Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-08-02273/USCOURTS-ca4-08-02273-0/pdf.json

Parties Involved:
Homeland Training Center, LLC
Appellee
Summit Point Automotive Research Center
Appellant
William Scott Inter Vivos Trust

Document Text:

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HOMELAND TRAINING CENTER, LLC, 

a Tennessee Limited Liability

Company,

Plaintiff-Appellant,

v.

SUMMIT POINT AUTOMOTIVE

RESEARCH CENTER, a West Virginia

Limited Liability Company,  No. 08-2272

individually and in its capacity as

Trustee of the William Scott Inter

Vivos Trust,

Defendant-Appellee,

and

WILLIAM SCOTT INTER VIVOS TRUST,

Defendant. 

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HOMELAND TRAINING CENTER, LLC, 

a Tennessee Limited Liability

Company,

Plaintiff-Appellee,

v.

SUMMIT POINT AUTOMOTIVE

RESEARCH CENTER, a West Virginia

Limited Liability Company,  No. 08-2273

individually and in its capacity as

Trustee of the William Scott Inter

Vivos Trust,

Defendant-Appellant,

and

WILLIAM SCOTT INTER VIVOS TRUST,

Defendant. 

Appeals from the United States District Court

for the Northern District of West Virginia, at Martinsburg.

John Preston Bailey, Chief District Judge.

(3:07-cv-00160-JPB)

Argued: October 27, 2009

Decided: February 3, 2010

Before WILKINSON, DUNCAN, and DAVIS,

Circuit Judges.

Affirmed in part, reversed in part, and remanded by published

opinion. Judge Wilkinson wrote the opinion, in which Judge

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Duncan joined. Judge Davis wrote a separate opinion dissenting in part and concurring in part.

COUNSEL

ARGUED: John Harlan Mahaney, II, HUDDLESTON &

BOLEN, LLP, Huntington, West Virginia, for Homeland

Training Center, LLC. William Richard McCune, Jr.,

Martinsburg, West Virginia, for Summit Point Automotive

Research Center. ON BRIEF: J. Jarrod Jordan, HUDDLESTON & BOLEN, LLP, Huntington, West Virginia, for Homeland Training Center, LLC. Peter L. Chakmakian, PETER L.

CHAKMAKIAN, LC, Charles Town, West Virginia; Alex A.

Tsiatsos, WM. RICHARD MCCUNE, JR., PLLC, Martinsburg, West Virginia, for Summit Point Automotive Research

Center.

OPINION

WILKINSON, Circuit Judge:

After one party to a contract repudiated it, the other party

filed an action for breach of contract and requested an order

of specific performance. As the litigation progressed, it

became apparent that the repudiation had destroyed any prospect of salvaging the contract, prompting the non-repudiating

party to abandon its earlier request for specific performance

and to seek monetary damages instead. The district court,

however, held that as a matter of West Virginia law, the original decision to seek specific performance precluded the nonrepudiating party from being able to claim monetary damages.

This was error. The theory of waiver on which the district

court predicated its ruling is not supported by West Virginia

contract law or the law of contracts generally. The district

court’s ruling lets a party who repudiates a contract force a

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non-repudiating party into a premature election of remedies.

Allowing the repudiating party to gain the upper hand in this

manner would undermine the value of contractual commitments. We therefore remand this case for trial on the issue of

damages occasioned by the repudiation.

I.

Defendants Summit Point Automotive Research Center,

LLC, and the William Scott Inter Vivos Trust, (collectively,

"SPARC") own a training facility in Jefferson County, West

Virginia, that is used by government security personnel. On

July 25, 2006, as part of a plan to have certain complementary

services provided on-site, SPARC agreed to lease 12 acres of

undeveloped land at the facility to another company.

Although the lease agreement took effect upon signing, it provided that the initial term would not begin unless SPARC’s

tenant chose to initiate it. The lease also provided, however,

that SPARC could force a decision one way or the other by

obtaining the necessary permits for the site and recording a

"final plat," a term described at some length by local ordinance. See Jefferson County, W. Va., Subdivision Ordinance,

art. 3, § 1a; art. 8, § 1c. This worked in two ways. First, the

lease would automatically terminate once a plat was recorded

unless the tenant notified SPARC within sixty days that it

desired to proceed. Second, if the lease were kept alive, the

initial term would automatically begin 120 days after recordation unless the tenant indicated that it had not obtained satisfactory financing.

The lease allowed the tenant to assign its interest if SPARC

consented to the assignment in advance. SPARC could not

unreasonably withhold its consent, but the tenant would

remain liable under the lease unless the beneficiary of the

assignment had a net worth greater than $10 million. The

lease also provided that each party could request that the other

affirm or deny the contract’s continued validity on ten days’

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notice. Finally, it allowed for an award of attorneys’ fees to

a "prevailing party" in litigation.

On October 3, 2006, Homeland Security Corporation,

SPARC’s original tenant, executed an assignment of its rights

under the lease to Homeland Training Center, LLC, ("HTC"),

the plaintiff in this suit. SPARC was not asked for its written

consent prior to the assignment, but it was informed of the

assignment in December 2006. Nine months after being notified, SPARC sent a letter requesting verification that HTC

had a net worth of at least $10 million, but also stating that

if SPARC had known of the assignment ahead of time, "[w]e

would, of course, have consented to this transaction."

