Tuesday, October 28, 2008
An action brought against a law firm that had served as escrow agent of payments made for vacation property use was dismissed by the trial court, an action affirmed by the New York Appellate Division for the First Judicial Department. The firm had acted properly in disbursing funds held in escrow:
Contrary to plaintiffs' contentions, the "Punta Esmeralda" development agreement was an authorized purpose because it constituted a binding contract. It contained an exchange of promises and "all of the essential terms of the contract". Accordingly, the escrow agreement authorized those disbursements. Moreover, the escrow agent properly disbursed some escrowed funds before the parties had fully satisfied their obligations under the Punta Esmeralda agreement or other payment triggers had occurred, since the escrow agreement required that defendant disburse "the amount evidenced by such agreements" for "contractually committed expenditures."
Plaintiffs' contention that defendant improperly released the entire rent amounts for residences that the sponsors had leased in Punta Esmeralda and in the Time Warner Center in New York is equally unavailing, as the leases obligated the sponsors to pay the full amount due on them, even if installment payments were permissible.
The invoices for furnishings and related expenses constituted enforceable agreements between the sellers and the sponsors and accordingly constituted proper documentation for authorized expenditures under the escrow agreement. Although some of the invoices were unsigned, the sponsors' transfer instructions, which accompanied each and every invoice to defendant, provided sufficient evidence of the venture's intent to be bound by them. (citations omitted)