Filed 5/25/22 BRE Atlas Prop. Owner LLC v. KS Development, LLC CA2/2

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

BRE ATLAS PROPERTY 

OWNER LLC et al.,

Plaintiffs, Crossdefendants and Respondents,

v.

KS DEVELOPMENT, LLC,

Defendant, Crosscomplainant and Appellant.

 B310957

 (Los Angeles County

 Super. Ct. No. 20STCV12247)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, David J. Cowan, Judge. Affirmed.

Park & Lim, S. Young Lim and James E. Adler for 

Defendant, Cross-complainant and Appellant.

Paul Hastings, D. Scott Carlton, Timothy D. Reynolds and 

Alyssa K. Tapper for Plaintiffs, Cross-defendants and 

Respondents.
2

This breach of contract action involves an unconsummated 

purchase and sale of nine hotels. The parties, defendant, crosscomplainant and appellant KS Development, LLC (Buyer), and 

plaintiffs, cross-defendants and respondents BRE Atlas Property 

Owner LLC, BRE SSP Property Owner LLC, BRE SH Brisbane 

Owner LLC, BRE Newton Hotels Property Owner LLC, BRE SSP 

Thousand Oaks LLC, and BRE Polygon Property Owner LLC 

(collectively Seller),1 each contended the other party breached the 

purchase and sale agreement, and each claimed entitlement to a 

$9 million deposit held in escrow.

The trial court found that Buyer breached the purchase 

and sale agreement and that Seller was entitled to the $9 million 

deposit as liquidated damages. Substantial evidence supports 

the trial court’s findings, and we therefore affirm the judgment.

BACKGROUND

The purchase and sale agreement

On January 3, 2020, Buyer and Seller signed an agreement 

for the purchase and sale of nine select service hotels located in 

California2 for a total purchase price of $265 million (the PSA). 

The PSA specified a 45-day due diligence period (ending on 

1 The Seller entities are subsidiaries of, or under the control 

of, Blackstone Real Estate Group.

2 The nine hotels were the Courtyard by Marriott San Luis 

Obispo, Courtyard by Marriott Thousand Oaks, Town Place 

Suites by Marriott Thousand Oaks, Hampton Inn & Suites 

Thousand Oaks, SpringHill Suites by Marriott Irvine, Homewood 

Suites by Hilton San Francisco, Hampton Inn & Suites West 

Sacramento, Residence Inn by Marriott San Marcos, and 

Residence Inn by Marriott Bakersfield. Select service hotels are 

generally room-only operations or hotels with limited services.
3

February 18, 2020) and an initial closing date 30 days thereafter 

on March 19, 2020.3

Deposit and liquidated damages

Section 2.3 of the PSA required Buyer to make two deposits 

totaling $9 million. The first deposit of $3 million was due upon 

signing the PSA. The second $6 million deposit was due at the 

close of the 45-day due diligence period. At any time before the 

close of the due diligence period, Buyer could terminate the 

transaction and have its initial $3 million deposit returned. At 

the close of the due diligence period, the entire $9 million deposit 

became nonrefundable; however, the parties designated the $9 

million deposit as liquidated damages for breach of the PSA.

Seller’s representations, warranties, and covenants

Section 3.2 of the PSA sets forth Seller’s representations 

and warranties. As relevant here, section 3.2(i) states:

“Financial Statements. The financial statements 

provided to Buyer with respect to each Hotel are the 

same financial statements that each applicable 

Manager has provided to Seller with respect to such 

Hotel with respect to the periods covered thereby, 

and Seller generally relies on the accuracy of such 

financial statements for its own use.”

3 Section 7.1(b) provides that, “during the Due Diligence 

Period, Buyer may review at each Hotel, to the extent that such 

items are existing and in Seller’s possession or control, the 

current books and records concerning such Hotel, certificates of 

occupancy, as built plans and specifications, surveys, rent rolls, 

tax statements, inventory lists, service and maintenance 

agreements, and other instruments, documents and agreements, 

reasonably requested by Buyer to investigate such Hotel . . . .”
4

Section 3.3 of the PSA governs amendments to and 

limitations on Seller’s representations and warranties. Section 

3.3(a) states:

