Drakk Holdings v. PSIP SN Vermont CA2/2

Filed 6/23/26 Drakk Holdings v. PSIP SN Vermont CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

DRAKK HOLDINGS, LLC, B343318, B346187
(Los Angeles County
Plaintiff and Appellant, Super. Ct. No. 20TRCV00847)

v.

PSIP SN VERMONT LLC,

Defendant and
Respondent.

APPEAL from a judgment and order of the Superior Court
of Los Angeles County, Ronald F. Frank, Judge. Reversed and
remanded.
Greines, Martin, Stein & Richland, David E. Hackett,
Stefan Caris Love; Goodkin Law Group, Daniel L. Goodkin and
Randy Aguirre for Plaintiff and Appellant.
Allen Matkins Leck Gamble Mallory & Natsis, Marissa M.
Dennis, Marshall C. Wallace; Alan J. Droste and Alan J. Droste
for Defendant and Respondent.
Plaintiff and appellant Drakk Holdings, LLC (appellant),
appeals from the judgment of dismissal following defendant and
respondent PSIP SN Vermont LLC’s (respondent) successful
motion for summary judgment. Specifically, appellant appeals
the ruling granting summary adjudication as to its cause of
action for “specific performance/breach of implied covenant of
good faith and fair dealing.” (Capitalization and boldface
omitted.) Appellant contends a jury can find respondent breached
the implied covenant by unreasonably refusing to allow an
environmental assessment and an extension of the closing date
necessary for appellant to purchase the property at issue in this
case. Further, appellant argues it presented evidence showing a
triable issue of material facts exists as to whether it is entitled to
specific performance because appellant was ready, willing, and
able to perform under the purchase and sale agreement.
Appellant also appeals from the order awarding respondent
attorney’s fees and costs and the order requiring appellant to post
an appeal bond. Appellant asserts these orders should be
reversed with the reversal of the judgment.
We conclude triable issues exist as to appellant’s cause of
action for breach of implied covenant of good faith and fair
dealing, as well as its claim for specific performance. Thus, we
reverse and remand.

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BACKGROUND
Appellant’s business and the property
Keith Kenneally1 is a co-owner of Drakk Holdings, LLC.
Keith operates a business that “acts like a travel agent for
produce growers/farmers and produce brokers.” The business
enters into air cargo contracts and provides trucking and storage.
Keith operates primarily through Jet Pro, Inc. (Jet Pro), which
handles administration, and JPI Services, Inc. (JPI Services),
which manages the warehouse workers.
Jet Pro leased a warehouse on La Cienega Boulevard near
Los Angeles International Airport, an area where Keith had long
wanted to buy a warehouse. With Jet Pro’s lease expiring in
October 2018, Keith’s realtor, Sean O’Donnell, showed him a
warehouse for sale in Gardena. Keith was interested in the
property, indicating he “finally had an opportunity to build the
showcase business facility of [his] dreams.” The property was
part of a larger parcel purchased by respondent in 2015. The
parcel had four warehouses and had yet to be subdivided.
Respondent worked with an experienced civil engineer to begin
subdividing the parcel after the purchase. One of respondent’s
owners, Lonnie Nadal, oversaw the subdivision. By 2017,
respondent had to comply with a list of conditions before it could
complete the subdivision.
The purchase and sale agreement
While Keith wished to purchase the property, no one could
take title to it until the subdivision was complete. Further, a

1 Keith Kenneally and his brother, Bernard Kenneally, who
represented Keith’s business in this matter, will be referred to by
their first names to avoid confusion. We mean no disrespect.

3
tenant had not yet vacated the property. From March through
April 2018, Keith through his realtor negotiated the sale of the
property with respondent. Keith formed Drakk Holdings, LLC, to
act as a holding company for the property. The proposed closing
date was initially “15 days after the removal of Buyer’s
Contingencies and the recordation of the parcel map estimated
[to] be August, 2018.” Respondent later changed the estimated
recordation date to September 2018.
Appellant and respondent entered into a purchase and sale
agreement for the property (purchase agreement), with an
effective date of May 24, 2018. Under the terms of the agreement,
appellant was to pay $6.765 million for the property, including
$200,000 in earnest money. Respondent was to “perform the
Seller Work, at Seller’s sole cost, in accordance with the Plans
and Specifications … prior to the Closing.” Respondent was also
required to deliver or make available certain property documents,
including environmental reports, within five days after the
effective date of the contract. The agreement included an
inspection period, defined as “[t]he period beginning on the
Effective Date and ending on the date that is forty-five (45) days
after the Effective Date.”
During the inspection period, the physical due diligence
clause of the agreement indicated appellant had, upon providing
notice, “reasonable access to the Property at all reasonable times
during normal business hours, upon appropriate notice to any
tenants of the Property, for the purpose of conducting reasonably
necessary tests, including surveys and architectural, engineering,
geotechnical and environmental inspections and tests.” Under
this clause, however, “with respect to any intrusive inspection or
test (i.e., core sampling) [the purchaser] must provide a proposed

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scope of testing to Seller and obtain Seller’s prior written consent
(which may be withheld in Seller’s sole and absolute discretion).”
Section 4.4, the “Due Diligence/Financing/Termination
Right” clause of the purchase agreement, allowed appellant until
the end of the inspection period to obtain financing to acquire the
property and to inspect and investigate the property to
determine, in its absolute discretion, if the property was
acceptable. Section 4.4 allowed appellant to terminate the
purchase agreement for any reason by giving written notice
before the end of the inspection period, otherwise the purchase
agreement continued in full force and effect.
The closing date of the sale was set as “Fifteen (15) days
after the later of (a) Substantial Completion of the Seller Work or
(b) expiration of the Inspection Period.” Before closing, the
property had to be “a separate legal parcel in compliance with the
California Subdivision Map Act.” Neither party could waive this
condition. The agreement indicated “[t]ime is of the essence in
the performance [of] each and every obligation of this
Agreement.”
Respondent was subsequently 15 days late in providing
appellant certain environmental reports, thus failing to meet the
contract’s five-day deadline for providing property documents.
Appellant agreed to amend the purchase agreement to extend the
inspection period to July 30, 2018. Once appellant’s consultant
reviewed the environmental reports and recommended no further
investigation, appellant made the decision to proceed.
The lease and second amendment
Shortly afterwards, respondent again changed its
estimated map-recordation date to November 2018 from the
September estimate. Keith was “shocked” by this delay because it

5
frustrated his financing, relocation (as the La Cienega warehouse
lease was expiring before November 2018), and property-
improvement plans. From Keith’s perspective, the delay made all
of the escrow closing dates listed in the purchase agreement
useless. To deal with this issue, the parties agreed to negotiate a
lease and another purchase agreement amendment (second
amendment).
Under the lease, appellant would hold tenancy starting in
October 2018 for five years or until closing. Jet Pro and JPI
Services could take joint possession. The lease restricted the
premises to be used solely for the following purposes: “General
office and industrial/warehouse use for the purpose of receiving,
storing and shipping products, materials and merchandise made
and/or distributed by Tenant.” However, appellant had a
nonexclusive right to use the common areas and may be in
possession of the premises when respondent performed the seller
work. Appellant was prohibited from making any alterations to
the premises without respondent’s consent. Appellant was
responsible under the lease for complying with “all laws, statutes,
ordinances, orders and regulations, now or hereinafter enacted,
affecting the Premises and the Project.”
Under the second amendment, appellant was “entitled to a
credit against the Purchase Price at Closing in an amount equal
to the Base Monthly Rent … from the Term Commencement Date
(as defined in the Lease) through the date immediately preceding
the Closing Date.” The second amendment had a time of the
essence clause and also redefined the closing date to be “fifteen
(15) days after the later of (a) Substantial Completion of the
Seller Work and (b) satisfaction of the condition set forth in
Section 7.2.5 of the Agreement.” Further, the second amendment

6
indicated, prior to closing, the lease governs if there are any
inconsistencies between the purchase agreement and the lease.
Shortly before the lease and second amendment were to be
executed, Nadal sent an e-mail indicating the estimated
recordation date had been pushed to 2019. A few weeks later,
Nadal wrote: “County approved new improvements to the
building and in line for committee approval of the tentative, then
final maps. They say 6 months.”
After the parties executed the lease and second
amendment, dated September 7, 2018, appellant took possession
of the property in October 2018. Appellant then spent nearly $3
million on improvements to the property. Jet Pro and JPI
Services then moved their operations to the property.
Further delays in recordation
In December 2018 and January 2019, Nadal notified
appellant the recordation will be completed in June 2019.
However, recordation was not completed in June 2019.
The repeated delays in recordation interfered with
appellant’s loan application process. Keith received loan approval
at favorable rates due to his net worth and financial strength, but
the loan applications were only good for 90 days. Once the 90-day
period expired, the process started again with Keith updating his
financial profile.
In September 2019, Los Angeles County approved the
property’s tentative parcel map. Although the tentative approval
had many unmet conditions, Nadal told appellant he expected the
recordation of the tract map in January 2020. The final parcel
map was not recorded until September 2, 2020.

