Court Opinion

ID: 8487779
Source: CourtListenerOpinion
Date Created: 2022-11-18 19:01:32.96569+00
Date Added: 2024-06-11T16:50:05.267517
License: Public Domain

Filed 11/18/22 Montano v. Davila 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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

 CLAUDIA MONTANO,                                                       B311432

           Plaintiff and Respondent,                                    (Los Angeles County
                                                                        Super. Ct. No. BC695708)
           v.

 ELSA DAVILA et al.,

           Defendants and Appellants.

     APPEAL from the judgment of the Superior Court of Los
Angeles County, Monica Bachner, Judge. Affirmed.

     The Milner Firm and Timothy V. Milner for Defendants
and Appellants.

     Gordon Law, Donald Scott Gordon, and Justin Michael
Gordon for Plaintiff and Respondent.
                              ******
       A prospective buyer of a commercial building sued the
prospective sellers for breach of contract and fraud, and was
awarded actual and punitive damages exceeding $200,000 after a
multi-day bench trial. The prospective sellers challenge this
award, as well as the court’s rejection of their cross-claims. We
conclude there was no error, and affirm.
         FACTS AND PROCEDURAL BACKGROUND
I.     Facts
       A.    The building
       In 2017, Elsa Davila (Davila) and Jesus Tapia (Tapia)
(collectively, owners) owned a commercial building on
Washington Boulevard in Culver City, California. The primary
tenant in the building was the El Alteno Sports Bar (the Bar).
       Claudia Montano (plaintiff) wanted to the buy the Bar, and
she spoke with the Bar’s owner about buying the Bar as well as
with the owners about buying the building housing the Bar.
       B.    Plaintiff signs an agreement to buy the building
       Plaintiff and the owners eventually negotiated a Purchase
Agreement (the Agreement) for plaintiff to buy the building.
Plaintiff’s purchase price under the Agreement was $1.5 million.
The owners agreed to finance plaintiff’s purchase as follows:
       ●     Plaintiff would pay the owners a $75,000 down
payment, and an additional $25,000 lump sum payment within
six months.
       ●     Plaintiff would pay the owners a monthly payment
toward the outstanding balance. The initial monthly payment
was $6,100 (the sum of the Bar’s $3,100 monthly rent plus $3,000
from plaintiff), but the payment would rise to $8,000 once the
tenant ended the lease.

                                2
       ●      After two years, plaintiff would be able to obtain a
bank loan to pay the owners the remaining balance.
       ●      The owners would hold the deed until the full $1.5
million purchase price was paid in full.
Under the Agreement, plaintiff would be responsible for taking
care of the building, for supervising the tenant, and for paying all
property taxes.
       The Agreement also had the following, somewhat unusual
provision:
              “In the event a separate party happens to offer
       [the owners] more than [$1.5 million] for the property
       it is agreed to give [plaintiff] priority to pay
       remaining debt within 60 days. If [plaintiff] is unable
       to pay remaining debt within 60 days and [the
       owners] are able to sell the property, they will
       reimburse [plaintiff] all previous debt that was
       rendered to that point.”
(Italics added.) During the period when the Agreement was
negotiated, plaintiff was aware that the owners had listed the
building for sale with a real estate agent. However, the owners
assured plaintiff that their listing agreement had expired or was
about to expire, and that they were not “actively marketing” the
building for sale. Indeed, Davila acknowledged that this
provision was meant to apply only “if by chance somebody came
along and made an offer.”
       On the basis of the owners’ representations, plaintiff signed
the Agreement on November 4, 2017. Plaintiff thereafter made
the $75,000 down payment, started making monthly payments,
and paid the 2017 property tax bill for the building.

                                 3
       C.     The owners’ continued marketing of the
building, sale to a third party, and rescission of the
agreement
       Unbeknownst to plaintiff, the owners’ listing agreement
was not about to expire, and the owners continued to actively
market the building through their listing agent. On January 29,
2018, the owners signed a contract to sell the building for exactly
$1.5 million to an entity called “I’m For Real Estate, LLC.”
       On February 20, 2018,1 the owners (through their lawyer)
sent plaintiff a letter (1) expressing “serious doubts” as to
whether the Agreement was “enforceable at all,” and accusing
plaintiff of engaging in elder abuse, and (2) “serv[ing] notice that
they have received an offer” “for more than [$1.5 million]” (which,
as noted above, is inaccurate), and demanding that plaintiff had
60 days (until April 21, 2018) to pay the nearly $1.4 million
remaining balance if she wanted to buy the building. (Italics
added.)
       On March 23, 2018—just 31 days later—the owners sent
plaintiff a second letter informing her that the Agreement was
“rescinded” and refunding her the amounts she had paid under
the Agreement, which the owners calculated to be $88,455.90.
       On April 5, 2018, plaintiff sent a letter to the owners, their
listing agent, and the third parties in control of the “I’m For Real
Estate, LLC.” In the letter, plaintiff refused to rescind the
Agreement, informed the owners she was suing them for civil

1     The court and the parties refer to an earlier, February 2,
2018 letter in which the owners purported to cancel the
Agreement. However, the letter is not in the record and, in light
of our analysis, the letter would at most provide an alternate
route to affirmance; we need not address this alternate route.

