Opinion
NOT TO BE PUBLISHED
Santa Cruz County, Super. Ct. No. CV144001
Duffy, J.
In October 2001, Monterey Vista Mobile Estates Homeowners’ Association (Monterey Vista) entered into a written contract (Agreement) to purchase a mobilehome park in Watsonville known as the Monterey Vista Mobile Estates (Park). The Bybee Family Trust (Bybee Trust, or Trust), by its trustees, Frank and Joyce Bybee, signed the Agreement. The Trust owned a 70 percent undivided interest in the Park. The owners of the remaining 30 percent interest in the Park—Joseph Sherman (20 percent), and Oliver and Janice Bybee Holt (10 percent; collectively, Holt)—were not signatories. Frank Bybee died less than two months later. The purchase transaction ultimately failed and Monterey Vista brought suit for breach of contract and misrepresentation. After a bench trial, the court initially ordered specific performance in favor of Monterey Vista as to the Bybee Trust’s 70 percent interest in the Park and ordered an accounting of incidental damages resulting from the failure to close escrow. The court later vacated its specific performance order and ultimately awarded to Monterey Vista contract damages of $215,665.63, and attorney fees and costs of $274,803.41. Monterey Vista appealed and the Trust cross-appealed.
For ease of reference and meaning no disrespect in doing so, we will on occasion refer to Frank and Joyce Bybee as the Bybees and to the individuals by their forenames. After Frank Bybee’s death in December 2001, his son-in-law, Mark Lundquist, was named as a successor trustee of the Bybee Trust and acted as co-trustee with Frank’s widow, Joyce. For simplicity, our references to the Bybee Trust are to the trust entity and to its trustees in place at the time of the matters alleged or at the time the litigation was pending.
Monterey Vista argues that the court erred by vacating its original order granting specific performance because that reversal was based on the untenable theory that Monterey Vista had not shown an ability to perform by actually having obtained financing. Monterey Vista contends further that it should have been awarded damages incidental to specific performance based on the difference between the cost of the originally anticipated loan (i.e., financing the purchase of a 100 percent interest in the Park) and the much higher loan cost for the purchase of the Bybee Trust’s 70 percent interest in the Park. Monterey Vista argues that, due to the unique circumstances here—where the amount of such loan differential exceeds the entire value of the Trust’s interest in the Park—the equitable solution would be to order the Trust to convey its interest subject to seller-financing on the same terms that Monterey Vista would have received under the originally contemplated purchase of the entire interest in the Park. Additionally, Monterey Vista asserts that the court erred by refusing to award incidental damages based upon the loss of the 30 percent interest in the Park due to the Trust’s breach of contract. Finally, Monterey Vista argues in the alternative that if we were to conclude that specific performance was properly denied, it should have been awarded damages to compensate it for the loss of the ability to buy the Park, based upon the difference between the contract price and its market value at the time of breach.
In their cross-appeal, the Bybee Trust argues that there was no basis for the court’s finding that the Trust breached the Agreement by failing to convey to Monterey Vista its undivided 70 percent interest in the Park. It contends that the parties never intended the conveyance of only a partial interest in the Park if the minority co-owners refused to sign the Agreement. Therefore, any recovery in Monterey Vista’s favor that was fashioned by the court—either the court’s initial order of specific performance or later judgment for damages for breach of contract—was improper because it was premised on the alleged breach of a nonexistent agreement. The Bybee Trust also asserts that Monterey Vista failed to establish that it had the ability to perform under the Agreement, because its deposit into escrow for the purchase of the entire interest in the Park was more than one-half million dollars less than the amount necessary to close escrow. Further, the Trust contends that the award of damages was improper because Monterey Vista failed to mitigate its damages; the vast majority of damages (the Trust asserts) related to expenses unnecessarily incurred by Monterey Vista in its attempt to acquire a 100 percent interest in the Park after it became aware that the Trust’s co-owners had unequivocally refused to sell. Finally, the Trust argues that the court erred in its award of attorney fees and costs to Monterey Vista by failing to give legal effect to the Trust’s formal offer to compromise under Code of Civil Procedure section 998, which offer was of a monetary amount greater than Monterey Vista’s ultimate damages recovery.
We hold that the court erred in concluding that the Bybee Trust breached the Agreement by failing to convey its undivided 70 percent interest in the Park to Monterey Vista. Accordingly, we will reverse the judgment and the order awarding Monterey Vista its fees and costs.
FACTS
I. Liability Evidence
A. Negotiations
The Park is located on a 15 and one-half acre site in Watsonville. It includes 122 units, a clubhouse, swimming pool, parking, and open space. Sherman—who lives near Pasadena and is involved in managing, building, and operating mobilehome parks—built the Park in the early 1970’s along with a former partner (Jack Oloh). Sherman, Oloh, and three investors originally owned the Park. Shortly after the Park was completed, Oloh and the other partners sold their collective 80 percent interest to the Bybees; Sherman was adamant about not selling, and he retained his 20 percent interest. After the sale, Sherman was not involved in the Park’s management. Frank Bybee was responsible for the day-to-day operations of the Park; Sherman simply received monthly profit checks reflecting his 20 percent interest. Sherman very seldom saw Frank; his last visit to the Park was in approximately 1981.
Mary Crowther and her husband have lived at the Park since 1991. They were managers of the Park from the time they moved there through February 28, 2001. Crowther has also served as secretary on the board of directors of the Park’s homeowners’ association since June 2001. The Crowthers were friends of the Bybees and they socialized together. Frank Bybee was 82 or 83 in 2001. Crowther “had known Frank Bybee for many years and [she] knew him to be an honest[,] trustworthy man.” Crowther was aware early on that there was a co-owner of the Park who held a 20 percent interest, Sherman, whom Frank “referred to as his partner down south....” She never saw Sherman at the Park.
Kenneth Gray lives in the Park and became president of its homeowner’s association in June 2000. He understood that the Bybees were the owners and that Frank Bybee was “the ultimate manager of the [P]ark.” Upon being elected association president, he had a letter sent in June 2000 to Frank Bybee—a letter of the type that had been sent annually—inquiring as to the Bybees’ interest in selling the Park.
Gray followed up on that letter by visiting the Bybees at their home in the Park. At that time, Frank stated that he and his wife would be interested in selling the Park and that they would probably want somewhere between $30,000 and $40,000 per space. He also told Gray—either at that time or shortly afterward—that he had minority partners who owned the Park with him. One was a person in Southern California who owned a 20 percent interest, and the other was Frank’s son-in-law (along with his wife), who had done some landscaping work in exchange for a 10 percent interest. “[Frank] always called [the minority owners] his partners.” Frank reiterated his interest in selling at a homeowners’ meeting on July 18, 2000.
After Frank indicated in 2000 that he would be interested in selling the Park, Crowther suggested that he retain an attorney or accountant to assist him with the sale. Although he thought hiring an accountant was a good idea, he was unwilling to retain an attorney, telling Crowther, “[W]hat do I need a lawyer for[?] I know what I want.”
The homeowners’ board hired outside consultants to study the feasibility of the proposed purchase; the study was funded by the City of Watsonville. In January 2001, the consultants concluded that it was feasible for the homeowners to purchase the Park at a per-space price of $33,000.
David Semelsberger was one of several attorneys the board interviewed in connection with the homeowners’ purchase efforts. Semelsberger has specialized for nearly 20 years in the representation of mobilehome park residents in litigation and in efforts to purchase mobilehome parks. He had represented mobilehome park tenants in connection with the purchase of mobilehome parks on approximately 12 occasions prior to February 2001. In February 2001, the residents of the Park retained Semelsberger’s law firm. The board retained the firm because of Semelsberger’s expertise in handling other mobilehome park acquisitions, and because he was willing to advance costs and to work on a contingency arrangement. Under the engagement agreement, the homeowners were obligated to pay Semelsberger’s firm $122,000 out of the escrow when and if the purchase of the Park was consummated.
The first thing that Semelsberger did was create a nonprofit public benefit corporation that would be the buyer in the transaction. This was accomplished in April 2001 so that the buyer, Monterey Vista, would be eligible to receive loans from state and federal agencies.
In April 2001, Semelsberger prepared a two-page offer letter—a document that he referred to as a “mini[-]contract”— under which Monterey Vista proposed to purchase the Park for $32,000 per space, or $3,904,000. Semelsberger and Gray met with the Bybees on April 10, 2001, and presented the offer. Frank promised to respond to Monterey Vista’s proposal. Semelsberger had no subsequent meetings or direct communications with the Bybees.
Ten days later, Frank met with Gray and countered with a proposal to sell at $33,500 per space. After obtaining board approval, Gray had Semelsberger prepare a modified mini-contract to increase the offer as requested by Frank. Gray then met with the Bybees on April 24, 2001; at that meeting, the Bybees, as “Owners,” signed a two-page letter previously signed by Semelsberger confirming that the Bybees would sell the Park to Monterey Vista for $4,087,000, or $33,500 per space.
Gray and the board—with Semelsberger’s assistance—sought to obtain financing for the purchase. Surveys conducted showed that there were a sufficient number of low-income Park residents for Monterey Vista to qualify for an MPROP loan through the California Department of Housing and Community Development (Department). Semelsberger submitted a detailed MPROP loan application to the Department on August 24, 2001. The Department set a hearing on the application for October 31, 2001.
An MPROP loan is a loan under the Mobilehome Park Resident Ownership Program (Health & Saf. Code, § 50781, subd. (j)) made pursuant to Health and Safety Code section 50780 et seq.
Also in August 2001, Semelsberger had conversations with Santa Cruz Title Company about obtaining a preliminary title report for the Park. The preliminary title report was thereafter issued on August 21, 2001. Semelsberger noted from that report that the owners of the Park were the Bybee Trust (an undivided 70 percent interest), Sherman (an undivided 20 percent interest), and Holt (an undivided 10 percent interest). On September 4, 2001, Shelley Ainsworth of Santa Cruz Title Company sent a fax marked “Urgent” to Semelsberger, stating, inter alia, “In regards to the prelim on the above mentioned property, I noticed quite a few owners of record.” Semelsberger testified that this “was information that was important to [him].”
The preliminary title report indicated as follows: “Title to said estate or interest at the date hereof is vested in: [¶] Joseph Sherman, a Single Man, as to an undivided 20 [percent] Interest and Frank A. Bybee[,] Jr[.] and Joyce P. Bybee, Co-Trustees, the Bybee Family Trust, dated [S]eptember 28, 1977, as to an undivided 70 [percent] Interest and Oliver Holt and Janice Bybee Holt, husband and wife, as joint tenants, as to an undivided 10 [percent] Interest.”
B. Execution of the Agreement
As a condition of its approval of the MPROP loan, the Department required that there be a more formal sales agreement executed by the parties, which Semelsberger prepared. He wanted to have it executed before the October 31 hearing on the loan application. After Gray suggested some revisions to the draft agreement that were implemented by Semelsberger, Gray presented the draft to the Bybees on October 14, 2001; it was left with the Bybees.
