Reed Foundation, Inc. v. FDR Four Freedoms Park LLC

Appellate Division of the Supreme Court of New York, First Department · 2013 · Contracts

ContractsSpecific PerformanceImpracticabilityspecific performancedonor recognition agreementexpress contract termsaesthetic concernsimpracticability

Facts

The Foundation agreed to give the LLC a $2.5 million grant to help fund construction of the FDR Four Freedoms Park, and in return the LLC agreed in interrelated agreements to engrave specific recognition text in a precise location on the granite Threshold near a bust of FDR. The agreements detailed the exact wording, placement, and design of the inscription, and the Recognition Agreement provided that the Foundation would be entitled to seek specific performance if the LLC breached. After the Park was essentially completed and after the Foundation's funds had helped the LLC secure public funding and complete the project, the LLC refused to engrave the recognition text in the agreed location and instead sought to relocate it to another area of the Park because its architects and consultants thought the original placement was not the best aesthetic. The Foundation refused to consent and sought to enforce the contract.

Issue

May a party avoid an express contractual obligation to place donor recognition text in a specifically agreed location on the ground that advisors later believe that performance would be aesthetically undesirable? If not, is specific performance an appropriate remedy, and does impracticability excuse the LLC's nonperformance?

Rule

Aesthetic considerations outside the contract do not trump clear contractual terms. Specific performance is appropriate where the contract expressly provides for that remedy and the promised performance concerns a unique, specially significant recognition interest for which legal remedies are inadequate. The defense of impossibility or impracticability is narrowly applied and excuses performance only when destruction of the subject matter or means of performance makes performance objectively impossible due to an unanticipated event that could not have been foreseen or guarded against in the contract.

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In Seattle, the Marlowe Civic Arts Center signed a donation agreement with Nina Patel under which Patel would give $1 million for a renovation. In exchange, the center promised to engrave specific recognition text on the interior stone arch at the entrance to the main hall, and the agreement stated that Patel could seek specific performance because damages would be inadequate. After taking the money and completing the renovation, the center refused to engrave the arch because its design committee now believes the inscription would disrupt the hall's visual harmony.

If Patel sues, what is the strongest argument for relief under the governing rule?

Explanation. The majority held that aesthetic considerations extraneous to the contract cannot trump clear contractual terms specifying the location of recognition text. It also upheld specific performance where the contract expressly provided for it and the promised inscription involved a unique, specially significant location for which legal remedies were inadequate. Thus, Patel has a strong argument for specific performance: later objections about aesthetics do not override the center’s precise contractual promise, and damages would not adequately substitute for recognition at the particular agreed-upon site.