Hennefer v. Butcher

• Decision Date: 17 June 1986
• Citation: 182 Cal.App.3d 492,227 Cal.Rptr. 318
• Court: California Court of Appeals Court of Appeals
• Parties: James A. HENNEFER, and Robert N. Klein, II, Plaintiffs, Cross-Defendants and Respondents, v. Dan BUTCHER, Defendant, Cross-Complainant and Appellant. B006864.

Page 318

227 Cal.Rptr. 318

182 Cal.App.3d 492

James A. HENNEFER, and Robert N. Klein, II, Plaintiffs, Cross-Defendants and Respondents, v. Dan BUTCHER, Defendant, Cross-Complainant and Appellant.

B006864.

Court of Appeal, Second District, Division 7, California.

June 17, 1986.

Review Denied Aug. 27, 1986.

Dudley Gray, Torrance, Norman Miller, Redondo Beach, Owen D. Petersen, Torrance, Edward J. Horowitz, Los Angeles, for defendant, cross-complainant and appellant.

Allen, Matkins, Leck, Gamble & Mallory, Alfred E. Augustini and Anne Cole-Pierce, Los Angeles, for plaintiffs, cross-defendants and respondents.

THOMPSON, Associate Justice.

Seller Dan Butcher appeals from the judgment awarding buyers James Hennefer and Robert Klein specific performance of a contract to sell 4.85 acres of vacant land in Torrance. Seller contends that the trial court erred in (1) ordering specific performance because the contract was too ambiguous; (2) determining seller's right to a "premium payment"; and (3) failing to add interest on the purchase price as an offset to damages awarded buyers for delay. Buyers controvert these contentions and further claim that (4) the appellate court should correct a mathematical error in the judgment, and (5) assess damages for a frivolous appeal. For the reasons that follow, we will modify the judgment to correct the clerical error and, as modified, affirm the judgment.

Procedural and Factual Background

The evidence, viewed in the light most favorable to the judgment (Ellison v. Ventura Port District (1978) 80 Cal.App.3d 574, 581, 145 Cal.Rptr. 665), shows that seller in bad faith repudiated his agreement to sell buyers the land which was needed for buyers' condominium project after buyers were successful in obtaining approval of rezoning. ¹ In October 1977, buyers and seller signed a written contract which provided, among other things, for sale of the property for $760,000. In April 1978, seller sent a letter cancelling escrow.

Subsequent negotiations led to the parties signing "Addenda of May 26, 1978 Amending Escrow Instructions," which modified the original contract and, inter alia, increased the purchase price to $1,050,000. The agreement provided that buyers would have 120 days from June 1, 1978, "to obtain approval of final zoning," i.e., the city council's vote approving the complete package of applications for zoning change. Buyers could obtain additional monthly extensions to get this approval upon paying $5,000 for the first and $10,000 for each additional. The addenda agreement also provided for a "premium payment" or bonus in "consideration of the especially long escrow" if the property were rezoned and its "as-is appraised value" after rezoning was higher than the $1,050,000 purchase price based on a three-appraiser procedure at the time escrow would close. Escrow was to close 60 days after zoning became final. ²

Buyers made extension payments for October, November and December 1978 and thus had until January 1, 1979, to obtain the city council's approval of final zoning. On December 19, 1978, the approval of final zoning was achieved with the city council's unanimous approval of buyers' conditional use permit and tract map applications. A December 21 letter from buyer Hennefer so notified seller. However, on January 11, seller wrote escrow wrongfully cancelling the escrow and May addenda agreement, claiming that buyers should have paid an additional $10,000 to extend the escrow to February. Seller refused to convey the property unless buyers increased the purchase price and paid cash. ³

Meanwhile, buyers had been preparing to close escrow and negotiating with lenders, including Citizens Savings & Loan. In March 1979, Citizen's appraiser, Mr. Emmi, prepared a written appraisal of the property which was also sent to seller. This appraisal evaluated the as-is value of the land rezoned as $1,003,000.

As a result of seller's refusal to close escrow and convey, buyers had to change their plans and develop a different parcel of the project first. Also during the litigation herein, necessary governmental approvals, such as buyers' conditional use permit and tentative tract map, expired.

Buyers sued seller, electing to proceed at trial for specific performance of the May 1978 addenda, plus incidental damages resulting from the delay. Buyers' allegation in the verified complaint that the consideration was fair and reasonable was not controverted in the answer. At trial, in addition to other witnesses, buyers called Emmi and seller called Hill, another appraiser, as expert witnesses on the as-is value of the land.

