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Cobble Hill Nursing Home v. Henry and Warren Corp.

548 N.E.2d 203 (1989)

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Cobble Hill Nursing Home v. Henry and Warren Corp.

New York Court of Appeals

548 N.E.2d 203 (1989)

Facts

Eugene Hollander operated a nursing-care facility on premises he leased from his own company, Henry and Warren Corporation (H&W) (defendant). Hollander faced imprisonment for insurance fraud. To receive a lighter sentence, Hollander agreed to place the facility under the receivership of Cobble Hill Nursing Home, Inc. (Cobble Hill) (plaintiff). The receivership agreement between Hollander, H&W, the state health department, and Cobble Hill gave Cobble Hill an option to buy the facility. The agreement emphasized that, given Cobble Hill’s nonprofit status and limited financial resources, H&W could not expect Cobble Hill to pay market rates to rent or buy the facility. Finally, the agreement provided that the health department would set the rent and purchase prices in accordance with department regulations and applicable state laws. The department set Cobble Hill’s rent—and eventually Cobble Hill’s purchase price for the facility—at prices that H&W deemed so low as to be confiscatory. Cobble Hill sued for specific performance of the receivership agreement’s option clause. The trial court dismissed the suit on the grounds that the clause lacked an explicit mechanism for determining the facility’s purchase price. An intermediate appellate court affirmed. Cobble Hill appealed to the New York Court of Appeals.

Rule of Law

Issue

Holding and Reasoning (Kaye, J.)

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