You are here: / Contract Law
,

​THE BUYER WAS NOTIFED TIME WAS OF THE ESSENCE IN THIS REAL ESTATE DEAL AND WAS GIVEN A REASONABLE TIME IN WHICH TO CLOSE; THEREFORE THE BUYER WAS NOT ENTITLED TO SPECIFIC PERFORMANCE AND THE SELLERS WERE ENTITLED TO THE DOWN PAYMENT AS LIQUIDATED DAMAGES (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the buyer in this real-estate deal could not demand specific performance because he was notified time was of the essence and was provided with a reasonable time within which to close. The sellers were entitled to keep the down payment as liquidated damages:

… [T]he buyer does not have a cause of action for specific performance. Although time was not made of the essence in the contract, the defendants subsequently provided valid notice that time was of the essence insofar as the notice: (1) gave clear, distinct, and unequivocal notice that time was of the essence, (2) gave the buyer a reasonable time in which to act, and (3) informed the buyer that if he did not perform by the designated date, he would be considered in default … . “What constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case” … . Although the determination of reasonableness is usually a question of fact, it may become a question of law where, as here, there is no dispute as to the facts … . Contrary to the buyer’s contention, he had a reasonable amount of time to perform, where, among other things, he had approximately 62 days to close from the initial closing date. Because he failed to close after the notice to cure was sent, the defendants were entitled, pursuant to the contract, to terminate the contract and retain the down payment as liquidated damages … . Further, the parties’ submissions clearly demonstrate that the buyer did not substantially perform his contractual obligations, and was not ready, willing, and able to perform his remaining obligations. His allegations that he remained ready, willing, and able to close and had fulfilled all of his obligations under the contract are bare legal conclusions, which are not presumed to be true … . Herman v 818 Woodward, LLC, 2023 NY Slip Op 03912, Second Dept 7-26-23

Practice Point: Here the buyer in this real estate deal was notified that time was of the essence and was given a reasonable time during which to close. The buyer, therefore, was not entitled to specific performance and the sellers were entitled to the down payment as liquidated damages.

 

, , ,

A JUDICIAL FORECLOSURE SALE SHOULD BE SET ASIDE IF THERE IS DOUBT ABOUT THE TITLE (HERE SUSPICION A DEED WAS FORGED); CAVEAT EMPTOR (BUYER BEWARE) IS NOT STRICTLY APPLIED TO A JUDICIAL SALE AT AUCTION (SECOND DEPT). ​

The Second Department, reversing Supreme Court and setting aside the judicial foreclosure sale, determined the possibility a deed was forged cast suspicion on the fairness of the sale. The court noted that caveat emptor (buyer beware) is not strictly applied to a judicial sale:

“‘[A] purchaser at a judicial sale should not be compelled by the courts to accept a doubtful title,’ and, ‘if it was bad or doubtful, he [or she] should, on his [or her] application, be relieved from completing the purchase'” … .

Moreover, “[t]he rule that a buyer must protect himself [or herself] against undisclosed defects does not apply in all strictness to a purchaser at a judicial sale” … . “[A] sale of land in the haste and confusion of an auction room is not governed by the strict rules applicable to formal contracts made with deliberation after ample opportunity to investigate and inquire” … .Golden Bridge, LLC v Rutland Dev. Group, Inc., 2023 NY Slip Op 03854, Second Dept 7-19-23

Practice Point: Here the purchase of property at a foreclosure judicial sale was set aside because of suspicion a deed was forged. The doctrine of caveat emptor (buyer beware) is not strictly applied to a judicial sale.

 

, , , ,

PLAINTIFF, WORKING FOR A SUBSIDIARY OF VERIZON, WAS INJURED LAYING A CABLE UNDER A CITY STREET; THE MAJORITY HELD THERE WERE QUESTIONS OF FACT WHETHER A FRANCHISE AGREEMENT BETWEEN THE CITY AND VERIZON AND/OR THE ISSUANCE OF A CITY PERMIT RENDERED THE CITY A PROPER DEFENDANT; A TWO-JUSTICE DISSENT DISAGREED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Mendez, over a two-justice dissent, determined the City was not entitled to summary judgment in this Labor Law case. Plaintiff was working for a subsidiary of Verizon (Empire City) laying a conduit in a trench in the street when a backhoe pushed a metal plate onto his foot. The City argued it was not an owner under the Labor Law, had no notice of the alleged dangerous condition, and there was no nexus between the City and and the work performed by Verizon. The majority held there were questions of fact about the existence of a franchise agreement between the City and Verizon, and whether a permit for the work had been issued by the City. Although the “lack of a nexus” argument was raised for the first time in reply, the majority held the issue raised a question of law and was properly considered by the motion court:

