Failure to Satisfy Condition Precedent Bars Breach of Contract Claim

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Posted on: Sep 30 2025

In Macklowe Inv. Props. LLC v. MIP 57th Dev. Acquisition LLC, 2025 N.Y. Slip Op. 05192 (1st Dept. Sept. 30, 2025) (here), the plaintiff, a real estate brokerage, sued pursuant to a letter agreement for a leasing commission after securing a tenant for defendants’ property. The letter agreement required satisfaction of a condition precedent before payment of the commission: execution of a leasing commission agreement. Plaintiff never fulfilled this condition. The motion court held that without satisfying this requirement, plaintiff’s breach of contract claim had not yet ripened. Plaintiff argued futility and waiver, but the motion court rejected these claims, noting that defendants had offered a draft agreement and never refused to negotiate. The First Department affirmed the motion court’s ruling, emphasizing that the condition precedent was never met and defendants did not act in bad faith to prevent its fulfillment. Thus, no commission was owed.

Background

Plaintiff, a licensed real estate brokerage office, and defendants entered into a development management agreement and a property management agreement. Defendant, MIP 57th Development Acquisition, LLC (“MIP Acquisition”), is the owner of the retail and garage portions of certain real property located on Park Avenue in New York City. Defendant, MIP Acquisition is also the owner of the adjoining real property located on East 57th Street in New York City, as successor by merger to defendant NY Medical Investors, LLC. Defendant, 432 Park Properties Inc., together with defendants MIP Acquisition and NY Medical, hold an ownership interest in MIP 57th Development Holding, LLC, which owns MIP Acquisition.

On April 7, 2017, the parties entered into a letter agreement (the “Agreement”) that, among other things, set forth the terms and conditions under which plaintiff, acting as a real estate broker, would be entitled to a leasing commission in connection with the lease of commercial space at real property owned by MIP Acquisition. Relevant to the Court’s decision, Section 5 of the Agreement contained a condition precedent specifying when plaintiff would be entitled to a commission: “[Plaintiff] shall be entitled to receive a standard New York City commission rate with respect to any final lease agreement executed by Phillips [de Pury / Mercury Group] … [when plaintiff] has executed an industry-standard leasing commission agreement in form and substance reasonably satisfactory to [MIP Acquisition] pursuant to which [plaintiff] shall provide customary representations and warranties and, solely with respect to Phillips ….”

On December 7, 2018, an affiliate of Phillips de Pury / Mercury Group, Phillips Auctioneers LLC (“Phillips”), entered into a lease agreement (“Lease”) with MIP Acquisition to lease certain retail space located at the subject property. Pursuant to the Lease, Phillips agreed to pay MIP Acquisition $121,642,500 in rent over the course of a 15-year term.

On January 16, 2019, plaintiff sent defendants an invoice for the leasing commission that it calculated at $3,282,622.00. Defendants disagreed with plaintiff’s calculation; thus, no commission was paid.

In December 2021, plaintiff brought suit alleging that it was entitled to a leasing commission under the Agreement. In that regard, Plaintiff asserted three causes of action: breach of contract; breach of the implied covenant of good faith and fair dealing; and in the alternative, unjust enrichment.

Motion Court’s Decision and Order

Both parties filed motions for summary judgment. Plaintiff sought summary judgment as to both liability and damages for its breach of contract cause of action. In support of its motion, plaintiff contended that defendants refused to pay the standard New York City commission rate for the tenant it procured for the property.

In opposition and in support of its own motion for summary judgment, defendants contended that plaintiff failed to satisfy the condition precedent in the Agreement, thus plaintiff’s claims were not yet ripe.

Both parties relied on Section 5 of the Agreement.

During oral argument, plaintiff claimed that providing defendants with the industry-standard leasing commission agreement, as set forth in Section 5 of the Agreement, was futile because defendant argued that plaintiff was not entitled to the amount it sought.

The motion court held that it was not futile to comply with the terms of the Agreement and that defendants did not waive their right to the executed leasing commission agreement identified in the underlying agreement.

