MARINERS BAY COMPANY, Cross–Complainant and Appellant, v. Richard HAMLIN, et al., Cross–Defendants and Respondents.
Mariners Bay Company brought this action for negligence, breach of contract and indemnity against its former attorney, Richard Hamlin and his firm, Stall & Hamlin (hereafter Hamlin). The trial court granted Hamlin's motion for summary judgment and subsequently entered a judgment in favor of Hamlin. We reverse.
FACTS AND PROCEEDINGS BELOW
The issues in this appeal can best be understood by reviewing the underlying lawsuits between Mariners Bay Company and Antonio Zorrilla.
A. Mariners Bay v. Zorrilla (Unlawful Detainer)
Antonio Zorrilla owned a 27–foot pleasure boat which he docked at a slip he rented from Mariners Bay. When Zorrilla failed to pay his rent for the slip Mariners Bay, represented by Attorney Hamlin, brought an unlawful detainer action and received a judgment for $722. Hamlin then obtained a writ of execution and instructed the marshal to seize and sell Zorrilla's boat in satisfaction of the judgment.
The sale of Zorrilla's boat was scheduled for Monday, February 23, 1987, at 10:00 a.m. Zorrilla was notified of the pending sale.
B. Zorrilla v. Mariners Bay (Breach of Contract)
On Friday, February 20, 1987, Zorrilla telephoned Hamlin's office and spoke to Dianne Saylors, a paralegal. Zorrilla asked Saylors if he could bring a check for the amount due on the judgment to Hamlin's office on Monday, February 23rd, to prevent the sale of his boat. Saylors advised Zorrilla Monday would be too late and that he had to bring the check that day. A factual dispute exists with respect to the remainder of the telephone conversation between Saylors and Zorrilla. Saylors' declaration states she told Zorrilla that upon payment of the judgment he would receive a release which he had to take to the marshal's office and pay the marshal's fees. Zorrilla's declaration states he was never advised by anyone he had to go to the marshal's office, deliver any documents to the marshal or pay the marshal any costs or fees in order to prevent the sale of the boat. According to Zorrilla, Saylors told him all he had to do to halt the sale of his boat was to satisfy the debt owed to Mariners Bay by delivering a cashier's check for the balance due on the judgment to her office Friday afternoon.
Late Friday afternoon Zorrilla brought a check to Hamlin's office for the balance of the judgment and was given a receipt and a release directed to the county marshal. The release authorized the marshal to release Zorrilla's boat upon Zorrilla's payment of any fees due the marshal. The release stated at the bottom: “This must be filed with the marshal.”
Zorrilla did not file the release with the marshal. Upon returning to his office Zorrilla gave the release to an employee and said, “Here is the release. Get the boat from the marshal. We have to get it out of the water because we don't have a slip anymore.”
The marshal sold Zorrilla's boat on Monday morning, February 23rd, as scheduled.
Zorrilla filed an action for breach of contract against Mariners Bay based on the alleged promise by Mariners Bay, through its attorney, Hamlin, that it would halt the sale of Zorrilla's boat if he paid the outstanding judgment by Friday afternoon. This action is pending in the trial court.
C. Mariners Bay v. Hamlin (Professional Negligence; Indemnity)
In response to the suit against it by Zorrilla for breach of contract, Mariners Bay cross-complained against Hamlin for professional negligence, breach of contract and indemnity. Mariners Bay seeks compensation from Hamlin for any damages it is required to pay Zorrilla and for its cost of defense of Zorrilla's suit.
Hamlin moved for summary judgment on the cross-complaint by Mariners Bay. He contended: (1) he owed no duty to Mariners Bay or Zorrilla beyond executing the release instructions to the marshal and giving those instructions to Zorrilla to file with the marshal's office; (2) proof of the alleged contract between Zorrilla and Mariners Bay to halt the execution sale was barred by the parol evidence rule; and (3) because he breached no duty to Zorrilla or Mariners Bay he is not liable to Mariners Bay for indemnity for any losses it may suffer as a result of Zorrilla's lawsuit.
