2018-00225360-CU-BC

Kamar Singh vs. Florin Bradshaw Investors, LLC

Nature of Proceeding: Motion to Expunge Notice of Pendency of Action

Filed By: Hoffman, Jason L.

Defendants SI Real Estate, Inc. (“SIR”) and Florin Bradshaw Investors, LLC’s (“Florin Bradshaw”) (collectively “Defendants”) motion to expunge lis pendens is GRANTED.

1. Overview

This is an action for breach of contract and specific performance arising from the failed purchase of two properties. Plaintiffs Kamar Singh (“Singh”) and Kent Hogan (collectively “Plaintiffs”) are the assignees of two Vacant Land Purchase Agreement and Joint Escrow Instructions. The first purchase agreement is for a 70 lot subdivision (the “Garcia Rivera Estates”). The second purchase agreement is for a 30 lot subdivision (the “Lynn Estates Property”). Both properties were expected to close escrow on March 1, 2017.

Plaintiffs allege that prior to closing escrow on Garcia Rivera Estates, their lender required a lot line adjustment and that funding of the purchase would be split at 35 lots per closing. The lenders required that the closing of the front 35 lots occur first (since that was where all access and utility stubs would start from). Plaintiffs allege that Florin

Bradshaw agreed and advised Plaintiffs to proceed with a lot line adjustment at a cost of over $15,000. Plaintiffs allege that based on Florin Bradshaw’s representations, Plaintiffs proceeded to incur additional engineering and other fees of over $300,000.

Plaintiffs further allege that during the buyer acquisition period, Plaintiffs learned that the Lynn Estates Property fell within a flood plain and would require additional substantial engineering and entitlement work that would delay its closing based on FEMA approvals. Plaintiffs allege that Defendants were willing to work with them and extended the closing to after the Garcia Rivera Estates Property closed.

Plaintiffs allege that they attempted to close on the first 35 lots of the Garcia Rivera Estate Property, but Florin Bradshaw refused, and instead demanded that they close the back 35 lots. Defendants refuse to close on both contracts.

2. Legal Standard

Defendant argues that the lis pendens should be expunged because Plaintiffs cannot establish the probable validity of any real property claim. Pursuant to CCP § 405.32, “the court shall order that the notice be expunged if the court finds that the claimant has not established by a preponderance of the evidence the probable validity of the real property claim.” Plaintiffs have the burden to establish the probable validity of their claims by a preponderance of the evidence. (Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 319.)

3. Analysis

a. Facts Common to Both Purchases

Both purchases were all cash purchases, with no loan contingency. (Declaration of Alex Sioukas in Support of Motion (“A. Sioukas Decl.”), Exs. 1 and 5.) Pursuant to Addendum No. 1 of both purchase agreements, dated October 6, 2016, Plaintiffs acknowledged that they had completed all due diligence on the properties and removed all contingencies. (Id. at Ex. 1, Addendum No. 1, and Ex. 5, Addendum No. 1.) With respect to the close of escrow, the parties twice agreed in writing to extend the close of escrow to the final closing date of July 26, 2017. (Id. at Ex. 1, Addendum No. 3, and Ex. 5, Addendum No. 3.)

Additionally, both purchase agreements include the following language “All understandings between the parties are incorporated in this Agreement. Its terms are intended by the parties as a final, complete and exclusive expression of their Agreement with respect to its subject matter and may not be contradicted by evidence of any prior or contemporaneous oral agreement. . . Neither this Agreement nor any provision in it may be extended, amended, modified, altered or changed, except in writing Signed by Buyer and Seller.” (Id. at Exs. 1 and 5.)

Plaintiffs were unable to close escrow by July 26, 2017 and Defendants cancelled the purchase agreements and retained the deposits as liquidated damages. (Declaration of Dean Sioukas in Support of Motion (“D. Sioukas Decl.”), ¶ 3; A. Sioukas Decl., ¶ 6.)

Defendants proffer evidence that they never agreed to or advised Plaintiffs that they would extend the date to close escrow. (A. Sioukas Decl., ¶¶ 7, 9, 18; D. Sioukas Decl., ¶¶3, 4, 5, 6.)

