Court Opinion

ID: 618513
Source: CourtListenerOpinion
Date Created: 2011-12-08 00:24:05+00
Date Added: 2024-06-11T17:50:45.011320
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             DEC 07 2011

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

SURINDERJIT SINGH BRAR; BALVIR                   No. 10-35715
KAUR BRAR,
                                                 D.C. No. 2:08-cv-01777-RSM
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM *

THRIFTY PAYLESS INC, a California
corporation; FIRST AMERICAN TITLE
INSURANCE COMPANY, a California
corporation,

              Defendants - Appellees.

SURINDERJIT SINGH BRAR; BALVIR                   No. 10-35741
KAUR BRAR,
                                                 D.C. No. 2:08-cv-01777-RSM
              Plaintiffs - Appellees,

  v.

THRIFTY PAYLESS INC, a California
corporation,

              Defendant - Appellant.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                   Appeals from the United States District Court
                      for the Western District of Washington
                   Ricardo S. Martinez, District Judge, Presiding

                      Argued and Submitted December 5, 2011
                               Seattle, Washington

Before: TASHIMA, McKEOWN, and TALLMAN, Circuit Judges.

      Plaintiffs-Appellants Surinderjit Singh Brar and Balvir Kaur Brar (together,

the “Brars”) appeal the decision by the district court, following a bench trial,

awarding Defendant-Appellee Thrifty Payless Inc. (“Thrifty”) the earnest money

paid by the Brars and Counterclaim-Defendants Amarjeet Singh and Aswinder

Brar (collectively, the “Buyers”) pursuant to a failed commercial real estate sales

agreement. Thrifty cross-appeals the court’s denial of prejudgement interest. We

have jurisdiction in this diversity action, 28 U.S.C. § 1291, and we affirm the

award of the earnest money to Thrifty, reverse the denial of prejudgment interest,

and remand for entry of an amended judgment. As the parties are familiar with the

facts, we repeat them here only as necessary to explain our decision.

      We review a district court’s findings of fact following a bench trial for clear

error and its conclusions of law de novo. Jarvis v. K2 Inc., 486 F.3d 526, 529 (9th

Cir. 2007). Under Washington law,1 “[i]f a contract requires performance by both

      1
             The parties agree Washington law applies to the contract at issue.

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parties, the party claiming nonperformance of the other must first establish as a

matter of fact the party’s own performance,” unless that performance was excused.

Willener v. Sweeting, 730 P.2d 45, 49 (Wash. 1986). In Willener, the Washington

Supreme Court held that where neither party to a real estate contract performed, the

prospective buyers were entitled to a refund of their earnest money. Id.

      The Brars concede that the Buyers failed to tender the purchase price on the

closing date but, relying on Willener, contend that Thrifty is not entitled to keep

the earnest money because it allegedly failed to

             maintain the Property [until the closing date] in the same
             manner as prior hereto pursuant to its normal course of
             business (such maintenance obligation not including
             extraordinary capital expenditures or expenditures not
             incurred in such normal course of business), subject to
             normal wear and tear . . . or other events beyond [its]
             control . . . .

In particular, the Brars point to the condition of the floors on the closing date.

      Unlike Willener, however, where the sellers “did not satisfy the

performance required by the agreement,” 730 P.2d at 50-51, here, the district court

correctly determined that Thrifty satisfied its contractual obligations, finding that

the Brars’ contention that “Thrifty failed to maintain the property in its existing

condition up to closing . . . is incorrect.” Thrifty’s lease of the property to

Liquidation World, Inc. (“LWI”) was not a material breach. Indeed, the Buyers

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acquiesced to—and negotiated to continue—LWI’s lease. Nor was Thrifty’s

failure to finalize repairs to the floor by the closing date a material breach.

Thrifty’s expert, whom the district court found to be “highly credible,” testified

that the cracks in the floor were not the result of LWI’s use of the property and

likely had been there for some time; the Brars offered no evidence to the contrary.

Any repairs to the floor were voluntarily undertaken by Thrifty in an effort to close

the sale.

       Thrifty satisfied its contractual obligations by tendering marketable title on

the closing date and, thus, the earnest money was forfeited to Thrifty upon the

Buyers’ default. We therefore affirm the district court’s award of the earnest

money to Thrifty.

       The Brars and Thrifty agree that the district court erred in denying

prejudgment interest. Subsequent to the district court’s decision, the Washington

Supreme Court clarified that “prejudgment interest may be awarded not only when

one party has improperly used the funds, but also when one party is improperly

deprived of those funds.” Forbes v. Am. Bldg. Maint. Co. W., 240 P.3d 790, 794

(Wash. 2010) (emphasis added). Having been deprived of the “use value” of the

earnest money, which was held in escrow by the title company, Thrifty is entitled

to prejudgment interest. Accordingly, we reverse the district court’s denial of

                                            4
prejudgment interest and remand for entry of an amended judgment against the

Buyers with interest at the Washington statutory rate of twelve percent per annum,

Wash. Rev. Code § 19.52.010(1), from the date of the failed closing.

      Costs on both appeals shall be awarded to Thrifty.

      In No. 10-35715, the judgment is AFFIRMED. In No. 10-35741, the order

is REVERSED and REMANDED with directions.

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