Ryan v. Ocean Twelve, Inc.

Delaware Court of Chancery · 1973 · Contracts

Contractsspecific performancebuilding contractsadequate remedy at lawequity jurisdictionconstruction defectscertainty of termsjudicial supervision

Facts

Plaintiffs owned eight condominium units developed and built by defendant. They alleged that when title was transferred, construction was incomplete, and defendant expressly represented that lists of deficiencies would be prepared for each unit and completed after settlement; plaintiffs also received an agreement of warranty covering defective material and workmanship. Plaintiffs claimed defendant failed to complete listed work and failed to correct numerous defects, including problems with air conditioning, the roof, appliances, the sewage system, the driveway, and the seawall. The attached deficiency lists for the eight units described many varying unfinished items and defects.

Issue

Whether the Court of Chancery should exercise equity jurisdiction to order specific performance of the developer's alleged obligations to complete and repair numerous construction items in eight condominium units, or whether plaintiffs had an adequate remedy at law in damages.

Rule

As a general rule, equity will not order specific performance of a building contract when carrying out and enforcing such an order would be impractical, unless special circumstances exist or the public interest is directly involved. Even where specific performance might otherwise be available, the obligation must be fixed and certain and the construction plan must be so precisely definite as to make compliance subject to effective judicial supervision. When compensatory damages covering the cost of correction will afford the same ultimate relief and no special circumstances make money damages inadequate, equity generally will not assume jurisdiction.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nina Patel bought a newly built townhouse in Columbus, Ohio from Lakeview Row Homes, LLC. After closing, she discovered dozens of unfinished and defective items throughout the home, including uneven flooring, misaligned cabinets, intermittent plumbing leaks, and trim work she says is visibly poor; the sale documents contain only a general promise to complete remaining work and repair defects.

If Nina sues in equity seeking an order requiring Lakeview Row Homes to finish and repair the townhouse, what is the strongest argument that the court should decline specific performance?

Explanation. The majority rule is that equity generally will not specifically enforce building or repair obligations when enforcement would be impractical. Numerous unfinished or defective items requiring a series of corrective acts make supervision difficult, especially where satisfactory completion may depend on judgment or taste. If money damages measured by the cost of correction can provide the same ultimate relief, equity ordinarily should not assume jurisdiction. The other choices overstate the rule or misstate equity doctrine. (Derived from Ryan v. Ocean Twelve, Inc. (1973).)