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  • Writer's pictureDesmond Collins

Without a 3rd Party to Determine Sufficiency of Performance, Determination may be a Mistake

Coral Farms, L.P. v. Mahony (2021) 63 Cal.App.5th 719 [Moore, O’Leary, and Fybel]

Three landowners with neighboring properties agreed they would remediate a mudslide and perform mitigation work on their respective properties in accordance to plans attached to the agreement, which was memorialized in a contract. As part of the agreement, each landowner agreed to obtaining a written report from a design engineer or geologist that the work was completed in accordance to the parties' plan. After the work was completed, two of the landowners sued the third, alleging that the Defendant's work breached the plan. However, the trial court ruled against the Plaintiffs, because the Defendant complied with the contract and and supplied an engineer's report, stating that their work was indeed completed in accordance with the approved plants. The Court of Appeal affirmed, stating that, if the parties agree that the sufficiency of performance is to be determined by a third party, that party's determination is conclusive in the absence of proof of fraud or mistake. The Plaintiffs then argued that, because the settlement agreement did not identify the engineer or geologist as the “final arbiter” of the approval, they could challenge the performance as insufficient. The Court of Appeal rejected this argument as well.

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