Procedural Posture

Appellant sellers sought review of the decision of the Superior Court of Lake County (California), which denied their request for either specific performance or damages in their suit against respondent purchasers and respondent title company for breach of a real estate sales contract.

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Overview

Appellant sellers contracted to sell a walnut grove to respondent purchasers. The parties opened escrow with respondent title company. Respondent purchasers delivered a check to respondent title company with instructions not to cash it until further notice. Subsequently, respondent purchasers went bankrupt and refused to complete the transaction. Appellants filed suit seeking specific performance or damages. The lower court found that respondent title company was negligent and that respondent purchasers had breached the contract, but did not award damages. Appellants sought review. The court found that substantial evidence supported the finding that respondent title company was negligent. Further, there was substantial proof that appellants did not sustain any actual damages because the property had appreciated in value since the time of the uncompleted sale. However, the court determined appellants were entitled to recover consequential damages caused by respondent purchasers’ breach of contract. The court thus reversed the judgment, and remanded the case with directions that appellants be awarded consequential damages that did not exceed the amount of the deposit.

Outcome

The decision denying appellant sellers’ request for either specific performance or damages was reversed because appellants were entitled to recover consequential damages incurred due to respondent purchasers’ breach of contract and respondent title company’s negligence. The case was remanded for a determination of consequential damages due appellants, which could not exceed the amount of respondent purchasers’ deposit.