WILLIE PERRYMON v. RICHARD BULLIS

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Court of Appeal, Second District, California.

WILLIE PERRYMON, Plaintiff and Respondent, v. RICHARD BULLIS et al., Defendants and Appellants.

B207481

Decided: January 21, 2010

Ivie, McNeill & Wyatt, Rickey Ivie and Jennifer R. Jacobs for Defendants and Appellants. Friedman, Enriquez & Carlson, Grant A. Carlson and Kyle P. Kelley for Plaintiff and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

INTRODUCTION

Defendants Richard Bullis and Potential Life Foundation (together Bullis) appeal from the judgment entered in favor of plaintiff Willie Perrymon upon the trial court's finding that Bullis repudiated the purchase and sale agreement between the parties.   Bullis contends there is no evidence to support the trial court's findings.   Because the record contains substantial supporting evidence, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. The parties open escrow.

In January 2003, Perrymon and Bullis entered into a written contract entitled “Agreement to Sell Personal Property.”   Thereunder, Perrymon agreed to purchase from Bullis four contiguous parcels of real property known as 2911, 2913, 2915, and 2919 Southwest Drive, Los Angeles for $200,000 (the property).   The parties opened escrow on January 15, 2003.   The instructions required Perrymon to deposit $250 initially, a $39,750 cashier's check three days before closing, and a “new First conventional Deed of Trust in the amount of $160,000” by closing on February 14, 2003.

Bullis does not challenge the trial court's finding that “Perrymon and Bullis both acted in conformity with the understanding that Escrow remained open following the expiration of the original closing date [of February 14, 2003].   The parties therefore waived the time is of the essence provision.”

The escrow instructions also provided in paragraph 6 that a party electing to cancel escrow may do so “only by depositing into escrow a written demand on the other party to perform hereunder within five days from such deposit, and if such other party does not perform within five days, then in addition, by depositing a written cancellation in escrow after said five days.” 1

In March 2003, Perrymon deposited into escrow a cashier's check in the amount of $40,000.

2. Per the parties' agreement, Perrymon commences renovating the property.

The office building at 2919 Southwest Drive had no heat, water, or bathroom, and there was a big hole in the roof.   On another lot, 2913 Southwest Drive, was a single family dwelling that was in “bad, bad condition,” with a leaking roof and boarded up windows.   There was a burned-out building in the back that had been filled with trash.   The remaining two lots were vacant, but a roofer was using one to park his trucks and leave his tar pits.   Perrymon's first two loan applications were denied.   Thereafter, the parties agreed that Perrymon would clean and fix up the property to qualify it for financing.

Perrymon began cleaning the property of trash around May 2003.   He renovated between October 2003 and November 2004.   He refaced the front of the office building, installed tile, skylights, and bathrooms, insulated, and upgraded the electricity.   In the house, he took down a wall and replaced the roof, windows, stucco, kitchen cabinets, sinks, toilets, ceramic tile, lights, and electricity.   Perrymon financed these improvements from an equity line of credit on his house.   Bullis came once or twice a week during construction to watch Perrymon and never told Perrymon to stop or that he was not permitted to make the improvements.

Meanwhile, in August 2003, Bullis suggested Perrymon apply for a loan at Bullis's bank.   To qualify for a loan with that bank, Perrymon had to deposit an additional $21,000 into escrow, which he did.   On August 15, 2003, the parties signed an addition or amendment to the escrow instructions under which they agreed that escrow would release $60,000 to Bullis.   In turn, Bullis would deliver to escrow a promissory note and trust deed on the property in Perrymon's favor.   The accounts would be adjusted at closing.   Bullis planned to use the money to buy material for his business.   Nothing in the amended instructions states that the loan was given in consideration for an extension of escrow.

