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Clymer v. Champagne

California Court of Appeals, Fourth District, First Division
May 12, 2009
No. D051833 (Cal. Ct. App. May. 12, 2009)

Opinion


DANA CLYMER et al., Plaintiffs and Appellants, v. ANN MARIE CHAMPAGNE et al., Defendants and Respondents. D051833 California Court of Appeal, Fourth District, First Division May 12, 2009

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of San Diego County, No. GIN44219, Thomas P. Nugent, Judge.

McDONALD, J.

Plaintiff Dana Clymer attempted to purchase a residence owned by defendants Ann Marie Champagne and Richard Champagne (together the Champagnes), who were then in the midst of divorce proceedings. After Clymer was unsuccessful at acquiring the residence, she (along with her real estate broker, plaintiff Home Plus Realty (HPR) (together Buyers)) filed a lawsuit against the Champagnes alleging numerous claims, including breach of contract and a series of claims sounding in fraud.

The dispute also resulted in litigation between Buyers and the Champagnes' real estate broker. In Clymer v. Pickford Realty, Ltd. (Oct. 24, 2008, D051032) (nonpub. opn.) (Clymer I), this court affirmed the judgment against Buyers and in favor of the real estate broker.

The Champagnes moved for and obtained summary adjudication on five of Buyers' claims against them. However, the court denied cross-motions seeking summary adjudication on the breach of contract claim, concluding Buyers could not obtain summary adjudication because the contract did not satisfy the statute of frauds but the Champagnes could not obtain summary adjudication because there were triable issues of fact on whether they were estopped to assert the statute of frauds defense.

Buyers moved for a jury trial on all remaining issues, including whether the Champagnes were equitably estopped from relying on the statute of frauds. The court denied the motion, and instead ordered that the issue of equitable estoppel would be tried first to the court and would be limited to whether Buyers could demonstrate the Champagnes were equitably estopped from relying on the statute of frauds either because Buyers had suffered unconscionable injury or the Champagnes had been unjustly enriched. After Buyers' opening statement summarized their evidence on these issues, the Champagnes moved for nonsuit, which the court granted. Judgment was thereafter entered for the Champagnes.

On appeal, Buyers assert the court erred in granting summary adjudication on their fraud-based claims, and erred when it bifurcated the trial and subsequently granted nonsuit on Buyers' contract claim.

RELEVANT UNDISPUTED FACTS

A. The Property

In August 2004, the Champagnes, then married, acquired title to certain realty in Rancho Santa Fe, California (the Property). Richard signed the documents to purchase the Property in his name and on behalf of Ann pursuant to a power of attorney granted to him by Ann. However, by November 2004, Ann filed for divorce.

Richard was apparently able to sign Ann's name on the documents necessary to acquire the Property because Ann had given him a general Power of Attorney. Whether that power of attorney remained effective through March of 2005, notwithstanding the dissolution proceedings (see Prob. Code, § 4154), is not revealed in this record.

B. The Listing and Initial Offer

In January 2005, in apparent contemplation of the marital dissolution proceedings, the Champagnes signed a listing agreement with a realtor that listed the Property for sale for a price between $3 million and approximately $3.5 million.

Sometime in early March, Clymer learned the Property was listed on the Multiple Listing Service (MLS). She contacted Lawless, the Champagnes' real estate agent, and made an appointment to see the Property. Either prior to or during Clymer's initial visit, Lawless told Clymer the Champagnes were in the midst of a divorce proceeding.

On March 10, HPR (acting as Clymer's real estate agent) submitted an offer by Clymer to purchase the Property for the price of $2.4 million. The written offer was later amended at Lawless's request to provide that both Ann and Richard were required to sign the acceptance. Neither Ann nor Richard signed an acceptance of the offer before it expired.

C. The Initial Counteroffers

Richard directed Lawless to respond to Clymer's initial offer with a counteroffer (Counteroffer No. 1). On March 11, 2005, Lawless faxed a counteroffer (signed only by Richard and accompanied by a fax cover sheet and memorandum) to HPR, Clymer's agent. The fax cover sheet stated: "Attached Is Counter Offer # 1 + Accompanying Memo Relating [To Ann's] Signature Requirement +/or the Presiding Court's Authorization." The "accompanying memo" stated, in part, that "The purpose of this memo is to inform [Buyers] that Richard... has instructed me to prepare and submit the following Counter Offer #1.... [¶] The information contained herein is subject to the approval and written authorization of [Ann] and/or the presiding court in the matter of the divorce proceeding between [Richard and Ann]." Later that day, Lawless faxed "Counter Offer 1A," which advised Clymer that it "replaces Counter Offer 1 & Memo." Counteroffer No. 1A (again signed only by Richard) and the accompanying memo was essentially identical to Counteroffer No. 1 except that Counteroffer No. 1A added, as an express term within the body of the counteroffer, that "Final Acceptance of this counter offer is subject to written approval of [Ann] or court order." Clymer did not accept either Counteroffer No. 1 or Counteroffer No. 1A.

