## Facts

- A developer planned to build a multi-story office building on a Santa Ana lot and retained a licensed architect under a written contract.
- The architect’s services were divided into Phase 1 (preliminary plans) and Phase 2 (final plans and specifications and construction supervision).
- The contract made Phase 2 obligations contingent on the owner obtaining financing it deemed economically satisfactory, expressly stating this was a condition precedent to commencing, continuing, completing Phase 2, or paying fees for it.
- The contract also stated that 75% of the architect’s fee would be payable only from construction loan funds.
- The architect completed Phase 1 and was paid $600.
- Using the preliminary plans, the owner obtained a construction cost estimate of about $1,020,850 and received a conditional construction loan offer requiring clear title and a first trust deed.
- The owner instructed the architect to proceed with Phase 2 and paid $12,000 as an estimated 25% portion of the total fee.
- A third party filed an adverse title action and recorded a lis pendens, clouding title and preventing satisfaction of the lender’s clear-title condition.
- The owner never obtained construction loan funds, abandoned the project, and instructed the architect to stop work.
- The architect claimed he performed more than 25% of the work, sought additional compensation, and sought to foreclose a mechanic’s lien.

## Issues

1. Whether the contract made payment of the remaining Phase 2 fee contingent on obtaining economically satisfactory financing and the actual existence of construction loan funds, so that nonoccurrence barred further recovery.
2. Whether the owner failed to make reasonable efforts to obtain financing, such that it could not rely on the financing condition.
3. Whether the owner’s conduct (directing Phase 2 work and paying 25%) or lack of earlier notice estopped it from asserting failure of the financing condition.

## Decision

- The Supreme Court of California affirmed judgment for the owner.
- The court held that obtaining construction loan funds was a condition precedent to any obligation to pay the remaining 75% of the architect’s fee.
- The court found the owner made reasonable efforts to secure financing and did not wrongfully prevent the condition from occurring.
- The court rejected equitable estoppel because the architect did not prove misrepresentation, concealment, or justified detrimental reliance sufficient to override the express financing condition.
- Because no construction loan funds were ever obtained, no further duty to pay arose beyond amounts already paid.

## Legal Principles

- When a contract provides that compensation is payable only from a specific fund, failure of that fund bars recovery absent wrongful prevention by the obligor.
- Express financing provisions may operate as conditions precedent to performance and payment, not merely as timing terms.
- A party subject to a condition precedent must do what the contract presupposes to attempt to bring about the condition, including reasonable efforts consistent with the agreement.
- Equitable estoppel requires proof of conduct amounting to misrepresentation or concealment and justified reliance causing detriment; it will not be applied to negate clear contractual conditions without such proof.

## Conclusion

The court enforced contractual provisions allocating to the architect the risk that project financing would fail, holding that the owner owed no additional fees because payment was limited to construction loan funds that never came into existence and the owner did not wrongfully cause that failure.


Parsons v. Bristol Dev. Co., 62 Cal. 2d 861, 402 P.2d 839 (Cal. 1965)