CANTON v. SMEED

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Court of Appeal, Fifth District, California.

J.B. CANTON, Plaintiff and Respondent, v. J.R. SMEED, Defendant and Appellant.

F055816

Decided: February 11, 2010

Law Offices of Joseph A. Uremovic and Joseph A. Uremovic;  Clifford & Brown and John R. Szewczyk for Defendant and Appellant. Noriega & Associates and Donald C. Oldaker for Plaintiff and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

OPINION

This is an appeal from a judgment entered on a jury verdict against defendant and appellant J.R. Smeed and in favor of plaintiff and respondent J.B. Canton.   The issues raised in the appeal are without merit.   We will affirm the judgment.

Facts and Procedural History

Respondent sued appellant for commissions respondent claimed were due under a contract between respondent and appellant.   The claim for commissions arose in the following manner:

Appellant owned land in Kern County.   Some of the land had been subdivided and some had not.   Much of appellant's land was the subject of a notice of pendency of an action (see Code Civ. Proc., § 405 et seq.) filed in Kern County.   Appellant had listed some of the land for sale with agents from Keller Williams Realty named Kris Darney and Kim Darney (the Darneys).

In 2005, David Brown, on behalf of California Land & Ranches, Inc., submitted an offer to purchase some of appellant's properties.   That offer was accepted but, during a due diligence investigation, Brown discovered certain unfavorable information and the escrow was canceled.

By early February of 2006, California Land & Ranches, Inc., was no longer developing properties in California, and Brown had gone to work as a real estate salesperson for respondent J.B. Canton, who did business as Twin Oaks Land Company.   Brown contacted appellant to determine whether appellant would be interested in listing his properties with respondent.   Brown, a land surveyor with experience in developing new subdivisions, proposed that respondent would assist in preparing the various tracts for sale as individual lots and would pay for advertising expenses during the listing period.

Respondent, through Brown, exchanged proposed listing agreements with appellant.   Brown (on behalf of respondent) and appellant executed a document entitled “Listing Agreement,” dated March 29, 2006 (the agreement).   The agreement identifies appellant as “Seller” and respondent as “Broker.”   The agreement provides that respondent shall have an “Exclusive Agency Right to Sell” appellant's “real property consisting of various parcels of undeveloped land in Sand Canyon, Kern County[,] California, as more fully described in Exhibit A attached hereto, ․” Two terms of the agreement are particularly pertinent to this appeal.   First, respondent “acknowledges that Seller has the right to sell the property in bulk during the terms of this listing.”   Second, the Darneys had “the right to sell any or all of the property under terms and conditions as agreed to by separate Agreement” between appellant and the Darneys.

The agreement provided for payment of commissions for respondent's services, described as “Sales, Management and Advertising.”   In section 3.A of the agreement, “Seller agrees to pay Broker, as compensation for Broker[']s services, 15% of purchase price for all sales procured by Broker.  [The agreement then states the conditions for payment of the 15 percent commission.]  [¶] Seller agrees to pay Broker 5% commission on all sales made by [the Darneys].  [The agreement then states the conditions for payment of the 5 percent commission.]  [¶] Seller agrees to pay Broker 5% of any bulk sale made by Seller.  [The agreement then states the conditions for payment of the 5% commission.]”   A separately designated section 3.C provides that respondent “shall be entitled to payment on all sales as outlined above, excepting only any persons who Seller dealt with prior to this Agreement.   Seller to furnish Broker with a list of names of such persons within five (5) days of commencement of this Listing.” 1

A separately numbered paragraph 6 concerned indemnification:  “Seller shall indemnify and hold Broker harmless from any loss or litigation expense caused by the active or passive conduct of Seller, and Broker shall indemnify and hold Seller harmless from any loss or litigation expense caused by the active or passive conduct of Broker.   Broker shall not accept compensation related to the Property, from any other person, without the advance written consent of Seller, and any such compensation shall be deducted from any commission payable by Seller to Broker.   Both parties are aware that there is pending litigation affecting the Parcels, and that any complications related thereto, shall not be subject to these indemnification provisions.”

