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BUYERS OF THE HOME HEALTHCARE AGENCY SEEK SPECIFIC PERFORMANCE OF THE PURCHASE AGREEMENT; THE SPECIFIC PERFORMANCE PROVISIONS SURVIVE THE TERMINATION OF THE AGREEMENT; BUT THE BUYER’S MOTION FOR SUMMARY JUDGMENT SEEKING SPECIFIC PERFORMANCE SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT). ​

The First Department, reversing (modifying) Supreme Court, in a factually complex opinion by Justice Oing, determined (1) the specific performance provisions in the purchase agreement survived termination of the purchase agreement; and (2) the buyer’s summary judgment motion seeking specific performance should not have been granted. The facts of the case are far too detailed to summarize here.

This dispute arises out of a failed sale of a home healthcare agency. The seller accuses the buyer of repudiating the contract; the buyer charges that seller thwarted its efforts to close the deal because of seller’s remorse. At stake: who owns the business. If the seller prevails, it retains the termination fee; if the buyer prevails, the contractual remedy of specific performance compels the seller to close and sell the company to the buyer. …

The parties entered into the Membership Interest Purchase Agreement, dated September 25, 2019, wherein the seller agreed to sell its interest in Extended Nursing to the buyer for $49 million. The Purchase Agreement required the buyer to make an initial escrow deposit of $1.47 million, which amount would be retained as a termination fee by the seller in the event that the buyer did not close. One of the critical components of the purchase, for which the seller specifically negotiated, was that closing should occur at the earliest practicable time. … The outside date was March 25, 2021 — 18 months after the date the parties executed the Purchase Agreement. The seller claims that the outside date was an essential term … . … § 14.17 of the Purchase Agreement provides the buyer with the remedy of specific performance, which, under Purchase Agreement § 12.2(c), survives termination of the Purchase Agreement. Extended CHHA Acquisition, LLC v Mahoney, 2023 NY Slip Op 01762, First Dept 4-4-23

Practice Point: Here the specific performance provisions of the purchase agreement survived the termination of the agreement, but the buyers’ motion for summary judgment seeking specific performance should not have been granted.

 

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