Allen v. Smith

In Allen v. Smith (2002) 94 Cal.App.4th 1270, the buyer offered to purchase residential property; using a standard form agreement, the buyer agreed to an initial deposit of $ 20,000, which was to be increased by $ 33,250 upon removal of contingencies. The offer also authorized liquidated damages of three percent of the purchase price, in case of a default. The seller presented a counter offer calling for contingencies to be removed in 21 days and the deposit to be increased to $ 100,000, which was to be released to the seller "as a non refundable purchase option monies." (Id. at p. 1275.) The buyer accepted the counter offer, paid the initial deposit, released the contingencies, and paid the increased deposit, but then notified the seller she would not complete the purchase. The buyer sought a refund of her additional deposit, conceding the initial $ 20,000 deposit was forfeited as liquidated damages. The trial court granted the buyer's motion for summary judgment. (Id. at p. 1276.) The appellate court concluded the parties intended to enter into an purchase and sale agreement, not an option. (Allen v. Smith, supra, 94 Cal.App.4th 1270, 1279.) The parties used standard forms commonly used for the purchase and sale of property. (Id. at p. 1280.) The contract did not give the buyer complete discretion to decide whether to proceed with the sale; once the contingencies were removed, the buyer was conclusively deemed to have elected to proceed. (Ibid.) Further, there was no independent consideration for the option, the agreement did not specify the option period, nor did it prescribe a mode of acceptance. (Id. at pp. 1280-1281.) The Court considered whether the parties' contract constituted an option or purchase agreement. (Allen, supra, 94 Cal.App.4th at pp. 1277-1281.) In that case, the contract consisted of a California Association of Realtors standard form deposit receipt and counteroffer. (Id. at p. 1279-1280.) On the counteroffer, the seller's real estate agent handwrote on the form that the deposit was "to be released to seller as a nonrefundable purchase option monies." (Id. at p 1275.) There was no separate option agreement or any other indication of the option. (Id. at pp. 1280-1281.) Rather, the evidence was clear that the parties intended to enter into a purchase and sale agreement, rather than an option agreement. (Id. at p. 1279.) The Court observed that "an appellate court has no jurisdiction to review an award of attorney fees made after entry of judgment, unless the order is separately appealed." (Allen, supra, 94 Cal.App.4th at p. 1284.) The plaintiff in Allen did not separately appeal the order awarding the defendant his attorney's fees and costs. (Ibid.) Because the Allen court lacked jurisdiction to review the order, it did not reverse it but instead directed the trial court to do so on remand. (Ibid.)