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Court Rules on Breach of Contract

The plaintiff in the case is Island Estates Management, while the defendant is MBA-Manorhaven, LLC.

History

A New York Probate Lawyer said the plaintiff had an agreement to buy a property from the defendant, based on a contract signed in December of 1998. A deposit of $350000 was placed to secure the purchase, but the final purchase price was to be based on how many units got approved for the subdivision. Island Estates had an option to review the property which was to last 60 days. During that window they could terminate the agreement if they chose. That agreement was extended, in writing, several times, a fact that neither party argues.

The agreement also includes obligations on behalf of the buyer. For example, Island Estates had a year to get a zoning permit so that subdivision could go forward. Brooklyn Probate Lawyers said the seller also had thirty-days to provide written notice to cancel the agreement and refund the deposit. This couldn’t be exercised if the failure to meet milestones was beyond the control of the buyer. However, the buyer had a maximum of two years to meet these milestones unless they paid $100,000 for an extension, which they did not.

A problem arose when environmental contamination was found on the property; although MBA-Manorhaven had not represented that there was such according to Island Estates. Long Island Probate Lawyers said it was agreed that along with extending the deadline that MBA would pay for the cleanup costs of the site up to the amount of $400,000, while Island Estates would pay any amount beyond that up to $600,000, while anything beyond that would be shared 50/50.

Island Estates alleges that MBA-Manorhaven breached their contract by failing to provide bills showing the amount of the cleanup costs, and also that they did not complete the cleanup as required in the agreement. Based on the various portions of the agreement, closing of the deal would not be completed until Island Estates received the Special Use Permit and Site Plan. However, that would not be issued until the environmental conditions were improved. MBA-Manorhaven is using that breach of contract as its reason for termination of the contract. Island Estates would like to instead close the deal.

Submitted as evidence that MBA-Manorhaven has a poor track record of cleaning up environmental problems was the claim that the DEC stated that MBA-Manorhaven has “…not always been as aggressive about remediating pollution as they have been about debating its existence…” That statement and the elapsed four year period shows that MBA-Manorhaven did not take sufficient action to correct the problem of the environmental status of the property.

When a party breaches a contract, they are not permitted to use their own breach as a reason for canceling the agreement. Essentially, MBA-Manorhaven sought to get out of any obligation they might face simply by failing to conform to their responsibilities in the agreement. This would not be an act of good faith, and is why the defendant’s request to dismiss the case must be denied.

According to the initial contract, if the cleanup costs were going to be more than 2 million, then either party could cancel, unless the other party notified them within a time limit that they would pay for costs in excess of that amount. MBA-Manorhaven sought to cancel, but within the time limit, Island agreed to pay the costs, rendering that cancellation invalid.

Results

None of the reasons given by MBA-Manorhaven was able to create a valid reason by which they could cancel the contract with Island Estates. As a result, the defendant’s move to dismiss the case is denied. Further, the counsel for both sides of the contract was ordered to move to a conference that would start in motion the proceedings of completion of the original deal.

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