Source: https://www.scribd.com/document/9986466/1cpw
Timestamp: 2018-10-20 11:28:55
Document Index: 96477322

Matched Legal Cases: ['§ 1332', '§ 1391', '§ 1311', '§ 13', 'art: 3', 'art: 6', 'art: 40', 'art: 16']

1cpw | Breach Of Contract | Damages
Week 5 - Natural Gas Case Study - Diane Pearson
Case 1:09-cv-00029-DAB
--------------------------------------------------ONE CENTRAL PARK WEST PROPERTY LIMITED, Plaintiffs,
09CIV 00029
FRANPEARL EQUITIES CORP., Defendants.
.~)D,.
One Central Park West Property Limited ("One Central Park West"), by its undersigned attorneys, Cleary Gottlieb Steen & Hamilton LLP ("Cleary Gottlieb"), for their Complaint against defendant FranPearl Equities Corp. ("FranPearl"), allege on the basis of knowledge with respect to itself and its own conduct and on information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. This action involves FranPearl's improper attempt to back out of its
contractual obligation to purchase a residential unit in the Trump International Hotel and Tower Building from One Central Park West forlan agreed price of $7,800,000.00. 2. By this action, One Central Park West seeks, among other things, an order
1) declaring that the Final Sales Contract (as defined below in Paragraph 14) by and among One Central Park West and FranPearl regarding the transfer of Unit Number 29A at the building known as the Trump International Hotel and Tower Building located at One Central Park West, New York, New York, 10023 ("Unit 29A"), is valid and enforceable by its terms, 2) declaring that FranPearl breached the Final Sales Contract by failing to settle the purchase of Unit 29A as required by the terms thereof, and 3) awarding damages to One Central Park West, including but
not limited to liquidated damages as provided for under the Final Sales Contract. One Central Park West also seeks an order awarding damages based upon FranlPearl's breach of the implied covenant of good faith and fair dealing as well as the doctrine of promissory estoppel. THE PARTIES 3. One Central Park West is a corporation organized and existing under the
laws of Canada, with its principal place of business at Suite 3100 Canwest Place, 201 Portage Avenue, Winnipeg, MB R3 3L7, Canada. 4. FranPearl is a corporation organized and existing under the laws of the
State of New York, with its principal place of business at 120 West 23rd Street, New York, NY 10011. JURISDICTION AN]) VENUE 5. This Court has jurisdiction over the subject matter and the parties of this
action pursuant to 28 U.S.C. §§ 1332(a)(2). 6. Venue is proper in this Judicial District under 28 U.S.C. §§ 1391(a). BACKGROUND A. The Negotiation And Sale Of Unit 29A 7. On or about October 28, 2008, a representative of FranPearl inspected
Unit 29A, which at that time was being offered by One Central Park West for sale for the price of $9,000,000.00. 8. On or about October 29, 2008, FranPearl offered to purchase Unit 29A, as
well as certain items located iji the unit, for a price of $7,800,000.00. 9. On October 30, 2008, counsel for One Central Park West provided
counsel for FranPearl with a draft sales contract for Unit 29A (the "Draft Sales Contract" ) via
email, which provided for the sale of Unit 29A from One Central Park West to FranPearl for a price of $7,800,000.00. The Draft Sales Contract included a list of certain furniture and other items in the apartment that were to be included in the sale price, commonly referred to as the "inventory list." The inventory list initially included with the Draft Sales Contract mistakenly included a sculpture, a bar and a coffee table (the "Over-Inclusive Inventory List"). 10. The sculpture, bar and coffee table at issue are of sentimental value to the
estate of Israel Asper (the "Asper Estate"). Israel Asper is the founder of Canwest Global Communications Corp., the parent company of One Central Park West ("Canwest"). 11. The next day, October 31, 2008, counsel for One Central Park West
emailed counsel for FranPearl a revised inventory list (the "October 31I' Email") that did not include the aforementioned sculpture, bar and coffee table (the "Updated Inventory List"). In that email, counsel for One Central Park West expressly stated that the inventory list had been revised and instructed counsel for FranPearl to disregard the Over-Inclusive Inventory List sent with the Draft Sales Contract the day before. 12. The October 3 Is Email also welcomed counsel for FranPearl to contact
counsel for One Central Park West with any questions. Counsel for FranPearl did not provide any comments or any objection to the Updated Inventory List. 13. On November 5, 2008, counsel for FranPearl suggested that a reference to
26 U.S.C. § 1311 of the Internal Revenue Code of 1986, as amended, be added to the Draft Sales Contract. Counsel for FranPearl did not provide any comments or any objection to the Updated Inventory List. Counsel for One Central Park West considered the suggested change and, after making certain revisions with the consent of FranPearl, circulated a revised version of the provision.