                                  4
fraud, and indicated she had filed a report with the police
regarding possible criminal fraud.
II.    Procedural Background
       A.    Plaintiff sues
       In February 2018, plaintiff sued the owners. In the
operative third amended complaint, plaintiff sued for (1) breach
of contract, alleging that the owners’ letters repudiated the
Agreement by not giving her the full 60 days to pay the
outstanding balance, (2) fraud, alleging in pertinent part that the
owners had fraudulently induced her to sign the Agreement by
concealing that they were going to continue actively marketing
the building, (3) quiet title, alleging that the Agreement entitled
her to ownership of the building, and (4) specific performance,
alleging that the Agreement obligated the owners to convey her
the building.
       B.    The owners counter-sue
       The owners sued plaintiff (1) to quiet title to the building,
(2) for slander of title based on her April 5 letter to the third
party buyer, (3) for intentional interference with a contractual
relation based on the same April 5 letter, (4) for rescission of the
Agreement, (5) for elder abuse based on Tapia’s age and illness at
the time the Agreement was signed, and (6) for injunctive relief
to prevent plaintiff from further contacting the third party buyer.
       C.    Trial
       The matter proceeded to a multi-day bench trial in October
2019; the parties called nine witnesses.
       The trial court issued its tentative statement of decision in
February 2020. The court found that the owners had breached
the Agreement by declaring it to be “rescind[ed]” just 31 days
after informing plaintiff she had 60 days to pay the outstanding

                                 5
balance, but found that the contract was not “specifically certain”
enough to support the remedy of specific performance. The court
also found by clear and convincing evidence that the owners had
induced plaintiff to enter into the Agreement by telling the
“explicit lie[]” that their listing agreement was about to expire
while concealing that they were “going to actively sell the
[building].” The court rejected plaintiff’s quiet title claim. The
court concluded that plaintiff had suffered $81,483.27 in actual
damages, comprised of the amount of rent she would have been
allowed to collect from the tenant for 18 months, out-of-pocket
expenses of $15,227.37, the property tax bill she paid of
$1,455.90, and $9,000 in labor expenses. The court also found by
clear and convincing evidence that the owners were “guilty of
oppression, fraud or malice” because they had “manipulat[ed]”
plaintiff into signing the Agreement so they could “receive a
stream of income while deceitfully continuing to market the
property”; the court accordingly awarded an additional $163,000
in punitive damages. The court rejected the owners’ remaining
counterclaims, finding that they had not established any
damages to support their slander of title and intentional
interference claims, that injunctive relief was not a separate
cause of action, and that they had not established the cause of
action for recission.2
       The court issued its final statement of decision in January
2021, adding $12,323.07 in prejudgment interest.
       D.     Appeal
       The owners appealed the tentative statement of decision,
but we dismissed their appeal as improper.

2     At trial, the owners had moved to dismiss the cause of
action for elder abuse.

                                 6
       The owners then timely filed an appeal of the final
statement of decision, which is before us now.
                            DISCUSSION
       The owners argue that the trial court erred in (1) ruling in
plaintiff’s favor on her breach of contract and fraud claims, and
(2) ruling against them on the slander and intentional
interference cross-claims. The sole challenge the owners bring is
to the sufficiency of the evidence. As to the trial court’s rulings
on plaintiff’s claims (that is, on plaintiff’s breach of contract and
fraud claims), we review those rulings for substantial evidence,
asking whether the evidence in the record—when viewed in the
light most favorable to the trial court’s findings—supports those
findings. (King v. State of California (2015) 242 Cal.App.4th 265,
278-279.) As to the trial court’s rulings on the owners’ claims
(that is, on their claims for slander of title and intentional
interference), we also review those rulings for substantial
evidence, but because the owners had the burden of proof below,
we may overturn the trial court’s findings only if “‘the evidence
compels a finding in favor of [the owners] as a matter of law.’”
(Dreyer’s Grand Ice Cream, Inc. v. County of Kern (2013) 218
Cal.App.4th 828, 838.)
I.     Plaintiff’s Claims
       A.     Breach of contract
       The owners argue that they should not be liable for
breaching the Agreement because plaintiff did not satisfy one of
the preconditions to enforcing the Agreement—namely, paying
the outstanding balance of the purchase price within 60 days of
being told the owners had received an offer to buy the property
that exceeded $1.5 million. (Accord, Galdjie v. Darwish (2003)
113 Cal.App.4th 1331, 1337-1338 [a buyer’s failure to pay money

