Summary
In Hitz v. Meltzner (June 23, 2011, B222882) [nonpub. opn.] (Hitz I), we reversed in part, affirmed in part, and remanded the matter for a new trial on Hitz's claim for a commission pursuant to the La Tienda Broker Agreement.
Summary of this case from Hitz v. Alta Investment CompanyOpinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. LC081919, Richard B. Wolf, Judge.
Gray. Duffy and Kevin H. Park for Plaintiff and Appellant.
Law Offices of Richard P. Keavney and Richard P. Keavney for Defendants and Respondents.
J. ASHMANN-GERST
Jeffrey K. Hitz doing business as Level One Commercial Real Estate Services (Hitz) sued Alta Investment Company (Alta) for failing to pay broker commissions on two transactions. In addition, Hitz sued Sidney Meltzner (Meltzner), Lionel B. Sanders (Sanders), USA Rancho Conejo LLC (USA), Vincent Hall (Hall), Sam Wagner (Wagner) and TOLD Partners, Inc. (TOLD) for intentional interference with contractual relations. Hitz did not prevail on any of his claims and now appeals the judgment. We reverse in part and affirm in part.
FACTS
The first transaction
Alta owns commercial property located on La Tienda Drive in Westlake Village (La Tienda property). It works with Meltzner as a consultant and employs Sanders as its certified public accountant. The La Tienda property is adjacent to Oaks Christian School (Oaks Christian). Beginning in 2003, Oaks Christian expressed interest in buying or leasing the La Tienda property, but Alta was never able to consummate a deal. In September 2006, Meltzner selected Hitz as the exclusive broker for the La Tienda property. Meltzner told Hitz that Oaks Christian was off limits.
Alta and Hitz executed a standard owner-agency agreement for the sale or lease of property (La Tienda Agreement) on a form created by the AIR Commercial Real Estate Association (AIR). The AIR form obligated Alta to pay Hitz a commission for the sale or lease of the La Tienda property pursuant to a schedule of commissions except as modified by section 7.1 of the La Tienda Agreement. Under section 7.1, transactions involving excluded parties were classified as excluded transactions. Excluded transactions triggered alternative payment terms. If an excluded transaction transpired in the first 30 days after the La Tienda Agreement was executed, then Hitz was limited to a commission equal to his out-of-pocket expenses. After 30 days, he was limited to half his regular commission. In an addendum, Alta identified Oaks Christian as excluded per section 7.1. The term of the agreement was December 1, 2006, to May 30, 2007.
We sometimes refer to the commission called for by section 7.1 of the La Tienda Agreement as a reduced commission.
On March 22, 2007, Hitz contacted Oaks Christian regarding a potential lease of the La Tienda property. When Meltzner learned of this contact, he was very upset. He instructed Hitz not to speak to Oaks Christian because it was an excluded party and told him to concentrate on finding other potential tenants. In April 2007, Sanders met with officials from Oaks Christian to discuss a lease. They eventually worked out a deal.
Oaks Christian signed a letter of intent and paid a nonrefundable deposit of $150,000. In 2008, Oaks Christian leased the La Tienda property. Hitz was never paid a commission.
The second transaction
John Moller (Moller), the owner of property at 905 Rancho Conejo Boulevard in Thousand Oaks, California (905 property), hired TOLD as an exclusive broker to sell the 905 property. Hall owned a majority of TOLD’s stock. Wagner was a TOLD agent.
According to the trial court’s statement of decision, Moller is a principal of USA and USA owned the 905 property.
Alta offered to purchase the 905 property for $6 million. In the offer, Hitz was listed at Alta’s broker. Alta agreed to use Hitz’s services for any transaction involving the 905 property for one year (905 Agreement). Moller did not accept Alta’s offer.
Eventually, Moller agreed to lease the 905 property to Condor Pacific Industries of California, Inc. (Condor Pacific) with an option to purchase for $6.825 million. Condor Pacific is Meltzner’s company. Moller paid TOLD $73,165 and designated the payment as a leasing commission. The option to purchase was assigned to Alta. It exercised the option and purchased the 905 property in August 2009. As a result, TOLD received a commission of $175,000 (but $73,165 was deducted). Hitz was not immediately paid a commission for Alta’s purchase of the 905 property.