On October 18, 2001, Frank Bybee came to Crowther’s home and asked her to contact his accountant, Steve Richards, in Fresno. They called Richards together; at Frank’s request, Crowther gave Semelsberger’s telephone number to Richards so that he could tell the attorney what information he thought should be contained in authorization forms that were being prepared. Richards said that having authorization forms signed by the co-owners was for Frank’s protection as well as for the protection of Monterey Vista.
Also on October 18, Gray, at Frank’s request, spoke to Semelsberger. Gray relayed the information from Frank that the Bybees’ accountant had suggested that Monterey Vista obtain written authorizations for the sale from the other Park owners. As confirmed in Semelsberger’s notes, Gray asked him to “get letter[s] from other partners that they authorized Bybee to sign the agreement.” Later that day, Semelsberger spoke by telephone with Richards “about obtaining authorization form[s] for Mr. Bybee’s partners to sell.” Semelsberger indicated in his notes of that conversation: “[I]mportant for Frank Bybee to have authority to sign the documents from his partners[. S]end it to Mr. Bybee.” He testified that he believed that the statement about it being important to obtain written authority came from Richards.
Semelsberger prepared three authorization forms for execution by Sherman and Holt and faxed them to Crowther on the same day (October 18). Crowther then took them to Frank Bybee. Semelsberger testified that he did not believe that obtaining signed authorization forms from the minority owners was necessary in order to have a complete contract “[b]ecause [he] felt that [Frank Bybee] had authority to sign on behalf of the other partners.” This was based upon what Semelsberger was told by Gray or Crowther.
The unsigned power of attorney forms for signature by Sherman and Holt that Semelsberger prepared and faxed on October 18, 2001, contained identical language reading as follows: “The undersigned owner of an interest in Monterey Vista Mobile Estates mobilehome park property and partner of Frank A. Bybee[,] Jr. and Joyce P. Bybee do certify that I am one of the owners of Monterey Vista Estates property and there are no other owners of the property or partners in the ownership of Monterey Vista other than Frank A. Bybee[,] Jr. and Joyce P. Bybee, Co-Trustees of the Bybee Family Trust, Joseph Sherman, Oliver Holt, and Janice Bybee Holt. [¶] I further certify that either Frank A. Bybee[,] Jr. or Joyce P. Bybee be, and are, hereby authorized and empowered for and on behalf of me to execute and deliver a purchase and sale agreement to sell the [Park]..., and all other documents to be executed in connection with this sale, and to take all actions that may be considered necessary to conclude the transaction contemplated by the parties. [¶] The authority conferred in this power of attorney and certificate shall be considered retroactive, and any and all acts authorized in this document that were performed before the execution of this power of attorney and certificate are approved and ratified. The authority conferred by this power of attorney and certificate shall continue in full force and effect through the conclusion of the sale and close of escrow....”
Later on October 18, Crowther advised Semelsberger by e-mail that Frank Bybee also wanted “a generic [authorization] form (no names)” as well. Frank wanted the additional form because he had been gifting ownership interests in the Park to his children such that “he feels that they own more of the [P]ark than he does, so he would like to have each one of them sign an agreement giving him authorization to sign the purchase agreement. He did not seem to think there would be any problem, but he does want their signatures on a document. He said he was not even sure if Joe Sherman wanted to sell, and he may have to do a little arm twisting there.” Semelsberger testified that he prepared a blank authorization form as a result of this request because “there may have been some children involved that Mr. Bybee preferred to have sign so there [would] be no question.” He faxed the blank form to Crowther on October 19, 2001. Because the Bybees’ children were not listed as owners in the preliminary title report, Semelsberger did not feel that it was necessary to obtain these written authorizations.
On the evening of October 19, Crowther sent an e-mail to Semelsberger and members of the board, stating, “Frank now has all the forms he needs... to get the authorizations from all interested parties (those owning an interest in the [P]ark) and just needs to get them signed. Then he will be able to sign the final purchase agreement.... [¶] He (Frank) said that he had talked to Joe Sherman (the 20 [percent] owner) and that he, Joe, really did not want to sell, but if Frank had his mind made up and definitely wanted to do it, he (Joe) would not stand in the way....”
On October 21, 2001, Frank Bybee provided Gray with some notes reflecting revisions to the agreement that Frank wanted. Included among the proposed revisions was that the purchase price be renegotiated if the sale was not concluded by February 28, 2002. Frank told Gray that he had spoken to the minority owners and that they had agreed to the sale. Gray outlined in an October 22 e-mail to Semelsberger the revisions that Frank had requested and confirmed the substance of his conversation with Frank the day earlier. “[Frank] spoke with the minority partners and they [had] agreed to the sale... the 20 [percent] owner told [Frank] he [had] let the property go too cheap....” Gray closed the e-mail by stating: “[Frank] did say that they will sign the agreement as soon as the above changes are made. He is not concerned that he have the signed authorizations from his partners in his hand before the signing, as he already [had] their oral consent.” Semelsberger made the revisions to address Frank’s concerns.
On October 24, 2001, Gray met with the Bybees twice. During the second meeting, Gray presented the final version of an eight-page “Purchase and Sale Agreement,” which the Bybees and Gray signed. In the introductory portion of the Agreement, it identified the “Seller” collectively as being comprised of “Frank A. Bybee[,] Jr. and Joyce P. Bybee, Co-Trustees, the Bybee Family Trust, dated September 28, 1977, as to an undivided 70 [percent] Interest, Joseph Sherman, a Single Man, as to an undivided 20 [percent] Interest[,] and Oliver Holt and Janice Bybee Holt, husband and wife, as joint tenants, as to an undivided 10 [percent] Interest, Joint Tenants and Partners.” Paragraph 2 of the Agreement—captioned “WARRANTY OF AUTHORITY AS SELLER”—provided: “Seller warrants that Frank A. Bybee[,] Jr. and Joyce P. Bybee are authorized to execute this agreement on Seller’s behalf.” And subsection e to paragraph 16—captioned “INTERPRETATION OF THE AGREEMENT”—provided: “No Representation Regarding Legal Effect of Document. No representation, warranty, or recommendation is made by Seller or Buyer... regarding the legal sufficiency, legal effect, or tax consequences of this Agreement or the transaction, and each signatory is advised to submit this Agreement to his or her respective attorney before signing it.”
After the Agreement was executed, Crowther (at Frank’s request), on October 26 and October 30, 2001, faxed authorization forms (containing the names of the proposed signatories) to Sherman and Holt, respectively. At the time Frank gave her the forms, he said that no fax cover letter was needed because he had already spoken to Sherman and Holt. Frank told Crowther that “he had talked to Joe Sherman and that he had agreed to the sale, he said he really didn’t want to sell but that’s what Frank wanted, he wouldn’t stand in his way....” Crowther never saw any authorization form having the signature of a co-owner on it.
On October 30, 2001, Sherman called Kevin McCann—his attorney for many years who practices in Carlsbad—and indicated that he had received a telephone call from Semelsberger; Sherman asked that McCann call him back to find out what he wanted. In McCann’s first call to Semelsberger that day, Semelsberger said that there was a contract to sell the Park. McCann very quickly said that he did not handle any matter concerning the Park on Sherman’s behalf and that he would have to speak with his client before discussing it further. (McCann was not even aware that his client had an ownership interest in the Park before the telephone call.) McCann called Sherman, who said that he was a part owner of the Park; knew nothing about a contract; hadn’t agreed to sell; and was not interested in selling. McCann telephoned Semelsberger again and told him that his client did not know what Semelsberger was talking about, had not agreed to sell the Park, was not interested in selling his interest, and “[w]as frankly angry that an attempt was being made to sell his portion of the [P]ark without him participating in it.” McCann asked Semelsberger to send him a copy of the Agreement. Semelsberger faxed it right away. McCann did not hear again from Semelsberger until eight months later.
C. Developments after Execution of Agreement
On October 31, 2001, Gray and Semelsberger attended a Department hearing in San Francisco concerning the proposed MPROP loan. On November 16, 2001, the Department approved a loan of $1.5 million.
Frank Bybee passed away on December 2, 2001. Monterey Vista continued forward with its efforts to obtain financing, but (according to Gray) did not “bother the family for a reasonable length of time.” On January 7, 2002, Patrick King—a patent attorney and a Monterey Vista board member since May 2001—sent an e-mail to Gray addressing, inter alia, his concerns about the minority owners’ consent to the sale. King wrote: “Have we confirmed that the 20 [percent] owner is going to go along with [our] purchase[?] We need to get those ‘letters of authority’ signed off by the family trust and the 20 [percent] and 10 [percent] owners. [¶] Since we are getting close to getting all of our contingencies in line, who[m] do we rely upon to see that all of the important details are properly and timely executed? Our lawyer? Their lawyer?... The Homeowners Board? I am concerned that, if the important details are not kept under control, our sellers might balk at Frank Bybee’s ‘deal’ and want to get a better deal for themselves or even keep the [P]ark. I want to see a checklist that is as detailed as necessary to make sure that we are watching the store....” On the same day, Gray forwarded King’s e-mail to Semelsberger, stating that it was “FYI and response.”
At a homeowners’ meeting the next day, among the subjects discussed was procuring the signed authorizations of the co-owners. Crowther wrote in her minutes: “There also was a discussion of the other two partners giving their written authorizations to our lawyer of their approval of the park purchase. This was to be forthcoming and did not seem to be a problem.” According to Crowther, after Frank’s death, obtaining the signed authorizations became “a matter of importance to [Monterey Vista].” Similarly, Gray testified that he “[a]bsolutely” became concerned about the authorizations after Frank’s death, “[b]ecause [he] thought it would be a way that there was a possibility that they might object to the agreement, that we didn’t have it. It was a loose end.”
On February 16, 2002, Gray met with Joyce Bybee and Lundquist. (Gray understood that Lundquist was the new manager of the Park.) The purpose of the meeting was to squelch rumors that there were problems with Monterey Vista’s efforts to purchase the Park and to assure Lundquist that it was doing everything necessary to conclude the deal. In an e-mail sent to the other board members later in the day to summarize the meeting, Gray stated that he was “90 [percent] convinced after talking with [Lundquist] that the family will cooperate fully with the purchase.... Why only 90 [percent] certainty? Because [Lundquist] hedged when [Gray] asked about the authority issue. [Lundquist] said they are having a full meeting next week, and that issue should be resolved. He said the problem is that they have not been able to reach Joe Sherman to get clear on his position. [Gray] told [Lundquist] that Joe’s attorney told [Semelsberger] that he will go along with the family’s wishes, which is the same thing that Frank told [Gray] after he spoke with Joe.”
The Department sent Gray the formal agreement for the MPROP loan on February 22, 2002. After obtaining approval for the MPROP loan, Semelsberger made more intensified efforts to obtain a loan from Red Capital (with which the United States Department of Housing and Urban Development [HUD] was involved). Because it did not have the financing needed by the end of February 2002, Monterey Vista—by confirming letters sent by its other attorney, Perry Olsen—elected to extend the closing three times. The third extension letter did not identify an outside date to which the close of escrow was being extended.
