On March 20, 2020, the Wyoming Supreme Court issued a decision in the case of Jerry Davis v. Harmony Development, LLC. Link: https://documents.courts.state.wy.us/Opinions/Davis S-19-0119.pdf
I would ask that each Broker and Licensee review this decision as it has good guidance on the importance of the Statute of Frauds, Substantial Performance and Specific Performance. This is the first case I am aware that a Buyer has been ordered to comply with the specific performance remedy. This Order sets forth the fact pattern and reason why specific performance was order and upheld by the Wyoming Supreme Court. This case has many lessons for each member to consider in its transactions.
In this case, the Court held that the underlying contract was not enforceable under the Statute of Frauds for failure to sufficiently describe the property in question. In a contract for the sale of land, it “must indicate with reasonable certainty the nature of the transaction and must provide a basis for identifying the land. . . a valid contract to convey land must expressly contain a description of the land, certain in itself or capable of being rendered certain by reference to an extrinsic source which the writing itself designates.” In this case, the original property was described as “Lot 1, Block 2, Harmony Hills Addition No.2” and then plat was ultimately filed with the City of Casper describing the lot as “Lot 1, Block 1”. There was an addendum that changed the legal description in the contract to “Lot 1, Block 1” to match the plat. However, the contract and the addendum did not indicate “with reasonable certainty” the “basis for identifying the land”. The addendum was signed by both parties and identified the property’s location as “Lot 1, Block 1, Harmony Hills Addition No. 2, Phase 1.” The addendum failed to incorporate or attach the plat depicting the land identified as “Lot 1, Block 1”. While both the original contract and the addendum reference the plat, at the time the addendum was executed the plat had not been filed. There were no additional documents signed by Davis that identified the property with certainty and therefore the contract violated the statute of frauds.
However, there are equitable exceptions to the statute of frauds, including the doctrine of full or partial performance and promissory estoppel. A contract violating the statute of frauds “that has been partially or wholly performed by one party, to its detriment, may be enforced by that party.” In the case at hand, there was no dispute as to the terms of the agreement. The Court found that Harmony’s partial performance of the contract and the performance was substantial. Harmony provided a title commitment; received approvals from the City of Casper, and invested in “water, sanitary, storm, sewer, gas lines, electrical installation, dirt movement and grading along with curb, gutter and sidewalks.” The Court also found that Davis’s conduct, until the time he announced he would not go through with the purchase, amounted to a representation that he intended to purchase the lot as required by the agreement. Harmony, in reliance on Mr. Davis’s conduct and the contract, proceeded to perform its obligations under the contract and altered its position to its detriment. The Court found that the contract was enforceable under the doctrine of partial performance.
Upon finding that a valid contract existed and Davis breached the contract, the Wyoming Supreme Court addressed the finding of specific performance. The remedy for specific performance is available to compel the performance of a contract on the precise terms agreed upon or such a substantial performance as will do justice between the parties under the circumstances. “It has been recognized that where land, or any estate or interest in land, is the subject matter of the agreement, the jurisdiction to enforce specific performance is undisputed, and does not depend on the inadequacy of the legal remedy in the particular case; and further that the remedy is as equally available when the party seeking specific performance is the seller as when the party is the buyer.” The Court found that the contract expressly has specific performance as a remedy. The award of specific performance is on a case by case basis and the special equities of the situation demand such relief. The court considers the following factors in awarding such relief: adequacy of consideration; whether the specific performance remedy would impose a hardship on one party that outweighs the benefits to the other; whether the remedy would place an undue hardship on a third party; whether specific performance is impossible; whether either party has unclean hands or has engaged in bad faith; whether the contract contains liquidated damages or specific performance clauses; and whether the contract provides that time is of the essence. The Court found that there was enough evidence to support specific performance as a remedy.
I would suggest reading the entire Opinion.I have heard many individuals state that specific performance is never ordered or enforced.I would recommend after review, discussing any additional questions with your counsel.
-Mike Lansing, Wyoming REALTOR Legal Counsel