On or about April 14, 2006, Brown and appellant met to discuss Brown's ideas for repricing certain of the properties.   As a result, a document entitled “Price List March 10, 2006” was annotated to reflect prices at which Brown would offer the properties.   According to Brown, this document was adopted by Brown and appellant as a modification of the “Exhibit A” list of properties called for by the agreement.   Respondent proceeded to advertise and sell some of the parcels.   Brown also set up a sales office in a house owned by appellant.

On May 31, 2006, appellant entered into a written agreement to sell all of his properties in Sand Canyon to Galtar LLC. Although Galtar was not a party to the litigation mentioned in paragraph 6 of the agreement between appellant and respondent, the sale was made to Galtar at the direction of the plaintiff in that litigation, pursuant to a settlement agreement between appellant and that plaintiff.   Deeds were recorded for those sales on July 26, 2006.   Although appellant told Brown toward the end of May that a sale of most of appellant's property was then “in escrow,” Brown first learned that the sale had closed when Brown encountered the buyers' agents at the sales office in August of 2006.

Brown had repeatedly asked appellant about the sale of the properties.   On August 22, 2006, after further discussions, appellant and Brown met.   Appellant gave Brown a check for $20,000 and requested he sign a letter acknowledging receipt of payment in full for all outstanding commissions and “any other amounts that may be due” from appellant.   The letter also stated that appellant and respondent “have agreed that the listing agreement with us signed on 29 March 2006 is hereby cancelled, ․” Brown took the money but refused to sign the letter, telling appellant he did not agree the listing contract was canceled.

Respondent sued appellant in April of 2007, claiming appellant's sale of all his property to Galtar constituted a bulk sale under the agreement and that respondent was entitled to a 5 percent commission based on a sale price alleged to be $3.2 million.   After a jury returned a verdict for respondent and against appellant in the amount of $184,372.40, the court entered judgment for respondent.   Appellant filed a motion for new trial, which was denied.   Appellant filed a timely notice of appeal.

Discussion

As appellant recognizes in his reply brief, his contentions on appeal are neither as complex nor as numerous as respondent has characterized those contentions in his own brief.   We will limit ourselves to the contentions appellant actually makes.

In his opening brief, appellant's sole argument is that the agreement was insufficient under Civil Code section 1624, subdivision (a)(4), the statute of frauds.   In relevant part, the statute of frauds states that the “following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent:  [¶] ․ [¶] (4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate ․ or to procure, introduce, or find a purchaser or seller of real estate ․ for compensation or a commission.” 2

Exclusive reliance in appellant's opening brief is placed upon the case of Steve Schmidt & Co. v. Berry (1986) 183 Cal.App.3d 1299, 1307 (Schmidt ), for the proposition that a real estate listing agreement, in order to be valid under the statute of frauds, must include a legal description of the property to be sold and a selling price for the property.   Appellant argues that the properties covered by the agreement were not identified by legal description and, even if the agreement were permitted to be supplemented by other memoranda sufficiently identifying the properties, none of the relevant writings or memoranda contained sales prices for some of the properties.  (Respondent's trial evidence indicated that the parties agreed to establish sales prices for some of the parcels at a later date, after other sales had established a market for the parcels.)

As appellant impliedly acknowledges in his reply brief, Schmidt did not hold that the statute of frauds imposes specific requirements for the contents of a real estate listing agreement.   In fact, the Schmidt case did not involve statute of frauds questions at all.   Instead, Schmidt merely rejected the claim that the absence of terms in addition to those included in the contract before the court rendered the contract uncertain under general contract law.  (Schmidt, supra, 183 Cal.App.3d at p. 1306.)

Recognizing that Schmidt provides no support whatsoever for his claims on appeal, appellant shifts gears in his reply brief.   Although his argument is rather unclear and is waived by his failure to include such an argument in his opening brief (9 Witkin, Cal. Procedure (5th ed.   2008) Appeals, § 723, pp. 790-791), the reply brief apparently contends there was insufficient evidence to support the jury's implied conclusion that all the property sold to Galtar had been covered by the agreement between appellant and respondent.3  We disagree.

