Greenwich S.F., LLC v. Wong
190 Cal. App. 4th 739
| Cal. Ct. App. | 2010Background
- Chan and Greenwich S.F. entered into (via Chan) a real property sale contract for the Greenwich Street property; Chan would remodel and share profits with Greenwich S.F. at closing.
- Wong died shortly after purchase; Chan and Greenwich S.F. formed Greenwich S.F. as the buyer/developer entity to redevelop the property.
- The project evolved from a two-unit duplex to a single-family residence; plans were drafted by Li and revised multiple times, with approvals anticipated but not finalized.
- Appellant—Wong’s widow—refused to transfer title during probate; escrow issues and probate delays occurred; escrow was eventually canceled.
- Plaintiffs sought damages including lost profits (consequential damages under Civil Code 3306) and predevelopment costs; expert appraisal testimony projected substantial profits based on plans.
- Jury awarded $600,000 for lost profits, $90,000 for predevelopment costs, and $60,000 escrow-related damages; the trial court later awarded attorney fees to plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lost profits are recoverable under Civil Code 3306 as consequential damages | Greenwich S.F. argues lost profits are recoverable under 3306. | Chan argues lost profits are not recoverable as consequential damages under 3306. | Loss profits may be recoverable in appropriate cases under 3306. |
| Whether the evidence supports lost profits with reasonable certainty | Profits were foreseeable and plan-based, supported by plans and market projections. | Profits were speculative and not proven with reasonable certainty. | Evidence insufficient; lost profits not proven with reasonable certainty; reversed for lost profits. |
| Whether the escrow deposit damages were properly awarded | Deposit constituted recoverable consequential damages under 3306 if not returned. | Escrow funds were canceled and may not have been in appellant's possession; issue unclear. | Damages sustained given stipulation about credit if funds are later received; otherwise proper under 3306. |
| Whether pre-renovation costs (renovation expenses) were properly awarded | Costs incurred toward planning/renovation were recoverable predevelopment expenses under 3306. | Costs lacked corroboration and direct linkage to loss profits; insufficient evidence. | Evidence insufficient to support $90,000 award; may be remandable for proper proof. |
Key Cases Cited
- Stevens Group Fund IV v. Sobrato Development Co., 1 Cal.App.4th 886 (1991) (amendment to 3306; explains consequential damages and no bad faith requirement)
- Reese v. Wong, 93 Cal.App.4th 51 (2001) (limits on damages under 3306; measures at time of breach vs. trial)
- Horning v. Shilberg, 130 Cal.App.4th 197 (2005) (lost profits not allowed as alternative measure when unavailable; applies 3306)
- Kids’ Universe v. In2Labs, 95 Cal.App.4th 870 (2002) (lost profits for unestablished online venture insufficient to show reasonable certainty)
- Parlour Enterprises, Inc. v. Kirin Group, Inc., 152 Cal.App.4th 281 (2007) (evidence of anticipated profits must be based on actual operations and similar enterprises)