Sternlib

INTRODUCTION

Defendant Story Lending, LLC (Story) appeals from a judgment entered after a bench trial awarding Plaintiffs Rika Sternlib and Joseph Sternlib damages for breach of a construction loan contract. We conclude the record supports the trial court’s finding that Story breached the agreement by refusing to make an authorized loan disbursement when due. However, because the trial court applied an incorrect measure of damages, we will reverse the award and remand the case for a retrial on the damages issue.

FACTS AND PROCEDURAL BACKGROUND

Plaintiffs Rika and Joseph Sternlib are husband and wife. In 2004, Rika Sternlib acquired two adjacent hillside lots for a purchase price of $575,500. For several years, Plaintiffs worked on a building plan for a residence on one of the lots. The plan was finally approved by the City of Los Angeles in October 2008. In June 2008, Plaintiffs began looking for a loan to finance construction. Plaintiffs’ broker contacted three lenders, but Story was the only one interested in the loan. Story makes “hard money loans,” which rely primarily on the equity in the property pledged as security, rather than the borrower’s credit history. These loans…