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Genschel v. Breen

Court of Appeals of California, First Appellate District, Division One.
Nov 17, 2003
A102124 (Cal. Ct. App. Nov. 17, 2003)

Opinion

A102124.

11-17-2003

RAINER GENSCHEL, Cross-Complainant and Appellant, v. DENNIS J. BREEN, Cross-Defendant and Respondent.


Rainer Genschel appeals from a judgment entered against Genschel on a cross-complaint filed by him against Dennis J. Breen.

We will affirm.

FACTUAL/PROCEDURAL BACKGROUND

On December 4, 2000, Genschel and Breen entered into a contract under which Breen was to purchase a two-unit residential building owned by Genschel for $1.2 million. As relevant, the parties agreed that the sale was to close on January 5, 2001, and time was of the essence. The upper unit of the property was to be delivered vacant, but Genschel would be permitted to lease the lower unit for up to 12 months after the close of escrow. Neil Gingold, of Vanguard Properties, acted as Genschels agent in the sale, and Sean Dwyer represented Breen.

On December 7, 2000, Genschel wrote to his agent, Gingold, that an anticipated job in Europe was being delayed, and he therefore needed to slow down the sale of the property. Genschel suggested that the closing date be postponed to March 30, 2001. Dwyer relayed this information to Breen. Dwyer then wrote a letter to Gingold, dated December 9, the meaning of which is central to the lawsuit. Dwyer wrote:

I am sending this letter as a result of our telephone conversation Friday morning. In our conversation, you made mention that your client Mr. Rainer Genschel would like to extend the close of escrow to March 30, 2001. I have discussed this, among other things with my client Mr. Dennis Breen and we find the extension acceptable.

We would like a formal counter offer with the appropriate changes. Mr. Breen did express a few concerns that he would like to make . . . very clear. They are listed as follows:

1. The inspection contingencies have been waived.

2. The date for removing loan contingency will now be March 10, 2000 [sic].

3. Mr. Genschel is to deliver the property vacant, with no rent back accepted.

4. Mr. Genschel is to proceed in obtaining condominium status at no cost to my client. You referenced this in conversation directly with Mr. Breen and he would like to make sure that continuing efforts are made to condo the building.

5. Increased deposit will be made on February 1, 2000 [sic].

Please note Mr. Breens intent to purchase this property remains the same. He expects Mr. Genschel to completely comply with the fully executed contract. The original contract is binding, and if Mr. Genschel does not feel comfortable with the above terms, my client feels it will be necessary to comply with the original terms and closing dates contracted. Please note Mr. Breen does feel changes warrant supervision of his attorney, and he has elected to forward this letter to his attorney.

On December 14, 2000, Breens attorney, Saul Ferster, wrote to Genschel emphasizing Breens position that Genschel was presently bound by the terms of the December 4 contract, asserting that unless the parties mutually agreed on an amendment to the contract, in writing, Genschel was obligated to transfer title on January 5, 2001, and Breen intended to perform his obligations by that date.

In the meantime, Breen learned that Genschel was showing one of the units to some other party, with the representation that the building as a whole might be converted to a tenancy in common. Breen became concerned that Genschel intended to break the entire deal. On December 18, 2000, therefore, Breen filed suit against Genschel, and placed a lis pendens on the property.

On December 19, 2000, Genschels attorney, Brian Soriano, wrote a letter to Ferster stating that Genschels position was that Breen, through Dwyers letter of December 9, had agreed to extend the date for close of escrow to March 30, 2001, but that "[o]ther than the date for the close of escrow, no additional contract terms have been agreed to by Mr. Genschel."

Ferster responded by a letter of December 26, asserting that there was no agreement to delay the close of escrow. "Therefore, it would appear that the closing date remains January 5, 2001." Ferster wrote, further, that "Mr. Breen is willing to extend the date of close to March 30, 2001, but wants written acknowledgement of Mr. Gensels acceptance of those proposed terms set forth in the letter still relevant, and one additional term [access to the units prior to the close of escrow for purposes of assessing such things as planned construction]." Ferster also wrote that if the extension were to be granted, the parties would need to execute appropriate addenda to the purchase agreement.

