Demurrer in Pacific Union International, Inc. vs. Ludwick, Erik et al| Trellis.Law

On November 07, 2018 a Motion-Secondary was filed involving a dispute between Pacific Union International, Inc., and Booth, Paul D., Trustee Of The Anything Trust, Erik Ludwick, The Anything Trust Dated Oct. 12, 2007, for Civil-Roseville in the District Court of Placer County.

Preview
Lawrence E. Skidmore (SBN 137587
—

ARONOWITZ SKIDMORE LYON FL LE Ds
A PROFESSIONAL CORPORATION superior
Oty of Placer
HO

200 Auburn Folsom Road, Suite 305
Auburn, CA 95603 MAY -2 2018
WY

ro eee
acsimile:e 823-5241
-823- _-; otticertters& clerk
FF

MICHAEL A.J. NANGANO (SBN 133999) By; R. Brown, DOF
AH

LAW OFFICES OF MICHAEL A.J. NANGANO ~~
133 No. Altadena Drive, Suite 403 yh iL /
HD

Pasadena, CA 91107
Phone: (626) 796-9998
NN

Fax: (626) 796-9992
eo

Attorney for Defendants
Co
OS
Sle

SUPERIOR COURT OF THE STATE OF CALIFORNIA
—-

IN AND FOR THE COUNTY OF PLACER
Ee
KY
Ww
Ee
FP
EEF

wee IC UNION INTERNATIONAL, Case No. S-CV 0042080
gat!
EF
DH

agit!
tt!

Plaintiff,
get!
FFE

DEFENDANTS’ REPLY BRIEF
gt
TON

vs. IN SUPPORT OF DEMURRER
eget

TO COMPLAINT
et”

ERIK LUDWICK, an individual AND
eet”

Beneficiary of The Anything Trust dated
DO

Steere” See”

October 12, 2007; THE ANYTHING Hearing Date: May 9, 2019
NF

TRUST DATED OCTOBER 12, 2017;
FO

See

PAUL D. BOOTH, in his capacity as Trustee Time: 8:30 A.M.
See

of The Anything Trust Dated October 12,
KF
NN

Nee

2007; and Does 1 through 50, inclusive, Dept.: Dept 42
See
NY
NO

See

Trial Date: None Set
ee

Defendants.
Ww

ee
NY

ee
BP
NO

ae
ae
UN
NY
ADA
NO
NO
oN
wo

DEFENDANTS’ REPLY BRIEF RE DEMURRER TO COMPLAINT
I
INTRODUCTION
HHO

Defendants THE ANYTHING TRUST DATED OCTOBER 12, 2007 (“The Trust”); ERIK LUDWICK,
WW

individually and as beneficiary of The Trust; and PAUL D. BooTH, in his capacity as Trustee of The
he

Trust (hereinafter collectively “Defendants”) have demurred to the Complaint of Plaintiff PACIFIC
nN
Dn

UNION INTERNATIONAL, INC. (“Plaintiff”) in this matter on the following grounds:

L. That Plaintiff's claims are barred by applicable Statutes of Frauds including, but not
SN

limited to, California Civil Code §1624(4);
Oo

Z. That Plaintiff has no standing to sue Defendants on a contract as to which Plaintiff
Co

was neither a party nor a legally cognizable successor in interest; and, therefore,
et
O&O

Ep That “Plaintiff's” claims fail to state facts sufficient to constitute a viable cause of
me
KF

action against Defendants, or either of them.
NY
em

This is allegedly a Breach of Contract Action arising from the sale of a parcel of residential
WD

real estate located at 200 Toyopa Drive, Pacific Palisades, CA 90272 in the County of Los Angeles,
Fe

CA (“the Toyopa Property”). The Defendant Trust was the owner of record of the Toyopa Property
A

and does not do business or own property in Placer County. Defendant Erik Ludwick (“Ludwick”)
HD
wm

is the current Trustee and primary beneficiary of the Trust; and a resident of Los Angeles County.
NINH

Defendant Paul Booth (“Booth”) is the former Trustee of the Trust, and a resident of Placer County.
SBF

Simply put, the primary basis for Defendants’ demurrer is that there is no enforceable contract
DO
RO

between Plaintiff, on the one hand, and Defendants, or any of them, on the other, upon which
HNO
CO

Plaintiff can legally maintain its claim for payment of a real estate broker’s or agent’s commission.
HN
KK
NO
NY

