Specific Performance without Legal Damages; Impossibility Defense
From 'Ash Park, L.L.C. v. Alexander & Bishop, Ltd.' (2008AP1735)
We conclude that the circuit court did not erroneously exercise
its discretion when it ordered specific performance of this
contract. The contract provides that specific performance is an
available remedy, and neither the contract nor Wisconsin law
requires Ash Park to demonstrate that a legal remedy would be
inadequate as a precondition to relief. Further, although
impossibility is a defense to specific performance, Alexander &
Bishop failed to present evidence that performance would be
impossible in the proceedings before the circuit court.
¶5 Additionally, we decline to alter longstanding Wisconsin law
by imposing a requirement that a seller of real estate
demonstrate the inadequacy of legal damages as a prerequisite to
an order for specific performance. Although a judicial sale and
deficiency judgment may be a means of effectuating an award of
specific performance, we conclude that this procedure is not
mandatory. Rather, it depends on the facts and equities of the
case. Because a duty to mitigate is contrary to an award of
specific performance and would pose practical difficulties for
the non-breaching seller, we decline to require mitigation when
a seller asks for interest in addition to specific
performance.[footnote omitted]
...
¶35 When a buyer breaches a contract, several different remedies
may be available to the seller. 2 'Contract Law in Wisconsin'
§§13.1, 13.4 (3d ed. 2007). The seller may seek actual damages,
often measured as the difference between the contract price and
the value of the property.(13) Id., §13.6; see also 25 Samuel
Williston, 'A Treatise on the Law of Contracts', §66:80 at 8-9
(4th ed. 2002). The seller may select liquidated damages----
typically, retention of earnest money. 2 Contract Law in
Wisconsin, supra, §§13.36, 13.62. Finally, the seller may seek
specific performance of the contract. Id. §13.53.
¶36 Actual damages and liquidated damages are considered damages
at law--a legal remedy. By contrast, specific performance is an
equitable remedy that seeks to award performance of the contract
as specifically agreed. Id. §13.53. The purpose of specific
performance is to order the breaching party to do that which it
agreed to do in the contract. Id.
¶37 Here, the parties' contract provided specific performance as
one of several remedies Ash Park could seek in the event of
Alexander & Bishop's breach.[footnote omitted] When a contract
specifies remedies available for breach of contract, the
intention of the parties generally governs. 'Moritz v.
Broadfoot', 35 Wis. 2d 343, 347-48, 151 N.W.2d 142 (1967).
Additionally, under Wisconsin common law, specific performance
is a remedy available to a seller of real estate. See, e.g.,
'Heins v. Thompson & Flieth Lumber Co.', 165 Wis. 563, 571, 163
N.W. 173 (1917); see also 'Anderson', 155 Wis. 2d at 511-12
(reaffirming the rule of 'Heins').
¶38 The availability of specific performance as a remedy does
not mean that the court will automatically grant specific
performance upon a seller's request. Rather, as an equitable
remedy, an award of specific performance is discretionary.
'Anderson', 155 Wis. 2d at 513. The fairness of ordering
specific performance depends on the facts and equities of the
individual case before the circuit court and will vary from case
to case.[footnote omitted]
¶39 Before ordering specific performance, the court must be
satisfied that the claim is fair, just, reasonable, and not the
product of an unconscionable or oppressive bargain. 'Contract
Law in Wisconsin', supra, §13.61 (citing 'McKinnon v. Benedict',
38 Wis. 2d 607, 619, 157 N.W.2d 665 (1968)); see also
'Anderson', 155 Wis. 2d at 512. Further, impossibility of
performance is a defense to specific performance: "[W]here it
would be impossible for a party to perform the contract,
specific performance will not be granted."[footnote omitted]
'Anderson', 155 Wis. 2d at 512.
¶41 In some contexts, specific performance is unavailable where
legal damages are adequate to remedy the breach. See, e.g.,
'Restatement (Second) of Contracts' §359 (1981); 25 Williston,
supra, §67:1 at 184 ("[T]he general rule defining the instances
where specific performance will be granted may be stated as
follows: where damages are an inadequate remedy and the nature
of the contract is such that specific enforcement of it will not
be impossible or involve too great practical difficulties . . .
equity will grant a decree of specific performance."); 'Contract
Law in Wisconsin', supra, §13.53.; 'Welch v. Chippewa Sales
Co.', 252 Wis. 166, 168, 31 N.W.2d 170 (1948).
¶42 In the context of contracts for land, however, Wisconsin law
does not require a seller to demonstrate the inadequacy of a
remedy at law as a prerequisite to an award of specific
performance. Wisconsin statutes provide that "specific
performance of contract or covenant" is an available remedy for
"any person having an interest in real property . . . unless the
use of a remedy is denied in a specific situation." Wis. Stat.
§840.03(1)(f).
¶43 Further, Wisconsin courts have not restricted a seller's
remedy of specific performance to cases in which a remedy at law
is inadequate. In 'Heins', the seller of a parcel of land sought
specific performance, and this court determined that specific
performance was an available remedy. 165 Wis. at 571. Similarly,
in 'Taft v. Reddy', 191 Wis. 144, 150, 210 N.W. 364 (1926), this
court concluded that "the [land contract] vendor's right to
specific performance is established beyond question[.]" See also
'Yee v. Giuffre', 176 Wis. 2d 189, 194 n.3, 499 N.W.2d 926 (Ct.
App. 1993). None of these cases requires the seller to
demonstrate that a legal remedy would be inadequate.
