Martinez v. Crayton

Filed 3/15/07 Martinez v. Crayton CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County. Stanley Weisberg, Judge. Affirmed.

Russell J. Thomulka and Ronald P. Kaplan for Defendant and Appellant.

The Bucklin Law Firm and Stephen L. Bucklin for Plaintiffs and Respondents.

Gelia E. Crayton (appellant) appeals from a judgment ordering specific performance of a contract for the sale of residential property. Because the trial courts finding that respondents Ana Martinez, Yvonne Deward,^[1]and Eusebio S. Martinez (respondents) are entitled to specific performance is in accord with the essential terms of the agreement and supported by substantial evidence, we affirm.

CONTENTIONS

Appellant contends that the trial court erred in awarding respondents specific performance because they failed to prove the existence of a contract. Even if a contract did exist, appellant contends that the courts order of specific performance was improper for the following reasons: (1) the contract was not just and reasonable; (2) the contract had terminated; (3) respondents failed to prove that they had performed or were able to perform under the contract; and (4) respondents legal remedy was not inadequate. Appellant further contends that respondents are not entitled to the equitable remedy of specific performance because they did not behave equitably.

BACKGROUND

1. The Purchase Agreement

Appellant is a part-time real estate agent who owned a condominium located at 8458 Langdon Avenue, #3, North Hills, California. Two of appellants creditors, who had obtained judgments against her, had judgment liens against the property, one in the principal amount of $11,899.21 and the other in the principal amount of $7,430.38. In March 1999, appellant listed her condominium unit for sale.

In November 1999, appellant filed for Chapter 7 bankruptcy. One of her intentions in filing bankruptcy was to remove the two judgment liens so that she could sell her condominium unit.

Respondents Ana Martinez and Yvonne Deward are Catholic nuns. In 1999 they were looking for an inexpensive property to purchase in California. Because the two nuns had little income, respondent Eusebio Martinez, Ana Martinezs father, agreed to purchase a condominium with them. Yvonne Dewards sister introduced the two nuns to real estate agent Spencer Dezube. Dezube saw appellants condominium listed on the multiple listing service. The two nuns went to see it with him in December 1999. On December 7, 1999, Dezube wrote a Residential Purchase Agreement (purchase agreement) on behalf of respondents. Under the purchase agreement, respondents offered to purchase the condominium unit for $88,000, which Dezube testified was the full list price for the unit. When Dezube presented the purchase agreement to appellant, they discussed a rental of the property during the period of escrow in addition to the purchase. According to Dezubes testimony, appellant did not inform him of her bankruptcy or the liens on the property at that time. However, appellant testified that she told Dezube of her bankruptcy and that she could not sell the property unless the liens were removed.

On December 9, 1999, appellant prepared Counter Offer No. 1 (counter offer) to the purchase agreement. It contained the following language:

As per legal advice, removal of any cloud on title by the courts shall determine length of escrow. However, every effort shall be made by seller to close escrow in 90 days or less. Buyer is offered the option of renting townhome unit at $30 per day & putting utilities in buyers name while in escrow & shall make intentions known to seller upon acceptance of this counteroffer.

On December 14, 1999, respondent Ana Martinez signed the Acceptance portion of the counter offer, subject to the following: As per 1/1/00, rent to be $25 per day for the first 60 days and $20 per day thereafter. Appellant signed the multiple counter offer signature line on the same date, thereby accepting respondents counter to appellants counter offer.

The purchase agreement which the parties signed contains the following language regarding any possible liens on the property:

At Close Of Escrow, Buyer shall receive a grant deed conveying title . . . Title shall be subject to all encumbrances, easements, covenants, conditions, restrictions, rights and other matters which are of record or disclosed to Buyer prior to Close Of Escrow, unless disapproved in writing by Buyer within the time specified in paragraph 16. However, title shall not be subject to any liens against the Property, except for those specified in the Agreement.

There are no liens specified in the purchase agreement.

Dezube also prepared a short rental agreement, which appears to be simply a photocopy of paragraph five of the counter offer. Appellant signed the rental agreement and returned it to Dezube with a note. The note read:

Here is the rental agreement you wrote up for your clients and asked me to sign. My court date in bankruptcy court is 12/16/99, so I dont know how or when all that which is involved will be resolved &/or if I can get my clouds on title (liens) removed . . . but at least your clients will have a roof over their heads while I TRY! As Ive told you & your clients there are no guarantees & you know my intentions as reiterated here. At least if your clients will pay me this minimal rent you have proposed while I work on all we have discussed, we both win! If I finally notify you that I cant get clear title from my bankruptcy, & all my efforts fail, as long as your clients prove to be good tenants, we can negotiate a lease for the going rental rate if they wish to continue to rent rather than buy. However, lets not put the cart before the horse.

