Judge: Michael E. Whitaker, Case: 23SMCV01071, Date: 2023-09-12 Tentative Ruling

Case Number: 23SMCV01071    Hearing Date: April 18, 2024    Dept: 207

TENTATIVE RULING

MOVING PAPERS:

1. Notice of Motion and Motion for Summary Judgment; Memorandum of Points and Authorities
2. Separate Statement of Undisputed Material Facts
3. Declaration of Stefan Baugh

MOTION

This case arises from the alleged breach of a purchase and sale agreement for real property in South Carolina.  The seller, Plaintiff EMRES II South Carolina, LLC (“Plaintiff”) has sought liquidated damages from purchaser, Defendant Spain Companies, LLC (“Defendant”) pursuant to the terms of the agreement. 

Plaintiff now moves for summary judgment.  Plaintiff’s motion is unopposed.

LEGAL STANDARD – MOTION FOR SUMMARY JUDGMENT

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)  “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.”  (Ibid.)  

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues.  Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.”  (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839 [cleaned up].)  Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true.  Nor may the trial court grant summary judgment based on the court's evaluation of credibility.”  (Id. at p. 840 [cleaned up]; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].) 

DISCUSSION

1.     BREACH OF CONTRACT

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.”  (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) 

On April 18, 2022, Plaintiff and Defendant executed a Purchase and Sale Agreement for Plaintiff to sell and Defendant to purchase real property for a purchase price of $71,500,000.00.  (Baugh Decl. ¶¶ 2-3 and Ex. A.)  Pursuant to the terms of the agreement, Defendant was to pay Plaintiff a security deposit of $400,000.00 within three business days of April 18.  (Ex. A at ¶ 2.2.1.)

On April 21, 2022, Defendant emailed Plaintiff, indicating it no longer intended to move forward with the transaction.  (Baugh Decl. ¶ 4 and Ex. B.)  Consistent with Defendant’s email, Defendant has not paid the deposit or purchased the property.  (Baugh Decl. ¶¶ 5-6.)

Plaintiff “was ready, willing, and able to sell the Property to Spain Companies.”  (Id. ¶ 7.)

Plaintiff is now entertaining other offers on the property, all of them less than the $71.5 million contractual purchase price.  (Id. at ¶ 8.)  Defendant has now submitted a new offer to purchase the property for $60 million.  (Ibid.)

Thus, Plaintiff has established the existence of a contract, Plaintiff’s performance or excuse for nonperformance, Defendant’s breach, and resulting damages.

Section 11.1 of the agreement provides:

11.1 Purchaser Default If Purchaser shall fail or refuse to purchase the Property in violation of Purchaser’s obligations hereunder for any reason other than a default by Seller under this Agreement, or shall otherwise be in default of its obligations hereunder, Seller sole remedy, shall be the right to terminate this Agreement and retain the full amount of the Deposit and all interest earned thereon. Seller and Purchaser acknowledge and agree that (a) it would be extremely difficult to accurately determine the amount of damages suffered by Seller as a result of Purchaser’s default hereunder; (b) the Deposit constitutes a fair and reasonable amount to be received by Seller as agreed and liquidated damages for Purchaser’s default under this Agreement, as well as a fair, reasonable and customary amount to be paid as liquidated damages to a seller in an arm’s length transaction of the type contemplated by this Agreement upon a default by the purchaser thereunder; and (c) receipt by Seller of the Deposit upon Purchaser’s default hereunder shall not constitute a penalty or a forfeiture.

(Ex. A at ¶ 11.1.)

            Although Defendant has not yet paid the security deposit and the contractual terms provide that the seller shall “retain” the security deposit, the appellate court has held that provisions permitting a party to “retain” a deposit apply equally to deposits that have not yet been paid.  (United Sav. & Loan Assn. v. Reeder Dev. Corp. (1976) 57 Cal.App.3d 282, 294–295.)

            Therefore, Plaintiff has demonstrated that Defendant owes Plaintiff the $400,000 security deposit, plus interest thereon.

            Section 12.3 of the agreement provides, “12.3 Applicable Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of South Carolina.”  (Ex. A at ¶ 12.3.)  South Carolina law provides for an 8.75% interest rate.  (See S.C. Code Ann. § 34-31-20(A).)

            As such, Plaintiff has demonstrated entitlement to 8.75% interest on the $400,000.

            Section 11.3 of the agreement further provides:

11.3 Attorneys’ Fees. Notwithstanding anything to the contrary in this Agreement, in the event that either Seller or Purchaser, as the case may be, shall bring a lawsuit against the other party to enforce their respective rights under Sections 11.1 and 11.2, above, the losing party shall pay the prevailing party’s costs and expenses incurred in connection with such litigation, including without limitation reasonable attorneys’ fees. The “prevailing party” shall be determined by the court hearing such matter from which no appeal may be taken.

(Ex. A at ¶ 11.3.)  Therefore, Plaintiff is also entitled to recover its reasonable attorneys’ fees.

CONCLUSION AND ORDER

Therefore, Plaintiff’s unopposed Motion for Summary Judgment is granted.  Plaintiff has demonstrated its prima facie case that Defendant breached the agreement and Plaintiff is entitled to recover from Defendant the $400,000 security deposit as liquidated damages, plus interest thereon at a rate of 8.75%, and reasonable attorneys’ fees. 

Plaintiff shall provide notice of the Court’s ruling and file a proof of service regarding the same. 

Further, Plaintiff shall file a proposed Judgment in conformity with the Court’s ruling on or before May 16, 2024.  Accordingly, the Court sets an Order to Show Cause re Entry of Judgment on June 6, 2024 at 8:30 A.M. in Department 207.    

DATED:  April 18, 2024                                                        ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court