Judd v. Perdue

Filed 5/25/10 Judd v. Perdue CA1/4

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION FOUR

Plaintiff and appellant Dennis Judd engaged defendant and respondent Paul Perdue to manage Judds rental property for him, and to negotiate the purchase of a separate parcel of real property. Perdue also represented the seller of that separate property. After negotiating with the seller through Perdue for about a month, Judd allowed a counteroffer from the seller to lapse, without making a return counteroffer. Six days after that counteroffer expired, Perdue purchased the property himself at the same price that Judd had last offered, without first telling Judd that he intended to do so.

Judd later sued Perdue for breach of fiduciary duty. The jury returned a defense verdict, and the judge denied Judds motions for judgment notwithstanding the verdict and a new trial. On appeal, Judd argues that Perdue was still his agent as of the date Perdue purchased the property, and therefore breached his fiduciary duty to Judd. We conclude that substantial evidence supports the jurys finding in Perdues favor on that issue. We therefore affirm.

Facts[1] and procedural background

Judd is a licensed real estate broker and self-employed real estate investor. Perdue, who is also a licensed real estate broker, served as the property manager for Judds rental property for about a year around 2000 and 2001, and then again starting in September 2003 through mid-March 2004. Sometime before January 5, 2004,[2] Perdue also became the listing brokerthat is, the sellers agentfor a parcel of commercial real property (the Basso property) owned by Karen Basso, which Perdue had been managing.

During the first week of January, Perdue told Judd that the Basso property was for sale. Judd then engaged Perdue as his agent for the purchase of the Basso property. On January 5, Perdue drafted an offer for the Basso property, which Judd signed, offering a purchase price of $950,000 (which Perdue believed was too low) and specifying other terms suggested by Judd. By its terms, the offer expired that same day. Basso did not accept the offer, but 15 days later, on January 20, she signed a counteroffer, drafted by Perdue, offering to sell the Basso property to Judd for $1.15 million, on different financing terms and with various other provisions different from the ones given in Judds initial offer. The offer stated that it would remain open until January 26.

In response, on January 22, Judd faxed Purdue a letter addressed to Basso, raising his offer to $1 million, and explaining his proposal for the financing and other terms. Basso testified both at her deposition and at trial that she never saw the January 22 letter.[3] Perdue explained that he told Basso about the letter, and that she responded that she did not want to look at a response from Judd that was in the form of a letter rather than a formal counteroffer.

Judd received no response to his January 22 letter, so on January 29, three days after Bassos January 20 offer expired, Judd instructed Perdue to deliver another counteroffer to Basso, in which Judd agreed to pay the $1.15 million price stated in Bassos January 20 offer, but specified different terms with respect to financing and other issues. Perdue delivered this counteroffer to Basso along with Judds January 22 letter. Later the same day, Perdue helped Basso prepare a responsive counteroffer (Bassos January 29 offer), and delivered it to Judd. Bassos January 29 offer, by its terms, was set to expire on February 10.

Judd testified at trial that he told Perdue he wanted to make a written counteroffer to Bassos January 29 offer, but that Perdue told him Basso would not respond well to that, so Judd agreed that Perdue would make an oral counteroffer instead. According to Judd, Perdue told Judd that he had made such a counteroffer, and that Basso was no longer interested.

Perdue testified, in contrast, that he would not have presented an oral counter to a written counteroffer, because an oral offer would not mean anything and would be a fishing expedition. Instead, Perdue averred that upon receiving Bassos January 29 offer, Judd told him that he was  going to let it sit,  and would not sign the contract. When Perdue asked Judd to explain this, Judd only repeated that he was  just going to let it sit.  [4] According to Perdue, he made clear to Judd that if Judd did not accept Bassos January 29 offer before the February 10 deadline, the property could be sold to another buyer. Judds statements that he was going to let [the offer] sit led Perdue to believe that we had no deal. Perdue therefore believed that his status as Judds agent for the purpose of purchasing Bassos property had been terminated. Perdue did not tell Judd that he considered his agency terminated, and he continued to serve as Judds rental property manager until mid-March, and remained in almost daily contact with him. Judd never again mentioned the Basso property to Perdue.

