Opinion
B223124
10-19-2011
THE ARGENT CORPORATION, Plaintiff and Respondent, v. CRAIG D. JONES et al., Defendants and Appellants.
Law Offices of Roxanne Huddleston and Roxanne Huddleston for Defendants and Appellants. Pircher, Nicholas & Meeks, and James L. Goldman for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC346866)
APPEAL from a judgment of the Superior Court of Los Angeles County. James R. Dunn and Robert Letteau (Ret.), Judges. Affirmed.
Law Offices of Roxanne Huddleston and Roxanne Huddleston for Defendants and Appellants.
Pircher, Nicholas & Meeks, and James L. Goldman for Plaintiff and Respondent.
INTRODUCTION
The trial court determined a broker/lender who provided initial financing of various real estate projects was entitled to fees based on constructions loans, permanent financing and sales as provided under various agreements with the borrower and entered judgment against the borrower. The borrower appeals, claiming the agreements were void for lack of a termination date among other challenges. We affirm.
FACTUAL AND PROCEDURAL SUMMARY
As summarized in the trial court's 31-page statement of decision, in April 1999, Ronald Siegel (acting on behalf of the Argent Corporation and its sole shareholder) and Craig Jones signed a contract under which Jones engaged Argent, a loan broker and lender, to locate equity investors for real estate projects Jones planned to develop through various limited liability companies. Most of the projects were located in Santa Monica. Jones agreed to pay Argent a fee for capital provided by investors Argent located and further agreed Argent would have the exclusive right to make or arrange for construction and permanent loans for any projects for which Argent or its investors provided equity capital. Both directly and through investors or an affiliated entity, Argent provided funds for Jones to acquire multiple properties Jones had identified for his projects.
By stipulation, the matter was tried by Hon. Robert Letteau (Ret.) as a privately compensated temporary judge. (Cal. Rules of Court, rule 2.830 et seq.)
"Between 1999 and 2005, Argent provided substantial financing for Jones and/or entities that he formed for purposes of developing and owning real estate projects that he controlled. Generally, when Argent provided financing, Jones and/or his entity agreed, in the escrow instructions relating to the loan or promissory notes reflecting the loan terms, or in both documents, that Argent would receive 2 to 4 points on the funding of the loan, interest at the rate of 10 [percent] to 14 [percent] per annum on the loan, an additional point when construction financing for the project in question and/or or some other project or projects was obtained, and another point when permanent financing for such project or projects was obtained or 75 [percent] of 1 point when the project or projects were sold if they were sold before permanent financing was obtained.[] In some but not all cases, the parties agreed that Argent would have the exclusive right to obtain such financing. In some cases, Jones signed the escrow instructions and notes on behalf of the entity he had formed or planned to form to be the owner of the project (referred to as a 'JSM' entity), and on behalf of himself—as an additional borrower and/or guarantor.
This was because an outside lender would typically require 25 percent equity and would lend only 75 percent of the value so the percentages were meant to be equivalent whether for sale or financing.
"In or about 2005, the relationship between Jones and Siegel deteriorated. Siegel learned that Jones had obtained financing from third-party lenders for some of his projects without paying Argent the fees that Jones had agreed to pay or paying him less than what was contractually required. Argent then filed this action against Jones and the entities that he formed to own these projects."
"Argent alleges in its . . . Fifth Amended Complaint, that Defendants [Jones and his entities] breached their contractual obligations to pay Argent fees on account of financing they obtained from third-party lenders. Argent also alleges that Jones committed fraud by engaging in a financing transaction with Argent without intending to comply with the obligations that he assumed in the contract documents. Finally, Argent seeks declaratory relief concerning its rights relating to certain transactions that may have occurred or that may occur between Defendants and third-party lenders or purchasers of Jones' projects.
"Jones and the other Defendants filed an Answer generally denying Argent's allegations and have asserted multiple affirmative defenses. Jones and the other Defendants have also filed a Cross-Complaint against Argent. . . ."
The Second, Third and Seventh Causes of Action: The Arrezo Project At 507 Wilshire Blvd.
