Reeder v. Longo

• Citation: 182 Cal.Rptr. 287,131 Cal.App.3d 291
• Court: California Court of Appeals Court of Appeals
• Decision Date: 29 April 1982
• Parties: Wayne REEDER, Plaintiff and Appellant, v. Gloria Petit LONGO; Rosita Petit Marvel; Mission Camarillo, Inc.; C. R. Wojciechowski; William Reardon; Bernice Reardon; Uni-Cal Financial Corporation and Union Bank, a California Corporation, Defendants and Respondents. Civ. 60094.

Page 287

182 Cal.Rptr. 287

131 Cal.App.3d 291

Wayne REEDER, Plaintiff and Appellant, v. Gloria Petit LONGO; Rosita Petit Marvel; Mission Camarillo, Inc.; C. R. Wojciechowski; William Reardon; Bernice Reardon; Uni-Cal Financial Corporation and Union Bank, a California Corporation, Defendants and Respondents.

Civ. 60094.

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

April 29, 1982.

[131 Cal.App.3d 292] Sims, Solomon & Konnoff by Gabriel W. Solomon, Bakersfield, for plaintiff and appellant.

Ferguson, Regnier & Paterson by William E. Paterson, Oxnard, for defendants and respondents Longo and Marvel.

Mazirow, Forer, Lawrence, Cunningham & Giden, Inc. by Anne S. Bachman, Los Angeles, for defendant and respondent Uni-Cal Financial Corp.

Z. M. Wojciechowski, Burbank, for defendants and respondents Mission Camarillo, Inc., C. R. Wojciechowski, William Reardon and Bernice Reardon.

HASTINGS, Associate Justice.

This is an appeal by plaintiff and appellant Wayne Reeder from a judgment of dismissal which followed a sustaining of demurrers[131 Cal.App.3d 293] without leave to amend to appellant's second amended and supplemental complaint. The second amended complaint stated five causes of action. As to defendants and respondents Gloria Petit Longo and Rosita Petit Marvel, the judgment ordered dismissal of the first count only. As to defendants and respondents Mission Camarillo, Inc., C. R. Wojciechowski, William Reardon and Bernice Reardon, the judgment of dismissal was to all five counts. As to defendant and respondent Uni-Cal Financial Corporation (Uni-Cal), named as a defendant only in appellant's fourth and fifth causes of action, the judgment of dismissal pertained to just these two counts.

The basic issue on appeal is whether a buyer of real property can waive an invalid subordination provision in the agreement of sale, that was inserted solely for his benefit, in order to prevent the contract from being declared invalid.

FACTS

Longo and Marvel owned a 120-acre parcel of land in Ventura County. In 1972 they sold the land to Mission Camarillo, Inc. (Mission), alleged to be the alter ego of defendant George Longo and respondents C. R. Wojciechowski, William Reardon and Bernice Reardon. Longo and Marvel took back from Mission a purchase money note secured by a deed of trust on only 80 of the 120 acres and allowed that deed of trust to be subordinated to a first deed of trust which was concurrently recorded in favor of Pennamco of New Jersey, Inc. (Pennamco). Thereafter, Mission defaulted and Longo and Marvel commenced foreclosure proceedings. Subsequently, in March and April of 1976, Longo and Marvel entered into a partially written and partially oral agreement with appellant to sell to him 70 of the 120 acres.

The written agreement to sell the 70 acres to appellant contained all of the material factors required for sale of real property. However, it also contained two conditions which respondents rely upon to support their argument that the agreement was invalid. The first condition, hereinafter called the subordination proviso, reads as follows: "Sellers agree to subordinate the note and deed of trust referred to in paragraph 1 above to a development and/or construction loan pursuant to a subordination agreement to be executed between the parties at close of escrow." The deed of trust to be subordinated by the sellers was in the amount of $125,000 and was the balance of the purchase price that appellant agreed to pay for the property. The total purchase price of the [131 Cal.App.3d 294] property was $700,000. $10,000 was to be deposited by appellant at the opening of escrow and $565,000 was to be deposited in escrow just prior to its close. The subordination proviso was solely for the benefit of appellant.

The second condition in the written agreement provides as follows: "It is expressly

understood between buyer and sellers that in order to deliver title to said property to Buyer, Sellers will have to: (a) complete the foreclosure of the interest of Mission Camarillo, Inc. under Sellers' current deed of trust; and (b) acquire the interest of Associated Urban Finance Corporation (Pennamco) in the forty (40) acres contiguous to the eighty (80) acres secured by Sellers' deed of trust. In the event sellers are unable to secure such title then Buyer shall have no obligation to complete this escrow nor shall Sellers incur any liability to buyer therefor. If sixty (60) days after the opening of escrow it appears that Sellers will be unable to deliver title to Buyer, then Buyer shall have the option of canceling this escrow without liability."

In addition to the above clauses the written agreement also acknowledged that Longo and Marvel were foreclosing their second deed of trust in order to regain title to the 80-acre parcel and that they would convey title free and clear of any encumbrances.

Appellant's second amended complaint, although not a model of pleading, sets forth five causes of action, which summarized are as follows: The first cause of action is for specific performance requiring Longo and Marvel and Mission to deliver grant deeds to the 70-acre parcel to appellant. It alleges the written agreement between the parties which is incorporated by reference as an exhibit and it states that Longo and Marvel were successful in foreclosing on the 80 acres, 70 of which were to be conveyed to appellant. It then alleges that pursuant to an oral agreement between the parties, Longo and Marvel were to use the $575,000 cash to be paid in escrow by appellant to eliminate the first trust deed of Pennamco.

The first cause of action also alleges that the written agreement was prepared by counsel for Longo and Marvel and that the subordination proviso, inserted for appellant's benefit, was known by counsel or should have been known to be unenforceable and might cause the entire contract to fail. There is a further allegation that after receiving notice of this alleged legal problem with the sale agreement that appellant [131 Cal.App.3d 295] waived the subordination proviso and was ready to fully perform the contract by full payment of the purchase price. ¹

The second cause of action is against the named defendants cited earlier in this opinion, except Uni-Cal, and seeks damages for breach of contract based upon violation of certain express covenants in the agreement and the covenant of good faith and fair dealing implied in the contract.

The third cause of action is against the same defendants and is based upon fraudulent inducement and seeks damages for time and money expended in anticipation of acquisition and development of the 70-acre parcel.

The fourth cause of action is against the same defendants and Uni-Cal alleging a conspiracy to interfere with the contract and economic interests of appellant. It seeks to impose a constructive trust on the 70-acre parcel and conveyance of the property to appellant.

The fifth cause of action is against all defendants excepting Longo and Marvel and seeks damages (lost profits) for their interference with appellant's contract and his economic interests.

DISCUSSION

The sustaining of the demurrers which led to the dismissals was based on the law set forth in a series of California case...