Law School Case Brief
Edge Grp. Waiccs LLC v. Sapir Grp. LLC - 705 F. Supp. 2d 304 (S.D.N.Y. 2010)
Specific performance may be precluded by impossibility of performance either at the time of breach or at the time that court relief is sought. The courts have long recognized that impossibility (or even impracticability) of performance at the time that performance was due may excuse enforcement of a contract if the impossibility was brought about by force majeure, or circumstances that were not caused by the party. In such a case, the court will read into the contract a clause excusing performance if an essential element to the contract ceases to be available prior to the time at which performance is due absent the fault of either party. In those circumstances, the aggrieved party cannot establish the existence of an enforceable contract at the time that performance was due, and therefore the remedy of specific performance will not be available to it.
Plaintiff Edge Group sought specific performance of a contract for the sale of an interest in a limited liability company. The anticipated transaction would have involved a payment of $20 million by defendant Sapir Group in exchange for a 50 percent interest in WAICCS Las Vegas 2 LLC, which was the sole member of another limited liability company, WAICCS Las Vegas 3 LLC. At the conclusion of discovery, both parties moved for summary judgment. Defendant Sapir argued that plaintiff's relief was limited to payment of the $1 million now held in escrow, or, possibly, no payment at all because it had not proven or mitigated its damages. Plaintiff Edge sought specific performance of the contract (payment of $20 million in exchange for tender of its ownership interest in WAICCS 2).
Was plaintiff entitled to specific performance of the contract in question?
Plaintiff's motion for summary judgment was granted in part because there was no question that the parties entered into a valid contract for the sale of plaintiff's interest in the LLC and that defendant breached its contractual obligation to purchase that interest; plaintiff was unable to calculate its legal damages; there was no basis for defendant's contention that the option agreement as amended precluded a resort by plaintiff to specific performance; and, absent defendant's ability to show at trial that its financial status materially changed so as to preclude its ability to perform its obligations under the option agreement as amended, plaintiff established the appropriateness of the equitable remedy of specific performance for defendant's breach.
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