Opinion
NOT TO BE PUBLISHED
Monterey County Super. Ct. No. M89750.
Judge of the Santa Clara County Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Respondent Bernice Jacobs, a real estate broker, claimed to have a partnership with appellants Mei-Wen Chu and Jan Hwa Chu to purchase and resell real properties, but there was no written partnership agreement. After a bench trial, the court found that there was no partnership but ordered the Chus to pay for Jacobs’s services. Judgment was entered requiring the Chus to pay Jacobs a broker’s fee and property management fees as well as reimbursement of Jacobs’s expenses.
On appeal, the Chus challenge the award of the broker’s fee on the grounds that the statute of frauds bars recovery for broker services under contract, quantum meruit, and estoppel theories and that the evidence was insufficient to comply with the statute of frauds. The Chus also assert that there was insufficient evidence to support the award of property management fees.
We conclude that the statute of frauds does apply to any agreement concerning Jacobs’s services, and that while there was no documentation of such an agreement sufficient to satisfy the statute with respect to a broker’s fee, there was sufficient evidence with respect to an agreement to pay a $3,000 consultation fee. We also conclude that there was sufficient evidence to support the award of property management fees for Jacobs’s efforts in remodeling one of the properties, but not for her efforts in managing the rental of that property. We will order modification of the judgment and affirm the judgment as modified.
Facts
Jacobs’s Background and Experience
As of trial, Jacobs had been a broker for 33 years, having obtained her real estate license in 1972 and her broker’s license in 1976. Over the previous 20 years, she had developed a specialty in acquiring properties at a reduced value at foreclosure sales, repairing the properties, and then quickly reselling them. She estimated that 98 percent of her work involved such purchases, and that of approximately 70 such transactions, 90 percent had involved her working in a partnership with another investor. Over the years, she partnered with seven different investors, providing the real estate expertise while her partners provided the funds to buy and repair the properties. Jacobs never had a written partnership agreement with any of her partners.
Typically, Jacobs researched 30 to 40 properties before finding one that was “a value.” Her work included investigating potential purchases, conducting market analyses to determine fair market value, and doing title searches. She also oversaw remodeling by determining what had to be done and then selecting and hiring the contractors. She sometimes advanced costs for repair or clean-up. Her partners customarily paid her $3,000 up front to cover her out-of-pocket expenses.
Jacobs generally waived her commissions as part of the arrangement. The $3,000 advance payment, plus additional costs of purchase and repair, were subtracted from the sale proceeds, and then these profits were divided 50-50 with her partners.
The Chus’ Background and Initial Encounter With Jacobs
Jan Chu was born in China, and came to the United States in 1970. After obtaining a Ph.D. in meteorology from UCLA, he worked as a research scientist for the United States Navy. He does not have any formal training in business. At the time of trial, he was a professor at the Defense Language Institute in Monterey. He was not assisted by an interpreter at trial.
Mei-Wen Chu met Jan in Taiwan in 1990, and came to the United States in 2002. She was assisted by a Mandarin interpreter at trial.
For clarity and meaning no disrespect, we refer to defendants individually as “Mei” and “Jan” and collectively as “the Chus.” (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn.1.)
According to the Chus, when they met Jacobs, they owned a single-family home in Marina and a pretzel business in the Capitola Mall. They had $300,000 in savings and were looking to invest in real property.
In May 2007, the Chus went to an open house at a property Jacobs was selling. Jacobs had purchased the property at a discounted price at a foreclosure auction and was selling it for $80,000 to $100,000 over what she had paid. The Chus had researched the property and told Jacobs they were interested in buying properties at discounted prices as she had done. She explained that she purchased the property at a foreclosure auction and told the Chus that sometimes she accepted partners to do this.
Jacobs testified that at a later meeting, she told the Chus about some deals she had closed involving foreclosed properties and explained her usual procedure to them. According to Jacobs, the Chus said they had $400,000 to $450,000 to invest and asked to be partners with her. After the meeting, Jacobs researched hundreds of properties, looking for the right one to buy; she and Mei went to about 20 foreclosure auctions.
Santa Cruz Property
On July 9, 2007, the Chus purchased a condominium in Santa Cruz at a foreclosure auction for $355,956. Jacobs testified that she instructed the auctioneer to put her name on the deed, along with the Chus’ names, because she was a partner in the transaction, but that was not done. Only the Chus’ names appeared on the trustee’s deed because they provided the funds to buy the property. Jacobs testified that she discussed the deed problem with Mei and proposed that the next property they buy together would be in Jacobs’s name only, to which Mei agreed.
Jacobs oversaw the remodeling of the Santa Cruz property, which started on July 13, 2007. The work included installing new carpets, linoleum, closet doors, a stove, and counter tops; fixing cabinets and a broken window; and painting. Jacobs paid for some of the work out-of-pocket, but expected to be reimbursed by the Chus.
Within eight days after purchasing the property, the parties had decided to refinance it. Jacobs testified that the Chus took out the loan to generate cash so they could buy other properties and to pay Jacobs her share of the profits. Jacobs told the Chus she would waive her loan fee for refinancing the property, since they were partners. The loan proceeds were available in mid-October 2007.
