3328 Oakhurst v. Oakhurst National Plaza CA2/2 ( 2014 )

Filed 5/29/14 3328 Oakhurst v. Oakhurst National Plaza CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
3328 OAKHURST, LLC, B242868
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. SC110202)
v.
OAKHURST NATIONAL PLAZA, LLC
et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los Angeles County. Allan J.
Goodman, Judge. Affirmed.
Law Offices of James B. Smith, James B. Smith; Benedon & Serlin, Gerald M.
Serlin and Douglas G. Benedon for Defendants and Appellants.
Egerman & Brown, Mark Egerman, Philip Brown and Lee A. Egerman for
Plaintiff and Respondent.
_________________________
Defendant and appellant Oakhurst National Plaza, LLC (Oakhurst National),
through its manager, LM Management LLC (LM), entered into a purchase and sale
agreement (the purchase agreement) to sell its apartment building for $7.5 million to
Mark Egerman (Mark) (the transaction). Pursuant to an amendment to the purchase
agreement, plaintiff and respondent 3328 Oakhurst, LLC (3328 Oakhurst) was
subsequently substituted in for Mark as the buyer.
After Oakhurst National cancelled escrow and terminated the transaction, 3328
Oakhurst sued Oakhurst National, LM, and LM’s sole owner and member, Marvin
Markowitz (Markowitz), for, inter alia, breach of the purchase agreement. Oakhurst
National, LM, and Markowitz cross-complained for breach of the same agreement.
Following trial, a jury found in favor of 3328 Oakhurst, and judgment was entered.
Oakhurst National and LM appeal. They argue: (1) they were discharged from
performance because 3328 Oakhurst did not perform a concurrent condition and/or
condition precedent; and (2) LM was not a party to the purchase agreement. According
to Oakhurst National and LM, because the judgment must be reversed, so too must the
award of attorney fees and costs in favor of 3328 Oakhurst.
We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Purchase Agreement
Oakhurst National owned a 31-unit apartment building located at 3328 Oakhurst
Avenue in Los Angeles (the building). LM was Oakhurst National’s managing member;
Markowitz was LM’s manager as well as its sole member and owner.
Oakhurst National elected to sell the property. Mark and his son, Lee Egerman
(Lee), learned of the listing and thought the property presented a good investment
opportunity.
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In February 2010, Oakhurst National and Mark executed the purchase agreement.1
Pursuant to the purchase agreement, Mark agreed to purchase the property for $7.5
million. Also pursuant to the terms of the purchase agreement, Mark was to assume
Oakhurst National’s existing loan with Chase Bank (the Chase Bank Loan), which was
approximately $5.135 million and tender the $2.365 million balance into escrow.
The purchase agreement provides that time is of the essence.
Buyer’s Loan to Seller
The parties met on February 17, 2010. At the meeting, Markowitz revealed that
he was under tremendous financial pressure and that Oakhurst National needed funds to
meet third party obligations before the close of escrow. Because they shared community
ties, Mark agreed to loan Oakhurst National $1 million in exchange for an option
agreement. In turn, Markowitz promised that Oakhurst National would “not cancel.”
Amendment to Purchase Agreement
The purchase agreement was formally amended on March 25, 2010. The
amendment accomplished three primary objectives: (1) Mark assigned his interest in the
purchase agreement to 3328 Oakhurst, an entity in which Mark and Lee were
comanaging members; (2) In lieu of depositing $225,000, 3328 Oakhurst deposited $1
million into escrow with instructions to release it to Oakhurst National; and (3) Oakhurst
National agreed that it could not cancel the purchase agreement while the $1 million loan
was still outstanding.
Under the terms of the amendment, the $1 million released would be applied to the
purchase price of the property, but if, for whatever reason, the transaction did not close,
Oakhurst National would still be obligated to repay the loan within six months. If the
transaction did not close and Oakhurst National failed to timely repay the $1 million loan,
title to the property would be transferred to 3328 Oakhurst, in which Oakhurst National
1 The agreement was signed by LM on Oakhurst National’s behalf.
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would retain the $1 million and 3328 Oakhurst would acquire title to the property subject
to the existing lien held by Chase Bank.
