SONBYRNE SALES, INC. v. TOWN BOARD OF TOWN OF ONONDAGA ( 2012 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1007
CA 12-00354
PRESENT: SCUDDER, P.J., SMITH, CENTRA, LINDLEY, AND MARTOCHE, JJ.
IN THE MATTER OF SONBYRNE SALES, INC.,
PETITIONER-APPELLANT,
V MEMORANDUM AND ORDER
TOWN BOARD OF TOWN OF ONONDAGA AND THOMAS
ANDINO AS SUPERVISOR OF TOWN OF ONONDAGA,
RESPONDENTS-RESPONDENTS.
GOLDBERG SEGALLA LLP, SYRACUSE (KENNETH M. ALWEIS OF COUNSEL), FOR
PETITIONER-APPELLANT.
COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (NADINE C. BELL OF COUNSEL),
FOR RESPONDENTS-RESPONDENTS.
Appeal from a judgment (denominated order) of the Supreme Court,
Onondaga County (Deborah H. Karalunas, J.), entered November 10, 2011
in a proceeding pursuant to CPLR article 78. The judgment denied and
dismissed the petition.
It is hereby ORDERED that the judgment so appealed from is
unanimously reversed on the law without costs, the petition is granted
and the determination of respondent Town Board of Town of Onondaga to
rescind the Agreement for Mutual Conveyance is annulled.
Memorandum: Petitioner commenced this CPLR article 78 proceeding
seeking to annul the determination of respondent Town Board of Town of
Onondaga (Board) rescinding the Agreement for Mutual Conveyance
(Agreement) executed by petitioner’s President and respondent Thomas
Andino, as Supervisor of the Town of Onondaga. Petitioner further
seeks to compel the Town of Onondaga (Town) to comply with the terms
and conditions of the Agreement. We conclude that Supreme Court
should have granted the petition.
Pursuant to a resolution dated April 4, 2011 (Resolution), the
Board resolved, inter alia, to “discontinue and abandon” the southern
terminus of East Avenue in the Town and to convey to petitioner that
land “together with portions of Town-owned property” adjacent thereto
(collectively, the Premises). In exchange, petitioner would convey to
the Town an adjoining parcel of property on East Avenue. The Board
also resolved that the conveyances would be “in accordance with a
conditional contract to be entered into between [the Town and
petitioner] and dated April 4, 2011”; that Andino was “authorized to
sign the conditional contract . . . [and] . . . to sign any and all
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documents and take any necessary action to give full force and effect
to th[e] resolution”; and, finally, “that the abandonment of the
southern terminus of East Avenue and the sale of the Premises to
[petitioner] [were] subject to permissive referendum.”
Following the adoption of the Resolution, petitioner’s President
and Andino executed the Agreement, which contained four contingencies.
The first three contingencies related to petitioner’s obtaining the
zoning approvals, easements and utilities necessary for its proposed
development of the Premises. Petitioner agreed to use its “best
efforts” to satisfy those contingencies “in a timely fashion” but,
even “if any one or more of [the first three contingencies] [was] not
satisfied or waived by [petitioner], [petitioner] . . . nevertheless
ha[d] the option, for a period of two years from the date of th[e]
Agreement, to acquire title to the [Premises] under the remaining
terms and conditions of th[e] Agreement.” The fourth contingency
provided that the obligations of the parties to the Agreement were
contingent upon “[a]doption of a [r]esolution of the . . . Board . . .
consenting to this Agreement, such [r]esolution to be subject to a
permissive referendum pursuant to Town Law.”
On May 4, 2011, petitions were filed protesting the Resolution
and Agreement and seeking a permissive referendum. A Town Councilman
challenged those petitions. While that challenge was pending, Andino
moved at a Board meeting on June 20, 2011 for the Board to rescind the
Agreement. The Board passed that motion unanimously.
