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Edwards v. Symbolic International

April 30, 2009

RICHARD EDWARDS, DBA EUROTRADING, PLAINTIFF
v.
SYMBOLIC INTERNATIONAL, INC., DEFENDANT.



The opinion of the court was delivered by: Jan M. Adler U.S. Magistrate Judge

ORDER:

(1) GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [Doc. 31] AND (2) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT [Doc. 32]

I. INTRODUCTION AND PROCEDURAL BACKGROUND

This straightforward contract case involves a single issue -- whether the $300,000 liquidated damages provision in a contract between the parties for the sale of a Ferrari for $3.1 million is valid and enforceable, or whether it is unenforceable under California Civil Code § 1671(b) because it "was unreasonable under the circumstances existing at the time the contract was made." Id.

On March 10, 2009, Plaintiff Richard Edwards ("Edwards" or "Plaintiff") and Defendant Symbolic International, Inc. ("Symbolic" or "Defendant") filed cross-motions for summary judgment [Docs. 31, 32]. On March 27, 2009, each side filed an opposition to the other side's motion for summary judgment ("MSJ") [Doc. Nos. 37, 38]. In addition, Plaintiff filed a request for judicial notice [Doc. 38-4] and a statement of facts disputed by Plaintiff [Doc. 38-5]. On the same day, Defendant filed an opposition to Plaintiff's statement of undisputed facts [Doc. 37], evidentiary objections to the Declaration of Richard Edwards ("Edwards Decl.") [Doc. 37-3], and a request for judicial notice [Doc. 37-4]. The parties also filed a supplemental joint stipulation of facts [Doc. 38-7] on March 27, 2009. On April 3, 2009, the parties filed replies in support of their motions for summary judgment [Docs. 39-41].

On April 27, 2009, the Court heard oral argument on the parties' cross-motions for summary judgment. Upon due consideration of the written and oral arguments of the parties and the record herein, the Court GRANTS Defendant's Motion for Summary Judgment [Doc. 31] and DENIES Plaintiff's Motion for Summary Judgment [Doc. 32].*fn1

II. FACTUAL BACKGROUND

Plaintiff Richard Edwards is a dealer of vintage and high end cars and is actively engaged in the purchase, resale, brokering and collection of such cars. Edwards Decl., ¶ 3. Plaintiff admits that his primary source of income for the past 25 years has been the buying and selling of cars. Edwards Decl., ¶ 3, 5; Edwards Deposition Transcript attached as Ex. 12 to Symbolic's Index of Exhibits in Support of ("Edwards Depo. Tr.") at 11:4-8. Edwards admits that he has been involved with over 50 transactions involving exotic or vintage cars valued at over $1 million (Edwards Depo. Tr. at 23-24) and that he intended to buy the Ferrari at issue solely for commercial, rather than personal purposes, in order to sell it for a profit. Id. at 15-16. Defendant Symbolic is an automobile dealer located in La Jolla which is also in the business of buying and selling rare and vintage cars for profit. Declaration of Elliott Grossman ("Grossman Decl."), ¶ 2; Declaration of Patrick Van Schoote ("Van Schoote Decl."), ¶¶ 2-3.

In early July, 2007, Edwards told Symbolic he was interested in acquiring a 1959 Ferrari 250 GT Spyder California LWB (long wheel base). Edwards Decl., ¶ 6. Edwards spoke to Symbolic salesperson Elliot Grossman ("Grossman"), who told Edwards that Symbolic did not own such a car, but that it had a customer who did. Id. Grossman offered to have Symbolic approach the customer to inquire whether he was interested in selling his 1959 Ferrari Spyder. Id. The customer agreed to sell his 1959 Ferrari Spyder to Symbolic for a total acquisition price of $2,785,000 including a $200,000 nonrefundable deposit, with the balance of the purchase price to be paid by August 13, 2007. Van Schoote Decl., ¶ 7; Hancock Contract, Def's Ex. 10. After Symbolic came to terms with the owner to purchase the Ferrari, Grossman began negotiating the sale of the Ferrari with Edwards. Grossman Decl., ¶ 11.

On July 8, 2007, Grossman told Edwards that the Ferrari could be purchased through Symbolic for $3,100,000. Edwards' Decl., ¶ 7. Edwards sent a handwritten letter to Grossman the same day, stating that he agreed to purchase the Ferrari for $3.1 million, subject to it passing inspection, that he agreed to pay "a non-refundable deposit of $300,000" within 5 business days of the inspection, and that he would pay Symbolic the balance of $2.8 million within 30 working days of the inspection. See 7/8/07 handwritten letter from Edwards to Grossman, Def's Ex. 1. The parties then had back-and-forth negotiations regarding the sale terms, specifically regarding the date when the final balance payment was due.