HTC entered into negotiations in early 2007 with an investment company it hoped would finance the project. SPARC,

however, formed the opinion that HTC was not doing enough

to position itself to proceed with the lease, and in June 2007

it communicated its concerns to HTC in writing. HTC

responded by letter several days later, describing its efforts up

to that point. The parties met to discuss the issue on July 23,

2007, and in the course of the meeting, SPARC told HTC that

it would probably be filing a "merger plat" soon. This was

thought to be faster than the subdivision process associated

with preparation of a "final plat." On August 7, 2007, SPARC

filed a merger plat in the Jefferson County Clerk’s Office, but

it did not notify HTC that it had done so. Shortly thereafter,

SPARC also asked to amend the lease to provide that the initial term of the lease would begin no later than December 1,

2007, but HTC denied the request.

SPARC first notified HTC that it had actually filed the

merger plat in a letter dated October 17, 2007. That letter

stated that the lease had terminated because HTC had failed

to provide notice of its determination to proceed within sixty

days of the plat recording. HTC responded on October 26,

2007, stating that the merger plat was not a "final plat" within

the meaning of the lease, that the lease remained "in full force

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and effect," and that it intended "to perform under the Lease

as such." SPARC replied on October 31, stating that "[t]he

Lease has been terminated by [HTC’s] inability or refusal to

adhere to its terms." That same day, HTC received a commitment letter from the investment company with which it had

been negotiating since the start of the year. The letter expired

before it could be acted upon, however.

On December 4, 2007, HTC wrote SPARC to say that it

had received commitments for financing, but that because of

SPARC’s having "taken the position that the Lease is terminated, HTC will likely be unable to close on the funding and

to consummate the transactions with its funding sources."

HTC asked SPARC whether it would "acknowledge that the

Lease between the parties is still in effect and avoid this

impending problem." The next day, HTC filed a breach of

contract suit in federal district court for the Northern District

of West Virginia. The suit sought a preliminary injunction,

which was granted shortly thereafter, and requested an order

of specific performance. Later that same day, SPARC

responded to HTC’s December 4 letter by fax, stating that it

would neither admit nor deny the continued existence of the

lease, but offering to "accept the lease as it stands" if HTC

provided proof of financing by January 15, 2008. Three

weeks later, SPARC filed counterclaims for breach of contract against HTC, alleging that HTC had breached the lease

by failing to make sufficient efforts to obtain financing and by

participating in the assignment from Homeland Security Corporation.

In January 2008, HTC disclosed the litigation to the various

investors who had pledged to finance the project, prompting

them all to withdraw. Throughout the spring, HTC worked to

make alternative financing arrangements. SPARC, meanwhile, prepared a new plat of the property, one which indisputably qualified as a "final plat," and duly recorded it after

approvals had been obtained. With two weeks to go before

HTC would be forced to notify SPARC that it wished to keep

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the deal alive, the venture capital firm that HTC saw as its last

chance to secure financing informed HTC that while it was

interested in financing the project, it would not become

involved unless the lease dispute was resolved. One week

later, HTC notified SPARC that it was exercising its option

to terminate the lease. Thereafter, HTC dropped its claim for

specific performance and instead asked the district court for

an award of damages.

Both sides filed motions for summary judgment. The district court rejected each of SPARC’s counterclaims, holding

that HTC was under no duty to seek out financing within any

particular time frame and that, while the assignment was

improper, SPARC had waived any claim by assenting to it

after the fact. The district court also held that although

SPARC had repudiated the contract, HTC could not bring a

damages action based upon the repudiation because its earlier

decision to request specific performance constituted a binding

election not to terminate the contract. In short, the court held

that though both sides had breached the contract, neither side

could recover for breach. Both sides appealed from the district

court’s rulings.

II.

We review the grant or denial of motions for summary

judgment de novo, applying the same standard as the district

court. Holland v. Washington Homes, Inc., 487 F.3d 208, 213

(4th Cir. 2007). In general, the interpretation of a written contract is a question of law. Williams v. Professional Transp.,

Inc. 294 F.3d 607, 613 (4th Cir. 2002). Jurisdiction is founded

on diversity of citizenship, and on questions of substantive

law, this court must apply the law that the forum state, West

Virginia, would apply if it heard the case. CACI Intern., Inc.

v. St. Paul Fire and Marine Ins. Co., 566 F.3d 150, 154 (4th

Cir. 2009) (citing Klaxon Co. v. Stentor Elec. Mfg Co., 313

U.S. 487, 496-97 (1941)). It is undisputed that West Virginia

would apply its own law to the questions before us.

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III.

We begin with SPARC’s arguments, raised by way of

cross-appeal. We conclude that the district court was correct

to reject each of these arguments, which we address in turn.

First, SPARC claims that HTC breached the lease by failing to make sufficient efforts within a "commercially reasonable" period of time to line up financing. It is unnecessary for

us to determine whether HTC’s efforts to obtain financing

were so meager as to be "commercially unreasonable," for no

duty of commercial reasonableness of the sort SPARC asserts

existed. Under West Virginia law, commercial reasonableness

is a "gap filler," invoked only when a disputed issue is not

addressed in explicit terms by the parties. See First Nat’l

Bank of Bluefield v. Clark, 447 S.E.2d 558, 562 (W. Va.