According to Semelsberger, a dispute arose after the last extension because the seller contended that the Agreement had expired. Semelsberger called McCann in late June 2002. He told Sherman’s counsel that he was “trying to get this deal back on track,” he had unsuccessfully attempted to put together a mediation or arbitration, and there was an arbitration pending concerning contract issues.
On July 2, 2002, Semelsberger sent two letters to Holt and Sherman (through his attorney, McCann); each letter contained a demand that the minority owner provide within 10 days “clear and affirmative confirmation” that he or she “will abide by the [Agreement] signed by [his or her] partner, Frank Bybee.” On the same day, McCann faxed a letter to Semelsberger that had been drafted a day earlier. In it, McCann advised Semelsberger: “You and I first discussed this matter late last year. As I explained at that time, Mr. Sherman was surprised to find his name mentioned in a purported contract to sell the [P]ark, when he had neither signed the contract, nor agreed to such a sale. Shortly after that time Mr. Bybee died. We heard that there was disfavor in connection with the sale, and I did not hear from you again. We assumed that the sale was not going forward, and so it was with surprise that I received information from you recently suggesting that you felt that it was.” Monterey Vista filed a lawsuit against the Park owners on July 18, 2002.
McCann testified that within the next two weeks, he received a request for arbitration submitted by Olsen on behalf of Monterey Vista. McCann responded that Sherman was not a party to an arbitration agreement and would not participate. Shortly thereafter, Sherman received a summons and complaint seeking to compel arbitration.
An arbitration proceeding took place later in 2002; Sherman and Holt were not parties to the arbitration. As a result of an arbitration award rendered on December 30, 2002, Monterey Vista understood that it had until March 1, 2003 to close escrow under the Agreement.
On February 27, 2003, Gray, Crowther, and Semelsberger attended a meeting at which escrow documents were signed by Gray. Funds to purchase the Park—consisting of the MPROP loan of $1.5 million and the Red Capital loan (of approximately $3 million)—were deposited into escrow. Gray and Crowther testified that they believed that Monterey Vista at the time had signed all documents and had deposited all funds necessary to close escrow on that date. Semelsberger similarly testified that he believed that all of the funds necessary to complete the purchase were deposited into escrow at that time. Gray understood at the time that the owners would be signing off the next day.
The record is less than clear concerning the amount of the Red Capital loan proceeds, the amount of funds deposited into escrow on behalf of Monterey Vista, and the amount of funds that were necessary to close escrow. Semelsberger testified that the Red Capital loan was “something over $3 million....” Two unsigned escrow closing statements noted that the estimated total needed to close escrow was in excess of $4.8 million. However, a fax from Fidelity National Title to the Trust’s counsel indicated that there were two deposits into escrow for $2,896,781.60 and $1,500,000, totaling $4,396,781.60. Semelsberger testified that, although he believed that there were sufficient funds deposited to close escrow, he was unaware of other funds that were deposited, except for a possible additional deposit of $16,537.
Nothing happened, however, on February 28, 2003. On March 3, attorney Gregory Roberts, representing the Trust, sent a letter to the title company and to Monterey Vista’s attorneys (Semelsberger and Olsen), indicating that Sherman and Holt were unwilling to be parties to the sale, the Park could not be sold without their participation, and escrow should therefore be cancelled.
Semelsberger testified that before that time, he “do[es]n’t think” that he received any notice that the seller was not going to perform.
II. Damages Evidence
A. Testimony of Kenneth Gray
Gray testified that Monterey Vista incurred various damages as a result of escrow not closing. These damages included its guarantee of a loan deposit relative to the Red Capital loan in the amount of $16,537; a deposit it wired into escrow that was required by Red Capital in the amount of $1,689.79; a loan fee and attorney fees owed to Red Capital of $115,759 and $12,500, respectively; and surveying fees totaling $17,400.
B. Testimony of Benjamin Tucker
Benjamin Tucker, a commercial loan consultant, was asked by Monterey Vista to locate financing for its prospective purchase of a 70 percent interest in the Park (in connection with the court’s initial order of specific performance). There were problems in locating financing because providing a loan to purchase less than a 100 percent interest in property is unconventional. Tucker obtained letters of intent from two companies that were willing to make interest-only, three-year loans at an adjustable interest rate of three percent above prime. (At the time of Tucker’s testimony in October 2006, the prime rate was 8.25 percent.) Tucker recalled that the loan amounts in the two proposals were $2.25 million and approximately $2.46 million. Neither company had made a firm commitment for the proposed loan. Tucker testified that substantial loan fees of approximately $124,000 would be charged for the proposed loan. At the end of the three-year term, the proposed loan would either have to be paid off or refinanced with a new loan of a similar type and with similar fees.
Gray testified that Monterey Vista was unable to obtain financing from either Red Capital or MPROP because the funding was for the proposed sale of less than a 100 percent interest in the Park.
C. Testimony of Richard Fabrikant
Richard Fabrikant, a business financial economist who holds a doctorate degree, was retained as an expert to conduct an analysis of the loss of contract benefits allegedly sustained by Monterey Vista arising out of its inability to purchase the Park. Dr. Fabrikant calculated—assuming the court did not order specific performance of the Trust’s 70 percent interest in the Park—Monterey Vista’s loss of the opportunity to purchase a 100 percent interest in the Park to be $4,956,165. He testified further that, assuming the court granted specific performance of the Trust’s 70 percent interest, Monterey Vista’s loss of opportunity as to the remaining 30 percent interest in the Park would be valued at $1,293,906.
Dr. Fabrikant testified that this figure was based upon determining “the ongoing value of receiving the net operating income. It’s a capitalized value of the $491,802 in net operating income, so it sort of gives you a number of after 30 years what’s the value into infinity.... So if I got $491,802 forever and the capitalization rate is [seven] and a half percent, that gives me then the final amount of value in the year 2034.” He testified that that value was $7,049,000, which was reduced to present value to $4,956,165.
Dr. Fabrikant, utilizing the terms of the loan for the proposed purchase of a 70 percent interest described by Tucker, provided an analysis of the differential between the overall cost of such an interest-only loan as compared with the cost of financing under the more favorable arrangements Monterey Vista had for 30-year fixed loans when it attempted to acquire a 100 percent interest. The total differential, reduced to present value—representing the higher cost of procuring successive interest-only loans at variable interest rates for 30 years with balloon payments—was $5,866,425.
This calculation was based upon Dr. Fabrikant’s use of the figure of $3,370,000 as the loan amount. The expert made the assumption—utilizing a total adjusted price for the purchase of a 100 percent interest in the Park at $4,814,285—that this figure represented the purchase price of a 70 percent interest in the Park. We note, however, that this assumed loan amount for the purchase of a 70 percent interest in the Park was substantially greater than the loan amounts ($2.25 million and $2.46 million) of the interest-only loan proposals about which Tucker testified.
D. Testimony of David Semelsberger
Semelsberger testified that Monterey Vista incurred damages consisting of expert costs (engineering and appraisal fees) of $29,409; it was his belief that those costs would be duplicated in connection with a subsequent transaction to purchase a 70 percent interest in the Park. In addition, he testified that his client incurred a loan application fee of $10,023 to HUD, and a retainer paid to Red Capital of $2,500.
On cross-examination, Semelsberger identified these expert costs to have included fees for infrastructure inspection ($7,068); an asbestos survey ($1,500); geotechnical and environmental consulting ($7,140); and seismic evaluation ($1,200). Although these specific costs totaled only $16,908, Semelsberger was unable to identify specifically the additional expert costs that comprised the total of $29,409.
E. Testimony of Dennis Cunningham
Dennis Cunningham, a real estate appraiser with an M.A.I. designation, was retained by Red Capital in May 2002 to appraise the Park. He testified that the fair market value of the Park as of May 13, 2002, was $4,570,000. Cunningham did a second appraisal of the Park at the request of Monterey Vista’s counsel. He appraised the Park as of August 19, 2004, at $4,590,000. He testified further that the fair market value of the Park had remained fairly static between 2002 and 2004, and that the value as of March 1, 2003 would have been within the $20,000 difference between the values he determined as of 2002 and 2004.
Jack Kidder, an M.A.I. real estate appraiser retained as an expert by the Trust, concluded that Cunningham’s appraisal of the Park was “probably a little on the high side, but... within a reasonable range.” He opined that the Park had a fair market value in the range of $4.3 million. Kidder agreed with Cunningham that there was only a nominal increase in the Park’s value of about $20,000 between 2001 and 2004.
PROCEDURAL BACKGROUND
On July 18, 2002, Monterey Vista filed a complaint for specific performance and damages for breach of contract, naming as defendants the Bybee Trust, Sherman, Holt, and fictitious parties. Monterey Vista alleged that defendants were the fee simple owners of the Park. On October 24, 2001, Monterey Vista, as buyer, and defendants, as seller, entered into the Agreement for the purchase and sale of the Park for a total purchase price of $4,087,000, all payable at close of escrow. The Agreement—attached as an exhibit to the complaint—identified the owners of the Park as the Bybee Trust (undivided 70 percent interest), Sherman (undivided 20 percent interest), and Holt (husband and wife, as joint tenants, an undivided 10 percent interest). Monterey Vista alleged that defendants breached the Agreement in that Sherman and Holt in June 2002 refused to sign authorization forms required by Monterey Vista’s lenders and defendants each unequivocally repudiated the Agreement in July 2002.
Hereinafter in this section we will refer at times to the Bybee Trust, Sherman, and Holt collectively as defendants.
Sherman and Holt filed separate motions for summary judgment, or, in the alternative, for summary adjudication of claims. The court granted the two motions, concluding that Sherman and Holt had never given their consent to the sale of the Park. The court held: “Notwithstanding the assertion that negotiations between the Plaintiffs and Sherman/Holt[] were continuing and the undisputed fact that substantial sums were ultimately spent by Plaintiff in furtherance of the proposed sale, the facts before the court fail to support consent to the sale and, instead, reflect continuing objections to the sale by Sherman and Holt[].” At the same time, the court reformed the Trust’s motion for summary adjudication to a motion for judgment on the pleadings and granted that motion with leave to amend.
Shortly thereafter, Monterey Vista filed a second amended complaint (Complaint) against the Bybee Trust only. In that pleading, Monterey Vista alleged that on October 24, 2001, it agreed to buy, and the Trust agreed to sell the latter’s 70 percent interest in the Park, along with the remaining 30 percent in the Park. It alleged further that immediately before signing the Agreement, Frank and Joyce Bybee orally represented to Monterey Vista that they were authorized by Sherman and Holt to execute the Agreement on their behalf. Monterey Vista alleged that the Trust breached the contract by refusing to convey its 70 percent interest in the Park. The Complaint included three causes of action, namely, specific performance of contract, breach of contract (seeking damages), and misrepresentation.