On November 12, 2008, counsel for One Central Park West prepared an
execution version of the sales contract for Unit 29A that included FranPearl's requested revisions referred to in paragraph 13, above (the "Contract"). Counsel for One Central Park West then sent the Contract to counsel for FranPearl with the Updated Inventory List attached thereto (the two documents are collectively referred to herein as the "Final Sales Contract"). Counsel for FranPearl made no suggestions or objections to any part of the Final Sales Contract. 15. On November 12, 2008, One Central Park West executed the Contract that
had been circulated to counsel for FranPearl earlier that day. 16. On November 13, 2008, counsel for One Central Park West received from
counsel for FranPearl four original Contracts signed by FranPearl that attached the OverInclusive Inventory List instead of the Updated Inventory List. 17. In transmitting the Contract on November 12th, counsel for FranPearl
failed to mention that he had replaced the Updated Inventory List with the Over-Inclusive Inventory List, despite the fact that the Updated Inventory List had been circulated as the correct inventory list to be appended to the contract since October 31, 2008 and that the Updated Inventory List had been attached to the Contract when circulated for signature on November 12, 2008. 18. On the same day, November 13, 2008, in order to remedy the apparent
mistake by counsel for FranPearl, counsel for One Central Park West attached FranPearl's signature pages to the Final Sales Contract which had been circulated to FranPearl's counsel the day before and emailed the Final Sales Contract, with signature pages, to FranPearl. 19. Also on the same day, November 13, 2008, Cleary Gottlieb, in its role as
escrow agent, received from FranPearl a down payment in the form of a check in the amount of
$780,000.00. (Section 16 of the Contract provides that Cleary Gottlieb shall act as escrow agent for FranPearl's down payment relating to the instant transaction.) 20. Counsel for One Central Park West first noted in an email sent to
FranPearl's counsel at 2:15 pm. on November 13, 2008 (the "November 13'h Email") that the hard copy version of the contract it had received, which attached the Over-Inclusive Inventory List and included FranPearl's signature pages, did not contain certain revised language that counsel for One Central Park West had included in the version of the Contract delivered for FranPearl's signature on November 12"'. In that email, counsel for One Central Park West asked counsel for FranPearl whether the revised language, which related to the manner in which the down payment would be paid,, was acceptable to FranPearl. 21. Counsel for FranPearl responded in an email sent at 2:23 pm on November
13, 2008 that the change "should be fine." 22. FranPearl gave no indication that it had any objection whatsoever to the
Updated Inventory List during the entire course of the negotiations from the date the Updated Inventory List was first circulated on October 31, 2008 through November 13, 2008, when FranPearl signed the Contract and substituted the Over-Inclusive Inventory List for the Updated Inventory List. 23. In an email on December 4, 2008 counsel for FranPearl requested that the
closing of the transaction (the "Closing") be delayed from the date contained in Section 4 of the Contract of December 15, 2008 until December 29, 2008. After due consideration, counsel for One Central Park West agreed to that request in an email on December 5, 2008. 24. December 29, 2008. As a result of this correspondence, the Closing was delayed until
On December 15, 2008, FranPearl performed a walk-through inspection of
Unit 29A, as is customarily performed by a purchaser of real estate. 26. On December 18, 2008, more than one month after the Contract had been
executed by both parties, FranPearl's counsel objected for the first time to the Updated Inventory List. 27. On December 18, 2008, in a telephone conversation with counsel for One
Central Park West, counsel for FranPearl stated that FraniPearl expected the three items at issue to be transferred as part of the sale of Unit 29A. 28. Later that same day, December 18, 2008, FranPearl's counsel also stated
that FranPearl would be willing to proceed with the scheduled Closing on the understanding that such a Closing would not include the three items at issue, if One Central Park West would agree to a $25,000 reduction in the purchase price of Unit 29A. 29. One Central Park West believes that the market value of the three items at
issue is significantly lower than $25,000.00. 30. As a result of sentimental value, at the request of the Asper Estate, One
Central Park West removed the items from Unit 29A prior to December 15'h' and shipped them to the homes of various family members of the Asper Estate. 31. Because FranPearl's valuation of the three items at issue seemed to have
been unjustifiably inflated, on December 19, 2008, counsel for One Central Park West initially informed FranPearl by voicemail that One Central Park West would not be willing to agree to the suggested $25,000 reduction in purchase price.
