Linden Partners v. Wilshire Linden Assocs.
California Court of Appeal
62 Cal. App. 4th 508, 73 Cal. Rptr. 2d 708 (1998)
- Written by Kelly Nielsen
Facts
Linden Partners (LP) (plaintiff) entered into a contract to buy an office building from Wilshire Linden Associates (WLA) (defendant). The contract contained a due diligence period that allowed LP to obtain and review information about the building before the purchase was scheduled to close. The contract also required that WLA provide LP with documents called estoppel certificates before the deal closed. These estoppel certificates were supposed to contain information about the lease terms of each of the building’s tenants, including the amount of rent the tenant was paying. One of the building’s occupants, Bank Leumi (Leumi), was actually a subtenant of another bank and would not cooperate with WLA’s attempts to get information about its rent obligations. Not long before the deal closed, WLA bought out the other bank’s lease, which made Leumi a direct tenant of the building. WLA obtained a copy of Leumi’s sublease, which included a formula for calculating Leumi’s rent rather than a specific number. During discussions with LP about the deal, a WLA representative misread the formula in the sublease and verbally gave LP an incorrect formula. Using this incorrect formula, LP then calculated Leumi’s monthly rent as $9,327.61. Shortly before closing, a different WLA representative also misread the sublease formula in the same manner as the first representative and also miscalculated Leumi’s monthly rent as $9,327.61. WLA used this incorrect rent number in the contractually required estoppel certificate for Leumi and gave that certificate to LP. The purchase deal then closed. Later, LP discovered that Leumi was actually paying a monthly rent of only $6,177.60. LP asked WLA to pay the difference between the amount of rental income represented in the estoppel certificate and the actual rent being paid by Leumi. WLA refused. LP sued WLA in state court. A jury found that WLA had not tried to defraud LP but that it had breached the sale contract by providing incorrect information in the required estoppel certificate. The jury awarded LP $131,000 for the breach. WLA appealed.
Rule of Law
Issue
Holding and Reasoning (Simpson, J.)
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