Tenzer v. Superscope, Inc.

• Court: United States State Supreme Court (California)
• Writing for the Court: GRODIN; BIRD
• Citation: 702 P.2d 212,39 Cal.3d 18,216 Cal.Rptr. 130
• Parties: , 702 P.2d 212 Michael L. TENZER, Plaintiff and Appellant, v. SUPERSCOPE, INC., Defendant and Respondent. L.A. 31842.
• Decision Date: 25 July 1985

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216 Cal.Rptr. 130 39 Cal.3d 18, 702 P.2d 212 Michael L. TENZER, Plaintiff and Appellant,
v.
SUPERSCOPE, INC., Defendant and Respondent. L.A. 31842. Supreme Court of California,
In Bank. July 25, 1985.

[702 P.2d 213] [39 Cal.3d 21] Merle H. Horwitz, Herbert A. Bernhard and Greenberg, Bernhard, Weiss & Rosin, Los Angeles, for plaintiff and appellant.

Nossaman, Guthner, Knox & Elliott and Alvin S. Kaufer, Los Angeles, for defendant and respondent.

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GRODIN, Justice.

Plaintiff Michael L. Tenzer (Tenzer) appeals from a judgment in favor of defendant Superscope, Inc. (Superscope) after the trial court granted Superscope's motion for summary judgment.

39 Cal.3d 22

FACTS

The facts, as revealed by Tenzer's complaint ¹ and the papers filed in support of and in opposition to the motion for summary judgment, are these:

Superscope is a corporation listed on the New York Stock Exchange and authorized to do business in California. Joseph Tushinsky is the president of the corporation, as well as the chairman of its board of directors.

Tenzer has been involved in a management capacity in the real estate and housing industries in the western part of the United States for 20 years. Although he has extensive personal and business contacts among investors in the real estate field, Tenzer is not a licensed real estate broker.

Tenzer and Tushinsky served together on the board of directors of a charitable organization in Los Angeles. Sometime prior to May of 1979, they began to discuss the possibility that Tenzer should become a member of the Superscope board of directors (Board).

On May 10, 1979, at Tushinsky's invitation, Tenzer attended a Board meeting. At this meeting Tenzer learned, for the first time, that Superscope was attempting to sell its corporate headquarters to meet pressing cashflow problems. The next day, Tenzer was elected to the Board at the corporation's annual meeting. At a Board meeting the same day, the need to sell the corporation's headquarters was again discussed.

The next meeting of the Board occurred on June 22, 1979. At this meeting, the outside directors, ² including Tenzer, first learned the details of Superscope's financial predicament. The Board was informed that the corporation was technically in default on over $45 million in loans and that the corporation's banks were threatening to accelerate payment on these loans. The Board was also told that a cash sale of the corporate headquarters was imperative to avoid reorganization pursuant to the federal Bankruptcy Act. The headquarters building, together with other property and facilities including a warehouse, parking lot, and adjacent undeveloped acreage, had been on the real estate market for nearly a year, but Superscope's real estate broker had not yet been able to effect a sale. The asking price for the property was approximately $16 million. At this meeting, Tushinsky expressed[39 Cal.3d 23] his view that the situation was desperate and that a miracle was needed to save the corporation.

Subsequently, Tushinsky, in a phone conversation, implored Tenzer personally to [702 P.2d 214] seek a suitable buyer for the property. Shortly afterwards, Tenzer became aware that Paul Amir, a Beverly Hills-based entrepreneur, was interested in negotiating a quick-closing real estate purchase for tax reasons. The Superscope headquarters appeared to be precisely the sort of property which would suit Amir's needs. Tenzer discussed the Superscope property with Amir without revealing its identity and verified that Amir might be interested in buying it.

With this information in hand, Tenzer telephoned Tushinsky. He explained that he was calling not in his capacity as a Board member, but as a finder, that he had located a potential buyer for the corporate headquarters and that, should the sale be consummated, he would expect a finder's fee of 10 percent. Tushinsky responded enthusiastically, authorizing Tenzer to discuss the matter further with his contact. Tushinsky also indicated that payment of a

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finder's fee was entirely proper, that the requested fee was satisfactory, and that if a $16 million sale were to close when expected, Tenzer's fee would be earned and payable upon the closing.

Neither Tenzer nor Tushinsky discussed the need to reduce the finder's fee agreement to writing. Tenzer felt that their personal relationship and Tushinsky's integrity were sufficient assurance that he would be paid. In reliance upon Tushinsky's promise, Tenzer then revealed each party's identity to the other.

The Board accepted Amir's offer in July 1979. A contract for the sale of Superscope's headquarters to Amir was consummated in August, and the sale was ultimately closed.