The evidence showed that the course of conduct between Brown and appellant treated all of the relevant properties as part of the agreement.   In particular, with respect to the primary parcel appellant contends was not included in the agreement, two letters from Brown to appellant dated March 3, 2006, specifically discuss the inclusion of Spring Creek Estates in the development plan.   A letter sent to appellant two weeks after execution of the agreement demonstrates that appellant and Brown had discussed Spring Creek Estates and that Brown was actively trying to sell the property.   Combined with Brown's testimony concerning both the scope of the agreement and his discussions with appellant, there was ample evidence the jury could believe in reaching its conclusion that all of the property sold to Galtar had been included in the March 29, 2006, agreement.4

Appellant has failed to demonstrate error occurred in the trial court.

Disposition

The judgment is affirmed.   Respondent is awarded costs on appeal.

VARTABEDIAN, Acting P. J.

WE CONCUR:

WISEMAN, J.

GOMES, J.

FOOTNOTES

FN1. Appellant wrote two names at the end of the agreement following the notation “3C.” The parties agree neither of these names is related to the entities that ultimately purchased appellant's property..  FN1. Appellant wrote two names at the end of the agreement following the notation “3C.” The parties agree neither of these names is related to the entities that ultimately purchased appellant's property.

FN2. It appears to us appellant's assumption that respondent sued for a broker's commission is unsupported by any evidence.   The “bulk sale” commission was in the nature of compensation for professional development services, a recognized exception to the “real estate listing” requirements of Civil Code section 1624, subdivision (a)(4).  (See Phillippe v.. Shapell Industries (1987) 43 Cal.3d 1247, 1254.)   In light of our resolution of the other issues appellant has raised, however, we need not resolve this issue..  FN2. It appears to us appellant's assumption that respondent sued for a broker's commission is unsupported by any evidence.   The “bulk sale” commission was in the nature of compensation for professional development services, a recognized exception to the “real estate listing” requirements of Civil Code section 1624, subdivision (a)(4).  (See Phillippe v.. Shapell Industries (1987) 43 Cal.3d 1247, 1254.)   In light of our resolution of the other issues appellant has raised, however, we need not resolve this issue.

FN3. The reply brief states:  “Here, the failure to adequately and competently provide a description of the properties to which the Listing Agreement applied, and to later attempt to provide a different list based upon the understanding which was solely that of the subject broker who was attempting to recover commissions for property which was sold and allegedly covered under the terms of the document, should never have been permitted.   In this regard, the extrinsic evidence offered by Respondent as to the coverage of the subject Listing Agreement is clearly at odds with the express terms of the Agreement itself.”.  FN3. The reply brief states:  “Here, the failure to adequately and competently provide a description of the properties to which the Listing Agreement applied, and to later attempt to provide a different list based upon the understanding which was solely that of the subject broker who was attempting to recover commissions for property which was sold and allegedly covered under the terms of the document, should never have been permitted.   In this regard, the extrinsic evidence offered by Respondent as to the coverage of the subject Listing Agreement is clearly at odds with the express terms of the Agreement itself.”

FN4. Appellant contends his new trial motion should have been granted because “using the March 3, 2006, letter[s] to supplement the terms of the March 29, 2006, Listing Agreement was a violation of the Statute of Frauds, contrary to the integration clause of the Listing Agreement and a direct prejudice” to appellant.   Apart from such problems as failure to object to the evidence in the trial court and failure to present a reasoned argument supported by authorities in his appellate briefs, the letters did not “supplement” the agreement, in the sense of expanding the scope of the agreement;  instead, they served as corroboration of the actual scope of the agreement, clearly a permissible purpose for such evidence..  FN4. Appellant contends his new trial motion should have been granted because “using the March 3, 2006, letter[s] to supplement the terms of the March 29, 2006, Listing Agreement was a violation of the Statute of Frauds, contrary to the integration clause of the Listing Agreement and a direct prejudice” to appellant.   Apart from such problems as failure to object to the evidence in the trial court and failure to present a reasoned argument supported by authorities in his appellate briefs, the letters did not “supplement” the agreement, in the sense of expanding the scope of the agreement;  instead, they served as corroboration of the actual scope of the agreement, clearly a permissible purpose for such evidence.

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