Ho v. Stone

Filed 10/30/07 Ho v. Stone CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from an order of the Superior Court of Stanislaus County. Roger M. Beauchesne, Judge.

Drinker, Biddle & Reath, H. Christian LOrange, Alan J. Lazarus and Benjamin J. Holl for Cross-defendants and Appellants.

Frank M. Tse and Stephanie A. Yee for Cross-complainants and Respondents.

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This is an appeal from a postjudgment order denying a request for attorney fees. Appellants have not shown reversible error; accordingly, we affirm the order.

Facts and Procedural History

Stone Real Estate, Inc., conducted business as Prudential Commercial Real Estate (Prudential). Appellants Ronald Stone, Thomas Stone, and Craig Lewis were the principal shareholders of Stone Real Estate, Inc.

Prudential obtained an oral listing agreement with respondents Wai Man Sa Lo Ho and Tammy Pui Sun Ho (respondents) to sell commercial real estate in Modesto. Eventually, a Prudential broker presented respondents with an offer to purchase showing as buyer Ronald V. Stone, et al. or assigns and listing another Prudential broker as buyers agent. The offer included the following disclosure: Buyer discloses that its members are brokers with active licenses with the California Department of Real Estate.

Shortly before escrow was scheduled to close, respondents were notified that the buyers consisted of the three appellants and that all three were owners of Prudential. Respondents, through their attorney, notified appellants that this issue provided grounds for rescission of the sale agreement. Respondents stated their intention to go forward with the sale, but they unilaterally instructed the escrow agent to withhold Prudentials sales commission of $160,000 until further instructions from respondents or a court. Escrow closed; the commission was withheld.

Prudential sued respondents to recover its commission on the oral listing agreement. Respondents filed a cross-complaint against Prudential, the buyers and sellers individual brokers, and appellants. The cross-complaint alleged four causes of action: breach of fiduciary duty against Prudential, Lewis, and the listing agent; negligence against Prudential, Lewis, and both the sellers and the buyers agent; fraud against Prudential, Lewis, and the listing agent; and breach of contract against Prudential. Strikingly absent were any causes of action specifically against respondents Ronald and Thomas Stone.

After a trial to the court sitting without a jury, judgment was granted against respondents both on the complaint and the cross-complaint. Prudential and appellants moved for an award of attorney fees. As to Prudential, the motion was denied and its request for fees is not involved in this appeal.

As to appellants, the motion was based on paragraph 33 of the purchase and sale agreement, which provided: In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs . The agreement also stated: Real Estate Brokers are not parties to the Agreement between Buyer and Seller. The trial court denied appellants motion for attorney fees on the basis that appellants were not sued as buyers but were, instead, sued solely as real estate agents who were acting at all times in that capacity. Appellants filed a timely notice of appeal.

Discussion

This case involves interpretation of a contract and, because the facts are not in dispute, our review of the issue is de novo. (Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 545, fn. 1.)^[1]

Ronald Stone clearly was a named buyer in the contract, satisfying the first requirement of the fee provision, that the action be one between Buyer and Seller. Therefore, the question on appeal is whether the cross-complaint filed against appellants aris[es] out of the purchase agreement, the second requirement of the attorney fee clause. That is, we must determine whether the nature of the claims asserted by [cross-complainants] fall within the intended scope of the attorney fee clause. (Id. at p. 545.)

The trial court, although phrasing its conclusion somewhat differently, determined that respondents claims against appellants did not fall within that intended scope: [T]he Cross-Complaint does not reach [appellants] in their capacity as buyers of the property. The Cross-Complaint specifically alleges that [appellants] are named in their capacity as real estate agents and that, at all times set forth therein, they were acting in said capacity.

Appellants contend there is no legal, logical or equitable reason why these cross-defendants should not be permitted to recover their hefty legal expenses, as envisioned by the attorney fees provision of their contract. They continue: [N]othing in the contract indicates that the fees provision should rest in any part on the elements of the tort claims invoked by the plaintiffs in the complaint. (Presumably, appellants reference is to the allegations of the cross-complaint.)

Contrary to appellants claim, the contract does indicate that the nature of the torts asserted makes the fees provision inapplicable in the present circumstances: The contract states unequivocally Real Estate Brokers are not parties to the Agreement between Buyer and Seller. Thus, as in Super 7 Motel Associates v. Wang, supra, 16 Cal.App.4th at page 546, it is clear the attorney fees provision excludes any obligation of brokers to pay attorney fees under the contract and any right to receive such fees.

Where the contract did not exclude brokers from an attorney fee provision, courts have reached a different conclusion. In both Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342-1343, and Pacific Preferred Properties, Inc. v. Moss (1999) 71 Cal.App.4th 1456, 1463, for example, the attorney fees clause expressly included real estate agents as well as the buyer and seller. Under such a clause, both courts concluded, the capacity of the parties did not affect the determination whether the litigation arose from the purchase contract because the attorney fees clause covered the parties in all relevant capacities. Thus if, in the present case, the attorney fees clause had included brokers within its scope, the activities of those brokers would arise from the purchase contract; Prudential and all of those sued as its employees would have been eligible for prevailing-party attorney fees on causes of action alleging broker misconduct.

The actual contract language in the present case, however, clearly excludes from the attorney fees clause the types of claims that arise between brokers and their clients. Accordingly, we conclude the type of agent-related claims involved in the cross-complaint were not intended to be covered by the attorney fees clause. (See Super 7 Motel Associates v. Wang, supra, 16 Cal.App.4th at p. 545; see also Xuereb v. Marcus & Millichap, Inc, supra, 3 Cal.App.4th at p. 1343.) It is not reasonable to conclude the parties to this contract intended identical agent-related causes of action to be covered or not covered by the attorney fees clause based solely on the coincidence that one of agents was a buyer and one was not.

As a practical matter, this result is reinforced by the fact that the motion for attorney fees was filed by all of the cross-defendants and represented (accurately, it appears) that all fees were incurred working on issues common to all of the cross-defendants, by one firm of attorneys representing all cross-defendants. In other words, there is no claim by appellants that they incurred separate or additional fees based on their status as buyers, over and above fees they may have incurred as employees of Prudential.

Finally, appellants contend it is relevant to the interpretation of the attorney fees provision that cross-complainants failed to prove that appellants in fact acted as agents or brokers in this matter. An award of prevailing-party attorney fees, however, presumes that the opposing party failed to establish one or more facts necessary to its cause of action; otherwise the party claiming such fees would not have prevailed in the litigation. The particular outcome of the litigation is not helpful in determining the parties intent as expressed in a contract formed long before the litigation.

Disposition

The order of the trial court denying an award of attorney fees is affirmed. Costs on appeal are awarded to respondents.

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VARTABEDIAN, Acting P. J.

WE CONCUR:

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CORNELL, J.

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DAWSON, J.

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^[1] It is important to mention initially that this appeal does not involve a claim for attorney fees as a sanction for frivolous litigation nor does it involve an action for malicious prosecution. (See, e.g., West Coast Development v. Reed (1992) 2 Cal.App.4th 693, 704; see also City of Long Beach v. Bozek (1982) 31 Cal.3d 527, 538.) Instead, this case involves only attorney fees claimed under a contract. We do not consider any noncontractual basis for an award of fees.