Preview
Lawrence E. Skidmore (SBN 137587)
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ARONOWITZ SKIDMORE LYON
A PROFESSIONAL CORPORATION FILED
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200 Auburn Folsom Road, Suite 305
Auburn, CA 95603
SUPERIORTOUNTY
COURTOF OFPLACER
CALIFORNIA
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Telephone: 530-823-9736
Facsimile: 530-823-5241 MAR 29 2019
FF
JAKE CHATTERS
MICHAEL A.J. NANGANO (SBN 133999) EXECUTIVE OFFICER & CLERK
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LAW OFFICES OF MICHAEL A.J. NANGANO By: C. Waggoner, Deputy
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133 No. Altadena Drive, Suite 403
Pasadena, CA 91107
Phone: (626) 796-9998
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Fax: (626) 796-9992
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Attorney for Defendants
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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IN AND FOR THE COUNTY OF PLACER
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PACIFIC UNION INTERNATIONAL, Case No. S-CV 0042080
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INC.,
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Plaintiff, DEFENDANTS’ NOTICE OF
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DEMURRER & DEMURRER
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VS. TO COMPLAINT
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ERIK LUDWICK, an individual AND
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Beneficiary of The Anything Trust dated Hearing Date: May 9, 2019
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October 12, 2007; THE ANYTHING
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TRUST DATED OCTOBER 12, 2017; Time: 8:30 A.M.
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PAUL D. BOOTH, in his capacity as Trustee
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of The Anything Trust Dated October 12, Dept.: Dept 42
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2007; and Does 1 through 50, inclusive,
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Trial Date: None Set
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Defendants.
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DEFENDANTS’ DEMURRER TO COMPLAINT
TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:
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PLEASE TAKE NOTICE, that on May 9, 2019, at 8:30 a.m., in Department 42 of this Court
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located at 10820 Justice Center Drive, Roseville, CA 95678, or as soon thereafter as the matter may
be heard, Defendants
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The Anything Trust Dated October 12, 2007 (hereinafter simply “The Trust”);
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Erik Ludwick, individually and as a beneficiary of The Trust; and
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Paul D. Booth, in his capacity as Trustee of The Trust (hereinafter simply “Defendants”)
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will demur to the Complaint in this matter under Code of Civil Procedure §§430.10 ef seq.
The issue presented on this Demurrer is whether Plaintiff Pacific Union International, Inc..
(hereinafter simply “Plaintiff’) has stated a viable cause of action for collection of a real estate
commission fora sales transaction in which Plaintiff was never involved as Defendants’ sales agent
or Broker? Defendants respectfully submit that the answer to that question, as a matter of law, is
and must be: “NO.”
Specifically, Defendants demur to Plaintiff’s complaint on the following grounds:
Ii That Plaintiffs claims are barred by the applicable Statutes of Frauds including, but
not limited to, California Civil Code §1624(4):
2. That Plaintiff has no standing to sue Defendants on a contract to which Plaintiff was
neither a party nor a legally cognizable successor in interest; and, therefore,
ns That “Plaintiff's” claims fail to state facts sufficient to constitute a viable cause of
action against Defendants, or either of them.
This Demurrer is based on this Notice of Demurrer, the attached Memorandum of Points and
Authorities, the Court’s record and file herein; and upon such further oral and documentary
evidence as may be presented at the hearing on the Demurrer.
DATED: March 24 , 2019 MICHAEL A.J. NANGANO, A LAW CORPORATION
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BY dt AD S is (_?
(“MICHAEL A.J. NANGANO
Facsimile signature as original
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DEFENDANTS’ DEMURRER TO COMPLAINT
MEMORANDUM OF POINTS AND AUTHORITIES
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This is allegedly a Breach of Contract Action arising from the sale of a parcel of residential
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real estate located at 200 Toyopa Drive, Pacific Palisades, CA 90272 in the County of Los Angeles,
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CA (hereinafter simply “the L. A. County Property”). Defendant “The Anything Trust Dated
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October 12, 2007" (hereinafter simply “the Trust”) was the owner of record of the Los Angeles
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County Property and does not do business or own any property in Placer County. Defendant Erik
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Ludwick (“Ludwick”) is the current Trustee and primary beneficiary of the Trust, and a resident
of Los Angeles County. Defendant Paul D. Booth (“Booth”) is the former Trustee of the Trust, and
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a resident of Placer County. !
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PLAINTIFF WAS NEVER A PARTY TO THE LISTING AGREEMENT
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OR ANY OF THE AMENDMENTS THERETO
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On or about August 29, 2016 Defendants entered into a real estate brokerage “Listing
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Agreement” with “Partners Trust,” a real estate agency which had its principle place of business at
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23410 Civic Way, Malibu, CA 90265 in the County of Los Angeles. (See Exhibit “A” to the
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Complaint at page 1, 1" paragraph; and the signature lines on page 5 of Exhibit “A”.) The basis of
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Plaintiff's complaint is Defendants’ alleged breach of this “Listing Agreement.”
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However, Plaintiff was not a party to the Listing Agreement with Defendants, and never had
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any direct involvement whatsoever with Defendants, or any of them. Rather, Plaintiff subsequently
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acquired “Partners Trust” in a corporate purchase transaction, the details of which are not known
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to Defendants at this time except to the extent discussed in the Complaint. Based on this corporate
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acquisition, Plaintiff now claims that it is entitled to enforce the terms of the Listing Agreement
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against Defendants — even though Plaintiff was never a party to that Listing Agreement, and
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never had any contractual relationship with Defendants.
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' Defendants Ludwick, Booth and the Trust are sometimes hereinafter collectively referred
to simply as “the Defendants.” Ludwick is replacing Booth as the Trustee of the Trust.
