High Tide Cafe v. Frenk

 

 

 

 

 

 

 

 

Filed 1/29/07  High Tide Cafe v. Frenk CA4/1

 

 

 

NOT
TO BE PUBLISHED IN OFFICIAL REPORTS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  This opinion has not been certified for
publication or ordered published for purposes of rule 977.

 

 

COURT
OF APPEAL, FOURTH APPELLATE DISTRICT

 

DIVISION
ONE

 

STATE
OF CALIFORNIA

 

 

 

HIGH TIDE CAFE,               Plaintiff and Appellant,               v.   PETER FRENK et al.,              Defendants;   G.R. BILL BUSINESS BROKERS, INC.,               Third Party Claimant and Respondent.

D047862         (Super. Ct. No. GIC850389)

 

            APPEAL from a judgment of the Superior Court of San Diego County,
Francis M. Devaney, Judge.  Affirmed.

 

            High Tide Café (High Tide) entered into a
listing agreement with G.R. Bill Business Brokers, Inc. (G.R. Bill) to sell its
restaurant business.  The listing agreement, which entitled G.R. Bill to a
broker's commission in the event the sale was "accomplished," did not
contain an attorney fees clause.  G.R. Bill found a buyer, and High Tide and
the buyer entered into a purchase contract
that acknowledged G.R. Bill's right to payment of a commission in accordance
with the terms of the listing agreement.  The parties to the purchase contract opened
an escrow, and the escrow instructions, which acknowledged G.R. Bill's right to
payment of a commission "upon the close of escrow" and contained two
attorney fees clauses, defined "close of escrow" as the transfer of a
specified liquor license to the buyer.  Although the liquor license was
transferred to the buyer, and both High Tide and the buyer agreed in writing
that the other contingencies were satisfied, the buyer refused to sign escrow
closing instructions. 

            High Tide and the buyer arbitrated their dispute. 
After the arbitrator awarded damages in favor of High Tide, G.R. Bill brought a
claim seeking to recover its $30,000 broker's commission plus attorney fees and
costs from escrow funds deposited by the buyer into the escrow account and
later transferred to the sheriff's department.  High Tide contested the claim,
asserting it did not owe G.R. Bill a commission under the listing agreement
because a completed sale never occurred.  Following a trial, the court entered
judgment in favor of G.R. Bill and ordered High Tide to pay to G.R. Bill a
commission in the amount of $30,000, attorney fees in an amount exceeding
$20,000, plus costs. 

            High Tide appeals, contending the judgment
should be reversed because (1) the phrase "in the event a
sale . . . is accomplished" in the listing agreement
unambiguously conditioned High Tide's payment of a commission to G.R. Bill on a
completed or consummated sale; (2) the consummation of a sale means payment of
the purchase price and conveyance of title, and thus the sale of High Tide's
business was never completed or consummated because the buyer breached the
contract; and (3) G.R. Bill was not entitled to an award of attorney fees
because the listing agreement did not contain an attorney fees provision, and
G.R. Bill was not an intended third party beneficiary of the purchase agreement
or escrow instructions. 

            We conclude the court did not err in (1) finding
that High Tide was contractually obligated to pay G.R. Bill's $30,000
commission because the sale was "accomplished" within the meaning of
the listing agreement, and (2) awarding reasonable attorney fees to G.R. Bill as
the prevailing party.  Accordingly, we affirm the judgment.

FACTUAL
BACKGROUND

            A.  Listing
Agreement

            High Tide listed its restaurant (the Café) for
sale through its broker, G.R. Bill, pursuant to a listing agreement executed by
High Tide's president, Ronn Tompot.  The listing agreement, which obligated
High Tide to pay G.R. Bill a broker's commission in the event a sale was "accomplished,"
provided:  "In the event a sale exchange, lease or management contract is accomplished
or is in negotiation during listing period, or within the subsequent one year
to a registered client of Broker, I agree to pay Broker on demand 10[ percent]
of the total price . . . or a minimum commission of
$20,000, whichever is greater."  (Italics added.)  The listing agreement,
which did not include an attorney fees provision, contained an arbitration clause.^[1] 

            B.  Purchase Contract

            G.R. Bill located a buyer, Pacific Surfrider
Enterprises, Inc. (Pacific Surfrider).  Pacific Surfrider, through its majority
shareholder Peter Frenk, and High Tide executed a purchase contract in which
High Tide agreed to sell the Café to Pacific Surfrider for the sum of
$350,000.  The purchase contract included an arbitration clause similar to the
one contained in the listing agreement.^[2] 

            The purchase contract also included the
following provision under which High Tide and Pacific Surfrider agreed to pay a
commission to G.R. Bill in accordance with the terms of the listing agreement: 
"[We] the undersigned, hereby accept the above offer and agree . . . to
pay Broker a commission of $ As per Listing Contract in accordance with
the terms of the listing agreement."  (Italics added.) 