1994) ("[W]here a contract fixes no definite time for performance, the law usually implies that performance shall be

within a reasonable time."). In this case, the lease provided

that the initial term would begin 120 days after SPARC filed

a "final plat," unless HTC considered its financing options

unsatisfactory, in which case HTC could postpone the start of

the initial term. At a minimum, then, the lease gave HTC 120

days to attempt to secure financing. Any duty to act within a

"commercially reasonable" time would only apply if HTC

chose to delay the commencement of its obligations under the

lease beyond the 120-day mark.

This never occurred, however. The district court ruled that

the "merger plat" filed by SPARC did not qualify as "final

plat" under the lease, and SPARC has not challenged that ruling on appeal. A duty of commercial reasonableness could not

arise until 120 days after the filing of the second plat in the

spring of 2008, but by that point, HTC had already exercised

its contractual right to terminate the lease due to difficulties

with financing. The lease therefore was never held open into

the period when HTC would have been subject to a duty of

commercial reasonableness. Moreover, even if we accepted

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SPARC’s position that the "merger plat" qualified as a "final

plat" and the lease terminated sixty days later after HTC

failed to take action, it is equally the case that the commercial

reasonableness duty would be inapplicable since the 120-day

mark would never have been reached.

Next, we consider SPARC’s claim that the assignment

from Homeland Security Corporation to HTC constituted a

breach of the contract. The lease agreement demanded that

SPARC’s written consent be obtained prior to any assignment, which did not occur. The assignment therefore violated

the terms of the lease and clearly constituted a breach, as the

district court held. That said, SPARC never expressed any

opposition to the assignment after learning of it in December

2006 and in fact acknowledged in its letter of September 2007

that it would "of course" have assented to the assignment if

notice had been given. SPARC thus waived any right to claim

a breach based on the assignment, as SPARC itself concedes.

SPARC nonetheless argues that the waiver should not be

given effect because the waiver was made without knowledge

of HTC’s net worth. SPARC, however, realized that it had not

ascertained HTC’s net worth at the time of its waiver. After

all, SPARC requested that information in the very same letter

in which it approved the assignment. Having given its blessing without reservation and in full knowledge that it had not

learned HTC’s net worth, SPARC’s waiver was sufficiently

informed to be effective.

Finally, SPARC contends that the district court erred in its

conclusion that SPARC repudiated the lease. The doctrine of

anticipatory breach allows a suit for breach of contract to be

brought if one party to a contract renounces its future contractual obligations, in essence promising ahead of time not to

perform when performance comes due. See Robert J. Riley,

The Doctrine of Anticipatory Breach as Applied in West Virginia, 31 W. Va. L.Q. 182, 183 (1925). Under West Virginia

law, to constitute a contractual repudiation, a statement

renouncing a contract must be "positive, absolute and

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unequivocal." Mollohan v. Black Rock Contracting, Inc., 235

S.E.2d 813, 816 (W. Va. 1977). Both SPARC and HTC point

to the record of each party’s conduct after October 17, 2007,

in support of their respective claims concerning repudiation.

The dispositive consideration, however, is whether SPARC

objectively manifested an unwillingness to perform under the

contract—not its actual, subjective intention. See Record Club

of America, Inc. v. United Artists Records, Inc., 643 F. Supp.

925, 940 n.10 (S.D.N.Y. 1986), vacated on other grounds by

890 F.2d 1264 (2d Cir. 1989). The post-October 17 evidence

is relevant only to the separate and secondary issues of

whether, even if the statement was a repudiation, HTC was in

some way barred from obtaining the relief it sought. (See

infra.) Whether the letter amounted to a repudiation depends

here on the nature of the statement and the surrounding circumstances at the time it was made. 

The district court was correct to find a repudiation.

SPARC’s letter of October 17, 2007, declared that because

HTC had not expressed its intention to proceed with the lease

within sixty days of the "merger plat" filing, "the lease has

been terminated by the tenant." The statement contained no

caveat or qualification and its tone was firm. Furthermore,

SPARC was not compelled to take such a precipitous course

of action, since the lease allowed either party to request verification from the other that the lease was still in effect. SPARC,

evidently seeking to get out of the contract as fast as it could,

rejected such a course. Particularly in light of SPARC’s

option to request assurances, the only reasonable conclusion

HTC could draw after receiving the October 17 letter was that

SPARC was not going to perform under the lease, which

seems exactly the message SPARC was trying to convey.

Moreover, SPARC failed even to notify HTC of its plat filing

so that HTC would be aware of the possible need to make a

determination to proceed. SPARC’s failure to do so, and

instead to attempt to bring about the termination of the contract by stealth, further underscores the correctness of the district court’s determination that a repudiation occurred.

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IV.

We turn then to the crux of this dispute. The district court

found that while SPARC had unjustifiably repudiated the contract, HTC could not obtain monetary damages for breach of

contract because it had initially brought, though later abandoned, a claim for specific performance. This conclusion was

in error.

A.

The case before us presents what is in essence a straightforward question of election of remedies law. The common law

doctrine of election of remedies applies where two possible

remedies are available for the same legal injury. See Harrison

v. Miller, 21 S.E.2d 674, 678 (W. Va. 1942) (citation omitted). The basic purpose of the doctrine is to prevent a plaintiff

from obtaining a windfall recovery, either by recovering two

forms of relief that are premised on legal or factual theories

that contradict one another or by recovering overlapping remedies for the same legal injury. See Dionne v. Mayor and City

Council of Baltimore, 40 F.3d 677, 681 (4th Cir. 1994); see

also 25 Am.Jur.2d Election of Remedies § 3.