Soriano wrote back, reiterating Genschels position that by communicating that Breen had found Genschels request for an extension to be "acceptable," Breen had in fact agreed to it, and that Breens "acceptance" was "not made contingent on any other event." Soriano also wrote that Genschel was not then available, but "I can assure you at this time, however, that Mr. Breens failure to close on January 5, 2001, will never be raised by Mr. Genschel as a default by Mr. Breen nor a reason not to complete the purchase agreement.

On January 3, 2001, Ferster wrote back that they had learned from Gingold that Genschel was not available, would not be able to close on January 5, 2001, and expected to close on March 30. Ferster wrote that, "based on those facts, and the representations made in your letter of December 28," they understood that Breen did not need to be prepared to close on January 5, and that Genschel had "accepted and bound himself to the conditions in Mr. Dwyers letter."

Soriano replied that Ferster was mischaracterizing Genschels position, which was that the parties had agreed to extend escrow, but had agreed to no other amendment proposed by Breen.

Neither party tendered performance on January 5, and escrow did not close on that date. The parties, through their attorneys, continued to try to find some means of resolving the matter, apparently through mediation and/or arbitration. By March 30, it was apparent that escrow was not going to close on that date either, and the parties at that time agreed that neither would claim the failure to close by March 30 to be breach of the contract.

On June 6, 2001, however, when the matter still had not resolved, Ferster wrote that Breen had elected to terminate the contract. Their position was that Genschels failure to perform under the original agreement by January 5, or to agree to the conditions for extending escrow to March 30, entitled Breen to cancel the contract. On July 25, Breen withdrew the lis pendens against the property.

Genschel refused to authorize the escrow holder to release Breens deposit of $36,000. He later sold the property for $ 995,000. In the meantime, Vanguard Properties brought suit against Genschel for loss of its commission on the sale. Genschel filed a cross-complaint against Breen for breach of contract, seeking the difference between the $1.2 million Breen had agreed to pay under the parties contract and the $995,000 Genschel received when he sold the property to a third party.

On December 10, 2002, the trial court denied Vanguards motion for summary judgment against Genschel. On January 13, 2003, the court granted Breens motion for summary judgment against Genschel, finding, in part, that Genschel sought to push back the closing date to March 30, 2001, that Breen indicated that he would accept the new date upon Genschel making a formal counteroffer with a number of changes to the contract, that Genschel did not make a counteroffer, and that the contract did not survive January 5, 2001. The court entered judgment in favor of Breen on February 20, 2003.

This appeal followed.

DISCUSSION

Under Code Civil Procedure section 437c (section 437c), a defendant moving for summary judgment has the burden of establishing evidentiary facts sufficient to entitle that defendant to judgment. The defendant need not disprove the plaintiffs entire claim, needing only to show that one or more elements of the plaintiffs cause or causes of action cannot be established. Once the defendants burden is met, the burden shifts to the plaintiff to set forth specific facts showing that a triable issue of fact exists. (Code Civ. Proc., § 437c, subd. (o); First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 736-737.)

In evaluating the propriety of a grant of summary judgment, our review is de novo and we independently review the record before the trial court. Because the granting of a summary judgment motion under section 437c involves pure questions of law, we are required to reassess the legal significance and effect of the papers presented by the parties in connection with the motion. We apply the same three-step analysis required of the trial court in ruling on a motion for summary judgment. First, we identify the issues framed by the pleadings, because the courts sole function on a motion for summary judgment is to determine from the submitted evidence whether there is a triable issue as to any material fact. Second, we determine whether the moving party has met its statutory burden of proof. Finally, if the moving party has met its statutory burden of proof, and the summary judgment motion prima facie justifies a judgment, we determine whether the opposing party has met its burden of demonstrating the existence of a triable issue of one or more material facts as to the cause or causes of action at issue. In making that determination, we strictly construe the evidence of the moving party and liberally construe that of the opponent, resolving any doubts as to the propriety of granting the motion in favor of the party opposing the motion. (Zavala v. Arce (1997) 58 Cal.App.4th 915, 925-926.) If the filings in opposition do not raise a triable issue of material fact, the motion must be granted. (Code Civ. Proc., §437c, subd. (c); River Bank America v. Diller (1995) 38 Cal.App.4th 1400, 1410-1411.)

