Van Wagner Advertising Corp. v. S & M Enterprises

Facts

By a lease dated December 16, 1981, Barbara Michaels gave Van Wagner, a company that erected and leased billboards, space on the eastern exterior wall of a building on East 36th Street in Manhattan. The term was three years plus option periods totaling seven additional years. The wall faced an exit ramp of the Midtown Tunnel, so vehicles entering Manhattan from the tunnel could see it. In early 1982 Van Wagner put up an illuminated sign and leased it to Asch Advertising, Inc. for three years starting March 1, 1982. By an agreement dated January 22, 1982, Michaels sold the building to S & M Enterprises. On August 19, 1982 S & M sent Van Wagner a letter purporting to cancel the lease as of October 18 under section 1.05. That section let the lessor, or its successor, end the lease on at least 60 days' written notice in the event, and only in the event, of a bona fide sale of the building to an unrelated third party. Van Wagner left the space under protest. One of S & M's partners testified that S & M bought the building to demolish existing buildings and build a mixed residential-commercial development, to begin when a lease of the building expired in 1987, if not sooner.

Issues

1. Did S & M breach the lease by cancelling it under section 1.05, when the parties disagreed about whether a buyer of the building, and not only a seller, could cancel?
2. Is a tenant entitled to specific performance of a lease of billboard space because the space is unique, when money damages can be measured with reasonable certainty?
3. Did the trial court err in the amount and time period of the damages it awarded for the breach?

Holding

The trial court did not abuse its discretion in denying Van Wagner specific performance. The billboard space's value could be fixed with reasonable certainty, and specific performance would harm S & M out of proportion to its benefit to Van Wagner. But damages should have run for the whole Asch contract and through the lease's expiration.