7
Appellant’s lender’s request for updated environmental
reports
In 2019, appellant’s lender, Harvest Commercial Capital,
LLC (Harvest), required new environmental assessments due to
changes in California’s environmental standards. Harvest
engaged Fulcrum Resources Environmental (Fulcrum Resources)
to prepare a phase I environmental site assessment for the
property. Fulcrum Resources completed the report on August 6,
2020, recommending “a limited subsurface investigation of the
Property or a Phase II Environmental Site Assessment.” Fulcrum
Resources recommended analyzing eight soil borings to a depth of
15 feet. Harvest accepted the recommendation and requested
appellant to undertake the phase II environmental site
assessment.
On September 2, 2020, appellant notified respondent of the
need for the phase II environmental assessment. Bernard, who
represented Keith’s business, e-mailed Nadal indicating Keith
was prepared to pay for the assessment immediately and wanted
to confirm respondent granted permission for Fulcrum Resources
to get on and off the property quickly.
Nadal replied the same day stating, “you had a year to
conduct all of your investigations, rather than waiting until now.
You do not have permission to do this Phase 2, until I
confirm in writing that you may proceed. [¶] I need to see
the Phase 1 that was done on your behalf. [¶] I need to be given
the exact Phase 2 sampling that is contemplated. [¶] I will have
to get this approved by all of ownership.” On September 10, 2020,
Nadal e-mailed Keith stating, “The tract map has recorded and
the buildings can be sold now,” but the phase II environmental
assessment was not mentioned.

8
On September 16, 2020, Fulcrum Resources provided
respondent a summary letter regarding the assessment,
explaining why it was needed and that it was only for the lender’s
due diligence for appellant’s loan. Fulcrum Resources also
indicated the environmental reports would not be made public.
Bernard e-mailed Nadal the next day reiterating appellant was
not engaged in any new investigations of the property and the
assessment was simply due to the lender’s due diligence for the
loan underwriting.
On September 23, 2020, Nadal sent Bernard the results of
environmental tests conducted on the property in 2015. Bernard
forwarded the documents to Fulcrum Resources, who responded,
“Results from the previous investigation exceeded current
regulatory screening levels hence our recommendation for further
subsurface investigation at the site.”
Termination of the purchase agreement
On September 25, 2020, respondent formally notified
appellant of the parcel map recordation. The notification stated,
“the Closing shall occur fifteen (15) days after the date hereof
(i.e., October 12, 2020); provided, however, that in no event shall
the Closing occur prior to the recordation of the CC&Rs … and
the Access Easement ….” The same day, respondent
communicated to appellant in an e-mail stating, “As described in
the letter, we are waiting for the CC&Rs and a related access
easement to record before we can close, but we are hopeful that
will … happen over the next week or so.”
On September 30, 2020, in an e-mail communicated to
Keith’s realtor, Nadal indicated, “The Buyer’s [inspection] period
expired over a year ago, and we won’t be reopening it. We aren’t
approving any phase 2 testing.” In response, Bernard proposed

9
the phase II environmental assessment be allowed to proceed, the
rent credit against the purchase price would stop on the
recordation date, and escrow would close as soon as Keith funds
it.
On October 7, 2020, respondent’s counsel responded
stating, “Seller has considered your request below to proceed with
air sampling and is willing to permit the testing on the terms set
forth in the attached PSA amendment.” However, air sampling
was not a substitute procedure for the soil sampling needed in
the phase II assessment. Respondent proposed a third
amendment to the purchase agreement, in which respondent
required an additional deposit of $100,000. Further, the proposed
amendment indicated the rent credit against the purchase price
would be $140,717.50 and run to March 18, 2019, the date of the
substantial completion of the seller work.
The closing did not occur before the October 12, 2020,
deadline. On October 21, 2020, respondent sent appellant a letter
indicating it is willing to proceed with the closing no later than
October 30, 2020. Respondent asserted appellant’s failure to
perform its closing obligations by this date will constitute default
under the agreement. On October 27, 2020, appellant responded
to the letter, explaining, “Since May 2018, Keith has had his
Bankers in line to close Escrow (everyone waiting for the Tract
Map’s recording). The Phase II update request somehow got
blown way out of proportion with thoughts that Keith was still
‘investigating’ the Property.” Appellant further indicated, “the
entire month of September and part of October were lost due to
the Phase II update request. Keith has now moved on to
alternative financing. He learned today that closing Escrow this
week is impossible, but 2 or 3 more weeks are needed. [¶]

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Further, if this Bank does not perform without much delay, Keith
will be in a position to close Escrow with no Bank (all cash) in 4
to 5 weeks.”
The next day, respondent responded with an e-mail stating,
“I have discussed your email below with the seller group, and we
remain focused on closing this Friday on the terms set forth in
the purchase agreement. To that end, seller is delivering all
documents and taking all other actions required of it to fully
perform its closing obligations and expects buyer to do the same.”
The e-mail concluded by adding, “we are in this situation as a
result of buyer’s indication that it would not be able to close on
the originally scheduled closing date and its subsequent failure to
meaningfully respond to seller’s proposed PSA amendment to
accommodate buyer’s concerns or otherwise engage with seller on
this transaction over the past 3 weeks despite seller’s multiple
contact attempts.”
On October 29, 2020, appellant e-mailed a response stating,
“[Keith] intends to fully fund Escrow and consummate the
Purchase & Sale” and offered “to wire an Additional Deposit of
$150,000 (non-refundable) to be part of the Earnest Money and
shall apply to the Purchase Price at Closing.” Appellant also
offered that “all rent (commencing November 2020) paid to the
Seller will no longer qualify as a credit against the Purchase
Price.” On November 2, 2020, appellant followed up with an
e-mail indicating arrangements were made to sell a warehouse
near San Francisco Airport to acquire cash to close. Respondent
replied the same day, stating, “seller made its closing deliveries
to escrow on Friday, but we understand that buyer did not
deliver its closing funds (as you had informed me and escrow in
advance that buyer would fail to do). Per my earlier

11
correspondence, buyer is now in breach under the purchase
agreement and the lease and seller is evaluating its rights and
remedies. As such, buyer no longer has the right to purchase the
property pursuant to the existing purchase agreement. If buyer
still desires to purchase the building, it needs to make a new offer
for such purchase for seller’s consideration.”
Towards the end of December 2020, Keith wanted to
complete the phase II assessment for his own peace of mind.
Keith proceeded with the assessment without asking permission
from respondent, which was completed on January 26, 2021. The
report from the assessment revealed nothing of concern as it
concluded no further investigation was needed. Keith sought
financing from Zions Bank and submitted the environmental
assessment report. In May 2021, Zions Bank offered
appropriately $6.34 million to purchase the property. Zions Bank
approved a loan, but there were conditions to close the loan. On
June 16, 2021, Bernard sent a final request to close escrow on the
original terms by June 21, 2021, but respondent did not accept.
The lawsuit
On November 27, 2020, appellant filed a lawsuit against
respondent. The operative complaint asserted six causes of action
for (1) specific performance/express written agreement; (2)
specific performance/promissory estoppel; (3) specific
performance/breach of implied covenant of good faith and fair
dealing; (4) promissory estoppel—money damages; (5) fraud and
deceit—false promise; and (6) negligent misrepresentation.
Under the third cause of action, the complaint alleged respondent
in bad faith frustrated appellant’s rights under the purchase
agreement, the second amendment, and the lease by obstructing
appellant’s ability to fund the balance of the purchase price with

12
its loan. Respondent allegedly refused to cooperate with the
harmless request by appellant’s lender for an updated
environmental report necessitated by the delay in recordation.
Respondent allegedly failed to cooperate in setting a reasonable
date to close escrow.
In addition, appellant alleged respondent wrongfully
conditioned any further updated environmental report on
whether appellant accepted the exploitative amendments
respondent proposed. The complaint alleged respondent
unreasonably interfered with appellant’s ability to maintain the
funding necessary to close on the closing dates unilaterally set by
respondent. Appellant alleged the updated phase II report was
unrelated to the allotted time that respondent maintained
appellant was allowed in the inspection period under the
purchase agreement. Respondent allegedly had no reasonable
basis to deny the request for an updated phase II report since
appellant was already committed to purchasing the property by
not canceling the contract at the end of the inspection period.
Appellant alleged, despite its willingness to accommodate
respondent’s own delays, respondent breached the implied
covenant by arbitrarily denying appellant’s ability to perform and
receive the bargained-for benefits of the contract.
Appellant requested specific performance of the purchase
agreement. As to specific performance, appellant alleged it was at
all times ready, willing, and able to purchase the property.
Appellant also requested damages if specific performance was not
available.
The motion for summary judgment
In August 2023, respondent moved for summary judgment,
contending the implied covenant of good faith and fair dealing

