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Offerman v. Granada LLC

Court of Appeals of Arizona, First Division

November 14, 2017

DOUGLAS OFFERMAN, Plaintiff/Appellee,
v.
GRANADA LLC, Defendant/Appellant.

         Appeal from the Superior Court in Maricopa County No. CV2014-015038 The Honorable Karen A. Mullins, Judge The Honorable Katherine M. Cooper, Judge REVERSED AND REMANDED.

          Law Office of Lawrence K. Lynde, PLLC, Lawrence K. Lynde Counsel for Plaintiff/Appellee

          Manning & Kass, Ellrod, Ramirez, Trester, LLP, Richard V. Mack Counsel for Defendant/Appellant

          Judge Michael J. Brown delivered the opinion of the Court, in which Presiding Judge Diane M. Johnsen and Judge Jennifer B. Campbell joined.

          OPINION

          Michael J. Brown, Judge

         ¶1 Granada, LLC ("Granada") appeals the superior court's judgment in favor of Douglas Offerman ordering specific performance of an alleged option to purchase a home owned by Granada. Because the option was not sufficiently definite to support specific performance, we reverse and remand for further proceedings consistent with this decision.

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 Offerman leased a home from Granada from August 2012 through August 2014. Granada's principal Gilbert Houseaux, a licensed real estate agent, acted as the agent for both Offerman and Granada in the transaction. Before the lease began, Offerman expressed an interest in purchasing the property, but Granada declined to sell at that time. The parties, however, added the following language to their lease agreement, which Houseaux drafted:

At the completion of the 24 month lease, the Tenant has the option to purchase [the] property . . . for a sales price to be determined at that time by an independent appraiser acceptable to both Tenant and Landlord. (Terms and Conditions to be stipulated by both parties at such time).
If the Tenant chooses to exercise his right to purchase this property at the end of the 2 year lease agreement, he shall be credited $200.00 of each $1900.00 of monthly rent paid towards purchase.
The acceptable condition of the property when Tenant takes occupancy will be considered the condition Tenant agrees to accept at time of closing. All inspections and contingencies to be performed and satisfied prior to initial move-in. Property to be sold AS-IS.

         ¶3 As the end of the lease term neared, believing this language gave him an option to purchase the property, Offerman told Houseaux he intended to exercise the option and asked Granada to name an independent appraiser. Receiving no response from Houseaux, Offerman retained an appraiser who valued the property at $240, 000 and shared the appraisal with Granada. Granada did not name an appraiser or obtain an additional appraisal. Instead, Granada sent Offerman a draft purchase contract with a proposed $350, 000 sale price, which Offerman rejected. Granada later notified Offerman it would not renew the lease, but Offerman remained in the house, paying the monthly rent of $1, 900 for several months after the original lease term ended.

         ¶4 Offerman sued Granada for breach of contract, alleging Granada had failed to agree on an independent appraiser, refused to respond to Offerman's efforts to exercise the option by proposing a "grossly inflated" cash purchase price, and served him with an eviction notice rather than engaging in the purchase process. Offerman asked the court to (1) order Granada to "specifically perform pursuant to the terms of the purchase option"; (2) set the purchase price at $240, 000; (3) compel Granada to open escrow at a title company of Offerman's choosing and to "cooperate in the purchase process, the establishment and completion of escrow and the closing"; and (4) order all of the $1, 900 payments Offerman made after September 1, 2014, be applied toward the purchase price.

         ¶5 After a bench trial, the superior court found that Offerman was entitled to specific performance of the option. The court then held an evidentiary hearing "on all issues" relating to the form of judgment. Following that hearing, the court entered judgment ordering Granada to sell the property to Offerman for $240, 000. The court also, inter alia, named a title agency to hold escrow, determined the date for close of escrow, divided the various transaction fees between the parties, and ordered Granada to arrange for a property inspection. The court further directed the title agency to use the judgment "as the ...


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