“(a) Amendments to Schedules. Seller shall have the 

right to amend and supplement the representations, 

warranties and schedules to this Agreement from 

time to time prior to the Closing by providing a 

written copy of such amendment or supplement to 

Buyer; provided, however, that if any such 

amendment or supplement provided to Buyer after 

the expiration of the Due Diligence Period discloses 

any condition, fact or other matter that (i) is either 

(A) within Seller’s Knowledge as of the Effective Date 

or (B) within Seller’s reasonable control after the 

Effective Date and in violation of this Agreement and 

(ii) would materially adversely impact the ownership 

or value of the Assets in the aggregate (a ‘Material 

Adverse Effect’), then Buyer, as its sole remedy, shall 

have the option of (x) waiving the breach of 

representation or warranty and proceeding with the 

Closing, or (y) terminating this Agreement, in which 

event the Deposit (including, for the avoidance of 

doubt, the Non-Refundable Portion of the Deposit) 

shall be returned to Buyer and neither party shall 

have any further obligations under this Agreement 

other than those which explicitly survive a 

termination hereof.”

Section 3.3(b) states:

“(b) Limitations on Representations and Warranties 

of Seller Notwithstanding anything in this

Agreement to the contrary, Seller shall have no 

liability, and Buyer shall make no claim against 

Seller, for (and Buyer shall be deemed to have waived 

any failure of a condition hereunder by reason of) a 

failure of any condition or a breach of any 
5

representation or warranty, covenant or other 

obligation of Seller under this Agreement or any 

amendment or supplement described in Section 3.3(a) 

or any document executed by Seller in connection 

with this Agreement (including for this purpose any 

matter that would have constituted a breach of 

Seller’s representations and warranties had they 

been made on the Closing Date) if the failure or 

breach in question constitutes or results from a 

condition, fact or other matter that was (i) known to 

Buyer (i.e., within Buyer’s Knowledge) prior to the 

expiration of the Due Diligence Period, (ii) known to 

Buyer (i.e., within Buyer’s Knowledge) prior to 

Closing and Buyer proceeds with the Closing, (iii) not 

within Seller’s Knowledge as of the Effective Date or 

(iv) not within the reasonable control of Seller after 

the Effective Date (or, if within Seller’s reasonable 

control, not in violation of this Agreement); provided, 

however, and notwithstanding Seller’s lack of 

liability and Buyer’s waiver of any claim for 

condition, fact or other matter referenced in clause

(iii) directly above, nothing referenced in clause (iii) 

above shall prevent Buyer from terminating this 

Agreement in accordance with Section 3.3(a) above 

and receiving a return of the Deposit. . . .”

Section 3.4 of the PSA sets forth Seller’s covenants prior to 

closing. As relevant here, Section 3.4(b) states:

“Covenants of Seller Prior to Closing. From the 

Effective Date until the Closing or earlier 

termination of this Agreement, Seller or Seller’s 

agents shall: [¶] . . . [¶]

“(b) Conduct of Business, Maintenance and 

Operation of Hotel. Continue to carry on the 

business and maintain the Hotels substantially in the 

same manner as currently conducted and maintained 
6

(or if not within Seller’s control under the applicable 

Management Agreement, use commercially 

reasonable efforts to cause such Manager to do so) 

including, to the extent expressly defined and 

required in each applicable Existing Franchise 

Agreement, maintaining all hotel operating supplies 

in accordance with par levels set forth therein.”

The transaction

Buyer paid the initial $3 million deposit into escrow on 

January 3, 2020, commencing the 45-day due diligence period. 

Seller, at Buyer’s request, thereafter provided 2017, 2018, and 

2019 financial statements prepared by Seller’s accounting staff. 

The financial statements were not prepared by the hotel 

managers themselves but contained financial data from each of 

the managers for the nine hotels in three formats: (1) last 12

months, (2) month to date and year to date, and (3) forecast. 

Seller relied on these financial statements for its own use in its 

business.

