## Facts

- Buyers agreed to purchase a Beverly Hills medical office building for $22.2 million under a written purchase agreement; escrow opened in June 1989 and closed in October 1989 after extensions.
- The building’s value depended largely on rental income; the agreement required the sellers to provide leases, a rent roll stating “rent being paid,” and tenant estoppel certificates.
- One occupant, Bank Leumi, was initially a subtenant under a Wells Fargo master lease and paid rent to Wells Fargo, which paid the sellers.
- Shortly before closing, the sellers bought out Wells Fargo’s master lease, making Bank Leumi a direct tenant and enabling the sellers to obtain Bank Leumi’s sublease.
- The sublease described rent by a formula; seller representatives misread the formula and communicated an incorrect monthly rent amount ($9,327.61).
- The incorrect rent figure was inserted into the contractually required Bank Leumi estoppel certificate and provided to the buyers before closing.
- After closing, the buyers discovered the formula yielded a lower actual monthly rent ($6,177.60) and demanded compensation for the shortfall; the sellers refused.
- The buyers sued for fraud and breach of contract; a jury rejected fraud but found breach of contract and awarded about $131,000 in damages based on the rent differential.
- The sellers appealed, challenging liability, causation, damages, and jury instructions concerning independent investigation.

## Issues

1. Whether a seller breaches a real estate purchase agreement by providing inaccurate rent information in a contractually required estoppel certificate, even without fraudulent intent.
2. Whether the buyer’s independent investigation and sophistication bar recovery or negate causation for contract damages based on the misstatement.
3. Whether the trial court erred in instructing the jury on independent investigation and in refusing the sellers’ proposed additional instructions.

## Decision

- The Court of Appeal affirmed the judgment for the buyers.
- The sellers’ inaccurate rent statement in the required estoppel certificate supported breach of contract liability despite the jury’s finding of no fraud.
- The buyer’s due diligence did not, by itself, bar recovery or defeat causation where the transaction contemplated reliance on specified contractual disclosures.
- The trial court’s instructions on independent investigation were sufficient; refusing additional proposed instructions was not error because they were duplicative and potentially confusing.
- The damages award was supported by evidence tying the misstatement to a measurable loss in expected rental income.

## Legal Principles

- A party who undertakes contractual duties to provide specified transactional disclosures can be liable for breach when those disclosures contain material inaccuracies, even if the inaccuracy is negligent or mistaken rather than fraudulent.
- Rejection of a fraud claim does not preclude contract relief when the same conduct violates an express contractual obligation.
- A buyer’s independent investigation does not automatically bar contract recovery when the parties bargained for and relied on particular written representations (such as estoppel certificates) as part of the agreed process.
- Trial courts may refuse special jury instructions that are duplicative, confusing, or not helpful when the subject is adequately covered by the instructions given.
- Contract damages may be awarded for a proven, nonspeculative loss caused by inaccurate rent information that affects the property’s income stream.

## Conclusion

The court upheld a jury verdict that the sellers breached the purchase agreement by misstating a tenant’s rent in a required estoppel certificate, and it held that the buyers’ extensive due diligence did not bar contract damages where the misstatement caused a measurable rental-income loss.


Linden Partners v. Wilshire Linden Assocs., 62 Cal. App. 4th 508, 73 Cal. Rptr. 2d 708 (Ct. App. 1998)