D. Counteroffer No. 1B

The final counteroffer transmitted by Lawless to Buyers was faxed on March 17. That counteroffer (Counteroffer No. 1B), again signed only by Richard, provided that Richard was willing to accept the original offer price of $2.4 million subject to certain conditions. However, it also specified it would expire and be deemed revoked unless the counteroffer was signed as accepted by Clymer and a copy of the signed counteroffer was personally received by the Champagnes not later than March 18, 2005, at 2:00 p.m. Unlike Counteroffers Nos. 1 and 1A, Counteroffer No. 1B was not accompanied by a memo explicitly stating it was subject to Ann's approval. However, Buyers admitted they had previously understood both Ann and Richard needed to sign the contract before it would be binding.

Richard neither signed Ann's name to Counteroffer No. 1B nor placed anything within it indicating that he was signing it on her behalf. Indeed, Richard understood that after the divorce was filed all powers of attorney from Ann had become null and void.

Although Clymer signed Counteroffer No. 1B, and denoted that her signature was affixed at 2:00 p.m. on March 18, the fax transmittal line sending the acceptance from HPR's fax machine showed it was sent to Lawless's fax number nearly three hours after the 2:00 p.m. deadline. (Clymer I, supra, D051032 at p. 5.)

E. Subsequent Events

Sometime on March 18, Lawless received a letter from Ann's divorce attorney (Mr. Childers) stating in part that "it appears the reasonable and prudent course of conduct is for Ann... to agree to the offer at $2.4 million.... [¶]... [¶] On behalf of my client, [Ann], she agrees to sign the offer as written at $2.4 million.... I will provide [Ann] the contract documents you have faxed to me for signature on Monday, March 21, 2005. Thereafter, I will FedEx those documents back to you directly." Childers testified he was not authorized to execute any documents on Ann's behalf. Lawless thereafter provided copies of that letter to Buyers.

The following day, Clymer (along with her mother and HPR's representative) met with a loan broker to fill out a loan application, and also visited the Property. The following Monday, Clymer also spent time with her daughter exploring the local schools and the neighboring town.

At some point, HPR also tendered to Lawless a check for the deposit into escrow for the Property. However, there is no evidence the check was ever negotiated or any escrow instructions were ever prepared.

On the afternoon of March 21, Lawless informed Buyers that Ann was unwilling to sell the Property to Clymer at the $2.4 million price, and HPR informed Lawless that Clymer would not pay more than $2.4 million. Within two days, Buyers had hired attorneys who demanded that Ann and Richard sell the Property on the terms contained in the counteroffer Clymer purported to accept on March 18. Additional communications between the parties during the ensuing seven weeks did not resolve their dispute and Buyers filed the present lawsuit. The Property was ultimately sold to a different buyer in May 2005.

The precise content of the conversation between Lawless and HPR's representative, Mr. Murray, was disputed. According to Murray, Lawless stated the judge in the divorce proceeding had personally instructed Lawless to obtain a higher price, and Lawless therefore tried to get Clymer to pay $2.5 million, but Murray replied that Clymer already had a contract to buy the Property. Lawless denied stating she had personally spoken with the judge in the divorce proceeding. Lawless averred that Childers asked her to remain available by telephone in case the judge handling the hearing on the divorce wanted information about the sale of the Property, but no telephone contact occurred. After that hearing, Lawless was told by Childers that Ann would not sign the contract, and Lawless relayed that information to Murray, to which Murray replied that Clymer would be "passing" on the Property and would instead be looking at other properties. (Clymer I, supra, D051032, at pp. 6-7 & fn. 5.)

Among the communications during that period was an April 21, 2005, letter from the attorneys for the Champagnes offering to sell the Property for $2.4 million on the same terms and conditions as were contained in Counteroffer No. 1B, with an appropriate adjustment of dates (including the closing date) to mirror the time frames contained in Counteroffer No. 1B. That offer specified Clymer must accept the offer by 5:00 p.m. on April 22. The following day, the Champagnes (through their attorneys) agreed to extend the deadline to noon on April 23, but specified the signing date (for purposes of calculating the dates for closing and other deadlines) would be deemed to be April 22, 2005. Although Clymer purported to accept this offer by an April 23 letter, her acceptance specified that "the signing date for purposes of calculating the dates [will] be April 25, 2005." (Clymer I, supra, D051032.) The Champagnes' attorneys rejected Clymer's purported acceptance, both because it was untimely received and because it set forth a modified term by changing the date from April 22, 2005, to April 25, 2005.

II

PROCEDURAL BACKGROUND

A. The Lawsuit

Buyers' action pleaded claims against the Champagnes for breach of contract, alleging Richard signed Counteroffer No. 1B for himself and also for Ann under the authority of a July 22, 2004, Power of Attorney. Buyers alleged Clymer's timely and unconditional March 18, 2005, acceptance of Counteroffer No. 1B therefore created an enforceable contract to acquire the Property or, alternatively, that a contract was formed when Clymer accepted the Champagnes' April 21 offer. The complaint sought damages from the Champagnes for breach of that contract. Buyers also pleaded a series of fraud-based claims against the Champagnes, including claims styled as causes of action for fraud, intentional misrepresentation, negligent misrepresentation, and concealment.

