King v. Borges

• Decision Date: 05 October 1972
• Citation: 28 Cal.App.3d 27,104 Cal.Rptr. 414
• Court: California Court of Appeals Court of Appeals
• Parties: James A. KING, Defendant, Cross-Complainant and Appellant, v. Joseph K. BORGES, Cross-Defendant and Respondent. Civ. 38074.

Page 414

104 Cal.Rptr. 414

28 Cal.App.3d 27

James A. KING, Defendant, Cross-Complainant and Appellant, v. Joseph K. BORGES, Cross-Defendant and Respondent.

Civ. 38074.

Court of Appeal, Second District, Division 2, California.

Oct. 5, 1972.

Gainsley, Winkler, Kaufman & Ward by Richard C. Dunsay, Los Angeles, for defendant, cross-complaint and appellant.

Helen E. Simmons and Joseph K. Borges, Inglewood, for cross-defendant and respondent.

COMPTON, Associate Justice.

Roosevelt and Margie Green (the Greens) sued James A. King (King) in the Municipal Court to recover $1,000 deposited by them in an escrow. King cross-complained for libel naming as defendants the Greens and Joseph K. Borges (Borges), their attorney. King prayed for $25,000 general damages and $25,000 punitive damages. The matter was transferred to the Superior Court where the libel action was tried separately. ¹

A jury awarded King $3,500 compensatory damages and $2,500 punitive damages against Borges. ² The trial judge ordered a new trial. King appeals from that order.

The Greens were in the market to buy a house. A Mrs. Taylor offered a house for sale and King was her broker. The Greens made a deposit with King of $1,000 on Taylor's house. An escrow was opened but the Greens could not qualify for the requisite financing. The escorw was mutually cancelled by Taylor and the Greens.

The Greens asked for their $1,000 deposit back but King laid claim to it and the escrow refused to deliver it.

The Greens consulted Borges who wrote the following letter to the State of California, Division of Real Estate, with copies distributed as indicated:

'JOSEPH K. BORGES, Attorney at Law

1318 North La Brea Avenue

Inglewood, California--OR 8--7678

May 25, 1965

'Division of Real Estate

107 S. Broadway

Los Angeles, California

Re: Home Builders Escrow No. 7975, Taylor to Green

Gentlemen:

'I have the following complaint to file against James A. King, real estate broker. Mr. King sold my clients, Mr. and Mrs. Roosevelt Green, a piece of property for $30,000, subject to obtaining a loan. My clients paid him $1,000 as good faith deposit. These funds were placed in Home Builders Escrow Company along with escrow instructions which were signed by the buyer and seller. My clients, the buyers, did not qualify for a loan. Therefore, both the buyer and seller signed mutual cancellation instructions. The broker is demanding the $1,000 from escrow, claiming it belongs to him. He refuses to sign cancellation instructions. We have notified escrow not to release the funds to him as it is our opinion that he will spend these funds and he is one not to be trusted. Mr. King has made a demand to escrow for this $1,000. From a legal standpoint, his principal, Mrs. Taylor, canceled and if he has any claim at all, it will be against his client, the seller.

'On behalf of my clients, I would like to file an accusation against James A. King for wrongfully withholding funds not belonging to him. Perhaps a letter from one of your deputies inquiring as to his reasons for holding these funds would straighten the matter out. I am enclosing a letter received from the attorneys for the escrow company whereby they plan to interplead if the matter is not resolved. The Greens should not be forced to additional attorney's fees on behalf of the escrow company for filing said interpleader. I am sure you will understand my concern for my clients.

'Very truly yours,

S/ Joseph K. Borges

Joseph K. Borges

'JKB/br

cc: Mr. & Mrs. Roosevelt Green

cc: Home Builders Escrow Company

cc: James A. King

cc: Barsam and LeVeque'

This letter upon which the claim of libel is based was written without the knowledge of the Greens, hence the non-suit as to them.

During the trial the judge instructed the jury that the letter and its copies were conditionally privileged so that the pivotal issue submitted to the jury was that of malice.

In his order granting a new trial the judge set forth the grounds therefor as Code of Civil Procedure section 657, subdivisions 1 and 7 (irregularity in the proceedings and error in law). The reason for the order was 'that the letter sent to the California Divisions of Real Estate . . . was absolutely privileged under subsection 2 of Section 47 Civil Code as a communication preliminary to an official proceeding authorized by law.' Thus the trial judge concluded that he had erred in instructing the jury that the letter was only conditionally privileged.

This holding refers to the original letter, the court ruling that the carbon copies sent to other persons were only conditionally privileged.

Civil Code section 47 provides in pertinent part: 'A privileged publication or broadcast is one made--. . . 2. In any (1) legislative or (2) judicial proceeding, or (3) in any other official proceeding authorized by law; . . . 3. In a communication, without malice, to a person interested therein, (1) by one who is also interest . . .'

King contends that the trial judge erred first in holding that the letter was absolutely privileged and secondly in granting the new trial in any event because there was sufficient evidence to sustain the verdict on the basis of the distribution of the copies.

The original letter to the Division of Real Estate was absolutely privileged.

Business and Professions Code, Division IV, section 10004 et seq., contain a licensing and regulatory scheme which governs, among other things, the conduct of the real estate brokers in this state.

Business and Professions Code section 10176 empowers the Real Estate Commissioner, either on his own motion or upon a written verified complaint of any person, to investigate the actions of any person licensed under Division IV. The Commissioner is authorized to suspend or revoke a license for various types of specific misconduct, as well as 'Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing.' (Bus. & Prof.Code § 10176(i).)

By force of Business and Professions Code section 10100, the Real Estate Commissioner, in proceeding to suspend or revoke a license, is required to proceed under sections 11500 et seq. of the Government Code, which sections in turn control administrative adjudications. Government Code section 11501 specifically names the Real Estate Commissioner as an agency empowered to conduct administrative hearings.

Government Code section 11503 through 11510 provides for the procedure for an administrative hearing and gives the Commissioner power of subpoena.

'The phrase 'in any other official proceeding authorized by law' (contained) in section 47, subdivision 2, has been interpreted to encompass those proceedings which resemble judicial and legislative proceedings, such as transactions of administrative boards and quasi-judicial and quasi-legislative proceedings. (Citations.) In accord with the California cases, the general rule is now well established that The absolute privilege is applicable not only to judicial but also to quasi-judicial proceedings and defamatory statements made in both judicial and quasi-judicial proceedings having some relation thereto are absolutely privileged (citations).' (Ascherman v. Natanson, 23 Cal.App.3d 861, 865, 100 Cal.Rptr. 656, 659; petition denied April 26, 1972.)

It must be conceded that the activities of the Commissioner in investigating and disciplining licensees is an 'official proceeding authorized by law' and thus within the ambit of Civil Code section 47(2) so that any matter communicated to the Commissioner having some relation to such proceeding would be absolutely privileged.

King argues that no action or investigation was pending at the time Borges wrote the letter and thus under the circumstances the privilege did not attach. We disagree.

Civil Code section 47(2) specifically exempts from the privilege statements contained in pleadings in actions for dissolution of marriage when the statements concern persons against whom no relief is sought. By implication then all other pleadings including the initial complaint are part of the judicial proceedings.

The letter in the case at bar does not technically qualify as a formal complaint or accusation which itself would precipitate an administrative adjudication. It is in the nature of a request for investigation. As to the latter type of communication, an absolute...