KUISH

INTRODUCTION

Plaintiff Bradford Kuish entered into a written agreement to purchase defendants William W. Smith, Jr., and Rhonda Lynn Smith’s Laguna Beach residence for $14 million, but later unilaterally cancelled escrow. Defendants promptly sold the property to a third party for $15 million, but refused to return plaintiff’s $620,000 deposit, relying on the agreement’s description of the deposit as “non-refundable.”

Following a bench trial on plaintiff’s claims seeking the return of the deposit, the trial court found in favor of defendants. The court concluded, inter alia, defendants’ retention of $600,000 of the deposit did not constitute a forfeiture but did constitute separate and additional consideration for defendants’ agreement to extend the escrow closing date. The court also concluded $20,000 of the deposit was refundable to plaintiff, but that amount was offset by the amount of damages sustained by the roof of the residence during the escrow period plus the amount of interest plaintiff owed defendants.

We reverse and remand the matter to the trial court. As we will explain, defendants’ retention of $600,000 of plaintiff’s deposit constitutes an invalid…