In its second cause of action for breach of contract, Argent alleged Jones and his entities failed to pay on a construction loan obtained by Wells Fargo Bank. "On or about October 5, 2004, Argent agreed to, and did, make a $900,000 loan to Jones. (Ex. 50). The loan was secured by the property located at 1244 6th Street in Santa Monica, where Jones maintained his office. In the escrow instructions for the loan (Ex. 49), Jones agreed to pay a one point fee if and when Jones obtained a construction loan for the property located at 507 Wilshire Blvd. in Santa Monica and another one point fee when he obtained a permanent loan for that property or .75 [percent] of sales price if the project that Jones intended to construct there, i.e., the Arrezo project, was sold before [a] permanent loan was obtained.
"On or about February 13, 2006, Wells Fargo Bank made a construction loan to one of Jones' entities, JSM Arrezo, in the amount of $21,785,000 (Ex. 75). Argent did not receive any compensation on account of this loan.
"Under the agreement identified above (Ex. 49), Argent was entitled to receive 1 [percent] of the amount of the construction, or $217,785. . . ."
Argent's third cause of action alleged Jones's fraud regarding the construction loan on the Arrezo project. By clear and convincing evidence (as well as a preponderance of the evidence), the trial court found: (1) Jones never intended to make any payment to Argent on account of any construction loan or permanent loan for, or any sale of, the Arrezo Project; (2) Jones did not intend to comply with the promises he made in this regard when he accepted the proceeds of the $900,000 loan from Argent; (3) Jones knew Argent would not have made the loan if Jones had disclosed his intention to Siegel; (4) Jones committed fraud, and intended to and did mislead and deceive Siegel by executing the loan documents and accepting the loan proceeds without telling Siegel he did not regard the escrow instructions as binding and did not intend to do what he promised to do; (5) Siegel reasonably believed Jones would comply with his covenants when he caused Argent to make the loan and would not have done so had Jones disclosed his true intention.
"In deciding that Jones engaged in fraud, the Court relies on, in part, Jones' testimony that he intended to try to renegotiate the agreement with Argent . . . , Jones' deposition testimony that he didn't care what he signed . . . , his responses to the Court's inquiries on the subject, his demeanor while testifying, his claim that he was coerced in connection with this transaction—which the Court finds to have been concocted without any factual or legal basis, what the Court finds to be a lack of credibility on his part, his failure to tell Siegel about the construction financing, his refusal to pay Argent even after it became clear that the financing was obtained, and the absence of any trial testimony on his part that he did intend to pay. Indeed, Jones testified that his intention, when he made the loan, was to try to renegotiate it later, as noted above. The Court rejects any suggestion that Jones told Siegel what his true intention was. The Court relies, in part, on Siegel's testimony that Jones did not tell him that he did not intend to pay. . . . Moreover, it is virtually inconceivable Argent would have made this loan if Jones had disclosed his true intention.
"The Court finds that the interest and points that Argent charged Jones for this loan, as well as the other loans that are the subject of this action, were less than what Argent would have charged if it did not receive Jones' agreement to pay additional fees upon the funding of other financing, and what a typical hard money lender would have charged for the kind of loan made by Argent. Defendants' expert witness, Alan Wallace, testified that the market rates for hard money loans back in 2001 were about 20-30 [percent] per annum for interest and about 8 to 12 points. . . . Mr. Wallace also acknowledged given Jones' special credit problems and the kind of loans that Argent was making, Argent was taking exceptional risk and, indeed, was the only lender on the planet that Jones could find. . . . Mr. Wallace's testimony was undisputed, and the Court therefore accepts it.
"As Siegel explained . . . , Jones volunteered to pay Argent additional fees 'down the road' when he obtained additional financing for and/or when he sold the subject project. Therefore, not only was Argent damaged by reason of Jones' fraud, but Jones was unjustly enriched by reason of his fraud in that Jones obtained the additional financing but never made any payment to Argent relating thereto.
"The Court finds that the actual damage that Argent has suffered on account of Jones' fraud is the same as that which Argent suffered as a result of Jones' breach of contract; and, therefore, that amount, i.e. $217,785 plus prejudgment interest, will be awarded to Argent, and against Jones, pursuant to the third cause of action.
"The Court also finds that Jones' conduct was such as to warrant the imposition of exemplary damages pursuant to Civil Code section 3294 . . . ." Based on factors including the manner and extent of Jones' deceit, proportionality to the damages caused and Jones' financial condition, the Court assessed the amount of $195,000 against Jones.
