Roberts v. Haro CA2/8
B266157
| Cal. Ct. App. | Aug 16, 2016Background
- Roberts owned a Tarzana home subject to multiple deeds of trust and arranged a lender‑approved short sale for $480,400. Two buyers (Haro and another) offered that price; the competing offers prompted negotiations for additional compensation outside escrow.
- Haro orally offered to procure Roberts a project/marketing manager engagement at Encon paying $90,000 (about $1,300/week, 6+ months); Roberts accepted and executed the written real‑estate sale through escrow.
- Shortly after closing Haro paid Encon $5,000 toward Roberts’s compensation; Roberts worked for Encon about one month but Haro refused to fund the remainder and repudiated the deal; Encon then ended the relationship.
- Roberts sued for breach of the oral employment agreement and promissory fraud (alleging Haro never intended to perform and induced her to sell the house); Haro demurred, asserting the oral side‑agreement is barred by the statute of frauds and, alternatively, that Roberts has unclean hands (alleged scheme to obtain payment outside escrow).
- The trial court sustained the demurrers without leave to amend and entered judgment for Haro. On appeal the Court of Appeal affirmed that the side agreement is within the statute of frauds but reversed the no‑leave ruling and remanded, concluding Roberts should be allowed to amend to plead facts showing partial performance and the lawfulness of the side agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the oral employment side‑agreement is barred by the statute of frauds | Roberts: side agreement is separate/divisible from the sale or, alternatively, part performance/estoppel removes the bar | Haro: agreement is integral to the sale of land and thus must be in writing; unenforceable and barred | Court: Agreement falls within statute of frauds, but plaintiff may amend to plead partial performance and lawfulness — remand for leave to amend |
| Whether partial performance/estoppel excuses the statute of frauds | Roberts: she partially performed (worked ~1 month; Encon received $5,000 from Haro) and changed position (rejected the other buyer’s $100,000 offer) | Haro: no unconscionable injury alleged; plaintiff’s conduct amounted to an attempt to defraud lender (unclean hands) | Court: Allegations of part performance and changed position are pleaded sufficiently to permit amendment to better allege unconscionable injury and lawfulness; leave to amend required |
| Whether promissory fraud claim is barred by the statute of frauds | Roberts: fraud claim survives; Tenzer/Riverisland permit fraud claims even if contract unenforceable | Haro: fraud claim is derivative of an unenforceable contract and should be barred | Court: Fraud claim is not necessarily barred; plaintiff may amend consistent with partial performance theory; fraud allegations here were adequate to permit amendment |
| Whether plaintiff’s alleged illegality/unclean hands defeats equitable relief | Haro: side deal was intended to hide payment outside escrow and defraud lender; equity should deny relief | Roberts: can amend to allege she and Haro sought counsel who advised the arrangement was lawful | Held: Material question whether side agreement was illegal; because parties did not litigate legality and record is undeveloped, plaintiff should be given leave to amend to plead lawfulness; dissent would bar relief for unclean hands |
Key Cases Cited
- Secrest v. Security National Mortgage Loan Trust 2002-2, 167 Cal.App.4th 544 (2008) (partial performance doctrine can remove statute of frauds barrier where performance unequivocally refers to the contract)
- Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn., 55 Cal.4th 1169 (2013) (fraud action not barred merely because the promise is unenforceable under the statute of frauds)
- Fischer v. Time Warner Cable, Inc., 234 Cal.App.4th 784 (2015) (standards on reviewing dismissal after demurrer; leave to amend abuse‑of‑discretion review)
- In re Marriage of Benson, 36 Cal.4th 1096 (2005) (statute of frauds writing requirement and sufficiency of memorandum)
- Tenzer v. Superscope, Inc., 39 Cal.3d 18 (1985) (promissory fraud actionable notwithstanding statute of frauds concerns)
- Beckwith v. Dahl, 205 Cal.App.4th 1039 (2012) (elements and sufficiency of promissory fraud pleading)
- Blain v. Doctor’s Co., 222 Cal.App.3d 1048 (1990) (unclean hands can bar relief; misconduct may preclude reliance on attorney advice)
- Hambey v. Wise, 181 Cal. 286 (1919) (traditional part‑performance doctrine in real property contracts)