GNM, L.P., v. 4930 Coldwater Canyon Venture, LLC

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR, ALTERNATIVELY, SUMMARY ADJUDICATION

 

MOVING PARTY: Defendant 4930 Coldwater Canyon Venture, LLC 

RESPONDING PARTY(S): Plaintiff GNM, L.P.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff GNM, L.P., brings this action against Defendant 4930 Coldwater Canyon Venture, LLC. Plaintiff alleges the parties entered into a purchase and sale agreement for the property at 4930 Coldwater Canyon Ave, Sherman Oaks, CA 91423, with Plaintiff as purchaser and Defendant as seller.  Plaintiff alleges it was ready to perform but that Defendant cancelled escrow and the contract.  Plaintiff brings causes of action for (1) breach of written contract and (2) breach of the implied covenant of good faith and fair dealing.

Defendant 4930 Coldwater filed a Cross-Complaint against Plaintiff for (1) breach of contract and (2) fraud. Defendant/Cross-Complainant alleges in its First Amended Cross-Complaint that Plaintiff/Cross-Defendant failed to timely deposit money into escrow in breach of the purchase and sale agreement, and then obtained an extension based on alleged misrepresentations. Defendant seeks to rescind the purchase and sale agreement and retain Plaintiff’s initial escrow deposit as liquidated damages.

Defendant 4930 Coldwater Canyon Venture, LLC, now moves for summary judgment, or in the alternative, summary adjudication. Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Motion for Summary Judgment, or in the alternative, Summary Adjudication, is DENIED.

Plaintiff is ordered to give notice, unless waived.

DISCUSSION:

I. Judicial Notice

Pursuant to Defendant’s request, the court takes judicial notice of the declarations of Lynette Gridley and Hirsch Sherman that Plaintiff filed in opposition to Defendant’s motion to expunge lis pendens on April 10, 2023. 

II. Evidentiary Objections

Pursuant to CCP § 437c(q), the Court only rules upon objections asserted against evidence which the Court deems to be material to the disposition of this motion, as follows:

Plaintiff’s objections numbered 1-14 are OVERRULED.

Defendant’s objections numbered 1-28 are OVERRULED. 

III. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

IV. Analysis

A. Background

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

Plaintiff GNM alleges it entered into a Residential Income Purchase Agreement (“RIPA”) as buyer to purchase property from Defendant 4930 Coldwater Canyon. (Compl. ¶ 4.) The RIPA required an initial deposit of $300,000, which Plaintiff submitted to escrow on or about June 13, 2022. (Id. ¶ 5.) 

On or about June 17, 2022, Plaintiff executed and sent a written removal of contingencies to the escrow officer, which stated that escrow “shall close on or before September 9, 2022.” (Id. ¶ 6.) 

An addendum to the RIPA states that Plaintiff “shall have on [sic] 15-day option to extend close of escrow.” (Id. ¶ 7.) On or about September 1, 2022, Plaintiff “drafted and emailed to its real estate broker under the [RIPA] a request to extend the Escrow by 15 days,” and “GNM is informed and believes that its broker informed 4930 CC's broker, and the Escrow Company, of such extension request.” (Id.) Plaintiff alleges this extended the escrow closing date to September 26, 2022. (Id.)

On or about September 7, 2022, Defendant “sent the Escrow Company a Notice to Buyer to Perform and Demand to Close Escrow which purported to require the Escrow to close on or before September 10, 2022.” (Id. ¶ 8.) On September 9 and 13, 2022, GNM’s counsel demanded that the Notice be withdrawn, contending it “was written in error” because Plaintiff exercised its option to extend the close of escrow. (Id. ¶ 10.) Defendant did not respond. (Id. ¶ 11.) 

On or about September 23, 2022, Plaintiff’s lender “provided loan documents to Escrow,” amounting to the “full funding of the purchase price under the [RIPA].” (Id. ¶ 13.) Defendant, however, has not closed the Escrow, “necessitating the filing of this action.” (Id. ¶ 14.) Plaintiff asserts two causes of action for (1) breach of the purchase and sale agreement and (2) breach of the implied covenant of good faith and fair dealing. 

B. Defendant’s Burden

The burden begins with Defendant to show that “one or more elements of a cause of action . . . cannot be established.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. To establish a breach of contract, Plaintiff must demonstrate: (1) the existence of a contract; (2) Plaintiff’s performance or excuse for nonperformance; (3) Defendant’s breach (or anticipatory breach); and (4) resulting damage.  (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Defendant argues it cancelled the contract according to its terms after plaintiff failed to perform its obligations under the contract and did not cure its default after being given notice and an opportunity to cure the default. In other words, Defendant contends Plaintiff cannot establish its performance under the contract.

Defendant presents the following evidence: By its terms, the RIPA required the parties to close escrow by August 10, 2022. (SSUMF 2.) However, on June 17, 2022, the parties agreed to extend the close of escrow to on or before September 9, 2022. [FN 1] (SSUMF 4.) By September 9, Plaintiff had not closed escrow because it had not obtained the funds to do so. (SSUMF 10.) 