On the seventh cause of action for declaratory relief with respect to the permanent loan provision, pursuant to the terms of the Arrezo agreement, the trial court found Argent was entitled to additional compensation from Jones and JSM Arrezo and any other entity Jones used to own the Arrezo project if and when Jones or such entity obtains permanent financing or sells the property, provided such financing is obtained or sale occurs on or before October 5, 2014 (within 10 years of the date on which the agreement was made).
The Fourth, Sixth and Tenth Causes of Action: The Tuscany Project At 1514 7th Street.
"On or about December 20, 2001, Argent made a $900,000 loan to JM 6th Street Associates, a limited partnership in which one of Jones' companies, Jones-Mow LLC ('Jones-Mow') was the general partner. The note reflecting the loan (Ex. 12) was signed by Jones 'individually and personally,' and in his capacity as the manager of Jones-Mow. The loan was due on June 21, 2002, and was secured by a deed of trust on the property located at 1514 7th Street. The escrow instructions for the loan (Ex. 11) provide that Argent would receive 1 point on the funding of any construction loan for the project that Jones intended to develop at 1514 7th Street, i.e., the Tuscany Project, and another point on the funding of any permanent loan (or .75 [percent] of the sale price if the project was sold on completion of construction).
"In or about June 2002, the loan was extended to December 2002. (Exhibits 17, 18.) In or about November 2002, the balance of the loan was increased to $1,000,000 and the maturity date was extended to June 2003; at that time, a new note was executed. (Ex. 20.) However, there was no evidence that the original note was ever cancelled or endorsed 'payment in full' or words to that effect, or that the parties intended to terminate Argent's right to receive additional compensation upon the procurement of construction and/or permanent financing for the Tuscany Project. Further, in connection with this transaction, the fee charged by Argent was only 2 points (Ex. 159), which was the same amount that Argent charged for other extensions relating to this loan—not the amount that it typically charged Jones for new loans. It appears that a new note was executed because of the additional advance. In any event, the economic substance of the transaction was that, and therefore the transaction will be regarded by the Court as if, Argent made an additional $100,000 advance on the existing loan and agreed to extend the maturity date, and not as a novation.
"Subsequently, the loan was extended, and its amount was increased, on multiple occasions. (Exs. 24, 25, 29, 31, 37-40, 51-53.) Ultimately, the loan matured on June 1, 2005, at which time the principal balance due was $1,750,000. The loan was not paid until September 1, 2005. When the loan was paid, Jones or JM 6th Street Associates paid the principal balance due plus interest at the rate of 9 [percent] per annum, which was the rate at which interest was to accrue pursuant to the terms of the note provided that the note was not in default. The note provides for interest to automatically increase to 20 [percent] per annum at Argent's option if the borrower is in default."
In its fourth cause of action, Argent alleged underpayment by JM 6th Street Associates when it paid off the land loan in September 2005. The trial court found Argent was entitled to recover damages from Jones, JM 6th Street Associates and Jones-Mow in the amount of $30,828 plus prejudgment interest (with the calculation explained).
Argent conceded Jones had not obtained construction financing and/or a permanent loan for the Tuscany Project and was not entitled to recover on its sixth cause of action.
In its tenth cause of action, Argent sought declaratory relief on the issue of whether it was due compensation on account of any construction loan or permanent loan for, or any sale of, the Tuscany Project. Jones and his entities claimed Argent was entitled to nothing because the note executed in 2002 did not contain the agreement to provide such additional compensation as the original 2001 note did. The trial court disagreed because (1) the provisions regarding additional compensation were made in the loan escrow instructions dated December 20, 2001 (Ex. 11), and not just the note dated December 21, 2001 (Ex. 12); and (2) the additional compensation provisions contained in the original note were not regarded or treated by the parties as having been terminated, amended, satisfied, waived or otherwise no longer in effect.