I
WY

THE “BASIS” FOR PLAINTIFF’S CLAIM
KN
SP
HD

The “basis” for Plaintiff's claim is that on or about August 29, 2016 Partners Trust, a
HN
A

different real estate agency with a different Dept. of Real Estate broker’s license number than
NWN
NO

Plaintiff, entered into a “Listing Agreement” for property owned by the Trust in Malibu, CA.
NO
oN
mmo

Reply Brief in Support of Defendants’ Demurrers to Complaint
2
(Complaint, 410 and Ex. “A”.)' The Listing Agreement expired on February 28, 2017. (/d.) On
or about February 23, 2017 the Listing Agreement was allegedly “modified” to extend the term to
HO

August 31,2017. (Complaint, {13 & Ex. “B”.) Additional “modification” of the Listing Agreement
W

reduced the listing price for the Toyopa property. (/d.)
FP

Plaintiff asserts that it “performed all of its obligations under the Contract. Plaintiffs and its
WH

agents listed the Property for sale, energetically marketed it with professional insight and knowledge
DN

of the local market for over a year, and procured a qualified buyer.” (Complaint, 914.) In fact, all
NN

of these assertions are false. Why? Because Defendants did not have a contractual relationship with
me

Plaintiff! Rather, the “Listing Agreement” was, is and always has been between Defendants and
oo

“Partners Trust” -- not between Defendants and Plaintiff— as confirmed by ALL of the Exhibits to
DTABDEBRSS

the Complaint! So it was Partner’s Trust, not Plaintiff, who marketed the Property, etc.
BXRRSEBESBRF

So what is the sole basis for Plaintiff's claim against Defendants? That Plaintiff allegedly
eee

acquired Partners Trust in August 2017 (Complaint at §2), a year after the Listing Agreement was
entered into (Complaint, §10 & Ex. “A”); and only weeks before that Agreement, as extended,

expired. (Complaint, {13 & Ex. “B”.) But even after that acquisition, Plaintiff and Partner’s Trust

remain different corporations, operating under different DRE Licenses. (See footnote 1.) Plaintiff's

suggestions to the contrary at page 5, lines 21-24 and page 6, lines 7-8 of their Opposition can only

be seen as a transparent attempt to mislead the Court in this respect.
RO
NR
RO
NO
DBO
SSX

As shown in DEFENDANTS’ “Request for Judicial Notice” filed concurrently with its demurrer
on March 29, 2019, Plaintiff Pacific Union International, Napa, CA is licensed by the California
Department of Real Estate (“DRE”) under DRE License No. 01914356; while Partners Trust in Los
Angeles, CA is licensed under DRE License No. 01869103. They are today, and were at the time the
property was sold, different Real Estate Brokerages operating under different DRE Licenses.

Reply Brief in Support of Defendants’ Demurrers to Complaint
3
II
—

PLAINTIFF’S CLAIMS ARE BARRED BY THE STATUTE OF FRAUDS
NYO
WY

The statute of frauds declares several types of agreements “invalid” unless “they, or some
F&F

note or memorandum thereof, are in writing and subscribed by the party to be charged or by the
party's agent.” (Calif. Civil Code §1624, subd. (a).) Thus, “[a] court applying the statute of frauds
Dn

is accordingly presented with two questions: (1) does the statute apply to the contract at issue?; and
nNy

if so, (2) are the statute's requirements of a properly subscribed writing met?” (Westside Estate
Dm

Agency, Inc. v. Randall, 6 Cal.App.5th 317, 320.)
oOo

A. THE STATUTE OF FRAUDS APPLIES TO THE CONTRACT AT ISSUE.
OC

As applicable to this case, Civil Code §1624(4) provides in pertinent part that:
ee
—

“(a) The following contracts are invalid, unless they, or some note or
memorandum thereof, are in writing and subscribed by the party to be charged or by
HY

the party's agent:
WY
we
Fe

(4) An agreement authorizing or employing an agent, broker, or any
eH

other person to purchase or sell real estate, . . . or to procure, introduce, or find
a purchaser or seller of real estate . . . for compensation or a commission.”
DNDN
NF

Thus, “section 1624 of the Civil Code is applicable to the collection by the agent or broker
Oo

of his ‘compensation or a commission’ and the enforcement by the principal of the broker's
ODO

agreement..." (Steiner v. Rowley, 35 Cal.2d 713, 715 (1950); quoting Marks v. Walter G. McCarty
TO
NO

Corp., 33 Cal.2d 814, 205 P.2d 1025; Le Blond v. Wolfe, 83 Cal.App.2d 282, 188 P.2d 278.)
NO
K§