            C.  Escrow
Instructions and Definition of "Close of Escrow"

            High Tide and Pacific Surfrider opened an escrow
with Mission Valley Escrow for the transfer to Pacific Surfrider of title to the
Café, a liquor license, and an assignment of the lease upon its payment of the
purchase price. 

            The original set of escrow instructions contained
the following provision under which High Tide and Pacific Surfrider agreed that
High Tide was obligated to pay a commission to G.R. Bill, "upon the close
of escrow," for services "rendered and completed":  "It is
mutually understood and agreed by and between the parties hereto that [High
Tide] is obligated to pay a commission to broker, [G.R. Bill],
for services rendered and completed as per separate instructions.  Said
commission is payable forthwith upon the close of escrow from funds
deposited into escrow.  Both [Pacific Surfrider] and [High Tide] specifically
agree that the payment of said commission at that time is not contingent upon
the performance of any act, condition, or instruction in this escrow."  (Italics
added.) 

            The escrow instructions contained two provisions
under which High Tide and Pacific Surfrider agreed that "close of escrow" would be
deemed to occur upon the issuance of the liquor license by the Alcoholic
Beverage Control (ABC) Board .  The first provision stated:  "It is
mutually understood and agreed by and between the parties hereto that the actual
close of this escrow shall be upon the issuance of the permanent ABC license
to [Pacific Surfrider] by the [ABC] Board." 
(Italics added.)  The second provided:  "Close of escrow shall be
deemed to be the issuance of the permanent ABC license to [Pacific
Surfrider] by the [ABC] Board as set forth in the
Notice to Creditors of Bulk Sale.  You are to proceed with the closing of this
escrow PROVIDED all conditions of the escrow have been met and there is
sufficient money in escrow available to pay all approved claims, agents
commission, if any, prorations, your costs and charges, and the amount of
required by law to be withheld for unapproved
claims."^[3] 
(Italics added.) 

            1.  Attorney
fees clauses

             The escrow instructions also set forth numerous
other agreements following a statement indicating those agreements were made by
the parties outside of escrow.^[4]  They
included two attorney fees provisions.

            The first attorney fees clause, which referred
to disputes "between the parties," was set forth in an arbitration clause and provided that "[a]ny
attorney's fees incurred in connection with said Arbitration shall be awarded
to the prevailing party."  (Italics added.)  The second, which was not
limited to disputes "between the parties," pertained to disputes "regarding
the terms of this escrow" and provided the prevailing party was entitled
to reasonable attorney fees in the event "legal action or arbitration"
was required to "settle a claim or controversy regarding the terms of this
escrow."  

            D.  Satisfaction
of Sale Contingencies and Amended Commission Order

            Pacific Surfrider deposited the purchase funds
into escrow.^[5]  In
early November 2004, after the parties agreed in writing that all of the sale
contingencies had been satisfied with the exception of the transfer of the
liquor license, High Tide permitted Pacific Surfrider to take possession of the
leased restaurant premises.  Based on the parties' agreement to reduce the
purchase price to $300,000, High Tide executed an amended commission order
instructing Mission Valley Escrow to pay to G.R. Bill from the deposited escrow
funds a $30,000 broker's commission "at close of escrow." 

            Several weeks later, on December 2, 2004, the ABC Board issued the liquor license to Pacific Surfrider and authorized the
close of escrow. 

            Although the contingencies had been satisfied,
Pacific Surfrider refused to sign escrow closing instructions or allow the
release of sale proceeds to High Tide.  Mission Valley Escrow suspended all
further activity regarding the transaction, including any disbursement of
funds, pending resolution of the dispute. 

