Defendants Allied Princes Bay Co. (APB) , Allied Princes Bay Co. No.2, L.P. (APB 2) (together, Allied), Muss Development L.L.C., and Joshua Muss (together, the Muss defendants), move for partial summary judgment (1) on the first counterclaim to declare the contract between the parties to be terminated; (2) on the first and third counterclaims declaring that plaintiff Princes Point LLC (Princes Point) has materially breached the contract thereby entitling Allied to keep the entire down payment and certain compaction payments; and (3) awarding the Muss defendants attorneys fees and costs.

Procedural Background

This action arises out of a real estate contract pursuant to which Princes Point agreed to purchase from Allied a 23-acre parcel of waterfront property in Staten Island that had previously been listed by the Department of Environmental Conservation (DEC) as a hazardous waste site (see Princes Point, LLC v AKRF Engineering, P.C., 94 AD3d 588 [1st Dept 2012]). A dispute erupted between the parties concerning the propriety of a shoreline revetment seawall, an issue which delayed obtaining various development approvals (Development Approvals) and forestalled the contract closing.

Princes Point commenced this action in 2008 alleging fraudulent inducement, negligent misrepresentation, and seeking specific performance of the contract with a purchase price [*2]abatement, and rescission of a March 2006 amendment to the contract.

Princes Point moved to amend the complaint to add causes of action for fraud, promissory estoppel and prima facie tort, which this Court denied, and the First Department affirmed (Princes Point, LLC, 94 AD3d 588).

The Muss defendants moved to dismiss Princes Point's complaint, which this Court granted in its entirety, and the First Department unanimously affirmed (110 AD3d 564 [1st Dept 2013]).

The Contract^[FN1]

Under the parties' contract (Contract), Princes Point warranted and agreed that it was "expressly purchasing the Real Property in its existing condition AS IS ... AND WITH ALL FAULTS' with respect to all facts, circumstances, conditions and defects"; that it had undertaken all inspections and investigations that it deemed necessary as to the condition of Property; and that it was relying strictly and solely upon its own inspections and examinations and the advice and counsel of its own consultants, agents, legal counsel and officers.

The Contract provided that the closing was to occur within 30 days following the date of notice from the seller that all necessary Development Approvals had been obtained, "but in no event later than the Outside Closing Date" (Contract. § 5.2 [a]).The Outside Closing Date was defined, in section 5.3 (a) of the Contract, as 18 months after the execution and delivery of the Contract. If the Development Approvals could not be obtained by the Outside Closing Date, the Contract provided that either party could terminate the Contract by 30 days notice to the other party, whereupon plaintiff's deposit would be refunded and the parties released from all obligations, except those expressly surviving its termination (id.).

The Contract also granted the buyer the right to extend the Outside Closing Date in 30 day increments, up to six times, for an additional payment of $200,000 per extension, which amounts would be deemed added to the deposit (id.). In the event that the seller exercised its option to cancel and terminate, the Contract granted the buyer the right to waive any Development Approvals not obtained and to proceed to closing without any abatement in the purchase price (id. § 5.3 [b]).

Princes Point did not terminate the Contract at the expiration of the due diligence period, and began actively marketing the Property.

However, Allied was unable to obtain all of the necessary [*3]final Development Approvals by the Contract's Outside Closing Date. By late 2005, the DEC revisited the site and expressed concern that the appearance of the revetment did not correspond to the DEC-approved plan, and advised Allied that the revetment would need to be reinspected.

Amendment to the Contract

Allied advised Princes Point of the DEC's request to reinspect the Property, and that the DEC might require that the revetment be modified to satisfy the DEC's concerns. After it became clear that additional time and money would be required to obtain the final Development Approvals, Allied advised Princes Point that it intended to exercise its right to terminate the Contract unless Princes Point agreed to amend the Contract to increase the purchase price by $2 million and the amount of the down payment, and to reimburse Allied for half of the cost that Allied would thereafter incur to obtain the remaining Development Approvals and to perform work on the revetment.

Princes Point agreed to these amended terms, and the parties executed an amendment to the Contract by letter agreement dated March 22, 2006 (the Amendment).

In return for Princes Point's agreement to increase the purchase price and down payment, and to reimburse Allied for its extra costs, Allied agreed to extend the Outside Closing Date until July 22, 2007 (the New Outside Closing Date). As a further inducement for Allied's agreement to the extension, Princes Point agreed not to commence any legal action against Allied in the event that the Development Approvals have not been obtained or the Revetment work was not completed by the New Outside Closing Date.

On August 6, 2006, the DEC rendered its judgment that the revetment was not constructed in accordance with the approved plan in certain material respects.

Although it disagreed with the DEC's determination, Allied elected not to challenge the DEC's judgment and entered into a consent order with the DEC, which set forth the manner in which the revetment was to be reworked. The consent order was finalized on September 7, 2007, and the rebuilding of the revetment commenced immediately after the consent order was finalized.

