Palacios v. Keep

Filed 5/4/06 Palacios v. Keep CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Appellants Ron Palacios and Kelly Palacios appeal from a judgment of dismissal after an order sustaining a demurrer without leave to amend. Appellants allege they entered into a contract to purchase a "leasehold interest" in real property from respondents David J. Keep individually, and Geoffrey T. Marshall as trustee of the Marshall Family Trust. Respondents refused to perform and appellants sued to enforce the contract. Respondents demurred on the ground that appellants failed to allege the existence of a written contract. The trial court sustained respondent's demurrer without leave to amend. We affirm.

FACTS

Geoffrey T. Marshall is the trustee and beneficiary of the Marshall Family Trust. Appellants alleged that the trust and David J. Keep share a leasehold interest in Apartment Number 203 at 4975 Sandyland Road in Carpinteria, California. Appellants claim that Keep, Marshall and the trust agreed to sell their leasehold interest in the apartment to appellants for $480,000. The parties did not execute a written contract to this effect or enter into a lease. The only evidence of the transaction is 1) a check in the amount of $10,000 written by appellants payable to Geoffrey T. Marshall; 2) a handwritten receipt issued by Marshall for $10,000 and 3) an allegation that the parties had opened escrow and deposited $10,000.

The handwritten receipt is dated November 18, 2003, and signed by Geoffrey T. Marshall. It reads, "I received deposit on # 203 Sandyland (4975) Road ck to go to escrow $10,000, price, and closing to be fixed later." Following Marshall's signature was the statement, "P.S. Price not to exceed $480,000, deposit refundably [sic] B/4 escrow." Marshall initialed the statement and wrote his name, personal mailing address and phone number on the bottom of the receipt. He made no reference to the Marshall Family Trust, did not identify himself as a trustee nor state that he was acting on behalf of David J. Keep or a partnership.

After the parties opened escrow, respondents refused to sell their interest. Respondents acknowledge that they opened escrow, but claim they did not sign the escrow instructions. Appellants contend they are entitled to purchase respondents' leasehold interest, based upon their payment of $10,000, the written receipt and the deposit of their funds into escrow. They also allege they have suffered damage by encumbering another piece of real property in order to finance the full purchase price of the leasehold interest.

Procedural History

Appellants filed an action for "specific performance for sale of real property," requesting an order directing respondents to "specifically perform the agreement and deliver the leasehold interest in the real property . . . ." Appellants stated that respondents David J. Keep and the Marshall Family Trust are partners who hold a leasehold interest in the apartment. They alleged that "[o]n or about November 18, 2003, plaintiffs and defendants David J. Keep and The Marshall Family Trust through their agent Geoffrey T. Marshall entered into an agreement in which defendants agreed to sell and plaintiffs agreed to buy the leasehold interest in [Apartment 203] for the sum of $480,000.00. On that date plaintiffs gave defendants' agent the sum of $10,000.00 as a deposit on the purchase price of the leasehold interest and defendants' agent executed and delivered to plaintiffs a written receipt for said deposit." The parties opened escrow "with the consent of defendants David J. Keep and Geoffrey T. Marshall as trustee of The Marshall Family Trust."

Attached to the complaint was a one-page property description. The lessor of apartment 203 was identified as "4975 Sandyland Road Association" and the lessees were David J. Keep, Phyllis A. Keep, Geoffrey T. Marshall and Katherine J. Marshall.^[1] No mention was made of the Marshall Family Trust. Lessees Phyllis A. Keep and Katherine J. Marshall were not named as parties to this action.

Respondents demurred on the grounds that the complaint failed to state a cause of action and was uncertain. Appellants had not indicated whether the contract was written, oral or implied, nor alleged its terms. Nor did they allege that Marshall was authorized to serve as respondents' agent. Attached to the demurrer were copies of appellants' $10,000 check and the handwritten receipt signed by Marshall.

Appellants filed a first amended complaint, adding the allegation that "Geoffrey T. Marshall represented to [appellants] that . . . David J. Keep and . . . The Marshall Family Trust were a partnership which held a leasehold interest [in Apartment 203] . . . ." They also alleged that Marshall had represented to them that he had authority on behalf of the Marshall Family Trust and as a partner "to sell the leasehold interest . . . and enter into a sales agreement." Respondents demurred.

In their opposition to the demurrer, appellants contended that Marshall had specified the price of the property, its description, the opening of escrow and respondents' refusal to sell the property. They also alleged that they had detrimentally relied upon respondents' promise by encumbering another piece of property to finance the full "purchase price." Thus, they conclude respondents were barred from asserting the defense of the statute of frauds.

