SPECIFIC PERFORMANCE (THAT’S WHAT I WANT) – WOULD BE A TERRIBLE SONG TITLE

• Posted on: Jan 15 2021

The lyrics to the song “Money (That’s What I Want)”, written by Berry Gordy and Janie Bradford and covered by, inter alia, by The Beatles, seem shortsighted when contemplating available remedies in a breach of contract action.  Thus, according to the song “money don’t get everything, it’s true, what it don’t get, I can’t use, now give me money, that’s what I want.”  While money damages in an action at law may “afford a full and complete remedy” to make a plaintiff whole in the event of a contractual breach, such is not always the case.  Le Bel v. Donovan, 96 A.D.3d 415 (1^st Dep’t 2012) (citation and internal quotation marks omitted).

Many times, remedies for the breach of a contract other than monetary damages are necessary to make a plaintiff whole.  One such remedy is specific performance [a topic previously addressed by this BLOG], which “will not be ordered where money damages would be adequate to protect the expectation interests of the injured party.”  Sokoloff v. Harriman Estates Development Corp., 96 N.Y.2d 409, 415 (2001) (citations and internal quotation marks omitted).  Specific performance is an equitable remedy that, instead of awarding money damages to the prevailing party, requires the breaching party to perform under the contract.  “Specific performance is appropriate, however, when ‘the subject matter of the particular contract is unique and has no established market value.’”  BT Triple Crown Merger Co., Inc. v. Citigroup Global Markets Inc., 19 Misc. 3d 1129, *8 (NOR) (Sup. Ct. N.Y. Co. 2008) (quoting Van Wagner Advert. Corp. v. S&M Enters., 67 N.Y.2d 186, 193 (1986)).  “The point at which breach of a contract will be redressable by specific performance thus must lie not in any inherent physical uniqueness of the property but instead the uncertainty of valuing it….”  Van Wagner, 67 N.Y.2d at 193.  The Sokoloff Court also stated that:

The decision whether or not to award specific performance is one that rests in the sound discretion of the trial court. In determining whether money damages would be an adequate remedy, a trial court must consider, among other factors, the difficulty of proving damages with reasonable certainty and of procuring a suitable substitute performance with a damages award (see, Restatement [Second] of Contracts § 360). Specific performance is an appropriate remedy for a breach of contract concerning goods that “are unique in kind, quality or personal association” where suitable substitutes are unobtainable or unreasonably difficult or inconvenient to procure (see, id., comment c ).

Sokoloff, 96 N.Y.2d at 415.

It is generally accepted that “the equitable remedy of specific performance is routinely awarded in contract actions involving real property, on the premise that each parcel of real property is unique.”  Alba v. Kaufman, 27 A.D.3d 816, 818 (3^rd Dep’t 2006) (citations and internal quotation marks omitted).  Supreme court denied purchaser’s motion and granted seller’s cross-motion.

Ashkenazi v. Miller, a case decided by the Appellate Division, Second Department, on January 13, 2021, involved a lawsuit for specific performance of a real estate transaction.  The plaintiff, as buyer, entered into a contract with defendant, as seller, to purchase a building in Brooklyn for $2,050,000.  Among other things, the contract provided for a $200,000 down payment, a closing within 6 months (or on August 12, 2021) and no mortgage contingency.  The parties began negotiating an adjourned closing date but could not agree on a new date.  Accordingly, seller’s counsel sent a “time of the essence” letter setting a closing date for September 3, 2014. The letter provided that “if the plaintiff failed to appear at the closing, he would be in default and would forfeit all rights under the contract, including the down payment.”  When plaintiff failed to appear at the September 3^rd closing, defendant declared plaintiff to be in default and retained the down payment.

The Ashkenazi buyer commenced an action in supreme court in which he sought specific performance of the real estate contract.  Seller counterclaimed for a declaratory judgment that he was entitled to retain the down payment.  Defendant seller moved for summary judgment, inter alia, dismissing the complaint and the plaintiff cross-moved for summary judgment.  Supreme court denied plaintiff’s cross-motion for summary judgment on the complaint, granted defendant’s motion for summary judgment dismissing the complaint, but denied defendant’s motion for summary on its counterclaim seeking a declaration of entitlement to retain the down payment.  Plaintiff appealed and defendant cross-appealed.  The Second Department affirmed supreme court’s decision regarding the denial of plaintiff’s motion and reversed the denial of defendant’s cross-motion.

In so doing the Court recognized that “[t]o prevail on a cause of action for specific performance of a contract for the sale of real property, a plaintiff purchaser must establish that it substantially performed its contractual obligations and was ready, willing, and able to perform its remaining obligations, that the vendor was able to convey the property, and that there was no adequate remedy at law.”  (Citations and internal quotation marks omitted.)  As to the requirement of establishing that a purchaser was “ready, willing and able” to purchase, the Court stated:

In moving for summary judgment on a complaint seeking specific performance of a contract, the plaintiff purchaser must submit evidence demonstrating financial ability to purchase the property in order to demonstrate that it was ready, willing, and able to purchase such property” (Grunbaum v Nicole Brittany, Ltd., 153 AD3d 1384, 1385; see Kaygreen Realty Co., LLC v IG Second Generation Partners, L.P., 78 AD3d 1010, 1015). “When a purchaser submits no documentation or other proof to substantiate that it had the funds necessary to purchase the property, it cannot prove, as a matter of law, that it was ready, willing, and able to close” (Fridman v Kucher, 34 AD3d 726, 728; see GLND 1945, LLC v Ballard, 172 AD3d 1330, 1331).

The Court held that Ashkenazi buyer failed to demonstrate that he was a “ready, willing and able” purchaser because he submitted no evidence as to his “financial ability to purchase the property on the closing date” and admitted at his deposition that he did not have the funds to close.  

As to the seller’s burden on a motion for summary judgment dismissing a cause of action for specific performance, the Ashkenazi Court stated:

A defendant seller moving for summary judgment dismissing a cause of action for specific performance of a contract for the sale of real property has the burden of demonstrating the absence of a triable issue of fact regarding whether the plaintiff buyer was ready, willing, and able to close (see Point Holding, LLC v Crittenden, 119 AD3d 918, 919; Revital Realty Group, LLC v Ulano Corp., 112 AD3d 902, 904). Additionally, the seller must demonstrate, prima facie, that the buyer was in default (see Point Holding, LLC v Crittenden, 119 AD3d at 919; Nehmadi v Davis, 63 AD3d 1125, 1128).

The Court found that defendant’s “clear, distinct, and unequivocal” “time of the essence” letter setting the closing for September 3, 2014, obligated the parties to close on that date.  The seller was “ready, willing and able” but the buyer was not.  Also, because seller demonstrated that buyer failed to appear at the closing, buyer’s default was established.  Because “[a] buyer who defaults on a real estate contract without lawful excuse, cannot recover the down payment, at least where, as here, that down payment represents 10% or less of the purchase price,” the seller was entitled to a judgment declaring that he was entitled to retain the down payment.