Opinion
A147561
06-02-2017
CAROL GILBERT, INC., a California Corporation, Plaintiff and Respondent, v. CITY OF SAN FRANCISCO ELLIS-O'FARRELL PARKING CORP., Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco County Super. Ct. No. CGC-13-535744)
A real estate broker enters into an exclusive listing agreement with the master tenant of a city-owned parking garage for the purpose of finding a replacement subtenant for restaurant space on the ground floor. The listing agreement provides that a commission will be paid to the broker "[i]f a lease[] is entered into during the Term of this Agreement." The broker finds a subtenant, who signs a lease with the master tenant, but that sublease is never approved by the city that owns the garage, as was required by the master lease between the city and the master tenant. Was the sublease "entered into," such that the broker had a right to be paid the commission specified in the listing agreement? The trial court concluded the answer is yes.
The master tenant, defendant City of San Francisco Ellis-O'Farrell Parking Corporation (Ellis Parking), appeals from a summary judgment entered in favor of the broker, plaintiff Carol Gilbert, Inc. (CGI), on its claim for breach of contract in failing to pay a commission pursuant to its written exclusive listing agreement. The court granted summary judgment in favor of CGI, having previously denied a motion for summary judgment brought by Ellis Parking in which Ellis Parking alleged that no commission was owed as a matter of law. We affirm.
I. FACTS AND PROCEDURAL HISTORY
A. The Listing Agreement, Master Lease and Proposed Sublease
The following facts are undisputed.
The City and County of San Francisco (the City) owns the Ellis-O'Farrell parking garage near Union Square, which in addition to public parking facilities has commercial space on the ground floor. Ellis Parking is a nonprofit entity which was originally formed to facilitate bond financing for the construction of the garage, and which later managed the garage under a lease agreement with the City. Over the years, Ellis Parking has subleased the commercial space in the garage to various subtenants.
At the times relevant to this case, the relationship between the City and Ellis Parking was governed by a 1991 "Master Lease", which provided in part: "This lease may not be otherwise assigned, sublet, transferred or hypothecated by Tenant [Ellis Parking] without the written consent of Landlord [the City], which consent shall not be unreasonably withheld. . . . No suble[ase] shall be effective unless the subtenant shall execute an agreement which provides that the sublease is subject and subordinate to the terms of this lease."
Ellis Parking had difficulties with one of the subtenants in the commercial space, Les Joulins Jazz Bistro, and decided to search for a new subtenant. It retained CGI, a licensed real estate broker, to market the space. On September 25, 2009, Ellis Parking and CGI signed an exclusive listing agreement, which provided that CGI would be compensated on a commission basis under the following terms:
"Schedule of Fees and Commissions If a lease[] is entered into during the Term of this Agreement, or any extensions hereof, [Ellis Parking] will pay [CGI] a sum based on the following schedule: [¶] Seven percent (7%) of Scheduled Rent for the First Year of the Term plus [¶] Six Percent (6%) of Scheduled Rent for the Second and Third Years of the Term plus [¶] Five Percent (5%) of Scheduled Rent for the Fourth and Fifth Years of the Term plus [¶] Four Percent (4%) of Scheduled Rent for the Sixth through Tenth Years of the Term plus [¶] Three Percent (3%) of Scheduled Rents for the Remaining Years of the Term[.] [¶] When Commission Due Commissions shall be deemed one half due and payable upon the later of Lease Execution or Removal of Contingencies, and one half on the earlier of Tenant's Opening for Business or Commencement of Rent. . . ." The listing agreement contained an integration clause: "This Agreement is the sole and only agreement between the parties respecting the subject matter hereof and correctly sets forth the obligations of the parties to each other as of the date below. Any Agreements or representations not expressly set forth herein are null and void."
CGI fully performed its duty to market the space by bringing several prospective tenants to Ellis Parking's attention, and on March 16, 2012, the parties extended the listing agreement to March 31, 2013. CGI presented Man J. Kim, also known as "Lori's Diner" as a prospective subtenant. Ellis Parking approved the terms in Lori's Diner's letter of intent (LOI) and began negotiations for a 20-year sublease of the space.
