Facts

Plaintiff leased an industrial building in Long Beach from defendants. The lease had a 10-year term with two 10-year options. The lease included an option giving plaintiff the right to purchase the building during a specified three-year period at a set price: $10,800,000. Plaintiff exercised the purchase option, but defendants refused to honor it claiming (1) plaintiff had no right to exercise the option because they had been given three or more notices of default within a 12-month period which nullified the purchase option, and (2) the purchase option was incomplete and therefore ineffective because it lacked material sale terms.

Plaintiff brought filed suit for breach of contract and sought specific performance of the purchase option.

Defendants commenced arbitration seeking declaratory relief as to the issue of whether plaintiffs had the right to exercise the purchase option.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that it complied with the lease, that defendants had failed to give proper notice of defaults under the express terms contained in the lease, and a that the purchase option and sales agreement were certain and definite to accomplish the sale. Plaintiff claimed that during the three years plaintiff leased the property, the value of the building increased to approximately $20 million and defendants did not want to sell for the agreed-upon sales price of $10,800,000.

DEFENDANT'S CONTENTIONS: Defendants claimed that plaintiffs had no right to exercise the purchase option under the express terms of the lease.

Damages

Approximately $10 million in equity.

Result

The case settled, with plaintiffs purchasing the subject property from defendants for $10,800,000.