3. Perrymon successfully applies for a loan.

In October or November of 2004, as construction was nearing completion, Perrymon filed an application with Sunset Mortgage, who inspected the property and provided Perrymon with a summary of a proposed loan.   Perrymon told Bullis about the loan summary.   Bullis responded that he could do the loan, i.e. “carry the paper.”   Bullis took Perrymon's loan summary and promised to return with the paperwork early in the new year.   Perrymon understood that Bullis would make a loan under the same terms as proposed by Sunset Mortgage.   Although Bullis denied he agreed to carry the note, and insists that he unambiguously rejected Perrymon's request, the trial court found that Bullis's letters corroborated Perrymon's account of the events.

On February 18, 2005, Bullis's attorney sent a letter to escrow stating:  “The above referenced escrow was scheduled to close on or before February 4, 2004.   The escrow has not closed, despite numerous assurances thereafter from the Buyer that escrow would close in a timely fashion.   Please take notice that Mr. Bullis does hereby cancel the above-referenced escrow effective immediately.   Mr. Bullis is aware of the provisions of paragraph 6 of the escrow instruction that provide for notification to the other party as to cancellation, except for cancellations which relate to time and therefore are non-curable.   This request for cancellation is based upon the failure to close the escrow within the time frame called for in the Escrow Instructions.”  (Italics added.)   That same day, Bullis's attorney sent a letter to Perrymon informing him that Bullis was cancelling escrow.   Before this letter, Bullis had never told Perrymon he needed or wanted to close the deal.

Also, on February 18, 2005, Bullis executed grant deeds in favor of Potential Life Foundation (PLF), conveying the property and Bullis's residence to PLF as a donation.

Perrymon refused to cancel escrow.   Within a week of receiving Bullis's letter, Perrymon retained attorney Paul Enriquez who obtained the relevant documents.   Enriquez consulted with his longtime friend Ira Boren, a licensed real estate investor and a lender for more than 20 years.   The two have referred business to each other in the past.   Boren testified that he was familiar with the neighborhood because he has made 150 loans in the area.   The property would have had difficulty qualifying for a conventional loan because of the zoning issues, which issues would have precluded the loan's sale on the secondary market.   Hence, the property would have interested private lenders or small commercial banks only.   Nonetheless, Boren testified that even without regard to Perrymon's creditworthiness, he would have loaned $140,000 on the property in 2005.   Indeed, Boren testified at trial in the fall of 2007 that if the court ordered specific performance, he would lend the $140,000 “tomorrow.”   Still, Boren did not find Perrymon's credit score to be bad.   Bullis cross-examined Boren on to establish he was not a “conventional lender.”

On March 11, 2005, Perrymon filed this lawsuit against Bullis alleging causes of action for breach of contract, fraud, and unjust enrichment, seeking to quiet title, specific performance, and damages.   He also filed a notice of lis pendens.

Five months later, Bullis redeposited the $60,000 loan into escrow, along with $2,000 toward interest.   On December 30, 2005, PLF recorded all of the grant deeds from Bullis.

In its detailed 24-page statement of decision, the trial court found that Bullis breached the purchase and sale contract and that the transfer of his real estate holdings to PLF was a fraudulent conveyance.  (Civ.Code, § 3439 et seq.)   The court calculated Perrymon's damages to be $419,707.44.   It ordered Perrymon to vacate the property and return it to Bullis and PLF by March 20, 2008 or commence paying rent.   The court found that Perrymon met the requirements for specific performance and ordered Perrymon to file an election of remedies and a proposed judgment consistent with his election.   The judgment reflects Perrymon's election to opt for damages rather than specific performance.   Bullis filed his timely appeal.

CONTENTIONS

Bullis contends the evidence does not support the trial court's findings that:  (1) his February 18, 2005 letters constituted anticipatory repudiation of the purchase and sale agreement;  (2) he breached the contract first;  (3) Perrymon was ready, willing, and able to tender the purchase price;  and that (4) the contract was supported by adequate consideration.

