PAUL A. GOETZ, J.
Before the court are plaintiff's motion for summary judgment pursuant to CPLR 3212 and defendant's cross motion to dismiss pursuant to CPLR 3211 (a) (1) and (7), or for summary judgment pursuant to CPLR 3212.
In this matter, plaintiff seeks the return of $10,000, the sum of two deposits of $5,000 each, made by plaintiff to defendant in connection with plaintiff's successful bids during two non-judicial auction sales by defendant of certain shares of 2075-2081 Wallace Avenue Owners Corp., specifically those shares appurtenant to units 172 (located at 2079 Wallace Ave.) and 567 (located at 2081 Wallace Ave., Bronx, New York) and the proprietary leases for those two units.
The facts are not in dispute. The notices of sale for each of the two non-judicial auctions include the terms of sale for those shares of the defendant cooperative corporation appurtenant to the apartment units 172 and 567. The terms of sale indicate that plaintiff was to purchase certain shares that defendant allocated to the particular apartment unit purchased and the proprietary leases to be issued appurtenant to such shares. On December 4, 2012, plaintiff executed memoranda of sale relating to both properties promising to comply with the terms of sale attached to the memoranda. The terms of sale for each unit indicate that the shares are being sold pursuant to the defendant's rights under the New York State Lien Law and the Uniform Commercial Code and that the successful bidder will be required, among other things, to deposit with the auctioneer $5,000 which shall be retained by the defendant as liquidated
Plaintiff's summons and complaint, as signed by plaintiff's counsel, provides the following statement of the nature and substance of the plaintiff's cause of action:
Defendant's answer denies the allegations in the complaint and includes a counterclaim against the plaintiff seeking an unspecified amount for "unnecessary legal fees as a result of Plaintiff's frivolous conduct, the exact amount of which is unknown and continuing to date." Defendant contends that plaintiff's filing of this suit against defendant amounts to frivolous conduct.
Plaintiff has not responded to defendant's counterclaim. Neither parties' submissions on the instant motions address defendant's counterclaim for unspecified legal fees.
Plaintiff's supporting attorney affirmation lists attached exhibits
Plaintiff's supporting affidavit contends that when he placed the successful bids, he understood the term "AS IS" to refer exclusively to the physical condition of the apartment units; that he "was not represented by an attorney"; that he "was not aware that [he] needed a UCC search or to request financials for the units"; that he retained counsel and that his counsel obtained "copies of those documents" (possibly a reference to financial documents relating to the defendant); that financial information provided by defendant about the defendant was two years old and showed that the property was insolvent; that a "UCC search indicated several liens on the title"; that "as a result of the two items, [Plaintiff] decided not to go forward with the purchase"; that "defendants refuse to cure the issues"; that defendant did not return plaintiff's down payments; that plaintiff was purchasing the property for investment purposes; and that "it would be impossible to sell those properties with the two encumbrances that existed." Essentially, plaintiff argues that he is entitled to summary judgment, pursuant to CPLR 3212, on the grounds that liens exist against the cooperative corporation that would prevent plaintiff from reselling the individual units.
Plaintiff's supporting memorandum of law and attorney affirmations contend, without citation to specific statute or case law, that it is well-settled that the term "as is," when used in the context of the sale of real property, refers to the physical condition of the premises, not the "insurability" or "marketability" of the title for that premises. Plaintiff also contends that it is evident that the property being sold was insolvent, that plaintiff was unaware of that fact when he bid on the properties and that, therefore, plaintiff is entitled to the return of his two $5,000 deposits paid in connection with his successful bids for the shares appurtenant to the two co-op properties.
Plaintiff's attorney affirmation in opposition and reply to defendant's cross motion attaches documents relating to a bankruptcy filing by defendant that was terminated in 2002 and offers the unsubstantiated and conclusory claim that defendant acted deceitfully and in bad faith.
The proponent of a motion for summary judgment bears the initial burden of coming forward with evidence showing prima facie entitlement to judgment as a matter of law, and, unless that burden is met, the opponent need not come forward with any evidence at all. (Penava Mech. Corp. v Afgo Mech. Servs., Inc., 71 A.D.3d 493, 495-496 [1st Dept 2010], citing Winegrad v New York Univ. Med. Ctr., 64 N.Y.2d 851, 853 [1985], and Zuckerman v City of New York, 49 N.Y.2d 557, 562 [1980].)
Once the movant establishes prima facie entitlement to judgment, the burden shifts to the opposing parties to "demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action" (Zuckerman at 560). While all "facts must be viewed `in the light most favorable to the non-moving party'" (Vega v Restani Constr. Corp., 18 N.Y.3d 499, 503 [2012], quoting Ortiz v Varsity Holdings, LLC, 18 N.Y.3d 335, 339 [2011]), mere conclusory allegations or defenses are insufficient to defeat summary judgment (see Zuckerman, 49 NY2d at 562).
Plaintiff's submissions fail to establish entitlement to summary judgment in this matter. Plaintiff's unsubstantiated and conclusory contention that the term "AS IS," as set forth in the terms of sale, refers exclusively to the physical condition of the apartment units 172 and 567, is insufficient to establish plaintiff's entitlement to summary judgment. (Id.)