The trial court, in its oral ruling from the bench, found in favor of buyers that the contract was specifically enforceable, the buyers' damages were $150,000 and Emmi's appraisal was reasonable and would be relied on. In the court's subsequent statement of decision, the court stated that the essential terms of the agreement were fair and reasonably definite, and any ambiguities in the terms were caused by seller, and resolved against him pursuant to properly admitted parol evidence. The court found the purchase price to be $1,050,000 and the Emmi appraisal of $1,003,000 to be the proper as-is land value under the agreement. Since the seller had not objected to the court deciding the issue, the court accordingly concluded that there was no premium due under the agreement and the appraisal provisions were moot. The court also explained that its award of $150,000 to buyers for incidental damages due to delay included $50,000 reimbursement for direct expenses to obtain the governmental approvals which expired solely due to seller's refusal to convey the property and $100,000 reimbursement for carrying costs during the time it would take to reobtain these necessary but expired approvals.

The judgment which was entered provided in pertinent part that seller was directed to convey title to the subject property to buyers and, in exchange, buyers shall "(1) deliver to Safeco [the escrow] a letter directing Safeco to remit to defendant [seller] the sum of $1,000 previously deposited by plaintiffs [buyers] in the account of defendant [seller]; and (2) pay to defendant [seller] the sum of $949,000.00 by bank check, said sum representing the total balance of the purchase price due to defendant [seller] from plaintiffs [buyers]."

This appeal by seller followed.

I Specific Performance

Although seller concedes that substantial evidence supports the trial court's findings as to the meaning of the various ambiguous provisions of the contract, seller contends that the extensive amount of ambiguities precludes an award of specific performance. We disagree.

We recognize that the Civil Code provides that the court cannot specifically enforce "[a]n agreement, the terms of which are not sufficiently certain to make the precise act which is to be done clearly ascertainable." (Civ.Code § 3390, subd. 5.) But in determining whether the material factors in a contract are sufficiently certain for specific performance, the modern trend of the law favors carrying out the parties' intention through the enforcement of contracts and disfavors holding them unenforceable because of uncertainty. (Burrow v. Timmsen (1963) 223 Cal.App.2d 283, 288, 35 Cal.Rptr. 668; Cal.Real Property Remedies Practice (Cont.Ed.Bar 1982) § 5.9, p. 152.) ⁴ The defense of uncertainty has validity only when the uncertainty or incompleteness of the contract prevents the court from knowing what to enforce. (Crescenta Valley Moose Lodge v. Bunt (1970) 8 Cal.App.3d 682, 689, 87 Cal.Rptr. 428; Henderson v. Fisher (1965) 236 Cal.App.2d 468, 477, 46 Cal.Rptr. 173.) We are satisfied that properly admitted extrinsic evidence rendered the material contract provisions herein sufficiently definite for enforcement.

Neither law nor equity requires that every term and condition of an agreement be set forth in the contract. (King v. Stanley (1948) 32 Cal.2d 584, 588, 197 P.2d 321; Burrow v. Timmsen, supra, 223 Cal.App.2d at p. 288, 35 Cal.Rptr. 668.) "The usual and reasonable terms found in similar contracts can be looked to, unexpressed provisions of the contract may be inferred from the writing, external facts may be relied upon, and custom and usage may be resorted to in an effort to supply a deficiency if it does not alter or vary the terms of the agreement." (Ibid.) "If the parties have concluded a transaction in which it appears that they intend to make a contract, the court should not frustrate their intention if it is possible to reach a fair and just result, even though this requires a choice among conflicting meanings and the filling of some gaps that the parties have left." (1 Corbin on Contracts (1963) § 95, p. 400; Larwin-Southern California, Inc. v. JGB Investment Co. (1979) 101 Cal.App.3d 626, 641, 162 Cal.Rptr. 52; Doryon v. Salant (1977) 75 Cal.App.3d 706, 712, fn. 2, 142 Cal.Rptr. 378.)

Parol evidence which does not vary or contradict the written terms of the contract is admissible to explain ambiguities or give meaning and content to words used, provided it does not vary or contradict the terms of the contract. (McKeon v. Santa Claus, of California, Inc. (1964) 230 Cal.App.2d 359, 363-364, 41 Cal.Rptr. 43; Cal.Real Property Remedies Practice, supra, § 5.9, p. 152.) Even when the uncertainty of a written contract goes to " 'the precise act which is to be done' (Civ.Code, § 3390), extrinsic evidence is admissible to determine what the parties intended. [Citations.] It is only when the extrinsic evidence fails to remove the ambiguity that specific performance must be refused." (Crescenta Valley Moose Lodge v. Bunt, supra, 8 Cal.App.3d at p. 689, 87 Cal.Rptr. 428.)

In a real property transaction, the "material factors to be ascertained from the written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be...