Court: Appellate Division of the Supreme Court of the State of New York; May 7, 2014; New York; State Appellate Court
The legal action involves a request for a judgment declaring that the plaintiff/counterclaim defendant, as the assignee of the seller of certain real property, is entitled to an escrow deposit held by Duane Morris, LLP, related to the property's sale. The defendant/counterclaim plaintiff appeals from a Supreme Court order dated August 14, 2012, which granted summary judgment in favor of the plaintiff/counterclaim defendant and additional counterclaim defendants, declaring their entitlement to the deposit and dismissing the defendant's counterclaims. Specifically, the court dismissed several counterclaims and affirmed that the deposit is to be held by Duane Morris, LLP for the plaintiff/counterclaim defendant.
In December 2010, Brooklyn Law School (BLS) entered into a sale agreement with Brklyn Hts Condos, LLC (the defendant), requiring the defendant to deposit a down payment with Duane Morris. The agreement stipulated that BLS would deliver the property vacant and allowed the defendant reasonable access to the property upon prior notice. Over eight months, the defendant accessed the property 46 times but missed access on three occasions. On August 21, 2011, BLS requested more than two days’ notice for future access requests. The closing was scheduled for September 1, 2011. On the evening before closing, the defendant requested access for the next morning at 6:24 p.m. BLS's counsel indicated they could not guarantee access due to the short notice, emphasizing that the timing of the request was not reasonable per the contract terms.
At 9:08 a.m. the day after a scheduled property closing, the defendant’s counsel emailed BLS’s counsel, claiming BLS’s refusal to provide access at the agreed time constituted an unreasonable breach of their agreement. BLS representatives arrived at 10:00 a.m., but the defendant’s representatives were absent. BLS then offered to reschedule the closing for noon, which the defendant declined, stating that they had canceled the closing based on prior communications. Later that day, the defendant’s attorney sent a letter to BLS declaring BLS in default and demanded the return of the deposit. Subsequently, BLS sold the property to 184 Joralemon, LLC (the plaintiff), who then initiated legal action to recover the deposit as liquidated damages. The defendant raised several affirmative defenses and counterclaims, including lack of standing, breach of contract, and tortious interference. The plaintiff and other defendants sought summary judgment, which the court granted, dismissing the counterclaims. The case hinged on whether the defendant's request for access the evening before the closing constituted "reasonable notice" under the contract. The court found that the defendant’s late request did not meet the standard of reasonable notice, establishing the plaintiff's entitlement to judgment. The ruling emphasized that in contracts where time is of the essence, failure to perform at the specified time constitutes a material breach.
The defendant did not establish a triable issue of fact regarding the breach of contract. BLS was justified in denying the defendant's request for access due to inadequate notice, and there was no agreement to extend the closing date. Consequently, the defendant's failure to appear on the law day constituted a breach of contract. Given this breach and the lack of merit in the defendant's other arguments, the Supreme Court correctly granted summary judgment in favor of the plaintiff and other counterclaim defendants, dismissed the remaining counterclaims, and declared the plaintiff entitled to the deposit held in escrow, while denying the defendant's claim to that deposit. Judges Balkin, Dickerson, Leventhal, and Roman concurred in this decision.
