Nicholson v. Barab

• Decision Date: 13 September 1991
• Docket Number: No. B049404,B049404
• Citation: 233 Cal.App.3d 1671,285 Cal.Rptr. 441
• Parties: Loretta NICHOLSON, Plaintiff and Respondent, v. Saul BARAB and Marian Barab, Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

Page 441

285 Cal.Rptr. 441

233 Cal.App.3d 1671

Loretta NICHOLSON, Plaintiff and Respondent, v. Saul BARAB and Marian Barab, Defendants and Appellants.

No. B049404.

Court of Appeal, Second District, Division 5, California.

Sept. 13, 1991.

Certified for Partial Publication. ^*

[233 Cal.App.3d 1673] Sidney R. Troxell, Van Nuys, for defendants and appellants.

Woollacott, Jannol & Beres, Martin B. Jannol and Jay A. Woollacott, Los Angeles, for plaintiff and respondent.

GRIGNON, Associate Justice.

Defendants and appellants Saul and Marian Barab, individually and as trustees of the Barab Family Trust, appeal from a judgment entered after a court trial in favor of plaintiff and respondent Loretta Nicholson for damages and specific performance of an agreement to purchase residential real property from defendants. Defendants contend that: (1) the evidence is insufficient to support the judgment on the issues of the existence of an agreement, the adequacy of the consideration, the performance of conditions precedent and breach of the agreement; (2) the trial court's statement of decision is inadequate; and (3) the trial court erred in prohibiting the presentation of any evidence on the existence of an enforceable settlement agreement. We conclude that there is substantial evidence to support the judgment, that the statement of decision is adequate and that the trial court did not err by refusing to hear evidence as to the affirmative defense of compromise and settlement. We affirm.

FACTS

Defendants held title through a family trust to a single family residence in Venice, California ("Venice property"). During all pertinent times, the Venice property was leased pursuant to a written lease to tenants Jonette and Gene Fulmer. The lease expired on February 27, 1987. It provided for defendants' access to the premises during the last 30 days of the lease. The tenants also had an oral agreement with defendants' attorney Sidney R. Troxell, who managed the Venice property for defendants, that the tenants would have the right of first refusal to purchase the Venice property.

In the Fall of 1986, plaintiff became interested in purchasing the Venice property. Plaintiff had previously sold some residential property in Costa Mesa ("Costa Mesa property") and wanted to defer certain tax consequences from that sale through a tax-deferred "like-kind" property exchange in accordance with United States Internal Revenue Code section 1031. ¹ Plaintiff believed that the Venice property was a "like-kind" property that could be exchanged for her Costa Mesa property pursuant to section 1031. In order to effect the tax-deferred exchange, plaintiff created a trust when she sold her Costa Mesa property, in which Gary Leigh Smith was the trustor and "accommodator," and California Best Escrow, Inc., was the trustee of the $125,000 proceeds from the sale. In order to effectuate a tax-deferred exchange, an "accommodator" must first take title to the property to be exchanged and then sign it over to the buyer.

In the negotiations for the purchase of the Venice property, real estate broker George Poptsis of Poptsis Realty negotiated for plaintiff, and Troxell negotiated for defendants. The Venice property had previously been listed for sale, but was no longer listed because the tenants had not allowed access to the property.

Poptsis prepared an offer, dated September 11, 1986, for plaintiff to purchase the Venice property for $215,000. The terms of the offer included a $3,000 deposit, an $80,000 down payment, an escrow closing on February 24, 1987, and a contingency of plaintiff obtaining financing for the balance of $135,000. On September 12, 1986, when Poptsis met with Troxell to present the offer, he discussed the fact that plaintiff was involved in a tax-deferred exchange of property, and that an accommodator would be involved. Poptsis Realty also prepared a written commission agreement, which provided that Poptsis Realty would receive a 5 percent commission from the sale of the Venice property. Troxell stated that he would prepare an offer for defendants to present to plaintiff.

Troxell drafted an offer, dated October 1, 1986 ("October 1st contract"), which essentially mirrored the terms in the offer plaintiff had made, except that it included a $10,000 deposit and an escrow closing on March 1, 1987. The October 1st contract provided that plaintiff's performance was conditioned on, and that escrow would open when the following conditions were satisfied: (1) approval of the title report, expense reports and the existing lease and (2) commitment of a financial institution to a loan. Defendants' performance was conditioned on: (1) plaintiff's deposit of $80,000 into escrow; (2) loan approval within 60 days of October 1, 1986; (3) receipt of plaintiff's written approval of the expense records, the existing lease, and plaintiff's loan commitment; and (4) execution of escrow instructions consistent with the contract. The October 1st contract provided that the agreement could only be modified by a writing attached to the contract.