Election of remedies doctrine also has a sequencing component. See Kansas State Bank in Holton v. Citizens Bank of

Windsor, 737 F.2d 1490, 1499 (8th Cir. 1984). At common

law, the doctrine prevented a plaintiff from pleading alternative remedies or alternating between remedies once suit had

commenced. Olympia Hotels Corp. v. Johnson Wax Development Corp., 908 F.2d 1363, 1371 (7th Cir. 1990). With the

adoption of more flexible approaches to pleading and procedure and the merger of law and equity, however, most jurisdictions today have abandoned this dimension of election of

remedies doctrine. See Schwartz v. Rockey, 932 A.2d 885, 893

(Pa. 2007). Under the modern view, apart from issues of res

judicata or where some element of estoppel is present, a conclusive election typically is made only where a suit has

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advanced to judgment. See Olympia Hotels, 908 F.2d at 1371

(citations omitted).

It is clear that in West Virginia, election of remedies doctrine follows this trend.1

 In Stone v. Kaufman, 107 S.E. 295

(W. Va. 1921), the West Virginia Supreme Court allowed a

plaintiff to sue for damages after dropping its earlier claim for

specific performance. Moreover, West Virginia’s Rules of

Civil Procedure, which largely replicate the equivalent federal

provisions, embrace the modern principles of notice pleading,

pleading in the alternative, and the liberal amendment of

pleadings that have supplanted the common law’s more formalistic approach. See W. Va. R. Civ. P. 8(e) ("A party may

set forth two or more statements of a claim or defense alternately or hypothetically. . . A party may also state as many

separate claims or defenses as the party has regardless of consistency."); W. Va. R. Civ. P. 15 ("[L]eave [to amend pleadings] shall be freely given when justice so requires."). SPARC

cites statements from earlier West Virginia cases to the effect

that "[p]arties will not be permitted to assume successive

inconsistent positions in the course of a suit." MacDonald v.

Long, 131 S.E. 252, 253 (W. Va. 1926). Those decisions,

1We note that the sequencing component of election of remedies doctrine would likely qualify as "procedural" for purposes of Erie Railroad

Co. v. Tompkins, 304 U.S. 64 (1938), and Hanna v. Plumer, 380 U.S. 460

(1965), and that therefore the issue would likely be governed by federal

law. Similar devices have been treated as procedural. See Allen v. Zurich

Insurance, 667 F.2d 1162, 1167 n. 4 (4th Cir. 1982) (rules of judicial

estoppel); Hogue v. Sam’s Club, 114 F. Supp.2d 389, 391 n. 1 (D. Md.

2000) (rules concerning amendment of pleadings); see also Green v. Altman, No. 03-6437, 2004 WL 2106552, at *9 & n.10 (E.D.Pa. Sept. 21,

2004) (viewing the sequencing aspect of election of remedies doctrine as

a matter of federal law under Erie); Olympia Hotels, 908 F.2d 1371

(same). As a matter of federal law, election of remedies doctrine no longer

requires a party to elect a single remedy at the outset of suit. Kansas State

Bank in Holton v. Citizens Bank of Windsor, 737 F.2d 1490, 1499 (8th Cir.

1984). The parties did not raise the Erie issue, however, and since we

believe West Virginia election of remedies law provides the same result

as federal law, we decline to rule upon it. 

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however, concern the narrower doctrine of judicial estoppel.

See West Virginia Dept. of Transp., Div. of Highways v.

Robertson, 618 S.E.2d 506, 513 (W. Va 2005). That doctrine

bars a party from changing positions where the court has

already made a ruling based on the party’s earlier position and

typically applies only where the other party was misled by the

earlier position. Id. at 513-14 & n. 18. It is clear that as an

ordinary matter, a plaintiff may seek specific performance at

the outset of his breach of contract action and later change his

mind and ask for damages instead.

B.

Nor does West Virginia’s substantive law of contracts provide a limitation that election of remedies doctrine does not.

The prevailing view is that contract law typically should not

prevent a plaintiff from substituting one contractual remedy

for another. "Only if the other party has materially changed

his position in reliance on the original choice is a shift to

another remedy precluded by the election of the first."

Restatement (Second) of Contracts § 378, cmt a. In light of

Stone v. Kaufman, it is clear that West Virginia contract law

generally adopts this view. Stone is explicit on the point: "The

remedy of specific performance and by an action for damages

for a breach of a contract are not inconsistent. Under the law,

a party to a contract breached by the other may pursue not

both but either remedy, as our cases on the subject so hold.

So we find no merit in the point that plaintiff was barred by

his suit for specific performance." Stone, 107 S.E. at 296.

Unlike this case, however, Stone involved an actual breach

of contract, rather than a threatened, prospective one. We

must therefore determine whether the doctrine of anticipatory

breach, as construed by the courts of West Virginia, would

prevent a plaintiff whose cause of action was based upon a

repudiation from abandoning an initial claim for specific performance in favor of a claim for damages. We find that it does

not.

