This was originally posted on the SGR Blog.
Were Brooklyn Property Purchase Rights Abrogated by Passage of Time?
A real estate contract vendee had the right to purchase a parcel in Brooklyn. But that right was subject to a third-party’s right of first refusal to buy the lot. As a recent case illustrates, the Court was required to navigate those concurrent provisions after several years of failure to close on the contract, on the one hand, or exercise of the right of first refusal, on the other.
On January 17, 2017, Parkway Trading Group Corp. commenced an action for specific performance against Yehuda Blesofsky, alleging that, on or about February 20, 2008, Blesofsky, as seller, and Parkway, as purchaser, entered into a contract for the purchase of 328 Kingston Avenue in Brooklyn for $640,000.00 with a closing date of on or about August 15, 2008.
According to the complaint, the contract provided that the transaction was subject to a right of first refusal held by non-party Scholom Raskin, which granted Raskin the right of first refusal to purchase the property on the same terms and conditions as set forth in the contract. After Blesofsy agreed to sell the property to Parkway, Raskin commenced proceedings in the Supreme Court and subsequently the Rabbinical Court to enforce his right of first refusal with regard to the property. The proceedings brought by Raskin to enforce his right of first refusal endured for several years following the execution of the contract, thereby preventing Parkway from completing the transaction. In or about June 2017, Raskin and Parkway entered into a settlement agreement that allowed Parkway to purchase the property notwithstanding any right of first refusal held by Raskin.
On September 11, 2017, Parkway allegedly sent a letter to Blesofsky’s counsel scheduling a closing for October 17, 2017, time being of the essence, and warned that if Blesofsy failed to consummate the transaction on that date and time, he would be deemed in default. The TOE letter informed Blesofsky that Parkway and Raskin “had resolved their differences in favor of allowing [Parkway] to close on the property notwithstanding any right of first refusal held by Raskin.” The complaint alleged that Parkway appeared for the October 17, 2017 closing “ready, willing and able to tender the balance of the purchase price” but Blesofsky did not appear and was in default. The complaint also alleged that Blesofsky had failed and/or refused to tender the deed to the property in accordance with the contract.
Blesofsky answered the complaint and asserted several affirmative defenses, including that the contract was cancelled and terminated; Parkway’s claims were barred under the applicable statute of limitations as the closing date on the subject property was in 2008 and the contract was a result of duress and/or fraud.
Blesofsky moved for summary judgment dismissing the complaint. Blesofsky affirmed that “Raskin never sought to exercise or enforce the Right of First Refusal, and there was no impediment to [Parkway] closing on the contract on the closing date of August 15, 2008.” Blesofsky also affirmed that Raskin’s right of first refusal was “revived” for 45 days in Raskin’s 2009 Rabbinical Court proceeding against Parkway, after which “[Parkway] failed to request a new closing for the next eight years, until 2017.” Blesofsky sought to dismiss the complaint on the ground that Parkway’s unreasonable delay in tendering performance under the contract precluded its 2017 claim for specific performance.
Parkway opposed Blesofsky’s summary judgment motion and cross-moved for summary judgment on its claim for specific performance of the contract. Parkway submitted supporting affirmations from Meryl Wenig, Raskin’s attorney, and Samuel Stern, Parkway’s principal. Wenig and Stern affirmed that “[o]n or about February 21, 2008… Blesofsky notified Raskin that he accepted a bona fide offer to sell the [p]remises subject to [a] 30-year tenancy and afforded Raskin 45 days to exercise his [right of first refusal] upon the same terms.”
Wenig and Stern described two Supreme Court actions that Raskin commenced against Blesofsky in April 2008 and July 2008 to enforce his right of first refusal, after which Raskin and Blesofsky agreed to have their dispute decided by the Rabbinical Court. The Rabbinical Court issued an award, which was amended by a clarification. Wenig and Stern affirmed that the Rabbinical Court clarified that “the 45-day period within which Raskin had to exercise his [right of first refusal] did not begin to run until… Blesofsky was able to convey the [p]remises ‘free and clear’ of encumbrances and judgments.”
