Real Estate Developers Plead and Prove They Are Ready

Generally, a party must show that it has substantially performed its obligations under a contract and/or is able to continue such performance ("tender performance") to be entitled to the equitable remedy of specific performance on the contract (that is, to force the opposing party to fulfill its obligations under the contract).

On October 20, 2008, the Supreme Court of Texas held that, even when an opposing party refuses to perform or repudiates the contract at issue, a real estate purchaser must plead and prove it is ready, willing and able to perform under the terms of a purchase contract to be entitled to specific performance.

DiGiuseppe v. Lawler, --- S.W.3d ---, 2008 WL 4605951 (Tex. 10/20/08), involved a dispute between Nick DiGiuseppe d/b/a Southbrook Development Company and Richard Lawler regarding a real estate purchase agreement for approximately 756 acres of Mr. Lawler’s land near Frisco, Texas. Lawler "cancelled" the contract based on DiGiuseppe’s alleged breach thereof, and thereafter entered into a new purchase with a subsequent potential buyer. In reaction to DiGiuseppe’s demand that Lawler honor the purchase agreement, Lawler filed suit in Collin County seeking a declaration that the contract was terminated. DiGiuseppe counterclaimed for, among other things, specific performance of the purchase agreement.

The trial court granted DiGiuseppe specific performance of the contract and attorneys’ fees. The Court of Appeals reversed the lower court’s order granting specific performance, holding that DiGiuseppe "failed to conclusively establish, or to request and obtain a finding of fact on, an essential element of his claim for specific performance – that he was ready, willing and able to perform under the terms of the purchase contract." DiGiuseppe appealed to the Supreme Court of Texas.

Agreeing with the Court of Appeals, the Supreme Court of Texas reasoned that granting a plaintiff specific performance on a contract without requiring him to prove he was ready, willing and able to perform his obligations at the time required by the contract, would "grant the plaintiff more than he is entitled to under the contract." In support of its decision, the Court noted that "a plaintiff who could not arrange funding in time for closing may be able to marshal all the funds he needs by the time he files… a lawsuit for specific performance."

If you would like a copy of this opinion, or more information on the topic, please contact the Business Litigators at Clouse Dunn LLP at [email protected].