The Champagnes moved for summary judgment or, alternatively, for summary adjudication as to each of Buyers' claims. The court granted summary adjudication in the Champagnes' favor as to all of Buyers' fraud-based claims. However, the court denied summary adjudication on the contract claim because the court found that whether Buyers could maintain their contract claim notwithstanding the statute of frauds defense involved a triable issue of fact on whether the Champagnes were estopped to rely on the statute of frauds. The court subsequently agreed with the Champagnes that the estoppel issue should be bifurcated from the remaining contract issues and tried to the court before any jury trial on the remaining issues and, after Buyers' opening statement summarized their evidence on the estoppel issue, the court granted the Champagnes' nonsuit motion on the contract claim. The court entered judgment in the Champagnes' favor, and this appeal followed.

On appeal, Buyers argue the court erred by granting summary adjudication on their fraud claims, and erred when it bifurcated trial and granted nonsuit on their contract claim.

On appeal, Buyers also assert it was error to grant judgment against HPR on its separate cause of action seeking to recover its commission. However, Buyers do not articulate any basis for concluding HPR's separate cause of action would remain viable even were judgment properly entered against Clymer on her contract claim. Indeed, because that theory was apparently not articulated below, we need not further consider it for the first time on appeal. (DiCola v. White Brothers Performance Products, Inc. (2008) 158 Cal.App.4th 666, 675-676.) Accordingly, we do not evaluate HPR's claim separately from Buyers' contract claims.

III

SUMMARY ADJUDICATION ON THE FRAUD CLAIMS

The court granted summary adjudication in the Champagnes' favor as to all of Buyers' fraud-based claims. Buyers assert there were triable issues of fact as to the viability of their fraud-based claims, and therefore this ruling was error.

A. The Fraud-Based Claims

Buyers' fraud-based claims did not rely on any specific misrepresentations by the Champagnes, but were instead premised on alleged misrepresentations by the Champagnes' realtors (the realtor fraud) and the Champagnes' attorneys (the attorney fraud).

Although Buyers' complaint is not a model of clarity, it appears they sought to hold the Champagnes liable for the alleged misrepresentations and/or concealments of the Champagnes' realtors or attorneys either under respondeat superior principles or because the Champagnes conspired with their agents to perpetrate the alleged fraud on Buyers.

As to the realtor fraud, the complaint first alleged that, on March 21, Lawless misrepresented that the judge in the Champagnes' divorce proceedings had directed Lawless to obtain a higher price for the Property. Second, the complaint alleged Lawless's calls to an escrow company, advising it to hold off proceeding with escrow activities and subsequently terminating further action by the escrow company to consummate the transaction, constituted actionable misrepresentations. Finally, the complaint alleged Lawless made entries on the Multiple Listing Service that were actionable misrepresentations.

As to the alleged misrepresentations by the Champagnes' attorneys, Buyers first alleged the March 18, 2005, letter from Ann's divorce attorney (Childers) constituted a misrepresentation by Childers that Ann would consent to the contract. Second, they alleged Richard's attorney (Lewis) made verbal misrepresentations on March 30 and April 6 that affirmed the Champagnes would sell the Property to Clymer, but on April 12 repudiated that representation. Finally, Buyers alleged an April 21, 2005, letter from the Champagnes' attorneys again misrepresented that the Champagnes would sell the property to Clymer, and the Champagnes' attorneys misrepresented on April 19, 2005, that the dispute had caused the Champagnes to lose the opportunity to sell the Property to another buyer at a substantially higher price.

B. The Realtor Misrepresentations

In Clymer I, this court examined Buyers' claims against the Champagne's realtors that arose out of the same set of facts, and affirmed the entry of summary judgment in favor of the realtors on Buyers' fraud-based claims founded on the identical alleged misrepresentations that Buyers also rely on to support their claims against the Champagnes. The judgment in Clymer I is res judicata on Buyers' fraud-based claims insofar as those claims were premised on the alleged misrepresentations of the Champagnes' realtors. (Bernhard v. Bank of America (1942) 19 Cal.2d 807, 812-813 [judgment against plaintiff in favor of agent is res judicata in subsequent claim by plaintiff against principal for the same injuries].)

Buyers' reply brief on appeal argued the judgment in Clymer I was not res judicata because they had petitioned for review to the Supreme Court and therefore this court's opinion was not final. However, because that petition for review was denied, this court's opinion in Clymer I is now final.

C. The Attorney Misrepresentations

Each of the pleaded attorney representations was, in essence, an allegation that the Champagnes' attorneys represented the Champagnes would agree to sell the Property to Clymer. A fraud claim requires evidence (1) the defendant made a representation of fact, (2) that he or she knew to be false, (3) and was made with the intent to induce reliance by the plaintiff, (4) the plaintiff actually and justifiably relied on the representation, and (5) there was resulting injury from the reliance. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) We conclude the trial court correctly granted summary adjudication on Buyers' fraud claims, insofar as they were based on the attorney representations.

