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Escrow Holder by letter that the parties wished to continue with
the escrow and that they considered it still open.
Cancellation of Agreement
On January 31, 1992, after several weeks of negotiations
between petitioners and First American, those parties executed an
“Amendment to Limited Agreement” incorporating the matters
discussed in Mr. Steinman’s December 4, 1991, letter. Pursuant
to the “Amendment to Limited Agreement”, First American issued a
cashier’s check in the amount of $750,000 to petitioners so that
they could pay CDC. This amount was added to petitioners’
accumulated indebtedness to First American.
Since petitioners were unable to deliver title in fee simple
to Phase II free of the cloud of the State’s public easement
claim, petitioners and CDC decided to cancel escrow. CDC agreed
to accept $650,000 to terminate its rights under the Agreement.
By letter dated February 4, 1992, Mr. Steinman informed Escrow
Holder that petitioners and CDC agreed to cancel the Phase II
escrow. On February 14, 1992, petitioners and CDC signed a
“Mutual Release” in which they agreed to terminate the sale of
Phase II and to release each other from any causes of action
relating to the Agreement.
Pursuant to the terms of the Mutual Release, the parties
agreed that CDC would receive up to $650,000 from petitioners “as
consideration” for executing the Mutual Release: $600,000 to be
paid at the signing of the Mutual Release and an “Additional
Amount” of $50,000 to be paid upon, inter alia, the return of
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