Downtown Lawyer

Elder Construction Co. v. Ivey Lane, LLC, No. CA09-63.

In 2003, Elder Construction Company (“Elder”) and Ivey Lane, LLC (“Ivey Lane”), entered into a contract for Elder to purchase sixteen unimproved residential lots in the Enclave Subdivision of Springdale from Ivey Lane for a total purchase price of $1,282,400. Each of the lots available in the subdivision were listed in the contract with its individual price, ranging from $77,500 to $84,900 depending on the lot’s size, location, and topography. Elder determined which of the sixteen lots its would purchase from this list.

Under the contract, Elder was to purchase the sixteen lots in four separate closings that were scheduled to occur every six months until all of the sixteen  lots had been purchased. Elder purchased twelve lots during the first three closings, but did not appear for the fourth closing for Lots 2 ($77,500), 9 ($84,900), 12 ($84,900), and 46 ($77,500). Ivey Lane was able to sell Lot 46 to a third-party for $77,500. Ivey Lane then filed suit against Elder requesting specific performance for Elder’s breach of contract related to Lots 2, 9, and 12.

At trial, the primary dispute between the parties was whether the contract was severable into sixteen different contracts. Ivey Lane contended that the lots (1) were not physically or topographically identical (2) were independently priced based on their desirability. Elder admitted that each of the lots were different and individually priced, but argued that the contract was not severable based on the total purchase price for the lots. The trial court found that (1) Elder breached the contract with Ivey Lane, (2) the contract was severable, (3) Ivey Lane did not have an adequate remedy at law, and (4) Ivey Lane was entitled to specific performance. The trial court ordered Elder to purchase Lots 2, 9, and 12 at the prices listed in the contract within sixty days. The trial court also dismissed Elder’s counterclaim.

On appeal, Elder argued that the trial court incorrectly found that the contract was severable. The Arkansas Court of Appeals quoted previous precedent as follows:

Where the price to be paid is clearly and distinctly apportioned to different parts of what is to be performed, although the whole is in its nature single and entire, the contract is severable.

The court noted that, even though the contract contained a total price for the sixteen lots, both parties agreed that each of the lots was different and individually priced. Accordingly, the court held that there was sufficient evidence to support the trial court’s finding that the contract was severable.