Defendants signed the October 1st contract and the commission agreement on October 1, 1986. Troxell initialed the commission agreement. On October 9, 1986, plaintiff signed a separate copy of the October 1st contract, subject to an addendum.

The addendum went through several revisions and a final draft, dated October 1, 1986, was signed by plaintiff on November 6, 1986 and by both defendants on November 8, 1986. Poptsis received a copy of the signed addendum from either Troxell or Mr. Barab. After the addendum by defendants had been signed by all parties, defendants' signatures were lined-out by Troxell in an attempt to alter the contract after it had been entered into. The signed addendum referred to the October 1st contract but was never physically attached to the contract.

The addendum provided for escrow to open no later than March 15, 1987, a $5,000 deposit to open escrow, defendants' cooperation "with lender in obtaining all necessary inspections and documents to comply with their requirements to obtain a loan for subject property," plaintiff's approval of a current termite inspection report, plaintiff's approval of a preliminary title report, the Venice property to be delivered vacant and free of all lease and or rental agreements by close of escrow, defendants to carry certain insurance during escrow and a commission of 5 percent of sales price to be paid to Poptsis Realty at close of escrow.

Early in November 1986, plaintiff applied to Great Western Savings and Coast Federal Savings for a loan to purchase the Venice property. In a letter dated November 13, 1986, plaintiff approved of the current lease on the Venice property, the preliminary title report and the current termite inspection report. On November 13, 1986, plaintiff deposited $5,000 into escrow. Western Bank drafted escrow instructions for plaintiff, dated November 19, 1986. The instructions provided in pertinent part: (1) that the property be delivered vacant at close of escrow; (2) that seller "cooperate with lender in obtaining all necessary inspections"; (3) that seller comply with appropriate municipal ordinances; and (4) that Smith was the buyer, because he was the third-party accommodator necessary to effect the section 1031 tax-deferred exchange. The escrow instructions provided that:

"GARY LEIGH SMITH is acquiring title to subject property to effect a delayed tax deferred exchange for the benefit of [plaintiff]. Smith is not to be responsible for obtaining said loan or any other buyer requirements set forth in this instruction. Concurrently with the recording of the deed from [defendants] to Smith, escrow will cause to be recorded a deed from Smith to [plaintiff], an unmarried woman, which will be handed escrow holder prior to the close."

Plaintiff and Smith signed the instructions and they were then forwarded to Troxell. Troxell responded in a December 5, 1986 letter stating, "Your proposed escrow instructions do not conform to the Agreement of Purchase and Sale. [Defendants] have not agreed to sell to Gary Leigh Smith. Their compliance with Municipal Ordinances [requiring a report of residential building records and pending assessments] is waived by the agreement. It will be necessary for [plaintiff] to pay expenses of such compliance."

Poptsis had several conversations with Troxell. Revised escrow instructions, dated January 7, 1987, deleted Smith from the transaction. The revised instructions were signed by plaintiff and forwarded to Troxell. Defendants then requested further revisions, including deletion of reference to a broker's commission.

On January 14, 1987, Troxell told plaintiff that defendants would not go forward with the transaction. Poptsis then called defendants, but they would not cooperate in effecting the sale of the property. In a letter dated January 27, 1987, Poptsis informed Troxell that plaintiff was prepared to meet the scheduled closing date of March 15, 1987, and asked Troxell to schedule a time for an appraiser to get access to the Venice property for an appraisal for plaintiff's loan.

On January 30, 1987, the tenants signed an agreement presented to them by Troxell for the purchase and sale of the Venice property for $200,000, with an escrow closing date of April 1, 1987.

On February 6, 1987, plaintiff's attorney, who was retained to handle the sale, notified Troxell in writing that a new set of escrow instructions was being prepared in which all references to the broker's commission would be deleted, which would state that plaintiff would assume all costs of any city building reports defendants were required by ordinance to submit and would waive any rights she had against defendants with reference to the condition of the property in those reports. New escrow instructions, dated February 6, 1987, were drafted in accordance with the representations of plaintiff's attorney.

In a letter dated ...