315 Conn. 596
Conn.2015Background
- Howard-Arnold leased commercial property from T.N.T. with a ten-year lease (ending April 2010) that included an option to purchase: $223,500 plus the then-unpaid mortgage balance (capped at $350,000); after April 14, 2010 the option price was $223,500.
- Lease also required T.N.T. to perform environmental remediation (removal of underground oil tank and restoration) by April 30, 2001; trial court found T.N.T. had not proven full compliance.
- In 2001 Howard-Arnold sought bank financing; bank required further environmental testing, and Howard-Arnold never obtained financing or tendered the purchase price.
- In June 2007 Howard-Arnold’s counsel sent a letter electing to exercise the option and requested the mortgage balance, but also conditioned closing on T.N.T.’s completion of remediation; no payment or escrow was ever produced.
- Trial court denied specific performance of the sale option because Howard-Arnold had not tendered payment and was not excused from tender despite T.N.T.’s incomplete remediation; Appellate Court affirmed; Connecticut Supreme Court granted certification on whether exercise was proper when remediation was incomplete.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Howard-Arnold properly exercised the option to purchase | Exercise did not require immediate tender because article 36 is silent on timing and mortgage balance was uncertain | Option required payment to be made when exercising; Howard-Arnold never tendered payment or escrow | Howard-Arnold failed to exercise option; payment/tender was required and not made |
| Whether Howard-Arnold was excused from tendering because T.N.T. had not completed required remediation | T.N.T.’s breach of article 9 excused tender and/or frustrated purpose, so exercise could be conditioned | Option and payment obligation are independent of article 9; plaintiff could have exercised before remediation deadline | Not excused; remediation obligation is separate and frustration doctrine does not apply |
| Whether Howard-Arnold’s June 2007 letters sufficed as unequivocal acceptance | Letters constituted effective exercise of the option | Letters were conditional or proposals to modify terms and not unconditional tender | Letters were conditional and did not satisfy strict, unconditional exercise requirement |
| Whether defendant repudiated the option, excusing tender | (Argued) T.N.T. repudiated, relieving plaintiff of tender obligation | No clear statement by T.N.T. indicating it would not perform the option | Repudiation not established; tender still required |
Key Cases Cited
- Pack 2000, Inc. v. Cushman, 311 Conn. 662 (Conn. 2014) (option is a continuing offer that requires strict compliance to form contract)
- Bayer v. Showmotion, Inc., 292 Conn. 381 (Conn. 2009) (exercise of option creates a new bilateral contract)
- Smith v. Hevro Realty Corp., 199 Conn. 330 (Conn. 1986) (when payment is a condition to option exercise, a tender is required)
- 19 Perry Street, LLC v. Unionville Water Co., 294 Conn. 611 (Conn. 2010) (tender requires actual production of money and placing it within payee's power)
- Hess v. Dumouchel Paper Co., 154 Conn. 343 (Conn. 1966) (frustration of purpose doctrine explained)
- O'Hara v. State, 218 Conn. 628 (Conn. 1991) (elements required to invoke frustration of purpose)