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The doctrine of anticipatory breach has a well-defined

function. It allows a plaintiff to bring a breach of contract

action immediately, rather than having to wait for the promised non-performance actually to occur, which could be some

time well into the future. See Restatement (Second) of Contracts § 253(1). The doctrine gives the plaintiff the option to

have the law treat the promise to breach as a breach itself. In

this way, it operates as a doctrine of accelerated ripeness. See

Franconia Assocs. v. United States, 536 U.S. 129, 143 (2002)

(internal quotation marks omitted) ("[A] repudiation ripens

into a breach prior to the time for performance only if the

promisee elects to treat it as such.").

This is no small matter. Regardless of whether a plaintiff

is seeking an injunction or damages, the right to go to court

and bring an action on the basis of threatened nonperformance is a valuable means for the plaintiff to secure the

benefit of his bargain in the manner that is best for him and,

possibly, the repudiating party as well. It provides both sides

with certainty concerning their contractual rights and obligations.

But the doctrine of anticipatory breach, intended in significant part to work to the advantage of the non-repudiating

party, cannot be turned on its head. A party who repudiates

a contract cannot be allowed to force a non-repudiating party

to forfeit a claim for damages simply because it initially held

out the hope that the repudiating party would honor its side

of the bargain after all. It is well settled in contract law that

a non-repudiating party can encourage the repudiating party

to withdraw the repudiation without forfeiting the right to

bring an action for anticipatory breach if the repudiating party

fails to do so. See Restatement (Second) of Contracts § 257

(1981) ("The injured party does not change the effect of a

repudiation by urging the repudiator to perform in spite of his

repudiation or to retract his repudiation."). It is the nonrepudiating party who should generally be able to decide how

to proceed after a repudiation. "[I]n a contract action where

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one has been wronged and has a number of remedies, he may

select the most efficient one." Cochran v. Ollis Creek Coal

Co., 206 S.E.2d 410, 415 (W. Va. 1974). The repudiating

party should not be given the power to force the other’s hand.

It appears that the district court’s ruling was based upon a

misreading of language in Annon v. Lucas, 185 S.E.2d 343

(W. Va. 1971). Annon stated that, when a repudiation occurs,

"[t]here is no breach so long as the injured party elects to treat

the contract as continuing." Id. at 350 (internal quotation

marks omitted). This statement does not mean that failure to

terminate a contract after it has been repudiated waives the

right to sue for anticipatory breach. A party can certainly keep

a contract alive and sue for anticipatory breach at the same

time since West Virginia law expressly allows specific performance as a remedy for anticipatory breach. Miller v. Jones, 71

S.E. 248, 249 (W. Va. 1911). All that Annon meant is that the

statute of limitations will not begin to run from the time of

repudiation if the non-repudiating party decides to sue on the

basis of a later actual breach, rather than the repudiation.

Annon, 185 S.E.2d at 351 (citing Restatement (First) of Contracts § 322). Annon had nothing to do with a suit for specific

performance and in no way suggested that when a nonrepudiating party does bring an anticipatory suit, his initial

choice to request one remedy will bar him from changing his

mind during the litigation and recovering another.

In sum, we see no reason why, as a general matter, a party

who initially seeks specific performance cannot later switch

his preferred relief to an award of damages in the event that

specific performance is rendered impractical or impossible—

which, after all, is exactly what happened here. Moreover, the

notion that an election has to be made at the time suit is filed

is inconsistent with modern pleading practice. Consider that

while the plaintiff in this case did not request both specific

performance and damages as alternative remedies in its original complaint, it might well have done so. What election

could it be said to have made then? In a system where plainHOMELAND TRAINING CENTER v. SUMMIT POINT 15

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tiffs are allowed to plead alternative theories of liability, there

is no reason why they should be categorically forbidden to

plead alternative theories of remediation.

C.

Turning to the facts of this case, we find that HTC was not

precluded from obtaining a damages award after it abandoned

its claim for specific performance.

First, while anticipatory breach doctrine provides that a

non-repudiating party loses the right to treat a repudiation as

a breach if the repudiating party nullifies the repudiation, see

Restatement (Second) of Contracts § 256, no such nullification took place. The principal way for a repudiating party to

nullify its repudiation is by making a statement retracting it.

Id. Not only did SPARC not retract its repudiation, it repeatedly reaffirmed it. After HTC responded to SPARC’s October

17, 2007, repudiation of the contract, urging SPARC to

retract, SPARC reiterated its desire to put an end to the contract, stating once again that the lease had been "terminated,"

in its letter of October 31, 2007. The October 31 letter was as

unequivocal as the original repudiation, if not more so.

Several weeks later, HTC again wrote to SPARC, explaining that the repudiation was making it impossible to get

financing and asking once more for a retraction. SPARC

responded that it would accept the lease if HTC could verify

that it had obtained financing within six weeks’ time, but until

and unless that happened, it would "neither admit nor deny

the continued existence of the lease." This certainly was no

retraction. As a matter of law, a statement must be unconditional to be effective as a retraction. See Anderson Excavating

& Wrecking Co. v. Sanitary Improvement Dist. No. 177, 654

N.W.2d 376, 383 (Neb. 2002) (citation omitted); Vahabzadeh

v. Mooney, 399 S.E.2d 803, 805 (Va. 1991). SPARC could

not nullify its repudiation by trying to add new conditions to

the lease. Not only that, the response was sent after HTC had

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filed suit, and "an attempted retraction of a repudiation of a

contract, after suit has been filed, is too late and is therefore

ineffectual." 17A Am. Jur. 2d Contracts § 718. SPARC could

have retracted its repudiation at any point between October

17, when it was sent, and December 4, when suit was filed.