On December 18, 1999, the parties opened escrow with Capitol Hill Escrow Co. The escrow instructions described the title to be vested in respondents as free from encumbrances with the exception of certain taxes; any oil, gas, or mineral reservations of record; and a First Deed of Trust, which respondents were to record, securing a note in the amount of $85,360.00.

2. Events Following the Opening of Escrow

As required, respondents made a $1,000 deposit after signing the escrow instructions. The purchase agreement required that respondents obtain a loan in the amount of $85,600 and deposit an additional $1,400 prior to the close of escrow. According to the testimony of Dawna Thibodeau, a loan broker who worked with Eusebio Martinez in connection with this transaction, Eusebio Martinez obtained approval for a loan on the property. Ana Martinez also testified that she had obtained a loan jointly with her father for the purchase of the property.

By January 1, 2000, Ana Martinez and Yvonne Deward had moved into the property. The testimony conflicts as to the reasons for the lack of communication between the parties that followed. Appellant claims that she wrote respondents, stopped by the unit several times, and called the telephone number that respondents gave her which just rang and rang.^[2] She also claimed that respondents didnt pay her any rent until May 2000, at which time she received a payment which deducted nearly half of the five months rent for various repairs.

Respondents testified that appellant was at fault for the lack of communication. Respondents real estate agent, Dezube, testified that appellant did not return any of his telephone calls during 2000. Over the span of a one-month period, Dezube testified that he tried to call appellant approximately 20 times. Dezube testified that on three occasions he went to appellants office manager and attempted to elicit the office managers support in engaging in communication with appellant. Ana Martinez also testified that she attempted to contact appellant many times by telephone. She indicated that once she called from her sisters residence so that appellant wouldnt recognize the number, but when appellant answered and heard Ana Martinezs voice, appellant hung up.

Ana Martinez testified that she paid rent for the first nine months that they lived in the property, with the exception of certain deductions for repairs. She admitted that after the first nine months respondents stopped paying rent [b]ecause we wanted her to close the escrow. We told her that we would pay the rent when she closed the escrow.

Appellants bankruptcy case concluded on February 23, 2000. Neither of the two judgment liens on the property had been cleared. Appellant testified that she attempted to close escrow through the escrow company, but that this was not accomplished because they were unable to reach [respondents] or they didnt respond to their paperwork.

Respondents testified that appellant did not attempt to end the transaction at that point but instead demonstrated continuing efforts to try to close the deal. Approximately one year after the purchase agreement was signed appellant called Dezube and asked to meet with him and respondents Ana Martinez and Yvonne Deward at the condominium. Appellant never showed up for the meeting. Another year passed, and on December 14, 2001, appellant sent a letter to respondents. In it, appellant indicated that she had been battling abdominal cancer for the past year. She reminded respondents of the residential purchase contract and stated her position that rent was past due. However, she went on to state, Fortunately, I now have all that it will take to close our deal under control, even though it took me 10 times longer than planned due to my incompetent attorney [and] my illness.

In approximately April 2002, Ana Martinez and Yvonne Deward moved out of the condominium. With Eusebio Martinez, they purchased a home in Lancaster, California where they resided for approximately one year. The home in Lancaster was sold in May of 2003, at which time the two nuns moved back into the condominium. By that point, after urgings from Dezube, respondents had obtained an attorney to represent them in connection with the purchase of the condominium.^[3] In December 2002, respondents attorney sent a letter to appellant requesting that she sell respondents the property or proceed to mediation under the terms of the purchase agreement. Appellant did not respond to the letter. According to Ana Martinez, upon receipt of a warning that they would be evicted if they did not move out of the property, the two nuns moved to a rented property in Florida in December 2003, where they remained for approximately five months.

3. The Trial

Respondents complaint for specific performance was filed in December 2003.^[4] Respondents filed the operative first amended complaint on March 15, 2004. An amendment to the first amended complaint, attaching the purchase agreement, was filed on June 22, 2004. Appellant answered the first amended complaint on October 13, 2004, and cross-complained for unpaid rents. The matter proceeded to a court trial on July 5, 2005.

By minute order dated August 2, 2005, the court stated its tentative ruling as follows:

It is the tentative ruling of the court that plaintiffs shall have specific performance of the contract for the purchase price of the property at issue. Defendant is entitled to offset for unpaid rent and for the mortgage payments and property taxes for the period of time plaintiffs did not pay rent.

