Shusterman et al v. Cadaner et al

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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CHAYA SHUSTERMAN and ELIEZER LEVER,
Appellants,
MEMORANDUM AND ORDER
-against- 	25-CV-04520 (OEM)
ZEV CADANER and VILMA LOUISE JOHNSON,
Appellees.
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ORELIA E. MERCHANT, United States District Judge:
On August 13, 2025, Appellant-Creditors Chaya Shusterman (“Shusterman”) and Eliezer
Lever (“Lever”) (collectively, “Appellants”) appealed a June 13, 2025, memorandum decision and
August 6, 2026, order and judgment from the U.S. Bankruptcy Court. See Notice of Appeal and
Statement of Election at 3-41, Dkt. 1 (the “June 13 Order”). That order concerned the purchase of
Appellee-Debtor Vilma Louise Johnson’s (“Johnson”) real property, located at 1708 President
Street, Brooklyn, New York (the “Property”), and held that Appellants’ contract with Johnson to
purchase the Property was not enforceable.
Appellants ask this Court to reverse the June 13 Order and order specific performance of
Appellants’ contract with Johnson. See generally Brief for Defendants-Appellants Eliezer Lever
and Chaya Shusterman, Dkt. 4 (“Appellants’ Brief” or “App. Br.”). 	Johnson and Appellee-
Creditor, Zev Cadaner (“Cadaner”), (collectively, “Appellees”) argue that the June 13 Order is
entitled to deference and urge the Court affirm its findings. 	See generally Brief of Defendant-
Appellee 	Vilma 	Johnson, 	Dkt. 	6 	(“Johnson 	Opposition 	Brief” 	or 	“Johnson 	Opp. 	Br.”);
Plaintiff/Appellee Cadaner’s Brief, Dkt. 5 (“Cadaner Opposition Brief” or “Cadaner Opp. Br.”).
For the following reasons, the June 13 Order is affirmed, and the appeal is dismissed.
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RELEVANT BACKGROUND
A. Real Property Contracts
1. 	Lever Contract
In August 2020, Johnson contracted to sell Lever the Property (the “Lever Contract”). R.
at 744-61.1 Lever agreed to pay $1,200,000 for the Property with a $120,000 downpayment. Id.
at 745. The Lever Contract provided for closing on or about November 10, 2020, id. at 747, and
did not provide that “time is of the essence.” The Lever Contract states that:
If at Closing, there are other liens or encumbrances that Seller is obligated to pay
or discharge, Seller may use any portion of the cash balance of the purchase price
to pay or discharge them, provided Seller shall simultaneously deliver to Purchaser
at Closing instruments in recordable form and sufficient to satisfy such liens or
encumbrances of record, together with the cost of recording or filing said
instruments. As an alternative Seller may deposit sufficient monies with the title
insurance company employed by Purchaser acceptable to and required by it to
assure their discharge, but only if the title insurance company will insure
Purchaser’s title clear of the matter or insure against their enforcement out of the
Premises and will insure Purchaser’s Institutional Lender clear of such matters.
Upon reasonable prior notice (by telephone or otherwise), Purchaser shall provide
separate certified or official bank checks as requested to assist in clearing up these
matters.
Id. at 748 (quoting Lever Contract ¶ 20). The Lever Contract further provides:
(a) Seller shall comply with all notes or notices of violations of law or municipal
ordinances, orders or requirements noted or issued . . . as to lands, housing,
building, fire, health, environmental and labor conditions affecting the Premises.
The Premises shall be conveyed free of them at Closing. 	Seller shall furnish
Purchaser with any authorizations necessary to make the searches that could
disclose these matters.
(b) . . . All obligations affecting the Premises pursuant to the Administrative Code
of the City of New York incurred prior to Closing and payable in money shall be
discharged by Seller at or prior to Closing.
Id. at 747 (quoting Lever Contract ¶ 10).
1 Appellants and Johnson filed their own appendices with their briefs that differ in pagination. For the sake of clarity,
the Court refers to the bankruptcy appeal record. See Bankruptcy Record, Dkt. 2 (the “Record” or “R.”). All page
numbers cited in the Record refer to the Bates stamp in blue at the bottom right corner of each page.
