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Lubin Olson Wins Decisive Victory In "Best Efforts" Arbitration

Lubin Olson partner Manuel A. Martinez obtained an award in excess of $1.2 million on behalf of clients Delta Court Apartments, LLC and Coliseum Business Park, LLC (collectively, "Plaintiffs") in a binding arbitration before the Honorable William L. Bettinelli (Ret.) over a "best efforts" contract provision.

The arbitration involved a complex transaction that began as a $3.5 million real estate purchase money loan, but which subsequently was converted into a Lease and Put/Option Agreement. The defendant real estate developer contractually agreed to use "best efforts" to obtain preliminary subdivision approval to subdivide two 174 acre parcels of property on the Big Island of Hawaii into eight 40 acre lots. The contract provided that if defendant used best efforts to obtain preliminary subdivision approval within two years, but was unable to obtain the approval, then the return due to Plaintiffs would be reduced by approximately $1 million. Although defendant did all of the ground work necessary to submit the subdivision application during the first year, it never submitted the application to the County of Hawaii Planning Department. The defendant claimed that Plaintiffs had waived, or were estopped from enforcing, the best efforts clause and presented expert testimony that it was economically impracticable for defendant to proceed with the project.

Judge Bettinelli agreed with Plaintiffs that defendant failed to use its best efforts to obtain tentative subdivision approval within the two year deadline and that defendant's economic impracticability, waiver and estoppel defenses had no merit. Judge Bettinelli awarded Plaintiffs 100% of their damage claim and 100% of their attorneys' fees and costs.
 

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