Walmart Real Estate Business Trust v. Quarterfield Partners LLC
24-1355
4th Cir.Jun 4, 2025Background
- In 2005, Quarterfield entered into leases with Walmart and Sam’s, granting them rights to build/operate on Maryland real estate and providing a purchase option ("the Purchase Option").
- The Purchase Option allowed Walmart and Sam’s to buy the leased properties during a specific option period if certain notice requirements were met.
- The Leases required Quarterfield to send two 30-day notices before the option term commenced; Quarterfield never sent these notices.
- Walmart and Sam’s attempted to unilaterally exercise the Purchase Option in 2018-2019, despite not having received the required notices.
- The district court held for Walmart and Sam’s, interpreting the Purchase Option as unconditional and requiring Quarterfield to provide notice, and awarded damages and attorneys' fees to the Trusts.
- Quarterfield appealed, arguing the Purchase Option was conditional and Quarterfield was not obligated to provide notice under the Leases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Purchase Option unconditional or conditioned on Quarterfield sending notice? | The Purchase Option is unambiguous and unconditional; Quarterfield must provide notice, thereby triggering the option. | The Purchase Option is conditional and only arises upon Quarterfield sending two notices; no obligation exists to send the notices. | The Option is conditional on Quarterfield's notice; no obligation to send notice exists. |
| Did Quarterfield breach the Leases by not sending notices? | Quarterfield’s failure to send notices breached its contractual duty, entitling Trusts to enforce the Option. | There is no contractual duty to send notices; absence of notice means the Option did not arise, so no breach. | No breach; no duty to send notice under the contract. |
| Can the Trusts exercise the Purchase Option without the required notices? | Trusts can waive the required notice and exercise the Option unilaterally. | The Option cannot be exercised unless Quarterfield sends valid notices, which never occurred. | The Option cannot be exercised without Quarterfield’s notices. |
| Is the Option illusory if it gives Quarterfield complete discretion? | Giving Quarterfield unlimited notice discretion makes the Option unenforceable/illusory. | Discretion is constrained by good faith; not illusory even if conditional. | Not illusory; subject to duty of good faith/fair dealing. |
Key Cases Cited
- Straley v. Osborne, 278 A.2d 64 (Md. 1971) (distinguishes between unconditional options and conditional/first refusal rights; purchase options can be expressly conditioned)
- Lithko Contracting, LLC v. XL Ins. Am., Inc., 318 A.3d 1221 (Md. 2024) (contract construction based on plain language unless ambiguity exists)
- Connors v. Gov’t Emps. Ins., 113 A.3d 595 (Md. 2015) (contracts should be read to give effect to all clauses)
- Cheek v. United Healthcare of the Mid-Atl., Inc., 835 A.2d 656 (Md. 2003) (illusory promise doctrine under Maryland law)
- Questar Builders, Inc. v. CB Flooring, LLC, 978 A.2d 651 (Md. 2009) (discretion under contracts limited by good faith)