Opinion
NOT TO BE PUBLISHED
Superior Court County of Ventura, Steven E. Hintz, Judge, Ct. No. SC 035165
Musick, Peeler & Garrett, David A. Ossentjuk, Nazanin S. Lahijani Cohen; James N. Allison for Plaintiff, Cross-defendant and Appellant.
Silver & Arsht, Samuel J. Arsht, Randall A. Cohen, Jeffrey Scott Frasier; Benedon & Serlin, Douglas G. Benedon and Gerald M. Serlin for Defendants, Cross-complainants and Appellants.
PERREN, J.
Westlake Plaza Realty, Inc., dba Century 21 America (Century 21) filed an action against Patrick and Mary Leyden (the Leydens) alleging fraud, breach of contract and other causes of action regarding brokerage services performed by the Leydens as agents of Century 21. The Leydens responded with a cross-complaint against Century 21. The Leydens appeal from a judgment in favor of Century 21 on both the complaint and cross-complaint. They contend that Century 21 failed to prove damages as a result of their conduct, and that the trial court erroneously awarded tort damages for breach of contract. They also claim the evidence did not support the judgment. Century 21 cross-appeals contending that the trial court awarded insufficient damages. We affirm.
FACTS
The Leydens are a married "team" of realtors. Patrick Leyden is a licensed broker and Mary Leyden is a licensed salesperson. In 1999, the Leydens signed separate but identical "Broker-Independent Contractor" agreements with Century 21 (the Agreements). The Agreements provide that, in return for the use of the Century 21 name and office facilities, the Leydens would receive a percentage of the commissions on real estate sales generated by the Leydens. The Agreements require commissions to be paid to Century 21, with Century 21 distributing a percentage to the Leydens. As relevant to this appeal, the Leydens'share of the commissions was 80 percent.
The Agreements provide that "any and all listings of property, and all employment in connection with the real estate business shall be taken in the name of" Century 21 and "belong to" Century 21, and require the Leydens to submit copies of all forms and contracts to Century 21 within 24 hours of execution. The Agreements also provide that, upon termination, the Leydens'share of commissions on pending sales would be reduced to 50 percent, and, in the event of litigation, Century 21 could withhold commissions due to the Leydens pending resolution of the lawsuit.
Beginning in the summer of 2000, the Leydens began registering prospective buyers in a new residential project known as Country Club Estates. Although the homes had not been built, the developer, Toll Brothers, instituted a program under which brokers could register prospective buyers and receive a 3 percent commission if the prospects ultimately bought a home in the project.
Initially, the Leydens registered their buyers as clients of Century 21 in accordance with the Agreements but, beginning in early 2001, they began registering their most promising buyers in the name of Leyden Real Estate Services instead of Century 21. The Leydens also "re-registered" certain buyers by "whiting-out" the name Century 21 on the registration form and inserting Leyden Real Estate Services in its place. The Leydens also sent letters to Toll Brothers identifying prospects who were no longer interested in buying homes as Century 21 clients, while identifying prospects who had selected specific homes and were "in contract" with Toll Brothers as their own clients without mention of Century 21.
The Leydens did not submit any of the registration forms or letters to Toll Brothers to Century 21 as required by the Agreements, or otherwise inform Century 21 that they had any prospective sales in the Country Club Estates project. Century 21 did not learn of the Leydens' activities in the project until June 2002.
In June 2002, the sales manager of Toll Brothers reviewed the files of homes that were ready for closing and noticed that Leyden Real Estate Services was designated as the broker to receive the commissions on five sales. Aware of the Leydens' affiliation with Century 21, the sales manager contacted Century 21 for clarification. She spoke with Richard Quinn, Century 21's president. Quinn obtained copies of the relevant documents from Toll Brothers, and concluded that the Leydens appeared to be engaged in a scheme to conceal and divert commissions from Century 21. Shortly thereafter, Quinn terminated the Agreements.
At the time of termination, there were a number of pending transactions involving the Leydens in addition to the five Toll Brothers sales. As relevant to this appeal, there were eight transactions in which the Leydens were acting as agents of Century 21, and a transaction in which Patrick Leyden was involved in the purchase of "raw land" in Moorpark, California (Moorpark land).
Century 21 filed a complaint against the Leydens which, as amended, alleged fraud by concealment, breach of contract, breach of fiduciary duty, other causes of action, and which also sought recovery of punitive damages. The Leydens filed a cross-complaint against Century 21 which, as amended, alleged breach of contract, breach of the covenant of good faith, conversion, libel, invasion of property, and other causes of action.