            E.  High Tide's
Arbitration Award and Attachment of Funds

            In late December 2004 High Tide submitted the
dispute between High Tide and Pacific Surfrider to binding arbitration,
claiming that it (High Tide) had performed all of its contractual obligations;
escrow had closed when the liquor license was transferred to Pacific Surfrider;
and Pacific Surfrider had refused, without legitimate excuse, to close escrow. 

            In June 2005, after a contested arbitration
proceeding, the arbitrator ruled in High Tide's favor and awarded it the full
purchase price of $300,000, an additional but unspecified sum of $14,666,
attorney fees and costs in the amount of $13,976.84, plus arbitration fees, for
a total award in excess of $335,000.  High Tide thereafter obtained an ex parte
writ of attachment from the San Diego County Superior Court pursuant to which
Mission Valley Escrow transferred the sum of $319,601 from escrow to the San
Diego County Sheriff's Department.  

PROCEDURAL
BACKGROUND

            In August 2005 G.R. Bill filed in the court a "Third
Party Claim of Ownership of Levied Property" seeking to recover from the
$319,601 held by the sheriff's department the sum of $40,000, which included $30,000
as its 10 percent broker's commission under the listing agreement, plus $10,000
in anticipated attorney fees.  In its trial brief High Tide opposed the claim,
asserting that "it owe[d] no commission because a condition precedent
under G.R. Bill's listing agreement for earning a broker's commission, a
completed sale, never occurred" through no fault of High Tide when Pacific
Surfrider breached the purchase contract and refused to complete the sale.

            A.  Judgment
and Attorney Fees Award

            Following a trial, the court entered judgment in
favor of G.R. Bill based on its findings that (1) a sale was "accomplished"
within the meaning of the listing agreement; (2) the purchase contract and escrow
instructions authorized payment of the broker's commission to G.R. Bill upon
transfer of the liquor license to Pacific Surfrider; (3) equitable
considerations, including the fact that High Tide received through G.R. Bill's
services and arbitration the sale price it was seeking, supported G.R. Bill's
claim; and thus (4) G.R. Bill was entitled to its $30,000 broker's commission.  Following
a hearing on G.R. Bill's motion for attorney fees, the court granted the motion
and awarded fees in the amount of $20,283.75.

            The judgment ordered High Tide to pay G.R. Bill
a commission in the amount of $30,000, plus attorney fees in the amount of
$20,283.75 and costs in the amount of $1,260.75.  The judgment ordered the
sheriff's department to disburse $40,000 to G.R. Bill and provided that after
the disbursement of those funds, High Tide owed G.R. Bill a remaining balance
of $11,544.50.  High Tide's appeal followed.

DISCUSSION

I. 
BROKER'S COMMISSION

            High Tide contends the judgment in favor of G.R.
Bill should be reversed because the court erroneously found that High Tide was
obligated under the terms of the listing agreement to pay a broker's commission
to G.R. Bill.  Specifically, High Tide contends (1) the phrase "in the
event a sale . . . is accomplished" in the listing
agreement unambiguously conditioned High Tide's obligation to pay a commission
to G.R. Bill on a completed or consummated sale, (2) consummation of a sale requires
payment of the purchase price and conveyance of title, and thus (3) the sale of
High Tide's business was never completed or consummated because the buyer
(Pacific Surfrider) breached the contract.  We conclude the court did not err
in finding that the sale was "accomplished" within the meaning of the
listing agreement and that High Tide was thus contractually obligated to pay
G.R. Bill's commission.

            In Cochran v.
Ellsworth (1954) 126 Cal.App.2d
429, 438 (Cochran), a case on which High Tide relies, the Court of
Appeal explained that, "[g]enerally speaking, a real estate broker has
earned his commission when he has brought to the vendor a purchaser who is
ready, willing and able to buy the property upon the terms on which the agent
is authorized to sell, or when a written contract upon any terms acceptable to
the seller has been entered into with a purchaser originally brought to the
vendor by the agent.  [Citation.]  It is not necessary for the sale to be
completed, under the foregoing rule, for the broker to be entitled to
his commission.  [Citation.]"  (Italics added.)  The Cochran
court also stated that "[a] broker
who has rendered all required services is not to be denied compensation
therefor by the whims of a defaulting vendor or purchaser who arbitrarily
refuses to perform under a sales contract."  (Ibid.)  Another court
explained that "'the execution of a
contract of sale by the owner of real property is conclusive proof that he was
satisfied as to the qualifications of the purchaser and of his ability to
perform the contract, thus rendering the owner liable for the payment of the
broker's commission.  [Citations.]'"  (Moore v. Balboa Escrow
Co. (1953) 116 Cal.App.2d Supp. 921, 923.)

