Northwest Realty v. Greenberg CA2/2 ( 2021 )

Filed 6/28/21 Northwest Realty v. Greenberg CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
NORTHWEST REALTY, INC. B305368
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No.
v. YC072372)
JOSHUA GREENBERG,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Ramona G. See, Judge. Affirmed.
Spierer, Woodward, Corbalis & Goldberg, Stephen B.
Goldberg and Meighan E. Leon for Plaintiff and Appellant.
Law Offices of Brad Snyder, Bradley Allen Snyder and
Patricia M. Bakst for Plaintiff and Respondent.
________________________________________
Plaintiff and appellant Northwest Realty, Inc. (Northwest)
appeals from a judgment entered following a successful summary
judgment motion brought by defendant and respondent Joshua
Greenberg. Northwest sued Greenberg for an alleged breach of a
contract to pay a commission on the sale of residential property.
The superior court granted the motion for summary judgment,
concluding because Northwest was not a third party beneficiary
it could not prevail on a contract claim for damages and the claim
was barred by the statute of frauds. We agree the statute of
fraud bars the claim and affirm.
BACKGROUND
1. Lease Agreement and Addendum
In 2012, respondent Greenberg decided to lease his
residential property in Manhattan Beach for a two-year term.
Greenberg signed the lease agreement as landlord on
December 11, 2012. Ryan and Cassidy McCarthy signed the
agreement as tenants on the same date. The agreement
identified Re/Max Olson & Associates (Re/Max) as Greenberg’s
listing broker and Northwest as the McCarthys’ leasing broker.
It also stated the respective brokers were not parties to the
agreement. The agreement was signed by Re/Max’s agent, Collin
Hicks, and by Northwest’s agent, Alexandra Gauss.
The lease agreement was a preprinted form with boxes next
to paragraphs to be checked if they applied to the contracting
parties. The paragraphs providing for a broker’s commission to
be paid by either the landlord or the tenants “[u]pon execution of
this agreement” and “as specified in a separate written
agreement” were unchecked, and no such separate agreements
were executed. One checked paragraph expressly incorporated
the addendum into the lease agreement.
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The sole provision for payment of a broker’s commission
was in the addendum to the lease agreement. Paragraph 5 of the
addendum read: “Landlord shall give Tenant the right of first
refusal to purchase the Property. If Landlord is going to accept
an offer to purchase the Property from a 3rd party during the
term of this Lease and any extension periods, the Landlord’s
agent and the Tenant’s agent will each receive a commission of
2.5% (for a total of 5%) of the total purchase price at the close of
escrow if the Tenant purchases the the [sic] Property from the
Landlord” (paragraph 5). The addendum was signed by
Greenberg and the McCarthys on December 11, 2012.
2. Sale of the Residential Property
On June 11, 2015, Greenberg transferred title of the
residential property to his LLC, “9th Street MB, LLC.” On April
26, 2017, 9th Street MB, LLC sold the property to the McCarthys.
3. Complaint
Northwest demanded Greenberg pay a commission on the
sale of the residential property. Greenberg refused, and
Northwest filed this action for breach of contract. Specifically,
Northwest claimed it was entitled under paragraph 5 to receive
from Greenberg a commission in the amount of $102,500, which
was 2.5 percent of the purchase price, and Greenberg had
breached the agreement by refusing to pay the commission.
4. Summary Judgment Motion and Opposition
Greenberg moved for summary judgment on the ground he
was not a party to any contract with Northwest and thus
Northwest could not prevail on the contract claim as a matter of
law. Greenberg also asserted the claim was barred by the statute
of frauds.
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In opposing Greenberg’s motion, Northwest argued the
language of paragraph 5 and extrinsic evidence were sufficient to
establish a triable issue of material fact as to whether Northwest
was a third party beneficiary under the lease agreement and to
satisfy the statute of frauds.
In his reply, Greenberg argued there was no showing
paragraph 5 was drafted to expressly benefit Northwest.
Northwest and Greenberg each submitted extrinsic
evidence.
5. Superior Court’s Ruling and Entry of Judgment
The superior court granted summary judgment on
January 13, 2020, concluding Northwest was not a third party
beneficiary under the lease agreement. The court also concluded
the contract claim was barred by the statute of frauds for lack of
specificity. Following its order, the court entered judgment on
January 31, 2020. This appeal followed.
DISCUSSION
1. Standard of Review
A motion for summary judgment is properly granted only
when “all the papers submitted show that there is no triable
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd.
(c).) We review a grant of summary judgment de novo and decide
independently whether the facts not subject to triable dispute
warrant judgment for the moving party as a matter of law.
(Hartford Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 59
Cal.4th 277, 286; Schachter v. Citigroup, Inc. (2009) 47 Cal.4th
610, 618.) The evidence must be viewed in the light most
favorable to the nonmoving party. (Ennabe v. Manosa (2014) 58
Cal.4th 697, 703; Schachter, at p. 618.)