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DEFENDANTS’ DEMURRER TO COMPLAINT
Put as simply as possible, Plaintiff's claim in its unverified Complaint is for breach of
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contract on the basis that Defendants allegedly failed to pay Plaintiffa real estate sales commission:
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sd under a real estate listing agreement dated August 26, 2016 which was entered into
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in Los Angeles County between some of the Defendants as “seller,” on the one hand,
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and Partners Trust (not Plaintiff) as “broker,” on the other (see Exhibit “A” to
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Complaint, 1* page, 1° 4; and signature line on p.5 thereof);
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under a real estate listing agreement as to which Plaintiff had no relationship
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whatsoever for the first eleven (11) months of the listing — from August 26, 2016
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until August 2, 2017 (see Exhibit “A” and Complaint at §2.);
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. with respect to the sale of a property located in Los Angeles County for which
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Partners Trust’s, not Plaintiff, was the listing and selling broker (/d.);
* with respect to a sale which was transacted under Partners Trust’s own California
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Department of Real Estate License — No. 01869103; and
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* with respect to a sale which was NOT transacted under Plaintiff's corporate
California DRE License No. 01866771 (issued in the name of Samuel H. Kraemer as
designated officer); or under the license of any of Pacific Union International’s
related corporate entities. 7
Even when the Listing Agreement was modified after Plaintiff allegedly acquired Partners
Trust (a year after the Listing Agreement was first signed) the modifications in the Listing
Agreement continued to refer only to Defendants and Partner’s Trust, never to Plaintiff (see
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collective Exhibit “B” to Complaint). In short, Partner’s Trust, acting under its own corporate DRE
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license, was the sole selling agent and/or broker.
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2 The California Dept. of Real Estate website lists four (4) affiliated corporate licenses
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for Plaintiff,” each in the name of the “designated officer” for the particular location:
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License — No. 01842987 — licensed in the name of Scott Lee Gibson (Los Angeles)
No. 01866771 — licensed in the name of Samuel H. Kraemer (San Francisco)
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No. 01869607 — licensed in the name of Mark Alexander Mclaughlin (San Francisco)
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No. 01914356 — licensed in the name of David J. Buurma (Napa).
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DEFENDANTS’ DEMURRER TO COMPLAINT
But even though Plaintiff admits that it did not acquire Partners Trust until a year after the
Listing Agreement was signed (and only shortly before it expired), it disingenuously claims that:
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“Plaintiff performed all of its obligations under the Contract. Plaintiff and its agents
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listed the Property for sale, energetically marketed it with professional insight and
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knowledge of the local market for over a year, and procured a qualified buyer.”
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(Complaint at 414.)
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Balderdash!
It was in August 2017 — a year after the Listing Agreement was entered into by Defendants
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as seller, on the one hand, and Partners Trust as Broker, on the other— before Plaintiff even acquired
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Partners Trust (see Complaint at §2). By that time Partners Trust (not Plaintiff) had already done
all of the marketing of the Property and obtained the ultimate Buyer (Complaint at Js 2 & 15 - 18).
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Nonetheless, Plaintiff subsequently proceeded to act as a “dual” agent on behalf of both seller
and buyer; with Plaintiff allegedly “representing” the Buyer (whom it had never met and to whom
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it had never showed the Property) under an alleged exclusion letter prepared and delivered to
Defendants by Partners Trust (not Plaintiff) after the listing agreement expired. (See Complaint at
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418.) Plaintiffs entire case is premised on this “exclusion letter” but the purported “exclusion list”
was provided by Partners Trust (not Plaintiff); and Plaintiff has failed to establish the exclusion
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list’s validity or even existence; let alone that Plaintiff showed the property to the buyer and/or is
otherwise entitled to rely on Partners Trust’s alleged “exclusion letter.”
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II
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THE COMPLAINT IS BARRED BY THE STATUTE OF FRAUDS
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The statute of frauds declares several types of agreements “invalid” unless “they, or some
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note or memorandum thereof, are in writing and subscribed by the party to be charged or by the
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party's agent.” (Calif. Civil Code §1624, subd. (a).)
“A court applying the statute of frauds is accordingly presented with two questions: (1) does
the statute apply to the contract at issue?; and if so, (2) are the statute's requirements of a properly
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DEFENDANTS’ DEMURRER TO COMPLAINT
subscribed writing met?” (Westside Estate Agency, Inc. v. Randall, 6 Cal.App.Sth 317, 320; 2"
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Dist. 2016; hereinafter simply “Westside Estate Agency”)
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As applicable to this case, Civil Code §1624(4) provides in pertinent part that:
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“(a) The following contracts are invalid, unless they, or some note or memorandum thereof,
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are in writing and subscribed by the party to be charged or by the party's agent:
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(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
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estate . .. for compensation or a commission.”
Thus, “section 1624 of the Civil Code is applicable to the collection by the agent or broker
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of his ‘**** compensation or a commission ***’ and the enforcement by the principal of the broker's
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agreement..." (Steiner v. Rowley, 35 Cal.2d 713, 715; quoting Marks v. Walter G. McCarty
Corp., 33 Cal.2d 814, 205 P.2d 1025 & Le Blond v. Wolfe, 83 Cal.App.2d 282, 188 P.2d 278.)
“The purpose of [this provision] is to protect the owner of real property, not from every claim
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of a commission for selling the same, but from claims from persons never by him employed or
authorized to act.” (Moore v. Borgfeldt (1929) 96 Cal.App. 306, 313; emphasis added.)
And, in order to be entitled to recover a commission for a sale of real property, a broker must
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prove (1) that he was employed by or on behalf of the owner to sell the property; and (2) that his
authority, or some note or memorandum thereof, was in writing, signed by the seller, or by his
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authorized agent. (Civil Code, §1624(a)(4); McCarthy v. Loupe (1882) 62 Cal. 299; Steiner v.