“The purpose of [this provision] is to protect the owner of real property, not from every claim
NHN

of acommission for selling the same, but from claims from persons never by him employed or
NO
WYO
NO

authorized to act.” (Moore v. Borgfeldt (1929) 96 Cal.App. 306, 313; emphasis added.)
Fe
NO

B. THE STATUTE’S REQUIREMENT OF A PROPERLY SUBSCRIBED WRITING IS NOT
AN
NO

MET
TNO
NO

In order to fulfill the statute requirements and establish that it is entitled to recover a
NO

commission for a sale of real property, a broker must prove (1) that it was employed by or on behalf
on
NO

Reply Brief in Support of Defendants’ Demurrers to Complaint
4
of the owner to sell the property; and (2) that the broker’s authority, or some note or memorandum
thereof, was in writing, signed by the seller, or by his authorized agent. (Civil Code, §1624(a)(4);
HHO

Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247; Steiner v. Rowley, supra, 35 Cal.2d at 715;
WY

and Lambert v. Woodson, 125 Cal.App. 2d 186. (1954.)
Pe

Plaintiff cannot fulfill either of these two requirements because:
HOH

(1) Defendants employed Partners Trust, not Plaintiff, as their selling agent for the
Dn

Property in the written Listing Agreement (see Exhibit “A” to Plaintiff's Complaint);
ON

and

(2) there is NO writing signed by the Defendant Seller or the Seller’s authorized agent
oO

in favor of Plaintiff, as required in order for Plaintiff to be able to demand a
OC

commission from Defendants.
|

The California Supreme Court reaffirmed this position in Phillippe v. Shapell Industries,
NYO

supra, holding that a broker cannot recover any commission under a breach of contract theory (as
we
W

Plaintiff seeks to do here) unless there is a signed agreement between the broker and the
F&F

principal/seller. (Phillippe v. Shapell Industries, 43 Cal. 3d at 1255-58.) Plaintiff's claim that it
is the “successor in interest” to Partners Trust, even if it were factually accurate (which is dubious
vA

given the continued existence of both brokerages under separate DRE license numbers) is not
NDB

enough to fulfill the statutory requirements.

Ill
oe

EVEN IF IT’S CLAIMS WERE NOT BARRED BY THE STATUTE OF FRAUDS,
Oo
NRO

PLAINTIFF HAS FAILED TO STATE A VIABLE CAUSE OF ACTION
TD

UNDER REAL ESTATE BROKERAGE LAW
F|-§
DN

Further, before a real estate broker can be said to have earned his commission, it must also
NY
NO

be shown that the licensed broker produced a purchaser, who was ready and willing to make the
WD
NO

purchase and that he was the procuring cause of the transaction. (McGavock v. Woodlief (1857) 61
fF&
NO

U.S. (20 How.) 221, 15 L.Ed. 884; see also, Hahn v. Hauptman (1930) 107 Cal.App. 739 holding
UH
NO

that the plaintiff real estate broker was not entitled to a commission when the sale was negotiated
Dn
NO

by an unlicensed employee rather than the broker himself.) Once again, Plaintiff cannot fulfill this
NO
oN
wo

Reply Brief in Support of Defendants’ Demurrers to Complaint
5
requirement either — as it was Partners Trust, not Plaintiff who produced the purchaser and was, in
—

fact, “the procuring cause of the transaction.”
NY

Citing Schaffier v. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745 and
WY

Richmond Realeteria, Inc. v. Canterbury Estates, Inc. (1965) 234 Cal.App.2d 400, Plaintiff attempts
FP

to argue in its Opposition that it is entitled to a commission as the “successor-in-interest” to Partners
UH

Trust. But both cases are factually inapplicable here, as both cases involve claims for payment of
commission by participating brokers who were owed money due to their direct representation of
DN

either the Buyer or Seller of the real property sold. Neither case involved an alleged "successor in
interest" with no contractual relationship whatsoever with the seller, who is making a claim for
ON

commission owed to a previous participating broker. Plaintiff's Opposition is complete devoid of
any such legal authority, supporting and justifying the Defendants' request for dismissal without
Co

leave to amend on the basis of the strict prohibition of the statute of frauds.’
et
SGerAAarRanes
me

