Earp v. Nobmann

• Decision Date: 30 June 1981
• Citation: 122 Cal.App.3d 270,175 Cal.Rptr. 767
• Court: California Court of Appeals Court of Appeals
• Parties: Kenneth H. EARP, Plaintiff and Appellant, v. W. G. NOBMANN and Harbor Properties, Inc., Defendants and Respondents. HARBOR PROPERTIES, INC., and W. G. Nobmann, Cross-Complainants, Cross- Defendants and Respondents, v. Kenneth H. EARP, Cross-Defendant and Appellant, Robert A. Koetitz, Cross-Defendant, Cross-Complainant and Appellant. Civ. 19508.

Page 767

175 Cal.Rptr. 767

122 Cal.App.3d 270

Kenneth H. EARP, Plaintiff and Appellant, v. W. G. NOBMANN and Harbor Properties, Inc., Defendants and Respondents.

HARBOR PROPERTIES, INC., and W. G. Nobmann, Cross-Complainants, Cross- Defendants and Respondents, v. Kenneth H. EARP, Cross-Defendant and Appellant, Robert A. Koetitz, Cross-Defendant, Cross-Complainant and Appellant.

Civ. 19508.

Court of Appeal, Third District, California.

June 30, 1981.

Hefner, Stark & Marois, and Kenneth R. Stone, Sacramento, for cross-defendant, cross-complainant and appellant

Feldman, Waldman & Kline, Patricia S. Mar and Michael A. Adelman, San Francisco, for defendants and respondents.

McDonald, Duggan & Foppoli, and Dennis D. McDonald, Hayward, for plaintiff and appellant.

REYNOSO, Acting Presiding Justice.

Plaintiff and cross-defendant Kenneth H. Earp, and cross-defendant and cross-complainant Robert A. Koetitz, appeal from a judgment of the Superior Court of Sacramento County in favor of defendants, cross-complainants and cross-defendants W. G. Nobmann and Harbor Properties, Inc. (Due to a unity of interest Harbor and Nobmann sometimes will be referred to jointly as "Harbor".) The trial court found Earp to be liable to Harbor for wrongfully recording a lis pendens against certain property owned by Harbor, and for unprivileged disparagement of title. The court found Koetitz to be liable to Harbor for breach of an oral contract and for negligence as a real estate broker. Claims by Earp and Koetitz were denied by the court.

On appeal Earp contends: (1) his actions were privileged; (2) the findings that he acted in bad faith and with malice are not supported by the evidence; (3) the trial court erred in permitting amendment of the cross-complaint after the announcement of intended decision; (4) an erroneous measure of damages was applied; and (5) he should not be jointly and severally liable with Koetitz. On appeal Koetitz contends: (1) the trial court erred in permitting the introduction of extrinsic evidence of an oral agreement collateral to a written contract; (2) his actions were not the proximate cause of injury to Harbor; (3) he cannot be held liable for attorneys' fees; and (4) he is entitled to payment of his real estate commission for arranging a sale of real property.

As to the appeal of Earp we conclude: (1) the recordation of the lis pendens was absolutely privileged and does not support the award of damages; (2) the extrajudicial communications of Earp were only subject to a qualified or conditional privilege; however, the trial court erred in permitting Harbor to file a so-called amendment to conform to proof after the announcement of intended decision to set forth a cause of action based on those communications; (3) an erroneous measure of damages was used by the trial court. Accordingly we reverse the portion of the judgment which awards damages against Earp, said reversal being without prejudice to Harbor to seek recovery in further proceedings. We affirm the judgment against Earp in all other respects.

As to the appeal of Koetitz we conclude: (1) the court did not err in permitting the introduction of the extrinsic evidence of an oral agreement; (2) the evidence supported the finding that Koetitz was negligent and that his negligence was the proximate cause of injury to Harbor; (3) under the circumstances of this case attorneys' fees expended by Harbor in clearing its title to real property were properly awarded against Koetitz, but that one element of the damage award was speculative and uncertain and was not properly awarded; (4) Koetitz is not entitled to a real estate commission. Accordingly we modify the damage award against Koetitz and affirm the judgment as modified.

* * *

* * * Nobmann is the president and sole shareholder of Harbor Properties, Inc. In 1977 Harbor acquired a 437 acre ranch in Elk Grove. At about that time Nobmann first met Koetitz, who is a licensed real estate broker. In late summer, 1978, Nobmann and Koetitz discussed whether Harbor would be willing to sell the Elk Grove ranch, and Nobmann said that he would be interested in selling if a price of $1,800 per acre could be acquired. Nobmann spoke with Koetitz again in 1979, and again stated that he would sell the ranch if his price of $1,800 per acre were offered.