The close of the due diligence period coincided with the 

onset of the COVID-19 pandemic. Buyer became concerned about 

the impact of COVID-19 on the hospitality industry and Buyer’s 

ability to obtain financing for the transaction. To address these 

concerns, the parties executed, on February 18, 2020, a first 

amendment to the PSA that gave Buyer the right, upon an 

additional deposit of $1 million, to extend the closing date “solely 

in the event that Buyer’s acquisition lender states in writing that 

it is unable to close by the then-scheduled Closing Date due to 

concerns solely relating to the current COVID-19 coronavirus 

epidemic.” Upon execution of the first amendment, Buyer 

deposited into escrow the $6 million due at the close of the due 

diligence period.
7

On February 21, 2020, Buyer entered into a rate lock 

agreement with Credit Suisse First Boston (Credit Suisse) to 

secure the interest rate on the loan for the acquisition. In early 

March, however, Credit Suisse proposed new loan terms to 

Buyer. Buyer informed Seller that Credit Suisse was threatening 

to revoke its loan commitment and that Buyer needed additional 

time to negotiate new loan agreements.

From March 11, 2020, through March 17, 2020, Seller 

provided additional financial information requested by Buyer, 

including monthly financial statements, to facilitate Buyer’s 

negotiations with Credit Suisse. To expedite delivery of the 

requested information, Seller forwarded to Buyer reports and 

financial statements Seller received directly from the managers 

of the subject hotels.

On March 13, 2020, Buyer informed Seller that it needed to 

extend the closing date to consider alternative financing terms 

presented by Credit Suisse. That same day, the parties entered 

into a second amendment to the PSA extending the closing date 

by two weeks, from March 19, 2020, to April 1, 2020.

On March 16, 2020, Buyer requested that Seller provide 

either a six-month option to further extend the closing date at no 

additional cost or a $212 million, 24-month bridge loan to finance 

the acquisition. Seller declined the request.

Buyer’s notice of election to terminate

On March 18, 2020, Buyer terminated its rate lock 

agreement with Credit Suisse. That same day, Buyer sent Seller 

a letter from Buyer’s counsel, that alleged that Seller had

violated its covenant in section 3.4(b) of the PSA because 

“operations, occupancies, and revenues have significantly 

changed as a result of the COVID-19 virus since the time that 
8

Agreement was executed on January 3, 2020.” The letter stated 

that hotel managers had “provided financial statements to Seller 

that reflect substantially different results of operations, 

occupancies and revenues for the respective Hotels than those 

reflected in the financial statements previously provided to 

Buyer” and that Seller had not provided any amendments or 

supplements to the representations, warranties, and schedules to 

the PSA. Buyer’s letter further stated: “This letter constitutes 

notice that Buyer is electing the option of terminating the 

Agreement.” The letter stated that unless Seller cured the 

alleged unsatisfied conditions precedent by the closing date, 

“Buyer will elect the option of terminating the Agreement.”

On March 19, 2020, Seller responded in writing to Buyer’s 

notice of termination. Seller’s letter claimed violations of the 

PSA were baseless and that Buyer’s letter was a “pretextual 

attempt to excise itself from the Agreement and seek return of 

the deposit through accusations against Seller.” Seller’s letter 

urged Buyer to reconsider its position and to retract its notice to 

terminate. Seller’s letter countered that if Buyer did not do so, 

Seller would deem Buyer to have anticipatorily breached the 

PSA. Buyer did not respond to Seller’s March 19, 2020 letter.

On March 19, 2020, Buyer sent an e-mail to Marriott, one 

of the franchisors for several of the subject hotels, saying “[d]ue to 

the disruptions caused by the covid-19, we are suspending any 

further work on this transaction. We’ve let Seller know that this 

transaction cannot move forward at this time.” Later that day, 

Marriott’s counsel asked for confirmation as to whether Buyer 

intended to terminate the transaction or simply put it on hold. 

Buyer responded, “Yes. We will be terminating PSA and 
9

requesting a refund.” Buyer allowed its loan commitment with 

Credit Suisse to expire on March 21, 2020.

Seller’s notice of election to terminate and the current 

lawsuit

On March 26, 2020, Seller sent Buyer notice of its 

termination of the PSA based on Buyer’s anticipatory breach of 

the agreement. That same day, Seller filed a complaint alleging 

claims for declaratory relief, specific performance, and breach of 

contract, seeking release of the $9 million deposit as liquidated 

damages. Buyer filed a cross-complaint on May 12, 2020, 

alleging claims identical to Seller and seeking the same relief.