13
cannot impose a term that is contrary to the express obligations
in the parties’ written contract. Respondent argued appellant
gave up its right to conduct any further inspections of the
property, as well as its financing contingency, after the inspection
period. Respondent maintained it had absolute discretion to
disapprove any intrusive testing under section 4.3 of the
purchase agreement. Respondent indicated it was concerned
about having to disclose the test results to the other three buyers
of the subdivided property. Respondent asserted it was willing to
allow environmental testing by air samples and extend the
closing date for appellant to pursue financing, but appellant did
not respond to respondent’s proposed third amendment.
As to specific performance, respondent contended appellant
is not entitled to the remedy because appellant was not ready and
able to perform under the purchase agreement. Respondent
posited appellant did not have its own funds to purchase the
property and had not secured financing. Respondent argued
appellant cannot claim respondent’s breach excused appellant
from being ready and able to perform.
In opposition, appellant argued respondent’s conduct in
denying the phase II assessment and refusing an extension for
appellant to pursue alternate funds was unreasonable. Appellant
asserted air sampling was not a substitute for subsurface testing.
Appellant indicated the phase II report would have been
confidential. Appellant maintained it had already invested
millions into the property and paid the purchase price early
through rent to help subsidize respondent’s efforts. Appellant
contended the closing of the purchase agreement was years in the
making due to the delays in recordation. Appellant posited there
are issues of forfeiture because appellant stands to lose millions

14
of dollars, while respondent failed to articulate how it would
suffer any legitimate harm.
Further, appellant contended its request for the phase II
assessment was not a request under the due diligence sections of
the purchase agreement or an attempt to reopen the inspection
period. Appellant asserted the inspection period and financial
contingency provisions are expressly connected to appellant’s
right as a buyer of the property to back out of the deal. Appellant
maintained respondent’s cooperation with the assessment would
not relate to a reopening of the inspection period. Appellant
indicated respondent was aware the second amendment and the
lease did not cure appellant’s obligations to constantly update its
lenders to keep its loan application active.
As to specific performance, appellant argued it was always
ready, willing, and able to purchase the property. Appellant
asserted the ability to perform depends on all of the surrounding
circumstances in the case. Appellant maintained it had command
of resources to obtain the requisite credit or make an all-cash
offer for the property.
The trial court heard the summary judgment motion over
several dates. The first hearing was held on March 27, 2024,
during which a tentative ruling was issued. The tentative ruling
provided a discussion of the issues but continued the matter to
address missing exhibits. The next hearing was held on May 14,
2024. The court issued a tentative ruling at this hearing granting
the motion, in part, but requiring further oral arguments to
determine other portions of the ruling. The third hearing was
held on July 16, 2024, during which the court issued a tentative
ruling continuing the matter to allow a deposition of Zions Bank
to be completed. The final hearing was held on September 12,

15
2024. A tentative ruling was issued at this hearing granting the
motion, noting the evidence from the deposition of Zions Bank
does not raise a triable issue of material fact. The matter was
taken under submission.
On September 12, 2024, the trial court issued a minute
order indicating the motion for summary judgment is granted
and ordered respondent to submit a proposed order. Respondent
submitted a proposed order on September 26, 2024. Appellant
objected to the proposed order, arguing it failed to comply with
Code of Civil Procedure section 437c, subdivision (g).2 Appellant
also contended the proposed order improperly disposed of
respondent’s cross-complaint summarily in respondent’s favor.
On October 8, 2024, respondent dismissed its own cross-
complaint. On November 13, 2024, the trial court did not enter
respondent’s proposed order and instead issued a two-page order
granting the motion for summary judgment, finding no triable
issue as to any of the six causes of action. In the order, the court
stated the truncated order for the summary judgment motion is
entered instead because court reporters were present at most, if
not all, of the hearings and a series of tentative rulings were
issued outlining the standards the court employed in evaluating
the motion and containing rulings on evidentiary objections.
However, the order specified the court fully considered the
evidence, the parties’ oral argument, and all documents
submitted.
The trial court entered judgment on December 5, 2024.
Appellant timely appealed.

2 All undesignated statutory references are to the Code of
Civil Procedure.

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The motion for attorney’s fees and costs and the motion to
post an appeal bond
On December 16, 2024, respondent moved for an award of
attorney’s fees. Respondent argued it is entitled to an attorney’s
fees award as the prevailing party under the fees provision of the
purchase agreement, Civil Code section 1717, and Code of Civil
Procedure sections 1021 and 1032. Appellant opposed the motion,
arguing respondent excessively litigated the case and the
attorney hours spent contain duplicative work.
On January 21, 2025, the trial court heard the motion for
attorney’s fees and took the matter under submission. On
January 27, 2025, the court issued its ruling granting the motion
for attorney’s fees.
An amended judgment was entered on January 29, 2025,
which included an award of $800,796.70 in attorney’s fees and
$16,109.66 in costs.
On February 11, 2025, respondent moved for an order to
require appellant to post a bond as a condition of maintaining the
stay on appeal. Appellant opposed the motion. On April 17, 2025,
the trial court heard and granted the motion, ordering appellant
to furnish an undertaking in the amount of $816,906.36.
Appellant thereafter posted the undertaking.
Appellant timely appealed.

CONTENTIONS ON APPEAL
Appellant asserts three main arguments. First, appellant
contends the trial court erred in granting summary judgment
because a triable issue of material facts exist as to whether
respondent breached the implied covenant of good faith and fair
dealing. Appellant argues it was obligated under the lease to

17
comply with all laws and regulations affecting the property,
including environmental regulations. Appellant posits there is no
provision in the purchase agreement or the lease specifically
prohibiting or giving respondent absolute discretion over
appellant’s request to conduct the phase II environmental
assessment. Appellant asserts respondent unreasonably refused
the assessment required to comply with changing environmental
standards and to update appellant’s loan application to purchase
the property. Appellant maintains triable issues exist as to
whether respondent waived a strict closing date and the time-of-
the-essence clause of the purchase agreement.
Second, appellant asserts the trial court erred in granting
summary judgment because a triable issue of material facts
exists as to whether appellant was entitled to specific
performance of the purchase agreement. Appellant maintains it
was ready, willing, and able to perform the purchase agreement.
Appellant argues there is no iron-clad rule to show ability to
perform, and it depends on all of the surrounding circumstances
of the case. Appellant adds it had the financial resources to
obtain the requisite credit or make an all-cash offer for the
property.
Finally, appellant argues the trial court’s award of
attorney’s fees and costs to respondent and the order requiring
appellant to post an undertaking should be reversed with the
reversal of the judgment.

DISCUSSION
I. Standard of review and applicable law
“The standard of review for an order granting a motion for
summary judgment is de novo.” (Ryan v. Real Estate of Pacific,

18
Inc. (2019) 32 Cal.App.5th 637, 642.) “We need not defer to the
trial court and are not bound by the reasons in its summary
judgment ruling; we review the ruling of the trial court, not its
rationale.” (WFG National Title Ins. Co. v. Wells Fargo Bank,
N.A. (2020) 51 Cal.App.5th 881, 889 (WFG National Title).) “We
resolve any evidentiary doubts or ambiguities in favor of the
party opposing summary judgment.” (Ibid.) “The appellant,
however, still ‘has the burden of showing error, even if he did not
bear the burden in the trial court.’” (640 Octavia, LLC v. Pieper
(2023) 93 Cal.App.5th 1181, 1189 (640 Octavia).)
“Summary judgment is generally appropriate ‘if all the
papers submitted show that there is no triable issue as to any
material fact’ and that it ‘is entitled to a judgment as a matter of
law.’” (640 Octavia, supra, 93 Cal.App.5th at pp. 1188–1189.) “[A]
plaintiff can seek summary judgment by contending there is ‘no
defense’ to the action, and it proves there is ‘no defense’ by
establishing every element of its causes of action.” (Paramount
Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226,
239–240.) “Once the plaintiff has met that burden, the burden
shifts to the defendant to ‘set forth the specific facts showing that
a triable issue of material fact exists as to the cause of action or a
defense thereto.’” (640 Octavia, supra, at p. 1189.) “There is a
triable issue of material fact if, and only if, the evidence would
allow a reasonable trier of fact to find the underlying fact in favor
of the party opposing the motion in accordance with the
applicable standard of proof.” (Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 850.)
As to specific performance, respondent argues summary
adjudication of this issue is reviewed under an abuse of discretion
standard. We disagree. Respondent cites Petrolink, Inc. v. Lantel

19
Enterprises (2022) 81 Cal.App.5th 156 (Petrolink) and Petersen v.
Hartell (1985) 40 Cal.3d 102, 105 (Petersen), to support this
argument, though neither of these cases are summary judgment
cases.
Petrolink involved a motion to enforce judgment. (Petrolink,
supra, 81 Cal.App.5th at pp. 160–161.) While the Court of Appeal
in that case indicated a judgment or order for specific
performance is reviewed under an abuse of discretion standard
(id. at pp. 165–166), respondent fails to establish how such
holding is relevant to reviewing a summary judgment motion.
Petersen involved a nonjury trial. (Petersen, supra, 40
Cal.3d at p. 108.) Our Supreme Court in that case only indicated
the denial of specific performance was reviewed for abuse of
discretion because the remedy is discretionary. (Id. at p. 110.)
But again, respondent fails to show how such determination is
pertinent to reviewing a summary adjudication of a specific
performance claim.
Conversely, cases reviewing specific performance claims on
summary judgment—particularly the “ready, willing and able to
perform” issue argued here—have applied the de novo standard.
(See, e.g., Gaggero v. Yura (2003) 108 Cal.App.4th 884, 888, 890–
893 (Gaggero).) In Gaggero, the plaintiff sought specific
performance and defendant moved for summary judgment on the
ground the plaintiff “did not, and could not, establish that he was
ready, willing, and able to perform under the Purchase
Agreement.” (Id. at p. 888.) In setting forth the standard of
review, the Gaggero court stated: “In reviewing an order granting
summary judgment, the appellate court independently
determines whether, as a matter of law, the motion for summary
judgment should have been granted.” (Ibid.) The Gaggero court

