28th Highline Associates, L.L.C. v. Roache
OPINION AND ORDER: re: 21 MOTION for Judgment on the Pleadings filed by 28th Highline Associates, L.L.C.; 30 CROSS MOTION for Judgment on the Pleadings filed by Iain Roache. Based on the conclusions set forth above, judgment for Plaintiff on th e pleadings is granted and the Defendant's cross-motion is denied. For the reasons set forth, Defendant's second counterclaim, for declaratory judgment that he is entitled to the return of the Deposit, is dismissed. In view of the Opinion i n this action entered this date, the discovery motions are moot and dismissed. Enter judgment on notice. IT IS SO ORDERED. (Signed by Judge Robert W. Sweet on 2/22/2019) (ama) Transmission to Orders and Judgments Clerk for processing. Modified on 2/25/2019 (ama).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
28TH HIGHLINE ASSOCIATES, L.L.C.,
18 Civ. 1468
Attorneys for Plaintiff
CLARICK GUERON REISBAUM LLP
220 Fifth Avenue, 14 th Floor
New York, NY 10001
Emily Reisbaum, Esq.
Nicole Gueron, Esq.
Ashleigh Hunt, Esq.
Attorneys for Defendant
SMITH, GAMBRELL & RUSSELL, LLP
1301 Avenue of the Americas, 21 st Floor
New York, NY 10019
By: Michael P. Regan, Esq.
Plaintiff 28 th Highline Associates, L.L.C.
or "Highline") has moved for judgment on the pleadings pursuant
to Fed. Rule Civ. P. 12(c) and for fees and costs pursuant to
the parties' agreement.
Plaintiff seeks the release of a deposit on a luxury
apartment pursuant to a written agreement between the property
seller and purchaser after the Defendant failed to close on the
purchase. Under the agreement dated December 2015
"Agreement"), Defendant agreed to purchase from Plaintiff a
condominium apartment, a storage unit, and a parking space in a
building then under construction in Manhattan. As required,
Defendant placed a 20 percent deposit on the property, in the
amount of $2,113,000.00, to be held in escrow until the closing
of title and Defendant's transfer to Plaintiff (the
sponsor/seller) of the remainder of the purchase price.
When construction completed in July 2017, Plaintiff
notified Defendant of the scheduled closing date, but Defendant
did not close on the sale within the time prescribed by the
Agreement. Pursuant to the Agreement, Plaintiff issued a notice
of default on November 9, 2017, giving Defendant 30 days to cure
and close. Defendant failed to close within the prescribed cure
After fruitless discussions between the parties, on
January 19, 2018, Plaintiff wrote Defendant that it was planning
to terminate the Agreement pursuant to its explicit termination
provisions. In response, Defendant issued a notice to the escrow
agent claiming that he was fraudulently induced into the
Agreement through alleged oral misrepresentations, and
instructed the escrow agent to hold the deposit. On January 24,
2018, Plaintiff terminated the Agreement and demanded that the
escrow agent release the deposit. However, under the Agreement,
the escrow agent may not release the deposit until either:
the parties jointly execute a statement in writing directing
that it be released; or (2) a final, non-appealable order or
judgment of a court is entered. This action therefore ensued
seeking release of the deposit. The Defendant filed
counterclaims alleging fraudulent inducement and repudiation.
Based upon the conclusions set forth below, the motion of the
Plaintiff is granted, and the cross-motion of the Defendant is
I. Prior Proceedings and Allegations
In 2014, construction began on 520 West 28th
Condominium (the "Condominium"), located at 520 West 28th
Street, New York, NY 10001 (the "Building").
Emily Reisbaum, dated May 25, 2018
("Reisbaum Deel.") Ex. 1
("Compl."), 11 2, 15, 17). The Building was designed by the
Pritzker Prize-winning architect Zaha Hadid and is located
immediately adjacent to the High Line.
(Id. 1 16). Plaintiff,
the sponsor under the offering plan of the Condominium, began
listing planned apartments for sale while construction of the
Building took place.
(Id. 11 15, 17). One planned apartment was
Unit 33 (the "Apartment"), a three-bedroom apartment located on
the 17th floor of the Building.
(Id. 1 1 7) .
Defendant is a non-citizen who resides in Gibraltar.
(Reisbaum Deel. Ex. 2 ("Roache Deel."), 1 1). He is the Chairman
of Domain Venture Partners, where he manages a structured
investment fund for experienced investors.
(Id. 11 11-12). In
December 2015, with the advice of two lawyers (his in-house
counsel and a specialized New York City real estate attorney),
Defendant agreed to buy the Apartment and related property.
Reisbaum Deel. Ex. 3, Plaintiff's Reply to Counterclaims
("Reply"), 1 8; Ex. M). The purchase was documented in an
agreement and related riders, dated and executed on December 22,
(altogether the "Agreement").
(Compl. Ex. A). The Agreement
explicitly incorporated by reference the Condominium's offering
plan (the "Offering Plan"), which provided additional details
regarding the Building and the Apartment.
