Sale of Beachfront Home After Sandy Meets Impossibility of Performance

Hurricane Sandy’s damage to a waterfront Long Island home made it impossible for a divorcing couple to sell the property at the previously agreed-upon listing price, a court attorney referee said.

Days after the storm hit, the husband said he wanted the Massapequa home sold “as is” and subsequently suggested a $500,000 listing, anticipating $250,000 in flood insurance proceeds.

Before Sandy, the home had been listed at more than $1 million, which was what the parties had agreed to in a stipulation. But as late as December 2013, the house listed for $899,000 before it was eventually sold for $500,000 in November 2014.

On May 3, Nassau County Supreme Court Referee Marie McCormack trimmed the ex-wife’s bid for reimbursement of expenses such as home repairs and refused to make the ex-husband pay for a public adjuster’s services and other costs.

In A.R. v. G.R., McCormack said the ex-wife “was not acting reasonably with regard to the listing price of the marital residence. The evidence demonstrates that, due to the plaintiff, it was listed for an unreasonable price for an unreasonable period of time.”

In all, McCormack said about $30,000 should be deducted from the ex-husband’s share of the approximately $315,000 still held in escrow from the house sale and instead credited towards his former wife.

The estimated $30,000 sum represents what McCormack thought the wife was owed for expenses including carrying charges, insurance payments and one-fourth of the $40,000 in repair costs.

Likewise, McCormack said more than $25,000 should be deducted from the wife’s share of the escrow funds and credited towards her former husband. That sum was for damages to the man’s personal property in the storm, as well as a legal fee award.

According to the ex-husband’s attorney, Keith Richman of Richman & Levine in Garden City, the ex-wife was seeking more than $100,000 in reimbursements.

The pair was married for 18 years before the wife filed for divorce in 2009. Months after commencing the action, the husband was ordered to leave the premises pursuant to a protection order. The wife had exclusive use and occupancy of the marital residence.

According to a stipulation signed Oct. 1, 2012-less than a month before Sandy-the home was to be listed at $1.39 million and gradually reduced, depending on how long it stayed up for sale.

An engineer’s report said when Sandy hit, a surge of water damaged the house, including its gas boiler, its hot water heater and its heating system.

Six days after the storm, the ex-husband, a transportation supervisor and mechanic, told the broker he wanted to sell the premises in whatever condition it was in. He argued he did not owe his ex-wife any money for carrying charges incurred after January 2013 because the premises should have been sold at the reduced price immediately after the storm.

The man invoked the impossibility of performance doctrine, which lets parties out of contract terms because of uncontrollable circumstances that make performance impossible.

The woman said the impossibility of performance doctrine did not apply because the risks from Sandy were foreseen and discussed in another stipulation clause. That clause said if a fire or “major destruction” took place before the closing of title, the sides agreed to use the insurance money for repairs, which were needed to entice prospective buyers.

The man pointed to another stipulation provision, which said the parties “shall cooperate with each other on a timely basis to use their best efforts to maximize the sales price.” The woman said her divorce had been bitter and cooperation was not possible, and said she had lowered the price in “reasonable intervals,” following the broker’s suggestions.

McCormack, after an eight-day hearing, said the impossibility of performance doctrine applied because Sandy “was an extraordinary weather event that could not have been foreseen and caused mass devastation to homes on Long Island, particularly waterfront homes.”

Even if the premises were fully repaired, McCormack said the home’s value had been “substantially reduced” by the storm. She said the man was only responsible for 25 percent of the repairs.

The man said he was not responsible for the public adjuster’s fee because he neither signed the agreement for the adjuster’s services nor was consulted on the hiring. McCormack said the man would not be credited for the money spent to hire the adjuster.

He contended his ex-wife’s lack of preparation for the storm meant he lost around $50,000 in personal property, including tools, equipment and items of sentimental value.

McCormack said it was “difficult to determine with exactitude what items could have been salvaged if precautions were taken, but the plaintiff has made this assessment even more difficult in that she did not permit the defendant to have access to the home immediately after Sandy so that he could assess the damage.”

The woman should “not benefit from her wrongful conduct,” McCormack said, as she made the woman responsible for a portion of the property’s value.

Richman, who represented the man in the divorce, said in an interview that it was “very refreshing for a court to go through in the detail that it did to get to the right decision.” He said he had not found other cases pertaining to post-Sandy real estate listings in matrimonial matters.

Joseph Brancato Jr. of Brancato Brancato & Brancato in Garden City represented the ex-wife solely in the post-judgement proceedings. He said no decision had been made yet on whether to appeal.

Source: New York Law Journal