Wenig and Stern further affirmed that Blesofsky was unable to convey title to the property “free and clear” of all encumbrances because the property was encumbered by money judgments against Blesofsky, a mortgage lien, and 40 Environmental Control Board violations. Wenig asserted that “Blesofsky fail[ed] to establish as a matter of law that Raskin’s time to exercise his [right of first refusal] lapsed and, as such, [Parkway] was not inhibited from seeking specific performance prior to the commencement of this action.” Stern similarly asserted that “[t]he Court must deny… Blesofsky’s motion for summary judgment because he failed to establish as a matter of law that he was capable of conveying the [p]remises ‘free and clear’ of judgments and liens in accordance with” the Rabbinical Court’s clarification.
Stern further affirmed that Parkway was ready, willing, and able to proceed with its purchase of the property on October 17, 2017, the time of the essence closing date. Stern affirmed that on the October 17, 2017 closing date, he appeared for the closing and produced certified checks for the balance of the purchase price and the transfer fee.
On February 10, 2020, the Court issued a decision and order denying Blesofsky’s summary judgment motion on the ground that “under the circumstances of this case … [Parkway] sought to perform under the contract within ‘a reasonable time.’’” Essentially, the Court held that Parkway established that it could not close until the expiration of Raskin’s option, which was still in force until Parkway and Raskin resolved their dispute by a 2017 agreement.
The Court noted that Wenig’s affirmation and the appended exhibits reflected behavior by Blesofsky and Raskin consistent with continued applicability of the option and an attempt to comply with the Rabbinical Court’s conditions. The Court also noted that the property had been tied up in litigation throughout, largely based on Blesofsky’s actions. The Court granted Parkway’s summary judgment cross-motion because Parkway established its prima facie entitlement to specific performance of the contract by demonstrating that it was ready, willing, and able to perform under the contract. Blesofsky was able to convey the property and there was no adequate remedy at law.
Blesofsky then moved to reargue this February 10, 2020 order and, upon reargument, Blesofsky sought an order denying Parkway’s summary judgment cross-motion and granting his summary judgment motion dismissing the complaint. Arguing that the Court incorrectly found that the clarification of the Rabbinical Court extended Raskin’s option and enjoined Parkway from closing until conditions were met—and the Court was wrong to have found that the Rabbinical Court’s clarification imposed conditions on Blesofsky—delivery of a deed free and clear, because Blesofsky was not a party to the clarification proceeding.
Parkway, in opposition, argued that Blesofsy’s motion merely reiterated the facts and arguments he previously raised and failed to identify specific facts or law that the Court misapprehended. Parkway asserted that it was black-letter law that whether an amount of time was reasonable is determined on the facts and circumstances of the particular case. Parkway argued that it could not close until Raskin’s right of first refusal expired, and the Rabbinical Court extended Raskin’s time to exercise his option until Blesofsky was able to deliver “free and clear” title.
Parkway further asserted that, on his motion for summary judgment, Blesofsky failed to demonstrate that he was ever capable of complying with the Rabbinical Court’s conditions, thereby triggering the clock on Raskin’s option. Parkway explained that the Court correctly held that the 2017 “time of the essence” notice was reasonable because Raskin’s right of first refusal remained an impediment to Parkway’s closing until it was resolved by an agreement between Raskin and Parkway in 2017. Parkway asserted that Blesofsky’s absence from the second rabbinical proceeding did not terminate Raskin’s option.
Upon the motion to reargue, Blesofsky merely reiterated the same arguments that he previously made before the Court and failed to identify any specific facts or law that the Court overlooked or misapprehended when it denied Blesofsky’s summary judgment motion and granted Parkway’s summary judgment cross-motion for specific performance of the contract. The Court correctly determined that the approximately seven-year-period between the 2008 contract and Parkway’s attempt to schedule a “time of the essence” closing in 2017 was reasonable under the unique circumstances of this case. As the court expressly noted, Wenig’s cross-moving affirmation and the appended exhibits reflected behavior by Blesofsky and Raskin consistent with continued applicability of the option and an attempt to comply with the Rabbinical Court’s conditions. The Court also noted that the property had been tied up in litigation throughout, largely based on Blesofsky’s actions. Based on those undisputed facts, the Court properly determined that Parkway sought to perform under the contract within a reasonable time.