The defendants (Jones and related entities) had engaged in what was described as "pre-sale" of the project to a third party (Neil Scheckter) for $2.5 to $3 million. The contract between Argent and Jones and JM 6th Street Associates provides for Argent to receive a fee of .75 percent upon sale of the property. The trial court declared (1) Argent is entitled to .75 percent of any net proceeds from the sale of the property to Mr. Scheckter or any third party that have been or may be received by Jones or any JSM entity, including JM 6th Street Associates and its general partner Jones-Mow; and (2) Argent is entitled to one point on any construction loan and one point on any permanent loan that Jones or any JSM entity may obtain on the property. However, Argent shall only be entitled to such compensation should sale or financing occur on or before December 20, 2011, i.e., within 10 years of the time when the parties entered into the agreement on which Argent's claim is based.
The Fifth and Eleventh Causes of Action: The Genoa Project At 1408/1418 7th Street.
In its fifth cause of action, Argent alleged Jones and related entities failed to pay with respect to a construction loan made by Wells Fargo Bank. "On or about September 29, 2004, Argent made three 'land' loans to JSM Ticino/McCormick, LLC, in the amounts of $2.9 million, $500,000, and $1.35 million. (Exhibits 46-48.) Jones signed the promissory notes both as a guarantor and as manager of MM Ticino, the manager of JSM Ticino, LLC, and the manager of JSM Ticino/McCormick. The loans were secured by first, second, and third position deeds of trust on the property located at 1408-1418 7th Street in Santa Monica. The promissory notes provide that Argent would have the exclusive right to place construction and permanent loans on the subject property, and that Argent would receive a 1 point fee on the placement of such loans if they were placed by someone else. The notes also provide that Argent would be entitled to .75 [percent] of the amount of any sale of the property if the property were to be sold prior to the placement of the permanent loan. The promissory notes provide that Argent would be entitled to receive these fees from the JSM entity that Jones used to develop the project that he intended to develop at the subject property.
"On April 4, 2006, Wells Fargo provided a construction loan in the amount of $18,870,000 to a Jones entity, JSM Genoa, LLC. (Ex. 76) Argent was not asked to procure nor given the opportunity to procure a construction loan for the Genoa Project.
"Argent was entitled to receive $188,700 when the Wells Fargo loan was funded, i.e., on April 4, 2006, but has not received that amount or any other amount, from Jones, JSM Ticino/McCormick and JSM Genoa. Argent is, therefore, entitled to recover that amount plus prejudgment interest thereon from Jones, JSM Ticino/McCormick and JSM Genoa."
On the eleventh cause of action for declaratory relief with respect to permanent financing for the Genoa Project, the trial court found Argent to be entitled to an additional payment from Jones, JSM Ticino/McCormick and JSM Genoa (and any other entity Jones may use to hold title to the subject property) if and when permanent financing is obtained or when the property is sold before financing is obtained, provided such financing or sale occurs on or before September 29, 2014, i.e., within 10 years of the time when the parties entered into the agreement on which Argent's claim is based. Argent will be entitled to 1 percent of the amount of such financing unless the property is sold before such financing is obtained, in which case Argent will be entitled to .75 percent of the amount of the sale.
The Eighth Cause of Action: The Positano Project at 606 Broadway.
"On or about November 14, 2002, Argent made a land loan to JSM Amalfi, LLC and Jones in the amount of $2.5 million. (Ex. 19.) The loan was secured by the property located at 606 Broadway on which the Positano Project was later constructed. The parties agreed that Argent would receive 1 point on funding of the construction loan and 1 point on funding of the permanent loan unless the property was sold prior to such financing being obtained, in which case, Argent would be entitled to .75 [percent] of the amount of the sale. Argent did, in fact, receive a fee in the proper amount when the construction loan was placed; and Argent has not made any claim regarding that transaction.
"At some point after Argent made its land loan, Jones caused title to the property to be transferred to another JSM entity, JSM Positano, and that entity received a permanent loan from Prudential.
"Defendants JSM Amalfi, LLC and Jones breached their contractual obligations to Argent by failing to make any payment to Argent on account of the permanent loan made by Prudential."
There was an issue at trial as to the amount of the permanent loan. Based on the testimony of Alan Freeman (who worked with Jones at the time), the trial court allocated $23 million of the $235 million Prudential loan to the Positano Project. As a result, Argent was entitled to a fee in the amount of $230,000 and was awarded damages in that amount plus prejudgment interest (as calculated in the statement of decision).
The Ninth Cause of Action: 1244 6th Street.