For example, Buyers alleged Childers's March 18 letter to Lawless stating it appeared "reasonable and prudent" for Ann to agree to sell for $2.4 million, Ann "agrees to sign the offer as written at $2.4 million," and he would give the contract documents to Ann for signature and would thereafter FedEx the documents back to Lawless was a fraudulent representation. Similarly, Buyers alleged as additional fraudulent representations that the Champagnes' attorneys at various times thereafter (e.g. verbally on March 30 and April 6, and in writing on April 21, 2005) represented the Champagnes would sell the property to Clymer.

First, as to Childers's letter, he represented only that Ann would sign the offer as written. Ordinarily, a prediction of future events is not a representation of fact that supports a fraud claim. (See generally Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells (2000) 86 Cal.App.4th 303, 309-310 [actionable misrepresentation must be made about past or existing facts; statements regarding future events are merely deemed nonactionable opinions].) Moreover, even if this statement could serve as a representation of fact, there is no evidence the damages claimed by Buyers were caused by their reliance on Childers's statement. In Buyers' complaint, as well as in their opposition to the motion for summary adjudication of the fraud claims, they alleged detrimental reliance that Clymer "entered into the contract with Defendants with the intent to purchase the Property [but was] prevented... from purchasing the Property," and her resulting damages under the various fraud-based claims were "in the absolute minimum amount of $450,000--the amount of the additional profit Defendants made by selling the Property to a third party rather than Clymer." This loss, however, was not caused by Clymer's changing her position in reliance on Childers's statements, but by the Champagnes' refusal to sell the Property to Clymer.

Indeed, a fraud claim requires proof of actual injury, because "[d]eception without resulting loss is not actionable fraud." (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818.) There is no evidence Buyers suffered significant detriment in reliance on Childers's statement, because the only acts of reliance they identify on appeal that occurred between the time of Childers's statement and the time they learned Ann would not sign the contract were that Clymer traveled to San Diego to prepare a loan application and to visit the Property. Such detriment, in addition to being de minimus (cf. Linsk v. Linsk (1969) 70 Cal.2d 272, 280), appears to be the type of conduct preparatory to satisfying the contract and, while that detriment is potentially recoverable as harm attendant to a claim for breach of contract, would not be recoverable in a fraud action. (Service by Medallion, Inc. v. Clorox Co., at pp. 1818-1819.) Moreover, although Buyers contend it was error to find no detrimental reliance with resulting injury because the trips to San Diego showed they expended considerable time in reliance, creating cognizable damages, neither their complaint nor their opposition to the Champagnes' summary judgment motion contains any hint that this theory of injury was included within their fraud-based claims. Instead this newly minted theory, which appears contradictory to the position they took at trial, first surfaced in Buyers' opening brief on appeal and, under theory of the trial principles, may not create grounds for reversal. (See, e.g., Ernst v. Searle (1933) 218 Cal. 233, 240-241 ["[a] party is not permitted to change his position and adopt a new and different theory on appeal"]; accord, DiCola v. White Brothers Performance Products, Inc., supra, 158 Cal.App.4th at pp. 675-676 [appellate court does not consider arguments or theories not advanced by plaintiffs in the trial court when reviewing order granting summary judgment].)

The other alleged misrepresentations by the Champagnes' attorneys--alleged verbal misrepresentations on March 30 and April 6 affirming the Champagnes would sell the Property pursuant to the agreement that was later repudiated, and the April 21, 2005, letter from the attorneys representing the Champagnes would sell the Property to Clymer suffer from the same deficiencies: they were statements of opinion, and the damages Buyers pursued were the result of the failure to honor the alleged contractual obligations recoverable, if at all, in a contract action. Moreover, these subsequent alleged representations are subject to an additional problem: these discussions appear to represent efforts to settle the dispute over whether Clymer was entitled to purchase the Property. Offers of settlement cannot be used for any purpose, and the privilege has been broadly applied to prelitigation communications by attorneys. (Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903, 919.) Because the courts have concluded causes of action based on allegations that the defendant committed fraud when negotiating a settlement are within the privilege (see, e.g., Navellier v. Sletten (2002) 29 Cal.4th 82, 89-90; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1418-1420), for this additional reason Buyers' claim of fraud based on their alleged reliance on offers to settle the dispute are not viable.