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The Lever Contract subjects Lever to a “mortgage commitment contingency” (the
“Mortgage Contingency”) that provides:
(a) The obligation of the Purchaser to purchase under this contract is conditioned
upon issuance, on or before 60 days after a fully executed copy of this contract is
given to Purchaser or Purchaser’s attorney in the manner set forth in paragraph 25
or overnight mail (the “Commitment Date”), of a written commitment from an
Institutional Lender . . . of $960,000 for a term of at least 25-30 years (or such lesser
sum or shorter term as Purchaser shall be willing to accept) at the prevailing fixed
or adjustable rate of interest and on other customary commitment terms (the
“Commitment”).
. . . .
(e) If no Commitment is issued by the Institutional Lender on or before the
Commitment Date, then . . . Purchaser may cancel this contract by giving Notice to
Seller within 5 business days after the Commitment Date, provided that Purchaser
has complied with all its obligations under this paragraph.
(f) If this contract is canceled by Purchaser pursuant to subparagraphs [A]R7(d) or
(e), neither party shall thereafter have any further rights against, or obligations or
liabilities to the other by reason of this contract, except that the Downpayment shall
be promptly refunded to Purchaser.
Id. at 754-55 (quoting Lever Contract ¶ AR7). 	Paragraph 25 of the Lever Contract states that
“[a]ny notice or other communication (‘Notice’) shall be in writing and either (a) sent by either of
the parties hereto or by their respective attorneys . . . by registered or certified mail, postage
prepaid, or (b) delivered in person or by overnight courier” (“Paragraph 25”). Id. at 748 (quoting
Lever Contract ¶ 25). Lever’s attorney, Philip Lavender (“Lavender”), did not know the purpose
of this paragraph but acknowledged that the parties had agreed to those terms. Id. at 253. For the
purposes of the Mortgage Contingency, Lever “shall be deemed to have been given a fully executed
copy of this contract on the third business day following the date of ordinary or regular mailing,
postage prepaid.” Id. at 756.
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Furthermore, the Notes on Mortgage Commitment Contingency Clause section of the
Lever Contract states:
This clause allows Seller to cancel if a commitment is not accepted by Purchaser
by the Commitment Date, unless Purchaser timely supplies a copy of the
commitment, to allow Seller the option to avoid having to wait until the scheduled
date of closing to see if Purchaser will be able to close. Seller may prefer to cancel
rather than to wait and settle for forfeiture of the downpayment if Purchaser
defaults. 	Because of Seller’s right to cancel, Purchaser may not waive this
contingency clause. This clause means that Purchaser is subject to cancellation by
Seller even if Purchaser is willing to risk that he/she will obtain the Commitment
after the Commitment Date. Some Purchasers may not want to be subject to such
cancellation by Seller.
Id. at 751.
Johnson’s attorney, Ernest Wilson (“Wilson”), emailed a fully executed copy of the Lever
Contract to Lavender on August 12, 2020. Id. at 474-75. Lavender received the email that same
day, id. 207-09, 340, and upon receipt, Lever became aware that he had to apply for a mortgage,
id. at 250. 	As of October 11, 2020, sixty days after Wilson emailed the fully executed Lever
Contract to Lavender, Lever had not received an unconditional mortgage commitment, and Lever
had not requested an extension of time to obtain one. Id. at 374.
On October 13, 2020, Lavender emailed Wilson the title report and a list of itemized
conditions that needed to be resolved before closing. Id. at 763-64. The issues included: paying
off the mortgage; discontinuing the lis pendens action relating to the foreclosure; vacating the
foreclosure and sale; resolving any other judgments and liens against the record owner; paying off
Environmental Control Board liens at or prior to closing; ensuring that the tenant vacated the
property; removing the Department of Housing Preservation and Development violations; and
removing the open permit contained in the certificate of occupancy search. Id.
Between October 26, 2020, and November 30, 2020, Lavender emailed Wilson several
times requesting resolution of the open title issues and requesting that Johnson consent to
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assignment of the Lever Contract to Shusterman. Id. at 774-79. On December 4, 2020, Lavender
emailed Wilson stating that
[O]ur client is willing to accept a credit for the reasonable cost of removing the
violations from the property and closing out the open permit that exists filed against
the Premises. This is contingent on our client’s lender agreeing to close subject to.
