Gross Foundation v. Goldner

U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
Contracts

New York Law Journal

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Judge I. Leo Glasser

Gross Foundation bought two nursing facilities in Kansas. When it bought Infinia at Arma from Utah's Ivy at Arma, and Infinia at Abilene from Utah's Infinia Properties of Abilene, it entered an option agreement with Ivy at Arma and Infinia Properties of Abilene (jointly optionee) as to their repurchase of the two Kansas-based nursing facilities. Gross Foundation then leased the Arma Facility to Infinia at Arma and the Abilene Facility to Infinia at Abilene. Gross and Goldner signed an agreement under which Goldner guaranteed full payment of the purchase price payable by the optionee. On Dec. 6, 2004, a bankruptcy court in Utah confirmed Infinia at Arma's and Infinia at Abilene's 2003 Chapter 11 bankruptcy applications. That same day, Gross exercised its put option. Although the court dismissed Gross Foundation's unjust enrichment claim, it denied dismissal of its contract breach claim asserting that it was owed $600,000 for the two facilities pursuant to the guarantee and subsequent agreements. The debtors and optionee were not identical and Gross' 2004 Option Demand Letter was not voided by 11 USC §362(a). That letter constituted due exercise of the put option as required by the guarantee.

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