On appeal, Buyers also appear to assert summary adjudication was improper because the Champagnes did not address Buyers' theories of "fraudulent breach of contract" or "fraudulent denial of contract." Neither theory was pleaded in the complaint, and neither theory raised in opposition to the summary judgment motion, and therefore those claims are waived. Moreover, the court in Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85 largely overruled Seaman's Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752 by eliminating the tort of fraudulent or bad faith breach of contract claims in the noninsurance context, "at least in the absence of violation of 'an independent duty arising from principles of tort law' [citation]" (Freeman & Mills, Inc., at p. 102), and the present alleged contract is not an insurance contract. Although Buyers assert Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 has resurrected Seaman's whenever a plaintiff alleges the defendant engaged in misrepresentations to avoid contractual liability, the holding in Robinson was narrow. Robinson merely held that when a buyer contracts to purchase specific goods but receives nonconforming goods in breach of the contract, the buyer will not be limited to contract damages if the seller represents that the goods it is supplying to the buyer conform to certain contractual specifications, the seller knows this to be false, and in reliance on the misrepresentation the buyer uses the goods and suffers consequential damages. Under those circumstances, noted Robinson, the tortious conduct is both separate from the breach itself and caused damages independent of the contractual breach. (Robinson, at pp. 989-991.) Buyers made no effort below to articulate how this matter fell within Robinson, or on appeal proffered a coherent explanation of how Robinson would save their fraud claim against the Champagnes.

D. Conclusion

We conclude the trial court properly granted summary adjudication in favor of the Champagnes on Buyers' fraud-based claims.

III

NONSUIT ON THE CONTRACT CLAIM

A. Procedural Background

Although the court granted summary adjudication in the Champagnes' favor as to all of Buyers' fraud-based claims, it denied the Champagnes' motion for summary adjudication on the contract claim, as well as Buyers' cross-motion for summary adjudication on their claim for breach of contract against the Champagnes. The court denied Buyers' motion because it was undisputed that (1) Ann did not sign Counteroffer No. 1B and (2) there was no evidence Richard had signed Counteroffer No. 1B on Ann's behalf. However, the court denied the Champagnes' cross-motion for summary adjudication on the contract claim because it found that whether Buyers could maintain the contract claim notwithstanding the statute of frauds defense involved a triable issue of fact on whether the Champagnes were estopped to rely on the statute of frauds.

Buyers thereafter moved for a jury trial, arguing (1) the issue of equitable estoppel to rely on the statute of frauds may be tried to the jury; and (2) even if equitable estoppel was an issue for the court, the issues of contract formation should be tried first to the jury before issues linked to the Champagnes' affirmative defense (of noncompliance with the statute of frauds and equitable estoppel to interpose the statute of frauds defense) would be tried. The Champagnes opposed the motion, arguing that because the court had denied the motion for summary adjudication on the contract claim solely because it had found Buyers raised a triable issue of fact on whether the Champagnes were estopped to rely on the statute of frauds, the estoppel issue should be tried to the court before any other issues were adjudicated to a jury.

The court ruled (1) Buyers were not entitled to a jury trial on the estoppel issue and the issue would be tried to the court; and (2) the court trial on the estoppel issue would be conducted first and, if necessary, jury trial would then proceed on the breach of contract claim. Thereafter, the parties stipulated to a procedure for resolving the estoppel issue. First, the Champagnes moved in limine to exclude evidence of "any basis for estoppel to assert the statute of frauds, other than detrimental reliance resulting in unconscionable injury or unjust enrichment." The trial court granted the motion, concluding equitable estoppel could only be premised on proof of either unconscionable injury or unjust enrichment rather than any of the other grounds asserted by Buyers. The parties also stipulated Buyers would then present their opening statement summarizing their evidence on unconscionable injury or unjust enrichment, and the Champagnes would move for nonsuit. After Buyers' opening statement summarized their evidence on unconscionable injury and unjust enrichment, the Champagnes moved for nonsuit, and the court granted the motion.

B. The Court Properly Denied Buyers' Demand for Jury Trial on the Estoppel Issue

Buyers argue the court committed a series of errors in connection with addressing their contract claim. First, they argue that even if the court properly ordered the estoppel issue to be bifurcated, the court erred when it (1) denied Buyers' request for a jury trial on the estoppel issue because that issue may be tried to a jury, and (2) ordered the estoppel issue be tried before any remaining contract claims. The courts have consistently held the "question of estoppel to plead the statute of frauds made by the complaint is an equitable issue" (Ford v. Palisades Corp. (1950) 101 Cal.App.2d 491, 499) to be tried to the court rather than to a jury. (Ibid; accord, Jaffe v. Albertson Co. (1966) 243 Cal.App.2d 592, 607-608; Seymour v. Oelrichs (1909) 156 Cal.782, 794, disapproved on other grounds by Sterling v. Taylor (2007) 40 Cal.4th 757, 769-770.) Buyers cite no relevant authority undermining this rule, and we conclude the court did not err in denying Buyers' request for a jury trial on the estoppel issue.

Buyers cite People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283 as supporting their request for a jury trial on the estoppel issue. However, that case merely held that an action seeking forfeiture of personal property was an action triable at common law to a jury, and is not applicable to the issue presented here.