In response, on December 19, 2008, counsel for FranPearl sent a letter to
counsel for One Central Park West stating that FranPearl did not intend to close on Unit 29A the December 19th Letter"). 33. In the December 19"' Letter, counsel for FranPearl suggested that its
transmission of signature pages to the Contract that included the Over-Inclusive Inventory List instead of the Updated Inventory List on November 12, 2008 "constituted a counteroffer" by FraniPearl despite the fact that FranPearl never explicitly stated that it was thereby making a counteroffer. 34. Even assuming that FranPearl's valuation of the three disputed items were
accurate, FranPearl only valued these at approximately 0.3% of the total purchase price. FranPearl's own valuation of the three items demonstrates that the difference between the OverInclusive Inventory List and the Updated Inventory List is not financially material to the sale of Unit 29A. Indeed, in light of the value of the overall transaction, the fact that FranPearl would focus on the relatively insignificant value of the three items at issue as its purported justification for its attempt to void the entire transaction suggests that FranPearl's current position is motivated by something other than FranPearl's stated desire to obtain the three items at issue. 35. On December 19, 2008, counsel for One Central Park West sent a reply
letter to counsel for FranPearl stating its belief that the Final Sales Contract was enforceable according to its terms and stating the intention of One Central Park West to proceed with the Closing scheduled for December 29, 2008, but that One Central Park West would be willing to agree to the suggested $25,000 reduction in purchase price in consideration of the size of the requested reduction when compared to the value of the overall transaction.
On December 22, 2008, counsel for FranPearl sent a letter to counsel for
One Central Park West (the "December
Letter") arguing that the transmission of the Final
Sales Contract by counsel for One Central Park West to counsel for FranPearl on November 1It 3 by email and November
by mail constituted a "counteroffer" to its "counteroffer" of
November 12, 2008. In the December
Letter, counsel for FranPearl rejected what it had
characterized as One Central Park West's "counteroffer" and further stated that FranPearl was no longer willing to enter into the agreement it had proposed four days previously to purchase Unit 29A if the purchase price were reduced by $25,000. 37. In the December
Letter, counsel for FranPearl also demanded the
return of FranPearl's down payment and stated that if Cleary Glottlieb did not return that down payment by noon on December 23, 2008, FranPearl would take "all appropriate legal action."~ 38. On December 23, 2008, counsel for One Central Park West sent a letter to
counsel for FranPearl (the "December
Letter") stating that the Contract was enforceable and
that One Central Park West stood ready, willing and able to perform all of its obligations, including its obligations with respect to the Closing scheduled to take place on December 29, 2008 and stating further that it intended to perform all of its obligations under the contract. 39. December
Counsel for One Central Park West appended the following to the
Letter: (i) a timeline of facts, (ii) a summary of adjustments and closing checks
(on the assumption that the transaction would in fact close on December 29h"), and (iii) an amendment to the Contract regarding an issue initially requested by FranPearl before the dispute arose, but unrelated to the present dispute.
