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Kacirek v. Clifford

2005 WL 3098929 (N.J. Super. Ch. Div. 2005) (Unpublished)

CONTRACTS; SPECIFIC ENFORCEMENT —A court’s unwillingness to order specific performance of a contract because of the difficulty of supervising the contract is a rule of policy and convenience of administration and not a limitation on jurisdiction.

A buyer contracted to have a house built similar in design and construction to other houses built on the same road by the same builder. Over time, the buyer paid about two-thirds of the purchase price, but for none of the “extras” selected by the buyer. A point came when the builder believed that it had substantially completed the house and, in fact, it obtained a Certificate of Occupancy. The buyer refused to close because, according to the buyer, “construction was not complete and certain features were not included.” When the buyer and the builder could not resolve the controversy, the buyer sued for specific performance. The builder responded that it was ready, willing, and able to close title but insisted that the remaining balance of the purchase price should be deposited by the buyer into escrow. Accordingly, the builder believed that the transaction should close and that if the buyer believed that it was entitled to damages, it could pursue that claim in the law division. The Chancery Court analyzed New Jersey’s case law concerning the availability of a specific performance remedy. It understood that “[c]ourts of equity have traditionally been reluctant to grant specific performance of a building contract where it would entail continuing superintendence over a considerable period of time.” Here, the Court focused on the municipality having issued a certificate of occupancy and was concerned that if title did not close it would be “presiding over a building contract dispute involving construction details and the house [would] remain vacant.” This caused the Court to reflect that “specific performance is invoked only when the remedy at law is inadequate,” but still recognized that “[t[here is a virtual presumption, because of the uniqueness of land and the consequent inadequacy of monetary damages, that specific performance is the buyer’s appropriate remedy for the vendor’s breach of contract to convey.” On the other hand, a buyer “cannot request specific performance on his terms only.” The buyer must be “willing to accept the terms of the [very] contract he wants specifically enforced.”

The Court recognized that “both parties contested the quality of [the] workmanship, ... [but] both parties indicate[d] a willingness to close on the house.” Consequently, recognizing that it would be grossly unfair to the builder to “keep a habitable house unoccupied” and for the builder to incur carrying costs, it was willing to award specific performance even though it might “entail continuing and constant superintendence over a considerable period of time.” According to the Court, “this is a rule of policy and convenience of administration, rather than a limitation of jurisdiction… .” To limit the need for the Court’s continuing supervision, the Court accepted the buyer’s suggestion that mediation and arbitration be used to resolve the contract dispute. Therefore, it appointed a mediator and specified that after a sixty day period of mediation, the buyer needed to either close or to agree to terminate the contract. If the buyer closed, the buyer would be required to place an amount in escrow as determined by the mediator. If the buyer decided not to take title to the property, the buyer was to “be refunded his money” and the builder would be free to sell the property and, if it chose to do so, it could sue the buyer for alleged breach of contract.

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