GRUBB ELLIS COMPANY v. LLC

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Court of Appeal, Second District, California.

GRUBB & ELLIS COMPANY, Plaintiff and Appellant, v. nXa, LLC, Defendant and Respondent.

B225096

Decided: October 28, 2011

James A. Kaddo, Judge.   Affirmed in part, reversed in part and remanded.   McGarrigle, Kenney & Zampiello, Patrick C. McGarrigle and Philip A. Zampiello for Plaintiff and Appellant. Law Offices of Howard Rutten and Howard Rutten for Defendant and Respondent.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Grubb & Ellis Company (Grubb) sued nXa, LLC (NXA) for damages allegedly caused by the latter's breach of a real estate listing agreement.   The trial court granted NXA's motion for summary judgment.   The ensuing judgment in favor of NXA, and against Grubb, includes an award of $168,508.75 to NXA for attorney fees incurred in defending Grubb's action.   Grubb appeals and we affirm the judgment except to find that the amount of attorney fees awarded was error.

FACTS

The Background Setting

During the early 2000's, an entity known as 88 Palos Verdes Inn, Ltd. (not a party to the current litigation) owned real property located at 1700 Pacific Coast Highway in the City of Redondo Beach.   In 2001, 88 Palos Verdes and NXA entered into a written contract known as the “First Amended and Restated Agreement of Purchase and Sale of Real Property” (FAPSA), the broad terms of which provided that 88 Palos Verdes would sell the Redondo Beach property to NXA for $20 million (rounded).1

Over an ensuing course of years, 88 Palos Verdes and NXA executed a number of amendments to the FAPSA, predominantly regarding the purchase price and the deadline for NXA to consummate the transaction by delivering the purchase money into escrow.   In September 2005, 88 Palos Verdes and NXA inked an 11th Amendment to the FAPSA.   The purchase price was then $25 million, and the parties acknowledged that NXA had already deposited $1.08 million into a nonrefundable escrow.   The 11th Amendment to the FAPSA required NXA to deposit a further $1 million into escrow in October 2005 to extend the closing date through mid-December 2005.   In October 2005, NXA deposited the additional funds (obtained from an investor, Ralph Jackson, post ) into escrow.

In December 2005, 88 Palos Verdes and NXA executed a 12th Amendment to the FAPSA which extended the deadline for NXA to complete its purchase of the Redondo Beach property into February 2006.   NXA did not complete the purchase transaction by the deadline, and the FAPSA, in all of its amended incarnations, terminated by its own terms.   NXA was left with no ownership interest, or purchase rights, or any other interest in the Redondo Beach property and lost all of the nonrefundable funds that it had placed into the escrow.

The Listing Agreement Involved in the Current Case

Beginning sometime around the summer of 2005, NXA's members and officers were growing concerned that 88 Palos Verdes might begin demanding money for further extensions of the closing date for the sale of the Redondo Beach property.   They began looking for ways to finance further extensions of the sale's closing date.   In other words, NXA began searching for a possible investor to help NXA tide over its right to purchase the Redondo Beach property while NXA continued pursuing overall financing for the purchase.   NXA's search led to Ralph Jackson.

Effective October 13, 2005, NXA, by its managing members, Keith Taylor and Martin Leffler, entered into a written agreement with Ralph Jackson to obtain $1 million to be used to finance a further extension of the FAPSA with 88 Palos Verdes.   We refer to this written agreement as the “Jackson Investment Agreement.”   Broadly summarized, the Jackson Investment Agreement embodied two promises:  (1) Jackson promised to loan $1 million to NXA, paid into an escrow account as the nonrefundable deposit to 88 Palos Verdes to extend NXA's right to purchase the Redondo Beach property as stated in the 11th Amendment to the FAPSA;  and (2) NXA promised to repay Jackson's $1 million, plus another $400,000, within a specified time frame.2  As an alternative to these prompt repayment provisions, NXA promised to grant Jackson a 40 percent interest in any NXA-related development project involving the Redondo Beach property.

Meanwhile, in the midst of NXA's efforts to complete its purchase of the Redondo Beach property from 88 Palos Verdes, NXA had begun fertilizing the idea of reselling the property to a third party after its acquisition, either as part of a joint venture development project with NXA, or with the new third party taking control of the property in its own right.  (See fn. 2, ante.)   In furtherance of this end, NXA signed a listing agreement with Grubb, the “Exclusive Authorization of Sale” (EAS), on October 6, 2005.   Chris Jackson, the Grubb agent who would work to find a buyer for NXA, was the son of Ralph Jackson.   We discuss the terms of the EAS more fully below in addressing Grubb's challenges to the summary judgment entered by the trial court in favor of NXA.