If they require to close with escrow, we will have to go that route.
Speaking of the Purchaser’s Lender, we will require your client to sign the attached
assignment of contract from “Eli Lever” to his wife “Chaya Shusterman”. Please
email a copy of the attached assignment by Mr[s]. Johnson.
Id. at 774-75. 	Lever’s interests in the Lever Contract were assigned to Shusterman by an
assignment signed on December 15, 2020. Id. at 766-67.
In a letter dated June 30, 2021, Wilson advised Lavender that the October 12, 2020,
deadline was the “Commitment Date” under the Lever Contract and that Lever had not provided
notice that he applied for a mortgage or requested an extension of time to obtain the Mortgage
Commitment (“TOE Letter”). 	Id. at 781-82. 	Wilson asserted that time was of the essence and
represented that Johnson was “ready willing and able to proceed to a closing and tender
performance of her obligations under the contract of sale” declaring a closing date of July 30,
2021, at 10:00 a.m. (“Closing Date”). Id. 782.
Lavender responded by letter on July 2, 2021. 	He rejected the TOE Letter, stating that
closing was not a possibility because Johnson did not have “clean hands” for various reasons under
the Lever Contract, including, inter alia, that Johnson had failed to “provide the Premises free of
all violations as of the date of Closing”; “legalize/closeout all open permits or withdraw
applications attending to such permits”; “provide ‘marketable’ title (not ‘insurable’) to the
Premises; and provide “the Premises vacant, broom clean, free of tenant and occupants.” Id. at
784-85. 	Notably, Lavender rejected Johnson’s asserted “Commitment Date,” countering that it
had not come to pass per the terms of the Lever Contract because “a copy of a fully executed
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version of the Contract has not yet been delivered in a manner set forth in Paragraph 25 or by
overnight mail so the time period prior to the expiration of Commitment Date has not yet beg[u]n
to run.” Id. at 784.
On July 29, 2021, Wilson sent a letter to Lavender stating that closing was set for July 30,
2021, that time was of the essence, that Johnson had “satisfied the conditions for delivery to
[Lavender’s] client of such marketable title,” and that “the premises [would] be delivered vacant
at the closing.” Id. 787-88. Lavender responded by letter on July 30, 2021, again rejecting the
time-of-the-essence assertion for failure to comply with Paragraph 25. Id. at 790-91. He reiterated
that Lever had not waived the Mortgage Contingency and that Johnson had failed to provide a final
water meter reading, remove all violations filed against the Property, and afford Shusterman an
opportunity to confirm that the Property is vacant, broom clean, and free of tenants and occupants
as required under the Lever Contract. See id.
On July 30, 2021, Johnson, Wilson, and the title closer appeared for the closing. Id. at 488.
Wilson and Johnson were in the process of obtaining a payoff letter and had prepared the Property’s
deed and Automated City Register Information System (“ACRIS”) documents. 	Id. at 486-88.
Johnson was prepared to turn over the Property’s keys and satisfy any liens or encumbrances on
the Property from the sale proceeds. 	Id. 	Lever appeared for the closing, but Shusterman and
Lavender did not appear. Id. at 490. Lever did not have a mortgage in place or the funds to close.
Id. at 382-83, 376, 490.
In a letter dated August 26, 2021, Wilson stated that Lever and Shusterman’s failure to
close at the July 30, 2021, closing constituted a default and entitled Johnson to retain Lever’s down
payment as liquidated damages. Id. at 799-800.
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Lever and Shusterman did not obtain an unconditional mortgage commitment; rather Lever
obtained a conditional mortgage commitment from Quontic Bank for the November 10, 2020,
closing, id. at 340-41, and when the closing was moved to 2021, he obtained a second conditional
mortgage commitment from The Federal Savings Bank, see id. at 357-65.
2. 	Cadaner Contract
On November 12, 2020, Johnson and Cadaner contracted for Cadaner’s purchase of the
Property for $1,200,000. Id. at 806-10. A $120,000 down payment and the balance were due at
closing (the “Cadaner Contract”). Id.