The witness’s lack of knowledge renders his testimony inconclusive and speculative as to whether Empire City was working without a permit on the day plaintiff was injured, warranting denial of summary judgment … . * * *

… [T]here remain triable issues of fact as to whether there existed a nexus between plaintiff and the City … . Furthermore, plaintiff sought certified copies of the franchise agreements for both Verizon and Empire City as part of discovery and defendant failed to provide them. Thus, the City’s challenge to the franchise documentation as being unauthenticated should have been rejected by the court, as copies of the documents remained in defendant’s exclusive possession and control but were not provided to plaintiff …  Powell v City of New York, 2023 NY Slip Op 03843, First Dept 7-17-23

Practice Point: The plaintiff was employed by a subsidiary of Verizon and was injured laying a conduit in a trench under a City street. The City claimed it had no nexus to the work done by Verizon. The majority held questions of fact about the existence of a franchise agreement between the City and Verizon and the issuance of a permit by the City precluded summary judgment in favor of the City. There was a two-justice dissent.

 

AN UNJUST ENRICHMENT CAUSE OF ACTION IS NOT AVAILABLE WHERE A CONTRACT COVERS THE RELEVANT ISSUE, EVEN IF THE DEFENDANTS ARE NONSIGNATORIES; UNJUST ENRICHMENT IS NOT A “CATCH ALL” CAUSE OF ACTION, CRITERIA EXPLAINED (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the existence of a contract covering the relevant issue precluded the unjust enrichment cause of action, even though defendants were not signatories to the contract:

“The existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter” … . It makes no difference that defendants are not parties to the contracts governing the dispute, as “a nonsignatory to a contract cannot be held liable where there is an express contract covering the same subject matter” … . * * *

… “[U]njust enrichment is not a catchall cause of action . . . . It is available only in unusual situations when, though the defendant has not breached a contract nor committed a recognized tort, circumstances create an equitable obligation running from the defendant to the plaintiff” … . Here, plaintiff states a claim against defendants for recognized torts, obviating the need for the creation of that obligation. Iberdrola Energy Projects v MUFG Union Bank, N.A., 2023 NY Slip Op 03841, First Dept 7-13-23

Practice Point: If a contract covers the relevant issue, unjust enrichment is not available, even if the defendants are nonsignatories. Unjust enrichment is not a “catch all” cause of action and is appropriate only when there is no actionable breach of contract and the relevant issue is not otherwise addressed by other causes of action (here certain torts).

 

, , ,

ALTHOUGH THE STATUTE OF LIMITATIONS STARTED RUNNING WHEN THE FORECLOSURE ACTION WAS FIRST BROUGHT, THE SUBSEQUENT LOAN MODIFICATION AGREEMENT, ENTERED WHILE THE FORECLOSURE ACTION WAS STILL PENDING, STARTED THE STATUTE OF LIMITATIONS RUNNING ANEW (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that, although the six-year statute of limitations for the original foreclosure action had run, the loan modification agreement, which was entered after the foreclosure action was started and while it was still pending, restarted the statute of limitations:

RPAPL 1501(4) provides, in pertinent part, that “[w]here the period allowed by the applicable statute of limitation for the commencement of an action to foreclose a mortgage . . . has expired, any person having an estate or interest in the real property subject to such encumbrance may maintain an action . . . to secure the cancellation and discharge of record of such encumbrance.” Pursuant to General Obligations Law § 17-105, however, “a promise to pay the mortgage debt, if made after the accrual of a right of action to foreclose the mortgage . . . by the express terms of a writing signed by the party to be charged is effective . . . to make the time limited for commencement of the action run from the date of the . . . promise”… .  14 Fillm Corp. v Mid-Island Mtge. Corp., 2023 NY Slip Op 03759, Second Dept 7-12-23

Practice Point: Even if a foreclosure had been filed, starting the running of the statute of limitations, a loan modification agreement entered while the the foreclosure action was pending starts the running of the statute of limitations all over again.