The last extension of the Contract expired on July 22, 2008. According to Allied, the revetment work was completed in March 2009, at a total cost of over $6 million.

During the rebuilding of the revetment, the parties to the Contract extended the New Outside Closing Date on a month-to-month basis until, in June 2008, Princes Point commenced the instant action, just prior to the expiration of the last extension to the Contract.

The Muss defendants assert that Princes Points' commencement of this action prior to the expiration of the New Outside Closing Date was an anticipatory breach of the Amendment, as incorporated into the Contract, ending all of Allied's obligations to perform thereunder, and entitles Allied to retain the down payment and certain compaction payments as liquidated damages, in addition to attorneys' fees. The Muss defendants also contend that the Contract terminated by its own terms when the parties failed to close or give notice of intent to terminate under sections 5.2 and 5.3 of the Contract on or before the New Outside Closing Date.

In opposition, Princes Point asserts that the Muss defendants' theory of anticipatory repudiation fails because Allied is unable to demonstrate that it was able to perform its obligations under the Contract. Princes Point argues that the record demonstrates that between June 2006 through December 31, 2011, the Muss defendants could not obtain the Development Approvals as a result of the DEC's discovery of their "deliberate and wilful failure" to construct the revetment in accordance with the DEC's approved design. Princes Point also argues that the Muss defendants cannot withdraw their claim for specific performance, citing to CPLR 3217 (b).

I. Princes Point anticipatorily breached the Contract.

There is no factual dispute that Princes Point anticipatorily breached the Contract by commencing this action prior to the New Outside Closing Date, which relieved Allied of its contractual obligation to seek and obtain any remaining Development Approvals.

The expiration of the New Outside Closing Date was July 22 2008. Princes Point commenced this action on June 20, 2008, asserting claims for, inter alia, fraudulent inducement and rescission of the Amendment, elimination of the requirement that Princes Point share in the cost of repairs to the revetment, and specific performance of the Contract with a purchase price abatement.

In addition to increasing the amount of the purchase price, the Amendment obligated Princes Point to increase the deposit as consideration for extending the New Outside Closing Date, and barred Princes Point from suing Allied over its inability to obtain the Development Approvals by the New Outside Closing Date. The relevant provision of the Amendment states, as follows:

Purchaser [Princes Point] covenants, as a material inducement to Seller's [Allied] contract to the new Outside Closing Date, not to commence any legal action against Seller (...) in the event that any of the Development Approvals have not been issued for the Revetment Work has not been completed by the New Outside Closing Date. Without limiting the generality of the foregoing, Purchaser [*5]acknowledges that Seller's efforts prior to the date hereof to obtain the Development Approvals have complied in all respects with the Seller's obligations under the Contract to seek to procure such Development Approvals (emphasis added) (Exhibit 6, annexed to the Fairman Aff.).

The complaint, now dismissed in its entirety, is premised upon allegations that the Muss defendants misrepresented the condition of the revetment and concealed that it had been defectively constructed in order to induce Princes Point to execute the Amendment.

Under the doctrine of anticipatory repudiation, "when a party repudiates contractual duties prior to the time designated for performance and before all of the consideration has been fulfilled, the repudiation entitles the non-repudiating party to claim damages for total breach" (Norcon Power Partners, L.P. v Niagara Mohawk Power Corp., 92 NY2d 458, 464-64 [1998] see generally Rachmani Corp. v 9 E. 96th St. Apt. Corp., 211 AD2d 262 [1st Dept 1995]).

By commencing this lawsuit for an abatement of the purchase price and for rescission of the Amendment prior to the expiration of the New Outside Closing Date, which was the final extension permitted by the Contract, Princes Point anticipatorily breached the Contract. The act of commencing this lawsuit and seeking the particular relief of rescission of the Amendment and abatement of the purchase price, Princes Point unequivocally notified the Muss defendants of its intention to renounce its contractual duties and avoid performance of its obligations under the Amendment. Allied was not thereafter required to perform its contractual obligation of obtaining the Development Approvals.

The Court rejects Princes Point's contention that the Muss defendants must demonstrate that they were ready, willing and able to perform prior to declaring Princes Point in breach of the Amendment. The ready, willing and able requirement only applies when the non-breaching party is seeking to recover lost profits or expectation damages, and does not apply where, as here, a party merely seeks to recover a down payment (In re Asia Global Crossing, Ltd., 404 BR 335, 341 [SD NY 2009] see also American List Corp. v U.S. News and World Report, Inc., 75 NY2d 38 [1989]).

The Muss defendants are not seeking expectation damages, and are seeking to retain the down-payment as liquidated damages for Princes Point's breach of the Amendment.