The lawsuit
Hitz sued Alta and others on claims arising out of the two transactions. Alta eventually paid Hitz a $175,000 commission for the purchase of the 905 property. At trial, Hitz argued that Alta breached the La Tienda Agreement by failing to pay a $597,732 commission and breached the 905 Agreement by failing to pay a leasing commission. Hitz claimed that Meltzner and Sanders interfered with the La Tienda Agreement, and that USA, Hall, Wagner and TOLD interfered with the 905 Agreement.
The trial court issued a statement of decision and concluded that Hitz was not entitled to a commission for the sale of the La Tienda property or a commission related to the 905 property. In addition, the trial court concluded that there was no merit to the claims for intentional interference with contractual relations. Judgment was entered against Hitz on all his claims.
This timely appeal followed.
DISCUSSION
I. The First Transaction.
Hitz contends that the trial court erred when it interpreted the La Tienda Agreement. We agree.
A. Relevant law.
A contract must be interpreted in a manner that gives effect to the mutual intent of the parties if that intent can be ascertained. (Civ. Code, § 1636.) The language of a contract governs interpretation “if the language is clear and explicit, and does not involve an absurdity.” (Civ. Code, § 1638.) When a contract is written, its meaning must be ascertained from the writing alone, if possible. (Civ. Code, § 1639.) “When, through fraud, mistake, or accident, a written contract fails to express the real intention of the parties, such intention is to be regarded, and the erroneous parts of the writing disregarded.” (Civ. Code, § 1640.) The whole of a contract must be construed together in order “to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Civ. Code, § 1641.) Words shall be understood in their ordinary and popular sense “unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.” (Civ. Code, § 1644.) “Technical words are to be interpreted as usually understood by persons in the profession or business to which they relate, unless clearly used in a different sense.” (Civ. Code, § 1645.) “A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.” (Civ. Code, § 1647.) Further, case law establishes that the “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.” (Kennecott Corp. v. Union Oil Co. (1987) 196 Cal.App.3d 1179, 1189.)
“‘Where the meaning of the words used in a contract is disputed, the trial court must provisionally receive any proffered extrinsic evidence which is relevant to show whether the contract is reasonably susceptible of a particular meaning. [Citations.] [I]t is reversible error for a trial court to refuse to consider such extrinsic evidence on the basis of the trial court’s own conclusion that the language of the contract appears to be clear and unambiguous on its face.... [Citations.]’” (Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1350-1351, fn. omitted.) The decision whether to admit extrinsic evidence “‘involves a two-step process. First, the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine “ambiguity, ” i.e., whether the language is “reasonably susceptible” to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is “reasonably susceptible” to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step—interpreting the contract. [Citation.]’” (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1267, citing Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.)
We analyze a contract “de novo where ‘(a) the trial court’s contractual interpretation is based solely upon the terms of the written instrument without the aid of extrinsic evidence; (b) there is no conflict in the properly admitted extrinsic evidence; or (c) the trial court’s determination was made on the basis of improperly admitted incompetent evidence. [Citation.]’ [Citations.]” (Warburton/Buttner v. Superior Court (2002) 103 Cal.App.4th 1170, 1180.) But if interpretation turns upon the credibility of conflicting extrinsic evidence, an appellate court must determine whether the interpretation is supported by substantial evidence and then uphold that interpretation if it is reasonable. (Ibid.) There is no conflict in extrinsic evidence when the facts are undisputed but nonetheless give rise to competing inferences. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866, fn. 2 [“it is only when conflicting inferences arise from conflicting evidence, not from uncontroverted evidence, that the trial court’s resolution is binding”].)
B. The contractual language.
Pursuant to section 2.1 of the La Tienda Agreement, Alta employed Hitz as its sole and exclusive agent to represent Alta to find buyers or lessees. In particular, section 2.1 provided: “All negotiations and discussions for a Transaction shall be conducted by [Hitz] on behalf of [Alta].”