Rowley, supra, 35 Cal.2d at 715; and Lambert v. Woodson, 125 Cal.App. 2d 186, 2d Dist. 1954; and
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Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247.)
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Plaintiff cannot fulfill either of these requirements because (1) Defendants employed Partners
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Trust, not Plaintiff as their selling agent; and, therefore, (2) the written listing agreement was
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between Defendants and Partners Trust, not between Defendants and Plaintiff as required by law
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for Plaintiff to be able to collect a commission.
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Further, before a real estate broker can be said to have earned his commission, it must also
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be shown that the licensed broker produced a purchaser, who was ready and willing to make the
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purchase and that he was the procuring cause of the transaction. (McGavock v. Woodlief (1857) 61
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DEFENDANTS’ DEMURRER TO COMPLAINT
U.S. (20 How.) 221, 15 L.Ed. 884; see also, Hahn v. Hauptman (1930) 107 Cal.App. 739 holding
that the plaintiff real estate broker was not entitled to a commission when the sale was negotiated
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by an unlicensed employee rather than the broker himself.) Once again, Plaintiff cannot fulfill the
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requirement — as it was Partners Trust, not Plaintiff who produced the purchaser and was, in fact,
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“the procuring cause of the transaction.”
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In Westside Estate Agency, supra, Division 2 of the 2d District Court of Appeal addressed
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the “mirror image” of the issue presented in the instant case and concluded that the statute of frauds
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was (1) applicable; and (2) prohibited the real estate agent’s claim to a fee for a transaction in which
it was not involved and for which it did not have a written listing agreement. The Court
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summarized the case as follows:
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We are all familiar with the phrase, “caveat emptor”: Buyer beware. This case deals
with its less renowned cousin, “caveat sectorem”: Broker beware. California's statute
of frauds declares invalid any “agreement authorizing or employing an agent, broker,
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or any other person to purchase or sell real estate” unless that agreement is in writing
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and signed by the broker's client. (Civ. Code, §1624, subd. (a)(4).)... This is a nearly
absolute rule, with only a few very narrow exceptions. The broker in this case missed
out on a $925,000 commission because he agreed to help a friend buy a $45 million
Bel Air estate, but the deal was ultimately closed by another broker on different terms.
Critically, the first broker's agreement was not in writing. The first broker sued his
friend/client for the commission, and the trial court dismissed the lawsuit for
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noncompliance with the statute of frauds. After examining in detail the statute of
frauds and its exceptions, we conclude the trial court was right and affirm.
(Westside Estate Agency, supra, at 317.)
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In that case the plaintiff (Westside) claimed that it had an “implied” contract to act on the
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Randall’s behalf, that it had done so (including making offers on the property) and, therefore, when
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the Randalls ultimately bought the property for $46.25 million, it was entitled to a commission.
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Westside sued the Randalls, who demurred to the complaint and first amended complaint.’
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NO
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This is the mirror image of the instant case as, here, the original broker (Partners Trust)
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had a written broker’s agreement but the subsequent broker, Plaintiff, did not. Nonetheless, the
result, in terms of the statute of frauds, must be the same — only the broker who had a written
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contract is entitled to claim a broker’s fee.
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DEFENDANTS’ DEMURRER TO COMPLAINT
The trial court sustained the demurrer to the first amended complaint without leave to amend
—
as to the Randalls; reasoning that:
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* Westside was trying to collect a broker's commission from the Randalls without any
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written agreement evidencing the broker-client relationship;
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* that this claim fell “squarely within” the statute of frauds;
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* that the claim fell outside any of the exceptions to the statute; and
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* that any unwritten agreement was consequently unenforceable as a matter of law.
While the roles of the first and second brokers are reversed here — the bottom line remains
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the same: Partners Trust had a written contract to act on behalf of Defendant Anything Trust which
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was the owner and seller of the property. Plaintiff never had any written contract with Defendants,
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or any of them. To the contrary, Plaintiff is relying solely on the undisclosed terms of its alleged
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acquisition agreement with Partners Trust as the basis for its claim.
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But the result is, and must be the same — since there is no written agreement between Plaintiff
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and Defendants, Plaintiffs claim is barred by the Statute of Frauds.
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EVEN IF IT’S CLAIMS WERE NOT BARRED BY THE STATUTE OF LIMITATIONS,
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PLAINTIFF HAS FAILED TO STATE A VIABLE CAUSE OF ACTION
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A. Plaintiff Has Not Properly Pled or Established, a Right to a Commission.
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A broker's right to compensation; the amount owed; and, the principle / seller's obligation to
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pay compensation to the broker must be in writing and must be clearly set forth in the listing
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agreement. (Civil Code §1624(a)(4).) Any attempt to assign the broker's rights as an agent of the
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principle/seller must also be in writing, as:
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(3) An agreement for .. . for the sale of real property, or of an interest therein; such an
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agreement, if made by an agent of the party sought to be charged, is invalid, unless the
authority of the agent is in writing, subscribed by the party sought to be charged."
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(Civil Code §1624(a)(3).)
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In accordance with Civil Code §1624(a)(3), the California Supreme Court has held that a real
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estate broker is not entitled to recover any commission under a breach of contract theory, unless
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DEFENDANTS’ DEMURRER TO COMPLAINT
there is a signed agreement between the broker and the principal/seller. (Phillippe v. Shapell
Industries (1987) 43 Cal. 3d 1247, 1255-58; see also Buckaloo v. Johnson (1975) 14 Cal. 3d 815.)