The matter proceeded to an eight-day bench trial at which 

witnesses for both Buyer and Seller testified. After the trial 

concluded, a 24-page statement of decision issued in which the 

trial court found that Seller had not breached any contractual 

obligation; that Buyer’s March 18, 2020 letter and associated 

conduct was a repudiation and anticipatory breach of the PSA; 

and that Seller was entitled to terminate the PSA and obtain the 

$9 million deposit as liquidated damages. Judgment was entered 

in Seller’s favor, and this appeal followed.

CONTENTIONS ON APPEAL

Buyer raises the following contentions on appeal:

1. Seller’s failure during the due diligence period to provide 

Buyer with the same financial statements Seller received from 

the managers of the subject hotels violated section 3.2(i) of the 

PSA and was a material failure of a condition to closing.

2. The substantial decrease in profitability reflected in 

financial statement forecasts provided by Seller to Buyer during 

the due diligence period when compared to actual and updated 
10

forecast results provided to Buyer after the due diligence period 

ended was a material failure of a condition to closing under the 

PSA.

3. Seller breached the PSA by failing to implement at the 

subject hotels the same cost reducing measures for COVID-19 

that Seller implemented at its other hotels.

4. Buyer’s March 18, 2020 letter was not a repudiation or 

anticipatory breach of the PSA.

5. The trial court erred by finding that expiration of 

Buyer’s loan commitment with Credit Suisse was evidence of 

Buyer’s repudiation and anticipatory breach of the PSA.

6. Seller’s March 26, 2020 letter to Buyer was an 

anticipatory breach of the PSA.

DISCUSSION

I. Standard of review

The parties do not dispute that the terms of the PSA are 

unambiguous and require no extrinsic evidence for 

interpretation. Interpretation of a contract that is unambiguous 

and that is not based on extrinsic evidence is subject to de novo 

review. (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1183.) 

Application of contractual terms to the facts and circumstances of 

a given case is reviewed for substantial evidence. (Bowers v. 

Bernards (1984) 150 Cal.App.3d 870, 873.)

We review Buyer’s challenge to the sufficiency of the 

evidence supporting the trial court’s factual findings under the 

substantial evidence standard. (Thompson v. Asimos (2016) 6 

Cal.App.5th 970, 981.) “Under this deferential standard of 

review, findings of fact are liberally construed to support the 

judgment and we consider the evidence in the light most 
11

favorable to the prevailing party, drawing all reasonable 

inferences in support of the findings.” (Ibid.)

II. Financial statements

Whether a breach of an obligation is material, thereby 

excusing performance by the other party, is ordinarily a question 

of fact. (Brown v. Grimes (2011) 192 Cal.App.4th 265, 277; see 

Sanchez v. County of San Bernardino (2009) 176 Cal.App.4th

516, 529-530.) Substantial evidence supports the trial court’s 

factual determination that Seller’s failure to provide Buyer with 

the same financial statements that Seller received from the 

managers at each of the subject hotels was not a material breach 

of Seller’s obligations under section 3.2(i) of the PSA.

The evidence presented at trial showed that the financial 

statements Seller provided to Buyer during the due diligence 

period contained information that did not differ materially from 

that contained in the financial statements that Seller received 

from the managers of the subject hotels. Guy Johnston, a senior 

associate at Blackstone, Inc.’s real estate management team, 

testified at trial that the financial statements Seller provided to 

Buyer contained the same financial information the hotel 

managers provided to Seller. Mark Sample, Seller’s asset 

manager for the subject hotel properties, similarly testified that 

the hotel managers provided Seller with financial data files that 

Seller’s accounting and finance department verified for accuracy 

and completeness and then reformatted for Seller’s use. 

Johnston and Sample also testified that Seller used and relied on 

the same financial information that Seller provided to Buyer.

Buyer does not dispute that the financial statements it 

received from Seller did not differ materially from the financial 

information Seller received from the subject hotel managers. 
12

Buyer nevertheless claims it was deprived of “the assurance of 

reliability it had negotiated and agreed to” in section 3.2(i) of the 

PSA. Buyer presented no evidence, however, that the financial 

information it received was unreliable, inaccurate, or in violation 

of the PSA. To the contrary, Buyer’s executive vice president Phil 

Wolfgramm testified that he was familiar with the appearance 

and format of monthly financial reports prepared by managers 

for Marriott and Hilton, that he never objected to the form of the 

financial reports Seller provided to Buyer during the due 

diligence period, and that he never asked during the due 

diligence period for reports prepared directly by the Marriott and 

Hilton managers.