On December 24, 2008, counsel for FranPearl sent a letter to counsel for
One Central Park West (the "December 24h"Letter") stating that "no contract exists" and reiterating FranPearl' s demand for the return of its down payment. 41. On December 24, 2008, in preparation for the Closing, counsel for One
Central Park West gave counsel for FranPearl notice, via email, of the time and conference room location of the Closing, per the contract. 42. In addition, on December 24, 2008, counsel for One Central Park West
arranged to have First American Title Insurance Company of New York ("First American") on call to appear at the Closing to facilitate recording of the deed and other Closing documents. Counsel for One Central Park West also held the executed deed and other documents necessary to consummate the Closing in the appointed conference room at the appointed time. 43. 44. Neither FranPearl nor its counsel appeared at the Closing. Cleary Gottlieb is holding FranPearl's down payment in escrow pending
resolution of the instant dispute. B. FranPearl's Conduct After its Execution of the Contract 45. As of November 12, 2008 (the date the Contract was signed by both
parties), there was no reason for One Central Park West to believe that the parties had not reached a meeting of the minds with respect to the inventory list to be appended to the Contract. Moreover, counsel for FranPearl never communicated any objection to the Updated Inventory List until December 18, 2008. This objection was made more than six weeks after the October
Email to FranPearl' s counsel, which included the revised version of the contract documents
and which explicitly pointed out the substitution of the Updated Inventory List for the OverInclusive Inventory List.
On November 13, 2008, counsel for One Central Park West sent the Final
Sales Contract, consisting of the Contract and the Updated Inventory List, via email to counsel for FranPearl along with the signature pages of both FranPearl and One Central Park West. Counsel for FranPearl made no suggestions or objections to any part of the Final Sales Contract. 47. On November 14, 2008, counsel for One Central Park West sent two hard
copies of the Final Sales Contract via messenger to counsel for FranPearl along with the signature pages of both FranPearl and One Central Park West. Once again, counsel for FranPearl made no suggestions or objections to any part of the Final Sales Contract. 48. On November 25th and 26h and December
counsel for One Central
Park West and counsel for FranPearl exchanged emails regarding the scheduling of a conference call with First American, the title company handling the transaction. 49. In an email on December 9, 2008, counsel for FraniPearl noted that it had
inadvertently omitted FranPearl's broker, Ruth Goldman, from the contract of sale and asked counsel for One Central Park West how to address this issue. The parties decided to draft an amendment to the contract to include her name in the "Brokers" section. The negotiation of that amendment took place beginning on December 9, 2008 and continued until December 19, 2008; the day after counsel for FranPearl initially objected to the Updated Inventory List and the same day of the December 19t Letter in which counsel for FranPearl formally objected to the absence of the three items at issue in the proposed sale of Unit 29A. 50. As is demonstrated by email correspondence between counsel for One
Central Park West and counsel for FranPearl on December 4th and December 1O0h other amendments to the contract were also negotiated after the contract had been executed by both parties.
On December 1I, 2008 counsel for FranPearl sent an email to counsel for
One Central Park West attaching documentation required by 26 U.S. C. § 13 11 of the Internal Revenue Code of 1986, as amended. 52. On December 15, 2008 counsel for FranPearl sent an email to counsel for
One Central Park West attaching "Exchange Instructions, Return Checklists, Assignment, Notice of Assigrnment and Request for Funds" requesting that counsel for one One Central Park West obtain the signature of its client on the Notice of Assignment. 53. Each of the above-referenced interactions, considered either separately or
together, demonstrate that counsel for FranPearl reviewed the contract subsequent to FranPearl's execution of the contract. Despite the numerous interactions between counsel for FranPearl and counsel for One Central Park West during the time period from November 13, 2008 to December 18, 2008 regarding various provisions of the contract, FranPearl's counsel failed to make any objection to the Updated Inventory List until December 18, 2008. 54. FranPearl's failure to communicate any objection to the Final Sales
