Miroyan
Filed 12/5/13 Gnesa v. Miroyan CA5
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
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as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH
APPELLATE DISTRICT
HENRY
GNESA, JR., et al.,
Plaintiffs and Respondents,
v.
MICHAEL
MIROYAN,
Defendant and Appellant.
F065029
(Super.
Ct. No. 655920)
MICHAEL
MIROYAN,
Plaintiff and Appellant,
v.
HENRY
GNESA, JR., et al.,
Defendants and Respondents.
(Super.
Ct. No. 655938
APPEAL
from a judgment of the Superior Court
of
County. William A.
Mayhew, Judge.
Craig J.
Bassett for Defendant and Appellant and for Plaintiff and Appellant.
Law Office
of Ted M. Cabral and Ted M. Cabral for Plaintiffs and Respondents and
for Defendants and Respondents.
-ooOoo-
INTRODUCTION
Michael
Miroyan appeals the judgment after a court trial pertaining to a real property
sales contract. More specifically, Miroyan
contends the trial court erred in holding the contract at issue provided for
the sale of all 269 acres of real property located outside the City of Patterson. He asserts the contract permitted him to
purchase an unsubdivided portion of an existing parcel on the property. Further, he contends the contract violates the
Subdivision Map Act (Gov. Code, § 66410 et seq.; hereafter SMA) and is
therefore void. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Henry
Gnesa, Jr., individually and as trustee of a testamentary trust, Jill Gnesa,
and Henry Gnesa, Sr. (jointly, the Gnesas; individual references to Henry are
to Henry Gnesa, Jr.) own real property near Patterson, California. The property at issue here consists of four
parcels totaling 269 acres. The land is
used to grow almonds and walnuts. Water
sources and irrigation are in place and a walnut huller is also located on the
property.
In late
2004, the Gnesas and Miroyan entered into negotiations regarding the sale of
the property. Henry testified Miroyan
approached him regarding the sale; Miroyan testified Henry called him and asked
him if he was interested in purchasing the property. In any event, after the parties’ attorneys
exchanged various drafts of the agreement, an agreement was executed between
the Gnesas and Miroyan on January 6, 2005.
The
agreement provided the Gnesas would sell 269 acres of real property to Miroyan
at $32,500 an acre. A series of deposits
were to be made by the buyer into an escrow account over the course of 15 years,
and escrow was to close in May 2020.
In mid-2008,
Miroyan was facing default because he was unable to pay the required deposit
payment. As a result, the parties agreed
to an addendum wherein certain deadlines would be extended in exchange for a
forbearance payment of $73,000 to seller from buyer. It was signed by all parties.
In late
2008 or early 2009, a meeting was held at the office of the Gnesas’ counsel concerning
upcoming deposit payments due in 2009. Henry
and Jill Gnesa were in attendance, as was Miroyan. Henry recalled a discussion wherein Miroyan
would be given more time within which to sell property he owned in San Jose in
order to continue making payments or deposits toward this purchase. Miroyan testified he knew he would be “getting
out†of the agreement in September or October 2008. During the meeting, the Gnesas wanted to know
how he would make the 2009 payment. He
told them the money would come from the sale of a ranch he owned in the San
Jose foothills; he hoped that sale would conclude in January 2009.
Following
the meeting, a 2009 addendum was prepared by the Gnesas’ attorney, Richard
Frampton. The addendum sought to modify
certain deposit sums and deadlines, expedited the closing date to July 2015, and
also sought to clarify section 6.1.1 of the original agreement. Frampton testified he believed the
clarification of section 6.1.1 was needed because Miroyan brought up the
subject of a partial sale or closing at the meeting.
telephone conversations as well; on each occasion, Frampton would explain there
would be no partial closing without everyone’s agreement. Ultimately, however, the addendum was never
executed by the parties.
Following
the meeting, Miroyan asked his attorney, Terry Root, to draw up an amendment to
the original agreement and to section 6.1.1 in particular. It called for a partial early closing of a
60-acre parcel for the purchase price of $1,950,000.
executed.
