Princes Point in Staten Island

The state’s highest court heard oral arguments Tuesday on whether a lower court was right to rule that a major New York developer could keep a nearly $4 million deposit from the botched sale of waterfront property on Staten Island.

In February 2016, the Appellate Division, First Department, ruled that Muss Development was not required to return a prospective buyer’s nearly $4 million deposit on a 23-acre parcel of land on Raritan Bay in Staten Island (NYLJ, Feb. 8 2016).

In the unanimous decision, Princes Point v. Muss Development, 601849/08, Justice Rolando Acosta wrote that “because a rescission action unequivocally evinces the plaintiff’s intent to disavow its contractual obligations, the commencement of such an action before the date of performance constitutes an anticipatory breach.”

In 2004, Princes Point entered into a contract with companies controlled by the Muss Family—one of the largest real estate developers in New York City—to buy the oceanfront parcel of land on Staten Island. Princes Point made a $1.9 million down payment on the $35.9 million purchase price for the land with a condition that Muss Development must get approval from the government to develop more than 100 houses on the land.

After Hurricane Katrina down south prompted inspections here, state regulators found that there were defects in the seawall and ordered Muss Development to fix it.

In March 2006, Princes Point and Muss Development amended their contract to extend the “drop dead date,” the outside closing date, to June 2007. The amendment included an increase in the purchase price from $35.9 million to $37.9 million. The down payment was also increased to nearly $4 million under the amended contract, which also required Princes Point to pay half the cost of repairing the seawall and to get government approval to develop roughly 100 houses on the land.

A month before the closing date, Princes Point brought a rescission action against Muss Development, arguing that the company had concealed defects in the remediation work.

Court of Appeals Associate Judge Michael Garcia asked Scott Mollen—a partner at Herrick Feinstein, who is representing the Musses—whether the developer had any intention of selling the property under the terms of the contract.

“Absolutely,” replied Mollen, who noted that the Muss Development was “anxious and optimistic” to sell the property because of the housing bubble in 2008.

Princes Point’s appeal is being represented by Rosenberg Calica & Birney partner John Ciulla.