Opinion
F085951
06-07-2024
BROOKE ASHJIAN et al., Plaintiffs and Respondents, v. ART AVEDIS TERZIAN, Defendant and Appellant.
Gilmore Magness Janisse and David M. Gilmore for Defendant and Appellant. Whelan Law Group, Brian D. Whelan and Joseph Stolz for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Fresno County. No. 21CECG02233 Rosemary T. McGuire, Judge.
Gilmore Magness Janisse and David M. Gilmore for Defendant and Appellant.
Whelan Law Group, Brian D. Whelan and Joseph Stolz for Plaintiffs and Respondents.
OPINION
DETJEN, ACTING P. J.
Appellant Art Avedis Terzian entered into a contract to sell real property (sale contract) to Brooke Ashjian (Ashjian) and Gina Ashjian (collectively, the Ashjians).When Terzian refused to close escrow, the Ashjians brought suit against him for breach of contract, specific performance, and promissory fraud.
By all accounts, the transaction between Terzian and the Ashjians was conducted by and between Terzian and Brooke Ashjian. To avoid unnecessary complexity, when we refer to only Brooke Ashjian, we refer to him in the singular as "Ashjian."
Terzian filed an answer and generally denied all material allegations of the complaint. Thereafter, he failed to respond to a set of requests for admission and was deemed to have admitted the requests. The Ashjians then moved for judgment on the pleadings. The trial court granted the motion as to the breach of contract and specific performance causes of action but delayed entering final judgment until after a prove-up hearing was conducted to establish damages.
The Ashjians elected the remedy of specific performance. After the prove-up hearing concluded, the court entered judgment (final judgment) decreeing specific performance of the sale contract and establishing a monetary award in favor of the Ashjians. Terzian appeals from the final judgment.
We reverse and remand with instructions to the trial court.
FACTUAL AND PROCEDURAL BACKGROUND
I. Allegations of the Complaint
On August 2, 2021, the Ashjians filed suit against Terzian. The following allegations, all of which were denied by Terzian in his answer, are drawn from the Ashjians' complaint.
A. General Allegations Applicable to All Causes of Action
The Ashjians alleged, as follows: Terzian is the owner of approximately five acres of land-a parcel approximately four acres in size bearing assessor's parcel number (APN) 433-08-002 (subject property), and an adjacent one-acre parcel, each located in Fresno County, California. During an unspecified period of several years, Terzian, either by himself or through his prior real estate agents, marketed the subject property for sale.
According to the complaint, in 2020, the Ashjians approached Terzian about buying the subject property after seeing it advertised online. At the time, Terzian was no longer represented by a real estate agent. The Ashjians "were interested in purchasing and developing the [subject] property into an apartment complex with forty-eight (48) units," which is how the subject property had been marketed "in prior years." Ultimately, the parties struck a deal for the purchase and sale of the subject property.
A copy of the alleged sale contract, one page in length, was attached to the complaint as an exhibit. It reads, in substance, as follows:
“Brooke & Gina Ashjian
December 15, 2020
Mr. Art Avedis Terzian
[Address omitted.]
Re: APN: 433-08-002
“Purchase Agreement “Buyer Conditions:
Buyer has up to 5 months to acquire Conditional Use Permit (CUP). If more time is needed, Buyer assumes responsibility of maintaining the property (weed abatement and cleaning of debris) and paying for property taxes from that point onwards, until CUP is approved.
“Buyer to pay for all costs associated with acquiring the CUP.
The language "Selling price $249,000" was handwritten in print on the sale contract but was not initialed by the parties.
The sale contract bears a single signature for the Ashjians or their assignee, and a corresponding date of December 17, 2020. Below that signature line is the word "AGREED" under which is Terzian's name in handwritten print, identified as the "owner," and a corresponding date of December 15, 2020.
The Ashjians alleged Terzian's son, Tony, "negotiated for and inserted material terms into the [sale contract] on his father's behalf"; "carried messages to and from his father about the status and progress"; negotiated the contract provision allowing the Ashjians a five-month period to obtain a conditional use permit (CUP) after which the Ashjians would be responsible for "weed abatement and cleaning of debris" and payment of property taxes; obtained Terzian's signature on the contract; and e-mailed an executed copy of the contract to the Ashjians, after which they executed the contract. Thereafter, the Ashjians began the process of obtaining a CUP.
We use Tony's first name only when referring to him because his surname is not identified. No disrespect is intended.
The Ashjians further alleged they "invest[ed] a tremendous amount of money in plans, drawing, and professional and permitting fees" after which, in July 2020, they "attempted to close escrow." However, they were advised by the escrow agent that Terzian "would not sign the escrow papers." The CUP had not yet been approved but the Ashjians alleged the City of Fresno (City) indicated it would be approved.
The complaint twice alleges that the Ashjians attempted to close escrow in July 2020. The referenced date preceded the existence of the contract. We presume the date was alleged in error. Presumably, the Ashjians intended the alleged date to be July 2021.
In addition, the Ashjians alleged they sought Terzian's cooperation and his "affirmation of the [sale] contract as he had professed orally that the [sale contract] no longer applied." Terzian acknowledged signing the contract but refused to be bound by it. Terzian "attempted to renegotiate and suggested that a lot line adjustment be undertaken on the property," which the Ashjians interpreted as Terzian "want[ing] to now carve off portions of the [subject] property." The Ashjians contend that was never agreed to and that Terzian breached the contract by "failing and refusing to close escrow."
The Ashjians incorporated the above allegations into each of their causes of action.
B. Breach of Contract Allegations
The Ashjians alleged "[a]t the end of July 2020, [they] offered to place the entire purchase amount into escrow within three (3) business days of [Terzian's] written acknowledgement that he would execute the necessary papers to convey title through the title company," but Terzian refused. They further alleged they "have undertaken every obligation necessary under the contract or have been improperly stopped and blocked from doing so by [Terzian]"; they have been harmed as a result of Terzian's breach of contract and are entitled to "consequential damages, including the lost profits and stream of income that [they] would have enjoyed with their planned apartment complex" as well as "all out-of-pocket costs incurred to date to prepare the [s]ubject [p]roperty for construction and to obtain a CUP"; they "will be required to incur expenses to correct and repair said defects in addition to related costs such as loss of use and mitigation expenses"; and Terzian "[is] liable to [them] for said damages in an amount to be determined at trial." The cause of action does not allege a dollar amount of any alleged consequential damages.
See footnote 4, ante.
The above allegations were incorporated into the cause of action for specific performance.