We agree with petitioner that its failure to present a proposal
for zoning approval within two months of the Agreement did not violate
the Agreement’s provision requiring petitioner to use its “best
efforts to satisfy [the first three contingencies] in a timely
fashion” and did not justify rescission of the Agreement. During the
two-month period between the execution of the Agreement and the
Board’s vote to rescind the Agreement, petitions for a permissive
referendum had been filed and were in the process of being challenged
by the Town. In our view, it was not unreasonable for petitioner to
wait for the merits of that challenge to be determined before
submitting formal applications related to its proposed development of
the Premises. In any event, the Agreement specifically provided that
petitioner could proceed with the property conveyances even if none of
the first three contingencies was satisfied. Thus, to the extent that
respondents relied on the first three contingencies in determining to
rescind the Agreement, that determination was arbitrary and capricious
(see generally Matter of Pell v Board of Educ. of Union Free School
Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34
NY2d 222, 231-232).
We further agree with petitioner that the fourth contingency in
the Agreement was fulfilled except to the extent that respondents
prevented it from being fulfilled when they rescinded the Agreement
before a permissive referendum could be held. As noted, that
contingency provided that the Agreement was contingent upon
“[a]doption of a [r]esolution of the . . . Board . . . consenting to
this Agreement, such [r]esolution to be subject to a permissive
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referendum pursuant to Town Law.” Respondents contend that the fourth
contingency requires the Board to “adopt a resolution wherein its
consent to the Agreement is subject to permissive referendum”
(emphasis in original). According to respondents, the Resolution
“does not, and cannot, satisfy the [fourth] contingency” because it
“unequivocally states that the only matter subject to permissive
referendum is the ‘abandonment of the southern terminus of East Avenue
and the sale of the Premises to [petitioner].’ ” In short,
respondents contend that the fourth contingency requires a permissive
referendum on the Board’s actual consent to the Agreement. In our
view, respondents’ interpretation of the fourth contingency is
illogical.
The Resolution is “a Resolution of the . . . Board . . .
consenting to th[e] Agreement,” and thus the first prong of the fourth
contingency was satisfied. Respondents correctly note that, while the
Resolution contains many “resolved and determined” paragraphs, the
only paragraph discussing a permissive referendum is the one stating
that “the abandonment of the southern terminus of East Avenue and the
sale of the Premises to [petitioner] [were] subject to permissive
referendum.” In our view, the fact that this one paragraph does not
specifically state that the Board’s “consent” to the Resolution would
be subject to a permissive referendum is not dispositive. The fourth
contingency required that the “[r]esolution [was] to be subject to a
permissive referendum pursuant to Town Law” (emphasis added). The
Town Law requires a permissive referendum for the conveyance of land
(see § 64 [2]). Inasmuch as the Town Law does not require a
permissive referendum for “consent” to a contract, the Agreement must
be construed as providing that the subject matter of the permissive
referendum would be the abandonment of the southern terminus of East
Avenue and the conveyance of the Premises, not the Board’s consent to
the actual contract. We thus conclude that the Resolution satisfied
the second prong of the fourth contingency.
Finally, contrary to the contention of respondents, the fact that
the resolution discussed in the contingency was adopted before the
Agreement was actually executed is of no moment. The Agreement
required the adoption of a resolution consenting to the Agreement, and
such a resolution was adopted. The permissive referendum never
occurred, however, because respondents rescinded the Agreement before
the referendum could occur. We thus agree with petitioner that
respondents impermissibly “ ‘frustrated or prevented the occurrence of
the condition’ ” (ADC Orange, Inc. v Coyote Acres, Inc., 7 NY3d 484,
490, quoting Kooleraire Serv. & Installation Corp. v Board of Educ. of
City of N.Y., 28 NY2d 101, 106).
Inasmuch as the Agreement was a valid and binding contract and
none of the contingencies was unfulfilled, we agree with petitioner
that respondents’ determination rescinding the Agreement was arbitrary
and capricious (see Village of Lake George v Town of Caldwell, 3 AD2d
550, 554-555, affd 5 NY2d 727; see generally Matter of 4M Holding Co.
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CA 12-00354
v Town Bd. of Town of Islip, 81 NY2d 1053, 1055; Pell, 34 NY2d at 231-
232).
Entered: September 28, 2012 Frances E. Cafarell
Clerk of the Court