Opinion ID: 2995635
Heading Depth: 3
Heading Rank: 2

Heading: The Sellers’ federal lawsuit

Text: Seemingly oblivious to the November 30 deadline looming overhead, Ocean Atlantic sought to delay the initial closing for a third time. In early November, Ocean Atlantic claimed that it was entitled to another extension, based on a clause in the contract allowing for a minimum 45- day postponement of the closing date if the Board failed to issue sewer permits for the property. Ocean Atlantic asserted that the village had imposed a moratorium on such permits because its sewer plant was operating at total capacity. The Sellers, however, obtained information from village officials leading them to believe that permits were available but that Ocean Atlantic deliberately failed to obtain them. The Sellers further contended that Ocean Atlantic invoked the moratorium clause merely as a pretext for delay, in order to capitalize on the Sellers’ desire to close quickly and, once again, attempt to force them to agree to a price reduction. It appears that Ocean Atlantic’s lenders agreed to finance the deal on the assumption that other developers would be building expensive homes in the surrounding area. When these developments were scaled back, Ocean Atlantic and its lenders became concerned that the value of the Sellers’ property also would decline; this caused the lenders to insist on more costly guarantees that were eating into Ocean Atlantic’s anticipated profit margin. The Sellers believed that Ocean Atlantic’s president, Michael Ferraguto, was trying to defray his added costs by forcing the Sellers to accept less for their property. Specifically, by threatening to hold up the closing and bring a second lawsuit, Ferraguto hoped to pressure the Sellers into accepting a $1 million price reduction instead of walking away from the contract, inviting litigation, and running the risk of paying damages if they were saddled with a judgment against them./3 In response to Ocean Atlantic’s vexatious conduct, the Sellers filed a federal lawsuit November 22, 1999, seeking a declaratory judgment that the contract would be terminated if the closing did not occur by November 30, 1999. The lawsuit--which was now the second civil action involving the property--moved rather slowly. It was not until September 26, 2000 that the district judge ruled on the Sellers’ motion for summary judgment. The court denied the motion and set the trial for October 30, 2000, finding that there were genuine factual disputes concerningwhether the Village of Plainfield had, in fact, imposed a moratorium on sewer permits and thereby extended the closing date. Rather than proceed to trial, the Sellers and Ocean Atlantic entered into serious negotiations, and on October 26, 2000, they signed the settlement agreement containing the time-essence clause that is the basis of this lawsuit. The Sellers thereafter dismissed their lawsuit with prejudice and agreed for the third time to postpone the closing. The new date was scheduled for January 25, 2001.