On October 27, 2005, Lincoln Property Company Commercial, Inc. (Lincoln) delivered a “letter of intent” to Chris Jackson at Grubb which included an express statement that the “purpose of [the] letter of intent [was] to form the basis for the preparation of contractual documentation relative to the purchase by Lincoln” of the Redondo Beach property.   Lincoln's letter stated that the purchase price for the property would be $35 million and also stated that, upon NXA's acceptance of the letter, NXA would not offer the property for sale or sell the property for a period of 30 days.

On November 2, 2005, Grubb, by Chris Jackson, caused CLB Partners (CLB) to deliver a “Letter of Intent” to NXA “for a Real Estate Purchase and Sale Agreement (REPSA)” for the Redondo Beach property for a price of $34.5 million.   CLB's letter of intent expressly stated that it was “binding on neither [NXA], nor [CLB],” and that the final REPSA would “set forth the respective rights, obligations and duties” of NXA and CLB.3

On November 10, 2005, NXA entered into a real estate purchase contract with Lincoln.   The terms of the contract provided that NXA would sell the Redondo Beach property (which it still did not yet own) to Lincoln for $35 million.   The contract was subject to a number of common conditions for such a sale, including a contingency period allowing Lincoln to conduct due diligence.   On December 2, after learning that NXA had overstated the permissible scope of development on the Redondo Beach property site, Lincoln cut the purchase price it was willing to pay to about $28 million.   On December 6, Lincoln completely backed out of the transaction while it was still contingent.

On January 16, 2006, Brentwood Capital Partners (BCP) delivered a letter to Chris Jackson at Grubb for the purpose of “set[ting] forth the terms and conditions under which [BCP would] enter into an assignment and assumption” of NXA's rights to purchase the Redondo Beach property from 88 Palos Verdes pursuant to the FAPSA.   The purchase price for the assignment and assumption of rights was $26.1 million.   BCP's letter expressly stated:  “If our proposal is acceptable, please [have NXA] execute this letter of intent ․ and return such executed original to [BCP] on or before 5:00 p.m ․ on ․ January 18, 2006.”   The letter expressly stated that BCP's obligation to enter into the proposed assignment and assumption was subject to BCP's “completion of its due diligence and full review and evaluation of [the] transaction (as determined in BCP's sole discretion) within 7 business days from the mutual execution” of the letter by both BCP and NXA. On January 19, Keith Taylor, one of NXA's two managing members, sent an email to Chris Jackson at Grubb indicating that he (Taylor) had signed BCP's letter.

Also on January 10, 2006, Grubb, by Chris Jackson, caused Standard Pacific Homes (STP) to deliver a letter to NXA confirming STP's “interest ․ in entering into negotiations with [NXA] for the purchase” of the Redondo Beach property.

On January 20, 2006, Palos Verdes Developers, Inc. (PVD) delivered a nonbinding letter of intent to NXA to purchase the Redondo Beach property as part of a joint venture with NXA. Gerald Marcil, PVD's president, pursued efforts on the proposed joint venture being negotiated with NXA, but no binding agreement for a sale of the property was ever reached between NXA and PVD.

On February 15, 2006, NXA's FAPSA contract with 88 Palos Verdes expired by its own terms without the sale being closed.   NXA lost any and all rights and/or interests in the Redondo Beach property.   Ralph Jackson lost the $1 million that he had put into escrow pursuant to the Jackson Investment Agreement.   The other $1.08 million put into escrow by NXA was also lost.   In short, everyone lost.4

The Current Litigation

In February 2006, Grubb sued NXA. Grubb's complaint alleged a cause of action for damages allegedly caused by NXA's breach of the parties' EAS in that it failed to pay a commission to Grubb, and a cause of action for declaratory relief.   NXA filed cross-claims against Grubb, and Ralph and Chris Jackson.   NXA's operative second amended cross-complaint alleged that Grubb had failed to perform under the EAS in that Grubb did not find a ready, willing and able buyer for the Redondo Beach property, causing NXA to lose its interest in the property and its unrefunded deposits in the escrow.

In July 2008, NXA filed a motion for summary judgment (MSJ) or summary adjudication of issues (SAI).   The thrust of NXA's the motion rested on its position that it did not owe a commission to Grubb because “there was never any ‘close of escrow’, and Grubb failed to procure an offer to purchase the [Redondo Beach] property on ‘price and terms ․ agreeable to NXA” as required under the EAS. NXA also argued that “Grubb never procured a ready, willing and able purchaser at the agreed ․ list price or any other terms agreeable to NXA.” In September 2008, Grubb filed its opposition, arguing that NXA could not prevail on its MSJ/SAI because there was a disputed issue of fact whether NXA had acted in bad faith in failing to complete a sale of the Redondo Beach property with any of the buyers presented by Grubb.

On October 22, 2008, the trial court granted NXA's MSJ for the following stated reasons:

“[NXA]'s motion is granted because there exist no triable issues of material fact, and NXA is entitled to judgment as a matter of law.  [Citation.]