(Id. at i
Defendant received a copy of the Offering Plan, and all
(Id. at i 11.1; see also Reisbaum Deel. Ex. 4,
Defendant agreed to purchase the Apartment for
(Compl. Ex. A. i i 2, 3.1). He also agreed to
purchase licenses for the right to a storage unit
Vault") and parking space (the "Parking Space")
Storage Vault License, and Parking Space License altogether, the
"Property"), in the Building for $250,000 and $520,000
respectively, for a total of $10,565,000.00
(Compl. Ex. A. Rider to Agreement Re: Storage Vault
1.A; Rider to Agreement Re: Parking Space License i
Defendant agreed that he would place a 20% deposit on
the Property, in the amount of $2,113,000.00
(the "Deposit"), at
the date of signing, to be held in escrow by Levitt & Boccio,
LLP (the "Escrow Agent"), until the close of title on the
Apartment ( the "Closing") .
( Comp 1. Ex. A.
Agreement Re: Storage Vault License
Re: Parking Space License
3. 1, 4. 1; Rider to
l.B; Rider to Agreement
l.B.; Escrow Rider
would designate the date of the Closing on 30 days' notice,
subject to Defendant's right to "one (1) adjournment of the
closing for a period not to exceed thirty (30) calendar days[.]"
(Compl. Ex. A.
5.1, see also Rider to Purchase Agreement
At the Closing, Defendant would pay the balance of the Purchase
Price, $8,452,000.00, to Plaintiff, the Escrow Agent would
release the Deposit to Plaintiff, and Defendant would receive
the deed to the Apartment.
3.l(b); Escrow Rider
The Agreement defined certain events that would
constitute Defendant's default under the contract (an "Event of
Default"), and the consequences stemming therefrom.
Defendant's failure to pay the Balance on the closing date
designated by Plaintiff, after the expiration of all adjournment
rights granted to Defendant, constituted an Event of Default.
12; see also Rider to Purchase Agreement
A, B) .2 After
Plaintiff had given Defendant notice of the same, the Agreement
provided Defendant an additional 30 days to cure, during which
time was "of the essence." (Compl. Ex. A.
12 (b)). If Defendant
failed timely to cure, Plaintiff had "sole discretion" to cancel
the Agreement, and as its sole remedy, the right to retain as
liquidated damages the Deposit and any interest earned thereon.
(Id.). The Agreement also gave Plaintiff sole discretion not to
strictly enforce the cure period without waiving any of its
such that Plaintiff could subsequently invoke
the default provisions for Defendant's failure timely to close.
(Id. at~ 30.)
The Parties explicitly agreed that neither would
challenge the validity of the Agreement with respect to the
liquidated damages, nor Plaintiff's right to retain the Deposit
in the event of Defendant's default.
12(d) .) This damages
provision was agreed to "VOLUNTARILY, AFTER NEGOTIATION, WITHOUT
DURESS OR COERCION BY ANY PARTY UPON ANY OTHER PARTY," and with
each party having been, or having the full and adequate
opportunity to be, represented and advised by "COUNSEL,
ACCOUNTANTS, BROKERS, APPRAISERS AND OTHER EXPERTS AND ADVISORS
OF ITS OWN CHOOSING."
Defendant was in fact represented by
counsel, Jesse Gordon of Costello & Gordon LLP, during the
Agreement's negotiation, as well as his in-house counsel.
8; Ex. M.)
In addition to the representations in the Agreement
and Offering Plan, Defendant agreed that he had not relied on
any other representations, warranties, architect's plans,
statements, or estimates, written or oral, in deciding to enter
into the Agreement, and that this provision would survive
closing of title or termination of the Agreement.
(Compl. Ex. A.
20). The parties also agreed that the Agreement could not be
42). Instead, any changes were required
to be set forth in a separate written agreement signed by the
parties and referring to the Agreement.
(Id.) No such separate
(Answer, Counterclaims~ 16 (~the parties
never agreed to terms on any of these subjects"); see also Reply
16 (substantially same)).
Finally, the Agreement contained a one-way feeshifting clause, which provided that if Defendant defaulted, he
would be obligated to reimburse the Plaintiff, among others, for
any legal fees and disbursements it incurred in enforcing its
(Compl. Ex. A.
35) . This provision also
survives the termination of the Agreement.
The Agreement, and its associated Riders, was executed
on December 22, 2015.
(Compl. Ex. A). On or about December 21,
2015, Defendant, through his attorneys, paid the Deposit.
(Answer~ 33). The Deposit was then transferred into an
individual escrow sub-account in Defendant's name, within the
Escrow Agent's master escrow account.
With construction complete, on June 21, Plaintiff
notified Defendant that the Closing was scheduled to occur on
July 2 4, 201 7.
( Comp 1. Ex. C) . Pursuant to the Agreement, on
July 18, 2017, Defendant elected to exercise his right to
adjourn the closing date by 30 days, further requesting that the
closing occur at a "mutually agreeable date and time no later
than August 23, 2017 at 2:00 P.M." (Compl. Ex. D; see also
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?