Opinion ID: 2424191
Heading Depth: 1
Heading Rank: 4

Heading: Other Grounds for Affirmance

Text: Having decided that the trial court had authority to grant specific performance of the Preliminary Agreement, we briefly consider-and reject-appellee's alternative grounds for affirmance: (1) that Stanford has not shown that money damages would not be adequate; (2) that Stanford has not proven that it was ready, willing and able to perform; and (3) that Judge Braman's finding that the parties' obligation under the Preliminary Agreement to negotiate in good faith was extended to September 18, 1998, was clearly erroneous.
Specific performance is appropriate where `the legal remedy, usually money damages, is deemed to be either inadequate or impracticable.' Independence Mgmt. Co. v. Anderson & Summers, LLC, 874 A.2d 862, 870 (D.C.2005) (quoting Flack, 417 A.2d at 400). The core purpose of the equitable doctrine of specific performance is to effect a desire to do justice, which the legal remedy would fail to give. POMEROY, supra, § 1401, at 1033. In her order, Judge Hedge properly equated expectation damages with specific performance, in that both are for the purpose of placing the aggrieved party in as good a position as it would have been had the contract been performed. Judge Hedge also correctly noted that even though the parties had entered into a preliminary Type II agreement, [t]his may be the rare case in which a remedy based on the anticipated contract may be appropriate because all the terms of the deal had been agreed upon. Finally, Judge Hedge recognized, specific performance is deemed particularly apt in the context of contracts involving real property, especially where the property has unique features such as the Hotel. See City Stores Co. v. Ammerman, 266 F.Supp. 766, 776 (D.D.C.1967) (noting clear inadequacy of damages for breach of contracts involving interests in land or unique chattels); see also Johnson v. Jones, 109 Utah 92, 164 P.2d 893, 895 (1946) (preliminary agreement concerning land is specifically enforceable). Here, Stanford invested considerable time, money, and effort in negotiating with Potomac Creek and conducting due diligence investigation because it wanted to acquire the Hotel, but Potomac Creek's breach of the Preliminary Agreement and bad faith actions frustrated Stanford from accomplishing its objective, and rendered valueless Stanford's investment of time, effort and expense. Stanford, which owned and managed sixteen substantial hotels, represented to the court that its interest was to acquire the Hotel for its operations, not merely to realize financial benefits from the transaction. Potomac Creek recognized this interest in the Definitive Agreement which provides, in Paragraph 9.3(b), that in the event that closing on the transaction did not occur as a result of Potomac Creek's breach, Stanford, at its option, may require that Seller specifically perform its obligations. [11] Yet Potomac Creek would limit Stanford's remedies to damages. Although we agree that expectation damages can be an adequate remedy in some cases, they will not achieve substantial justice where the benefit of the bargain to the prevailing party is difficult to calculate or realize by the payment of money. As Judge Gasch noted in the context of breach of an agreement to lease space at the then-new Tysons Corner shopping center, 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. See City Stores Co., 266 F.Supp. at 776 (holding, as a matter of law, that mere fact that a contract, definite in material respects, contains some terms which are subject to further negotiation... will not bar a decree for specific performance, if in the court's discretion specific performance should be granted). In view of the presumptive suitability of specific performance of contracts involving land, and based on the facts of record, we think that in this case the burden is more appropriately placed on Potomac Creek to show that money damages would have been adequate, rather than on Stanford to disprove that damages are inadequate. The trial court will need to determine whether expectation damages would have been adequate in this case, including what weight should be given to Stanford's decision to ask for specific performance as its sole remedy.
Potomac Creek's second alternative ground for affirmance, that Stanford did not show that it was ready, willing, and able to perform, is also unavailing. As of trial, Stanford had demonstrated that it not only was ready, willing, and able to perform its obligations under the Preliminary Agreement, but that it had fully performed: Stanford had negotiated with Potomac Creek, conducted due diligence, and signed the Definitive Agreement. Judge Braman found that Stanford was at that time willing to concede all four of the remaining issues left unresolved in the Declaration, see supra note 5, and that Stanford could obtain the necessary financing to complete the transaction from the Hong Kong and Shanghai Bank, with which it had an established relationship. Potomac Creek's argument on appeal that Judge Braman's finding was stale by the time of Phase II, and that Stanford did not then provide current assurances that it could perform, ring hollow when one considers that Potomac Creek's argument to Judge Hedge was that she lacked authority to grant specific performance, not that Stanford could not satisfy its end of the bargain. Having decided that an order of specific performance directed to Potomac Creek was not legally available to enforce the Preliminary Agreement, Judge Hedge did not address whether Stanford was able to conclude the transaction. The question whether Stanford is now able to perform the Definitive Agreement is a determination that the trial court will need to take into consideration in deciding whether to grant specific performance of the Preliminary Agreement by ordering Potomac Creek to sign the Definitive Agreement.
Finally, we reject the argument that Judge Braman clearly erred in finding that the parties agreed to extend the 10-day time frame for completion of the Definitive Agreement  an agreement that eventually took several months to negotiate. Judge Braman interpreted the Preliminary Agreement's language that negotiations would proceed with a view to signing a Definitive Agreement within ten (10) days and concluded that it was intended to be [a] goal[], not [a] procrustean deadline[]. In reaching this conclusion, Judge Braman noted the absence of time is of the essence language in the Preliminary Agreement, contrasting it with the Definitive Agreement and the Declaration, both of which included such provisions, as well as the conduct of the parties, who never acted as if they were under the pressure of a deadline. See Drazin, 395 A.2d at 35 (noting that when a date for performance is specified, but not made of the essence, a party may make performance essential on that date or subsequently, by giving reasonable notice to that effect). Moreover, Judge Braman found, any deadline was waived by Potomac Creek's conduct, pointing to its extensive post-time line performance, including continuing negotiations on the Definitive Agreement and Declaration, the exchange of multiple drafts of both instruments and the supplying of due diligence materials and Potomac Creek's accept[ance of] Stanford's post-time line performance. An appellate court will not reverse trial court findings unless they are clearly erroneous or unsupported by the evidence. See D.C.Code § 17-305(a) (2001); Independence Mgmt. Co., 874 A.2d at 867. Judge Braman's findings in this regard are logical, reasonable and amply supported by the evidence.