Kenney v. Tanforan Park Shopping Center, G038323 [DK G039372 (Cal. App. 12/15/2008)
| Decision Date | 15 December 2008 |
| Docket Number | G038323 [DK G039372 |
| Parties | WILLIAM J. KENNEY, JR., et al., Plaintiffs and Appellants v. TANFORAN PARK SHOPPING CENTER, Defendant and Appellant. |
| Court | California Court of Appeals Court of Appeals |
Appeal from a judgment of the Superior Court of Orange County, No. 04CC05831, Geoffrey T. Glass, Judge. Judgment affirmed as modified.
Dell'Ario & LeBoeuf, Alan Charles Dell'Ario and Jacques LeBoeuf for Plaintiffs and Appellants.
Wheeler & Sheehan, David C. Wheeler and Joseph J. Sheehan for Defendant and Appellant.
Brokers William Kenney and Robert Peltzman entered into an exclusive listing agreement with Tanforan Park Shopping Center. When Tanforan fired Kenney and Peltzman prior to the agreement's expiration, the two brokers sued Tanforan for breach of contract. The trial court found that Tanforan wrongfully terminated Kenney and Peltzman and awarded damages of about $955,000 based on the commissions Kenney and Peltzman theoretically would have earned under the contract. (They actually never earned any commissions under the contract because they themselves leased nothing on behalf of Tanforan.) The court later amended its judgment to award Kenney and Peltzman prejudgment interest under Civil Code section 3287, subdivision (b), and attorney's fees.
Despite winning almost one million dollars for having done no actual work, it is Kenney and Peltzman, not Tanforan the defendant, who primarily appeals from the judgment. Kenney and Peltzman challenge the judgment on four grounds:
— They claim they are entitled to commissions based on all the leases obtained by subsequent brokers. (They got commissions on 34 leases; they claim commissions on 69 leases.)
— They claim additional commissions over the ones they got (i.e., beyond the 34) based on the leasing agreement's 360-day tail provision.
— They claim the court erred in reducing their recoverable damages by applying the doctrine of mitigation.
— They claim they are entitled to mandatory prejudgment interest.
These arguments fail, but for diverse reasons. The assertion that Kenney and Peltzman are entitled to a commission on all 69 leases eventually obtained by Tanforan is contrary to the law that limits a terminated broker to what he or she would have earned if the contract had not been terminated. (See Civ. Code, § 3300; Alderson v. Houston (1908) 154 Cal. 1, 10 [].)
The argument that they are entitled to commissions beyond the 34 accorded them by the trial judge under the 360-day tail provision fails because they were, in fact, compensated for all prospective lessees as of 360 days from the date — June 14, 2002 — that they themselves supplied a list of potential lessees pursuant to the contract's 360-day tail provision. What Kenney and Peltzman really want on appeal is for the 360-day tail provision to encompass every lessee who signed up within 360 days of the date of termination in the formal contract, that is, within 360 days of July 31, 2004. But there is no basis for such extra compensation when one realizes that the contract had long been terminated prior to July 31, 2004. Indeed, in their own letter of May 20, 2002, Kenney and Peltzman stated that they recognized Tanforan's breach of contract and would stop working on the project. (The list of prospects pursuant to the 360-day tail provision came later in the June 14, 2002 letter.)
The question of mitigation, as presented in the opening brief, is based on the theory that Kenney and Peltzman could have made income on top of what they were entitled to under the contract because what they would have earned under the contract did not require their full time services. The error here is one of logic: not taking into account the implied excluded middle. Or — in plainer terms, it's not either-or.
While it is true that Kenney and Peltzman had some free time to earn income beyond what was necessary to obtain leases for Tanforan, consummating the Tanforan leases certainly would have required some substantial time. The trial court recognized this fact, and based its reduction for mitigation of damages based on the premise that Kenney and Peltzman would have needed 60 percent of their time to have earned what the trial court prognosticated they "would have" earned. There is no challenge to the 60 percent figure as unsupported by substantial evidence.