C. Specific Performance Allegations
In their second cause of action for specific performance, the Ashjians alleged, as follows: "Pled in the alternative, [the Ashjians] have performed all conditions, covenants and promises required by them on their pa[rt] to be performed in accordance with the terms and conditions of the [sale contract]. The consideration and the terms set forth in the [sale contract] are and were fair and reasonable, and negotiated for and written by [Terzian] and/or his son[, Tony,] at his request." They alleged Terzian failed and refused to perform the sale contract. They further alleged they "have no adequate legal remedy in that damages will be inadequate to compensate [them] for the harm caused by [Terzian], and therefore [they] seek specific performance of the [sale contract]." Aside from the allegation of consequential damages incorporated from the breach of contract cause of action, the cause of action for specific performance makes no additional allegation of damages or monetary loss.
D. Dismissal of the Fraud Cause of Action
On November 21, 2022, the Ashjians dismissed their cause of action for fraud. Accordingly, we do not set forth the allegations of that cause of action.
E. Prayer for Relief
The Ashjians prayed for judgment against Terzian, as follows:
"1. For general and special damages including compensatory damages relating to the [sale] contract's performance and non-performance, interest on said amounts, other economic injury, all in an amount according to proof but not less than $15,000,000.00;
"2. Alternatively, for specific performance of the [sale contract] at issue;
"3. For punitive damages in an amount according to proof;
"4. Reasonable attorney's fees and costs under any applicable statutory authority[;]
"5. For prejudgment interest under Civil Code §3288, CCP §998, and any other applicable statutory authority;
"6. For all other relief as shall be deemed by the Court to be proper."
II. Terzian's General Denial and Answer to the Complaint
On August 23, 2021, Terzian, acting in propria persona, filed a "General Denial" (Judicial Council form PLD-050, boldface &some capitalization omitted), in which he "generally denie[d] each and every allegation of [the Ashjians'] complaint." On August 31, 2021, Terzian, again acting in propria persona, filed an "Answer-Contract" (Judicial Council form PLD-C-010 (Rev. Jan. 1, 2007), boldface &some capitalization omitted) to the "Cross-Complaint . . . [of] . . . Terzian" (boldface &some capitalization omitted). In it, Terzian stated he "generally denies each statement of the complaint or cross-complaint," checked the box for "AFFIRMATIVE DEFENSES," and stated the following "additional reasons that plaintiff is not entitled to recover anything":
No cross-complaint was filed in this matter. We presume the answer was intended to be directed at the Ashjians' complaint.
"1) [Terzian] did not sign a contract with [Ashjian]. [Ashjian] needed a CUP from the City of Fresno to stor[e] his aspha[]lt equi[p]ment. [Terzian] put his name as owner to get CUP from City of Fresno.
"2) Mutual Mistake: [Terzian] showed [Ashjian] back, low lands for the pur[ch]ase price of $249,000. [Terzian] offered [Ashjian] property for the purchase price of $249,000 included [sic] the back, low lands, located after steel met[a]l fence to Pleasant Street.
"3) Statu[t]es of Fr[au]d: [Ashjian] is seeking to fr[au]d[ul]ently take free land that was not verbally agreed upon."
III. Deemed Admissions
On November 12, 2021, the Ashjians filed a motion to deem admitted requests for admission they had propounded to Terzian due to his failure to properly respond to the requests. (See Code Civ. Proc., § 2033.280, subd. (b).)
All statutory references are to the Code of Civil Procedure unless otherwise noted.
In support of the motion, the Ashjians' counsel stated Terzian "sent a letter indicating '[he] received [the Ashjians' counsel's] letter requesting history and de[t]ails . . . of the property.'" The Ashjians' counsel did not attach a copy of the letter to the motion but described it as Terzian's "two cents on various happenings and events." Counsel stated the letter "did not comply with the obligation to respond to the written discovery requests at issue, and [Terzian] never responded to the requests for admission."
The letter referenced in the prior paragraph appears to have been produced by Terzian in connection with a subsequent motion for reconsideration. In the letter, Terzian stated, among other things, (1) he "installed a steel fence to separate the [entire five-acres] into two lots"; (2) he listed the entire five-acres (i.e., the subject property and adjacent one-acre parcel) for sale with a realty company for $629,000; (3) he was advised by the Planning and Development director and the councilwoman for the district that only a portion of the property (i.e., not the entire five acres) could be zoned commercial;(4) after the listing agreement with the realty company expired, he advertised online, and Ashjian expressed interest in the property; (5) after showing the property to Ashjian, Terzian said he would sell the entire five-acres for $600,000 at which point Ashjian stated he wanted the land for his asphalt and paving business "to park and store" equipment and that "he could not afford $600,000 for this use"; (6) Terzian told Ashjian he could "split the land and sell him the low lands in the back"; (7) Ashjian offered him $250,000 for the "back lands" and Terzian agreed; (8) Ashjian "said he would get a [CUP] for his asphalt and heavy equipment business" and "he would get a permit to park and stor[e] heavy equipment"; (9) Terzian told Ashjian he would "give [six] months to perform until May 15, 2021"; and (10) in July 2021, Ashjian told Terzian he wanted to close escrow and told him, "[y]ou have [two] weeks to move all equipment and move the steel fence 150 to 200 feet into my property," which Terzian stated "was not part of the deal I struck with . . . Ashjian when I met with him in July 2020."
Terzian did not file an opposition to the motion for deemed admissions. On January 3, 2022, the trial court issued its tentative ruling to grant the motion in its entirety "unless [Terzian] serves, before the hearing on the motion, a proposed response to the requests for admission that is in substantial compliance with . . . section 2033.220." Terzian did not serve proposed responses to the requests for admission as required by the court's tentative ruling and did not request oral argument. The court adopted its tentative ruling as its order and the following requests were deemed admitted:
On the day prior to the hearing on the motion, Terzian wrote the Ashjians' counsel arguing he "did reply to [counsel's] 3 page questionnaire [i.e., the requests for admission] within 30 days"; he was "planning to go to court" on the day of the hearing; and "[w]hatever questions you have for me you can ask any question in front of the committee or the judge."
(1) "Admit that you own the property located in Fresno County, California with APN 433-08-002 and located at W. Garland and N. Pleasant Ave in Fresno, California (hereafter referred to as 'Subject Property')."
(2) "Admit that you agreed in writing to sell the Subject Property to both Brooke Ashjian and Gina Ashjian for $249,000."
(3) "Admit that you are in breach of your agreement to sell the Subject Property to Brooke Ashjian and Gina Ashjian."
(4) "Admit that you have no lawful defense for your breach of your agreement to sell the Subject Property to Brooke Ashjian and Gina Ashjian."
(5) "Admit that you have no lawful excuse for your breach of your agreement to sell the Subject Property to Brooke Ashjian and Gina Ashjian."
(6) "Admit that Gina Ashjian has done all, or substantially all, of the significant things that your agreement concerning the Subject Property required Gina Ashjian to do."