 

,

THE DATE BY WHICH AN OPTION TO RENEW A LEASE IS TO BE EXERCISED CAN BE WAIVED BY THE ACCEPTANCE OF AN UNTIMELY ELECTION TO RENEW; THE REQUEST FOR A NEW LEASE WITH THE SAME MATERIAL TERMS DOES NOT AFFECT THE VALIDITY OF THE ELECTION TO RENEW (THIRD DEPT).

​The Third Department, reversing Supreme Court, determined there were questions of fact about whether defendant tenant had exercised its option to renew the lease. The court noted that the date by which an option to renew must be exercised is for the benefit of the landlord and therefore can be waived by the landlord:

… [W]e agree with plaintiff that, to the extent that Supreme Court concluded that defendant could not have exercised the option to renew because the option lapsed after November 30, 2018, that finding was erroneous. Although an “optionee must exercise the option in accordance with its terms within the time and in the manner specified in the option” … , the relevant case law establishes that the notice provision associated with the option was “solely for plaintiff’s benefit as the landlord and may be waived, even in the absence of a written waiver” … . Here, plaintiff’s assertion that he confirmed and accepted defendant’s untimely election constitutes such waiver.

… [W]here an option is exercised and all of the essential and material terms of the parties’ agreement are provided for in the original lease, the fact that a party contemplates “the subsequent execution of a more formal writing [that was] not done will not impair [the] effectiveness” of the election … . Nor would plaintiff’s inquiry as to whether defendant would like a future option to renew render defendant’s exercise of the option conditional … .

The core question is whether defendant exercised its option to renew, as a matter of law. Moore v Schuler-Haas Elec. Corp., 2023 NY Slip Op 03739, Third Dept 7-6-23

Practice Point: The date by which an option to renew a leased is to be exercised is for the benefit of the landlord and therefore can be waived by the acceptance of an untimely election. The request for a new lease with the same material terms does not invalidate the election to renew.

 

, , , , ,

THE AFFIDAVITS AND REAL ESTATE CONTRACT SUBMITTED IN SUPPORT OF THE MOTION TO DISMISS DID NOT CONSTITUTE DOCUMENTARY EVIDENCE WHICH UTTERLY REFUTED THE ALLEGATIONS OF UNLAWFUL DISCRIMINATION IN THE COMPLAINT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the complaint alleging unlawful discrimination in a real estate deal should not have been dismissed because the documentary evidence did not utterly refute the allegations in the complaint. After the real estate purchase offer was signed by both parties and the down payment was made, defendant’s attorney returned the down payment check with a letter saying that the defendant was no longer interested in selling to the plaintiff:

Here, neither the affidavits submitted in support of the defendant’s motion nor the purported contract between the defendant and another purchaser constituted documentary evidence within the intendment of CPLR 3211(a)(1) … , and the defendant’s evidentiary submissions were “insufficient to utterly refute the plaintiff’s factual allegations” … . Moreover, accepting the facts as alleged in the complaint as true, and according the plaintiffs the benefit of every possible favorable inference … , the complaint sufficiently stated a cause of action alleging unlawful discrimination pursuant to Administrative Code § 8-107(5). Jeffrey v Collins, 2023 NY Slip Op 03686, Second Dept 7-5-23

Practice Point: The affidavits and real estate contract submitted in support of the motion to dismiss did not utterly refute the allegations in the complaint and therefore did not support dismissal of the complaint based on documentary evidence.

 

, ,

HERE THE CLOSE RELATIONSHIP BETWEEN THE NON-SIGNATORY AND THE PARTY TO THE AGREEMENT WARRANTED FINDING THAT THE NON-SIGNATORY WAS BOUND BY THE FORUM SELECTION CLAUSE IN THE AGREEMENT (FIRST DEPT).

The First Department, after reinstating the tortious interference with contract cause of action, determined a non-signatory can be bound by a forum selection clause under the “closely related” doctrine. where the non-signatory and the party to the agreement have such a close relationship that it is foreseeable the forum selection clause will be enforced against the non-signatory:

We find that plaintiff alleged a sufficiently close relationship between Vivendi and the Editis Defendants to justify subjecting it to personal jurisdiction in New York … .  Plaintiff alleged that Editis … was a wholly-owned subsidiary of Vivendi, that Vivendi’s CEO was also the Chairman of Editis, and that Vivendi managed the Editis Defendants’ performance of the subject agreement …. . EPAC Tech. Ltd. v Interforum S.A., 2023 NY Slip Op 03543, First Dept 6-29-23

Practice Point: Here the “close relationship” doctrine warranted finding the non-signatory was bound by the forum selection clause in the agreement. The non-signatory was a wholly-owned subsidiary of the party to the agreement and the non-signatory’s CEO was the chairman of the party to the agreement.