Here, Genschel sought damages for breach of contract. In a contract for the sale of an interest in real estate, the delivery of the deed and the payment of the purchase price are dependent and concurrent conditions. (Alfinito v. Sater (1966) 246 Cal.App.2d 362, 383; Diamond v. Huenergardt (1959) 175 Cal.App.2d 214, 220.) In order for one party under such a contract to place the other in default, he must tender performance of the concurrent conditions required to be performed on his part. (Civ. Code, § 1439; Diamond v. Huenergardt, at p. 220.) A seller, therefore, cannot put the buyer into default without first tendering the deed. (Basset v. Johnson (1949) 94 Cal.App.2d 807, 810; disapproved on other grounds in People v. Benford (1959) 53 Cal.2d 1, 6.) In other words, the failure of the parties to perform concurrent conditions during the time for performance results in a discharge of both parties duties to perform (Pittman v. Canham (1992) 2 Cal.App.4th 556, 558-559), effectively terminating the contract.

The contract here, by its terms, was to be performed no later than January 5, 2001. Breen introduced evidence that Genschel, the seller, did not tender the deed on that date—or ever—and therefore made a prima facie showing that Breen had the defense that Genschels failure to perform his concurrent condition effectively discharged Breens duty to perform.

At that point, the burden shifted to Genschel to introduce evidence from which it might be concluded that Breen nonetheless breached the parties contract.

Modification

In the trial court, Genschel argued that Dwyers letter of December 9, 2000, written on Breens behalf, manifested an agreement between the parties to change the date of closing; i.e., to modify the December 4 contract by extending the closing date to March 30, 2001. Under this argument, the failure to perform by January 5, 2001, was not the failure of a concurrent condition, because the contract no longer called for performance by that date.

The issue is one of contractual intent. The relevant law was stated in Allen v. Smith (2002) 94 Cal.App.4th 1270, 1277: " `Contract formation is governed by objective manifestations, not the subjective intent of any individual involved. [Citations.] The test is "what the outward manifestations of consent would lead a reasonable person to believe." [Citation.] " The December 9 letter cannot reasonably be read as manifesting an agreement to delay closing. First, there is no suggestion that Genschel ever made an offer to delay closing that Breen could accept by means of the letter. Dwyer wrote only of a discussion with Gingold during which Gingold "made mention that your client Mr. Rainer Genschel would like to extend the close of escrow to March 30, 2001." Second, Breen did not "accept" anything. Dwyer wrote that Breen found the extension to be "acceptable"; not that he in fact accepted it. Third, the letter solicits a formal counteroffer from Genschel—suggesting, again, that Breen had yet to receive an offer from Genschel that he could accept, and that he did not mean to agree to anything until he received such an offer. Fourth, the letter as a whole quite clearly communicates that Breen viewed the December 4 agreement as binding unless and until Genschel made a formal counteroffer that included the five points set forth in Dwyers letter. At the very most, then, the December 9 letter was itself an offer, communicating a willingness to alter the original contract on the proposed terms should Genschel agree to them. Genschel never submitted the requested counteroffer (or acceptance) and never agreed to the terms proposed by Breen.

Genschel, therefore, failed to introduce evidence from which it might be concluded that the parties modified the December 4 contract to extend the closing date to March 30.

Waiver or Ratification

Genschel contends that the December 9 letter, coupled with Breens conduct both before and after January 5, including the filing of the lis pendens and the failure to disaffirm the December 4 contract within a reasonable time, effectively waived the time-is-of-the-essence provision.

It is settled that a party may waive the requirement that performance be rendered by the specified time. (Chan v. Title Ins. & Trust Co. (1952) 39 Cal.2d 253, 258.) " `Case law is clear that " `[w]aiver is the intentional relinquishment of a known right after knowledge of the facts. [Citations.] The burden . . . is on the party claiming a waiver of a right to prove it by clear and convincing evidence that does not leave the matter to speculation, and `doubtful cases will be decided against a waiver [citation]." The waiver may be either express, based on the words of the waiving party, or implied, based on conduct indicating an intent to relinquish the right. [Citation.] [Citation.] Thus, ` "California courts will find waiver when a party intentionally relinquishes a right or when that partys acts are so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished." [Citation.] " (Old Republic Ins. Co. v. FSR Brokerage, Inc. (2000) 80 Cal.App.4th 666, 678.) And while it is true that the question of waiver is a question of fact (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1052), it is equally true that when the facts, as here, are undisputed, the issue becomes one of law. (Old Republic Ins. Co. v. FSR Brokerage, Inc., at p. 679.)

