Brownwood Furniture v. Gonzalez

Filed 6/16/06 Brownwood Furniture v. Gonzalez CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Shahla S. Sabet, Judge. Reversed.

Law Offices of Steven R. Young and Steven R. Young for Plaintiffs and Appellants.

Best Best & Krieger and Richard T. Egger for Defendant and Respondent.

Plaintiffs Brownwood Furniture, Inc. and Sultana Street Furniture Partners

(Brownwood) appeal a judgment of dismissal entered following the trial court sustaining defendant Gustavo Gonzalez's demurrer to Brownwood's third amended complaint (complaint) without leave to amend.

This action involves Brownwood's attempt to purchase commercial real property from Gonzalez pursuant to a lease-option agreement. Gonzalez refused to sell the property after Brownwood timely exercised an option to purchase the property but failed to obtain funding for the purchase before the escrow closing deadline. The trial court concluded Brownwood had failed to allege in its complaint a valid theory of recovery and could not successfully amend the complaint.

Brownwood contends it alleged valid causes of actions and could amend to allege a fraud claim. Brownwood also argues there were factual issues which the court erred in deciding at the demurrer stage. We agree and therefore conclude the trial court erred in sustaining Gonzalez's demurrer without leave to amend. The judgment is reversed.

1. Facts and Procedural Background

Brownwood manufactures furniture. In May 2002, Brownwood and Gonzalez entered into a lease option agreement in which Gonzalez agreed to lease to Brownwood commercial property located in Ontario, with the option to buy the property at a set price. After Brownwood timely exercised the option, Gonzalez refused to sell Brownwood the property, and Brownwood sued Gonzalez for specific performance, quiet title, breach of contract and declaratory relief.

Before serving the complaint on Gonzalez, Brownwood amended the complaint to add several defendants. After Brownwood served the amended complaint on Gonzalez, Gonzalez demurred and Brownwood voluntarily filed a second amended complaint, to which Gonzalez once again demurred. At a case management conference, Brownwood agreed to amend his complaint again.

Brownwood's third amended complaint (complaint), the operative complaint in this matter, contains causes of actions for (1) reformation, (2) specific performance, (3) quiet title, (4) breach of contract, and (5) declaratory relief. Brownwood alleges in the complaint that on May 15, 2002, Brownwood and Gonzalez entered into a written lease with an option to purchase the property at a specified price. By addendum to the agreement, the parties agreed the one-year lease and option period would begin on August 12, 2002.

Before execution of the agreement and thereafter, Gonzalez told Brownwood on a number of occasions that the property was clean and not contaminated. In reliance on these representations, when Brownwood exercised the purchase option Brownwood agreed to escrow instructions containing an â€