Kenford Co. v. County of Erie

Citation. 73 N.Y.2d 312, 537 N.E.2d 176, 540 N.Y.S.2d 1, 1989 N.Y. 257

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Citation73 N.Y.2d 312, 537 N.E.2d 176, 540 N.Y.S.2d 1, 1989 N.Y. 257

Brief Fact Summary. Plaintiff Kenford Co. entered into a contract with Defendant, County of Erie, to donate land for a new stadium. Plaintiff also owned land in the periphery of the proposed stadium site. When Defendant decided not to build the stadium, Plaintiff sued to recover for the loss of anticipated appreciation in the value of the land that Plaintiff owned in the periphery of the proposed stadium site.

Synopsis of Rule of Law. A nonbreaching party is only entitled to damages within the contemplation of the parties at the time of contracting.

Points of Law - Legal Principles in this Case for Law Students.

Damages which may be recovered by a party for breach of contract are restricted to those damages which were reasonably foreseen or contemplated by the parties during their negotiations or at the time the contract was executed.

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Facts. Defendant passed a bond resolution to finance the construction of a stadium near the City of Buffalo. Plaintiff agreed to donate the land for the proposed stadium in exchange for Defendant permitting the management company of Dome Stadium, Inc. (DSI) to lease or manage the facility. At about the time of contract negotiations, Plaintiff exercised options on several parcels of land. The parties formed a contract that provided that Plaintiff would donate 178 acres of land and Defendant would commence construction within 12 months and negotiate a 40-year lease with DSI. Further, Defendant would receive, inter alia, increased property taxes and other tax revenues generated by the peripheral lands owned by Plaintiff. Subsequently, Defendant opted not to build the stadium, and Plaintiff sued to recover its lost appreciation in the value of its peripheral lands.

Issue. Is Plaintiff entitled to recover damages for lost anticipated appreciation in the value of its lands peripheral to the stadium site?

Held. No. A party to a contract may only recover damages that were within the contemplation of the parties at the time of formation of the contract. In the present case, Plaintiff purchased the peripheral lands in order to benefit from the expected appreciation in the value of the lands. However, there is no evidence that the defendant agreed to assume the risk that the lands would not appreciate due to the stadium not being built. In fact, the evidence indicates that Plaintiff alone assumed this risk. Hence, Plaintiff is not entitled to damages resulting from its lost anticipated appreciation in the value of its land.

Discussion. Damages awarded for breach of contract must be contemplated by the parties at the time of formation.

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