Contract and its subsequent conduct demonstrating its reliance on the Final Sales Contract as valid and binding constitute ratification and acceptance by FranPearl of the Final Sales Contract. C. Material Provisions Of The Contract of Sale 55. Section 3 of the Contract states in relevant part: 3. Purchase Price: (a) The purchase price ("Purchase Price") is $7,800,000.00, payable as follows: (i) $780,000.00 ("Down payment") on the signing of this Contract by bank check drawn on a bank acceptable to Seller or wire transfer, the receipt of which is hereby acknowledged, to be held in escrow pursuant to para. 16; and (ii) $7,020,000.00 constituting the balance of the Purchase Price, by certified check of Purchaser or official bank check (except as otherwise provided in this Contract) on the delivery of the deed as hereinafter provided. I1I
(b) All checks in payment of the Purchase Price shall represent United States currency and be drawn on or issued by a bank or trust company authorized to accept deposits in New York State. All checks in payment of the Down payment shall be payable to the order of Escrowee (as hereinafter defined). All checks in payment of the balance of the Purchase Price shall be payable to the order of Seller (or as Seller otherwise directs pursuant to subparas. 6(a)(ix) or 19(b)). (c) Except for the Down payment and checks aggregating not more than one-half of one percent of the Purchase Price, including payment for closing adjustments, all checks delivered by Purchaser shall be certified or official bank checks as hereinabove provided, 56. Section 4 of the Contract states in relevant part: Closing of Title: The closing documents referred 4. to in para. 6 shall be delivered, and payment of the balance of the Purchase Price shall be made, at the closing of title ("Closing"), to be held on or about December 15, 2008 at 10:00 A.M., at the offices of Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, New York 10006 or at the offices of Purchaser's lending institution or its counsel; provided, however, that such office is located in either the City or County in which either (a) Seller's attorney malntains an office or (b) the Unit is located. 57. Section 6(b) of the Contract states in relevant part: 6. (b) following: Closing Documents: At the Closing, Purchaser shall deliver to Seller the
Checks in payment of (y) the balance of the (i) Purchase Price in accordance with subpara. 3(b) and (z) any Purchaser Transfer Tax; (ii) If required by the Declaration or By-Laws, power of attorney to the Board, in the form required by the Condominium. The power of attorney shall be executed and acknowledged by Purchaser and, after being recorded, shall be sent to the Condominium;
(iii) New York City Real Property Transfer Tax Return executed and acknowledged by Purchaser and an Affidavit in Lieu of Registration pursuant to New York Multiple Dwelling Law, each in proper form for submission, if applicable; and (iv) If required, New York State Equalization Return executed and acknowledged by Purchaser in proper form for submission. 58. Section 40 of the Contract states in relevant part: 40. Delay in Closing. In the event that Purchaser is unable to close within fourteen (14) days of the Closing Date for any reason other than a delay by Seller, Purchaser agrees that: (a) Purchaser shall close this transaction within thirty (30) days after the Closing Date, time being of the essence against Purchaser and (b) that Purchaser shall pay Seller, as liquidated damages, interest on the purchase price at the rate of 6% per annum, for each day from and after the fourteenth day from the Closing Date through and including the actual date of Closing. 59. Section 16 of the Contract states in relevant part: 16. Down payment in Escrow: (a) Seller's attorney ("Escrowee") shall hold the Down payment for Seller's account in escrow in a segregated bank account at the depository identified at the end of this Contract until Closing or sooner termination of this Contract and shall pay over or apply the Down payment in accordance with the terms of this para. 16. Escrowee shall hold the Down payment in an interest-bearing account for the benefit of the parties. If interest is held for the benefit of the parties, it shall be paid to the party entitled to the Down-payment and the party receiving the interest shall pay any income taxes thereon. If interest is not held for the benefit of the parties, the Down-payment shall be placed in an IOLA account or as otherwise permitted or required by law. The Social Security or Federal Identification numbers of the parties shall be furnished to Escrowee upon request. At closing, the Down payment shall be paid by Escrowee to Seller. If for any reason Closing does not occur and either party gives Notice (as defined in paragraph 14) to Escrowee demanding payment of the Down payment, Escrowee shall give prompt Notice to the other party of such demand. If Escrowee does not receive Notice of objection from such other party to the proposed payment within 10 business days after the giving of such Notice, Escrowee is hereby authorized and directed to make such payment. If Escrowee does receive such Notice of objection within such 10 day 13