It never did so, and no retraction was ever effected.

A repudiating party may also be able to nullify its repudiation by performing under the contract if the non-repudiating

party has not yet elected to treat the repudiation as a breach.

See 17B C.J.S. Contracts § 540 (1999). The record, however,

contains no indication that SPARC performed under the lease

in the period between its repudiation on October 17, 2007,

and HTC’s filing suit, on December 4, 2007. Thus, while

SPARC claims that it continued to perform by filing a second

plat in March of 2008, that act came too late to nullify its earlier repudiation. Nor, for that matter, did it in any way suggest

that SPARC had changed course and decided to perform

under the lease. Throughout the litigation, SPARC maintained

that the lease had terminated. It was not until after HTC

moved to seek damages in place of an injunction that SPARC

ever suggested the lease had any continuing vitality.

We see no reason then why HTC should be precluded from

changing its request from one for specific performance to one

for damages after filing its complaint. Since specific performance has never been decreed, there is no possibility of de

jure double compensation if damages are now awarded.

SPARC claims, however, that allowing HTC to recover damages would amount to de facto double recovery because the

preliminary injunction provided HTC the injunctive relief it

sought. The preliminary injunction, however, was not effective in giving HTC the benefit of its bargain. It proved insufficient to disperse the cloud of legal uncertainty that SPARC’s

repudiation had cast over HTC’s business plans. This likely

was for the very same reason that it does not qualify as de

jure double recovery: it was "merely a temporary injunction

entered to preserve the status quo." Jim-Bob, Inc. v. Mehling,

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443 N.W.2d 451, 461 (Mich. App. 1989); see also Southern

Christian Leadership Conference v. Al Malaikah Auditorium

Co., 281 Cal. Rptr. 216, 226 (Ct. App. 1991); Preiss/Breismeister Architects v. Westin Hotel Co.-Plaza Hotel

Div., 437 N.E.2d 1154, 1154 (N.Y. 1982). It provided no

assurance to HTC or its prospective creditors that the lease

would ultimately be enforced. To ignore the provisional character of a preliminary injunction in the context of election of

remedies would be to impose upon plaintiffs a Hobson’s

choice "of seeking the injunction to preserve the status quo

and thereby being relegated to seeking only specific performance or foregoing the injunction and risking being forced to

seek damages in a situation in which the legal remedy may be

inadequate." Jim-Bob, 443 N.W.2d at 461.

Election of remedies doctrine is also grounded in estoppel,

and we consider the possibility that damages are now foreclosed because SPARC changed position in reliance on

HTC’s earlier manifestations. See Restatement (Second) of

Contracts § 378. SPARC contends that it spent "hundreds of

thousands of dollars improving the Lease property’s infrastructure before and after the alleged repudiation" and that it

performed under the lease by filing the second plat. CrossAppellant’s Reply Br. at 8. It is only conduct caused by

HTC’s decision to pursue specific performance that matters,

however. Thus, the only efforts by SPARC of any possible

relevance are those undertaken after HTC had received the

repudiation and expressed an intention not to terminate the

contract. In this regard, we call attention to SPARC’s own

claim at the outset of this litigation that it had "no plans to release or otherwise affect the disputed property. . . ." We also

note that, in issuing the preliminary injunction, the district

court specifically found that if SPARC were to prevail on the

merits, a provisional order to keep the lease alive while HTC

sought financing would not have caused any significant harm

to SPARC that could not be satisfied by HTC’s $60,000 bond.

Doubtless, there are some costs that SPARC incurred as a

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mance, particularly as relates to surveying the property and

obtaining permits. On the record of this case, however, we

cannot conclude that they precluded HTC from altering its

remedial request. SPARC’s own conduct ensured that specific

performance could not succeed. SPARC refused to provide

the assurances that HTC needed in order to salvage the

arrangement contemplated in the lease. In such circumstances,

it would be improper not to allow HTC to amend its request

after discovering the futility of its initial efforts to rescue the

deal. HTC was not unreasonable in supposing at the time it

filed suit that a simple order of specific performance would

place the project back on track. This, of course, proved too

sanguine, and it is now apparent that if HTC cannot have

damages, it can have no remedy at all. In our view, it would

be inappropriate to allow one who repudiates a contract and

thereby irreparably damages the contractual venture to invoke

the very conditions it helped to create in order to prevent the

other party to the contract from obtaining any relief. It is a

familiar maxim that "he who seeks equity must do equity."

Everly v. Peters, 397 S.E.2d 416, 418 (W. Va. 1989) (citations omitted).

We conclude, therefore, that there is no reason why HTC

may not now obtain an award of damages occasioned by

SPARC’s repudiation of the contract. What the measure of

damages may be is a matter for remand. We hold only that

West Virginia law provides no per se bar or indeed a bar in

this case to plaintiff’s amending its request for specific performance to seek damages instead.

V.

For the foregoing reasons, we affirm the district court’s

conclusion that SPARC has no valid breach of contract claims

to bring against HTC and that SPARC repudiated the contract.

We reverse the district court’s conclusion that an award of

monetary damages against SPARC was precluded by HTC’s

earlier request for specific performance, and we remand for

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trial on the issue of damages caused by SPARC’s breach.2

 To

hold otherwise would allow a party repudiating a contract to

deny the party who stuck by the bargain any remedy. The

judgment is hereby

AFFIRMED IN PART, 

REVERSED IN PART, 

AND REMANDED.

