Legal Question in Real Estate Law in California

You are tossing around very loaded words that have significant legal meaning, without, it seems, understanding what they mean, nor how real estate sale transactions work. You had a contingent contract, not a final binding contract. That's what the "contingency" means. Neither you nor the seller committed to be obligated to buy/sell the house until you conducted whatever information gathering you needed to do and removed the contingencies, at which point you both agreed that the other terms of the agreement would become binding. Only removal of the contingency would create a final binding contract of sale. When you came back and said you did not want to remove the contingency unless they agreed to make repairs, it was you who reopened negotiation of the terms of the contract. They then had every right to say if you did not want to accept the existing condition of the property, then they would just sell it to someone else. There is nothing "coercive" or "blackmail" about letting you know that the reason they took that position was they had a full-price backup offer. No one likes the other side to have the upper hand in negotiations, but it is not coercion or blackmail to take a hardline negotiating stance when you do have the upper hand, and to tell the other side why. The only thing that would be illegal would be if there was not, in fact, any such offer. In that case you might have a case for fraud.