On or about August 2, 2021, Lever or Shusterman caused the assignment of Lever’s
interests in the Lever Contract to Shusterman to be filed with the Kings County Clerk. See id. at
712-13. Cadaner’s attorney, Siamak Darouvar (“Darouvar”), was thereby put on inquiry notice of
the Lever Contract’s assignment. Id. at 135.
B. Procedural History
1. 	State Court Proceeding
On November 8, 2021, Cadaner filed an action in New York Supreme Court, Kings County,
against Johnson, Lever, and Shusterman seeking declaratory judgment that the Cadaner contract
is in full force and effect, for specific performance, for damages, for return of the down payment,
and for tortious interference with contract as to Lever and Shusterman. App. Br. at 7; see Zev M.
Cadaner v. Vilma Johnson, Chaya Shusterman, Eliezer Lever, Index No. 528557/2021 (“State
Court Proceeding”); R. at 701-02. 	There, Lever and Shusterman asserted cross claims against
Johnson seeking declaratory judgment that the Lever Contract is in full force and effect, specific
performance and damages, and counterclaims against Cadaner. Id. at 17-25.
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2. 	Bankruptcy Court Proceeding
On May 20, 2022, after commencement of the State Court Proceeding, Johnson filed for
Chapter 13 bankruptcy in the Eastern District of New York. R. at 703.2
On August 31, 2022, Johnson removed the State Court Proceeding to the Bankruptcy Court.
Id. at 703. The Bankruptcy Court conducted trial on May 30, 2024; June 10, 2024; and September
19, 2024. On June 13, 2025, the Bankruptcy Court issued its findings of fact and conclusions of
law by memorandum decision. See generally id. at 697-732. On August 6, 2025, the Bankruptcy
Court issued its order and judgment. See generally id. at 694-96.
3. 	Appeal
On August 13, 2025, Appellants appealed the June 13 Order. See generally Appeal.
Appellants subsequently learned that Johnson had filed a fourth amended Chapter 13 plan,
which contemplated a sale of the Property to Cadaner and a rejection of the Lever Contract. See
Declaration of Ira Kleiman ¶ 22, Dkt. 8-1 (“Motion for Stay” or “Stay Mot.”). 	A hearing on
confirmation of that plan was scheduled for November 20, 2025. Id.
On October 21, 2025, Appellants filed a motion for a stay of the Bankruptcy Court’s Order
and Judgment in the Bankruptcy Court pending the instant appeal. Id. ¶ 23.
On November 19, 2025, Lever and Shusterman also filed a motion in this Court for an
emergency stay of the Order and Judgment and “all further Bankruptcy Court proceedings”
pending the appeal. Id. ¶ 1.
The Bankruptcy Court heard argument on Appellants’ initial motion for a stay on
November 18, 2025. Stay Mot. ¶ 24. It denied the motion reasoning that Johnson “had the right
2 The Court takes judicial notice of the bankruptcy proceeding, In re Johnson, 1-22-41100-JMM (Bankr. E.D.N.Y.
May 20, 2022), Dkt. 1, under Federal Rule of Evidence 201. See Twentieth Century Fox Film Corp. v. Marvel Enters.,
220 F. Supp. 2d 289, 293 n.4 (S.D.N.Y. 2002).
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to reject the Lever Contract, and that the Appellants were really seeking money damages which
could otherwise be dealt with after confirmation, and which in any event were not a reason to grant
a stay.” Id.
On November 20, 2025, this Court ordered Appellees to respond to the second motion for
a stay. It additionally directed the parties to file a joint letter status report regarding the bankruptcy
proceedings and set a date for a conference on the motion. In their joint letter, filed the following
day, the parties represented that the confirmation hearing was adjourned to January 15, 2026, and
the motion for sale was filed with a return date of December 16, 2025. Joint Letter to the Court,
Dkt. 10 (Nov. 21, 2025). 	The parties acknowledged that these developments made the second
motion for a stay “less of an ‘emergency[.]’” Id. Thus, the Court cancelled the conference.
On December 9, 2025, Appellants renewed their request for a stay on an emergency basis,
stating that the return date for the motion for sale had been “moved up” from December 16, 2025,
to December 11, 2025. See Emergency Motion for a Stay Pending Appeal, Dkt. 13.
On December 11, 2025, the Court denied Appellants’ Motion for Stay. See Order, Dkt. 14.