In the meantime, the Santa Cruz property went on the market for $489,000. Since refinancing was in process, the property could not be listed on the Multiple Listing Service (MLS). Jacobs held some open houses and placed an ad on Craigslist.
The Santa Cruz property did not sell right away, so Mei decided to rent it out to defray the mortgage the Chus had to pay. Jacobs told the Chus she would manage the property without a fee, as part of her contribution to the partnership. Jacobs took care of advertising the rental on Craigslist and showing the property.
On December 1, 2007, Jacobs entered into a six-month lease with Caswell and Marrield Berry. The lease, which Jacobs prepared, listed her as landlord and did not mention the Chus. Jacobs obtained $3,100 from the Berrys for the first month’s rent and half of the security deposit. Jacobs deposited the $3,100 into her bank account because, by this time, she “could already see that the Chus weren’t... performing” and wanted the funds as a “potential offset.” Jacobs arranged for the remaining rent payments to be deposited directly into Mei’s bank account. The rental income on the Santa Cruz property was insufficient to cover the mortgage and homeowners’ association fees, resulting in a negative cash flow.
Seaside Property
On October 25, 2007, Jacobs notified Mei that a single-family home in Seaside was being sold at a foreclosure auction that day. She instructed Mei to obtain a cashier’s check in case they decided to purchase the property and to go to the auction at the Salinas courthouse. Meanwhile, Jacobs looked at the property, called the city to confirm that it was not in an area scheduled for condemnation, and did a title search which revealed a weed-abatement code violation. Jacobs learned that the property was being offered at a “specified bid” of $296,000, meaning that the lender would accept less than the $589,030 due on the loan. Jacobs felt that the house had ample equity, so she recommended that they purchase it. Mei bought the property at auction for $296,001. Jacobs took the steps necessary to clear the code violation.
Jacobs testified that before the auction, she suggested that they put the Seaside property in her name since she had not made any money on the first deal, and that she would obtain a loan in her name to “balance the equities.” Jacobs claimed Mei agreed to her proposal, but then put the Seaside property in the Chus’ names anyway. Later, Mei obtained a line of credit on the property and told Jacobs the bank had appraised it for $550,000. Initially, the Chus gave Jacobs a key to the Seaside property, but then rekeyed the house and “locked [her] out.” The Chus remodeled the Seaside property and rented it out without Jacobs’s help.
Documentary Evidence of Parties’ Relationship
On December 12, 2007, Jacobs sent the Chus an accounting of the expenses she incurred to remodel, advertise, show and lease the Santa Cruz property. Jacobs’s expenses included $283.73 for the “1/2 the interest on [her]credit line” and $1,500 for “1/2 reimbursement for auction....” Jacobs claimed $9,203.37 in expenses, but acknowledged that the Chus had already paid her $700.87. She also listed the $3,100 received from the Berrys as a credit.
We distinguish this 2007 accounting prepared by Jacobs from the 2009 accounting prepared by Jacobs’s counsel and submitted at the second phase of the trial.
On December 14, 2007, Jacobs sent the Chus a letter memorializing their “partnership agreement.” Her letter stated that: (1) she and the Chus had formed a partnership “for the purpose of purchasing foreclosure properties”; (2) the Chus would provide the funds to bid at auction, while Jacobs did the market research and marketing of properties; (3) Jacobs would contribute her commissions at no cost to the partnership; (4) the Chus would pay Jacobs $3,000 to cover expenses incurred to procure the properties; (5) the Chus would reimburse Jacobs for expenses incurred to repair or remodel the properties, conduct open houses, and advertise the properties for sale; and (6) the parties would divide net profits “50% to Chu[s] and 50% to Jacobs.” The letter stated that a “partnership agreement will be prepared by an attorney to properly and more fully memorialize our agreement” and contained signature lines for Jacobs and the Chus. Jacobs testified that she did not prepare a partnership agreement earlier because she did not have the time and did not get around to it.
In a December 15, 2007 e-mail, the Chus agreed to pay Jacobs $3,000 for her “auction consultation fee” but objected to paying the interest on her credit line. As to the claimed expenses, they responded to the accounting line by line, stating whether they would pay for each item and, if they disputed an item, the “[r]eason for not paying.” They objected to several expense items, stating that the “[r]eal estate agent pays the cost of open house, ” “multiple list, ” and “flyers, ink, etc., ” and that the property manager pays for “rental ads” and “credit screening” and to “screen and meet tenants.” The Chus agreed to pay Jacobs $5,394.19, less the $3,100 she retained from the rental, for a total of $2,294.19.
The e-mail also requested that Jacobs “draft an agreement between you and me, indicating how much you plan to charge me as real estate agent and as property manager, who represent me.” The Chus raised the question: “Judging from the negative cash flow scenario, I would like to sell the property, so I can give you the 50% of net profit. However, if there is a net lost, are we share the lost? I think this may be a new question that you might have an answer and a key test of equal partnership.” Testifying about this quote, Jan described it as a rhetorical question and not an acknowledgement of a partnership. The Chus did not sign Jacobs’s letter because they did not believe they were partners.