The trial court sustained the demurrer with 15 days leave to amend. It stated in its tentative ruling that the written receipt was insufficient to satisfy the statute of frauds. Moreover, appellants did not allege the existence of a document authorizing Marshall to act as the agent of David J. Keep and the trust. The court rejected appellants' estoppel argument because there were no factual allegations that appellants "have so changed their position that unconscionable injury would be suffered" or that respondents would be unjustly enriched.

Appellants filed a second amended complaint alleging that Geoffrey T. Marshall is the trustor, trustee and beneficiary of the Marshall Family Trust. They alleged that Marshall, "on behalf of the partnership, signed and executed a writing confirming an agreement to sell said property" and attached a photocopy of the handwritten receipt. Appellants claimed that respondents would be unjustly enriched "if the sale herein is not enforced . . . [because] . . . the subject real property has increased in value since the time of the signing of the receipt for money, the payment of money and the opening of escrow with a deposit of the funds herein."

Respondents demurred on the grounds that the second amended complaint did not allege the existence of a written instrument providing for the sale of an interest in real property; and did not allege a written instrument authorizing an agent to act on behalf of a party. The trial court sustained the demurrer to the second amended complaint without leave to amend and dismissed the action.

DISCUSSION

On appeal from a judgment of dismissal entered after a demurrer has been sustained without leave to amend, we accept the factual allegations of the complaint as true and review the pleading de novo to determine whether the facts as pleaded state a cause of action. (Medina v. Hillshore Partners (1995) 40 Cal.App.4th 477, 481; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) "If there is a reasonable possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended." (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)

Under the statute of frauds, certain agreements are invalid unless they are in writing and signed by the party to be charged, or the party's agent. (Civ. Code, §§ 1624, subd. (a)(3), 1091; Code Civ. Proc., § 1971.) Such agreements include "[a]n agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged." (Civ. Code, § 1624, subd. (a)(3), italics added.) Accordingly, an agreement for the sale of respondents' leasehold interest in Apartment 203 must be in writing to be valid.

There are four requirements to the formation of a valid contract: parties capable of contracting; their consent; a lawful object; and a sufficient cause or consideration. (Civ. Code, § 1550; Schaefer v. Williams (1993) 15 Cal.App.4th 1243, 1246.) In an action for specific performance of a contract the complaint must allege facts showing that the contract is fair, the consideration adequate, and that it would not be inequitable to enforce it. (Civ. Code, § 3391; Williams v. Foss (1924) 69 Cal.App. 705, 707.)

Here, appellants have not alleged the existence of a written agreement concerning transfer of the lessee's interest in Apartment 203. Marshall's handwritten receipt cannot be considered a contract because it is too indefinite to be enforced. It does not identify the parties, the term of the lease, or even a fixed price. Marshall executed the writing providing only his own name and personal address and telephone number. He makes no reference to a partnership, David J. Keep or the Marshall Family Trust. Nor have appellants alleged the existence of a separate written document authorizing Marshall to act as the lessees' agent.

The trial correctly ruled that appellants had failed to show detrimental reliance or unjust enrichment to avoid the bar of the statute of frauds. In its written ruling the court stated, "There are no allegations to show any permanent change in position, no inability to pay off the loan, and no giving up an opportunity to purchase a specific different property or interest in property."

Having independently reviewed the operative pleadings, we conclude the trial court did not abuse its discretion by sustaining appellants' demurrer without leave to amend. Appellants were unable to allege facts to support a cause of action for specific performance in their original, first or second amended complaints. Having independently reviewed the operative pleadings, we conclude that the trial court properly sustained respondents' demurrer.

The judgment is affirmed. Costs on appeal are awarded to Respondents.

NOT TO BE PUBLISHED.

COFFEE, J.

We concur:

GILBERT, P.J.

PERREN, J.

Thomas P. Anderle, Judge

Superior Court County of Santa Barbara

______________________________

McCarthy & Kroes, R. Chris Kroes and Scott London for Plaintiffs and Respondents.

Alfred R. Keep for Defendants and Respondents.

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Analysis and review provided by Santee Apartment Manager Attorneys.

^[1] The property description is a single page unsigned document defining the property interest as "A leasehold estate created by that certain 'Assignment and Amendment and Restatement of Long Term Apartment Lease and Long Term Apartment Sublease (now constituting a Lease Agreement)' dated July 21, 1992, executed by (1) La Majerada, a California Limited Partnership, and La Haya Leasehold Inc., a California Corporation, as assignors; (2) 4975 Sandyland Road Association, a California Corporation, as Lessor; and (3) David J. Keep and Phyllis A. Keep, husband and wife and Geoffrey T. Marshall and Katherine J. Marshall, husband and wife as Lessee, for a term of years upon the terms, convenants [sic] and conditions therein provided, recorded July 21, 1992 as Instrument No. 92-56515 of Official Records, Santa Barbara County, California herein refereed to as the 'Lease Agreement.'"