment [*7]would be necessary during the pendency of litigation" (emphasis
added). It clearly did not allege that both parties had such understanding.
Furthermore, ASM alleges that the tendering of the second payment was premised on
the title to the property being unencumbered. However, ASM fails to allege that K-Sher shared
this belief. The clear terms and disclosures in the Option do not support the contention that either
party held this belief.
Given that the parties are sophisticated businesses which were represented by
counsel at the time of formation and execution of the Option, there are no allegations that either
party had an unfair advantage over the other. ASM has failed to allege any facts that would
sufficiently give rise to a presumption that both parties shared a belief that was mistakenly
inserted into the written contract, this cause of action must be dismissed.
Finally, where a plaintiff seeks reformation of a contract, he must "show in no
uncertain terms, not only that fraud exists, but exactly what was really agreed upon between the
parties." George Backer Mgmt. Corp. v. Acme Quilting Co., supra at 219. Based upon
the pleadings and proof submitted on this motion, reformation of the Option is not appropriate.
D.Fraud (Second Cause of Action)
In order to establish a cause of action for fraud, a plaintiff must plead the following
elements: (1) a false representation; (2) of material fact; (3) with intent to defraud; (4) reasonable
reliance on the representation; (5) causing damages to the plaintiff. Lama Holding Co. v.
Smith Barney, 88 NY2d 413 (1996).
CPLR 3016(b) provides that an action for fraud must be pled "with particularity,
including specific dates and items, if necessary and insofar as practicable." Conclusory
allegations of fraud will not be sufficient. Dumas v. Fiorito, 13 AD3d 332 (2nd Dept. 2004); and Sargiss v. Magarelli, 50 AD3d
1117 (2nd Dept. 2008). See also, CPLR 3016(b). However, it is sufficient to plead facts that
would allow a reasonable inference of the alleged fraud. Pludeman v. Northern Leasing Systems, Inc., 10 NY3d 486 (2008).
The cause of action for common law fraud should be dismissed based upon ASM's
failure to allege the necessary elements for a cause of action for fraud and to plead sufficient facts
to allow a reasonable inference of fraud. ASM has also failed to plead the requisite intent to
defraud.
ASM has not identified any misstatements or misrepresentations by K-Sher upon
which it detrimentally and reasonably relied in entering into the Option. ASM asserts that K-Sher
did not disclose information that it knew or should have known with regard to Sara IV's claim. In
addition, ASM alleges that K-Sher represented that the Prior Option agreement with Sara IV was
not valid and that K-Sher indicated that Sara IV had no claim to the property.
ASM does not allege that K-Sher made any such statement with intent to induce
action. In fact, at the time that the Option was executed, ASM received a copy of the [*8]Prior Option agreement with Sara IV as an exhibit to the Option.
Consequently, ASM could have performed its own investigation into the circumstances of the
Prior Option. See, Cohen v. Cerier, 243 AD2d 670 (2nd Dept. 1997). In addition, the
language of the contract between ASM and K-Sher not only clearly dictated that Sara IV may
make a claim regarding the Prior Option but also addressed the parties' rights and obligations in
the event of such contingency.
The existence of a merger clause precludes any claim of oral misrepresentations
made to induce the action of a party. See, Danann Realty Corp. v. Harris, 5 NY2d 317,
320-21 (1959) (holding a general merger clause will not preclude claims for fraud or mistake, but
a merger clause addressing specific representations will have preclusive effect). In the relevant
clause within the Option (¶ 7[k]), ASM explicitly acknowledged that K-Sher "made no
representations as to the legal status or current effectiveness of the prior option." The
documentary evidence clearly establishes that no misrepresentation was made. Therefore, the
cause of action for fraud should be dismissed.
E.Specific Performance (Third Cause of Action)
The most significant aspect of an option is that it grants the holder the power to
compel the owner of the property to sell whether the owner is willing to part with ownership or
not. Metropolitan Transportation Auth. v. Brucken Realty Corp., 67 NY2d 156, 163
(1956). It has been defined as an irrevocable contract given for consideration, unilateral in form
and nature, by which the owner of real property agrees that another shall have the right to buy the
property at a certain price and within a stipulated time. Rottkamp v. Eger, 74 Misc 2d
858, 862 (Sup. Ct. Suffolk Co. 1973).
