Starr Update 2/5/20
We are thrilled to announce our litigation department’s successful representation of a sponsor-developer that brought suit against a defaulted purchaser, who claimed his default was justified because of construction delays that amounted to six months beyond sponsor’s anticipated closing projection. Although not entitled to terminate the purchase under the offering plan or purchase agreement, the defendant-purchaser failed to appear at the closing and consummate the sale. Defendant-purchaser claimed that sponsor had materially misrepresented the timing for the closing, which led him to forego exercising a right of rescission provided to all purchasers that had since come and gone. Our firm filed and won summary judgment in its entirety, permitting the sponsor to retain the full deposit as liquidated damages as well as pursue reimbursement of all attorneys’ fees, costs, and expenses.
In granting summary judgment, the Court determined that sponsor met its initial burden of proof and that defendant-purchaser was unable to establish the existence of a triable issue of fact that would excuse his failure to close. In particular, the Court found that defendant-purchaser not only failed to establish the requisite “knowingly false” (a/k/a scienter) statement on the part of sponsor, but also that defendant was unable to establish any material misrepresentations or justifiable reliance.
This decision is an achievement for all developers as we are unfortunately in a time in which many purchasers will threaten litigation as a tactic to force settlement regardless of the quality of their claims. The decision underscores that the obligation to abide by the terms of the offering plan and purchase agreement flow not only to the sponsor, but also to each individual purchaser who purchases thereunder, and it serves to refute and deter unsubstantiated claims by a purchaser who ultimately had no legal right to avoid closing and cancel the contract.