Massis v. Shahbaz CA1/3

Filed 6/2/21 Massis v. Shahbaz CA1/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
NIMER ANTON MASSIS,
Plaintiff and Appellant,
A155887
v.
DANIAL SHAHBAZ, (City & County of San Francisco
Super. Ct. No. CGC15546763)
Defendant and Respondent.
Plaintiff Nimer Anton Massis appeals from a judgment in favor of
defendant Danial Shahbaz after a bench trial. Massis sued Shahbaz, a real
estate agent, after the sale of Massis’s business went awry.
Massis argues the trial court made three legal errors in reaching its
decision. First, the court incorrectly found that Civil Code section 23441
obligated Shahbaz to return checks to the prospective buyer of Massis’s
business, Brandy Summers Rodriguez. Second, the court applied an incorrect
legal standard in finding Shahbaz was not liable because Shahbaz did not
“prevent” the deal from closing. Third, with regard to Massis’s claims for
negligence, breach of fiduciary duty, and interference with a contract, the
court applied an incorrect legal standard in finding that Shahbaz’s conduct
1 Further statutory references are to the Civil Code unless otherwise
specified.
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was not a substantial factor in causing the alleged harm. Related to this
third perceived error, Massis also contends there is no substantial evidence
supporting the court’s finding that his failure to arrange for the transfer of
the lease prevented the sale from closing. We shall reverse.
FACTUAL AND PROCEDURAL BACKGROUND2
Massis hired Shahbaz to help him sell his business. The proposed sale
included a lease to a retail store and a liquor license. Massis agreed to pay
Shahbaz $10,000 if Shahbaz found a buyer and the transaction closed.
Rodriguez responded to an advertisement for the business that Shahbaz
posted, and Shahbaz prepared a proposed offer (hereafter “Asset Purchase
Agreement”) for Rodriguez to present to Massis.
In May 2013, Rodriguez and Massis signed a contract prepared by
Massis’s attorney (hereafter “Sale Agreement”), with terms that differed from
those in the Asset Purchase Agreement that Shahbaz drafted. In particular,
the Asset Purchase Agreement provided the sale price was $110,000, and
Massis would pay Shahbaz $10,000, while the Sale Agreement provided the
sale price was $120,000 and omitted mention of compensation for Shahbaz.
The Sale Agreement indicated $60,000 was due immediately upon its signing,
and the remainder due “one year after the closing of the liquor license
escrow.” The Sale Agreement also stated: “In the event the lease cannot be
transferred to [Rodriguez], the Agreement is cancelled.” The Sale Agreement
did not contain a deadline for assignment of the lease.
Shahbaz was unaware that Massis and Rodriguez signed a different
agreement than the one he drafted. On June 24, 2013, Shahbaz asked for
2 The following factual summary is derived from the settled statement on
appeal and the trial exhibits in the appellate record.
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and obtained a signed copy of the Sale Agreement, but he forwarded it to
Rodriguez without reading it.
Up until mid-July 2013, Shahbaz, Massis, and Rodriguez
communicated about paperwork that Massis’s landlord needed regarding
assignment of the lease and about Rodriguez paying rent and a security
deposit. The landlord told Rodriguez he had some minor questions and
things that “ ‘shouldn’t be hard to put together.’ ” Specifically, the landlord
asked for a written statement from the lessees stating their intention to
assign the lease and giving the landlord permission to “go over the lease.”3
Massis testified that on June 15, 2013, he sent the landlord an email stating
the tenants gave the landlord permission to speak with Rodriguez and
engage in the process of transferring the lease.
Meanwhile, on July 6, 2013, Rodriguez delivered two cashier’s checks
totaling $60,000 to Shahbaz to be delivered to Massis at the close of escrow.
Until July 18, 2013, all parties expected the deal to close. On July 18,
however, Shahbaz finally read the Sale Agreement that Massis and
Rodriguez signed and realized it differed from the Asset Purchase Agreement
that he drafted. Shahbaz was angry because the Sale Agreement did not
provide for his $10,000 commission and he thought Massis was trying to
cheat him. Although Shahbaz never saw a signed copy of the Asset Purchase
Agreement, Shahbaz felt he had a duty to let Rodriguez know the Sale
Agreement did not accurately reflect the terms of the agreement.4 So,
3 According to the statement of decision, there were four lessees: Massis,
Massis’s wife, and another married couple.
