OSBORNE v. HUNTINGTON BEACH UNION HIGH SCHOOL DISTRICT

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Court of Appeal, Fourth District, Division 1, California.

Harold E. OSBORNE, Plaintiff and Appellant, v. HUNTINGTON BEACH UNION HIGH SCHOOL DISTRICT et al., Defendants and Respondents.

Civ. 9518.

Decided: November 21, 1969

Roy B. Woolsey, Newport Beach, and Gilbert W. Boyne, Modesto, for plaintiff and appellant. Adrian Kuyper, County Counsel, Timothy L. Strader, Deputy County Counsel, Dennin & Poitevin and William W. Dennin, Costa Mesa, for defendant and respondent Huntington Beach Union School District. Rimel, Harvey & Helsing, Santa Ana, for defendant and respondent Laguna Beach County Water District.

OPINION

Plaintiff appeals from a judgment dismissing his action against defendants Huntington Beach Union High School District and Laguna Beach County Water District following an order sustaining general demurrers to his second amended complaint without leave to amend.

The facts as alleged in the second amended complaint are:  Plaintiff, a licensed real estate broker, and defendant, Huntington Beach Union High School District, “through its agent Edwin W. Anderson”, entered into an oral contract respecting the purchase of property by the latter.   Plaintiff agreed to locate and find a seller for a parcel of real property suitable for school use.   Defendant School District agreed “to employ plaintiff as a broker and finder”;  he should be paid an amount equal to 5% of the total consideration given for the property;  to protect him and his fee;  and to cause the transferor of the property to pay the fee.   Both parties agreed the fee should be paid by the transferor.   Plaintiff found a suitable parcel of property, which was owned by defendant Laguna Beach County Water District.   A person named William V. Moorhead, “on behalf of Laguna Beach County Water District orally agreed to pay plaintiff a fee and commission in accordance with the terms of the oral contract between plaintiff” and School District.   Plaintiff did not disclose the name of the prospective seller to School District or of the prospective buyer to Water District until School District orally guaranteed its contract with him would be performed and defendant Water District had promised to pay him a seller's commission.   In reliance on the respective promises of School District and Water District he would be paid a commission, plaintiff revealed to each of them the identity of the other as a prospective party to acquisition of the property in question without requiring a written contract in the premises.   Thereafter, School District and Water District, respectively, learned of the commission agreement between the other and plaintiff.

In a cause of action against School District and a separate cause of action against Water District, plaintiff alleges that upon learning of the commission agreements in question each district communicated with the other;  “advised” the other there was a way to save money in the transaction by adopting a method of acquisition which would deprive plaintiff of his commission;  and further “advised” the other to breach its oral contract with plaintiff.

In a third cause of action plaintiff alleges a conspiracy between School District and Water District to deprive him of his commission, in furtherance of which a transfer of the property in question from Water District to School District was effected through eminent domain proceedings.

Plaintiff contends:  (1) The second amended complaint states causes of action “for interference with contract or other advantageous relations”, i. e., for damages resulting from inducing a breach of contract;  and (2) the order sustaining the demurrer without leave to amend was error because causes of action against the defendants, premised on estoppel, could have been stated, i. e., for recovery on oral contracts to pay a broker's fee or finder's fee which defendants are estopped to deny.

“An action will lie for the intentional interference by a third person with a contractual relationship either by unlawful means or by means otherwise lawful when there is a lack of sufficient justification.”  (Herron v. State Farm Mutual Ins. Co., 56 Cal.2d 202, 205, 14 Cal.Rptr. 294, 296, 363 P.2d 310, 312.)

 The complaint alleges each defendant “advised” the other to breach its contract.   Interfering with a contractual relationship by advice is not interference by unlawful means.   Thus, the issue is whether the alleged interference was justified under the circumstances of this case.

“Whether an intentional interference by a third-party is unjustifiable and actionable depends on a balancing of the importance, social and private, of the objective advanced by the interference against the importance of the interest interfered with, considering all circumstances, among which the methods and means used and the relation of the parties are important.”  (Masoni v. Board of Trade of San Francisco, 119 Cal.App.2d 738, 742, 260 P.2d 205, 208;  see also Imperial Ice Co. v. Rossier, 18 Cal.2d 33, 35, 112 P.2d 631.)