Breens letters to Genschel, through his agent and his attorney, do not express an intention to relinquish Breens right to hold Genschel to the terms of the December 4 contract, including the closing date of January 5, 2001. The letters quite clearly communicate Breens intention to agree to delay the closing of escrow until March 30 only if Genschel agreed to the five matters set forth in Dwyers letter of December 9. The December 9 letter, for example, informs Genschel that if he did not feel comfortable with those terms, Breen "feels it will be necessary to comply with the original terms and closing dates." Fersters December 14 letter advises Genschel that he and Breen viewed the December 4 agreement as absolutely and completely binding, and that unless the parties agreed to amend it, performance was due on January 5, 2001. Breen was, however, willing to entertain a proposal to extend the closing date "on reasonable, mutually agreed upon conditions."

Fersters letter of December 26 again communicates that Breen is willing to extend the closing date to March 30, 2001, "but wants written acknowledgement of Mr. Genschels acceptance of those proposed terms set forth in the letter [of December 9] . . . . [¶] Finally, if the extension is to be granted, we will need to have your client execute appropriate addenda to the purchase agreement within the next few days. . . . At the moment, Mr. Breen is moving forward toward a January 5, 2001 close so as not to be in default under the purchase agreement." Fersters letter of January 3, 2001, responding to Sorianos assertion that by the December 9 letter Breen had agreed, unconditionally, to extend the close of escrow to March 30, stated, "I feel compelled to state that I thoroughly disagree with your interpretation of the December 9, 2000 letter from Sean Dwyer to Neil Gingold. Clearly, the formal counteroffer referenced was in exchange for the requested extension to the March 30, 2001 close."

In short, Breen, by his communications to Genschel by and through Dwyer and Ferster, could not reasonably have caused Genschel to believe that Breen was relinquishing his right to insist on a January 5, 2001, closing date in the absence of an agreement by Genschel to the terms set forth in the December 9 letter.

The filing of the lis pendens also did not suggest any intention on Breens part to waive his right to a January 5 closing date. The lawsuit was filed to prevent Genschel from renting a unit and/or transferring title to the property to some other party. It communicated no more than that, as of December 18, when the lis pendens was filed, Breen believed that Genschel was contractually obligated to sell the property to him.

Breens conduct after January 5 also does not indicate an intention to continue under the terms of the December 4 agreement while waiving, unconditionally, the closing date of January 5, 2001. Breen, through Ferster, unequivocally expressed the view that Genschels failure to close on January 5, coupled with his attempt to keep the deal open after that date, constituted an acceptance of Breens terms for keeping the contract alive. Breens conduct after January 5, therefore, communicated only the belief that the original agreement no longer was in effect, and his willingness to proceed under a new or modified agreement that not only had a closing date of March 30, but included all the terms set forth in the December 9 letter.

Genschel, referring to the lis pendens, contends that Breen waived the time-is-of-the-essence clause by accepting the benefits of the contract. Although a lis pendens may provide a benefit to the party filing it because it interferes with the ability of the other party to convey property, such "benefit" is nothing that the parties seek by entering into the contract. And again, Breens conduct in filing the lis pendens suggests only that he believed that Genschel was contractually bound to sell the property to Breen. As Breen made clear, he believed that Genschel at first was bound under the terms of the December 4 contract, and later was bound under a new agreement that included the December 9 proposals. In light of Breens communications, the filing and maintenance of the lis pendens could not suggest that Breen instead intended to waive the time-is-of-the-essence provision in the December 4 contract.

Finally, Genschel argues that Breen ratified the contract, as interpreted by Genschel, by failing to disaffirm it within a reasonable time after January 5, 2001. To the contrary, Breens communications prior to January 5 consistently expressed Breens refusal to adopt Genschels interpretation of the parties agreement, and an intent to go forward only on the terms proposed in the December 9 letter. Breens subsequent conduct, therefore, indicated no more than an intent to proceed on his own terms; not that Breen was ratifying an agreement on Genschels terms.

Genschel, therefore, failed to introduce evidence from which it might be concluded that Breen waived the time-is-of-the-essence provision.

Repudiation

Genschel contends that even if Breen did not waive the time-is-of-the-essence clause, he repudiated the contract himself by Fersters letter of January 3 to Soriano, entitling Genschel to sue for breach without first tendering his own performance.