20
ultimately reversed the grant of summary judgment because it
determined the defendant failed to present evidence making a
prima facie case. (Id. at p. 893.) Accordingly, we conclude the
correct standard of review on this issue with respect to a
summary judgment motion is also de novo.
II. Triable issues of material facts exist as to the cause
of action for breach of implied covenant of good faith
and fair dealing
A. The order granting summary judgment does not
comply with the Code of Civil Procedure
Appellant contends the trial court’s order granting
summary judgment does not comply with section 437c,
subdivision (g), because it does not specify the reasons and
evidence relied upon for its determination. Appellant argues the
court never discussed the evidence relevant to respondent’s
breach of the implied covenant of good faith and fair dealing.
Appellant maintains it is entitled to an opportunity to submit
supplemental briefing under section 437c, subdivision (m)(2), if
the order is affirmed because the court failed to specify the
grounds it relied upon in reaching its ruling.
Section 437c, subdivision (g), states in relevant part: “Upon
the grant of a motion for summary judgment on the ground that
there is no triable issue of material fact, the court shall, by
written or oral order, specify the reasons for its determination.
The order shall specifically refer to the evidence proffered in
support of and, if applicable, in opposition to the motion that
indicates no triable issue exists. The court shall also state its
reasons for any other determination. The court shall record its
determination by court reporter or written order.”

21
Under section 437c, subdivision (m)(2), “[b]efore a
reviewing court affirms an order granting summary judgment or
summary adjudication on a ground not relied upon by the trial
court, the reviewing court shall afford the parties an opportunity
to present their views on the issue by submitting supplemental
briefs. The supplemental briefs may include an argument that
additional evidence relating to that ground exists, but the party
has not had an adequate opportunity to present the evidence or
to conduct discovery on the issue. The court may reverse or
remand based upon the supplemental briefs to allow the parties
to present additional evidence or to conduct discovery on the
issue.”
We agree the order granting summary judgment does not
comply with section 437c, subdivision (g). The order does not
specify the reasons for the trial court’s determination of the
summary judgment motion and the evidence relied upon. Instead,
the order explains: “The parties had court reporters present for
the hearings on most if not all of the hearings on the pending
motion, eliminating the need for the Court to detail each point,
each cause of action, each contended triable issue of fact, and
each basis on which the Court finds in favor of PSIP. Further, the
Court issued a series of tentative rulings which contained rulings
on evidentiary objections, and outlined the standards employed
by the Court in evaluating the motion. Accordingly, the Court
will enter this more truncated MSJ order rather than the lengthy
proposed order submitted by PSIP and objected to by DRAKK.”
While it is understandable the trial court does not want to
detail each basis of its decision, the order fails to clarify the
reasons and evidence relied upon for the ruling. The order does
not identify which hearings and what portions thereof formed the

22
oral orders, if any, for its determination. The order also indicates
“the Court issued a series of tentative rulings,” but it is unclear if
any of these rulings were adopted and, if so, to what extent, as
the order is silent on whether the tentative rulings were adopted.
Further this issue is obfuscated by the follow-up statement in the
order that the tentative rulings “outlined the standards employed
by the Court in evaluating the motion.” This statement suggests
the trial court only used the tentative rulings to guide its decision
and did not actually adopt them.
Further complicating this issue is the order’s statement
that the “series of tentative rulings … contained rulings on
evidentiary objections.” But despite sustaining some of the
objections, the order indicates the trial court gave “full
consideration of the evidence, oral argument by the parties, all
documents submitted, including the Separate Statement,
declarations, and authorities submitted by counsel, as well as
supplemental briefing.” If the tentative rulings were fully
adopted, these statements are contradictory. Accordingly, it
cannot necessarily be inferred the court entirely adopted the
series of tentative rulings it issued.
The lack of an order compliant with section 437c,
subdivision (g), results in unfairness because it frustrates
appellant’s ability in the underlying proceedings to directly
challenge the trial court’s bases for its ruling in a potential
motion for reconsideration or new trial. Accordingly, we conclude
it is appropriate to consider all of the matters the parties briefed
on appeal here, whether or not such matters were fully briefed or
developed in the trial court proceedings. Both parties here have
discussed matters that were not fully briefed or developed in the
underlying proceedings. We conclude such matters are not

23
waived and will be considered here. (See Y.K.A. Industries, Inc. v.
Redevelopment Agency of City of San Jose (2009) 174 Cal.App.4th
339, 367, fn. 34 [“[I]n any case, appellate courts enjoy broad
discretion not to hold an appellant to an implied waiver and may
entertain an issue on appeal that might otherwise have been
deemed waived by inaction or omission.”].)
As to the requirement under section 437c, subdivision
(m)(2), we conclude supplemental briefing is not necessary
because the order granting summary judgment is not being
affirmed.
B. The lease obligated appellant to comply with
laws and regulations affecting the property
without specifying respondent had absolute
discretion
Appellant contends several provisions in the lease
permitted appellant to conduct the phase II environmental
assessment.3 Appellant argues it was obligated to comply with all
laws and regulations affecting the property under the lease,
which governs when there are any inconsistencies with the
purchase agreement. Appellant maintains it could conduct the
environmental assessment given its obligations and nonexclusive
right to use the property’s common areas under the lease. We
agree.
“Our review of the trial court’s interpretation of a contract
generally presents a question of law for this court to determine
anew.” (DVD Copy Control Assn., Inc. v. Kaleidescape, Inc. (2009)

3 Respondent asserts appellant waived this argument on
appeal because it was not raised in the underlying proceedings.
As appellant argued the issue during the proceedings on
September 12, 2024, appellant did not waive the issue on appeal.

24
176 Cal.App.4th 697, 713 (DVD Copy Control).) “We look to
California’s rules of contract interpretation to decide whether the
questions we address are factual or legal. When interpreting
contracts, courts must first determine whether the language is
ambiguous, or, in other words, whether it is reasonably
susceptible to the interpretation urged by a party.” (Oakland-
Alameda County Coliseum Authority v. Golden State Warriors,
LLC (2020) 53 Cal.App.5th 807, 816 (Oakland).) “The ‘threshold
determination of “ambiguity” … is a question of law … ,’ ‘subject
to independent review.’” (Ibid.)
“Civil Code section 1638 provides that the ‘language of a
contract is to govern its interpretation, if the language is clear
and explicit … ,’ and section 1639 provides that when ‘a contract
is reduced to writing, the intention of the parties is to be
ascertained from the writing alone, if possible ….’ But, as
explained by our high court over 50 years ago, the meaning of
words can change depending on the circumstances.” (Oakland,
supra, 53 Cal.App.5th at p. 817.) “Interpretation of a written
instrument becomes solely a judicial function only when it is
based on the words of the instrument alone, when there is no
conflict in the extrinsic evidence, or when a determination was
made based on incompetent evidence.” (City of Hope National
Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.)
“But when … ascertaining the intent of the parties at the time
the contract was executed depends on the credibility of extrinsic
evidence, that credibility determination and the interpretation of
the contract are questions of fact that may properly be resolved
by the jury [citation].” (Ibid.) “‘Where … a conflict in the evidence
exists, it must be resolved in the trial court, as with any question
of fact, before the court can declare the meaning of the contract

25
as a matter of law.’” (Wolf v. Superior Court (2004) 114
Cal.App.4th 1343, 1359 (Wolf).)
Here, under section 6 of the lease, “Tenant shall promptly
comply with all laws, statutes, ordinances, orders and
regulations, now or hereinafter enacted, affecting the Premises
and the Project ….” The lease further states, “Except if and to the
extent of Landlord’s obligation to perform the Seller Work
pursuant to the Purchase Agreement, notwithstanding any
factors developed by the courts as a means of allocating the
obligation to make alterations to the Premises and/or the Project
in order to comply with present or future applicable laws,
ordinances or regulations, it is the intention of the parties that
such obligations are those of the Tenant.”
Under section 1.3 of the lease, “Tenant and Tenant’s
employees, suppliers, shippers, customers and invitees, during
the Term of this Lease shall have the nonexclusive right to use
the Common Areas with other present and future tenants in the
Project ….” The term “Common Areas” is defined as “all areas
and facilities outside the Premises and/or exterior boundaries of
the Project that are provided and designated by Landlord from
time to time for the general use and convenience of Tenant and
other tenants of the Project and their respective employees,
agents, representatives, invitees and licensees. The Common
Areas shall include, without limitation, the common roadways,
sidewalks, walkways, parkways, parking areas, driveways and
landscaped areas and similar areas and facilities in the Project
which are made available for the use or benefit of all Project
tenants and their invitees and other visitors.”
In addition, section 1.(f), of the second amendment to the
purchase agreement expressly states: “Except as expressly set