IV
mm

PLAINTIFF HAS NOT AND CANNOT PLEAD A VIABLE CLAIM
FOR A COMMISSION IT DID NOT EARN

A. PLAINTIFF HAS NOT PROPERLY PLED OR ESTABLISHED, A RIGHT TO A
COMMISSION.
A broker's right to compensation; the amount owed; and, the principle / seller's obligation to
me

pay compensation to the broker must be in writing and must be clearly set forth in the listing

agreement. (Civil Code §1624(a)(4).) Any attempt to assign the broker's rights as an agent of the

principle/seller must also be in writing, as:
SF
RN

(3) An agreement for. . . for the sale of real property, or of an interest therein; such an
agreement, if made by an agent of the party sought to be charged, is invalid, unless the
RN
BEKRYe

authority of the agent is in writing, subscribed by the party sought to be charged."
NO

(Civil Code §1624(a)(3).)
NO

In accordance with Civil Code §1624(a)(3), the California Supreme Court has held that a real
NO
RR

estate broker is not entitled to recover any commission under a breach of contract theory, unless
RO
wo
SSR

2
NO

The only other case cited by Plaintiff is an employer-employee case, Jenks V. Dla Piper
Rudnick Gray Cary US LLP (2015) 243 Cal.App.4th 1, which is also inapplicable to this matter.

Reply Brief in Support of Defendants’ Demurrers to Complaint
6
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.)
NYO

Here, there is no written contract whatsoever between PLAINTIFF and DEFENDANTS.
WY

Further, to sustain a breach of contract claim or, alternatively, any tort theories for the
Re

recovery of a sales commission allegedly owed, the following criteria MUST be fulfilled:
HD

l. Commissions can only be paid to a licensed broker who, in turn, may pay all or a
ND

portion thereof only to a licensed salesperson or broker associate with whom the

broker has a written contract. (Business & Professions Code §§10136, 10137, &
eo

10138.)
Co

No salesperson can accept compensation from any person other than the broker by
O&O

whom he or she is employed at the time of sale; and, no salesperson shall pay
|

compensation for performing any act for which a license is required to any real estate
NY
ee

licensee except through the broker under whom the salesperson is licensed. (Business
WY

& Professions Code §10137.)
Fk

The listing broker must have a valid, written contract with the principal for whom the
AH
me

broker is acting, e.g., the seller landlord/lessor, or borrower. (Civil Code §1624(a)(3);
DBO

Phillippe v. Shapell Industries (1987) 43 Cal. 3d 1247.) Here, of course, PLAINTIFF
NH

was not the listing broker — Partners Trust was.
Fe
ww

The selling broker must have a valid written agreement with the seller or be the
CO

“procuring cause" of the sale. (Civil Code §1624(a)(3); Phillippe v. Shapell
CO
NO

Industries, supra.) Here, of course, PLAINTIFF did not have a “valid written
K|&
HN

agreement” with DEFENDANTS and was not the “procuring cause” of the sale.
NN
NY

ANY ALLEGATION BY PLAINTIFF THAT IT IS ENTITLED TO A COMMISSION BY OR
WOW
NN

THROUGH AN “AGENCY” RELATIONSHIP WITH PARTNERS TRUST IS CONTRARY
Bk
N

TO APPLICABLE LAW
nN
HN

PLAINTIFF attempts to rely on a successor in interest theory in its complaint. But the issue
NON
NO

is really one of agency law. The appointment of an agent is personal transaction between the
NO
oN

principal and agent. An agent cannot assign the contract creating the agency to another agent
mW

Reply Brief in Support of Defendants’ Demurrers to Complaint
7
without the principal’s consent. That is reflected in the principle that an agent, except in very
limited circumstances, cannot appoint a subagent without the principal’s consent. (Civil Code
NO

§2349.) Only where the principle/seller's authority to pay any subagency broker and/or cooperating
WW

broker is certain, is the cooperating broker able to secure payment directly from the seller. (Schmidt
FP

v. Berry (1986) 183 Cal.App.3d 1299.)
WH

Although it is not uncommon for listing brokers to seek the cooperation of other real estate
Nn

brokers to carry out the purpose and objective of their agency; a principal/seller must consent to to
ON

the appointment of a subagent/cooperating broker and/or the establishment of a contractual and

fiduciary relationship directly between the principal and the subagent. Under such an appointment,
oo

the subagent represents the principal in the same manner as the listing broker. If when the listing
YS
&

broker appoints another broker to cooperate without the express or implied authority of the
ES
|

principal, the cooperating broker becomes the subagent or agent of the listing broker and not
NY
FOES

the subagent of the principal. (California Civil Code §§ 2349; 2350 and 2351; emphasis added.)
WY