DISCUSSION

When the challenge is to the sufficiency of the evidence to support the judgment, our role is well established:  “ ‘when a verdict is attacked as being unsupported, the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the jury.   When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court.’  [Citation.]”  (Estate of Bristol (1943) 23 Cal.2d 221, 223, quoting from Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.)  “[O]ur review requires us to focus on evidence that is favorable to [the respondent], rather than to weigh favorable evidence against unfavorable.  [Citation.]”  (Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 64.)  “ ‘If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion.’  [Citation.]”  (Donovan v. Poway Unified School Dist. (2008) 167 Cal.App.4th 567, 612.)

“Substantial evidence has been defined as relevant evidence that a reasonable mind might accept as adequate support for a conclusion [citation]” (Taylor Bus Service, Inc. v. San Diego Bd. of Education (1987) 195 Cal.App.3d 1331, 1340-1341), or “ ‘ “ponderable legal significance ․ reasonable in nature, credible, and of solid value.”  ‘ [Citation.]”  (Ofsevit v. Trustees of Cal. State University & Colleges (1978) 21 Cal.3d 763, 773, fn. 9.)

1. Bullis's February 18, 2005 letters constituted an unequivocal refusal to perform the contract.

Bullis contends that his February 18, 2005 letters do not constitute anticipatory repudiation of the contract.

“To justify the adverse party in treating the renunciation as a breach, the refusal to perform ․ must be distinct, unequivocal, and absolute.”   (Atkinson v. District Bond Co. (1935) 5 Cal.App.2d 738, 743;  accord, In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 750.)   In his February 18, 2005 letter, Bullis stated:  “Please take notice that Mr. Bullis does hereby cancel the above-referenced escrow effective immediately” and “Enclosed please find Notice of Cancellation of Escrow․”  (Italics added.)   Construing these letters, they reflect Bullis's clear and unequivocal refusal to perform.

Moreover, it has long been the law in California that upon a clear repudiation of the contract, the promisee, Perrymon here, has “the right of election either to treat the declaration as an empty threat and to wait until the time for performance arrived, or to act upon the declaration and treat it as a final assertion by [Bullis] that he was no longer bound by the contract, and as a wrongful renunciation of the contractual relation into which he had entered.   ‘If he elects to pursue the latter course, it becomes a breach of contract, excusing performance on his part and giving him an immediate right to recover upon it as such.   Upon such election the rights of the parties are to be regarded as then culminating, and the contractual relation ceases to exist, except for the purpose of maintaining an action for the recovery of damages.’   [Citations.]”  (Guerrieri v. Severini (1958) 51 Cal.2d 12, 18-19.)

Perrymon treated Bullis's February 18, 2005 letters as a positive repudiation.   Within a week of receiving them, he retained counsel and less than a month later, filed his complaint.   Thus, Perrymon acted promptly to protect his rights in reliance on Bullis's repudiation, and his filing of suit precluded Bullis from retracting his repudiation.   In so doing, Perrymon turned that repudiation into a breach.

2. The evidence shows that Bullis breached the contract first while Perrymon was in the midst of performing.

Bullis contends that there is no evidence to support the trial court's finding that Bullis was the first to breach the contract by his February 2005 letters canceling escrow.   Bullis reasons that Perrymon failed to tender the purchase price within a reasonable time following the time for performance set forth in the escrow instructions, i.e., February 14, 2003.   Bullis estimates that a reasonable time was five days from Bullis's February 18, 2005 letter cancelling escrow because paragraph 6 of the escrow instructions gave a party five days to perform upon a letter demanding performance.   As Perrymon did not perform within this five day period, Bullis argues, it was Perrymon who breached first.

“Where a specified time for performance has been waived by a party, ‘he must, in order to put the other in default, not only give notice that strict compliance will thereafter be required but must allow the other party a reasonable time within which to perform.  [Citations.]’  [Citations.]”   (Kossler v. Palm Springs Developments, Ltd. (1980) 101 Cal.App.3d 88, 99;  cf.  Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1339-1340;  Chan v. Title Ins. & Trust Co. (1952) 39 Cal.2d 253, 259 [any right of forfeiture which may have existed was suspended upon its waiver until definite notice to perform the contract by a specific date was given].)  “In the absence of such notice plaintiff cannot, therefore, enforce a right of forfeiture․”  (Chan, supra, at p. 259.)   But, Bullis's letters did not trigger the escrow instructions' five-day period for performance because, as Bullis himself acknowledges later in his brief, his letter did not comply with the requirements of the escrow instructions.   Nor did the letter give Perrymon five days to perform.