"On August 20, 2003, Argent made a loan in the amount of $1.5 million to Jones. (Ex. 28, 200-202.) The loan was secured by the property located at 1244 6th Street. Jones agreed, in the escrow instructions relating to the loan, that Argent would be entitled to 1 [percent] of the amount of any construction financing for the property and either 1 [percent] of the amount of any permanent financing or .75 [percent] of the amount of any sale if the property were sold prior to the placement of permanent financing.
"Jones used the property located at 1244 6th Street for office purposes. He has not constructed one of his apartment projects at the site. Jones did obtain what Jones himself identified as a 'permanent loan' on this property in the amount of $2-2.5 million. . . . However, the Court finds that this was not the kind of permanent loan that the parties had in mind when they agreed that Argent would receive a fee on account of any permanent loan concerning this property.
"In its ninth cause of action, Argent seeks a judicial declaration that Jones will be obligated to Argent for the fees specified in the escrow instructions if and when the triggering events occur, i.e., the funding of a construction loan and funding of a permanent loan. The Court finds that Argent is entitled to such relief, and that Argent will be entitled to .75 [percent] of the amount of any sale if the property . . . is sold prior to the placement of permanent financing. However, the Court will provide, in its judgment, that Argent will only be entitled to additional compensation for any such financing obtained or sale consummated on or before August 20, 2013, i.e., within 10 years of the time when the agreement in question was made."
In its statement of decision, the trial court also specifically addressed and rejected each of Jones's asserted defenses, including his argument that the contracts on which Argent's claims were based were unenforceable for lack of a termination date as required under Business and Professions Code sections 10176, subdivision (f), and 10131. The rule cited in Dale v. Palmer (1951) 106 Cal.App.2d 663, the trial court observed, "only applies to executory contracts," and "does not apply here, i.e., where the broker has provided the consideration to be provided by him or her pursuant to the contract." Further, as relevant to this appeal, only the Genoa Project authorized Argent to procure financing while the contracts relating to Arrezo (507 Wilshire), Tuscany (1514 7th Street), Positano (606 Broadway) and the office building (1244 6th Street) "do not authorize Argent to procure the construction loan or the permanent loan, or a buyer for the property. Therefore, [Business and Professions Code section] 10176 would not, in any event, apply to these contracts."
Moreover, the trial court noted, Business and Professions Code section 10176 does not bar enforcement of the contract relating to the Genoa project because the "authorization[] granting Argent the exclusive right to procure financing for th[is] project[] w[as] given, at least in part, in consideration for something that Argent had already done, i.e., provide financing other than that to which the authorizations related— not for something that Argent promised to do. In addition, the contractual provisions on which Argent is suing, and the ones with respect to which it is seeking damages, are not the ones that granted Argent the exclusive right to place the financing for th[is] project[]." (Original emphasis.) Rather, Argent's claim was based on the provision in the Genoa agreement that "'Should Jones and/or the respective JSM entity obtain its own loan, Argent shall still receive one (1) full point of said loan(s).'" Therefore, even if the provision in the prior paragraph granting Argent the exclusive right to procure financing were found to be unenforceable, Argent would still be entitled to damages for breach of the latter provision. "In consideration for Argent providing acquisition financing to Jones, Argent was granted both the right to place construction and permanent financing and the right to compensation if someone else placed it. Argent is seeking damages for violation of its second right—not the violation of the first." (Italics added.)
"There are other circumstances that would make it inequitable to find the agreements in questions to be unenforceable:
"Jones himself has been licensed as a real estate broker since 1994. If he felt that the authorizations that he provided to Argent should have included termination dates, he could have and should have said something before the contracts in question were executed.
"Argent had no control over, and could not even predict when the projects would be ready for construction, how long the construction would take, and when the projects would qualify for permanent financing; under these circumstances, any termination date would have been artificial.
"Defendants never provided Argent with an adequate opportunity to procure the permanent financing for the projects in question.
"Defendants did not show or even claim that they suffered any adverse consequence as a result of these agreements; specifically, they did not show or claim that these contracts in any way impaired their ability to obtain construction or permanent financing for the projects or sell the projects."
Jones appeals from the judgment subsequently entered.
