Centex Homes Corp. v. Boag

Brief Fact Summary. A couple purchased a condominium unit from a real estate developer.  Shortly after paying the deposit the husband, was transferred out of state by his employer.  The buyers cancelled their deposit checks, and the developer sued for specific performance.

Synopsis of Rule of Law. "[S]pecific performance relief should no longer be automatically available to a vendor of real estate, but should be confined to those special instances where a vendor will otherwise suffer an economic injury for which his damage remedy at law will not be adequate, or where other equitable considerations require that the relief be granted."

Facts. The Plaintiff, Centex Homes Corp (the "Plaintiff"), is a real estate developer.  The Plaintiff is currently developing six 31-story buildings with more than 3600 apartment units.  On September 13, 1972, the Defendants, Mr. & Mrs. Eugene Boag (the "Defendants"), executed a contract to purchase one of the 3600 apartment units in the Plaintiff's complex.  The contract price was $73,700 and the Defendants initially gave the Plaintiffs $525 as a portion of their deposit.  At or shortly after signing the contract, the Defendants gave the Plaintiff another $6870, which constituted the rest of their 10% deposit.  On September 27, 1972, Mr. Boag learned his employer was transferring him to another state and informed the Plaintiff he was no longer interested in the unit.  Simultaneously, he stopped payment on the $6870 check.  The Plaintiff sought specific performance of the contract or in the alternative $6870 in damages.

Issue. Whether specific performance is an appropriate remedy for "the enforcement of a contract for the sale of a condominium apartment?"

Held. Depends who is bringing the action.  The court first observes "[t]he principle underlying the specific performance remedy is equity's jurisdiction to grant relief where the damage remedy at law is inadequate."  Due to the uniqueness of parcels of real estate, the thought is that money damages do not provide adequate compensation to the purchaser of real estate.  The court recognizes however, that this rationale does not apply to the seller of real estate, because their damages are usually calculable.  Instead this remedy, when allowed in this context, has been "an outgrowth of the equitable concept of mutuality, I.e., that equity would not specifically enforce an agreement unless the remedy was available to both parties."  The court then observed that the New Jersey Supreme Court in [Fleischer v. James Drug Stores] held "mutuality of remedy is not an appropriate basis for granting or denying specific performance." 
•    As such, the court concluded "[t]he disappearance of the mutuality of remedy doctrine from our law dictates the conclusion that specific performance relief should no longer be automatically available to a vendor of real estate, but should be confined to those special instances where a vendor will otherwise suffer an economic injury for which his damage remedy at law will not be adequate, or where other equitable considerations require that the relief be granted."  The court observed that the condominium unit involved here was not unique, but like hundreds of virtually identical units.  The pricing of the units is based solely on the type of floor plan.  As such, a damage remedy is sufficient.

Discussion. This case offers an informative discussion about how the doctrine of specific performance developed and how specific performance is a sparingly used remedy.