26
forth in the Agreement [i.e., the purchase agreement and the first
amendment to the purchase agreement], prior to Closing the
terms of the Lease shall govern in the event of any
inconsistencies between this Agreement and the Lease.”
We conclude these provisions of the lease and the second
amendment to the purchase agreement show appellant was not
prohibited from conducting the phase II environmental
assessment to comply with changing environmental regulations.
The lease clearly indicates appellant was obligated to comply
with all laws and regulations affecting the property. Section 6 of
the lease does not limit or give respondent absolute discretion as
to how appellant is to comply with the laws and regulations
affecting the property. Appellant has a nonexclusive right to use
the common areas of the property, which is not limited by
respondent’s sole discretion.4 Given the plain language of the
agreements, appellant was not prohibited or limited by
respondent’s absolute discretion from conducting the
environmental assessment.
Respondent argues the environmental assessment is only
the lender’s requirement and there are no laws or regulations
affecting the property that required it. However, appellant
presents evidence showing that changes in California’s
environmental regulations was precisely why its lender required
the assessment.5 There is nothing showing why it would be

4 Under section 1.3 of the lease, appellant’s right to use the
common areas was “subject to the rules and regulations attached
as Exhibit ‘D.’” The items listed in Exhibit D do not expressly
include or prohibit any environmental testing on the premises.
5 Appellant’s real estate expert, John Gebhardt, stated in his
declaration: “It was discovered by Drakk’s lender during loan due

27
material to appellant’s obligations to comply with regulations
affecting the property if the regulation also happened to be a
lender’s requirement. At most, it is a triable issue as to whether
the new environmental laws that led to the request for the
assessment came within the lease’s provision requiring appellant
to comply with regulations affecting the property.
Respondent also contends appellant was prohibited from
conducting the environmental assessment because it was not
within the designated purpose for which appellant could use the
property. Section 6 of the lease states: “Tenant shall use the
Premises solely for the purposes set forth in the Basic Lease
Terms and for no other purpose without Landlord’s prior written
consent, which consent may be withheld in Landlord’s sole and
absolute discretion.” The purposes are set forth in paragraph e of
the basic lease terms, which states: “Tenant’s Use of Premises
(Section 6): General office and industrial/warehouse use for the
purpose of receiving, storing and shipping products, materials
and merchandise made and/or distributed by Tenant.” These
provisions have little relevance to appellant’s request for the
environmental assessment. Appellant was not requesting the
property be used for a purpose other than as a general office and
warehouse, such as using it as a residence. The assessment was
simply to comply with environmental regulations affecting the
property, not change the purpose for which the property was
used. It is at best a triable issue as to whether the request for an

diligence that environmental screening levels had changed in
California due to an adjustment in early 2019 by the San
Francisco Bay Area Water Quality Control Board and the
California Department of Toxic Substance Control.”

28
environmental assessment came within the lease’s provision
restricting the purpose for which the property was used.
In addition, respondent maintains appellant was prohibited
from conducting the environmental assessment because it was an
“alteration” to the property. Section 12 of the lease states:
“Tenant shall not make any alterations to the Premises or
Project, including any changes to the existing landscaping,
without Landlord’s prior written consent, which consent may be
withheld in Landlord’s sole, subjective and absolute discretion.”
The lease does not define the term “alteration.” But the language
of section 12 does not suggest this provision contemplates soil
sampling for an environmental assessment. This section uses
terms such as “changes to the existing landscaping,” “work on the
roof,” and “tenant improvements,” suggesting that alterations are
any significant changes to the property that become part of the
property. Indeed, section 12 indicates that “[a]ny alterations
made shall remain on and be surrendered with the Premises
upon expiration or termination of this Lease, except that
Landlord, in its sole and absolute discretion, may elect to require
Tenant at Tenant’s cost to remove any alterations (including any
initial tenant improvements) which Tenant may have made to
the Premises.” In contrast, while the environmental assessment
required drilling to analyze “[e]ight soil borings to a depth of 15
feet,” “[e]ach borehole will be abandoned/filled with bentonite,
and restored to pre-drilling condition via applying patching
materials.” Given the contract language and the evidence, at best
a triable issue of material facts exists as to whether the
environmental assessment is an “alteration” to the property
subject to respondent’s discretion.

29
C. Triable issues exist as to whether appellant’s
request fell under the physical due diligence
clause
Respondent further argues appellant could not perform the
environmental assessment because the inspection period had
ended. Respondent maintains it had sole and absolute discretion
to prohibit the assessment under the physical due diligence
clause of the purchase agreement.
Section 4.3 of the purchase agreement states: “Physical
Due Diligence. Commencing on the Effective Date and
continuing until the end of the Inspection Period, Purchaser shall
have reasonable access to the Property at all reasonable times
during normal business hours, upon appropriate notice to any
tenants of the Property, for the purpose of conducting reasonably
necessary tests, including surveys and architectural, engineering,
geotechnical and environmental inspections and tests, provided
that (a) Purchaser must give Seller two (2) full Business Days’
prior telephone or written notice … and with respect to any
intrusive inspection or test (i.e., core sampling) must provide a
proposed scope of testing to Seller and obtain Seller’s prior
written consent (which may be withheld in Seller's sole and
absolute discretion) ….”
Section 4.4 states: “Purchaser shall have through the last
day of the Inspection Period in which to (a) examine, inspect, and
investigate the Property Documents and the Property and, in
Purchaser’s sole and absolute judgment and discretion,
determine whether the Property is acceptable to Purchaser, (b)
obtain all necessary internal approvals, and (c) satisfy all other
contingencies of Purchaser, including, without limitation,
obtaining financing for the acquisition of the Property.”

30
The first amendment to the purchase agreement extended
the inspection period to July 30, 2018.
We conclude triable issues of material facts exist as to
whether these provisions of the purchase agreement apply to
appellant’s request for the environmental assessment.6 While it

6 Respondent maintains appellant conceded this issue in its
separate statement responses to undisputed material facts
Nos. 30 and 31. Respondent contends appellant disputed only on
legal grounds as to whether appellant had the right to conduct
property inspections after the inspection period or if respondent
had absolute discretion to refuse intrusive testing. We disagree
that appellant’s responses conclusively show it conceded this
issue. Appellant’s separate statement responses are at worst
ambiguous. The fact appellant asserted the matters are legal
contentions or conclusions does not preclude appellant from also
arguing there are disputed material facts. As discussed herein,
“the trial court’s interpretation of a contract generally presents a
question of law.” (DVD Copy Control, supra, 176 Cal.App.4th at
p. 713.) But “‘[w]here … a conflict in the evidence exists, it must
be resolved … as with any question of fact, before the court can
declare the meaning of the contract as a matter of law.’” (Wolf,
supra, 114 Cal.App.4th at p. 1359.) Thus, appellant’s assertions
on legal grounds could be a viable alternative argument given
that contract interpretation was at issue. Further, appellant
responded “disputed” in its separate statement responses,
suggesting appellant also disputed the matters on the facts.
While no evidence was cited in that specific portion of the
responses, appellant later set forth its own undisputed material
facts indicating it tried explaining to respondent that the
environmental assessment request was not a request under the
due diligence sections of the purchase agreement. Such facts
contravene respondent’s interpretation that sections 4.3 and 4.4
involving due diligence and the inspection period under the
purchase agreement directly apply to this matter.

31
was past the inspection period when appellant sought the
assessment, section 4.3 applies specifically to the purchaser’s own
“physical due diligence.” “Physical due diligence” is a term of art
and is not defined in the purchase agreement. Respondent
asserts expert opinion on contract interpretation is inadmissible,
“[h]owever, particular expressions may, by trade usage, acquire a
different meaning in reference to the subject matter of a contract.
If both parties are engaged in that trade, the parties to the
contract are deemed to have used them according to their
different and peculiar sense as shown by such trade usage and
parol evidence is admissible to establish the trade usage even
though the words in their ordinary or legal meaning are entirely
unambiguous.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc.
(1993) 18 Cal.App.4th 1, 15.)
Here, appellant presents evidence demonstrating its
request for the phase II environmental assessment was not a part
of “physical due diligence.” Appellant’s real estate consulting
expert, Gebhardt, attested appellant’s request for the
environmental assessment was not a request to reopen the due
diligence period. Gebhardt explained that appellant was
diligently pursuing the assessment for the loan as part of the
loan process and not as a contingency. Gebhardt stated, “It is
normal and customary, even after contingencies have been
waived, that the parties work together to resolve any issues with
a proposed loan, including environmental work and reports.”
(Underscoring omitted.)
Further, appellant’s realtor, O’Donnell, attested appellant
needed an updated phase II report for its banker and not to
reopen an investigation of the property. O’Donnell explained “it is
common knowledge that when Borrowers apply for loans and get

32
approval, the Banks do not hold the approval open for years ….
Hence, to keep the loan transaction active, [appellant] constantly
updated its Bankers with information to update its loan
application and [respondent’s] Track Map recording progress.”
O’Donnell added, “Parties and Realtors accommodate most
Bankers’ needs to consummate the transaction with a Close of
Escrow.” O’Donnell attested the changes in environmental
standards merely represented a change of circumstances that all
bankers and property buyers and sellers needed to address.
Hence, the foregoing evidence shows a triable issue exists
as to whether appellant’s request for the phase II environmental
assessment constituted physical due diligence. Appellant
presented industry experts establishing industry custom and
practice that are at odds with respondent’s interpretation of the
purchase agreement. Appellant’s experts showed the request for
the environmental assessment is normal and customary as part
of the loan process and does not fall within due diligence or
investigation of the property.
Section 4.4 of the purchase agreement pertains to the
purchaser obtaining financing to acquire the property. However,
the section involves appellant’s right to terminate the purchase
agreement as the “Purchaser may terminate this Agreement for
any reason or no reason” and the agreement continues to stay “in
full force and effect” if appellant “does not timely and properly
give a Due Diligence Termination Notice.” “Due Diligence
Termination Notice” is the purchaser’s “written notice of
termination to Seller and Escrow Agent … on or before the last
day of the Inspection Period.” It is true that, after the inspection
period, the “Purchaser shall be deemed to have acknowledged
that it has received or had access to all Property Documents and

