Non-Binding Offer | Tenure Gender Discrimination | Seller Keeps Down Payment

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Writing A Non-Binding Offer

No Fraud Cause of Action; Only Breach of Contract

In Keitel v. E*TRADE Financial Corporation, an Appellate Court recently reinforced why in contract negotiations, it is important that you retain the ability to change or modify an offer by expressly conditioning that offer on the execution of a more formal written agreement.

This case involved the well-known film and TV actor, Harvey Keitel, who alleged that the online stock trading company E*Trade, made a “firm and binding offer” to hire him for a celebrity spokesperson advertising campaign, and then backed out of the deal. The complaint was dismissed by the Supreme Court in New York County on the ground that no valid and binding contract was ever formed. The Appellate Court rejected Harvey’s arguments on appeal, and affirmed the dismissal.

According to the Appellate Court, the term sheet relied upon by Harvey stated that it “sets forth the general intent of the parties to discuss in good faith the terms and conditions” of the deal and that “neither party shall be bound until the parties execute a more formal written agreement.” Based on this clear and unambiguous language, the Appellate Court concluded that the term sheet did not constitute an enforceable contract.

Harvey had argued five points: (1) that his agent requested that any offer be “firm and binding,” (2) that E*Trade’s agent acknowledged this request, (3) that internalcommunications between E*Trade and its agents revealed an intention to make a “firm offer,” (4) that the cover email transmitting the term sheet labeled the offer “firm and binding,” and (5) that defendant later offered a fee to “kill” the contract. But the Appellate Court held these points insufficient to “negate or demonstrate a waiver of the provision that the parties would not be bound until they executed a formal writte an agreement.” Especially because “a waiver of a contractual provision ‘should not be lightly presumed,’ ‘must be unmistakably manifested, and is not to be inferred from a doubtful or equivocal act.’”

The Appellate Court stated that Harvey’s agent’s demand for a firm offer and E*Trade’s agent’s acknowledgment of this request, before consulting with her client, proved nothing about what was ultimately agreed. And the Court was not convinced that E*Trade and its agents’ internal communications preceding the offer, to which Harvey was not privy, created a binding contract.

As to E*Trade’s offer of a “kill” fee, the Appellate Court did not even consider it because “it is inadmissible as an offer of compromise under CPLR 4547.” CPLR 4547 provides:

Evidence of (a) furnishing, or offering or promising to furnish, or (b) accepting, or offering or promising to accept, any valuable consideration in compromising or attempting to compromise a claim which is disputed as to either validity or amount of damages, shall be inadmissible as proof of liability for or invalidity of the claim or the amount of damages. Evidence of any conduct or statement made during compromise negotiations shall also be inadmissible. The provisions of this section shall not require the exclusion of any evidence, which is otherwise discoverable, solely because such evidence was presented during the course of compromise negotiations. Furthermore, the exclusion established by this section shall not limit the admissibility of such evidence when it is offered for another purpose, such as proving bias or prejudice of a witness, negating a contention of undue delay or proof of an effort to obstruct a criminal investigation or prosecution.

Harvey had argued that CPLR 4547 did not apply because the existence of a contract was not in dispute when the offer was made, but the Appellate Court rejected this argument as “unsupported by the record.”

Lastly, with respect to the cover email transmitting the term sheet, the Appellate Court noted that “while it labeled the term sheet a ‘firm and binding offer,’ also noted that the offer was
contingent on ‘coming to terms on scripts, compensation, etc.’ More importantly, it attached the term sheet itself. In light of the provision stating that the term sheet was not binding absent execution of a formal written agreement, plaintiff’s reliance on the cover email was not reasonable.”

Female Whose Tenure Application was Rejected Stated a Gender Discrimination Claim

Discrimination Suit Over Denial of Public Housing’s Rental Dismissed

In Luka v. Bard College, a federal District Court recently dismissed an employee’s age and disability discrimination claims, but found that her complaint stated claim for gender discrimination under New York State Human Rights Law (“NYSHRL”).

According to the allegations of the complaint, the plaintiff, Barbara Luka, is a 48-year-old lesbian who was formerly employed as a Visiting Professor and an Assistant Professor by Bard College, a private liberal arts university in Dutchess County, New York. She is a scientist who “conducts research on the neurological and cognitive bases of language comprehension and human memory.” She received her PhD in 1999, and in May 2003, Bard hired her for a two-year appointment as a Visiting Professor in the Psychology Program. In 2005, the College hired her into a tenure-track position and upon the recommendation of a professor she was reappointed after a positive evaluation. Then, sometime the following year, that same professor became aware of her sexual orientation, and his attitude toward her became “actively very hostile.” The professor then “regularly” referred to plaintiff and her partner as a “bitch” and, on one occasion, commented that she seemed like she was having a “hormonal surge.”

She first stood for tenure during the 2009–2010 academic year, at which time she alleged that her “academic file and her external evaluations were exemplary” and her tenure application “garnered broad support from faculty across the College.” But that same professor, the only active tenured member in the Psychology Program, stepped in and “falsely and maliciously” told faculty members, including those in positions to evaluate her tenure application, that the plaintiff was “mentally unstable,” and told others in the Psychology Program that Plaintiff was “crazy” and “did not deserve tenure.” Her tenure application was ultimately denied. She was evaluated for tenure again in 2013, but that same thing happened. Her complaint to human resources at Bard was for naught.