In March
2010, a notice of default issued as Miroyan failed to make the 2009 deposit
payments in accordance with the original agreement and the operative 2008
addendum. On April 23, 2010, Frampton
advised in a letter to Miroyan that the Gnesas were rescinding their notice of
default in order to provide Miroyan the opportunity to cure his default or to
negotiate some sort of settlement. Henry
indicated at that point he considered repaying Miroyan some portion of the
forbearance payment to resolve the dispute and to cease having to deal with
Miroyan.
Miroyan did
not cure his default and settlement efforts were not successful. He had not made a deposit or payment since
2008. Henry authorized attorney Ted Cabral
to issue another default notice.
Shortly
thereafter, each party filed suit in the Stanislaus Superior Court. The Gnesas’ complaint sought to enforce the
agreement’s liquidated damages clause or, alternatively, an award of actual
damages for Miroyan’s breach. They also
sought a judicial declaration against Miroyan and Fidelity National Title Company
(Fidelity) as follows: that Miroyan had
materially breached and repudiated the agreement; that as a result, the
agreement was terminated and Miroyan had no interest, claim, or title in the
property or against the Gnesas; that Miroyan was obligated to execute and
tender a quitclaim deed to the Gnesas for recordation; and that Fidelity was
required to record the deed it held in escrow.
Miroyan’s complaint sought a judicial declaration that he was entitled
to purchase 30 acres of the property, or a proportional share equal to the
monies he had already paid.
name="_ftnref3" title="">[3]
The cases
were consolidated. Following a five-day
court trial, judgment was entered for the Gnesas, and Miroyan was to take
nothing by way of his complaint. This
appeal followed.
DISCUSSION
I. Standard of Review
Miroyan
contends the appropriate standard of review is de novo review because
resolution of the issues rests on the interpretation of the contract, and the
material facts are not in dispute. The
Gnesas counter that the correct standard is substantial evidence because the
trial court resolved issues of fact after consideration of conflicting evidence,
to which this court is bound if supported by the record.
“When a
trial court’s construction of a written agreement is challenged on appeal, the
scope and standard of review depend on whether the trial judge admitted
resolve any ambiguity or uncertainty in the contract. If extrinsic evidence was admitted, and
we apply the substantial evidence rule to the factual findings made by the
trial court. But if no extrinsic
evidence was admitted, or if, as here, the evidence was not in conflict, we
independently construe the writing. [Citations.]†(De Anza
Enterprises v. Johnson (2002) 104 Cal.App.4th 1307, 1315.)
As a result, where the issue presented rests only on the
interpretation of a written document and there is no need to consider
conflicting extrinsic evidence regarding the proper interpretation, the issue
is a question of law. The appellate
court is in as good a position as the trial court to pass on these questions
and is not bound by the trial court’s interpretation. The correct standard of review is de novo. (Southern
Pacific Land Co. v. Westlake Farms, Inc.
(1987) 188 Cal.App.3d 807, 817; Morey v.
Vannucci (1998) 64 Cal.App.4th 904, 913.)
When, however,
the meaning of the language of a contract is uncertain and parol evidence is
introduced to aid in its interpretation, the duty of the trial court is to
resolve the conflicts in the evidence and to interpret the language in light of
the evidence found credible. (
Cal.App.4th 1028, 1041.) When the trial
court resolves the conflict, we are bound to the facts as determined by the
trial court if those factual findings are supported by substantial evidence. (Parsons
v. Bristol Development Co. (1965) 62 Cal.2d 861, 865; Morey v. Vannucci, supra,
64 Cal.App.4th at p. 913.) When
interpretation turns upon the credibility of conflicting extrinsic evidence, we
will uphold any reasonable construction of the contract by the trial court. (Morey
v. Vannucci, supra, at p. 913.)
In sum, the
proper standard of review depends on whether and in what regard conflicting
interpret a particular provision of the contract. (See City
of Chino v. Jackson (2002) 97 Cal.App.4th 377, 382-383.) The paramount rule with regard to both of
these standards is to give effect to the mutual intention of the parties as it
existed at the time of contracting. (
103 Cal.App.4th 1170, 1180 [when construing contracts, courts will look for
expressed intent of parties, under an objective standard].) The intention of the parties, however, must
first be derived from the language of the contract. (Leo F.