Buyers also appear to contend the court abused its discretion in ordering the estoppel issue to be tried first. However, courts have long recognized that, when an action involves both equitable and legal issues, the so-called "equity first" rule permits the court to first resolve the equitable issues where resolution may be dispositive of the legal issues. (A-C Co. v. Security Pacific Nat. Bank (1985) 173 Cal.App.3d 462, 473; accord, Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1238 ["Where plaintiff's claims consist of a 'mixed bag' of equitable and legal claims, the equitable claims are properly tried first by the court. A principal rationale for this approach has been explained as follows: ' "When an action involves both legal and equitable issues, the equitable issues, ordinarily, are tried first, for this may obviate the necessity for a subsequent trial of the legal issues." ' "].) Here, the primary hurdle to Buyers' contract claim was that the contract, although unquestionably within the class of contracts that are unenforceable unless signed by the party to be charged, was not personally signed by Ann. Accordingly, absent evidence the Champagnes were estopped to interpose the statute of frauds, the remaining issues of breach and damages would be obviated.

Buyers argue this procedure was error because it deprived them of a jury trial on the issue of whether Ann was bound by Richard's signature (because Richard held a power of attorney for Ann) or, in the alternative, whether the contract claim could proceed solely against Richard based on his signature. We discuss those claims below.

C. Nonsuit on Buyers' Estoppel Claim Was Proper

The doctrine of estoppel to assert the statute of frauds permits enforcement of a contract, which enforcement would otherwise be barred by the statute of frauds only where (1) there would be unconscionable injury that would result from denying enforcement of the contract because the plaintiff had been induced by the other seriously to change his or her position in reliance on the contract, or (2) unjust enrichment would result if a party received the benefits of the other's performance but was allowed to rely on the statute to avoid contractual obligations. (Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623; Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 27.) Buyers assert the evidence outlined by their attorney's opening statement provided sufficient evidence that, if credited, would establish unconscionable injury to Buyers or unjust enrichment to the Champagnes, and therefore it was error to grant nonsuit on the issue of estoppel to assert the statute of frauds.

However, Buyers do not on appeal identify any evidence they suffered a substantial injury based on a serious change of their position in reliance on the contract, and our independent review of the record reveals only de minimus acts in reliance occurring in the three days between their purported acceptance of the offer until they learned Ann declined to agree to the contract. A serious change of position that results in "unconscionable injury" requires that the plaintiff's actions were unusual or extraordinary in their nature, rather than the kind of actions ordinarily undertaken by a prospective purchaser in anticipation of a possible contract to acquire the property (see, e.g., Irving Tier Co. v. Griffin (1966) 244 Cal.App.2d 852, 865), and mere loss of the benefit of the bargain from the unenforceable contract does not amount to unconscionable injury sufficient to estop the other party from interposing the statute of frauds. (See, e.g., Estate of Baglione (1966) 65 Cal.2d 192, 198.) We agree there was no evidence of unconscionable injury.

In their reply brief, Buyers assert that because they tendered $100,000 as a deposit, there is evidence from which unconscionable injury could be found. However, there is no suggestion the Champagnes retained those funds. Moreover, ordinarily even " '[t]he payment of money is not "sufficient part performance to take an oral agreement out of the statute of frauds" [citation], for the party paying money "under an invalid contract... has an adequate remedy at law." ' " (Secrest v. Security National Mortgage Loan Trust 2002 2 (2008) 167 Cal.App.4th 544, 555, quoting Anderson v. Stansbury (1952) 38 Cal.2d 707, 716.)

Buyers have also not identified the evidence to support a finding that the Champagnes would be unjustly enriched by having received the benefits of Buyers' performance. To the contrary, they received nothing from Buyers that the Champagnes retained to their unjust enrichment, and Buyers raise no claim to the contrary. Accordingly, we conclude the trial court, after hearing and evaluating Buyers' opening statement, properly granted the Champagnes' motion for nonsuit on the estoppel issue. (Nelson v. Specialty Records, Inc. (1970) 11 Cal.App.3d 126, 141 [court may grant nonsuit based on opening statement summarizing evidence by plaintiff].)

D. The Nonsuit Was Proper on the Other Contract Issues

Buyers appear to argue the court erroneously granted the motion for nonsuit because there was some evidence from which a jury could have concluded Ann was bound by the contract because the statute of frauds was actually satisfied. Buyers appear to assert that a jury could have found any one of four different persons (Richard, Childers, Lawless, or attorney Kurz) gave written approval to the contract on Ann's behalf as her authorized agent, and therefore the order granting nonsuit was error insofar as it was based on the implied conclusion that the contract embodied in Counteroffer No. 1B did not satisfy the statute of frauds. We conclude, for the reasons discussed below, the nonsuit was proper because the statute of frauds was not satisfied.

