A real estate deal gone wrong…what could be more New York than that?  In our world, only a legal malpractice claim after the deal is more relevant.

83 Willow, LLC v Apollo 2019 NY Slip Op 31203(U)  May 2, 2019 Supreme Court, New York County Docket Number: 151266/2015 Judge: Barbara Jaffe is the story of a client, an attorney and a big problem.  The problem is a one-sided contract.  However, the court finds damages are speculative and dismisses.

“Plaintiff limited liability company was formed in New Jersey and has its principal place
of business there. Defendant’s principal place of business is in New York County.
In reliance on defendant’s asserted skill, knowledge, and experience as an attorney,
plaintiffs managing member retained him in connection with the development and sale of an
undeveloped parcel ofland it owned in a redevelopment area in New Jersey.”

“Defendant drafted, reviewed, and revised the contract of sale, which provided, inter alia,
for a sales price of $3.730 million for the property, a deposit of $50,000, and the contingency
that within six months, plaintiff obtain site-plan approval for the development of a structure of a
minimum size and/or nature, with a six-month extension. The contingency constituted a material
element of and material inducement for entering into the contract, and defendant recommended it
to plaintiff, who relied on his professional guidance and advice on the interpretation of the
Unbeknownst to plaintiff, the contingency provision permitted only the buyer to cancel
the contract in the event that the contingency remained unsatisfied and contained no date on
which the contract would be deemed cancelled if the closing did not occur. In effect, the buyer
was given a” de facto option contract, extending in perpetuity, with no remedy to cancel
available to [plaintiff] and at a cost of approximately 1 % of the agreed upon value of the Property.”

Defendant advised plaintiff that the contract allowed it to cancel upon expiration of the
contingency provision. Thus, when the contingency provision expired, and on defendant’s
advice, on or about March 15, 2013, defendant informed the buyer’s attorney that the contract
was terminated and cancelled. In response, the buyer’s attorney objected and advised that the
contract permitted only the buyer to cancel. ”

“Soon thereafter, the buyer filed an action against plaintiff in the New Jersey Superior
Court seeking specific performance of the contract of sale, and filed a notice of pendency against
the property, the value of which then exceeded $5.5 million. Plaintiff was unable to sell the
property for fair market value even though there were ready, able, and willing buyers for that
amount. It was thus forced to sell the property to the buyer for $3.540 million.
Had it not been for defendant’s malpractice, plaintiff would have been able to cancel the
contract and sell the property for not less than $5.5 million and would not have incurred 18
months of litigation which cost it more than $200,000 in legal fees. ”

“Here, plaintiff’s assertion that absent defendant’s negligence, it would have been able to
terminate the contract and sell the property is fatally conclusory, and defendant reasonably
observes that the buyer would not have agreed to such a provision, having paid a non-refundable
deposit and undertaken to obtain the funds needed for the transaction. Thus is revealed the
speculative nature of plaintiff’s case. Additionally, even if open to the idea, the buyer would
likely have sought to extract something in return from plaintiff, a possibility that plaintiff does
not address.
Thus, defendant satisfactorily shows, prima facie, that plaintiffs claim that but for his
failure to negotiate the inclusion in the contract of sale a clause affording it the right to terminate
in the event of a failure to obtain the requisite approvals, it would have been able to terminate the
contract and sell the property for a higher amount of money than that set forth in the contract is
too conclusory and speculative to prove that he was the proximate cause of plaintiff’s damages. “