- Closing Date Not “Time of The Essence” Where Contract Failed to Identify it as Such and Later Notice was Insufficient: Revital Realty Group v Ulano Corp.
- October 1, 2012 | Author: Adam M. Rafsky
- Law Firm: Farrell Fritz, P.C. - Uniondale Office
In a September 7, 2012 decision by Justice Demarest, the court denied the defendant’s motion for summary judgment which sought to: dismiss the complaint; cancel a lis pendens; and an award damages on its two counterclaims. The action arose out of a contract for the sale of commercial property by the defendant (“Ulano”) to the plaintiff (“Revital”), in which the closing date was identified as the one hundred and twentieth day after the contract date, but was not designated as being “time of the essence”. Ulano subsequently asserted that closing date was of the essence and demanded Revital close on that date. Revital disagreed and requested an adjournment of the closing, which Ulano refused. Revital did not appear at the closing and commenced the action seeking specific performance based on anticipatory breach and breach of contract, and it filed a lis pendens against the property. Ulano asserted two counterclaims based on Revital’s alleged breach of contract for failing to appear at the closing and its allegedly inappropriate filing of the lis pendens.
On its motion, Ulano argued that Revital was not entitled to specific performance because it was not ready, willing, and able to close on the date specified in the contract. Revital argued that because the contract lacked a “time is of the essence” clause as to the closing, Ulano’s subsequent declaration was insufficient to change the contract’s terms. Therefore, Revital argued, it was entitled to a reasonable adjournment and Ulano’s failure to grant it was an anticipatory breach.
The court declined Ulano’s motion as to specific performance, holding that it could not be implied the closing date was “time of the essence”, and because the contract did not include such a clause, Ulano’s later notice was insufficient since it failed to afford Revital, as required, a reasonable time after the closing date set forth in the contract within which to perform. Therefore, the court held that: Revital was entitled to a reasonable adjournment; Ulano’s failure to grant it was an anticipatory breach; and Revital’s failure to appear at the closing was not a material breach. The court also declined Ulano’s motion with respect to the lis pendens and dismissed its counterclaim as to it, holding that “it is clear, based upon the demonstrated merits of plaintiff’s claims, that plaintiff has brought and maintained this action in good faith and filed the lis pendens” solely to protect its interest in the property. Finally, the court dismissed Ulano’s counterclaim for breach of contract, finding that Revital was absolved of its duty to close by Ulano’s anticipatory breach.
Revital realty Group, LLC v Ulano Corp., Sup Ct, Kings County, September 7, 2012, Demarest, J., Index No. 6702/12