“The ․ ‘Listing Agreement’ ․ reads as follows:

“ ‘Owner shall pay said commission to Broker if during the Listing Period:  ․ (b) a purchase is procured by or through Broker, Owner or any other person or entity who is ready, willing and able to purchase the Property or any interest therein on the terms above stated or other terms acceptable to the owner of the Property․’

“Grubb ․ claims that it procured a purchaser as discussed in this paragraph, i.e., one ready, willing and able to purchase the Property etc.   However, the agreement also specified that the purchase price was ‘$38 million or a price agreeable to seller’, and none of the purported purchases brought in by Grubb․

“The last page of the Listing Agreement states, ‘Other terms and conditions:  THIS LISTING IS SUBJECT TO THE COE.’ [I]t is undisputed that the term ‘COE’ is an acronym for ‘close of escrow.’   It is also undisputed that there was no close of escrow here.   Further, there was no other event which would trigger the obligation to pay a commission․

“Grubb ․ claims that NXA acted to cause the deal not to close escrow, or to frustrate the purpose of the contract so that Grubb ․ would not receive their commission.   However, the terms of the contract provided that [Grubb] had an exclusive right to receive a commission, even if the deal were completed with another purchaser, etc.   If the property were sold to anyone within the time frame of the Listing Agreement, [Grubb] would be entitled to the commission.   This was a complicated commercial real estate transaction involving NXA's attempt to flip the property quickly.

“If a buyer was not found, NXA would lose the rights, and all of the money it had invested thus far to obtain those rights.   Therefore, the alleged motivation for NXA to frustrate the purpose of the contract with [Grubb] is lacking.   In essence, within the four corners of [the Listing Agreement], [Grubb] did not perform according to the terms of that agreement.”

In January 2010, the trial court signed and entered an order granting a motion by NXA's lawyer, Howard Rutten, to be relieved as NXA's attorney of record.   On February 16, 2010, on Grubb's ex parte application, the trial court dismissed NXA's second amended cross-complaint on that ground that NXA had failed to that date to retain new counsel.

On March 5, 2010, NXA, ostensibly represented by Attorney Rutten (who was no longer NXA's attorney of record), filed a motion seeking roughly $210,000 in attorney fees and $17,000 in costs.

On April 14, 2010, the trial court entered judgment in favor of NXA on Grubb's complaint.

On May 18, 2010, the trial court granted NXA's motion for attorney fees and fixed the amount of its reasonable attorney fees at $168,508.75.

DISCUSSION

I. Summary Judgment

Grubb contends that the summary judgment in favor of NXA must be reversed because the “close of escrow” as between NXA and a third party presented by Grubb was not the “touchstone” for Grubb's contractual right to be paid its commission.   More specifically, Grubb argues the record discloses evidence showing that NXA acted in “bad faith” in failing to close a sale transaction with any of the potential buyers presented by Grubb, and that NXA's bad faith intervened to abrogate the close-of-escrow “trigger” for Grubb's commission.   Grubb's arguments have not persuaded us that the trial court's decision to grant summary judgment in NXA's favor must be reversed.

The EAS

As we have regularly noted throughout this opinion to this point, NXA never owned the Redondo Beach property;  it owned a contract right under the FAPSA to purchase the property.   Accordingly, while the EAS between NXA and Grubb provided, in its broadest terms, that NXA granted Grubb “the exclusive right to negotiate the sale of the [Redondo Beach] property” in exchange for which NXA would pay Grubb a commission upon certain conditions, there is only one reasonable interpretation to be given the EAS:  Grubb's commission was contingent upon one of two events:  (1) Grubb found a ready, willing and able buyer to purchase NXA's right under the FAPSA to purchase the Redondo Beach property (assuming 88 Palos Verdes agreed to accept the new buyer), or (2) Grubb found a ready, willing and able buyer to purchase the Redondo Beach property in a “flip” sale, that is, a “double escrow” transaction in which NXA acquired the property from 88 Palos Verdes and then promptly retransferred the property to the third party buyer.   The EAS provided that any commission earned by Grubb would be “paid through escrow upon the closing of sales or exchange transactions.”   The EAS expressly provided:  “This listing is subject to COE. In the event NXA ․ finds a joint venture partner, NXA ․ owes Grubb ․ nothing.”  (Underscoring omitted.)

The EAS further provided:  “The price and terms of the sale shall be as follows:  $38,000,000.00 or price agreeable to [NXA].”

Subject to NXA's retention of right to continue looking for a joint venture deal without having to pay a commission to Grubb, the EAS provided that NXA would pay a commission to Grubb of 2 percent on the gross sale price if, during the listing period, any one of the following four events occurred:

“(a) the Property or any interest therein is sold, transferred or conveyed by or through [Grubb], [NXA] or any other person or entity;  or (b) a purchaser is procured by or through [Grubb], [NXA] or any other person or entity who is ready, willing and able to purchase the Property or any interest therein on the terms above stated or other terms acceptable to the owner of the Property;  or (c) any contract for the sale, transfer or conveyance of the Property or any interest therein, including without limitation the granting of an option or right of first refusal, is made directly or indirectly by the owner of the Property;  or (d) this Authorization is terminated or the Property is withdrawn from sale without the written consent of [Grubb] or the Property is made unmarketable by [NXA]'s voluntary act.”

