Howard-Arnold, Inc. v. T.N.T. Realty, Inc.
Options, which impose obligations only on the optionor, require optionees to exercise them in strict compliance with their terms. Howard-Arnold, Inc. brought this action against T.N.T. Realty Inc., alleging breach of a lease and option contract and seeking specific performance of certain repairs and remediation responsibilities and specific performance of the option. The defendant counterclaimed, including for use and occupancy payments. After a bench trial, the court found that the plaintiff had not properly exercised the option because payment was not tendered and, accordingly, declined to order specific performance. The court also found, under the doctrine of impossibility, that the defendant was excused from its obligations to make further roof repairs. The court found that the defendant breached the lease by failing to perform certain environmental remediation but awarded no damages. On the counterclaim, the court ordered rental use and occupancy payments for a certain period. The plaintiff appealed, raising multiple claims. The Appellate Court reversed the judgment as to the roof repairs and remanded and, otherwise, affirmed the judgment. It was improper for the court, sua sponte, to apply the unpled special defense of impossibility to defeat the plaintiff's cause of action regarding roof repairs. However, given the plain language of the option and unchallenged factual finding that the plaintiff did not tender payment, the court did not err in finding that the plaintiff failed to exercise the option in accordance with its terms. The plaintiff argued that the defendant's failure to fulfill its obligations to remediate and repair the property excused the tender requirement. The cases cited for this proposition concerned specific performance of contracts for the sale of land, not specific performance of option contracts. The court did not abuse its discretion in declining to award specific performance of the option. Further, the trial court's finding was clearly erroneous that the plaintiff offered no defense to the counterclaim for rental and use and occupancy payments. But, this did not constitute a per se abuse of discretion by the court in fashioning its award to the defendant. The court explained the basis for its award was the arguments in the defendant's posttrial brief. The plaintiff offered no argument as to how the trial court could not reasonably have reached its decision based on the defendant's arguments.