Winternitz v. Summit Hills Joint Venture – Case Brief
Winternitz v. Summit Hills Joint Venture, 73 Md. App. 16, 532 A.2d 1089 (1987), cert. denied, 312 Md. 127, 538 A.2d 778 (1988).
Facts: Winternitz (P) operated a pharmacy and convenience store under a lease from Summit Hills Joint Venture (D). Before the lease expired, Winternitz discussed a renewal of the lease with a partner in Summit Hills Joint Venture. P informed him that he was considering selling his business and asked if he would be permitted to assign his lease to the buyer. P claimed that D orally agreed to renew the lease and permit him to assign it provided the assignee was financially sound.
P received an offer of $ 70,000 for his business with the purchaser to assume the lease on the premises for two years at $ 1,700 per month plus an option for 8 yrs at rent plus CPI not to exceed 12% per yr. The contract was contingent on the buyer procuring the lease. The new buyer was told by Ms. Harris, that she ‘foresaw no foreseeable problem’ with a transfer of the lease and P was assured that “as far as I know everything is okay.”
D later refused to allow P to assign his lease or to renew it. P was forced to renegotiate his sales contract in light of the terms of the new buyer’s lease and received only $15,000 rather than the original $70,000.
P sued D alleging that D breached both oral agreements causing his business to suffer a significant decrease in value. The jury awarded P $45,000. The court granted judgment N.O.V. in favor of D and P appealed.
Issues: 1) Is a contract within the Statute of Frauds void or voidable if that contract affects third parties? 2) May an oral contract that would be unenforceable under the Statute of Frauds be enforced with respect to independent duties owed to third parties? 3) Is the doctrine of part performance applicable in a suit for damages?
Holding and Rule: 1) No. A contract within the Statute of Frauds is neither void nor voidable if that contract affects third parties and it can affect the legal relationships between the contracting parties and third parties. 2) Yes. An oral contract unenforceable under the Statute of Frauds may be enforced with respect to independent duties owed to third parties. 3) No. The doctrine of part performance is not applicable in a suit for damages.
The contract falls within the Statute of Frauds because the contract was never signed. Nevertheless P sought to have the contract enforced under the doctrine of part performance.
Restatement (2d) of Contracts § 129: “A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.”
The court held that “part performance” is an equitable doctrine available only where the principal relief sought is specific performance of the oral agreement and not where money damages are sought. The court held that the trial court did not err in granting judgment notwithstanding the verdict on this count.
P contended that by reneging on the agreement to renew and permit assignment of the lease, D deliberately and wrongfully precluded P from satisfying the contingency in his first contract with the prospective buyer. The broker for the buyer testified that he asked D for a lease and D replied “as long as Mr. Winternitz walks out with nothing.”
Restatement (2d) Section 766A: “One who intentionally and improperly interferes with the performance of a contract … between another and a third person, by preventing the other from performing the contract or causing his performance to be more expensive or burdensome, is subject to liability to the other for the pecuniary loss resulting to him.”
Restatement (2d) Section 767: “In determining whether an actor’s conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors: (a) the nature of the actor’s conduct, (b) the actor’s motive, (c) the interests of the other with which the actor’s conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor’s conduct to the interference and (g) the relations between the parties.”
The jury found that the parties agreed to renew the lease and permit its assignment. The court held that an oral contract may be unenforceable as between the parties, but that it may have legal effects upon the relations between the contracting parties and third parties.
The court held that P was entitled to a remedy for D’s deliberate, independent, and successful interference with P’s contract with the buyer.
Disposition: Judgment reversed in favor of P with respect to D’s tortious interference with P’s contract with the buyer.
Notes: An oral contract under the Statute of Frauds between two parties may result in independent duties, which may be breached in tort when third parties are involved.
In this case P had detrimental reliance on D’s verbal promise when he sought to sell his company. D did not have to perform but D owed a duty not to maliciously interfere with the sale of P’s business.
See also: Goodman v. Dicker;and Hoffman v. Red Owl Stores, Inc.