Counsel are ordered to meet and confer regarding the issue of accounting for the offset. If counsel cannot come to a stipulation on that issue the matter will be subject to hearing on September 2, 2005 at 8:30 A.M. in this department.

The parties met and conferred and stipulated to an offset of $41,271.65, which was later increased by $1,536.52 to $42,808.17, bringing the final purchase price to $130,808.17.

On October 12, 2005, judgment was entered ordering appellant to specifically perform the subject contract by selling the condominium unit to respondents for $130,808.17.

Appellant filed her notice of appeal on December 7, 2005.

DISCUSSION

I. Standards of Review

In deciding the matter before us, the trial court resolved mixed issues of fact and law. We review de novo those issues dependent upon an interpretation of the purchase agreement and on undisputed facts. (Meyer v. Benko (1976) 55 Cal.App.3d 937, 942.) We apply the substantial evidence standard of review to the courts findings of fact. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 461-462.) Under this standard, we consider whether there is substantial evidence, contradicted or not, to support the courts factual conclusions. (Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 Cal.App.4th 765, 781.) We review the issues that fall within the trial courts equitable jurisdiction for abuse of discretion. (Wm. R. Clarke Corp. v. Safeco Ins. Co. of America(2000) 78 Cal.App.4th 355, 359.)

II. Specific Performance

In order to be entitled to specific performance, respondents were required to show: (1) the inadequacy of [a] legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms that are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. [Citation.] (Tamarind Lithography Workshop, Inc. v. Sanders (1983) 143 Cal.App.3d 571, 575, citing Henderson v. Fisher (1965) 236 Cal.App.2d 468, 473.) Appellant attacks the judgment below on the grounds that respondents failed to show a number of these requirements. We address each of appellants contentions in turn.

A. The Existence of a Reasonable Underlying Contract

Appellant contends that respondents failed to show this basic prerequisite to specific performance because (1) there was no meeting of the minds as to a material term of the contract; (2) even if there was a contract, it was not just and reasonable; and (3) even if a just and reasonable contract existed, it terminated after a reasonable period of time. We disagree with each of these contentions.

1. A Valid Contract Existed

In order to show the existence of a valid contract, respondents were required to show a meeting of the minds on the material terms of the contract. (Patch v. Anderson (1944) 66 Cal.App.2d 63, 65.) Appellants contention that there was no contract between the parties is premised on her position that there was no meeting of the minds as to a material term of the contractspecifically, what would happen if appellant could not remove the liens on the property in bankruptcy. This contention is meritless.

Appellant argues that she included language in her counter offer and the escrow instructions with which she intended to signify that the sale was contingent upon the removal of the liens in bankruptcy. However, the language inserted into both the counter offer and the escrow instructions does not indicate a contingency. Instead, it refers to the length of escrow: removal of any cloud on title by the courts shall determine length of escrow. However, every effort shall be made by seller to close escrow in 90 days or less.

In ascertaining the intent of the contracting parties, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., 1639.) The clear and explicit meaning of these provisions, interpreted in their ordinary and popular sense, unless used by the parties in a technical sense or a special meaning is given to them by usage (id., 1644), controls judicial interpretation. (Id., 1638.) Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning [citation]. [Citations.] (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.)

The language of the purchase agreement and escrow instructions, which both parties agreed to, does not reflect appellants alleged intention to signify that her obligation to perform was contingent upon the removal of the clouds on title. As set forth above, both the contract and the escrow instructions unequivocally required appellant to deliver title free of liens. Thus, a lack of agreement as to what would happen if appellant could not clear the liens on the property did not exist. Under the law, appellants failure to comply with this contractual obligation was a breach of the contract.

Further, the question of what would happen if appellant could not deliver clear title was not a material item. In order to obtain a judgment of specific performance, respondents were not required to show that all the terms and conditions of the agreement were set forth in the contract only that the material terms were clearly set forth. The material factors to be ascertained from the written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified [citation]. (King v. Stanley (1948) 32 Cal.2d 584, 589.) Those items were clearly determinable here.

Because the contract shows a meeting of the minds as to all material terms of the real estate purchase, a valid enforceable contract existed between the parties.

2. The Contract Was Just and Reasonable

Appellants next argument is that, assuming a valid contract existed, such contract was not just and reasonable unless it was contingent upon removal of the liens at no cost to appellant through her bankruptcy proceedings. Appellant argues that she was in dire financial straits (necessitating bankruptcy) at the time of the execution of the contract, thus the sale of the condominium did not even make sense if she had to pay off the liens herself. Without a clear understanding that the liens would be removed at no cost to her, appellant argues, the contract is unreasonable.