33
conducted all inspections and tests of the Property that it
considers important.” But section 4.4 is silent as to whether
appellant was prohibited from further requesting inspections or
tests of the property to obtain financing. Section 4.4 is also silent
as to what, if any, was respondent’s discretion to deny such
requests.
We note the subsequently executed lease extended
appellant’s rights and obligations with respect to the property. As
discussed above, the lease governs if it has any inconsistencies
with the purchase agreement. The lease’s provisions granting
appellant access to and imposing obligations to comply with laws
and regulations affecting the property are certainly at odds with
sections 4.3 and 4.4 of the purchase agreement. It should be
noted the length of the extended recordation and changes in
environmental regulations were events beyond what either party
had contemplated when they entered into their agreements. None
of the contract provisions directly address those circumstances
sufficiently to conclude there are no triable issues in this case.
D. Triable issues exist as to whether respondent
waived a strict closing date and the time-of-the-
essence clause
Respondent also contends it was within its right to refuse
further extensions of the closing date and did not waive the right
to insist on the October 30, 2020, date certain for the closing date.
Respondent asserts the antiwaiver provision under section 12.3 of
the purchase agreement precludes any finding of waiver.
“Waiver is a question of fact for the trial court.” (Gould v.
Corinthian Colleges, Inc. (2011) 192 Cal.App.4th 1176, 1179
(Gould).) “California law defines waiver as the intentional
relinquishment or abandonment of a known right or privilege.

34
[Citation.] Under this definition, waiver is based on intent.
[Citation.] The intent to waive may be expressed in words, either
oral or written, or implied by a party’s conduct.” (Smith v.
Ogbuehi (2019) 38 Cal.App.5th 453, 475.)
Section 12.3 of the purchase agreement states: “The failure
by either party to enforce against the other any term or provision
of this Agreement shall not be deemed to be a waiver of such
party’s right to enforce against the other party the same or any
other such term or provision in the future.” While antiwaiver
provisions are enforceable, they too can be waived. (See Gould,
supra, 192 Cal.App.4th at pp. 1177, 1180 [“And Gould cites no
authority that an antiwaiver provision in a lease cannot itself be
waived.”].)
To support its argument that antiwaiver provisions are
enforceable, respondent cites Hersch v. Citizens Savings & Loan
Assn. (1983) 146 Cal.App.3d 1002 (Hersch) and Los Angeles
Unified School Dist. v. Torres Construction Corp. (2020) 57
Cal.App.5th 480 (Torres). However, neither of these cases
indicate an antiwaiver provision cannot itself be waived.
Hersch is not a summary judgment case and simply
indicates an antiwaiver provision is enforceable. (Hersch, supra,
146 Cal.App.3d at pp. 1007, 1009.) Indeed, a waiver issue was
submitted to the jury. (Id. at pp. 1008–1009.) The Hersch court
only held that antiwaiver provisions are enforceable in the
context of affirming the trial court’s decision to refuse to submit a
different waiver issue to the jury. (Id. at pp. 1009–1010.) There is
no discussion in Hersch as to whether antiwaiver provisions can
be waived.
Torres is a summary judgment case, but there is little
discussion of antiwaiver provisions other than the Court of

35
Appeal indicating the provision in that matter prohibited waiver
by conduct. (Torres, supra, 57 Cal.App.5th at p. 505.) There is no
discussion of waiving antiwaiver provisions in Torres.
Appellant presented evidence demonstrating triable issues
of material facts exist as to whether respondent waived a strict
closing deadline. After the subdivision map was recorded on
September 2, 2020, the purchase agreement set the closing date
to 15 days later, September 17, 2020. The September 17, 2020
deadline passed without respondent doing anything to enforce
the closing date. Respondent only e-mailed appellant on
September 10, 2020, stating “[t]he tract map has recorded and
the buildings can be sold now,” with nothing mentioned about a
closing date or deadline.
It was not until September 25, 2020, when respondent
mentioned a closing date in a letter to appellant, stating “the
Closing shall occur fifteen (15) days after the date hereof (i.e.,
October 12, 2020).” The date provided in the letter was not even
15 days after the date of the letter, October 10, 2020, as two days
were added. Further, the new October 12, 2020, deadline was not
absolutely firm since respondent showed some uncertainty in the
letter, indicating “provided, however, that in no event shall the
Closing occur prior to the recordation of the CC&Rs … and the
Access Easement ….” This uncertainty was even more apparent
in an e-mail sent the same day in which it was communicated to
appellant, “As described in the letter, we are waiting for the
CC&Rs and a related access easement to record before we can
close, but we are hopeful that will … happen over the next week
or so.” (Italics added.) It can reasonably be implied from
respondent’s conduct of disregarding the agreement’s strict

36
timeframes that respondent waived a strict closing deadline
imposed by the contract’s time-of-the-essence provision.
In addition, the October 12, 2020 deadline passed without
respondent taking any action. It was not until nine days later on
October 21, 2020, respondent sent a letter indicating “Seller is
willing to proceed with the Closing by no later than Friday,
October 30, 2020. Purchaser’s failure to perform its Closing
obligations under the Agreement by such date shall constitute a
default under the Agreement, and Seller hereby reserves all
rights and remedies under the Agreement, at law and/or in
equity in connection with any such default ….” Respondent
explained it had “no obligation to further extend the Closing” and
that the October 30, 2020 date was an “additional accommodation
to Purchaser.” It can be inferred from such evidence that
respondent again waived a strict closing deadline by not adhering
to the contract’s timeframes.
Respondent maintains that at the time appellant
acknowledged that neither party had waived their rights under
the purchase agreement. Bernard wrote in an e-mail on
October 29, 2020, to respondent’s counsel, “Keith recognizes that
neither Party is waiving any rights under the PSA. See PSA ¶
12.3. He intends to fully fund Escrow and consummate the
Purchase & Sale.” This fails to establish no triable issues exist on
this matter as it is only evidence opposing appellant’s supporting
evidence. Appellant asserts the statement was in direct response
to respondent’s earlier e-mail stating it “reserves all rights and
remedies,” acknowledging respondent was still entitled to
performance in a reasonable time and had not forfeited all rights
of enforcement. Bernard’s statement in his e-mail is best

37
described as fairly general. At best, this is a triable issue of
material facts not appropriate for summary judgment.
Moreover respondent’s conduct poses the issue of forfeiture.
“A forfeiture is ‘[t]he divestiture of property without
compensation’ or ‘[t]he loss of a right, privilege, or property
because of a crime, breach of obligation, or neglect of duty.’”
(Marin Healthcare Dist. v. Sutter Health (2002) 103 Cal.App.4th
861, 877.) “[A] second indicator of a forfeiture or penalty, which is
an unfair divestiture of property that bears no relationship to the
actual damages anticipated by the parties when they negotiated
the contracts.” (VFLA Eventco, LLC v. William Morris Endeavor
Entertainment, LLC (2024) 100 Cal.App.5th 287, 308–309 (VFLA
Eventco).)
“Where a waiver prevents a forfeiture, the law ordinarily
permits a liberal construction to be placed upon the acts of the
parties waiving, with a view of bringing about a waiver of such a
forfeiture.” (Miller v. Modern Motor Co. (1930) 107 Cal.App. 38,
42.) “‘“Forfeitures are not favored by the courts, and, if an
agreement can be reasonably interpreted so as to avoid a
forfeiture, it is the duty of the court to avoid it. The burden is
upon the party claiming a forfeiture to show that such was the
unmistakable intention of the instrument. [Citations.] ‘A contract
is not to be construed to provide a forfeiture unless no other
interpretation is reasonably possible.’”’” (VFLA Eventco, supra,
100 Cal.App.5th at p. 308.)
Here, there is a triable issue as to whether respondent’s
conduct in strictly enforcing a closing date and the time-of-the-
essence provision resulted in a penalty to appellant. When the
parties negotiated the purchase agreement, appellant stood to
lose only its $200,000 deposit if it failed to perform. Appellant

38
does not dispute the $200,000 bore a reasonable relationship to
the anticipated range of harm caused by cancellation because
recordation and closing were believed to be imminent. Appellant
also had not expended resources to move to and operate on the
property.
Since appellant moved its business to the property before
closing and spent $3 million on proprietary improvements,
strictly imposing the original agreement’s timeframe and time-of-
the-essence provision can reasonably be seen as imposing a harsh
penalty on appellant beyond the parties’ reasonable expectations
when they negotiated those provisions. Respondent argues
appellant never owned the property, negotiated only for a five-
year lease without extensions, and knowingly took on the risks of
investing in the property. Respondent asserts the improvements
appellant made were unique to its business and had little value
to respondent. Respondent adds further it has maintained the
position appellant can take the improvements with it when it
moves out.
Respondent’s arguments fail to establish there are no
triable issues on this matter as they provide only an opposing
position on the facts. The parties entered the lease with the
intent appellant would operate its business and eventually
acquire the property. Appellant was certainly not a typical
temporary lessee with no expectation of ever retaining any
improvements made on the property. After the long delay in
recordation, the costs to appellant were substantially increased if
strict enforcement of a closing date prevented appellant from
acquiring the property. While respondent suggests the costs can
be mitigated, that too is a triable issue. Respondent’s opposing
arguments and interpretation of the situation shows this matter

