Sauer v. Kerper

• Decision Date: 27 January 2016
• Docket Number: D068287
• Court: California Court of Appeals Court of Appeals
• Parties: RICHARD N. SAUER, Plaintiff and Appellant, v. STEVE KERPER, Defendant and Respondent.

RICHARD N. SAUER, Plaintiff and Appellant, v. STEVE KERPER, Defendant and Respondent.

D068287

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

January 27, 2016

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. RIC1310218)

APPEAL from a judgment of the Superior Court of Riverside County, John Vineyard, Judge. Affirmed.

Wilson Law Firm and Dennis M. Wilson for Plaintiff and Appellant.

Manning & Kass, Ellrod, Ramirez, Trester, Rinat B. Klier Erlich and Candace E. Kallberg for Defendant and Respondent.

In this case, Dr. Richard Sauer sought to vacate a 2008 judgment in favor of his former real estate broker, Steven Kerper. For the reasons explained below, we determine there are no grounds for vacating the judgment at this late date. We thus affirm the judgment denying Dr. Sauer's motion to vacate.

The underlying litigation began in 2005, when Dr. Sauer sued Kerper for allegedly failing to accurately identify properties for sale in 2003. Kerper cross-complained, seeking his sales commission. In February 2008, the court entered final judgment in Kerper's favor (the February 2008 judgment). The judgment was amended several times, including to correct a clerical error by adding a $152,000 damages award and to later include a previously ordered attorney fees award.

In December 2011, Dr. Sauer brought a new action against Kerper seeking to set aside the February 2008 judgment (as amended) on grounds of extrinsic fraud or mistake. Dr. Sauer alleged he first learned of the judgment in March 2011 when he was served with collections documents and that his prior attorney (who was disbarred in 2010) had abandoned him before the February 2008 judgment was entered.

Kerper moved for summary judgment, arguing Dr. Sauer was not entitled to equitable relief because the undisputed facts show Dr. Sauer was not diligent; Dr. Sauer's attorney did not abandon him; and Dr. Sauer could not prove his original claims were meritorious. The court granted Kerper's motion based on its finding that Dr. Sauer's claims and defenses in the prior action had no merit. The court thus entered judgment in Kerper's favor.

We affirm this judgment, but on different grounds. We determine the undisputed facts show Dr. Sauer did not exercise reasonable diligence concerning his initial lawsuit against Kerper. Thus there was no proper equitable basis to vacate the February 2008 judgment or the amendments to the judgment. Based on this conclusion, we do not reach the merits of the underlying claims and defenses.

FACTUAL AND PROCEDURAL SUMMARY

I. Background¹

In November 2002, Dr. Sauer retained real estate broker Kerper (and/or his agency, collectively Kerper) to assist him in selling several parcels of undeveloped property. The parties signed a written listing agreement in which Dr. Sauer agreed to pay Kerper a 10 percent commission fee. The agreement identified six lots by parcel numbers (the Properties). In the listing agreement, Dr. Sauer warranted he had "OWNERSHIP, TITLE, AND AUTHORITY" over the Properties, with the qualification that: "Dr. Sauer has full control over all shares and he will obtain full title to the property at least forty-five days prior to close of escrow."

At the time, Dr. Sauer understood he had an ownership interest in only five of the six parcels and he did not own the sixth parcel (Parcel 28). Dr. Sauer was also aware that other individuals had minority interests in each of the five parcels, but he believed he could purchase their interests before the close of escrow. Dr. Sauer told Kerper or his assistant he did not own the sixth parcel and that if there were any questions about his ownership status, Kerper could look up the properties in public records or conduct a physical inspection of the properties.

In marketing materials, Kerper listed the six parcels of properties for sale, including Parcel 28. In May 2003, a third party (Buyer) offered to purchase the sixparcels for $1.49 million. A few days later, Dr. Sauer signed a written counteroffer identifying the properties for sale by six separate parcel numbers (including Parcel 28).

After the parties reached a final agreement on terms and price ($1.52 million), Dr. Sauer became aware the sixth parcel was included in the deal, but that he would be unable to obtain title to this parcel. In September 2003, Dr. Sauer drafted a memorandum clarifying that he owned only five of the parcels and offering to sell these five parcels for a total price of $1,650,000 (an increase in the prior price for the six identified parcels).

