Articles Posted in Real Estate Litigation

In their effort to combat a derelict and abandoned property, a group of local residents founded a community garden in 1985.  The garden covered three lots, 16, 18 and 19. Defendants (different owners throughout the relevant time periods) claimed to be the record owner of Lot 19 as it was used as part of the garden. In a long decision which we will highlight here, the First Department found that the garden’s use was open, adverse, and continuous, sufficient to withstand the dismissal of its adverse possession claim.

Starting in 1985, community residents cleared garbage, pulled weeds, and put up a fence to enclose the premises (consisting of the three lots). They planted assorted vegetation, including trees, installed playground equipment, and built a performance and exhibit stage. To improve the space, pathways and a fish pond were installed. The area was not public and was locked at night or when no community member was available to monitor its use. Over the years, many school and camp programs events were held there, and it was used generally as a community space, including for music and poetry gatherings. The members guarded the space, specifically against defendants. For example, in 1999, defendants cut the gate, entered the premises, and allegedly damaged the trees and equipment, and re-gated Lot 19 for their own use. The garden members tore down defendants’ gate, restored the garden, and reinstalled the gate so that all three lots were again combined into one parcel.

In 2013, a group with power tools and private security guards attempted to enter the garden. After a stand of, the police directed that the group be allowed into the garden. Lot 19 was then cleared and a new gate was installed segregating that Lot 19 from the others. Thereafter, New York City took steps to preserve to maintain the remaining lots as the garden.

Earlier this year, we wrote about the First Department’s decision addressing the question, as framed by the Court of Appeals, of “whether the mere commencement of an action seeking ‘rescission and/or reformation’ of a contract constitutes an anticipatory breach of such agreement.” The First Department found that it did. The Court of Appeals recently disagreed and reversed.

The facts of this case are found in our prior post. Briefly, a buyer entered into a contract to buy two parcels of land with the closing set for after the seller obtained certain regulatory approvals, but not later than 18 months from the contract date. If the approvals could not be obtained either party could, among other things, terminate the contract. After the approvals were delayed, the seller opted to terminate the contract and return the downpayment unless the buyer agreed to modify the contract. The contract was modified to extend the deadline to close and other contract terms. The parties also agreed that the buyer would not sue the seller if the approvals could not be timely delivered. Believing that the approvals were forthcoming, the parties again extended the closing deadline. Before that newly extended closing deadline, the buyer sued the seller seeking to cancel, or rescind, the contract. The seller counterclaimed claiming that the buyer’s lawsuit, by which it announced that it would not close and sought to cancel the contract before the time to close, was itself a default entitling the seller to keep the buyer’s substantial downpayment. After the buyer’s lawsuit for rescission was dismissed, the seller pursued its counterclaim for the downpayment. The First Department deemed the buyer’s lawsuit to be a breach of the parties’ contract and allowed the seller to keep the downpayment.

The Court of Appeals zeroed in on the First Department’s core finding that “the Appellate Division affirmed . . . because a rescission action unequivocally evinces the plaintiff’s intent to disavow its contractual obligations, the commencement of such an action before the date of performance constitutes an anticipatory breach’ (Princes Point LLC v. Muss Dev. L.L.C., 138 AD3d 112, 114 [1st Dept 2016] ). The Appellate Division also concluded ‘that the seller . . . was not required to show that it was ready, willing, and able to complete the sale [as a condition of receiving damages] because the buyer’s anticipatory breach relieved [the seller] of further contractual obligations’ (id.).”

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