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New York Commercial Division Case Compendium A Searchable Database of Court Decisions Issued by New York’s Commercial Division

Contractual Provision Deemed a Timing Mechanism Rather Than a Condition Precedent

Posted in Breach of Contract, Demarest, Carolyn E., Kings, Motion to Dismiss, Real estate, Summary Judgment

In an October 14, 2015 Commercial Division decision by Justice Demarest, the court denied defendant’s motion to dismiss, and granted plaintiff’s cross motion for summary judgment on his cause of action for specific performance of a contract.

In 1993, the parties began purchasing properties together and formed a general partnership, which they owned 50-50. Together they owned, managed, and leased four properties. In 2012, the parties entered an agreement to split the properties between them. In 2015, plaintiff filed this action alleging that defendant attempted to cancel the agreement and refused to consummate the transfers of title as set forth in the agreement. Defendant subsequently moved to dismiss the complaint alleging that the agreement is unenforceable because it contains a condition precedent that was never met. Plaintiff then filed his motion seeking an order to convert defendant’s motion into one for summary judgment, and granting him summary judgment.

Defendant alleged that paragraph 7 of the agreement, stating “the parties shall use their best efforts to consummate the transactions contemplated herein as soon as advised by both parties’ CPAs,” was a condition precedent. The court held that “[a]s a general rule, it must clearly appear from the agreement itself that the parties intended a provision to operate as a condition precedent.” Here, there was no clear language in the agreement that the parties intended paragraph 7 to operate as a condition precedent. Rather, it appeared from the language that paragraph 7 “was simply a timing mechanism to determine the date of transfer of the properties in accordance with the agreed-upon terms.” Thus, the court denied defendant’s motion to dismiss.

The court then turned to plaintiff’s motion. CPLR 3211(c) provides that the court may treat a motion to dismiss as a motion for summary judgment even though issue has not been joined where the issue involves the construction, interpretation, and application of an unambiguous contractual provision. The court may also grant summary judgment, despite the lack of joinder of issue, “when the respective submissions of both parties demonstrate that they are laying bare their proof and deliberately charting a summary judgment course.”

Here, defendant conceded in her reply memorandum that there is no triable issue, and that the failure of the condition precedent would be dispositive of the action. In addition, both parties submitted affidavits and documentary evidence. Thus, the court treated defendant’s motion to dismiss as one for summary judgment and addressed plaintiff’s cross motion for summary judgment despite the lack of joinder of issue.

Ultimately, the court granted summary judgment in favor of plaintiff on his specific performance claim because he submitted proof of the validity of the agreement, his performance thereunder, and that he was a ready, willing, and able to proceed. Because plaintiff could not prove that he sustained damages, the court denied summary judgment on plaintiff’s cause of action for breach of contract.

Gee v Zee Ying Wng, Sup Ct, Kings County, Oct. 14, 2015, Demarest, J., Index No. 503182/2015