LEGAL STANDARD
“District courts have appellate jurisdiction over final judgments, orders, and decrees
entered in bankruptcy court.” Satti v. Nechadim Corp., 17-CV-683 (MKB), 2018 WL 1010206, at
*3 (E.D.N.Y. Feb. 16, 2018). A bankruptcy court’s order is final “if it completely resolves all of
the issues pertaining to a discrete claim, including issues as to the proper relief.” In re Pegasus
Agency, Inc., 101 F.3d 882, 885 (2d Cir. 1996). A district court reviews a bankruptcy court’s legal
conclusions de novo and reviews factual findings for clear error. In re Bayshore Wire Prods. Corp.,
209 F.3d 100, 103 (2d Cir. 2000). 	One basis for clear error is that a court “overlooked[]
matters . . . that might reasonably be expected to alter the conclusion reached by the court.”
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Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). However, “clear error exists only
when a reviewing court is ‘left with the definite and firm conviction that a mistake has been
committed.’” 	In re Zubair, 20-CV-8829 (VB) & 21-CV-4222 (VB), 2021 WL 4974811, at *5
(S.D.N.Y. Oct. 26, 2021) (quoting In re Manville Forest Prods. Corp., 896 F.2d 1384, 1388 (2d
Cir. 1990)).
The standard of review for a mixed question depends on “whether answering it entails
primarily legal or factual work.” U.S. Bank Nat’l Ass’n ex rel. CWCap. Asset Mgmt. LLC v. Vill.
at Lakeridge, LLC, 583 U.S. 387, 396 (2018). 	Mixed questions of fact and law are generally
subject to de novo review. In re Vebeliunas, 332 F.3d 85, 90 (2d Cir. 2003). A mixed question of
law asks whether “the historical facts . . . satisfy the statutory standard, or to put it another way,
whether the rule of law as applied to the established facts is or is not violated.” Pullman-Standard
v. Swint, 456 U.S. 273, 289 n.19 (1982).
DISCUSSION
A. Whether the Bankruptcy Court Clearly Erred in Finding that Johnson was Ready,
Willing, and Able to Close
Appellants argue that the Bankruptcy Court erred by ruling that Johnson was ready, willing,
and able to perform on the Closing Date. 	App. Br. at 12. 	The Court reviews the Bankruptcy
Court’s finding that Johnson was ready, willing, and able to perform on the Closing Date for clear
error.
Appellants argue that the Bankruptcy Court inaccurately restated Appellants’ position
because it did not acknowledge Appellants’ argument that Johnson “was not ready willing and able
to close, as she had failed to vacate the premises in accordance with the terms of the Lever
Contract.” App. Br. at 13. Appellants argue that the Lever Contract specified that the Property
was to be delivered vacant and broom clean at the time of closing, id. (citing R. at 747), but the
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Property was not broom clean because it was undisputed that Johnson was still living in the
Property at the time of the Closing Date, and the yard area was full of debris and tires, id.
The Bankruptcy Court acknowledged Appellants’ position that they were not required to
close by the Closing Date because “(a) the Commitment Date had not expired, and (b) Johnson
was not an able seller due to her failure to cure title defects.” 	R. at 674 (citations omitted). 	It
noted that the Lever Contract required that the Property be delivered vacant and broom clean. Id.
at 	667-78. 	Nevertheless, 	the 	Bankruptcy 	Court 	concluded 	that 	Johnson 	proved 	“by 	a
preponderance of the evidence that she was ready, willing, and able to close on July 30, 2021.” Id.
at 677. Moreover, the Bankruptcy Court found that “Lever did not have a lawful excuse to close”
and offered to close notwithstanding certain outstanding violations.” Id. at 677-78.
These findings directly contradict Appellants’ argument Johnson was not “ready, willing,
and able.” Thus, even if the June 13 Order did not expressly restate Appellants’ argument that the
Property was not vacant and broom swept, doing so is not reasonably expected to alter the
conclusion. 	Because Appellants failed to appear for the closing, they did not give Johnson the
opportunity to perform. Accordingly, the Bankruptcy Court squarely concluded that Johnson had
proven that she was ready, willing, and able to proceed with the sale, notwithstanding any
inadequacies with the Lever Contract conditions.
