SMDV 1, LLC v. 459-461 Pacific Street, LLC

Syllabus

The plaintiff appealed from the trial court's judgment for the defendants on its complaint alleging, inter alia, breach of contract related to the defendant P Co.'s purported termination of a contract for the sale and purchase of certain real property. The contract established a minimum purchase price for the property, which was subject to an upward adjustment based on a formula predicated, in part, on figures to be derived from the anticipated purchase and development of adjoining parcels of land that, at the time the contract was executed, were subject to a separate ground lease and purchase agreement between two other entities. The ground lease and purchase agree- ment was subsequently terminated, and P Co. then gave the plaintiff notice of termination of the contract, claiming that the purchase price of the property referenced in the contract was contingent on the consummation of the ground lease. On appeal, the plaintiff claimed that the court improperly considered parol evidence to ascertain the parties' intentions in making its determination that the contract was unenforceable. Held: The trial court improperly used parol evidence to vary the terms of the contract when it determined that the contract was rendered unenforceable by the termination of the ground lease and purchase agreement, as the contract unambiguously established a minimum purchase price for the prop- erty, the plain language of the contract established that the closing on the property under the contract was independent of a closing on the ground lease and purchase, the contract included a merger clause, and the plaintiff and P Co. were both sophisticated commercial parties that had been repre- sented by counsel. Argued February 20—officially released July 8, 2025