Realmuto v. Gagnard

• Decision Date: 07 July 2003
• Docket Number: No. D040110.,D040110.
• Citation: 110 Cal.App.4th 193,1 Cal.Rptr.3d 569
• Parties: Peter REALMUTO, Plaintiff and Appellant, v. Robert GAGNARD et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

1 Cal.Rptr.3d 569

110 Cal.App.4th 193

Peter REALMUTO, Plaintiff and Appellant, v. Robert GAGNARD et al., Defendants and Respondents.

No. D040110.

Court of Appeal, Fourth District, Division 1.

July 7, 2003.

Scannell & Associates and Jonathan Preston, for Plaintiff and Appellant.

Lounsbery, Ferguson, Altona & Peak, Erick R. Altona, Escondido, and Judith Hartwig, for Defendants and Respondents.

AARON, J.

Appellant Peter Realmuto appeals from an order granting summary judgment in favor of respondents Robert Gagnard and Rodney Savoy. Realmuto has sued Gagnard and Savoy ("the buyers") for specific performance and for breach of a contract to purchase Realmuto's residence. The trial court granted summary judgment in favor of the buyers on the ground that Realmuto failed to provide them with a real estate transfer disclosure statement, as required by Civil Code ¹ section 1102 et seq. On appeal, Realmuto contends: (1) provision of a disclosure statement was not a condition precedent to the buyers' performance; (2) the exclusive remedy for failure to provide a disclosure statement is a suit for actual damages under section 1102.13; (3) the buyers waived their right to a disclosure statement; and (4) failure to provide a disclosure statement was not a material breach of the contract. We reject these arguments and affirm the judgment.

I.

FACTUAL AND PROCEDURAL

BACKGROUND

In December 1999, respondents Robert Gagnard and Rodney Savoy entered into a written agreement to purchase appellant Peter Realmuto's home located at 1311 Sunny Acres in Alpine, California. The buyers were investors who planned to assign the property to the Cuyapaipe Band of Mission Indians (also known as the Ewiiaapaayp Band of Kumeyaay Indians) (the tribe) for possible development of a casino on land adjacent to the tribe's reservation. Realmuto was aware that the buyers were purchasing the property for investment purposes, and not as a personal residence. The agreed purchase price was $683,000.²

The terms of the parties' agreement were set forth in a standard form residential purchase agreement and three counteroffers (collectively the Agreement). The Agreement provided that escrow was to close in 120 days.

Paragraph 6 of the Agreement required the seller to provide to the buyers certain written disclosures, including a real estate transfer disclosure statement (TDS or disclosure statement). (§ 1102 et seq.) Paragraph 6A stated that the required disclosure statement "shall be completed and delivered to Buyer, who shall return signed copies to Seller." Paragraph 6D further provided: "If the TDS ... is delivered to Buyer after the offer is signed, Buyer shall have the right to cancel this Agreement within 3 days after delivery in person, or 5 days after delivery by deposit in the mail, by giving written notice of cancellation to Seller or Seller's agent." Paragraph 16A stated that the seller had five days from the date of acceptance of the Agreement to "order, request or complete" the required written disclosures and two days "after receipt (or completion)" to provide them to the buyers.

The Agreement provided that the buyer would pay a nonrefundable deposit of $10,000 toward the total purchase price. Paragraph 20 of the standard form purchase agreement set forth a liquidated damages provision that included blank lines for both the seller and buyer to initial. This provision stated: "If Buyer fails to complete this purchase by reason of any default of Buyer, Seller shall retain, as liquidated damages for breach of contract, the deposit actually paid." The buyers initialed this paragraph, but Realmuto never did. Each of the subsequent counteroffers included the following provision: "Paragraphs in the purchase contract (offer) which require initials by all parties, but are not initialed by all parties, are excluded from the final agreement unless specifically referenced for inclusion in paragraph 1C of this or another Counter Offer." None of the counteroffers included a liquidated damages clause.

The final counteroffer stated that the property would be sold "as is" and that the seller would remove any storage sheds that were on the property. The parties executed the final agreement on December 13, 1999. In accordance with the terms of the agreement, the buyers paid a $10,000 deposit, half of which was released to Realmuto upon the opening of escrow and the other half 25 days later. In April 2000, the buyers paid Realmuto an additional $6,500 to extend the date for close of escrow to May 18, 2000.