HO
To sustain a breach of contract claim or, alternatively, any tort theories for recovery of alleged
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commission owed on the sale of real property, the following criteria MUST be fulfilled:
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i Commissions can only be paid to a licensed real estate broker who, in turn, may pay all or
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a portion thereof only to a licensed salesperson or broker associate with whom the broker has
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a written contract. (Business & Professions Code §§ 10136, 10137, & 10138.)
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No salesperson can accept compensation from any person other than the broker by whom he
or she is employed at the time of sale; and, no salesperson shall pay compensation for
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performing any act for which a license is required to any real estate licensee except through
the broker under whom the salesperson is licensed. (Business & Professions Code §10137.)
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The listing broker must have a valid, written contract with the principal for whom the broker
is acting, e.g., the seller landlord/lessor, or borrower. (California Civil Code §1624(a)(3);
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Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247.)
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The selling broker must have a valid written agreement with the seller or be the "procuring
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cause" of the sale. (Civil Code §1624(a)(3); Phillippe v. Shapell Industries, supra.)
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B. Any Allegecation by Plaintiff That It Is Entitled To a Commissiona by or
Through Partners Trust Is Contrary to Applicable Law
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Only where the principle / seller's authority to pay any subagency broker and/or cooperating
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broker is certain, was the cooperating broker able to secure payment directly from the seller.
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(Schmidt v. Berry (1986) 183 Cal.App.3d 1299.)
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Although it is not uncommon for listing brokers to eek the cooperation of other real estate
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brokers to carry out the purpose and objective of their agency; a principal / seller must consent to
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to the appointment of a subagent / cooperating broker and/or the establishment ofa contractual and
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fiduciary relationship directly between the principal and the subagent. Under such an appointment,
the subagent represents the principal in the same manner as the listing broker. If When the
listing broker appoints another broker to cooperate without the express or implied authority
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DEFENDANTS’ DEMURRER TO COMPLAINT
of the principal, the cooperating broker becomes the subagent or agent of
the listing broker
and not the subagent of the principal. (California Civil Code §§ 2349; 2350 and 2351.)
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CONCLUSION
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Since Plaintifwas
f never a “party” to the Listing Agreement: was not the procuring cause of
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the sale transaction between Defendants and the ultimate purchaser; and never had any other written
“broker” or “listing” agreement with Defendants, or any of them, providing for payment of money
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to Plaintiff, Plaintiff has no legal right to claim any “broker's commission” with respect to that
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transaction.
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To the contrary, Plaintiff's claim is barred by Civil Code §1624(a)(4); the additional Civil
Code and Business & Professional Code sections cited herein; and by applicable case law.
We would not usually ask that a demurrer to the initial complaint be sustained without leave
to amend. But here, since Plaintiff's claim is barred under the statute of frauds and so many other
statutory provisions, and there is, therefore, no way the Complaint could be amended to state a
viable cause of action, sustaining the demurrer without leave to amend would be appropriate.
Respectfully submitted,
DATED: March 2019 MICHAEL A.J. NANGANO, A LAW CORPORATION
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BY? —
MICHAEL A.J. NANGANO
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Attorneys for Defendants
Facsimile signature as original
Pursuant to C.R.C. Rule 2.305(d)
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DEFENDANTS’ DEMURRER TO COMPLAINT
Bo PROOF OF SERVICE
[am employed in the County of Los Angeles, State of California. I am over the age of 18
and not a party to the within action. My business address is 133 N. Altadena Drive, Suite 403.
Pasadena, CA 91107.
On March 29, 2019, I served the following document(s) described as:
DEFENDANTS* NOTICE OF DEMURRER AND DEMURRER TO COMPLAINT
on all interested parties in this action by placing [X] atrue copy [| the original thereof enclosed
in sealed envelopes addressed as follows:
SEE ATTACHED MAILING LIST
(BY FACSIMILE) The facsimile machine I used complied with Rule 2003(3) and no error
was reported by the machine. Pursuant to Rule 2008(e)(4), I caused the machine to print a
10 record of the transmission.
11 [x] (BY MAIL, 1013a, 2015.5 C.C.P.) lam readily familiar with the firm’s practice for
collection and processing correspondence for mailing. Under that practice, this document
12 will be deposited with the U.S. Postal Service on this date with postage thereon fully prepaid
at Los Angeles, California in the ordinary course of business. I am aware that on motion of
13 the party served, service is presumed invalid if postal cancellation date or postage meter date
is more than one day after date of deposit for mailing in affidavit.
14
(BY OVERNIGHT DELIVERY/COURIER) I served the above referenced document(s)
15 enclosed in a sealed package, for collection and for delivery marked for next day delivery in
the ordinary course of business, addressed to the office of the addressee(s) listed above or on
16 attached sheet.
17 (BY E-MAIL) I transmitted a copy of the foregoing document(s) via e-mail to the
addressee(s). Courtesy copy
18
(STATE) I declare under penalty of perjury under the laws of the State of California that the
19 above is true and correct.
20 Executed on March 29, 2019, at Pasadena, California.
2d
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CYL
Patriesa-M1. Poole
23
Facsimile signature as original
24 Pursuant to C.R.C. Rule 2.305(d)
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PROOF OF SERVICE
MAILING LIST
YP
MH Pacific Union International, Inc. v. Ludwick, et al.
Case No. SCV0042080
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Shannon B. Jones, Esq.
Lindsey Morgan, Esq.
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Shannon B. Jones Law Group, Inc.
208 W. El Pintado Road
Nn
Danville, CA 94526
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Lawrence E. Skidmore, Esq.