On February 16, Perdue gave Basso an offer to purchase the Basso property, in the name of Paul Perdue et al., on behalf of a partnership Perdue had formed for that purpose. Perdue offered Basso essentially the same price that Judd had offered Basso on January 29, but slightly more favorable financing terms. Basso accepted the offer. Perdue never told Judd that he intended to make this offer, or that he was interested in purchasing the Basso property for himself. Judd discovered that Perdue had done so only by chance at a later time.

On September 20, 2007, Judd filed a complaint against Perdue for breach of fiduciary duty and other causes of action. The case was tried to a jury in late January and early February 2009. At the trial, in addition to evidence regarding the underlying events, each party also presented expert testimony regarding the duties of real estate agents to their clients, and the manner in which the relationship between an agent and a client may be terminated.

Perdues expert, J. Patrick Burke, testified that it was reasonable for Perdue to believe that his agency relationship with Judd ended on February 10, given that Judd neither accepted Bassos January 29 offer nor made a further counteroffer, and did not make any further mention of the Basso property after February 10. Burke also opined that once Perdues agency relationship with Judd regarding the Basso property was over, Perdue was not obligated to inform Judd either that he considered his agency terminated, or that he intended to purchase the property himself. In addition, Burke corroborated Perdues testimony that oral offers are not acceptable in real property transactions.

Judds expert, Guy Puccio, opined that Perdue continued to have a fiduciary duty to Judd even after Bassos January 29 offer expired, because Perdue never informed Judd that he was no longer acting as Judds agent, and not enough time had elapsed since Perdue last acted as Judds agent to render such notice unnecessary. Puccio also testified that Perdue continued to have a fiduciary duty because Perdue continued to act as Judds property manager, but he acknowledged that Perdues duty to Judd as his property manager was separate and distinct from his duty to Judd as Judds agent for the purchase of the Basso property, and that each duty could be terminated separately.[5]

The jury returned a special verdict in favor of Perdue, and judgment was entered accordingly. Judd filed a motion for new trial and a motion for judgment notwithstanding the verdict. The trial judge denied both motions on April 3, 2009, and this timely appeal ensued.

discussion

It is undisputed that Bassos January 29 offer expired by its terms on February 10. It is also undisputed that Judd neither accepted Bassos January 29 offer, nor made a counteroffer to it. Perdue testified, in effect, that Judds reaction to Bassos January 29 offer caused Perdue to think that Judd was no longer interested in buying the Basso property. The central issue raised by this appeal is whether, given those facts, Perdue remained Judds agent, and therefore still owed Judd a fiduciary duty, as of February 16, the date on which Perdue bought the Basso property.[6]

Civil Code section 2355 provides, in pertinent part, that an agency is terminated as to every person having notice thereof, by . . . [] (a) The expiration of its term; [] (b) The extinction of its subject . . . [or] [] (d) the agents renunciation of the agency. . . .[7] In accordance with the statute, Judd and Perdue stipulated at trial that the trial court would instruct the jury as follows: An agency is terminated, as to every person having notice thereof, by any of the following: [] (a) The expiration of its term, or [] (b) The extinction of its subject, or [] (c) The agents renunciation of the agency. In his closing argument at trial, Perdues counsel acknowledged that given the evidence, the only basis for Perdues contention that his agency terminated prior to February 16, was the extinction of the subject.

Judd argues on appeal, as he did in support of his posttrial motions, that substantial evidence does not support the jurys implied finding that Perdues agency had terminated by February 16. The substantial evidence test was summarized as follows by our Supreme Court in Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559:  In reviewing the evidence on . . . appeal all conflicts must be resolved in favor of the [prevailing party], and all legitimate and reasonable inferences indulged in to uphold the [finding] if possible. It is an elementary, but often overlooked principle of law, that when a [finding] is attacked as being unsupported, the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the [finding]. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court. [Citation.] (Id. at p. 571, quoting Crawford v. Southern Pac. Co. (1935) 3 Cal.2d 427, 429.) To put it another way, [w]hen a judgment is attacked for insufficiency of the evidence, the appellate court must review the whole record in the light most favorable to the judgment below to determine whether it discloses substantial evidencethat is, evidence which is reasonable, credible, and of solid valuesuch that some reasonable trier of fact could find that the judgment and each essential element thereof was established by the appropriate burden of proof. (Rivard v. Board of Pension Commissioners (1985) 164 Cal.App.3d 405, 414.)

