Winternitz v. Summit Hills Joint Venture

Maryland Court of Special Appeals · 1987 · Contracts

Contractsstatute of fraudswriting requirementreal estatebroker commissionStatute of Fraudsoral lease renewalunsigned lease

Facts

The tenant operated a pharmacy under a written lease that expired January 31, 1983, after which the old lease would create only a month-to-month tenancy unless a new lease was made. The tenant testified that the landlord, through its agents, orally agreed to renew the lease on the terms of a proposed two-year written lease with an eight-year option and to allow assignment to a financially sound buyer, but the proposed lease was never signed by the landlord. Relying on those assurances, the tenant paid the higher February rent, contracted to sell his business to the Suh family contingent on obtaining the lease described in the contract, and presented the buyers to the landlord. The landlord then refused to renew or assign the lease, sent a 30-day eviction notice, and the tenant had to renegotiate the sale from $70,000 to $15,000 plus inventory.

Issue

Whether an oral agreement to renew a lease for more than one year and permit its assignment was enforceable for purposes of recovering money damages despite the Statute of Frauds based on the tenant's alleged part performance. Also, whether the landlord's intentional breach of that agreement could support liability for malicious interference with the tenant's separate sales contract with the buyers.

Rule

Under Maryland's Statute of Frauds, a leasehold interest for one year or more must be in a writing signed by the party creating it; absent such a writing, the lease has only the effect given by statute and cannot support an action for damages on the oral lease. The doctrine of part performance is an equitable doctrine that may justify specific enforcement of an oral land contract, but it does not apply in an action at law seeking only money damages. However, an oral contract unenforceable under the Statute of Frauds is not void, and intentional and improper conduct that prevents a party from performing a separate contract may constitute tortious interference, even when the interfering conduct is the defendant's own breach of its contract with the plaintiff.

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

In Columbus, Ohio, Dana Mercer operated a florist shop under a written lease that expired on June 30. In May, the landlord's manager orally agreed to a three-year renewal and emailed an unsigned draft lease, but the landlord never signed anything. After the landlord refused to proceed, Dana sued only for lost profits caused by the refusal to renew.

Under the rule applied by the majority, is Dana most likely to recover on the breach-of-lease claim?

Explanation. The majority held that a leasehold interest for one year or more must be in a writing signed by the party creating it. An oral agreement or unsigned draft may show that an agreement existed, but it cannot support a suit at law seeking money damages for breach of that lease. The contract is not void in all respects; it is simply unenforceable for that damages claim.