If a Buyer breaches an Agreement of Sale and refuses to buy the property, can the Seller seek specific performance as a remedy? A 2019 Superior Court decision concluded yes.
The Buyer, Marcia Avery, owned approximately 21 acres in Chester County that she wanted to subdivide the land into nine residential lots. In order to get township approval, she needed to access a certain public road. Because Ms. Avery’s property did not abut that road, she approached her neighbors, Daniel and Patricia Maisano, and requested them to sell her an easement. The Maisanos refused to grant Ms. Avery an easement across their land, but they were willing to sell the entire property to her. In December 2004, Ms. Avery and the Maisanos negotiated the sale of the Maisano Property for $1.5 million dollars on a Standard Agreement for the Sale of Real Estate. The initial settlement date was scheduled to occur two years later in December 2006.
In June 2006, Ms. Avery knew she would not be able to finance the purchase, so the parties negotiated an extension of the closing date for an additional two years to December 2008. As the second closing date approached, Ms. Avery realized she would not have financing so the parties again extended closing two and a half more years to June 2011. In June 2011, Avery was still not able to obtain financing. She did not negotiate an extension with the Maisanos, and failed to close on the transaction. In February 2016, the Maisanos sued Avery alleging, among other things, breach of contract, and sought specific performance as their remedy.
The trial court refused to grant specific performance because the Maisanos failed to establish that there was no adequate remedy at law; and instead awarded the Maisanos the $150,000.00 good faith deposit, plus interest, as liquidated damages. On appeal, the Superior Court observed that the fundamental rule in deciding a claim for breach of contract is to enforce the intent of the parties as set forth in the contract. If the contract is clear and unequivocal, it should be interpreted based on its contents alone. The Superior Court examined the default paragraph in the Agreement of Sale and made four key observations. First, in the event of a default, the Sellers had the option, but not the obligation, to keep all sums paid by the Buyer. Second, the Sellers could have elected to keep money paid by the Buyer either as money applied to the total damages, or as liquidated damages. Third, the Buyer and Sellers had the option to limit Sellers’ recoverable damages to all sums paid, but they chose not to elect that remedy. Fourth, the remedies outlined in the Agreement of Sale are not the exclusive remedies available to Sellers.
Having resolved that the Sellers were not limited to retaining the money paid by Buyer as liquidated damages, the Court then noted that a breach of contract claim for real estate in which a seller seeks to recover the full purchase price as money damages is, in effect, a claim for specific performance. The Superior Court held that the Maisanos were within their contractual rights to seek specific performance, and requesting specific performance was a demand for the full purchase price of the property.
It is worth noting that when the Superior Court overturned the trial court, it first affirmed the trial court’s ruling that specific performance is generally only available when damages at law are insufficient or impractical because actual damages are impossible to calculate with certainty. It also affirmed the trial court’s conclusion that there was nothing unique about the property that would make an award of money damages inadequate. However, the Superior Court reversed the trial court’s refusal to award the negotiated sale price as damages for Avery’s breach of contract. The Superior Court stated: “We have concluded that the Maisanos are entitled to the contract price damages and, in return, the Property must be conveyed to Avery.” Maisano v. Avery, 204 A.3d 515, 523 (2019).
Whether or not the judgment is collectible is another story.