The determination of the reasonableness of the underlying contract was within the sound discretion of the trial court. (Westwood Temple v. Emanuel Center (1950) 98 Cal.App.2d 755, 759.) Thus, we review the trial courts decision for an abuse of discretion. We note that this determination must be made by analyzing the adequacy of consideration as of the date of the contract. (Ibid.) Further, [t]he necessity for an adequate consideration in a specific performance action does not mean that the value of the things to be given in exchange for the property to be conveyed must measure up to the appraisement placed upon them by [appellant]. The doctrine merely requires that such consideration be just and fair under all the circumstances and that its sufficiency be addressed solely to the sound discretion and determination of the trial court and be supported by substantial evidence. [Citation.] (Ibid.)

The evidence before the trial court showed that respondents offer was to purchase the property for its listed price. Appellant admitted that the condominium market was very soft in 1999. She also admitted that, prior to agreeing to the purchase agreement with respondents, she had previously opened escrow with another buyer for $82,000, which is less than the amount she had agreed upon with respondents. Additionally, in her bankruptcy petition, appellant declared to the bankruptcy court that the value of the condominium was $55,000. Thus, the trial courts decision that the purchase price of $88,000 was reasonable consideration was not an abuse of discretion.

Nor did the trial court abuse its discretion in implicitly finding that the contract was reasonable even if appellant could not clear the liens at no cost to her. A seller of real property generally has a duty to furnish the buyer with good and marketable title. (King v. Stanley, supra, 32 Cal.2d at pp. 589-590.) As set forth above, both the purchase agreement and the escrow instructions required appellant to deliver title free of liens. Neither document contained a contingency specifying that the liens must be cleared at no cost to appellant. There was no reason for the trial court to rewrite this purchase agreement to include such a contingency.

Further, even if such a contingency had existed, appellant would have had an obligation to make some effort to clear the liens from the property. There was no evidence that appellant made any such effort. She apparently did not file an appropriate motion in bankruptcy court to eliminate them,^[5]and Dezube testified that she refused his offer to assist her in getting the loans removed. In addition, there was evidence that respondents were sympathetic to appellants position. Both Dezube and appellant testified that respondents offered to pay more money for the property after appellant was unable to clear the liens in bankruptcy. However, Dezube indicated that appellant failed to communicate with him regarding this suggestion.

In sum, we find that the trial court did not abuse its discretion in determining that the contract, as written, was just and reasonable.

3. The Contract Did Not Terminate

Appellant advances two arguments regarding termination of the contract. Appellant takes the position that the time is of the essence clause found in both the purchase agreement and the escrow instructions required that the contract be performed within the specified time. However, appellant argues that even if the time is of the essence clause did not operate to set strict time limits, the contract had to be performed within a reasonable time.

Relying on the time is of the essence clause and the legal doctrine that all contracts must be performed within a reasonable time, appellant sets out two arguments as to why the purchase agreement terminated prior to the commencement of this litigation. First, she argues that the contract terminated when she could not clear the liens within a reasonable time. Second, she argues that the contract terminated when neither side tendered performance within a reasonable time. Appellant claims that because the contract had terminated, the trial courts order of specific enforcement was improper.

a. The Time is of the Essence Clause Was Superseded By Appellants Specifically Drafted Language

Both of appellants termination arguments are based on the time is of the essence provision contained in the purchase agreement and the escrow instructions. An identical provision was contained in both documents, which read:

Time is of the essence. 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 agreement or contemporaneous oral agreement. This agreement may not be extended, amended, modified, altered, or changed, except in writing signed by Buyer and Seller.

Respondents counter that the time is of the essence clause was superseded by a specifically drafted clause that is, the clause which appellant inserted into both the purchase agreement and the escrow instructions stating that removal of any cloud on title by the courts shall determine length of escrow. However, every effort shall be made by seller to close escrow in 90 days or less. In support of their argument, respondents cite Civil Code section 1651, which provides in part:

Where a contract is partly written and partly printed, or where part of it is written or printed under the special directions of the parties, and with a special view to their intention, and the remainder is copied from a form originally prepared without special reference to the particular parties and the particular contract in question, the written parts control the printed parts, and the parts which are purely original control those which are copied from a form.

Because the clause was drafted by appellant, and was written in appellants own handwriting on the counter offer, respondents contend that it controls the printed language in the purchase agreement and escrow instructions. Appellant argues in response that the specifically drafted clause referred to by respondents means impliedly if not expressly that the deal is off if the liens are not removed by the bankruptcy court within 90 days.

