Homart Development Co. v. Sigman

• Decision Date: 05 April 1989
• Docket Number: No. 88-8140,88-8140
• Parties: HOMART DEVELOPMENT CO., Plaintiff-Appellant, v. W.T. SIGMAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1556

868 F.2d 1556

13 Fed.R.Serv.3d 444

HOMART DEVELOPMENT CO., Plaintiff-Appellant, v. W.T. SIGMAN, Defendant-Appellee.

No. 88-8140.

United States Court of Appeals, Eleventh Circuit.

April 5, 1989.

James W. Hawkins, Powell, Goldstein, Frazer & Murphy, William M. Ragland, Jr., Jerry B. Blackstock, Atlanta, Ga., for plaintiff-appellant.

John L. Watkins, Long, Aldrige and Norman, Atlanta, Ga., William G. Gainer, Northcutt, Edwards, Gainer & Moore, Conyers, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before HILL and FAY, Circuit Judges, and DAVIS ^*, District Judge.

HILL, Circuit Judge:

On September 25, 1986, Homart Development Co. (Homart) filed suit pursuant to federal diversity jurisdiction against Mr. W.T. Sigman. Homart alleged that Mr. Sigman breached a conditional option contract for the sale to Homart of real property that Mr. Sigman owns in Rockdale County, Georgia. The district court granted defendant Sigman's motion for judgment on the pleadings regarding plaintiff's action for specific performance of the conditional option contract, actual and consequential damages, and attorneys' fees. This appeal followed. We affirm the judgment of the district court.

I. FACTS AND PROCEDURAL HISTORY

Homart, a Delaware corporation registered to do business in Georgia, purchases and develops land for shopping malls and office complexes. Mr. Sigman, a resident In June, 1986, although negotiations for a one-year extension of the option failed, the parties agreed to extend the option through the next month. On July 28, 1986, Homart attempted to exercise its conditional option. Proper notice of the time, date, and place of closing was given to Mr. Sigman. Homart appeared at the closing with all necessary documentation and purchase proceeds, but neither Mr. Sigman nor his attorney attended to close the purchase.

of Georgia, owns a parcel of approximately 75 acres of real property located in Rockdale County, Georgia. Several years ago, Homart decided to pursue the development of several regional shopping malls in the Atlanta market. Homart considered Mr. Sigman's property to be an ideal location for a regional mall in the eastern metropolitan area. On August 30, 1983, Homart and Mr. Sigman completed negotiations and entered into a conditional option contract wherein Mr. Sigman granted Homart an option to purchase his property for $1,125,000 until June 30, 1986.

Two months later, Homart filed this suit against Mr. Sigman. In four counts, Homart sought specific performance of the conditional option contract, actual and consequential damages for alleged breach of contract if specific performance were not granted, attorneys' fees, or, alternatively, recovery in quantum meruit. Mr. Sigman answered the complaint, counterclaimed, and filed a motion for judgment on the pleadings regarding plaintiff's claims. Plaintiff then filed a motion to dismiss defendant's counterclaims and a motion for partial summary judgment.

A federal magistrate considered the parties' various motions and recommended, in part, that defendant Sigman's motion for judgment on the pleadings be granted with respect to plaintiff's action for specific performance, actual and consequential damages, and attorneys' fees. After a de novo review, the district court, declaring that it was not persuaded by Homart's objections, entered an order approving and adopting the magistrate's report and recommendation. The court directed the clerk to enter judgment on Counts I, II, and III pursuant to Fed.R.Civ.P. 54(b), and Homart appealed.

II. DISCUSSION

Initially, we shall review the district court's decision that the terms of the conditional option contract were not sufficiently definite to support either a claim for specific performance, or alternatively, a claim for actual and consequential damages for breach of contract. Then, we shall consider the appellant's arguments regarding the appellee's alleged waiver of deficiencies concerning the contractual terms and the district court's alleged conversion of the motion on the pleadings into a motion for summary judgment.

SPECIFIC PERFORMANCE

As the district court correctly stated, the Supreme Court of Georgia has established the following rule requiring certainty of terms before a court will decree the specific performance of a contract:

A court of equity will not decree the specific performance of a contract for the sale of land unless there is a definite and specific statement of the terms of the contract. The requirement of certainty extends not only to the subject matter and purpose of the contract, but also to the parties, consideration, and even the time and place of performance, where these are essential. Its terms must be such that neither party can reasonably misunderstand them. It would be inequitable to carry a contract into effect where the court is left to ascertain the intention of the parties by mere guess or conjecture, because it might be guilty of erroneously decreeing what the parties never intended or contemplated.

