Thursday, February 9, 2017
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C.A. Reinstates Suit Over Brokerage Commission
Panel Says Statute of Frauds Not Necessarily Fatal to Claims Where One of Several Owners Signed Contract
By KENNETH OFGANG, Staff Writer
The statute of frauds does not bar a real estate broker from suing the co-owners of a parcel for a commission, based on her claim that the one owner who signed the listing agreement did so on their behalf, the Sixth District Court of Appeal ruled yesterday.
The panel reinstated Bernice Jacobs’s suit against several defendants whom she alleges are liable for a $200,000 commission that she would have received had the signatory owner—John B. Locatelli—not repudiated her agreement. Her Marin Superior Court complaint accused Locatelli and the others of breach of contract, bad faith, and repudiation/anticipatory breach of contract, and seeks damages and/or specific performance.
The suit arises from a 2013 agreement to list a parcel of vacant land for sale. The agreement gave Jacobs an exclusive listing for one year, provided for a $2.2 million listing price, and guaranteed the broker a $200,000 commission if the property sold during the listing period, or within 60 days thereafter.
An exception provided that no commission would be paid if an entity called the Open Space Land Trust bought the property. Jacobs signed the agreement, as did Locatelli as “Trustee of the John B. Locatelli Trust, et al.”
In addition to the signature lines for the two signers, there were blank lines for the signatures of four other owners.
Interested Buyer
Shortly into the listing period, Jacobs alleged, she learned that the Trust for Public Lands was interested in the property, which she confirmed with its director of acquisitions, Joe Henry. But when she contacted Locatelli with the “good news,” he became angry, said he had been talking to Henry about the property for years, and said that the Trust for Public Lands should be substituted for the Open Space Land Trust in the exception clause.
Henry, however, denied talking to, or even knowing, Locatelli and claimed he had no knowledge that the property was for sale before talking to Jacobs, the plaintiff alleged. Locatelli, however, continued to insist otherwise, and told Henry to deal with him directly and not with Jacobs, she alleged.
The owners later entered into a contract to sell the property to the Trust for Public Lands, but the sale fell through. Jacobs sued Locatelli, the other owners, and the trust.
The owners demurred, saying the statute of frauds barred all of Jacobs’s claims. After the demurrer was sustained with leave to amend, Jacobs expanded on her original allegations, claiming that Locatelli signed the contract on behalf of a joint venture consisting of all of the owners, and that she expected discovery to disclose the existence of a signed agency agreement.
Marin Superior Court Judge Paul Marigonda sustained demurrers to the amended complaint by all defendants except Locatelli. A judgment of dismissal was subsequently entered, and the plaintiff appealed.
Presiding Justice Conrad Rushing, writing for the panel, said that neither the statute of frauds nor the related parol evidence rule barred any of Jacobs’s claims.
While the state has a long history of enforcing the statute of frauds in real estate commission cases involving unsigned agreements, Rushing said, a decade-old Supreme Court decision makes clear there are circumstances in which the statute will not apply.
Supreme Court Case
The case is Sterling v. Taylor (2007) 40 Cal.4th 757. The court there said that an ambiguous or incomplete writing may satisfy the statute, under the totality of the circumstances, if the alternative would be to enable a party to “evade just obligations,” immunize “litigants lacking integrity,” or “enable defendants to interpose the Statute as a bar to a contract fairly, and admittedly, made.”
The court allowed extrinsic evidence to show that a person who signed the agreement was in fact an agent of the entity which owned the property, even though the entity was not named and there was no indication the person was signing as an agent.
Rushing wrote yesterday:
“We are of the view that the trial court should have allowed the case to proceed so that Jacobs could introduce extrinsic evidence of the manner in which Locatelli signed the agreement and that its failure to do so runs afoul of the Supreme Court’s pragmatic approach to the statute of frauds as set forth in Sterling. While it is true that Locatelli did not explicitly indicate in the agreement that he was signing as an agent for any other entity or individual, it is also true that the agreement specified that there were multiple owners, which could be interpreted as referring to all of the members of the joint venture which Jacobs claims exists.”
The case is Jacobs v. Locatelli, H042292.
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