Cancellation of home construction contract upheld (8109)

Was the cancellation of a contract defendants and plaintiffs entered to build a home in the Town of Chili valid≠ If not, should the defendant’s $2,500 deposit be returned≠
In Faber Construction Co., Inc. v. Niko and Liljana Cukalevska, Monroe County Supreme Court Justice Thomas A. Stander was asked to determine whether the purchasers’ cancellation of the “Custom Home Construction and Sales Contract” was valid and whether they are entitled to refund on their deposit.
On or around September 26, 1998 Faber Construction Co. and the Cukalevskas entered into a “Custom Home Construction and Sales Contract.” Faber was to build a residential home in the Kita Subdivision in Chili.
Paragraph 7(A) of the contract, entitled “contingencies” states, “Attorney Approval. This contract is subject to the written approval of the attorney for purchaser builder within five days from the date of acceptance (the ‘approval period’). If purchaser’s or builder’s attorney makes written objection to the contract within the approval period, and such objection is not cured by written approval of all of the parties within the approval period, then either the purchaser or builder may cancel this contract by written notice to the other and any deposit shall be returned to the purchaser. If purchaser’s or builder’s attorney fails to approve this contract within said 15 days as specified herein, then this contingency is hereby deemed to be waived and is hereby removed as a condition of this contract.”
In a letter dated October 1, 1998, the purchaser’s attorney, Joseph A. Taddeo Jr., made four objections to the contract. The letter stated that after reviewing the contract and consulting his clients he “advised” the following: “purchasers were under the impression that the total sales price included permit and municipal fees, so the purchasers refused to pay the charges in paragraphs two, five and six of the contract; purchasers refused to close as specified in the contract; purchasers refused to agree to paragraph 30 of the contract, relating to access to prospective clients or purchasers; and purchasers also raised issues with respect to paragraph 7(B) of the contract.”
The builder’s attorney responded to the letter on December 2, 1998 in which he indicated that the terms in the October letter, in addition to subsequent agreements signed by purchasers, were approved. In fact, the builder’s attorney stated that the parties now had a “firm contract.”
On January 26, 1999 the purchasers’ attorney sent written notification to the builder that the contract was disapproved. The plaintiff moved pursuant to CLPR 3212 for summary judgment against the defendants and asked the court to dismiss the defendants’ counterclaim pursuant to CPLR 3211. The defendants’ also moved for summary judgment on their counterclaim pursuant to CPLR and for a $2,5000, in addition to costs and disbursements.
The Ruling
“The Attorney Approval Contingency Clause at issue in this case provides for a five day attorney approval period from the date of acceptance,” Judge Stander wrote. “The process established by the construction and sale contract requires the objecting attorney to make written objection, allow the opposing party an opportunity to cure, and then, if no cure occurs within the stated period, written cancellation of the contract may follow.”
In the case at hand, the builder argues that the purchasers’ attorney’s letter is not a written object because it states: “after reviewing this matter with my clients I must advise the following …” Judge Stander disagreed and found that the letter sent does in fact constitute an attorney’s disapproval letter.
“Following purchasers’ attorney disapproval letter, builder had an opportunity to cure by obtaining written approval of all of the parties within the approval period,” Judge Stander wrote. “There is no allegation or proof submitted that the approval period was extended by the parties. In fact, there was never a cure at any time either during or after the approval period. As such, the builder’s letter from counsel dated December 2, 1998, responding to the October 1, 1998 letter, was untimely and ineffective to cure the objections raised by purchasers’ attorney disapproval letter. As a result, purchasers’ cancellation of the contract on January 26, 1999 was valid.
The builder also argues that the attorney was not done within the 15 days, thus removing the contingency from the contract.
Judge Stander went on to say, “Builder’s argument is not persuasive. The contingency does not lapse merely because a disapproval occurred within the approval period, as opposed to an approval. The fact that either disapproval or approval of the contract occurred within the approval period is sufficient.”
The judge denied the builder’s motions for summary judgment and to dismiss purchasers’ counterclaim pursuant to Sections 3212 and 3211 of the CPLR.
On a counterclaim the plaintiff asked for $2,500, the amount of their deposit. Judge Stander granted their motion for summary judgment awarding them $2,500, stating, “The attorney approval clause clearly indicates that in the event an objection is made, and the necessary approvals do not occur with the approval period, then either party may cancel the contract and ‘any deposit shall be returned to the purchaser.”
Judge Stander also granted the defendants’ cross motion to dismiss plaintiff’s complaint.