With respect to the first cause of action (and the award of attorney's fees and costs), the parties have reached a settlement, and the judgment debtors on the first cause of action have dismissed their appeal. In addition, cross-complainant JSM Capri, LLC was named in the notice of appeal but dismisses its appeal as no judgment was entered against it.
DISCUSSION
The Contracts for Commissions on Construction Loans, Permanent Financing and Sales Are Not Void for Lack of a Termination Date.
According to Jones, Business and Professions Code sections 10176, subdivision (f), and 10131, subdivision (d), prohibit brokers from demanding or receiving any type of compensation or commission in connection with loans secured by real estate when the agreement for the compensation or commission "does not contain a definite, specified date of final and complete termination," and under Dale v. Palmer (1951) 106 Cal.App.2d 663, 666-668, because none of the contracts at issue set forth a specified termination date, such contracts are "void ab initio and unenforceable." We disagree.
Jones also cites an unpublished federal decision, Eastdil Realty, Inc. v. Barker Interests Limited (9th Cir. Mar. 17, 1988, Nos. 87-1802, 87-1803) 1988 WL 25483.
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Business and Professions Code section 10176, subdivision (f), provides as follows: "The commissioner may, upon his or her own motion, and shall, upon the verified complaint in writing of any person, investigate the actions of any person engaged in the business or acting in the capacity of a real estate licensee within this state, and he or she may temporarily suspend or permanently revoke a real estate license at any time where the licensee, while a real estate licensee, in performing or attempting to perform any of the acts within the scope of this chapter has been guilty of any of the following: [¶] . . . [¶](f) Claiming, demanding, or receiving a fee, compensation or commission under any exclusive agreement authorizing or employing a licensee to perform any acts set forth in Section 10131 for compensation or commission where the agreement does not contain a definite, specified date of final and complete termination."
Section 10131 defines the term "real estate broker" as follows: "A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others: . . .
(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity. . . ."
Jones concedes that "many courts have found Dale's holding unduly harsh and have refused to deprive brokers of commissions entirely; they have allowed recovery in some instances. (E.g., Wilson v. Stearns (1954) 123 Cal.App.2d 472; Nichols v. Boswell-Alliance Construction Corp. (1960) 181 Cal.App.2d 584; Babcock v. Houston (1973) 33 Cal.App.3d 858; Schaffter v. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745.)" According to Jones, however, such cases are distinguishable because "the broker's recovery is limited to commissions earned before the contract was terminated," but "Argent did not obtain any of the construction loans, permanent financing or sales on the projects for which it claimed commissions." Because Jones ignores the terms of the agreements he signed, which specifically provided for "deferred" fees payable to Argent upon placement of construction and permanent financing or sale in exchange for the funds Argent provided at the time the agreements were executed, he is mistaken.
Jones himself testified to the atypical borrower-lender relationship he had with Siegel, recounting how they would regularly meet at the beach on Saturdays and Sundays to walk and discuss his "big picture" view for his various projects and to work out the terms for each deal. According to Siegel, it was Jones who proposed the "deferred" compensation arrangement documented in the various exhibits produced at trial as it served Jones's purposes; he sought 100 percent financing, with no equity and no collateral of his own. He conceded he tried but could not find another lender to help him proceed with his projects. "Buyers can choose from many kinds of secured real property loans. (Indeed, creativity in real property financing is virtually unlimited.) The structure of financing varies dramatically from lender to lender." (Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2010) ¶ 6:35, p. 6-5, italics added.)
As the trial court observed, the contracts relating to Arrezo, Tuscany, Positano and the office building did not grant Argent the exclusive right to procure financing within the meaning of Business and Professions Code section 10176, and even as to the Genoa Project, which did specify Argent had the exclusive right to procure financing, Argent proceeded under the provision stating Argent was entitled to its percentage even if Jones and its entities obtained their own financing.
Further, as stated in Nichols v. Boswell-Alliance Constr. Corp., supra, 181 Cal.App.2d at page 587, "the harsh rule of Dale v. Palmer, supra, . . . has been tempered by the Supreme Court. In Lewis & Queen v. N.M. Ball & Sons, 48 Cal.2d 141. . . , the court held at page 151: 'In some cases, on the other hand, the statute making the conduct illegal, in providing for a fine or administrative discipline excludes by implication the additional penalty involved in holding the illegal contract unenforceable; or effective deterrence is best realized by enforcing the plaintiff's claim rather than leaving the defendant in possession of the benefit; or the forfeiture resulting from unenforceability is disproportionately harsh considering the nature of the illegality. In each such case, how the aims of policy can best be achieved depends on the kind of illegality and the particular facts involved. (See Wilson v. Stearns, 123 Cal.App.2d 472, 481-482 additional italics.]'" (Italics added.).
