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Metropolitan Lofts of NY, LLC v. Metroeb Realty 1, LLC

Supreme Court of New York, Second Department

April 4, 2018

Metropolitan Lofts of NY, LLC, appellant,
v.
Metroeb Realty 1, LLC, et al., respondents. Index No. 503441/12

         D54992 C/hu

          Argued -December 1, 2017

          Kaplan Kravet & Vogel, P.C. (Mischel & Horn, P.C., New York, NY [Scott T. Horn], of counsel), for appellant.

          Cohen Tauber Spievack & Wagner, P.C., New York, NY (Kenneth J. Rubinstein of counsel), for respondent Metroeb Realty 1, LLC.

          Lupkin & Associates PLLC, New York, NY (Jonathan D. Lupkin of counsel), for respondent RedSky Capital, LLC.

          WILLIAM F. MASTRO, J.P. RUTH C. BALKIN FRANCESCA E. CONNOLLY LINDA CHRISTOPHER, JJ.

          DECISION & ORDER

         In an action to recover damages for breach of contract, for specific performance of a contract for the sale of real property, and for declaratory relief, the plaintiff appeals, as limited by its brief, from so much of a judgment of the Supreme Court, Kings County (Lawrence Knipel, J.), dated June 6, 2014, as, upon a decision of the same court (Ann T. Pfau, J.), dated May 6, 2014, made after a nonjury trial, dismissed the complaint and declared that a contract executed on May 4, 2012, between the plaintiff and the defendant Metroeb Realty 1, LLC, for the sale of the subject real property is not valid and enforceable.

         ORDERED that the judgment is reversed insofar as appealed from, on the law, on the facts, and in the exercise of discretion, with one bill of costs, the complaint is reinstated, and the matter is remitted to the Supreme Court, Kings County, for further proceedings to determine what remedy is available to the plaintiff, and thereafter, for the entry of an amended judgment, inter alia, declaring that the contract executed on May 4, 2012, between the plaintiff and the defendant Metroeb Realty 1, LLC, for the sale of the subject real property is valid and enforceable.

          On October 22, 2012, the plaintiff commenced this action against the defendant Metroeb Realty 1, LLC (hereinafter Metroeb). The plaintiff sought to recover damages for breach of contract, specific performance of a contract for the sale of real property, and declaratory relief. The plaintiff alleged that on May 4, 2012, the parties entered into a contract in which Metroeb agreed to sell the subject property to the plaintiff for the sum of $30 million, but that Metroeb thereafter entered into a contract to sell the property to a different purchaser. Metroeb counterclaimed for a declaration that the purported contract was not valid and enforceable. RedSky Capital, LLC (hereinafter RedSky), which entered into the subsequent contract to purchase the property, intervened in the action as a defendant, asserting, inter alia, a counterclaim against the plaintiff for a declaration that the plaintiffs purported contract with Metroeb is not valid and enforceable. The action proceeded to a nonjury trial.

         The evidence at trial established that on May 3, 2012, following various negotiations regarding the sale of the property, Sam Sprei, acting as agent of the plaintiff, presented a contract of sale for the purchase of the property to Metroeb's principal, Aaron Berger. The contract bore the indicia of a formal contract for the sale of real property in that it was, inter alia, 22 pages long and annexed numerous schedules, including the metes and bounds description for the property, an agreement for the assignment of leases and security deposits for existing tenants, and a survey of the property. Additionally, the contract was signed by the plaintiffs principal, Isaac Jacobowitz, on behalf of the plaintiff. Sprei also gave Berger two down payment checks from the plaintiff totaling $3 million, the required down payment under the terms of the contract. Berger retained the checks, but never presented them for payment. On May 4, 2012, Sprei and Berger met at Berger's office and negotiated and made numerous handwritten changes to the contract. Each change was initialed by Berger and Sprei. Further, each page of the contract was initialed at the bottom by Berger and Sprei, and Berger signed the contract on the signature line as president of Metroeb.

         The contract provided that the closing would take place on July 9, 2013, with time being of the essence. Berger testified that it was his understanding that the contract would be sent to an attorney to be put in ''proper form, '' and then signed. On May 7, 2012, a copy of a $3 million certified check intended to replace the two prior checks was emailed to Berger. However, this check was never delivered to Berger and was later redeposited by Jacobowitz into his account. After the signing of the contract, Jacobowitz and Berger continued to negotiate aspects of the sale, but the parties never agreed to the changes or signed a new contract.

         On May 8, 2012, four days after signing the contract to sell the property to the plaintiff, Berger received an offer from RedSky to purchase the property for $32 million. On July 20, 2012, Metroeb and RedSky entered into a contract of sale for the property with a purchase price of $32.5 million. Notably, after the contract with RedSky was signed, Berger continued to negotiate and meet with Jacobowitz, to whom he sent copies of leases and plans for the building on May 17, 2012. During this period of time, the plaintiff arranged for $20 million in financing through a lender. Jacobowitz testified that the balance of the purchase price would be funded through the plaintiffs cash holdings.

         On August 20, 2012, Berger tendered to the plaintiff a proposed agreement for the "Termination of Contract of Sale, " dated July 26, 2012, which the plaintiff did not sign. On August 20, 2012, Berger contacted Chase Bank and was informed that the plaintiff s down payment checks were "not good at present.'' By letter dated August 21, 2012, Metroeb informed the plaintiff that it was cancelling the contract because the account on which the checks were drawn did not contain sufficient funds. Jacobowitz testified that the funds had been moved from that checking account to an interest-bearing account, and that sufficient funds would be transferred to the account to cover the checks when they were presented for payment. Jacobowitz testified that as of "the intended closing date under the contract, ' the plaintiff had the funds to close and was ready, willing, and able to perform.

         In a decision after trial dated May 6, 2014, the Supreme Court determined that the plaintiff and Metroeb had not come to a meeting of the minds on May 4, 2012, which the court found was evidenced by Berger and Jacobowitz's continuing negotiations after that date. Accordingly, by judgment dated June 6, 2014, the Supreme Court, inter alia, dismissed the complaint and declared that the May 4, 2012, contract between the plaintiff and Metroeb was not valid and enforceable. Further, the judgment directed that Metroeb shall convey the ...


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