Section 5.1 of the La Tienda Agreement provided that Alta shall pay Hitz an “[a]greed [c]ommission” for a transaction whether it “is consummated as a result of the efforts of [Hitz], [Alta], or some other person or entity.” The agreed commission was payable if a lease was executed or if a lessee was procured who was ready, willing and able to lease the La Tienda property on the terms stated in the La Tienda Agreement. Alternatively, it was payable if Alta removed or withdrew the La Tienda property from the transaction or the market; if Alta acted as though the property was not available for a transaction; or if Alta breached, terminated, canceled or repudiated the La Tienda Agreement. The amount of commission was set forth in a schedule of commissions.
In Section 7.1 of the La Tienda Agreement, the parties agreed to the following terms: “[Alta] shall, within five business days after the date hereof, provide [Hitz], in writing, with the names of those persons or entities registered with [Alta] by any other broker under any prior agreement concerning [the La Tienda property] (‘Excluded Persons, ’ see paragraph 7.5.) [Alta] shall also specify for each Excluded Person the type of transaction the consummation of which during the Term of [the La Tienda Agreement] entitles such other broker to any compensation (‘Excluded Transaction’). If [Alta] timely provides [Hitz] with the names of the Excluded Persons and specifies the Excluded Transaction for each Excluded Person, then the Agreed Commission paid to [Hitz] with respect to consummation of such Excluded Transaction with an Excluded Person shall be limited as follows: If such Excluded Transaction is concluded within the first thirty days of the commencement of the Term hereof, then [Hitz] shall be paid a commission equal to the reasonable out-of-pocket expenses incurred by [Hitz]... during said thirty days; or if such Excluded Transaction is concluded during the remainder of the Term hereof, then [Hitz] shall be entitled to a commission equal to one-half of the Agreed Commission. If the specified information concerning Excluded Persons and Transactions is not provided as set forth herein, then it shall be conclusively deemed that there are no Excluded Persons.”
Section 7.5 defined “Excluded Persons.” The section provided as follows: “In order to qualify to be an Excluded Person... the individual or entity must have: toured [the La Tienda property], submitted a letter of interest or intent, and/or made an offer to buy or lease [the La Tienda property]. In addition, Excluded Persons may only be registered by a broker who previously held a valid listing agreement covering [the La Tienda property], and such broker may only register individuals and entities actually procured by such listing broker.”
An addendum stated: “7.1 Continued. Excluded and Registered Persons. [¶] [Alta] identifies the following parties as excluded per paragraph 7.1: [¶]... [Oaks Christian]....”
C. Hypothetical meanings of section 7.1 and the addendum.
Section 7.1 required Alta to provide Hitz with a list of excluded persons and any excluded transactions within five days of executing the La Tienda Agreement. Only an excluded transaction triggered a reduced commission. Significantly, the addendum does not state that the parties agreed that Oaks Christian was an excluded person. Nor did it state that a lease between Alta and Oaks Christian was an excluded transaction. Rather, the addendum stated that Alta “identifies” Oaks Christian as one of a number of parties “excluded per paragraph 7.1.” The meaning of this language is ambiguous as it pertains to Oaks Christian and its transactions. Potential interpretations are: (1) Oaks Christian is a party that Alta believes meets the definition of excluded person and the reduced commission will apply to a transaction involving Oaks Christian upon proof that section 7.5 is satisfied, and only if the transaction was properly identified as an excluded transaction; (2) Oaks Christian is an excluded person based on Alta’s designation regardless of the requirements of section 7.5 and the reduced commission will apply to a transaction involving Oaks Christian only if it was properly identified as an excluded transaction; (3) Hitz is entitled to a reduced commission for any transaction involving Oaks Christian; or (4) Hitz is not entitled to either an agreed or reduced commission on any transaction involving Oaks Christian.
D. Interpretation.
In its statement of decision, the trial court interpreted section 7 and the addendum to mean that Oaks Christian was “expressly listed as an excluded party per paragraph 7.1 and not subject to the other provisions of paragraph 7.1.” The judgment did not award Hitz either the agreed commission pursuant to section 5 of the La Tienda Agreement or the reduced commission established in section 7.1 Thus, as a practical matter, the trial court interpreted the La Tienda Agreement as meaning that Hitz was not entitled to any commission for the La Tienda lease because Oaks Christian was a listed party in the addendum.
