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Case 9.3
RHODES V. DAVIS
United States District Court for the Southern District of New York
2012 U.S. LEXIS 144955 [September 27, 2012]
FACTS:
Neil Rhodes, Plaintiff, and Gary Davie, Defendant, co-owned Alarm Specialists, Inc. (ASI).
Each held 50% interest in ASI and 50% in OTR Realty, LLC. (OTR) an affiliated real estate company.
In an attempt to resolve a prior dispute before the Court, the parties entered into a Stipulation of
Discontinuance where the Defendant would buy out Plaintiff’s ownership interest in ASI for
$2,500,000 on or before October 1, 2009 with a down payment of $250,000 by September 5, 2008.
The down payment was made timely, but the closing date passed without a sale, thus Plaintiff
brought an action alleging breach of contract.
PROCEDURE: Although this is the first hearing on this specific matter, the parties had a previous
dispute heard by this same court. Rhodes v. Davis, 2012 U.S. Dist. LEXIS 1649 (S.D.N.Y., Feb. 9, 2012)
ISSUE: Can a court award specific performance in a contract case where the subject matter is unique
and there is no market equivalent?
RULE: “Specific performance is an extraordinary remedy to be invoked only after remedies at law have
been determined to be ‘incomplete and inadequate to accomplish substantial justice.’”
REASONING:
1. The Stipulation was an unambiguous and enforceable contract containing the complete terms of
their agreement. Thus, specific performance limited to the explicit terms of the Stipulation itself is
appropriate.
2. ASI is a closely held corporation, and Plaintiff and Defendant are ASI’s only shareholders. Due to
ADDITIONAL INFORMATION:
The Plaintiff argued for the difference in income tax rates (2.12% of $2,250,000) to put him in as
good of a position as he would have been had Defendant honored the contract terms. His request
damages.