Moreover, Plaintiff did not exercise the RIPA’s option to extend the close of escrow by 15-days, because Plaintiff did not provide written notice at least five days prior to September 9, 2022.  (SSUMF 13; Exh. A, “Text Overflow Addendum No. 1,” [“Buyer to have one 15-day option to extend the Close of Escrow. To exercise such extension option, Buyer shall provide written notice to Adrienne Barr/Berkadia no less than 5 days prior to the then scheduled Close of Escrow”].) Accordingly, on September 19, 2022, Defendant cancelled the sale. (SSUMF 14.) 

Defendant has therefore met its initial burden to demonstrate that Plaintiff cannot establish its performance under the contract, because Plaintiff did not close escrow within the time mandated by the RIPA. 

C. Plaintiff’s Burden

This switches the burden to Plaintiff to show via specific facts that a triable issue of material facts exists. (§ 437c(o)(2).) 

As an initial point, Plaintiff has not provided evidence to establish that it provided notice to Defendant to extend escrow prior to the September 9, 2022 closing date. Rather, it cannot be disputed that while Plaintiff may have prepared the note to exercise the extension, that note was never delivered to Defendant’s agent. Thus, any attempt to exercise the extension was ineffective. 

Moving on, Plaintiff contends that Defendant itself breached the RIPA by not providing a closing statement to the escrow officer. (Opp. 15: 17-19.) Under the RIPA, the parties were to sign and return closing documents 5-days after receipt. (D’s Exh. A, “RIPA,” ¶ N(2).) 

Importantly, however, it appears escrow never prepared or provided a closing statement. This is presumably because on September 7, 2022, Plaintiff informed escrow that it could not close on September 9. Accordingly, this argument fails.

Plaintiff then argues that even if it did not close escrow by the time required in the contract, that it had an equitable right to extend escrow beyond September 9, 2022. Plaintiff relies on its evidence that it was in position to close escrow by September 23, 2022—approximately two weeks after the scheduled close—when it sent buyer a notice to perform. (P’s SSAMF 27.) Plaintiff argues that failing to recognize an equitable extension of the closing date would result in a forfeiture.  

The RIPA contained a time is of the essence provision. (RIPA ¶ 34.) But a “time is of the essence provision in a contract does not always make untimely performance a breach.” (Magic Carpet Ride LLC v. Rugger Inv. Grp., L.L.C., 41 Cal. App. 5th 357, 367.) In certain cases, modern courts have “tempered” the traditional rule that failure to perform within the time specified is a material breach of the contract. (Id.) “A time is of the essence provision will not be enforced if doing so would work a forfeiture: ‘Our review of the authorities reveals that California courts generally do strictly enforce time deadlines in real estate sales contracts, permitting the seller to cancel after the time specified where time is specifically made of the essence unless there has been a waiver or potential forfeiture.’” (Magic Carpet Ride LLC v. Rugger Inv. Grp., L.L.C. (2019) 41 Cal. App. 5th 357, 367.)

Here, there is evidence of a potential forfeiture, because Plaintiff paid $300,000.00 to escrow on June 22, 2022. (SSAMF 15.)  [FN 2]
It is also important to note that Plaintiff was apparently in position to perform by September 23, 2022. Finally, it is unclear if Defendant suffered or would have suffered any damages from the delay. At the very least, there is no evidence in the record to firmly establish the damages. 

The court is mindful of its duty to “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.) Doing so here, Plaintiff has raised a triable issue of material fact whether Plaintiff substantially performed its obligations under the RIPA, and whether enforcement of the time is of the essence provision would result in an unjust forfeiture. (See Magic Carpet Ride LLC v. Rugger Inv. Grp., L.L.C. (2019) 41 Cal. App. 5th 357, 369 [whether party would experience unjust forfeiture and whether party had substantially performed its obligations under sales contract were triable issue of material fact].)

Accordingly, Defendant’s Motion for Summary Judgment, or in the alternative, summary adjudication, is DENIED.

IT IS SO ORDERED.

Dated:   May 14, 2024 ___________________________________

Judge of the Superior Court

FN 1- This court also discussed this point in its 04/21/23 Ruling on Defendant’s motion to expunge the lis pendens in this matter. The court explained: “Plaintiff has failed to present evidence that it ever exercised the 15-day extension as required under the RIPA Addendum.  Instead, that contention seems to be a contrived, after-the-fact justification to extend the close of escrow. Defendant, on the other hand, presents evidence that it never received the extension request, and that the parties were operating on the joint-belief that escrow would close on or about September 9, 2022.” (04/21/2023 Ruling, p. 5.) This still holds true.  

FN 2- The court’s discussion of this issue in its ruling on the motion to expunge occurred in a separate context, as a motion to expunge requires the court to essentially sit as a trier of fact to determine the probable validity of a claim by a preponderance of the evidence (CCP § 405.32.) But when ruling on a motion for summary judgment, “[t]he court does not weigh evidence, but instead considers whether the evidence creates a triable issue of fact.” (Blue Mountain Enterprises, LLC. v. Owen (2022) 74 Cal. App. 5th 537, 549.)