Cohen v. Shearer

California Court of Appeal Jul 15, 1980 No. Civ. 57996Published

Before: Roth

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Holding. The court held that a mutual instruction to an escrow agent to cancel an escrow does not, as a matter of law, constitute a rescission of the underlying contract of sale or an abandonment of a pending specific performance suit.

Issues

Whether a mutual instruction to cancel an escrow constitutes a rescission of the underlying real estate purchase agreement.
Whether the trial court erred in dismissing the appellants' action for specific performance based on the escrow cancellation.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“Nothing in that instruction, which related only to the escrow, makes any reference to the contract of sale nor to the specific performance suit”

“the trial court’s conclusion that specific performance would not lie because that form of relief had been disclaimed was mistaken.”

Opinion

ROTH, P. J.

In December of 1975, respondents agreed in writing to sell their home to appellants for the sum of $177,000. While escrow was pending, certain disputes between the parties resulted in respondents’ instruction to the escrow agent to cancel the escrow on March 25, 1976. When advised of this, appellants, on April 2, 1976, filed their suit for specific performance of the sale agreement. Four days later they requested the escrow agent to refund the monies they had previously deposited with it, some $37,000. That request was refused on the basis no consent for the refund had been given by respondents. Appellants, on April 29, then filed another action, against the escrow agent and respondents, in an effort to recover the deposit.

[941]

On June 22, 1976, both respondents and appellants executed a document addressed to the escrow agent which in pertinent part provided: “All previous instructions given by Buyer and Seller in the above escrow are hereby cancelled, and this escrow is not to be consummated.”

The escrow agent thereupon refunded appellants’ deposit and the action to recover those monies thus being mooted, was dismissed.

On July 6, 1976, respondents then filed in the specific performance action a motion for summary judgment and for an order expunging the lis pendens. The trial court’s minute order dated July 16, 1976, without explanation, granted the latter and placed the former off calendar.

Appellants thereafter, on August 16, filed their first amended complaint, for specific performance and damages, even though it was their understanding the trial court, by virtue of its ruling respecting the lis pendens, had determined that specific performance was not an available remedy.

Based on the same understanding, respondents then moved to strike that cause of action from the amended complaint and the motion was granted on September 10, 1976. A simultaneous motion for summary judgment was, again, placed off calendar.

Ultimately, appellants filed a further complaint for damages only, refused to go to trial on that cause and on July 16, 1979, suffered a dismissal of their action.

Cohen v. Shearer

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ROTH, P. J.

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