93 A.D.3d 115
N.Y. App. Div.2012Background
- Latipac contracted July 15, 2008 to buy a 24-unit apartment building with J-51 tax benefits for $6.2 million, and Schedule B identified nine units as FM with legal rents above $2,000.
- The contract included broad non-reliance and limitation clauses (Paragraphs 35, 41, 43, 48) governing representations, remedies for DHCR actions, and termination rights.
- DHCR’s pre-Tishman practice treated several units as luxury decontrolled; Tishman (Mar. 5, 2009) later held that J-51 buildings’ rent-stabilized units were not luxury decontrolled while benefits lasted.
- Closing was time‑of‑the‑essence and delayed by adjournments; Latipac claimed BMH breached by unresolved DHCR decreased service orders and demanded a $310,000 deposit refund.
- Latipac filed suit Jan. 29, 2009 seeking deposit return and a preliminary injunction to stop closing; TRO denied and closing proceeded later.
- BMH argued Tishman’s rule was not retroactive to a buyer-seller contract dispute and that Latipac bore the risk of regulatory change between contracting and closing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Tishman affect purchaser's closing obligation? | Latipac argues Tishman retroactively excuses performance. | BMH contends the Tishman rule is not retroactive in a contract dispute and did not excuse Latipac. | Tishman retroactivity not applicable to contract dispute; Latipac bears the risk. |
| What time frame governs the nine FM units’ status in the representation? | Nine FM units should be deregulated at closing under Tishman. | Representation speaks only as of contracting; no promise to keep status until closing; risk lies with buyer. | Representation spoke only at contracting; Latipac bears the risk of change between contracting and closing. |
| Is the credit mechanism for unresolved DHCR orders sufficiently definite? | Paragraph 43 is indefinite and amounts to an agreement to agree. | Credit can be computed by reference to Rent Stabilization Law § 25-516(a). | Credit amount is ascertainable by reference to § 25-516(a); paragraph 43 is enforceable. |
| Was Latipac entitled to injunctive relief to delay or prevent closing based on Tishman? | Tishman invalidates the nine-FM-unit representations and justifies delay/relief. | No entitlement to injunctive relief; delays were unfounded and did not excuse performance. | Latipac not entitled to preliminary injunction; denial affirmed. |
| Did equitable doctrines excuse performance or require restitution of the deposit? | Equitable principles excused Latipac from closing and entitled restitution. | No restitution; Latipac delayed closing and bore pre-closing risk; no frustration of purpose. | No relief under impossibility/frustration; Latipac bears pre-closing risk; deposit recovery denied. |
Key Cases Cited
- Urbis Realty Co. v. Globe Realty Co., 235 N.Y. 194 (1923) (change in law between contracting and closing does not relieve buyer of contract)
- Cobble Hill Nursing Home v. Henry & Warren Corp., 74 N.Y.2d 475 (1989) (indeterminacy doctrine; extrinsic standard may fix contract meaning)
- Tishman Speyer Props., L.P. v. Roberts, 13 N.Y.3d 270 (2009) (J-51 benefits/building rent status not luxury decontrolled during benefits)
- Roberts v. Tishman Speyer Props., L.P., 62 A.D.3d 71 (1st Dep’t 2009) (affirmed Tishman holding on appeal)
- Gersten v. 56 7th Ave. LLC, 88 A.D.3d 189 (2011) (res judicata considerations in post-Tishman contexts)
- 72A Realty Assoc. v. Lucas, 32 Misc.3d 47 (2011) (pre-Tishman DHCR interpretations; cites pre-Tishman code)