Between December 25, 2007, and January 20, 2008, Mei sent Jacobs six letters regarding homeowners’ association dues, loan fees, the lease, rent payments, Jacobs’s reimbursement claim, and their business relationship. In one of the letters, Mei stated, “You were the loan broker (get paid) and the real estate sales agent (failed to sale the property), and you are the property manager. I am thinking to compensate you, as a property manager, with on-going market service fee.” Mei asked Jacobs to provide information regarding “the fair-market cost, yearly or monthly, of a property manager in the Santa Cruz area.” She disputed the existence of a partnership, stating “my understanding is that you are my consultant for buying the property, and I am the one, as the owner, who pays the full cost and costs of remodeling.... After that I will sell the property. You will sell the property for me as professional real estate agent or I can hire any local real estate agent for selling service.”
On January 7, 2008, the Chus sent Jacobs a check to cover some of the undisputed items in her accounting. Jacobs did not respond to the letters or cash the check.
On an undisclosed date after December 14, 2007, Jacobs provided a separate accounting of her expenses on the Seaside property, which totaled $146.31.
Procedural History
On March 12, 2008, Jacobs filed a complaint against the Chus alleging causes of action for breach of an oral partnership agreement, an accounting, and other claims. The Chus filed a verified answer denying the existence of a partnership and asserting numerous affirmative defenses, including the statute of frauds.
The case was tried to the court in September 2009. On the first day of trial, the court granted Jacobs’s motion to bifurcate the damages and accounting issues. Jan testified that he understood that Jacobs would get a consultant’s fee for each property purchased and a broker’s commission when they sold the properties. Jan also testified that he had asked Jacobs for something in writing before each transaction so he could review it and have a lawyer review it, and that she had agreed to prepare something and said she would be happy to recommend a lawyer.
After the first phase of the trial, the court found insufficient “evidence to support the proposition that it was the intent of both parties to enter into a partnership.” The court stated, “Undoubtedly, the Chus wanted to work with Ms. Jacobs. Clearly she could steer them in a profit making direction through purchases at foreclosure auction. Mr. Chu credibly testified the he consistently sought a formal document that he could show an attorney and get advice regarding their ‘partnership.’ Ms. Jacobs agreed and said she would refer them to a lawyer. She testified that she never got around to drafting something; she didn’t have time. When Ms. Jacob[s] did finally draft an agreement, the Chus did not agree to the terms and refused to sign it.” The court found that the “agreement presented by Ms. Jacobs... was meant as a preliminary document to be referred to an attorney.” The court stated that the Chus are not native English speakers and that although Jan speaks English quite well, he did not understand all the nuances of the questions asked of him in court. The court held, “Under this kind of circumstance the need for a written contract is critical and that is what the Chus requested of Ms. Jacob[s].” The court found inadequate evidence of a partnership or a joint venture, and ordered the parties to present an accounting so Jacobs could be paid for her expenses and work. Jacobs has not filed a notice of appeal and does not challenge the court’s findings in the first phase of the trial.
In the second phase of the trial, Jacobs claimed a 6 percent broker’s fee related to the purchase of both properties. With regard to the Santa Cruz property, she claimed property management fees for the remodeling and rental of the property, a loan fee, remodeling costs, as well as payments she made to others for “sitting open houses, ” interviewing prospective buyers, preparing ads and flyers, showing the property, and screening prospective tenants. Jacobs asked the court to award her $61,833.86, less the $3,100 she collected from the Berrys, for a total of $58,733.86.
At the hearing on the accounting, the Chus argued that Jacobs was not entitled to either commissions or consulting fees because, in the absence of a written agreement, the statute of frauds (Civ. Code, § 1624) barred her from recovering for any work she did as a real estate broker. The Chus agreed that they owed Jacobs $815.37 in unreimbursed expenses.
All further statutory references are to the Civil Code unless otherwise stated.
The court made an award of $53,125.85 to Jacobs, as follows: (1) $39,117.42 representing a 6 percent broker’s fee for the purchases of both properties; (2) $7,650 representing a fee for managing the remodeling work on the Santa Cruz property; (3) $2,590 representing a fee for managing the rental of the Santa Cruz property; (4) $4,470 representing a loan fee for refinancing the Santa Cruz property; (5) $2,398.43 representing reimbursement of remodeling expenses and the cost of clearing code violations; and (6) a deduction of $3,100 for the money Jacobs had retained from the rental. The Chus challenge the award of the broker’s fees and the two property management fees.
Discussion
I. The Appeal is Timely.
Generally, a notice of appeal is due 60 days after notice of entry of judgment or 180 days after entry of judgment. (Cal. Rules of Court, rule 8.104(a).) The Chus filed their notice of appeal on April 5, 2010—more than 60 days after the court issued its February 2, 2010 written ruling on the accounting, but before the court filed the judgment after court trial and well before Jacobs gave written notice of entry of judgment. Although the notice of appeal was premature, in such cases we have the discretion to validate the appeal by treating the notice of appeal as if it had been filed immediately after entry of judgment. (Cal. Rules of Court, rule 8.104(d)(2); Cabral v. Soares (2007) 157 Cal.App.4th 1234, 1239, fn. 2.) This court has previously ordered that, pursuant to California Rules of Court, rule 8.104, former subdivision (e), now subdivision (d), the appeal is deemed filed immediately after June 10, 2010, the date the judgment was entered. We therefore proceed to the merits.