4 The statement of decision indicates that Shahbaz considered himself to
be a dual agent for Massis and Rodriguez, although he never made written or
oral disclosures to Rodriguez or Massis about that, and Rodriguez believed
Shahbaz was solely Massis’s agent. The settled statement on appeal does not
indicate that Shahbaz testified he considered himself a dual agent, but it
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without first communicating with Massis, Shahbaz told Rodriguez that he
would be returning her two cashier’s checks and that “the deal was off as far
as he was concerned.”
Both Shahbaz and Rodriguez testified that when Shahbaz returned the
checks, he told Rodriguez that Massis was “ ‘shady,’ ” that Massis cut him out
of his fee, and that he (Shahbaz) was unwilling to continue in the deal.
According to Rodriguez, Shahbaz told her that the Sale Agreement had
different terms than the “true contract.” According to Shahbaz, he told
Rodriguez that it was up to her if she wanted to complete the deal. Shahbaz
testified he did not know if Rodriguez would proceed with the deal. He did
not learn she pulled out of it until July 29, 2013, when he and Massis
communicated via text message.5
Massis testified he did not learn about the events of July 18 until
July 29 and up to that latter date, he believed the deal would close. He also
testified that he intended to pay Shahbaz $10,000 if the deal closed, and that
the omission of Shahbaz’s compensation in the Sale Agreement was a mere
oversight. Indeed, Massis and Shahbaz both testified that they worked
together once before and that Massis had paid Shahbaz his full fee based on
an oral agreement.
For her part, Rodriguez, who believed Shahbaz was acting on Massis’s
behalf, repeatedly testified that she considered his returning the checks to
her as an act that unambiguously cancelled the contract. Rodriguez did not
does state that Shahbaz did not disclose a dual agency on his part and that
both Rodriguez and Massis testified they believed Shahbaz was solely
Massis’s agent.
5 Shahbaz testified that he tried to contact Massis from July 18 to
July 29, 2013, but he provided no text messages or phone records to
corroborate this.
4
communicate this to Massis until July 29, 2013, when she sent him a text
message stating: “ ‘I’m sure [Shahbaz] told [you] he gave back my check and
the deal is off for us.’ ” (Bolding omitted.) Rodriguez also testified she told
Massis: “Shahbaz ‘didn’t feel comfortable with how things were playing out
and therefore neither do [I].’ ” (Capitalization omitted.)
Massis subsequently tried to sell the business and twice had potential
buyers, but no sale occurred despite the landlord’s willingness to allow the
assignment of the lease. Massis testified that as a result of Rodriguez’s
withdrawal from the Sale Agreement, he lost $110,000, plus $62,400 for 15
more months of rent, and $3,000 in attorney fees to his landlord for a
stipulation terminating the tenancy.
Massis sued Rodriguez and Shahbaz for breach of contract. Massis also
alleged causes of action against Shahbaz for breach of fiduciary duty,
constructive fraud, interference with a contract, and negligence. The parties
tried the case before the court over several days in March 2018. After Massis
rested his case, the trial court indicated it was prepared to grant Rodriguez’s
motion for judgment pursuant to section 631.8 of the Code of Civil Procedure.
The next day, Massis dismissed the action against Rodriguez with prejudice.
Upon conclusion of the trial, the trial court indicated it proposed to
grant judgment in favor of Massis. Massis prepared a proposed statement of
decision, to which Shahbaz filed objections contending his actions were not a
“substantial factor” in causing Massis’s alleged damages. The trial court
ultimately agreed with Shahbaz and issued a statement of decision rejecting
all of Massis’s claims.
In doing so, the trial court relied principally on the rule that “[c]onduct
is not a substantial factor in causing harm if the same harm would have
occurred without that conduct.” Starting from the premise that the sale of
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the business could not have been completed without the transfer of the lease,
the court found no evidence that Massis and the other tenants gave the
landlord written permission to assign the lease as the landlord had
requested. Therefore, the court determined, Massis’s failure to arrange for
the transfer of the lease prior to the transaction closing date prevented the
sale from closing. Moreover, the court explained, there was no “direct
evidence that Shahbaz made any statements to Rodriguez that prevented her
from closing the transaction.” Relatedly, the court rejected Massis’s
argument that Shahbaz wrongly returned the checks to Rodriguez. In the
court’s view, Shahbaz was obligated to return them pursuant to section 2344
“[o]nce Rodriguez asked Shahbaz to return the checks to her.” The court
entered judgment in favor of Shahbaz. Massis appealed.