In October 2012, representatives of Ellis Parking and Lori's Diner signed a written sublease, which expressly stated it was controlled by the terms of Ellis Parking's Master Lease with the City. Paragraph S of the Basic Lease Provisions of the sublease stated: "This Lease is actually a sublease that is subject and subordinate to the terms of that certain Master Lease (as further defined in Section 29.2 of this Lease) dated as of June 1, 1991 between the City and County of San Francisco and the City of San Francisco Ellis-O'Farrell Parking Corporation." Paragraph 29.2 of the sublease provided: "Landlord holds possession of the Premises under a lease ("the Master Lease") for the Ellis-O'Farrell Parking Garage, dated June 1, 1991 by and between the City and County of San Francisco (as "Landlord") and the City of San Francisco Ellis-O'Farrell Parking Corporation ("the Tenant"), a copy of which is attached hereto as Schedule 1. The complete Master Lease and all amendments shall be delivered to Tenant with this lease and Tenant shall acknowledge receipt of same by its signature to this Lease. The leasehold of Tenant under this Lease is subject to, and Tenant shall comply with and perform, all of City of San Francisco Ellis-O'Farrell Parking Corporation's obligations under the Master Lease as they relate to the Premises (other than payment of rent), and any provisions of this Lease which are inconsistent with any provisions of the Master Lease shall be of no force or effect. This Lease shall terminate with the termination of the Master Lease, however the termination is caused." A signature block for a City representative to approve the sublease as to form and content was affixed to the last page.
After the sublease was signed by representatives of Lori's Diner and Ellis Parking, Ellis Parking sent it to the City for approval. The City rejected the sublease at the recommendation of John Updike, the Director of the City's Department of Real Estate, and instead renegotiated the sublease with Les Joulins, the existing tenant. Lori's Diner never took possession of the premises, and neither the City nor Ellis Parking paid CGI any commission under the listing agreement.
Mr. Updike provided a declaration explaining the reasons for his recommendation: "I reviewed both proposals and concluded that given the rent concessions and other factors in the Kim [Lori's Diner] proposal, the Les Joulins offer would likely yield a better short and long-term economic benefit to the City. I also had concerns about the transparency of the listing process." Carol Gilbert, the president and principal of CGI, stated in her declaration that the Les Joulins offer was for three years only and was far inferior to the 20-year sublease contemplated by Lori's Diner. For purposes of this appeal, we are not called upon to decide whether the City acted reasonably in declining to approve the Lori's Diner sublease.
B. CGI's First Amended Complaint
On March 19, 2014, CGI filed the instant lawsuit against the City and Ellis Parking. The first amended complaint alleged several causes of action against the City stemming from its failure to approve Lori's Diner as a subtenant: breach of contract, breach of contract for a third party beneficiary, negligent and intentional interference with economic relations and intentional interference with contractual relations. As to Ellis Parking, the only cause of action was for breach of contract, based on the failure to pay CGI a commission under the listing agreement.
C. Ellis Parking's Motion for Summary Judgment
On December 19, 2014, Ellis Parking filed a motion for summary judgment, arguing it was not obligated to pay the commission because, as a matter of law, no sublease was entered into within the meaning of the listing agreement. It reasoned that because the Master Lease required the City to approve of any sublease, and because the sublease in this case specifically incorporated the terms of the Master Lease, approval by the city was a condition precedent to the sublease.
Ellis Parking submitted as evidence CGI's December 5, 2014, responses to form interrogatories. In response to form interrogatory no. 50.1, CGI identified the 2009 listing agreement as the contract that was allegedly breached, and further stated, "The only provision not in writing is that leases were subject to the approval of the City and County of San Francisco. That was understood at the inception of the relationship, as it was a part of the Master Lease with the City." In response to form interrogatory no. 50.2, CGI described the breach as follows: "There was a breach of the agreement in two particulars: (1) the City purportedly declined to approve the Man J. Kim [Lori's Diner] lease because of undisclosed problems with the marketing process. Those 'problems' were never disclosed to [CGI], and [CGI] performed under the agreement as it had since 2009; (2) the rationale for declining to approve the Man J. Kim lease was based on unwarranted twenty year projections of the existing leasehold. . . ." Ellis Parking also submitted copies of the 1991 Master Lease and the 2009 listing agreement, though it did not submit a copy of the sublease.
