Yackey v. Pacifica Development Co.

William Swann and Edward Gessin were real estate developers and builders and copartners of Pacifica Development Company (Pacifica) (defendant). Swann became interested in a 375-acre parcel of undeveloped land owned by George and Alma Yackey (plaintiffs). Swann made an offer to purchase the land, and, against the advice of their lawyer, the Yackeys accepted. Swann used his preferred escrow company to manage the sale. Under the escrow agreement, the vast majority of the purchase price was to be covered by a promissory note secured by a purchase-money trust deed. The escrow agreement also contained a release clause providing that, for every $2,500 of principal paid on the note, an acre of land would be released from the lien on the trust deed. The release clause did not specify in what order the acres would be released. Pacifica failed to close the sale in the agreed-upon time, and the Yackeys informed Swann’s attorney that they believed the buyers to be in breach of contract. The Yackeys sued to recover monetary damages for breach of contract. The trial court held that there was a contract, determined that Pacifica had breached it, and calculated a substantial figure for monetary damages attributable to the breach. However, the trial court relied on White Point Co. v. Herrington to further hold that the release clause was so uncertain as to make the entire escrow agreement unenforceable. Accordingly, the trial court ruled in favor of Pacifica, and the Yackeys appealed.