                                  7
due under a contract justifies the seller terminating that
contract].)
       We reject the owners’ argument.
       To prevail on a breach of contract claim, a plaintiff must
prove “(1) the existence of [a] contract, (2) plaintiff’s performance
or excuse for nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821, italics added.) Here, and
contrary to what the owners argue, plaintiff’s failure to pay the
outstanding balance is “excused.” As the owners’ February 20,
2018 letter stated (and even if we ignore that third party offer
here was for exactly $1.5 million rather than “more than” $1.5
million), plaintiff was not obligated to “perform” by paying the
outstanding balance until April 21, 2018. Prior to that date,
however, the owners sent their March 23, 2018 letter
“rescind[ing]” the Agreement and refunding plaintiff all of her
payments under the Agreement. This letter—sent while plaintiff
still had 29 days left to pay—constituted an express repudiation
of the Agreement. (Ferguson v. City of Cathedral City (2011) 197
Cal.App.4th 1161, 1168 (Ferguson).) Because a repudiation
“discharge[s] the other party’s duties to render performance”
(Central Valley General Hospital v. Smith (2008) 162 Cal.App.4th
501, 514; Ferguson, at p. 1168; Alphonzo E. Bell Corp. v. Listle
(1946) 74 Cal.App.2d 638, 645), plaintiff was excused from
making the payment of the outstanding balance and entitled to
sue for breach of contract. Contrary to what the owners suggest,
plaintiff’s refusal to accept the owners’ repudiation in her April 5,
2018 letter did not somehow negate that repudiation or obligate
plaintiff to make payments on an Agreement the owners had by
that time unequivocally repudiated.

                                  8
       B.    Fraud
       The owners argue that plaintiff did not adduce sufficient
evidence of justifiable reliance or damages, thereby undermining
any fraud damages and all punitive damages.
       We reject the owners’ argument.
       To prevail on a claim based on fraud in the inducement of a
contract, a plaintiff must prove (1) a ‘“misrepresentation ([that is,
a] false representation, concealment, or nondisclosure),”’ (2)
‘“knowledge of falsity (or “scienter”),”’ (3) ‘“intent to defraud, i.e.,
to induce reliance,”’ (4) ‘“justifiable reliance,’” and (5) ‘“resulting
damage.’” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
       Substantial evidence supports the trial court’s finding that
the owners falsely represented to plaintiff that their listing
agreement was about to expire and that they would not be
actively marketing the building, while concealing that their
listing arrangement was going to continue. Substantial evidence
also supports the findings that plaintiff reasonably relied on
those representations in deciding whether to enter into the
contract because she so testified, and thereafter suffered
damages by expending money and labor she would not have
otherwise poured into the building but for the fraudulent
misrepresentations and concealment. Contrary to what the
owners argue, whether plaintiff paid the outstanding balance
within 60 days is irrelevant to her fraud claim, which turns on
the owners’ conduct in fraudulently inducing her into signing the
Agreement in the first place. The owners also argue that plaintiff
did not take actions to protect herself, but that is also irrelevant
to her fraud claim.

                                   9
II.    The Owners’ Counter-Claims
       The owners next argue that the trial court erred in
rejecting their claims for slander of title and intentional
interference with contractual relations. Both claims require proof
of damages. (Schep v. Capital One, N.A. (2017) 12 Cal.App.5th
1331, 1336; Quelimane Co. v. Stewart Title Guaranty Co. (1998)
19 Cal.4th 26, 55.) At the conclusion of the bench trial, the
owners conceded they had not proven any damages as to these
claims. This concession is fatal to their claims. At oral
argument, the owners urged that their attorney’s concession was
wrong and that there was, in fact, evidence of damages
somewhere in the record (where in the record, they did not say).
This is too little, too late. A party cannot concede elements of
their claims before the trial court, and then turn around on
appeal and argue for the first time that the concessions were
wrong; this is classic sandbagging.
III. Sanctions
       Plaintiff seeks sanctions of $56,355.72 against the owners
for (1) filing the premature appeal from the initial statement of
decision, and (2) filing what they believe to be a frivolous appeal
from the final statement of decision solely for the purpose of
delay. We agree that the owners jumped the gun in filing their
first appeal, and that their second appeal—for the reasons we
have laid out above—lacks merit. While the second appeal skirts
dangerously close to the line that separates a meritless appeal
from a frivolous appeal, it does not cross that line. (See In re
Marriage of Flaherty (1982) 31 Cal.3d 637, 650 [sanctions are
appropriate and appeal should be found to be frivolous only when
“no reasonable attorney could have thought it meritorious.”]) We
accordingly decline to impose sanctions.

                                10
                       DISPOSITION
     The judgment is affirmed. Plaintiff is entitled to her costs
on appeal.
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

                                     ______________________, J.
                                     HOFFSTADT

We concur:

_________________________, P. J.
LUI

_________________________, J.
CHAVEZ

                                11