Piazza Paving Co. v. Foundation Constructors, Inc. (1981) 128 Cal.App.3d 583, 591.) It is the objective intent, as evidenced by
the words of the contract, rather than the subjective intent of a party, that
controls. A party’s undisclosed intent
or understanding is irrelevant. (
Cal.4th 815, 839 [interpretation of contract based on parties’ mutual intent at
time of contract formation]; Cedars-Sinai
Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 980.)
Here, the
trial court admitted conflicting extrinsic evidence to resolve the uncertainty
regarding whether the agreement called for the sale of all 269 acres and
whether section 6.1.1 of the parties’ agreement required partial closings. Material facts were most certainly in
dispute. We disagree with Miroyan that “at
best†the interpretation of the agreement at issue here was based upon
conflicting inferences “drawn from nonconflicting extrinsic evidence,†thus
requiring de novo review. Consequently, we
will determine whether substantial
evidence supports the trial court’s factual findings.
II. The Evidence Regarding the
Sale of the Property
Miroyan
contends the Gnesas agreed to sell an unsubdivided portion of an existing
parcel of their real property. He
contends this is so because the contract provides for and the sellers agreed to
partial closings as provided in section 6.1.1.
The Gnesas assert the agreement was always for the sale of all 269 acres,
and section 6.1.1 allowed for the future possibility of a partial closing or
closings.
A. Section 6.1.1
“Closing
Date and Increases to Purchase Price.
Escrow shall close on or after a date occurring six (6) months after
final approval by the City of Patterson of the final subdivision map (‘Final
Map’) establishing the Real Property as separate legal parcels, with a final
date for closing escrow occurring no later than May 1, 2020 (‘Outside
Closing Date’). Upon the further mutual
agreement of the parties, there may be four or more separate Close of Escrow
dates, so long as Seller is paid in full for the particular parcel(s) for which
any Closing Date relates, and so long as this partial Closing does not result
in the remaining Property being landlocked from Ward Avenue, or cut-off from
the water supply on the Property. Buyer
and Seller shall mutually agree to the terms of any partial Closing as
instructed to Escrow Holder. Neither
party is obligated to agree to such partial Closing. Escrow shall close upon sixty (60) days
written notice by Buyer. The closing of
the purchase and sale (the ‘Closing’) and the close of escrow (the ‘Close of
Escrow’) shall each be deemed to occur when the Grant Deed from Seller to Buyer
(defined in Section 6.2 below) is recorded in the Official Records of
Stanislaus County. As used herein, the
term ‘Closing Date’ means the date on which the Close of Escrow for all Real
Property parcels occurs. If the Closing
Date does not occur by May 1, 2010, the Purchase Price for the Property
will continue to increase by Three Hundred Fifty Thousand Dollars ($350,000). On each subsequent May 1, anniversary
date, through May 1, 2019, the Purchase Price for the property will
continue to increase by Three Hundred Fifty Thousand Dollars ($350,000), annually,
with a total possible increase to the Purchase Price by an amount of Three
Million Five Hundred Thousand Dollars ($3,500,000).â€
B. The Extrinsic Evidence
Offered Below
Henry
testified repeatedly that he never intended to sell anything less than the
entire 269 acres near Patterson that is the subject of this dispute. Further, he understood Miroyan wanted to buy
all 269 acres. Henry’s attorney
testified the agreement pertained to the sale of the entire 269 acres and
nothing less.
On the
other hand, Miroyan testified he never intended to purchase the 269 acres. Rather, he claimed he only entered into the
agreement as a favor to Henry because Henry’s wife was experiencing a
significant health problem and needed a liver transplant. Henry needed to sell the ranch to cover
related medical costs.
name="_ftnref4" title="">[4] Miroyan agreed to “park†some money in a
lengthy escrow in exchange for some acreage commensurate with his investment. Miroyan claimed neither Henry nor Frampton
said anything to him that would lead him to believe the Gnesas only wanted to
sell the entire property. He believed he
could buy as little or as much of the 269-acre property as he wished.
With
specific regard to section 6.1.1, Henry testified he understood this section
permitted him to consider a partial closing, but a partial closing was not
required. He did not wish to subject the
land to partial closings because the property had an integrated irrigation and
drainage system on a crop rotation program.
