Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment and order of the Superior Court of Los Angeles County. Super. Ct. No. GC038795, Joseph F. DeVanon, Judge.
James Ellis Arden; Marcarian Law Firm and Armond Marcarian for Plaintiff and Appellant.
Freedman & Taitelman, Michael A. Taitelman and Jacqueline C. Brown for Defendant and Respondent.
CHAVEZ, J.
Perry Wong (appellant) appeals from a final judgment entered after the trial court granted summary judgment in favor of Lee & Associates Commercial Real Estate Services, Inc. (respondent) on appellant’s breach of contract claim against respondent. Appellant also appeals from an order granting respondent’s motion for attorney fees. We affirm the judgment and the order.
CONTENTIONS
Appellant contends that he was a third party beneficiary of a listing agreement between respondent and the sellers of a property. Appellant further contends that he entered into a separate oral commission sharing agreement with respondent, and that he can enforce his rights under the oral commission sharing agreement through the written listing agreement. Therefore, appellant argues, the four-year statute of limitations applicable to written contracts, rather than the two-year statute of limitations applicable to oral contracts, is applicable to his breach of contract claim.
FACTUAL BACKGROUND
The material facts of this case are undisputed. On March 1, 2004, respondent entered into a written listing agreement with the owners of an industrial property in Commerce, California. Pursuant to the listing agreement, which was a standard agreement from the AIR Commercial Real Estate Association, respondent agreed to market the property in the multiple listing service of “the AIR and/or any other appropriate local commercial multiple listing service.” The agreement provided that respondent “shall cooperate with participants in the [multiple listing service] and may, at [respondent’s] election, cooperate with other real estate brokers (collectively ‘Cooperating Broker’). A Cooperating Broker may, as a third-party beneficiary hereof, enforce the terms of this Agreement against Owner or [respondent].” The owner of the property was to pay respondent a commission in the amount of 4.5 percent as a result of any sale, whether or not the sale was consummated by respondent or some other person or entity.
According to its website, the AIR Commercial Real Estate Association is a large, non-profit organization of industrial and commercial real estate brokers.
On May 19, 2004, appellant, a real estate broker, called respondent from his car. Appellant advised respondent that he would like to show the property in question to Mr. Ahn Tran. Appellant did not want to disclose his buyer, so he stated that he was representing the Ethics Corporation, a corporation appellant owned. Appellant was not a member of the multiple listing service at the time.
Appellant stated that while he was on the phone with respondent during this initial phone contact, respondent confirmed the initial $4,332,000 listing price, and that the listing broker’s 4.5 percent commission would be split if another broker procured a buyer. Appellant advised respondent that he was already in his car driving his client toward the property, and that he would take him there and show it to him.
On or about May 20, 2004, Tran submitted a standard offer, agreement and escrow instructions for the purchase of the property for $4,000,000 (purchase agreement). The purchase agreement identifies respondent as the “seller’s broker.” No “buyer’s broker” was identified. Pursuant to section 27.2 of the purchase agreement, respondent agreed to accept a flat fee of $120,000 as its commission. Section 27.2 also provided that “Buyer shall pay a commission to Buyer’s Broker outside of escrow and Seller shall have no responsibility to pay any Broker other than Seller’s Broker.”
On May 24, 2004, Tran executed a written “Disclosure for Purchase and Sale Agreement” (disclosure). In section 14 of the disclosure, Tran expressly confirmed that he was not represented by a buyer’s broker.
On August 23, 2004, escrow for the purchase and sale of the property closed. Respondent was paid its commission through escrow at the closing.
After the closing, appellant received $2,000 in cash from Tran for “making the introduction” to the transaction. Appellant testified in his deposition that, at the time, he was unaware that the purchase agreement specified that Tran would compensate any agent or broker used by him.
PROCEDURAL HISTORY
On April 3, 2007, appellant filed a complaint against respondent and the sellers. The complaint asserted causes of action for unjust enrichment and breach of contract against both respondent and the sellers, as well as a cause of action for deceit against respondent.
