## Facts

- A-S Development, Inc., a real-estate developer, agreed to sell substantial real-estate holdings to W.R. Grace Land Corporation under a June 30, 1974 main agreement.
- A condominium project, Channel Club Tower (CCT), was removed from the main agreement and governed by a June 30, 1974 supplemental agreement due to project-specific contingencies.
- The supplemental agreement set the CCT purchase price at book value as of the day before closing, with disputes later arising over valuation components (including capitalized interest).
- Closing for CCT was scheduled for March 1975; on March 13, 1975, Grace refused to take title, asserting title and valuation objections.
- After Grace’s refusal, A-S completed the project and sold individual condominium units over several years, receiving aggregate proceeds exceeding the contract price but incurring added selling-related costs and delayed receipt of funds.
- The case proceeded in phases: an earlier bench trial determined Grace’s liability for breach; a later trial addressed the proper measure of damages and the applicability of an attorney’s-fees clause.

## Issues

1. What measure of damages should apply when a buyer breaches a real-estate purchase obligation, the seller later sells the property in pieces for more than the contract price, and the seller receives proceeds over time rather than at the scheduled closing?
2. May the unpaid purchase price be treated as an “involuntary loan” to the breaching buyer, with damages measured by interest reflecting the lost use of money between the scheduled closing and actual receipts?
3. Does an attorney’s-fees provision in the main agreement apply to litigation arising from a supplemental agreement addressing a specific parcel within the overall transaction?

## Decision

- The court reaffirmed that Grace breached the supplemental agreement by refusing to close on March 13, 1975.
- The court awarded damages using an “involuntary loan” approach: the contract purchase price was treated as principal that should have been paid at closing, and subsequent unit-sale receipts were treated as repayments over time.
- The court calculated damages using an interest rate of 2% above prime (rejecting a higher spread proposed by A-S), to compensate for the loss of use of the purchase price without overcompensating.
- The court held that the attorney’s-fees clause in the main agreement applied to disputes under the supplemental agreement and allowed recovery of reasonable attorney’s fees.

## Legal Principles

- Contract damages may account for the time value of money when breach deprives the non-breaching party of timely receipt of a lump-sum payment contemplated by the contract.
- A court may treat an unpaid contract amount as a forced extension of credit to the breaching party and award interest-based damages measured over the period of delayed receipt, crediting later receipts as partial repayments.
- Later gross receipts exceeding the contract price do not necessarily eliminate damages where the contract promised a lump-sum closing payment and breach imposed delay, risk, and added costs on the non-breaching party.
- When multiple writings form a single integrated transaction, a fee-shifting provision in one agreement may be construed to apply to disputes arising under a related supplemental agreement addressing part of the same deal.

## Conclusion

The court compensated the seller for a buyer’s wrongful refusal to close by awarding interest-based damages reflecting the delayed use of the contract purchase price and by applying a fee-shifting clause from the principal agreement to a related supplemental agreement governing the disputed parcel.


A-S Dev., Inc. v. W.R. Grace Land Corp., 537 F. Supp. 549 (D.N.J. 1982)