Petrolink, Inc. v. Lantel Enterprises

Plaintiff Petrolink, Inc. sought the modification of a judgment entered in its favor on its cause of action for specific performance. Petrolink leased a parcel of undeveloped property from defendant Lantel Enterprises pursuant to a lease agreement that included a provision allowing the lessee to purchase the property. Petrolink notified Lantel of its desire to exercise the option, but the parties obtained appraisals that were far apart in their valuation of the property. The parties ultimately could not agree on the value. They sued one another, each asserting various causes of action (including specific performance), claiming that the other party had refused to complete the sale and purchase transaction, and essentially seeking a judicial determination as to the fair market value of the property. During the pendency of the litigation, Petrolink continued to pay Lantel monthly rent on the property. The case went to trial before a judge. At trial, Lantel did not dispute that Petrolink had exercised the purchase option. The main factual issue at trial concerned what the fair market value of the property was at the time Petrolink notified Lantel of its desire to purchase the property. The judge appointed an expert and obtained an independent appraisal of the property, which was between the values in the appraisals that the parties had obtained. The trial court ultimately entered judgment in favor of Petrolink on its specific performance cause of action and found the date on which Petrolink exercised the purchase option was August 25, 2011, the date of its letter notifying Lantel of its desire to exercise the option. Although Petrolink had requested it, the court did not grant Petrolink an offset for any of the rent that it had paid to Lantel during the pendency of the litigation. On appeal, Petrolink contended the trial court erred in failing to offset the rents it paid to Lantel through the pendency of this litigation against the purchase price. The Court of Appeal agreed with Petrolink that once it exercised the purchase option, the lease was terminated and a contract for purchase and sale came into existence. To the extent that the trial court denied Petrolink an offset for the rents that it paid during the pendency of the litigation, the court failed to account for the delayed performance of the contract for purchase and sale. Specifically, the court failed to place the parties in the positions in which they would have been at the time the sale and purchase contract should have been performed. Therefore, the Court of Appeal reversed judgment to permit the trial court to undertake an accounting between the parties that takes into account the delay in performance of the contract, and places both parties in the positions in which they would have been if the contract had been timely performed. View "Petrolink, Inc. v. Lantel Enterprises" on Justia Law