A court trial commenced in January 2005. (Trial and post-trial proceedings extended over a period of more than two years.) After four days of trial proceedings, the matter was submitted. On January 19, 2005, the court issued its “Order After Trial” in which it found that there was an agreement by the Trust to sell its 70 percent interest in the Park to Monterey Vista. It concluded that there had been no agreement as to the sale of the interests of Sherman and Holt. The court noted that, before it could issue a statement of decision and judgment, Monterey Vista would be required to make an election of remedies, namely, (1) whether it was electing to proceed on its contract or tort (misrepresentation) claims, and (2) if Monterey Vista made a contract election, whether it wished to proceed on its claim for damages or for specific performance.
Extensive briefing followed on the propriety of Monterey Vista being compelled to make such an election of remedies; Monterey Vista argued against such requirement, while the Trust argued in favor of it. On March 14, 2005—in its “Preliminary Findings of Fact and Conclusions of Law-Additional Orders After Trial”—the court reiterated its conclusion that Monterey Vista was required to make an election of remedies and noted that the matter would stand submitted after the court received that election. Thereafter, Monterey Vista, under protest, elected to pursue a contract claim (rather than a tort claim) and elected specific performance (rather than damages).
Monterey Vista does not raise the claim on appeal that the trial court erred in requiring it to make an election of remedies. Therefore, Monterey Vista forfeited any challenge to this ruling. (See Tiernan v. Trustees of Cal. State University & Colleges (1982) 33 Cal.3d 211, 216, fn. 4 [due process argument raised in trial court that the plaintiff should have been afforded a hearing to protect her reputation not asserted on appeal and deemed forfeited].)
On May 19, 2005, the court issued its order, captioned “Statement of Decision,” finding “a valid contract for sale of 70 [percent] of the [Park].... The court orders specific performance of that agreement.” The court awarded expenses of $153,148.79 to Monterey Vista that it incurred “in conjunction with the thwarted close of escrow.” It also directed the parties to prepare an accounting as to additional issues, including any additional financing cost that Monterey Vista would incur and any credits to which the Trust might be entitled.
Slightly over a year later, after receiving further submissions by the parties, the court by letter concluded that “[f]rom the documents reviewed, at the present time, [Monterey Vista is] unable to complete the purchase transaction due to inability to finance the purchase of 70 [percent] of the [P]ark. At this point, the Court believes that imposing an obligation on [the Trust] to finance the purchase is inappropriate; instead, there may be an entitlement to damages.”
The court conducted a further hearing on October 10, 2006, in which it took testimony from, among others, Monterey Vista’s damages experts. On November 6, 2006, it issued a further order—captioned “Order After Trial ‘Damages’ ”—in which it reiterated its conclusions that (1) Monterey Vista was unable to conclude the purchase of the Trust’s 70 percent interest in the Park, and (2) the court would not require the Trust to give seller-financing to complete the transaction. The court further rejected Monterey Vista’s request for damages for “the difference in the cost of financing available for purchase of 100 [percent] of the Park on March 1, 2003, and the current cost of financing for purchase of 70 [percent] of the Park,” finding the claim “too speculative.” It modified its prior award of expenses, concluding that the amount of Monterey Vista’s total compensable damages was $215,665.63. Finally, the court found that Monterey Vista was entitled to attorney fees according to proof. Both parties submitted proposed statements of decision and judgments to the court.
Although the Bybee Trust orally objected and filed formal objections to the taking of further testimony concerning Monterey Vista’s claim for damages, it does not raise that claim in its cross-appeal here. Any objection by the Trust is therefore deemed forfeited. (See Tiernan v. Trustees of Cal. State University & Colleges, supra, 33 Cal.3d at p. 216, fn. 4.)
The court filed on January 17, 2007, its “Statement of Decision and Judgment” (Judgment). In it, the court—consistently with its November order—vacated its prior order of specific performance and awarded Monterey Vista damages for breach of contract in the amount of $215,665.63.
Monterey Vista filed motions for new trial and to vacate judgment and enter a different judgment. The court denied those motions after a hearing on March 16, 2007. The court also heard Monterey Vista’s motion for attorney fees and entered an order on March 19, 2007, awarding Monterey Vista attorney fees and costs in the amounts of $235,418.20 and $39,385.21, respectively.
Monterey Vista filed a timely notice of appeal from the Judgment on March 19, 2007. On April 9, 2007, the Bybee Trust filed a timely notice of cross-appeal from the Judgment and from the postjudgment order awarding fees and costs.
DISCUSSION
I. Issues On Appeal
The issues presented in Monterey Vista’s appeal are as follows:
1. Whether the court erred in vacating its original order granting specific performance, based on the theory that Monterey Vista had not shown an ability to perform because it had not actually obtained financing for the purchase.
2. Whether Monterey Vista should have been awarded damages incidental to specific performance in the form of the difference between the cost of the loan as originally anticipated (involving the financing of the purchase of a 100 percent interest in the Park) and the much higher loan cost for the purchase of the Bybee Trust’s 70 percent interest in the Park.
3. As an alternative to such an award of incidental damages, whether the court should have ordered the Trust to provide carry-back financing in connection with the equitable remedy of specific performance of the Trust’s 70 percent interest, with the loan terms to be the same as those that Monterey Vista would have received under its originally contemplated purchase of the entire interest in the Park.
4. Whether the court erred by refusing to award incidental damages for Monterey Vista’s loss of a 30 percent interest in the Park.
5. In the event it is determined that denial of specific performance was proper, whether the court erred by failing to award Monterey Vista damages for the loss of the ability to buy the Park, based upon the difference between the contract price and its market value at the time of breach.
The issues presented in the Bybee Trust’s cross-appeal are:
1. Whether the court erred in finding that the Trust breached the Agreement by failing to convey its 70 percent undivided interest in the Park to Monterey Vista.
2. Assuming the existence of a contract under which the Trust was obligated to convey its 70 percent interest in the Park, whether the court erred in concluding that Monterey Vista had fulfilled its contractual obligations by depositing the requisite funds to purchase the Park.
3. Whether the award of damages was excessive because most of it was related to expenses that were nonrecoverable due to Monterey Vista’s failure to mitigate damages.
4. Whether the court’s award of attorney fees and costs to Monterey Vista was improper because it failed to give legal effect to the Bybee Trust’s formal offer to compromise under Code of Civil Procedure section 998, which offer was of a monetary amount greater than Monterey Vista’s ultimate damages recovery.
Because we deem the threshold inquiry in this matter to be whether the court’s judgment was correctly premised on the finding that the Trust had breached the Agreement by failing to convey its 70 percent interest in the Park, we address at the outset the first issue of the cross-appeal.
II. Standard of Review
Questions of law are reviewed independently on appeal. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888 (Crocker National Bank).) Where “the inquiry requires a critical consideration, in a factual context, of legal principles and their underlying values, the question is predominantly legal and its determination is reviewed independently.” (Ibid.; see also Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 438.) Further, although questions of disputed fact are reviewed on appeal under a substantial evidence standard (Crocker National Bank, supra, at p. 888), “[w]hen the decisive facts are undisputed, we are confronted with a question of law and are not bound by the findings of the trial court.” (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799.) Our review is of the trial court’s result rather than its reasons. (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 101 Cal.App.4th 1317, 1325.)
As will be evident from our discussion below, the question in the cross-appeal of whether the court properly found that the Bybee Trust breached the Agreement by failing to convey its 70 percent interest in the Park “requires a critical consideration, in a factual context, of legal principles and their underlying values” (Crocker National Bank, supra, 49 Cal.3d at p. 888), and we therefore review it independently. Further, we agree with the Trust that the decisive facts relevant to the court’s finding of a breach of contract are undisputed, thus mandating independent review on this ground as well.
In connection with its assertion that a de novo review of the court’s equitable decisions is proper, Monterey Vista argues that the facts relevant to its own appeal are undisputed. In response to the cross-appeal, however, Monterey Vista urges that the substantial evidence standard of review is proper because the issues in the Trust’s cross-appeal “concern disputed facts.” This assertion notwithstanding, three pages earlier in its cross-respondent’s brief, Monterey Vista observes that “the relevant facts are undisputed,...” In any event, we find that the decisive facts germane to resolving whether the court below properly found that the Trust breached the Agreement are undisputed.
III. Enforcement of Contract to Sell Bybee Trust’s 70 Percent Interest in Park
A. Contentions of the Parties
The Bybee Trust asserts that the court erred in finding that the Trust breached the Agreement by failing to convey its undivided 70 percent interest in the Park to Monterey Vista. It contends that the Agreement did not provide for the sale of anything other than a 100 percent interest in the Park. The Trust argues that the law is clear that when the parties know at the time of the contract that there are multiple owners, no enforceable agreement is created until all co-owners have signed either personally or through a duly authorized agent. It contends further that “there is no implied agreement that the partial interests of the co-owners who do execute an agreement will be conveyed separately if the unanimous agreement of all owners cannot be obtained.” The Bybee Trust asserts that the trial court erroneously construed Wilk v. Vencill (1947) 30 Cal.2d 104 (Wilk) as creating a presumption that an enforceable agreement to sell a co-owner signatory’s partial interest exists where one or more other co-owners have not signed the agreement, irrespective of the parties’ intentions and negotiations.
Here (the Trust argues), Monterey Vista and its attorney—a real estate specialist with experience in mobile home park sales—were aware from the outset of negotiations that the property was owned by multiple tenants in common and that the written consent of each of them was necessary to conclude the sales transaction. Monterey Vista nonetheless failed to secure either the co-owners’ signatures on the Agreement or their written authorization permitting the Bybees to sign on their behalf as required by law. The Bybee Trust contends that the court therefore erred by enforcing a nonexistent agreement of Monterey Vista and the Trust to convey the latter’s partial interest in the property.
In support of its claims that no contract is formed until the consent of all co-owners is obtained and that there is no implied duty on the part of signing owners to convey their partial interests, the Bybee Trust cites what it contends to be “a long history [of cases] in California.” The authorities cited in support of its position are Jackson v. Torrence (1890) 83 Cal. 521 (Jackson); Olson v. Lovell (1891) 91 Cal. 506 (Olson); Wightman v. Hall (1923) 62 Cal.App. 632 (Wightman); and Lindsay-Field v. Friendly (1995) 36 Cal.App.4th 1728 (Lindsay-Field).
Monterey Vista urges that it was entitled to specific performance of the Agreement and that “this result [is not] affected by the fact that [the Trust] owns only a 70 [percent] interest in the Park. Rather, it is well settled that where a seller agrees to convey all of a parcel of real property but is only able to convey a portion of the parcel, the purchaser is entitled to specific performance to the extent of the seller’s interest....” In support of this position, Monterey Vista cites Wilk, supra, 30 Cal.2d 104; Smiddy v. Grafton (1912) 163 Cal. 16 (Smiddy); Farnum v. Clarke (1906) 148 Cal. 610 (Farnum); Milkes v. Smith (1949) 91 Cal.App.2d 79 (Milkes); and Stevens Group Fund IV v. Sobrato Development Co., (1991) 1 Cal.App.4th 886 (Stevens Group).