“It is settled that if a contract for the sale of real property specifies no time of payment, a reasonable time is allowed.”  (Patel v. Liebermensch (2008) 45 Cal.4th 344, 346.)   Looking at the record, it supports the conclusion that Perrymon was performing in a reasonable time, especially given escrow was opened in January 2003 and the parties' waived time is of the essence.   Perrymon had already deposited in escrow more than the $250, and the $39,750 required by the instructions.   In fact, he deposited a total of $61,000 in cashier's checks into escrow.   Because no conventional lender would take a mortgage on the property in its dilapidated condition, the parties contemplated that the property would have to be rehabilitated first.   Perrymon immediately commenced renovations.   As his work was nearing a close in the fall of 2004, Perrymon made a third application for financing, this time with Sunset Mortgage, who sent him a summary of a loan proposal.   Perrymon immediately notified Bullis who agreed to carry the financing on Perrymon's purchase.   In short, Perrymon's performance was timely as he filed his application with Sunset Mortgage while renovations necessary for approval of a loan were in the final stages.   He only ceased pursuing that application because of his reliance on Bullis's representations that Bullis would carry the loan.   Bullis then attempted to cancel escrow three months later while Perrymon was still performing.   Thus, the evidence shows that Bullis breached the contract first while Perrymon was still performing.

3. There is sufficient evidence to support the trial court's finding that Perrymon was ready, willing, and able to tender the contract price.

Bullis contends that the evidence does not support the trial court's finding that Perrymon was ready, willing, and able to tender the purchase price.   In particular, he observes (a) there was no testimony about the terms of the loan;  and (b) recognizing that Boren, the hard money lender, testified that he would have approved a loan to Perrymon, Perrymon never testified he would have agreed to the loan.

“[A] buyer seeking specific performance of a contract for the sale of realty has the burden of proving that he was able to perform his obligations under the contract.   Where the action is based on the seller's anticipatory breach, the buyer must still show he was ready and able to perform his side of the bargain at the time his performance came due.  [Citations.]”  (Henry v. Sharma (1984) 154 Cal.App.3d 665, 669-670.)   As promisee, Perrymon had to prove he would have had the ability to perform under the contract but for the promisor's repudiation.  (Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 625.)

To make this showing, the buyer need not have already obtained an enforceable loan contract (Henry v. Sharma, supra, 154 Cal.App.3d at p. 672), Bullis's contention to the contrary notwithstanding.   Rather, “the proof needed to show ability depends on all the surrounding circumstances.”  (Ibid.) The buyer must show that it “ ‘ “commanded resources upon which [it] could obtain the requisite credit.”  ‘ [Citations.]”  (Ibid.) In Ersa Grae Corp. v. Fluor Corp., supra, the deal contemplated that the buyer would put together a consortium headed by the buyer to finance construction and land lease of the property.  (1 Cal.App.4th at p. 618.)   The appellate court held that after the seller repudiated the contract, the buyer was not obligated, despite the seller's breach, to put together the consortium and raise the financing.   Rather, the buyer must prove that, but for the seller's breach, the buyer had the ability to put together the package and “fund the deal.”  (Id. at p. 626, italics added.)

