Galdjie v. Darwish

• Decision Date: 04 December 2003
• Docket Number: No. B163970.,B163970.
• Citation: 7 Cal.Rptr.3d 178,113 Cal.App.4th 1331
• Parties: Manouchehr GALDJIE, Plaintiff and Respondent, v. Barbara Kramar DARWISH et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

7 Cal.Rptr.3d 178

113 Cal.App.4th 1331

Manouchehr GALDJIE, Plaintiff and Respondent, v. Barbara Kramar DARWISH et al., Defendants and Appellants.

No. B163970.

Court of Appeal, Second District, Division 4.

December 4, 2003.

As Modified on Denial of Rehearing December 23, 2003.

Green & Marker, G. Richard Green and Bo Thoreen for Plaintiff and Respondent.

Ezer Williamson & Brown and Mitchel J. Ezer, Los Angeles, for Defendants and Appellants.

CURRY, J.

Appellants Barbara and David Darwish appeal from a judgment awarding specific performance to respondent Manouchehr Galdjie on a real estate agreement between respondent and the Barbara Kramer Darwish and David Darwish Revocable Living Trust ("the Trust"). Appellants contend that the agreement was automatically discharged when neither party performed concurrent obligations on the date specified in the escrow instructions and that respondent pursued the wrong parties by naming appellants as individuals in the complaint rather than in their capacity as trustees for the Trust. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The Purchase Agreement and Escrow Instructions

On February 5, 1998, respondent, acting as his own real estate agent, submitted a purchase offer on an apartment building located on Yale Street in Santa Monica. Barbara Darwish signed a counteroffer that same date, raising the price somewhat and adding additional conditions. The "Darwish Trust" was identified as the seller. Respondent accepted the counteroffer on February 7.

In accordance with the agreement, respondent put $10,000 down. At the time of closing, he was to pay an additional $66,000 and obtain a loan for the remaining balance of $304,000. Within 10 days of the acceptance of the offer, respondent was to "provide to Seller a letter from lender stating that, based on a review of Buyer's written application and credit report, Buyer is prequalified for the [loan] indicated above" and the seller was to deliver to respondent a termite report and certain other documentation. The agreement contained terms that stated "Time is of the essence" and "This agreement may not be extended, amended, modified, altered, or changed in any respect whatsoever except in writing signed by Buyer and Seller."

According to the escrow instructions executed on February 18, 1998, the sellers of the property were appellants, acting as trustees of the Trust. The sale was to close on April 9, 1998. The escrow instructions contained a provision which stated: "In the event that conditions of this escrow have not been complied with at the expiration of the time provided for herein, you are instructed, nevertheless, to complete the same at any time thereafter as soon as the conditions (except as to time) have been complied with, unless any of the parties have made written demand for cancellation and/or return of money or documents."

On April 1, 1998, in connection with faxing respondent some information needed by a prospective lender, Barbara Darwish wrote a note addressed to respondent stating that the contract would not be extended beyond April 9, "the date everything should be wrapped up." A handwritten note dated May 11, 1998, addressed to the escrowholder and signed by Barbara Darwish requested that escrow be "closed" due to respondent "not closing this escrow on time." On May 12, 1998, appellants both signed instructions requesting cancellation of escrow which were faxed to the escrow holder. Also on May 12, respondent obtained a commitment letter from Washington Mutual for a loan in the amount of $279,000. One of the loan conditions was "receipt and approval of a complete copy of the termite report per the purchase contract."

Evidence at Trial

The matter was tried to the court. Respondent testified that he first attempted to obtain a loan on March 10. He spoke with Barbara Darwish frequently after the escrow instructions were signed and informed her that he was having trouble getting a loan. She told him they would continue until he got the loan and encouraged him to go forward. Respondents discussed the absence of a termite report both with Barbara Darwish and with the seller's agent, Suzanne Cole. The termite report was needed to fund the loan, but not to obtain the commitment letter.

According to respondent, on April 1, during a telephone conversation about a possible loan, Barbara Darwish orally agreed to extend escrow. Respondent first heard about appellants' attempt to cancel escrow on the day he finally received a loan commitment letter, May 12. A few days earlier, he informed Barbara Darwish that he had received a loan commitment letter.¹ She said that was fine. Respondent believed the loan could have funded within three days. He did not understand why appellants would cancel after the commitment was obtained because the deal could have closed within a short period of time.