Monterey Vista argues further that the authorities upon which the Bybee Trust relies are inapposite and are distinguishable on their facts. Specifically, Monterey Vista argues that in the three cases on which the Trust relies—Jackson, supra, 83 Cal. 521, Olson, supra, 91 Cal. 506, and Wightman, supra, 62 Cal.App. 632—there were signature lines in the agreements for the nonsignatory co-owners, a circumstance not present here.
Citing Angell v. Rowlands (1978) 85 Cal.App.3d 536 (Angell), Monterey Vista contends further that, while there is a line of cases that includes Jackson (relied on by the Trust)that “is based on Tewksbury v. O'Connell (1862) 21 Cal. 60 [Tewksbury], declaring the rule that a contract is not complete and binding until it is signed by all of the parties who are purportedly bound by it” (id. at p. 540), there is another “line of case authority... based on Cavanaugh v. Casselman (1891) 88 Cal. 543 [Cavanaugh], which holds that an agreement is valid without the signature of all the parties purportedly bound by the agreement unless there is an express intention indicated that there will be no binding contract if all parties do not sign.” (Ibid.) Monterey Vista asserts that the principle under the Cavanaugh line of cases—that “a signer cannot escape liability unless he affirmatively establishes that the signatures of all parties were contemplated as being a condition precedent to the validity of the contract” (Angell, supra, at p. 541)—operates here to prevent the Trust from claiming that the Agreement was unenforceable.
The Bybee Trust replies that, contrary to Monterey Vista’s claim that it did not know that the minority owners needed to sign the Agreement, its attorney, Semelsberger, knew in August 2001 that the Park’s ownership was based on a tenancy in common, not a partnership; accordingly, Monterey Vista knew before the Agreement was executed in October 2001 that a conveyance of the Park required the formal agreement of Sherman and Holt. The Trust replies further that Cavanaugh and its progeny are distinguishable because they involved circumstances where one of the buyers did not sign the agreement. In contrast, the cases cited by the Bybee Trust involved the situation present here, i.e., the enforceability of an agreement where one of the co-owners of the property purportedly being sold does not sign the agreement.
B. Discussion
We observe that there is no case directly on point to inform our decision as to whether the Agreement, as the court below found, was enforceable as to the Bybee Trust’s 70 percent interest in the Park. We reach this conclusion after a thorough review of all authorities (both California and out-of-state) cited by the parties, as well as consideration of a number of authorities that were not cited in the briefs.
In several cases cited by the Trust, courts have found that a contract for the sale of real property signed by less than all of its co-owners would not be enforced in part against the signing co-owners. (See, e.g., Olson, supra, 91 Cal. 506; Jackson, supra, 83 Cal. 521; Mullarky v. Young (1909) 9 Cal.App. 686 (Mullarky).) While the circumstances of these cases admittedly are not identical to those found here, the authorities are nonetheless persuasive. By contrast, the authorities cited by Monterey Vista are distinguishable from the facts presented here because they are ones where (1) the primary issue being addressed was the application of the statute of frauds (see, e.g., Cavanaugh, supra, 88 Cal. 543); (2) the defect in title or undisclosed co-owner was discovered by the buyer long after the contract was signed (see, e.g., Smiddy, supra, 163 Cal. 16; Milkes, supra, 91 Cal.App.2d 79); (3) there was an attempt by a nonsignatory buyer to enforce an agreement against a signatory seller (see, e.g., Cavanaugh, supra); or (4) there were elements of estoppel in which the buyer changed his or her position in reliance on the seller’s assurances of going along with the sale (see, e.g., Ellis v. Mihelis (1963) 60 Cal.2d 206 (Ellis); Wilk, supra, 30 Cal.2d 104).
We will therefore discuss in some detail the cases cited by the Trust and their potential application here. Following that discussion, we will address Monterey Vista’s authorities and its contention that it relied on the Bybees’ representations that they had the authority of the minority co-owners to sign the Agreement on their behalf.
1. Authorities cited by Bybee Trust
In Jackson, supra, 83 Cal. 521, an agreement for the sale of a hotel and saloon was signed by both owners, husband and wife, but was acknowledged only by the husband. (Id. at p. 524.) A few days after the agreement’s execution, the owners indicated an intent to repudiate it. (Id. at p. 527.) The trial court granted the buyers’ request for specific performance as to the husband’s community interest, but refused relief as to the wife’s separate interest because she did not acknowledge the agreement. (Id. at p. 524.) The buyers appealed from the denial of specific performance as to the wife’s interest and the husband appealed from the order compelling the conveyance of his interest. (Ibid.)
The court rejected the buyers’ appeal (Jackson, supra, 83 Cal. at p. 537), including their assertion that the wife was estopped from asserting that she had an interest in the property because she did not specifically inform the buyers of the nature and extent of that interest during the negotiations. (Id. at pp. 532-533.) It concluded that the buyers always understood that the wife was claiming an interest in the property and “[f]or that reason they sought to bind her by a written contract to convey....” (Id. at p. 535.) The court noted, “The intending purchaser of land which has been conveyed to a married woman is under no compulsion to take it and pay for it without getting her deed, properly acknowledged. He knows her husband has no title to it except through the deed purporting to convey it to her, and that he can get no clear and perfect title himself without a deed from her. If she is willing, deliberately and with full knowledge of her rights and of the effects and consequences of her acts, to disclaim all interest in the property, she will be willing to sign and acknowledge a deed. If she is not willing to sign and acknowledge a deed, no other sort of admission should be held to bind her.... [¶]... If a purchaser cannot get a married woman’s acknowledged deed for property, the title of which stands in her name, let him keep his money, and wash his hands of the business.” (Id. at pp. 533-534.)
The Jackson court also reversed the order granting specific performance as to the husband’s interest in the property. (Jackson, supra, 83 Cal. at p. 538.) It reasoned, “A husband and wife own separate undivided interests in a house and lot, where they live and carry on a business. They agree together that they will sell the whole property for a fixed sum. Necessarily they intend, among other things, to take up their abode in some other place, and transfer their business, if they continue in business, to some other establishment. They do not intend to separate themselves, one to go and the other to stay. Neither intends to sell out his interest and leave the other a tenant in common with strangers, especially when the property, as here, consists of both realty and personalty, together with the good-will of a hotel and saloon business. That the sale shall be complete as to both must in all such cases be a highly material consideration, and certainly it cannot be inferred from the fact that the husband is willing to unite with the wife in making a complete disposition of their common property and business, that he is also willing to dispose of his share of the property and business for a share of the price, leaving his wife a co-tenant with the purchasers. [¶] The effect of this decree, however, in just such a case, is to compel the husband to do what he never agreed to do, and what it cannot be supposed he would ever have been willing to consent to do. The only contract he executed, or intended to execute, was a contract in which his wife was to join, for the conveyance of the whole property for a round sum. Until this contract was completed by the accession of his wife, there was no contract of which there could be any breach or failure to perform. [¶] As we have seen, the wife never did execute, and it never became binding upon the husband, because it never bound her. [Citation.]” (Id. at p. 538; see also Mullarky, supra, 9 Cal.App. at p. 687 [buyer’s suit for breach of contract to sell real property owned by husband and wife not maintainable where contract not signed by seller-wife].)
In Olson, supra, 91 Cal. 506, a contract to convey Sacramento property to Olson in exchange for the sum of $1,750 and Olson’s conveyance of Placer County property contained a recital that it was made by Olson, on the one hand, and Lovell and Judson, on the other hand. It was signed by Olson and Lovell; Judson’s name was signed by Lovell with Lovell’s initials but there was no evidence that he was Judson’s attorney-in-fact. (Id. at p. 507.) Olson sued Lovell for specific performance, seeking a conveyance of Lovell’s one-half interest in the Sacramento property in exchange for one-half of the Placer County property and $875. (Id. at pp. 506-507.) The court sustained Lovell’s demurrer without leave to amend and the Supreme Court affirmed the judgment. The court concluded that the case was indistinguishable from Jackson, supra, 83 Cal. 521, notwithstanding the fact that Jackson concerned co-ownership of property by husband and wife. (Olson, supra, at p. 508.) “To compel [Lovell] to convey an undivided half of the Sacramento lot would be to force him ‘to perform a contract which he never made or intended to make.’ He did not contract to convey his half of the lot, thus making [Olson] and Judson co-tenants thereof, or to take in exchange an undivided half of the Placer County land and half of the $1,750, thus becoming a tenant in common with [Olson].... The contract upon its face clearly means that [Lovell] and Judson were to convey the whole of their land in exchange for the whole of [Olson’s] land, together with the whole of a certain named sum of money; and if such contract cannot be specifically enforced as written, then it cannot be so enforced at all.” (Id. at pp. 508-509.)
Similarly, in Wightman, supra, 62 Cal.App.632, the court refused to specifically enforce an agreement involving multiple property owners. Wightman was given an option to purchase real property owned by Hall and her two sisters. On the date the option was to expire, Hall, as “ ‘agent,’ ” signed a document purporting to extend the time to exercise the option. (Id. at p. 633.) Since Hall’s sisters had not signed the option extension and there was no evidence that they ratified Hall’s actions or were estopped from asserting that the option had expired, the court held that Wightman was not entitled to specific performance against the two sisters. (Id. at p. 635.) Citing Olson, supra, 91 Cal. 506, the Wightman court held that “[c]onsequently[, the trial court] properly denied the prayer for specific performance against all of the defendants, since they were co-owners. [Citation.]” (Wightman, supra, at p. 635)
Here, as was the case in Jackson, Olson, Mullarky, and Wightman, Monterey Vista always understood that there were others besides the Bybee Trust claiming an interest in the Park. Both Gray and Crowther were aware well before execution of the Agreement that there were minority owners of the Park. The preliminary title report provided to Monterey Vista’s attorney, Semelsberger, disclosed clearly that the Bybee Trust, Sherman, and Holt each owned undivided interests in the Park as tenants in common. The title company advised Semelsberger in an “[u]rgent” fax that there were multiple owners, and Semelsberger deemed this information “important.” Semelsberger identified the separate owners of the Park in the Agreement as the collective “Seller.”
Moreover, Semelsberger—after preparing a draft of the formal purchase and sales agreement and providing it to his client for negotiations with the Bybees—prepared (at the request of both his client and the Bybees’ accountant) three power of attorney forms, which he sent to Crowther for execution by the minority owners of the Park. These forms provided that the minority owners gave the Bybees authority—with retroactive application—to sign a purchase and sale agreement and to sign all other documents necessary for the sale of the Park. Monterey Vista thus was plainly aware of the existence of co-owners besides the Trust and should have known that the Agreement would not be binding without either their execution of the Agreement or their written authorization to the Bybees’ execution of it on their behalf. Therefore, in the words of the Jackson court, if Monterey Vista could not obtain the consent of each Park owner, it should “keep [its] money, and wash [its] hands of the business.” (Jackson, supra, 83 Cal. at p. 534.)
