Market Street Associates Limited Partnership v. Frey

Facts

J.C. Penney Company (hereinafter “Penney”) entered into a sale-leaseback agreement with General Electric Pension Trust (hereinafter “the pension trust”) (defendant). Under the agreement, Penney sold properties to the pension trust, which then leased back to Penney. Paragraph 34 of the agreement required the pension trust to finance the costs and expenses of additional improvements to the properties, provided that the amount of the costs and expenses were at least $250,000. Additionally, the agreement provided that the parties should negotiate in good faith concerning the construction of such improvements and, if negotiations failed, then Penney was entitled to repurchase the property. Penney assigned its lease for a Milwaukee shopping center to Market Street Associates (hereinafter “Market Street”) (plaintiff). Market Street wrote to the pension trust formally requesting $2 million in funding for improvements to the shopping center. Market Street had sought other financing sources before turning to the pension trust. In its writing to the pension trust, Market Street did not mention paragraph 34 of the agreement. The pension trust denied the request, stating that it was not interested in making loans for less than $7 million. The pension trust refused to sell the property to Market Street who sued to compel specific performance.