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2. Statute of Frauds Bars the Contract Claim
In California, the statue of frauds generally provides that
any contract to compensate a broker for procuring a purchaser or
seller of real property or a lessor or lessee of real property for a
period longer than one year is invalid unless that contract or note
or some memorandum thereof is in writing and signed by the
broker’s client. (Civ. Code, § 1624, subd. (a)(4).) To satisfy the
statute of frauds the writing must “identif[y] the subject of the
parties’ agreement, show[] that they made a contract, and state[]
the essential contract terms with reasonable certainty.” (Sterling
v. Taylor (2007) 40 Cal.4th 757, 766.) “The writing need not
memorialize the entire contract between the principal and broker
[citations], and need not be signed by all parties to the real estate
transaction [citation]. A memorandum summarizing the contract
will suffice as long as it sets forth the fact of employment or
authority to act. [Citations.] . . . Whether a writing is sufficient
is a question of law we review de novo.” (Westside Estate Agency,
Inc. v. Randall (2016) 6 Cal.App.5th 317, 330.)
The lease agreement identified the contracting parties and
clearly set forth their rights and obligations to each other. The
contracting parties each signed the agreement and the
addendum. The issue is whether these writings were sufficient to
enforce Northwest’s claim that Greenberg was required to pay
Northwest a sales commission. To be sufficient, the required
writing must also state, with reasonable certainty, “ ‘ “ ‘the terms
and conditions of all the promises constituting the contract and
by whom and to whom the promises are made.’ ” ’ ” (Rivers v.
Beadle (1960) 183 Cal.App.2d 691, 696; Ferrara v. Silver (1956)
138 Cal.App.2d 616, 618; see In re Marriage of Shaban (2001) 88
Cal.App.4th 398, 405–406.) As discussed, the lease agreement
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did not mention either Greenberg’s or the McCarthys’ obligation
to compensate Re/Max or Northwest. Paragraph 5 stated only
that “the Landlord’s agent and the Tenant’s agent will each
receive a commission of 2.5% (for a total of 5%) of the total
purchase price at the close of escrow” if the tenants purchased
the property. Focusing on paragraph 5, the superior court
concluded it was unenforceable because “there is no specific
language” designating Greenberg as the party to pay the
commission. The court further concluded extrinsic evidence
failed to remedy this deficiency.
Northwest does not dispute that Greenberg’s designation as
the party to pay the commission was an essential term to be
stated with reasonable certainty. Nor does Northwest seriously
dispute the superior court’s conclusion that paragraph 5 is
insufficient to overcome the statute of frauds. Instead,
Northwest argues the extrinsic evidence it proffered at the
hearing confirmed Greenberg’s “agreement to pay Northwest the
commission.” Northwest’s extrinsic evidence consisted of (1) the
transcript of Greenberg’s deposition, in which he testified that his
assistant, Misty Austin, was authorized to make an agreement on
his behalf; (2) a series of pre-sale e-mails between Northwest’s
agent Gauss (who drafted the lease agreement and addendum)
and Austin, in which Austin agreed to Gauss’s proposal to add
paragraph 5 language “that says we would each receive a
commission of 2.5% (a total of 5%) if the tenant buys the
property”; (3) the deposition of Re/Max’s agent Hicks, who
testified he had Greenberg sign the lease listing agreement form
in effect at the time, but could not recall discussing it with him,
and Hicks never had a transaction in which the buyer paid the
commission; (4) a blank unsigned copy of the lease listing
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agreement form, which included a condition that the “[o]wner
agrees to pay Broker if Tenant” acquires the property; and
(5) Gauss’s declaration stating, “There was no question that
Greenberg would be responsible for the payment of any and all
commissions.”
Northwest proffered other evidence to which Greenberg
successfully objected as not relevant: Paragraphs of the Multiple
Listing Service (MLS) Rules and Regulations and the MLS lease
listing for the residential property. The court also excluded
portions of Gauss’s declaration in which she explained the MLS
lease listing showed Gauss’s commission was 2.5 percent, the
lease listing agreement form requires the owner to pay the
broker’s commission, and the MLS Rules and Regulations
described how participating brokers are awarded compensation
and commissions.
None of this evidence, excluded or not, helps Northwest,
whose argument reflects a misperception of the statute of frauds.
“[T]he writing requirement of the statute of frauds ‘ “serves only
to prevent the contract from being unenforceable” [citation]; it
does not necessarily establish the terms of the parties’ contract.’
[Citation.] Unlike the parol evidence rule, which ‘determines the
enforceable and incontrovertible terms of an integrated written
agreement,’ the statute of frauds ‘merely serve[s] an evidentiary
purpose.’ ” (Sterling v. Taylor, supra, 40 Cal.4th at p. 766.)
Thus, extrinsic evidence purportedly showing that Greenberg
“agreed to pay” the sales commission is not legally sufficient to
satisfy the statute of frauds because his promise to pay the
commission is missing from paragraph 5. Moreover, to consider
any such extrinsic evidence would conflict with the integration
clause in paragraph 43 of the lease agreement.
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To be sure extrinsic evidence is admissible to resolve
ambiguities in disputed essential terms. (Sterling v. Taylor,
supra, 40 Cal.4th at p. 767.) However, the agreement must still
provide the essential terms, and “it is clear that extrinsic
evidence cannot supply those required terms.” (Ibid.) The
superior court properly determined paragraph 5 violated the
statute of frauds and granted the motion for summary judgment.
DISPOSITION
The judgment is affirmed. Greenberg is entitled to his
costs on appeal.
LUI, P. J.
We concur:
CHAVEZ, J.
HOFFSTADT, J.
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