Time of the Essence? 30 Days Notice? Urban Legend..............

July 10, 2022

A declaration of Time of the Essence must be on 30 days prior written notice. True? Urban Legend.

With respect to the above statement, the following Decision warrants a close and thorough read:

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Index No. 523222/2016

07-22-2019

LOUIS DILAURO, Plaintiff, v. CAROLANN JOHNS and ROSE MARIE RICCIO, Defendants

NYSCEF DOC. NO. 98?PRESENT:?Motion Seq. # 6 DECISION & ORDER

Upon the foregoing papers, Louis DiLauro ("Plaintiff") moves this Court for an Order (i) pursuant to?CPLR S 3212?granting Summary Judgment in his favor and (ii) for such other and further relief as this Court deems just and proper.

This is an action for Breach of Contract in a Real Estate Transaction. On or about August 26, 2016, the Plaintiff and the Defendants entered into a Contract of Sale of Commercial Property located at 354 Sackett Street, Brooklyn, NY (Block 428 Lot 29). At the time the parties entered into the Contract, the Plaintiff gave a deposit of $62,700.00. The Contract states that "the closing shall take place at the Office of Sellers' Attorney or the Purchasers' Institutional Lender at 2:00PM on or sixty (60) days from the Purchaser’s receipt of a fully executed Contract."?

On September 20, 2016, the Plaintiff sold his existing property at 41 King Street, Brooklyn, NY. On September 25, 2016, the Defendants received Notice of two Housing Code Violations and an Environmental Control Board Violation. The Defendants cured the Environmental Control Board?Violation. The Defendants attempted to cure the Housing Code Violations. However, a Housing Preservation and Development Inspection revealed that these Violations were not cured.

Section 10 of the Contract, entitled Governmental Violations and Orders, states: "the Seller shall comply with all Notes or Notices of Violations of Law or Municipal Ordinances, Orders or requirements noted or issued as of the date hereof by any Governmental Department having authority as to lands, housing, buildings, fire, health, environmental and labor conditions affecting the Premises. The Premises shall be conveyed free of them at closing." The Defendants offered to give the Plaintiff money to hold in escrow but the Plaintiff refused.

On November 1, 2016, the Plaintiff sent a "Time is of the Essence" letter giving notice that the closing on the Property was scheduled for November 21, 2016. The Defendants were therefore required to cure all Violations prior to the law date. The Defendants waited until two days prior to the law date, on a Saturday, November 19, 2016, and responded they would not be ready to close on November 21, 2016.

The Defendants did not appear at the closing on November 21, 2016. On November 23, 2016, the Plaintiff demanded that the Defendants return the down payment of $62,700.00. The Defendants never returned the deposit. The Plaintiff also alleges in the Complaint that the purchase of the subject Property was intended as a 1031 exchange. Further, because the Defendants failed to close on the Law Date the Plaintiff alleges that as a result of the Defendants’ Breach of Contract, the Plaintiff was unable to complete a 1031 exchange and incurred additional tax liabilities amounting to $627,891.00.

Summary Judgment is a drastic remedy that deprives a Litigant of his or her day in Court and should, therefore, only be employed when there is no doubt as to the absence of triable issues?of material fact.?O'Brien v Port Auth.?of N.Y.?& N.J.,?29 N.Y.3d 27,?31 (2017);?Zuckerman v.?City of New York?,?49 N.Y.2d 557?,?560 (1980); Sillman v.?Twentieth Century-Fox Film Corp.,?3 N.Y.2d 395?,?404 (1957).?A Motion for Summary Judgment will be granted if, upon all the papers and proof submitted, the Cause of Action or Defense is established sufficiently to warrant a Directed Judgment in favor of any Party as a Matter of Law.?CPLR 3212?[b]; Botach Mgt.?Group v.?Gurash?,?138 A.D.3d 771?,?772 (2nd?Dept.?2016).?On such a Motion, the evidence will be construed in a light most favorable to the Party against whom Summary Judgment is sought.?Spinelli v Procassini?,?258 AD2d 577,?686 (2nd?Dept.?1999).?Summary Judgment should be granted where the Party opposing the motion fails to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact.?Lau v Margaret E.?Pescatore Parking,?Inc.,?30 N.Y.3d 1025,?1027 (2017).