Green v. Zaring, 222 Ga. 195, 149 S.E.2d 115, 117-118 (1966); Williams v. Manchester Building Supply Co., 213 Ga. 99, 97 S.E.2d 129 (1957). The definite and specific statement of terms must be expressed by the writing itself or determined through use of a "key," a word or phrase in the writing referring to material that will make the terms definite. Beller & Gould v. Lisenby, 246 Ga. 15, 268 S.E.2d 611 (1980); The district court decided that the terms of two of the "Additional Provisions" describing conditions to the option contract were not sufficiently definite to support a specific performance claim. The two provisions, paragraphs C.1 and C.2, read as follows:

Sturdivant v. Walker, 202 Ga. 585(4), 43 S.E.2d 527 (1947); Muller v. Cooper, 165 Ga. 439, 141 S.E. 300 (1929). ¹

C.1. Development Intent. Purchaser agrees that it will not exercise the Option unless it has at the time of such exercise a reasonable intent to develop the Property.

C.2. Relocation of Residence. After exercising the Option, Purchaser shall, at Purchaser's election either (i) move Seller's residence now located on the Property up to two miles and put it in the same operational and functional condition as it exists just prior to the time of the move, provided, however, that Seller's residence shall not be moved sooner than two (2) years after the Date of this Contract and not later than six months following beginning of construction, or, (ii) pay to the Seller the appraised value of the building (excluding land) at the time in question, provided, however, that if the appraised value is paid, Seller may within thirty (30) days after such payment remove all personal property, and appliances (which items shall not be included in appraised value). In addition, if Purchaser decides building is to be destroyed and Purchaser has salvaged any materials he wants then Seller shall be allowed but not obligated to thereafter, within 45 days, to wreck and/or remove any or all remaining salvageable material from the aforesaid residence. In addition, Purchaser agrees to exclude from the Property up to one and one-half acres in the Southeast corner of the Property designated by Purchaser in order that it may be used by Seller or any member of Seller's family for their home exclusively, such parcel to be ground leased by Purchaser to Seller for $1.00 per year until the first to occur of (y) December 31, 2040, or (z) one year after the land is no longer used as a residence. Seller shall have five years from the date of Closing to complete construction of residence.

The district court was correct in its determination that the terms of paragraph C.1 are too indefinite, thereby precluding a decree of specific performance of the conditional option contract. As the district court recognized, there are several descriptive deficiencies in the terms of paragraph C.1. First, paragraph C.1 fails to describe the type or scope of development contemplated by the parties. In Green v. Zaring, supra, the Supreme Court of Georgia found a contract too vague to enforce where the parties had agreed to form a corporation to develop the defendant's property "with apartment buildings and related structures." Nothing in the contract indicated what the parties intended regarding the number, size, design, or quality of the buildings and the court could not determine what the parties envisioned. In the Appellant concedes that the terms of paragraph C.2 are not sufficiently certain to be enforced. Rather, it argues that C.2 is severable from the option contract. Because the unenforceability of paragraph C.1 alone provides sufficient grounds to preclude a decree that the contract be specifically performed, we need not discuss whether the terms of paragraph C.2 are sufficiently definite to be enforced or whether the paragraph is severable.

present case, paragraph C.1 does not describe the development contemplated or furnish a key that leads to a certain description of the expected development. Appellant contends that the parties never intended that paragraph C.1 describe the type or scope of development to be pursued. Rather, the appellant maintains that the parties viewed paragraph C.1 as an anti-speculation clause insuring that Homart would not simply hold onto the land as an investment. This interpretation is not clearly stated in paragraph C.1 and no key exists that would lead to a certain illustration of this suggested meaning. In fact, appellant's urging that paragraph C.1 was meant as an anti-speculation clause only supports the conclusion that the paragraph is vague and indefinite. Second, C.1 leaves uncertain whether the corporate purchaser's state of mind, required to have a "reasonable intent" to develop, is to be objectively demonstrated, or whether subjective intent is sufficient. If the purchaser's intent is to be objectively demonstrated, paragraph C.1 fails to...