In response, CGI submitted excerpts from the deposition of Russell Keil, who was the President of Ellis Parking at all times relevant to this case. Mr. Keil testified that during the process of obtaining City approval of a sublease, Ellis Parking would bring a prospective deal to the attention of the City's real estate department, draft and execute a lease with the prospective tenant, and send it to the City's real estate department for approval. In this case, the City made a decision to pursue the Lori's Diner deal as opposed to two other offers, including one by Les Joulins, the existing subtenant, for a three-year lease. Mr. Keil testified about the particulars of the contemplated deal and why it was superior to that proposed by Les Joulins. He disagreed with the City's ultimate decision to reject the Lori's Diner sublease and to instead enter into a deal with Les Joulins. The City was not required to approve listing agreements, but was required to approve the payment of leasing commissions.
CGI also introduced evidence that on March 9, 2015, it amended its responses to form interrogatory number 50.1 to state that the unwritten portion of the listing agreement, which required the approval of the City, "was a condition as to time and/or method of payment, and not a condition as to the right to payment." Its amended answer to form interrogatory number 50.2, asking it to identify all breaches of the listing agreement, additionally stated, "[Ellis Parking]'s obligation to pay [CGI]'s commission arose when [Ellis Parking] entered into to the sub-lease with Man J. Kim [Lori's Diner]. [Ellis Parking] failed to pay the commission upon demand, constituting a breach."
Section 2030.310, subdivision (a) of Code of Civil Procedure provides, "Without leave of court, a party may serve an amended answer to any interrogatory that contains information subsequently discovered, inadvertently omitted, or mistakenly stated in the initial interrogatory. At the trial of the action, the propounding party or any other party may use the initial answer under Section 2030.410, and the responding party may then use the amended answer."
The trial court denied Ellis Parking's motion for summary judgment in a written order issued on March 23, 2015: "There is a triable issue of material fact regarding whether [Ellis Parking] breached the parties' listing agreement. [Ellis Parking] admits at Request for Admission 44 that it never paid the commission and the evidence demonstrates that plaintiff performed its contractual obligation by obtaining a new tenant. [Citation.] [Ellis Parking]'s moving papers do not sufficiently raise the condition precedent issue and plaintiff may be able to recover a commission under Seck v. Foulks (1972) 25 Cal.App.3d 556, 571 [(Seck)]."
D. Second Amended Complaint
In a second amended complaint filed September 28, 2015, CGI added causes of action against the City for recapture of improper distribution and fraudulent transfer of assets, based on the subsequent winding down of Ellis Parking as an entity and the transfer of its assets to the City itself. As with the first amended complaint, the only cause of action against Ellis Parking was breach of contract based on its failure to pay CGI a commission under the listing agreement.
E. CGI's Motion for Summary Judgment or Summary Adjudication
On October 1, 2015, CGI filed its own motion for summary judgment on its breach of contract claim against Ellis Parking or, alternatively, summary adjudication of the following issues: "1. That CGI is entitled to judgment against [Ellis Parking] on its first cause of action for breach of contract. [¶] 2. That [Ellis Parking] has the contractual duty to pay CGI a commission." CGI argued it was entitled to payment of its commission as a matter of law because Ellis Parking and Lori's Diner had entered into a sublease within the meaning of the listing agreement. CGI argued that any condition precedent to the commission had to be included in the listing agreement itself, and suggested the consent provision in the Master Lease allowed the City to terminate its lease with Ellis Parking, but did not void the sublease.