Aronowitz Skidmore Lyon
A Professional Law Corporation
200 Auburn Folsom Road, Suite 305
Auburn, CA 95603
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PROOF OF SERVICE
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Lawrence E. Skidmore (SBN 137587) — ARONOWITZ SKIDMORE LYON A PROFESSIONAL CORPORATION FILED PO 200 Auburn Folsom Road, Suite 305 Auburn, CA 95603 SUPERIORTOUNTY COURTOF OFPLACER CALIFORNIA WY Telephone: 530-823-9736 Facsimile: 530-823-5241 MAR 29 2019 FF JAKE CHATTERS MICHAEL A.J. NANGANO (SBN 133999) EXECUTIVE OFFICER & CLERK OH LAW OFFICES OF MICHAEL A.J. NANGANO By: C. Waggoner, Deputy Dn 133 No. Altadena Drive, Suite 403 Pasadena, CA 91107 Phone: (626) 796-9998 N Fax: (626) 796-9992 Don Attorney for Defendants SO oO SUPERIOR COURT OF THE STATE OF CALIFORNIA ES KF IN AND FOR THE COUNTY OF PLACER ESO NYO Fr WY F&F SF PACIFIC UNION INTERNATIONAL, Case No. S-CV 0042080 Se” Se YF DAH INC., See F- Plaintiff, DEFENDANTS’ NOTICE OF See DEMURRER & DEMURRER NIN See” Se FF VS. TO COMPLAINT Fe See FF ERIK LUDWICK, an individual AND See Beneficiary of The Anything Trust dated Hearing Date: May 9, 2019 BO See FF October 12, 2007; THE ANYTHING See TRUST DATED OCTOBER 12, 2017; Time: 8:30 A.M. TD Se N PAUL D. BOOTH, in his capacity as Trustee See of The Anything Trust Dated October 12, Dept.: Dept 42 KS|& NN Se 2007; and Does 1 through 50, inclusive, ae Trial Date: None Set ae NY N Nine Defendants. WO NO Ne ae BP ee NHB Name NT NO TO NO ND NO NO o l DEFENDANTS’ DEMURRER TO COMPLAINT TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: NO PLEASE TAKE NOTICE, that on May 9, 2019, at 8:30 a.m., in Department 42 of this Court to located at 10820 Justice Center Drive, Roseville, CA 95678, or as soon thereafter as the matter may be heard, Defendants nN The Anything Trust Dated October 12, 2007 (hereinafter simply “The Trust”); DD Erik Ludwick, individually and as a beneficiary of The Trust; and aI Paul D. Booth, in his capacity as Trustee of The Trust (hereinafter simply “Defendants”) Ho will demur to the Complaint in this matter under Code of Civil Procedure §§430.10 ef seq. The issue presented on this Demurrer is whether Plaintiff Pacific Union International, Inc.. (hereinafter simply “Plaintiff’) has stated a viable cause of action for collection of a real estate commission fora sales transaction in which Plaintiff was never involved as Defendants’ sales agent or Broker? Defendants respectfully submit that the answer to that question, as a matter of law, is and must be: “NO.” Specifically, Defendants demur to Plaintiff’s complaint on the following grounds: Ii That Plaintiffs claims are barred by the applicable Statutes of Frauds including, but not limited to, California Civil Code §1624(4): 2. That Plaintiff has no standing to sue Defendants on a contract to which Plaintiff was neither a party nor a legally cognizable successor in interest; and, therefore, ns That “Plaintiff's” claims fail to state facts sufficient to constitute a viable cause of action against Defendants, or either of them. This Demurrer is based on this Notice of Demurrer, the attached Memorandum of Points and Authorities, the Court’s record and file herein; and upon such further oral and documentary evidence as may be presented at the hearing on the Demurrer. DATED: March 24 , 2019 MICHAEL A.J. NANGANO, A LAW CORPORATION gif x “ay f }. ON BY dt AD S is (_? (“MICHAEL A.J. NANGANO Facsimile signature as original 4 20544) t . . ZIVIGH DEFENDANTS’ DEMURRER TO COMPLAINT MEMORANDUM OF POINTS AND AUTHORITIES LO This is allegedly a Breach of Contract Action arising from the sale of a parcel of residential WY real estate located at 200 Toyopa Drive, Pacific Palisades, CA 90272 in the County of Los Angeles, FF CA (hereinafter simply “the L. A. County Property”). Defendant “The Anything Trust Dated HO October 12, 2007" (hereinafter simply “the Trust”) was the owner of record of the Los Angeles Dn County Property and does not do business or own any property in Placer County. Defendant Erik ON Ludwick (“Ludwick”) is the current Trustee and primary beneficiary of the Trust, and a resident of Los Angeles County. Defendant Paul D. Booth (“Booth”) is the former Trustee of the Trust, and oO a resident of Placer County. ! Ss = I BP PLAINTIFF WAS NEVER A PARTY TO THE LISTING AGREEMENT EEO OR ANY OF THE AMENDMENTS THERETO OH EF KR On or about August 29, 2016 Defendants entered into a real estate brokerage “Listing FE KA Agreement” with “Partners Trust,” a real estate agency which had its principle place of business at ee 23410 Civic Way, Malibu, CA 90265 in the County of Los Angeles. (See Exhibit “A” to the aD Complaint at page 1, 1" paragraph; and the signature lines on page 5 of Exhibit “A”.) The basis of ewe ee Plaintiff's complaint is Defendants’ alleged breach of this “Listing Agreement.” SG However, Plaintiff was not a party to the Listing Agreement with Defendants, and never had S&F DN any direct involvement whatsoever with Defendants, or any of them. Rather, Plaintiff subsequently SH YN acquired “Partners Trust” in a corporate purchase transaction, the details of which are not known NN ODP to Defendants at this time except to the extent discussed in the Complaint. Based on this corporate NO acquisition, Plaintiff now claims that it is entitled to enforce the terms of the Listing Agreement SF NO against Defendants — even though Plaintiff was never a party to that Listing Agreement, and NO RR never had any contractual relationship with Defendants. bwpO Se NO ' Defendants Ludwick, Booth and the Trust are sometimes hereinafter collectively referred to simply as “the Defendants.” Ludwick is replacing Booth as the Trustee of the Trust. Se 3 DEFENDANTS’ DEMURRER TO COMPLAINT Put as simply as possible, Plaintiff's claim in its unverified Complaint is for breach of = contract on the basis that Defendants allegedly failed to pay Plaintiffa real estate sales commission: