California Court of Appeals, Fourth District, Third Division
from a judgment of the Superior Court of Orange County, Linda
S, Marks, Judge Super. Ct. No. 30-2016-00877830 Reversed and
Riper Law and David A. Van Riper for Defendant and Appellant.
Sayre for Plaintiffs and Respondents.
and Appellant Rugger Investment Group LLC (Rugger) entered
into a contract to sell an airplane to Plaintiffs and
Respondents Magic Carpet Ride, LLC (MCR) and Kevin T.
Jennings. Rugger deposited a lien release into escrow eight
days after the expiration of a 90 day period in which it was
required to do so. The trial court found Rugger could not
claim substantial performance because it had violated the
plain language of the contract. For that reason, the court
granted the motion of MCR and Jennings for summary
adjudication of their breach of contract cause of action and
for summary adjudication of Rugger's rescission and
breach of contract causes of action. Voluntary dismissal of
other causes of action produced an appealable final judgment.
reverse and remand. Whether Rugger substantially performed
its contract obligations is a triable issue of material fact
that defeats summary adjudication. We hold that a provision
in the parties' contract making time of the essence does
not automatically make Rugger's untimely performance a
breach of contract because there are triable issues regarding
the scope of that provision and whether its enforcement would
result in a forfeiture to Rugger and a windfall to MCR.
September 2015, Jennings and Rugger entered into a purchase
and sale agreement (the Agreement) by which Jennings agreed
to purchase from Rugger an aircraft, identified as a pre
owned 2000 JetProp DLX Conversion of 1989 Malibu JetProp (the
Aircraft). The purchase price was $610, 000. Jennings made a
$50, 000 down payment. Jetstream Escrow & Title Service,
Inc. was the escrow agent for the transaction. Paragraph 6.14
of the Agreement states: “Unless specifically stated to
the contrary herein, time shall be of the essence for all
events contemplated hereunder.”
2.6 of the Agreement required Rugger to transfer the Aircraft
on the closing date free and clear of all liens and
encumbrances. Rugger was not able to comply with this
requirement due to a mechanic's or materialman's lien
filed against the Aircraft by Cutter Aviation Phoenix, Inc.
consequence, MCR and Rugger entered into an amendment to the
agreement (the Amendment). The Amendment identified MCR as
the buyer instead of Jennings. The Amendment gave Rugger 90
days from the date of closing in which to provide one of
three means of releasing the Cutter lien, including,
“Lien Release fully executed by Cutter... in original
form delivered to Escrow Agent, recognized and accepted by
the FAA [Federal Aviation Administration ].” Rugger
agreed to hold back $90, 000 with escrow for a period of 90
3a. of the Amendment states that if Rugger can obtain a lien
release by any one of the three ways identified in paragraph
2 within the 90 day term, then the entire amount of the
holdback would be released to Rugger on the 90th day.
Paragraph 3b. of the Amendment states that if Rugger cannot
obtain a lien release by any one of the three ways identified
in paragraph 2 within the 90 day term, then Rugger
“agrees to release entire amount of holdback to Buyer
at the expiration of the 90 day term.”
on behalf of MCR, and Rugger agreed the closing date would be
February 23, 2016. An aircraft bill of sale dated February
23, 2016 passed title to the Aircraft from Rugger to MCR, and
Jennings accepted the Aircraft on that date.
did not obtain a lien release within 90 days of February 23,
2016. Rugger obtained a lien release from Cutter on May 31,
2016, eight days after the expiration of the 90 day period,
and delivered the lien release to escrow. The lien release
was on an FAA form entitled “Notice of
Recordation-Aircraft Security Conveyance.” The lien
release was not filed with the FAA. Rugger asked that $38,
000 be released to it from escrow to cover the amount that
Jeffrey Brannon (Rugger's managing member, not a party to
this appeal) had paid to Cutter to get the lien released.
Jennings did not agree to that request.
filed a complaint against Rugger for breach of contract and
breach of the implied covenant of good faith and fair
dealing. An amended complaint added MCR as a plaintiff. The
amended complaint alleged Rugger breached the Amendment by
failing to obtain a release of the Cutter lien within the
requisite 90 day time period and by refusing to release the
$90, 000 holdback.
amended cross complaint brought by Rugger and Brannon
asserted causes of action against Jennings for breach of
contract, breach of implied contract, and rescission of the
Amendment. The amended cross complaint alleged Jennings
breached the Amendment by refusing to allow the escrow to
release the $90, 000 holdback to Rugger. The trial court
sustained without leave to amend Jennings's demurrer to
the breach of implied contract cause of ...