Consequently, the motion court denied plaintiff’s motion and granted defendant’s cross-motion for summary judgment.

Plaintiff appealed. The First Department affirmed.

The First Department’s Decision

The Court held that “[d]efendants met their prima facie burden of establishing that their obligation to pay plaintiff a commission pursuant to the letter agreement was never triggered and thus that defendants did not breach the agreement.”[1] Noting that “it [was] undisputed that the parties never entered into a leasing commission agreement,” the Court explained that the failure to enter into such an agreement was “a condition precedent to defendants’ obligation to pay plaintiff a commission pursuant to the parties’ April 7, 2017 letter agreement.”[2]

The Court also held that “[p]laintiff failed to raise a triable issue of fact as to whether defendants waived the condition precedent.”[3] “Defendants were not required to repeatedly remind plaintiff of its obligations under the agreement,” said the Court.[4]

Finally, the Court rejected plaintiff’s argument that defendants prevented the condition precedent from occurring.[5] Under New York’s prevention doctrine, “[i]f a promisor himself is the cause of the failure of performance of a condition upon which his own liability depends, he cannot take advantage of the failure.”[6] The prevention doctrine applies where a party takes steps in bad faith to cause the condition precedent’s failure.[7] The Court found that “[w]hile the record indicate[ed] that there was disagreement as to the amount of the commission to which plaintiff was entitled, defendants never indicated that they would not enter into ‘an industry-standard leasing commission agreement in form and substance reasonably satisfactory to’ them, as set forth in the letter agreement.”[8] The Court noted that “[d]efendants offered plaintiff a proposed leasing commission agreement in October 2019, and there [was] no evidence indicating that plaintiff ever countered with another proposed commission agreement, or that defendants declined to enter into a commission agreement or would have done so.”[9] “Thus,” concluded the Court, “plaintiff ha[d] not … raised an issue of fact as to prevention”.[10]

Takeaway

As shown in Macklowe, courts will not enforce a party’s contractual rights unless all agreed-upon terms have been satisfied, such as conditions precedent. In Macklowe, plaintiff’s right to a commission was contingent upon executing a separate leasing commission agreement. Because that condition never occurred, the obligation to pay never arose.

Macklowe also demonstrates that a waiver of rights requires clear intent. A party’s failure to enforce a contractual term does not automatically constitute waiver. In Macklowe, the Court emphasized that waiver must be intentional and clearly demonstrated. Silence or inaction, even over time, is insufficient to establish a waiver.

Macklowe further shows that the prevention doctrine is narrowly applied. In Macklowe, plaintiff argued that compliance was futile and that defendants prevented performance. The Court rejected both arguments, stating that futility must be based on clear evidence that performance would have been refused, and prevention requires bad faith conduct. Mere disagreement over payment terms does not meet these requirements.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] Slip Op. at *1.

[2] Id. “A condition precedent is an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises.” Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690 (1995) (internal quotation marks omitted).

[3] Id. “Contractual rights may be waived if they are knowingly, voluntarily and intentionally abandoned. Such abandonment may be established by affirmative conduct or by failure to act so as to evince an intent not to claim a purported advantage.” Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 N.Y.3d 96, 104 (2006) (internal quotation marks and citation omitted). “[W]aiver should not be lightly presumed” and must be based on a clear manifestation of intent to relinquish a contractual protection.” Id.

[4] Id. Courts may not infer waiver from “mere silence”. Homapour v. Harounian, 200 A.D.3d 575, 576 (1st Dept 2021) (internal quotation marks omitted).

[5] Id.

[6] Vector Media, LLC v. Golden Touch Transp. of N.Y., Inc., 189 A.D.3d 654, 655 (1st Dept. 2020) (internal quotation marks omitted).

[7] See Ellenberg Morgan Corp. v. Hard Rock Cafe Assoc., 116 A.D.2d 266, 271 (1st Dept. 1986).

[8] Slip Op. at *1.

[9] Id.

[10] Id.

Tagged with: Breach of Contract, Business Litigation, Commercial Litigation