Princes Point's reliance upon Pesa v Yoma Dev. Group, Inc. (18 NY3d 527 [2012]), is misplaced. In that action, the Court of Appeals considered whether a buyer alleging anticipatory breach must show that it was ready, willing and able to close when the seller has repudiated the real estate contract. The Court held [*6]that issues of fact remained as to whether the seller had a right to cancel the contract, and whether the buyer's failure to fulfill a condition precedent to closing, obtaining a mortgage commitment, was a result of the seller's non-performance of its own obligations.

Here, in contrast, there is no credible assertion that the Muss defendants caused Princes Point's breach or somehow frustrated its performance, as was at issue in Pesa (Id.). Princes Point's complaint alleging that the Muss defendants breached any duties with respect to obtaining the Development Approvals has been dismissed as meritless.

II. Allied is entitled to retain the down payment and Compaction Payments as liquidated damages.

Under the terms of the Contract, the down-payment is "consideration for the rights granted to Buyer [Princes Point] to purchase Real Property and shall be non-refundable except as otherwise provided herein" (emphasis added) (Contract, § 3.2 [a]).

Additionally, section 2.6 (iv) states:

"[I]f this Contract fails to close or is terminated due to a default by Buyer ..., the Compaction Payments shall be deemed liquidated damages flowing from such Buyer default, and shall be retained by Seller as liquidated damages in addition to the liquidated damages specified under Section 10.2.^[FN2]"

Princes Point does not point to any provision of the Contract entitling it to a refund of the down-payment or the Compaction Fees.

Upon Princes Point's breach, Allied is entitled to retain the down payment and Compaction Payments as liquidated damages for its breach of the Contract (see generally Uzan v 845 UN Ltd. Partnership, 10 AD3d 230 [1st Dept 2004]).

III. The Contract terminated by its own terms.

The Contract plainly and expressly does not permit closing "later than the Outside Closing Date" under section 5.2. Notwithstanding Princes Point's breach, the Contract expired on its own terms, and the Muss defendants are entitled to this declaration. In this regard, Prince Point's assertion that the Contract is still in effect and that it still retains the right to compel a closing is puzzling.

The Contract contains an option to cancel the Contract, which either party may exercise following expiration of the Outside Closing Date, as follows:

Section 5.3 states:

(a) The parties agree that if, despite use of diligent efforts by Seller, and full cooperation by Buyer, Seller is unable to obtain all Development Approvals on or prior to the date which is eighteen (18) months after execution and delivery of this Contract by each of the parties (the "Outside Closing Date"), either party may thereafter terminate this Contract by notice to the other party ... whereupon the Deposit shall be refunded. Notwithstanding the foregoing, the Buyer shall have the right to extend the Outside Closing Date ... The maximum number of extensions shall be six ...

(b) Notwithstanding the foregoing, in the event Seller is the party that exercises its option to cancel and terminate this Contract as herein above provided, Buyer shall have the right, by notice to Seller ..., to waive any Development Approval and to proceed to Closing without any abatement in the Purchase Price" (emphasis added).

However, the unambiguous language of section 5.3 does not mandate that Allied exercise the option to terminate the Contract, as the Contract terminated at the expiration of the New Outside Closing Date, on July 22, 2008, under section 5.2.^[FN3]

Furthermore, the contention that the Muss defendants are prohibited from withdrawing a portion of their first [*8]counterclaim, that Princes Point immediately proceed to closing, is baseless. The Muss defendants seek to withdraw an alternate form of relief, and do not seek to discontinue the action, which would be subject to CPLR 3217 (b) ("an action shall not be discontinued by a party asserting a claim except upon order of the court").

Pleading in the alternative and seeking inconsistent, alternative forms of relief are permitted by the CPLR (Two Queens, Inc. v RND Enterprises, Inc., 296 AD2d 302 [1st Dept 2002]). Princes Point does not point to any authority that prohibits a party from pursuing one form of relief over another, particularly at this late stage of the action.

IV. Attorneys' fees.

The Muss defendants are entitled to recover its attorneys' fees as the "prevailing party" to this litigation, under section 13.1 of the Contract, which states:

"In the event of any litigation arising out of or under thisContract ... the prevailing party shall be entitled to collect from the non-prevailing party reasonable attorneys' fees and costs."

The Court has carefully considered Princes Point's additional arguments, and find them meritless.

According, it is

ORDERED that the defendants' motion for partial summary judgment is granted in its entirety, and the parties shall settle a judgment; and it is further

ORDERED that the issue of calculation of defendants' reasonable attorneys' fees and costs incurred in litigating this action is severed and referred to a Special Referee to hear and report, and counsel for the defendants shall, within 30 days from the date of this order, serve a copy of this order with notice of entry, upon the Special Referee Clerk, who is directed to place this matter on the calendar of the Special Referee's Part for the earliest convenient date.

Dated: January 31, 2014

ENTER:

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J.S.C.