Plaintiff purchasers appealed from a judgment of the Superior Court of Ventura County (California) that entered an order of dismissal of plaintiffs’ complaint based upon defendant sellers’ demurrer that it failed to state sufficient facts to constitute a cause of action for specific performance of an option to buy land and for damages.
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Overview
Defendant sellers and plaintiff purchasers entered into a written option agreement for the sale of land. The judgment that dismissed plaintiffs’ complaint for failing to state causes of action for specific performance of the contract arising from the exercise of the option and damages was reversed. The court held that plaintiffs sufficiently pled a valid exercise of the option by alleging that defendants accepted the oral notice of exercise of the option, rather than in writing as required by the contract, and this was binding on defendants. The court further stated that if it determined that plaintiffs validly exercised the option, defendants could not negate that exercise by claiming rejection of nonconforming escrow instructions. Plaintiffs’ bare allegation of bad faith, which was a conclusion of law, was sufficient to state a cause of action under Cal. Civ. Code § 3306. Plaintiffs’ assertion that there was an oral modification to the contract violated the statute of frauds, Cal. Civ. Code § 1624. Allegations that defendants misrepresented ownership of the property for the purpose of inducing plaintiff to buy the option adequately pled actionable fraud.
Outcome
The court reversed the judgment that dismissed plaintiff purchasers’ complaint because they sufficiently pled that defendant sellers’ waived any defect in the exercise of an option to buy, that defendants acted in bad faith, and that defendants fraudulently misrepresented the status of their ownership of the property for sale. The court further gave plaintiffs’ an opportunity to amend to allege facts establishing equitable estoppel.