Procedural Posture

Procedural Posture

Plaintiff purchasers brought an action for breach of contract, fraud, and breach of fiduciary duty against defendant sellers that arose out of a contract where the sellers agreed to build a fishing vessel. Verdicts were entered against the sellers. The Superior Court of Los Angeles (California) denied their motions to vacate the judgment and their motion for entry of judgments notwithstanding the verdict. The sellers appealed.

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Overview

After the trial run of a fishing vessel, the purchasers insisted on delivery of the ship. Delivery was made under protest as construction work remained to be done. The purchasers signed a receipt stating that the contract had been complied with, that the ship was complete and shipshape and all machinery and component parts were in good working order, and that the ship was entirely seaworthy. Shortly after delivery, construction defects were discovered. The sellers were notified and they requested that the ship be returned to the shipyard for repairs. This demand was refused. The court found that: (1) no trust relationship was created by the contract or dealings of the parties under Cal. Civ. Code ยงยง 2216, 2217, and 2221, as no fiduciary relationship had been formed, nor was there a divided ownership of property, as knowledge and skill was not property that could be held in trust; (2) the sellers did not breach the contract as the purchasers failure to return the ship was a breach due to their failure to comply with a condition precedent; and (3) there was no fraud as the purchasers failed to show that the actual value of the ship was less than the amount that they paid.

Outcome

The court reversed the judgments against the sellers and dismissed all other appeals.