Ownes v. Foundation for Ocean Research

• Decision Date: 19 June 1980
• Citation: 165 Cal.Rptr. 571,107 Cal.App.3d 179
• Court: California Court of Appeals Court of Appeals
• Parties: Vernon S. OWENS, Plaintiff and Appellant, v. FOUNDATION FOR OCEAN RESEARCH et al., Defendants and Respondents. Civ. 22036.

Page 571

165 Cal.Rptr. 571

107 Cal.App.3d 179

Vernon S. OWENS, Plaintiff and Appellant, v. FOUNDATION FOR OCEAN RESEARCH et al., Defendants and Respondents.

Civ. 22036.

Court of Appeal, Fourth District, Division 1, California.

June 19, 1980.

Hearing Denied Aug. 27, 1980

Levy, Saxon & Alt and Mark A. Saxon, San Diego, for plaintiff and appellant.

Thompson, Sullivan, McGrath & McDonald and Eric V. Benham, San Diego, for defendants and respondents.

GERALD BROWN, Presiding Justice.

Vernon Owens appeals a judgment dismissing his action against the Foundation for Ocean Research (FOR) and its representatives for damages based upon claims in equitable estoppel, fraud, interference with contract and/or prospective economic advantage, civil conspiracy, and breach of warranty of authority. The trial court dismissed the action after sustaining FOR's demurrer on the ground the complaint failed to state any cause of action on the facts alleged.

It should be noted at the outset our review is limited by the following established principles: A demurrer admits the truth of all properly pleaded material allegations in the complaint, without regard to the difficulty of proof (Alcorn v. Anbro Engineering, Inc., 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216). The allegations of the complaint must be liberally construed with a view to attaining substantial justice among the parties (King v. Central Bank, 18 Cal.3d 840, 843, 135 Cal.Rptr. 771, 558 P.2d 857, quoting from Youngman v. Nevada Irrigation Dist., 70 Cal.2d 240, 244-245, 74 Cal.Rptr. 398, 449 P.2d 462). However, all intendments weigh in favor of the regularity of the trial court proceedings and the correctness of the judgment. Unless clear error or abuse of discretion is demonstrated, the trial court's judgment of dismissal following the sustaining of defendants' demurrer will be affirmed on appeal (Banerian v. O'Malley, 42 Cal.App.3d 604, 610, 116 Cal.Rptr. 919).

Stating the facts most favorably to appellant, Owens orally agreed to act as FOR's broker in selling a large tract of its San Diego property ("Rancho Zorro"). After being assured by FOR's attorney the agreement had been reduced to writing and adopted in resolution form by the corporation's board of directors, Owens contacted Watt Industries as a potential buyer of Rancho Zorro. Watt Industries eventually bought the property, but FOR refused to pay the agreed-upon brokerage commission.

When Owens sued to recover his commission on several alternative theories of liability, FOR demurred to the complaint claiming the entire action was barred by the statute of frauds. At the hearing, Owens rejected an opportunity to amend and elected to stand on his complaint. The court, noting the thrust of the entire matter was to circumvent the statute of frauds, sustained the demurrer as to all causes of action without leave to amend.

ESTOPPEL

Owens' first cause of action seeks recovery of his brokerage commission based on the oral listing agreement. However, the statute of frauds in California requires a writing to establish the existence of a broker's listing agreement (Civ.Code, § 1624, subd. (5)). ¹ The courts have been This case is unique, however, in that it involves the seller's assurances a written, binding agreement actually exists. Since such representations would lead one to believe the contract complies with the statute of frauds, a broker's reliance may be reasonable even presuming his familiarity with the law. Unlike an oral promise to pay, the seller's affirmative misrepresentations as to the existence of a writing will support an action by the broker in equitable estoppel (see 1 Miller and Starr, Current Law of California Real Estate (1975), § 1:54, p. 73, fn. 10). To hold otherwise would suggest a broker cannot trust anything the seller says. This is impractical in everyday business transactions which often depend upon the personal integrity of the parties. The statute of frauds should not necessarily require a broker's insistence on seeing the actual written contract before doing any work. An oral agreement is enforceable, despite the statute of frauds, where one party to the agreement is prejudicially led to believe a writing exists because of the misrepresentations of the other party (Civ.Code, § 1623). ²

adamant in refusing to enforce oral contracts of this type. Even estoppel doctrines have been ineffective in securing relief for brokers, who are versed in real estate law and presumed to know listing agreements are unenforceable unless written (Pac. etc. Dev. Corp. v. Western Pac. R.R. Co., 47 Cal.2d 62, 70, 301 P.2d 825). In failing to press for a writing, brokers run the risk of relying upon the seller's oral promise and have no cause for complaint if their efforts go unrewarded (Franklin v. Hansen, 59 Cal.2d 570, 575, 30 Cal.Rptr. 530, 381 P.2d 386). The estoppel exception to the statute of frauds is only applicable where a broker in relying on the seller's representations, changes his position and suffers unconscionable injury (LeBlond v. Wolfe, 83 Cal.App.2d 282, 286, 188 P.2d 278). The rationale for denying a broker's claim is that his unsound reliance on the seller's oral promise to stand on the agreement or put it in writing later is not a legally sufficient "change of position" for purposes of pleading estoppel (Keely v. Price, 27 Cal.App.3d 209, 212, 103 Cal.Rptr. 531).

FRAUD

Owens' second, third and fourth causes of action allege the facts of this case so as to encompass the various theories of fraud. As with estoppel, an action for fraud will not be sustained where its purpose is merely to circumvent the statute of frauds (Keely v. Price, supra, 27 Cal.App.3d 209, 215, 103 Cal.Rptr. 531). Since a broker is presumed to know his contract must be written, any reliance on the alleged misrepresentation is unreasonable as a matter of law (Kroger v. Baur, 46 Cal.App.2d 801, 804, 117 P.2d 50).

However, a distinction similar to that used in sustaining the estoppel claim can be found in the fraud cases. A broker's reliance on a representation that the contract is written may be reasonable. The facts supporting Owens' claim in equitable estoppel will also support an alternative cause of action for the underlying fraud. ³

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