Westside Estate Agency, Inc. v. Randall
6 Cal. App. 5th 317
| Cal. Ct. App. | 2016Background
- Stephen Shapiro, a licensed broker and principal of Westside Estate Agency, agreed orally to represent friends James and Eleanor Randall in buying a Bel Air estate; no written broker agreement was signed.
- Shapiro made offers in Oct–Nov 2014, including a $45 million offer; sellers made counteroffers with conditions the Randalls did not accept.
- The Randalls later purchased the property in Feb–Mar 2015 for $46.25 million with attorney Richard Meaglia acting as their broker; Meaglia applied a $925,000 cooperating broker fee against the price.
- Westside sued the Randalls (and Meaglia initially) seeking $925,000 as an unpaid commission, alleging breach of an implied contract; defendants demurred.
- The trial court sustained the demurrer as to the Randalls under California's statute of frauds (§ 1624(a)(4)) and denied leave to amend; judgment of dismissal was entered and appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the statute of frauds (§ 1624(a)(4)) bar Westside’s claim for a commission based on an unwritten broker agreement? | Westside contends the oral/implied agreement to find a home for the Randalls is enforceable and not barred. | Randalls argue the statute applies to unwritten agreements to employ a broker to purchase real estate, so claim is invalid. | Statute applies and bars recovery; demurrer sustained. |
| Can Westside invoke equitable estoppel or fraud to avoid the statute of frauds? | Westside suggests estoppel or equitable theories prevent Randalls from invoking the statute. | Randalls respond that licensed brokers are conclusively presumed to know the writing requirement; estoppel requires actual fraud. | Estoppel unavailable absent actual fraud; Westside alleged no actual fraud. |
| Do alternative doctrines (implied-in-fact contract, expectation damages, or labeling) avoid the statute? | Westside argues its claim is for an implied-in-fact contract or expectation damages, not a commission claim subject to the statute. | Randalls argue substance controls; remedies calling cannot avoid statute. | Substance controls; recharacterization cannot evade the statute; claim barred. |
| Could a writing in the offers or other emails satisfy the statute or was Westside the procuring cause? | Westside argues written offers/emails may memorialize employment and it was procuring cause. | Randalls argue the offers did not evidence employment by the Randalls and Westside did not procure the ultimate sale. | No adequate writing alleged; facts show Westside was not the procuring cause; leave to amend properly denied. |
Key Cases Cited
- Phillippe v. Shapell Industries, 43 Cal.3d 1247 (Cal. 1987) (statute bars recovery for unwritten broker commission claims except in narrow exceptions)
- Beazell v. Schrader, 59 Cal.2d 577 (Cal. 1963) (quantum meruit recovery barred for broker commissions covered by statute)
- Tenzer v. Superscope, Inc., 39 Cal.3d 18 (Cal. 1985) (limits estoppel against statute of frauds; actual fraud required for certain agent claims)
- Chan v. Tsang, 1 Cal.App.4th 1578 (Cal. Ct. App. 1991) (broker may recover if written purchase contract contemplates broker commission and principal cancels)
- Donnellan v. Rocks, 22 Cal.App.3d 925 (Cal. Ct. App. 1972) (broker can be third-party beneficiary of purchase agreement providing commission)
- Coulter v. Howard, 203 Cal. 17 (Cal. 1927) (broker may recover where principal subsequently ratifies unwritten agreement in writing)
- Marks v. Walter G. McCarty Corp., 33 Cal.2d 814 (Cal. 1949) (statute reaches persons who aid in purchase or sale even if not licensed brokers)