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PLAINTIFF ENTITLED TO SUMMARY JUDGMENT ON THE FRAUD AND BREACH OF FIDUCIARY DUTY CAUSES OF ACTION, DEFENDANT PURCHASED THE PROPERTY FOR HERSELF WHILE ACTING AS PLAINTIFF’S REAL ESTATE BROKER (SECOND DEPT).

The Second Department determined plaintiff was entitled to summary judgment on the fraud and breach of fiduciary duty causes of action against defendant (Maureen), a real estate broker. The complaint alleged that Maureen purchased the property herself while acting as plaintiff’s broker:

“[A] real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal”… . “[I]n dealing with the principal, a real estate broker must act honestly and candidly, and the broker must disclose all material information that it may possess or obtain concerning the transactions involved”… . Moreover, “[w]here a broker’s interests or loyalties are divided due to a personal stake in the transaction or representation of multiple parties, the broker must disclose to the principal the nature and extent of the broker’s interest in the transaction or the material facts illuminating the broker’s divided loyalties” … . “A breach of this duty of loyalty by a real estate broker may constitute a fraud for which the broker is answerable in damages” … . Edwards v Walsh, 2019 NY Slip Op 01197, Second Dept 2-20-19

 

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THE TERMS OF THE PURCHASE CONTRACT INDICATED BUYER, WHO PURCHASED THE PROPERTY KNOWING IT WAS CONTAMINATED BY OIL, WOULD INDEMNIFY SELLER FOR COSTS RELATED TO THE ENVIRONMENTAL CONDITIONS, QUESTION OF FACT WHETHER BUYER, WHO SIGNED THE CONTRACT ‘ON BEHALF OF AN ENTITY TO BE FORMED,’ WAS INDIVIDUALLY LIABLE (FOURTH DEPT).

The Fourth Department determined that the terms of the purchase contract for property contaminated by oil indicated the buyer would indemnify the seller for costs associated with the condition of the property. The Fourth Department further held there was a question of fact whether the buyer signed the contract in his individual capacity in that he signed “on behalf of an entity to be formed:”

The purchase contract provided that a “Phase One Environmental report” had been completed on the property and that Marks, the “Buyer” of the property, was in receipt of the environmental report and “approve[d] of same.” The contract further provided that Atkin was the “Seller,” the property “was not in compliance with federal, state and/or local laws/ordinances,” the Buyer agreed to purchase the property “as is,” the “Buyer accept[ed] the property as is, with no representations or warranties as to environmental conditions” of the property, and the Buyer “release[d] and indemnifie[d] Seller with respect to any claims as to environmental conditions on or related to the property.” Thus, the terms of the contract establish that, prior to entering into the contract, both Atkin and Marks were generally aware of the property’s historical environmental contamination by the Exxon defendants and their predecessor, and the language in the indemnification provision, considered in light of the contract as a whole and the circumstances of the sale of the property, clearly and unambiguously expresses the intent of the parties that the Buyer would indemnify the Seller with respect to any claims regarding environmental conditions related to the property … . …

Although it is well settled that “[a]n individual who acts on behalf of a nonexistent corporation can be held personally liable” … , the determination “[w]hether a person is personally obligated on a preincorporation transaction depends on the intention of the parties” … . One Flint St., LLC v Exxon Mobil Corp., 2019 NY Slip Op 00752, Fourth Dept 2-1-19

 

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INSURANCE LAW STATUTE AND RELATED REGULATIONS WHICH PROHIBIT REAL PROPERTY TITLE INSURANCE COMPANIES FROM PROVIDING SPORTS TICKETS, MEALS AND OTHER ENTERTAINMENT TO SOLICIT BUSINESS FROM THOSE WHO USE THEIR SERVICES ARE VALID AND ENFORCEABLE (FIRST DEPT).