In summary, the EAS provided that a third party's acquisition of NXA's interest in the Redondo Beach property was an express condition precedent to Grubb's right to a commission.   And, the EAS recognized that NXA retained the right to continue pursuing a joint venture development partner for the Redondo Beach property, in which situation Grubb would not earn any commission.

The Controlling Law

A broker's right to be paid a commission is determined by the terms of his or her contract, and the seller and broker may provide in their contract that no commission shall be earned until the occurrence of a specified event or condition.  (Seck v. Foulks (1972) 25 Cal.App.3d 556, 571.)   When a contract between a seller and broker conditions the payment of a commission upon the broker's finding of a ready, willing and able buyer, the terms of any ensuing transaction between the seller and the buyer control the issue whether the broker is due a commission.   For example, where a seller enters into an enforceable and unconditional contract of sale with a buyer presented by the broker, the buyer's acceptability to the seller is conclusively presumed because the seller is estopped from denying the qualifications of a purchaser with whom the seller was willing to contract, and the broker is entitled to his or her commission.   However, where the contract of sale between the seller and buyer is conditional, the broker's commission is not earned until the condition in the contract of sale is performed.  (Kopf v. Milam (1963) 60 Cal.2d 600, 605.)

When, as in the current case, the terms of a listing agreement provide that a broker will be paid a commission only upon the completion of a sale, the completion of the sale is a condition precedent to the payment of the broker's commission.  (See Seck v. Foulks, supra, 25 Cal.App.3d at p. 575, fn. 16.)   At the same time, however, the broker may be entitled to his or her commission even in the absence of the prerequisite completion of a sale when a sale was “ ‘not consummated because the seller, acting arbitrarily or in bad faith, prevented consummation․’  “ (Id. at p. 575.)   This rule applies even when a listing agreement provides that the payment of the broker's commission shall be made from the sale proceeds upon the close of escrow.  (Ibid.;  see also Collins v. Vickter Manor, Inc. (1957) 47 Cal.2d 875, 881 [a seller is not allowed to take advantage of his or her own remissness to defeat a broker's recovery of a commission].)   Accordingly, we agree with Grubb's general proposition that, if Grubb performed, and if NXA acted in bad faith to scuttle any sale of the Redondo Beach property, this would allow Grubb's case to move forward to a judgment even in the face of the undisputed fact that NXA never entered a sale's contract with a third party buyer.

Analysis

On appeal from a summary judgment in favor of a defendant, we follow a three-step, de novo approach:  first, we identify the issues framed by the pleadings;  second, we determine whether the defendant presented evidence which justifies a judgment in his or her favor;  and, finally, we determine whether the plaintiff presented evidence to show the existence of any triable, material issue of fact.  (See, e.g., Donchin v. Guerrero (1995) 34 Cal.App.4th 1832, 1838.)   We liberally construe the evidence in opposition to the motion and strictly construe the moving party's evidence.  (Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64.)

In the current appeal, we must determine if the record discloses any disputed evidence on Grubb's assertions that (1) it presented “ready, willing and able” buyers to NXA, but (2) NXA, acting by and through its officers and members harbored a “secret, concealed intent never to sell the [Redondo Beach] property․”  Grubb argues its evidence showed that NXA's comanaging members, Keith Taylor and Martin Leffler, “secretly ceded” their management powers to Oscar Katz, a member of NXA who, at the time of NXA's forming, was assigned the largest percentage interest share in the limited liability company.   Grubb argues its evidence further showed that, as a result of this secret ceding of power, Taylor and Leffler lacked real authority to enter or perform NXA's contractual duties under the EAS with Grubb, and lacked real authority to enter any contract of sale for the Redondo Beach property.   Finally, Grubb argues its evidence showed that the person with the real power, Katz, never intended to sell the Redondo Beach property in a “flip” transaction.

We agree with Grubb that the evidence which it has cited was sufficient to show the existence of triable issues of fact regarding whether NXA's refusal to consummate a sale was in bad faith.   The problem with Grubb's arguments is that it appears to assume the predicate fact, without pointing us to evidence in the record, that it presented “ready, willing and able buyers” to NXA in the first instance.

