Sawyer v. First City Financial Corp

124 Cal.App.3d 390 (1981)

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Nature of the Case

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Facts

Sawyer (P) sold 32 acres of land to First City (D) for $1.18 million for cash and a note of $670,000. D borrowed $1.8 million from Toronto Bank (D1), and P subordinated its note to D1. D eventually discontinued payments to D1 on the note and D1 foreclosed on the note and purchased the land for $650,000. The land was then sold to Lexington Properties for $800,000. P sued on the basis that at the time of the foreclosure sale, D1 had agreed to resell the realty to D for a price equal to D1's total investment in it and that that transfer was delayed until the sale to Lexington Properties could be arranged. Lexington Properties obtained development funds from Lomitas Properties, Inc. which was a corporation owned and controlled by D. The net effect was that there was a conspiracy to deprive P of his $650,000 interest in the land by a fraudulent and secret transfer of title. In the first trial, judgment was rendered in favor of D under what was basically a contract action, and during that trial, P filed another action and moved to delay the first trial and consolidate. That was denied. P lost the first trial. In the second trial, all parties joined in the first were named as well as the new corporation, Lexington and a party named Erlich, under conspiracy and fraud charges under what was basically a tort action. Motions were filed for res judicata, and the trial court granted that motion. P appealed.