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Singh, determined that Insurance Law 6409 (d) was not ambiguous and the related regulations promulgated by the Department of Financial Services (DFS), with two exceptions, were valid. The statute and regulations deal with real property title insurance companies and prohibit the companies from soliciting business by providing sports tickets, meals and other entertainment to those who can use their services, including attorneys:

Following the investigation, DFS determined that some practices that resulted in higher premiums and closing costs for consumers, violate Insurance Law § 6409(d). DFS found that “insurers reported meal and entertainment expenses in the following categories: advertising, marketing and promotion, and travel, and other'” (Statement of Maria T. Vullo, Superintendent New York State DFS, Prepared for Delivery at Public Hearing: An Examination of Recent Title Insurance Regulation in New York, January 12, 2018) and expenses reported in the “other” category were “replete with excessive entertainment,” often including “wining and dining . . . of real estate professionals” (id.). For example, one insurer spent approximately $2.5 million to $5.4 million a year, amounting to about 5% to 14% of its charged premiums, on tickets to basketball, baseball, and tennis events for attorneys and other clients in a position to refer business to the insurer (id.). Some insurers paid for their clients to go to bars, strip clubs, and Hooters restaurants (id.). Insurers paid for “expensive designer goods” and “gift cards” for referral sources (id.). One insurer spent about 15% to 30% of premiums on entertainment and gifts for referral sources. Another insurer spent about 50% of its revenue on meals for referral sources. Insurers would report these expenses in the information submitted to DFS to support the premiums they charged (id.).

As a result of its investigation, DFS estimated that, on average, 5.3% of premiums charged statewide violated Insurance Law § 6409(d) from 2008 to 2012. To prevent such practices and to protect consumers from exorbitant costs, DFS promulgated Insurance Regulation 208. Matter of New York State Land Tit. Assn., Inc. v New York State Dept. of Fin. Servs.. 2019 NY Slip Op 00245, First Dept 1-15-19

 

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THERE EXISTS A QUESTION OF FACT WHETHER DEFENDANT’S FAILURE TO APPEAR AT THE LAW DAY CLOSING WAS WILLFUL WITHIN THE MEANING OF THE REAL ESTATE CONTRACT, PLAINTIFFS’ MOTION SEEKING SUMMARY JUDGMENT ON THE ACTION TO RETAIN THE DOWN PAYMENT PROPERLY DENIED, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SEEKING THE RETURN OF THE DOWN PAYMENT SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, modifying Supreme Court, determined that defendant’s motion for summary judgment in plaintiffs’ action to retain the defendant’s down payment because defendant did not appear at the real estate closing should not have been granted. Although plaintiffs demonstrated they were ready and willing close on the time-of–the-essence closing date, defendant raised a question of fact whether the failure to appear was “willful” within the meaning of the real estate contract. Defendant submitted evidence his application for credit in connection with a mortgage on the property had been declined. Plaintiff’s motion for summary judgment was properly denied. But defendant’s motion for summary judgment seeking return of his down payment should not have been granted:

“The fundamental, neutral precept of contract interpretation is that agreements are construed in accord with the parties’ intent” … . The best evidence of the parties’ intent is their own writing… . A written agreement that is complete, clear, and unambiguous on its face is to be enforced according to the plain meaning of its terms … . Here, the contract provided that a party would be considered in breach if a default was willful, and that the plaintiffs could retain the down payment as liquidated damages only if the defendant “willfully” defaulted under the contract. The defendant submitted a copy of a “Statement of Credit Denial” from his lender which indicated that his application for an extension or renewal of credit with respect to a mortgage on the property had been declined. Consequently, a triable issue of fact existed as to whether the defendant had a lawful excuse for defaulting given the denial of his application to extend or renew his mortgage commitment, or whether he willfully defaulted.

Accordingly, we agree with the Supreme Court’s determination denying the plaintiffs’ motion for summary judgment on the complaint.

However, the Supreme Court should not have, upon searching the record, awarded summary judgment to the defendant dismissing the complaint and directing the return of the down payment to the defendant. A buyer who defaults on a real estate contract without ” lawful excuse'” cannot recover the down payment amount, “at least where . . . that down payment represents 10% or less of the contract price” … . Since a triable issue of fact existed as to whether the defendant’s failure to close was willful, the Supreme Court should not have determined, at this juncture, that he was entitled to the return of his down payment. Goetz v Trinidad, 2019 NY Slip Op 00099, Second Dept 1-9-19

 

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THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT).

The First Department determined the misrepresentation of the dimensions of the cooperative apartment in the listing could not be deemed incorporated by reference into the purchase agreement. The complaint was therefore properly dismissed:

… [P]laintiffs allege that defendants prepared a floor plan, which accompanied the listing for the unit at issue, that stated that the unit was “~1,966” square feet, when it was, in fact, approximately 1,495 square feet. Plaintiffs contend that the floor plan was incorporated into the offering plan by reference, and the offering plan, in turn, was incorporated into the purchase agreement. …

The doctrine of incorporation by reference “is appropriate only where the document to be incorporated is referred to and described in the instrument as issued so as to identify the referenced document beyond all reasonable doubt'”… . Here, the listing is not identified in any of the relevant purchase documents … .