On May 3, 2007, the sellers filed a demurrer to appellant’s complaint. The sellers’ demurrer to the complaint was sustained without leave to amend.
On April 24, 2007, respondent filed a demurrer to the complaint. The trial court sustained respondent’s demurrer to the first cause of action for deceit and the fourth cause of action for unjust enrichment, with leave to amend. The trial court overruled respondent’s demurrer to the second cause of action for breach of contract.
Rather than amending the complaint, appellant dismissed with prejudice his causes of action for deceit and unjust enrichment against respondent. Thus, appellant’s only remaining cause of action against respondent was for breach of contract.
On October 3, 2007, respondent filed a motion for summary judgment on the breach of contract cause of action. Respondent argued that the listing agreement entered into between respondent and the sellers did not give appellant any enforceable right to a share of the commission. Further, respondent argued that there was no separate, enforceable cooperation agreement between appellant and respondent. Respondent noted that appellant alleged that he had entered into an oral cooperation agreement for a 2.25 percent commission, but the two-year statute of limitations on the breach of an oral agreement had “long since expired.”
Appellant did not dispute any of the facts offered by respondent. However, appellant opposed the summary judgment motion. In his opposition, appellant noted that “two separate, express agreements” were at issue – “one written and one oral.” Appellant argued that he was a third party beneficiary to the written listing agreement, and therefore was entitled to enforce the commission splitting agreement between the parties.
Appellant’s opposition brief initially was not included in the record due to appellant’s failure to properly designate it. On November 24, 2008, respondent filed a motion to correct or augment the record to include appellant’s opposition. We granted the motion.
The trial court heard the summary judgment motion on January 9, 2008. On January 14, 2008, the court entered an order granting the motion. In a written order, the court found that the listing agreement did not impose an obligation on respondent to share its commission or pay appellant any money. The court noted that although “there may have been a right to sue the Seller for nonpayment of the commission, there is no right to sue Defendant agent for failure to pay commission.” In addition, the court noted that paragraphs 2.3 and 2.4 of the listing agreement permitted respondent’s use of cooperating agents, but created no express duty or obligation on the part of respondent to share the commission with anyone. Thus, respondent did not breach the agreement. The trial court entered judgment in favor of respondent and against appellant.
On March 3, 2008, the trial court granted respondent’s motion for attorney fees. On March 12, 2008, appellant filed a notice of appeal of the judgment and fee order.
DISCUSSION
I. Standard of review
We review a grant of summary judgment de novo, and decide independently whether the facts not subject to triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) The trial court’s stated reasons for granting summary judgment are not binding on us because we review its ruling, not its rationale. (Kids’ Universe v. In2labs (2002) 95 Cal.App.4th 870, 878.)
We may affirm an order granting summary judgment on a ground not relied on by the trial court, if the parties have been afforded an opportunity to brief the issue. (Code Civ. Proc., § 437c, subd. (m)(2).)
II. Applicable principles of summary judgment
A defendant moving for summary judgment has met its burden of showing that a cause of action has no merit if the defendant “has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of material fact exists as to that cause of action or a defense thereto. The plaintiff . . . may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists . . . .” (Code Civ. Proc., § 437c, subd. (p)(2).)
The elements of a cause of action for breach of contract are: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages to plaintiff. (Careau & Co. v. Sec. Pac. Bus. Credit (1990) 222 Cal.App.3d 1371, 1388.)
Appellant’s claim for breach of contract against respondent must be based on an express agreement between the two parties. (See Colbaugh v. Hartline (1994) 29 Cal.App.4th 1516, 1523 [“‘When the cooperating broker is the procuring cause of the sale, his recovery from the listing broker is limited to the terms of the cooperation agreement’”].) As set forth below, we find that appellant has failed to show the existence of a written commission sharing agreement. Further, due to the expiration of the two-year statute of limitations, appellant may no longer enforce any alleged oral commission sharing agreement. Thus, appellant has failed to create a triable issue of fact as to the existence of an enforceable commission sharing contract between the parties, and his breach of contract cause of action fails as a matter of law.
