Court Opinion

ID: 9955109
Source: CourtListenerOpinion
Date Created: 2024-03-27 18:02:29.038025+00
Date Added: 2024-06-11T08:15:16.295206
License: Public Domain

Filed 3/27/24 Zheng v. Ing CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                        DIVISION TWO

JOHN ZHENG,                                               B322586

         Plaintiff and Appellant,                         (Los Angeles County
                                                          Super. Ct. No. 20STCV09517)
         v.

SALLY ING et al.,

     Defendants and
Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Douglas W. Stern, Judge. Affirmed.

      Decker Law, James Decker and Griffin Schindler for
Plaintiff and Appellant.

     Klinkert, Gutierrez & Neavel, James E. Klinkert, Paul J.
Gutierrez and Kelly A. Neavel for Defendants and Respondents.
       John Zheng (appellant) appeals from a judgment entered
following the trial court’s grant of a motion for nonsuit brought
by respondents Sally and Samuel Ing (respondents) after
appellant presented his case-in-chief at trial. Appellant argues
the trial court erred in granting nonsuit on his claims against
respondents, which stemmed from a contract for the sale of
commercial real property. We find no error and affirm the
judgment.

                   FACTUAL BACKGROUND
       On January 7, 2018, appellant and respondents entered
into a contract for the sale of real property (contract or
agreement) located at 9443-9445 Valley Boulevard in Rosemead,
California (the property).1 Respondents were listed as the
buyers, and appellant was listed as the seller. The contract as
finally negotiated stated a purchase price of $795,000.
Respondents indicated they would make an initial deposit of

1     Appellant’s complaint lists the date of the agreement as
January 9, 2018. In their briefing to this court, the parties
repeatedly place the date of the agreement as January 6, 2018.
We note a document entitled “Seller Counter Offer No. 2,” which
is chronologically the last document of the contractual documents
in the record, provides: “Confirmation of Acceptance: A Copy of
Signed Acceptance was personally received by Seller, or Seller’s
authorized agent as specified in paragraph 2A on . . . Jan/07/2018
at 4:00 PM. A binding Agreement is created when a Copy of
Signed Acceptance is personally received by Seller or Seller’s
authorized agent whether or not confirmed in this document.”
Based on this language and appellant’s initials preceding the
language, we place the date of the agreement as January 7, 2018.

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$22,500 by personal check and obtain a first loan in the amount
of $350,000.
      Upon execution of the contract, respondents made a deposit
of $22,500 into escrow. Respondents had sufficient resources to
buy the property, but preferred to finance a portion of it with a
loan.
      The contract contained the following integration clause:
“All understandings between the Parties are incorporated in this
Agreement. Its terms are intended by the Parties as a final,
complete and exclusive expression of their Agreement with
respect to its subject matter, and may not be contradicted by
evidence of any prior agreement or contemporaneous oral
agreement. . . . Neither this Agreement nor any provision
in it may be extended, amended, modified, altered or
changed, except in writing Signed by Buyer and Seller.”
      The contract contained the following language concerning
respondents’ investigation of the property: “Buyer’s acceptance of
the condition of, and any other matter affecting the Property, is a
contingency of this Agreement as specified in this paragraph and
paragraph 18B.”
      As to title and vesting, the contract provided: “Buyer shall
be provided a current preliminary title report (‘Preliminary
Report’). . . . Buyer’s review of the Preliminary Report and any
other matters which may affect title are a contingency of this
Agreement as specified in paragraph 18B.”
      Paragraph 18.B.(1) provided: “BUYER HAS: 17 . . . Days
After Acceptance, unless otherwise agreed in writing, to . . .
complete all Buyer investigations; review all disclosures, reports,
lease documents to be assumed by Buyer . . . and other applicable

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information, which Buyer receives from Seller, and approve all
matters affecting the Property.”
       It further provided: “By the end of the time specified in
paragraph 18B(1) . . . , Buyer shall Deliver to Seller a removal of
the applicable contingency or cancellation . . . of this Agreement.”
       The final counteroffer provided the final purchase price and
indicated: “(2) property to be sold as is, in its present physical
condition. Seller will not do any repairs and will not provide
termite report or clearance. (3) No Loan Contingencies.”
       Escrow opened on January 8, 2018. The title report was
provided to respondents via e-mail on January 11, 2018.
       The preliminary title report showed title to the property
was vested in Tammy Jing Gong. Tammy Jing Gong was not a
party to the transaction, and respondents were concerned the
property was owned by someone other than the person with
whom they had entered the contract. In addition, the title report
showed the property was encumbered by a $400,000 deed of
trust, a $300,000 deed of trust, a $2.45 million deed of trust, and
another $300,000 deed of trust. The loans encumbering the
property equaled approximately $3.45 million, which was more
than four times the purchase price of the property. In addition,
the property was the subject of two recorded notices of building
code violations, a lien for past due property taxes, and abstracts
of judgments and judgments in the amounts of $14,392.83,
$1,114,634.26 and $800,702.14. This information concerned
respondents.
       Respondents asked several times for additional disclosures
concerning the property including “income statements and
estoppels,” yet they were never delivered.