Superior Motels, Inc. v. Rinn Motor Hotels, Inc. (1987) 195 

Cal.App.3d 1032, on which Buyer relies as support for its 

position, is distinguishable. The court in that case found the 

subtenant’s appointment of a receiver to be a material breach of a 

master lease provision prohibiting the bankruptcy, insolvency, or 

receivership of the lessee, despite the subtenant’s continued 

payment of rent. (Id. at p. 1052.) The court found that the 

sublessor, who had assigned its interests and obligations under 

the master lease to the subtenant in exchange for the subtenant’s 

stock, had lost the value of its consideration for the sublease. (Id. 

at p. 1055.) No such circumstances are present here.

Sacket v. Spindler (1967) 248 Cal.App.2d 220, which lists 

the factors to be considered in determining whether a breach is 

material, undermines rather than supports Buyer’s position. The 

first of those factors cited by the court in Sacket is “[t]he extent to 

which the injured party will obtain the substantial benefit which 

he could have reasonably anticipated.” (Id. at p. 229.) The 

evidence here showed that financial statements Buyer received 
13

during the due diligence period contained all material financial 

information concerning the subject hotels that Buyer could 

reasonably have expected.

Substantial evidence supports the finding that Seller did 

not breach section 3.2(i) of the PSA.

III. Forecasts

Buyer contends a net decline in forecasted profits for the 

subject hotels that became evident in March 2020 because of 

reduced occupancy rates triggered by COVID-19 rendered Seller’s 

previous forecasts inaccurate4 and resulted in a failure of 

condition under section 5.2(a) of the PSA. Section 5.2(a) states 

that Buyer’s obligation to close the transaction is subject to the 

condition that “[e]ach of the representations and warranties 

made by Seller in this Agreement . . . shall be true and correct in 

all material respects when made and on and as of the Closing 

Date as though such representations and warranties were made 

on and as of the Closing Date (unless such representation or 

warranty is made on and as of a specific date, in which case it 

shall be true and correct in all material respects as of such 

date) . . . .”

5

4 Specifically, Buyer contends financial forecasts for March

2020 that Seller provided in February 2020, which showed 

estimated EBITDA (earnings before interest, taxes, depreciation, 

and amortization) profit for the nine hotels of $2,494,359 in 

March 2020 and $7,159,424 in the second quarter of 2020 were 

inaccurate when compared to actual results for the subject hotels 

in March 2020, which showed aggregate profits of only $128,324 

for March 2020 and an updated forecast for the second quarter of 

2020, which projected a loss of $1,905,999.

5 Section 5.2(a) provides:
14

The PSA contains no representation or warranty by Seller, 

however, with respect to financial forecasts or forecasted profits. 

Seller’s representations and warranties are set forth in section 

3.2. The only representation and warranty in that section 

remotely related to financial matters is 3.2(i), which states that 

the financial statements provided to Buyer with respect to each 

hotel are the same financial statements that each hotel manager 

“Conditions to Buyer’s Obligations. The 

obligation of Buyer to purchase and pay for the 

Assets is subject to the satisfaction (or waiver by 

Buyer) as of the Closing of the following conditions:

“(a) Representations and warranties. Each of 

the representations and warranties made by Seller in 

this Agreement (as the same may be amended or 

supplemented in accordance with Section 3.3) shall 

be true and correct in all material respects when 

made and on and as of the Closing Date as though 

such representations and warranties were made on 

and as of the Closing Date (unless such 

representation or warranty is made on and as of a 

specific date, in which case it shall be true and 

correct in all material respects as of such date), 

excluding, however, any inaccuracies or changes in 

the representations and warranties made by Seller 

resulting from any action, condition or matter that (i) 

is expressly permitted or contemplated by the terms 

of this Agreement, (ii) was within Buyer’s Knowledge 

prior to the expiration of the Due Diligence Period, 

or, subject to Section 3.3, prior to the Closing, (iii) 

was not within Seller’s Knowledge as of the Effective 

Date or (iv) is a result of events or occurrences 

outside of the reasonable control of Seller after the 

Effective Date.”
15

has provided to Seller and that Seller generally relies on the 

accuracy of those financial statements for its own use.