Moreover, any purported representation or warranty is refuted by the clear terms of the purchase agreement, which contains a merger clause, states that no representations are being made by the sponsor, that the unit was being purchased “as is” and that the onus was on the buyer to inspect “to determine the actual dimensions” prior to purchasing  … . …

Reasonable reliance is an element of claims for fraud, aiding and abetting fraud and negligent misrepresentation… . Plaintiffs cannot as a matter of law establish reasonable reliance on a representation concerning the condition of the apartment since they had the means to ascertain the truth of the condition … . …

… [P]plaintiffs’ allegations based on purported representations made in the listing fail to set forth a viable claim under General Business Law §§ 349 or 350, as they do not fall within the type of deceptive acts, that, if permitted to continue, would have a broad impact on consumers at large … . Von Ancken v 7 E. 14 L.L.C., 2018 NY Slip Op 08097, First Dept 11-27-18

CONTRACT LAW (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/INCORPORATION BY REFERENCE (CONTRACT LAW, (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/FRAUD (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/CONSUMER LAW (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/PURCHASE AGREEMENTS (COOPERATIVES, THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/LISTING (REAL ESTATE, THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/REAL ESTATE (LISTING, (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))/COOPERATIVES (THE ACTUAL DIMENSIONS OF THE COOPERATIVE APARTMENT WERE SMALLER THAN THE DIMENSIONS DESCRIBED IN THE LISTING, THE LISTING COULD NOT BE DEEMED INCORPORATED BY REFERENCE INTO THE PURCHASE AGREEMENT, THE COMPLAINT ALLEGING BREACH OF CONTRACT, FRAUD AND DECEPTIVE BUSINESS PRACTICES PROPERLY DISMISSED (FIRST DEPT))

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REAL ESTATE PURCHASE CONTRACT, ALTHOUGH MISSING SOME TERMS, SATISFIED THE STATUTE OF FRAUDS, SUMMARY JUDGMENT ON THE SPECIFIC PERFORMANCE ACTION, HOWEVER, SHOULD NOT HAVE BEEN GRANTED, PLAINTIFF FAILED TO DEMONSTRATE THE FINANCIAL ABILITY TO CLOSE ON THE LAW DATE (SECOND DEPT).

The Second Department agreed with Supreme Court that the real estate purchase contract, although some terms were missing, satisfied the statute of frauds, Therefore the motion to dismiss the action for specific performance was properly denied. However, Supreme Court should not have granted summary judgment because plaintiff failed to demonstrate he had the financial ability to purchase the property on the law date:

“Only reasonable certainty, not absolute certainty, as to the terms of the agreement is required” … . Here, the essential terms of the contract were explicitly contained in the agreement, thus satisfying the requirements of the statute of frauds. The agreement is subscribed by the parties to be charged, identifies the parties to the transaction, describes the property to be sold with sufficient particularity, and states the purchase price, the down payment received, and how the purchase price was to be paid … . Additionally, while some terms, such as the closing date, the quality of title to be conveyed, and the risk of loss between the contract and the closing, are not included within the agreement, the remaining terms are clear and enforceable and, thus, the law will serve to fill in those missing provisions … . …

… [T]he plaintiff’s submissions failed to demonstrate that he had the financial ability to consummate the sale of the property on January 25, 2016, the date which he had set for the closing in his time-is-of-the-essence letter to the defendant. The plaintiff’s submissions highlighted, rather than eliminated, triable issues of fact as to whether he possessed the funds necessary to consummate the sale. In light of the foregoing, the plaintiff did not meet his prima facie burden on his motion, and thus, the motion should have been denied without regard to the sufficiency of the opposition papers … . O’Hanlon v Renwick, 2018 NY Slip Op 08027, Second Dept 11-21-18

