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Chaudhry Corporation v. City of Newark

A-0423-10T3 (N.J. Super. App. Div. 2011) (Unpublished)

CONTRACTS; SPECIFIC PERFORMANCE —The doctrine of laches can bar the grant of specific performance where a buyer waits ten years to sue and where it would be inequitable and prejudicial to the seller to grant such a remedy.

A taxi business bought a property from a municipality at public auction. The sale was approved by the municipality. A title search then showed that the property was unmarketable. The business owner allegedly told this to the municipality but, eventually, the municipality notified the buyer that the buyer was in default. A resolution was passed rescinding the purchase contract based on the allegation that the buyer had failed to close title within the time period specified in the contract. Ultimately, the municipality discussed the property with a redeveloper who was proposing a project for twenty-two, price-controlled housing units on the subject property.

Ten years later, the taxi business sued the municipality, seeking to enforce its rights to acquire the property. The complaint alleged that it had been the highest bidder and had entered into a valid contract with the municipality. It also alleged that the municipality wrongfully failed to convey title. It sought specific performance. The municipality responded with the affirmative defense of laches.

The lower court found that the buyer’s owner was not credible in various respects, and ruled that the doctrine of laches barred the buyer’s demand for specific performance. It found that the buyer had unreasonably delayed filing suit to compel a closing by sitting back for six years before seeking to enforce its rights.

The buyer appealed, arguing that the lower court’s factual findings were “patently erroneous” and contrary to the record. The Appellate Division disagreed, concluding that the lower court’s findings of fact were supported by substantial credible evidence in the record. The Court deferred to the lower court’s first-hand findings and observations. It also pointed out that specific performance is granted when: (1) a contract is valid and enforceable, (2) its terms are clear enough so that a court can determine each parties’ duties, and (3) enforcement of the contract would not be “harsh or oppressive.” While the buyer had proven the first two requirements, it failed as to the third one. The Court concluded that it would be harsh and oppressive to require the municipality, twelve years later, to convey land in which it had already made plans for a multi-unit redevelopment project. Furthermore, the lower court had properly applied the principle of doctrine of laches. Ten years to file a complaint was too long to wait, and the buyer’s justification for the delay was inadequate. According to the Court, it would be “inequitable and prejudicial” to the municipality to grant specific performance to the buyer. For those reasons, the lower court’s decision was affirmed.


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