To avoid this evidentiary gap, Grubb argues it never had the burden in opposing NXA's MSJ to present any evidence showing that it had performed its contractual duties under the EAS. This is so, argues Grubb, because NXA's MSJ did not contend that the buyers Grubb presented to NXA were not ready, willing and able buyers.   In Grubb's perspective, NXA's MSJ was exclusively based on one ground –– Grubb did not present any buyer who was willing to pay a purchase price that NXA deemed “acceptable.”   Grubb claims that the issue of what was “acceptable” to NXA necessarily involves a factual issue as to the mental state of a party, which cannot and should not have been resolved in the context of an MSJ. Apparently, Grubb claims it had no burden to submit any evidence showing that it had found a ready, willing and able buyer for NXA. Instead, it claims it only had to address the “price acceptable to NXA” issue.

The trial court did not construe NXA's MSJ so narrowly, nor do we.   In sum, both parties point to the same evidence –– NXA argued that all Grubb did was to find possible buyers who presented letters of intent.   Grubb argues it presented NXA with letters of intent from several possible buyers.   Given this context, NXA's MSJ largely came down to a question about the legal effect of the letters of intent as to one of the two essential element of Grubb's case ––its allegation that it presented “ready, willing and able” buyers to NXA.

Grubb's arguments on appeal regarding NXA's bad faith would overcome the trial court's decision to grant summary judgment if there was evidence in the record showing that Grubb presented at least one buyer to NXA who stood “ready, willing and able” to purchase NXA's interests in the Redondo Beach property.   But that is not what is shown in the record.   The evidence in the record, construed in accord with the usual standard of review from an order granting an MSJ, shows that Grubb presented four possible buyers to NXA, namely, Lincoln, CLB, BCP, and STP. The problem for Grubb, however, is that evidence showing it found possible buyers willing to execute letters of intent or a contingent contract is not evidence showing Grubb found a “ready, willing and able” buyer.”  (Cf. Kopf v. Milam, supra, 60 Cal.2d at p. 605 [a conditional contract between a seller and buyer does not show that the buyer was a ready, willing and able buyer].)   It is this difference which leads us to affirm the trial court's decision to grant NXA's MSJ.

Lincoln executed a contingent purchase contract, but then backed out of the deal during the contingency period when it learned that NXA had misrepresented the number of condominium units which could be built on the Redondo Beach property.   Lincoln was not a willing buyer.   And there is no evidence showing that NXA acted in bad faith to kill the Lincoln deal.   On the contrary, the evidence shows that NXA tried to do the opposite by attempting to lure Lincoln into a deal with inflated representations about the scope of permissible development on the Redondo Beach property site.

This leaves the evidence in the form of the letters of intent from CLB, BCP, and STP. Here, there is no evidence in the record showing anything beyond the fact that all three entities gave such letters to NXA. That is, there is no evidence showing these entities would sign an unconditional contract to close a deal for the Redondo Beach property at a price acceptable to NXA or at any price.   And, because the letters of intent were conditional at best, the buyers' qualifications will not be presumed.  (Kopf v. Milam, supra, 60 Cal.2d at p. 606.)   The letters of intent, alone, do not constitute substantial evidence supporting a judgment in favor of Grubb.   Anyone could have delivered a nonbinding letter of intent to purchase the multimillion Redondo Beach property involved in this case.   That letter, however, would not have a tendency in reason to prove that a person was actually ready, willing and able to buy the property.   A letter of intent proves the existence of the letter of intent and nothing more.   Because there is no evidence in the record creating a dispute on the factual issue whether Grubb presented a willing, able, and ready buyer to NXA, it is immaterial whether NXA may have acted in bad faith to prevent the closing of a purchase transaction.   The legal authorities cited by Grubb on its “bad faith” theory do not support its proposition that all it had to do to earn a commission was to have some person or entity send a nonbinding letter of intent to NXA.

Grubb argues it presented evidence showing that BCP's letter of intent offered to pay $26.1 million to NXA for the Redondo Beach property, and showing that such a price was “acceptable” to NXA. According to Grubb, the “acceptable price” component is shown by the fact that the Jackson Investment Agreement included language by which NXA indicated that it would accept a price of $26 million for its interests in the Redondo Beach property.   We accept for purposes of discussion that there is a triable issue of fact whether a $26.1 million purchase price was “acceptable to NXA” within the meaning of its EAS with Grubb.   Even so, evidence showing that Grubb found a possible buyer who made a nonbinding purchase offer in an “acceptable” amount of $26.1 million is not evidence showing that Grubb presented a ready, willing and able buyer to NXA. Anyone could have made such an offer, naming any purchase price, but evidence establishing the existence of such an offer is not evidence that the potential buyer was actually ready, willing and able to close the purchase.

Grubb's argument that it was an intended “third party beneficiary” of the Jackson Investment Agreement is no more helpful to the success of its appeal.   Assuming that the Jackson Investment Agreement was, as Grubb argues, expressly made to benefit Grubb, this does not amount to evidence showing that Grubb presented any ready, willing and able buyer to NXA.

