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Stiefvater Real Estate Inc. v. Hinsdale

decided: February 27, 1987.

STIEFVATER REAL ESTATE, INC., PLAINTIFF-APPELLANT,
v.
JAMES G. HINSDALE AND ELIZABETH M. HINSDALE, DEFENDANTS-APPELLEES



Appeal from a judgment of the United States District Court for the Southern District of New York (MacMahon, J.) granting summary judgment for defendants in action to recover real estate brokerage commission. Reversed and remanded.

Author: Pratt

Before: KAUFMAN, NEWMAN, and PRATT, Circuit Judges.

PRATT, Circuit Judge :

This action by plaintiff Stiefvater Real Estate, Inc. ("Steifvater"), to recover a $15,900 brokerage commission fee for having produced a purchaser for the house of defendants James G. and Elizabeth M. Hinsdale ("Hinsdale"), was commenced in New York state and removed by Hinsdale on the basis of diversity of citizenship to the United States District Court for the Southern District of New York. The district judge, Hon. Lloyd F. MacMahon, treating Hinsdale's motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) as one for summary judgment under Fed. R. Civ. P. 56, not only granted the motion but, having found Stiefvater's claim to be "frivolous", granted Hinsdale's request for attorneys' fees under Fed. R. Civ. P. 11.

A review of the record on appeal demonstrates that the district court misperceived this case as turning upon whether the contract between Hinsdale, as seller, and the purchaser procured by Steifvater had been lawfully cancelled by Hinsdale. Under that misperception the district court concluded that because Hinsdale rightfully cancelled the contract of sale, Stiefvater was not entitled to collect its commission. The critical issue under New York law, however, is whether Stiefvater produced a purchaser ready, willing, and able to buy on terms agreeable to Hinsdale.

There is no issue as to the purchaser's readiness and willingness to buy; whether the purchaser was financially able to consummate the transaction is in sharp controversy and presents a genuine issue of material fact properly to be determined at trial. Accordingly, we reverse and remand for further proceedings.

BACKGROUND

Stiefvater entered into an exclusive brokerage agreement with Hinsdale on June 20, 1985, regarding Hinsdale's house in Pelham Manor, New York. The agreement provided for a commission of 6% of the selling price, but was silent on precisely how and when that commission would be deemed earned.

On June 26, Hinsdale entered into a contract of sale with Craig and Susan Devonshire, prospective purchasers produced by Steifvater. The contract established a selling price of $265,000 and a closing date of July 15, 1985. In addition, it contained a standard mortgage commitment clause, which provided that if purchaser could not obtain a written mortgage commitment by July 8, either party could cancel the contract. It is undisputed that the Devonshires did not obtain a written commitment by that date; however, the parties' interpretations of subsequent conversations between James Hinsdale and Craig Devonshire are directly at odds.

Stiefvater, in opposing Hinsdale's motion to dismiss, submitted an affidavit by Devonshire in which he states that during telephone conversations on July 9 and 10 Hinsdale expressly agreed not to exercise the right to cancel the contract of sale if a closing could be scheduled for July 11 at the latest. After confirming that funds would be available from his lender on that date, Devonshire telephoned his attorney, who conferred with Hinsdale's attorney and scheduled the closing for the afternoon of July 11.

The Devonshires drove up from their Washington, D.C., residence to attend the closing, but upon arrival at their lender's offices were informed that Hinsdale had cancelled the contract and was refusing to consummate the transaction. The Devonshires' lender states in its affidavit that it was fully prepared to fund the mortgage loan as of midday on July 11, and would have closed that loan but for Hinsdale's absence from the scheduled closing.

By contrast, Hinsdale in his reply affidavit below asserts that he explained to Devonshire during their July 9 telephone conversation that he had another offer in hand, that their contract of sale was officially cancelled, and that the cancellation had been put in writing in accordance with the contract. Moreover, when Devonshire proposed a closing date earlier than that prescribed in the contract, Hinsdale responded by saying Devonshire was attempting to act "out of contract". In fact, Hinsdale subsequently sold his house to a party who was an "excepted buyer" under the brokerage agreement with Stiefvater; Hinsdale, therefore, was not required to pay a commission with respect to that buyer.

The written cancellation referred to in Hinsdale's affidavit is a letter by his attorney to the Devonshires dated July 8, 1985. Although Hinsdale expressly states that the letter was sent on July 8, his attorney, in an affidavit submitted in support of a motion to stay discovery, states that the "defendants exercised their right under the contract of sale to rescind the agreement * * * by certified mail on July 11, 1985." The affidavit also describes July 11 as "the every same day that defendants rescinded the contract".

In its memorandum and order dated March 27, 1986, the district court mischaracterized the July 8 mortgage commitment date as "the agreed upon closing date." Furthermore, the district court stated that Stiefvater did not deny that Hinsdale had cancelled the contract of sale in writing on July 8, 1985. "Rather plaintiff ignores the written cancellation and instead contends that time for performance -- the closing date -- was orally extended by defendants' attorney until July 11, 1985." The court concludes that "the entire contract of sale was cancelled by defendants in writing on July 8, 1985, pursuant to the terms of the contract itself", and that "plaintiff has failed to offer my evidence, other than conclusory hearsay, that the buyers were ever ready, willing and able to perform under the contract of sale." In addition, the ...


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