period or if for any other reason Escrowee in good faith shall elect not to make such payment, Escrowee shall continue to hold such amount until otherwise directed by Notice from the parties to this Contract or a final, nonappealable judgment, order or decree of a court. However, Escrowee shall have the right at any time to deposit the Down payment with the clerk of a court in the county in which the Unit is located and shall give Notice of such deposit to Seller and Purchaser. Upon such deposit or other disbursement in accordance with the terms of this para. 16, Escrowee shall be relieved and discharged of all further obligations and responsibilities hereunder. (b) The parties acknowledge that, although Escrowee is holding the Down payment for Seller's account, for all other purposes Escrowee is acting solely as a stakeholder at their request and for their convenience and that Escrowee shall not be liable to either party for any act or omission on its part unless taken or suffered in bad faith or in willful disregard of this Contract or involving gross negligence on the part of Escrowee. Seller and Purchaser jointly and severally agree to defend, indemnify and hold Escrowee harmless from and against all costs, claims and expenses (including reasonable attorney's fees) incurred in connection with the performance of Escrowee's duties hereunder, except with respect to actions or omissions taken or suffered by Escrowee in bad faith or in willful disregard of this Contract or involving gross negligence on the part of Escrowee. (c) Escrowee may act or refrain from acting in respect of any matter referred to herein in full reliance upon and with the advise of counsel which may be selected by it (including any member of its firm) and shall be fully protected in so acting or refraining from action upon the advice of such counsel. (d) Escrowee acknowledges receipt of the Downpayment by check subject to collection and Escrowee's agreement to the provisions of this para. 16 by signing in the place indicated in this Contract. (e) Escrowee or any member of its firm shall be permitted to act as counsel for Seller in any dispute as to the disbursement of the Downpayment or any other dispute between the parties whether or not Escrowee is in possession of the Downpayment and continues to act as Escrowee. 60. Section 13(a) of the Contract states in relevant part:
Defaults and Remedies: (a) If Purchaser defaults 13. hereunder, Seller's sole remedy shall be to retain the Downpayment as liquidated damages, it being agreed that Seller's damages in case of Purchaser's default might be impossible to ascertain and that the Downpaymnent constitutes a fair and reasonable amount of damages under the circumstances and is not a penalty. FIRST CLAIM- BREACH OF CONTRACT 61. One Central Park West repeats and realleges paragraphs 1 through 60
inclusive as if fully set forth herein. 62. 63. The Final Sales Contract constitutes a valid and enforceable contract. FranPearl's failure to pay the balance of the Purchase Price (as defined in
the Contract) on the date of the Closing constitutes a breach of FranPearl's obligations under, among other things, Sections 3, 4, 6(b) and 40 of the Contract. 64. FranPearl's failure to comply with the terms of the Contract, including but
not limited to Sections 3, 4, 6(b) and 40, has injured One Central Park West by, among other things, depriving it of FranPearl's contractual undertakings. 65. As a direct and proximate result of FranPearl's breach, One Central Park
West is entitled to a judgment declaring that it is entitled to retain FranPearl's down payment as liquidated damages pursuant to Section 13 of the Contract. 66. All conditions precedent to the institution and maintenance of this action
and the granting of the relief sought herein have occurred, have been waived or have otherwise been satisfied. SECOND CLAIM- BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING 67. One Central Park West repeats and realleges paragraphs I through 66
inclusive as if fully set forth herein. 15
On October 31, 2008, One Central Park West advised FranPearl that it
should disregard the Over-Inclusive Inventory List and that it should instead append the Updated Inventory List to the Draft Sales Contract. 69. On December 18, 2008, more than one month alter the Contract had been