We review the terms of the contract de novo. (Meyer v. Benko, supra, 55 Cal.App.3d at p. 942.) On the basis of Civil Code section 1651, we find that appellants specific, handwritten language supersedes the time is of the essence clause. This specific language inserted by appellant provides that the length of escrow shall be determined by appellants ability to have the liens removed by the courts. The length of the escrow is not specified, and certainly contemplates that the escrow may last longer than 90 days. While the language suggests that appellant shall make every effort to remove the liens within 90 days, there is no suggestion that the deal is off if the liens are not removed within that time frame.

b. The Contract Did Not Terminate Because of Appellants Failure to Clear the Liens Within a Reasonable Time

Citing Fowler v. Ross (1983) 142 Cal.App.3d 472, 479, appellant argues that even if time was not of the essence, all contracts terminate within a reasonable period of time.

Appellant first argues that the purchase agreement terminated within a reasonable period of time after it became clear that [appellant] was not going to have the liens removed in bankruptcy. This argument lacks merit because, as set forth above in section II.A.1, the purchase agreement was not contingent upon appellants ability to remove the liens in bankruptcy. In fact, both the purchase agreement and the escrow instructions required appellant to deliver title free and clear of liens. Her failure to do so is a breach of the contract. (See, e.g., Post v. Palpar, Inc. (1960) 184 Cal.App.2d 676, 680.)

Further, appellant cannot rely upon her own inaction to prevent enforcement of the contract. As set forth above, there was no evidence that she made any effort to remove the liens either in the bankruptcy proceeding or otherwise. A party responsible for delayed performance cannot cancel the contract on the grounds of delayed performance. (Taylor v. Sapritch (1940) 38 Cal.App.2d 478, 481 [A party to a contract cannot take advantage of his own act or omission to escape liability therefrom].)

Nor are we convinced by appellants argument that the virtually unprecedented increase in the prices and value of residential real estate, which occurred during the time period following the formation of the contract, should be a factor weighing in favor of a finding that the contract expired soon after appellants bankruptcy proceedings closed. As set forth above in section II.A.2, the reasonableness of the contract must be analyzed at the time of its formation. The consideration that respondents offered to pay for the property was reasonable at the time. By finding termination of the contract on the grounds that the property had substantially increased in value by the time litigation commenced, we would be allowing appellant to gain the benefit of the propertys increase in value by taking advantage of her own failure to clear the liens. This we decline to do.

c. Substantial Evidence Supports the Trial Courts Implied Finding That a Reasonable Time Had Not Expired for Performance of the Purchase Agreement

Appellant next argues that the purchase agreement expired because neither side tendered performance within a reasonable period of time. Appellant argues that, because a reasonable time for performance of this real estate agreement had expired prior to the time respondents filed their lawsuit or even contacted an attorney, the agreement cannot now be specifically enforced. What constitutes a reasonable time for performance of a real estate contract is a question of fact which depends on the circumstances of each case. (Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 381.) We apply the substantial evidence standard to review the trial courts implied factual finding that a reasonable time had not expired, thus allowing enforcement of the purchase agreement.

Under the substantial evidence standard, we must view the evidence in the light most favorable to the respondents, giving them the benefit of every reasonable inference and resolving all conflicts in their favor. (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) Applying this standard, we note that substantial evidence supports a factual finding that, under the circumstances of this case, a reasonable time for respondents to seek specific enforcement of the contract had not expired. The evidence showed that appellant wrote to respondents two years after the purchase agreement was signed, indicating that she still intended to close the transaction and blaming herself for the delay. Specifically, appellant stated, I now have all that it will take to close our deal under control, even though it took me 10 times longer than planned due to my incompetent attorney [and] my illness. This supports the testimony of Ana Martinez that it took us a long time to realize the reality of the situation that she had changed her mind and was not going to sell the property. Having received assurances from appellant as late as two years after the signing of the contract that it was her intention to go through with the agreement, it is not unreasonable for another year to have passed before respondents found and retained an attorney, who sent his first communication to appellant on December 13, 2002.

Appellant acknowledges that certain evidence indicated that she continued to treat the transaction as still alive long after the 90 day period specified in the agreement. However, she argues that the evidence shows that she did so only to induce respondents to pay her the back rent. While there may have been such evidence before the trial court, appellants argument does nothing more than create a conflict in the evidence. We are bound to follow the well-established standard of review and resolve all such conflicts in evidence in favor of the prevailing party. (Jessup Farms v. Baldwin, supra, 33 Cal.3d at p. 660.)