The record supports a finding that the Property was vacant and broom swept. The June 13
Order relied on Wilson’s testimony at trial that Johnson had prepared the Property’s deed, ACRIS
documents, and was prepared to turn over the Property’s keys and satisfy any liens or
encumbrances on the Property from the sale proceeds as support for its finding that Johnson was
ready, willing, and able to perform. Id. at 712. While not noted as a finding of fact in the June 13
Order, the Court acknowledges that Wilson’s testimony also confirmed that Johnson had obtained
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a dumpster and removed all debris and tires to ensure the Property would be delivered vacant and
broom clean for closing. See id. at 486-87.
Moreover, “[w]here the bankruptcy court was able to view firsthand the actions and
statements of the parties and based its decision on sound legal principles, a reviewing court ‘should
not substitute its judgment for that of the bankruptcy court,’ in the absence of a finding of abuse
of discretion.” In re White, 3:24-cv-442(AWT), 2024 WL 4850199, at *3 (D. Conn. Nov. 21, 2024)
(quoting In re Casse, 198 F.3d 327, 341 (2d Cir. 1999)); see also In re Pisculli, 426 B.R. 52, 59
(E.D.N.Y. 2010), aff’d, 408 F. App’x 477 (2d Cir. 2011). Here, the Bankruptcy Court made the
requisite findings of fact, weighed the credibility of the evidence, and, on that basis, formed its
opinion. Upon review of the record, there is no clear error in the Bankruptcy Court’s finding that
Johnson was ready, willing, and able to close on the Closing Date. The Court declines to disturb
its finding. Accordingly, the Bankruptcy Court’s finding that Johnson was ready, willing, and able
to close on the Closing Date is affirmed.
B. Whether the Liens on the Property, Violations, and Encumbrances Did Not Have to
Be Cleared Prior to Closing
Appellants argue that the Bankruptcy Court erred in concluding that the Lever Contract
“does not appear to require that the liens, violations and encumbrances be cleared prior to its
closing,” R. at 721, because the Lever Contract requires that the seller convey marketable title,
App. Br. at 15. Appellants assert that for Johnson to declare time of the essence she had to be
prepared to convey marketable title and, because there were a “litany of open items,” she could
not do so. App. Br. at 16. The issue for the Court is whether the Lever Contract requires that liens,
violations, and encumbrances be cleared prior to closing and whether Johnson’s representation
that such impairments would be resolved at closing prohibited her from delivering “marketable
title” at the Closing Date. This is a mixed issue of law and fact subject to de novo review.
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Johnson argues that the Bankruptcy Court appropriately found that she was ready, willing,
and able to convey marketable title and that Lever’s own default caused the failed closing. Johnson
Opp. Br. at 24. 	She contends that the Lever Contract ¶¶ 10 and 20 required her to deliver
marketable title at closing, not prior, and that the Lever Contract “expressly permitted [her] to
satisfy liens, violations, and encumbrances from the closing proceeds.” Id. at 25; see also R. at
747-48 (authorizing the Seller to convey the Property free of conditions affecting the premises at
closing and to use the purchase price to remove encumbrances).
Under New York law, “[t]he test of the marketability of a title is ‘whether there is an
objection thereto such as would interfere with a sale or with the market value of the property.’”
Voorheesville Rod & Gun Club, Inc. v. E.W. Tompkins Co. Inc., 626 N.E.2d 917, 920 (N.Y. 1993)
(quoting Reagan v. Lanze, 354 N.E.2d 818, 822 (N.Y. 1976)). “[I]n the absence of a stipulation to
the contrary, it is presumed that a marketable title is to be conveyed.” Id. “The test of whether a
title is marketable is whether the purchaser can peacefully enjoy and use the property for his
intended and announced purposes.” 	DeJohn v. Mandelbaum, 505 N.Y.S.2d 659, 661 (2d Dep’t
1986). Contrary to Appellants’ position that marketability requires so-called “pristine title,” App.
