The conflict between Capstone and Zaki was not resolved by negotiations and the parties had to decide how to proceed. The contract stipulated that the seller could cancel the contract and retain the deposit, but if the buyer gave written notice he could not do so and deemed the election to proceed. The seller used Brett Isbell as its broker, while Zaki did not have a broker. The sale was concluded after Zaki paid the $5,000 deposit and opened escrow.
Capstone breached contract
The District Court for the Southern District of Texas recently held that Capstone breached a contract in Zaki v Isbell. In this case, the company lacked due diligence and should have done more to ensure that the sale would be final and successful. In Zaki v Isbell, Capstone argues that Zaki breached the contract by violating a covenant of good faith.
Capstone manipulated bargaining power
The second factor, which we have not addressed, is whether Capstone manipulated its bargaining power in Zaki v Isley. Regardless of whether it manipulated its bargaining power, Capstone breached its contract with the Association. It violated both the express and implied covenants of good faith and fair dealing. The Court found that Capstone acted unfairly, and therefore violated the governing contract.
Capstone did not timely deal with combative Association
The Superior Court in Zaki v Isbell found that Capstone materially breached the implied covenant of good faith by failing to timely deal with the combative Association. The court concluded that Capstone’s failure to timely deal with the Association rendered the purchase contract void, and that Capstone’s failure to close the transaction constituted a material breach of the contract, and therefore excused Zaki from performance.
Capstone’s material breach excused Zaki’s funding of escrow
The Superior Court concluded that Capstone’s failure to timely deal with the Association violated an implied covenant of good faith. Because Capstone failed to comply with the contractual obligations, the court found that the purchase contract was no longer valid as of the closing date on April 3. Because the breach was material, Capstone’s failure to perform excused Zaki’s performance of the escrow.
Isbell’s back injury lawsuit
The Court of Appeals reversed a judgment entered against Isbell after the jury rendered a verdict in his favor. Afterward, Isbell filed a Petition for Writ of Certiorari, asking the Supreme Court to review the case and consider the evidence in the light most favorable to him. After reviewing the record, the Supreme Court unanimously affirmed the judgment, awarding Isbell $75,000 in compensatory damages and no punitive damages.
CC&Rs did not mention a non-compete or a right to approve a buyer
Giangobbe, the Association’s attorney, resisted Kim’s repeated requests for information and notified him that he was prepared to sue if Zaki failed to provide the information. Giangobbe responded that the Association’s attorney was unresponsive to his requests, and he offered to meet with Kim at his office.