Even if the forecasted financial information could be 

deemed to be a representation and warranty by Seller, the 

forecasts were made as of a specific date. Buyer does not claim 

the forecasts were false or inaccurate on the date they were 

made.

Seller’s representations and warranties, moreover, are 

limited by sections 3.3(b) and 5.2(a) of the PSA, which relieve 

Seller from liability for failure of any condition or breach of any 

representation or warranty resulting from a condition “not within 

the reasonable control of Seller after the Effective Date [of 

January 3, 2020].”6 Buyer does not dispute that reduced hotel 

occupancy because of COVID-19 was outside of Seller’s 

reasonable control. The trial court found that differences 

between forecasted and actual financial performance resulting 

from reduced occupancy levels were similarly outside of Seller’s 

reasonable control and ability to cure.

Substantial evidence supports the trial court’s 

determination that forecasts Buyer received after the due 

diligence period ended did not cause Seller’s representations and 

warranties to be false or misleading. Multiple witnesses, 

including Johnston, Sample, and Byron Blount, the managing 

director of Blackstone, Inc.’s real estate group, testified that the 

monthly financial forecasts are “snapshots in time” that change 

6 We do not address Buyer’s argument as to whether sections 

3.3(b) and 5.2(a) constitute force majeure provisions, as this 

argument was not raised in the trial court below. (In re Marriage 

of Eben-King & King (2000) 80 Cal.App.4th 92, 117 [issues not 

raised in trial court will not be addressed on appeal].)
16

or are updated over time as managers obtain more information. 

Buyer’s executive vice-president Wolfgramm admitted during his 

testimony that monthly financial forecasts are expected to change 

over time.

Substantial evidence supports the determination that 

Seller did not breach any representation or warranty concerning 

forecasted profits.

IV. Operation and maintenance of subject hotels

Substantial evidence supports the trial court’s finding that 

Seller fulfilled its obligations under section 3.4(b) of the PSA to 

“[c]ontinue to carry on the business and maintain the Hotels 

substantially in the same manner as currently conducted and 

maintained” from the date the parties executed the PSA until the 

closing. Seller’s asset manager Sample testified that each of the 

subject hotels was staffed, open, accepting reservations, and 

operating in March 2020 as they had been previously, because 

Seller was cognizant of its obligation to do so under the PSA. 

Sample contrasted operations at the subject hotels with reduced 

operations at approximately 100 other hotels owned by Seller at 

the time, where hotel staff was furloughed or laid off.

We reject Buyer’s argument that Seller was required to 

reduce staffing at the subject hotels because of reduced occupancy 

resulting from COVID-19 as inconsistent with the plain language 

of section 3.4(b) of the PSA. The trial court found, moreover, that 

Buyer failed to show that retaining staffing at the subject hotels 

was an improper or unnecessary expense, or that employees 

should have been laid off to keep operations as profitable as 

possible.
17

V. Buyer’s March 18, 2020 letter

“[R]epudiation is ordinarily a question of fact and intent, 

and [whether a contract has been repudiated] must be 

determined by the facts in the particular case.” (Gold Min. & 

Water Co. v. Swinerton (1943) 23 Cal.2d 19, 28 (Gold Mining).) 

Substantial evidence supports the trial court’s factual 

determination that Buyer’s March 18, 2020 letter and associated 

conduct was a repudiation of its obligations under the PSA and 

an anticipatory breach of contract.

The March 18, 2020 letter plainly states that it “constitutes 

notice that Buyer is electing the option of terminating the 

Agreement.” Although the letter purports to condition exercise of 

that option on Seller’s failure to cure alleged unsatisfied 

conditions precedent to closing, the trial court found no 

unsatisfied conditions existed. As discussed previously, 

substantial evidence supports those findings. Conditioning one’s 

performance under a contract on actions that the other party has 

no duty or obligation to perform is an anticipatory breach. (Gold 

Mining, supra, 23 Cal.2d at p. 28.) An anticipatory breach is a 

total breach of the contract. (Id. at p. 29.)