However, in order to validly exercise an option to purchase, the optionee must
strictly adhere to the terms and conditions of the option agreement by notifying the grantor of the
option of its intent to exercise the option in the manner prescribed by the option. Raanan v.
Tom's Triangle, Inc., 303 AD2d 668, 669 (2nd Dept. 2003).
Specific performance is a discretionary remedy which is an alternative to the award
of damages as a means of enforcing a contract. See, Hadcock Motors, Inc. v. Metzger, 92
AD2d 1 (4th Dept. 1983). It is an equitable remedy, available in the court's discretion when the
remedy at law is inadequate and which requires that the litigant come into court with "clean
hands." See, McGlone v. McGlone,
17 AD3d 549(2nd Dept. 2005); and Pecorella v. Grater Buffalo Press, Inc., 107
AD2d 1064 (4th Dept. 1985).
Moreover, specific performance is not available where the option has not been
exercised according to its terms. See, Zafarani v. Gluck, 40 AD3d 1082 (2nd Dept. 2007) (denying
specific performance where plaintiff failed to establish that it had exercised an option according
to its terms). ASM's failure to establish that it complied with the terms of the Option militates
against this Court from awarding the equitable remedy of specific performance. See, Toobe v. Scarlato, 45 AD3d 759,
760 (2nd Dept. 2007) (dismissing cause of action for specific performance where plaintiff failed
to obtain a mortgage commitment as required by the option in question). See also, Bey v. Maratea, 5 AD3d 713 (2nd
Dept. 2004). Indeed, the failure of ASM to fully adhere to the payment terms required under the
Option bars its enforcement of the Option.
F.Breach of Contract (Fourth Cause of Action)
[*9]
The elements of a cause of action for breach of
contract are: (1) the existence of a contract between the plaintiff and defendant; (2)
consideration; (3) performance by the plaintiff; (4) breach by the defendant; and (5) damages
resulting from the breach. Furia v. Furia, 116 AD2d 694, 694-95 (2nd Dept. 1986).
It is a fundamental principle of contract interpretation that "when the parties set
down their agreement in a clear, complete document, their writing should be enforced according
to its terms." Henrich v. Phazar Antenna
Corp., 33 AD3d 864 (2nd Dept. 2006). The interpretation of an unambiguous contract
term or provision is a matter for the court, and circumstances extrinsic to the agreement will not
be considered when the parties' intent may be gleaned from the four corners of their agreement.
Innophos, Inc., v. Rhodia, S.A., supra; Greenfield v. Philles Records Inc.,
supra; Katina, Inc. v. Famiglietti, 306 AD2d 440 (2nd Dept. 2003); and
Tikotzky v. New York City Transit Auth., 286 AD2d 493 (2nd Dept. 2001).
ASM alleges that K-Sher breached the contract because K-Sher was unable to
deliver clear title to the property. ASM's cause of action for breach of contract must be
dismissed. Even when considering its allegations as being true, ASM's breach of the very
contract it seeks to enforce bars recovery. See, Jarecki v. Shung Moo Louie, 95 NY2d
665, 669 (2001) ("[P]laintiff cannot now seek recourse based on an agreement that no longer
exists"). See also, Merrill Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 185
(2nd Cir. 2007) ("Under New York law, a party's performance under a contract is excused where
the other party has substantially failed to perform its side of the bargain or, synonymously, where
that party has committed a material breach.")
ASM has clearly established the existence of a contract, with the requisite
consideration in the form of payments and waiver of rights. ASM has alleged that the initial
payment constituted performance. This Court disagrees. Based upon the full disclosure of the
Prior Option, ASM was obligated to fully pay the agree option price before its rights matured.
