Enforceable Option-to-Purchase Provision

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WI Court of Appeals – District II

Case Name: Headstart Building, LLC, v. National Centers for Learning Excellence, Inc.

Case No.: 2016AP434

Officials: HAGEDORN, J.

Focus: Enforceable Option-to-Purchase Provision

This dispute arises out of an option-to-purchase provision in a lease between Headstart Building, LLC (Headstart), the lessor, and National Centers for Learning Excellence, Inc. (National), the lessee. This case comes before our court because National attempted to exercise its option, and the two appraisers were nowhere close to each other—in large part because they appraised different interests. Following a trial, the circuit court dismissed Headstart’s claims—its ruling partially resting on the conclusion that there was no meeting of the minds regarding the proper appraisal methodology. Following supplemental briefing, the court reaffirmed its conclusion that there was no meeting of the minds and declared the option itself void. Therefore, the court determined that a declaratory judgment ruling regarding the proper appraisal methodology was unnecessary, and it dismissed National’s counterclaim. National appeals from the circuit court’s order declaring the option void.

The sole issue on appeal is whether the option is enforceable. Because the option specified a method to determine the purchase price with reasonable certainty, we conclude that the circuit court erred by declaring the option void and remand for consideration of National’s now resurrected and unaddressed counterclaim for declaratory judgment on the proper interpretation of the option agreement.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.