Nowhere does Pacific Union allege that the Anything Trust consented to an assignment of
FH
YF

the listing agreement from Partners Trust to Pacific Union. Therefore, Pacific Union fails to state
KF
DH

a cause of action against Anything Trust because, notwithstanding their allegation that they “own
FSF

the contract” by virtue of acquiring Partners Trust, they fail to allege that Anything Trust consented
NH
FP

to an assignment of the listing agreement.
eH
FF
UO
FY

CONCLUSION
Oo
N
—§|§
NY

Simply put, Plaintiffs seeks to recover a real estate commission for a transaction in which it
HY
N

was not involved, under a contract to which it was not a party. But clearly, as a matter of law,
WY
N

Plaintiff has no legal right to claim any “broker’s commission” with respect to the transaction in
Pk
NN

question. To the contrary, Plaintiff's claim is barred by Civil Code §1624(a)(4); the additional Civil
AN
NH

Code and Business & Professional Code sections cited herein; and by applicable case law.
DH
NO

We would not usually ask that a demurrer to the initial complaint be sustained without leave
NO
oN

to amend. But here, since Plaintiffs claim is barred under the statute of frauds and so many other
wb

Reply Brief in Support of Defendants’ Demurrers to Complaint
8
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.
NH
WY

Respectfully submitted,
F&F
OO

DATED: May 2, 2019 MICHAEL A.J. NANGANO, A LAW CORPORATION
Do
tN
Oo
Co

BY:
MICHAEL A.J. NANGANO
eet

Attorneys for Defendants

Facsimile signature as original
Pursuant to C.R.C. Rule 2.305(d)
ROO
RO
RN
DRO

Reply Brief in Support of Defendants’ Demurrers to Complaint
9
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 May 2, 2019, I served the following document(s) described as:

DEFENDANTS’ REPLY BRIEF IN SUPPORT OF 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), | caused the machine to print a
10 record of the transmission.

1d (BY MAIL, 1013a, 2015.5 C.C.P.) Iam 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. | 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 PRIORITY MAIL) I served the above referenced document(s) enclosed in a sealed
15 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 attached sheet.
16
(BY E-MAIL) | transmitted a copy of the foregoing document(s) via e-mail to the
17 addressee(s). Courtesy copy

18 (STATE) I declare under penalty of perjury under the laws of the State of California that the
above is true and correct.
1.9
Executed on May 2, 2019, at Pasadena, California.
20

21 ae
PatriciaM1. Peott”
22

23 Facsimile signature as original
Pursuant to C.R.C. Rule 2.305(d)
24

1
PROOF OF SERVICE
FF MAILING LIST
Pacific Union International, Inc. v. Ludwick, et al.
NYO

Case No. SCV0042080
WW

Shannon B. Jones, Esq.
FB

Lindsey Morgan, Esq.
Shannon B. Jones Law Group, Inc.
Oo

208 W. El Pintado Road
Danville, CA 94526
HO
YAY

Lawrence E. Skidmore, Esq.
Aronowitz Skidmore Lyon
oO

A Professional Law Corporation
200 Auburn Folsom Road, Suite 305
Auburn, CA 95603
10 (via email)
Ld

Zao

2
PROOF OF SERVICE

Case Info

Case No.

(Subscribe to View)

Document Filed Date

May 02, 2019

Case Filing Date

November 07, 2018

County

Parties

Booth, Paul D., Trustee of The Anything Trust Defendant
Erik Ludwick Defendant
Jones, Shannon Ball Rossi Domingue LLP Attorneys for Plaintiffs
Nangano, Michael Anthony John Michael AJ Nangano, A Law Corporation Attorney for the Defendant
Nangano, Michael Anthony John Michael AJ Nangano & Associates Attorney
Pacific Union International, Inc. Plaintiff
Skidmore, Lawrence E. Aronowitz & Skidmore Inc Attorney
Skidmore, Lawrence E. Aronowitz & Skidmore Inc Attorney for the Defendant
The Anything Trust Dated Oct. 12, 2007 Defendant
Lindsey Morgan Attorneys for Plaintiffs
Alan Jacobus Attorney
Franklin Bigelow Attorneys for Plaintiffs
Shannon Ball Attorney
Bruce Tackowiak Attorneys for Defendants
Susan Daley Attorney
Michael Agoglia Attorneys for Defendants
Amberly Morgan Attorney
Shannon Dillon Attorneys for Defendants
Dean Rossi Attorneys for Plaintiffs
Michael Antoncich Attorneys for Defendants
Michael Alfred Attorney

For full print and download access, please subscribe at https://www.trellis.law/.

Motion-Secondary: Pacific Union International, Inc. vs. Ludwick, Erik et al

Preview

Case Info

Parties