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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: March 27, 2016

Plaintiff May Seek Specific Performance Requiring Defendant to Cooperate in Obtaining Permits

On March 17, 2016, Justice Oing of the New York County Commercial Division issued a decision in Little Cherry, LLC v. Two Bridges Housing Development Fund Co., 2016 NY Slip Op. 30435(U), holding that a plaintiff could seek an order requiring specific performance of contractual obligations to cooperate in obtaining regulatory approvals.

In Little Cherry, the parties entered into a contract relating to the development of real estate in lower Manhattan. They “agreed to ‘consult in good faith and cooperate with each other with respect to obtaining city zoning and development approvals’ and that the applications for these approvals would be handled by counsel retained by [one of the defendants], at [the plaintiff’s] sole cost and expense, under the joint direction of” those parties. The “[d]efendants also agreed to use their best efforts to obtain any necessary approvals from the New York State Attorney General’s Office and New York State Supreme Court pursuant to Not-for-Profit Corporation Law ยงยง 510, 511 and 511-a.”

The agreement provided that “[i]f defendants’ good-faith efforts to do so failed, the Contract would terminate.” Ultimately, the defendants gave the plaintiff notice that the agreement had terminated for failure to obtain the necessary approvals. The plaintiff brought an action seeking, among other things, specific performance of the defendants’ obligation to cooperate in obtaining the approvals, alleging that they had not done so. The court denied the defendants’ motion for summary judgment dismissing that claim, explaining:

Defendants next argue that this claim must be dismissed because an injunction directing defendants to “cooperate” in obtaining the Plan Consent and Permit Modification would fail to define specifically what the enjoined person must or must not do, in language so clear and explicit that a layman can understand what he is expected to do, or refrain from doing, and would, as a result, create a situation requiring judicial supervision over an extensive period of time to determine whether defendants were adequately cooperating.

Contrary to defendants’ concern, the relief sought here is sufficiently specific to avoid dismissal. Furthermore, dismissal of this claim based on concerns of continued judicial superintendence of the defendants’ performance would be premature at this juncture. Finally, defendants argue that dismissal is appropriate because approvals of the sale from the New York State Attorney General, Supreme Court, and the New York City Department of Housing Preservation and Development are required, but may never be granted. This argument is unavailing. While courts will not grant specific performance of the sale of a property where the seller does not have the power to convey the property in question, specific performance may be granted as long as the court is satisfied that it lies within the seller’s power — or within the seller’s power as supplemented by that of the court — to do so. Defendants do not claim that the sale will never be approved, however, but only argue that such approval is unlikely.

(Internal quotations and citations omitted).

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