In reviewing the verdict under the substantial evidence test, we view the evidence most favorably to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor. (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660; Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1100.) The testimony of a single credible witness is sufficient to constitute substantial evidence, even if that witness is a party to the action. (Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059, 1075; In re Marriage of Mix (1975) 14 Cal.3d 604, 614.) In short, [a] judgment will not be reversed based on an evaluation of the strength of the opposing evidence or the relative weakness of supporting evidence when compared to opposing evidence. It can be reversed based only on the absence or insubstantiality of supporting evidence, as determined from a review of all related evidence in the record. [Citation.] (Rivard v. Board of Pension Commissioners, supra, 164 Cal.App.3d at p. 413, italics in original, fn. omitted.) The same substantial evidence test applies to our review of the trial courts order denying Judds motion for judgment notwithstanding the verdict. (Carter v. CB Richard Ellis, Inc. (2004) 122 Cal.App.4th 1313, 1320.)

The effect of this standard is that to prevail, Judd must demonstrate that the record does not contain evidence from which a reasonable trier of fact could derive the findings he seeks to overturn. (See Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633.) The ultimate determination is whether a reasonable trier of fact could have found for the respondent based on the whole record. [Citation.] (Id. at p. 1633.)

In reviewing the trial courts order denying a motion for new trial, we normally apply a different standard. [W]hen reviewing an order denying a new trial, the appellate court is required to review the entire record to determine independently whether the error on which the new trial motion is based is prejudicial. [Citation.] (Plancarte v. Guardsmark (2004) 118 Cal.App.4th 640, 645; see also City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 872.) Here, however, Judds motion for new trial was based entirely on the same grounds regarding lack of substantial evidence that were asserted in his motion for judgment notwithstanding the verdict. Thus, our inquiry on appeal as to both of Judds posttrial motions is essentially the same.

In denying Judds posttrial motions, the trial judge cited the following evidence as supporting the jurys verdict: (1) Perdues testimony that on January 29, Judd told him that Judd was not going to sign the sales agreement, and that Perdue therefore believed that he no longer represented Judd in connection with the transaction; (2) Burkes expert testimony that the fiduciary relationship was terminated on February 10; and (3) Bassos testimony that Perdue told her, after January 29, that Perdue [sic] was no longer interested in the property, and that she considered the negotiations with Judd over because his offer was too low.[8] On appeal, Judd argues that this evidence is not sufficient to support the verdict because: (1) Perdues uncommunicated belief that Judd was no longer interested in buying the Basso property does not establish the extinction of [the] subject of the agency; (2) the trial court mischaracterized Bassos testimony, and in any event, it did not establish that the agency had expired; and (3) the testimony of Burke cited in the trial courts order was ruled inadmissible at trial, and stricken from the record.

Even if we disregard Burkes and Bassos testimony, however, there is still substantial evidence to support the verdict, within the meaning of the applicable standards of review. Judd stipulated to a jury instruction stating that an agency is terminated by the extinction of its subject. The jury was not further instructed as to the meaning of the terms extinction or subject in the context of the instruction. Accordingly, the jury could apply its own common sense understanding of those terms. (See generally People v. Bunyard (2009) 45 Cal.4th 836, 857 [jury instruction that had common-sense core of meaning required no further elucidation].) The jury was therefore free to conclude that the subject of Perdues agency was Judds interest in the purchase of the Basso property, rather than the general availability of that property for sale. The jury, as the trier of fact, was also entitled to determine that Perdues account of his communications with Judd on January 29 was more credible than Judds. Finally, the jury was entitled to infer from those communications that the extinction of Judds interest in purchasing the Basso property occurred before Perdue purchased the Basso property on February 16. Accordingly, Perdues testimony about his communications with Judd on January 29, even standing alone, constitutes substantial evidence sufficient to support the jurys verdict.