The Bybee Trust also cites the more recent case of Lindsay-Field, supra, 36 Cal.App.4th 1728, involving a personal property rather than a real property contract. There, the defendants were members of a syndicate that owned individual interests as tenants in common in a stallion, Naevus, retired from racing to stud. (Id. at pp. 1730; 1731, fn.1.) They were sued by Australian horsebreeders and their joint venturer to enforce a contract signed by the syndicate’s manager, Sturgis, under which Naevus was to have been transported to Australia for a portion of the year for breeding. (Id. at p. 1730.) After the jury returned a verdict of $400,000 in damages against some but not all of the syndicate members—i.e., those who, prior to a syndicate meeting to discuss and vote on the agreement, indicated to Sturgis that they approved of the plaintiffs’ proposal—both sides appealed. (Id. at pp. 1730-1731.)
The appellate court reversed, concluding that there was no binding contract. (Lindsay-Field, supra, 36 Cal.App.4th at p. 1731.) Because the court held that the terms of the syndicate agreement required that the breeding contract be approved by a vote of the members—and the contract was voted down at a formal meeting of the syndicate’s members—it concluded that no contract was created. “The jury’s solution of simply letting [the two members who did not give informal approval of the proposal that was communicated by Sturgis] off the hook of liability is no solution at all. This was not an agreement by individual members to sell their shares. It was a contract requiring that Naevus go to Australia. It could not be satisfied by sending 85 percent of the horse to Australia. Either there was a contract binding all the members of the syndicate under the rules of the syndicate agreement, or there was no binding contract.” (Id. at p. 1735.)
The concept of the lack of intention to split up ownership, discussed in Jackson, Olson, and Lindsay-Field, has application here as well. There was no evidence either at the time the Agreement was negotiated or when it was executed that the Bybee Trust wanted to sell separately its undivided 70 percent interest in the Park, or that Monterey Vista was willing to purchase that interest by itself. To the contrary, the Agreement identified the seller collectively as consisting of the co-owners of the Park who held undivided interests as tenants in common; called for the purchase and sale of the Park in its entirety; specified a purchase price of $4,087,000 for the Park in its entirety; provided that Monterey Vista’s performance was contingent upon “[f]ee title to all property [being] conveyed to Buyer free and clear of all encumbrances, except for permitted exceptions”; and obligated the “Seller” to convey to Monterey Vista “a fee simple interest” in the Park. Further, as evidenced by the parties’ discussions concerning the approval of the sale by the minority owners, the conveyance of each of the undivided interests in the Park was an integral part of the transaction. Although we acknowledge the distinction between this instance where the co-owners are mere business associates and Jackson, where the co-owners of the business were husband and wife, it is nonetheless true here that there was no evidence that the co-owners contemplated a scenario in which Sherman and Holt (who co-owned the Park as a for-profit business venture) would become tenants in common with a stranger-nonprofit entity, Monterey Vista.
There are a number of cases from other jurisdictions that have similarly concluded that a contract for the sale of real property with multiple owners where not all are signatories may not be enforced by the buyer to the extent of the signatory’s partial interest. (See, e.g., Rose v. Henderson (Fla. 1912) 63 Fla. 603 [59 So. 138] [contract not signed by several co-owners not subject to specific performance as to signatories’ interests, absent fraud, misrepresentation, or concealment]; Jasperson v. Bohnert (Iowa 1952) 243 Iowa 1275 [55 N.W.2d 177] [specific performance of agreement with price abatement as to two-thirds interest in property improper, where third co-owner refused to sign agreement and buyer was aware that property had three owners]; Stout v. Porritt (Mich. 1930) 250 Mich. 13 [229 N.W. 409]; Axe v. Potts (Pa. 1944) 349 Pa. 345 [37 A.2d 572] [buyer’s suit for specific performance as to two-thirds interest in property dismissed where it was clear that property had three owners and agreement was incomplete because one owner had not signed it].) In Stout, supra, the contract was signed by three of four owners listed on the document, and the court rejected the buyer’s request for specific performance of the interests of the signatories. It held, “According to its terms, all the vendor’s obligations were to bind all those named as parties of the first part, and all its vendor’s benefits to accrue to all of them. There was no separation or severance as to parties, estate, or obligation. The contract stated accurately the understanding of the parties who signed it. It was to have been a joint contract by all the vendors named to convey the whole estate.” (Stout, supra, at pp. 17-18 [229 N.W. at p. 411.)
2. Monterey Vista’s authorities
As noted above, Monterey Vista places significant reliance upon Wilk, supra, 30 Cal.2d 104. The case was cited both by Monterey Vista in its trial brief and by the court in two of its orders after trial in support of the proposition that Monterey Vista could be granted an order of specific performance for the conveyance of the Bybee Trust’s partial interest in the Park.
In that case, Wilk entered into a contract with Charles Vencill to purchase the Vencill residence, the agreement being signed by the two of them but not by Vencill’s wife. (Wilk, supra, 30 Cal.2d at pp. 105-106.) The agreement called for an escrow to be opened within thirty days after the Vencills’ anticipated execution of a property settlement agreement. (Id. at p. 106.) Wilk gave the agreement to Mrs. Vencill to sign; she told him “she approved of and consented to the sale and agreed to sign the agreement as well as any other documents necessary to the transfer of title.” (Ibid.) She told Wilk, however, that she wanted to defer execution until she had reached a property settlement agreement with her husband. (Ibid.) In reliance on the agreement and Mrs. Vencill’s statements, Wilk made repairs and improvements to the property with Mrs. Vencil’s knowledge and approval (id. at pp. 106-107), and forwent an opportunity to purchase a comparable home in the same neighborhood (id. at pp. 108). After the Vencills signed their property settlement agreement, Mrs. Vencill refused to sign the sales agreement and the Vencills refused to sell the property to Wilk. (Id. at p. 107.) Wilk sued for specific performance or, in the alternative, damages; the trial court sustained without leave to amend the Vencills’ separate demurrers. (Ibid.)
The Supreme Court reversed. The court rejected Mrs. Vencill’s assertion that the claim was barred by the statute of frauds because she did not sign the agreement. (Wilk, supra, 30 Cal.2d at pp. 107-108.) The court concluded that Wilk had alleged sufficient facts to support his claim that she was equitably estopped from asserting a statute of frauds defense, based upon her alleged representation that she would sign the agreement and Wilk’s change of position in reliance thereon. (Id. at p. 108.) The Supreme Court also rejected the argument that, even if Wilk were unable to prevail against Mrs. Vencill, he could not recover in contract against Charles Vencil. “One joint tenant may dispose of his interest without the consent of the other. [Citation.] Further, a party may agree to convey more than he possesses and, although he cannot fully perform, specific performance may be available in so far as it is possible. [Citations.] The contract does not show on its face that both joint tenants were to sign. Mr. Vencill, in view of his impending separation, may have intended to convey his interest whatever the decision of his wife. The nature and extent of [Wilk’s] recovery, if any, against Mr. Vencill will be decided after the facts have been presented to the trial court. It was therefore error to sustain Mr. Vencill’s demurrer, regardless of the ruling with respect to his wife.” (Id. at pp. 108-109.)
Wilk is distinguishable. In Wilk, there were significant facts alleged that the unsigning co-owner (Mrs. Vencill) made representations that she would sign the agreement (Wilk, supra, 30 Cal.2d at p. 106), and that the buyer detrimentally relied on them by making improvements to the property he anticipated buying with Mrs. Vencill’s knowledge (id. at pp. 106-107) and gave up an opportunity to purchase comparable property (id. at p. 108). These factors alleged in the complaint—which were not present in the case before us—were sufficient to support a potential verdict against the nonsignatory owner on the basis that she was equitably estopped to assert the statute of frauds.
Also in Wilk, there was a reference in the sales agreement to the Vencills’ impending separation, such that, at least at the demurrer stage, it could not be definitively stated that Mr. Vencill had no intention of conveying his partial interest in the property, regardless of whether Mrs. Vencill consented. In remanding the case for further proceedings, the court noted, “Mr. Vencill, in view of his impending separation, may have intended to convey his interest whatever the decision of his wife. The nature and extent of [Wilk’s] recovery, if any, against Mr. Vencill will be decided after the facts have been presented to the trial court.” (Wilk, supra, 30 Cal.2d at p. 109.) In contrast, here there was nothing in the Agreement—nor was there any evidence adduced at trial—indicating that the Bybee Trust intended to convey its partial interest in the Park, regardless of whether its co-owners agreed concurrently to convey their respective interests.
Monterey Vista also relied below on Ellis, supra, 60 Cal.2d 206 in support of its position that the Agreement could be specifically enforced as to the Trust’s interest in the Park only, claiming in its trial brief that the case was “very similar to the present situation.” There, Ellis, the buyer, sued two brothers, Pericles and Elias Mihelis, for specific performance of a contract to sell Stanislaus County ranch property they owned as joint tenants. (Id. at pp. 210-211.) Ellis was acquiring the property as part of an exchange with third parties, the Ratto family, who agreed to sell Ellis property in Alameda County. (Id. at p. 211.) Prior to the execution of a deposit receipt, Pericles listed the Stanislaus property with a broker (Moreno), “telling him that he was the owner.” (Ibid.) Pericles and Moreno prepared a form in which receipt of $5,000 was acknowledged as a deposit for the purchase price of $165,000 for the Stanislaus property; the balance of the purchase price was to be paid within 30 days by $30,000 and an interest-bearing note for $130,000 secured by a deed of trust and crop mortgage. (Id. at pp. 211-212.) The note provided that the seller could retain the deposit if the buyer failed to complete the transaction. (Id. at p. 212.) Pericles signed the document below a recital that stated “ ‘I (or we) agree to sell and convey the above described property on the terms and conditions herein stated,...’ ” (Ibid.) Moreno advised Antone Ratto that Pericles had signed the agreement; Ratto in turn advised Ellis, who authorized Ratto to sign his name to the agreement. (Ibid.) Ratto did so and delivered the deposit check to Moreno. (Ibid.) Pericles told Moreno that “he was ‘very satisfied on the whole thing.’ ” (Ibid.) However, two weeks later, at a meeting at the Stanislaus ranch attended by Pericles, Elias, Ratto, and Moreno, Pericles said that “that he had changed his mind and did not want to sell, that he was not ‘going through with the deal,’ that as a result of a frost occurring a few days earlier which had damaged some vineyards in the area but left his grapes unharmed his crop had become too valuable for him to sell the ranch, and that he could get the same price after the harvest. He also stated, ‘I will probably have to sell you my half, but my brother doesn't want to sell; Elias doesn’t want to wait 10 years.’ ” (Ibid.) Elias confirmed that he did not want to sell the ranch and did not want to wait 10 years to be paid. (Ibid.) Ellis, after tendering full performance and ratifying Ratto’s actions in connection with the purchase transaction, brought suit against the Mihelises. (Id. at p. 213.)
In three of its orders after trial, the trial court cited Ellis, supra, 60 Cal.2d at page 219, not for the proposition that specific performance of the Agreement conveying only a partial interest in the Park was proper, but for the principle that damages for the failure to consummate the sale incident to specific performance were recoverable.