Appellant discusses at length the trial court’s purported error in interpreting Colbaugh. Because we are obliged to conduct an independent review, without regard to the trial court’s rationale (Kids’ Universe v. In2labs, supra, 95 Cal.App.4th at p. 878), we find this discussion irrelevant.
III. No written commission sharing agreement existed between appellant and respondent
Appellant argues that he was a third party beneficiary to the listing agreement entered into between respondent and seller on March 1, 2004. Appellant’s position is based on the language in that contract indicating that respondent was required to “cooperate with participants in the [multiple listing service] and may, at [respondent’s] election, cooperate with other real estate brokers (collectively ‘Cooperating Broker’).” The agreement further provided that a “Cooperating Broker may, as a third-party beneficiary hereof, enforce the terms of this Agreement against Owner or [respondent].”
The listing agreement’s permissive language, authorizing respondent to elect to cooperate with other real estate brokers, does not render appellant a third party beneficiary of the contract. Instead, it merely acknowledges that respondent may cooperate with such other brokers at its discretion. Without a separate, enforceable cooperation agreement, such a broker cannot be considered a “cooperating broker” and may not enforce the terms of the agreement as a third party beneficiary.
Appellant does not dispute that he was not a member of the multiple listing service at any relevant time, thus the affirmative language directing that respondent “shall cooperate with participants in the [multiple listing service]” is inapplicable.
Appellant argues that even if appellant was not an express third party beneficiary to the contract, the law implies that cooperating brokers like appellant should be considered third party beneficiaries under the circumstances. The cases cited by appellant in support of this argument, Calhoun v. Downs (1931) 211 Cal. 766, 770-771 and Donnellan v. Rocks (1972) 22 Cal.App.3d 925, both concern a broker’s right, as a third party beneficiary, to enforce the broker’s express right to a commission contained in a purchase agreement between a buyer and a seller. The cases set forth the basic principle of law that “an agreement between a vendor and a purchaser which expressly provides for the payment of a commission to a broker makes the broker a third party beneficiary.” (Donnellan, at p. 930.) Here, in contrast, the listing agreement gave appellant no express right to a share of the listing broker’s commission. The principles set forth in these cases do not confer on appellant any “implied” right as a third party beneficiary to the listing agreement.
Further, even if appellant were a third party beneficiary, his ability to enforce the listing agreement would not entitle him to a share of the commission. The listing agreement provides that a third party beneficiary may “enforce the terms of this Agreement against Owner or [respondent].” (Italics added.) Thus, it gave cooperating brokers the right to enforce the terms of the listing agreement. Those written terms made no provision for a split of the commission. In fact, on the contrary, the listing agreement expressly stated that, upon the sale of the property, the seller “shall” pay respondent the commission regardless of whether the sale was consummated as a result of the efforts of respondent, the owner, or some other person or entity. Thus, even if appellant could enforce the listing agreement, he could only enforce the seller’s obligation to pay respondent. Nothing in the listing agreement entitles appellant to share respondent’s commission.
In order to enforce his right to 2.25 percent of the sale price, appellant must point to a separate, express agreement between appellant and respondent setting forth such right.
IV. The two-year statute of limitations bars enforcement of the alleged oral commission sharing agreement
Appellant alleges that the separate, express agreement between appellant and respondent was an oral agreement entered into during the telephone conversation between the parties in May 2004 just before appellant showed Tran the property. As an oral agreement, any such contract is subject to the two-year statute of limitations set forth in Code of Civil Procedure section 339 (section 339).
Appellant argues at length that the statute of frauds does not bar oral commission sharing agreements. Respondent makes no effort to contradict the extensive legal authority appellant has set forth on this topic. However, appellant’s statute of frauds argument does not salvage his breach of contract claim. While commission sharing agreements may not be subject to the statute of frauds, they are subject to the statute of limitations.