(7) "Admit that Brooke Ashjian has done all, or substantially all, of the significant things that your agreement concerning the Subject Property required Brooke Ashjian to do."
(8) "Admit that in refusing to close escrow and convey marketable title to the Subject Property you breach[ed] your agreement to sell the Subject Property to Brooke A[s]hjian and Gina Ashjian."
(9) "Admit that in breaching your contract with Brooke Ashjian you have caused Brooke Ashjian to suffer consequential damages in the amount of $15,750,000."
(10) "Admit that in breaching your contract with Brooke Ashjian you have caused Gina Ashjian to suffer consequential damages in the amount of $15,750,000."
(11) "Admit that prior to the sale of the Subject Property you had marketed the Subject Property for sale as approximately 4.04 acres."
(12) "Admit that prior to the sale of the Subject Property you had marketed the Subject Property for sale as 4.04 acres."
(13) "Admit that prior to the sale of the Subject Property you instructed your son to provide Mr. Ashjian with a site plan for the Subject Property with forty-eight (48) apartment units to induce Brooke Ashjian to purchase the Subject Property."
(14) "Admit that you or your agents marketed the Subject Property for sale a [sic] capable of developing forty-eight (48) apartment units."
(15) "Admit that you signed the contract attached as Exhibit A [i.e., the sale contract] in the place above your name."
(16) "Admit that when you signed the contract attached as Exhibit A in the place above your name you intended to defraud Brooke Ashjian and cause him to suffer damages."
IV. Motion for Reconsideration of Order Granting Deemed Admissions
On January 24, 2022, Terzian, now represented by counsel, moved for reconsideration (motion for reconsideration) of the trial court's order granting the Ashjians' motion for deemed admissions. The motion for reconsideration was heard at the same time as the Ashjians' motion for judgment on the pleadings discussed in the following section, and was denied.
V. Motion for Judgment on the Pleadings
On April 22, 2022, while the motion for reconsideration remained pending, the Ashjians filed a motion for judgment on the pleadings "as to the Complaint, and the entire Answer" of Terzian to the complaint. The motion was made "on the grounds that the Complaint states facts sufficient to constitute a cause or causes of action against [Terzian] and the Answer, and judicially noticeable deemed admissions, do[] not state facts sufficient to constitute a defense thereto."
Terzian, once again proceeding in pro. per., filed an unsworn statement in opposition to the motion for judgment on the pleadings. No other opposition papers were filed by Terzian. In his unsworn statement, he reiterated and expanded on much of the same information set forth in his letter to the Ashjians' counsel in his attempted response to requests for admission. He also stated he "showed [Ashjian] the boundary where the metal fence and gate is, and the telephone pole that separates the boundary w[h]ere my developed land is and the undeveloped low lands. I told him that the boundary would have to be adjusted. He agreed ...."
In his unsworn statement, Terzian also stated that he checked with a civil engineer and confirmed the entire five acres "is legally one property and that a lot line determination needs to be performed. It was never divided by the City .... The property can not be sold separately. It can only be sold as one. The title company will not recognize it as two parcels or will insure it if it was sold separately." In support of these contentions, Terzian attached an e-mail purportedly from a civil engineer which reads, in part: "According to the City . . ., this parcel is legally only one parcel and not two as show[n] on the current APN map. With that in mind, a lot line adjustment cannot be perfected. The process to split the property must be accomplished by a parcel map process." Terzian also attached a copy of part of a purported "CONDITION OF TITLE" (boldface omitted) guarantee from a title company, which showed a single legal description for the two APN parcels that comprise the entire five acres.
On July 13, 2022, the trial court issued a tentative ruling on the Ashjians' motion for judgment on the pleadings. The tentative ruling was to grant the motion for judgment on the pleadings as to the breach of contract and specific performance causes of action but to deny it as to the fraud cause of action. The court acknowledged the Ashjians' request that it "enter an interlocutory judgment declaring them to be the prevailing parties now and determine damages later," but stated it would be unusual to enter an interlocutory judgment in a breach of contract case. It concluded, however, that interlocutory judgments are permitted in accounting actions and that the determination of incidental damages in connection with specific performance is the functional equivalent of an accounting. Thus, the court-presumably on the assumption the Ashjians would elect specific performance-stated that although it intended to grant the motion for judgment on the pleadings, a final judgment would not be entered until after conclusion of a prove-up hearing to determine damages. The court adopted its tentative ruling.
VI. Dismissal of Fraud Cause of Action and Prove-up Hearing
On November 21, 2022, at the Ashjians' request, the trial court dismissed the fraud cause of action without prejudice. On that same day, the Ashjians applied for final judgment, elected specific performance, and submitted declarations to the court in an effort to prove-up their consequential damages claim in the amount of $4,068,146.
On December 2, 2022, Terzian, once again represented by counsel, opposed the Ashjians' application. In a declaration, he reiterated, among other things, his contention that the subject property is part of a larger, unsubdivided property for which two separate APN numbers were assigned. On December 8, 2022, the Ashjians filed reply papers in support of their application.
On December 6, 2022, the trial court issued its tentative ruling to grant final judgment for specific performance in favor of the Ashjians and against Terzian and to award the Ashjians $4,068,146 after applying an offset of $249,000 for the purchase price of the subject property.
On December 20, 2022, the trial court adopted its tentative ruling as the order of the court and issued judgment consistent with that order the same day. Notice of entry of the judgment was likewise served that same day.
VII. Post-judgment Proceedings
On January 4, 2023, Terzian timely filed and served a "Notice of Intention to Move for New Trial Or for a New and Different Judgment" (boldface &some capitalization omitted) (§ 659, subd. (a)(2)), moved for said relief pursuant to sections 661 and 662 (new trial motion), and filed additional papers in support of the new trial motion on January 17, 2023. In his supporting paperwork, Terzian again contended the subject property was part of a larger, unsubdivided parcel. The court set a hearing on the motion for February 9, 2023, and the parties filed their respective opposition and reply papers.
For reasons not evident from the record on appeal, on February 6, 2023, the new trial motion was taken off calendar and was never heard. As a result, the new trial motion was denied by operation of law effective March 6, 2023. (§§ 657, 660, subd. (c).)
On March 20, 2023, Terzian timely filed his notice of appeal of the final judgment. (Cal. Rules of Court, rule 8.108(b)(1)(B).) Additional background and procedural facts will be discussed below as necessary.
On February 14, 2024, Terzian petitioned this court for a writ of supersedeas and requested an immediate stay in the enforcement of the final judgment. On February 16, 2024, this court granted a stay of certain scheduled execution sales "pending the determination of [the] writ petition or further order of this court." On March 22, 2024, after the parties had completed briefing, this court issued a writ of supersedeas to stay enforcement of the final judgment "pending finality of this appeal or further order of this court."
