Case 1:13-cv-04724-HB Document 20 Filed 09/19/13 Page 1 of 4
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
CINDY K. CHAN and HUNG P. WONG,
BARBARA SMITH and CLARENCE ALVIN
13 Civ. 4724 (HB)
OPINION & ORDER
Hon. HAROLD BAER, JR., District Judge:
Plaintiffs Cindy Chan and Hung Wong bring this action seeking specific performance of
the contract of sale for a cooperative apartment in midtown Manhattan. For the reasons stated
below, Defendants’ cross motion to dismiss the amended complaint is GRANTED. Plaintiffs’
motion for a preliminary injunction is DENIED as moot.
In February 2013, Plaintiffs agreed to purchase apartment 35-A at 200 Central Park South
in New York City for $4.89 million. Plaintiffs’ contract with Defendants Barbara Smith and
Clarence Alvin Daniel Gasby, the sellers, expressly provided that sale was contingent upon “the
unconditional consent” of the Park South Tenants Corporation (the “Corporation”), the
cooperative housing corporation. (Am. Compl. Ex. A ¶¶ 1.6, 6.1.) Decisions for the Corporation
were made by the cooperative’s Board of Directors (the “Board”). (See Am. Compl. ¶¶ 19, 21.)
Sale of the apartment was to close “on or about April 2, 2013 (‘Scheduled Closing Date’) at 2:00
P.M.” (Id. ¶ 1.15.) But “[i]f the [Board] ha[d] not made a decision on or before the Scheduled
Closing Date, the Closing [would] be adjourned for 30 business days for the purpose of obtaining
such consent.” (Id. ¶ 6.3.)
Under the contract, both Plaintiffs and Defendants had the right to cancel the sale if the
Board did not consent to that sale. First, if the Board failed to consent by the adjourned date,
either party had the right to “cancel the Contract by Notice, provided that the [Board’s] consent
is not issued before such Notice of cancellation is given.” (Id.) Second, either party could also
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“cancel this Contract by Notice” at any time if the Board refused consent. (Id.) In other words,
without consent from the co-op board, there was no deal.
Plaintiffs submitted their application to the Board on February 25, 2013. Then, on May
1, the Board rejected Plaintiffs’ application. On May 30, Defendants sought to refund Plaintiffs’
down payment, noting that the sale of the apartment “did not receive board approval.” (Id. Ex.
D.) On the same day that Defendants attempted to return the down payment, Plaintiffs’ attorney
contacted the Board to seek reconsideration. And on June 3, the Board agreed to reconsider its
rejection. Plaintiffs then returned the down payment to Defendants on June 5, advising that
“Purchasers have made an appeal to the Corporation . . . requesting that their application be
reconsidered by the full Board.” (Id. Ex. E.) Nevertheless, on June 10 Defendants again tried to
return Plaintiffs’ down payment, this time invoking expressly their right to cancel the transaction
“per paragraph 6.3 of the Contract of Sale.” (Id. Ex. F.) And as explained above, paragraph 6.3
permitted either party to cancel the contract “if [the Board’s] consent is not given by such
adjourned date” or “if such consent is refused at any time.” (Id. Ex. A ¶ 6.3.) According to the
amended complaint, on June 14 the Board reversed itself and approved Plaintiffs’ application.
(Id. ¶ 43.) And on June 18, Plaintiffs notified Defendants of this approval. But Defendants still
refused to sell or close under the contract.
I turn first to Defendants’ cross motion to dismiss. “A court should construe a contract as
a matter of law only if the contract is unambiguous on its face.” Banks v. Correctional Servs.
Corp., 475 F. Supp. 2d 189, 195 (E.D.N.Y. 2007) (citing Metro. Life Ins. Co. v. RJR Nabisco
Inc., 906 F.2d 884, 889 (2d Cir. 1990)). And in breach of contract actions, “the complaint is
deemed to incorporate the contract by reference because the contract is integral to the plaintiffs’
claim.” Bader v. Wells Fargo Home Mortg. Inc., 773 F. Supp. 2d 397, 407 (S.D.N.Y. 2011)
(quoting Verzani v. Costco Wholesale Corp., 641 F. Supp. 2d 291, 297–98 (S.D.N.Y. 2009)).
The contract at issue here gave either party the right to cancel the contract (1) at any time after
the Board refused consent or (2) if the Board had not made a decision by May 14, 2013—30
business days after the April 2 “Scheduled Closing Date.” By granting different rights for when
consent is refused as opposed to when “consent is not given by” the deadline, the contract
envisions cancellations even while the Board’s decision was still pending. (See Am. Compl. ¶
41.) And here, the parties do not dispute that by June 10, the Board still had not given its
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consent to the sale. Thus, whether Plaintiffs had appealed the Board’s initial denial or not is
irrelevant. Defendants’ notice of cancellation on June 10—less than one month after the May 14
adjourned deadline—effectively cancelled the sale pursuant to the contract’s express language.