As for her gender discrimination claim, the Court recognized that to “state a claim for gender discrimination under the NYSHRL, a plaintiff must plausibly allege that she ‘is a member of a protected class, was qualified, suffered an adverse employment action, and has at least minimal support for the proposition that the employer was motivated by discriminatory intent.’”

In support of Bard’s motion to dismiss the claim, it focused on the plaintiff’s purported failure to allege facts giving rise to an inference of discriminatory intent, arguing that the professor’s alleged comments were “stray remarks” untethered to the decision to deny the plaintiff tenure–presumably because the plaintiff was otherwise a qualified woman who was denied tenure. But the Court rejected Bard’s argument, holding that while calling the plaintiff or her partner a “bitch” and making a disparaging comment about her “hormonal surge,” could very well be considered “stray remarks,” which “have no remedy in the law,” she had alleged “a great deal more relevant conduct” than these remarks, including that the professor “regularly” referred to her as a “bitch” at a time when she was having her tenure review. She had also alleged that the professor “engaged in gender-biased conduct” in connection with another female’s tenure application, and had sexually harassed yet another female.

Although Bard argued that the gender discrimination claim was pleaded as “‘a proxy’ for her sexual orientation claim, the two theories can coexist. Indeed, the Second Circuit recently cautioned that, when evaluating a complaint involving gender and sexual orientation discrimination claims, ‘courts should not rely on the mere fact that a complaint alleges sexual orientation discrimination to find that a plaintiff fails to state a separate claim for gender stereotyping discrimination, but should instead independently evaluate the allegations of gender stereotyping.’ Although Plaintiff’s gender discrimination claim is not a gender stereotyping claim, the principle is the same. Plaintiff’s status as a lesbian practically necessitates her status as a woman, whether she is one that ‘presents’ as stereotypically feminine or not. Despite the interrelationship of her two claims, both can survive a motion to dismiss if the complaint contains sufficient facts independent of a sexual orientation discrimination claim to plead a plausible claim of gender discrimination.” The Court
concluded she had done so.

Seller Entitled to Retain $1 Million Down Payment as Damage

Seller Entitled to Retain $1 Mi llion Down Payment as Damage

In Ward Capital Mgmt. v. New Pelham Parkway N. LLC, a Bronx Supreme Court awarded the defendants-sellers summary judgment dismissing the plaintiff-buyer’s complaint, and granting the sellers declaratory judgment entitling them to retain a $1 million down payment as liquidated damages for breach of the contract for the sale of real property.

In New York, parties may seek a “declaratory judgment” after a legal controversy has arisen but before any damages have occurred or any laws have been violated. A declaratory judgment differs from other judicial rulings in that it does not require that any action be taken. Instead, the court, after analyzing the controversy, simply issues an opinion declaring the rights and obligations of each of the parties involved. The only caveat is that there must be an actual, rather than hypothetical, controversy that falls within a court’s jurisdiction.

In this case, the parties entered into a contract for the sale of four residential properties located in Bronx County, each improved by mid-rise apartment buildings, and containing, in the aggregate, approximately 300 residential units, at a purchase price of $60 million. The plaintiff-purchaser deposited two down payments as required by the contract of sale totaling $1 million. The contract provided that the plaintiff-purchaser would accept insurable title, subject to certain enumerated “approved title exceptions.” The defendants-sellers were permitted to use the cash portion of the purchase price to satisfy liens or encumbrances, provided they delivered either satisfaction instruments, or deposited with the title company sufficient monies acceptable to the title insurer to obtain satisfactions and to insure title free of the liens.

The contract provided for a “due diligence period” during which the plaintiff-purchaser could cancel the contract and recover the down payment, which would end 30 days after the date of the contract. The closing would occur “on or about sixty (60) days immediately following the date of expiration of the Due Diligence Period, TIME BEING OF THE ESSENCE or the next following Business Day, if such date shall not be a Business Day….” An amendment to the contract extended the due diligence period and required a closing 45 days from the date of the expiration of the Due Diligence Period, “with all other terms remaining intact.”

Defendants-sellers had scheduled the closing as provided in the amendment to the contract and the plaintiff-buyer appeared but was not ready or able to close on that date. In response to the defendants-sellers motion, the plaintiff-buyer argued that the contract did not contain an explicit closing date barring holding it in default. The Court disagreed finding the formal, fully executed amendment to the contract explicitly set forth a date—with a time of the essence clause—for closing, and the defendants-sellers had proved they were ready, willing and able to close on that date. Although the plaintiff-purchaser claimed there were two mortgages on the properties that were in foreclosure, the Court found that the defendants-sellers had obtained pay-off statements for the outstanding mortgages and that there was “no indication on the record that the mortgages would not have been readily satisfied at closing by the payment of money, as was permitted under the contract, nor that the title company would not accept funds at closing to insure the property and omit these mortgages from any title exceptions.” Accordingly, the Court granted the defendants-purchasers the relief they requested, reasoning: “Absent a breach on the part of the seller, a purchaser who defaults on a real estate contract without lawful excuse cannot recover its down payment.”

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