Escrow
On March 30, 2010, escrow opened, 3328 Oakhurst was to apply to Chase Bank
for approval within five days after escrow opened. In fact, 3328 Oakhurst applied to
Chase Bank to assume the Chase Bank Loan on February 19, 2010, six weeks before it
was required to do so. And, pursuant to the terms of the parties’ agreement, Chase Bank
was to approve 3328 Oakhurst’s loan assumption within 45 days of the opening of
escrow (May 14, 2010).
On May 13, 2010, the day before the expiration of the 45-day loan assumption
deadline, 3328 Oakhurst met with Oakhurst National to discuss the timing of Chase
Bank’s approval. It had become apparent that Chase Bank was not going to act within
the time frame established by the purchase agreement. 3328 Oakhurst wanted Oakhurst
National to reaffirm its prior representation that it would close the deal, even if Chase
Bank did not approve the loan assumption within the contractual 45 days.
At the meeting, Markowitz was very agitated and distracted by his financial
burdens. He confirmed that “he had to close. He’d give [3328 Oakhurst] whatever time
was necessary to get the approval [and that 3328 Oakhurst] should continue to move
forward.” He advised 3328 Oakhurst to “[t]ake the time” it needed and expressly stated
that Oakhurst National would not cancel.
Also at the meeting, Mark handed Markowitz a draft of a second amendment to
the purchase agreement, which would have extended the closing date for the escrow.
Markowitz was concerned by this amendment because he believed that it put Oakhurst
National at risk of losing the property. Markowitz stated that he would show it to his
attorney and then return it.
Based in part on Markowitz’s representations made at the May 13, 2010, meeting,
3328 Oakhurst continued to move forward with its assumption of the Chase Bank Loan.
However, when Oakhurst National failed to return a signed copy of the second
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amendment to the purchase agreement, 3328 Oakhurst became concerned about the
purchase.
Chase Bank’s Approval of 3328 Oakhurst’s Assumption of the Chase Loan
On June 3, 2010, Chase Bank sent 3328 Oakhurst a letter conditionally approving
the loan assumption subject to 3328 Oakhurst agreeing to specified terms and conditions.
The following day, 3328 Oakhurst notified both Oakhurst National and its real
estate agent that Chase Bank had “tentatively approved the assumption of the loan.” That
same day, 3328 Oakhurst also sent Chase Bank an e-mail informing it that it had accepted
Chase Bank’s specified terms and conditions.
Oakhurst National Cancels Escrow
On June 16, 2010, Oakhurst National notified escrow that it was canceling the
sale. Markowitz explained that he was “unable to wait any longer” and accused 3328
Oakhurst of failing “to comply with the terms of the Purchase Agreement.” 3328
Oakhurst was surprised by Oakhurst National’s cancellation notice. Believing that
Oakhurst National must have been confused with the loan assumption process, Lee sent
an e-mail to Oakhurst National detailing where the parties stood in the process.
3328 Oakhurst believed that Oakhurst National did not have the right to cancel
escrow and continued its attempts to close. On June 21, 2010, Lee, on behalf of 3328
Oakhurst, sent Oakhurst National’s real estate agent an e-mail giving notice that Fannie
Mae had approved 3328 Oakhurst’s loan assumption and that escrow was in a position to
close but for Oakhurst National’s notice of cancellation. By this time, the loan had been
approved and Chase Bank had “everything [it] needed to prepare loan documents.”
Mark followed up with a second e-mail to Oakhurst National’s real estate agent
about whether Oakhurst National would rescind its cancellation and close and whether
3328 Oakhurst should wire the requisite funds to escrow. 3328 Oakhurst continued to
make efforts to close the transaction. Throughout this time, Chase Bank remained
willing to proceed with 3328 Oakhurst’s assumption of the loan.
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By the end of June 2010, 3328 Oakhurst notified Oakhurst National that it could
close within a day and pushed for a closing of escrow. Escrow sent 3328 Oakhurst and
Oakhurst National the loan assumption documents, which 3328 Oakhurst executed, but
Oakhurst National did not. Other than the parties signing the loan documents, no other
documents were required to close escrow.
On August 3, 2010, 3328 Oakhurst sent Oakhurst National’s attorney a letter
detailing the history of its effort to purchase the property. In that letter, 3328 Oakhurst
gave notice that Oakhurst National was in breach for failing to close and again attempted
to persuade Oakhurst National to close. Oakhurst National did not respond to that letter.
Repayment of the Loan
In September 2010, Oakhurst National repaid 3328 Oakhurst the $1 million loan.