In support of his argument that Perdue continued to owe Judd a fiduciary duty as of February 16, when Perdue made his own offer for the Basso property, Judd cites Menzel v. Salka (1960) 179 Cal.App.2d 612. In Menzel v. Salka, the defendant real estate agents found a buyer for the plaintiffs property, and an escrow was opened. Before the sale closed, however, the buyer told the agents that she could not close the transaction and was willing to forfeit the bulk of her deposit. Rather than informing the plaintiffs of this development, one of the agents agreed to buy the property himself from the original buyer, on terms which essentially gave him a discount, and opened a separate escrow with her.

The trial court found that the agents had realized secret profits and commissions in connection with the sale of the plaintiffs property. On appeal, the agents argued that their agency relationship with the plaintiffs terminated when they procured the buyer, and they no longer owed the plaintiffs a fiduciary duty. The appellate court rejected this argument on the ground that the sale of the property was in escrow and thus the transaction was not completed at the time that the agent entered into his separate agreement with the original buyer. (Menzel v. Salka, supra, 179 Cal.App.2d at p. 623.) In addition, the agents admitted in their testimony that they continued to act as agents and fiduciaries of the [plaintiffs], and so informed them, after the opening of both escrows, and the [plaintiffs] continued to rely upon them in such capacity. (Id. at pp. 623-624, italics added, original italics omitted.) Therefore, the court concluded that the fiduciary relationship between the agents and the plaintiffs did not terminate on the opening of the escrow between the plaintiffs and the original buyer. (Id. at p. 624.)

The present case is obviously distinguishable on its facts. Here, no escrow was ever opened. By the time Perdue made his own offer to purchase the Basso property, more than two weeks had elapsed since Judd told Perdue that he did not intend to respond to Bassos January 29 offer, and during that time, Judd had not expressed to Perdue any interest in reopening negotiations. Moreover, Perdue never told Judd after January 29 that he considered himself still to be acting as Judds agent for the purchase of the Basso property. Thus, nothing in the opinion in Menzel v. Salka, supra, 179 Cal.App.2d 612 persuades us that the verdict and judgment in the present case are not supported by the evidence and the applicable law.

disposition

The judgment is affirmed. Perdue shall recover his costs on appeal.

_________________________

RUVOLO, P. J.

We concur:

_________________________

SEPULVEDA, J.

_________________________

RIVERA, J.

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[1] Perdue did not file a respondents brief on appeal. We have therefore decided this appeal on the record, the opening brief, and Judds counsels presentation at oral argument. (Cal. Rules of Court, rule 8.220(a)(2).) Our statement of facts is based on a review of the entire trial record.

[2] All further references to dates are to the year 2004 unless otherwise noted.

[3] Basso explained at trial that she had been having some health problems since her deposition was taken, and did not remember the details of the sale of the Basso property, or of her deposition testimony. She averred, however, that she had testified truthfully at her deposition.

[4] Bassos testimony was consistent with Perdues version of these events. She did not recall Perdue coming to her with an oral counteroffer after she made her January 29 offer, and her understanding was that after she made her January 29 offer, her negotiations with Judd came to an end.

[5] Likewise, Burke testified that Perdues agency relationship with Judd as Judds property manager was separate and distinct from his agency with respect to the Basso property, because [t]he agency relationship is specific to the transaction or the activity.

[6] For purposes of this appeal, we will assume, without deciding, that if Perdue was still Judds agent with respect to the Basso property as of February 16, Perdue breached his fiduciary duty to Judd by purchasing the Basso property without first informing Judd that he intended to do so.

[7] It is not disputed that the other subdivisions of Civil Code section 2355 are inapplicable to the facts of this case.

[8] Of course, in determining whether there was substantial evidence to support the verdict, we are not limited to the evidence identified in the trial courts order. Nonetheless, it provides a good place to start, particularly in the absence of a respondents brief.

The trial courts order denying Judds posttrial motions also cited Puccios testimony that an agents fiduciary relationship may terminate without notice if there is no conduct or communication between the agent and the principal over a long period of time. We agree with Judd that this testimony does not support the jurys verdict, because Perdue purchased the Basso property a relatively short time after January 29, and Judd and Perdue remained in frequent contact during the intervening period. Accordingly, in determining whether substantial evidence supports the verdict, we do not rely on this testimony.