Paragraph 6(b) of the Option defines default with respect to K-Sher as follows, "the Prospective
Seller can fail to honor this Option, except as otherwise effected by, and provided herein, as to
the Prior Option, by refusing or failing to convey good title to the Property or the stock to, and as
elected by, the Prospective Buyer." ASM alleges that its failure to make the second payment was
based on its reliance on � 7(m) which provided for an extension of the time for the exercise of
theoption or a closing in the event of "an order of the court of competent jurisdiction." Paragraph
7(m) did not, however, modify or suspend payment of the full option price during the pendency
of the Prior Option litigation. Indeed, the Option contemplates the return of the full $500,000
option price in the event the Prior Option was validated.
In addition, in his affidavit submitted in opposition to K-Sher's motion, Mackey
alleges that K-Sher refused to accept tender of the second payment despite correspondence
indicating that payment would be forthcoming following the vacatur of the notice of pendency,
thus constituting a breach on K-Sher's behalf. Where an affidavit has been submitted regarding a
motion to dismiss, the court may consider allegations set forth in the affidavit to remedy any
deficiencies within the pleading. See Nonnan v. City of New York, supra (noting
affidavits "are generally intended to remedy pleading defects"); and Rovello v. Orofino
Realty Co., 40 NY2d 633, 635 (1976) ("[I]n instances in which a motion to dismiss is not
converted to a summary judgment [*10]motion, affidavits may be
received for a limited purpose only, serving normally to remedy defects in the complaint").
The papers submitted in support of ASM's motion demonstrate that it never tendered
the balance of the option price although it promised to do so and acknowledged such obligation
at various points. The documentary proof of ASM's ability to pay the balance is speculative, at
best.
ASM's correspondence indicating the availability of funds and that payment would
be forthcoming are insufficient to show that ASM was ready, willing and able topay the balance
of the option price. 145 East Merrick Road Corp. v. Sangco Realty Corp., 113 AD2d 746
(2nd Dept. 1985). See also, Chernow v.
Chernow, 39 AD3d 684 (2nd Dept. 2007). The June 12, 2006 and July 11, 2006 emails
from ASM's counsel are consistent with the understanding that the Sara IV notice of pendency
was contemplated in the Option, as was an order of a court of competent jurisdiction, sufficient
to toll the time of K-Sher's performance under the Option but not ASM's obligation to fund the
option price. A clear reading of the Option negates ASM's interpretation and argument. See,
Kaplan v. Lippman, 75 NY2d 320 (1990); and Kendall v. Kendall, 44 AD3d 827 (2nd Dept. 2007).
Accordingly, the fourth cause of action must be dismissed.
G.Dismissal of the Notice of Pendency
CPLR 6515 provides that:
The court, upon motion of any person aggrieved and upon such notice as it may
require, may direct any county clerk to cancel a notice of pendency, upon such terms as are just,
whether or not the judgment demanded would affect specific real property, if the moving party
shall give an undertaking in an amount to be fixed by the court, and if
1. the court finds that adequate relief can be secured to the plaintiff by the giving of
such an undertaking; or
2. in such action, the plaintiff fails to give an undertaking, in an amount to be fixed
by the court, that the plaintiff will indemnify the moving party for the damages that he or she
may incur if the notice is not cancelled.The vacating of a valid notice of pendency pursuant to
CPLR 6515 is discretionary. 5303 Realty Corp. v. O & Y Equity Corp., 64 NY2d 313
(1984). However, with all of ASM's causes of action being dismissed, the notice of pendency
must be vacated.
Accordingly, it is,
ORDERED,that Defendant K-Sher's motion to dismiss each of Plaintiff
ASM's causes of action is granted; and it is further,
ORDERED, that Defendant K-Sher's motion to vacate and discharge the
notice of pendency dated September 4, 2007 is granted; and it is further,
ORDERED, that the County Clerk of Nassau County is hereby directed,
upon service of a copy of this order, to vacate and discharge of record, the notice of pendency
filed on September 4, 2007 with regard to the property known as 14 Brooklyn Avenue, Valley
Stream, New York and recorded in Section 1, Lot 13-18, Block I.
This constitutes the decision and Order of this Court.
[*11]
Dated: Mineola,
NY_____________________________
September 18, 2008Hon. Leonard B. Austin, J.S.C.
Footnotes
Footnote 1: ASM contributed $2,500
towards K-Sher's defense costs in the Sara IV litigation.