Br. at 15, “[m]arketability does not assure a buyer title free from every doubt, or even every
encroachment. Rather, it shields the buyer from defects in title that are more than simply possible
or very remote.” In re Ilana Realty, Inc., 154 B.R. 21, 25 (S.D.N.Y. Mar. 15, 1993) (citing Reagan,
354 N.E.2d at 822).
Although the Lever Contract provides that the Property shall be conveyed free of
violations, encumbrances, and liens at closing, R. at 747, it also states that the “Seller may use any
portion of the cash balance or purchase price to sell or discharge them,” id. at 748. Thus, liens,
violations, and encumbrances could be cleared at closing without running afoul of the contract or
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the delivery of marketable title. 	Additionally, Lavender testified that most outstanding items,
including the mortgage, judgment of foreclosure and sale, parking tickets, Environmental Control
Board liens could be resolved at closing and that the Department of Housing Preservation and
Development violations and open permits could be addressed through escrow funds after closing.
Id. at 255-61. The Record also demonstrates that Johnson had ordered a mortgage payoff letter,
had the deed and transfer documents prepared, and was prepared to turn over vacant possession
and the keys on the Closing Date. Id. at 486-88.
Based on the foregoing, Appellants’ enjoyment of title would not be obscured by the
purported title defects at the time of the Closing Date because the defects were either in the process
of being resolved or would be resolved upon closing. Both outcomes were expressly contemplated
by the Lever Contract. 	Therefore, the Bankruptcy Court’s decision that the Property liens,
violations, and encumbrances did not have to be cleared prior to closing is affirmed.
C. Whether the Mortgage Contingency Was Triggered
Appellants argue that the Bankruptcy Court erroneously “reformed” the Lever Contract by
ruling that delivery of the Lever Contract by email triggered the Mortgage Contingency because it
was contrary to the terms of the Lever Contract. App. Br. at 17-18. Appellants further argue that
the Bankruptcy Court erred in determining that Appellants were not prejudiced by Johnson’s
delivery of the Lever Contract by email. Id. at 20-21. The two issues for the Court are (1) whether
Johnson’s delivery of the fully executed Lever Contract via email triggered the Mortgage
Contingency despite noncompliance with Paragraph 25 and (2) if the Mortgage Contingency was
triggered, whether the deviation from Paragraph 25 prejudices Appellants.
“Under New York law, ‘strict compliance with contractual notice provisions need not be
enforced where the adversary party does not claim the absence of actual notice or prejudice by the
deviation.’” Schweizer v. Sikorsky Aircraft Corp., 634 Fed. App’x 827, 829 (2d Cir. 2015) (quoting
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Fortune Limousine Serv., Inc. v. Nextel Comm’cns, 826 N.Y.S.2d 392, 395 (2d Dep’t 2006)); see
also Dellicarri v. Hirschfeld, 619 N.Y.S.2d 816, 817 (3d Dep’t 1994) (“Strict compliance with the
contract’s notice provisions was not required, for defendants do not claim that they did not receive
actual notice or that they were in any way prejudiced as a result of this minimal deviation.”); Iskalo
Elec. Tower LLC v. Stantec Consulting Servs., Inc., 916 N.Y.S.2d 373, 373-75 (4th Dep’t 2010)
(finding effective notice where notice was sent to corporate counsel, rather than the chief executive
officer as was required by the contract, and where no prejudice was asserted); Thor 725 8th Ave.
LLC v. Goonetilleke, 138 F. Supp. 3d 497, 509-11 (S.D.N.Y. 2015), aff’d, 675 Fed. App’x 31 (2d
Cir. 2017) (finding that termination notice, while delivered to incorrect address, was nonetheless
effective because the adverse party had actual notice and did not allege prejudice); Gorey v. Allion
Healthcare Inc., 18346–2004, 2008 WL 183721, at *6 (N.Y. Sup. Ct. Jan. 7, 2008) (finding notice
effective and “in no way prejudic[ial]” where an employee hand-delivered notice to the chief
executive officer’s desk and emailed him rather than mailing notice as was required by the
contract). 	Where a party claims that no notice was ever received, by contrast, enforcement of
contractual notice provisions may be proper.
Per the Mortgage Contingency, Appellants had sixty days after “a fully executed copy of
this contract is given to Purchaser or Purchaser’s attorney in the manner set forth in Paragraph 25
or overnight mail (the ‘Commitment Date’),” to secure an unconditional mortgage commitment.