In support of its motion, CGI presented excerpts from the deposition of Carol Gilbert, the President of CGI. Ms. Gilbert testified it was her understanding that Ellis Parking was managing the garage on behalf of the City and had obtained an agreement with the San Francisco Municipal Transportation Agency (SFMTA) to have a lawyer draft a lease acceptable to Ellis Parking. Ms. Gilbert further understood the City would actually issue a commission check on behalf of Ellis Parking. "It was my understanding that the lease was subject to approval by SFMTA . . . it was my understanding that [Ellis Parking] was acting on behalf of SFMTA. . . ." It "never occurred" to Ms. Gilbert that the City would not approve the sublease with Lori's Diner, given all the circumstances, and she did not view the City's approval as a contingency that needed to be removed before the lease could go into effect because "the City, through [Ellis Parking], had the lease drawn and submitted it to the tenant for execution."
Ms. Gilbert also testified she was aware of the consent requirement in the Master Lease but understood it to be "a condition as to time and/or method of payment, and not a condition as to the right to payment" of the commission. She based this conclusion on her conversations with Russell Keil, the head of Ellis Parking, who told her that "so long as we did our job and so long as [Ellis Parking] was happy with the job that we did, there would be no question that we got paid and that we would get paid when a deal was consummated and consented to by the SFMTA."
CGI also submitted excerpts from the deposition of Charles Hansen, an attorney and professor at the University of California Berkeley School of Law, who was designated an expert in the custom and practice of commercial real estate. Professor Hansen testified that the custom and practice in California was that commissions on commercial leases were earned upon the execution of a lease, regardless of whether that lease went into effect: "[I]t's very common in California that the commission is earned even though for some reason the deal doesn't come to closing or lease execution or a typical phrase in leasing, turnover or surrender of the property. It appeared to me that the correspondence from the city was premised on the notion that as long as this lease doesn't go into effect with Lori's Diner, you have not earned a commission, CGI. That's simply not the standard. Not the standard in commercial practice. . . . [¶] The way it works in California is that the deal doesn't have to close. The tenant doesn't have to take possession for the commission to be earned. Commissions are earned every day in situations where for some reason the deal didn't come to pass. The property burned down the day before the close of escrow; you still get the commission. . . .[¶] . . . .[¶] It is both a legal standard and an industry custom. In other words, it's part of the context in which California brokers operate." Hansen additionally testified: "[T]he well established custom is that if there is some other condition to the broker earning her commission, you know, something on the order of yes, but not unless the city approves that, the lease, then that is made explicit in the listing agreement because the custom is that the broker client relationship is typically committed to an integrated writing."
Ellis Parking argued in opposition that a legally enforceable sublease (i.e., one that had been approved by the City) was a condition precedent to CGI's right to a commission under the listing agreement. It reasoned that because the sublease was not effective if the City did not consent to the deal, and because the City did not give its consent, the condition was never satisfied and no commission was due. Among the items of evidence offered in support of its opposition was CGI's original response to form interrogatory number 50.1, stating that an unwritten term of the listing agreement was that leases were subject to the City's consent.
As previously noted, on March 9, 2015, CGI amended subdivision (b) of that response to add: "This provision was a condition as to time and/or method of payment, and not a condition as to the right of payment."
The trial court granted the motion for summary adjudication and ruled that CGI was entitled to one half of the commission pursuant to the listing agreement. "As a matter of law, the sublease between Man J. Kim, on behalf of Lori's Diner, and [Ellis Parking] was executed. . . . Because there was nothing in the Exclusive Listing and Sale Agreement which mentioned or referenced the City's approval as being a contingency that needed to be removed in order for [CGI] to receive the commission, [CGI] is entitled to one half of the commission. [Citation.] The right of a broker to recover a commission must be measured and limited by the terms of this contract. The seller and the broker may specifically provide in the commission agreement that no commission shall be earned until the happening of a specified event or contingency, or except on certain defined terms and conditions. Such qualifying language must appear in the commission agreement itself such as the listing, the deposit receipt, the contract of sale, or escrow instructions. Such a limitation on the broker's commission must be clear and it must specifically indicate the intentions of the parties.[]" On a subsequent motion by CGI, the court entered a judgment of $245,717.38, one-half the total commission amount, against Ellis Parking and in favor of CGI.
