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Venturi & Co. LLC v. Pacific Malibu Development Corp.

April 10, 2009


APPEAL from a judgment of the Superior Court of Los Angeles County. Ruth Ann Kwan, Judge. Reversed and remanded. (Los Angeles County Super. Ct. No. BC 336772).

The opinion of the court was delivered by: Rubin, Acting P. J.


Venturi & Company LLC, appeals from the judgment dismissing its complaint after the court entered summary judgment for respondents Pacific Malibu Development Corp. and Hermitage Estates Limited. Respondents' cross-appeal from the court's order denying them their attorneys' fees. We reverse the order granting summary judgment, dismiss the cross-appeal for attorneys' fees as moot, and remand for further proceedings.


In June 2003, appellant Venturi & Company LLC and respondents Pacific Malibu Development Corp. and Hermitage Estates entered into a contract involving development of a high-end resort on undeveloped property on the Bahamian island of Little Exuma. Under the contract, appellant agreed to serve as a financial advisor and find financing for the Little Exuma project through a private placement of equity, preferred stock, debt securities, or a combination of those financial instruments, which collectively the contract called "Securities." The contract described appellant's services for respondents as follows:

"In connection with its engagement hereunder, [appellant] shall: [¶] a. review the proposed development costs, business operations and financial requirements of the Project; [¶] b. assist [respondents] in preparing information materials and documents with regard to a Placement, including an executive summary, confidential information memorandum, term sheets and related due diligence information in connection with the Project; [¶] c. assist [respondents] in formulating a marketing strategy for the Securities, including identifying and contacting selected parties with regard to a Placement, scheduling meetings with such parties and participating in meetings and/or relevant discussions relating thereto; [¶] d. advise [respondents] as to the strategy and tactics of negotiations in connection with the Placement and, if requested, assist in the negotiations with the related parties; and [¶] e. provide such other financial advisory and investment banking services as may be mutually agreed upon by [respondents] and [appellant]."

Respondents agreed to compensate appellant with two possible fees. First, respondents promised upon "completion of a Placement" to pay appellant a "Monthly Advisory Fee" of $30,000 for at least three months "at the close of any such Placement."

Second, respondents promised to pay a "success fee" to appellant "promptly upon consummation of any Placement of Securities." The amount of the success fee, which appellant describes as akin to a finder's fee, depended on appellant's role in the consummated placement. If appellant either introduced (the contract's word was "identified") respondents to the party who provided financing, or participated in "active negotiations" with that party, respondents promised to pay appellant a success fee equal to 5 percent of the placement's proceeds. If, on the other hand, appellant neither identified the party providing financing nor negotiated the financing, then respondents owed appellant only 1 percent of the placement's proceeds. Thus, appellant was entitled to some payment under the contract even if appellant did not secure financing for the project.

After signing the contract, appellant contacted more than 60 potential sources of financing for the project. Two of those sources -- Lou Reese Investor Group and Blenheim Partners -- signed "term sheets" with respondents. Neither of them, however, finally committed to provide financing and, in the end, respondents did not receive financing from any source that appellant had identified.

Respondents terminated the contract in January 2005. Two months earlier, however, respondents had signed a term sheet with the Talisker Group. Appellant was not involved in respondents' negotiations with the Talisker Group or in the placement of Securities with that group. Nevertheless, appellant claimed the contract's provision for a success fee entitled appellant to compensation following the placement. When respondents refused to pay appellant's fee, appellant sued respondents. Appellant's operative third amended complaint alleged respondents' refusal to pay the fee breached their contract. The complaint also alleged a cause of action for quantum meruit for the reasonable value of appellant's services.*fn1

Respondents moved for summary judgment. They argued appellant had provided the services of a real estate broker by soliciting financing for the Little Exuma project yet did not have a broker's license. Thus, respondents asserted, section 10136 of the Business and Professions Code barred appellant from receiving any compensation as an unlicensed broker. (Bus. & Prof. Code, § 10136 [only licensed real estate broker may receive compensation for real estate brokerage services].) Appellant opposed summary judgment. It argued that one of its managing principals, Jane Venturi, had a real estate sales license and was employed by a real estate broker (whom appellant did not identify) when respondents had signed their term sheet with the Talisker Group, the document that triggered appellant's right to a fee.

The court entered summary judgment for respondents. The court found appellant had acted as a real estate broker when working on the Little Exuma project. (See Bus. & Prof. Code, § 10131 discussed below.) The court pointed, however, to appellant's lack of evidence that Jane Venturi's unnamed broker had employed or authorized her to work on the project. Hence, appellant did not present a triable issue of fact that it was a licensed real estate broker entitled to compensation. The court entered judgment for respondents but denied respondents' request for attorney's fees. This appeal (and respondents' cross-appeal for attorneys' fees) followed.


Business and Professions Code section 10131 defines a "real estate ...

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