Steiner v. Thexton

Paul Thexton (defendant) owned 12.29 acres of land. Development of Thexton’s parcel would require splitting it so that Thexton could retain about two acres for his residence. County development permits would also have to be obtained. Thexton received an offer to purchase his property for $750,000, but the buyer wanted Thexton to split the parcel and obtain the permits. Thexton rejected the offer. In 2003, Martin Steiner (plaintiff) was interested in buying 10 acres of Thexton’s parcel, including handling the parcel-splitting process, for $500,000. Thexton and Steiner signed a written agreement, entitled “REAL ESTATE PURCHASE CONTRACT,” that bound Thexton for three years to allow Steiner to purchase the 10-acre parcel for $500,000 if Steiner pursued the county approval and permitting process. A provision of the agreement gave Steiner “absolute and sole discretion” to cancel the transaction for any reason. Thereafter, Steiner incurred thousands of dollars to file an application with the county planning department and attend hearings to gain approval of a tentative parcel map. In October 2004, Thexton decided he no longer wished to sell the property. Steiner nevertheless attended a final hearing and gained approval to split the parcel. Steiner sued Thexton for specific performance of the agreement. Thexton opposed, arguing that the agreement constituted an option unsupported by consideration. The trial court ruled in favor of Thexton, and the court of appeal affirmed. The courts reasoned that at the time of signing the agreement, Steiner had not given anything of value for the option to purchase Thexton’s property. The California Supreme Court reviewed the matter.