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Inc. v. 20 Amity Property, L.L.C.

Superior Court of New Jersey, Appellate Division

November 19, 2013

XU'S NORTH 11th STREET PROPERTY, INC., Plaintiff-Appellant,
20 AMITY PROPERTY, L.L.C., QING XIANG WANG and XIU YUN CHEN, Defendants-Respondents


Submitted October 29, 2013

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-0462-10.

Kevin Kerveng Tung, P.C., attorneys for appellant (Kevin K. Tung, on the brief).

Raymond A. Grimes, attorney for respondents.

Before Reisner, Alvarez and Carroll.


Plaintiff, Xu's North 11th Street Property (plaintiff), appeals from a May 30, 2012 order of judgment in favor of defendants, 20 Amity Property LLC (Amity), Qing Xiang Wang, and Xiu Yun Chen. The order, which was issued after a bench trial, granted specific performance of a real estate contract between plaintiff and Amity, by ordering Amity to pay plaintiff $194, 330.56, giving Amity clear title to the property, and ordering the discharge of plaintiff's lis pendens. Having thoroughly reviewed the record, we conclude that the decision of Judge Christine Farrington was supported by sufficient credible evidence and was consistent with applicable law. R. 2:11-3(e)(1)(A). We affirm substantially for the reasons stated in her written opinion dated May 16, 2012.


The evidence is set forth at length in Judge Farrington's opinion and need not be repeated here in the same level of detail. We summarize the most pertinent facts. Lin Xu (Xu) was in the wholesale food supply business. He was also a one-third owner of plaintiff, which was a real estate company.[1] Amity, which supplied food products to restaurants, was one of Xu's customers. Amity's owners, Chen and her husband Wang, were also friends of Xu.

Amity[2] needed additional refrigerated warehouse space, and agreed to buy plaintiff's warehouse (warehouse or property) in Jersey City. The parties entered into a contract of sale on November 11, 2005, at a price of $980, 000, including an $80, 000 deposit. Although Xu was aware at the time that the property was in foreclosure due to a $400, 000 tax lien, he did not disclose that fact to the buyers. He also failed to disclose that the warehouse did not have a certificate of occupancy for use as a refrigerated warehouse. Xu was further aware that the buyers had a pressing need to begin remodeling the warehouse space so they could start using it as soon as possible. In fact, one of the reasons they needed more space was that they planned to buy a large supply of monosodium glutamate (MSG) from Xu.

On November 18, 2005, the parties signed a revised sale contract, which contained a $500, 000 liquidated damages clause in the event the seller breached the contract. Chen, whom the judge found entirely credible, testified that she insisted on the clause because the parties had also agreed that Amity could start fixing up the warehouse before the closing took place, and she wanted to protect her anticipated investment in making those repairs and in purchasing hundreds of thousands of dollars worth of inventory and equipment in reliance on a timely closing.

Not only was plaintiff unable to close on the contract by the anticipated December 2005 date, but in May 2006, Xu finally revealed the tax lien to defendants and made a desperate plea for funds to help pay off the lien in order to avoid an imminent foreclosure sale. Fearing the loss of all the money they had already spent to fix up the property, defendants agreed that plaintiff could use their $80, 000 contract deposit to help pay off the lien. They also advanced plaintiff an additional $170, 000 to help satisfy the lien. In return, however, they insisted on an escrow agreement with the following essential provisions: plaintiff was required to escrow the deed with defendants' attorney and, if plaintiff was unable to close by July 31, 2006, defendants' attorney could release the deed to them and they could record it. Plaintiff was unable to close on the property by July 31, and defendants duly obtained the deed out of escrow and recorded it.

Meanwhile, as defendants continued to fix up the property, they discovered multiple additional problems that Xu had concealed from them. Those included the lack of a certificate of occupancy to operate the premises as a refrigerated warehouse, contrary to Xu's representation to them that the property could lawfully be used for that purpose. That deficiency cost them thousands of dollars to correct. Additionally, the property was the subject of multiple preexisting citations for building code violations, which defendants paid thousands of dollars to resolve in order to use the premises. ...

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