The Supreme Court rejected the Mihelises’ contention that there was no effective agreement because the deposit receipt was signed by Ratto on Ellis’s behalf without written authority to do so, and Ellis did not ratify Ratto’s action before the Mihelises refused to perform. It concluded that the statute of frauds did not bar Ellis’s claim, inter alia, because the Mihelises, not Ellis, were the parties to be charged and Pericles had signed the agreement. (Ellis, supra, 60 Cal.2d at p. 213.) The court also held that it would be inequitable to permit the avoidance of the agreement due to the lack of Ellis’s written authorization because (1) Ellis provided Ratto with oral authorization to sign the agreement, (2) Ellis provided the deposit of $5,000, which, under the agreement, would be forfeited in the event of Ellis’s default, (3) Pericles initially “expressed his satisfaction with ‘the whole thing’ ” (id. at p. 214), and (4) Pericles required that the Rattos begin work on the ranch before escrow closed and was aware that one of the Ratto brothers and his family had moved to the area to start crop-dusting on the ranch. (Id. at pp. 214-215.)
The Supreme Court concluded further that the statute of frauds barred enforcement of the agreement against Elias because he did not sign it and he had given no written authorization to Pericles to sign on his behalf. (Ellis, supra, 60 Cal.2d at pp. 218-219.) As to the action against Pericles, the court remanded the case for further proceedings with the following remarks: “On the record now before us Pericles could be compelled as a joint tenant to convey his half interest in the ranch [citations], but the case was obviously not tried on that theory, and a reversal is also necessary as to Pericles. We, of course, do not know what evidence will be introduced or what remedy will be sought in the event of a retrial. Questions that may arise should [Ellis] seek to recover damages against Pericles alone without specific performance or as incident thereto have not been briefed, and we shall not discuss them here,...” (Id. at p. 219.)
Ellis is distinguishable from the case before us in that there was no disclosure to the buyer at the time the contract was entered into that the ranch property was co-owned, and there was no evidence that Ellis knew that the ranch was co-owned by Elias. Here, the Agreement clearly stated that Sherman and Holt owned undivided 20 percent and 10 percent interests in the Park, respectively, along with the Bybee Trust. Moreover, Monterey Vista’s board members as well as its attorney were plainly aware of the co-ownership of the Park before the Agreement was signed. In addition, in Ellis, Pericles, the signing co-owner—unlike the Bybee Trust here—stated, after repudiating the sale, that he would probably sell his interest alone. (Ellis, supra, 60 Cal.2d at p. 212.) Also, there was significant part performance by the buyer in reliance on the purchase agreement (i.e., payment of a deposit that was nonrefundable in the event of his default (id. at p. 212)), and by the Rattos, the ultimate parties to acquire the property (ibid.). Further, the Supreme Court did not specifically decide whether the agreement was enforceable as to Pericles’s one-half interest, alone. Instead, the court remanded the case for further proceedings because the case was not tried on the theory of Ellis’s seeking an order of specific performance as to Pericles’s interest in the ranch by itself. (Id. at p. 219.)
Monterey Vista—as it did below—also relies on Milkes, supra, 91 Cal.App.2d 79 in support of its claim that it is entitled to enforce the Agreement as to the Trust’s 70 percent interest in the Park. In Milkes, the plaintiffs agreed to purchase real property from the defendant (Smith) for $4,250. (Id. at p. 80.) At trial, it was discovered that a nonparty (Douglas) also owned an interest in the property as a result of the foreclosure of street improvement liens. (Ibid.; see also id. at p. 81.) The trial court rejected the buyers’ request for specific performance, concluding that, due to the co-ownership problem, the contract was “ ‘incapable of specific performance and unenforc[e]able.’ ” (Id. at p. 80.)
The appellate court reversed and directed the court to enter a decree of specific performance after determining the amount to which the buyers were entitled as an abatement as a result of the defendant’s being unable to convey complete title. (Milkes, supra, 91 Cal.App.2d at p. 84.) It reasoned that under well-settled law, a buyer may compel specific performance where a seller either has equitable title to property or some interest in property. (Id. at pp. 81-82.) “[I]f a vendor has any interest in the property he has contracted to convey, the vendee at his option may enforce the contract with respect to whatever interest the vendor possesses, and may also receive compensation for the deficiency in performance. [Citations.]... ‘In actions by a vendee for the specific performance of a contract for the sale of real estate, where it appears that the vendor is unable to make a complete or perfect title, or that there is a deficiency in the quantity of land contracted to be sold the general rule is that the vendee, if he so elects, is not only entitled to have the contract specifically performed to the extent of the vendor’s ability to comply therewith by requiring him to give the best title he can or convey what he has, but he may compel the vendor to convey his defective title or deficient estate, and at the same time have a just abatement out of the purchase price for the deficiency of title, quantity, or quality of the estate to compensate for the vendor’s failure to perform the contract in full. The vendee, in other words, may waive full performance and accept such title as the vendor is able to give, and if he chooses to do so, he has a right to that and to an abatement, and the court will not hear the objection, by the vendor, that the purchaser cannot have the whole.’ ” (Id. at pp. 82-83, quoting 49 Am.Jur. (1943) Specific Performance, § 105, p. 123.)
Milkes is distinguishable because the co-owner there was not identified in the contract and was unknown until the time of trial. Here, the co-owners were identified in the Agreement and their existence was well known by Monterey Vista and its attorney when the contract was entered into.
Significantly, the principle enunciated in Milkes upon which Monterey Vista relies—that a buyer may obtain specific performance to the extent of the contracting seller’s interest even though the seller has less of an interest in the real property than was contemplated under the agreement—has no application here. Monterey Vista seeks to stretch the principle beyond its bounds by applying it to an instance in which the contract clearly specified that the property was co-owned, and the buyer knew at the time of contracting that there were owners of undivided interests in the property who had not signed it. None of the numerous cases cited by the court (Milkes, supra, 91 Cal.App.2d at p. 82) in support of the proposition quoted two paragraphs, ante, offers any support for Monterey Vista’s contention. Further, although the court’s quote (Milkes, supra, at pp. 82-83) from 49 Am.Jur., supra, section 105, page 123, appearing above may offer superficial support for Monterey Vista’s contention, the principle stated in that treatise does not apply to defects in title or other defects of which the buyer is aware at the time of the contract: “The general doctrine of the right of the vendee to specific performance with an abatement from the purchase price is qualified by an important limitation—that it cannot be invoked by a purchaser who, at the time of the making of the contract, had notice of the fact that the vendor had a limited interest in the land, or that his title was defective, or the quality deficient.” (Id., § 106, pp. 125-126, fn. omitted; see also 71 Am.Jur.2d (2001) Specific Performance, § 152, p. 158 [no partial specific performance where “purchaser who, at the time of the making of the contract, had notice of the fact that the vendor had a limited or undivided interest in the land, or that his or her title was defective, or the quality deficient, or that he or she had title to a part only of the land sold”].) This limitation of the principle allowing a buyer to seek partial specific performance is made clear in the Milkes court’s quotation of another treatise later in the opinion: “ ‘When a person who owns only an undivided share of a tract of land enters into an agreement to sell the whole, as though he was the owner of the entirety, to a purchaser who is ignorant of any defect in the title, such vendee may compel a conveyance of the share which the vendor actually owns, and have compensation for the residue, or he may rescind the agreement at his election.’ ” (Milkes, supra, 91 Cal.App.2d at p. 83, quoting Pomeroy, Specific Performance of Contracts (3d ed.) § 439, pp. 906-907, italics added.)
The 11 California cases cited in Milkes, supra, 91 Cal.App.2d at page 82 are inapposite here and do not support Monterey Vista’s argument that it is entitled to specific performance of the Agreement as to the Trust’s 70 percent interest in the Park. (See King v. Stanley (1948) 32 Cal.2d 584, 590, overruled on another ground in Patel v. Liebermensch (2008) 45 Cal.4th 344, 351 [no issue as to defective title; court cites Miller v. Dyer (1942) 20 Cal.2d 526, 529, generally, for proposition that “seller may not refuse to perform on the ground that his title is not as complete as the one agreed to be conveyed”]; Miller v. Dyer, supra [vendor, who agreed to convey real property she did not own at time but who had concurrently entered into a purchase contract with property’s then-owner, held equitable title sufficient for specific performance by vendee]; Smiddy v. Grafton (1912) 163 Cal. 16 [buyer entitled to specific performance with contract price reduced by amount of undisclosed mortgage]; Smith v. Bangham (1909) 156 Cal. 359 [filing of homestead declaration by wife of optionor after he granted option to purchase real property did not bar specific performance in favor of optionee following his timely exercise of option]; Farnum v. Clarke (1906) 148 Cal. 610 [vendor, who had agency agreement with vendee to procure land and entered into competing agency agreement with another and identified land to be procured, had sufficient equitable interest in land to support specific performance action]; McCowen v. Pew (1905) 147 Cal. 299 and McCowen v. Pew (1912) 18 Cal.App. 302 [optionee entitled to specific performance conveying 1160 acres of land with price adjustment for optionor’s removal of timber from 10 acres]; Quarg v. Scher (1902) 136 Cal. 406 [buyer entitled to specific performance of 23 and 1/2 acres of land with price adjustment where seller represented land consisted of 40 acres]; Marshall v. Caldwell (1871) 41 Cal. 611 [buyer entitled to specific performance of seller’s one-half interest with price abatement, notwithstanding his misrepresentation of exclusive ownership of property]; Twisselman v. Cohn (1943) 57 Cal.App.2d 987 [buyer entitled to specific performance to extent of vendor’s interest, with price abatement, notwithstanding title defect as to one of three tracts described in agreement]; Anderson v. Willson (1920) 48 Cal.App. 289 [buyer entitled to specific performance of four lots subject to (and with price abatement for) third party’s undisclosed partial interest, notwithstanding seller’s misrepresentation of fee simple ownership].)
Monterey Vista also notes that in Stevens Group, supra, 1 Cal.App.4th at page 895, this court recited the passage from Milkes, supra, 91 Cal.App.2d at page 82 that quoted from 49 American Jurisprudence, supra, Specific Performance, section 105, page 123. In Stevens Group, we were not concerned with the issue of the ability of a buyer to enforce a contract of sale where it was signed by some co-owners but not signed by other co-owners known by the seller to exist at the time. Rather, the case involved the narrow issue of whether specific performance is proper where there is a condition that the seller convey clear title, the seller cannot satisfy that condition at the time of the sale (i.e., because there is a loan against the property that is not prepayable), but because of the passage of time, the seller becomes able to satisfy the condition by the time of trial. (Stevens Group, supra, at pp. 893-895.)
Lastly, Monterey Vista relies on Angell, supra, 85 Cal.App.3d 536. There, an agreement to purchase a Santa Rosa home was executed by Mr. Rowlands, as buyer, but not by his wife, although her name appeared twice on signature lines in the document. (Id. at pp. 538-539.) It was signed by the seller, Mr. Angell, but not by Mrs. Angell, whose name did not appear on the document. (Ibid.) A separate agreement augmenting the first was signed by both men the next day, but was not signed by either spouse (although there were signature spaces for each of them). (Id. at p. 539.) Rowlands provided a $2,000 deposit. (Ibid.)