DAVIS, Circuit Judge, dissenting in part and concurring in

part:

I agree with the disposition of SPARC’s cross-appeal in

Part III of the Majority Opinion. I am unable to join my fine

colleagues in the majority, however, in the disposition of the

appeal by HTC. The majority asserts that HTC’s suit "sought

a preliminary injunction, which was granted shortly thereafter, and requested an order of specific performance." Maj. Op.

at 6. Unlike the majority, but like the district court, I am persuaded that the preliminary injunction sought and obtained by

HTC was the very "order of specific performance" it sought

by filing this suit in December 2007. 

As the district court recognized, at the time of SPARC’s

alleged breach, the preliminary injunction (despite the nomenclature) afforded HTC complete relief for the very breach of

contract in consequence of which it sought a remedy from the

district court. J.A. 983-85. West Virginia contract law is clear:

a party may obtain either specific performance of a contract,

or damages flowing from a breach of a contract, but not both.

Stone v. Kaufman, 107 S.E. 295, 296 (W. Va. 1921) ("The

remedy of specific performance and by an action for damages

for a breach of contract, are not inconsistent. Under the law,

a party to a contract breached by the other may pursue not

both but either remedy, as our cases on the subject all hold.").

Thus, the effect of the majority’s remand for a trial on dam2We also vacate the district court’s denial of attorneys’ fees to HTC. 

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ages gives HTC two bites of an apple under circumstances in

which West Virginia law permits it only one bite. Id.

To be sure, whether SPARC’s posturing in connection

with, and after delivery of, the October 17, 2007 letter constitutes an actionable repudiation of the agreement presents a

close question in my view, one not comfortably resolved as

a matter of law.1 Certainly, there is no evidence in the record

that SPARC had a third party waiting in the wings with which

it could quickly do business. Thus, the majority’s assertion

that SPARC "was seeking to get out of the contract as fast as

it could," Maj. Op. at 10, is curious.2 But accepting the district

court’s conclusion that HTC was entitled to treat the letter as

an anticipatory repudiation, and thus as an actionable breach

of contract, it is clear that what HTC was entitled to under

West Virginia law was to make a choice: 

[1] treat the contract as rescinded, and recover on

quantum meruit so far as [it] ha[d] performed; . . .

[2] keep the contract alive for the benefit of both parties, being at all times ready and able to perform, and

at the end of the time specified in the contract for

performance, sue and recover under the contract; or

[3] treat the repudiation as putting an end to the contract, and sue for the profits [it] would have realized

if [it] had not been prevented from performing. 

Point 1, syllabus, Annon v. Lucas, 185 S.E.2d 343 (W. Va.

1971) (brackets and alteration added).3

1

See Mollohan v. Black Rock Contracting, Inc., 235 S.E.2d 813, 816

(W. Va. 1977) (quoting Dingley v. Oler, 117 U.S. 490, 502 (1886)) ("An

anticipatory repudiation must be ‘a positive, unconditional, and unequivocal declaration of fixed purpose not to perform the contract in any event

or at any time.’"); Wood County Airport Auth. v. Crown Airways, Inc., 919

F. Supp. 960, 967-69 (S.D.W. Va. 1996). 

2

Indeed, in its preliminary injunction opinion, the district court specifically found that "[SPARC] . . . has no present plans to re-lease or otherwise affect the disputed property." J.A. 346. 

3

"[T]he syllabus . . . is the law in West Virginia." Union Trust Co. of

Maryland v. Townshend, 101 F.2d 903, 910 (4th Cir. 1939). 

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It is clear to me that HTC chose option number three: it

treated the repudiation as an actionable breach of contract and

persuaded the district court to accept that characterization.

Rather than sue then and there for lost profits and the benefit

of its bargain, however, it sought and obtained the alternative

remedy of specific performance.

4

 The effect of the preliminary injunction (that is, the order of specific performance)

was threefold: (1) it precluded SPARC from entering into any

alternative arrangement with respect to the land with a willing

third party; (2) it affirmatively required SPARC to perform

fully its contractual undertakings going forward, i.e., to record

a proper "final plat" and to forebear from any further acts or

omissions inconsistent with the parties’ agreement; and (3) it

permitted HTC to continue, as contemplated by the parties’

agreement, its quest for financing that would have been critical to its consummation of the deal.5

 Having foregone a claim

for damages, HTC received all to which it was entitled.

4Of course, it is not at all surprising that HTC did not seek money damages (in the form of lost profits) in December 2007 because it almost certainly would have encountered a wholesale failure of proof at that time.

This is true notwithstanding that HTC repeatedly assured the district court

at the time of the preliminary injunction hearing that financing for the deal

was well in hand. J.A. 346 ("HTC has secured acceptable financing for the

project."). In any event, as the majority acknowledges, Maj. Op. at 19, the

measure of damages in the unusual circumstances of this case will be for

the district court to fathom in the first instance. 

5The district court’s injunction ordered: 

. . . that SPARC and the Trust are hereby enjoined from selling

or re-leasing the property in question for a period of 120 days

from the December 18, 2007, hearing, or April 16, 2008. SPARC

and the Trust are further enjoined from taking any actions with

respect to the Lease which are inconsistent with the terms of the

Lease as if the same remain in full force and effect. During this

period, HTC may exercise its rights under the Lease to continue

the project going forward with respect to financing, inspection,

and other issues preliminary to construction. 

