The following e-filed papers read herein: NYSCEF Doc. Nos.

In this action arising from the parties' alleged mutual breaches of an assignment agreement for the successful auction bid to purchase a previously-foreclosed-upon property in Kings County, plaintiff moves for summary judgment pursuant to CPLR 3212: 1) cancelling and rescinding the Assignment Agreement at issue; and 2) directing defendants to return plaintiff's down payment, which was paid to defendants upon execution of said agreement, in consideration for the assignment of the successful auction bid.

In November 2017, pursuant to a separate foreclosure action in Kings County Supreme Court, Index No. 23602/2008 ("Foreclosure Action"), an auction occurred for the property located at 9 Holmes Lane, Brooklyn, NY 11236, Block 8241, Lot: 153 ("Subject Property"). The defendant in the action before this court, Nison Badalov ("Badalov"), successfully bid on the Subject Property on behalf of 9 Holmes DBNB 2018 LLC ("LLC"), another defendant in this action, with the final bid totaling $475,000. Id. As consideration for the bid, our defendants [*2]deposited $47,500 into an escrow account controlled by the court-appointed referee for the Subject Property, Helene Blank, Esq. Id.

Later, Badalov and the LLC assigned their successful bid for the Subject Property to the plaintiff in this action, East Sunrise Management Inc. ("East Sunrise"), for $105,000 ("Assignment Agreement"), and plaintiff simultaneously deposited a down payment of $47,500 with co-defendant Balisok & Kaufman PLLC ("Balisok"), serving as escrow agent. The Assignment Agreement was premised on the successful bid in the Foreclosure Action, and it stipulated that "[East Sunrise] is fully responsible to the terms of sale index no: 23602/2008 and [Badalov] is fully responsible for assigning the bid and the LLC to [East Sunrise] legally at closing." Id. The Agreement also contained a proviso stipulating that, "[i]n the event that [the] transaction is cancelled due to no fault of the purchaser, the seller shall return the down-payment in full." Id.

Over the following year and a half, the parties in the Foreclosure Action discovered an issue with the legal description on the deed of the Subject Property, which clouded its title. Though the plaintiff in the Foreclosure Action later successfully moved for an order amending the Subject Property's legal description in April 2019, "[d]ue to the time and expense involved in resolving the legal description," the parties in the Foreclosure Action were unable to come to mutually agreeable terms regarding the closing. Based on these facts, the Foreclosure Action plaintiff successfully moved for an Order, entered October 28, 2019 ("October 28 Order"), vacating the entire foreclosure auction and sale a year and a half after it was effectuated, and ordering the Foreclosure Action referee to return to our defendants their $47,500 deposit.

Throughout the litigation and negotiation of those issues in the Foreclosure Action, the parties in this action continued to negotiate a potential closing date for the Subject Property. These conversations stalled, seemingly due to factors unrelated to the title-clouding deed issues in the Foreclosure Action, but neither side declared the deal dead until the October 28 Order was entered in the Foreclosure Action, vacating the November 2017 auction. As a result, plaintiff in this action, East Sunrise, requested that defendants return its $47,500 deposit, on the basis that the deal could no longer move forward because the Assignment Agreement had assigned a bid in an auction that had been vacated, and therefore no longer had legal effect on the Subject Property itself. The defendants refused to return the deposit, arguing to East Sunrise that they had negotiated a potential side deal with the plaintiff in the Foreclosure Action to sell the Subject Property, regardless of the failure of the previous auction. Defendants argued to plaintiff that they would still be able to successfully purchase the Subject Property, and that the Assignment Agreement still required East Sunrise to complete its original obligation to then purchase it from defendants, even though the auction had been vitiated.

Plaintiff then brought this action, seeking return of its down payment, and following discovery, moved for summary judgment seeking the return of its down payment from defendants. Defendants opposed, arguing that East Sunrise had anticipatorily breached or repudiated the contract even before the October 28 Order was entered because they refused to close, and that defendants were keeping plaintiff's $47,500 as liquidated damages, because defendants allegedly would have made even more money on the subject transaction had plaintiff not repudiated the Agreement.

The proponent of a summary judgment motion "must make a prima facie showing of [*3]entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact." Trustees of Columbia Univ. in the City of NY v. D'Agostino Supermarkets, Inc., 36 NY3d 69, 73-74 (2020); Pullman v. Silverman, 28 NY3d 1060, 1062 (2016); Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). Failure to make such a prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Pullman, supra, 28 NY3d at 1062; Midwood Lumber & Millwork, Inc. v. NY Constr. & Renovation Inc. 2023 NY Misc. LEXIS 49962 at 4 (Sup. Ct, Kings Co. 2023). If the moving party proffers the required evidence, the burden shifts to the nonmoving party "to establish the existence of material issues of fact which require a trial of the action." Trustees of Columbia Univ., supra, 36 NY3d at 74.

It is the primary rule of construction of contracts that the "intent of the parties must be found within the four corners of the contract, giving a practical interpretation to the language employed and the parties' reasonable expectations." Geothermal Energy Corp. v. Caithness Corp., 34 AD3d 420, 424 (2d Dept. 2006). "Where possible, a contract should be interpreted to avoid inconsistencies and to give meaning to all of its provisions." Zullo v. Varley, 57 AD3d 536, 537 (2d Dept. 2008).

"[W]hen parties set down their [contract] in a clear, complete document, their writing should . . . be enforced according to its terms." Consedine v. Portville Cent. Sch. Dist., 12 NY3d 286, 293 (2009). The Court of Appeals "has recognized this rule's special import in the context of real property transactions, where commercial certainty is a paramount concern, and where . . . the instrument was negotiated between sophisticated, counseled business people negotiating at arm's length." Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, 475 (2004) (internal quotations omitted). In such circumstances, "courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include." Id. "[C]ourts 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." Id.