Symbolic agreed to the purchase price of $3.1 million and the non-refundable deposit of $300,000, but rejected Edwards' proposed timeline. Grossman Decl., ¶¶ 13-16. Grossman informed Edwards that the "30-working days" he proposed for payment of the balance was not acceptable. Id., ¶ 14. In response, Edwards prepared a second letter, which was typed on July 8, 2007. Id. In this letter, Edwards proposed that the balance of $2.8 million be paid within 30 "calendar days" of the inspection. See 7/8/07 Letter from Edwards to Grossman, Pltff's Ex. A in support of Plaintiff's MSJ; Grossman Decl., ¶ 14. Symbolic rejected these payment terms and the first draft of the contract that contained them. Grossman Decl., ¶ 15; first draft of contract, Def's Ex. 3. Edwards ultimately agreed to Symbolic's time requirements regarding payment of the balance of the purchase price. Grossman Decl., ¶ 16. Edwards had his solicitor of 20 years, Bill Ranson, prepare the final version of the contract, which was printed on Plaintiff's Eurotrading letterhead. Edwards Depo. Tr. at 36.

The final version of the contract, executed on July 11, 2007, provided that following a satisfactory inspection of the Ferrari, Edwards was to pay Symbolic a nonrefundable deposit of $300,000 by July 18, 2007. See 7/11/07 Contract, attached as Pltff's Ex. B ("Contract"). The Contract also provided that Plaintiff was obligated to pay the balance of the purchase price -- $2,800,000 -- by August 13, 2007. Id. Finally, the Contract contained the following liquidated damages provision drafted by Plaintiff: "In the event that the Buyer fails to complete upon being given notice to complete then the Seller will retain the deposit by way of liquidated damages for breach of contract." Id.*fn2

Edwards informed Symbolic by letter dated July 12, 2007 that he had completed his inspection, that the Ferrari was satisfactory, and that he would proceed with his purchase. 7/12/07 Letter, Def's Ex. 5. Edwards then paid Symbolic the $300,000 nonrefundable deposit. Def's Ex. 6; Edwards Depo. Tr. at 71. For the next several weeks, Grossman reminded Edwards that the $2.8 million balance needed to be paid on time. Edwards Depo. Tr. at 107-108. On August 6, 2007, Symbolic sent Edwards a written "Notice to Complete" advising him that the $2,800,000 balance was due on August 13, 2007 and reiterating that if Plaintiff did not make this payment by that date, as agreed in the Contract, Symbolic would retain the $300,000 deposit as liquidated damages. Pltff's Ex. D, Notice to Complete dated 8/6/07.

Edwards did not pay the $2.8 million balance on August 13, 2007. Grossman Decl., ¶ 28. On that date, Plaintiff informed Symbolic by handwritten letter that he did not have the funds to complete the transaction on that day. Pltff's Ex. E. However, Edwards stated that he "fully intend[ed] to honor our agreement," that he was able to complete the transaction by August 22, 2007, and asked Symbolic for "a little patience."

The next day, on August 14, 2007, Symbolic advised Edwards by letter that he was in breach of the contract, that Symbolic was now free to sell the Ferrari to an alternate buyer, and that Symbolic would retain the $300,000 non-refundable deposit as liquidated damages. Pltff's Ex. F, 8/14/07 Letter from Symbolic's counsel to Edwards. However, Symbolic told Edwards he could still purchase the Ferrari if he would: (1) sign a new contract; (2) immediately remit another $300,000 non-refundable deposit; and (3) agree to a new purchase balance of $2.6 million (for a total purchase price of $3.2 million) to be paid by August 27, 2007. Id.; Pltff's Ex. G, draft amended contract.

On August 21, 2007, Edwards told Symbolic (through counsel) that he was prepared to remit the $2.8 million balance due on the original contract. Edwards' Declaration in Opposition to Def's MSJ ("Edwards' Opp Decl."), ¶ 14. On August 22, 2007, Symbolic told Edwards it was considering his offer and would reply the next day. Plaintiff's MSJ at 4. On August 23, 2007, Symbolic told Edwards the Ferrari had been

Id. Symbolic admits that the car was sold on or about August 23, 2007 to a third party for $3.5 million. Joint Stipulation of Undisputed Facts, ¶ 2 [Doc. 38-7]. On September 18, 2007, Edwards filed the instant action seeking return of the $300,000 deposit, asserting claims for (1) rescission/restitution and (2) unjust enrichment.

III. LEGAL STANDARDS

Summary judgment is proper where the pleadings and materials demonstrate "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A material issue of fact is a question the trier of fact must answer to determine the rights of the parties under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. Summary judgment may be granted in favor of a defendant on an ultimate issue of fact where the defendant carries its burden of "pointing out to the ...


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