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Realpro, Inc v. Smith Residual Company

February 28, 2012

REALPRO, INC., PLAINTIFF AND APPELLANT,
v.
SMITH RESIDUAL COMPANY, LLC ET AL., DEFENDANTS AND RESPONDENTS.



(Super.Ct.No. RIC540649) APPEAL from the Superior Court of Riverside County. Paulette Durand- Barkley, Temporary Judge.

The opinion of the court was delivered by: Hollenhorst J.

CERTIFIED FOR PUBLICATION

OPINION

(Pursuant to Cal. Const., art. VI, § 21.) Affirmed.

Plaintiff and appellant RealPro Inc. (RealPro) appeals from a judgment in favor of defendants Smith Residual Company, LLC and J&A Gonzales, LLC (hereafter referred to collectively as Sellers), entered after the trial court sustained without leave to amend the demurrer of Sellers to RealPro's complaint to recover a real estate commission. The trial court found that RealPro "failed to allege facts giving rise to the existence of an enforceable written contract for the payment of a real estate commission . . . ." RealPro challenges the trial court's ruling.

I. PROCEDURAL BACKGROUND

A demurrer admits all the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) Accordingly, we will refer to the allegations in the complaint for the chronology of this matter. (See Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 954, fn. 4.)

RealPro is a real estate broker conducting business under the fictitious business name of Landpro Network Realty. Sellers own 46.8 acres of vacant land in Riverside County (the Property). On or about September 21, 2005, Sellers retained the services of MGR Services, Inc. (MGR), a real estate broker, to act as their exclusive agent for the sale of the Property. Sellers entered into a "Standard Owner-Agency Agreement for Sale or Lease of Real Property" (the Listing Agreement) with MGR. The Listing Agreement was for a term from September 21, 2005, to April 1, 2006. It set forth the following sale price and terms: "'$17,000,000 cash or such other price and terms acceptable to [Sellers], and other additional standard terms reasonably similar to those contained in the "STANDARD OFFER AGREEMENT AND ESCROW INSTRUCTIONS FOR THE PURCHASE OF REAL ESTATE," published by the AIR Commercial Real Estate Association ('AIR') or f[o]r such other price and terms agreeable to [Sellers].'" The Listing Agreement authorized MGR to list the Property in the appropriate local commercial multiple listing services, including AIR, and "'at [MGR's] election, cooperate with other real estate brokers (collectively "Cooperative Broker"). A Cooperative Broker may, as a third party beneficiary hereof, enforce the terms of this [Listing] Agreement against the [Sellers] or [MGR].'"

On or about November 21, 2005, RealPro contacted MGR regarding the Property. The next day, RealPro delivered to MGR a written offer to purchase the Property for all cash at the full listing price of $17,000,000 (Offer). The buyer was "ready, willing, and able to purchase the Property . . . on all material terms contained in the Loopnet listing as represented by MGR to be in the Listing Agreement . . . ."

On December 22, 2005, RealPro received an acknowledgement from MGR that it had received the Offer and indicated that the listing price was being increased to $19,500,000 (Counteroffer). Except for the increased price, Sellers indicated that the terms of buyer's offer to purchase were acceptable. Both MGR and Sellers confirmed in writing the brokerage fee of 4 percent split 50/50 between RealPro and MGR. On March 16, 2006, RealPro, as third party beneficiary of the Listing Agreement, demanded its 2 percent brokerage fee, along with copies of the Listing Agreement and amendments.

When Sellers refused to pay the brokerage fee to RealPro, it filed a complaint on November 20, 2009, alleging breach of contract and breach of implied covenant of good faith and fair dealing. Although a copy of the Listing Agreement was attached to the complaint, RealPro failed to attach a copy of the Offer or Counteroffer. Sellers demurred to the complaint, and RealPro filed a first amended complaint (FAC), which alleged (1) declaratory relief, (2) breach of contract, and (3) breach of the implied covenant of good faith and fair dealing. Again, RealPro failed to attach a copy of the Offer or Counteroffer.

Sellers demurred to the FAC on the grounds that (1) declaratory relief "operates prospectively, and not for the redress of past wrongs," (2) RealPro failed to provide the Offer and Counteroffer, which contradict the allegations in the FAC*fn1 ; (3) conditions precedent (i.e., the listing price is "'$17,000,000 cash or for such other price and terms acceptable to the owner,'" and that escrow must close prior to payment of any commission) were not met; and (4) there was no written agreement between MGR and RealPro.

In opposition, RealPro argued that (1) the Offer and Counteroffer are "extraneous documents" that may not be considered by the court; (2) no contract between MGR and RealPro was necessary because RealPro was the third party beneficiary of the Listing Agreement; (3) use of the word "or" means that RealPro could either procure an offer for $17 million or an offer for such other terms as the Sellers found acceptable; and (4) there was no requirement for escrow to close in order for RealPro to earn its commission.

Hearing on the demurrer was held on July 14, 2010. Following argument from counsel, the court took the matter under submission. On August 4, the court entered its order sustaining the demurrer without leave to amend. The court found that RealPro had "failed to allege facts giving rise to the existence of an enforceable written contract for the payment of a real ...


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