NO sd under a real estate listing agreement dated August 26, 2016 which was entered into WY in Los Angeles County between some of the Defendants as “seller,” on the one hand, eP and Partners Trust (not Plaintiff) as “broker,” on the other (see Exhibit “A” to OO Complaint, 1* page, 1° 4; and signature line on p.5 thereof); DD under a real estate listing agreement as to which Plaintiff had no relationship NHN whatsoever for the first eleven (11) months of the listing — from August 26, 2016 eo until August 2, 2017 (see Exhibit “A” and Complaint at §2.); Co . with respect to the sale of a property located in Los Angeles County for which ksre anos Partners Trust’s, not Plaintiff, was the listing and selling broker (/d.); * with respect to a sale which was transacted under Partners Trust’s own California CGCHernaaqua Department of Real Estate License — No. 01869103; and ee * with respect to a sale which was NOT transacted under Plaintiff's corporate California DRE License No. 01866771 (issued in the name of Samuel H. Kraemer as designated officer); or under the license of any of Pacific Union International’s related corporate entities. 7 Even when the Listing Agreement was modified after Plaintiff allegedly acquired Partners Trust (a year after the Listing Agreement was first signed) the modifications in the Listing Agreement continued to refer only to Defendants and Partner’s Trust, never to Plaintiff (see S DR collective Exhibit “B” to Complaint). In short, Partner’s Trust, acting under its own corporate DRE F&F license, was the sole selling agent and/or broker. KD SSB KN NY 2 The California Dept. of Real Estate website lists four (4) affiliated corporate licenses RBRRE for Plaintiff,” each in the name of the “designated officer” for the particular location: NY License — No. 01842987 — licensed in the name of Scott Lee Gibson (Los Angeles) No. 01866771 — licensed in the name of Samuel H. Kraemer (San Francisco) NM No. 01869607 — licensed in the name of Mark Alexander Mclaughlin (San Francisco) Dm No. 01914356 — licensed in the name of David J. Buurma (Napa). BPN 4 DEFENDANTS’ DEMURRER TO COMPLAINT But even though Plaintiff admits that it did not acquire Partners Trust until a year after the Listing Agreement was signed (and only shortly before it expired), it disingenuously claims that: NY “Plaintiff performed all of its obligations under the Contract. Plaintiff and its agents WY listed the Property for sale, energetically marketed it with professional insight and Fe knowledge of the local market for over a year, and procured a qualified buyer.” OH (Complaint at 414.) HN Balderdash! It was in August 2017 — a year after the Listing Agreement was entered into by Defendants ON as seller, on the one hand, and Partners Trust as Broker, on the other— before Plaintiff even acquired Co Partners Trust (see Complaint at §2). By that time Partners Trust (not Plaintiff) had already done all of the marketing of the Property and obtained the ultimate Buyer (Complaint at Js 2 & 15 - 18). ele Nonetheless, Plaintiff subsequently proceeded to act as a “dual” agent on behalf of both seller and buyer; with Plaintiff allegedly “representing” the Buyer (whom it had never met and to whom EOE it had never showed the Property) under an alleged exclusion letter prepared and delivered to Defendants by Partners Trust (not Plaintiff) after the listing agreement expired. (See Complaint at FE 418.) Plaintiffs entire case is premised on this “exclusion letter” but the purported “exclusion list” was provided by Partners Trust (not Plaintiff); and Plaintiff has failed to establish the exclusion RRR list’s validity or even existence; let alone that Plaintiff showed the property to the buyer and/or is otherwise entitled to rely on Partners Trust’s alleged “exclusion letter.” He II NO THE COMPLAINT IS BARRED BY THE STATUTE OF FRAUDS NO The statute of frauds declares several types of agreements “invalid” unless “they, or some HN NO note or memorandum thereof, are in writing and subscribed by the party to be charged or by the NO party's agent.” (Calif. Civil Code §1624, subd. (a).) “A court applying the statute of frauds is accordingly presented with two questions: (1) does the statute apply to the contract at issue?; and if so, (2) are the statute's requirements of a properly 5 DEFENDANTS’ DEMURRER TO COMPLAINT subscribed writing met?” (Westside Estate Agency, Inc. v. Randall, 6 Cal.App.Sth 317, 320; 2" we Dist. 2016; hereinafter simply “Westside Estate Agency”) wp As applicable to this case, Civil Code §1624(4) provides in pertinent part that: WwW “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, B® are in writing and subscribed by the party to be charged or by the party's agent: WNW DN (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 ON estate . .. for compensation or a commission.” Thus, “section 1624 of the Civil Code is applicable to the collection by the agent or broker 0 of his ‘**** compensation or a commission ***’ and the enforcement by the principal of the broker's ee aAaasRanxzs agreement..." (Steiner v. Rowley, 35 Cal.2d 713, 715; quoting Marks v. Walter G. McCarty Corp., 33 Cal.2d 814, 205 P.2d 1025 & Le Blond v. Wolfe, 83 Cal.App.2d 282, 188 P.2d 278.) “The purpose of [this provision] is to protect the owner of real property, not from every claim ww of a commission for selling the same, but from claims from persons never by him employed or authorized to act.” (Moore v. Borgfeldt (1929) 96 Cal.App. 306, 313; emphasis added.) And, in order to be entitled to recover a commission for a sale of real property, a broker must RVR prove (1) that he was employed by or on behalf of the owner to sell the property; and (2) that his authority, or some note or memorandum thereof, was in writing, signed by the seller, or by his Ge authorized agent. (Civil Code, §1624(a)(4); McCarthy v. Loupe (1882) 62 Cal. 299; Steiner v. Rowley, supra, 35 Cal.2d at 