executed by both parties, FranPearl objected for the first time to the Updated Inventory List. On information and belief, FranPearl knew at that time that it was improper to rely upon the OverInclusive Inventory List, which One Central Park West had previously advised FranPearl on numerous occasions was to be replaced with the Updated Inventory List. 70. On that same day, December 18, 2008, FranPear stated that it would be
willing to proceed with the scheduled Closing on the understanding that such a Closing would not include the three items at issue, if One Central Park West would agree to a $25,000 reduction in the purchase price of Unit 29A. 71. Even assuming that FranPearl's valuation of the three disputed items were
accurate, FranPearl only valued these at approximately 0.3% of the total purchase price. 72. On December 19, 2008, One Central Park West advised FranPearl that the
Final Sales Contract was enforceable according to its terms and that One Central Park West intended to proceed with the Closing scheduled for December 29, 2008, but that One Central Park West would be willing to agree to the suggested $25,000 reduction in purchase price in consideration of the size of the requested reduction when compared to the value of the overall transaction. 73. On December 22, 2008, FranPearl advised One Central Park West by
letter that it was no longer willing to honor the proposal that it had made four days earlier, on
December 18, to purchase Unit 29A if the agreed upon purchase price of $7,800, 000 were reduced by $25,000. 74. In light of the facts and circumstances, FranPearl's objection to the
absence of the three items at issue from the proposed sale of Unit 29A cannot be the true basis for FranPearl's unwillingness to proceed with the sale. 75. On information and belief, FranPearl breached the implied covenant of
good faith and fair dealing by unfairly, arbitrarily and unreasonably construing and interpreting the parties' correspondence and the relevant contract documents, in a knowingly improper attempt to prevent One Central Park West from receiving the fruits of the parties' bargain. 76. FranPearl further failed to adhere in good faith to its contractual
obligations and to deal fairly with One Central Park West in the transactions at issue, including but not limited to its obligations to comply with Sections 3, 4, 6(b) and 40 of the Contract, and to take all actions necessary to enable One Central Park West to receive the fruits of the parties' bargain consistent with those provisions and all other applicable provisions of the Contract. 77. For the foregoing reasons, FranPearl breached the implied covenant of
good faith and fair dealing contained in the Contract. 78. FranPearl's breach of the implied covenant of good faith and fair dealing
has injured One Central Park West by, among other things, depriving it of FranPearl's contractual undertakings. 79. FranPearl's breach of the implied covenant of good faith and fair dealing
has fur-ther injured One Central Park West by requiring it to incur substantial costs associated with seeking a replacement buyer, including, but not limited to, any potential losses associated
with any difference between the amount for which FranPearl agreed to purchase Unit 29A and the final sales price to any other party. 80. FranPearl's breach of the implied covenant of good faith and fair dealing
has also injured One Central Park West by requiring it to incur substantial costs associated with bringing this action, including, but not limited to, attorneys' fees. THIRD CLAIM- PROMISSORY ESTOPPEL 81. One Central Park West repeats and realleges paragraphs 1 through 80
inclusive as if fully set forth herein. 82. On or about October 29, 2008, FraniPearl offered to purchase Unit 29A, as
well as certain items located in the unit, for a price of $7,800,000.00. 83. On October 30, 2008, counsel for One Central Park West provided
counsel for FranPearl with the Draft Sales Contract, which provided for the sale of Unit 29A from One Central Park West to FranPearl for a price of $7,800,000.00. 84. The inventory list attached to the Draft Sales Contract provided to
FranPearl on October 30, 2008 mistakenly included a sculpture, a bar and a coffee table (the Over-Inclusive Inventory List). 85. On October 31, 2008, One Central Park West advised FranPearl that it
should disregard the Over-Inclusive Inventory List and that it should instead append the Updated Inventory List to the Draft Sales Contract. 86. Accordingly, as of October 31, 2008, FranPearl understood that the
proposed sale of Unit 29A did not include the three items at issue. 87. On or about November 12, 2008, FranPearl executed the Contract.
