City Stores Company v. Ammerman
266 F. Supp. 766, 1967 U.S. Dist. LEXIS 9198 (1967)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A court of equity will grant specific performance of a valid option contract that, while leaving some details for future negotiation, provides a definite, objective standard for determining the essential terms. The inadequacy of a legal remedy and the court's ability to supervise performance are key factors in granting such relief.
Facts:
- Defendants, Lerner and Gudelsky, sought to build a large shopping center at Tyson's Corner, Virginia, but first needed to secure a zoning change from the Fairfax County Board of Supervisors.
- Facing opposition from county planning commissions and competition from another proposed shopping center, the defendants' prospects for obtaining the rezoning were poor.
- Defendants asked City Stores Company, which owned Lansburgh’s Department Store, for a letter expressing preference for their project, which could be used to persuade the zoning board.
- In exchange for this assistance, on May 29, 1962, defendants signed a letter promising that if their zoning application was successful, they would give City Stores 'the opportunity to become one of our contemplated center’s major tenants with rental and terms at least equal to that of any other major department store in the center.'
- City Stores provided the requested letter of support, which defendants used in their presentation to the zoning board.
- Defendants successfully obtained the necessary zoning for the shopping center.
- In 1965, defendants entered into leases with two other major department stores, Woodward & Lothrop and Hecht, thereby establishing the terms for other major tenants.
- Defendants then refused to offer a lease to City Stores, intending to lease the final major tenant space to another party, Sears.
Procedural Posture:
- City Stores Company filed a complaint against the defendants in the U.S. District Court, seeking specific performance of the contract.
- The District Court granted a preliminary injunction to prevent the defendants from leasing the last available department store site to another party pending the outcome of the case.
- The case then proceeded to a trial on the merits before the District Court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is an agreement to offer a lease on terms 'at least equal to that of any other major department store in the center' sufficiently definite to be specifically enforced by a court of equity when the party seeking enforcement has already provided consideration?
Opinions:
Majority - Gasch, District Judge.
Yes, such an agreement is sufficiently definite to be specifically enforced. The letter from the defendants, given in exchange for services performed by the plaintiff, created a binding unilateral contract, effectively an option. This contract is not void for indefiniteness because the essential terms of the lease to be offered to City Stores are not left to the parties' future agreement, but are to be determined by an objective, ascertainable standard: the terms of the leases granted to other major tenants like Hecht and Woodward & Lothrop. The fact that some non-essential details, such as store design and construction, remain to be negotiated does not bar specific performance, especially since the plaintiff has fully performed its obligations and would be virtually remediless otherwise. The court reasoned that money damages would be inadequate to compensate for the loss of the unique business opportunity to operate in a major regional shopping center. Furthermore, the court has the authority to supervise the execution of the lease and subsequent construction, and any potential difficulties in supervision are outweighed by the importance of specific performance to the plaintiff.
Analysis:
This decision represents a significant embrace of the modern trend in contract law to enforce agreements that might have been considered too indefinite under older precedents. It establishes that as long as the material terms of a contract can be made certain by reference to an extrinsic, objective standard, courts are willing to grant specific performance. The case is a leading example of a court's refusal to let a party escape a contractual obligation by citing indefiniteness after receiving the full benefit of the other party's performance. It solidifies the principle that specific performance is an appropriate remedy for breaches of contracts involving unique commercial opportunities, like a long-term lease in a major shopping center, where monetary damages are inherently speculative and inadequate.
