On May 14, 2025, the Second Department issued a decision in JP Pizza Eastport, LLC v. Luigi’s Main St. Pizza, Inc., 2025 NY Slip Op. 02915, holding that a buyer’s anticipatory repudiation of a purchase contract entitled the seller to retain the buyer’s down payment as liquidated damages, explaining:
The doctrine of anticipatory breach provides that a wrongful repudiation of the contract by one party before the time for performance relieves the nonrepudiating party of its obligation of future performance and entitles that party to recover the present value of its damages from the repudiating party’s breach of the total contract. For an anticipatory repudiation to be deemed to have occurred, the expression of intent not to perform by the repudiator must be positive and unequivocal. When one party to a contract commits an anticipatory breach, the nonbreaching party, must choose one of two options: either treat the contract as terminated and seek damages, or ignore the breach and wait for the breaching party to perform.
Here, the defendants established their prima facie entitlement to summary judgment dismissing the cause of action alleging breach of contract. Pursuant to the contract, the defendants had until September 15, 2018, to obtain the requisite approvals and were entitled to extend that deadline to October 15, 2018. By declaring the contract void ab initio through their attorney’s letter dated August 22, 2018, and demanding the return of the down payment, the plaintiffs anticipatorily breached the contract. In response, the defendants exercised their right to ignore the plaintiffs’ breach and wait for them to perform. The plaintiffs thereafter, and before the closing date, commenced this action seeking, inter alia, rescission of the contract. Notably, the plaintiff did not assert a cause of action for specific performance of the contract. In response, the defendants interposed an answer asserting, among other things, an affirmative defense alleging that Montauk Highway, LLC, had repudiated the contract and that Luigi’s, LLC, was entitled to retain the down payment as liquidated damages. The plaintiffs’ conduct, first by the letter declaring the contract void ab initio and demanding the return of the down payment, and then by the commencement of this action, amounted to a positive and unequivocal expression of their intent not to perform, and the defendants, under the terms of the contract, were entitled to retain the down payment as liquidated damages for the plaintiffs’ anticipatory breach. In opposition, the plaintiffs failed to raise a triable issue of fact.
(Internal quotations and citations omitted).