R. at 754. Paragraph 25 of the Lever Contract states in relevant part that notices shall be sent to
the parties or their attorneys by registered or certified mail or delivered in person by overnight
courier with receipt acknowledged. 	Id. at 748. 	Although Wilson delivered the fully executed
contract to Lavender by email on August 12, 2020, Lavender testified that upon receipt of the fully
executed contract from Wilson, Lever was aware that he had to apply for a mortgage. Id. at 250.
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Regardless, on October 11, 2020, sixty days after Lavender’s receipt of the fully executed contract
via email, Lever had not met the conditions of the Mortgage Contingency by securing an
unconditional mortgage commitment or, at least, requesting an extension of time to do so.
Furthermore, Lever had already taken steps to secure two mortgages, despite his contention that
the Mortgage Contingency was not yet triggered. Id. at 340-41, 357-65.
Appellants rely on the two letters transmitted by Lavender to Wilson, long after the
Commitment Date and only after Johnson sought to enforce the Closing Date, to assert that
Appellants had not waived the Mortgage Contingency by failing to timely obtain a mortgage
commitment because the fully executed contract was not mailed in accordance with the Lever
Contract Paragraph 25 notice terms. 	See App. Br. at 18 (referring to Lavender’s July 2, 2021,
letter, R. at 784-85, and July 30, 2021, letter, id. at 790-91). Appellants do not claim that no notice
was received or that they did not receive actual notice. Instead, Appellants try to capitalize on the
technical language of the Lever Contract although Appellants’ counsel acknowledged receipt of
the fully executed contract via email and thereafter investigated mortgage options.
Appellants urge that they were prejudiced by the Bankruptcy Court effectively “reforming”
the Lever Contract. 	App. Br. at 19-21. 	Appellants do not identify in what way the purported
reformation of the Lever Contract prejudices them beyond asserting that written agreements should
be construed in accordance with the parties’ intent. Id. (citing Wallace v. 600 Partners Co., 658
N.E.2d 715, 717 (N.Y. 1995); Vermont Teddy Bear Co. v. 538 Madison Realty Co., 807 N.E.2d
876, 879 (N.Y. 2004); Schron v. Troutman Sanders LLP, 986 N.E.2d 430, 433 (N.Y. 2013)). While
that may be true, deviations from the written contract are still permissible. See Schweizer, 634 F.
App’x at 829; Fortune Limousine Serv., Inc., 826 N.Y.S.2d at 395.
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Because the Mortgage Contingency was triggered and Appellants did not perform on the
Closing Date, nor were they ready, willing, and able to, Appellants cannot seek specific
performance of the Lever Contract. 	See Fridman v. Kucher, 826 N.Y.S.2d 104, 106 (2d Dep’t
2006) (“A purchaser who seeks specific performance of a contract of the sale of real property must
demonstrate that he or she was ready, willing, and able to perform the contract, regardless of any
anticipatory breach by a seller.”).
Accordingly, the Court affirms the Bankruptcy Court’s decision that the Mortgage
Contingency was triggered on August 12, 2020, because Appellants had actual notice of the Lever
Contract and were not prejudiced. As such, the Bankruptcy Court appropriately held Appellants
in default. Appellants’ requests for specific performance and declaratory judgment, App. Br. at 21,
are denied.
D. Whether 	the 	“First 	in 	Time” 	Doctrine 	or 	Business 	Judgment 	Rule 	Support
Enforcement of the Lever Contract
Appellants argue that given the existence of two enforceable contracts—the Lever Contract
and Cadaner Contract—the “first in time” doctrine set forth in Comment ‘a’ of the Restatement of
Contracts 2d § 146, should govern, and the Lever Contract deserves priority. 	App. Br. at 22.
Appellants further contend that application of the “business judgment” standard favors permitting
Johnson to assume the Lever Contract. App. Br. at 23-24. As set forth above, however, the Lever
Contract is not enforceable. 	Consequently, the Court does not reach the application of priority
principles and the business judgment rule.
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CONCLUSION
For the foregoing reasons, the June 13 Order is affirmed, and Appellants’ appeal is
dismissed. The Clerk of Court is respectfully directed to enter judgment and close this case.
SO ORDERED.
/s/
ORELIA E. MERCHANT
United States District Judge
February 4, 2026
Brooklyn, New York
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