II. The Trial Court Erred in Awarding Jacobs a Broker’s Fee.
The Chus argue that Jacobs is not entitled to recover the equivalent of a 6 percent broker’s fee for the foreclosure purchases of the Santa Cruz and Seaside properties because the statute of frauds requires that an agreement, or some note or memorandum of the agreement, employing a real estate broker to purchase property must be in writing and subscribed by the party to be charged. They contend that there was no written agreement or memorandum of an agreement to employ Jacobs as their agent or broker to purchase the properties. They argue that their December 15, 2007 e-mail does not meet the requirements of the statute of frauds. They also assert that Jacobs is not entitled to the broker’s fee under contract, quantum meruit, or estoppel theories. Jacobs contends that the statute of frauds does not apply to an oral contract fully performed by one of the parties, and that she fully performed by procuring two properties for the Chus to purchase.
We conclude that the statute of frauds applies and that the Chus’ written communications are insufficient to support the award of the broker’s commissions, but that they do support the award of a $3,000 consultation fee for the purchase of the Santa Cruz property. We also hold that Jacobs cannot rely on equitable estoppel or quantum meruit theories to recover a broker’s commission.
A. The Statute of Frauds Applies.
Section 1624, California’s statute of frauds, provides in relevant part: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent: [¶]...[¶] (4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, ..., or to procure, introduce, or find a purchaser or seller of real estate..., for compensation or a commission.”
Thus, a “broker’s real estate commission agreement is invalid under section 1624, [subdivision] (d) unless the agreement ‘or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by the party’s agent.’ The writing must unequivocally show on its face the fact of employment of the broker seeking to recover a real estate commission.” (Phillippe v. Shapell (1987) 43 Cal.3d 1247, 1258 (Phillippe).) The primary purpose of the writing requirement is to protect property owners against compensation claims from individuals who were never authorized to act as the owner’s intermediary in a real estate transaction. (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 21 (Rader).) The writing requirement also protects real estate brokers and agents who have been properly employed and perform services for their principals in good faith. (Selk v. Foulks (1972) 25 Cal.App.3d 556, 575.)
Although Phillippe is the lead case on the statute of frauds in cases involving real estate brokers, neither party cited it in the trial court proceedings where both sides were represented by counsel. Although it was discussed at length in the Chus’ opening brief, Jacobs, representing herself on appeal, does not mention or address the case in her responding brief. Instead, Jacobs relies on the general rule that the statute of frauds does not apply to executed oral agreements. Citing Miller & Starr, California Real Estate (3d ed. 2000), section 1:75, she asserts that an oral contract is enforceable regardless of the statute of frauds if it has been fully performed by one party and all that remains to be done is the payment of money. She contends that she fully performed by presenting two properties for the Chus to purchase. She also contends that it would be unconscionable for the Chus to “walk away” with increased equity in the properties without requiring them to pay her for her work.
Jacobs’s reliance on this rule is misplaced. The very treatise on which Jacobs relies cites Philippe for the following proposition, which is contrary to her argument: “When the broker or other person seeks to enforce an agreement that is unenforceable under the statue of frauds, compensation cannot be recovered for services even though they have been performed successfully by procuring a buyer or lessee, and the principal has received and accepted the benefit of the services.” (Miller & Starr, Cal. Real Estate, supra, § 5:6, p. 25, fn omitted.)
In this case, there was no written contract between the parties. Consequently, we consider whether the record contains proof of a memorandum sufficient to meet the requirements of the statute of frauds.
It “is a question of law whether a memorandum, considered in light of the circumstances surrounding its making, complies with the statute of frauds.” (Sterling v. Taylor (2007) 40 Cal.4th 757, 772 (Sterling).) As a general proposition, an appellate court reviews questions of law de novo. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 801.) Furthermore, the appellate court independently interprets written instruments and is not bound by the interpretation of the trial court, except where the parties present conflicting extrinsic evidence at trial. (Parson v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866.) Here, the Chus presented extrinsic evidence regarding the meaning of portions of their December 15, 2007 e-mail, but that evidence was undisputed. We therefore apply a de novo standard of review to the interpretation of the e-mail and the letters.
B. The Parties’ Correspondence Does Not Satisfy the Statute of Frauds.
The California Supreme Court reviewed the legal requirements governing written memoranda under the statute of frauds in Sterling. There, the court explained, “The statute of frauds demands written evidence that reflects the parties’ mutual understanding of the essential terms of their agreement, when viewed in light of the transaction at issue and the dispute before the court. The writing requirement is intended to permit the enforcement of agreements actually reached, but ‘to prevent enforcement through fraud or perjury of contracts never in fact made.’ ” (Sterling, supra, 40 Cal.4th at p. 775, citing Rest.2d Contracts, § 131, com. c, p. 335.)