            Here, the
plain language of the listing agreement obligated High Tide to pay G.R. Bill a
broker's commission in the amount of 10 percent of the sale price or $20,000,
whichever was greater, in the event the sale of the restaurant, including the
transfer of a liquor license, was "accomplished."  The listing
agreement did not define the term "accomplished."

            It is undisputed that G.R. Bill found a willing,
ready and able buyer─Pacific Surfrider─and High Tide and Pacific
Surfrider entered into a purchase contract that acknowledged High Tide's
obligation to pay G.R. Bill "a commission . . . in
accordance with the terms of the listing agreement."  That High Tide
considered Pacific Surfrider to be an acceptable buyer is also shown by the
fact that they entered into the purchase contract and opened an escrow for the
transfer to Pacific Surfrider, upon its payment of the purchase price into the
escrow account, of title to the Café property, a liquor license, and an
assignment of the lease.  It is also undisputed that G.R. Bill performed all
required broker services, and, through no fault of G.R. Bill, Pacific Surfrider
refused to allow the escrow company to disburse the sale proceeds to High Tide.

            Our analysis does
not end, however, with a determination that the record shows that (1) G.R. Bill
brought to High Tide a "willing, ready and able" buyer within the
meaning of Cochran, supra, 126 Cal.App.2d at page 438; (2) High
Tide considered Pacific Surfrider to be an acceptable buyer within the meaning of Moore v. Balboa Escrow Co.,
supra, 116 Cal.App.2d Supp. at page 923; and (3) G.R. Bill performed all
required services as High Tide's broker.  We next address, and reject, High
Tide's contention that the phrase "in the event a
sale . . . is accomplished" in the listing agreement
unambiguously conditioned High Tide's obligation to pay a commission to G.R.
Bill on a completed or consummated sale.

            In ASP Properties Group v. Fard, Inc. (2005) 133 Cal.App.4th 1257, this court recently
discussed the principles governing contract interpretation, and explained that "'[t]he
precise meaning of any contract . . . depends upon the
parties' expressed intent, using an objective standard.  [Citations.]  When
there is ambiguity in the contract language, extrinsic evidence may be considered
to ascertain a meaning to which the instrument's language is reasonably
susceptible.  [Citation.] . . . [¶] We review the agreement
and the extrinsic evidence de novo, even if the evidence is susceptible to
multiple interpretations, unless the interpretation depends upon credibility.  [Citation.]
 If it does, we must accept any reasonable interpretation adopted by the trial
court.  [Citation.]'  [Citation.]  '[W]here . . . the
extrinsic evidence is not in conflict, construction of the
agreement is a question of law for our independent review.  [Citation.]' 
[Citations.]  In contrast, '[i]f the parol evidence is in conflict, requiring
the resolution of credibility issues, we would be guided by the substantial
evidence test.  [Citation.]'  [Citation.]  However, extrinsic evidence is not
admissible to ascribe a meaning to an agreement to which it is not reasonably
susceptible.  [Citation.]"  (Id. at pp. 1266-1267.)

            Here, the meaning
of the term "accomplished" as used in the listing agreement is
reasonably susceptible to more than one interpretation on the facts of this
case, and thus, under the foregoing principles of contract interpretation, we
must consider not only the express terms of the listing agreement between High
Tide and G.R. Bill, but also the extrinsic evidence concerning the escrow
instructions and the arbitrated dispute between High Tide and Pacific
Surfrider.  (See ASP Properties Group v. Fard, Inc., supra, 133
Cal.App.4th at p. 1266.)