715; and Lambert v. Woodson, 125 Cal.App. 2d 186, 2d Dist. 1954; and NO FF Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247.) NO Plaintiff cannot fulfill either of these requirements because (1) Defendants employed Partners KN BBR Trust, not Plaintiff as their selling agent; and, therefore, (2) the written listing agreement was NO between Defendants and Partners Trust, not between Defendants and Plaintiff as required by law NO RRR for Plaintiff to be able to collect a commission. NO Further, before a real estate broker can be said to have earned his commission, it must also NO be shown that the licensed broker produced a purchaser, who was ready and willing to make the SS purchase and that he was the procuring cause of the transaction. (McGavock v. Woodlief (1857) 61 6 DEFENDANTS’ DEMURRER TO COMPLAINT U.S. (20 How.) 221, 15 L.Ed. 884; see also, Hahn v. Hauptman (1930) 107 Cal.App. 739 holding that the plaintiff real estate broker was not entitled to a commission when the sale was negotiated PO by an unlicensed employee rather than the broker himself.) Once again, Plaintiff cannot fulfill the WY requirement — as it was Partners Trust, not Plaintiff who produced the purchaser and was, in fact, Fe “the procuring cause of the transaction.” OO In Westside Estate Agency, supra, Division 2 of the 2d District Court of Appeal addressed DN the “mirror image” of the issue presented in the instant case and concluded that the statute of frauds CON was (1) applicable; and (2) prohibited the real estate agent’s claim to a fee for a transaction in which it was not involved and for which it did not have a written listing agreement. The Court oOo summarized the case as follows: SS We are all familiar with the phrase, “caveat emptor”: Buyer beware. This case deals with its less renowned cousin, “caveat sectorem”: Broker beware. California's statute of frauds declares invalid any “agreement authorizing or employing an agent, broker, AaAaBRHNH or any other person to purchase or sell real estate” unless that agreement is in writing Rw and signed by the broker's client. (Civ. Code, §1624, subd. (a)(4).)... This is a nearly absolute rule, with only a few very narrow exceptions. The broker in this case missed out on a $925,000 commission because he agreed to help a friend buy a $45 million Bel Air estate, but the deal was ultimately closed by another broker on different terms. Critically, the first broker's agreement was not in writing. The first broker sued his friend/client for the commission, and the trial court dismissed the lawsuit for GCA noncompliance with the statute of frauds. After examining in detail the statute of frauds and its exceptions, we conclude the trial court was right and affirm. (Westside Estate Agency, supra, at 317.) FSF In that case the plaintiff (Westside) claimed that it had an “implied” contract to act on the NY Randall’s behalf, that it had done so (including making offers on the property) and, therefore, when NO ONKH the Randalls ultimately bought the property for $46.25 million, it was entitled to a commission. NO Westside sued the Randalls, who demurred to the complaint and first amended complaint.’ NO RRR NO 3 This is the mirror image of the instant case as, here, the original broker (Partners Trust) NN had a written broker’s agreement but the subsequent broker, Plaintiff, did not. Nonetheless, the result, in terms of the statute of frauds, must be the same — only the broker who had a written BPN contract is entitled to claim a broker’s fee. 7 DEFENDANTS’ DEMURRER TO COMPLAINT The trial court sustained the demurrer to the first amended complaint without leave to amend — as to the Randalls; reasoning that: KO * Westside was trying to collect a broker's commission from the Randalls without any WY written agreement evidencing the broker-client relationship; BR * that this claim fell “squarely within” the statute of frauds; OH * that the claim fell outside any of the exceptions to the statute; and NN * that any unwritten agreement was consequently unenforceable as a matter of law. While the roles of the first and second brokers are reversed here — the bottom line remains Oo the same: Partners Trust had a written contract to act on behalf of Defendant Anything Trust which Oo was the owner and seller of the property. Plaintiff never had any written contract with Defendants, OS or any of them. To the contrary, Plaintiff is relying solely on the undisclosed terms of its alleged | acquisition agreement with Partners Trust as the basis for its claim. NY me But the result is, and must be the same — since there is no written agreement between Plaintiff WwW and Defendants, Plaintiffs claim is barred by the Statute of Frauds. FP A Ill ND EVEN IF IT’S CLAIMS WERE NOT BARRED BY THE STATUTE OF LIMITATIONS, NHN PLAINTIFF HAS FAILED TO STATE A VIABLE CAUSE OF ACTION FB wm A. Plaintiff Has Not Properly Pled or Established, a Right to a Commission. OBO A broker's right to compensation; the amount owed; and, the principle / seller's obligation to Oo NO pay compensation to the broker must be in writing and must be clearly set forth in the listing NO | agreement. (Civil Code §1624(a)(4).) Any attempt to assign the broker's rights as an agent of the NO NY principle/seller must also be in writing, as: WY KN (3) An agreement for .. . for the sale of real property, or of an interest therein; such an Ff NN agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged." UN HN (Civil Code §1624(a)(3).) DO NO In accordance with Civil Code §1624(a)(3), the California Supreme Court has held that a real bw oN estate broker is not entitled to recover any commission under a breach of contract theory, unless MO 8 DEFENDANTS’ DEMURRER TO COMPLAINT there is a signed agreement between the broker and the principal/seller. (Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247, 1255-58; see also Buckaloo v. Johnson (1975) 14 Cal. 3d 815.) HO To sustain a