In Wilson v. Stearns, supra, 123 Cal.App.2d 472, the Nichols court observed, a "real estate listing agreement lacking a definite termination date, as does ours, is nevertheless enforceable as between the parties to the extent it has been performed." (Nichols, supra, 181 Cal.App.2d at pp. 587-588.) "The fundamental purpose of the rule must always be kept in mind, and the realities of the situation must be considered. Where, by applying the rule, the public cannot be protected because the transaction has been completed, where no serious moral turpitude is involved, where the defendant is the one guilty of the greatest moral fault, and where to apply the rule will be to permit the defendant to be unjustly enriched at the expense of the plaintiff, the rule should not be applied. (Schaffter v. Creative Capital Leasing Group, supra, 166 Cal.App.4th at p. 755, quoting Wilson v. Stearns, supra, 123 Cal.App.2d at p. 282, original italics.)
As set forth in its statement of decision, the trial court performed this analysis and weighed such factors and concluded that Argent, which had provided considerable financing up front, in exchange for Jones's agreement to pay reduced fees at the time with additional compensation due at later specified dates, was entitled to be paid, rather than allowing Jones to be unjustly enriched by the numerous transactions from which he benefitted. We find no error.
To the extent Jones claims error in the trial court's decision to limit Argent's recovery to the 10-year period following the execution of the respective agreements, we find no prejudicial error. Indeed, he claims there is no substantial evidence to support the trial court's choice of this term, but Jones himself testified to a 10-year timetable in completing another of his projects.
We Reject Jones's Arguments Regarding the Trial Court's Ruling on Argent's Fraud Cause of Action.
In connection with the fraud cause of action, Jones first argues the judgment cannot stand because he cannot be liable for fraudulently procuring an illegal contract; however, we have rejected his claim that the contracts were void and unenforceable. He next contends that the evidence shows only a breach of contract and not fraud. However, as recounted in the trial court's statement of decision, the record (including Jones's own testimony on the subject) supports the trial court's further finding that Argent had established all the elements of its fraud cause of action. Regarding his challenge to the duplicative award of damages, as Argent argues, the trial court specifically provided in the judgment that Argent is not entitled to double recovery for the breach of contract and fraud determination with respect to the Arrezo Project.
The Trial Court Did Not Err in Its Determination of the Tenth Cause of Action in Argent's Favor.
In its tenth cause of action, Argent sought declaratory relief on the issue of whether it was due compensation on account of any construction loan or permanent loan for, or any sale of, the Tuscany Project. Jones and his entities claimed Argent was entitled to nothing because, according to Jones, the original note had been paid off. As reflected in the trial court's statement of decision, viewing all of the documents relating to this project together (Civil Code § 1642), the determination that the parties' agreement was repeatedly extended and the deferred compensation provisions continued is supported by the record. We find no error.
Judgment Was Properly Entered Against Jones-Mow on the Tuscany Project.
Although Jones signed the agreements relating to this project on behalf of Jones-Mow, and Jones-Mow is identified as the general partner of JM 6th Street Associates, a party to the contract, Jones says Jones-Mow is not liable for the obligations under the fourth and tenth causes of action. According to Argent, these facts subject Jones-Mow to liability. (Corp. Code, §§ 16306 (partner of general partnership is jointly and severally liable for obligations of the partnership); 15643, subd. (b).) Jones says the general rule of 16036 does not apply and section 15643 was repealed six months before judgment was entered in this case. This argument apparently was never presented to the trial court, and the argument is only raised in passing in this appeal without discussion of Jones-Mow's status in relation to the Corporations Code provisions cited by Argent. We reject Jones's cursory argument raised for the first time on appeal.
DISPOSITION
The judgment is affirmed. Argent is entitled to its costs of appeal.
WOODS, J.
We concur:
PERLUSS, P. J.
JACKSON, J.