The Champagnes argue the collateral estoppel effect of our judgment in Clymer I provides an independent ground for affirming the nonsuit. In Clymer I, this court discussed whether Lawless could be liable for interfering with the contract and concluded, in part, there was no evidence Clymer timely accepted Counteroffer No. 1B, creating a valid contract with which Lawless could have interfered. (Clymer I, supra, D051032, at pp. 18-20.) Where the collateral estoppel effect of a judgment validates the prior grant of a nonsuit, the court will uphold the nonsuit order. (See, e.g. Zeppi v. Beach (1964) 229 Cal.App.2d 152, 160-161.) However, to obviate any concern that this court's discussion of an alternative ground in Clymer I for rejecting Buyers' interference claim against the realtors (Clymer I, supra, D051032, at pp. 20-21) might undermine its collateral estoppel effect as to the propriety of the nonsuit on Buyers' contract claims (see generally Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82-88), we discuss the other reasons that convince us the nonsuit was proper.

Richard

Buyers' principal assertion was that Richard signed Counteroffer No. 1B and, because he held a power of attorney for Ann, his signature constituted Ann's signature. However, it is undisputed Richard neither signed Ann's name to Counteroffer No. 1B nor placed anything within it suggesting that he was signing it on her behalf. Although Buyers assert Richard's signature alone was sufficient to bind Ann because of his power of attorney, Richard's signature did not denote he was signing for Ann under a power of attorney. Civil Code section 1095 (section 1095) specifically provides that "[w]hen an attorney in fact executes an instrument transferring an estate in real property, he must subscribe the name of his principal to it, and his own name as attorney in fact." Although Buyers assert this provision only applies to deeds, section 1095 refers to any "instrument transferring an estate in real property." The courts have long held that " '[t]he words "real property" are co-extensive with lands, tenements, and hereditaments. [Citation.] Land also embraces all titles, legal or equitable, perfect or imperfect [citation], including such rights as lie in contract--those which are executory as well as those which are executed.' " (Lynch v. Cunningham (1933) 131 Cal.App. 164, 173-174, quoting Fish v. Fowlie (1881) 58 Cal. 373, 375, italics added.) Because a contract for sale of real property transfers to the buyer the equitable title to the land (see Estate of Dwyer (1911) 159 Cal. 664, 675), a contract to sell real property is an "instrument transferring an estate in real property," to which section 1095 applies.

To the contrary, Richard's testimony was that he believed, after the divorce was filed, all powers of attorney became null and void. Our analysis presumes the power of attorney remained valid despite the divorce proceedings. (But see Prob. Code, § 4154.)

Buyers rely on Sunset Milling & Grain Co. v. Anderson (1952) 39 Cal.2d 773 to argue that section 1095 applies only to deeds, and contracts to sell real property are governed by the more general provisions of Civil Code section 2337. However, Sunset Milling did not involve a contract to sell real property. Moreover, even if Civil Code section 2337 did govern, Buyers' claim would still fail. Section 2337 states that "[a]n instrument... by which the agent intends to bind his principal, does bind him if such intent is plainly inferable from the instrument itself." First, the only evidence was that Richard did not intend his signature to bind Ann, and Buyers cite no evidence impeaching Richard's intent. More importantly, section 2337 specifies the intent must be "plainly inferable from the instrument itself." There is nothing in the instrument itself suggesting Richard, by signing individually, plainly manifested his intent that he was signing for himself and for Ann as her attorney-in-fact, and there is no evidence Clymer understood Richard had intended his signature was both for himself and for Ann as her attorney-in-fact.

Moreover, when a court interprets a contract, the goal is to determine and effectuate the mutual intent of the parties at the time the contract was formed (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955), and when the parties intend that a party's signature on the contract is required, the contract is not formed until the signature is affixed to the contract. (See, e.g., Stromer v. Browning (1966) 65 Cal.2d 421, 427, fn. 2; Fugate v. Cook (1965) 236 Cal.App.2d 700, 703.) In every prior iteration of the counteroffer, the parties expressed their clear understanding that Richard's signature was not intended to bind Ann, but instead that Ann's signature was required, because the documents explicitly stated the offer was subject to written approval by Ann or by court order. (Tennant v. Wilde (1929) 98 Cal.App. 437, 444 [court may consider correspondence leading up to the execution of the agreement to interpret parties' intent].) Indeed, Buyers admitted they had no basis to believe Richard could sign on Ann's behalf because they were unaware of the power of attorney at the relevant times.

Moreover, this mutual intent and understanding--that Richard's signature on Counteroffer No. 1B did not constitute Ann's signature--was confirmed when Buyers received Childers's letter (stating Ann "agrees to sign the offer" and would be signing the contract documents) but raised no objection that Ann's signature had already been affixed to the contract by Richard. As explained by the court in Universal Sales Corp. v. Cal. etc. Mfg. Co. (1942) 20 Cal.2d 751, 761-762, "when a contract is ambiguous, a construction given to it by the acts and conduct of the parties with knowledge of its terms, before any controversy has arisen as to its meaning, is entitled to great weight, and will, when reasonable, be adopted and enforced by the court. [Citations.] The reason underlying the rule is that it is the duty of the court to give effect to the intention of the parties where it is not wholly at variance with the correct legal interpretation of the terms of the contract, and a practical construction placed by the parties upon the instrument is the best evidence of their intention." (Accord, Kennecott Corp. v. Union Oil Co. (1987) 196 Cal.App.3d 1179, 1189 ["[t]he conduct of the parties after execution of the contract and before any controversy has arisen as to its effect affords the most reliable evidence of the parties' intentions"]; Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 754.) The absence of any contemporaneous objection by Clymer that Ann had already signed the contract persuades us the parties understood Richard's signature was not intended to include Ann's signature.

