Savre v. Santoyo, 2015 ND 170

Background

Savre leased commercial property from Santoyo and, in July 2009, they executed a Lease to Purchase Option Agreement giving Savre an option to buy if he paid at least $180,000 toward purchase or exercised the option during a specified April 2013 window. The option credited $4,000 toward purchase for each monthly payment "timely made."
The option agreement included an exclusivity/nonassignment clause and a clause requiring written notice for waiver/modification; the lease allowed Santoyo to terminate on default by written notice.
Savre frequently paid rent late; Santoyo accepted the late payments without giving written notice of termination. Savre made monthly payments that the court found met the $4,000-per-month credit and had paid at least $180,000 by February 27, 2013.
Savre gave handwritten written notices in Dec. 2012 and Feb. 2013 attempting to exercise the option; Santoyo did not respond. After Santoyo refused to convey, Savre stopped payments, was evicted, and sued for breach and unjust enrichment; Santoyo counterclaimed for property damage.
The district court found Santoyo breached the option by failing to convey and awarded Savre $31,996 for overpayments, denied speculative damages, and dismissed Santoyo’s counterclaim for property damage. Santoyo appealed.

Issues

Issue	Plaintiff's Argument (Savre)	Defendant's Argument (Santoyo)	Held
Whether Santoyo breached by refusing to sell after Savre’s exercise of the option	Savre argued he personally exercised the option (Dec. 2012 & Feb. 2013 notices) after paying ≥ $180,000 and financing was not a condition	Santoyo argued no duty to sell to JDDS or any third party; Savre’s attempt relied on a nonparty (JDDS) and Savre lacked financing, so Santoyo did not breach	Court: Savre personally exercised the option; no assignment occurred; Santoyo’s failure to respond constituted breach — finding not clearly erroneous
Whether Santoyo waived strict compliance with timing and other option terms by accepting late payments	Savre argued Santoyo’s acceptance of late payments and failure to give written termination notice waived strict timeliness requirements	Santoyo argued written-waiver clause required any waiver in writing and he never gave written waiver; Savre failed to strictly comply	Court: Waiver may be inferred from conduct; Santoyo’s long acceptance of late payments and failure to enforce remedies amounted to waiver despite the written-waiver clause — finding not clearly erroneous
Whether obtaining financing was a condition precedent to Savre’s exercise	Savre: financing was not a condition (agreement contains a financing-disclaimer)	Santoyo: Savre testified he lacked funds and relied on JDDS financing, so performance was contingent	Court: Financing disclaimer controls; obtaining financing was not a condition to exercise — court’s finding upheld
Whether the district court made adequate findings dismissing Santoyo’s counterclaim for property damage	Savre: Santoyo failed to prove damages with adequate corroboration; dismissal supported by lack of proof	Santoyo: Presented testimony and photos; court’s two-sentence credibility conclusion was conclusory and insufficient	Court: District court’s findings were inadequate and conclusory; dismissal reversed and remanded for specific findings

Key Cases Cited

Brash v. Gulleson, 835 N.W.2d 798 (N.D. 2013) (bench-trial findings reviewed under clearly erroneous standard)
Sanders v. Gravel Prods., Inc., 755 N.W.2d 826 (N.D. 2008) (breach occurs when contractual duty is not performed; waiver principles)
Prairieview Nursing Home v. N.D. Dep’t of Human Servs., 598 N.W.2d 116 (N.D. 1999) (strict compliance rule for option to purchase)
Pfeifle v. Tanabe, 620 N.W.2d 167 (N.D. 2000) (waiver may be inferred from acts or conduct)
Abelmann v. SmartLease USA, L.L.C., 856 N.W.2d 747 (N.D. 2014) (contract interpretation principles applied to leases)
Sterling Dev. Grp. Three, LLC v. Carlson, 859 N.W.2d 414 (N.D. 2015) (contract/lease interpretation)