Chevron U.S.A. v. IRA Administrators CA3

BACKGROUND

TCN Properties, L.P. (TCN) and Chevron entered into an Agreement of Purchase and Sale and Joint Escrow Instructions (purchase agreement) on November 4, 2008. The parties agreed that TCN would transfer to Chevron title to property in Lathrop, California, subject to TCN first constructing an office building and ancillary improvements on the property to Chevron’s specifications. Chevron paid an initial deposit of $100,000, an increased deposit of $1.6 million on December 23, 2008, and the balance in monthly progress payments, save for 10 percent to be paid at the close of escrow. The obligations of each party were dependent on the other having complied with numerous conditions, including Chevron’s final acceptance of the construction. TCN gave Chevron a promissory note and deed of trust characterizing Chevron’s deposit and progress payments under the purchase agreement as secured loans. The deed of trust was recorded on December 23, 2008. Between November 2008 and August 2009, Chevron paid TCN more than $8 million for the construction of a 24,100 square

2 foot building with related improvements, reserving about $700,000 for payment at closing. On August 11, 2009, IRA…