Pittman v. Canham (1992) 2 Cal.App.4th 556, cited by appellant in support of her position, is distinguishable. There, both parties failed to perform concurrent conditions which were required to take place before a certain date pursuant to a valid time is of the essence clause. (Id. at p. 560 [where the parties have made time the essence of the contract, at the expiration of time without tender by either party, both parties are discharged].) Here, the length of escrow was to be determined by the length of time it took appellant to clear the liens. Further, even if the time is of the essence clause was enforceable, timeliness provisions are subject to waiver by the party for whose benefit they are made. (Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1339, fn. omitted.) Here, as in Galdjie, the trial court would have been justified in finding a waiver of any timeliness provisions based on appellants communication to respondents two years after the contract was signed indicating that she still intended to close the deal. (Id. at p. 1340.)

B. Substantial Evidence Supports the Trial Courts Finding That Respondents Had the Ability to Perform the Contract

To be entitled to specific performance, a plaintiff must show that it was ready, willing and able to perform both at the time the original contract was entered into and during the specific performance action. (Ninety Nine Investments, Ltd. v. Overseas Courier Service (Singapore) Private, Ltd. (2003) 113 Cal.App.4th 1118, 1126.) Appellant contends that respondents did not prove that they were ready, willing, and able to perform their obligations under the contract, and thus were not entitled to specific performance. First, appellant contends that respondents failed to show that they had obtained, or were able to obtain, a loan to purchase the condominium. Second, appellant contends that respondents failed to pay the rent. We review the trial courts implied factual findings that respondents had performed or shown an ability to perform their obligations under the contract for substantial evidence. (Id. at p. 1127.)

Respondents were not required to show that they had obtained a legally enforceable loan contract. They only needed to prove that they commanded resources upon which [they] could obtain the requisite credit. [Citations.] (Henry v. Sharma (1984) 154 Cal.App.3d 665, 672.) The evidence showed that respondents had such resources both at the time the contract was entered into and at the time of trial. Eusebio Martinez, who was the primary loan candidate, receives a total monthly income of nearly $4,000 in benefits from his former positions as a Los Angeles County Sheriff and a military police officer with the United States Air Force. He also receives pension benefits from the United States, social security benefits and disability benefits. His only liability at the time of his loan application was $135 per month in alimony. He had liquid assets of over $70,000, and total assets of almost $80,000. The testimony of Dawna Thibodeau, the loan broker who worked with Eusebio Martinez in connection with this transaction, Eusebio Martinez, and Ana Martinez, was that respondents had obtained approval for a loan on the property. The testimony of appellants witness Laura Chatelain, an expert in mortgage loan processing, that there were many discrepancies in respondents loan application, apparently did not convince the trial court that respondents were unable to perform their financial obligations.

The trial courts decision that respondents failure to continue paying rent, and failure to deposit the additional $1,400.00 into escrow were not reason to disallow specific performance is also supported by substantial evidence under the facts of this case. Appellants counter offer provided that starting on January 1, 2000, the rent was $25 per day for the first 60 days and $20 for each day thereafter. The counter offer also contemplated that appellant would make every effort to remove the liens and close escrow within 90 days. Because of appellants continued failure to make any efforts to remove the liens and produce clear title to the property, respondents were justified in treating appellant as in breach of contract. (See, e.g., Moresco v. Foppiano (1936) 7 Cal.2d 242, 245-246 [sellers failure to deliver deed as promised prevented seller from contending that buyer was in default]; Hutton v. Gliksberg (1982) 128 Cal.App.3d 240, 244 [rejecting sellers argument that buyer was in default for failing to deposit additional cash into escrow, where evidence showed that buyer was ready to do so should seller tender performance]; Groobman v. Kirk (1958) 159 Cal.App.2d 117 [finding that buyer was not in default for failing to deposit the balance of the purchase price into escrow where the evidence showed that seller did not tender a deed and title policy insuring an unencumbered title].)

As both Ana Martinez and Yvonne Deward testified, respondents withheld the rent in order to get her to close the escrow, but intended to pay appellant the rent when the purchase transaction closed. Respondents action in withholding the rent was thus a reaction to appellants own actions in failing to close the transaction or even communicate with respondents. Ana Martinez admitted under questioning from the court that respondents owed appellant rent, and the trial court appropriately awarded appellant an offset of $42,808.17 for the unpaid rent, mortgage payments and property taxes which accrued during the time that respondents occupied the property.