REAL ESTATE (REAL ESTATE PURCHASE CONTRACT, ALTHOUGH MISSING SOME TERMS, SATISFIED THE STATUTE OF FRAUDS, SUMMARY JUDGMENT ON THE SPECIFIC PERFORMANCE ACTION, HOWEVER, SHOULD NOT HAVE BEEN GRANTED, PLAINTIFF FAILED TO DEMONSTRATE THE FINANCIAL ABILITY TO CLOSE ON THE LAW DATE (SECOND DEPT))/CONTRACT LAW (REAL ESTATE PURCHASE CONTRACT, ALTHOUGH MISSING SOME TERMS, SATISFIED THE STATUTE OF FRAUDS, SUMMARY JUDGMENT ON THE SPECIFIC PERFORMANCE ACTION, HOWEVER, SHOULD NOT HAVE BEEN GRANTED, PLAINTIFF FAILED TO DEMONSTRATE THE FINANCIAL ABILITY TO CLOSE ON THE LAW DATE (SECOND DEPT))/SPECIFIC PERFORMANCE (REAL ESTATE PURCHASE CONTRACT, ALTHOUGH MISSING SOME TERMS, SATISFIED THE STATUTE OF FRAUDS, SUMMARY JUDGMENT ON THE SPECIFIC PERFORMANCE ACTION, HOWEVER, SHOULD NOT HAVE BEEN GRANTED, PLAINTIFF FAILED TO DEMONSTRATE THE FINANCIAL ABILITY TO CLOSE ON THE LAW DATE (SECOND DEPT))/EVIDENCE (REAL ESTATE PURCHASE CONTRACT, ALTHOUGH MISSING SOME TERMS, SATISFIED THE STATUTE OF FRAUDS, SUMMARY JUDGMENT ON THE SPECIFIC PERFORMANCE ACTION, HOWEVER, SHOULD NOT HAVE BEEN GRANTED, PLAINTIFF FAILED TO DEMONSTRATE THE FINANCIAL ABILITY TO CLOSE ON THE LAW DATE (SECOND DEPT))

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PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the county’s motion to dismiss plaintiff’s complaint seeking specific performance, based on the language of the real estate purchase contract, should have been granted. Plaintiff was the highest bidder on real property and signed a purchase contract but did not appear on the closing dates:

… [W]e find that the terms and conditions of the contract of sale utterly refute the plaintiff’s allegations and establish a defense as a matter of law. The contract clearly provides that the plaintiff’s failure to close pursuant to the terms and conditions of sale will result in a forfeiture of the down payment; that in the event the closing is postponed at the plaintiff’s request, then the adjourned date shall be deemed the final law date; that the plaintiff’s failure to close on the final law date shall entitle the County to cancel the sale and to retain the down payment; and, in those circumstances, the plaintiff waives all claims of any right, title and interest in the subject property and the down payment. Additionally, the terms and conditions of the contract of sale demonstrate that a material fact claimed by the plaintiff—the alleged breach of contract by the County—is not a fact at all, and no significant dispute exists regarding it. Mahmood v County of Suffolk, 2018 NY Slip Op 07715, Second Dept 11-14-18

CONTRACT LAW (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/REAL ESTATE  (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/CIVIL PROCEDURE (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))/MUNICIPAL LAW  (REAL ESTATE PURCHASE CONTRACT, PLAINTIFF’S COMPLAINT SEEKING SPECIFIC PERFORMANCE OF A REAL ESTATE PURCHASE CONTRACT PROPERLY DISMISSED BASED UPON THE LANGUAGE OF THE CONTRACT, PLAINTIFF DID NOT APPEAR AT EITHER SCHEDULED CLOSING AFTER SUBMITTING THE HIGHEST BID AND SIGNING THE CONTRACT (SECOND DEPT))

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ALTHOUGH PLAINTIFF DEFAULTED ON A MATERIAL TERM OF AN INSTALLMENT LAND SALE CONTRACT, DEFENDANT WAS NOT ENTITLED TO SPECIFIC PERFORMANCE OR CANCELLATION AND RETENTION OF THE SUBSTANTIAL PAYMENTS WHICH PLAINTIFF HAD MADE, PLAINTIFF WAS ENTITLED TO CONTINUED POSSESSION (THIRD DEPT).

The Third Department, reversing Supreme Court, determined that, although plaintiff had defaulted on an installment land sale contract (re: the payment of school taxes), defendant was not entitled to specific performance and was not entitled to cancellation of the contract and retention of the installment payments:

“[T]he execution of a[n installment] contract for the purchase of real estate and the making of a part payment gives a contract vendee equitable title to the property and an equitable lien in the amount of the payment” … . The contract vendor, in turn, “holds the legal title in trust for the vendee, subject to the vendor’s equitable lien for the payment of the purchase price in accordance with the terms of the contract” … . “Accordingly, the vendee under a land sale contract has acquired an interest in the property that must be extinguished before the vendor can resume possession, notwithstanding whether a provision in the contract provides that in the event of the vendee’s uncured default . . ., the vendor has the right to declare the contract terminated and repossess the premises. A vendor may not enforce his [or her] rights by an action in ejectment, but must instead proceed to foreclose the vendee’s equitable title or bring an action at law for the purchase price” … .