On or about May 5, 2000, the buyers and the tribe entered into a written assignment and assumption agreement. Under the assumption agreement, the tribe agreed to assume the buyers' rights, title, and interest in four specified properties. The four properties did not include the Realmuto property.

Realmuto never provided the required TDS to the buyers. According to Realmuto, the buyers did not ask him to provide a disclosure statement during the escrow period.

The buyers never completed their purchase of the Realmuto property. On January 4, 2001, Realmuto sued the buyers for specific performance and for breach of contract. The buyers filed a cross-complaint against the tribe, which they subsequently dismissed. The buyers also filed a cross-complaint against Realmuto and their own broker. The buyers' broker in turn filed a cross-complaint and third party complaint against the buyers, the tribe, Realmuto's broker, two gaming organizations, and joint ventures between the gaming organizations and the tribe.

The trial court granted summary judgment for the buyers in Realmuto's action against them for specific performance and breach of contract. The court found that providing the buyers with a TDS was a condition precedent to the buyers' duty to perform. Because it was undisputed that Realmuto never delivered a TDS to the buyers, the trial court concluded that there were no triable issues of fact and that the buyers were entitled to judgment as a matter of law.

II. DISCUSSION

A. Standard of Review

Under Code of Civil Procedure section 437c, subdivision (c), summary judgment is proper where the papers submitted establish that no triable issues of material fact exist and that the moving party is entitled to judgment as a matter of law. "On appeal, the reviewing court exercises its independent judgment, deciding whether the moving party established undisputed facts that negate the opposing party's claim or state a complete defense." (Romano v. Rockwell Internal, Inc. (1996) 14 Cal.4th 479, 486-487, 59 Cal. Rptr.2d 20, 926 P.2d 1114; see also Regents of University of California v. Superior Court (1999) 20 Cal.4th 509, 531, 85 Cal.Rptr.2d 257, 976 P.2d 808.)

B. Delivery of the Disclosure Statement Was a Condition Precedent to the Buyers' Performance

Realmuto contends the trial court erred in finding that the delivery of a disclosure statement, as required by section 1102 et seq., was a condition precedent to the buyers' performance of the contract. Realmuto maintains "[t]here is no language in the contract which states that close of escrow shall occur, only after seller has provided an appropriate disclosure to the buyer." Realmuto also asserts that "the language in the contract calling for time frames to disclose should be viewed as a directive" rather than as a condition precedent. We disagree.

In contract law, "a condition precedent is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises." (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313, 24 Cal.Rptr.2d 597, 862 P.2d 158.) The existence of a condition precedent normally depends upon the intent of the parties as determined from the words they have employed in the contract. (13 Williston on Contracts (4th ed.2000) § 38:16, at p. 441.)

In this case, however, we are dealing with a statutory requirement that was expressly incorporated into the parties' agreement—the requirement that the seller provide to the buyers a real estate transfer disclosure statement. (§ 1102 et seq.) Thus, our primary task is to determine whether the Legislature intended the delivery of a disclosure statement to be a condition precedent to the buyer's performance. In deciding this issue, we are guided by settled principles of statutory interpretation. "The fundamental purpose of statutory construction is to ascertain the intent of the lawmakers so as to effectuate the purpose of the law." (People v. Pieters (1991) 52 Cal.3d 894, 898, 276 Cal.Rptr. 918, 802 P.2d 420 (Pieters).) "We must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences." (People v. Jenkins (1995) 10 Cal.4th 234, 246, 40 Cal.Rptr.2d 903, 893 P.2d 1224.)

Our analysis must begin with the language of the statute. (Pieters, supra, 52 Cal.3d at p. 898, 276 Cal.Rptr. 918, 802 P.2d 420.) In 1985, the Legislature enacted Senate Bill No. 1406, which requires sellers to deliver a real estate transfer disclosure statement to buyers in covered transfers of residential property. (Stats. 1985, ch. 1574, § 2, operative Jan. 1, 1987, p. 5788.) With specified exceptions not applicable here (§ 1102.2), the law requires the seller of any real property "improved with or consisting of one to four dwelling units to provide a written disclosure statement to the buyer. (§ 1102.)

The form of the required disclosure statement is set forth in detail in section 1102.6. The disclosure form prescribed by section 1102.6 states, "prospective Buyers may rely on this information in deciding whether and on what terms to purchase the subject property." (§ 1102.6.) The required disclosures include information about the buildings and any significant defects, as well as information about the...