Channel Home Centers v. Grossman

Grossman (defendant) and his company Tri-Star, while trying to secure financing to purchase Cedarbrook Mall, asked Channel Home Centers (plaintiff) to sign a letter of intent for a store lease so Grossman could show lenders evidence of a committed tenant; the letter specified lease terms and had Grossman commit to withdraw the property from the market while the lease was finalized. Relying on the letter, Channel had a lease drafted, developed marketing and building plans, and purchased materials and equipment. Grossman nonetheless began showing the property to another prospective tenant and terminated negotiations, claiming Channel failed to submit a satisfactory lease in time, then leased the space to the other tenant. Channel sued, and the district court held the letter of intent was not a binding agreement.