We conclude, both as a matter of statutory law under section 1095 and as a matter of interpreting the intent of the parties, Richard's signature on Counteroffer No. 1B did not bind Ann for purposes of satisfying the statute of frauds.

Buyers argue on appeal that, even if the nonsuit was proper as to Ann, it was improper as to Richard because the contract was enforceable against Richard because he signed the contract. However, Buyers' complaint alleged no separate claim solely against Richard, and Buyers have not on appeal identified where this theory was asserted in any other form in the trial court proceedings. Accordingly, it may not be raised on appeal. (DiCola v. White Brothers Performance Products, Inc., supra,158 Cal.App.4th at pp. 675-676.)

The Other Agents

Buyers also assert that, even if Richard's signature was inadequate, the signatures by Lawless, Childers and/or Kurz satisfied the statute of frauds. Although each claim suffers from its own individualized infirmities, all share a common deficiency: Buyers have identified no facts that would satisfy the "equal dignities" rule. Civil Code section 2309 provides: "An oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing can only be given by an instrument in writing." (Italics added.) This statute, known as the "equal dignities rule," requires that the agent have written authority to bind his or her principal upon any agreement within the class of contracts covered by the statute of frauds or other sections that make a writing necessary. (O'Banion v. Paradiso (1964) 61 Cal.2d 559, 563.)

Buyers did not proffer below, and have not identified on appeal, any evidence that either Childers or Kurz had written authority from Ann to execute a contract to sell the Property on her behalf, which is fatal to Buyers' theory that the statute of frauds was actually satisfied by their signatures. Buyers do appear to assert on appeal, however, that the equal dignities rule was satisfied as to Lawless by virtue of the written listing agreement between Ann and Lawless. However, Buyers cite no authority suggesting a standard listing agreement with a real estate broker authorizes the broker to sign on behalf of his or her principal, and the rule is to the contrary. As explained in Holway v. Malloy (1945) 70 Cal.App.2d 317, in which the court reversed a judgment awarding the buyer specific performance, a broker's listing agreement was "merely authorizations to the broker to find a purchaser or purchasers for the property. Authority given to a broker 'to sell' real property, in listing it for sale, only authorizes him to find a purchaser; it relates to the services to be performed by the agent in order to earn the agreed compensation and does not make him the agent of the owner to enter into a contract of sale. This is a well established canon of the law of real property." (Id. at p. 319.) In Mason v. Mazel (1947) 82 Cal.App.2d 769, 773, the court reaffirmed that a listing agreement ordinarily provides the agent the limited authority to market the property, and the agent " 'has no power to bind his principal by a contract of sale unless it appears that it was intended to confer such additional authority.' [Quoting Stemler v. Bass (1908) 153 Cal. 791, 795.] An intention to give such an agent additional authority, such as to bind the owner to convey the property, must be clearly and definitely stated. [Citation.]... 'The rule deduced from the authorities with regard to the power... of agents to execute contracts of sale of real property for the owners thereof is... if such authority is intended to be conferred, the language used in conferring it should be so clear, distinct and certain in its meaning to that end as to leave no room for doubting that such is its purpose.' [Quoting Church v. Collins (1912) 18 Cal.App. 745, 748.]" In this case, Buyers cite no evidence that the listing agreement between Ann and Lawless was anything more than an ordinary listing agreement, much less that it contained "clear, distinct and certain" language authorizing Lawless to bind Ann under the statute of frauds.

We conclude there was no evidence that, even if Lawless, Childers and/or Kurz had purported to sign a contract to sell the Property on Ann's behalf, the equal dignities rule would have precluded a trier of fact from concluding the statute of frauds was satisfied.

E. Conclusion

We conclude the order granting nonsuit was proper because there was no evidence from which a trier of fact could have concluded the statute of frauds was actually satisfied or the Champagnes were estopped from relying on the statute of frauds.

DISPOSITION

The judgment is affirmed. The Champagnes are entitled to costs on appeal.

WE CONCUR, McCONNELL, P. J., O'ROURKE, J.


Summaries of

Clymer v. Champagne

California Court of Appeals, Fourth District, First Division
May 12, 2009
No. D051833 (Cal. Ct. App. May. 12, 2009)
Case details for

Clymer v. Champagne

Case Details

Full title:DANA CLYMER et al., Plaintiffs and Appellants, v. ANN MARIE CHAMPAGNE et…

Court:California Court of Appeals, Fourth District, First Division

Date published: May 12, 2009

Citations

No. D051833 (Cal. Ct. App. May. 12, 2009)