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Court of Appeal:
Cryptic Handwritten Document Constituted a Contract
Some of the Terms Were Represented by ‘X’; Wiley Says That Was No Bar to Enforcement
By a MetNews Staff Writer
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Above is a photo of the exterior of the Coffee Bean in Calabasas where, the Court of Appeal determined in an opinion filed Tuesday, an enforceable contract was formed when both parties signed a sketchy handwritten recitation of their agreement. |
The Court of Appeal for this district has held, in an opinion likely destined for inclusion in law school casebooks, that an enforceable contract was formed when two men each signed a cryptic, handwritten, two-page agreement they worked out over coffee, with some of the terms, to be based on future events, represented by an “X.”
“As supplemented by parol evidence,” Justice John Shepard Wiley Jr. of Div. Eight wrote, “the Writing was definite enough to be an enforceable contract.”
The parol evidence, he noted, was a declaration by plaintiff Edwart Der Rostamian explaining what he and defendant David Delrahim intended to memorialize on Nov. 23, 2015.
“Rostamian’s explanation of the Writing made it definite enough for judicial enforcement,” Wiley said in an opinion filed Tuesday.
The two had met at the Coffee Bean in Calabasas; Rostamian whipped out a notebook; he borrowed a pen from a woman; Rostamian scribbled down what they agreed upon.
Rostamian signed the agreement on his own behalf and on behalf of his company, Tiffany Builders LLC. Delrahim acted for himself and for Blue Vista Partners.
Agreement Reached
What they agreed was that Tiffany Builders would back out of a deal to buy 13 gas stations from Ibrihim Mekhail for $12.4 million, which was in escrow but had hit snags. Blue Vista would step in and attempt to get the price lowered, and would pay Tiffany Builders $500,000 for clearing the way.
The writing starts out:
“FROM $12,400,000, BRING THE VALUE TO X AMOUNT DIFFERENCE BETWEEN $12.4 MILLION AND X AMOUNT WILL BE ALOCATED [sic] BASED ON THE FOLLOWING. $500,000 TO TIFFANY BULDERS [sic] TO GET OUT OF GLENOAKS ESCROW.”
Other terms are recited, including ownership being vested in Rostamian of four of the stations that were not being sold along with land.
Delrahim proceeded to buy the stations from Mekhail for $11 million and paid Rostamian nothing. Rostamian and Tiffany Builders sued for breach of contract, specific performance, and unfair practices, as well as for tortious interference with prospective advantage.
Los Angeles Superior Court Judge Ralph C. Hofer granted summary judgment in favor of the defendants. Wiley’s opinion reverses the judgment to the extent it is predicated on Hofer’s determination that no contract was formed at the Coffee Bean, but affirms insofar as Hofer rejected the tort theory.
Wiley’s Opinion
Noting that on summary judgment, Hofer was obliged to accept as true Rostamian’s declaration, Wiley declared:
“The Writing, as explicated by Rostamian, was not too indefinite to enforce. It was not an illusory contract. When people pen their names to a document they have drafted together, the law accords their act a potent meaning. Delrahim and Rostamian signed their joint creation, thereby enacting a ritual signifying commitment: an exchange of promises. Courts strive to effectuate designs like that. Powerful authority proves it.”
He added:
“We construe instruments to make them effective rather than void….This rule is of cardinal importance….The law leans against destroying contracts because of uncertainty. If feasible, courts construe agreements to carry out the reasonable intention of the parties.”
The justice went on to say:
“Indefiniteness as to an essential term may prevent the creation of an enforceable contract, but indefiniteness is a matter of degree. All agreements have some degree of indefiniteness. People must be held to their promises. If the parties have concluded a transaction in which it appears they intend to make a contract, courts should not frustrate their intention if it is possible to reach a just result, even though this requires a choice among conflicting meanings and the filling of gaps the parties have left. This rule comes nearer to attaining the purpose of the contracting parties than any other.”
‘X’ Not Indefinite
Addressing the use of “X”s in the writing, Wiley said:
“This use of X was acceptably certain. As Rostamian explained, X was a placeholder to be replaced with the final contract price Delrahim’s company would pay Mekhail. The contract provided a formula for ascertaining the presently unknown sum X, which future events would determine exactly. The X clause was no barrier to contract enforcement because the parties had provided a practical and objective method for determining X’s value.”
In finding that Hofer correctly ruled that Tiffany Builders had no viable cause of action for tortious interference, Wiley pointed out:
“Both negligent and intentional interference with prospective economic advantage require an economic relationship between the plaintiff and a third party, which here was Mekhail.”
Given that Tiffany Builders had assigned its interests to another company, he said, “Tiffany no longer had an interest in the economic relationship with Mekhail.”
The case is Tiffany Builders LLC v. Delrahim, 2023 S.O.S. 4272.
Attorneys on appeal were Jason K. Smith and Mark T. Kearney of the Irvine firm of MK Smith, for Tiffany Builders and Rostamian, and Martin Fox and Lana Lukyanov of the Burbank firm of Bleau Fox, for Delrahim and Blue Vista.
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