Stratton v. Tejani

In Stratton v. Tejani (1982) 139 Cal. App. 3d 204, the Court of Appeal affirmed a decree of specific performance entered in favor of the buyers, but remanded the matter to the trial court with the proviso that where the seller has failed to timely close escrow, a buyer is entitled to incidental damages for increased financing costs caused by the seller's breach. Presumably for the purpose of guiding the trial court on remand, the appellate court observed that the difficult question was not whether such damages were awardable, but rather how to correctly assess such damages. The court rejected the method adopted in Hutton v. Gliksberg, 128 Cal. App. 3d 240, whereby damages were computed by calculating the interest differential over the full term of the buyer's mortgage and then discounting it to present cash value. The court opined that this method lacked an underlying factual basis in light of the fact that residential real property typically is held for only 7 to 10 years. The court concluded that the preferable approach would be to require the trial court to determine factually how long the buyers would remain in possession of the property and to award the present cash value of the interest differential calculated over the anticipated period of possession rather than for the life of the loan. (Stratton v. Tejani, supra, 139 Cal. App. 3d at pp. 214-215.)