The President of a major bank in England came to Adam Leitman Bailey, P.C., under immediate threat of being evicted from a Manhattan townhouse, as a result of an unjustified claim of unlawful lease holdover, and under further threat of losing a $1,000,000 deposit Client paid pursuant to a contract of sale to purchase the premises.  Because subscribers to Client’s investment portfolio had themselves delayed paying the funds Client required to consummate the purchase, Client was unable to pay the balance of the contract price on the then-scheduled Time Is Of The Essence (“TOE”) Closing Date, and the Townhouse Owner/Seller had refused to adjourn the Time Is Of The Essence Closing Date.

Client’s dilemma stemmed from Client having previously requested to adjourn several prior scheduled Closing dates, due to the failure of Client’s investors to pay their subscriptions in a timely manner. As a result, before granting its consent for the latest adjournment, Townhouse Owner, as both Landlord and Seller, had demanded that Client sign certain unconscionably stringent agreements which essentially required Client to confess judgment in the amount of the purchase contract deposit, and waive all possible legal defenses to an action of eviction brought in New York City Civil Court, if Client did not timely close under the Contract of Sale for the Premises on the scheduled Time Is Of The Essence Closing Date.

Client’s transactional counsel and Townhouse Owner Landlord/Seller’s counsel engaged in a series of email communications, prior to the scheduled Time Is Of The Essence Closing Date of December 31, 2023, in which Townhouse Owner Landlord/Seller’s counsel, recognizing that December 31st was a Saturday, first offered to close on the sale on Friday, December 30, 2023. counsel then set Tuesday, January 3, 2024, as the new Closing Date. Client’s transactional counsel advised Townhouse Owner Landlord/Seller’s counsel that Client would be “unable to close this transaction on January 3, 2024, but nevertheless, Purchaser fully intends to fulfill his obligations under the contract, . . . [but] [h]e anticipates that the closing can take place this April, . . . [and] Purchaser . . . intends to continue to pay rent and other expenses relating to the premises pursuant to his lease as he has in the past and will advise you as soon as he is able to close.”

Nevertheless, prior to December 31, 2023, and purportedly pursuant to the terms of the agreements Client had been forced to sign, Townhouse Owner Landlord/Seller proceeded to file a Notice of Petition and Petition, for Client’s eviction from the Premises, in a summary holdover proceeding in New York City Civil Court.

Adam Leitman Bailey, P.C. attorneys, faced with seemingly iron-clad provisions of the Landlord/Seller imposed agreements, had to quickly devise a strategy to halt the eviction proceeding and prevent Client’s loss of its $1,000,000 deposit under the Contract of Sale for the Premises. The most immediate issue was obtaining an adjournment of the imminent Civil Court hearing on Townhouse Owner/Landlord’s petition for eviction. Adam Leitman Bailey, P.C. needed time to analyze all of the onerous agreements to determine the best legal options available for the Client.

Adam Leitman Bailey, P.C. determined First, that Townhouse Owner/Landlord had jumped the gun and violated its own confession of judgment agreement by commencing its Civil Court eviction proceeding before the scheduled Time Is Of The Essence Closing Date (December 31, 2023); Second, that the confession of judgment agreement could not be self-executing prior to Client having failed to appear and pay the balance of the contract price on the Time Is Of The Essence Closing Date; Third, that the Time Is Of The Essence Closing Date (December 31, 2023) was a Saturday, and, pursuant to both the parties’ agreement and applicable provisions of the General Construction Law, the Time Is Of The Essence Closing Date could be ONLY the next “business” day – Monday, January 2, 2024, despite that day being celebrated as a “holiday” by most businesses, but not all banks; and Fourth, although Townhouse Owner/Seller claimed that Client had not appeared at a purported Closing held on Tuesday, January 3, 2024, the Time Is Of The Essence Closing had not occurred on “the next business day” after December 31, 2023, and Client was NOT in default of the Contract of Sale, and his deposit was NOT forfeit.

Accordingly, Adam Leitman Bailey, P.C. commenced suit for the Client in New York County Supreme Court, alleging causes of action, First, for a Declaration of an Anticipatory Breach of Contract by Townhouse Owner Seller; Second, for a Declaration that Client is Not in Default of the Contract; Third, for Fraudulent Inducement; Fourth, for Breach of the Covenant of Good Faith and Fair Dealing; Fifth, Enjoining Escrow Agent from Releasing the Downpayment; Sixth, Enjoining Townhouse Owner From Disbursing Any Part Of The Escrow; Seventh, Enjoining Townhouse Owner from marketing and contracting the sale of the Premises; Eighth, Enjoining Townhouse Owner to Schedule a New Time Is Of The Essence Date; Ninth, Enjoining Townhouse Owner from Prosecuting the Summary Holdover Proceeding; and Tenth, Enjoining the Removal to Supreme Court of the Summary Holdover Proceeding from the Civil Court.

Simultaneously, Adam Leitman Bailey, P.C. moved to dismiss the Summary Holdover Proceeding in Civil Court, (a) based on documentary evidence, (b) for lack of subject matter jurisdiction, and (c) for failure to state a cause of action, because the petition was filed on December 21, 2023 before the expiration of Client’s lease for the Townhouse. Adam Leitman Bailey, P.C.’s motion to dismiss the Petition languished in Civil Court for nearly six months.

While determination of the Adam Leitman Bailey, P.C. dismissal motion remained pending and undecided in Civil Court, the Townhouse Owner/Seller moved to dismiss Client’s action in Supreme Court. Nevertheless, due to court backlog, and a change of assigned judges to that case, Townhouse Owner/Seller’s motion to dismiss remained pending and undecided for the balance of 2023 and well into 2024. During this time, the parties engaged in lengthy settlement discussions, and jointly agreed to adjourn numerous status conferences to further those discussions. Finally, at a status conference which the Court declined to adjourn in August 2024, the parties advised the Court that the parties were in meaningful settlement negotiations, and the Judge inquired of Townhouse/Seller’s counsel if he would agree to withdraw Townhouse/Seller’s motion to dismiss in light of what appeared to be an imminent settlement of the case. Townhouse/Seller’s motion to dismiss Client’s complaint was withdrawn, but Client’s action remains pending – despite several follow-up conferences in which Townhouse Owner/Seller’s counsel continues to promise delivery of a final settlement agreement that will dispose of both the Supreme Court action and a re-filed Civil Court action which also continues to be adjourned due to ongoing settlement negotiations, which is subject to the terms of a settlement agreement the parties have negotiated.

Accordingly, Adam Leitman Bailey, P.C.’s client, who initially faced imminent eviction from the Townhouse premises and was forced to buy the Townhouse or lose his down payment, was able in the interim, during the pendency of the motions to dismiss, in both Civil Court and Supreme Court, to negotiate a settlement agreement with Townhouse Owner Landlord/Seller, which waived the Client’s rent obligation to the date he vacated the Premises in August 2024.

The Adam Leitman Bailey, P.C. attorneys who worked on this matter were Adam Leitman Bailey, John M. Desiderio, and Dov Treiman, in state Supreme Court and Housing Court. 

From our client: “Mr. Bailey! Well Done. It was one of your Perry Mason moments!”