Complaint
In November 2010, 3328 Oakhurst filed an action against Oakhurst National, LM,
and Markowitz for breach of contract, breach of the implied covenant of good faith and
fair dealing, and fraud. Oakhurst National, LM, and Markowitz each filed a cross-
complaint against 3328 Oakhurst, Lee, and Mark.
Motion for Summary Judgment
3328 Oakhurst moved for summary judgment against LM and Markowitz on their
cross-complaints, arguing that they were not parties to the transaction and therefore had
no right to sue for breach. The trial court agreed and entered judgment against LM and
Markowitz on their cross-complaints.
Trial; Judgment; Appeal
On April 24, 2012, a jury trial commenced. Following a variety of dismissals, a
motion for partial directed verdict, and a stipulation, the only claims submitted to the jury
were 3328 Oakhurst’s claims against Oakhurst National and LM for breach of contract
and breach of the implied covenant of good faith and fair dealing. The jury was
instructed, pursuant to the stipulation, to treat Oakhurst National and LM as one and the
same entity.
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The jury rendered a verdict in favor of 3328 Oakhurst, finding Oakhurst National
and LM jointly and severally liable for breach of contract and breach of the implied
covenant of good faith and fair dealing. It awarded compensatory damages in the amount
of $605,100.
Judgment was entered, and Oakhurst National, LM, and Markowitz’s timely
appeal ensued.
DISCUSSION
I. Standard of Review
The parties agree as to the standard of review. We are bound by the jury’s factual
determinations if they are supported by substantial evidence, and we review questions of
law de novo. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal. App. 4th
452, 461.)
II. Analysis
Oakhurst National raises three arguments as to why the judgment should be
reversed. We address each in turn.
A. Discharge from performance
Oakhurst National argues that it was discharged from its performance under the
purchase agreement because 3328 Oakhurst did not perform. Thus, according to
Oakhurst National, it cannot be liable for breach of contract or breach of the implied
covenant. The evidence indicates otherwise. On June 16, 2010, Oakhurst National
cancelled and terminated the purchase agreement. At that time, 3328 Oakhurst had no
obligation to fund the purchase price, since Oakhurst National had expressly waived the
condition that the Chase Bank Loan be assumed within 45 days.
In fact, until Chase Bank approved the assumption, 3328 Oakhurst could not fund
the purchase price because 3328 Oakhurst was first required to assume the loan, a
requirement of the purchase agreement. But, 3328 Oakhurst was always able to tender
performance; the only obstacle was Oakhurst National’s refusal to close. Under these
circumstances, Oakhurst National was not discharged from performance.
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Pittman v. Canham (1992) 2 Cal. App. 4th 556 is distinguishable. In that case,
neither party performed for several months; therefore, neither the buyer nor the seller was
entitled to enforce the contract. (Id. at pp. 559–560.) Here, 3328 Oakhurst tendered full
performance, while Oakhurst National cancelled and terminated the transaction.
Oakhurst National also argues that because it cannot be liable for breach of
contract, it necessarily cannot be liable for breach of the implied covenant. As set forth
above, we conclude that Oakhurst National is liable for breach of contract. Thus, this
argument fails.
B. Because LM was not a party to the purchase agreement, it cannot be liable for
its breach
LM argues that as Oakhurst National’s agent, it was not liable for Oakhurst
National’s breach of contract. But, LM forgets that it stipulated that it and Oakhurst
National were to be treated by the jury as one and the same company.2 Specifically, they
agreed that all instructions referring to Oakhurst National were to include LM. Following
those instructions, the jury found LM “jointly and severally liable” for Oakhurst
National’s breach of contract. LM cannot now complain that the jury did so.
(Redevelopment Agency v. City of Berkeley (1978) 80 Cal. App. 3d 158, 167.)
C. Attorney fees and costs
Finally, Oakhurst National and LM assert that because the judgment against each
of them must be reversed, so too must the award of attorney fees and costs. Because we
affirm the judgment, this argument fails.
2 At oral argument, appellants’ counsel argued that the parties entered into a
standard agency stipulation. The terms of that stipulation are never clarified for us. And,
in any event, no agency instructions were given to the jury.
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DISPOSITION
The judgment is affirmed. 3328 Oakhurst is entitled to costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
___________________________, J.
ASHMANN-GERST
We concur:
______________________________, P. J.
BOREN
______________________________, J.*
FERNS
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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