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       Respondents decided to cancel the transaction.
Respondents never approved the title report or any other matter
affecting the property as required under the contract.
       On January 16, 2018, respondents provided a signed
document captioned “Cancellation of Contract, Release of Deposit
and Cancellation of Escrow.” Through the document,
respondents cancelled the contract. Respondents noted as the
reason being “buyers can not get the loan approval due to all the
exceptions in the preliminary title report.” Respondents
indicated they were cancelling pursuant to paragraph 14 of the
contract. On January 23, 2018, respondents provided a followup
iteration of the same document clarifying that they were
cancelling pursuant to paragraph 18 of the contract.
       A notice of default and election to sell one of the deeds of
trust was recorded on January 29, 2018. Respondents did not
learn of this default until after they had cancelled the
transaction. A few months later, on November 30, 2018, another
encumbrance identified in the title report became the subject of
foreclosure proceedings.
       On January 24, 2018, the escrow holder provided notice of
the buyer’s request for release of deposit and escrow cancellation.
On February 1, 2018, the escrow holder informed the parties that
because there was a dispute on the cancellation, the matter
would be put on hold until the escrow holder received further
instructions.
       At trial, appellant testified that in addition to respondents’
offer, he had received one other offer to purchase the property.
Although the other offer was for more money, appellant accepted
respondents’ offer because he thought it would close faster than
the other offer, and appellant was on the verge of foreclosure.

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Appellant testified “timing-wise” the other offer was “impossible”
for him.

                    PROCEDURAL HISTORY
       On March 9, 2020, appellant filed a complaint against
respondents for fraudulent inducement, breach of written
contract, and declaratory relief. The claim for declaratory relief
sought a judicial determination as to which party was entitled to
receive respondents’ deposit.
       On May 5, 2020, respondents filed an answer to the
complaint generally denying the allegations and stating several
affirmative defenses. On the same day, respondents filed a cross-
complaint seeking rescission and restitution, declaratory relief,
statutory penalties and damages for elder abuse.
       Jury trial commenced on April 26, 2022. After appellant
presented his case, respondents moved for nonsuit on the
complaint pursuant to Code of Civil Procedure section 581c.
Following argument, the trial court granted the motion for
nonsuit. As to the cause of action for breach of written contract,
the trial court found the jury could not, as a matter of law, find
that respondents’ cancellation was invalid or improper. The
court further found there was no evidence of damages to
appellant, or that he suffered any loss because of the cancellation.
The court also granted nonsuit as to the fraudulent inducement
cause of action, finding there was insufficient evidence that
respondents made a promise without intent to perform when they
entered into the contract. As to declaratory relief, the court
determined that respondents were entitled to have the deposit
returned to them.

                                 6
      Following the trial court’s ruling, respondents moved to
dismiss the cross-complaint without prejudice. The court granted
the motion.
      Judgment in favor of respondents was entered on June 2,
2022. Notice of entry of judgment was served and filed on June 3,
2022, by the court clerk. Appellant filed a notice of appeal from
the judgment on July 29, 2022.

                             DISCUSSION
I.     Applicable law and standard of review
       Code of Civil Procedure section 581c provides that after a
plaintiff has completed presentation of evidence in a trial by jury,
the defendant may move for a judgment of nonsuit. “A motion for
nonsuit is a procedural device which allows a defendant to
challenge the sufficiency of plaintiff’s evidence to submit the case
to the jury.” (Campbell v. General Motors Corp. (1982) 32 Cal.3d
112, 117.) A trial court “may not grant a defendant’s motion for
nonsuit if plaintiff’s evidence would support a jury verdict in
plaintiff’s favor.” (Id. at pp. 117-118.) A trial court may grant a
motion for nonsuit if the court determines that, as a matter of
law, “the evidence presented by plaintiff is insufficient to permit
a jury to find in his favor.” (Nally v. Grace Community Church
(1988) 47 Cal.3d 278, 291.)
       We review an order granting a motion for nonsuit de novo.
We must interpret the evidence most favorably to the plaintiff’s
case and resolve all presumptions, inferences and doubts in favor
of the plaintiff. Judgment in favor of the defendant must be
required as a matter of law. (Nally v. Grace Community Church,
supra, 47 Cal.3d at p. 291.)