In California it has been held a purchaser of real property who induces a seller thereof to violate the latter's oral contract with a broker for the payment of a commission, and to assert the invalidity of the contract because of a failure to comply with the statute of frauds, is not liable to the broker for unjustifiable interference with the oral contract.  (Sweeley v. Gordon, 47 Cal.App.2d 385, 387, 118 P.2d 16, 842—petition for hearing by the Supreme Court denied;  in accord:  Colburn v. Sessin, 94 Cal.App.2d 4, 6–7, 209 P.2d 989.)

In the case at bench the trial court sustained the demurrers in reliance upon the foregoing holding.

Plaintiff asks this court to disregard the decisions in Sweeley v. Gordon, supra, 47 Cal.App.2d 385, 118 P.2d 16, 842 and Colburn v. Sessin, supra, 94 Cal.App.2d 4, 209 P.2d 989, and directs attention to decisions upholding recovery by a broker from a third person for induced breach of an oral contract to pay him a commission, citing Friedman v. Jackson, 266 Cal.App.2d 517, 72 Cal.Rptr. 129;  Golden v. Anderson, 256 Cal.App.2d 714, 64 Cal.Rptr. 404 and Zimmerman v. Bank of America, etc., 191 Cal.App.2d 55, 12 Cal.Rptr. 319.   In the cited cases the party charged with unjustifiable interference with the oral contract of the broker either used an unlawful means, such as fraud or misrepresentation, or was not a party to the real estate transaction about which the oral contract was concerned.   The factual situation in the case at bench is not distinguishable from the factual situation in Sweeley v. Gordon, supra, 47 Cal.App.2d 385, 118 P.2d 16, 842 and Colburn v. Sessin, supra, 94 Cal.App.2d 4, 209 P.2d 989.

In addition to the foregoing, there are other reasons in support of the order sustaining the general demurrers to the second amended complaint.

 Essential to a cause of action for damages resulting from unlawful interference with a contract is the existence of a contract.  (Allen v. Powell, 248 Cal.App.2d 502, 505, 56 Cal.Rptr. 715;  Augustine v. Trucco, 124 Cal.App.2d 229, 246, 268 P.2d 780.)   The allegations in the second amended complaint did not establish the existence of any contract between plaintiff and either School District or Water District.

 A school district acts through a board with powers limited both in scope and by the method of their exercise, and is bound by the action of its board only when the latter acts with respect to a matter within a power conferred and in conformance with required formalities.  (Ed. Code §§ 1001, 1002.5;  Lipman v. Brisbane Elementary School Dist., 55 Cal.2d 224, 231, 11 Cal.Rptr. 97, 359 P.2d 465;  Reams v. Cooley, 171 Cal. 150, 153, 157, 152 P. 293;  Paterson v. Board of Trustees, etc., 157 Cal.App.2d 811, 818, 321 P.2d 825.)   A school board has the power to purchase land for school purposes.  (Ed.Code § 15002.)   For the sake of argument, we will assume this power includes the power to employ a real estate broker to find a seller of such property.   The official action of the school board is taken by a formal vote of the members of the board which must be recorded in a journal of its proceedings.  (Ed.Code § 1002.5.)   The cause of action against School District does not allege the school board, as such, entered into any contract with plaintiff.   It is alleged only the School District “by and through its agent Edwin W. Anderson” agreed to employ plaintiff as a finder;  agreed plaintiff should be paid a 5% commission by Water District;  and “agreed to protect plaintiff and his fee and to cause transferor to pay the same”.   The power to contract respecting the purchase of property for school purposes may be delegated to the superintendent of the school district or such person as he may designate, provided a majority of the school board votes accordingly.   (Ed.Code § 15961.)   The second amended complaint does not allege Anderson was district superintendent or that the power to contract with plaintiff had been delegated to him.   Furthermore, “no contract made pursuant to such delegation * * * shall be valid or constitute an enforceable obligation against the district unless and until the same shall have been approved or ratified by the governing board, said approval or ratification to be evidenced by the motion of said board duly passed and adopted.”  (Ed.Code § 15961.)   The second amended complaint does not allege the oral contract with plaintiff by Anderson on behalf of School District was ratified as required.   Under these circumstances there was no contract between plaintiff and School District with which Water District could interfere.

