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OBSERVER File Photo
The Hotel Lenhart in Bemus Point is pictured. State Supreme Court Justice Grace Hanlon ruled earlier this week not to nullify the hotel’s sale to new owners.
The sale of the Hotel Lenhart to a Pittsburgh-area couple is still in effect.
State Supreme Court Justice Grace Hanlon recently ruled against a declaratory judgment requested by John Johnston Jr., Barbara Johnston, Deborah Johnston and Lenhart Enterprises Inc. that would have nullified the Johnstons’ sale of the historic Bemus Point hotel to William and Jill Curry for $3.5 million.
Hanlon’s seven-page decision notes that a request for a declaratory judgment has to show there are no material issues of act for the court to decide. That isn’t the case in the argument over the sale of the Hotel Lenhart.
Hanlon’s decision hinges on her reading of a 1989 case cited by the Johnston family, Weaver v. Hilzen. Neil Robinson, the Johnstons’ attorney, argued the precedent in the 1989 case means either party in a real estate sale to cancel a contract upon notice to the other if a mortgage can’t be obtained.
“The contract language in the Weaver case is distinguishable from the contract before the court,” Hanlon wrote in her decision. “In Weaver, a clause in the contract: ‘gave either party the right to cancel the contract in the event the plaintiff was unable to procure a mortgage within 45 days of the contract date.’ The contract language in this case is vastly different, as it requires a ‘mortgage commitment within 30 days from the date of the municipal approval of all zoning and permits necessary for continuing the existing business.’ The plaintiff has failed to submit sufficient evidence or any documentation to satisfy the contingency in the addendum regarding zoning and permits, which would have triggered the defendant’s time frame for them to secure financing.”
Hanlon only ruled in one of the two lawsuits filed over the Hotel Lenhart sale in March. The Johnston family filed its lawsuit seeking to nullify the sale while the Currys asked Hanlon to enforce the terms of the sale. The Johnstons claim in their filing that the Currys haven’t met several stipulations required in the sale contract – which both sides have entered as evidence for the court to consider. They say the $3.5 million sale price included seven parcels of land, with $30,000 to be deposited and the remainder to be paid in cash at closing.
Attorney Daryl Brautigam, the attorney representing the Currys, wrote in an affidavit filed April 2 that the Johnstons couldn’t have invoked a time is of the essence clause in the original sale contract because the original sales contract contained no closing date. Instead, the contract states closing would happen 30 days after all contingencies in the contract have been resolved. Brautigam notes several contingencies remain open in addition to the lack of mortgage financing – including some that were required of the Johnston family – while a formal declaration of the time is of the essence clause wasn’t actually sent from the Johnstons’ attorney to the Currys’ attorney, though there were several mentioned in correspondence between the two lawyers threatening the use of the contract-breaking clause.
“No such demand has been included in the correspondence attached by plaintiffs as Exhibit B to their moving papers,” Brautigam argued. “Mr. Robinson could not have sent such a letter since, as pointed out above, the contractual requirements for establishing a closing date had never been met by the plaintiffs and thus the predicate for a ‘time is of the essence’ letter had never been established. These deficits continue to be true to this day.”