Plaintiffs’ attempts to inject ambiguity into the contract’s language are unavailing. See
Banks, 475 F. Supp. 2d at 195 (“Contractual language ‘whose meaning is otherwise plain is not
ambiguous merely because the parties urge different interpretations in the litigation.’” (quoting
Metro. Life Ins. Co., 906 F.2d at 889)). First, Plaintiffs argue that the use of the phrase “on or
about” in reference to the closing date means that no firm closing date was established. (See
Am. Compl. Ex. A ¶ 1.15.) Despite the contract’s language spelling out that either party could
cancel “if consent is not given” following adjournment of the closing for “30 business days,”
Plaintiffs urge that Defendants’ right to cancel did not arise until they gave notice that time was
of the essence. Yet even if the contract’s use of the phrase “on or about” suggests some
flexibility in the actual closing date or time, the contract’s language also states explicitly that
“[t]he date scheduled for Closing is on or about April 2, 2013 (‘Scheduled Closing Date’) at 2:00
P.M.” (Id.) The “Scheduled Closing Date” as used throughout the contract is therefore
expressly defined as April 2, 2013 regardless whether the actual closing occurred on that date.
PRC, L.P. v. IAC/Interactivecorp, 82 A.D.3d 421, 422 (1st Dep’t 2011) (“It is ‘elementary’ that
‘clauses of a contract should be read together contextually in order to give them meaning.”
(quoting HSBC Bank USA v. Nat’l Equity Corp., 279 A.D.2d 251, 253 (1st Dep’t 2001))).
Indeed, the contract tied the “Scheduled Closing Date” not only to the time upon which
Defendants could cancel but also to other dates in the contract. For example, the contract
required Plaintiffs to deliver a “Lien and Judgment search” to Defendants “not less than 10
calendar days prior to the Scheduled Closing Date.” (Am. Compl. Ex. A ¶ 15.1.) And as
explained above, the contract envisions a thirty-day adjournment from the Scheduled Closing
Date before Defendants’ right to cancel arises. (Id. ¶ 6.3.)
Date” used throughout the contract was not a fixed date would if adopted contradict other
language in the same contract. To extend the “on or about” language in paragraph 1.15 so that it
embraced the rest of the contract would render these specific date calculations a nullity. See Int’l
Multifoods Corp. v. Commercial Union Ins. Co., 309 F.3d 76, 86 (2d Cir. 2002) (“We disfavor
In light of these specific provisions, Plaintiffs’ contention that the “Scheduled Closing
The contract as a whole also supports this reading. See Diamond Castle Partners IV
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contract interpretations that render provisions of a contract superfluous."). And given that the
contract also contained an express cancellation right tied to these specific dates, Defendants'
failure to notify Plaintiffs that time was of the essence before cancellation did not affect
Defendants' right to cancel. See Burns v. Bankruptcy Estate a/Swyers, No. 03 Civ. 0656,2003
WL 23350110, at *2 (W.D.N.Y. Dec. 9, 2003) (lack of "time is of the essence" clause is
"irrelevant" when party invokes an express cancellation clause); W. W. W. Assocs., Inc. v.
Giancontieri, 77 N.Y.2d 157, 160 (1990) (dismissing claim seeking specific performance where
defendants canceled contract one day after contract expressly granted right to cancel).
Finally, neither the implied covenant of good faith and fair dealing nor the contract's
language requiring that the parties cooperate suggest a different result. (See Am. Compl. Ex. A.
~ 24.1.) Indeed, the implied covenant of good faith and fair dealing does not imply obligations
"inconsistent with other terms of the contractual relationship." Oscar de fa Renta, Ltd. v.
Mulberry Thai Silks, Inc., No. 08 Civ. 4341, 2009 WL 1054830, at *5 (S.D.N.Y. Apr. 17,2009)
(internal quotation marks omitted) (quoting Times Mirror Magazines, Inc. v. Field & Stream
Licenses Co., 294 F.3d 383,394-95 (2d Cir. 2002)). While Plaintiffs allege that Defendants did
not submit certain materials that the Board had requested in February 2013, Plaintiffs do not
claim that this delay affected the Board's consideration of Plaintiffs' application. (See Am.
Compl. ~~ 16-20.) Thus, to the extent that Plaintiffs rely upon Defendants' alleged recalcitrance
as supporting a breach of the implied covenant of good faith and fair dealing or their duty to
cooperate, that conduct does not support specific performance. See Nat 'I Mkt. Share, Inc. v.
Sterling Nat 'I Bank, 392 F.3d 520, 525 (2d Cir. 2004) ("Causation is an essential element of
damages in a breach of contract action.").
I have considered the parties' remaining arguments and find them meritless. For the
reasons stated above, Defendants' cross motion to dismiss is GRANTED. Plaintiffs' motion for
a preliminary injunction is DENIED as moot and the temporary restraining order is vacated. The
Clerk of Court is instructed to close all open motions, close this case, and remove it from my