DISCUSSION
Massis argues the trial court erred in applying section 2344 to find
Shahbaz rightly returned the checks to Rodriguez. He also challenges the
court’s conclusion that Shahbaz’s conduct was not a substantial factor in
causing the alleged harm. He contends that in applying the rule that
“[c]onduct is not a substantial factor in causing harm if the same harm would
have occurred,” the court wrongly failed to consider and apply an exception to
the rule. We address these claims below.
A. Causation
To establish liability under each of his causes of action, Massis had to
show Shahbaz’s conduct was a substantial factor in causing the alleged harm.
(CACI Nos. 303, 400, 2200, 4101, 4111; Franklin v. Dynamic Details, Inc.
(2004) 116 Cal.App.4th 375, 391.) An actor’s conduct is a substantial factor
in bringing about harm if the injury, or its full extent, would not have
occurred but for that conduct. (In re Ethan C. (2012) 54 Cal.4th 610, 640
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(Ethan C.).) “Conversely, if the injury would have occurred even if the actor
had not acted wrongfully, his or her conduct generally cannot be deemed a
substantial factor in the harm.” (Ibid.)
There is an “exception” to the “but for” test which operates in cases
involving “concurrent independent causes,” i.e., “multiple forces operating at
the same time and independently, each of which would have been sufficient
by itself to bring about the harm.” (Viner v. Sweet (2003) 30 Cal.4th 1232,
1240 (Viner).) That is, the “ ‘but for’ limitation does not apply . . . if the
actor’s wrongful conduct alone would have produced the harm, even without
contribution by other forces.” (Ethan C., supra, 54 Cal.4th at p. 640; Viner, at
p. 1240 [“if ‘two forces are actively operating . . . and each of itself is sufficient
to bring about harm to another, the actor’s negligence may be found to be a
substantial factor in bringing it about’ ”].)
Causation is ordinarily a question of fact, but the issue of causation
may be decided as a question of law “if, under undisputed facts, there is no
room for a reasonable difference of opinion.” (Nichols v. Keller (1993) 15
Cal.App.4th 1672, 1687; Fagerquist v. Western Sun Aviation, Inc. (1987) 191
Cal.App.3d 709, 719.) Here, the material facts regarding the parties’ conduct
are undisputed. Accordingly, we review de novo the issue of whether
Shahbaz’s conduct alone would not have produced Massis’s harm.6
Until July 18, 2013, Rodriguez had expected the deal to close. Then, on
July 18, when Shahbaz returned the checks to Rodriguez, he told her that
6 Although the record is unclear on the point, we presume the court
made an implied factual finding that Shahbaz’s conduct alone would not have
produced Massis’s harm. (Fladeboe v. American Isuzu Motors Inc. (2007) 150
Cal.App.4th 42, 59–60.) Although our analysis applies the de novo standard
(Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 912), we
would reach the same ultimate conclusion under the substantial evidence
standard.
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Massis was “ ‘shady’ ” and that he was unwilling to stay in the deal.
Rodriguez believed Shahbaz was acting on Massis’s behalf when he returned
the checks, and “she considered the return of the checks by Shahbaz on July
18, 2013 an act that unambiguously cancelled the contract.” (Capitalization
omitted.) “Once Shahbaz gave [Rodriguez] the checks back, she considered
the deal off.” (Capitalization omitted.) When Rodriguez finally
communicated with Massis on July 29, 2013, she told him: “ ‘I’m sure
[Shahbaz] told [you] he gave back my check and the deal is off for
us.’ Shahbaz ‘didn’t feel comfortable with how things were playing out and
therefore neither do [I].’ ” (Capitalization and bolding omitted.)
This evidence points unerringly to one conclusion: the deal was off on
July 18, 2013 as far as Rodriguez was concerned because of Shahbaz’s
conduct alone. We thus conclude the evidence did not support the trial
court’s finding on causation.
We take a moment to address the trial court’s observation that, “[w]hen
asked on cross examination whether she would have closed the transaction
after July 18 if the landlord had given written consent to the assignment of
the lease, Rodriguez responded, ‘If everything happened that was supposed to
happen, I would have closed the deal.’ ” While the trial court apparently
viewed Rodriguez’s statement as evidence that Shahbaz’s conduct was
insufficient by itself to cause Massis’s harm, we cannot agree. When
considered with all of Rodriguez’s other testimony, her statement cannot
reasonably be understood as suggesting that she would have gone forward
with the deal despite Shahbaz’s conduct in returning her checks and
criticizing both Massis and the deal itself.