39
at best involves triable issues of material facts not appropriate
for summary judgment.
Given evidence of two waivers and issues of forfeiture, it is
apparent there are triable issues of material facts as to whether
respondent waived a strict closing deadline, the time-of-the-
essence provision, and the antiwaiver clause. It can be implied
through respondent’s conduct that it intentionally relinquished or
abandoned its right to strictly enforce a closing date and the
time-of-the-essence provision. Respondent did not strictly adhere
to the contract’s closing timeframe on multiple occasions and
ultimately set a unilateral final closing date. While respondent
may have retained the right to appellant’s performance within a
reasonable time, triable issues exist as to whether respondent
could strictly impose a closing date, which it unilaterally set.
E. Triable issues exist as to whether respondent’s
denial of appellant’s request to conduct the
environmental assessment was reasonable
Appellant argues it presented evidence demonstrating a
triable issue of material facts exists as to whether respondent
breached the implied covenant of good faith and fair dealing by
unreasonably refusing to allow the phase II environmental
assessment. We agree.
The elements for breach of the implied covenant of good
faith and fair dealing are (1) the parties entered into a contract;
(2) the plaintiff did all or substantially all of the significant
things the contract required the plaintiff to do or the plaintiff was
excused from having to do so; (3) all conditions required for the
defendant’s performance had occurred; (4) the defendant unfairly
interfered with the plaintiff’s right to receive the benefits of the

40
contract; and (5) the defendant’s conduct harmed the plaintiff.
(CACI No. 325.)
“Implied in every contract is a covenant of good faith and
fair dealing.” (Cordoba Corp. v. City of Industry (2023) 87
Cal.App.5th 145, 156.) “[I]t is ‘a simple matter to determine
whether given conduct is within the bounds of a contract’s
express terms.… Difficulty arises in deciding whether such
conduct, though not prohibited, is nevertheless contrary to the
contract’s purposes and the parties’ legitimate expectations.’”
(Avidity Partners, LLC v. State of California (2013) 221
Cal.App.4th 1180, 1204.) “The implied covenant prevents one side
from unfairly frustrating the other’s right to receive the benefits
of the agreement actually made.” (Cordoba, supra, at p. 156.)
“The implied covenant protects the reasonable expectations of the
contracting parties based on their mutual promises. [Citations.]
The scope of conduct prohibited by the implied covenant depends
on the purposes and express terms of the contract.” (Digerati
Holdings, LLC v. Young Money Entertainment, LLC (2011) 194
Cal.App.4th 873, 885.) “ ‘If the cooperation of the other party is
necessary for successful performance of an obligation, a promise
to give that cooperation, and not to do anything which prevents
realization of the fruits of performance, will often be implied.’”
(Ninety Nine Investments, Ltd. v. Overseas Courier Service
(Singapore) Private, Ltd. (2003) 113 Cal.App.4th 1118, 1131.)
“In essence, the covenant is implied as a supplement to the
express contractual covenants, to prevent a contracting party
from engaging in conduct which (while not technically
transgressing the express covenants) frustrates the other party's
rights to the benefits of the contract.” (Love v. Fire Ins. Exchange
(1990) 221 Cal.App.3d 1136, 1153.) “[T]he covenant of good faith

41
can be breached for objectively unreasonable conduct, regardless
of the actor’s motive.” (Carma Developers (Cal.), Inc. v. Marathon
Development California, Inc. (1992) 2 Cal.4th 342, 373.) “Good
faith and objective reasonableness are questions of fact, based on
all the circumstances.” (Peak-Las Positas Partners v. Bollag
(2009) 172 Cal.App.4th 101, 106.)
We conclude triable issues of material facts exist as to
whether respondent’s refusal to allow the phase II environmental
assessment was unreasonable and breached the implied covenant
of good faith and fair dealing. As discussed above, appellant was
responsible under the lease for compliance with all laws and
regulations affecting the property. Thus, compliance with the
new environmental regulations fell within appellant’s obligations
under the lease. Appellant’s lender also required an updated loan
application due to the new environmental regulations. Keith
would have paid for the environmental assessment, the results of
which would have been kept confidential. These circumstances
developed due to the long delays in recordation and the changes
to environmental standards, which neither party anticipated
when they entered the purchase agreement.
In addition, appellant presents evidence showing
respondent knew appellant was highly motivated to acquire the
property and had already invested millions of dollars in
improvements to the property. Appellant provides evidence that
respondent operated in bad faith and attempted to take
advantage of the situation. On October 7, 2020—only five days
before the October 12, 2020 respondent-set deadline—respondent
offered to allow appellant to conduct “air sampling.” This was not,
however, a substitute procedure for the soil sampling needed in
the phase II assessment. Further, respondent demanded a third

42
amendment to the purchase agreement requiring an additional
deposit of $100,000, and the rent credit against the purchase
price to be $140,717.50 to run only to March 18, 2019, the date of
the substantial completion of the seller work. This total amount
in credit was about $500,000 less than if it ran through the end of
October 2020. Appellant also shows the value of industrial
property in the area had increased since the parties entered into
the purchase agreement, giving respondent incentive to be
uncooperative concerning the environmental assessment and
closing the sale.
The foregoing evidence demonstrates respondent acted
unreasonably and contrary to the contract’s purposes and the
parties’ legitimate expectations. There is no evidence appellant
was having doubts about purchasing the property. Indeed,
evidence shows appellant was motivated to close, offering an
additional $150,000 deposit and a cutoff of rent credit in
exchange for an extension. There is no evidence appellant had
suddenly experienced a financial downturn that impact its ability
to acquire the property. To the contrary, appellant’s lender
indicated, “Keith’s net worth and financial strength far exceeded
what was necessary to be approved for a loan to acquire the
Property.” The parties had tolerated extensive delays in closing
the transaction. The evidence is sufficient to show respondent’s
refusal to allow the environmental assessment under these
circumstances unfairly interfered with appellant’s right to receive
the benefits of the contract.
Respondent contends it had sole and absolute discretion to
decline any intrusive testing at the end of the inspection period,
which could not be overridden by the implied covenant. While it
is true the implied covenant is limited when a party is given

43
absolute discretion over a matter (see Wolf v. Walt Disney
Pictures & Television (2008) 162 Cal.App.4th 1107, 1121; Storek
& Storek, Inc. v. Citicorp Real Estate, Inc. (2002) 100 Cal.App.4th
44, 61), there are no express provisions giving respondent
absolute discretion over how appellant satisfied its obligation
under the lease to comply with all laws and regulations affecting
the property. There are also no express provisions under the
purchase agreement giving respondent absolute discretion to
prohibit appellant from further requesting inspections or tests of
the property to obtain financing. At most, triable issues exist as
to whether appellant’s request for the environmental assessment
fell within a provision under which respondent had sole and
absolute discretion.
Finally, there is the related issue of whether respondent
allowed a reasonable time for appellant to perform. As discussed
above, respondent allowed multiple closing dates to pass without
acknowledgment. Respondent set a final closing date entirely on
its own. At that point, the parties had already tolerated years in
delay to the recordation. It is not apparent how allowing more
time for the environmental assessment would have substantially
prejudiced respondent. Given the circumstances, triable issues
exist as to whether the final closing date was reasonable in light
of appellant’s need for the environmental assessment.
F. Triable issues exist as to whether appellant is
entitled to specific performance as a remedy
As to specific performance, appellant posits triable issues
exist as to whether it is “ready, willing and able to perform” on
the purchase agreement. Appellant asserts it presented ample
evidence of its ability to perform and that respondent hindered it

44
from performing. Appellant maintains this issue depends on a
case’s particular circumstances and not on any ironclad rule.
“To obtain specific performance after a breach of contract, a
plaintiff must generally show: ‘(1) the inadequacy of his legal
remedy; (2) an underlying contract that is both reasonable and
supported by adequate consideration; (3) the existence of a
mutuality of remedies; (4) contractual terms which are
sufficiently definite to enable the court to know what it is to
enforce; and (5) a substantial similarity of the requested
performance to that promised in the contract.’” (Real Estate
Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.) “[I]t is
axiomatic that to obtain specific performance, a buyer must prove
not only that he was ready, willing and able to perform at the
time the contract was entered into but that he continued ready,
willing and able to perform at the time suit was filed and during
the prosecution of the specific performance action.” (C. Robert
Nattress & Associates v. CIDCO (1986) 184 Cal.App.3d 55, 64.)
“[I]n order to obtain specific performance, buyers must
prove they had the ability to pay the purchase price within a
reasonable time.” (Henry v. Sharma (1984) 154 Cal.App.3d 665,
670 (Henry).) “What constitutes a ‘reasonable time’ for
performance is a question of fact [citation] as is the question of
the buyer’s ability to perform.” (Ibid.) “What constitutes
reasonable time depends on the situation of the parties, the
nature of the transaction and the facts of the particular case.” (Id.
at p. 672.) “[T]he proof needed to show ability depends on all the
surrounding circumstances.” (Ibid.)
We conclude appellant presented evidence establishing a
triable issue exists as to whether it was ready, willing, and able
to perform on the purchase agreement. The balance of the

