Van Wagner Advertising Corp. v. S & M Enterprises

New York Court of Appeals · 1986 · Contracts

Contractsspecific performanceadequacy of damagesunique propertycommercial leasebillboard leaseequitable reliefdisproportionate hardship

Facts

Barbara Michaels leased exterior wall space on a Manhattan building to Van Wagner Advertising for billboard use for an initial three-year term plus options totaling seven more years. After Michaels sold the building to S & M, S & M sent Van Wagner notice purporting to cancel the lease under a clause allowing termination upon a bona fide sale of the building. Van Wagner vacated under protest and sued, arguing that only the seller, not the buyer, had the right to cancel. At trial, S & M also presented evidence that it bought the building as part of a larger plan to demolish existing structures and construct a mixed residential-commercial development.

Issue

Whether Van Wagner was entitled to specific performance of the billboard-space lease after S & M wrongfully canceled it, and whether the trial court properly calculated damages for the breach. Also, whether the lease provision permitted the purchaser to cancel the lease.

Rule

Specific performance is not awarded as a matter of course for breach of a lease. The relevant inquiry is not mere physical uniqueness of the property but whether the value of the promised performance can be determined with reasonable certainty without an unacceptably high risk of undercompensation; if damages are adequate and specific performance would work disproportionate hardship, equitable relief should be denied. When damages are the proper remedy, they should be awarded for the full period that can be established with reasonable certainty rather than forcing multiple suits.

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

Lena Ortiz leased rooftop space in Chicago to BrightLine Displays, a small advertising company, for a digital sign facing a busy expressway. Two years later, Ortiz repudiated the lease to free the roof for another project, but evidence at trial showed a robust Chicago market for comparable rooftop advertising locations and reliable pricing data from numerous similar leases.

If BrightLine sues for specific performance, how should the court most likely rule?

Explanation. Specific performance is not automatic for leases. The key inquiry is whether money damages can be measured with reasonable certainty without a substantial risk of undercompensation. Physical uniqueness alone is not enough. Where comparable commercial uses and market information make valuation reliable, damages are adequate and specific performance should be denied.