PISTOL L.C. v. GREEN FAMILY FLOORING, INC. (Iowa Ct. App., Apr. 2023)
BACKGROUND: Tenant, Green Family Flooring, sued Landlord for breach of a first right of refusal in a commercial lease, which would have allowed Tenant to buy the building.
EVIDENCE: Landlord and Tenant entered into a commercial lease agreement. Landlord owned the building and also occupies a part of the building where Landlord operated the restaurant. The commercial lease included a provision that gave Tenant an option and right of first refusal to purchase the leased premises on the same terms and conditions of any third-party offer. Landlord sent Tenant a notice of an offer that would buy the building AND Landlord’s restaurant business assets, with continued running of the restaurant assets for an additional $300,000. Tenant informed Landlord it would buy the building through the right of first refusal but not the restaurant assets. Landlord refused to comply with Tenant’s response and proceeded to sell the package deal to the third party. Tenant sued.
COURT RULING: The Court focused on the specific contractual language in the lease that said “in the event of any offer to purchase the building in which the premises are located…”, and reasoned that the Landlord breached the contractual provision of preferential right by creating and asserting a package deal that was beyond the plain terms of the “building” purchase right. The Court found that the Landlord could not defeat the right of first refusal. Put simply, the Landlord “had bargained away any right to force Tenant to buy either the restaurant with the land or nothing at all.” Tenant wins.
City of Sherwood v. Bearden (Ark. Ct. App., Feb. 2023)
BACKGROUND: Homeowners sued the City, alleging inverse condemnation due to inadequate subdivision rainwater drainage pipes causing repeated flooding to their home.
EVIDENCE: Homeowners alleged that public stormwater pipes near their property were not sufficient in size to handle the rainwater in the area, and the City's failure had resulted in repeated flooding of their home and that the City's action had resulted in a “taking” due to the “continuous and systematic trespass of water” onto their property. Homeowners pointed to evidence that the City had created the flooding problem through approval of the drainage system and had failed to fix the problem despite its duty to maintain the drainage system. City admitted that it was the City's duty to maintain the rainwater and storm-drainage systems.
COURT RULING: The Court reminded that inverse condemnation is a cause of action against a government to recover the value of property that has been taken in fact by a government although not through eminent-domain procedures. When a city acts in a manner that substantially diminishes the value of a landowner's land, and its actions are shown to be intentional, it must compensate for the taking of property. However, even though the homeowners established that the City had approved a private developer's subdivision drainage system, the Court held that the mere approval of a developer's plans is not sufficient evidence of government action that could constitute a taking. Further, a city's approval of a private development pursuant to the City's regulations did not give rise to liability against the City for the negligence of a developer. City wins.
Sound Around, Inc., v. Hialeah Last Mile LLC, et. al., (U.S. Dist. Ct., Fla., Apr. 2023)
BACKGROUND: Buyer sought to enforce the Purchase Agreement against two seller defendants, for a warehouse in Miami, Florida for a sale price of $11,434,050. Sellers dispute and claim that one seller defendant is not bound by the contract.
EVIDENCE: Sellers had publicly listed the commercial warehouse property through a commercial broker. The Buyer approached the Sellers’ commercial broker and put the Property under contract. However, although both sides had full knowledge that the Property was owned jointly by two different seller entities, the final commercial contract completely omitted one of the sellers. Nonetheless, throughout the parties' interactions, it appeared clear that all parties, Buyer, and both sellers were fully on board in selling the entire Property interests. The marketing listing included the entire Property, the LOI included both sellers and the omitted seller even took extensive steps after the contract was signed to complete work on the Property as required by the contract. All evidence clearly showed it was merely a mutual mistake in omitting the one seller as a signatory to the contract.
COURT RULING: The Court recognized that equity may reform a contract when “due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties”. But in further analysis, the Court determined that the evidence relating to the unsigned seller related to the remodeling of the Property by the unsigned seller, and that none of the remodeling evidence mentioned anything about the sale contract, and thus, they did not clearly show the unsigned seller as binding itself to a sale of its interest in the Property. The Court then ruled, pursuant to statute of frauds, that for a real estate purchase contract to be enforceable through specific performance it must first be embodied in one or more written documents or memoranda signed by the party against whom enforcement is sought. The unsigned seller wins and cannot be bound.
By: Sean Rieger