 The cause of action against Water District alleges “William V. Moorhead, on behalf of Laguna Beach County Water District orally agreed to pay plaintiff a fee and commission” in accordance with the terms of the oral contract between plaintiff and School District.   There is no allegation respecting the authority of Moorhead to act for Water District.   The powers of the county water district are exercised by a board of directors (Water Code § 30523), which may act only by “ordinance, resolution or motion”.  (Water Code § 30523.)   Among other things, a water district expressly is given the power to make contracts (Water Code § 31004), and to dispose of property.   (Water Code § 31041.)   Absent an allegation the board of Water District, by duly adopted ordinance, resolution or motion, entered into a contract with plaintiff to pay him a commission, there was no such contract School District could advise Water District to breach.

 Assuming School District and Water District each had the power to advise the other to breach its alleged oral contract with plaintiff, the complaint does not allege the action taken in the exercise of this power conformed to the method prescribed, i.e., board action with majority vote by ordinance, resolution or motion properly recorded.   It is a matter of note the allegations School District and Water District advised each other to breach its contract are made on information and belief.   Facts ascertainable from public records may not be pleaded on information and belief.  (Sayers v. Superior Court, 84 Cal. 642, 645, 24 P. 296.)   The mere allegation School District and Water District each advised the other to breach its contract with plaintiff is not a sufficient allegation of compliance with the statutory formalities in the premises.

Pertinent to the issue at bench is the statement in Lipman v. Brisbane Elementary School Dist., supra, 55 Cal.2d 224, 231, 11 Cal.Rptr. 97, 100, 359 P.2d 465, where the court said:

“In the absence of compliance with the statutory requirements there was no authority for the acts complained of by plaintiff insofar as concerns the alleged breach of contract, and it is obvious that the district cannot properly be held liable for acts which have not been duly authorized.”

The foregoing conclusions direct attention to the inability of plaintiff to state a cause of action against either School District or Water District for unlawful interference with plaintiff's contracts, which is a tort.

 Under statutory law applicable to the case at bench, a public entity is not liable for injury caused by the act of its officials or employees where the act was not within the scope of their authority or employment, or where the officials or employees are immune from liability.  (Govt.Code §§ 810.2, 815, 815.2.)   A public official or employee is not liable for an injury caused by an act which was the result of an exercise of discretion vested in him.  (Govt.Code § 820.2;  Lipman v. Brisbane Elementary School Dist., supra, 55 Cal.2d 224, 233, 11 Cal.Rptr. 97, 359 P.2d 465;  gen. see Widdows v. Koch, 263 Cal.App.2d 228, 237–239, 69 Cal.Rptr. 464.)   Assuming the alleged acts of interfering with plaintiff's contracts were within the scope of the authority of the members of the boards, and of the employment of their agents Anderson and Moorhead, they were discretionary.  (Lipman v. Brisbane Elementary School Dist., supra, 55 Cal.2d 224, 230, 232, 11 Cal.Rptr. 97, 359 P.2d 465;  see also Widdows v. Koch, supra, 263 Cal.App.2d 228, 239, 69 Cal.Rptr. 464;  Burgdorf v. Funder, 246 Cal.App.2d 443, 446, 54 Cal.Rptr. 805;  Tietz v. Los Angeles Unified School Dist., 238 Cal.App.2d 905, 909, 48 Cal.Rptr. 245.)   Under these circumstances, the officials and employees were immune from liability and a cause of action does not lie against the public entity they represent on account of the acts of which plaintiff complains.

 The conspiracy cause of action does not allege something was done which, without the conspiracy, would give rise to a cause of action.   The demurrer thereto properly was sustained.  Tietz v. Los Angeles Unified School Dist., supra, 238 Cal.App.2d 905, 912–913, 48 Cal.Rptr. 245;  Wise v. Southern Pacific Co., 223 Cal.App.2d 50, 64, 35 Cal.Rptr. 652.)

 Plaintiff was not entitled to rely upon the representation defendants would perform a contract unenforceable under the statute of frauds.   No basis exists for an estoppel.  (Hicks v. Post, 154 Cal. 22, 28, 96 P. 878;  Barcelon v. Cortese, 263 Cal.App.2d 517, 525, 69 Cal.Rptr. 657;  Rosenbaum v. Rosenbaum, 257 Cal.App.2d 193, 198, 64 Cal.Rptr. 632;  White v. Hirschman, 54 Cal.App.2d 573, 574, 129 P.2d 430;  Sweeley v. Gordon, 47 Cal.App.2d 381, 384, 118 P.2d 14.)   No error occurred in sustaining the demurrer without leave to amend.

The judgment is affirmed.

COUGHLIN, Associate Justice.

GERALD BROWN, P.J., and WHELAN, J., concur.

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