This matter involves plaintiff's two successful bids to purchase shares in the defendant cooperative corporation and the proprietary leases appurtenant to apartment units 172 and 567, not, as plaintiff contends, the sale of real property. Plaintiff's argument relies on the incorrect premise that a
"Cooperative apartments are personal property, not real property." (LI Equity Network, LLC v Village in the Woods Owners Corp., 79 A.D.3d 26, 30 [2d Dept 2010] [citation omitted]; see also Silverman v Alcoa Plaza Assoc., 37 A.D.2d 166 [1st Dept 1971] [holding that cooperative shares of stock are "goods" within the meaning of article 2 of the UCC].) Therefore, "`[a] contract for the sale of a cooperative apartment, in reality a sale of securities in a cooperative corporation, is governed by the Uniform Commercial Code.'" (LI Equity Network, LLC v Village in the Woods Owners Corp., 79 AD3d at 30, quoting Friedman v Sommer, 63 N.Y.2d 788, 789 [1984]). Article 9 of the UCC governs secured transactions. UCC 9-610 provides for disposition of collateral after default, governs non-judicial foreclosure sales in New York and provides, in pertinent part,
Here, pursuant to UCC 9-610 (a), defendant, as the secured party to/in the shares assigned to apartment units 172 and 567 may dispose of the collateral (the shares and proprietary leases appurtenant to the two apartments) after default by the prior owner of the shares.
While UCC 9-610 (d) provides that a contract for sale of the cooperative shares includes warranties which, by operation of
Even if such a guarantee existed, and it does not, UCC 9-610 (e) provides that a secured party (here the defendant) may disclaim or modify such warranties. Defendant explicitly disclaimed any warranties relating to its obligations by stating in paragraph 15 of the terms of sale that "the cooperative ... makes no representation about either the title or any underlying mortgages on the premises or other obligations of the cooperative corporation except as may be expressly set forth herein." (Emphasis added.) No express representations were made by the defendant in the terms of sale. If any warranties relating to the financial stability of the defendant did exist, and again, they do not, the defendant effectively disclaimed them in accordance with UCC 9-610 (d) and (e). The plain language of the terms of sale for each transaction indicates that the shares are being transferred without any guarantee, warranty or representation, express or implied on the part of defendant. Nothing in the terms of sale accepted by plaintiff, as evidenced by his signature on both memoranda of sale, indicates that the sales are conditioned upon the financial status of the defendant or conditioned in any other way.
In general,
"Whether or not a writing is ambiguous is a question of law to be resolved by the courts." (Id.) The court determines, as a matter of law, that the terms of sale for both transactions clearly indicate that in the event of a default by plaintiff, the defendant shall retain the deposit as liquidated damages (terms of sale ¶ 12); that the shares are being transferred "AS IS" on a "quit-claim"
Moreover, plaintiff's complaint is with the liens or encumbrances on the defendant corporation, not liens or encumbrances on the individual apartments in the cooperative. Therefore, plaintiff's emphasis on the terms "AS IS" and "quit-claim" is misplaced because those terms relate to the shares and proprietary leases appurtenant to individual apartment units 172 and 567 and not the liens or encumbrances on the defendant corporation.
Because the cooperative shares are not realty, but goods, as defined under article 2 of the UCC, UCC 2-718 governs the measure of damages stemming from breach of a contract for the sale of a cooperative apartment. (Shulkin v Dealy, 132 Misc.2d 371, 374 [Sup Ct, NY County 1986]). UCC 2-718 (1) provides "[d]amages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach ... A term fixing unreasonably large liquidated damages is void as a penalty." Thus, UCC 2-718 permits liquidated
Accordingly, because plaintiff has failed to make a prima facie showing of entitlement to summary judgment, plaintiff's motion for summary judgment is denied in its entirety.
The court finds that defendant, based upon the terms of sale executed by the plaintiff in both transactions, has established entitlement to summary judgment. There is no dispute that plaintiff did not timely close on the cooperative apartments. Plaintiff's failure to close on the cooperative apartments constituted a material breach of the terms of sale and, as shown above, defendant is entitled to retain plaintiff's two deposits of $5,000 each as liquidated damages, pursuant to the terms of sale.
The terms of sale do not require defendant to provide plaintiff with any information concerning the financial status of the defendant prior to closing. Moreover, nothing in the pleadings, plaintiff's affidavit, or the conclusory affirmations of plaintiff's counsel demonstrates the existence of a factual issue in dispute.
Accordingly, defendant's cross motion for summary judgment is granted and summary judgment is awarded to defendant and the matter is dismissed with prejudice.
Defendant's cross motion to dismiss is denied as moot.
Neither party's submissions address the counterclaim for legal fees. 22 NYCRR 130-1.1 provides that the court, in its discretion, may award to any party or attorney in any civil action costs and reasonable attorney's fees resulting from frivolous conduct. Conduct is frivolous if it is completely without merit in law; it is undertaken primarily to delay or prolong the resolution of litigation, or to harass or maliciously injure another; or it asserts material misstatements of facts.
The court declines to find that plaintiff's complaint is completely without merit in law. Defendant's submission makes no showing of entitlement to attorney's fees in this matter
Accordingly, to the extent that defendant's cross motion for summary judgment might be construed to include the counterclaim for the unspecified amount of attorney's fees, that part of the motion is denied and the counterclaim is dismissed.
