Princes Point LLC v. Muss Development LLC

Facts

P agreed to purchase the property from Ds. A purchase agreement was executed in 2004. As a condition precedent to closing, D was required to deliver certain government approvals necessary to develop the property. The agreement prescribed [a closing date of 30 days after P received notice that the approvals had been obtained but in no event later than the 'Outside Closing Date,' which the agreement defined as 18 months after the execution and delivery of that compact. If the approvals could not be obtained by the outside closing date, then either party could terminate the agreement upon 30 days' notice. P retained an option to waive the approvals and proceed to closing. Hurricane Katrina made its presence known and D was required to remedy defects in retaining walls. D was unable to obtain the requisite development approvals by the closing date and advised P that it intended to exercise the right to terminate the agreement unless P agreed to amend it. P and D amended the purchase contract to increase the purchase price and down payment to be made with respect to the property, to require the parties to share in the costs of remediation, and extend the 'Outside Closing Date' for the sale to July 22, 2007. That date was extended-on approximately 11 occasions-to July 22, 2008, based on the ongoing nature of the remedial work required to close the sale. The amendments contained a forbearance clause, which provided that, 'as a material inducement to D's agreement to the New Outside Closing Date,' P would 'not . . . commence any legal action against D if any of the Development Approvals had not been issued or the remedial work had not been completed by the New Outside Closing Date. One month before the final new outside closing date, P commenced this action alleging fraud in the inducement of the amendments to the contract. P sought to eliminate the increase in the purchase price and the requirement that P share in the cost of repairs to the property. Ds sought a judgment declaring that either the contract had terminated or P must immediately proceed to close without any abatement in the purchase price. Ds also alleged that, by failing to close the transaction in accordance with the contract, P defaulted on that agreement, thereby entitling D to retain 'the entire down payment,' as well as the payments P made in furtherance of its obligation to share in the cost of the remediation of the property. P's causes of action were dismissed. Ds sought a judgment declaring that the contract is terminated and that P materially breached the contract. The Court granted the motion, adjudging that the contract had 'expired by its terms' and that P 'materially breached' that compact, entitling defendants to, among other things, retain the down payment and the remedial payments made pursuant to the amendments to that agreement. The Appellate Division affirmed and determined 'that because a rescission action unequivocally evinces the plaintiff's intent to disavow its contractual obligations, the commencement of such an action before the date of performance constitutes an anticipatory breach.' P appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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