Bollag

Parties agree to act reasonably in their contractual relationship. This case demonstrates that when a party acts unreasonably, it is reasonably certain that no one prospers.

Michael Bollag appeals a judgment extending the escrow on a land sale contract so that buyer Peak-Las Positas Partners (PLP) can obtain a lot line adjustment for a housing project. The trial court found that Bollag acted unreasonably in refusing to extend the escrow after PLP paid most of the purchase price and incurred about $5 million in costs for the lot line adjustment. PLP also received attorney’s fees and costs. We affirm.

Facts

PLP, a general partnership, owns and plans to develop a 10-acre parcel near Las Positas Road in Santa Barbara. Bollag owns the adjoining 86-acre parcel, which includes a ridgetop residence at 3666 Campanil Drive, Santa Barbara. The property is hilly terrain and slopes down to PLP’s property.

In 1999, PLP entered into a purchase and sale agreement and joint escrow instructions (purchase agreement) to buy 4.5 acres of Bollag’s property for $475,000. After escrow opened on July 23, 1999, PLP paid a $150,000 nonrefundable deposit. The purchase agreement provides that…