In March 1979, Koetitz showed the ranch to Earp, who became interested in purchasing it. At about this time the 6-B Cattle Company also became interested in the ranch. In late March 6-B made an offer to purchase the ranch which was well below the asking price, and Harbor made a counteroffer to 6-B. On April 2, 1979, Koetitz met with Earp and drew up a "deposit receipt" offer to purchase the ranch. The purchase price in the offer was $786,600, which Earp intended to pay by securing an institutional loan for $455,885, and by assigning three unsecured, interest-only promissory notes to Harbor. Earp hoped to acquire the ranch without personally expending any cash.

Koetitz called Nobmann and informed him that he had an offer on the ranch. Nobmann suggested that he mail the offer, but Koetitz desired to present it personally so a meeting was set for April 4, 1979. When Koetitz presented the offer Nobmann indicated that he was happy with the price, but asked whether he was "getting ... into trouble" with the unsecured notes. Koetitz told Nobmann that unsecured notes are better than secured notes, a curious belief to which Koetitz adhered at trial. Nobmann told Koetitz that he desired to effect a tax-free exchange for other property, and to this end Koetitz wrote: "Subject to Buyer cooperating w/sellers' effecting a tax-deferring exchange out via other ppty; and in the event Buyer is unable to close by 5-15-79 he may then have possession of ppty upon deposit of an additional $25,000." Nobmann signed the offer with the handwritten additions, but did so with the express condition that he would have the opportunity to take it to his office and get the approval of his controller. Nobmann told Koetitz that he would call by 10:00 o'clock the following morning and give him an answer on the whole thing.

After leaving Nobmann, Koetitz visited Earp and informed him that Nobmann had accepted but that he had until 10:00 a. m. the following day to withdraw his offer, or to withdraw his acceptance of Earp's offer. Earp initialed the counter terms suggested by Nobmann.

On the morning of April 5, 1979, Nobmann gave the offer to Mr. Brusco, Harbor's controller and secretary. Brusco was very critical of the offer, and informed Nobmann that the deal was disadvantageous. Among other things Brusco believed that no third party would accept assignment of the unsecured promissory notes and therefore a tax-free exchange could not be worked out, and that the deal as offered would actually cost Harbor out-of-pocket expenses to consummate. He advised Nobmann to cancel. Brusco also suggested that he would meet personally with Earp to attempt to work out a deal that would be satisfactory.

After meeting with Brusco, Nobmann called Koetitz and told him to hold up on the whole thing, not to do anything with it, and not to put it into escrow. Later that day Brusco met with Earp, but at that time Earp made it clear that he was not interested in effecting a real property exchange, the only deal he would accept would allow him to unload the unsecured notes.

On April 6, 1979, Koetitz claimed that he had the "green light" to proceed, and he wrote to Nobmann to inform him that he was opening an escrow. When Nobmann received this communication on April 9, 1979, he wrote to Koetitz and confirmed the fact that he had withdrawn his acceptance of the Earp offer. Nobmann stated that he was happy with the price in the offer but not with the terms, and that he would continue to attempt to work out terms that On April 11, 1979, attorneys for Harbor wrote to Koetitz and informed him that they had advised Harbor that it was not bound by the purported agreement to sell the ranch. Among the reasons given was the withdrawal of Nobmann's acceptance, the indefiniteness of the offer, and the fact that Harbor was record owner of the property and Nobmann did not have the authority to enter into a contract to sell Harbor's real property. The attorneys suggested terms by which the sale could be consummated.

were agreeable. When he received this letter Koetitz wrote to the title company with which he had opened the escrow and stated that he had misunderstood his earlier conversation with Nobmann and that the escrow was opened without authorization.

On April 16, 1979, Koetitz wrote to Earp and enclosed a copy of the letter from Harbor's attorneys. He described the letter as "typical lawyer talk," and stated that he did have the "green light" to proceed from Nobmann. Koetitz also stated that regardless if Nobmann "... succeeds in blowing this sale too, I'm going after the commission. Regardless of the nit-picking, you and he have a bonafide agreement, so he owes the commission." Koetitz also wrote to the Harbor attorneys to inform them that an agreement had been reached.

Earp replied to Koetitz concerning the Harbor letter and stated that he believed he had an agreement and intended to take possession on May 15, 1979. Thereafter the correspondence of the parties indicates that their positions became rigid, Harbor insisting that there was no agreement, and Earp and Koetitz insisting that there was an agreement.

On April 10, 1979, 6-B Cattle Company prepared an offer to purchase the Harbor ranch for the price of $792,000, in an all-cash deal. This offer was mailed to Nobmann, and he received it within a few days after it was prepared. When Nobmann received the 6-B offer he called their agent and informed him that Harbor had made a counteroffer to Earp (the letter from Harbor's attorneys) and that he would have to wait seven days before the 6-B offer could be considered.

When Harbor did not receive an acceptance...