Based on the contractual language, it cannot be said that the La Tienda Agreement clearly and unambiguously deprived Hitz of an agreed as well as reduced commission for a lease to Oaks Christian. Undeniably, section 7.1 did not say that Hitz was entitled to nothing for a transaction involving a particular party. Rather, section 7.1 provided that the agreed commission would be “limited” for purposes of an excluded transaction. Within the first 30 days, Hitz was limited to a commission equal to his out of pocket expenses. After the first 30 days, Hitz was limited to a commission equal to one-half the agreed commission. In order for the parties to clearly and unambiguously write a contract that precluded Hitz from receiving a commission for a transaction involving Oaks Christian, they could have stated: “Hitz shall not be entitled to a commission for a lease or sale of the La Tienda Property to Oaks Christian;” or “Any transaction involving Oaks Christian falls outside of this agreement and shall not entitle Hitz to any compensation.” The addendum, however, merely stated that Oaks Christian was excluded per section 7.1.
In a vacuum, the use of the word excluded certainly suggests something that is shut out or denied entry. The question arises, excluded from what? To gain an understanding, we have to rely on context. The word was used as a modifier in the phrases excluded persons and excluded transactions. The significance of these phrases under section 7 was that they excluded Hitz from an agreed commission and limited him to a reduced commission. Thus, it appears that the word excluded connotes a limitation on Hitz’s rights, not a negation.
The analysis, however, must continue. Now we consider whether extrinsic evidence makes the La Tienda Agreement reasonably susceptible to the interpretation advocated by Alta and accepted by the trial court.
Meltzner testified that before and after Alta signed the La Tienda Agreement, he told Hitz that Oaks Christian was off limits because it was an excluded party. The first draft of the La Tienda Agreement provided that Hitz would not receive a commission if Alta and Oaks Christian entered into a lease within 60 days. Later drafts contained the addendum and provided that for excluded transactions after 30 days, Hitz would receive a reduced commission. On April 6, 2007, Hitz sent an e-mail to Oaks Christian stating that it was an excluded party listing and that there would be a significantly reduced brokerage fee for any agreement concluded between Oaks Christian and Alta.
The evidence supports the reasonable interpretation that Oaks Christian was deemed an excluded person and any transaction involving Oaks Christian was deemed an excluded transaction that triggered a reduced commission. That is the very interpretation Hitz suggested in his e-mail to Oaks Christian when he claimed his fee would be reduced if there was a lease. Moreover, with respect to excluded transactions, the first draft of the parties’ agreement establishes that they contemplated a window of time during which no commission would be paid and, conversely, assumed that some sort of commission would otherwise be paid. The final draft of the parties’ agreement is consistent with the first draft insofar as it contains a window during which Hitz’s rights are greatly reduced and affords a larger payment outside that window.
The evidence, however, does not support the interpretation that Hitz was entitled to nothing. The ordinary and popular meaning of “per” is “by means of” or “through.” Thus, when the addendum stated that the listed parties were “excluded per paragraph 7.1, ” it meant that they were excluded by means of or through section 7.1. The purpose of section 7.1 was to exclude certain transactions from the agreed commission and substitute different payment terms. To read the addendum any other way would rewrite the contract. We have no such power. (Cousins Inv. Co. v. Hastings Clothing Co. (1941) 45 Cal.App.2d 141, 147.) “Parol evidence is not admissible ‘to flatly contradict the express terms’ of an agreement. [Citation.]” (Supervalue, Inc. v. Wexford Underwriting Managers, Inc. (2009) 175 Cal.App.4th 64, 75.) We note that Meltzner states in his opening brief that he “understood that the language of the addendum was sufficient to exclude [Oaks Christian] from the agreement.” But a party’s unexpressed understanding of a contract is not evidence of mutual intent. (Merced County Sheriff’s Employees’ Assn. v. County of Merced (1987) 188 Cal.App.3d 662, 672 [“mutual assent is gathered from the reasonable meaning of words and the acts of the parties, not from their unexpressed intentions or understanding”].)
See Merriam-Webster’s Collegiate Dictionary (10th ed. 1999) page 861.