                                 7
II.    Breach of written contract
       The trial court interpreted the contract as allowing the
buyers to evaluate the preliminary title report and other relevant
conditions before making a final decision as to whether to proceed
with the transaction. The trial court found appellant failed to set
forth evidence that respondents had not done so in good faith.
The trial court also found appellant failed to present evidence of
damages from respondents’ permissible cancellation of the
contract.
       Appellant points out that when respondents first submitted
their cancellation of the contract, they indicated they were
cancelling the agreement pursuant to paragraph 14 of the
agreement because they could “not get the loan approval due to
all the exceptions in the preliminary title report.” Appellant
argues that the issue is whether those reasons permitted
respondents to cancel the contract. If not, appellant argues, then
respondents’ failure to perform constitutes a breach. Appellant
further argues paragraph 14 is inapplicable, and respondents
expressly waived any loan contingency. Therefore, appellant
adds, respondents were precluded from cancelling the purchase
agreement based on their inability to obtain a loan.2 Because
this was the only reason stated for cancellation, appellant argues,

2     Appellant highlights language in the form contract stating:
“NO LOAN CONTINGENCY: Obtaining any loan specified
above is NOT a contingency of this Agreement. If Buyer does not
obtain the loan and as a result Buyer does not purchase the
Property, Seller may be entitled to Buyer’s deposit or other legal
remedies.” However, the box indicating this paragraph was
intended to be part of the agreement is not checked.

                                8
respondents breached the purchase agreement when they
submitted their cancellation on January 16, 2018.
       Under the terms of the contract, respondents were within
their rights to cancel the contract within 17 days after receiving
the preliminary title report with the full list of exceptions.
Pursuant to paragraph 16.A., respondents’ acceptance of “the
condition of, and any other matter affecting the Property,” was an
express contingency of the agreement. Further, pursuant to
paragraph 17.A., respondents’ “review of the Preliminary Report
and any other matters which may affect title” were
“contingenc[ies] of this Agreement as specified in paragraph
18B.” Paragraph 18.B. allowed respondents 17 days to cancel.
Respondents canceled within the specified time frame.
       These provisions gave respondents a broad right to cancel
the contract if respondents did not approve of any matter
affecting the property. In fact, the contract was contingent upon
respondents’ approval. Such contingency allowed respondents to
withdraw if the contingency was not met. (See Steiner v. Thexton
(2010) 48 Cal.4th 411, 419 [“a common form of real estate
contract binds both parties at the outset . . . while including a
contingency . . . that allows one or both parties to withdraw
should the contingency fail”]; Galdjie v. Darwish (2003) 113
Cal.App.4th 1331, 1341 [“‘A condition precedent must be satisfied
prior to the creation of an enforceable contract . . . .’”]; Crescenta
Moose Valley Lodge v. Bunt (1970) 8 Cal.App.3d 682, 687 [“If a
condition is solely for the benefit of the buyer, its effect . . . is to
give the buyer an option not to consummate the purchase if he
fails to meet the condition.”].) A contingency of the contract—
respondents’ review and acceptance of the preliminary report—

                                   9
was not met. Thus, respondents were permitted to withdraw
from the contract.
       Respondents’ reference on the initial cancellation form to
their inability to obtain a loan due to the preliminary title report
is inconsequential. Respondents were entitled to cancel the
contract after viewing the unacceptable preliminary title report
within the time frame permitted for cancellation. No provision of
the contract required that respondents articulate with specificity
the reason for their cancellation. Respondents’ initial
cancellation referenced “all the exceptions in the preliminary title
report,” which was sufficient reason for the cancellation.
Respondents’ revised cancellation, signed on January 23, 2018,
was carried out within the 17-day time period following the
January 7, 2018 contract, and appellant provides no objection to
its timeliness.3 This second draft of the cancellation clarified that
it was undertaken pursuant to paragraph 18 of the contract,
which permitted cancellation of the contract within 17 days.
       Respondents’ actions were well within their rights and did
not constitute a breach of the contract as a matter of law. The
trial court properly granted respondents’ motion for nonsuit as to
appellant’s breach of contract claim.4

3     Even if the date the parties entered the contract was
January 6, 2018, January 23, 2018, was the 17th day following
entry of the contract, thus the second draft of the cancellation
was still provided within the 17-day time period permitted under
the contract.
4    Because we have found the trial court properly granted
nonsuit of appellant’s breach of contract claim, we decline to
address appellant’s argument regarding damages from any such
breach. There was no breach of contract as a matter of law,

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III.  Declaratory relief
      Appellant’s cause of action for declaratory relief concerned
“the $22,500.00 earnest money deposit being held in escrow.”
Appellant sought a judicial determination of the respective rights
and duties of the parties as well as an award of costs and
attorney fees. Following respondents’ motion for nonsuit as to
appellant’s complaint, the court determined that respondents
were entitled to have the deposit returned to them.
      Appellant objects to the trial court’s ruling on procedural
grounds, arguing, “[a] trial court may grant nonsuit only on the
ground(s) raised” in the motion. (Quoting Alvarez v. Jacmar
Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1200.)
Appellant quotes John Norton Farms, Inc. v. Todagco (1981) 124
Cal.App.3d 149, 161, for the proposition that “[i]t is also a
fundamental rule that the motion should state the precise
grounds on which it is made, with the defects in the plaintiff’s
case clearly and particularly indicated. This gives the plaintiff
an opportunity to cure the defect by introducing additional
evidence.” Appellant argues only the defendant, not the trial
court, may bring such a motion. (Code Civ. Proc., § 581c, subd.
(a).) He claims respondents did not move for nonsuit on the
declaratory relief cause of action.