The Buyer responded it was willing to pay $1,266,000 for the five parcels (calculated based on determining the per parcel price at the agreed sales price). After Dr. Sauer refused, the Buyer's assignee (Assignee Buyer) sued Sauer. Under the parties' agreement, the parties submitted the matter to arbitration.

After a two-day arbitration hearing held in July 2004, the arbitrator found in favor of the Assignee Buyer. The arbitrator found: "The ownership error which killed the sale and gave birth to this litigation was solely created by [Dr. Sauer] and no one else involved had any clue to the flaw [regarding ownership of the sixth property] until title reports emerged. The unilateral nature of this error is clearly upon [Dr. Sauer] and entitle[d] [Assignee Buyer] to the available legal remedies." The arbitrator awarded Assignee Buyer specific performance requiring Dr. Sauer to transfer the five properties at the agreed per-parcel price; monetary damages; and prevailing party attorney fees.

In November 2004, the superior court entered a judgment confirming this arbitration award.

II. Dr. Sauer's First Lawsuit Against Kerper

Four months later, in March 2005, Dr. Sauer—represented by attorney Frank Ferris—sued Kerper, alleging Kerper was responsible for the misidentification of the properties for sale. Kerper filed a cross-complaint, seeking payment of his commission fee. These matters were consolidated with another action involving the Properties.

In March 2007, Dr. Sauer (represented by Ferris) filed a third amended complaint against Kerper, alleging breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, fraud, and negligent misrepresentation. On the fiduciary duty and bad faith claims, Sauer alleged that Kerper breached his duties by failing to confirm the accuracy of the Properties' legal description; continuing to represent to third parties that six parcels were for sale despite his awareness that Dr. Sauer owned only five parcels; and failing to inform Dr. Sauer of the "inaccuracy of the documents [he] was signing."

After the court sustained Kerper's demurrer to the fraud and negligent misrepresentation causes of action, Kerper moved for summary judgment on the two remaining claims (breach of fiduciary duty and bad faith), and on Kerper's cross-complaint for his $152,000 commission fee. Kerper argued the undisputed facts showed Dr. Sauer guaranteed in the listing agreement that he was the property owner and warranted delivery of clear title; Kerper owed no duty to independently confirm the accuracy of this title information; and Kerper was entitled to his commission because he presented a ready and willing buyer. Dr. Sauer did not file an opposition to the motion, and the court granted the motion.

In February 2008, the court entered judgment against Dr. Sauer on his complaint and in favor of Kerper on his cross-complaint. The judgment stated that defendants "shall recover their costs pursuant to post judgment procedure." Several months later, in 2008, the court entered an amended judgment nunc pro tunc to correct a "clerical error" in the judgment by adding damages of $152,000 reflecting Kerper's commission fee. That same month, the court found Kerper was entitled to prevailing party attorney fees in the amount of $35,232. More than two years later, on December 7, 2010, the court entered an amended judgment to include these attorney fees. The record is not clear as to the reason for the delay in adding attorney fees to the judgment.

III. Current Action

A. Dr. Sauer's Complaint Seeking to Vacate February 2008 Judgment

In December 2011, Dr. Sauer filed an independent action against Kerper seeking to set aside the February 2008 judgment and amendments to the judgment. Dr. Sauer alleged the 2008 judgment should be set aside based on "extrinsic mistake and extrinsic fraud" because his prior attorney (Ferris) "abandoned [him], [and] so utterly failed to represent him in the motions for summary judgment and in the motions to amend the judgment as to constitute actual misconduct . . . ."

In the complaint, Dr. Sauer alleged Ferris never informed him of the February 2008 judgment (or amendments), and he "first learned" of the February 2008 judgment in March 2011, when Kerper personally served him with debtor's examination documents seeking to enforce the judgment. Dr. Sauer alleged he was diligent in seeking relief because he filed the complaint within 10 months after learning of the February 2008judgment, and described the steps his new attorneys took to investigate the basis for the judgment. Dr. Sauer alleged his prior claim for breach of fiduciary duty was meritorious, but acknowledged he was not seeking to revive the other claims that had been dismissed by demurrer in the prior action (fraud and negligent misrepresentation). He also alleged he had a meritorious defense to Kerper's commission claim.

Dr. Sauer attached information to his complaint showing that on December 17, 2010, the State Bar of California disbarred Ferris for committing misconduct in his representation of three former clients (not Dr. Sauer). This...