            On the factual record presented in this case, we
reject High Tide's claim that the parties intended the term "accomplished"
in the listing agreement to mean that High Tide's obligation to pay G.R. Bill
its broker's commission was conditioned on the completion or consummation of a
sale through escrow.  At page 2 of the escrow instructions, High Tide expressly
agreed to pay a broker's commission to G.R. Bill for its "services
rendered and completed as per separate instructions," and further agreed
that "[s]aid commission [was] payable forthwith upon the close of
escrow from funds deposited into escrow."  (Italics added.)  It is
undisputed that the escrow instructions expressly defined the term "close
of escrow" to mean the issuance of the liquor license to Pacific Surfrider,
and High Tide agreed to accept this definition.  Specifically, the escrow
instructions provided at page 2:  "It is mutually understood and agreed
by and between the parties hereto that the actual close of this escrow
shall be upon the issuance of the permanent ABC license to [Pacific
Surfrider] by the [ABC] Board."  (Italics added.)  Another provision at
page 5 of the escrow instructions stated that "[c]lose of escrow
shall be deemed to be the issuance of the permanent ABC license to [Pacific
Surfrider] by the [ABC] Board . . . ."  (Italics
added.) 

            Under Civil Code section 1559,^[6] which
governs a third party beneficiary's right to enforce a contract made expressly
for its benefit, G.R. Bill was a third party beneficiary of High Tide's express
agreement in the escrow instructions (discussed, ante) to pay a broker's
commission to G.R. Bill upon the "close of escrow," which those
instructions defined as the issuance of the liquor license to Pacific
Surfrider.  (See also Donnellan v. Rocks (1972) 22 Cal.App.3d 925, 930 ["an agreement between a vendor and purchaser which
expressly provides for the payment of a commission to a broker makes the broker
a third party beneficiary"].) 

            G.R. Bill's
status as a third party beneficiary of that agreement is also evidenced by the
undisputed fact that in early November 2004 High Tide executed an amended
commission order instructing Mission Valley Escrow to pay to G.R. Bill from the
deposited escrow funds a $30,000 broker's commission "at close of escrow." 
One commentator has observed that a seller's written escrow instruction
authorizing disbursement of funds to pay a broker's commission "may make
the broker a third party beneficiary of the escrow, though not necessarily a party
to the escrow."  (Greenwald & Asimov, Cal. Practice Guide:  Real
Property Transactions (The Rutter Group 2006) [¶] 4:578, p. 4-143 (rev. #1,
2005).)

            Had High Tide, in executing the listing
agreement, intended to be obligated to pay the commission only upon the
transfer of title and payment of the purchase price through escrow, as High
Tide claims on appeal, it would not have agreed to escrow instructions obligating
it to pay G.R. Bill's broker's commission upon issuance of the liquor license,
nor would it have instructed Mission Valley Escrow in writing to pay that
commission "at close of escrow," which the escrow instructions
defined as the occurrence of that event.

            Thus, the undisputed facts establish that
although the listing agreement obligated High Tide to pay G.R. Bill broker's
commission when the sale was "accomplished," an ambiguous term that
the listing agreement did not define, High Tide subsequently agreed in the
escrow instructions that it was obligated to pay the commission upon "close
of escrow" defined as the issuance of the liquor license to Pacific
Surfrider.  Because that agreement was expressly made for G.R. Bill's benefit,
G.R. Bill had standing as a third party beneficiary to enforce it.  (Civ. Code,
§ 1559.)

            The court did not err in finding that G.R. Bill
was entitled to its $30,000 commission on the ground the sale of High Tide's
restaurant property was "accomplished" within the meaning of the
listing agreement.  Pacific Surfrider deposited the purchase funds into escrow.
 The record shows that in early November 2004, after High Tide and Pacific
Surfrider agreed in writing that all of the sale contingencies had been
satisfied with the exception of the transfer of the liquor license, High Tide
permitted Pacific Surfrider to take possession of the leased restaurant
premises.  When the parties agreed to reduce the purchase price to $300,000,
High Tide executed an amended commission order instructing Mission Valley
Escrow to pay to G.R. Bill from the deposited escrow funds a $30,000 broker's
commission "at close of escrow."  It is undisputed that several weeks
later, in early December 2004, the ABC Board issued the liquor license to
Pacific Surfrider and authorized the close of escrow.  Thus, the sale was "accomplished,"
and High Tide's contractual obligation under the listing agreement to pay G.R.
Bill's broker's commission matured, when the condition precedent to which High
Tide assented─the "close of escrow" as defined in the escrow
instructions─occurred upon issuance of the liquor license.

            It is true that the buyer, Pacific Surfrider,
refused to allow the escrow company to disburse the sale proceeds to High Tide,
and High Tide had to arbitrate the resulting dispute.  However, it is
undisputed that High Tide was the prevailing party in the arbitration
proceeding, and the arbitrator awarded it not only damages in an amount exceeding
the purchase price of $300,000, but also its attorney fees, costs, and
arbitration fees. 