Given our analysis and conclusion, we need not address Massis’s claim
that any failure of the four tenants to give written permission for the
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landlord to assign the lease would not have prevented the sale from closing.
We also need not address Massis’s contention that the trial court erred in
determining that Shahbaz was not liable because he did not make statements
“preventing” Rodriguez from closing the transaction.7 That said, because the
issue may be relevant to the proceedings on remand, we address whether the
trial court erred in applying section 2344 to find Shahbaz rightly returned
the checks to Rodriguez.
B. Section 2344
To reiterate, the trial court reasoned Shahbaz was obligated under
section 2344 to return Rodriguez’s two cashier’s checks to her once she
“asked” him to.8 Massis contends Shahbaz had no right to return the checks
because title in the checks had vested in Massis under the terms of the Sale
Agreement. That is, the agreement obligated Rodriguez to pay Massis
7 We understand the trial court’s finding that there “is no direct evidence
that Shahbaz made any statements to Rodriguez that prevented her from
closing the transaction” as a basis to further justify the conclusion that
Shahbaz’s conduct was not a substantial factor in causing the alleged harm.
That said, it is unclear why the court made this finding, as the causes of
action raised by Massis did not require proof that Shahbaz prevented
Rodriguez from fulfilling her end of the Sale Agreement.
8 We note that although the court’s statement of decision asserts “[o]nce
Rodriguez asked Shahbaz to return her checks to her, Shahbaz was obligated
to return her property” (italics added), nowhere in the statement of decision,
such as in its summary of the evidence, does the court include facts indicating
that Shahbaz gave Rodriguez the checks back because she asked him for
them. Similarly, the settled statement on appeal, approved by the trial court,
does not include any facts or circumstances that suggest Rodriguez asked for
the checks back. To the contrary, the testimony of both Shahbaz and
Rodriguez as recounted in the settled statement only indicates that
Shahbaz—angry because he thought Massis was trying to cheat him out of
his commission—contacted Rodriguez, then went to her and returned the
checks on his own accord and without prompting.
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$60,000 immediately upon signing, and to satisfy that obligation Rodriguez
gave two checks totaling $60,000 to Shahbaz, who was Massis’s agent, with
instructions to give the checks to Massis.
Section 2344 provides: “If an agent receives anything for the benefit of
his principal, to the possession of which another person is entitled, he must, on
demand, surrender it to such person, or so much of it as he has under his
control at the time of demand, on being indemnified for any advance which he
has made to his principal, in good faith, on account of the same; and is
responsible therefor, if, after notice from the owner, he delivers it to his
principal.” (Italics added.) Thus, the statute plainly required a showing that
Rodriguez was entitled to possession of the two checks when she allegedly
demanded their return. Although the court made no explicit finding on this
point, we infer the court made an implied finding (Fladeboe v. American
Isuzu Motors Inc., supra, 150 Cal.App.4th at pp. 59–60), and turn to examine
the propriety of that finding. We conclude it is unsupported by substantial
evidence.
Under the terms of the Sale Agreement, Rodriguez agreed to
immediately pay Massis $60,000 upon signing, which occurred in May 2013.
The Sale Agreement did not attach conditions to Massis taking title to the
money; nor did it give Rodriguez any right to retain the money after its
transfer to Shahbaz, whom Rodriguez understood to be Massis’s agent. (See,
e.g., Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221,
233 [“in the absence of escrow instructions to the contrary—title to a deposit
vests in the seller when the seller ‘accept[s] the contract’ ”]; Holloway v.
Thiele (1953) 116 Cal.App.2d 68, 69–73 [deposit belonged to the sellers based
on the operative contract, and their agent was liable after returning that
deposit based on undisclosed conditions not set out in the contract].)
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Although Shahbaz testified that Rodriguez instructed him to deliver the
checks to Massis “at the close of escrow,” such circumstance does not change
the terms of the Sale Agreement. Notably, Shahbaz fails to address Massis’s
argument on this point. Ultimately, there is no substantial evidence that
Rodriguez was entitled to the checks back.
DISPOSITION
The judgment is reversed. The matter is remanded to the trial court to
redetermine the issues based on the evidence previously before it in
conformity with the views herein expressed. The court may receive
additional evidence as it deems necessary or advisable. Massis shall recover
his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
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_________________________
Fujisaki, Acting P. J.
WE CONCUR:
_________________________
Petrou, J.
_________________________
Jackson, J.
A155887
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