The written agreement or written memorandum of the agreement need not contain all the terms of the employment contract. In cases involving real estate brokers, at a minimum, it must set forth the following essential terms: (1) the fact of employment of the broker to act in the real estate transaction; (2) the broker’s identity; and (3) a sufficiently certain description of the real property involved. (Woodbridge Realty v. Plymouth Development Corp. (1955) 130 Cal.App.2d 270, 274; Rosenbaum v. Rosenbaum (1967) 257 Cal.App.2d 193, 198-199; Barcelon v. Cortese (1968) 263 Cal.App.2d 517, 525-526.) As long as these requirements are met, the other terms, including the agreement to pay the broker and the amount of the broker’s compensation need not be specifically stated in writing. The amount of compensation and other terms may be shown by extrinsic evidence and if there is no evidence, an agreement to pay a reasonable commission will be inferred. (Beazell v. Schrader (1963) 59 Cal.2d 577, 580; Rader, supra, 178 Cal.App.3d at p. 21.)
“[I]f a memorandum includes the essential terms of the parties’ agreement, but the meaning of those terms is unclear, the memorandum is sufficient under the statute of frauds if extrinsic evidence clarifies the terms with reasonable certainty and the evidence as a whole demonstrates that the parties intended to be bound. Conflicts in the extrinsic evidence are for the trier of fact to resolve, but whether the evidence meets the standard of reasonable certainty is a question of law for the court. (Sterling, supra, 40 Cal.4th 757, 771.) But “a memorandum of the parties’ agreement is controlling evidence under the statute of frauds. Thus, extrinsic evidence cannot be employed to prove an agreement at odds with the terms of the memorandum.” (Ibid.) “Thus, in determining whether extrinsic evidence provides the certainty required by the statute, courts must bear in mind that the evidence cannot contradict the terms of the writing.” (Id. at p. 772.)
The written agreement or memorandum of the agreement must also be signed by or on behalf of the party against whom broker compensation is sought. (Marks v. Walter G. McCarty Corp. (1949) 33 Cal.2d 814, 820 (Marks); Rader, supra, 178 Cal.App.3d at p. 21.) The Chus do not challenge the sufficiency of their December 15, 2007 e-mail or their letters to meet the subscription requirement of the statute of frauds.
The e-mail was not signed by either Mei or Jan, but does contain the following typewritten closing “Best regards, Mei.” The letters are also unsigned, but contain similar closings.
Although the Chus contend that the only memorandum of their agreement with Jacobs is their December 15, 2007 e-mail, the letters they wrote in December 2007 and January 2008 may also serve as memoranda of their agreement with Jacobs. We will therefore consider the letters as well as the e-mail.
Of the three terms required to satisfy the statute of frauds for a broker compensation agreement, the correspondence from the Chus easily meets the requirement concerning identity of the broker, but is lacking with respect to identification of the property and the fact of employment. The e-mail identifies Jacobs by her first name “Bernice” and her initials “BJ”; the letters refer to Jacobs by her first and last names. There is also no dispute that Jacobs was the real estate broker who was the subject of the communications.
The Chus’ letters contain the address of the Santa Cruz property, and thus satisfy the statute of frauds with regard to that property. (See Sterling, supra, 40 Cal.4th at pp. 767-768, 775, citing Preble v. Abrahams (1891) 88 Cal. 245.) But neither the e-mail nor the letters describe or refer to the Seaside property. The e-mail was written in response to the 2007 accounting and Jacobs’s December 14, 2007 letter setting forth the proposed terms of a partnership agreement. As of that date, Jacobs had only provided the Chus with an accounting relating to the Santa Cruz property. The Chus’ e-mail and letters only refer to the Santa Cruz property. Accordingly, there is no memorandum satisfying the statute of frauds with regard to the Seaside property.
The dispute here involves the fact of employment, the nature of the services Jacobs was retained to perform, and the amount of compensation, if any, set forth in the e-mail and the letters. The Chus’ e-mail refers to Jacobs as their “real estate agent” with regard to the sale of the Santa Cruz property, and objects to certain expenses claimed in the 2007 accounting on the ground that a real estate agent customarily pays such expenses. However, the e-mail does not contain any statements that support a promise to pay a 6 percent broker’s fee for Jacobs’s efforts related to the purchase of the properties. To the contrary, the e-mail makes it clear that compensation for real estate agent services is not agreed upon and is still under discussion: “Please draft an agreement between you and me, indicating how much you plan to charge me as real estate agent and as property manager, who represent me” and “if you had trouble selling the property, I can find another real estate agent for listing and selling of the property....” The Chus made it quite clear that the only compensation they were at that time willing to pay was $3,000 for “[t]he cost for [Jacobs’s] consultation” regarding the Santa Cruz property: “[We] will pay you $3,000 for your auction consultation fee, which is the full amount as we had agreed on, and which is... twice the amount that you requested....”
In the 2007 accounting, Jacobs requested $1,500 as “1/2 reimbursement for auction.”
