Stevens Group Fund IV v. Sobrato Development Co

In Stevens Group Fund IV v. Sobrato Development Co. (1991) 1 Cal.App.4th 886, the buyer contended the trial court had erred both in determining that section 3306 did not authorize the recovery of lost rents as consequential damages and in denying its request for specific performance. (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 888.) The Court of Appeal reversed the trial court's denial of the buyer's request for specific performance of a real property sales contract where the seller had been unable to convey clear title due to a lienholder's refusal to accept prepayment of a loan secured by the property. (Stevens Group Fund IV, supra, 1 Cal.App.4th 886, 889.) The Court of Appeal reversed the trial court's denial of the buyer's request for specific performance, but rejected the buyer's contention that section 3306 authorized the recovery of lost rents and lost profits as consequential damages. (1 Cal.App.4th at pp. 889, 892.) The court held that lost rents received from lease of the property were not properly an item of consequential damages "in this case" (id. at p. 892), as the buyer's experts had included these rents as part of their capitalized income and comparable sales approaches to determining fair market value. Hence, to award market value and also rental profits as consequential damages in the circumstances would have permitted a double recovery. (Id. at pp. 891-893.) The buyer had also offered as evidence of lost profits the receipt of two offers to purchase the property for more than the contract price before the sale was to close. (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 890.) However, upon the court's tentative ruling that such evidence was inadmissible, the buyer did not seek to introduce evidence of the two offers at trial. (Ibid.) Clearly, the buyer had waived any right to challenge the exclusion of this evidence on appeal by failing to pursue it at trial. It does not appear to have been an issue in the appeal. Similarly, the court rejected the buyer's claim that it was entitled to either the difference between the contract price and fair market value or consequential damages as alternative measure of damages, stating, "the language of the statute is clear. It does not provide for alternative measures of damages." (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 893.) Stevens Group Fund IV did not hold that lost profits--from rents or otherwise--were not recoverable as consequential damages under section 3306 in an appropriate case.