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Orner v. Liu

419 N.J. Super. 431, 17 A.3d 266 (App. Div. 2011)

CONTRACTS — When a contract, such as a settlement agreement, sets a deadline by which the parties will enter into a further agreement or have no further liability, one to the other, a court will not extend that deadline at the unilateral request of one of the parties.

A pair of property contracts with the same seller stipulated that time was of the essence. The contracts did not have a mortgage contingency clause. When the buyer expressed an inability to close due to difficulties in exporting currency from another country, the seller agreed to an extension. The closing date was eventually extended more than once but, in each instance, the seller insisted that time was of the essence. When the buyer still lacked the funds to close on the final agreed-upon date, the seller declared a default.

The buyer then advised the seller that it was attempting to obtain mortgage funding. Even though the contracts had been terminated, the seller nonetheless allowed the buyer access to the properties for appraisals to be performed. The seller’s counsel also wrote to the buyer’s counsel regarding disposition of the deposit. With no agreement reached, the seller filed an action alleging that the buyer had defaulted and, thus, the seller was entitled to retain all deposited funds. The buyer filed a counterclaim as well as notices of lis pendens on the properties.

The lower court discharged the notices of lis pendens and declared that the buyer had no further right to, or interest in, the first deposit, which the seller had received in exchange for extending an earlier closing date, leaving unadjudicated the seller’s right to a later deposit. After a deposition, the parties discussed and reached an amicable resolution of their disputes. The settlement, put on the record, stipulated that the remaining deposited funds would be released to the seller; new contracts would be executed by a certain date; the new contracts would contain a mortgage contingency; the date for closing, with time of the essence, had to occur no later than a certain date; the buyer would receive a credit at the closing in the amount of the deposited funds from the first failed transaction; and, if no closing occurred on or before a certain date, the parties would have no further obligation to each other. Once the parties agreed that the terms on the record constituted the entire agreement, the lower court entered an order memorializing the a settlement; its order also directed the release of the remaining deposited funds to the seller and dismissed all claims with prejudice and without costs.

The parties did not agree on the form of the new contracts and chose not to execute any. Ultimately, the seller advised the buyer that it was no longer interested in pursuing the sale. One day prior to one year after the lower court’s last order, the buyer moved to vacate the order. The lower court rejected the motion.

On appeal, the Appellate Division affirmed for the reasons expressed by the lower court. The Court agreed that the settlement agreement left some details unresolved, but was clear that the parties would have no further obligations if the properties did not change hands on or before the agreed-upon date. Thus, when disagreements emerged, it was incumbent on the buyer to seek the intervention of the lower court before the deadline elapsed; nothing except the seller’s consent could resurrect the buyer’s opportunity to purchase the properties after the deadline. Because the buyer allowed that deadline to pass, the lower court rightly found that the buyer had abandoned its only opportunity to seek relief from the final judgment.

Additionally, the Court agreed with the lower court that the buyer failed to move for relief in a timely fashion. Even though within the one-year time bar contained in the court rule, the buyer did not satisfy the rule’s requirement that such motions be filed within a reasonable time. The Court noted that the rule does not mean that it is reasonable to file such a motion within one year; the one-year period represented only the outermost time limit for the filing of a motion.


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