Lemke Construction v. Daly, A101001 (Cal. App. 11/19/2003)

Decision Date19 November 2003
Docket NumberA101597.,A101001.
CourtCalifornia Court of Appeals Court of Appeals
PartiesLEMKE CONSTRUCTION, INC., Plaintiff and Respondent, v. LAWRENCE W. DALY, Defendant and Appellant.

Lambden, J.

Lemke Construction, Inc. (LCI) made an offer to purchase on a vacant piece of real estate. The offer was accepted by Barbara Neditch (Barbara) and her husband Stanley Neditch (Stanley). Barbara signed the purchase and deposit contract and Lawrence W. Daly (Daly) signed it as her listing real estate agent. Subsequently, Barbara and Stanley (collectively, the Neditches) sold the property for more money to a different party and LCI sued the Neditches, Daly, and others, for fraud, breach of contract, and negligent and intentional misrepresentation. After a court trial, the judge found in favor of LCI on the breach of contract claim and against it on the other claims. Pursuant to a provision in the purchase and deposit contract, the court awarded LCI attorney fees.

Daly challenges both the judgment and award of attorney fees, arguing that, as the listing agent, he was not a party to the purchase and deposit contract. Consequently, he asserts he cannot be liable for breach of contract or be responsible for attorney fees under a provision in this contract. We agree that he cannot be liable in his role as the listing agent, and we cannot determine from the trial court's statement of decision the legal and factual basis for holding him liable. We therefore remand for the court to clarify its reasoning for finding him liable.


On September 1, 2000, Barbara, at her husband's instruction, executed a residential listing agreement with Daly for a property on Kipling in Concord (the property). The listing agreement stated that the seller, Shan Shon Ness Trust (the trust), employs and grants Daly the exclusive and irrevocable right to sell or exchange the property. Barbara signed the agreement and, above her signature, she wrote Shan Shon Ness Trust.

Barbara entered into a contract for the sale of the property with Qian Wang but, on November 9, 2000, she cancelled escrow and retained the $3,000 deposit. In the cancellation of sale notice, under the heading of seller, were the typed names of Daly, Stanley, and Shannon Neditch (Shannon). Daly signed above his name. The only other signature was Barbara's. Under her signature, were the following handwritten words: "Barbara Neditch—manager of Shan Shon Ness Trust."

On November 10, 2000, LCI entered into an agreement with Barbara to purchase the property for $185,000 (referred to as the purchase agreement or the purchase contract). Eric Lemke (Lemke) signed on behalf of LCI. Barbara signed the agreement as the seller and Daly signed the agreement as the listing agent for Barbara. Five days later, an agent of LCI wrote to Daly requesting all "disclosures, plans or reports pertinent to subject property." Daly wrote on the letter, "I have no reports."

On November 16, 2000, Barbara entered into an agreement to sell the property for $205,000 to Discovery Builders, Inc. Barbara signed as the seller and Daly signed as the listing agent for Barbara. Two days later, on November 18, Barbara signed an addendum to this agreement with Discovery Builders, Inc. The addendum reported that the offer was accepted as a back-up offer. It also stated the following: "Seller has accepted a purchase contract from an earlier buyer. If for any reason that purchaser cannot perform per contract[,] seller will notify the agents for Discovery Builders Inc. of such, and this contract shall become the primary offer that has been accepted." In addition, it provided the following: "Seller of Property is the Shan Shon Ness Trust. The trustee for trust is Virginia P. Hertz. In the event this offer becomes primary offer, purchaser shall redraw contract."

Sometime in November, LCI received the preliminary report on the property from American Title Company. The report stated that title of the property is vested in the following: "Lawrence A. Daly, Stanley E. Neditch and Shannon Neditch, acting as initial Trustees of the Shan Shon Ness Trust dated May 13, 1994." An agent for LCI, Beverly Steiner (Steiner), contacted Daly regarding this report. Daly said that he was no longer a trustee, and that the report was in error.

On November 20, Lemke completed the contingency removal and sent it by facsimile to Daly. The removal stated in pertinent part the following: ". . . Let [it] be noted that seller has not provided existing reports, material to the property . . . . By lack of said disclosure, buyer expects that no known material conditions shall exist upon buyers review." In addition it stated that the "[b]uyers agree to abide by the terms of the contract as written. . . ."

