Best v. Edwards – 2/1/2008

February 5, 2008

Arizona Court Of Appeals Division One Holds That Modification Of A Real Estate Option Contract That Extends The Life Of An Option Is A Material Modification That Must Be In Writing.

In 2003, the parties entered into a written contract giving Best an option to purchase certain real property within a specified period. Before the option expired, Best recorded an amendment, extending the option for one year. Though any extension was required to be agreed to by all parties, the amendment was only signed by Best. When the Defendants attempted to sell the property to a third party, Best refused to release the property, claiming that an oral agreement to extend the option was in effect. Best brought an action for specific performance of the option contract, and the Defendants moved for summary judgment on statute of frauds grounds. Best argued that the statute of frauds did not bar enforcement of the extension, and even if it did, the defendants were equitably estopped from asserting such a defense because Plaintiff had relied on the oral extension. The trial court granted the Defendants’ motion, declaring that any extension to the contract was required by the statute of frauds to be in writing. Plaintiff appealed.

The Arizona Appeals Court, affirmed the summary judgment, holding that the extension to the option contract was required to be in writing. The Court reasoned that because the parties had made time of the essence by setting an expiration date for the option, an extension of the time frame was a material modification. The Court cited Kammert Bros. Enter., Inc. v. Tanque Verde Plaza Co., 4 Ariz. App. 349, 360, 420 P.2d 592, 603 (1966), vacated on other grounds, 102 Ariz. 301, 428 P.2d 678 (1967), for the proposition that a modification to a contract that was required to be in writing by the statute of frauds must also be in writing. The Court went on to hold that Best could not rely on equitable estoppel to defeat the writing requirement because he had not alleged any particular detriment arising out of his reliance upon the oral extension other than the loss of the benefit of the agreement itself.

Judge Weisberg wrote the opinion, in which Judges Irvine and Norris concurred.