The listing agreement called for one-half of the commission to be paid upon the execution of the lease or the removal of contingencies, whichever occurred later, and the second half to paid when the subtenant opened for business or began paying rent, whichever occurred earlier. The trial court apparently concluded that CGI was not entitled to receive the second half of its commission because Lori's Diner never opened for business or began paying rent. Because CGI has not pursued its cross appeal (see below), we need not decide whether this aspect of the trial court's ruling was correct. (See Wallace v. Carlin (1928) 92 Cal.App. 31, 33-35 [broker was owed the balance of a five percent commission where listing agreement called for one percent to be paid when unbuilt apartments were sold and four percent to be paid when the apartments were built; although the apartments were never built, agreement merely fixed time of payment and did not condition the commission on the apartments being built].)
Ellis Parking appeals from the judgment entered in favor of CGI and the order denying its own motion for summary judgment. (See Lackner v. LaCroix (1979) 25 Cal.3d 747, 753 [order denying summary judgment is nonappealable order although reviewable on appeal from the final judgment].) CGI filed and then dismissed a cross-appeal.
II. STANDARD OF REVIEW
Summary judgment is available when there is no triable issue as to any material fact and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A plaintiff moving for summary judgment bears the burden of establishing that each element of the cause of action in question has been proven, and hence, that " 'there is no defense' thereto." (Id., subd. (o)(1); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) We review an order granting summary judgment de novo. (People ex rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 520.)
The interpretation of a contract is a question of law subject to de novo review where the interpretation does not turn on the credibility of extrinsic evidence. (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 604; Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.) "[T]o the extent the evidence is not in conflict, we construe the [contract], and we resolve any conflicting inferences, ourselves." (Schaefer's Ambulance Service v. County of San Bernardino (1998) 68 Cal.App.4th 581, 586.)
III. DISCUSSION
Ellis Parking seeks a reversal of the orders denying its own motion for summary judgment and granting summary judgment in favor of CGI. It argues that as a matter of law, CGI was not entitled to a commission under the listing agreement. We disagree.
" 'Where a valid listing contract exists between broker and seller, it is that agreement from which the broker's rights and duties arise.' " (Metzenbaum v. R.O.S. Associates (1986) 188 Cal.App.3d 202, 210.) The broker's right to compensation "must must be found within the four corners" of the listing agreement, which will be "strictly enforced according to its lawful terms." (Howard Gitlen & Associates, Inc. v. Ameri (1989) 208 Cal.App.3d 90, 95; see Blank v. Borden (1974) 11 Cal.3d 963, 969.)
" 'In this state it is well established, in the absence of any specific agreement to the contrary, that a broker employed to sell real or personal property has earned his commission when, within the life of his contract . . . he has produced a person who is ready, willing, and able to purchase the property on terms satisfactory to the seller, . . . . In such cases, the broker's right to commission accrues when the contract of sale is executed, or when opportunity to make such contract is given the seller, and the broker becomes entitled to his commission even though the seller is unable or unwilling to complete the sale.' " (Seck, supra, 25 Cal.App.3d at pp. 572-573, citing Twogood v. Monnette (1923) 191 Cal. 103, 107; see also R.J. Kuhl Corp. v. Sullivan (1993) 13 Cal.App.4th 1589, 1601-1602.) " 'The seller and the broker may specifically provide in the commission agreement that no commission shall be earned until the happening of a specified event or contingency, or except on certain defined terms and conditions. Such qualifying language must appear in the commission agreement itself such as the listing, the deposit receipt, the contract of sale or escrow instructions. Such a limitation on the broker's commission must be clear and it must specifically indicate the intentions of the parties.' " (Seck, at p. 569.)
