Van Wagner Advertising Corp. v. S&M Enterprises
501 N.Y.S.2d 628, 492 N.E.2d 756 (N.Y. 1986)
- Van Wagner had leased space on a building for a billboard in a prime location. The building was sold to S&M. S&M cancelled the lease.
- The lease had a clause saying that a new owner could cancel the lease if the building was sold. However, the Court interpreted that to mean that the lease could be canceled as part of the sale. S&M didn’t cancel Van Wagner’s lease until 8 months later.
- So in theory, S&M had the ability to terminate the lease if they decided to sell the building in the future.
- Van Wagner sued for breach of contract.
- Van Wagner wanted specific performance. They wanted the lease back.
- Van Wagner argued that the space was ‘unique’ and that he could not place a billboard elsewhere for similar value. That warranted specific performance as opposed to damages.
- That wouldn’t mean that Van Wagner would get something for nothing, if they received specific performance, they’d still have to pay rent.
- S&M argued that even if they lost on the breach of contract issue, damages would be adequate and specific performance was not warranted.
- In general, you can only get specific performance if you can to show that damages would be inadequate.
- The Trial Court found for Van Wagner.
- However, the Trial Court found that the only recovery would be for damages, not for specific performance.
- The Court basically said the damages were for the period between breach of contract at the Court’s decision, and that if S&M did not allow Van Wagner to put their billboard back, they would continually get assessed for more and more damages.
- But, that doesn’t mean that they must give the space back. It was S&M’s choice.
- The Appellate Court affirmed.
- The Appellate Court found that “physical uniqueness” was not an inherent value of the property, but it just meant it would be hard to calculate its value.
- If something cannot be properly valued, specific performance may be warranted as being the most equitable solution (that’s known as the Difficulty of Proof provision).
- However, in this case, despite the uniqueness of the location, it was pretty easy to value what a billboard at that location was worth.
- The Court found that the Trial Court erred in the way they assigned damages. Van Wagner was due all damages now, they don’t have to sue again for continuing damages if S&M continues to not honor the lease.