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Scott Cyr, et al v. Dwayne Mcgovran

May 29, 2012


(Super. Ct. No. CV080109) (San Luis Obispo County) Charles S. Crandall, Judge Superior Court County of San Luis Obispo

The opinion of the court was delivered by: Yegan, J.



Law students are taught that ownership of real property can be compared to the possession of a "bundle of sticks," i.e. there are certain rights and privileges associated with such ownership and that each stick represents a distinct right or privilege. (See e.g.United States v. Craft (2002) 535 U.S. 274, 278, 152 L.Ed.2d 437, 446.) Here, appellants had an option to purchase real property. This does not give them a stick in the bundle. As we shall explain, an option to purchase real property is a contractual right which, if exercised, gives them the "bundle of sticks." Then and only then does option holder own an interest in real property which can be injured.

Scott Cyr, Mesa Vista LTD, and Mid-Coast Capital appeal from the judgment entered after the trial court granted respondents' motion for summary judgment. Respondents are Century 21 Filer Realtors, Inc., Gail Kemble (listing real estate agent), and Ken Taylor (listing real estate broker). Appellants contend that their negligence cause of action, based on a perceived injury to real property, should be subject to the three year statute of limitation of Code of Civil Procedure section 338, subdivision (b)*fn1 and not the two year statute of limitation of section 339, subdivision 1. They are mistaken and we affirm.

Factual and Procedural Background

Dwayne and April McGovran (the McGovrans) owned a ranch consisting of eight parcels of land (the "Tienda Properties") in San Luis Obispo County. The parcels were lots 3, 4, 5, 6, 11, 12, 13, and 14. In June 2002 the McGovrans listed the property for sale with respondents. In August 2002 the McGovrans and appellant Cyr agreed that Cyr would buy two parcels (lots 6 and 11) outright from the McGovrans and, apparently for tax reasons, could have options to buy the remaining six parcels over a period of two years. If Cyr timely exercised his option to purchase lot 12, he would then have an option to purchase lot 5. If he timely exercised his option to purchase lot 5, he would then have an option to purchase lots 3, 4, 13, and 14.

In December 2002 the McGovrans' lender filed a notice of default as to some of the parcels subject to Cyr's options. As a condition of obtaining a new loan, the McGovrans gave the new lender an option to purchase the same six parcels that Cyr had options to purchase. The lender's option was exercisable only if Cyr failed to timely close escrow on lots 5 and 12. The lender's option conflicted with Cyr's options in that "the escrow closing dates [shown in Cyr's options] were later than those shown in the [lender's] Option . . . ." Pursuant to Cyr's options, he had until December 30, 2003, to close escrow on lots 5 and 12. Pursuant to the lender's option, Cyr had until September 15, 2003, to close escrow.

In August 2003 "Cyr became aware of the potential problem with the [lender's] Option which could cloud title to the Tienda Properties." Cyr did not close escrow on lots 5 and 12 by the September 15th date shown in the lender's option. "On September 16, 2003, [the lender] recorded a Memorandum of Option Agreement . . . clouding title to lots 5 and 12 of the Tienda Properties."

On November 4, 2003, Cyr's attorney "took issue with and denied the claim by [the lender] that it had some right in the Tienda Properties which was superior to [Cyr's] rights."

Cyr assigned his option rights on lot 5 to appellant Mesa Vista, LTD. He assigned his option rights on lot 12 to appellant Mid-Coast Capital. In October 2003 Mid-Coast Capital closed escrow on lot 12. On November 26, 2003, the lender filed a complaint for specific performance of its option. On the same date, the lender recorded a lis pendens. Despite the lis pendens, appellants went on to complete the purchase of all of the parcels constituting the Tienda Properties. On lot 5, escrow closed in December 2003. On lots 3 and 4, escrow closed in March 2004. On lots 13 and 14, escrow closed in December 2004. The lender's lawsuit was subsequently dismissed and the lis pendens was expunged.

On December 23, 2005, appellants filed an action against the McGovrans and respondents, the McGovrans' real estate agents. The third cause of action for negligence claimed that respondents had negligently failed to assure that the McGovrans did not grant to their lender an option inconsistent with appellants' options. The allegations included the following: (1) "the real estate licensees had . . . duties imposed on them by affiliation with the National Association of Realtors, as well as assumed a duty to correct the erroneous [lender's] option"; (2) "the real estate professionals breached their duty of care . . . such that Cyr and the other [appellants] were forced to incur consequential damages and also were required to and did employ attorneys and experts to defeat the claimed interest of [the lender]"; (3) appellants "suffered costs related to holding the properties . . . until the cloud on title could be lifted, and thereby were deprived of the ability to recognize profit from the sale of one or more of the parcels"; (4) respondents breached their duty to "disclose fully to [appellants] . . . all facts affecting the value or desirability of the parcels . . . at all times until the transactions had closed"; and (5) respondents "failed and refused to cooperate with and assist [appellants] in defending against the claims made by [the lender], thus increasing the costs to [appellants] to defeat the [lender's] claims."

Respondents filed a motion for summary judgment. The trial court granted the motion on the ground that appellants had failed to file their complaint within the two-year statute of limitations for ...

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