On December 27, 2023, the Ashjians moved this court to take judicial notice of a criminal complaint filed on July 21, 2023, against Terzian. We deferred ruling on this matter until consideration of the appeal on its merits. We now deny the motion. The Ashjians failed to explain the relevance of the criminal complaint to the issues on appeal as required by California Rules of Court, rule 8.252(a)(2)(A), and we see none. Moreover, it appears the Ashjians are asking this court to judicially notice the truth of hearsay allegations in the criminal complaint which we may not do. (Richtek USA, Inc. v. uPI Semiconductor Corp. (2015) 242 Cal.App.4th 651, 658, 660.)
DISCUSSION
I. Motions for Judgment on the Pleadings and the Standard of Review
The Ashjians brought their motion for judgment on the pleadings pursuant to section 438, subdivisions (b)(1) and (c)(1)(A). Under section 438, "[a] party may move for judgment on the pleadings[]" on the ground "the complaint states facts sufficient to constitute a cause or causes of action against the defendant and the answer does not state facts sufficient to constitute a defense to the complaint." (§ 438, subds. (b)(1), (c)(1)(A).)
The motion may be directed to "[t]he entire complaint . . . or as to any of the causes of action stated therein." (§ 438, subd. (c)(2)(A).) "The grounds for [the] motion . . . shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice." (Id., subd. (d).) "If the motion is granted with respect to the entire complaint or answer without leave to file an amended complaint or answer, as the case may be, then judgment shall be entered forthwith in accordance with the motion granting judgment to the moving party. (Id., subd. (h)(3).)
"A motion for judgment on the pleadings is similar to a demurrer in most respects .... [Citation.] Except as provided in the statute governing motions for judgment on the pleadings, . . . section 438, the rules governing demurrers apply." (Alameda County Waste Management Authority v. Waste Connections US, Inc. (2021) 67 Cal.App.5th 1162, 1173-1174 (Alameda County Waste).) "Where a plaintiff brings such a motion, we assume the defendant could have proven all of the factual allegations in its answer" (id., at p. 1174) and" 'disregard the controverted allegations of the complaint'" (Engine Manufacturers Assn. v. State Air Resources Bd. (2014) 231 Cal.App.4th 1022, 1034 (Engine Manufacturers)). However, "admissions or concessions of matters which cannot reasonably be controverted are properly considered on a motion for judgment on the pleadings." (Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549 (Evans), disapproved on other grounds in Black Sky Capital, LLC. v. Cobb (2019) 7 Cal.5th 156, 162, 165.)
In determining whether a motion for judgment on the pleadings should be granted, a court determines whether "under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law." (Guardianship of Olivia J. (2000) 84 Cal.App.4th 1146, 1155 (Olivia J.); see Alameda County Waste, supra, 67 Cal.App.5th at p. 1174.) The "motion 'must be denied if the defendant's pleadings raise a material issue or set up affirmative matter constituting a defense.' [Citation.] Stated differently, '[w]here the answer, fairly construed, suggests that the defendant may have a good defense, a motion for judgment on the pleadings should not be granted.'" (Engine Manufacturers, supra, 231 Cal.App.4th at p. 1034.) In making its determination, a court is obliged "to indulge all inferences in favor of the party against whom the motion for judgment on the pleadings was made." (Treweek v. City of Napa (2000) 85 Cal.App.4th 221, 234 (Treweek).)
" 'On appeal, we do not review the validity of the trial court's reasoning but only the propriety of the ruling itself.'" (Alameda County Waste, supra, 67 Cal.App.5th at p. 1174.) "We derive the pertinent facts from properly pleaded allegations in the challenged pleading and judicially noticeable matters and our standard of review is de novo." (City and County of San Francisco v. All Persons Interested in Matter of Proposition C (2020) 51 Cal.App.5th 703, 713, fn. omitted.)
The Ashjians acknowledge the "standard of review for judgment on the pleadings is de novo" but contend that standard is only applicable to the trial court's granting of the motion and does not apply to the court's subsequent determination of incidental compensation during the prove-up hearing. They argue" 'the grant or denial of specific performance is reviewed under an abuse of discretion standard'" (underlining omitted), citing Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472 (Real Estate Analytics). However, Terzian is challenging the lawfulness of the procedure employed by the trial court to determine incidental compensation, which is a question of law we review de novo. (See Center for Biological Diversity v. Department of Fish & Wildlife (2015) 62 Cal.4th 204, 219.) Moreover, where a trial court has discretion, its failure to adhere to the law and follow proper procedure is an abuse of discretion. (Dunlap v. Mayer (2021) 63 Cal.App.5th 419, 424; People v. Superior Court (Brim) (2011) 193 Cal.App.4th 989, 991; Conservatorship of Scharles (1991) 233 Cal.App.3d 1334, 1337.)
II. The Prove-up Process Employed by the Trial Court Finds No Support in the Law and Resulted in a Denial of Terzian's Due Process Rights
Terzian asserts numerous errors on the part of the trial court and devotes a large portion of his opening brief to challenging the trial court's use of a prove-up process based on declarations to determine a monetary award in favor of the Ashjians. This challenge has merit.
A. The Parties' Contentions
Terzian correctly contends that "[i]n ruling on a motion for judgment on the pleadings, the court must look only to the pleadings and those items of which judicial notice may be taken," citing section 438, subdivision (d). Terzian further contends there is no authority for the trial court's decision to determine damages by way of a prove-up hearing based solely on declarations. He argues he was denied due process as a result of the prove-up procedure employed by the court and the damages award is supported only by hearsay and speculation.
The Ashjians contend the trial court had already granted judgment on the pleadings prior to conducting the prove-up hearing, and that, thereafter, the court was sitting in equity to determine incidental damages caused by Terzian's delay in performing the sale contract. They do not, however, address Terzian's challenge to the use of declarations to determine damages.
B. The Right to an Accounting
A party who properly obtains a decree of specific performance from a trial court sitting in equity may be awarded incidental compensation "when such compensation is necessary to fully vindicate the plaintiffs' contractual rights." (Rogers v. Davis (1994) 28 Cal.App.4th 1215, 1221; see id. at pp. 1220-1221.)"' "In California the compensation which may be awarded incident to a decree of specific performance is not for breach of contract and is not legal damages. The complainant affirms the contract and asks that it be performed. Since the time for performance has passed, the court relates that performance back to that date, by treating the parties as if the change in ownership had taken place at that time. Thus[, for example,] the buyer is entitled to the rents and profits from the time the contract should have been performed, and the seller is entitled to an offset for the interest on the purchase money which he would have received had the contract been performed. The process is more like an accounting between the parties than an assessment of damages." '" (Id. at p. 1221.)