"The essential elements of a Breach of Contract Cause of Action are 'the existence of a Contract, the Plaintiff's performance under the Contract, the Defendant's Breach of that Contract, and resulting damages.'"?Liberty Equity Restoration Corporation v Pil Soung Park,?160 A.D.3d 628 (2nd?Dept.?2018).?Further, the Law is clearly established that even where time is not made of the essence in the original Contract and the closing date set forth therein has passed, either Party can declare time of the essence by giving a clear, distinct and unequivocal notice of (1) a new closing date; (2) giving the other Party a reasonable time in which to act; and, (3) informing the other Party that if he does not perform by the designated date, he/she will be considered in default.?Nehmadi v Davis?,?63 A.D.3d 1125?,?1127 (2nd?Dept.?2009)?,?citing Guippone v Gaias?,?13 A.D.3d 339 (2nd?Dept.?1989).?Specifically, the Appellate Division has held that three (3) days',?Smith v Lynch?,?50 A.D.?3d 881 (2nd?Dept.?2008)?, four (4) days',?3M Holding Corp.?v Wagner?,?166 A.D.2d 580 (2nd?Dept.?1990)?, and five (5) days'?Guippone v Gaias?,?13 A.D.3d 339 (2nd?Dept.?2004)?, notice??was sufficient. The failure to appear at a closing constitutes a willful default?Smith v Lynch?50 A?.D.3d 881,?882 (2nd?Dept.?2008).

The Defendants oppose the Motion and states 20 days was inadequate notice. The Defendants cite no Law to support this contention. As set forth above, the Second Department has held that notice as little as three days is sufficient. Therefore, the Plaintiff's Time of the Essence letter constitutes reasonable notice to the Defendants.

The Defendants also oppose the Plaintiff's Motion contending that the location of the closing differed from that set forth in the Contract. The Defendants rely upon the Decision in?Nehmadi v Davis 63,?A.D.3d 1125?,?1128 (2nd?Dept.?2009)?for the proposition that the closing location cannot differ from the one set forth in the Contract. However, Nehmadi does not even mention that the closing location was an issue.?Id.?at 1128.?Moreover, it is notable that the Defendants never objected to the location set forth in the Time of the Essence letter until now.

In the instant case, because the Plaintiff's Time of the Essence letter was adequate, the Defendants breached the Contract by failing to appear at the closing. The Plaintiff is, therefore, entitled to an Order granting Summary Judgment in its favor. While the Plaintiff submits an Affirmation by his Certified Public Accountant as evidence of the damages, this Court finds that this standing alone is insufficient proof as a matter of Law. Therefore, this matter is referred to JHO/Referee to determine the amount of damages. Accordingly, it is:

ORDERED that the Plaintiff's Motion for Summary Judgment is granted, and it is

ORDERED that the Defendants are directed to return the Plaintiff's down payment within 30 days of service of this Order with Notice of Entry, and it is

ORDERED that this matter is referred to a JHO to conduct a hearing on the issue of damages.

Dated: July 22, 2019

/s/_________

Loren Baily-Schiffman,

JSC

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In the matter at hand, the Court clearly held, on Summary Judgment, which the Court noted is an extreme remedy, that 20 days prior written notice is more than sufficient notice for purposes of setting a Law Date.?More importantly, the Court, in its Decision, made note of the fact that the Second Department has held that three (3) days prior written notice is more than sufficient notice.?A litany of prior cases are referred to in the Decision, noting extremely short time frames that have passed muster. So one should be wary of the fact that 30 days prior written notice is not carved in stone.

On a collateral note, the Contract of Sale, as executed, only requires that the Seller dispose of Violations that existed as of the date of the Contract of Sale.?In this instance, the Purchaser, in an effort to cancel the Contract, hung his hat on the existence of a Violation that post-dated the Contract of Sale, that was not disposed of. ?The Court for some odd reason, bought this argument. I don’t.

So what is the solution? As opposed to Attorneys continuing to circle the airport, at some point, one has to land.?So instead of waiting for a lawsuit to determine if the notice given was deemed to be “adequate notice” recite clearly in the Contract of Sale, by agreement among the parties as to what shall be deemed adequate notice.?How about a Clause in the Contract of Sale which reads as follows:

Notwithstanding anything to the contrary herein contained or otherwise, the parties hereto specifically acknowledge that with respect to the closing date contained in the Contract of Sale, time is not of the essence and that the closing of title shall take place on or about the date set forth in this Contract of Sale for closing of title at the offices of the Purchaser's Attorney or such other place as the Seller’s attorney and the Purchaser’s attorney shall otherwise ?agree, in writing.?Either party, however, may elect to make time to be "of the essence" on thirty (30) days prior written notice, which notice may not be given any earlier than the closing date set forth in the Contract of Sale, which notice shall be given to both the other Party and to the other Attorney, and such notice may be given by E-Mail, overnight delivery, certified mail or by personal delivery.