If he were to sell pieces of the property, it would become difficult if
not impossible to farm.
name="_ftnref5" title="">[5] Additionally, concerns regarding spraying, fumigating,
and harvesting, as well as dust and noise, weighed against separate sales or
closings. The language in section 6.1.1
that would permit separate closings required the mutual agreement of the
parties. He believed the section was “pretty
clear.†Earlier draft versions of the
agreement, and this section in particular, were objectionable because those
versions did not include language requiring the parties’ mutual agreement. When asked about the need for clarification
of this section, as referenced in the unsigned 2009 addendum prepared by
Frampton, Henry believed it was needed because there was concern Miroyan would
not follow through with the purchase of the entire property as he was not
making deposit payments timely. Also, the
relationship between Henry and Miroyan was strained by that time.
Counsel for
the Gnesas testified similarly. He did
not recall any discussion about partial closings prior to January 3, 2005. Frampton indicated the language of section
6.1.1 was drafted by Miroyan’s attorney, Terry Root.
during the period between January 3 and 5, 2005, the attorneys, on behalf
of their clients, negotiated the language of section 6.1.1. (Plfs’ Exhs. 26-31.) The first two drafts of the parties’ agreement
did not include any language pertaining to possible partial closings. In a draft version forwarded via e-mail on
January 5 from Root to Frampton, the following language appeared for the
first time in section 6.1.1: “At Buyer’s
sole discretion there may be four or more separate Close of Escrow dates, so
long as Seller is paid in full for the particular parcel(s) for which any
Closing Date relates, and so long as Buyer and Seller mutually agree to the terms
of the Closing ….†Frampton’s
reaction to the inclusion of this language was “extremely negative.†Partial closings cause “problems down the lineâ€
and he was not comfortable with the language.
Frampton advised Root “that we absolutely did not want part of this
closing and the other part not closing,†and he objected to the language giving
the buyer complete discretion. The next
version of the draft agreement deleted the phrase “At Buyer’s sole discretionâ€
and replaced it with “Upon the further agreement of the parties.†Frampton objected to this language as well. He advised Root he wanted stronger language, indicating
it had to be “a mutual decision, that it would be looked at at the time that it
was suggested, and that nobody be obligated to agree to a closing of part of
the parcel.†Later that same date, another
draft of the agreement was forwarded for review from Root to Frampton. This version provided as follows:
“… Upon the further mutual agreement of the parties, there
may be four or more separate Close of Escrow dates, so long as Seller is paid
in full for the particular parcel(s) for which any Closing Date relates, and so
long as this partial Closing does not result in the remaining Property being
landlocked from Ward Avenue, or cut-off from the water supply on the Property. Buyer and Seller shall mutually agree to the
terms of any partial Closing as instructed to Escrow Holder. Neither party is obligated to agree to such
partial Closing.â€
Thus, as between these two drafts, from the first version to
the second, the word “mutual†was added, as was the sentence providing that
neither party was obligated to agree to a partial closing. The draft that followed did not include any
changes to section 6.1.1. The Gnesas
signed that version of the agreement the following day.
Miroyan
testified Henry knew of his requirements regarding partial closings and partial
sales. He testified he did not review
the various iterations of the agreement because that is what he hired an
attorney for. Miroyan told his attorney
he wanted partial closings at the buyer’s discretion, and he had partial sales
in mind. He did not remember agreeing to
the language in the final version of the agreement.
discretion. And he did not direct his
attorney to approve the language changes in the drafts, although he admitted he
did not read them, or only read portions of them. Miroyan believed Frampton’s effort to clarify
section 6.1.1 in the unsigned 2009 addendum was “subterfuge.†He believed the parties’ agreement provided
it was the buyer’s decision—his decision—to make a partial close or sale.
When
parties to a contract introduce conflicting
evidence to support their interpretation of uncertain language, the issue
presented is one of fact to be determined by the trial court’s observations and
conclusions regarding credibility of witnesses. (Abbate
v. County of Santa Clara (2001) 91 Cal.App.4th 1231, 1239.) A review of the record reveals there is
substantial evidence to support the court’s reasonable construction of the
contract and its factual findings. Here,
the trial court was faced with conflicting evidence regarding this
agreement. It is plain the trial court
accorded the testimony of the Gnesas and Frampton more weight than that offered
by Miroyan.
The Gnesas’
exhibits further support the trial court’s factual findings. The contract references the entire property,
consisting of four assessor’s parcels and 269 acres. The per acre price of $32,500 allows for
modification of the total number of acres, and hence the total price, following
review by a civil engineer or surveyor.