In order to relate the parties' performance back to the date performance was due, the trial court "gives the complainant credit for any losses occasioned by the delay and permits the defendant to offset such amounts as may be appropriate." (Ellis v. Mihelis (1963) 60 Cal.2d 206, 220.)" '[T]he court must give credit to either party for such expenditures that it has occasioned in relation to the property, such as taxes, assessments, insurance premiums, repairs and the like.'" (Bravo v. Buelow (1985) 168 Cal.App.3d 208, 214 (Bravo).)
" '[A]n accounting should be had which should take into consideration, among other things, the following: the rents received by defendants during the period from the date of the conveyance of the title to the premises; any profits resulting to the defendants in their operation of the property; any losses sustained by the plaintiff because of the delay in conveyance of title; necessary expenses incurred by the defendants in the operation of the property, such as payments of principal and interest on the mortgage, property taxes, insurance, and minor repairs; [and] the benefits to the plaintiff in retaining the use of the purchase money during the pendency of the litigation.'" (Bravo, supra, 168 Cal.App.3d at pp. 214-215.) In addition, "[a] defaulting seller is entitled 'to the interest upon the total purchase price from the date on which the conveyance should have occurred.'" (Id. at p. 215.)
C. The Prove-up Process Employed by the Trial Court Was Not Authorized and Did Not Afford Terzian Due Process
Assuming, without deciding, a trial court has authority to issue an interlocutory judgment of specific performance in connection with a motion for judgment on the pleadings with the intent that a subsequent accounting be performed to determine whether the prevailing party is entitled to incidental damages, we nevertheless conclude there is no support for the prove-up process employed by the court for that purpose.
The parties have not cited any cases in which an interlocutory judgment of specific performance was obtained via a motion for judgment on the pleadings followed by an accounting to determine incidental damages. Moreover, we have found none. However, it is not uncommon for a trial court to order an accounting as part of an interlocutory judgment. (See Degnan v. Morrow (1969) 2 Cal.App.3d 358, 362-364 [discussing various cases]; see also Lacey v. Bertone (1949) 33 Cal.2d 649, 650; Murphy v. Magee (1915) 169 Cal. 710, 711; Yeboah v. Progeny Ventures, Inc. (2005) 128 Cal.App.4th 443, 446-447; Papadakis v. Zelis (1992) 8 Cal.App.4th 1146, 1149; Rose v. Boydston (1981) 122 Cal.App.3d 92, 94; Brown v. Memorial Nat. Home Foundation (1958) 158 Cal.App.2d 448, 453; Miller v. Busby (1950) 101 Cal.App.2d 83, 86; McAllen v. Souza (1937) 24 Cal.App.2d 247, 250; Nadler v. Nadler (1934) 138 Cal.App. 118, 119.)
Terzian argues the use of declarations in a prove-up process is generally only allowed in cases of default judgments and summary judgment/summary adjudication proceedings. (Cal. Rules of Court, rule 3.1800(a)(2) [permitting use of declarations to obtain default judgment]; § 437c, subds. (b)(1), (f)(2) [permitting use of declaration in seeking summary judgment and summary adjudication].) Terzian observes this was not a case of default because Terzian answered the complaint, and that the Ashjians did not move for summary judgment/summary adjudication or adhere to the procedures mandated for such a motion. Declarations may also be used as evidence in accountings conducted under the Probate Code but only where the proceeding is uncontested. (Prob. Code, § 1022; Evangelho v. Presoto (1998) 67 Cal.App.4th 615, 620.)
The use of declarations in civil proceedings is limited. "An affidavit may be used to verify a pleading or a paper in a special proceeding, to prove the service of a summons, notice, or other paper in an action or special proceeding, to obtain a provisional remedy, the examination of a witness, or a stay of proceedings, and in uncontested proceedings to establish a record of birth, or upon a motion, and in any other case expressly permitted by statute." (§ 2009.) However, "[s]ection 2009 . . . has no application to the proof of facts which are directly in controversy in an action. Its provisions apply only to matters of procedure, matters collateral or incidental to the action, but have no relation to the proof of facts the existence of which is made an issue of the case." (Oil Tool Exchange, Inc. v. Hasson (1935) 4 Cal.App.2d 544, 547; see Rowan v. City etc. of San Francisco (1966) 244 Cal.App.2d 308, 314, fn. 3 ["Affidavits being hearsay may not be used in evidence except where permitted by statute."]; Moon v. Moon (1944) 62 Cal.App.2d 185, 188 ["an affidavit is incompetent evidence save where authorized by law"].) A declaration is the equivalent of an affidavit. (Aero Properties, Inc. v. Gottlieb (1962) 206 Cal.App.2d 711, 713, fn. 1 [citing § 2015.5].)
The parties have not provided this court with any legal authority authorizing the use of declarations to conduct the type of equitable accounting that attends a decree of specific performance and our research has not revealed any such authority. Thus, whether the prove-up process employed by the trial court is viewed as a separate process from the motion for judgment on the pleadings (see fn. 11, ante) or as part of the motion process itself (which limits consideration to matters that "appear on the face of the challenged pleading" and matters subject to judicial notice (§ 438, subd. (d)), there is no support for the process utilized by the court.
"Due process is the opportunity to be heard at a meaningful time and in a meaningful manner. [Citation.] Unlike some legal rules, due process' "is not a technical conception with a fixed content unrelated to time, place and circumstance." [Citation.]' [Citation.] Rather, it' "is flexible and calls for such procedural protections as the particular situation demands." '" (Southern Cal. Underground Contractors, Inc. v. City of San Diego (2003) 108 Cal.App.4th 533, 543.)
Even assuming, again without deciding, the trial court could have properly entered an interlocutory judgment for specific performance in connection with the motion for judgment on the pleadings with the intent that incidental damages be proven at a later point in time, Terzian would still have been entitled (assuming no other procedural bar) to conduct discovery on the issue of the Ashjians' damage claims (§ 2017.010), to present his own witnesses and evidence concerning the parties' respective compensation claims in the accounting process (Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1357), and to cross-examine the Ashjians' witnesses (Evid. Code, § 776).
Notably, in their motion for judgment on the pleadings, the Ashjians requested the trial court "grant this motion and that upon granting of this motion and entering an interlocutory judgment of liability, the Court set a trial by jury to determine . . . damages." (Italics added.) Thus, the Ashjians did not originally envision damages would be determined through a prove-up process based on declarations.
It is also notable that the trial court gave no indication in its order granting judgment on the pleadings that it would even consider Terzian's claims for offsetting compensation. Rather, the court's order stated, "plaintiffs will still need to provide evidence to support their claimed damages before they can obtain a final judgment" and that "while the court intends to grant the motion for judgment on the pleadings, it will not enter a final judgment yet. Instead, plaintiffs will need to calendar a hearing to prove up their damages with admissible evidence."
