10.2.4.1 City Stores Co. v. Ammerman | rauvinj | November 01, 2012

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10.2.4.1 City Stores Co. v. Ammerman

Original Creator: Kessler, Gilmore & Kronman Current Version: rauvinj
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CITY STORES CO. v. AMMERMAN, 266 F. Supp. 766 (D.D.C. 1967). The defendants (Ammerman and others) were interested in constructing a shopping center at Tyson's Corner in Fairfax County, Virginia. To help persuade the local zoning authorities to approve their plans, the defendants solicited a letter from the plaintiff expressing its interest in the project and its desire to become a major tenant if the center should in fact be built. In return, the defendants wrote a letter to the plaintiff promising to give it the opportunity to become one of the "contemplated center's major tenants with rental and terms at least equal to that of any other major department store in the center." The zoning application was granted and the center built, but the defendants refused to give the plaintiff a lease. City Stores sued for specific performance of the promise contained in the letter written by the defendants. After characterizing the letter as "a binding unilateral contract, which gave plaintiff an option to accept a lease" on the occurrence of certain "express and implied conditions precedent," Judge Gasch went on to consider whether the contract was sufficiently definite to be the subject of a decree for specific performance:

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"It is not contested by the plaintiff that if it were to accept a lease tendered by defendants in accordance with the contract, there would be numerous complex details left to be worked out. The crucial elements of rate of rental and the amount of space can readily be determined from the Hecht and Woodward & Lothrop leases. But some details of design, construction and price of the building to be occupied by plaintiff at Tyson's Corner would have to be agreed to by the parties, subject to further negotiation and tempered only by the promise of equal terms with other tenants. The question is whether a court of equity will grant specific performance of a contract which has left such substantial terms open for future negotiation.

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"The defendants have cited a number of cases in support of their argument that a court of equity will not grant specific performance of a contract in which some terms are left for further negotiations by the parties, or which would require a great deal of supervision by the court. I have examined those cases cited which were decided in this jurisdiction, because unless the precedents here establish a clear policy one way or the other, this court may exercise its discretion in fashioning an equitable decree. Moreover, this is an area of law in which not all jurisdictions are in agreement, and whichever way this court were to decide the case, there would be cases holding to the contrary in other parts of the country." A discussion of the cases followed.

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After concluding that "the mere fact that a contract, definite in material respects, contains some terms which are subject to further negotiation between plaintiff and defendant will not bar a decree for specific performance, if in the court's discretion specific performance should be granted," Judge Gasch continued:

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"The question whether a contract which also calls for construction of a building can or should be specifically enforced apparently never has been decided before in this jurisdiction. The parties have cited no cases on this point.

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"At the outset, it should be noted that where specific performance of such contracts has been granted the essential criterion has not been the nature Or subject of the contract, but rather the inadequacy or impracticability of legal remedies. See 5 Williston on Contracts §1423 (Rev. Ed. 1937); 4 Pomeroy's Equity Jurisprudence §§1401-1403 (5th Ed. 1941). Contracts involving interests in land or unique chattels generally are specifically enforced because of the clear inadequacy of damages at law for breach of contract. As Pomeroy says:

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The foundation and measure of the jurisdiction is the desire to do justice, which the legal remedy would fail to give. . . .

. . . The jurisdiction depending upon this broad principle is exercised in two classes of cases: 1. Where the subject-matter of the contract is of such a special nature, or of such a peculiar value, that the damages, when ascertained according to legal rules, would not be a just and reasonable substitute for or representative of that subject-matter in the hands of the party who is entitled to its benefit; or in other words, where the damages are inadequate; 2. Where, from some special and practical features or incidents of the contract inhering either in its subject matter, in its terms, or in the relations of the parties, it is impossible to arrive at a legal measure of damages at all, or at least with any sufficient degree of certainty, so that no real compensation can be obtained by means of an action at law; or in other words, where damages are impracticable.

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"It is apparent from the nature of the contract involved in this case that even were it possible to arrive at a precise measure of damages for breach of a contract to lease a store in a shopping center for a period of years which it is not money damages would in no way compensate the plaintiff for loss of the right to participate in the shopping center enterprise and for the almost incalculable future advantages that might accrue to it as a result of extending its operations into the suburbs. Therefore, I hold that the appropriate remedy in this case is specific performance.

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"Some jurisdictions in the United States have opposed granting specific performance of contracts for construction of buildings and other contracts requiring extensive supervision of the court, but the better view, and the one which increasingly is being followed in this country, is that such contracts should be specifically enforced unless the difficulties of supervision outweigh the importance of specific performance to the plaintiff. 5 Williston on Contracts §1423 (Rev. Ed. 1937). This is particularly true where the construction is to be done on land controlled by the defendant, because in that circumstance the plaintiff cannot employ another contractor to do the construction for him at defendant's expense. In the case at bar, the fact that more than mere construction of a building is involved reinforces the need for specific enforcement of the defendants' duty to perform their entire contractual obligation to the plaintiff. . . .

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"The defendants contend that the granting of specific performance in this case will confront the court with insuperable difficulties of supervision, but after reviewing the evidence, I am satisfied that the standards to be observed in construction of the plaintiff's store are set out in the Hecht and Woodward & Lothrop leases with sufficient particularity (Plaintiff's Ex. F) as to make design and approval of plaintiff's store a fairly simple matter, if the parties deal with each other in good faith and expeditiously, as I shall hereafter order.

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"For example, Article VIII, Sec. 8.1, Paragraph (G) of the Hecht lease (the Woodward & Lothrop lease contains a similar provision) says:

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The quality of (i) the construction, (ii) the construction components, (iii) the decorative elements (including landscaping irrigation systems for the landscaping) and (iv) the furnishings; and the general architectural character and general design, the materials selection, the decor and the treatment values, approach and standards of the Enclosed Mall shall be comparable, at minimum, to the qualities, values, approaches and standards as of the date hereof of the enclosed mall at Topanga Plaza Shopping Center, Los Angeles, California. . . .

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''The existing leases contain further detailed specifications which will be identical to those in the lease granted to plaintiff. The site for plaintiff's store has already been settled by the design of the center. Although the exact design of plaintiff's store will not be identical to the design of any other store, it must he remembered that all of the stores are to he part of the same center and subject to its overall design requirements. If the parties are not in good faith able to reach an agreement on certain details, the court will appoint a special master to help settle their differences, unless they prefer voluntarily to submit their disagreements to arbitration. . . ." [footnotes omitted.]

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February 15, 2015

10.2.4.1 City Stores Co. v. Ammerman

10.2.4.1 City Stores Co. v. Ammerman

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