45
property’s purchase price was just under $6 million—the $6.765
million purchase price, minus the $200,000 earnest money
deposit and $637,632.50 in rent credit. Keith attested, “from the
beginning of this deal to the present, we have maintained enough
liquidity and owned multiple properties that we could sell to close
this deal with or without financing.” From 2019 to 2021, these
assets included cash/liquidity of about $4.45 million, commercial
property of $2.18 million netted, and residential property of $3.48
million (after loan payoff).
As to financing, the senior vice president of Harvest, Chris
Rabenold, whom Keith contacted for the purchase of the property,
attested that “Keith’s net worth and financial strength far
exceeded what was necessary to be approved for a loan to acquire
the Property. He had loan approval, but waiting for the Tract
Map’s recording became a nuisance and an ongoing paper-
pushing nightmare.” Rabenold indicated Harvest needed the
phase II environmental assessment due to changes in California’s
environmental regulations. Rabenold stated, “DRAKK had loan
approval, and Harvest required an updated Phase II. Due to
screening law changes, the purchase money loan was available to
fund escrow provided an updated Phase II was presented. [¶] …
To underwrite a loan of this size, I needed the Property delivered
to DRAKK clean or within acceptable toxins per California
environmental regulations.” Further, Rabenold attested, “It must
always be remembered that DRAKK was never denied a loan.
The Seller’s refusal to allow an updated Phase II prevented
DRAKK’s loan Application from continuing.”
In addition, Keith indicated appellant had always been
ready, willing, and able to perform on the purchase agreement.
Keith stated, “For example, on December 1, 2019, Bank of

46
America committed to loan $4,178,533.94 as a First Mortgage
and $2,000,000.00 related to the [tenant improvements].” In May
2021, Zions Bank offered Keith appropriately $6.34 million to
purchase the property. Donald Brian Franke, who worked in
specialty loan servicing at Zions Bank, described the offer letter
to Keith as a “commitment letter” for the approval of a loan as
“[t]he loan was clearly approved under the appropriate process
that was clearly documented in the system. And then once it’s
approved, it’s presented to the borrower, and the borrower then
can proceed to try and close with the loan officer or the borrower
also can reject it and decide they don’t want to do it.”
Accordingly, the evidence shows appellant made at least a
prima facie showing it was ready, willing, and able to perform on
the purchase agreement. Appellant demonstrates the value of
Keith’s cash/liquidity and real property assets exceeded the
balance of the property’s purchase price. Appellant shows Keith’s
financial strength was far more than what was needed for
appellant to obtain a loan for the property. This is evidence of
appellant’s ability to pay for the property since Keith had the
resources to obtain the requisite credit. (See Henry, supra, 154
Cal.App.3d at p. 672 [“We believe the evidence supports the trial
court’s finding that the buyers had the ability to pay in the sense
that they ‘“commanded resources upon which [they] could obtain
the requisite credit.”’”].) Indeed, Keith had more resources than
the buyers in Henry, whose evidence of ability to pay for a house
was upheld because they were employed, owned residential
property worth about a quarter of the purchase price, owned
other real property, and purchased another property on similar
terms. (See id. at pp. 668, 672.)

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Moreover, appellant had loan approval from Harvest to
acquire the property, but it was respondent who refused to allow
the phase II environmental assessment required to update the
loan application. Keith also “requested 4-5 weeks to pay the
Purchase Price with ‘all-cash,’ eliminating the need for
Financing.” Keith indicated, however, “[respondent] denied [his]
request and proceeded to terminate the transaction
immediately.” “[H]indrance of the other party’s performance
operates to excuse that party’s nonperformance.” (Erich v.
Granoff (1980) 109 Cal.App.3d 920, 930.) This factor can be
considered in specific performance cases. (See Stratton v. Tejani
(1982) 139 Cal.App.3d 204, 211 [“Substantial evidence supports
the court’s finding that the conduct by the Tejanis in impeding
the Strattons’ performance operated to excuse the latter’s
performance on March 2, 1981.”].) Keith attested he “was
shocked that [respondent] refused to allow an updated Phase II
… but became furthermore astonished when [respondent]
declined an ‘all-cash’ Escrow Closing.” This evidence shows
respondent obstructed appellant from obtaining financing for the
property and thereby hindered appellant’s performance.
Respondent argues the environmental assessment would
have taken too long, estimating it would have taken around a
month based on the secret testing appellant pursued towards the
end of December 2020 and completed on January 26, 2021.
Respondent also posits it would have taken at least an additional
month after the four-to-five week extension appellant requested
to obtain the funds needed for the cash offer. But as discussed
earlier, “reasonable time” is a factual issue and depends on the
parties’ situation, the nature of the transaction, and the facts of
the case. (See Henry, supra, 154 Cal.App.3d at pp. 670, 672.)

48
Given the yearslong delay of the recordation, the substantial
nature of the transaction, and the large investments appellant
had already made on the property, one can reasonably find the
timeframes for either of appellant’s requests were reasonable.
And as previously mentioned, “any evidentiary doubts or
ambiguities [are resolved] in favor of the party opposing
summary judgment.” (WFG National Title, supra, 51 Cal.App.5th
at p. 889.)
As to Zions Bank’s loan approval, respondent asserts it was
not issued until May 2021, it was a conditional counteroffer, and
there is no proof all of the loan’s condition precedents were met
for the funds to release. But the fact there are weaknesses in
appellant’s evidence regarding Zions Bank’s loan approval only
go to the weight of the evidence, not the absence of a triable
issue. Further, there is no “iron-clad rule” requiring buyers to
“establish ability to perform by proving they had obtained a
legally enforceable loan contract. Rather, the proof needed to
show ability depends on all the surrounding circumstances.”
(Henry, supra, 154 Cal.App.3d at 672.)
We note respondent’s arguments here rely on its assertion
the trial court’s findings on specific performance are reviewed for
abuse of discretion.7 As discussed above, however, nothing shows
summary adjudication of this issue is reviewed under an abuse of
discretion standard. While an abuse of discretion standard may

7 Respondent asserts the order granting summary
adjudication as to the first, second, and third causes of action
seeking specific performance should be affirmed. However,
appellant only appealed the third cause of action for “specific
performance/breach of implied covenant of good faith and fair
dealing.” (Capitalization and boldface omitted.)

49
apply in other contexts, such as findings in a trial, nothing shows
an exception exists for reviewing this matter raised on summary
judgment. Hence, the proper determination is whether appellant
presented evidence related to its ability to perform, not whether
the trial court’s findings thereof are reasonable. (See Gaggero,
supra, 108 Cal.App.4th at pp. 888–889 [“[T]he appellate court
independently determines whether, as a matter of law, the
motion for summary judgment should have been granted.… [¶] …
[¶] [T]he burden shifts to the plaintiff to show that a triable issue
of one or more material facts exists ….”].)
Respondent attempts to demonstrate the weaknesses of
appellant’s evidence and maintains the trial court’s findings are
not arbitrary or capricious. But that is not the proper analysis for
a summary judgment motion. It is not appellant’s burden to
make an unassailable case that it was ready, willing, and able to
perform on the purchase agreement. Respondent’s arguments do
not establish there are no triable issues as to specific
performance. Respondent fails to show appellant provided no
evidence making a prima facie showing. The fact there are
weaknesses and counterarguments as to appellant’s evidence do
not establish summary adjudication is proper on the matter.
III. The order for attorney’s fees and costs and the order
to post an appeal bond must be reversed with the
reversal of the judgment
Appellant asserts the order awarding respondent attorney’s
fees and costs and the order requiring appellant to post an appeal
bond should fall with the reversal of the judgment. We agree.
When “we reverse the judgment, we also reverse the award
of attorney fees because [the respondent] is no longer necessarily
the prevailing party in this action.” (Lafferty v. Wells Fargo Bank

50
(2013) 213 Cal.App.4th 545, 551.) Further, “[a]n order awarding
costs falls with a reversal of the judgment on which it is based.”
(Merced County Taxpayers’ Assn. v. Cardella (1990) 218
Cal.App.3d 396, 402.)
Because we reverse the judgment entered in favor of
respondent, respondent is no longer necessarily the prevailing
party in this case. The order for attorney’s fees and costs and the
order requiring an undertaking therefore must be reversed
because they were based on respondent being the prevailing
party.

DISPOSITION
The judgment, the order for attorney’s fees and costs, and
the order to post an appeal bond are reversed. On remand, the
trial court is directed to enter an order vacating the judgment,
the order for attorney’s fees and costs, and the order to post an
appeal bond. The court is directed to enter a new order denying
the motion for summary adjudication as to the third cause of
action for specific performance/breach of implied covenant of good
faith and fair dealing.
Appellant is awarded its costs on appeal.

CHAVEZ, Acting P. J.

We concur:

RICHARDSON, J. GOORVITCH, J.

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