Daly responded by sending a letter by facsimile to Steiner at LCI. The letter stated that he had spoken to the trustee and that she would like "to see something more along these lines incorporated into the contingency removal: [¶] 1. I have modified your contingency removal to reflect her wishes. Please take a look and then get back to me. [¶] 2. I would like my liability release incorporated into the agreement. That is why I forwarded it to you last week. [¶] 3. The seller does not know of any problems with the site, nor do I, but they are not willing to guarantee anything other than a clear title at this point. [¶] 4. The trustee wants your purchaser to do their [sic] research, get comfortable with the facts and then go from there."

On November 28, 29, or 30, Daly told Steiner that his client did not want to acknowledge the contingency removal because his client had another buyer. On November 30, Barbara signed a letter stating that she was canceling the sale of the property. The property was sold to Discovery Builders for $205,000 and LCI's deposit of $5,000 was not returned.

On December 12, 2000, LCI filed a complaint against Daly, the Neditches, Shannon, and the trust for, among other claims, breach of contract. LCI filed an amendment to the complaint on November 26, 2001, adding Virginia P. Hertz (Hertz) as a defendant. LCI filed a first amended complaint (FAC) on December 26, 2001, alleging breach of contract, specific performance, fraud, negligent misrepresentation, and intentional misrepresentation. LCI alleged that Daly, Shannon, and Stanley were the trustees of the trust and that Barbara was a manager of the trust. It further alleged that the trust owned the property.

A bench trial began on February 25, 2002. The court issued its statement of decision on May 31, 2002 and amended it on June 3, 2002. The court concluded that LCI and Barbara had a purchase contract and that Barbara was "acting with ostensible authority on behalf of the Shan Shon Ness Trust . . . and as an agent for her husband Stanley Neditch (one of the three recorded trustees of the Trust at the time of the transaction) . . . ." The court stated that it "finds further that at all times relevant, the only recorded title information indicated that title was held in the name of `Lawrence A. Daly, Stanley E. Neditch and Shannon Neditch, acting as initial trustees of the Shan Shon Ness Trust, dated May 13, 1994.' " The court further found that Barbara's notice of cancellation of the contract, demonstrated the sellers' "intent not to perform which was unjustified and unexcused under the circumstances." As a result, the court found that LCI was entitled to a refund of its $5,000 deposit, expenses of $2,250, and "the difference between the price agreed to be paid ($185,000) and the fair market value of the estate ($ 205,000) agreed to be conveyed at the time of the breach, or $20,000." The court also found that LCI was entitled to simple interest at the rate of 10 percent per annum from December 11, 2000 until the date judgment was to be entered.

The statement of decision noted that LCI had withdrawn its claim for specific performance. The court found against LCI on its claims of fraud and intentional and negligent misrepresentation.

On June 17, 2002, Daly, and the other defendants, filed their objections to the proposed judgment. They complained, among other things, that "[t]he named Defendants in the Judgment are `Lawrence A. Daly, Stanley E. Neditch, Barbara Neditch, Shannon Neditch, and Virginia Hertz'. However, neither the Statement of Decision, nor the facts of this case would provide any basis for any liability of Shannon Neditch. The same is true of Lawrence A. Daly and Virginia Hertz. . . ."

The court filed its judgment on September 23, 2002, and it incorporated its unchanged statement of decision dated June 3, 2002. On October 15, 2002, Daly and the other defendants filed a motion to correct a clerical error in the judgment and requested the court to determine, among other things, that Daly was not individually liable on the judgment. The court denied the motion on the grounds that no clerical error had been shown. The minute order stated the following: ". . . It is undisputed that Barbara Neditch was not authorized under the trust to sell this property. The substance of this action and the judgment was directed against Lawrence Daly, Stanley Neditch, and Barbara Neditch as individuals, for their individual conduct with regard to the Agreement."

LCI moved for attorney fees pursuant to a provision in the purchase agreement. The court awarded LCI $66,465 in attorney fees.

Daly filed timely notices of appeal from the judgment and the award of attorney fees, and we consolidated these appeals.

I. LCI's Failure to Amend the Complaint

Daly contends that the FAC alleged that he was a trustee of the trust, and LCI never amended it to allege he was liable in any other capacity. At trial, Daly maintains that LCI argued and proved that he was not a trustee and attempted to establish fraud by proving that Hertz was the sole trustee. Consequently,...

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