Vincent Lupo, a loan officer for Washington Mutual, issued the loan commitment letter to respondent. The loan was for two-thirds of the purchase price. Lupo testified that the lack of a termite report was the only thing that prevented the lender from drawing up loan documents. There were eight other "conditions" set forth in the commitment letter, but the other conditions had to do with documents and information that had to be signed or received at closing.

Suzanne Cole testified that she had not seen a termite report prior to being informed that escrow was cancelled. Afterward, Barbara Darwish gave her some documents and intimated that Cole should say they had been in her file the whole time. At some point, Barbara Darwish told her they were going ahead with the deal even though it did not close on time.

Barbara Darwish testified that the current owner of the property is the "Yale Trust," and in February 1998, the owner was the Trust. She did not cancel the agreement after the 10-day contingency to obtain a loan commitment passed because she decided to give respondent more time and to work with him. She obtained a termite report on February 14, 1998, and mailed a copy to respondent. She spoke to respondent frequently, sending him whatever information he requested between the date escrow opened and April 1. On April 1, she sent the note to respondent indicating that escrow would not be extended. ~(RT 79)~ They did not communicate between April 1 and May 11, when she sent the note to the escrowholder, attempting to cancel escrow.

Trial Court's Findings

The court ruled in favor of respondent and issued a judgment ordering "Barbara Kramer Darwish and David Darwish" to "specifically perform pursuant to the parties' written Real Estate Purchase Contract and Receipt of Deposit agreement, dated February 5, 1998, and ... sell the Property ... to [respondent] within ninety (90) days."

The court made specific factual findings, including that respondent began efforts to obtain a loan by March 1998; that there was no timely prequalification letter from a lender as required by the agreement; and that respondent was not declared to be in default at that time. Nor was respondent declared in default on April 9, despite Barbara Darwish's April 1 letter to him warning that the deal must be wrapped by that date. Therefore, the case turned on "what transpired between April 9, 1998, the closing date stated in the escrow instructions, and May 11-13, 1998, when [Barbara Darwish] requested that the escrow be closed, just as [respondent] was obtaining the loan."

According to the court's findings, the following transpired: "On May 12, 1998, [respondent] obtained a loan commitment letter from [a lender] for the Property. One of the items required by the lender prior to issuing the loan documents and funding the loan was receipt and approval of a complete copy of the termite report, pursuant to the Agreement. By this time, however, [appellants] had decided to close the escrow. On May 13, 1998, [Barbara Darwish] sent a hand-written memo dated May 11, 1998 to the escrow agent and to the seller's broker ... stating that she was asking `that this escrow be closed due to the buyer not closing this escrow on time.'" Between April 9 and "May 11-13" respondent and Barbara Darwish were in "constant communication" and respondent "advised [Barbara Darwish] of his efforts to obtain a loan." Barbara Darwish "communicated her approval of his efforts"; "agreed orally to extend escrow beyond April 9, 1998"; "told [respondent] to call the escrow company and have the escrow extended"; "as of May 8 ... was still cooperating and encouraging [appellant] to go forward with the transaction"; and "although [respondent] asked [Barbara Darwish] for the termite report several times, [she] never sent it to him, the lender, or the escrow company."

The court acknowledged that Barbara Darwish's testimony contradicted many of these findings, but the court did not find her testimony credible. To the contrary, the court specifically found that she had "a propensity to manufacture evidence after the fact for purposes of litigation." Specifically, the court pointed to the handwritten letter dated May 11, which "was not faxed until May 13."² The court also pointed to the attempt to influence Cole's testimony concerning the contents of the broker's files.

Motion for New Trial

After judgment was entered, appellants moved for a new trial. Appellants contended they were sued as individuals, but could not be individually liable since they were acting as trustees of the Trust. The court denied the motion because the issue was not raised at trial and because, although the judgment ordered appellants to transfer the property as individuals, their status as trustees gave them the power to effect a valid transfer. This appeal followed.

DISCUSSION

Appellants raise two issues on appeal: (1) whether the failure of either party to perform as required on the scheduled closing date automatically discharged the parties' agreement; and (2) whether respondent's failure to name the Trust as defend...