Although the trial court credited Terzian with the purchase price for the subject property in assessing damages, the process employed by the court was not in the nature of an accounting and the court did not consider whether Terzian had other recoverable expenditures and losses. Notably, the sale contract itself identified at least two potential items for which Terzian may have been entitled to offsetting compensation-property taxes and certain maintenance costs-in addition to any additional offsets Terzian might be entitled to (e.g., interest on the purchase price during the delay period).
The prove-up procedure employed by the trial court was contrary to law and did not afford Terzian a meaningful opportunity to challenge the "evidence" the Ashjians offered in support of their incidental damage claims, or to provide his own evidence in support of offsetting expenses. As a result, Terzian was denied due process of law.
III. The Pleadings and Deemed Admissions Do Not Provide a Sufficient Basis for Granting Judgment on the Pleadings
The Ashjians defend the trial court's decree of specific performance by arguing that all the elements of their claims for specific performance were satisfied. They rely on the deemed admissions to satisfy the elements of their claim for specific performance and argue the deemed admissions allowed the court to disregard the allegations of Terzian's answer. We do not agree that all elements of the specific performance cause of action have been met.
A. The Elements Necessary for Breach of Contract and Specific Performance Causes of Action
To state a claim for breach of contract, a plaintiff must allege" '(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.'" (D'Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)
"To obtain specific performance, a plaintiff must make several showings, in addition to proving the elements of a standard breach of contract." (Darbun Enterprises, Inc. v. San Fernando Community Hospital (2015) 239 Cal.App.4th 399, 409 (Darbun).) Specifically," '[a] complaint for specific performance must allege the following: [¶] (1) A specifically enforceable type of contract, sufficiently certain in its terms [citation]. [¶] (2) Adequate consideration, and a just and reasonable contract [citation]. [¶] (3) The plaintiff's performance, tender, or excuse for nonperformance [citation]. [¶] (4) The defendant's breach [citation]. [¶] [and] (5) Inadequacy of the remedy at law [citation].' " (Darbun, at p. 409, fn. 5, quoting 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 785, pp. 203-204.)
" 'In addition, the defense of the statute of frauds must be anticipated in the complaint.'" (Darbun, supra, 239 Cal.App.4th at p. 409, fn. 5.) Here, the alleged contract is written. Consequently, the statute of frauds has no application. (See Civ. Code, § 1624, subd. (a).)
B. Terzian's Answer Placed All Material Allegations of the Complaint at Issue
"[J]udgment on the pleadings must be denied where there are material factual issues that require evidentiary resolution." (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 322.) Thus, in general, a plaintiff's motion for judgment on the pleadings must be denied if the "answer raises a material issue or sets up affirmative matter constituting a defense." (Barasch v. Epstein (1957) 147 Cal.App.2d 439, 442 (Barasch).) Where the motion is brought by a plaintiff, the plaintiff "admits the untruth of his own allegations insofar as they have been controverted, [and] all such averments must be disregarded whether there is a direct and specific denial or an indirect denial by virtue of affirmative allegations of a contrary state of facts." (MacIsaac v. Pozzo (1945) 26 Cal.2d 809, 813, italics added.)
Where, as here, the complaint is not verified, the effect of a general denial is to "put in issue the material allegations of the complaint." (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 383 (FPI Development).) A general denial is sufficient to place all material allegations at issue and, absent consideration of judicially noticeable material, will preclude judgment on the pleadings in favor of a plaintiff. (People ex rel. Becerra v. Superior Court (2018) 29 Cal.App.5th 486, 499 (Becerra); see Barasch, supra, 147 Cal.App.2d at p. 443.)
Here, Terzian filed an answer containing a general denial and alleged three defenses he denominated as affirmative defenses. Because Terzian's general denial placed all material allegations of the complaint at issue, the trial court could not rely on those allegations to grant the motion for judgment on the pleadings. (Becerra, supra, 29 Cal.App.5th at p. 499.) Thus, whether the trial court properly granted the Ashjians' motion for judgment on the pleadings depends on whether the deemed admissions judicially noticed by the trial court entitled the Ashjians to judgment as a matter of law. (See Alameda County Waste, supra, 67 Cal.App.5th at p. 1174; Olivia J., supra, 84 Cal.App.4th at p. 1155.)
C. The Deemed Admissions Are Insufficient To Support a Decree of Specific Performance
The deemed admissions undoubtedly supply some of the elements necessary to a decree of specific performance. However, they do not supply all the elements necessary to such a decree. Specifically, there are no deemed admissions that the sale contract was "just and reasonable" as to Terzian, or that consideration for the sale contract was adequate. (See Civ. Code, § 3391, subds. 1, 2; Darbun, supra, 239 Cal.App.4th at p. 409, fn. 5.) The allegation in the complaint that the sale contract was "fair and reasonable," and any implied allegation in the complaint that the consideration was adequate, were denied by Terzian in his answer. Thus, absent judicially noticeable material establishing these elements, the motion for judgment on the pleadings should not have been granted as to the specific performance cause of action and the final judgment should not have been entered. (Becerra, supra, 29 Cal.App.5th at p. 499; Barasch, supra, 147 Cal.App.2d at p. 443.)
The complaint does not actually allege that the consideration was adequate. However," 'where the facts are sufficiently pleaded there is no necessity of alleging in so many words that the contract was supported by adequate consideration.'" (Johnson v. Servaes (1962) 210 Cal.App.2d 392, 399.) For purposes of analysis, we give the Ashjians the benefit of doubt that this element was sufficiently implied by the allegations of the complaint.
The Ashjians argue that Terzian's admissions he had "no lawful defense" and "no lawful excuse" for breaching the sale contract are sufficient to overcome any allegations in Terzian's answer wherein he generally denied all material allegations of the complaint and set forth affirmative defenses. We do not agree.
The required elements that the sale contract be "just and reasonable" as to Terzian and supported by adequate consideration, are not affirmative defenses-they are elements of the claim for specific performance that the Ashjians must allege and prove. (Vezaldenos v. Keller (1967) 254 Cal.App.2d 816, 830 [" 'It is the law in this jurisdiction that in an action for specific performance plaintiff must allege and prove facts from which the court may determine that the contract was based upon an adequate consideration and was just and reasonable [as] to the party to be charged ....' "]; Eichholtz v. Nicoll (1944) 66 Cal.App.2d 67, 69 [burden of proving the justice and reasonableness of a contract is on the person seeking the remedy of specific performance].) Consequently, Terzian's admission that he has "no lawful defense" for breaching the sale contract is not contrary to his general denial of the allegation that the subject contract was fair and reasonable as to him and any implied allegation that consideration was adequate.
