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A-S Dev., Inc. v. W. R. Grace Land Corp. - 537 F. Supp. 549 (D.N.J. 1982)

Rule:

The courts are mindful of the value of time in calculating the compensation for a damages award. Delay in receiving compensation is an element in determining the damages and an award made on one date is not the equivalent of an award made at an earlier date. The delayed compensation is a greater figure and delay enters into the late award as an element of loss.

Facts:

Plaintiff A.S. decided to sell its real estate activities to defendant W. R. Grace ("Grace"), which consisted of holdings located in various parts of the United States. The parties drafted an agreement reciting the terms of that transfer dated June 30, 1974. One of the parcels in the transaction, Channel Club Tower, (hereinafter "CCT"), which was then under construction, was removed from the sale and was subject of a supplement agreement. The supplemental agreement provided that the sales price was based on the book value on the day before closing, and Grace disagreed with that part of the sales price attributable to capitalized interest in the amount of $ 543,323. Defendant refused to close title on CCT, and plaintiff proceeded to sell the individual apartment units to "retail" buyers. Sales amounted to a total of $ 13,806,695 by June 1980. Defendant contended that this figure or the 1975 real estate tax assessment figure of $ 11,192,000 were indisputable evidence of the property's market value and should have been used as a yardstick for the measure of damages.

Issue:

Did plaintiff suffer no damage or minimal damage by virtue of defendant’s failure to buy the CCT?

Answer:

No

Conclusion:

There was no question but that had A. S. received the purchase price when it was due on March 13, 1975, it would have been in a position to invest the money in a potentially profitable undertaking. The time value of money due was a valid consideration to be used in measuring plaintiff's damages. Grace's initial thesis-that plaintiff suffered no damage or minimal damage by virtue of Grace's failure to buy CCT was unsupportable in the context of practical investments. To completely ignore the passage of time during plaintiff's efforts at mitigation of damages was to overlook a most obvious aspect of plaintiff's injury. That plaintiff sought to sell this property to Grace as a departure from the real estate business and not as a profit-making transaction in and of itself was not dispositive of plaintiff's lost profits claim. The court was persuaded that the methodology of the involuntary loan was, in the final analysis, the fairest design for compensating plaintiff for its loss.

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