The letter at issue was written after Ferster received a December 28 letter from Soriano. Sorianos letter expressed Genschels position that Breen had "accepted" Genschels proposal to delay the closing date, but that the parties had agreed to none of the other points proposed in Dwyers letter of December 9. Soriano wrote, further:

Mr. Genschel is presently unavailable to respond to the items newly proposed in your December 26, 2000, letter. I can assure you at this time, however, that Mr. Breens failure to close on January 5, 2001, will never be raised by Mr. Genschel as a default by Mr. Breen nor a reason not to complete the purchase agreement. Mr. Genschel will return right after the New Year, at which time I will be able to respond to the newly raised issues in your December 26, 2000, letter.

Ferster then wrote, as relevant here:

Since I wrote you my letter of December 26, 2000 [stating that Breen was moving forward toward a January 5, 2001, close], Sean Dwyer received information from Neil Gingold that Mr. Genschel was not available and would not be able to close on January 5, 2001, and that he was expecting instead to close on March 30, 2001. Apparently, Mr. Genschel conveyed this information to Mr. Gingold by telephone. Our understanding is that Mr. Genschel is in Germany at this time, and would not be available to close on January 5, 2001 in any event. [¶] Therefore, based on those facts, and on the representation made in your letter of December 28, 2000 that Mr. Breen need not be prepared to close on January 5, 2001, Mr. Breen will discontinue his preparations for closing on that date and will look toward a March 30, 2001 closing instead.

Ferster then expressed Breens view that "Mr. Genschel, having received [the letter of December 9] from Sean Dwyer, and then having compelled a change in closing from January 5, 2001 to March 30, 2001, by making himself unavailable to close on January 5 and by reiterating his intention to close on March 30 instead, both through you and Mr. Gingold, has accepted and bound himself to the conditions in Mr. Dwyers letter."

Fersters letter, taken in context, cannot be viewed as a repudiation of the December 4 contract. To the contrary, Breen consistently maintained his intent to perform under the terms of that contract until he ascertained that Genschel would not perform. Fersters letter, therefore, far from communicating an unwillingness to perform, communicated Breens understanding that Genschel was repudiating the December 4 contract by making himself unavailable to close on January 5, while at the same time expressing Breens interest in going forward on the terms proposed in Dwyers December 9 letter. Furthermore, Soriano assured Ferster that Genschel would not view Breens failure to tender performance on January 5, 2001, as a breach. In light of that assurance, and of Breens explanation of his actions, Genschel cannot reasonably claim that Breens suspension of his performance manifested an intention to repudiate the contract.

Genschel therefore did not introduce evidence from which it might be concluded that Breen repudiated the parties contract before January 5, 2001.

Agreement to Close on March 30

Although the parties continued to negotiate after January 5, 2001, there is no evidence that they reached any agreement after that date. The evidence, instead, is that each was attempting to fashion an agreement on his own terms, but that neither was willing to accept the terms proposed by the other. The only term that they could agree on was that the sale was to close on March 30, 2001, but as they had agreed on nothing else, both parties were fully entitled to break off negotiations after that date. Breens letter of June 6, therefore, could not have been a breach of any agreement between the parties.

CONCLUSION

Genschel did not introduce any facts from which it might be concluded that the December 4, 2000, contract remained in effect after January 5, 2001, that the parties entered into a second, binding agreement that was in effect after that date, or that Breen repudiated the December 4 contract.

DISPOSITION

The judgment is affirmed.

We concur, Marchiano, P.J., Margulies, J. --------------- Notes: Ferster wrote, in part, "The Contract is absolutely and completely binding as it now stands. Mr. Breen has performed fully to date, and intends to continue to perform in a timely manner in compliance with its terms. Barring some mutually agreed-upon amendment, made in writing, you are due to transfer title on January 5, 2001. It is Mr. Breens unqualified intention to complete the Contract on or before that date."


Summaries of

Genschel v. Breen

Court of Appeals of California, First Appellate District, Division One.
Nov 17, 2003
A102124 (Cal. Ct. App. Nov. 17, 2003)
Case details for

Genschel v. Breen

Case Details

Full title:RAINER GENSCHEL, Cross-Complainant and Appellant, v. DENNIS J. BREEN…

Court:Court of Appeals of California, First Appellate District, Division One.

Date published: Nov 17, 2003

Citations

A102124 (Cal. Ct. App. Nov. 17, 2003)