Toll Brothers held the commissions on the Toll Brothers sales until the outcome of the lawsuit. Century 21 withheld commissions on the non-Toll transactions.
The trial court conducted a bench trial beginning in April 2004. Trial of compensatory damages and punitive damages was bifurcated. A statement of decision was filed on August 15, 2005. A judgment was filed September 2005, and an amended judgment was filed on April 24, 2006.
In its statement of decision, the trial court found in favor of Century 21 on Century 21's fraud, breach of contract, and breach of fiduciary duty claims. It found fraud by concealment in the Toll Brothers transactions, breach of contract regarding the Toll Brothers transactions and the Moorpark land transaction, and breach of fiduciary duty regarding the Toll Brothers and Moorpark land transactions. The court expressly stated that testimony by the Century 21 witnesses was credible but testimony by the Leydens was not credible.
The trial court found in favor of the Leydens on an intentional interference with economic advantage claim and a statutory claim was dismissed during trial.
The trial court awarded Century 21 damages of $63,168 regarding the Toll Brothers sales which consisted of 50 percent of the commissions for those transactions, the percentage set forth in the Agreements in the event of termination. The court found that Century 21 had been damaged in the amount of $63,168 on each of its three claims (fraud, breach of contract and breach of fiduciary duty) but, concluding that double or triple recovery was not permitted by law, awarded a total of only $63,168.
Century 21 was also entitled to retain a 6 percent franchise fee.
The court awarded Century 21, $48,359 in damages on the eight pending non-Toll Brothers transactions which also represented 50 percent of the commissions due on those transactions. The court awarded Century 21, $5,000 of the $25,000 commission on the Moorpark land transaction.
The court ruled in favor of Century 21 on all of the causes of action in the Leydens' cross-complaint, except for a claim for $1,500 in prize money the Leydens won in a contest conducted by Century 21. The court also found clear and convincing evidence of fraud, and awarded $43,000 to Century 21 as punitive damages.
The Leydens appeal contesting most of the trial court's ruling on the complaint and cross-complaint. Century 21 cross-appealed contesting the award of $20,000 of the $25,000 commission for the Moorpark land deal to the Leydens.
DISCUSSION
Standard of Review
On appeal, we view the evidence in the light most favorable to the judgment, and are bound by trial courts' findings that are supported by substantial evidence. (San Diego Metropolitan Transit Development Bd. v. Handlery Hotel, Inc. (1999) 73 Cal.App.4th 517, 528.) While we are not bound by a trial court's interpretation of the law and independently review the application of the law to undisputed facts (ibid.), we are bound by express findings in the statement of decision that are supported by the evidence. (People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 139 Cal.App.4th 1006, 1012.)
Leyden Contentions Regarding Judgment on Complaint
1. Century 21 Incurred Damage
The Leydens contend that they may have "attempted" to commit fraud, breach of contract, and breach of fiduciary duty, but their scheme was thwarted before completion. Without citation of authority, they argue that Century 21's share of the commissions cannot constitute damages because the commissions were held by Toll Brothers and ultimately paid to Century 21 after the judgment was entered. We disagree.
The Leydens also challenge the award of punitive damages.
Undisputedly, damage to the plaintiff is a necessary element of each of Century 21's causes of action. In this case, damages for both the tort and contract claims is the amount necessary to compensate the plaintiff "for all the detriment proximately caused" by the Leydens' misconduct. (Civ. Code, §§ 3333, 3300; see also Fragale v. Faulkner (2003) 110 Cal.App.4th 229, 236-238; City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 887; Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)
The trial court correctly ruled that Century 21 suffered compensable damages because the Leydens prevented Century 21 from obtaining its share of the commissions in the manner required by the Agreements and forced Century 21 to use legal process to enforce its rights. The decision by Toll Brothers to withhold payment pending resolution of the case provided Century 21 with a source of funds to satisfy its judgment, but the ease with which Century 21 was able to recover does not transform the commissions into something other than damages. Moreover, although not necessarily the only damages Century 21 could have sought, the evidence supports the trial court's conclusion that the commissions due to Century 21 under the Agreements constituted an appropriate measure of the detriment suffered by Century 21. (See Santa Barbara Pistachio Ranch v. Chowchilla Water Dist. (2001) 88 Cal.App.4th 439, 446-449.)