In this case, the exclusive listing agreement governing the relationship between Ellis Parking and CGI provided that CGI would receive a commission as outlined in the schedule "[i]f a lease/s is entered into during the term of this Agreement." This was the only contingency specified; the listing agreement did not state that the commission would be paid only if the City approved a lease entered into by Ellis Parking and a subtenant. Thus, while Ellis Parking is correct that the parties to a signed contract may "agree[] that it would not be binding until the happening of some future event, a condition precedent, and this can be shown by parole evidence" (Haines v. Bechdolt (1965) 231 Cal.App.2d 659, 661), the listing agreement did not provide for any such conditions precedent beyond the requirement that Ellis Parking enter into a sublease.
Ellis Parking suggests that because CGI indicated in its discovery responses that City approval was a "provision not in writing" of the listing agreement, there is a triable issue of fact as to whether the listing agreement incorporated the consent provision of the Master Lease. But this ignores that the listing agreement contained an integration clause. "Pursuant to the parole evidence rule, extrinsic evidence cannot be used to contradict or supplement an agreement if it is intended to be a final expression of that agreement and a complete and exclusive statement of the terms. . . . 'If on its face a writing purports to be a complete and final expression of the agreement, parole evidence is excluded.' " (Lonely Maiden Productions, LLC v. GoldenTree Asset Management, LP (2011) 201 Cal.App.4th 368, 376.)
It is undisputed that CGI brought Lori's Diner to the table as a prospective tenant, that Lori's Diner and Ellis Parking agreed to the terms of a 20-year sublease, and that representatives of Ellis Parking and Lori's Diner signed—i.e., "entered into"—a written sublease with the full expectation of moving forward with the deal. Giving the phrase "entered into" a " ' "reasonable and commonsense interpretation" ' " (Reynolds, supra, 107 Cal.App.4th at pp. 524, 526), CGI was entitled to a commission upon the signing of a lease, as occurred in this case. "[W]here " 'contract language is clear and explicit and does not lead to absurd results, we ascertain the intent [of the parties] from the written terms and go no further." ' " (Id., at p. 524; see Merriam-Webster's Collegiate Dict. (11th Ed. 2004) p. 416, col. 2. ["enter into 1: to make oneself a party to or in"].)
Ellis Parking argues the sublease was not "entered into," even though it was signed by the two parties. It notes that paragraph 29.2 of the sublease expressly incorporated the terms of the Master Lease with the City, which prohibited Ellis Parking from subleasing the garage without the City's consent. Citing Bennett v. Carlen (1963) 213 Cal.App.2d 307, 308 (Bennett), Ellis Parking submits the sublease never went into effect because it was never approved by the City.
The decision in Bennett is distinguishable. In that case, the prospective purchaser of a leasehold interest presented a written offer to the seller giving the seller five days to obtain the consent of the landlord as required by the seller's agreement with the landlord. (Bennett, supra, 213 Cal.App.2d at p. 308.) The seller did not obtain the requisite consent and the deal did not go through. (Ibid.) The court of appeal concluded the prospective purchaser was not entitled to recover damages from the seller for breach of contract because the written offer made the landlord's consent a condition precedent to the consummation of an agreement. (Id. at p. 309.) By contrast, the terms of the listing agreement did not make City approval a condition precedent to CGI's receipt of its commission. CGI's entitlement to a commission is governed by the listing agreement, not by the sublease signed by Ellis Parking and Lori's Diner. (See Seck, supra, 23 Cal.App.3d at p. 569.)
Similarly distinguishable are three decisions cited by Ellis Parking for the proposition that no sublease was entered into because the consent of the City was a condition precedent to any agreement.
In Earp v. Nobmann (1981) 122 Cal.App.3d 270, disapproved of on other grounds in Silberg v. Anderson (1990) 50 Cal.3d 205, a president of a company signed a written agreement for the sale of real property, but orally stated that his acceptance of the buyer's offer would not be effective until the controller of the company could review and approve the offer. (Earp, supra, 122 Cal.App.3d 270 at pp. 278, 288.) The court of appeal noted the parole evidence rule did not bar evidence of an oral statement to show a contractual agreement had not been reached (Id. at pp. 288-289), and concluded the president's statements conditioning the agreement on the controller's approval was "a classic condition precedent to the effectiveness of a written document." Here, by contrast, there is no evidence that Russell Keil, who signed the sublease on behalf of Ellis Parking, qualified his signature on the sublease in a similar fashion.