Written agreements are governed by the four-year statute of limitations set forth in Code of Civil Procedure section 337 (section 337).
The following facts are undisputed: escrow for the sale of the property closed on August 23, 2004. Respondent was paid its commission on that date. Thus, pursuant to section 339, appellant was required to file suit no later than August 23, 2006. Appellant did not file his complaint until April 3, 2007. Under these facts, the statute of limitations found in section 339 bars any claim based on this alleged oral contract.
Appellant makes no argument that he was unaware of the closing or respondent’s purported breach of the oral agreement in August 2004. Even if he had made such an argument, a letter in the record to appellant from respondent’s attorney, dated December 14, 2004, formally rejecting appellant’s demand for payment, shows that appellant was aware of the purported breach by December 2004. Thus, his claim for breach of oral contract had to be filed no later than December 2006.
Appellant claims that “It would make no sense to argue that the two-year statute of limitations for an oral agreement . . . should apply here.” Appellant’s position is that his “standing” to bring this action as a third party beneficiary springs from the written listing agreement. Thus, appellant argues, respondent’s obligation to share the commission could not arise until after the written agreement was enforced.
We reject this contrived effort to avoid the applicable statute of limitations. As set forth above, appellant is not a third party beneficiary of the written listing agreement. Even if he were, the listing agreement only allows third party beneficiaries to enforce the terms of the listing agreement itself, which provides for a commission to be paid exclusively to respondent regardless of who procures the sale of the property and does not specify any obligation on the part of respondent to split the commission.
Division of Labor Law Enforcement, Dep’t of Industrial Relations v. Dennis (1947) 81 Cal.App.2d 306 (DLLE) is not helpful to appellant. The case was brought by the assignee of certain former employees of the respondent to recover the difference between the wages paid the employees and the amounts payable to them under the provisions of two collective bargaining agreements. The question presented was whether the two-year statute of limitations under section 339, or the four-year statute of limitations under section 337, was applicable to the claims at issue. Claims based on the oral contracts of hiring would have been barred, while claims based on the written collective bargaining agreements would not have been barred. While acknowledging that the oral and written contracts were separate and distinct, the court found that the employees had a right to sue as third party beneficiaries under the written collective bargaining agreement. In so holding, the court specifically noted “‘In order to be founded upon an instrument in writing, the instrument must, itself, contain a contract to do the thing for the nonperformance of which the action is brought.’” Because the written bargaining agreement contained an agreement by the respondent to pay certain designated wages to anyone working for him in certain capacities, the appellant’s causes of action for breach arose from that written agreement and thus were not barred. (DLLE, supra, at p. 310.) Here, as discussed above, the written listing agreement contained no provision requiring respondent to pay appellant a portion of the commission. Therefore, appellant’s cause of action for breach of a commission sharing agreement did not arise from that written contract. Appellant cannot revive his breach of contract claim by reading into the written listing agreement terms which are not expressly set forth therein.
The written listing agreement is separate and distinct from the alleged oral commission sharing agreement. Any cause of action based on the alleged oral commission sharing agreement is barred by the statute of limitations.
Appellant attempts to argue that even if there had been no commission splitting agreement at all, commissions earned from properties listed in the multiple listing service should be split between the listing broker and the selling broker because “that is how the system works.” In support of this argument, appellant cites Estate of Cattalini (1979) 97 Cal.App.3d 366, 375. Cattalini discusses the question of whether the Probate Code authorizes a probate court to order payment of part of a broker’s commission to a cooperating broker where the administratrix of the relevant estate had granted the listing broker held an exclusive right to sell. The case does not support appellant’s position that, even without an express commission sharing agreement, respondent should be required to split the commission with appellant.
V. Attorney fees
Appellant’s sole argument regarding the award of attorney fees is that the award should be reversed if the judgment is reversed. Because we affirm the judgment, we also affirm the attorney fee award.
DISPOSITION
The judgment and order are affirmed. Respondent is awarded its costs of appeal.
We concur: BOREN, P. J. DOI TODD, J.