            Thus, High Tide received the benefit of the
bargain and was made whole with respect to the expenses it incurred in successfully
arbitrating its claim against Pacific Surfrider.  In this respect, too, the
sale was "accomplished" within the meaning of the listing agreement. 
The fact that High Tide received the benefit of the bargain through arbitration,
rather than through escrow, is legally immaterial and does not demonstrate a
failure of a condition precedent to High Tide's obligation to pay the
commission.

            High Tide relies on Cochran, supra, 126 Cal.App.2d
429, as support for its claim that the sale of its Café property was never
completed, and thus it did not owe G.R. Bill a commission because under Cochran
"[t]he consummation of a sale of property means payment of the purchase
price and conveyance of title."  High Tide's reliance on Cochran is
misplaced.

            In Cochran,
the plaintiff broker cooperated with the listing broker and found a buyer who
was interested in purchasing the listed property.  (Cochran, supra, 126
Cal.App.2d at pp. 431-432.)  The plaintiff, the seller and the buyer negotiated
the terms of the sale, and the seller's attorney prepared a memorandum
agreement that provided for payment of the plaintiff's commission upon "consummation"
of the sale.  (Id. at p. 432.)  Although the parties opened an escrow,
escrow did not close because the buyer served a notice of rescission upon the
seller, claiming fraudulent misrepresentations about the property had been made
to him.  (Id. at pp. 432-433.)  Although the seller brought an action
against the buyer for specific performance, the action was never brought to
trial because the seller and buyer mutually rescinded the transaction.  (Id.
at p. 433.)  The plaintiff broker then brought an action against the seller to
collect his commission, and the trial court found that no commission was due to
the plaintiff because the parties intended that the commission would be payable
only if the buyer completed the purchase transaction.  (Ibid.)  The Court
of Appeal affirmed the judgment on the grounds that (1) the trial court's
interpretation of the commission agreement was conclusive because it was based
on conflicting extrinsic evidence and was supported by the evidence; (2) under
existing case law, the term "consummation of the sale" meant
completion of the transaction through payment of the purchase price and
conveyance of title, and thus "[t]he sale could have been completed only
upon payment of the purchase price, delivery of deeds conveying title and close
of escrow"; and (3) "[t]hose events did not transpire and therefore
the sale was not consummated within the provisions of the agreement."  (Id.
at p. 440.)  The Cochran court also explained that liability for payment
of the commission did not arise because "rescission [took] place prior to
consummation of the transaction, and with the broker's compensation contingent
upon consummation."  (Id. at p. 441.)

            Cochran is
factually distinguishable.  Here, unlike in Cochran, the seller (High
Tide) was contractually obligated to pay the broker's commission in the event
the sale was "accomplished," the meaning of which was not defined by
either case law or the parties in the listing agreement.  Also, unlike the
seller in Cochran, High Tide expressly agreed in the escrow instructions
that "close of escrow" meant issuance of a liquor license, rather
than payment of the purchase price and conveyance of title, demonstrating the
parties' intent that the commission was payable in this case upon issuance of
that license.  Furthermore, unlike the seller in Cochran, High Tide received
the benefit of the bargain under the purchase contract and was made whole
through successful arbitration of its breach of contract claim against the
buyer, such that the court could reasonably find that the sale was "accomplished"
within the meaning of the listing agreement.

            For the foregoing reasons, we conclude that High
Tide's claim that it did not owe G.R. Bill a commission because the sale was
not "accomplished" or completed for purposes of the listing agreement
is unavailing.  Accordingly, we affirm the portion of the judgment awarding the
$30,000 broker's commission to G.R. Bill.

II. 
ATTORNEY FEES

            High Tide also challenges the court's award of
attorney fees in favor of G.R. Bill, contending G.R. Bill was not entitled to
attorney fees because (1) the listing agreement did not contain an attorney
fees provision, (2) G.R. Bill was not an intended third party beneficiary of
the purchase agreement or escrow instructions, and (3) neither of the attorney
fees provisions in the escrow instructions applied to G.R. Bill or this action. 
These contentions are unavailing.