We should note here, though, that one, rather subtle, aspect of the mitigation issue has not been raised on appeal. Apropos what we have said above about the 360-day tail, it is at least arguable that no mitigation should have been applied to those leases (if we count correctly, no more than 14 of them1 ) that Kenney and Peltzman got credit for by way of the 360-day tail period of May 2002 through May 2003. The argument would be that those particular commissions were, as of May 2002, in the bag and therefore the two brokers would not have needed to spend any of their time on them. But that theory is not presented in the opening brief, and we may treat that subtlety as waived.
Likewise, as to prejudgment interest, while it is arguable that the commissions on those 14 leases were capable of being made certain prior to trial, that precise argument is also not the one proffered by the opening brief. The argument in the opening brief is entirely predicated on Kenney and Peltzman winning the whole enchilada on their first point, namely that they were entitled to commissions on all leases, not just leases that "would have been" earned if the contract had not prematurely terminate. But the quest for the whole enchilada, as we have noted above and will explain in more detail below, is in vain.
For its part, Tanforan has brought its own cross-appeal, contending that the trial court improperly assigned the burden of proving whether the leases that eventually were obtained were "extensions" or "renewals" for purposes of calculating the leases Kenney and Peltzman probably would have earned under the contract had the contract remained in force. The point is a non-issue because it turns out that the trial court actually did put the burden on Kenney and Peltzman, which is where it properly belonged in the first place. The cross-appeal also challenges attorney fees awarded to Kenney and Peltzman based on work done in a previously dismissed case over the same matter. Since that work was necessary for the second case, the award was within the trial judge's discretion.
There is, however, this loose end: Prejudgment interest was added after judgment was entered and an appeal was taken. On that small point, Tanforan must prevail. Because the trial court lacked the jurisdiction to make such an award after a notice of appeal was filed, the award is void. However, rather than bother the trial court with this matter, we will simply modify the judgment on appeal to strip from it the prejudgment award, and, as modified, affirm the judgment.
Tanforan Park Shopping Center, LLC ("property owner") is the owner of a large shopping center. The property owner entered into an exclusive right to lease agreement with brokers William Kenney and Robert Peltzman ("original brokers"). Under this agreement, the original brokers were entitled to a commission on each lease procured during the term of the agreement, except for holdovers, assignments, extensions or renewals of leases with existing tenants. Further, the agreement contained a tail provision entitling the original brokers to a commission for each lease entered into during the 360 days after the expiration or termination of the contract, provided that the original brokers negotiated with the tenant and identified the tenant in writing within 30 days of the expiration date or earlier termination of the listing agreement. This agreement was to expire on July 31, 2004; however, the property owner retained the right to terminate the agreement earlier should either of the original brokers fail to remain directly involved in the leasing of the property.
Shortly after entering into the leasing agreement, the property owner realized that the shopping center needed to be renovated. The original brokers agreed to negotiate the removal of the tenants. In many cases, these negotiations included negotiations for re-leasing the shopping center.
On May 17, 2002 the property owner sent a letter to the original brokers attempting to terminate the leasing agreement on the ground that the brokers failed to remain directly involved in leasing the property. Subsequently, on June 14, 2002, the original brokers provided the property owner with a list of prospective tenants with whom they had negotiated.
Within 10 days (on June 24, 2002) a lawsuit was filed by the original brokers for breach of contract action against the property owner. Ten months later, the original brokers sought leave to amend their complaint to request a declaration that the leasing agreement was still in effect. The court denied this motion, finding that the original broker's election to sue for breach of contract damages based on the termination of the leasing agreement precluded them from seeking declaratory relief affirming such agreement. The original brokers eventually dismissed the lawsuit.
Several weeks later, the brokers re-filed the case in San Mateo Superior Court, including a cause of action for declaratory relief that the leasing agreement was still in effect. The case was transferred to Orange County. The property owner then moved to strike the declaratory relief action, and the court granted the motion, reiterating its finding that the leasing agreement was terminated upon brokers' filing of the breach of contract lawsuit.
The breach of contract issue proceeded to a bench trial. The trial judge found that the property owner's attempt to terminate the...
To continue reading
Request your trial