J.A. 346-47. 

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The majority concludes, to the contrary, that HTC chose

option two, that is, "it kept the contract alive." But how did

HTC keep the contract alive? It obtained an order of specific

performance requiring SPARC to perform. Most assuredly, as

the district court recognized, this is not what West Virginia

law anticipates.

If A contracts to sell land to B for $100, but A gets a better

offer in the meantime and threatens to sell to C for $200, then

B has a choice to make. B can sue A (because B claims an

entitlement to the apparent $100 increase in the value of the

land, and thus the benefit of his bargain) and B can seek, at

the commencement of the suit, in the alternative, specific performance and damages. In particular, B can choose to allow

A to sell to C and limit his damages claim against A to the

disputed $100 profit. On the other hand, however, at B’s

insistence, the court will compel A to go through with his deal

with B and sell to B at $100. If, thereafter, C changes his

mind and decides not to buy from B for the $200 he had

offered A, surely B could not then seek damages of $100 from

A on a theory of breach of contract. But that seems to me to

be the import of the majority’s approach in this case. 

I take a different view of the record. Just as B obtained

complete relief (specific performance) in the above scenario,

HTC obtained complete relief before the district court,

namely, SPARC’s full performance of any and all of its contractual undertakings that were due on and after the issuance

of the preliminary injunction.6 Contrary to the majority’s

6The district court described the effect of HTC’s decision to seek and

obtain specific performance by SPARC as a "forfeiture" of its damages

claim. J.A. 985. Whether or not that characterization is the most apt, the

district court was surely correct in reasoning that HTC had achieved all the

relief to which it was entitled by virtue of the preliminary injunction: 

[N]o genuine issue of material fact exists with regard to whether

or not the parties continued to perform under the Lease following

the repudiation. . . . [I]t is uncontested that [SPARC] continued

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view, HTC did not "change its mind" see Maj. Op. at 12-13,

or "abandon[ ] its claim for specific performance." Id. at 16.

HTC could not "change its mind" because it had already

received what it wanted and what it proved it was entitled to:

specific performance. 

There is not a scintilla of evidence in the record to suggest

that SPARC committed any further breach of contract after

the district court issued its preliminary injunction and after the

parties had "continued to perform." See supra note 6.7 Eventually, as it was entitled to do, HTC elected to abandon the

agreement when it failed to obtain the financing necessary to

continue with the deal, notwithstanding the "make whole"

relief it had obtained from the district court.8

performance under the Lease by securing approval of the final

plat from the Jefferson County Planning Commission and by

recording the same in the office of the Clerk of the County Commission of Jefferson County. 

J.A. 985. 

7

It appears that the unspoken theory of HTC, implicitly embraced by the

majority, is that simply by requiring HTC to file a lawsuit, SPARC

thereby cast something of a pall over the deal, possibly scaring off potential lenders and investors. As a matter of West Virginia law, it is doubtful

that SPARC owed HTC some extra-contractual duty to display public

enthusiasm for the deal. At all events, HTC surely foresaw that some if not

many potential investors would not look benignly at the December litigation, and this would be particularly true during the nationwide economic

collapse of late 2007. See J.A. 346 ("This Court recognizes the difficulties

in the mortgage market over the last year."). This is yet a further indication

that HTC made a binding election of remedies in December 2007. 

8As the majority notes and as the district court recognized, the parties’

agreement was structured such that there were two separate and distinct

parts to the agreement. The first part essentially required affirmative performance by both parties, i.e., to obtain the necessary permits and financing for the project, and to fashion and record the "final plat." The second

part laid out terms for the actual construction of the buildings and leasing

of the land. J.A. 30-47. Bifurcating the two parts of the contract was an

election clause, which effectively allowed HTC to terminate the agreement

going forward if it was unable to secure financing: 

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Thus, with one exception, I would affirm the district court’s

order dismissing this case as fully heard and resolved. I would

vacate the district court’s order insofar as it denied attorney’s

fees to HTC and remand the case for consideration by the district court whether fees should be awarded. Consistent with

the views expressed above, I would permit HTC to argue that

it was a "prevailing party" because it persuaded the district

court to issue an order of specific performance, i.e., the preliminary injunction.9

With respect, I dissent. 

Until all of the conditions set forth in Paragraph 3 herein are satisfied, Tenant may terminate this Lease by giving written notice

to Landlord as provided herein, and this Lease shall be of no further force or effect, except for such matters which are designated

to survive the termination of this Lease and except for any payment obligations pursuant to Paragraph 6(B) herein. 

J.A. 32. 

At that point, if HTC elected not to go forward with the Lease, the

agreement would naturally terminate, releasing both parties from further

performance. 

9A party may prevail, for the purposes of an award of contractual attorney’s fees, in any one (or more) of three ways: (1) by winning the lawsuit;

(2) by prevailing on the principal issues; and (3) when there is a causal

connection between the lawsuit and a change in the defendant’s conduct.

See Daily Gazette Co., Inc. v. West Virginia Dev. Office, 521 S.E.2d 543,

553-54 (W. Va. 1999) (construing statutory fee-shifting provision allowing an award of fees to a "successful party"). Arguably, HTC was a prevailing party in that it obtained an order for specific performance;

presumably, any award of attorney’s fees would cover only the fees

incurred in obtaining the preliminary injunction. 

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