Grubb next argues that NXA cannot avoid its commission obligation by claiming that NXA's attempt to complete a joint venture deal with PVD was “superior” to any transaction with the possible buyers presented by Grubb, and/or by claiming that all of the deals with the potential buyers presented by Grubb were “not acceptable” to NXA. Grubb argues that determining whether NXA, by and through its myriad managers and members, actually made such a qualitative assessment requires both an examination of the state of mind of NXA's managers and members, and of the objective reasonableness of the assessment.   This type of “mental state” determination, argues Grubb, is not appropriate under the summary judgment statute.  (Citing Code Civ. Proc., § 437c, subd. (e) [a trial court has discretion to deny an MSJ where a party's state of mind is a material issue in an action and where the only evidence of such state of mind is the party's own declaration].)   Again, we would find Grubb's argument persuasive if there was evidence in the record showing that Grubb had presented a ready, willing and able buyer to NXA. But, as we have explained in the previous part of this opinion, we find the evidence showing the existence of the various letters of intent does not show the existence of any triggering event for Grubb's right to be paid a commission.

Grubb also argues the trial court improperly weighed credibility in ruling that the evidence was “lacking” to show that NXA had acted in a bad faith in failing to complete a deal with any of the buyers presented by Grubb.   Assuming we agreed with Grubb, its argument does not warrant reversal of the trial court's decision to grant NXA's MSJ for the reasons explained above.   The issue of NXA's bad faith is immaterial in the absence of any evidence showing that Grubb presented a ready, willing and able buyer to NXA. However, we agree with the trial court's conclusion because, as did the trial court, we believe it inescapable that no reasonable juror would ever find that NXA deliberately threw away $2 million held in a nonrefundable escrow, and its interest in the Redondo Beach property, so that it could cheat Grubb out of $500,000.

Finally, Grubb argues that, because the trial court sustained Grubb's objections to NXA's evidence in support of its MSJ, this means (1) NXA never met its initial burden under the summary judgment statute and (2) the burden to show the existence of a triable issue of fact never shifted to Grubb.   (Huynh v. Ingersoll–Rand (1993) 16 Cal.App.4th 825, 830–831 [there is no obligation on a party opposing an MSJ to present any evidence unless and until the moving party has presented evidence necessary to sustain a judgment in its favor].)   We disagree with Grubb that the evidentiary posture of the current case did not allow for summary judgment in favor of NXA. Grubb is correct that NXA supported its MSJ solely by a declaration from its manager, Martin Leffler.   And Grubb is correct that it filed objections to large parts of Leffler's declaration on various grounds including lack of foundation and lack of personal knowledge.   Finally, Grubb correctly tells us that the trial court sustained Grubb's evidentiary objections “in their entirety.”   But Grubb is wrong that NXA's remaining evidence was not sufficient to satisfy its burden under the summary judgment statute.

The majority of the parts of Leffler's declaration excluded by the trial court's evidentiary rulings dealt with matters such as the price at which NXA would deem a sale of the Redondo Beach property “acceptable,” and Oscar Katz's authority over a sale of the property.   In sustaining Grubb's objections, the trial court implicitly ruled that such matters could not be proved up by Leffler's declaration.5  NXA's remaining evidence proved up the parties' EAS, and the letters of intent from the various potential buyers of the NXA's interests in the Redondo Beach property.   The EAS and the letters of intent are not truly in dispute in this case.   Indeed, as we noted above, both parties point to the letters of intent as critical evidence, and both parties' have argued their positions based on the letters of intent.   Thus, contrary to Grubb's argument, this is an ideal case for summary judgment because the critical evidence is not truly in dispute, and it is the legal effect of that evidence which controls the outcome.   So, the evidence excluded was not material, and NXA otherwise presented sufficient evidence to tender properly the issue of whether this case was appropriate for summary judgment.

This brings us back to our original analysis.   We simply disagree with Grubb that the trial court should have denied NXA's MSJ because Grubb “presented admissible evidence establishing each of the elements of its breach of contract cause of action.”   We see no evidence showing that Grubb presented to NXA a buyer who stood “ready, willing and able” to purchase NXA's interests in the Redondo Beach property.

II. Attorney Fees –– The Prevailing Party Issue

Grubb contends the award of attorney fees must be reversed because NXA did not establish that it was the “prevailing party” in the litigation between the parties.   We disagree.

The parties' EAS included a provision for an election to arbitrate any commission dispute, and further included this attorney fee provision in the event they did not elect arbitration:  “[I]f a claim or controversy arises concerning any failure to pay [Grubb] all or any portion of the [commission provided in this agreement], the prevailing party shall be entitled to its costs and attorneys' fees in any legal action regarding the collection of a commission due hereunder.”