therefore appellant may not recover contractual damages.
Further, appellant asks we disregard any argument regarding
the fraudulent inducement claim as his appeal only addresses his
causes of action for breach of contract and declaratory relief.
Because there was no breach of contract as a matter of law, and
appellant has failed to appeal the fraudulent inducement cause of
action, the issue of damages is irrelevant.

                                11
       Appellant also makes a due process argument, citing
Midway Venture LLC v. County of San Diego (2021) 60
Cal.App.5th 58, 64, for the proposition that “[i]t is a fundamental
aspect of procedural due process that, before relief can be granted
against a party, the party must have notice of such relief and an
opportunity to be heard.”].) Appellant argues where “the denial
of due process prevents a party from having a fair hearing, the
denial of due process is reversible per se.” (Beverly Hills
Multispecialty Group, Inc. v. Workers’ Comp. Appeals Bd. (1994)
26 Cal.App.4th 789, 806.) Appellant argues no notice was given
that his declaratory relief claim could be subject to the motion for
nonsuit, thus he was prejudicially denied a fair hearing on that
matter.
       Respondents did not limit their motion for nonsuit to
specific causes of action, but instead sought nonsuit “as to the
complaint based on the fact that . . . the buyer was entitled under
the contract to cancel the escrow based on disapproval of the
preliminary title report.” Appellant fails to provide a citation to
the record supporting his contention that respondents moved for
nonsuit only as to appellant’s claims for breach of contract and
fraudulent inducement. While respondents mainly argued as to
those two causes of action, they did not expressly limit their
motion.
       Further, appellant had sufficient notice that the $22,500
escrow deposit was at issue when the parties argued respondents’
motion for nonsuit. Respondents’ attorney specified, “I would
also move for judgment on the cross-complaint to the extent of
the rescission claim. Based on the evidence in front of us now,
it’s obvious [respondents] had the right to cancel that agreement.
They did.” Respondents’ first cause of action for rescission and

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restitution sought return of the deposit. Appellant’s attorney was
present in court when respondents raised the rescission claim
and was permitted to make argument concerning this issue.
       In addition, the trial court made it clear during argument
that it intended to resolve the declaratory relief cause of action,
stating: “The third cause of action is the declaratory relief. . . .
The court finds that [respondents] are entitled to $22,500—well,
the deposit.” Appellant’s attorney made no objection to the court
deciding the issue at that time. The court thoroughly reviewed
the complaint and cross-complaint in the presence of the parties
to make sure there were no issues remaining to go to the jury. In
doing so, the court noted, “The cross-complaint has, I’m reading
from the caption, ‘rescission and restitution.’” The court found,
without objection from appellant, “I think the rescission and
restitution we essentially dealt with.”
       Appellant had adequate notice and an opportunity to be
heard regarding the resolution of the $22,500 deposit. By failing
to object to the trial court’s determination of the issue during the
hearing on respondents’ motion for nonsuit, he has forfeited any
such objection on appeal. (People v. McCoy (2013) 215
Cal.App.4th 1510, 1525 [failure to raise constitutional claim
before the trial generally forfeits issue on appeal].)
       Finally, even if appellant had insufficient notice the
declaratory relief cause of action was at issue—which he did
not—the language of the contract requires the outcome stated by
the court. The transaction failed not because of a breach by
respondents, but because of a failure of a contingency which
relieved respondents of their obligation to perform. Under the
circumstances, respondents were entitled to their deposit as a
matter of law. “[G]rounds not specified in a motion for nonsuit

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will be considered by an appellate court only if it is clear that the
defect is one which could not have been remedied had it been
called to the attention of plaintiff by the motion.” (Lawless v.
Calaway (1944) 24 Cal.2d 81, 94, abrogated on other grounds as
recognized in Borrayo v. Avery (2016) 2 Cal.App.5th 304, 310.)
Appellant could not have altered the outcome of the declaratory
relief cause of action. Because the contract mandated that the
deposit be returned to respondents, the trial court properly
considered and ruled on the issue as a matter of law.

                        DISPOSITION
      The judgment is affirmed. Respondents are awarded their
costs of appeal.

                                      ________________________
                                      CHAVEZ, J.

We concur:

________________________
LUI, P. J.

________________________
HOFFSTADT, J.

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