Substantial evidence thus supports the trial courts finding that respondents showed a sufficient ability to perform their obligations under the contract, thus entitling them to specific enforcement of the contract.

C. Respondents Legal Remedy Was Inadequate

One of the factors which respondents were required to show before specific performance could be awarded was the inadequacy of their legal remedy. (Tamarind Lithography Workshop, Inc. v. Sanders, supra, 143 Cal.App.3d at p. 575.) Appellant argues that specific enforcement is inappropriate here because respondents legal remedy was not inadequate.

Civil Code section 3387 (section 3387) creates a presumption that residential real property is unique and that a breach of a contract to transfer such property cannot be adequately compensated by money damages. Section 3387 provides:

It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive. In all other cases, this presumption is a presumption affecting the burden of proof.

Appellant contends that because Eusebio Martinez, one of the three purchasers of the property, admitted that he did not intend to reside in the property, the presumption set forth in section 3387 is not conclusive. Instead, appellant argues, it is a rebuttable presumption. Appellant points out that Ana Martinez admitted that there were other condominiums in the complex for sale, and takes the position that this constitutes an admission that the property was not unique, thus rebutting the presumption contained in section 3387.

Appellant does not dispute that Ana Martinez and Yvonne Deward intended to occupy the property. The evidence showed that Ana Martinez looked to her father, Eusebio Martinez, to assist them in purchasing the property because she and Yvonne Deward had no credit and he had greater financial means than they did. Appellant cites no case law in support of the proposition that the conclusive presumption set forth in section 3387 does not apply when two of three parties seeking performance conclusively intend to occupy the premises. The two nuns intended to reside in the property, and Eusebio Martinez was helping them financially. Appellants argument that the presumption found in section 3387 is not conclusive under these circumstances is completely unsupported and therefore unpersuasive. Section 3387 conclusively establishes the uniqueness of the condominium and therefore the propriety of specific performance as a remedy here.

III. The Trial Court Did Not Abuse Its Discretion in Deciding That Respondents Were Entitled to an Equitable Remedy

Specific performance is an equitable remedy. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1240.) Appellant cites Civil Code section 3391 for the proposition that to get equity, one must do equity. Even if respondents were able to show all the factors of specific performance, appellant argues, respondents are not deserving of the equitable remedy of specific performance because they did not do equity. In support of this argument, appellant points to respondents failure to pay rent regularly. Appellant also cites the doctrine of laches, arguing that respondents waited too long before commencing litigation. We address each contention separately.

We note that the question of whether or not to grant an equitable remedy is within the sound discretion of the trial court. (Wm. R. Clarke Corp. v. Safeco Ins. Co. of America, supra, 78 Cal.App.4th at p. 359.) We therefore review appellants contentions that respondents did not deserve an equitable remedy for abuse of discretion.

A. Respondents Failure to Pay Rent

As discussed above in section II.B., respondents admitted at trial that they stopped paying appellant rent in order to try to force her to close the transaction. Respondents entered the lease agreement believing that they would not be renting the property for more than 90 days. At the time that they began to withhold the rent payments, they had been living in the property for at least seven months^[6]and found appellant avoiding all communication with them. Their efforts to contact appellant regarding closing the transaction were unsuccessful. It was not an abuse of discretion for the trial court to determine that, under the circumstances, respondents were justified in treating appellant as in breach of contract and withholding performance of their obligations. (See, e.g., Moresco v. Foppiano, supra, 7 Cal.2d at pp. 245-246 [sellers failure to deliver deed as promised prevented seller from contending that buyer was in default].)

The trial court was also apparently not convinced by appellants complaints that respondents deducted money from the rental payments for various necessary repairs to the property. Under Civil Code section 1942, respondents were entitled to repair and deduct up to one month of rent up to two times per year. The record suggests that the repairs were necessary for example, upon moving in, the nuns found themselves without a usable telephone jack. Eusebio Martinez testified that he tried to contact appellant regarding the need for several repairs to the property but never got an answer from her. Under these circumstances, the trial court did not abuse its discretion in determining that respondents actions in withholding the rent and deducting for repairs should not prevent the awarding of an equitable remedy in their favor.

B. Laches

The remedy of specific performance is subject to equitable defenses, including laches. However, laches cannot be shown by a mere lapse of time. The defense of laches requires unreasonable delay plus either acquiescence in the act about which the plaintiff complains or prejudice to the defendant resulting from the delay. (Conti v. Board of Civil Service Commissioners (1969) 1 Cal.3d 351, 359.)

