## Facts

- Edge Group WAICCS LLC held a 50% membership interest in WAICCS Las Vegas 2 LLC (WAICCS 2).
- WAICCS 2 wholly owned WAICCS Las Vegas 3 LLC (WAICCS 3), which held a 20.4% undivided tenant-in-common interest in undeveloped Las Vegas real estate subject to transfer restrictions.
- Edge and The Sapir Group LLC entered an amended option agreement under which Sapir could buy Edge’s 50% interest in WAICCS 2 for $20 million.
- The amended agreement required Sapir to place $1 million in escrow to be applied to the purchase price at closing.
- Sapir exercised the option, thereby obligating itself to close on the purchase.
- As the closing approached, market conditions deteriorated; Sapir chose not to close and later asserted the deal was no longer attractive.
- In litigation, Sapir initially admitted it could have closed but decided not to; it later argued it lacked the financial capacity to perform and that Edge’s recovery was limited to the escrow.

## Issues

1. Whether Edge was entitled to specific performance compelling Sapir to pay $20 million in exchange for Edge’s 50% interest in WAICCS 2 after Sapir exercised the option.
2. Whether the contract limited Edge’s remedy to the $1 million escrow (or required denial of relief for failure to prove or mitigate damages).
3. Whether market decline or Sapir’s claimed inability to pay made specific performance unavailable or inequitable.

## Decision

- The court granted Edge’s summary-judgment motion in part and denied Sapir’s summary-judgment motion in full.
- The court ordered specific performance requiring Sapir to pay the $20 million purchase price in exchange for Edge’s interest in WAICCS 2.
- The court directed release of the $1 million escrow to Edge pursuant to the agreement.
- The court rejected Sapir’s arguments that market conditions, valuation concerns, alleged financial inability, or the escrow provision barred specific performance.

## Legal Principles

- Specific performance is generally available under New York law when a contract effectively concerns a unique real-property interest and legal damages are inadequate or difficult to compute.
- An exercised option becomes a binding purchase obligation; a party’s later change of mind based on economic conditions does not excuse performance absent a recognized discharge doctrine.
- Foreseeable market fluctuations are risks allocated by contract and ordinarily do not constitute impossibility or frustration sufficient to avoid performance.
- An escrow deposit provision is not treated as an exclusive remedy unless the contract clearly states it is exclusive; otherwise, it may function as a payment mechanism associated with performance.
- A breaching party’s claimed inability to perform, particularly when inconsistent with prior admissions and unsupported by competent proof, does not necessarily defeat equitable relief at summary judgment.

## Conclusion

The court enforced an exercised option to purchase an LLC interest whose value derived from a restricted tenant-in-common real-estate holding, holding the asset sufficiently unique to justify specific performance, rejecting an escrow-only remedy, and ordering Sapir to close and pay the contract price.


Edge Grp. WAICCS LLC v. Sapir Grp. LLC, 705 F. Supp. 2d 304 (S.D.N.Y. 2010)