Court Opinion

ID: 8607181
Source: CourtListenerOpinion
Date Created: 2022-11-24 04:19:01.150011+00
Date Added: 2024-06-11T16:55:17.306411
License: Public Domain

KOZINSKI, Circuit Judge,
dissenting:
GE Capital agreed to finance Olyaie’s purchase of a gas station if he met certain conditions designed to minimize GE Capital’s liability for contaminated gas tanks at the site. The key condition relevant to this case required Olyaie to obtain an indemnification agreement from Valero/Exxon that was acceptable to GE Capital. In a February 14, 2001, letter predating the signing of the actual loan agreement, GE Capital indicated that it might be willing to waive this condition, should Olyaie obtain a supplemental pollution liability policy from AIG, and it subsequently acted as a liaison between Olyaie and AIG. But at no point did GE Capital indicate that it was willing to waive the indemnity provision—unless Olyaie obtained an AIG pollution liability policy.
The parties do not dispute whether Olyaie had obtained either an acceptable indemnification agreement or a supplemental AIG policy by the scheduled closing date, April 24, 2001. He had not. Thus, the condition precedent to GE Capital’s obligation to fund the purchase had not been met, and GE Capital had no obligation to close the loan on the scheduled date. For this reason, Olyaie has no breach of contract claim. Nonetheless, the majority allows Olyaie to revive his contract claim under different names by holding that summary judgment was inappropriate on Olyaie’s implied repudiation and bad faith claims.
The nub of Olyaie’s implied repudiation claim is that GE Capital’s cancellation of the April 24th closing made it “substantially impossible” to close the loan by April 30, 2001, the date on which both Olyaie’s option to purchase the Valero station and GE Capital’s loan commitment expired. It might have been difficult—perhaps even impossible—for Olyaie to meet these conditions in the six remaining days. But “an implied repudiation results from conduct where the promisor puts it out of his power to perform so as to make substantial performance of his promise impossible.” Taylor v. Johnston, 15 Cal.3d 130, 123 Cal.Rptr. 641, 539 P.2d 425, 430 (1975) (emphasis added). The sole reason for the promisor’s—GE Capital’s—refusal to close the loan on April 24th was that Olyaie had not satisfied the environmental conditions. If Olyaie had satisfied the conditions before April 30th, there’s nothing in the record to suggest GE Capital couldn’t have closed on the loan. The logistics of getting all of the parties together for a second time may have been difficult, but, in an era of air travel, video conferencing, qmail, facsimiles and FedEx, there’s no reason to believe it would have been impossible— which is the standard California courts apply in determining whether a contract has been impliedly repudiated. Id. Moreover, the loan agreement allowed Olyaie to ask for a sixty-day extension of the commitment from GE Capital—a provision plaintiff never invoked.
Assuming the facts in a light most favorable to plaintiff, GE Capital was somewhat unresponsive to Olyaie’s follow-up inquiries after the closing was canceled. But *614Olyaie never gave GE Capital any indication that he had satisfied the environmental conditions or was taking the steps necessary to do so in advance of the April 30th deadline. And, until he did so, there was no reason to talk. Olyaie’s lawyer did have a conversation with GE Capital’s counsel in which he threatened that his client was on the verge of taking his business elsewhere. The majority sees GE Capital’s counsel’s response—that Olyaie should do “what he has to do”—as an indication that GE Capital was no longer willing to fund the loan. This overlooks the fact that it was Olyaie’s failure to satisfy the conditions, not GE Capital’s recalcitrance, that was holding up the closing at this point. Given that the loan commitment was quickly approaching and Olyaie had yet to satisfy the environmental conditions, there was little reason for GE Capital to be optimistic. Thus, GE Capital’s counsel’s statement was a realistic assessment of what Olyaie would be able to do—not an indication of GE Capital’s unwillingness to perform.
Finally, the majority holds that Olyaie has alleged an act of bad faith on GE Capital’s part for misrepresenting the status of Olyaie’s insurance policy with AIG. The only evidence Olyaie relies on to support this claim are Carole Sullivan’s statements in early April that he was “qualified” for the loan and that everything was “final.” But these statements merely confirmed what GE Capital had communicated in March—that it had agreed to fund Olyaie’s purchase of the gas station, subject to Ms meeting the environmental conditions. GE Capital gave periodic updates to Olyaie’s loan agent, C.J. Lynden, throughout March and April on the status of the AIG negotiations, and apprised her of the difficulties it was having in obtaining affordable supplemental policies for the station purchasers. And this knowledge is imputed to Olyaie. In re Marriage of Cloney, 91 Cal.App.4th 429, 110 Cal. Rptr.2d 615, 623 (2001). Moreover, Olyaie himself faxed an insurance questionnaire to AIG on April 10th. So, as of that date, a mere two weeks before the scheduled closing, he knew with certainty that he wasn’t covered. He received no subsequent confirmation that his application had been accepted, nor did he cut a check for the premium.
Thus, as of April 24, 2001, Olyaie had, on one hand, a vague assurance from Sullivan, communicating nothing more than was in the March commitment letter, and, on the other, knowledge that GE Capital’s negotiations with AIG were not going well and that he had heard nothing from AIG, two weeks after faxing in his questionnaire. If Olyaie relied on Sullivan’s statements rather than the weight of the evidence available to him, that was his mistake, not GE Capital’s.
GE Capital’s abrupt cancellation of the closing was not a model of professional courtesy. But it didn’t “destroy[] or injure] the right of [Olyaie] to receive the fruits of the contract.” Storek & Storek, Inc., v. Citicorp Real Estate, Inc., 100 Cal.App.4th 44, 122 Cal.Rptr.2d 267, 276 (2002). The fruits would have been there for Olyaie to enjoy, if he had satisfied the environmental conditions. GE Capital’s efforts to help him satisfy those conditions in no way extended the scope of the company’s contractual obligations to Olyaie. To the extent he believed otherwise, he was mistaken, and the company had no obligation to clarify matters for him.