2. No Duplicate or Otherwise Improper Damages Awarded
The trial court concluded that the same facts formed the basis of the Leydens' fraud, breach of contract, and breach of fiduciary duty, and that Century 21's damages on all the claims were identical. In addition, the amended judgment states that Century 21 incurred damages for the three claims "in the aggregate amount of $63,168.72." Based on this language, the Leydens contend that the trial court erroneously awarded tort damages for breach of contract. We disagree. We further reject any claim that the trial court awarded damages for both the tort and contract claims in violation of the doctrine of election of remedies.
The same wrongful conduct may constitute both breach of contract and a tort. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774; Perry v. Robertson (1988) 201 Cal.App.3d 333, 340.) In addition, a plaintiff may pursue both contract and tort claims arising from the same operative facts. (Perry, supra, at p. 340; General Ins. Co. v. Mammoth Vista Owners' Assn. (1985) 174 Cal.App.3d 810, 828.) Here, it is not contested that the Leydens' concealment of commissions due to Century 21 under the Agreements constituted fraud and breach of fiduciary duty and also served as the method by which the Leydens breached the Agreements.
Under the doctrine of election of remedies, however, a plaintiff with multiple remedies on the same state of facts must ultimately "choose or elect between them; and if he has clearly elected to proceed on one, he is bound by this election and cannot thereafter pursue the other." (3 Witkin, Cal. Procedure (4th ed. 1996) Actions, § 174, pp. 243-244.) In short, the plaintiff is not prevented from pursuing recovery on multiple theories, but may recover compensatory damages only under one theory. (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1159; Perry v. Robertson, supra, 201 Cal.App.3d at p. 340.)
We reject the Leydens' claim Century 21 never elected its remedy and, thereby, was awarded compensatory damages for all three of its causes of action, resulting in double or triple recovery. Although there was no formal election before or during trial, the statement of decision and judgment demonstrate that the trial court applied the rule requiring election of remedies in its damage award. (See Fairchild v. Park (2001) 90 Cal.App.4th 919, 926-927 [election may incur a finding of liability].) The trial court found that Century 21 had incurred $63,168 in damages for each of the three claims, but recognized the duplicative nature of the damages and expressly stated that Century 21 could recover its lost commissions only once, regardless of how many theories it pursued. There was no double or triple recovery and the trial court did not award tort damages for the contract claim.
3. Evidence Supports Breach of Contract Regarding Moorpark Land
The Leydens contend that Richard Leyden did not breach his Agreement in connection with the Moorpark land transaction because he acted as a principal, not broker, in that transaction, and the Agreements cover only listings and "employment in connection with the real estate business." (Italics added.) The Leydens rely on a trial court finding that Patrick Leyden "acted as a principal" in purchasing the Moorpark land, and case law holding that a person acting on his or her own behalf in a real estate transaction is not a broker because the person is not acting "for another or others" in an agency or employment relationship. (Horning v. Shilberg (2005) 130 Cal.App.4th 197, 203-204; see also Bus. & Prof. Code, § 10131.) We conclude that the cited finding by the trial court is not dispositive and that Horning is distinguishable.
In the statement of decision, the trial court found that Patrick Leyden "acted as a principal in the purchase of [the Moorpark land], which, during escrow, was assigned to a limited liability company of which he was a member." As previously stated, we are bound by express findings in a statement of decision that are supported by the evidence and will not imply contrary findings to support the judgment. (People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes, supra, 139 Cal.App.4th at p. 1012.) In this instance, however, the evidence supports the conclusion that Richard Leyden acted in a dual role of principal and broker in connection with the Moorpark land. Moreover, the statement of decision as a whole shows that the trial court also made that finding.
In addition to the finding cited by the Leydens, the trial court found that Patrick Leyden engaged in the Moorpark land transaction "through his own broker's license" and, in so doing, breached the provision of his Agreement that "all real estate business be taken in the name of Century 21." Undisputed evidence shows that "Patrick Leyden and/or assignees" was designated as the buyer of the Moorpark land, "Leyden Realty" was designated as the broker and "agent of the Seller exclusively", and Patrick Leyden signed the purchase agreement both as buyer and on behalf of Leyden Realty as broker. Further, the purchase agreement provides for a $25,000 commission to Leyden Realty, and $10,400 of the commission was paid to a broker who assisted Patrick with the remainder used "to pay LLC expenses."
Furthermore, liability based on such a dual role is also consistent with the Horning case. In that case, the court rejected the argument that the defendant was "'. . . wearing two hats in the transaction (that of buyer and buyer's broker)'" because the contract specifically stated that he was acting as a principal and that no real estate brokers were involved. (Horning v. Shilberg, supra, 130 Cal.App.4th at p. 205.) Here, the Moorpark land purchase contract expressly states that Leyden Realty was acting as the seller's broker and entitled to a brokerage commission for such services.