In Peterson v. Montgomery Holding Co. (1949) 89 Cal.App.2d 890, a real estate broker brought an action to recover commissions allegedly due for procuring a commercial tenant for property on which the defendant property owner proposed to erect a building. (Id. at p. 891-892.) The written commission agreement provided that the broker commission would be paid the "commission upon the occurrence of two expressly named contingencies: (1) that plaintiff should obtain the Owl Drug Company as a tenant for the defendant's property; (2) that a contract for the construction of the building should be executed by the defendant." (Id. at p. 893.) The court of appeal affirmed a judgment following nonsuit where the evidence showed the property owner and tenant could not come to an agreement on the terms of the lease and the building was never constructed; hence, neither condition precedent had come to pass. (Id. at pp. 894-896.) The only condition precedent to CGI's right to a commission under the listing agreement was that a lease be "entered into." A lease was "entered into" when Ellis Parking and Lori's Diner signed the sublease, so unlike in Peterson, the condition precedent in this case was satisfied.
Finally, in Leventritt v. Cowell (1913) 21 Cal.App. 597, the court held a real estate broker who had signed an agreement with a property owner requiring payment of a commission " 'upon the signing of this lease' " was not due a commission when no lease was ever signed. (Id. at pp. 600-601.) Here, of course, a written sublease was signed by the parties.
Another aspect of the listing agreement supports our conclusion that a sublease was "entered into" in this case. In addition to calling for a commission when a lease was "entered into," the listing agreement provided that the commission "shall be deemed one half due and payable upon the later of Lease Execution or Removal of Contingencies," with the second half being due when the tenant occupied the premises or rent payments commenced. (Italics added.) In this case, there were no contingencies to be removed, and the undisputed evidence shows a sublease was executed by Ellis Parking and Lori's Diner. (See Nielson Construction Co. v. International Iron Products (1993) 18 Cal.App.4th 863, 866, 869 [definition of "executed" included the meaning of " 'to sign . . . . To perform all necessary formalities, as to make and sign a contract' "].) As the trial court correctly concluded, the execution of the sublease triggered CGI's right to receive half the commission amount.
In support of its motion for summary judgment, CGI presented the deposition testimony of Carol Gilbert: "[A removal of contingencies] generally [] would refer to inspection of the premises, the tenant's ability to—or their belief that they could, in fact, secure the necessary permits, both in terms of developing the property and the right to sell beer, wine, or spirits depending, and the execution of a mutually acceptable lease document and/or other transaction-related documents." Asked whether she viewed the City's approval of the lease as a contingency, Ms. Gilbert testified: "The City, through [Ellis Parking], had the lease drawn and submitted to the tenant for execution. [¶] . . . .[¶] It was my understanding that [Ellis Parking] was managing the garage and the process and had secured the agreement by SFMTA to have a lawyer who specializes in lease documentation draft a lease that was acceptable to [Ellis Parking] and, therefore, to the City."
We do not find it significant that the sublease signed by Ellis Parking and Lori's Diner contained a space for the "Lease Effective Date" that was left blank when it was sent to the City for approval. " 'The law is established in California that when an instrument is delivered which contains a blank, the person in possession thereof has prima facie authority to complete it by filling in the blank.' " (Smith v. Lagerstrom (1950) 34 Cal.2d 858, 860.) Presumably, if the City had approved the sublease it would have filled in the effective date and the agreement would have become binding on both Ellis Parking and Lori's Diner. The City's failure to approve the sublease, and in so doing to make it legally binding on the parties, does not change the fact that a lease was executed and "entered into" for purposes of the listing agreement governing CGI's right to a commission.