As a matter of basic contract interpretation, plaintiff's summary judgment motion must be granted, because it correctly interpreted the one-page Assignment Agreement at issue. Plaintiff has shown entitlement to summary judgment for the return of its down payment, because: (1) the Assignment Agreement in evidence was plainly tied to, and conditioned upon, the enforceability of the auction bid in the underlying Foreclosure Action; (2) the auction bid was vacated and made a nullity through no fault of plaintiff; and (3) the Assignment Agreement specifically directed the return of plaintiff's down payment in exactly this situation. In response, defendants failed to raise a triable issue of fact, and they failed to show their own entitlement to retention of the down payment as a form of liquidated damages.

In its preamble, the Assignment Agreement between defendant Badalov and plaintiff East Sunrise states plainly that it was made "for the assignments of bid for 9 Holmes Ln, Brooklyn, New York 11236." (Emphasis added). In the only "WHEREAS" paragraph laying out the condition giving rise to the Agreement, it states "[Badalov] is the successful bidder of the [S]ubject [P]roperty." (Emphasis added).

As to the specific obligations of the parties, the Agreement stipulates that "[Badalov] [*4]shall lawfully assign the LLC and the bid of the Subject Property which [Badalov] acquired for $475,000.00 to [East Sunrise] for $105,000 above the successful bid." Id. (Emphasis added). The Agreement also states that "[East Sunrise] is fully responsible to the terms of sale index no: 23602/2008," which undoubtedly refers to the Terms of Sale used as an advertisement for the original 2017 auction in the Foreclosure Action. (Emphasis added).

Finally, the Agreement cautions that "[n]o waiver of any provisions of this agreement shall be valid unless in [w]riting," and then includes an unequivocal integration clause, stating "[t]his agreement constitutes the entire Agreement and understanding between the parties [i]n relation to the [S]ubject [P]roperty and there are no promises, representation[s], conditions, provisions or terms related thereto other than those set forth in this Agreement."

The Assignment Agreement is crystal clear that the item of value assigned by Badalov to East Sunrise was its "successful bid" on the Subject Property. While Badalov also assigned the LLC, the LLC was valuable only to the extent it legally possessed, on paper, the successful bid. The item East Sunrise covenanted to pay $105,000 for (part of which was then actually given as the subject down payment), was the "successful bid."

The "transaction" referenced in Paragraph 2 of the Assignment Agreement was the transfer of the "successful bid." When the Foreclosure Court vacated the auction, it retroactively declared the "successful" bid to be an unsuccessful nullity. As a result, defendants had nothing of value to assign to East Sunrise, and the transaction was cancelled. The court views this situation as essentially the same set of circumstances the parties anticipated when they addressed the possibility of the transaction being "cancelled due to no fault of the purchaser" in the clear language of the Agreement.

In opposition, defendants argue that plaintiff had already anticipatorily breached or repudiated the Assignment Agreement by the time the court in the Foreclosure Action vacated the auction and defendants' winning bid. Defendants base this argument on numerous text and email conversations between counsel for the parties from August to November 2019, when the parties in this action were struggling to schedule and finalize terms of closing for the Subject Property. They argue that plaintiff was stalling in that negotiation, breaching the vague time-is-of-the-essence language in the Assignment Agreement, and changing their negotiating positions with respect to the closing.

Defendants allege that plaintiff most likely had buyer's remorse, and that plaintiff was now attempting to raise artificial impediments and barriers to the actual closing as a fig leaf excuse to relieve them of their obligation to follow through on the remainder of the Assignment Agreement. While that may or may not be true, the plain fact is that the parties' closing would have been cancelled regardless of plaintiff's actions after August 2019 because the Foreclosure Action court soon thereafter vacated the auction bid, rendering the transaction in the Assignment Agreement without effect. In fact, the Foreclosure Action plaintiff had already moved to vacate the auction in July of 2019, which clearly, and reasonably, impacted East Sunrise's willingness to consummate a closing it had clear notice was likely to be rendered impossible.

Defendants additionally argue that, even after the auction was vacated, "Defendant and the foreclosing bank continued to negotiate and the foreclosing bank made it clear that it was still willing to close with Defendant which meant that Defendant could still close with Plaintiff." [*5]Defendants' Improper Sur Reply, at 16. But this argument misses the crucial fact that such a transaction would not have been governed by the Assignment Agreement. Regardless of whether defendants could have still negotiated a separate deal with the foreclosing bank in the Foreclosure Action, the terms of the Assignment Agreement make clear that the only transaction contemplated by it was the assignment of Badalov's successful bid in the auction.

In arguing that plaintiff was still obligated to negotiate a separate sale of the property with defendants and the foreclosing bank outside of the nullified auction bid assignment, defendants ask the court to write into the Assignment Agreement terms and understandings which were not contemplated by plaintiff at the time of the Agreement's execution. The Agreement is very short and highly specific about the nature of the transaction. The court cannot, on its own, rewrite the terms of the Assignment Agreement to make it an all-purpose, omnibus contract governing any possible future sale and negotiation of the Subject Property. The court is unable to force plaintiff to abide by terms of a contract that it did not sign, especially in the presence of the Assignment Agreement's integration clause.

Plaintiff has shown, as a matter of law, that they are entitled to the return of their down payment, and that defendants have, at least in some part, breached the Assignment Agreement by refusing to do so. For their part, defendants have failed to raise a triable issue of fact as to the meaning of the clear terms of the Assignment Agreement, the unequivocal effect of the October 28 Order, and plaintiff's alleged obligation to purchase the Subject Property following the nullification of the transaction at the heart of the Assignment Agreement.

Therefore, plaintiff's motion for summary judgment (Mot. Seq. 3) is GRANTED in its entirety.