The sale was never concluded and the seller, Angell, sued for breach of contract. (Angell, supra, 85 Cal.App.3d at p. 539.) Rowlands contended that since neither his wife nor Mrs. Angell had signed the agreements, there was no binding contract. (Id. at p. 540.) The appellate court disagreed, holding that “the Cavanaugh[, supra, 88 Cal. 543] line of cases holds that a signer cannot escape liability unless he affirmatively establishes that the signatures of all parties were contemplated as being a condition precedent to the validity of the contract [citation].” (Id. at pp. 541.) It concluded, “We therefore decline to follow the Tewksbury[, supra, 21 Cal. 60] line of cases insofar as they hold that an agreement is invariably incomplete until signed by all parties purportedly bound. Instead, we adopt the Cavanaugh line of cases, i.e., that a contract is invalid if not signed by all parties purportedly bound only when it is shown, either by parol or express condition, that the contract was not intended to be complete until all parties had signed. Conversely, in the absence of a showing that the contract is not intended to be complete until signed by all parties, the parties who did sign will be bound.” (Id. at p. 542.) Because Rowlands did not establish that he intended to be bound by the contract only if it were signed by all parties, the court held that the instruments were valid and binding. (Ibid.)
Angell is distinguishable because its holding was based on the reasoning that the buyer was bound by his execution of the contract and the act of making a deposit, notwithstanding the fact that the buyer’s wife had not executed the agreement. The case did not involve a buyer asserting that an agreement to sell co-owned property executed by only some of the co-owners was subject to specific performance as to the signatory co-owners’ partial interest. In addition, Cavanaugh, supra, 88 Cal. at page 549, merely held that a contract need not “invariably be executed by all whose names appear in the instrument before it shall be binding upon any.” In Cavanaugh, the court held that in an action by a buyer who had not signed the agreement, the signatory seller, who was the party to be charged, could not assert that the agreement was invalid under the statute of frauds. (Id. at pp. 548-549.) As with the other cases cited by Monterey Vista, Cavanaugh did not concern circumstances in which a buyer sought specific performance for the conveyance of a partial interest in property where the contract was for the sale of property in its entirety and one or more co-owners known to the buyer had not signed the agreement. We must respectfully disagree with Angell to the extent that the case may be read as suggesting that under Cavanaugh and its progeny, where an owner enters into an agreement to sell property in fee simple and the buyer is aware that there are nonsignatory owners, the signatory owner must establish that he or she did not intend to be bound to sell his or her partial interest to avoid, at the buyer’s option, partial specific performance. As we have observed, neither Cavanaugh nor other cases upon which Monterey Vista rely offer support for that proposition.
3. Representation of authority
In addition to its other arguments, Monterey Vista contends that it relied on the Bybees’ alleged representations that they were authorized to sign the Agreement on behalf of the co-owners, Sherman and Holt. It asserts that there was evidence at trial that Frank Bybee led it to believe that the minority owners were his business partners and that he had authority to bind them to the purchase and sales contract. Moreover (Monterey Vista argues), the Agreement “had signature lines only for the Bybees, and the clear language of the contract expressly stated that the Bybees had authority to bind the minority owners.” (Original italics.) These arguments do not persuade us that there was a basis for concluding that the Trust breached the Agreement by failing to convey its partial interest in the Park.
First, notwithstanding the testimony of Gray and Crowther that Frank Bybee referred to the minority owners as his partners, there was a wealth of evidence presented to Monterey Vista prior to its execution of the Agreement that there was no formal partnership arrangement. The preliminary title report provided to Semelsberger in August 2001 (two months before the Agreement’s execution) plainly stated that the Park was owned by the Trust, Sherman, and Holt as tenants in common; no partnership arrangement was of record. Semelsberger acknowledged in his testimony that the report did not disclose that the co-owners were partners or that they owned the property collectively as joint tenants. He testified further that after being informed by Gray or Crowther that the minority owners were Frank’s partners, he did not make any inquiry to determine what type of partnership existed, because he did not think it was important to know this information.
Even were there a partnership arrangement between Frank Bybee and the minority co-owners—and to be clear, there was no evidence of such an arrangement besides Frank’s referring to the co-owners as his “partners”—there was no evidence that the co-owners of the Park were engaged in the business of selling mobilehome parks. Therefore, even were there a partnership, Frank would not have had the authority to bind the assumed partnership entity to the Agreement. (See Corp. Code, § 16301 [act of partner, including execution of instrument, binds partnership if it is done “for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership”].)
The circumstances here are analogous to those in Lindsay-Field, supra, 36 Cal.App.4th 1728. There, although the plaintiffs’ representative, Porter, admitted that he knew a vote of the syndicate was required, he believed that the manager had the authority to bind its members when he signed the agreement. (Id. at p. 1734.) The court noted that Porter never asked for written evidence of Sturgis’s authority and did not ask to see the syndicate agreement. (Ibid.) “Ostensible authority of an agent cannot be based on the agent’s conduct alone; there must be evidence of conduct by the principal which causes a third party reasonably to believe the agent has authority. [Citations.]” (Ibid.) Here, there was no evidence of conduct by the alleged principals (Sherman and Holt) suggesting that the Bybees were their agents for purposes of agreeing to sell the Park. As the Supreme Court observed many years ago, “A third person... is not compelled to deal with an agent, but if he does so, he must take the risk. He takes the risk not only of ascertaining whether the person with whom he is dealing is the agent, but also of ascertaining the scope of his powers. The rule is cogently stated in 1 Mechem on Agency, second edition, section 743, page 527, as follows: ‘An assumption of authority to act as agent for another of itself challenges inquiry. Like a railroad crossing, it should be in itself a sign of danger and suggest the duty to “stop, look and listen”. It is therefore declared to be a fundamental rule, never to be lost sight of and not easily to be overestimated, that persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.’ ” (Ernst v. Searle (1933) 218 Cal. 233, 240.)
Second, its contention notwithstanding, there is no evidence that Monterey Vista actually relied on any alleged representations that the Bybees had authority to sign the Agreement on behalf of their minority owners. Monterey Vista and its attorney were told by Richards, the Bybees’ accountant, that written authorizations should be prepared for signature by the co-owners. Crowther was told that obtaining such authorizations was for the protection of both the Bybees and Monterey Vista. Semelsberger prepared powers of attorney—which provided that they would apply retroactively—for the signatures of Sherman and Holt. The authorizations were never signed, and shortly after the Agreement was executed, Semelsberger was informed by McCann, Sherman’s attorney, that his client had no knowledge of the transaction and did not consent to the sale. Furthermore, after Frank Bybee passed away in early December 2001, obtaining signed authorizations from the minority owners—according to Crowther and Gray—became “a matter of importance” and was “a loose end” to Monterey Vista. In the words of one board member, King, obtaining the authorizations was one of “the important details [that if] not kept under control, [might result in] our sellers... balk[ing] at Frank Bybee’s ‘deal’ and want[ing] to get a better deal for themselves or even keep the [P]ark.”
Third, it is not entirely clear that the “Warranty of Authority” clause in the Agreement drafted by Monterey Vista’s attorney constituted a representation that the Bybees were authorized to sign on behalf of Sherman and Holt. Rather than using the plain language that the Bybees were authorized to execute the agreement on behalf of those co-owners, paragraph 2 of the Agreement states that “Seller warrants that Frank A. Bybee[,] Jr. and Joyce P. Bybee are authorized to execute this agreement on Seller’s behalf.” Furthermore, Monterey Vista acknowledged in the last paragraph of the Agreement that Seller had made “[n]o representation, warranty, or recommendation... regarding the legal sufficiency [or] legal effect... of this Agreement or the transaction.”
Fourth, even were we to conclude that paragraph 2 of the Agreement adequately stated that the Bybees were authorized to sign on behalf of the minority co-owners, that clause is of no consequence in connection with Monterey Vista’s contract claims. There was no written authorization signed by Sherman or Holt; therefore it was ineffective to bind the minority co-owners (as the court below found) under the equal dignities rule. (See Civ. Code, § 2309.) Significantly, the claimed breach of contract is not related to paragraph 2; rather, it is the Trust’s refusal to convey its partial (70 percent) interest in the Park to Monterey Vista.
The claim, as alleged in the Complaint, that the Bybees falsely represented that “they were legally authorized to enter into the [A]greement on behalf of the owners of a 30 [percent] undivided interest in the [Park]” was the basis for Monterey Vista’s tort (misrepresentation) claim. Monterey Vista elected to proceed on its contract claims, and the misrepresentation claim is therefore not before us. (See fn. 14, ante.)
4. Conclusion
In both Olson, supra, 91 Cal. 506, and Jackson, supra, 83 Cal. 521, the court rejected efforts by the buyer to obtain specific performance of a signatory owner’s partial interest in co-owned real property, where the agreement concerned the sale of the property in its entirety and the parties were at all times aware that there were co-owners who had not effectively entered into the agreement to sell. Those were the circumstances present in the case before us. Although Monterey Vista argues that Olson and Jackson are distinguishable because in those cases there were signature lines for the nonsignatory co-owners appearing in the agreements, we do not find that distinction compelling. Here, both Monterey Vista and its attorney were well aware at the time the Agreement was executed that there were minority owners of the Park; indeed, the Agreement specifically identified Sherman and Holt as co-owners and delineated the respective undivided interests in the Park that they each owned. The inexplicable omission of signature lines for them in the Agreement does not preclude the application here of Olson, Jackson, Lindsay-Field, supra, 36 Cal.App.4th 1728, Wightman, supra, 62 Cal.App. 632, or Mullarky, supra, 9 Cal.App. 686.
For the reasons stated above, and after careful review of the record and legal authority, we conclude that the court erred in holding that the Bybee Trust breached the Agreement by failing to convey their partial interest in the Park to Monterey Vista. We will therefore reverse the judgment and the postjudgment order awarding attorney fees and costs in favor of Monterey Vista. (See Giles v. Horn (2002) 100 Cal.App.4th 206, 241 [order awarding attorney fees falls as matter of course when judgment on which it was based is reversed].)
Since we have concluded that the court erred in finding that the Bybee Trust breached the Agreement, we need not address the remaining issues argued in the cross-appeal or the issues raised in Monterey Vista’s appeal. (See Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 845, fn. 5 [appellate courts will not address issues whose resolution is unnecessary to disposition of appeal]; Hiser v. Bell Helicopter Textron Inc. (2003) 111 Cal.App.4th 640, 655 [same].)
DISPOSITION
The judgment is reversed and the matter is remanded for entry of a judgment in favor of the Bybee Trust. The order awarding costs and attorney fees to Monterey Vista is also reversed. Costs on appeal are awarded to the respondent and cross-appellant the Bybee Trust.
WE CONCUR: Bamattre-Manoukian, Acting P.J., Mihara, J.