The other correspondence from the Chus is consistent with the e-mail. In two of the letters, Mei asked Jacobs to provide her social security number so the Chus could pay her “$3,000 for your consultation cost.” In the last letter, Mei stated, “my understanding is that you are my consultant for buying the property, ” and after the property is remodeled, “[y]ou will sell the property for me as a professional real estate agent or I can hire any local real estate agent for selling service.” Nothing in the letters can be construed as a written memorandum of a promise to pay a broker’s fee related to the purchase of the properties.
Moreover, the documents authored by Jacobs herself are also consistent with the conclusion that the Chus agreed to pay only a $3,000 fee. Neither the 2007 accounting nor her letter refers to a 6 percent broker’s fee for the purchase of the properties. In her letter, Jacobs stated the she would “do the market research, to include title searches, market analyses, viewing of properties, and marketing of properties.” She promised to contribute her “listing commission” and her “sales commission, at no cost to the partnership”—as she testified she had done in her other partnerships. She also stated that she would be reimbursed for “approximate out of pocket expenses advanced in the procurement of foreclosure properties, ” but proposed that because those “expenses may be difficult and cumbersome to ascertain, ” she receive $3,000 instead.
In summary, none of the documentary evidence is sufficient under the statute of frauds to support a promise to pay a 6 percent broker’s fee for Jacobs’s efforts in purchasing either property. We therefore concluded that the statute of frauds bars recovery of such a broker’s fee.
C. Jacobs Is Not Entitled to Recover a Broker’s Fee Under the Equitable Theories of Equitable Estoppel or Quantum Meruit.
In Phillippe, the court addressed the question whether licensed real estate brokers may invoke equitable remedies to avoid the sometimes harsh results of the statute of frauds, and concluded that a license real estate broker cannot avoid the requirements of the statute of frauds by asserting equitable estoppel. (Phillippe, supra, 43 Cal.3d at pp. 1260-1264, 1270.) The court explained that the “ ‘rationale for the rigorous application of the statute of frauds to bar claims by licensed real estate brokers is related to the statutory licensing requirements. “Real estate brokers are licensed as such only after they have demonstrated a knowledge of the laws relating to real estate transactions (Bus. & Prof. Code, §§ 10150, 10153), and it would seem that they would thus require less protection against pitfalls encountered in transactions regulated by those laws.” ’ ” (Id. at p. 1260.) A licensed real estate broker is presumed to know that contracted-for real estate commissions are invalid and unenforceable unless put in writing and subscribed by the person to be charged. (Id. at p. 1261.)
The Phillippe court observed that “courts have long had little sympathy for the broker who fails to adhere to the statute of frauds. In Marks, supra, 33 Cal.2d 814, the plaintiff broker had dealt for several months with the owner of a hotel without obtaining a signed employment agreement. The hotel was eventually sold as a result of the broker’s efforts, but he was not paid a commission. This court accepted the trial court’s findings that the defendant had promised to pay the broker a commission and that the broker was the procuring cause of the sale, but decided that the broker was not entitled to recover a commission because his agreement did not comply with the statute of frauds. ‘The plaintiff, a man of experience in this line of business, knew how to protect himself in the transaction but failed to do so.’ ” (Phillippe, supra, 43 Cal.3d at p. 1261, citing Marks, at p. 823.)
Moreover, an applicant for a real estate broker’s license must successfully complete a course in the legal aspects of real estate at an accredited institution, must have been licensed and actively employed as a real estate salesperson for at least two years, and must demonstrate an understanding of “ ‘the general purposes and general legal effect of agency contracts’ ” by written examination. (Phillippe, supra, 43 Cal.3d at p. 1261, citing Bus. & Prof. Code, §§ 10150.6, 10153, 10153.2.) To renew her license, a broker must successfully complete continuing professional education courses including legal study. (Ibid., citing Bus. & Prof. Code, § 10170.5.) In light of these requirements, the court concluded that “[l]icensed brokers are conclusively presumed to know the requirements of section 1624, [subdivision] (d).” (Id. at p. 1262.)
The Phillippe court held that given this “presumed knowledge, ” a licensed real estate broker seeking to recover a commission under an oral agreement could not assert equitable estoppel to avoid the statute of frauds. The court explained that courts consider two factors in evaluating an equitable estoppel claim: unconscionable injury to the promisee and unjust enrichment of the promisor. The court concluded that the broker in Phillippe suffered no unconscionable injury, since his reliance on the oral contract was not reasonable and he did nothing more than perform services pursuant to an invalid agreement. The court also held that there was no unjust enrichment of the broker’s principal, stating, “The fact that a broker’s principal does not pay for the broker’s services under an unenforceable oral contract does not constitute unjust enrichment sufficient to support equitable estoppel.” (Phillippe, supra, 43 Cal.3d at p. 1263.) The court held that to “determine that mere nonpayment constitutes unjust enrichment sufficient for estoppel would also conflict with consistent holdings that licensed brokers, who cannot recover under oral agreements invalid under the statute of frauds, are also prohibited from recovery in quantum meruit for the reasonable value of their services. (Id. at pp. 1263-1264.) Thus, the court held “that a licensed real estate broker or salesperson cannot assert equitable estoppel against a statute of frauds defense to an oral commission agreement that is subject to Civil Code section 1624, [subdivision] (d) unless there is a showing of actual fraud by the party to be charged under the invalid oral agreement. Because licensed brokers are involved in almost every real estate sale, to decide otherwise would be to eviscerate if not abrogate section 1624, [subdivision] (d).” (Phillippe, supra, at p. 1264.) The court also concluded that sound policy reasons support denying equitable estoppel to a licensed real estate broker. (Id. at pp. 1265-1269.) Thus, Jacobs cannot rely on an equitable estoppel theory.