Leyden Contentions Regarding Judgment on Cross-Complaint
1. Evidence Supports Finding of Good Cause for Termination
The Leydens contend that they were terminated without good cause because Century 21 conducted an inadequate investigation and did not allow them to present a defense. We disagree.
An employer acts with good cause in terminating an employee for misconduct when, after an appropriate investigation, the employer has reasonable and non-pretextual grounds for believing the employee committed a dischargeable act. (Cotran v. Rollins Hudig Hall Intern., Inc. (1998) 17 Cal.4th 93, 107, 109.) The adequacy of an investigation is determined on a case-by-case basis. (Id., at p. 108.) Here, substantial evidence supports the trial court's finding that Century 21 acted reasonably and in good faith after an adequate investigation.
Century 21's president Quinn reviewed the Toll Brothers' registration forms to confirm that the Leydens had failed to identify Century 21 as the broker as required by the Agreements or inform Century 21 about their actions. Quinn also afforded the Leydens an opportunity to provide a credible and innocent explanation for their conduct.
The Leydens argue that Quinn had prepared termination letters and changed the locks before the meeting, and that the trial court found the Leydens "were not permitted to make a significant defense." Nevertheless, the Leydens had an opportunity to defend themselves. Mary Leyden used that opportunity to admit she and her husband had diverted clients to their own company in order to purchase the "home of their dreams" and Richard Leyden, who arrived at the meeting late, had nothing to say. The facts were not complex and, as the trial court stated, termination is a normal reaction by an employer confronted with employee deceit.
2. Withholding Commissions not Breach of Agreements
Paragraph 39b of the Agreements provides that Century 21 "may withhold the payment of any commission due . . . in the event of threatened or pending arbitration of litigation." When Century 21 discovered the Leydens' deceit regarding the Toll Brothers transactions, it withheld commissions on eight other pending transactions. The Leydens contend that withholding these commissions breached paragraph 39b of the Agreements. Relying solely on expert witness testimony regarding the "prevailing practice" in the industry, the Leydens argue that paragraph 39b applies only to commissions that are the subject of the threatened or pending arbitration or litigation. We disagree.
The primary function of the court in interpreting a contract is to give effect to the mutual intent of the parties. (ASP Properties Group v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1269; Civ. Code, § 1636.) Such intent is inferred, if possible, solely from the written contract provisions interpreted in their ordinary and popular sense, and courts will not strain to create an ambiguity where none exists. (ASP Properties Group, supra, at p. 1269; Civ. Code, § 1638.)
Here, the Agreements cover "any and all listings of property, and all employment in connection with the real estate business" and permit Century 21 to "withhold the payment of any commission due" in the event of litigation. (Italics added.) The record shows that the trial court found no manifest ambiguity in this language, and we see none. The plain meaning of this language permits Century 21 to withhold commissions on any or all pending transactions involving the agents whether or not the transaction is specifically the subject of pending litigation.
The Leydens rely exclusively on expert witness testimony that the "prevailing practice" in resolving disputes between the agent of a real estate brokerage company and the company is to "freeze" only the commissions on transactions that are "the cause of the dispute." Extrinsic evidence, including evidence of custom and practice in an industry, is admissible to show contract language that is reasonably susceptible of either of two meanings. (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 391; Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1356-1358.) But, the interpretation of a written instrument is essentially a judicial function, and experts may not give opinions on matters that are essentially within the province of the court to decide. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 884; Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
Here, the Leydens seek to use the expert testimony as evidence of the parties' intent as to the meaning of common words in the Agreements. The expert did not analyze the language of the Agreements or testify regarding a unique meaning given to terminology in a particular industry. He simply made a statement regarding a general practice in the industry. Moreover, even if the testimony is relevant to the interpretation of the Agreements, it serves only to assist the court and is not conclusive. Experttestimony, even if uncontradicted, may be rejected by the trier of fact as long as the rejection is not arbitrary. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 632.)
In any event, there was conflicting evidence of the meaning of the commission withholding provision. Richard Quinn testified that the challenged commissions were properly withheld pursuant to paragraph 39 of the Agreements. To the extent the trial court was required to resolve conflicting evidence, its ruling was reasonable and "supported by substantial evidence." (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 956.)
3. No Error in Denial of Defamation Claim
The Leydens contend that they were libeled by Richard Quinn's statements that the Leydens breached their Agreements and violated Department of Real Estate regulations. The truth of Quinn's statements defeats this contention. (Campanelli v. Regents of University of California (1996) 44 Cal.App.4th 572, 581.)