Plaintiffs counter that: (1) they had an oral modification with Defendants to extend the close of escrow and Plaintiffs performed under the oral modification, and (2) Defendants are estopped from denying an oral modification.

b. Garcia Rivera Estates

Plaintiffs claim that Defendants orally agreed to extend the close of escrow in order to obtain a lot line adjustment for the Garcia Rivera Estates from the County of Sacramento. (Declaration of Kamar Singh in Opposition to Motion, (“Singh Decl.”) ¶¶ 11, 23, 24.) Although the purchase was an all-cash offer with no loan contingency, Plaintiffs apparently required financing for the purchases. (Id. ¶ 7.) Plaintiffs’ lenders mandated that Plaintiffs obtain a lot line adjustment from the County of Sacramento and that closing of the front 35 lots occur first. (Id. ¶ 9.) According to Singh, in July 2017, Alex Sioukas “agreed to the lot line adjustment requirement and agreed to extend the closing date to ten days past the date of acquisition of a lot line adjustment from Sacramento County.” (Id. ¶ 11.) Dean Sioukas, as the legal owner of the property was required to sign the Application for Boundary Line Adjustment. (Id., Ex.
1.) He signed the Application on July 17, 2017. Singh was identified as the contact for DPS Construction, the Applicant. (Id.) On August 2, 2017, Singh submitted the Application and paid $15,000 for the lot line adjustment which was approved. (Id. ¶ 13; D. Sioukas Decl., ¶ 4; A. Sioukas Decl., ¶ 7, Ex. 3.) Plaintiffs have “also continued with incurring engineering and entitlement fees” on the property. (Singh Decl., ¶ 25.)

Plaintiffs insist that the “the agreement to extend closing on the Garcia Property was fully executed – the seller signed the Lot Line Adjustment Application presented to him by the Plaintiffs after orally agreeing to the extension of closing until ten days after the application was approved.” (Opposition, 4:24-26.) And, Plaintiffs “executed on the oral extension agreement by submitting the Application for the Lot Line Adjustment and paying the $15,000 fee. (Opposition, 5:2-3.)

Defendants proffer evidence that they never agreed to or advised Plaintiffs that they would extend the date to close escrow. (A. Sioukas Decl., ¶¶ 7, 9, 18; D. Sioukas Decl., ¶¶3, 4, 5, 6.) Indeed, in a July 26, 2017 email (the final date to close), Singh requested that the escrow date be extended to allow the County time approve the lot line adjustment. (A. Sioukas Decl., Ex. 4.) Defendants did not agree to the extension and were ready and willing to close on July 26th. (Id.)

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to show by a preponderance of evidence that there was an oral modification to the purchase agreements. First, as a matter of law, Civ. Code §1698 precludes modification of a written contract by oral agreement because both purchase agreement expressly prohibit oral modifications.

Civ. Code §1698 provides in part: “(a) A contract in writing may be modified by a contract in writing. (b) A contract in writing may be modified by an oral agreement to the extent that the oral agreement is executed by the parties. (c) Unless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration. The statute of frauds (Section 1624) is required to be satisfied if the contract as modified is within its provisions.” This statute has been paraphrased as follows: “A contract in writing may be subsequently modified by an oral agreement only if (i) the written contract does not contain an express provision requiring that modification be in writing; and (ii) such oral agreement has been performed by the parties, which may consist of full performance by one party only to the oral agreement, or, as an executory oral agreement, is supported by a new consideration.” (Marani v. Jackson (1986) 183 Cal.App.3d 695, 704 [emphasis in original].)

Additionally, Defendants expressly rejected Plaintiffs’ request to extend the close of escrow. The fact that Dean Sioukas signed the Application is of no consequence because he was required to sign the Application as the legal owner of the property. He also signed the Application on July 17th — before the close of escrow. But Plaintiffs did not submit the Application until August 2nd – after escrow closed (and after Defendants rejected Plaintiffs’ request to extend escrow). Even if the contract did not prohibit oral modifications, there is no evidence of new consideration for the oral modification or that the statute of frauds was satisfied. (Civ. Code § 1698(c).)