The payment schedule calls for deposits in ascending values over the
course of a 15-year period, and makes no reference to any deposit applying to
any particular separate parcel. It gives
the Gnesas the right to farm the entire property. And, significantly, while section 6.1.1
partial closings, it does not, as Miroyan argues, require them.
In sum, the
trial court resolved the conflicts in the evidence and interpreted the language
of the agreement in light of the evidence it found credible. Because its findings of fact are supported by
substantial evidence, we uphold the trial court’s reasonable construction of
those facts. (Parsons v. Bristol Development Co., supra, 62 Cal.2d at p. 865; Leep
v. American Ship Management, supra,
126 Cal.App.4th at p. 1041; Morey v. Vannucci,
supra, 64 Cal.App.4th at p. 913.)
III. The Applicability of the
Subdivision Map Act
Miroyan
contends the agreement is void in any event because it violates the provisions
of the SMA. The Gnesas contend the SMA
does not apply because the contract called for the sale of the entire 269 acres.
The SMA, the
primary regulatory scheme for the subdivision of property in California, requires
a subdivision to be designed in conformity with applicable general and specific
plans and to include public improvements. (See Gardner
v. County of Sonoma (2003) 29 Cal.4th 990, 996-997; Hill v. City of Clovis (2000) 80 Cal.App.4th 438, 445.) “To comply with the [SMA], the landowner must
secure local approval and record an appropriate map.†(van’t
Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 564.) “The map, when recorded, gives constructive
notice to transferees. [Citations.] Because it is recorded locally in the chain of
title, it also partakes of the qualifications of a conveyance.†(John
Taft Corp. v. Advisory Agency (1984) 161 Cal.App.3d 749, 756.)
“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.†(
see Gardner v. County of Sonoma,
Ops.Cal.Atty.Gen. 299, 301 (1978).) To
accomplish these goals, the SMA, among other things, 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 (Gov. Code,
to sell, lease or finance “is expressly conditioned upon the approval and
filing of a final subdivision map or parcel map ….†(§ 66499.30, subd. (e).) Violation of the SMA by the subdivider or an
owner of record at the time of the violation is a criminal offense punishable
by imprisonment, a fine or both. (§ 66499.31.)
Additionally, a grantee of property
divided in violation of the SMA may bring an action to recover damages within
one year of the date of discovery of the violation. (§ 66499.32, subd. (b)); and any contract
to purchase property may be void or voidable. (§ 66499.32, subd. (a) [providing for the
voidability of deeds or contracts violative of SMA]; see Black Hills Investments, Inc.
v. Albertson’s, Inc. (2007) 146 Cal.App.4th 883, 891-895 & fn. 4
[contract for sale of unsubdivided parcels in violation of SMA was void;
§ 66499.32 remedy of voidability applies only to sales of property divided
in violation of SMA]; Sixells,
Cal.App.4th 648, 653-654 [contract for sale of parcel before final map filed
without being “‘expressly conditioned’†on approval and filing of final
subdivision or parcel map found void as matter of law at time executed].)
Miroyan’s
argument relies upon the assumption we will find the parties’ agreement to be
one for the purchase of subdivided land. However, we have already determined it does
not. It merely allows for consideration
of a partial future closing of a portion of the entire 269 acres. And it does not require such a
transaction. Simply stated, this
agreement does not involve the sale of any parcel or subdivided portion of a
larger real property; it concerns the sale of 269 acres comprising four
parcels. There were to be no partial
sales of one of the four parcels. As a
result, the requirements of a final map or parcel map pursuant to the SMA are
not applicable to this purchase. To the
extent Miroyan makes additional arguments related to the SMA, we need not
address them as the SMA does not apply.
DISPOSITION
The
judgment is affirmed. Costs are awarded
to respondents.
__________________________
PEÑA, J.
WE CONCUR:
________________________________
LEVY, Acting P.J.
________________________________
CORNELL, J.
name="_ftn1" title="">[1]Partial
sales were not discussed in negotiations.
The Gnesas were not interested in a partial sale.
name="_ftn2" title="">[2]Miroyan
had paid approximately $980,000 in deposit payments by this time.