In deciding who is the prevailing party on claims involving a contract, the trial court must compare the parties' demands on those claims and the relief awarded on the claims.  (Hsu v. Abbara (1995) 9 Cal.4th 863, 876–877 (Hsu ).)   The prevailing party determination is made only upon final resolution of the contract claims and only by a comparison of the extent to which each party has succeeded or failed to succeed in its contentions.   (Ibid.) In determining litigation success, a court should respect substance over form, and may be guided by equitable considerations.   For this reason, the trial court may declare a party a prevailing party without respect to a pure crunching of numbers and may base its decision on whether the party has achieved its main objective in the litigation.  (Ibid.) On appeal, a trial court's determination of which party, if any, was the prevailing party is reviewed under a combination of the substantial evidence test –– the historical facts of the litigation –– and the deferential abuse of discretion standard ––the trial court's assessment of the comparative success or lack of success of the party who is claiming fees.  (Ibid.)

Grubb's contract claim in this case was that NXA was contractually required to pay a commission to Grubb.   On that claim, the trial court entered judgment in favor of NXA. In other words, the end result of the litigation is that NXA does not have to pay a commission, or any money in any other form or for any other purpose, to Grubb.   We are satisfied that substantial evidence supports the trial court's conclusion that NXA was the prevailing party.

To avoid this conclusion, Grubb argues the prevailing party issue is not so clear cut because NXA filed a cross-complaint arising from the parties' EAS, and then failed to obtain any relief on its cross-claims.   Grubb cites us to McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450 (McLarand ), telling us that the opinion is “directly applicable to the facts” in the case before us today.   NXA does not even acknowledge the McLarand opinion in its respondent's brief.   NXA instead argues that a party who obtains a “simple, unqualified win” in a contract case is “entitled” to its attorney fees (citing Hsu, supra, 9 Cal.4th at p. 876.)   We find Grubb's argument the less persuasive, and, inasmuch as it is Grubb's burden to show an abuse of discretion, we will not reverse the trial court's prevailing party ruling.

In McLarand, two parties filed competing claims on a contract and neither won anything.   In other words, plaintiff lost on its complaint, and defendant lost on its cross-complaint.   The trial court found that there was no prevailing party.   The Court of Appeal held that the trial court's decision was not an abuse of discretion.  (McLarand, supra, 231 Cal.App.3d at p. 1456.)   In other words, the McLarand case supports the proposition that a trial court is not mandated to declare one or the other party the prevailing party;  it does not stand for the proposition, as Grubb appears to argue, that, when no party obtains any affirmative recovery on competing contract claims, there can be no prevailing party in the case as a matter of law.

The issue in the current case between Grubb and NXA is whether the trial court's decision that one party –– NXA –– did prevail in the litigation was an abuse of discretion.   That is, was the decision was arbitrary, capricious or beyond the bounds of reason in light of the circumstances.  (Blackman v. Burrows (1987) 193 Cal.App.3d 889, 893.)   It was not.   We are not close to seeing a decision that no judge could reasonably have made under the circumstances.  (In re Marriage of Rosen (2002) 105 Cal.App.4th 808, 829.)   It is true, just as it was in McLarand, that neither party won a money award, but this does not mean as a matter of law that NXA did not obtain its main objective in this litigation.  (Hsu, supra, 9 Cal.4th at pp. 876–877.)   Grubb initiated the case to get paid a $500,000 commission and the trial court ruled that NXA owed no commission to Grubb.   The record does not defeat NXA's assertion that its cross-complaint was largely a cautionary and protective litigation tactic.6  Because we see no abuse of discretion affecting the trial court's decision to declare NXA the prevailing party, we affirm.

III. Attorney Fees –– The Amount of the Fees Issue

Grubb next contends the trial court abused its discretion when it awarded the amount of $168,508.75 to NXA for its attorney fees.   We agree.

We also review the trial court's decision on the reasonable value of legal services on NXA's behalf under the abuse of discretion standard.  (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.)   The court's discretion must be guided by consideration of the nature and the difficulty of the litigation, the skill employed by the lawyers, the results obtained, the experience of counsel, and the time and reasonableness of the attorneys' rates and hours.  (Cf. Serrano v. Priest (1977) 20 Cal.3d 25, 49 [fixing the amount of fees in the public attorney general context].)

NXA's motion for attorney fees was supported by a declaration from its former attorney, Howard Rutten.  Rutten's declaration included an exhibit in the form of an accounting of his “firm's time and expense records․”  Rutten stated he had “personally incurred approximately 601.85 hours of time in work related to the defense of Grubb's complaint [for its commission].”   Rutten concluded that, based on his hourly rate of $350, “NXA incurred $210,648 in attorney's fees to [his] office in connection with the defense of the Grubb complaint.”

On May 18, 2010, Grubb, by its counsel, and NXA, ostensibly by Rutten, argued the motion for attorney fees to the trial court, following which the court took the matter under submission.   Later that day, the trial court issued an order stating its reasons for an award of fees in the amount of $168,508.75.