            A.  Background

            The first attorney fees clause in the escrow
instructions, which referred to disputes "between the parties," and
the arbitration clause that preceded it, provided:  "Any controversy or
claim between the parties arising out of or relating to this contract,
or the breach thereof, shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrator(s) may be entered in any Court having jurisdiction
thereof.  Any attorney's fees incurred in connection with said Arbitration
shall be awarded to the prevailing party."  (Italics added.)

            The second attorney fees clause, which was not
limited to disputes "between the parties," pertained to disputes regarding
"the terms of this escrow" and provided:  "In the event legal
action or arbitration is required to settle a claim or controversy regarding the
terms of this escrow, the prevailing party shall be entitled to reasonable
attorney fees, costs and necessary disbursements in addition to any other
relief to which he may be entitled."  (Italics added.)

            In granting G.R. Bill's motion for attorney
fees, the court found that although the listing agreement did not contain an
attorney fees provision, G.R. Bill was entitled to an award of attorney fees as
the prevailing party because (1) the escrow instructions contained the two foregoing
attorney fees provisions, the second of which (in paragraph 13 of page 4 of the
instructions) pertained to a "legal action or arbitration" that was "required
to settle a claim or controversy regarding the terms of this escrow," and was
not limited to a claim or controversy "between the parties"; and (2)
G.R. Bill was entitled to recover fees as a third party beneficiary under both
attorney fees provisions, but particularly under the second provision, because it
applied to persons other than the named parties, and the proceeding on G.R.
Bill's motion for attorney fees involved litigation of a controversy regarding
the terms of the escrow.

            B.  Analysis

            We reject High Tide's contention that G.R. Bill
was not a third party beneficiary of the purchase contract and the escrow
instructions because (High Tide asserts) their terms "show these contracts
were not made for the express benefit of G.R. Bill."  For reasons already
discussed, we have concluded that G.R. Bill was a third party beneficiary of
the express agreements between High Tide and Pacific Surfrider in the escrow
instructions that (1) High Tide was obligated to pay the broker (G.R. Bill) a
commission "forthwith upon the close of escrow," and (2) "actual
close of escrow shall be upon the issuance of the permanent ABC license to the
buyer by the [ABC] Board."  G.R. Bill was also a third party beneficiary
of the express agreement between High Tide and Pacific Surfrider in the
purchase contract to pay G.R. Bill a commission "in accordance with the
terms of the listing agreement."  G.R. Bill was entitled to enforce those agreements
as a third party beneficiary because they were expressly made for its benefit. 
(Civ. Code, § 1559.)

            High Tide also asserts that even assuming G.R.
Bill was an intended third party beneficiary, it was still not entitled to
recover its attorney fees.  Specifically, High Tide claims the two attorney
fees provisions contained in the escrow instructions did not apply to G.R. Bill
because those provisions were preceded by language (see fn. 4, ante)
showing they involved fee agreements between High Tide and Pacific Surfrider
only "and nobody else."  High Tide also claims those provisions did
not apply to this legal action because (1) the first provision was limited to
attorney fees incurred in connection with an arbitration, which this case did
not involve; and (2) the second provision was limited to a "legal action
or arbitration . . . to settle a claim or controversy
regarding the terms of this escrow," and G.R. Bill's claim to recover its
commission involved not a dispute regarding the terms of the escrow, but a
dispute about whether a sale had been "accomplished" within the
meaning of the listing agreement.  These claims are unavailing.

            In its motion for attorney fees, G.R. Bill
argued that, as the prevailing party in this breach of contract action to
recover its commission, it was entitled to its attorney fees as a third party
beneficiary of the purchase contract and escrow instructions because (1) the
purchase contract was supplemented by the two attorney fees clauses in the
escrow instructions, (2) the second clause relating to escrow disputes was not
limited to those "between the parties" (i.e., between High Tide and
Pacific Surfrider), and (3) G.R. Bill was entitled to an award of fees as a
prevailing, nonsignatory third party beneficiary of those fees clauses under
Civil Code section 1717,^[7] which
was enacted to establish mutuality of remedy when a contract provides recovery
of attorneys fees for only one party. 

            In its written opposition to that motion, High
Tide asserted that (1) the express terms of the purchase contract and escrow
instructions "show[ed] these contracts were not made for the express
benefit of G.R. Bill," (2) G.R. Bill was not an intended third party
beneficiary of the attorney fees clauses in the escrow instructions, and (3)
those clauses did not apply to this action. In granting G.R. Bill's motion, the
court rejected High Tide's assertions and resolved the issue by finding that
G.R. Bill was entitled to recover fees as a third party beneficiary under both
attorney fees provisions set forth in the escrow instructions.