The trial court granted Hamlin's motion for summary judgment and subsequently entered judgment for Hamlin.
I. TRIABLE ISSUES OF FACT EXIST AS TO WHETHER HAMLIN, AS AGENT FOR MARINERS BAY, AGREED TO HALT THE EXECUTION SALE IN RETURN FOR ZORRILLA'S PAYMENT OF THE JUDGMENT AND, IF SO, WHETHER HAMLIN, AS AGENT FOR MARINERS BAY, BREACHED THAT AGREEMENT.
In the underlying action against Mariners Bay, Zorrilla alleges an agreement between himself and Hamlin, acting as attorney for Mariners Bay, under which Hamlin agreed to prevent the sale of Zorrilla's boat if Zorrilla paid the amount due on the judgment by Friday, February 20th. It is undisputed Zorrilla paid the amount due on the judgment on the afternoon of Friday, February 20th.
Zorrilla filed a declaration in the present action in which he stated he telephoned Hamlin's office on February 20th and “asked [Hamlin] what needed to be done in order to prevent the sale of my boat the following Monday, February 23, 1987.” He was told that to halt the sale of the boat he “needed to satisfy the debt owed to Mariners, by delivering to [Hamlin's] office, a cashier's check in the amount of $293.28.” Zorrilla's declaration goes on to state, “At no time was I ever advised that I had to go to the Marshal's office, deliver any documents to the Marshal's office, or pay the Marshal any costs or fees, in order to prevent the sale of my boat.”
Hamlin disputes this version of events. In support of his motion for summary judgment he submitted the declaration of his paralegal, Dianne Saylors, in which Ms. Saylors states:
“On February 20, 1987, I received a call from Mr. Zorrilla. Mr. Zorrilla wanted to know if he could bring over a check and pay off the judgment to prevent the sale of the boat. I informed Mr. Zorrilla that if he brought over a check on that day ․ he would receive a release and he could take that release to the Marshal's office, pay the Marshal's costs and he would receive his boat․ I told Mr. Zorrilla that Monday would be too late, and that he had to give us the check and pay the Marshal's costs on Friday, February 20.”
Hamlin also submitted the release which provides in relevant part:
“TO: Marshal of Municipal Courts, County of Los Angeles [¶] TOTAL RELEASE. You are hereby to release all property held under attachment-execution in the above entitled action to the defendant(s) upon condition that defendant pay all marshal's costs (storage, towing, etc.) to date.
Zorrilla admits he received the release and read the part quoted above. In small print at the bottom of the release are the words: “This must be filed with the marshal.” There is no evidence as to whether Zorrilla read this portion of the release.
Mariners Bay argues the evidence submitted on the motion for summary judgment presents a classic example of an action with triable issues of fact. On the one hand, Zorrilla contends a bilateral contract was formed in which Hamlin, acting as agent for Mariners Bay, promised to call-off the sale of the boat in return for Zorrilla's promise to pay the judgment by a certain time at a certain place. Zorrilla performed his end of the bargain by delivering a check for the amount due on the judgment within the time specified at the place named. Mariners Bay, through its agent Hamlin, failed to perform its promise by not halting the sale of the boat. Hamlin contends, on the other hand, the only agreement he made with Zorrilla on behalf of Mariners Bay was to furnish Zorrilla a release of the boat conditioned on Zorrilla's payment of the judgment and any accrued marshal's fees. Mariners Bay, through Hamlin, fully performed its obligations under the contract.
Hamlin argues there are no triable issues of fact in this action because the terms of the agreement between Mariners Bay and Zorrilla regarding release of the boat are embodied in the provisions of the release itself and proof of any other agreement between Zorrilla and Hamlin, as agent for Mariners Bay, is barred by the parol evidence rule.
We reject Hamlin's parol evidence argument for several reasons.