Plaintiff, having made substantial payments to defendant pursuant to the installment land sale contract at issue, acquired equitable title to the property and an equitable lien in the amount of all payments made pursuant to the contract. Thus, despite plaintiff’s default under the contract, defendant cannot obtain relief under the provision of the rider that provides for cancellation of the contract and forfeiture of all monies paid by plaintiff as liquidated damages… . Accordingly, to the extent that defendant’s motion sought a declaration to that effect, it must be denied. Defendant’s remedies are, instead, limited to foreclosing plaintiff’s equitable title or bringing an action at law for the purchase price of the property, neither of which defendant has sought … . Further, because defendant could not summarily cancel the contract and resume possession, plaintiff is entitled to continued possession of the premises during such time. Cloke v Findlan, 2018 NY Slip Op 07220. Third Dept 10-25-18

REAL ESTATE (ALTHOUGH PLAINTIFF DEFAULTED ON A MATERIAL TERM OF AN INSTALLMENT LAND SALE CONTRACT, DEFENDANT WAS NOT ENTITLED TO SPECIFIC PERFORMANCE OR CANCELLATION AND RETENTION OF THE SUBSTANTIAL PAYMENTS WHICH PLAINTIFF HAD MADE, PLAINTIFF WAS ENTITLED TO CONTINUED POSSESSION (THIRD DEPT))/CONTRACT LAW (REAL ESTATE, ALTHOUGH PLAINTIFF DEFAULTED ON A MATERIAL TERM OF AN INSTALLMENT LAND SALE CONTRACT, DEFENDANT WAS NOT ENTITLED TO SPECIFIC PERFORMANCE OR CANCELLATION AND RETENTION OF THE SUBSTANTIAL PAYMENTS WHICH PLAINTIFF HAD MADE, PLAINTIFF WAS ENTITLED TO CONTINUED POSSESSION (THIRD DEPT))/DEBTOR-CREDITOR (REAL ESTATE, INSTALLMENT CONTRACT, ALTHOUGH PLAINTIFF DEFAULTED ON A MATERIAL TERM OF AN INSTALLMENT LAND SALE CONTRACT, DEFENDANT WAS NOT ENTITLED TO SPECIFIC PERFORMANCE OR CANCELLATION AND RETENTION OF THE SUBSTANTIAL PAYMENTS WHICH PLAINTIFF HAD MADE, PLAINTIFF WAS ENTITLED TO CONTINUED POSSESSION (THIRD DEPT))/INSTALLMENT LAND SALE CONTRACT  (ALTHOUGH PLAINTIFF DEFAULTED ON A MATERIAL TERM OF AN INSTALLMENT LAND SALE CONTRACT, DEFENDANT WAS NOT ENTITLED TO SPECIFIC PERFORMANCE OR CANCELLATION AND RETENTION OF THE SUBSTANTIAL PAYMENTS WHICH PLAINTIFF HAD MADE, PLAINTIFF WAS ENTITLED TO CONTINUED POSSESSION (THIRD DEPT))

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SELLERS STRUCTURED THEIR OFFER TO SELL PROPERTY WITH THE INTENT TO DEPRIVE PLAINTIFF OF HIS RIGHT OF FIRST REFUSAL, SELLERS EXHIBITED BAD FAITH AS A MATTER OF LAW, SUPREME COURT REVERSED (THIRD DEPT). ​

The Third Department, reversing Supreme Court, determined plaintiff had the right of first refusal on the sale of a car wash. Defendant sellers’ attempt to put a restriction on the deed to prohibit the operation of a car wash on the property was deemed a deliberate, bad faith effort to defeat plaintiff’s first refusal rights:

The inclusion of the deed restriction within the purchase agreement was precisely targeted to prevent plaintiff — which defendants knew was in the car wash business and had entered into the right of first refusal as a means of preserving its opportunity to operate a car wash on the property — from exercising its first refusal rights. We find that [the] documentation conclusively demonstrates that defendants improperly structured their agreement to defeat plaintiff’s first refusal rights …. As defendants did not disavow these submissions, or the intent contained therein, they failed to meet their burden to raise an issue of fact in this regard. Under the circumstances presented here, the purchase agreement was thus entered into in bad faith as a matter of law … .

