## Facts

- PDQ Lube Center, Inc. agreed to purchase commercial real estate from R. Lowell Huber for $125,000 using a written purchase contract with financing and appraisal-based qualification terms, an integration clause, and a “time is of the essence” clause.
- Because the property had been used as a gas station, the parties executed an environmental addendum under which Huber agreed to remove underground storage tanks and obtain environmental clearance after PDQ paid a $4,000 cleanup deposit.
- PDQ paid the $4,000 deposit, and Huber accepted it, but Huber did not remove the tanks or obtain environmental clearance as agreed.
- The unresolved tank and environmental conditions impeded PDQ’s ability to obtain an appraisal and complete financing, and the transaction did not close.
- After trial, the court found Huber acted in bad faith by failing to perform the addendum obligations and ordered specific performance conditioned on Huber completing removal/clearance and PDQ tendering the full purchase price within 84 days after clearance.
- After Huber later completed cleanup and obtained clearance, the trial court ruled PDQ did not timely tender the full purchase price within the judgment’s deadline and terminated Huber’s obligation to convey.
- The parties filed consolidated appeals: Huber challenged liability and specific performance; PDQ challenged termination of the conveyance obligation.

## Issues

1. Whether Huber breached the implied covenant of good faith and fair dealing by failing to remove underground storage tanks and obtain environmental clearance after accepting the cleanup deposit, thereby preventing PDQ from satisfying financing and appraisal-related conditions.
2. Whether specific performance was an appropriate remedy for the real-estate sale under the contract and the circumstances.
3. Whether PDQ satisfied the specific-performance decree by making a timely, complete tender of the full purchase price within the court-imposed deadline after environmental clearance.

## Decision

- The court affirmed the judgment finding Huber breached the implied covenant of good faith and fair dealing by failing to perform his environmental obligations after accepting PDQ’s deposit.
- The court affirmed that Huber’s breach prevented PDQ from completing the contract’s financing and appraisal-related conditions and that Huber could not rely on PDQ’s nonperformance of those conditions to avoid the sale.
- The court affirmed the grant of specific performance as an equitable remedy for the land sale, subject to conditions set by the trial court.
- The court affirmed the later order terminating Huber’s duty to convey because PDQ did not make a timely, unconditional tender of the full purchase price as required by the specific-performance decree.

## Legal Principles

- Every contract includes an implied covenant of good faith and fair dealing requiring parties to act consistently with the contract’s agreed purpose and the other party’s justified expectations; the covenant does not create duties not contemplated by the agreement.
- A party that prevents or frustrates the other party’s performance of contractual conditions cannot invoke the nonoccurrence of those conditions to escape liability.
- In real-property transactions, specific performance is available in equity but may be conditioned on strict compliance with court-imposed requirements, including deadlines and full tender of the purchase price.
- Failure to comply with the conditions of a specific-performance decree can extinguish the right to compel conveyance, even where the opposing party previously breached.

## Conclusion

The court held that the seller’s failure to remove underground tanks and obtain environmental clearance after taking the buyer’s cleanup deposit breached the covenant of good faith and excused the buyer’s inability to satisfy financing and appraisal conditions, but the buyer ultimately forfeited specific performance by failing to tender the full purchase price within the decree’s deadline, permitting termination of the seller’s duty to convey.


PDQ Lube Ctr., Inc. v. Huber, 949 P.2d 792 (Utah Ct. App. 1997)