breach of contract claim or, alternatively, any tort theories for recovery of alleged WY commission owed on the sale of real property, the following criteria MUST be fulfilled: FP i Commissions can only be paid to a licensed real estate broker who, in turn, may pay all or OH a portion thereof only to a licensed salesperson or broker associate with whom the broker has DN a written contract. (Business & Professions Code §§ 10136, 10137, & 10138.) ON No salesperson can accept compensation from any person other than the broker by whom he or she is employed at the time of sale; and, no salesperson shall pay compensation for co performing any act for which a license is required to any real estate licensee except through the broker under whom the salesperson is licensed. (Business & Professions Code §10137.) ESO The listing broker must have a valid, written contract with the principal for whom the broker is acting, e.g., the seller landlord/lessor, or borrower. (California Civil Code §1624(a)(3); Ee Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247.) Ee The selling broker must have a valid written agreement with the seller or be the "procuring FEF cause" of the sale. (Civil Code §1624(a)(3); Phillippe v. Shapell Industries, supra.) Ee ee B. Any Allegecation by Plaintiff That It Is Entitled To a Commissiona by or Through Partners Trust Is Contrary to Applicable Law ee Only where the principle / seller's authority to pay any subagency broker and/or cooperating NO broker is certain, was the cooperating broker able to secure payment directly from the seller. NO (Schmidt v. Berry (1986) 183 Cal.App.3d 1299.) NO Although it is not uncommon for listing brokers to eek the cooperation of other real estate NO brokers to carry out the purpose and objective of their agency; a principal / seller must consent to NO to the appointment of a subagent / cooperating broker and/or the establishment ofa contractual and mo fiduciary relationship directly between the principal and the subagent. Under such an appointment, the subagent represents the principal in the same manner as the listing broker. If When the listing broker appoints another broker to cooperate without the express or implied authority 9 DEFENDANTS’ DEMURRER TO COMPLAINT of the principal, the cooperating broker becomes the subagent or agent of the listing broker and not the subagent of the principal. (California Civil Code §§ 2349; 2350 and 2351.) wo Ww CONCLUSION te Nn Since Plaintifwas f never a “party” to the Listing Agreement: was not the procuring cause of ND the sale transaction between Defendants and the ultimate purchaser; and never had any other written “broker” or “listing” agreement with Defendants, or any of them, providing for payment of money eo to Plaintiff, Plaintiff has no legal right to claim any “broker's commission” with respect to that Oo transaction. co To the contrary, Plaintiff's claim is barred by Civil Code §1624(a)(4); the additional Civil Code and Business & Professional Code sections cited herein; and by applicable case law. We would not usually ask that a demurrer to the initial complaint be sustained without leave to amend. But here, since Plaintiff's claim is barred under the statute of frauds and so many other statutory provisions, and there is, therefore, no way the Complaint could be amended to state a viable cause of action, sustaining the demurrer without leave to amend would be appropriate. Respectfully submitted, DATED: March 2019 MICHAEL A.J. NANGANO, A LAW CORPORATION to ss & Aa “Oo, ae ~ t nN NO BY? — MICHAEL A.J. NANGANO Leo tO Attorneys for Defendants Facsimile signature as original Pursuant to C.R.C. Rule 2.305(d) 10 DEFENDANTS’ DEMURRER TO COMPLAINT Bo PROOF OF SERVICE [am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action. My business address is 133 N. Altadena Drive, Suite 403. Pasadena, CA 91107. On March 29, 2019, I served the following document(s) described as: DEFENDANTS* NOTICE OF DEMURRER AND DEMURRER TO COMPLAINT on all interested parties in this action by placing [X] atrue copy [| the original thereof enclosed in sealed envelopes addressed as follows: SEE ATTACHED MAILING LIST (BY FACSIMILE) The facsimile machine I used complied with Rule 2003(3) and no error was reported by the machine. Pursuant to Rule 2008(e)(4), I caused the machine to print a 10 record of the transmission. 11 [x] (BY MAIL, 1013a, 2015.5 C.C.P.) lam readily familiar with the firm’s practice for collection and processing correspondence for mailing. Under that practice, this document 12 will be deposited with the U.S. Postal Service on this date with postage thereon fully prepaid at Los Angeles, California in the ordinary course of business. I am aware that on motion of 13 the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. 14 (BY OVERNIGHT DELIVERY/COURIER) I served the above referenced document(s) 15 enclosed in a sealed package, for collection and for delivery marked for next day delivery in the ordinary course of business, addressed to the office of the addressee(s) listed above or on 16 attached sheet. 17 (BY E-MAIL) I transmitted a copy of the foregoing document(s) via e-mail to the addressee(s). Courtesy copy 18 (STATE) I declare under penalty of perjury under the laws of the State of California that the 19 above is true and correct. 20 Executed on March 29, 2019, at Pasadena, California. 2d 22 CYL Patriesa-M1. Poole 23 Facsimile signature as original 24 Pursuant to C.R.C. Rule 2.305(d) 29 26 27 28 1 PROOF OF SERVICE MAILING LIST YP MH Pacific Union International, Inc. v. Ludwick, et al. Case No. SCV0042080 W Ww Shannon B. Jones, Esq. Lindsey Morgan, Esq. MO Shannon B. Jones Law Group, Inc. 208 W. El Pintado Road Nn Danville, CA 94526 ~ Lawrence E. Skidmore, Esq. Aronowitz Skidmore Lyon A Professional Law Corporation 200 Auburn Folsom Road, Suite 305 Auburn, CA 95603 10 11 12 3 14 15 16 17 18 19 20 21 22 23 24 29 26 27 28 2 PROOF OF SERVICE