Hamlin's argument assumes there was only one agreement between the parties and this agreement was for release of the boat from the marshal's custody. However, one of the questions of fact in this case is how many agreements, if any, were made between the parties. Releasing the boat from the marshal is a different subject from preventing or halting the marshal's sale of the boat.1 While release of the boat required payment of the marshal's fees and costs, Hamlin could have halted the sale of the boat by simply FAXing a request for postponement to the marshal on Friday afternoon. (Code Civ.Proc., § 701.580; see fn. 1, supra.)
In reading Zorrilla's complaint and his declaration it seems clear Zorrilla's immediate concern was to “prevent” the sale of his boat. He alleges he asked Saylors “what he had to do in order to prevent the sale of his boat on the following Monday” and Saylors replied he had to pay the judgment “in order to ․ prevent the sale of his boat.” Saylors' own declaration acknowledges “Mr. Zorrilla wanted to know if he could bring over a check and pay off the judgment to prevent the sale of the boat.”
Saylors' declaration states she responded to Zorrilla's question about how he could prevent the sale of his boat by telling him if he brought in the amount due on the judgment Friday afternoon “he would receive a release and he could take that release to the Marshal's office, pay the Marshal's costs and he would receive his boat.” Zorrilla denies Saylors made these statements to him.
Before it can be determined whether parol evidence is being offered to vary the terms of an agreement, it is necessary to determine what those terms are. (See Pacific Gas & E. Co. v. G.W. Thomas Drayage Etc. Co. (1968) 69 Cal.2d 33, 39, 69 Cal.Rptr. 561, 442 P.2d 641.) For example, while the parol evidence rule might prevent Zorrilla from disputing the terms under which his boat would be released from the marshal's custody, it would not prevent him from introducing evidence of the terms under which the sale of the boat would be prevented. As noted above, release and prevention of sale are separate subjects and the terms as to one are not necessarily inconsistent with the terms as to the other. (Cf. Shapiro v. Wells Fargo Realty Advisors (1984) 152 Cal.App.3d 467, 482, 199 Cal.Rptr. 613.) Furthermore, agreements to prevent the sale of the boat and to release the boat from the marshal might naturally have been made as separate agreements so performance of the former would not be held up by the latter. (Cf. Masterson v. Sine (1968) 68 Cal.2d 222, 228, 65 Cal.Rptr. 545, 436 P.2d 561.) In order to protect his client's interests, Hamlin could have agreed to halt the sale of the boat upon the payment of the judgment but not to authorize release of the boat unless Zorrilla also paid the marshal's costs and fees.
Hamlin's reliance on the parol evidence rule also fails because an issue of fact exists as to whether the instructions to the marshal to release the boat were intended by the parties as a final expression of their agreement with respect to the terms for release of Zorrilla's boat. An integration clause in a writing is persuasive evidence of the parties' intent it serve as a complete expression of the parties' agreement. (Masterson v. Sine, supra, 68 Cal.2d at pp. 225–226, 65 Cal.Rptr. 545, 436 P.2d 561.) It follows the absence of such language is persuasive evidence to the contrary. No such language appears in the release executed by Hamlin. Furthermore, the marshal's release form is a writing directed to the marshal containing instructions for the release of property. It is not the sort of writing that was designed to, or normally would, embody an agreement between the parties underlying the release. The present case is analogous to Pollyanna Homes, Inc. v. Berney (1961) 56 Cal.2d 676, 680, 16 Cal.Rptr. 345, 365 P.2d 401 in which the court held it was improper to apply the parol evidence rule where the only writings between the parties were escrow instructions directed to third parties, containing the mechanics of exchanging various deeds and lacking an integration clause. At this stage of the proceedings there is no basis for excluding proof of the terms of the release by parol evidence.
We conclude, therefore, a dispute of fact exists as to whether Mariners Bay contracted with Zorrilla to prevent the sale of the boat in return for Zorrilla's payment of the judgment. Assuming such a contract was formed, a further dispute of fact exists over whether Hamlin's giving Zorrilla the marshal's release form, with or without instructions on what to do with it, satisfied Mariners Bay's obligations under the contract.
