Market Street Associates v. Frey

Facts

J.C. Penney (plaintiff) entered into a sale-leaseback agreement with General Electric Pension Trust (“General Electric”) (defendant). Pursuant to this agreement, General Electric agreed to give reasonable consideration for requests for financing of additional improvements. A specific provision, “paragraph 34,” of this agreement stated that if the average annual appreciation in the property exceeded six percent that the parties would negotiate in good faith. If a breakdown in negotiations occurred, then J.C. Penney was entitled to buy back the property for less than market value. Twenty years later, J.C. Penney assigned a successor, Market Street Associates (“Market Street”), to the lease. Without mentioning paragraph 34, Market Street requested financing from General Electric for a project. Their request was denied, and Market Street then sought to buy back the property it leased from General Electric. When the General Electric refused to sell, Market Street sought specific performance.