We have reviewed NXA's motion, including Attorney Rutten's declaration and attached accounting, the reporter's transcript of the hearing on the motion, and the trial court's order.   We agree with Grubb that the trial court abused its discretion because it did not attempt to apportion attorney fees between two separate cases on which Rutten worked on behalf of NXA, those being the present case involving NXA's alleged breach of a listing contract, and the parallel case involving NXA's alleged fraud in connection with the Jackson Investment Agreement.  (See fn. 4, ante.)   The exhibit attached to Rutten's declaration in support of NXA's motion for an award of attorney fees in the present case, i.e., the accounting of fees, is entitled:  “In re Reference To:  Litigation re nXa/ Grubb Ellis / Ralph Jackson etc.”   None of the work listed in this accounting is identified by case number as having been performed in connection with the litigation involving the “Grubb” commission and the litigation involving “Ralph Jackson” and the Jackson Investment Agreement.   “Reviews,” “motions,” and “conferences” concerning “pleadings” and “discovery” do not identify by case number which case is involved as the the “pleadings,” “discovery,” or “motions.”   It is unclear to us why any work involving “Ralph Jackson” could be charged off in the present case involving Grubb;  Jackson's claims arising from the investment he made in NXA had no connection legal wise with the listing agreement case that we can see.   The fraud claims in the Jackson Investment Agreement case between NXA and Jackson may be said to be historically related to the breach of contract claim in the listing agreement case between NXA and Grubb, but they were wholly separate from a standpoint of being legally related.   The accounting submitted by Rutten is so vague and devoid of information, the trial court should not have relied upon it to fix an award of reasonable attorney fees incurred by NXA to defend itself in the present case.

We agree with NXA that the trial court was not necessarily required to apportion NXA's attorney fees incurred in defending against Grubb's claim for a commission and in pursuing NXA's cross-claims in the same case.  (See Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129–130.)   But this is a far cry from allowing NXA to recover from Grubb each and every dollar it has paid to its attorneys, for whatever cases, in the present case.

DISPOSITION

The award of attorney fees is reversed and remanded to the trial court to appropriately measure attorney fees in a manner consistent with this opinion.   The judgment is otherwise affirmed.   Parties shall bear their own costs on appeal.

BIGELOW, P. J.

We concur:

RUBIN, J.

FLIER, J.

FOOTNOTES

FN1. The FAPSA originally was between 88 Palos Verdes and a predecessor entity of NXA. For clarity, we refer to the buyer as NXA throughout this opinion..  FN1. The FAPSA originally was between 88 Palos Verdes and a predecessor entity of NXA. For clarity, we refer to the buyer as NXA throughout this opinion.

FN2. The expectation underpinning the prompt repayment terms was that NXA would sell its interests in the Redondo Beach property in a “flip” transaction with a third party whose payment to NXA would generate a sufficient source of money to repay Jackson..  FN2. The expectation underpinning the prompt repayment terms was that NXA would sell its interests in the Redondo Beach property in a “flip” transaction with a third party whose payment to NXA would generate a sufficient source of money to repay Jackson.

FN3. Later, CLB learned NXA had overstated the number or density of condominium units that could be built permissibly on the Redondo Beach property and cut the price it was willing to pay for the property..  FN3. Later, CLB learned NXA had overstated the number or density of condominium units that could be built permissibly on the Redondo Beach property and cut the price it was willing to pay for the property.

FN4. In an action apart from the action giving rise to the appeal before us today, Ralph Jackson sued NXA, all of its individual members, and Michael Hackman, NXA's attorney.   That separate litigation alleged causes of action for fraud and similar wrongs, all connected to Jackson's decision to loan $1 million to NXA pursuant to the terms of the Jackson Investment Agreement.   The trial court entered two separate summary judgments, one in favor of Hackman and the other in favor of Martin Leffler, one of NXA's managing members.   A little over a year ago, we affirmed the judgment in favor of Hackman and reversed the judgment in favor of Leffler.  (Jackson v. Hackman (June 1, 2010, B210156) [nonpub. opn.].).  FN4. In an action apart from the action giving rise to the appeal before us today, Ralph Jackson sued NXA, all of its individual members, and Michael Hackman, NXA's attorney.   That separate litigation alleged causes of action for fraud and similar wrongs, all connected to Jackson's decision to loan $1 million to NXA pursuant to the terms of the Jackson Investment Agreement.   The trial court entered two separate summary judgments, one in favor of Hackman and the other in favor of Martin Leffler, one of NXA's managing members.   A little over a year ago, we affirmed the judgment in favor of Hackman and reversed the judgment in favor of Leffler.  (Jackson v. Hackman (June 1, 2010, B210156) [nonpub. opn.].)

FN5. Interestingly, Grubb's evidence in opposition to the MSJ also largely concerned these and similar matters..  FN5. Interestingly, Grubb's evidence in opposition to the MSJ also largely concerned these and similar matters.

FN6. NXA essentially abandoned its cross-complaint upon prevailing on Grubb's claim for a commission..  FN6. NXA essentially abandoned its cross-complaint upon prevailing on Grubb's claim for a commission.