II. AN AGENT IS SUBJECT TO LIABILITY FOR LOSS CAUSED TO THE PRINCIPAL BY THE AGENT'S BREACH OF A DUTY OWED THE PRINCIPAL.
The issue of Hamlin's liability to Mariners Bay cannot be determined at this time. As explained above, Hamlin's liability depends on whether Zorrilla, in the underlying action, can prove a contract between himself and Mariners Bay in which Mariners Bay agreed to halt the sale of the boat in return for Zorrilla's payment of the judgment by Friday afternoon and breach of this contract by Mariners Bay.
However, if Zorrilla proves such a contract and proves Mariners Bay breached it, Hamlin may be liable to Mariners Bay for its costs in defending Zorrilla's action and for any damages it is required to pay Zorrilla. This liability arises from the well-settled rule “[a]n agent is subject to liability for loss caused to the principal by any breach of duty.” (Rest. 2d Agency (1958) § 401.) Under this rule, “the agent who subjects his principal to liability because of a negligent or other wrongful act is subject to liability to the principal for the loss which results therefrom.” (Id., comment (d); see, e.g., Amen v. Merced County Title Co. (1962) 58 Cal.2d 528, 532, 25 Cal.Rptr. 65, 375 P.2d 33 [agent liable for loss suffered by principal to third party resulting from agent's negligent handling of principal's affairs].)
This rule applies to attorneys acting as agents for their clients under the rationale the client, as principal, has been subjected to vicarious liability because of the negligence or other wrongful conduct of the attorney. (Mallen & Smith, Legal Malpractice (3d ed. 1989) § 8.11 and cases cited therein.)
In the present case, it is undisputed Hamlin was acting as the agent for Mariners Bay in collecting the judgment. If, in doing so, he made an agreement with Zorrilla regarding payment of the judgment in return for halting sale of the boat, he did so on behalf of Mariners Bay. Thus, if Hamlin acted in such a manner as to breach this contract the breach is attributable to Mariners Bay as the principal and Mariners Bay would be liable to Zorrilla for damages occasioned by the breach. (Civ.Code, § 2330.) Hamlin, however, owed a duty to Mariners Bay to exercise due care in the performance of the contract he made on its behalf. Every agent owes its principal a duty to use reasonable care, diligence and skill in its work. (2 Witkin, Summary of Cal. Law (9th ed. 1987), Agency, § 42 and cases cited therein.) As an attorney, Hamlin owed Mariners Bay a duty “to use such skill, prudence, and diligence as lawyers of ordinary skill and capacity commonly possess and exercise in the performance of the tasks which they undertake.” (Lucas v. Hamm (1961) 56 Cal.2d 583, 591, 15 Cal.Rptr. 821, 364 P.2d 685.) If Hamlin breached this duty he is liable for the losses Mariners Bay suffered as a result of his negligence. Because the parties have argued at length over the issue of duty, we emphasize Hamlin's liability, if any, arises from his breach of duty to his client and principal, Mariners Bay. Under the facts presented on the motion for summary judgment, Hamlin owed no duty directly to Zorrilla. (Held v. Arant (1977) 67 Cal.App.3d 748, 751, 134 Cal.Rptr. 422.)
The judgment in favor of Hamlin on the cross-complaint by Mariners Bay is reversed. Appellant is awarded its costs on appeal.
1. Code of Civil Procedure section 699.060, subdivision (a) provides in relevant part: “The levying officer shall release property levied upon when the levying officer receives a written direction to release the property from the judgment creditor's attorney of record․”Code of Civil Procedure section 701.580 provides in relevant part: “The judgment debtor and judgment creditor together may request in writing that a sale be postponed to an agreed day and hour.”
JOHNSON, Associate Judge.
LILLIE, P.J., and FRED WOODS, J., concur.