We first address the question of whether respondents delay was unreasonable. As discussed previously, as late as December 2001 appellant communicated with respondents in such a way as to lead them to believe that she still intended to close the transaction as planned. By December 2002 respondents had obtained an attorney and sent an initial communication to appellant regarding the possibility of mediation. Under these circumstances, it was not an abuse of discretion for the trial court to conclude that such delay was not unreasonable.

We next turn to the question of prejudice. Appellant contends that she was prejudiced by respondents delay in commencing litigation because they were tying up her property without paying rent, forcing her to pay mortgage, property taxes, insurance, and homeowners association dues without receiving any rent. This argument is undermined by the courts equitable award, which granted to appellant an offset which compensated her for this money. Appellants trial attorney stipulated to the offset. Appellants only other claim of prejudice was that, due to plaintiffs delay in filing suit, she is now forced to sell a $300,000 asset for $88,000. The trial court did not abuse its discretion in determining that the rise in value of the property was not the type of prejudice that should prevent enforcement of the contract. Appellant had an obligation to clear the liens and close the transaction in a timely manner. The trial court was not required to allow appellant to benefit from her own delay by taking advantage of the rise in value of the property since the time that she agreed to sell it.

IV. The Trial Court Did Not Err in Ordering Appellant to Pay Off the Liens

The judgment entered by the trial court provided that [t]he amounts necessary to pay off any liens on the condominium shall be deducted from the purchase price set forth above. The effect of this order is to reduce the purchase price and charge appellant with the cost of paying off the liens. Appellants final argument is that, even if the judgment of specific performance was otherwise proper, it was error for the trial court to order appellant to bear the cost of paying off the liens. This argument is based on appellants position that the purchase agreement was conditioned upon appellants ability to remove the liens at no cost to her.

As set forth above in section II.A.2, we disagree with appellants contention that the purchase agreement was contingent upon her removal of the liens at no cost to her. Such language is not specified in the contract. However, the purchase agreement and the escrow instructions do provide that appellant was required to deliver title to respondents free and clear of liens. The trial court did not err in enforcing these provisions.^[7]

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________, J.

CHAVEZ

We concur:

_______________________, Acting P. J.

DOI TODD

_______________________, J.

ASHMANN-GERST

Publication courtesy of San Diego pro bono legal advice.

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^[1] Yvonne Deward testified that she goes by various names, including Yvonne Sasbytruya, Yvonne Deliard, and Sister Placid. We will use the name Yvonne Deward, which is the name used in documents found in the trial court record.

^[2] Appellant claimed to have sent four handwritten letters to the nuns dated January 20, 2000, March 1, 2000, May 4, 2000, and June 6, 2000. However, Ana Martinez testified repeatedly that she never received any handwritten communication from appellant. Upon being shown the handwritten letters in court, Ana Martinez testified that she had never seen them before. She stated, As I read what she says in these letters, it makes me very upset. I did not receive any written communications from her like this, no. Respondents suggest in their brief to this court that appellant falsely created these handwritten letters for the purpose of deceiving the court. After the conclusion of the trial proceedings, respondents filed a motion in the trial court attempting to suggest that appellant had forged or altered these handwritten letters. That motion was denied by the trial court. We therefore decline to address the issue.

^[3] Respondents apparently filed their first action regarding the property at issue here in January 2003. That action was dismissed. Respondents assert in their brief to this court that the action was dismissed due to a calendaring mistake.

^[4] When asked by appellants trial attorney why she waited four years before filing an action, Ana Martinez responded, Because as Ive indicated, we felt kindly for a long time. We thought everything was up front and above the table and it took us a long time to realize the reality of the situation that she had changed her mind and was not going to sell the property and we were advised that we should get a lawyer, but the thought of bringing a lawsuit was just -- we didnt want to do that. We didnt want to do it. We just kept praying and hoping . . . .

^[5] The procedure to strip away liens in bankruptcy is to file an adversary action in the bankruptcy case against the creditors holding the liens. (See Fed. Rules of Bankr. Proc., rule 7001 et seq., 11 U.S.C.) There is no indication on any of appellants bankruptcy papers that an adversary proceeding was filed.

^[6] Ana Martinez testified that she remembers paying the rent for the first nine months that she and Yvonne Deward lived at the condominium, which would have been through September 2000. However, in their brief respondents claim that, counting the deductions respondents had to spend to make necessary improvements on the property their rent was covered through July 31, 2000.

^[7] Because we affirm the order of specific enforcement, we do not address appellants contention that, if the court reverses the order of specific enforcement, appellant is still entitled to receive the stipulated $42,808.17 in back rent and other remuneration.