Mercury Bowl v. Thee Aguila, Inc. CA2/4

BACKGROUND

A. Respondents Acquire the Property In 2015, TAI borrowed $5.7 million from Pico Rivera First Mortgage Investors, LP (“First Mortgage”), secured by a deed of trust against the Property. TAI eventually defaulted on the loan and First Mortgage foreclosed on the Property, taking title following a trustee’s sale in December 2017. Respondents purchased the Property from First Mortgage for more than $4 million in November 2019.

B. TAI’s Complaint and the Oral Option Contract

In May 2019, TAI filed the underlying action against First Mortgage and others,1 alleging that First Mortgage and its principal breached an “Option Contract.” According to TAI, pursuant to this agreement, the parties “allowed” the trustee’s sale to proceed so that First Mortgage would have title to the Property, and TAI would have “a post[-]foreclosure right of redemption . . . .” TAI alleged that the Option Contract called for TAI to make reasonable efforts to either locate a buyer for the Property or pay an unspecified “agreed upon payoff sum” “within twelve (12) months from the date of foreclosure.” First Mortgage, TAI alleged, agreed to maintain “viable title to the Property” for 12…