Tenzer was aware of other real estate opportunities for Amir, but he refrained from exploring such opportunities on Amir's behalf in reliance upon Tushinsky's promise that he would receive a finder's fee from the Superscope sale. Prior to the Board's approval of the Amir transaction, Tenzer informed it that he was entitled to a finder's fee in the event of a sale to Amir. He did not, however, reveal the amount of the finder's fee to which Tushinsky had agreed. ³ Tenzer took no part in the deliberations concerning or in the vote approving acceptance of Amir's offer.

[39 Cal.3d 24] At the July 27, 1979, Board meeting at which the sale to Amir was approved, a discussion regarding the payment of finders' fees to directors was held, but a final decision on the issue was deferred to the next Board meeting on August 24, 1979. At the August meeting, a motion was made to authorize the payment of finders' fees to corporate directors. Tenzer maintains that the discussion involved only whether such fees would be approved for future transactions, and did not touch upon approval of the finder's fee arrangement he had already made with Tushinsky. He believed that the Board had ratified that arrangement when it accepted Amir's offer in July. In any case, Tenzer participated in the August discussion and voted on the motion. Part of the discussion centered upon whether such fees were permitted under the corporate bylaws. ⁴ All outside directors[702 P.2d 215] voted in favor of the resolution authorizing payment of finders' fees. All the "inside" directors (including corporate employees and members of the Tushinsky family) voted against. The resolution was defeated. Tenzer has never received a finder's fee for his services in connection with the Amir transaction.

Tenzer filed suit against both Superscope and Tushinsky. He alleged three "causes of action" which he entitled "Breach of Contract and Unjust Enrichment," "Estoppel," and "Fraud." The complaint further alleged that, in making the promise to pay him a 10 percent finder's fee, Tushinsky had acted as the agent of the corporation, and that he made the promise fraudulently, with no intent to perform. Rather, Tenzer alleged, Tushinsky intended to cheat him by inducing him to reveal Amir's name

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while secretly harboring an intent to prevent payment of the agreed fee.

After a hearing on the merits, Superscope's motion for summary judgment pursuant to Code of Civil Procedure section 437c was granted. ⁵ Tenzer filed a timely appeal from the judgment in favor of Superscope. For the reasons stated below, we reverse.

39 Cal.3d 25

DISCUSSION

Tenzer's contentions on appeal may be summarized as follows:

1. There is a finder's fee exception to the statute of frauds contained in Civil Code section 1624, subdivision 5. Therefore, an oral contract to pay a finder's fee in a real estate transaction is enforceable.

2. Even if the statute of frauds would normally preclude enforcement of an oral finder's fee contract, in this case Tenzer performed in reliance upon the agreement and Superscope retained the benefits. This should operate as an estoppel to assert the statute of frauds as a defense.

3. Because of Tushinsky's misrepresentations, Tenzer may maintain an action for fraud even if the underlying oral agreement is unenforceable.

4. Summary judgment was inappropriate because of the presence of triable issues of fact.

As explained further below, we find that, liberally construed, the papers Tenzer submitted in opposition to the motion for summary judgment are sufficient to raise triable issues of fact as to the second and third of these contentions. Thus summary judgment was inappropriate. (See, e.g., Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 851-852, 94 Cal.Rptr. 785, 484 P.2d 953.) However, we find no merit in Tenzer's first argument.

I.

Civil Code section 1624, provides in pertinent part as follows: "The following contracts are invalid, unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent: ... 5. An agreement authorizing or employing an agent, broker, or any other person to ... find a purchaser or seller of real estate ... for compensation or a commission; ..."

In his first cause of action, Tenzer attempts to claim damages based upon breach of an alleged oral contract employing him to find a purchaser of real estate for a commission. He does not allege that the contract was ever put in writing. Under the plain language of the statute this contract, if it was entered into, was invalid.

Tenzer argues that precedent establishes the statute is irrelevant to his claim. He cites several cases, including Tyrone v. Kelley (1973) 9 Cal.3d 1, [39 Cal.3d 26] 106 Cal.Rptr. 761, [702 P.2d 216] 507 P.2d 65; Rees v. Dept. of Real Estate (1977) 76 Cal.App.3d 286, 295, 142 Cal.Rptr. 789; and Spielberg v. Granz (1960) 185 Cal.App.2d 283, 8 Cal.Rptr. 190, for the proposition that there is a "finder's exception," both to licensing laws and the statute of frauds. He is in error. Those cases merely stand for the principle that a finder in a real estate transaction need not be licensed as a real estate broker to collect a finder's fee....