Since the court here found no partnership or joint venture between the parties, its award in favor of Jacobs sounds in quantum meruit. However, the Phillippe court observed that the quantum meruit theory of recovery in these circumstances has been “ ‘roundly rejected by the [C]alifornia courts’ ” and explained, “ ‘[T]he purpose of the statute would be largely defeated if the broker should be allowed to recover in quantum meruit for his services..., either on the oral contract itself or in quasi-contract for reasonable compensation. This is made obvious by the fact that reasonable compensation would be determined by the commission that is customarily paid in the community, and the oral contract that the broker alleges to have been made is practically always a contract to pay this customary commission.’ ” (Phillippe, supra, 43 Cal.3d at p. 1264.)
Jacobs cites a number of cases to support her contention that a real estate broker may recover a commission in quantum meruit under an executed oral contract. Reedy v. Smith (1871) 42 Cal. 245 does not assist Jacobs, since that case involved a written contract and not the statute of frauds. None of the other cases cited by Jacobs involved real estate professionals, except Realty Corporation of America v. Burton (1958) 162 Cal.App.2d 44 (Burton). Burton is distinguishable from the situation presented here, since it involved the modification of a written contract and application of section 1698. In Burton, the court concluded that a written agreement regarding the payment of a broker’s commission could be modified by a written collateral agreement or by a novated oral agreement that had been fully executed.
Jacobs also relies on Carey v. Cusack (1966) 245 Cal.App.2d 57, but that case does not support her position. In Carey, the court concluded that the statute of frauds did not apply because “recovery was given for subdivision services and not for the commission for the sale of the property.” (Id. at p. 69.) Thus, the brokers in Carey were not rendering the kinds of services that were listed in section 1624, subdivision (d). In addition, the fact of their employment was established by a writing. (Ibid.) Jacobs had no writing that established her employment for the purpose of purchasing the properties.
In summary, there was no express written contract to pay Jacobs a 6 percent broker’s fee related to purchase of the properties. None of the documentary evidence is a memorandum sufficient to satisfy the statute of frauds proving an agreement to pay such a fee. Finally, Jacobs is not entitled to recover the 6 percent fee under either an equitable estoppel or a quantum meruit theory. We therefore conclude that the trial court erred when it awarded Jacobs 6 percent broker commissions for the purchase of both properties.
However, we also hold that the e-mail is a sufficient memorandum of an agreement by the Chus to pay Jacobs a $3,000 consultation fee for her efforts related to the purchase of the Santa Cruz property. Since the Chus’ e-mail and letters did not address the Seaside property, there was insufficient evidence of a promise to pay a consultation fee for that property. For these reasons, we will order the trial court to modify the judgment to delete the $39,117.42 awarded in broker’s fees and to add a $3,000 consultation fee.
III. The Trial Court Erred in Awarding Property Management Fees.
Claiming insufficiency of evidence, the Chus challenge the trial court’s award of property management fees related to the Santa Cruz property. We agree as to the rental management services, and disagree as to the remodeling management services.
“The trial court’s factual findings... are subject to limited appellate review and will not be disturbed if supported by substantial evidence.” (Williams v. Saunders (1997) 55 Cal.App.4th 1158, 1162.) An appellate court is “not in a position to weigh any conflicts or disputes in the evidence. Even if different inferences can reasonably be drawn from the evidence, [the appellate court] may not substitute [its] own inferences or deductions for those of the trial court. [Its] authority begins and ends with a determination of whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, which will support the judgment. [Citations.] Therefore, we must consider all of the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference from the evidence tending to establish the correctness of the trial court’s decision, and resolving conflicts in support of the trial court’s decision.” (Estate of Beard (1999) 71 Cal.App.4th 753, 778-779.)
A. The Evidence Was Insufficient to Support the Award of a Rental Management Fee for the Santa Cruz Property.
At the hearing on the 2009 accounting, Jacobs claimed $2,590 for her services as property manager related to the rental of the Santa Cruz property. Jacobs described this service as “acquire tenants @ $185/mo. for 14 months, from 12-1-2007 until 1-31-2009.” In support of her claim, Jacobs provided the court with a copy of the lease agreement. The court awarded Jacobs the full amount claimed.
The Chus argue that Jacobs was not entitled to any property management fees after December 31, 2007. In reviewing this issue, we address two aspects of the award: the hourly rate claimed and the number of months awarded.
