Judge: Douglas W. Stern, Case: 21STCV36477, Date: 2022-09-13 Tentative Ruling

Please contact Department 52 at SMCDEPT52@lacourt.org and send a copy of the email to all parties, to advise the courtroom staff if parties are submitting on the court’s tentative ruling.
Please provide the Case Name, Case Number, and party.

Case Number: 21STCV36477    Hearing Date: September 13, 2022    Dept: 52

Tentative Ruling:

            Defendants Kee Whan Ha, 1000 South Vermont, LLC, 1054 Vermont, LLC, and 1035 Menlo, LLC’s Demurrer and Motion to Strike Portions of the Third Amended Complaint

Defendants Kee Whan Ha, 1000 South Vermont, LLC, 1054 Vermont, LLC, and 1035 Menlo, LLC demur to the first, third, fifth, and sixth causes of action alleged in plaintiff Andrew Suh’s third amended complaint. 

First Cause of Action: Breach of Contract

            The statute of frauds bars this cause of action.  “An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate … or to procure, introduce, or find a purchaser or seller of real estate… for compensation or a commission” must be “in writing and subscribed by the party to be charged or by the party’s agent.”  (Civ. Code, § 1624(a)(4).)  “The procurement of a purchaser is not such performance as will entitle a broker to recover a commission in the absence of a compliance with the requirements of section 1624.”  (Augustine v. Trucco (1954) 124 Cal.App.2d 229, 238; accord Phillippe v. Shapell Industries (1987) 43 Cal.3d 1247, 1260 (Phillippe).)

Plaintiff alleges four potential contracts.  Each constitutes an agreement employing plaintiff as a broker to find a purchaser of real estate for a 2% commission.  (TAC, ¶¶ 18, 25-26, 28.)  None of them satisfy the statute of frauds.

First, plaintiff alleges he and Ha “entered into an oral contract” for that purpose.  (TAC, ¶ 25.)  An oral contract cannot be enforced under the statute of frauds.

Second, plaintiff alleges, “On August 27, 2018 … a written commission agreement was prepared and executed by Plaintiff.”  (TAC, ¶¶ 18, 26.)  Plaintiff omits any allegation that defendants executed or signed the agreement.  Because defendants are the parties to be charged, this agreement does not satisfy the statute of frauds.

 Third, plaintiff alleges, “On August 28, 2018, HA and Plaintiff entered into another written commission agreement.”  (TAC, ¶¶ 18, 26.)  Plaintiff does not allege any party signed the agreement.  Moreover, he only alleges that defendant Ha entered it.  Plaintiff’s allegations do not include defendants 1000 South Vermont, LLC, 1054 Vermont, LLC, and 1035 Menlo, LLC.

Fourth, plaintiff alleges that “in September 2018” a real estate sales agreement and joint escrow instructions were “prepared for the selling defendants with the following language: [¶] ‘Purchaser and seller each represents and warrants to the other that it has not dealt with any person or entity entitled to a brokerage commission, finder’s fee or other compensation with respect to the transaction contemplated hereby other than Andrew Suh of Choice 100 Realty on behalf of Seller to be compensated by Seller pursuant to a separate agreement…’ ”  (TAC, ¶ 26.)

Again, plaintiff does not allege defendants executed that agreement.  Instead, he alleges the property was not sold until at least 2020.  “In March of 2020, due to the Covid-19 pandemic, all parties ceased communications.  Suh believed that all communications and efforts to sell the Subject Property were ceased.”  (TAC, ¶ 20.)  In 2021, Suh learned “he was not included in the escrow instruction as selling defendants’ agent or to receive the two (2) percent commission as agreed upon.  On September 13, 2021, Suh demanded to be included in the escrow as selling defendants’ agent.”  (¶ 22.) 

Plaintiff thus does not allege the buyer and sellers entered the agreement prepared in September 2018 but failed to honor the commission provision.  Rather, he alleges the buyer and sellers entered a sales agreement with different escrow instructions that omitted the provision for his 2% commission.

