SMITH v. IRACE

Citation Codes

Equivalent Citations

citation codes

Docket Number

2005-03548.

Attorney(S)

Jaspan Schlesinger Hoffman, LLP, Garden City, N.Y. (Michael Permut and Linda S. Agnew of counsel), for appellants. Anthony P. Gallo, P.C., Commack, N.Y. (Anthony J. Gallo of counsel), for respondent.

Judges

Robert J. Miller
Mark C. Dillon

See more information ...

Smart Summary

Factual and Procedural Background

This case arises from a contract for the sale of real property. The defendants appealed from a Supreme Court order that granted the plaintiff's motion for summary judgment compelling specific performance of the contract and denied the defendants' cross motion for summary judgment dismissing the complaint. The contract provided that the purchaser's possession would begin immediately after the tenant vacated and the premises were broom cleaned. The tenant vacated in June 2003, and the plaintiff took possession and began paying utilities. In March 2004, the building was destroyed by fire. The plaintiff then sought specific performance of the contract with an abatement of the purchase price. The Supreme Court granted the plaintiff's motion and denied the defendants' cross motion. The defendants appealed.

Legal Issues Presented

Whether the plaintiff bore the risk of loss due to the destruction of the property by fire after taking possession under the contract.
Whether the plaintiff was entitled to specific performance of the contract with an abatement of the purchase price following the fire.
Whether the defendants' motion to dismiss the complaint should have been granted based on the risk of loss provisions.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Lucenti v Cayuga Apts., 48 NY2d 530, 536	Under General Obligations Law § 5-1311, the purchaser bears the risk of loss after legal title or possession transfers, and is not relieved of the obligation to pay the purchase price despite destruction of the property.	The court applied this principle to hold that since possession had passed to the plaintiff before the fire, the plaintiff bore the risk of loss and could not claim an abatement of the purchase price.
Kings Ridge Elec. Corp. v La Bella, 31 AD2d 821	Evidence of the purchaser's ability to exclude the public from the premises is relevant to the risk of loss analysis.	The court found no evidence that the plaintiff was unable to exclude the public, supporting the conclusion that risk of loss had passed to the plaintiff.

Court's Reasoning and Analysis

The court analyzed the contract terms and relevant statutory law, specifically General Obligations Law § 5-1311, which governs risk of loss in real estate transactions. The contract stipulated that possession would commence immediately after the tenant vacated and the premises were broom cleaned. The tenant vacated in June 2003, and the plaintiff took possession by receiving the key and paying utilities shortly thereafter. The fire occurred in March 2004, after possession had passed. Under the cited precedent in Lucenti v Cayuga Apts., the purchaser remains obligated to pay the purchase price even if the property is destroyed after possession or title transfer. Additionally, the court noted there was no evidence that the plaintiff was unable to exclude the public from the premises, further supporting the transfer of risk. Consequently, the plaintiff bore the risk of loss and was not entitled to an abatement of the purchase price. The court reversed the Supreme Court’s order, denied the plaintiff’s motion for summary judgment, granted the defendants’ cross motion, and dismissed the complaint.

Holding and Implications

The order of the Supreme Court is reversed, the plaintiff's motion for summary judgment is denied, the defendants' cross motion for summary judgment dismissing the complaint is granted, and the complaint is dismissed.

The direct effect of this decision is that the plaintiff, having taken possession prior to the fire, bears the risk of loss and cannot seek specific performance with an abatement of the purchase price. No new legal precedent was established; the court applied established statutory and case law principles to resolve the dispute.

Show full summary ...

SMITH HOLDINGS, LLC, Respondent, v. EUGENE L. IRACE et al., Appellants.

Ordered that the order is reversed, on the law, with costs, the motion is denied, the cross motion is granted, and the complaint is dismissed.

Under the terms of the parties' contract of sale the risk of loss in the event of a fire was governed by General Obligations Law § 5-1311. Pursuant to this provision, "when legal title or possession has been transferred to the purchaser he is not relieved by destruction of all or any part of the property from his obligation to pay the price" ( Lucenti v Cayuga Apts., 48 NY2d 530, 536). In the instant case, the parties' contract provided that "Purchaser's possession hereunder shall begin immediately after tenant vacates and premises are broom cleaned."

The tenant vacated the premises and the plaintiff received a key to the premises in June 2003. In July 2003 the plaintiff opened an electrical utilities account in the name of a professional corporation owned by the plaintiffs principal and started paying for utilities for the premises.

In March 2004 the building on the property was destroyed by fire. Thereafter, the plaintiff commenced the instant action, seeking specific performance of the contract with an abatement of the purchase price. After issue was joined, the plaintiff moved for summary judgment compelling specific performance of the contract of sale. The defendant cross-moved, inter alia, for summary judgment dismissing the complaint. The Supreme Court granted the motion and denied the cross motion. We reverse.

Since possession and the right to possession passed to the plaintiff before the fire, the plaintiff bore the risk of loss ( see Lucenti v Cayuga Apts., supra.) There was no evidence that the plaintiff was not able to exclude the public at large from the premises ( see Kings Ridge Elec. Corp. v La Bella, 31 AD2d 821). Therefore, the plaintiff must either cancel the contract or proceed with the contract without an abatement.