In defense of the trial court’s ruling, Alta focuses on whether it was required to offer proof that Oaks Christian was an excluded person as defined by section 7.5 of the La Tienda Agreement. This is a red herring. While there is an ambiguity as to whether Oaks Christian was conditionally or automatically an excluded party and whether the La Tienda lease was conditionally or automatically an excluded transaction under section 7.1, there is no ambiguity on this record as to whether the La Tienda Agreement required Alta to pay Hitz some form of commission for procuring Oaks Christian as a lessee as long as all contractual terms were satisfied.
Continuing on, Alta argues that Hitz breached his fiduciary duty by failing to disclose his belief that Oaks Christian was not an excluded party due to Alta’s failure to satisfy the conditions in sections 7.1 and 7.5. The remedy, Alta tells us, is to deem Oaks Christian an excluded party. The flaws with this argument are many. Alta does not cite any law supporting the advocated remedy, nor does it suggest that breach of fiduciary duty was tried as an affirmative defense. Even if the advocated remedy was available, it would only establish that Oaks Christian was an excluded person and the La Tienda lease was an excluded transaction. In that instance, Hitz would still be entitled to pursue a reduced commission.
E. Breach and damages.
The term of the La Tienda Agreement began on December 1, 2006, and ended on May 30, 2007. Oaks Christian did not pay its $150,000 nonrefundable deposit until June 12, 2007, and did not enter into a lease until 2008. Alta argues that Hitz is not entitled to a commission because the La Tienda lease was executed after the La Tienda Agreement expired.
What Alta ignores is section 5 of the La Tienda Agreement. The trial court did not interpret section 5, and Alta failed to offer an analysis of its meaning. Without deciding the issue, we note that section 5 states that an agreed commission is payable if Alta breaches or repudiates the La Tienda Agreement. In our view, Hitz’s right to recover is a question of fact. Under section 2 of the La Tienda Agreement, Hitz had the exclusive right to negotiate a lease. There is evidence suggesting that Alta breached this provision by either cutting Hitz out of the negotiations with Oaks Christian or by repudiating the La Tienda Agreement by telling Hitz to stay away from Oaks Christian. Upon remand, Hitz is entitled to litigate the meaning of section 5 of the La Tienda Agreement and any issues of breach or repudiation.
II. The Second Transaction.
With respect to the 905 Agreement, Hitz concedes that pending trial he was paid the $175,000 commission that he was owed by Alta. Hitz contends, however, that judgment should have been entered in his favor for breach of the 905 Agreement. His theory is that he would not have been paid if he did not sue, and he should be declared the prevailing party. We deem this argument waived. Hitz cited no law supporting it. (Sprague v. Equifax, Inc. (1985) 166 Cal.App.3d 1012, 1050.) Also, Hitz does not suggest that he ever made this argument to the trial court. Arguments raised for the first time on appeal are not considered. (Santantonio v. Westinghouse Broadcasting Co. (1994) 25 Cal.App.4th 102, 113.)
Although we deem the argument waived for purposes of appeal, Alta is not precluded from filing an appropriate motion and asking the trial court to make a prevailing party determination.
III. Intentional Interference with Contractual Relations.
In his opening brief, Hitz offers no argument or headings directed at his causes of action for intentional interference with contractual relations. In his conclusion section, he states: “The evidence at trial proved that [Meltzner and Sanders] interfered with the [La Tienda Agreement]; and [Meltzner, Wagner, Hall and TOLD] interfered with the 905 [Agreement].” Hitz’s reply brief is silent with respect to his interference claims. Nowhere in his briefs does he assign error. “It is not our responsibility to develop an appellant’s argument.” (Alvarez v. Jacmar Pacific Pizza Corp. (2002) 100 Cal.App.4th 1190, 1206, fn. 11.) We therefore conclude that any claim of error regarding the interference claims is waived. (Tan v. California Fed. Sav. & Loan Assn. (1983) 140 Cal.App.3d 800, 811.)
DISPOSITION
The judgment is reversed and remanded for a new trial with respect to Hitz’s claim for a commission in connection with the sale of the La Tienda property. In all other respects, the judgment is affirmed.
The parties shall bear their costs on appeal.
We concur: BOREN, P. J., DOI TODD, J.