Viewing the evidence in the light most favorable to Perrymon and giving him every reasonable inference, the evidence shows that but for Bullis's breach, Perrymon had the ability get the $140,000 balance to fund the deal in February 2005.   First, Perrymon filed a loan application in the fall of 2004.   After Sunset Mortgage walked through the renovated property, it issued a summary of a proposed loan.   Perrymon did not pursue that loan only because he relied on Bullis's representation that Bullis would carry the loan.   Second and more important, immediately upon notice of cancellation from Bullis, Perrymon retained Enriquez.   Enriquez contacted Boren, who testified repeatedly that he would have loaned the remaining $140,000 to Perrymon in 2005, and was prepared to lend it upon the court's order for specific performance.   The testimony of one witness, even a party, may be sufficient if believed.  (In re Marriage of Mix (1975) 14 Cal.3d 604, 614;  City and County of San Francisco v. Givens (2000) 85 Cal.App.4th 51, 56;  Evid.Code, § 411).   Perrymon was required to prove he had the ability to fund the deal.   This evidence is both substantial and uncontroverted and supports the trial court's finding that Perrymon met the requirements of Ersa Grae Corp. and Henry v. Sharma, namely, that he “ ‘ “commanded resources upon which [he] could obtain the requisite credit” ‘ “ and could fund the deal in 2005 when Bullis cancelled escrow.  (Henry v. Sharma, supra, 154 Cal.App.3d at p. 672;  Ersa Grae Corp. v. Fluor Corp., supra, 1 Cal.App.4th at p. 626.) 2

Bullis argues that the escrow required a conventional loan, and Boren testified that the property would not qualify for a conventional loan.   The contention is unavailing.   Loan contingencies are for the benefit of the buyer.   The seller “would have had no complaint if [the buyer] elect[s] to forego financing altogether and to pay the purchase price with ․ cash.”   (Doryon v. Salant (1977) 75 Cal.App.3d 706, 711-712.)

The cases Bullis cites do not support his argument that Perrymon was required to demonstrate nothing less than that he had a “firm loan commitment from a federal savings bank and bank deposits sufficient to cover the down payment․”  Each cited case demonstrates that the necessary proof of “ability depends on all the surrounding circumstances.”  (Henry v. Sharma, supra, 154 Cal.App.3d at p. 672.)   The court in Hutton v. Gliksberg (1982) 128 Cal.App.3d 240, rejected as “absurd” the contention that the buyers were in default because they did not deposit the $400,000 cash into escrow, stating that the lender was prepared to deliver loan funds to escrow immediately upon request and that the lender's loan commitment was the equivalent of cash.   (Id. at p. 247.)   Likewise, the court in Stratton v. Tejani (1982) 139 Cal.App.3d 204 held that the buyers' firm loan commitment from a financially capable lender plus cash on hand was sufficient evidence.  (Id. at p. 212.)   Most important, the court in Behniwal v. Mix (2005) 133 Cal.App.4th 1027, also cited by Bullis, rejected the “casual assumption that ability to complete the transaction could only be shown by the presence of a current lender, legally bound to give the buyers a loan for so much of the contract price as the buyers otherwise cannot pay in cash.”  (Id. at p. 1044, first italics added.)  Behniwal instead followed Henry v. Sharma, supra, 154 Cal.App.3d 665, which required only that the buyers demonstrate they had the financial ability to qualify for a loan and indeed had qualified for a loan.   (Behniwal v. Mix, supra, at pp. 1044-1045, citing Henry v. Sharma, supra, at p. 672.)   Where the Behniwals had obtained a preapproval for a loan and arranged for a relative to help out, the evidence was sufficient to show that they were ready, willing, and able to perform.

Likewise, here, Perrymon not only had applied for a loan and received a summary of a proposed loan, but he had also obtained an oral commitment from a hard lender.   Boren's commitment is not speculative where he made it in open court, under oath, and the court found it credible.   We may not reconsider the credibility and weight of the evidence.  (Estate of Teel (1944) 25 Cal.2d 520, 526.)   Moreover, Boren had seen Perrymon's credit rating and, although he did not find it to be bad, was more focused on the value of the security for the loan, than the creditworthiness of the borrower.   He found the property sufficiently valuable to lend the money.   Finally, Perrymon had about $73,000 in cash and “a lot [of] equity” in his house.   While he testified he did not want to use the equity, he nonetheless had access to it in 2005.3  Therefore, Perrymon had the financial ability and thus demonstrated he was ready, willing, and able to perform.