Having concluded that Plaintiffs fail to show by a preponderance of evidence that there was an oral modification, the Court need not address Plaintiffs’ argument that they partially performed on the modification. (See Marani v. Jackson (1986) 183 Cal.App.3d 695, 705 [“In view of this lack of new consideration, even full performance by the promisee alone would not suffice to render the agreement “executed” within Civil Code section 1698.]

Plaintiffs also fail to show by a preponderance of evidence that Defendants are estopped from denying an oral modification. “To estop a defendant from asserting the statute of frauds, a plaintiff must show unconscionable injury or unjust enrichment if the promise is not enforced. The doctrine of estoppel has been applied where an unconscionable injury would result from denying enforcement after one party has been induced to make a serious change of position in reliance on the contract or where unjust enrichment would result if a party who has received the benefits of the other’s performance were allowed to invoke the statute. (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 944 [emphasis added.) Plaintiffs fail to show that there was an oral

modification. Thus, Defendants could not have “induced” Plaintiffs into relying on a non -existent oral modification. Moreover, there is no showing that Defendants would be unjustly enriched. Although Defendants retained Plaintiffs’ deposit for the property, Plaintiffs released the non-refundable deposit in October 2016, before any purported oral modification arose, and after Plaintiffs removed all contingencies. (A. Sioukas Decl., Ex. 1, Addendum No. 1.) Nor is there any evidence that the lot line adjustment unjustly enriched Defendants.

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to establish the probable validity of their claim on the Garcia Rivera Estates.

c. Lynn Estates Property

Before the close of escrow Plaintiffs learned that a portion of the back part of the property was in a flood plain and would require additional engineering to obtain approval by government agencies. (D. Sioukas Decl., ¶ 6.) Plaintiffs claim that Defendants orally agreed to extend the close of escrow until after the FEMA application had been approved. (Singh Decl. ¶ 19.) Plaintiffs have expended almost $300,000 in additional engineering and entitlement work for the property. (Id. ¶ 20.)

As a matter of law, Civ. Code §1698 precludes modification of a written contract by oral agreement because both purchase agreement expressly prohibited oral modifications. Defendants also dispute that any agreement exists to extend the closing deadline. Defendants unambiguously rejected Singh’s request to extend the deadline, and they were ready and willing to close on July 26th. (A. Sioukas Decl., Ex. 4.) Having concluded that Plaintiffs fail to show by a preponderance of evidence that there was an oral modification, the Court need not address Plaintiffs’ argument that they partially performed on the modification. Even if the contract did not prohibit oral modifications, there is no evidence of new consideration for the oral modification or that the statute of frauds was satisfied. (Civ. Code § 1698(c).)

Plaintiffs also fail to show by a preponderance of evidence that Defendants are estopped from denying an oral modification. Plaintiffs fail to show that there was an oral modification. There is no showing that Defendants would be unjustly enriched. Plaintiffs released the non-refundable deposit in October 2016, before any purported oral modification arose, and after Plaintiffs removed all contingencies. (A. Sioukas Decl., Ex. 5, Addendum No. 1.) While Plaintiffs have expended almost $300,000 in additional engineering and entitlement work for the property, they fail to explain how Defendants were unjustly enriched.

The Court concludes, for the purposes of this motion only, that Plaintiffs fail to establish the probable validity of their claim on the Lynn Estates Property.

The motion is GRANTED and the lis pendens is expunged.

4. Attorneys’ Fees

CCP § 405.38 allows for the award of attorneys’ fees to a prevailing party unless the opposing party “acted with substantial justification or other circumstances render the imposition of fees unjust.” The Court concludes that Plaintiffs did not act with substantial justification or other circumstances to render the imposition of fees unjust. The Court awards Defendants reasonable attorneys’ fees and costs in the amount of $1,185 ($375/hr x 2 hrs + $60 filing fee.)