Similarly, the admission that Terzian has "no lawful excuse for [his] breach" of the sale contract is not inconsistent with his general denial of allegations that the subject contract was fair and reasonable as to him and supported by adequate consideration. Whether Terzian may be lawfully excused from his alleged breach of the sale contract has no bearing on whether he may successfully avoid a decree of specific performance on grounds the sale contract was not fair and reasonable as to him or that consideration was not adequate-neither of which are elements of a breach of contract claim. We neither can, nor should, infer that these elements were met by the aforementioned admissions. (Treweek, supra, 85 Cal.App.4th at p. 234.)
The deemed admissions of "no lawful defense" and "no lawful excuse" for breaching the contract are not contrary to Terzian's general denial of the fairness and reasonableness of the subject contract and the adequacy of consideration. Because those elements of the claim were sufficiently controverted by Terzian, and because there are no deemed admissions that supply those elements, the trial court erred in granting the motion for judgment on the pleadings for specific performance and entering the final judgment.
IV. Terzian Must Be Allowed To Assert His Contention the Subject Property Is Not a Separate Legal Property Capable of Lawful Conveyance Under the Subdivision Map Act
A. Terzian's Contention
As mentioned, Terzian claimed in various filings with the trial court that the subject property was not a single parcel that could lawfully be conveyed. The first time he made this claim, he did so in his unsworn "[d]eclaration" (boldface omitted) filed in opposition to the motion for judgment on the pleadings but the trial court did not address the issue in its ruling on the motion. Terzian raised the issue a second time in his sworn declaration and accompanying memorandum of points and authorities in opposition to the Ashjian's application for damages and final judgment. Terzian raised the issue a third time in his sworn declaration and accompanying memorandum of points and authorities in support of his new trial motion.
Case law provides the sale of an unsubdivided portion of a larger, legal parcel of real property violates Government Code section 66499.30, subdivision (b), of the Subdivision Map Act (SMA) unless the contract of sale "is expressly conditioned upon the approval and filing of a final subdivision map or parcel map" as provided in subdivision (e) of said statute. (Black Hills Investments, Inc. v. Albertson's, Inc. (2007) 146 Cal.App.4th 883, 894 (Black Hills).) The Black Hills court concluded a contract for sale in violation of Government Code section 66499.30, subdivision (b) is void, and not merely voidable, unless the exception in subdivision (e) of said statue has been met. (Black Hills, at pp. 894, 896.)
Government Code section 66410 et seq.
For reasons not clear from the parties' briefs or the record on appeal, Terzian did not re-assert that the subject property needed to be separated from the larger five-acres parcel in order to lawfully convey the property to the Ashjians. The matter was addressed by the parties on appeal in supplemental briefing ordered by this court.Following receipt and review of the parties supplemental briefs and reply briefs it appears the parties continue to dispute whether the subject property is a legal parcel subject to lawful conveyance.
Terzian did, however, mention in his opening brief that the subject property "is a single parcel" and that "there is some dispute about that between Ashjian and Terzian." Terzian contends this is a factual dispute which "would require denial of the judgment on the pleadings."
"An appellate court is generally not prohibited from reaching a question that has not been preserved for review by a party.... Whether or not it should do so is entrusted to its discretion." (People v. Williams (1998) 17 Cal.4th 148, 162, fn. 6.)
In an effort to resolve the issue, the Ashjians moved this court to (1) take judicial notice of two prior deeds related to the subject property and five assessor's maps, and (2) take additional evidence on appeal pursuant to section 909 and California Rules of Court, rule 8.252(b) and (c). Terzian, for his part, requested this court take judicial notice of the grant deed by which he obtained title to the subject property and adjacent parcel. We deferred ruling on the Ashjians' motion and Terzian's request pending consideration of the appeal on its merits. We grant each party's respective request for judicial notice of the aforementioned documents for the limited purpose of understanding the parties' contentions. We decline, however, to take evidence pursuant to section 909 and California Rules of Court, rule 8.252(b) and (c). Because we conclude herein the judgment must be reversed and remanded to the trial court for further proceedings, any dispute concerning whether the separate property is a legal parcel for purposes of conveyance under the SMA is best resolved by the trial court. (See Bombardier Recreational Products, Inc. v. Dow Chemical Canada ULC (2013) 216 Cal.App.4th 591, 605.)
B. Terzian Should Be Allowed To Amend His Answer To Raise His Contention the Subject Property Is Not a Legal Parcel Capable of Lawful Conveyance
" 'A trial court has wide discretion to allow the amendment of pleadings, and generally courts will liberally allow amendments at any stage of the proceeding.' [Citation.] A' "motion for judgment on the pleadings is analogous to a general demurrer."' [Citation.]' "In the case of either a demurrer or a motion for judgment on the pleadings, leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action."' (Ventura Coastal, LLC v. Occupational Safety &Health Appeals Bd. (2020) 58 Cal.App.5th 1, 32 (Ventura Coastal).) A party "can even make this showing for the first time on appeal." (Id. at p. 33.)
"Denial of leave to amend is reviewed for abuse of discretion." (Ventura Coastal, supra, 58 Cal.App.5th at p. 33.) In the demurrer context, the California Supreme Court noted that" '[w]here the complaint is defective, "[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his complaint, and it ordinarily constitutes an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable possibility that the defect can be cured by amendment. [Citations.]"' [Citations.] This abuse of discretion is reviewable on appeal 'even in the absence of a request for leave to amend' [citations], and even if the plaintiff does not claim on appeal that the trial court abused its discretion in sustaining a demurrer without leave to amend." (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 970-971.) By parity of reasoning, we conclude the same is true with respect to an amendment to an answer in connection with a plaintiff's motion for judgment on the pleadings. (See Alameda County Waste, supra, 67 Cal.App.5th at p. 1174 ["Except as provided in the statute governing motions for judgment on the pleadings, . . . section 438, the rules governing demurrers apply."].)
The SMA" 'has three principal goals: to encourage orderly community development, to prevent undue burdens on the public, and to protect individual real estate buyers. [Citations.]' [Citation.] 'By generally requiring local review and approval of all proposed subdivisions, the [SMA] aims to "control the design of subdivisions for the benefit of adjacent landowners, prospective purchasers and the public in general." [Citation.] More specifically, the [SMA] seeks "to encourage and facilitate orderly community development, coordinate planning with the community pattern established by local authorities, and assure proper improvements are made, so that the area does not become an undue burden on the taxpayer." [Citations.]' [Citation.] [¶] 'To enforce its important public purposes, the [SMA] generally prohibits the sale, lease, or financing of any parcel of a subdivision until the recordation of an approved map in full compliance with the law.'" (Black Hills, supra, 146 Cal.App.4th at p. 890, italics omitted.)