4. We need not determine whether consideration was inadequate.

Bullis contends that the contract was not supported by adequate consideration because the appraised value of the property was double the contract price.   The contention is patently meritless.   According to Civil Code section 3391, “Specific performance cannot be enforced against a party to a contract ․ [¶] 1. If he has not received an adequate consideration for the contract [.]”  However, it appears from the record, although it does not contain Perrymon's election of remedies, that he opted for damages because his proposed judgment ordered him to vacate the property and awarded him $419,707.44 in damages.   In a damages case, consideration is presumed from the written contract.  (Civ.Code, § 1614 [“A written instrument is presumptive evidence of a consideration.”].) All the law requires is a mere peppercorn of consideration.  (Cf. Third Story Music, Inc. v. Waits (1995) 41 Cal.App.4th 798, 808, fn. 5.)

DISPOSITION

The judgment is affirmed.   Respondent is to bear costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. In its entirety, the paragraph provides:  “In the event that the conditions of this escrow have not been complied with at the expiration of the time provided for herein, you are instructed, nevertheless, to complete the same at any time thereafter as soon as the conditions (except as to time) have been complied with, unless any of us shall have made written demand upon you for the return of money or documents deposited by him.   Party electing to cancel this escrow hereby promises and agrees to pay your cancellation expenses.   After the expiration of such time, this escrow may be cancelled by any one party thereto only by depositing into escrow a written demand on the other party or parties to perform hereunder within five days from such deposit, and if such other party or parties do not perform within said five days, then in addition, by depositing a written cancellation in escrow after said five days.”.  FN1. In its entirety, the paragraph provides:  “In the event that the conditions of this escrow have not been complied with at the expiration of the time provided for herein, you are instructed, nevertheless, to complete the same at any time thereafter as soon as the conditions (except as to time) have been complied with, unless any of us shall have made written demand upon you for the return of money or documents deposited by him.   Party electing to cancel this escrow hereby promises and agrees to pay your cancellation expenses.   After the expiration of such time, this escrow may be cancelled by any one party thereto only by depositing into escrow a written demand on the other party or parties to perform hereunder within five days from such deposit, and if such other party or parties do not perform within said five days, then in addition, by depositing a written cancellation in escrow after said five days.”

FN2. Cases relied on by Bullis are distinguished because the promisees' readiness and ability to fund in those cases were dependent on conditions precedent.   In Cockrill v. Boas (1931) 213 Cal. 490 the promisee did not have the ability and willingness to perform because he was unable to meet his lender's water rights condition.  (Id. at p. 492.)   In C. Robert Nattress & Associates v. CIDCO (1986) 184 Cal.App.3d 55, the evidence showed that the loan was based on an oral commitment which in turn depended on another oral commitment.  (Id. at p. 65.).  FN2. Cases relied on by Bullis are distinguished because the promisees' readiness and ability to fund in those cases were dependent on conditions precedent.   In Cockrill v. Boas (1931) 213 Cal. 490 the promisee did not have the ability and willingness to perform because he was unable to meet his lender's water rights condition.  (Id. at p. 492.)   In C. Robert Nattress & Associates v. CIDCO (1986) 184 Cal.App.3d 55, the evidence showed that the loan was based on an oral commitment which in turn depended on another oral commitment.  (Id. at p. 65.)

FN3. Bullis cites Perrymon's testimony that he did not have enough equity or cash to secure a loan for $140,000.   But, Boren was prepared to lend the money at the time of trial, and so this testimony is irrelevant..  FN3. Bullis cites Perrymon's testimony that he did not have enough equity or cash to secure a loan for $140,000.   But, Boren was prepared to lend the money at the time of trial, and so this testimony is irrelevant.

KLEIN, P. J. KITCHING, J.