 

, , , ,

THE APPLICABLE STATUTES OF LIMITATIONS FOR DECLARATORY-JUDGMENT CAUSES OF ACTION DEPEND ON THE NATURE OF THE UNDERLYING ALLEGATIONS; HERE THE ALLEGATIONS SOUNDED IN FRAUD, UNJUST ENRICHMENT AND VIOLATIONS OF THE REAL PROPERTY LAW; ALL WERE TIME-BARRED (SECOND DEPT).

​The Second Department, revering Supreme Court, determined the declaratory judgment causes of action were time-barred according to the statutes of limitations applicable to the underlying allegations, i.e., fraud, unjust enrichment, Real Property Law (RPL) and Real Property Actions and Proceedings Law (RPAPL) causes of action:

“Actions for declaratory judgments are not ascribed a certain limitations period. The nature of the relief sought in a declaratory judgment action dictates the applicable limitations period. Thus, if the action for a declaratory judgment could have been brought in a different form asserting a particular cause of action, the limitations period applicable to the particular cause of action will apply” … . Here, the cause of action for declaratory relief could have been, and previously was, brought in the form of causes of action to recover damages for fraud and intentional misrepresentation. Since the instant action was commenced more than six years after the plaintiff allegedly was fraudulently induced to convey title to the property and more than two years from the discovery of the alleged fraud, the cause of action for declaratory relief was time-barred … .

… [T]he second cause of action … seeks to void the defendant’s title to the property by virtue of the plaintiff’s claim that the plaintiff was fraudulently induced into conveying title to the defendant. Accordingly, this cause of action is governed by the six-year statute of limitations governing actions based upon fraud and, therefore, was untimely.

… [T]he cause of action to recover damages for unjust enrichment accrued … when the deed conveying title to the defendant was executed, and, therefore, this cause of action was also time-barred.

… [T]he cause of action alleging a violation of Real Property Law § 265-a was time-barred since it was commenced more than two years after recordation of the subject deed and more than six years after the alleged fraudulently induced conveyance. Mahabir v Snyder Realty Group, Inc., 2023 NY Slip Op 03342, Second Dept 6-21-23

Practice Point: The applicable statutes of limitations for declaratory-judgment causes of action depend on the nature of the underlying allegations. Here the underlying allegations sounded in fraud, unjust enrichment and Real Property Law causes of action. All were time-barred.

 

, , ,

THE LETTER OF INTENT WAS AN AGREEMENT TO AGREE WHICH CONTEMPLATED ONLY OUT-OF-POCKET DAMAGES FOR A BREACH; THE JUDGE SHOULD NOT HAVE RELIED ON CREDIBILITY DETERMINATIONS TO, SUA SPONTE, AWARD SUMMARY JUDGMENT TO PLAINTIFFS (FIRST DEPT).

​The First Department, reversing Supreme Court, determined that the letter of intent (LOI) was an agreement to agree which, if breached, supported only out-of-pocket damages, not cover damages. The judge improperly relied on credibility determinations to, sua sponte, award summary judgment to plaintiffs:

… [R]ecovery for breach of a preliminary agreement’s confidentiality provision could not be based on “the theory that it would have acquired” the company at issue, as the “defendant[] w[as] not bound to go forward with the transaction” … . * * *

… [T]he text of the LOI and the surrounding circumstances support a finding that the parties did not contemplate cover damages at the time of contracting. That the parties entered only a preliminary agreement with no obligation to close a transaction and no specific damage provision for breach conclusively shows that defendant did not wish to assume the risk of covering whatever replacement transaction plaintiffs might pursue … .

… [T]he court improperly relied on credibility determinations to resolve material issues that should have been resolved by the jury. It is “not the function of a court deciding a summary judgment motion to make credibility determinations” … . Cresco Labs N.Y., LLC v Fiorello Pharms., Inc., 2023 NY Slip Op 03305, First Dept 6-20-23

Practice Point: Here the letter of intent was an agreement to agree which contemplated only out-of-pocket damages for a breach.

Practice Point: The judge should not have relied on credibility determinations to, sua sponte, award summary judgment to plaintiffs.

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy