Wednesday, October 3, 2012

SELLING A HOME IN TODAY'S MARKET

The factual background of "184 JORALEMON LLC, Plaintiff, v. BROOKLYN LAW SCHOOL, Defendant. 31 Misc 3d 1201(A) Supreme Court, Kings County. Decided March 28, 2011":

"This action arises out of plaintiff's attempted purchase of property owned by defendant located at 184 Joralemon Street, Brooklyn, New York (the "Property") and the disputed enforceability of a Proposed Agreement of Sale (the "Agreement"), executed on December 16, 2010 by plaintiff's member, Albert Laboz, but not by defendant, by which defendant purportedly agreed to sell plaintiff the Property for $9,200,000. Defendant claims that it did not execute the Agreement because it received a subsequent higher bid for the Property and had a fiduciary obligation to accept that bid.
Section 28 of the Agreement states: "BINDING EFFECT. The submission of this Agreement to Purchaser shall not be construed as an offer, nor shall Purchaser, or any other person, corporation, or other entity have any rights with respect thereto, unless and until both Seller and Purchaser shall have executed this Agreement, and a fully executed copy is delivered to Purchaser or his attorney" (Ex. C to Motion). Section 29 of the Agreement states: "It is understood and agreed that all understandings and agreements heretofore had between the parties hereto are merged into this Agreement . . ." (id.).

On Thursday, December 16, 2010, Edward Duffy, counsel for plaintiff, sent an email to Dennis Konner, counsel for defendant, at 1:39 PM stating, "I am attaching clean and marked versions of the revised purchase agreement. Please note that in the interest of speed I am sending it to my client simultaneously and it remains subject to his review and comment" (Ex. D to Motion).

That same day, at 2:01 PM, Konner responded, "Ed, Other than attaching the form of the student Housing License which should be removed, your changes are acceptable to us. Please add the Seller's FEIN-23-7227990 to the Escrow Agreement and add the Purchaser's FEIN if it is available. You should also date the Agreement and Escrow Agreement. Please send a clean and redlined version against the prior version so we can forward same to the Seller for approval." At 3:11 PM, Duffy replied, "Dennis, Per your voice mail, the attached shows all changes made today" (id.).

At 5:35 PM, Duffy then wrote, "Dennis, I am attaching the Agreement of Sale, executed by the buyer. The escrow agreement attached to the Agreement of Sale is also signed. I revised the Agreement to include counterpart languages, as we discussed; clean and marked versions are attached as well. Rather than increase the deposit under the contract to $2,000,000, we want to have refunded the $160,000 overpaid in the $2,000,000 wire sent to your firm's escrow account earlier today. Please wire the $160,000 in accordance with the wire instructions below and retain the remaining $1,840,000 in accordance with the terms of the Agreement of Sale and Escrow Agreement . . . . I will messenger three signed copies of the Agreement of Sale to your attention tomorrow. Thanks. We look forward to receiving the seller's signature pages" (id.). According to the complaint, on December 17, 2010, defendant's counsel, acting as Escrow Agent, refunded plaintiff the $160,000, retaining the remaining balance in accordance with the terms of the Agreement.
 
At 5:57 PM on December 16, 2010, Laboz sent an email to Frederick Cohen, another of defendant's counsel from Duane Morris LLP, and Joan Wexler, the president of Brooklyn Law School, containing only the subject heading, "Are we done?" At 8:50 PM, Wexler replied, "I just got home. I've been at meetings and then holiday parties tonight. Please forgive me. I haven't had a chance to review the latest contract. Tomorrow, again I will be out of the office, but Monday, I'll be back full strength and I will look it over. I am confident all will be fine." At 8:54 PM, Laboz responded, "My money was wired today. Don't be such a lawyer, you're more than adequately represented" to which Wexler replied, "Keep calm. We'll be good." At 9:01 PM, Laboz wrote, "I'll defer to you. We're ready when you are" (id.).

At a meeting on December 20, 2010, Wexler advised Laboz that defendant was declining to sign the contract and accepting a higher offer. At the time, defendant had not yet returned the $1,840,000 deposit.

Plaintiff filed a notice of pendency and commenced this action on December 30, 2010 by filing a summons and complaint, seeking specific performance of the Agreement and damages incurred from an alleged breach of contract. Defendant subsequently brought the instant motion, by order to show cause, and appeared for oral argument on March 9, 2011.

Plaintiff claims that, although unsigned by the defendant, the Agreement is valid and enforceable as it had been agreed to in principle and merely required execution, as evidenced by email correspondence between the parties. Defendant claims that, to be valid and enforceable, the Agreement must satisfy the statute of frauds and must have been executed by all parties, as required by the express language in the Agreement itself."

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