Accordingly, as plaintiff demonstrated a right to enforcement of the contract, its cross motion for partial summary judgment should have been granted, and the complaint and cross claims should not have been dismissed. Clifton Land Co. LLC v Magic Car Wash, LLC, 2018 NY Slip Op 07027, Third Dept. 10-18-18

CONTRACT LAW (SELLERS STRUCTURED THEIR OFFER TO SELL PROPERTY WITH THE INTENT TO DEPRIVE PLAINTIFF OF HIS RIGHT OF FIRST REFUSAL, SELLERS EXHIBITED BAD FAITH AS A MATTER OF LAW, SUPREME COURT REVERSED (THIRD DEPT))/REAL ESTATE (CONTRACT LAW, SELLERS STRUCTURED THEIR OFFER TO SELL PROPERTY WITH THE INTENT TO DEPRIVE PLAINTIFF OF HIS RIGHT OF FIRST REFUSAL, SELLERS EXHIBITED BAD FAITH AS A MATTER OF LAW, SUPREME COURT REVERSED (THIRD DEPT))/BAD FAITH (CONTRACT LAW, REAL ESTATE, SELLERS STRUCTURED THEIR OFFER TO SELL PROPERTY WITH THE INTENT TO DEPRIVE PLAINTIFF OF HIS RIGHT OF FIRST REFUSAL, SELLERS EXHIBITED BAD FAITH AS A MATTER OF LAW, SUPREME COURT REVERSED (THIRD DEPT))/RIGHT OF FIRST REFUSAL (CONTRACT LAW, REAL ESTATE, SELLERS STRUCTURED THEIR OFFER TO SELL PROPERTY WITH THE INTENT TO DEPRIVE PLAINTIFF OF HIS RIGHT OF FIRST REFUSAL, SELLERS EXHIBITED BAD FAITH AS A MATTER OF LAW, SUPREME COURT REVERSED (THIRD DEPT))

SUMMARY JUDGMENT ON SPECIFIC PERFORMANCE CAUSE OF ACTION PROPERLY DENIED, CRITERIA EXPLAINED (SECOND DEPT).

The Second Department determined plaintiff's motion for summary judgment on the specific performance cause of action was properly denied:

In order to make time of the essence, where the contract does not provide for same, “there must be a clear, distinct, and unequivocal notice to that effect giving the other party a reasonable time in which to act” … . Despite arguments that the plaintiffs raise to the contrary, there is no specific time period that is per se adequate, since “[w]hat constitutes a reasonable time for performance depends upon the facts and circumstances of the particular case,” and “[t]he determination of reasonableness must by its very nature be determined on a case-by-case basis” … . “Included within a court's determination of reasonableness are the nature and object of the contract, the previous conduct of the parties, the presence or absence of good faith, the experience of the parties and the possibility of prejudice or hardship to either one, as well as the specific number of days provided for performance” … .

Under the circumstances presented here, the plaintiffs failed to establish, prima facie, that the time-of-the-essence letter provided the defendants with a reasonable time within which to close … . Furthermore, by submitting certain email exchanges between the parties' attorneys concerning the scheduling of the closing, the plaintiffs failed to eliminate triable issues of fact as to whether the defendants objected to the plaintiffs' attempt to declare a law date … .  Kok Chai Lee v Robertson, 2018 NY Slip Op 06520, Second Dept 10-3-18

REAL ESTATE (SPECIFIC PERFORMANCE, SUMMARY JUDGMENT ON SPECIFIC PERFORMANCE CAUSE OF ACTION PROPERLY DENIED, CRITERIA EXPLAINED (SECOND DEPT))/SPECIFIC PERFORMANCE (SPECIFIC PERFORMANCE, SUMMARY JUDGMENT ON SPECIFIC PERFORMANCE CAUSE OF ACTION PROPERLY DENIED, CRITERIA EXPLAINED (SECOND DEPT))/TIME OF THE ESSENCE  (SPECIFIC PERFORMANCE, SUMMARY JUDGMENT ON SPECIFIC PERFORMANCE CAUSE OF ACTION PROPERLY DENIED, CRITERIA EXPLAINED (SECOND DEPT))

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