The evidence shows that the Leydens breached their Agreements. Evidence also shows that there are two provisions of the Business and Professions Code giving the Real Estate Commissioner authority to suspend or revoke a broker or salesperson's license for engaging in fraud or dishonest conduct, including nondisclosure of commissions to an employer. (Bus. & Prof. Code, §§ 10176, subds. (g), (i), 10177, subd. (j).) A "defendant need not prove the literal truth of the allegedly libelous accusation, so long as the imputation is substantially true so as to justify the 'gist or sting' of the remark." (Campanelli v. Regents of University of California, supra, 44 Cal.App.4th at pp. 581-582.) The trial court could reasonably conclude that an accusation of violating "regulations" has at least the same "gist or sting" as an accusation of violating statutes covering the same subject matter.
4. No Error in Denial of Invasion of Privacy Claim
Richard Quinn sent an e-mail to Century 21's agents and staff stating that Century 21 had terminated the Leydens for breach of the Agreements and violating Department of Real Estate regulations. Quinn repeated the information at a regular sales meeting. The Leydens contend that this conduct was an invasion of their right of privacy. We disagree.
An invasion of privacy claim requires a plaintiff to establish a legally protected privacy interest, a reasonable expectation of privacy, and conduct constituting a "serious" invasion of privacy. (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 39-40.) Even if these elements are shown, conduct may be justified if it furthers a countervailing interest. (Id., at p. 40.)
Here, substantial evidence supports the finding that the Leydens did not have a reasonable expectation of privacy regarding disclosure of the reason for their termination. To be actionable, public disclosure of private facts must involve a communication to a large or at least significant portion of the public, not to just a few individuals. (Kinsey v. Macur (1980) 107 Cal.App.3d 265, 270.) Century 21's disclosure was only to its own agents and employees.
In addition, the information was directly related to job performance and, therefore, did not exceed the known and inherent risks of the workplace. (See Hill v. National Collegiate Athletic Assn., supra, 7 Cal.4th at p. 36.) The Leydens' fiduciary relationship with Century 21 diminished any expectation of privacyregarding job performance. "Actionable invasions of privacy must be sufficiently serious in their nature, scope, and actual or potential impact to constitute an egregious breach of the social norms underlying the privacy right." (Id., at p. 37.) Moreover, Century 21 has a legitimate interest in safeguarding the workplace from conflicts of interest, and assuring that misconduct does not spread, or affect job performance of other personnel.
CENTURY 21 CROSS-APPEAL
No Error in Determination of Damages
Century 21 contends that the trial court erred in ruling that the Leydens were entitled to 50 percent of the commissions on the Toll Brothers' transactions and 80 percent of the commission on the Moorpark land transaction. Century 21 argues that it should have received 100 percent of the commissions. We disagree.
Century 21 relies on the general rule that a party to a contract cannot recover for a breach of contract unless that party has fully performed its contractual obligations and cannot require performance by the other party unless it has fully performed its obligations. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 848, p. 935; Civ. Code, § 1439.) This rule, however, bears little or no relationship to the facts of this case. The Leydens did not recover without performing their contractual obligations. Century 21 was awarded damages and is challenging the measure of those damages.
Contract damages are designed to place the plaintiff in the same position he would have been in had the defendant performed the contract. (See Martin v. U-Haul Co. of Fresno (1988) 204 Cal.App.3d 396, 409.) As a corollary to this rule, "[e]xcept as expressly provided by statute, no person can recover a greater amount in damages for the breach of an obligation, than he could have gained by the full performance thereof on both sides." (Civ. Code, § 3358.) The damages awarded should place the injured party in the same position it would have held had the contract properly been performed, but may not exceed the benefit which it would have received under those circumstances. (Steelduct Co. v. Henger-Seltzer Co. (1945) 26 Cal.2d 634, 648-649.) In this case, the court awarded damages based on the percentage of the commissions Century 21 would have been entitled to under the Agreements. Any more would have been a windfall.
Moreover, when the trial court provides a statement of decision, a party must object to any portion of the statement that it deems to be deficient. (Code Civ. Proc., § 634; In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134.) Failure to object waives any claim on appeal. (Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 140-141.) Not only did Century 21 fail to object to the award of damages, the damages assessed by the court conform to the damages requested by Century 21's own proposed statement of decision.
The judgment is affirmed. Century 21 shall recover costs.
We concur: GILBERT, P.J., COFFEE, J.