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Sanowicz v. Bacal

California Court of Appeals, Second District, Fifth Division

February 26, 2015

HILLEL SANOWICZ, Plaintiff and Appellant,
v.
BEN BACAL, Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County No. SC118380, Gerald Rosenberg, Judge.

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COUNSEL

Jonathan P. Chodos for Plaintiff and Appellant.

Law offices of Ronald Richards and Associates, Ronald Richards and Nicholas A. Bravo, for Defendant and Respondent.

OPINION

GOODMAN, J. [*]

INTRODUCTION

Plaintiff Hillel Sanowicz (Sanowicz) and defendant Ben Bacal (Bacal) are licensed real estate salespersons. Sanowicz alleges that he and Bacal agreed to share commissions earned by either of them on certain sales of real property, but that Bacal breached that agreement. Sanowicz sued both Bacal and Sotheby’s International Realty, Inc. (Sotheby’s), dismissing the latter shortly after filing suit. This appeal is from the judgment entered by the trial court sustaining without leave to amend Bacal’s general demurrer to Sanowicz’s first amended complaint. We hold that two licensed real estate agents may agree to share commissions earned under the circumstances we describe in this opinion. Thus, we reverse, determining that leave should be granted to amend on remand if Sanowicz can do so in a manner consistent with the legal principles discussed.

PROCEDURAL AND FACTUAL BACKGROUND

On September 13, 2012, Sanowicz, a licensed California real estate agent, [1] filed his complaint against Sotheby’s, a licensed California real estate broker,

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and Bacal, a licensed California real estate agent, in which Sanowicz alleged causes of action for breach of fiduciary duty, fraud, negligent misrepresentation, breach of contract, conversion, and money had and received. Plaintiff voluntarily dismissed Sotheby’s without prejudice on December 12, 2012. After Bacal’s demurrer to the original complaint was sustained with leave to amend, Sanowicz filed his first amended complaint on April 5, 2013.

We take the facts relevant to resolution of this appeal from the first amended complaint as this appeal challenges the trial court’s order sustaining a demurrer. (Adams v. Paul (1995) 11 Cal.4th 583, 586 [46 Cal.Rptr.2d 594, 904 P.2d 1205].) Sanowicz was a real estate agent employed at John Bruce Nelson & Associates (JBN), a licensed real estate agency, at the time he met Bacal, who was then working at Keller Williams (KW), also a licensed California real estate agency.

While Sanowicz was an agent at JBN, he and Bacal represented, respectively, the potential buyer and seller of a particular parcel of real property. Although that transaction did not close, they kept in contact and eventually Bacal suggested to Sanowicz that they form a “joint venture” in which they jointly would work on real estate transactions. At one point in their collaboration, Sanowicz left JBN and moved to work at KW, at the instigation of Bacal. One of Sanowicz’s clients was a celebrity who was looking to purchase residential real property. Bacal encouraged Sanowicz to tell potential sellers that he had a celebrity interested in purchasing a property like theirs. Bacal used this representation to create new “representation relationships” with potential sellers of “A class estate properties in exclusive areas of Los Angeles.” Sanowicz and Bacal entered into oral and written agreements that they would share equally any commissions earned, and did actually share some commissions. Three written agreements of this nature are exhibits to the first amended complaint. Each is signed by both Sanowicz and Bacal and concerns a particular parcel of residential real property.

Sanowicz also alleged that in or around September 2010, Sanowicz met Joseph Lam (aka Lam Cheng) who was interested in selling a property at 777 Sarbonne Road, Los Angeles (Sarbonne). Sanowicz then introduced Bacal to Lam with the express understanding and oral agreement that Sanowicz and Bacal would split the commission earned on the sale of Sarbonne. On October 11, 2010, while both were at KW, they entered into a written agreement, on a California Association of Realtors Referral Fee Agreement form, to equally divide any commissions earned on the sale of Sarbonne if Lam were to sell Sarbonne within two years of the date of their agreement. That agreement is Exhibit A to the first amended complaint. No signature of a licensed real estate broker appears on this document.

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Bacal left KW (for Sotheby’s) in April or May 2012. Sanowicz alleged Bacal moved to a new broker so that he could consummate the sale of Sarbonne without Sanowicz’s knowledge. Sanowicz specifically described Sotheby’s as participating in the sale of the Sarbonne property.

Sanowicz further alleged that Bacal falsely represented to him that Bacal was not continuing to work on the Sarbonne project even though Bacal “was going into escrow on Sarbonne the very next day” after he made that claim. Sanowicz alleged that Sarbonne was sold by Sotheby’s and Bacal (as broker and agent respectively) for approximately $14 million, with escrow closing on July 16, 2012. This was within two years of the date of the original contract between Sanowicz and Bacal to share commissions on the sale of this property.

In June 2012, prior to the sale of Sarbonne, Sanowicz asked Bacal to disclose what “joint projects” he continued to work on and “to document his prior arrangements with Sanowicz on the sharing of commissions.” In response, Bacal identified “a few projects and represented he was not working on others.” Based on these discussions, Sanowicz and Bacal entered into compensation sharing agreements on still other projects.[2] Sanowicz claims in his complaint that there are additional property transactions on which Bacal has earned commissions which are subject to the commission sharing agreements but which Bacal has concealed from Sanowicz, with the result that Bacal owes Sanowicz additional commission income.

Sanowicz seeks one half of the $210,000 agent’s commission Bacal received on the sale of Sarbonne, with interest. In addition, Sanowicz seeks one half of the commissions earned on other sales made as required by their joint venture agreements.

The first amended complaint contained six causes of action: (1) for breach of fiduciary duty based on Bacal allegedly inducing Sanowicz to move from JBN to KW on the promise to share contacts and commissions and based on their partnership and “joint enterprise” arrangements; (2) for fraud for making the representations that induced Sanowicz to move to KW and to lull Sanowicz into not demanding that they enter into a new joint venture agreement “that addressed the move to Sotheby’s;” (3) for negligent misrepresentation; (4) for breach of contract to pay the half of commissions earned under their agreement on the Sarbonne transaction; (5) for conversion of the half of the commission earned by Bacal on the sale of Sarbonne which Sanowicz contends is due to him by reason of their commission sharing agreement; and (6) for money had and received.

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Bacal filed timely general and special demurrers to the first amended complaint, asserting the same defects were present in each of the causes of action, and a separate motion to strike all allegations requesting punitive damages. He demurred generally on the grounds that each claim failed to state a cause of action (Code Civ. Proc., § 430.10, subd. (e)), and specially, asserting that each claim was fatally uncertain (Code Civ. Proc., § 430.10, subd. (f)) and that Sanowicz lacked the legal capacity to sue (Code Civ. Proc., § 430.10, subd. (b)).[3]

Bacal’s principal legal contention was that Business and Professions Code section 10137, [4] which provides that it is unlawful for a real estate agent to accept compensation from any person other than the real estate broker under whom he or she is licensed, makes illegal the agreements alleged between Sanowicz and Bacal. On this premise, Bacal contended that all of Sanowicz’s claims for relief were barred by statute ...


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