Terra Law San Jose California

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Serving Clients Throughout the Northern California Bay Area

Terra Law focuses on implementing solutions that achieve the strategic legal and business goals of their clients in practice areas including business and commercial law, corporate law, intellectual property law, and real estate law.

Missing a contract deadline not a breach despite a time is of the essence clause

In the recent case of Magic Carpet Ride LLC v. Rugger Investment Group LLC (2019 DJDAR 9998) the Court addressed the question of whether a short delay in performance constituted a breach justifying a damage award. On summary judgment, the Trial Court determined it did. The Trial Court rejected applicability of the substantial compliance doctrine and in part relied on a “time is of the essence clause.” In short, the Trial Court held that an eight day delay in providing a lien release to escrow in an aircraft sales transaction, justified an award of damages to the party entitled to the lien release in part because of the presence of such a clause.

The appellate Court reversed the grant of summary judgment. Quoting the restatement of Contracts, the Appellate Court held triable issues of fact existed on whether the substantial compliance doctrine negated breach. This was so because the injured party received what it had bargained for, the short delay could be compensated and the defaulting party had cured its failure to perform. Of particular interest to all those who draft contracts, the Court refused to uphold summary judgment on the basis of the “time is of the essence clause.” The Court noted that “to give effect to such a cryptic provision,” the Court must know “what performance at what time is a condition of what party’s duty to do what?” The Court also noted that California law does not require strict performance of contractual deadlines in real estate contracts where there is a potential forfeiture. The Court determined that this rule should be applied to contracts generally. Here the defaulting party stood to lose $90,000 in hold back monies and the 38,000 paid to get the required lien release while the supposedly injured party suffered no significant detriment. In short, the Court also held that a triable issue of fact existed as to whether the defaulting party would suffer an unjust forfeiture under the facts in question.

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Recent Success #2

The Sixth District Court of Appeal recently issued its published decision in the case of Orozco v. WPV (cite) . The Appellate  Court upheld a jury verdict holding one of the largest real estate entities in the Country as lessor (represented by one of the largest law firms in the Country)  liable to the leasee for lost profit and other damages  based on  fraud and concealment. The underlying real estate matter involved the lease of restaurant space in a retail center. In addition to upholding the jury verdict, the Appellate Court held that the guarantor of the lease was entitled to rescission of the guarantee and an award of damages.   The case was tried to a jury by Terry Hugmanick and James McDaniel who also handled the appeal with assistance from David Draper and Martin Dioli.

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Recent Success

The California Sixth District Court of Appeal recently issued its published decision in the case of Orozco v. WPV San Jose, LLC (Vornado Realty Trust) (2019) 36 Cal.App.5th 375,  upholding a jury verdict of $872,141 in favor of Terra Law’s client and reversing the trial court’s order denying rescission of the client’s lease guarantee and denying his entitlement to certain attorney’s fees.

The underlying real estate matter involved a complex lease dispute and fraud action between Terra Law’s clients (a small restaurant business and its owner) as tenant and guarantor of the lease and Vornado Realty Trust (“Vornado”), the owner of the retail shopping center in San Jose, as the lessor.  After a 15 day jury trial, the jury found that Vornado was liable to the tenant for  substantial lost profits and other damages based on the fraudulent representations and concealment by Vornado’s leasing agent.  Terra Law established that while our client was asking questions about the possibility of competing restaurants being leased space within the shopping center, Vornado’s leasing agent was making verbal representations that Vornado would not lease space to competing restaurants while, in fact, it had  intended all along to locate a competing restaurant only two doors away from our client’s business.  On arrival of the competitor, the restaurant business of Terra Law’s client was destroyed.

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Property line disputes, driveway disputes, what can the neighbors do or not do on the property boundaries? These are frequent questions that arise as people go to improve their properties or get an unexpected surprise from a land survey. A historical use of your property which may have once been inconsequential (is the fence on the true property line or can the neighbors really park there?) can have a big impact on your home or business properties.

An encroachment exists where a building or other improvement (such as a wall or fence, patio, or landscaping) on one property extends beyond the property line and encroaches upon an adjoining property. An encroachment may be actionable as, among other things, a trespass or a nuisance by the adjoining property owner. What remedies are available to the encroacher?

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