On November 13, 2008, FranPearl provided Cleary Gottlieb, in its role as
escrow agent, a down payment in the form of a check in the amount of $780,000.00, as required by the Contract. 89. In an email on December 4, 2008 counsel for FranPearl requested that the
Closing be delayed from the date contained in Section 4 of the Contract of December 15, 2008 until December 29, 2008. After due consideration, counsel for One Central Park West agreed to that request in an email on December 5, 2008. As a result of this correspondence, the Closing was delayed until December 29, 2008. 90. On December 18, 2008, more than one month after the Contract had been
executed by both parties, FranPearl objected for the first time to the Updated Inventory List. On information and belief, FranPearl knew at that time that it was improper to rely upon the OverInclusive Inventory List, which One Central Park West had previously advised FranPearl on numerous occasions was to be replaced with the Updated Inventory List. 91. On that same day, December 18, 2008, FranPearl stated that it would be
willing to proceed with the scheduled Closing on the understanding that such a Closing would not include the three items at issue, if One Central Park West would agree to a $25,000 reduction in the purchase price of Unit 29A. 92. Even assuming that FranPearl's valuation of the three disputed items were
accurate, FranPearl only valued these at approximately 0.3% of the total purchase price. 93. On December 19, 2008, One Central Park West advised FranPearl that the
Final Sales Contract was enforceable according to its terms and that One Central Park West intended to proceed with the Closing scheduled for December 29, 2008, but that One Central Park West would be willing to agree to the suggested $25,000 reduction in purchase price in
consideration of the size of the requested reduction when compared to the value of the overall transaction. 94. On December 22, 2008, FranPearl advised One Central Park West by
letter that it was no longer willing to honor the proposal that it had made four days earlier, on December 18, to purchase Unit 29A if the agreed upon purchase price of $7,800,000 were reduced by $25,000. 95. In light of the facts and circumstances, FranPearl's objection to the
absence of the three items at issue from the proposed sale of Unit 29A cannot be the true basis for FranPearl's unwillingness to proceed with the sale. 96. One Central Park West's reliance upon FranPearl' s statements and
conduct indicating that FranPearl would purchase Unit 29A was foreseeable. 97. One Central Park West's reliance upon FranPearl's statements and
conduct indicating that FranPearl would purchase Unit 29A was reasonable. 98. As a result of One Central Park West's reliance upon FranPearl's
statements and conduct indicating that FranPearl would purchase Unit 29A, One Central Park West incurred substantial costs associated with preparing for the Closing, including but not limited to brokers' fees and attorneys' fees. 99. As a result of One Central Park West's reliance upon FranPearl's
statements and conduct indicating that FranPearl would purchase Unit 29A, One Central Park West did not market Unit 29A to alternative buyers after November 12, 2008, the date on which FranPearl signed the Contract. On information and belief, One Central Park West was injured as a result of its inability to market Unit 29A to alternative buyers during that period.
As a result of One Central Park West's reliance upon FranPearl's
statements and conduct indicating that FranPearl would purchase Unit 29A, One Central Park West has incurred, and will continue to incur, substantial costs associated with seeking and ultimately obtaining a replacement buyer, including, but not limited to, potential losses associated with any difference between the amount for which FranPearl agreed to purchase Unit 29A and the final sales price to any other party. 101. As a result of One Central Park West's reliance upon FranPearl's
statements and conduct indicating that FranPearl would purchase Unit 29A, One Central Park West has incurred, and will continue to incur, substantial costs associated with bringing this action, including, but not limited to, attorneys' fees. PRAYER FOR RELIEF WHEREFORE, One Central Park West demands a trial by jury pursuant to Rule 38 of the Federal Rules of Civil Procedure and respectfully requests that the Court enter an order: 1. 2. 3. Declaring that the Contract is valid and binding; Declaring that FranPearl breached the Contract; Granting judgment to One Central Park West and awarding liquidated damages
on the First Claim in an amount to be ascertained at trial, but not less than $780,000.00; 4. Granting judgment to One Central Park West and awarding liquidated damages
on the Second Claim in an amount to be ascertained at trial, but not less than $780,000.00;
Granting judgment to One Central Park West and awarding damages on the Third
Claim in an amount to be ascertained at trial; and 6. Granting any such other or further relief as the Court deems just and proper. CLEARY G TIEB STEEN & HAMILTON L.LP
Dated: New York, New York January 5, 2009
Lawrence B. Friedman Christopher P. Moore
One Liberty Plaza New York, New York 10006 (212) 225-2000 Attorneys for Plaintiff
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