"Normally, courts will not' "lend their aid to the enforcement of an illegal agreement or one against public policy ...." '" (Asdourian v. Araj (1985) 38 Cal.3d 276, 291.) "The rule that the courts will not lend their aid to the enforcement of an illegal agreement or one against public policy is fundamentally sound." (Norwood v. Judd (1949) 93 Cal.App.2d 276, 288-289; see Napa Valley Elec. Co. v. Calistoga Elec. Co. (1918) 38 Cal.App. 477, 478-479 ["It is a settled rule that a contract will not be enforced if the contract is in violation of the provisions of a statute enacted for the protection of the public."].) "This rule is based on the rationale that 'the public importance of discouraging such prohibited transactions outweighs equitable considerations of possible injustice between the parties.'" (Asdourian v. Araj, at p. 291.) Moreover, even if the matter is not raised below, "an appellate court may consider the question for the first time on appeal." (Griffis v. Squire (1968) 267 Cal.App.2d 461, 465-466.)
Because Terzian attempted to place the question of the validity of the contract at issue by way of his filings with the trial court (although he made no mention of the SMA, the Black Hills case, or a desire for leave to amend his answer), and because the conveyance of a nonlegal parcel is contrary to the public purposes of the SMA, we conclude the trial court abused its discretion by not allowing, sua sponte, Terzian leave to amend his answer to assert the subject property was not a separate legal property capable of lawful conveyance under the SMA at the time the parties entered into the sale contract.
We disagree with Terzian's contention that the affirmative defenses he raised are broad enough to include an allegation that the sale contract is void for failure to comply with the SMA.
In any event, in light of our determination that the trial court erred in decreeing specific performance and entering the final judgment, there is no reason that Terzian should not now be allowed to assert the subject property was not a separate legal parcel capable of lawful conveyance.
V. Terzian's Contentions Regarding Damages
Because we have concluded that the process for determining incidental damages in this case was unauthorized and that the trial court erred in entering final judgment in this matter, the issue of damages will, in the normal course of the litigation and absent dismissal, be revisited by the trial court upon remand. Accordingly, it is unnecessary that we delve too deeply into the court's damages award. Presumably, the parties and their counsel will have sufficient opportunity to brief the law and argue issues pertaining to liability and damages and provide the court with an opportunity to make a reasoned determination as to both. However, given the proceedings to date, we believe it prudent to impress upon the trial court the need to properly assess damages, should there be any and should liability be imposed on Terzian.
"[A]lthough the courts have occasionally stated that where specific performance is granted, the court may also award such damages as the plaintiff is lawfully entitled to by reason of delay in performance [citations], the only compensation which traditionally has been awarded involves the above adjustments relating to the loss of use of the property or purchase money during the period required to pursue the specific performance remedy." (Hutton v. Gliksberg (1982) 128 Cal.App.3d 240, 248 (Hutton).) Thus, generally, incidental damages awarded in connection with a decree of specific performance must be attributable to the period of delay occasioned by the nonperformance of the contract.
Moreover, to the extent lost profits may appropriately be sought as damages in connection with a decree of specific performance-a proposition which we neither endorse nor reject since the appropriateness of such an award is fact dependent-we nevertheless caution the trial court that such profits may be recovered only" 'if the evidence shows with reasonable certainty both their occurrence and the extent thereof.'" (Brandon &Tibbs v. George Kevorkian Accountancy Corp. (1990) 226 Cal.App.3d 442, 458, original italics.) And, again, such an award would be limited to that which is attributable to the period of delay. (Hutton, supra, 128 Cal.App.3d at p. 248.)
Terzian has raised valid concerns that the evidence proffered in this case did not rise to the requisite level of certainty. For example, Terzian correctly contends that the Ashjians admitted a CUP was not obtained in this matter. Moreover, the evidence proffered did not include competent evidence from which a court might determine that a CUP was reasonably certain to follow. If a CUP was necessary to construct a 48-unit apartment complex (an issue the parties will undoubtedly have the opportunity to address), the procurement of such a CUP would be necessary for the Ashjians to obtain financing for the project, to construct the complex, and to enter into a lease with the Ashjians' would-be tenant. In addition, the Ashjians' anticipated lease with their would-be tenant appears to be contingent upon further approvals from, or agreements with, the United States Department of Housing and Urban Development and the County of Fresno. The trial court will need to consider such issues (and potentially others) to determine whether the occurrence and extent of any such claimed incidental damages have been shown with reasonable certainty.
Finally, Terzian contends that special damages claimed by the Ashjians were not within the contemplation of the parties at the time of contracting. "It is a well recognized rule of law that recovery may be had for damages not covered by the general liability for breach of contract, only where the facts are specially pleaded showing that the injury was one reasonably within the contemplation of the parties. [Citations.] To this general rule must be added the statement that: 'to cover the requirements in such a case . . . there must also be pleaded facts which show that the conditions likely to result in the special injury complained of were brought to the attention of the defendant at the time the contract was made.' (Italics ours.)" (Shook v. Pearson (1950) 99 Cal.App.2d 348, 352.)
In response, the Ashjians cite to Bravo for the proposition that "[c]ompensation as an incident to specific performance need not be limited by contract[ual] concepts of foreseeability, so long as said compensation is reasonable." (Bravo, supra, 168 Cal.App.3d at p. 215.) On this point, we simply emphasize the final clause of the statement in Bravo-i.e., "so long as said compensation is reasonable." We leave it to the parties to argue such matters, and for the trial court to determine such matters in the first instance, on remand.
We note, however, that the parties dispute the meaning of the CUP referenced in the sale contract-an issue that was not resolved by the deemed admissions. Terzian contends the CUP was to obtain City approval to store equipment on the subject property whereas the Ashjians contend the CUP was to obtain City approval for the construction of a 48-unit apartment complex. This is a factual determination for the trial court on remand and might well impact the trial court's determination of damages should the Ashjians prevail in this matter.
Terzian also contends the CUP was a condition precedent to closing escrow, which was not met. The Ashjians argue the condition was for their sole benefit and, consequently, they had the right to waive the condition. It is unnecessary that we address this issue. We leave it for the trial court upon remand.
On remand, the trial court must give due consideration to whether damage claims asserted in this matter have been proven with requisite certainty in addition to other considerations that may impact a potential future award of damages under either the Ashjian's breach of contract cause of action, or their claim for specific performance, as the case may be.
DISPOSITION
The final judgment is reversed in its entirety. The matter is remanded to the trial court for further proceedings not inconsistent with this opinion. Upon remand, the trial court shall allow Terzian to amend his answer to expressly allege a defense that the subject property is not a separate legal parcel subject to lawful conveyance. The writ of supersedeas shall be discharged upon the finality of this opinion. (Cal. Rules of Court, rule 8.264.) Terzian is entitled to his costs on appeal.
In light of our disposition of the case, we need not address Terzian's remaining assertions of error.
WE CONCUR: PEÑA, J., SMITH, J.