Offerman v. Granada
418 P.3d 921
| Ariz. Ct. App. | 2017Background
- Offerman leased a Granada-owned house for 24 months; lease included a clause giving Offerman an "option to purchase" at lease end, with price to be determined "by an independent appraiser acceptable to both Tenant and Landlord" and other "Terms and Conditions to be stipulated by both parties at such time." Rent credits toward purchase were specified and the property was to be sold "AS-IS."
- As lease end approached, Offerman notified Granada he would exercise the option and procured an appraiser who valued the property at $240,000; Granada did not agree on an appraiser and later proposed a $350,000 price.
- Granada declined to renew the lease; Offerman remained and continued paying $1,900/month. He sued for breach and sought specific performance, asking the court to set the price at $240,000 and compel completion of the sale.
- After a bench trial the superior court ordered specific performance and fixed the sale at $240,000, then conducted a hearing to supply many transactional details (escrow, inspections, allocation of fees) and entered judgment. It also awarded attorney’s fees to Offerman.
- Granada moved for a new trial; the motion was denied and Granada appealed. The Court of Appeals reversed, holding the option lacked sufficient definiteness to support specific performance and vacated the fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the lease option was sufficiently definite to order specific performance | Offerman: his timely exercise created an enforceable option; substantial forbearance supports enforcement under Restatement §87(2) and the parties agreed on an appraisal mechanism | Granada: option left essential terms open (price selection process, closing/payment terms, escrow, title/condition), so specific performance is improper | Court: Option too indefinite for specific performance; numerous essential terms were left for future negotiation |
| Whether the independent-appraiser mechanism made price ascertainable | Offerman: independent appraiser (he procured one) provided a determinable price | Granada: mechanism required an appraiser acceptable to both parties and provided no tie-breaker or fallback for impasse | Held: Mechanism failed because parties required mutual acceptance and no alternative for impasse was provided |
| Whether court could supply missing essential terms and order performance | Offerman: court can enforce by implying reasonable terms or by using appraisal Offerman obtained | Granada: court cannot act as contract maker to fill in many material terms | Held: Court cannot supply numerous essential terms; specific performance unavailable when material terms are left for future negotiation |
| Whether Offerman could obtain damages or other remedies instead of specific performance | Offerman: sought specific performance primarily; also argued equitable estoppel/fraud/fiduciary issues | Granada: disputed enforceability and emphasized procedural/contract deficiencies | Held: Court did not decide damages or other remedies; reversal only limits specific performance but leaves other remedies open on remand |
Key Cases Cited
- Daley v. Earven, 131 Ariz. 182 (App. 1981) (specific performance requires a written agreement with sufficiently definite terms)
- Christmas v. Turkin, 148 Ariz. 602 (App. 1986) (agreement to negotiate remaining terms precludes specific performance)
- Holaway v. Realty Assoc., 90 Ariz. 289 (1961) (mechanism to identify property can suffice when parties provided an agreed method)
- Savoca Masonry Co. v. Homes & Son Const. Co., 112 Ariz. 392 (1975) (court cannot act as contract maker to supply numerous essential elements)
- The Power P.E.O., Inc. v. Employees Ins. of Wausau, 201 Ariz. 559 (App. 2002) (specific performance unavailable when contract leaves material terms for future negotiation)