Erin Food Services, Inc. v. Derry Motel, Inc.

553 A.2d 304, 131 N.H. 353, 1988 N.H. LEXIS 136
CourtSupreme Court of New Hampshire
DecidedDecember 30, 1988
DocketNo. 87-329
StatusPublished
Cited by6 cases

This text of 553 A.2d 304 (Erin Food Services, Inc. v. Derry Motel, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Erin Food Services, Inc. v. Derry Motel, Inc., 553 A.2d 304, 131 N.H. 353, 1988 N.H. LEXIS 136 (N.H. 1988).

Opinion

Souter, J.

In this appeal from an order of the Superior Court ('C. Flynn, J.) requiring specific performance of a real estate option contract, the defendant-seller claims that the plaintiff-buyer breached the agreement by failing to satisfy an affirmative obligation to obtain required subdivision approval and by failing to make tender of performance that was both timely and adequate in other respects. The defendant claims further that specific performance is inappropriate in light of the significant appreciation in the value of the land between the dates of the contract and the trial court’s order. We affirm.

In 1982 and prior thereto, the defendant, Derry Motel, Inc., owned a. tract of land located near the intersection of N.H. Route 102 and Interstate Route 93 in Londonderry. In March of that year, Derry Motel granted an assignable option to George Matarazzo, acting for Land Use Group, Inc., to purchase an approximately 18-acre portion of the tract, and in the following year conveyed the remaining 4.3 acres to David Murray, the principal of the plaintiff, Erin Food Services, Inc., who built a Burger King restaurant on the land.

[355]*355One acre of the parcel subject to option was under lease to the Shell Oil Company for the operation of a filling station, and the remainder was used as a site for a motel. The terms of the option entitled Land Use, for approximately one year, to purchase the entire tract for $650,000, or the motel site exclusive of the acre leased to Shell for $500,000. In the event that Land Use exercised its right to extend the option for a further year, it was entitled during that period to buy the whole parcel for $700,000 or the motel site alone for $500,000. Derry Motel and Land Use did agree on a one-year extension, and in September, 1983, Land Use assigned its rights to Erin, which wrote to Derry Motel in March, 1984, exercising the option to buy the motel site, exclusive of the filling station’s acre.

Derry Motel’s principals, John Janigan and his brother, were by that time reluctant to sell. After receiving Erin’s communication, the Janigans kept silent until April 11, when Derry Motel’s then counsel wrote to counsel then representing Erin claiming that the agreement had expired prior to Erin’s purported exercise of its option, and claiming further that the motel had become subject to a lease encumbering its title. Actually, John Janigan had proposed to enter into the lease agreement only after receipt of Erin’s letter exercising the option, and he later admitted that he knew his counsel was wrong in claiming the exercise to be untimely, but had declined at first to correct the mistake, in order to keep pressure on Erin. By April 16, however, Derry Motel’s counsel had acknowledged the timeliness of Erin’s action, and the parties were ostensibly ready to proceed to effect the conveyance.

Their disagreements were not all behind them, however, and it is well to note here the provisions of the option agreement on which the parties’ contentions would later focus. Under its terms, a closing would be scheduled to occur twenty days after notice by Land Use (for which we will hereinafter substitute Erin) of its exercise of the option, and the agreement provided that “[a]ll times, wherever specified herein, are of the essence of this Agreement.” Derry Motel was obligated to produce a warranty deed “conveying good and clear record and marketable title free from all encumbrances,” except for certain easements not here relevant.

The agreement provided that if Shell Oil exercised a right of first refusal to purchase the acre subject to its lease (an event that never occurred, since Erin never exercised its option with respect to the Shell site), Derry Motel would be responsible for subdividing the tract. Except in the event either of Shell’s exercise of first refusal or of Erin’s decision to acquire only the motel site without Shell’s [356]*356leased acre, the option provided that Derry Motel would convey the tract “in its entirety; however, nothing herein shall be deemed to prevent [Erin] from obtaining a subdivision or subdivisions of the Premises prior to the acquisition and conveying portions of the premises at closing ... at [Erin’s] sole discretion.” It was agreed that Erin “may apply to any local, county, state and/or federal boards, agencies and authorities for development approvals, subdivision, resubdivision, building permits, and any other approvals, required to use the Option Premises or any portion thereof as may be required by [Erin].... Derry Motel... agrees to execute a Special Power of Attorney permitting [Erin] to execute such applications.” Such a power of attorney was in fact given to Erin.

It will be noted that none of the quoted provisions expressly allocated an obligation to obtain the local subdivision approval that would be required in the event Erin chose to buy the motel site without Shell’s acre, and starting in April, 1984, the parties disputed whose responsibility it was. In July, the stalemate supposedly ended with agreement to cooperate in obtaining the subdivision approval, after which Erin’s counsel did some work in preparing an application. When he had not submitted an application to the Derry Planning Board by October, however, John Janigan did so. He also appeared with Murray at a November board hearing on the application, and at a meeting on December 5, 1984, the board granted subdivision approval subject to a condition that the existing motel building be razed within one year. (No issue about the commencement of the one-year period is in contention before us, and we assume that the time is meant to run from the date of any subdividing conveyance of the motel site.)

Derry Motel did not wait for the subdivision approval, however, before pressing to close the transaction. In July, its counsel proposed an August closing with escrow of funds, subject to a condition that Erin would make the additional purchase of the Shell acre if subdivision approval had not been obtained within a year. When Erin expressed willingness to agree to an escrow closing but declined to accept the condition, Derry Motel proposed a September closing subject to a new agreement that the escrow could be terminated and the option cancelled if the subdivision had not been approved by November 1, 1984. Again, Erin said no. Derry Motel then demanded an October 1 closing regardless of the status of the subdivision request, with the transaction to be rescinded if the subdivision was later denied. After October 1 had passed with no closing, Derry Motel’s counsel demanded a closing on November 13, without postponement, noting that a preliminary hearing on [357]*357subdivision had been scheduled for November 8 and that official indications boded well for approval. In reply, Erin’s counsel expressed fatigue induced by Derry Motel’s serial demands for a closing prior to fulfilling its obligation to obtain subdivision approval, and undertook to close on the transaction within forty-eight hours of final subdivision approval.

On November 7, the planning board indicated that subdivision approval would be conditioned, inter alia, on razing the motel.

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Cite This Page — Counsel Stack

Bluebook (online)
553 A.2d 304, 131 N.H. 353, 1988 N.H. LEXIS 136, Counsel Stack Legal Research, https://law.counselstack.com/opinion/erin-food-services-inc-v-derry-motel-inc-nh-1988.