Background and Facts

Chalk Supply, LLC, buys paints and other products, which it repackages and sells to consumers. Chalk Supply agreed to lease a warehouse from Ribbe Real Estate, LLC (RRE), for eighteen months. Chalk Supply prepaid twelve and a half months' rent to RRE. At Chalk Supply's request, the lease provided that a fire suppression system would be installed, if required, with the cost to be "divided by 84 months (7 years) of which Tenant will pay in like equal installments during the term of the lease." A local ordinance required a fire suppression system. On receiving an estimate of the cost, however, RRE e-mailed Chalk Supplybefore the tenant had moved onto the propertythat RRE was not willing to pay for the system without a longer lease term.

Chalk Supply filed a suit in a Michigan state court against RRE, claiming breach of contract. The court ruled that RRE's e-mail was an anticipatory repudiation of the parties' lease and ordered RRE, the landlord, to return the money Chalk Supply had paid in advance of the lease term. RRE appealed.

In the Words of the Court

PER CURIAM, [By the Whole Court]

* * * *

* * * Under the doctrine of repudiation or anticipatory breach, * * * it is widely accepted that a party's statement of intention not to perform a duty under the contract except under conditions that go beyond the contract constitutes a repudiation.

[In Paragraph 11 of the lease,] the parties agreed that * * * RRE would pay the initial cost for fire suppression, and Chalk Supply would repay that amount over 84 months

[Despite Paragraph 11, RRE's] e-mail is clear: RRE "will not be willing to invest" the amount necessary for fire suppression unless the parties reviewed "the lease tenure." That is, RRE would not pay for fire suppression unless the parties agreed to a longer lease. * * * This was, then, an anticipatory repudiation of the lease: * * * RRE would not perform a duty under the contract (pay for fire suppression if required) unless Chalk Supply extended the lease (a condition that went beyond the contract).

RRE contends that [the] e-mail could not have been an anticipatory repudiation because it "was not unequivocal and was conditioned on the requirement of fire suppression." This argument is meritless. Under the lease, RRE was required to pay for fire suppression if it was required, so * * * saying that RRE would not pay for fire suppression if it was required was disavowing the very thing that RRE agreed to do. [Emphasis added.]

* * * *

* * * Fire suppression was * * * required by local ordinance. Thus, when [RRE] sent the * * * e-mail, Paragraph 11 applied, and RRE repudiated its duty under the lease to pay for fire suppression. Under such circumstances, there can be no doubt that following this repudiation, Chalk Supply had a cause of action for breach of contract.

Decision and Remedy

A state intermediate appellate court affirmed the judgment of the trial court. RRE's e-mail constituted an anticipatory repudiation of the parties' contract, and the landlord (RRE) had to return the money that Chalk Supply had paid in advance of the lease

Questions with explanation

1. Fact (summaries) of the case including the plaintiff and defendants

2. Why are they in court

3. Issues before the court

4. Decision of the court

5. what Facts did the court used to decide the case