Watson v. Cal-Three, LLC

After guarantor Watson (plaintiff) sent Cal-Three (defendant) a default notice and then gave a title company an incorrect payoff figure that scuttled a townhome closing, the trial court found Cal-Three had not actually been in default when Watson sent that notice; Watson subsequently paid off the underlying construction loan, foreclosed, bought the property himself, and resold the townhomes and land for a combined profit exceeding $1.1 million. The trial court, finding Watson acted in bad faith, ordered disgorgement of those full sale proceeds to Cal-Three, and Watson appealed the damages calculation.