            The record thus shows that in the proceedings on
G.R. Bill's claims for its commission and attorney fees, High Tide and G.R.
Bill litigated a "claim or controversy regarding the terms of this escrow"
within the meaning of the second attorney fees clause set forth in the escrow
instructions, which did not limit its application to a claim or controversy "between
the parties" (i.e., between High Tide and Pacific Surfrider's
predecessor-in-interest, Peter Frenk).  The second attorney fees clause was
thus applicable to those claims.

            The language preceding the attorney fees clauses
to the effect that neither the escrow holder (Mission Valley Escrow) nor the
broker (G.R. Bill) was "concerned" with those fee agreements because "performance
of same is outside of escrow" (see fn. 4, ante), did not defeat
G.R. Bill's right to fees as a prevailing third party beneficiary.  That language
served only to put Mission Valley Escrow and G.R. Bill on notice that High Tide
and Pacific Surfrider (the "parties herein") had entered into certain
agreements, including the agreements in the two attorney fees clauses, which did
not require the participation of third parties.  As already discussed, the
first attorney fees agreement dealt with disputes between High Tide and Pacific
Surfrider, and the second dealt with disputes between either of those party and
any third party, such as G.R. Bill, regarding the terms of the escrow. 

            We conclude that G.R. Bill, as a prevailing
third party beneficiary of the purchase contract and escrow instructions, was
entitled to an award of reasonable attorney fees under Civil Code section 1717
pursuant to the attorney fees agreement contained in the second attorney fees clause
(discussed, ante) set forth in the escrow instructions.  The fact that
G.R. Bill was not a party to that attorney fees agreement does not preclude its
contractual entitlement to an award of fees.  High Tide was a party to that
agreement, and it would have been entitled under the mutual remedy provisions of Civil Code
section 1717 to recover its reasonable attorney fees from G.R. Bill under that
clause had it prevailed in this action by G.R. Bill to recover its commission
under the listing agreement.  We find support for this conclusion in Steve
Schmidt & Co. v. Berry (1986) 183 Cal.App.3d 1299 (Berry).

            In Berry, a cooperating broker successfully
sued the seller of real property and his listing broker to recover a commission
as a nonsignatory third party beneficiary of a listing agreement between the seller
and the listing broker after the cooperating broker found a ready, willing and
able buyer, and the seller refused to sell the property to that buyer.  (Berry,
supra, 183 Cal.App.3d at pp. 1302, 1304-1305, 1313.)  The listing agreement
recognized the interest of "other brokers" in any commission due
under that agreement, and contained an attorney fees clause authorizing an
award of reasonable attorney fees to the prevailing party in an action to
enforce the provisions of the listing agreement.  (Id. at pp. 1304, 1313.) 
Affirming the award of attorney fees in favor of the plaintiff broker, the Berry
court concluded that even though the plaintiff was not a signatory to the
listing agreement, it was entitled as a third party beneficiary of the listing
agreement to recover its attorney fees under the attorney fees clause contained
in that agreement by virtue of Code of Civil Procedure section 1717, which
creates a reciprocal right to attorney fees when a contract provides the right
to only one party, because the plaintiff would have been liable for fees under
the listing agreement had the defendant prevailed.  (Berry, supra, 183
Cal.App.4th at pp. 1315-1317.)

            Similarly here, by operation of Civil Code
section 1717, G.R. Bill was entitled as the prevailing third party beneficiary
of the purchase contract and escrow instructions to recover its reasonable
attorney fees pursuant to the second attorney fees clause in the escrow
instructions because G.R. Bill's action to recover its commission and its motion
for attorney fees involved claims "regarding the terms of this escrow"
within the meaning of that clause, and G.R. Bill would have been liable for
fees under that clause had High Tide prevailed.  Accordingly, we also affirm
the portion of the judgment awarding reasonable attorney fees to G.R. Bill as
the prevailing party in this matter.

DISPOSITION

            The judgment is
affirmed.  G.R. Bill shall recover its costs on appeal.

 

                                                           

NARES, Acting P. J.

 

WE CONCUR:

 

 

                                                           

                                       HALLER,
J.

 

 

                                                           

                                            IRION,
J.

 

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