Buyer never responded to Seller’s March 19, 2020 letter, 

which gave Buyer the opportunity to “reconsider its position” 

with regard to terminating the PSA. Rather, Buyer’s subsequent 

conduct further supports the trial court’s finding of anticipatory 

breach. On March 18, 2020, the same day Buyer sent its notice of 

termination letter to Seller, Buyer terminated its rate lock 

agreement with Credit Suisse. One day later, on March 19, 2020, 

Buyer sent an e-mail to Marriott, one of the hotel franchisors, 

stating that Buyer was “suspending any further work on this

transaction.” The following day, on March 20, 2020, in response 
18

to a request by Marriott for clarification, Buyer informed 

Marriott that it was terminating the PSA.

Buyer’s reliance on Thornton v. Victor Meat Co. (1968) 260 

Cal.App.2d 452, California Canning Peach Growers v. Harris 

(1928) 91 Cal.App. 654, and other cases stating that a mere 

threat not to perform does not constitute repudiation is 

misplaced. Buyer’s repudiation consisted of more than a mere 

threat not to perform. Buyer’s conduct subsequent to its 

March 18, 2020 letter, in addition to the letter itself, constitute 

substantial evidence of repudiation and anticipatory breach.

VI. Expiration of loan commitment

That Buyer allowed its loan commitment with Credit 

Suisse to expire on March 21, 2020 is further evidence of its 

repudiation of the PSA. Buyer’s conduct in the days preceding 

expiration of its loan commitment—terminating its rate lock 

agreement with Credit Suisse, sending notice of termination of 

the PSA to Seller, not responding to Seller’s March 19, 2020 

letter urging Buyer to rescind its notice of termination, and 

informing Marriott that Buyer intended to terminate the PSA—

amply supports the trial court’s finding of anticipatory breach. 

Given this factual context, Buyer’s allowing its loan commitment 

to lapse further evidences its intent to terminate the transaction 

with Seller.

Buyer contends the lapse of its loan commitment with 

Credit Suisse did not support a finding of anticipatory breach 

because Seller did not prove that Credit Suisse was Buyer’s only 

source of funds. Buyer claims there was evidence that it could 

have financed the purchase itself or on different terms with 

Credit Suisse or other lenders. That evidence consists of 

testimony by Buyer’s principal, Ronnie Lam, that Buyer in the 
19

past had made an all cash purchase of a hotel in Las Vegas. Lam 

also testified, however, that Buyer did not proceed with an all 

cash purchase in this case because it risked being “out of cash” at 

closing. Although Lam testified that Buyer was negotiating loan 

terms with other banks, such as Goldman Sachs and JP Morgan, 

Buyer submitted no documentary evidence of negotiations with or 

commitments from these other lenders. As the trial court noted 

in its statement of decision, “[t]he Court cannot just assume 

Buyer had $260 million then available even if Lam says he had.” 

The trial court further noted that had Buyer needed additional 

time to secure more reasonably priced financing, it could have 

exercised its option to extend the closing date under the parties’ 

amendment to the PSA. Buyer did not do so.

The trial court did not err by determining that Buyer’s 

decision to allow its loan commitment with Credit Suisse to lapse 

was further evidence of anticipatory breach.

VII. Seller’s March 26, 2020 letter

When a party to a bilateral contract repudiates the 

contract, the other party “can treat the repudiation as an 

anticipatory breach and immediately seek damages for breach of 

contract, thereby terminating the contractual relation between 

the parties.” (Mammoth Lakes Land Acquisition, LLC v. Town of 

Mammoth Lakes (2010) 191 Cal.App.4th 435, 463.) As discussed, 

substantial evidence supports the trial court’s finding that 

Buyer’s March 18, 2020 letter and subsequent conduct 

constituted an anticipatory breach of the PSA. Although Seller 

afforded Buyer an opportunity to retract its notice of termination, 

Buyer did not do so. Seller was accordingly entitled to treat 

Buyer’s repudiation as a material breach, terminate the PSA, and 

recover the $9 million deposit as liquidated damages. (Ibid.)
20

DISPOSITION

The judgment is affirmed. Seller shall recover its costs on 

appeal.

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CHAVEZ, J.

We concur:

________________________

LUI, P. J.

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ASHMANN-GERST, J.