With regard to the sufficiency of the evidence to support the hourly rate, a person who acts as a professional property manager for the owner of rental property must have a real estate license, and a real estate broker or agent cannot recover compensation for property management services unless there is a written employment agreement signed by the property owner. (§ 1624, subd. (a)(4); Bus. & Prof. Code, §§ 10130, 10131, 10176, subd. (j); Miller & Starr, supra, Cal. Real Estate, §5:8, pp. 33-34.) In the e-mail and their letters, the Chus acknowledged that Jacobs was their property manager for the Santa Cruz property, but asked her to provide them with information regarding the customary fee. These writings satisfy the statute of frauds. (Woodbridge Realty v. Plymouth Development Corp., supra, 130 Cal.App.2d at p. 274; Rosenbaum v. Rosenbaum, supra, 257 Cal.App.2d at pp. 198-199.) The amount of compensation need not be stated in writing and may be shown by extrinsic evidence, and if there is no evidence, an agreement to pay a reasonable commission will be inferred. (Beazell v. Schrader, supra, 59 Cal.2d 577, 580; Rader, supra, 178 Cal.App.3d at p. 21.)
Although there is no evidence regarding the amount paid to rental managers in Santa Cruz, Jacobs claimed in the 2007 accounting that her rental management services were worth $185, or 10 percent of the $1,850 monthly rent. Since Jacobs had more than 30 years experience in real estate, her assertion of the value of her services is some evidence from which the court could conclude that a reasonable fee was $185 per month.
With regard to the sufficiency of the evidence to support an award of rental management fees for 14 months, Jacobs leased the property to the Berrys on December 1, 2007, for a six-month term ending on May 31, 2008. The Chus sent Jacobs several letters in January 2008 inquiring about the rent for December and January. The letters support the conclusion that the Chus considered Jacobs their rental manager for at least the first two months of the lease term. Jacobs never responded to the letters. After accepting the rent for the first month, Jacobs arranged for the rent payments to be deposited directly into the Chus’ account. Jacobs filed her complaint on March 12, 2008. Therefore, the evidence supports an award of two months rental management fees but does not support the court’s award of fees for a period of 14 months.
For these reasons, we conclude there was insufficient evidence to support the court’s award of $2,950 for rental management fees for the Santa Cruz property. However, the evidence does support an award of fees for property management services for two months at $185 per month, for a total of $370. We will order the judgment modified to award Jacobs $370 for property management services related to the rental.
B. Substantial Evidence Supports the Award of Property Management Fees for the Remodeling of the Santa Cruz Property.
The 2007 accounting claimed $7,650 for property management services to oversee the remodeling of the Santa Cruz property, describing these services only as “90 Hours @ $85/Hr.” The court awarded Jacobs the full amount claimed. The Chus contend that there was insufficient evidence to support the court’s award for these services and that the court erred because Jacobs failed to “identify the nature and character” of the services performed and “did not show the basis for the hourly rate of $85.00.” We disagree.
The 2007 accounting revealed that the remodeling work took at least three months, and Jacobs testified that the work included installing new carpets and linoleum, replacing a broken window, fixing cabinets, and installing new counters in the kitchen and bathrooms. Jacobs said Mei helped with the remodeling and hired a painter and a linoleum installer, but they did a sloppy job so that work had to be redone. Jacobs purchased a new stove and arranged for its installation, and shopped at Home Depot for sinks, faucets, and other materials. She arranged for a plumber to reconnect the plumbing for the kitchen and bathroom sinks after the new countertops were installed. In October 2007, she wrote a check to Skylight Place to replace the broken window. The following day, she paid a contractor to paint and to install closet doors and mirrors, and a few days later asked that contractor to install baseboards and do additional work. In December 2007, she hired another contractor to do some painting and clean-up. In light of all the work that was done, the number of hours claimed does not appear to be unreasonable.
At the hearing on the 2009 accounting, Jacobs’s counsel advised the court that Jacobs was available to explain the work she had done and to answer any questions the court might have. Although the court did question Jacobs about several line items, neither the court nor the Chus questioned Jacobs about her property management services related to the remodeling work. The Chus did not challenge the number of hours or the hourly rate claimed for overseeing the remodeling. The court observed that the Chus “did not contest the reasonableness of [Jacobs’s] charges, only the propriety or legality of the charges.” Again, based on Jacobs’s 30 years experience in real estate, her assertion of the value of her services is some evidence from which the court could conclude that the amount is reasonable. There was no evidence that the hourly rate was excessive or that the work took less than the 90 hours claimed.
For these reasons, we conclude that the award of $7,650 for managing the remodeling work was supported by substantial evidence.
Disposition
The trial court is ordered to modify the judgment to delete the $39,117.42 awarded for the 6 percent broker’s commissions (lines 1 and 35 on Jacobs’s formal accounting) and to insert an award of $3,000 for Jacobs’s services with regard to the foreclosure purchase of the Santa Cruz Property (line 1 of the accounting); and to delete the $2,590 awarded for property management services for the rental of the Santa Cruz Property (line 2 on the accounting) and to insert $370 for those property management services (line 2 of the accounting). As so modified, the judgment is affirmed. The Chus are awarded their costs on appeal.
WE CONCUR: PREMO, ACTING P.J., ELIA, J.