Third Cause of Action: Intentional Interference with Prospective Economic Relations

            Plaintiff fails to allege sufficient facts for this cause of action against defendant Ha.  The label to the third cause of action states it is “by plaintiff against Ha and Zukor.”  (TAC, p. 13, line 9.)  The factual allegations, however, do not state that Ha interfered with any prospective economic relations with a third party.  The factual allegations instead assert that Zukor interfered with plaintiff’s economic relations with the other defendants.

Fifth Cause of Action: False Promise

Plaintiff fails to allege sufficient facts for this cause of action.  Promissory fraud is “fraud or deceit based on a promise made without any intention of performing it.”  (Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1453; see also Civ. Code, § 1710(4).) 

The plaintiff must allege: “(1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.”  (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060 (Beckwith).)  The plaintiff must also “set ‘forth facts to show that his or her actual reliance on the representations was justifiable, so that the cause of the damage was the defendant’s wrong and not the plaintiff's fault.’ ”  (Id. at p. 1066.)

Plaintiff cannot allege justifiable reliance on defendants’ promise of a commission because he is a licensed real estate broker.  “Licensed brokers are conclusively presumed to know the requirements of” the statute of frauds.  (Phillippe, supra, 43 Cal.3d at p. 1262.)  “[T]he broker’s reliance on the oral contract was not reasonable in light of the broker’s presumed knowledge of the requirements of the statute of frauds.”  (Ibid.) 

Plaintiff alleges “[h]e is a duly licensed real estate broker, California Department of Real Estate License No. 01898256.”  (TAC, ¶¶ 13, 14.)  He is therefore conclusively presumed to know that a contract for his commission must be in writing and must satisfy the statute of frauds.  Because he has not alleged sufficient facts to satisfy the statute of frauds, his reliance on defendant’s promises was not justifiable.   

Sixth Cause of Action: Unfair Business Practices

            Plaintiff fails to allege sufficient facts for this cause of action.  Business and Professions Code section 17200 prohibits “unlawful, unfair, or fraudulent” acts, which are three separate varieties of violation.  (Drum v. San Fernando Valley Bar Assn. (2010) 182 Cal.App.4th 247, 253.)  The law “covers a wide range of conduct” and “embraces anything that can properly be called a business practice and that at the same time is forbidden by law.”  (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143, internal quotes and citations omitted.) 

            Plaintiff makes the conclusory allegation that defendants engaged in “unlawful, fraudulent and deceptive conduct” in violation of Business and Professions Code section 17200.  (TAC, ¶ 62.)

As to the “unlawful” prong of the statute, this cause of action relies on the others.  It cannot stand without them. 

For the “unfair” prong, plaintiff must allege a business practice that violates public policy “tethered to specific constitutional, statutory, or regulatory provisions” or a “substantial” consumer injury “that consumers themselves could not reasonably have avoided” and that “must not be outweighed by any countervailing benefits to consumers or competition.”  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1366.) 

Plaintiff alleges no violation tethered to a specific constitutional, statutory, or regulatory provision.  Assuming he constitutes a “consumer” despite acting as a licensed real estate professional, plaintiff could reasonably have avoided any harm by insisting defendants execute a written commission agreement before working to find a buyer.  And the countervailing benefits of denying plaintiff a commission in these circumstances outweigh the potential injuries to consumers.  “[T]he primary purpose of section 1624(d) is to protect real estate sellers and purchasers from the assertion of false claims by brokers for commissions.”  (Phillippe, supra, 43 Cal.3d at p. 1257.)

Finally, for the “fraudulent” prong, plaintiff must “ ‘show that members of the public are likely to be deceived’ ”  by defendants’ business practice.  (Schnall v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 1167.)  Assuming the standard for “members of the public” applies to licensed real estate professionals, plaintiff should not have been deceived by the business practice of refusing to pay his commission where there is no written agreement.  As discussed above, plaintiff is conclusively presumed to know that any commission agreement must satisfy the statute of frauds.

Disposition

Defendants Kee Whan Ha, 1000 South Vermont, LLC, 1054 Vermont, LLC, and 1035 Menlo, LLC’s demurrer to the first, third, fifth, and sixth causes of action is sustained with 15 days’ leave to amend. 

Defendants’ motion to strike is therefore moot.