Ellis Parking's claim that the lease was not entered into until it was approved by the City is also refuted by case law recognizing that when the assignment of a lease requires the consent of the lessor, an assignment made without such consent is not void but merely voidable at the discretion of the lessor. (Guerin v. Blair (1949) 33 Cal.2d 744, 746; People v. Klopstock (1944) 24 Cal.2d 897, 900-901; Chapman v. Great Western Gypsum Co. (1932) 216 Cal. 420, 424-427.) In such situations, the lessor (here, the City) may terminate the underlying lease and give notice, but unless it does so, the assignment remains in effect. (Klopstock, at p. 902; Northwestern Pac. R. Co. v. Consumers Rock & Cement Co. (1942) 50 Cal.App.2d 721, 722-723.) Under these authorities, the City's consent cannot be viewed as a condition precedent to the vesting of rights under the sublease, even if the City could terminate the sublease by terminating the Master Lease. (See Garcia v. Gunn (1897) 119 Cal. 315, 318.) Consequently, Ellis Parking "entered into" a lease with Lori's Diner within the meaning of the listing agreement when they signed the sublease, triggering CGI's right to a commission.
Ellis Parking argues the term "entered into" was ambiguous because it was susceptible to more than one reasonable interpretation; i.e., while it could be construed to refer to the signing of a sublease by Ellis Parking, it could also be construed to refer to the final approval of the sublease by the city. (Supervalu, Inc. v. Wexford Underwriting Managers, Inc. (2009) 175 Cal.App.4th 64, 73.) When a contract is ambiguous, the court may consider extrinsic evidence of the parties' intent, including the circumstances under which the parties negotiated or entered into the contract, the subsequent conduct of the parties, and industry custom or usage. (Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 979-980; Howard Entertainment, Inc. v. Kudrow (2012) 208 Cal.App.4th 1102, 1114.) We do not find the term "entered into" to be ambiguous in this context, but even if it were so construed, the extrinsic evidence supports CGI's interpretation of the listing agreement, namely, that a commission was due upon the signing of the sublease.
CGI presented excerpts from the deposition of Professor Charles Hanson regarding the customs of the commercial real estate industry in California, to the effect that in the absence of a contrary agreement, a deal need not close for the broker to earn her commission. Parties are presumed to contract pursuant to a fixed and established usage and custom of the trade or industry. (Ermolieff v. R.K.O. Radio Pictures (1942) 19 Cal.2d 543, 550; Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines (1999) 74 Cal.App.4th 1232, 1244.) Professor Hanson's testimony was uncontradicted and supports the conclusion that absent an express agreement to the contrary in the listing agreement itself, the failure to obtain City approval did not defeat CGI's right to its commission once a lease had been executed.
Language in a 2011 LOI presented by CGI on behalf of another prospective tenant, which was prepared before the Lori's Diner deal, does not create an ambiguity or raise a triable issue of fact regarding the interpretation of the term "entered into." Ellis Parking cites a paragraph in the LOI stating: "It is understood by the prospective tenant that the property is indirectly owned by the City [] and administered by an independent real estate corporation. The terms and conditions of the contemplated transaction must go through an approval process. It is further understood that the president of [Ellis Parking] will first obtain approval from the Board of Directors, following which the terms and conditions will be submitted to MTA (Metropolitan Transit Authority) who will in turn seek approval from the City Attorney. Board of Supervisors approval may or may not be required. It is anticipated the approval of terms and conditions will occur in January/February. Another 30 to 45 days will probably be required for approval of the draft lease which will then be submitted for review and approval. A lease should be fully executed and delivered sometime in April, 2011." This document shows CGI was aware that the terms of any proposed sublease would be sent to the City for approval before the sublease was drafted; it in no way suggests CGI expected its commission to be withheld once a lease had been executed by Ellis Parking.
Summary judgment was properly granted in favor of CGI.
We express no opinion regarding the merits of CGI's claims against the City, which is not a party to this appeal. It appears from the Register of Actions included in the clerk's transcript in this appeal that the causes of action against the City were dismissed without prejudice following the entry of judgment against Ellis Parking.
IV. DISPOSITION
The judgment is affirmed. Respondent shall recover its ordinary costs on appeal.
/s/_________
NEEDHAM, J. We concur. /s/_________
JONES, P.J. /s/_________
BRUINIERS, J.