Horton v. O'Rourke Case Brief Summary | Law Case Explained

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Horton v. O'Rourke, 321 So.2d 612 (1975)
Most often, damages awarded for a breach of contract are intended to put the nonbreaching party in the same position it would’ve been in if the breaching party had fully performed its obligations. But that isn’t always the case, as the court explains in Horton versus O’Rourke.
Howard Horton owned H & H Construction Company. Thomas O’Rourke and three other families, whom we’ll collectively call O’Rourke, contracted with H & H to purchase homes that H & H was building. When construction was complete, O’Rourke moved into the house without closing on the sale. Instead, O’Rourke agreed to pay monthly rent, with closing conditioned on Horton’s ability to clear any outstanding defects in the title to the property.
After taking possession, O’Rourke learned that the title was encumbered by a substantial federal tax lien. Based on Horton’s assurances that the lien would soon be removed, O’Rourke invested in improvements to the house and continued the rental agreement for nearly two years. Ultimately, however, Horton notified O’Rourke that it was impossible to clear the title defect. Horton offered to return O’Rourke’s earnest money deposit on the property or continue the rental agreement at a higher rate.
O’Rourke sued Horton for specific performance of the purchase contract. After a bench trial, the trial court denied specific performance but awarded O’Rourke damages. The court based the damage award on a benefit-of-the-bargain analysis, measured by the difference between the market value of the property when it should’ve been conveyed and the remaining unpaid contract price. Horton appealed to the Florida District Court of Appeal.
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