Opinion
G044514 Super. Ct. No. 30-2009-00291374
12-19-2011
JERRY FULLER, Plaintiff and Appellant, v. MONOGRAM REAL ESTATE, LLC, et al., Defendants and Respondents.
Law Offices of Ernest Mooney and W. Ernest Mooney for Plaintiff and Appellant. Farella Braun & Martel, Thomas B. Mayhew and Amber C. Chrystal for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
Appeal from a judgment of the Superior Court of Orange County, Gregory Munoz, Judge. Affirmed.
Law Offices of Ernest Mooney and W. Ernest Mooney for Plaintiff and Appellant.
Farella Braun & Martel, Thomas B. Mayhew and Amber C. Chrystal for Defendants and Respondents.
Jerry Fuller appeals from a summary judgment entered in favor of Monogram Real Estate LLC, and Quintess LLC (collectively Monogram) in Fuller's breach of contract action. Fuller maintains the trial court incorrectly failed to recognize Monogram accepted his counteroffer creating a binding lease agreement. Alternatively, Fuller argues the court should have granted him a continuance due to Monogram's discovery abuses. We find his contentions lack merit and affirm the judgment.
I
The following facts are undisputed. Fuller was the developer/owner of a luxury home in Hawaii. Fuller hired real estate agent, Shawn Fransen, to sell or lease the property. Monogram is a company that acquires real estate that is made available for use by a luxury destination club, Quintess.
In the spring of 2008, Monogram was involved in negotiations to purchase Fuller's home. A purchase agreement was not reached.
Later that year, negotiations resumed and in early July 2008 Monogram's president, Alex Preiser, submitted a proposed standard lease agreement that also contained a specifically tailored addendum (the Lease). Monogram agreed to lease the property for two years (July 17, 2008, to July 31, 2010) at the rental rate of $44,000 per month. The addendum contained several purchase options and a preemptive right provision, giving Monogram the right of first refusal to buy the property. The first purchase option provided Monogram could acquire the property in 2008 for $8,900,000. The second option provided Monogram could purchase the property in 2009 for $9,200,000. The preemptive right provision gave Monogram the right of first refusal to purchase the property should a third party make an offer. If this should occur, Monogram's purchase price would be "an amount equal to the proposed agreement of [l]andlord less ten percent (10%)."
Preiser signed and initialed the Lease. Fransen forwarded the Lease to Fuller for his review and signature. Fuller received the Lease and crossed out the term "'less ten percent (10%)'" from the preemptive right provision and initialed the change. Fuller gave the Lease back to Fransen, who immediately forwarded it to Monogram. The parties agree that prior to exchanging proposed leases, they did not discuss the ten percent discount of the purchase price for the right of first refusal or that Fuller would object to such a term.
Monogram did not initial or otherwise accept in writing Fuller's counteroffer regarding the preemptive right provision. However, over the next several days, Monogram told Fransen it would soon pay the security deposit and it was preparing to take possession of the property. On July 15, 2008, Jack Sanders, a representative of Monogram, sent an e-mail to Fransen indicating Fransen "'will not be happy,' the wire did not make it out today" (referring to the security deposit). Monogram contacted Fransen and asked him for keys to the property. Fransen stated he would not deliver the keys until the security deposit had been paid.
On July 25, 2008, Monogram notified Fransen it had changed its mind and was not going forward with the Lease agreement. It also sent a letter to Fuller expressing its "sincerest apologies." Fuller claimed he did not receive this letter.
The apology letter to Fuller stated, "As you are aware, we have made the difficult decision not to enter the Lease arrangements for your Kolea home. Thank you for your time and consideration in this matter and please accept our sincerest apologies. Our business model is a dynamic one and many factors impact our decision making."
The following year, on June 12, 2009, Monogram and Fuller entered into a lease of the same property for a period of three months (August 31, 2009, to November 15, 2009.)
On August 7, 2009, Fuller filed a lawsuit against Monogram alleging it had breached the Lease agreement regarding the property. Monogram moved for summary judgment on the grounds the Lease was not enforceable. It also moved for leave to amend its answer to add the statute of frauds as an affirmative defense after learning in discovery Fuller planned to assert Monogram orally assented to the counteroffer. At the hearing, the court inquired if Fuller planned to assert any theory based on an oral agreement or amend his pleadings. Fuller stated he was proceeding on the theory of breach of a written contract and, consequently, the court denied Monogram's motion to amend its answer to respond to breach of an oral contract.
The court entered summary judgment in favor of Monogram. In its minute order, the court explained Fuller admitted his action of crossing out the 10 percent discount language was a counteroffer to the lease provisions offered by Monogram. The court rejected Fuller's argument Monogram did not need to actually sign the written counteroffer because "the acceptance thereof was implied by words and conduct. Although courts have held a written contract may be accepted via an oral acceptance (also through words and conduct) the facts necessary to make such a finding do not exist here. Such an acceptance may be shown only where there is evidence of unequivocal acceptance of the terms of the written contract. (Amen v. Merced Country Title Co. (1962) 58 Cal.2d 528 [(Amen)]; E.O.C. Ord, Inc. v. Kavakovich (1988) 200 Cal.App.3d 1194 [(E.O.C. Ord)].) [¶] In contrast, when the evidence does not show an unequivocal acceptance of the terms of a written contract, the contract formed is founded on an oral, not written, agreement. (James De Nicholas Associates, Inc. v. Heritage Constr. Corp. (1970) 5 Cal.App.3d 421 [(De Nicholas)].) [Fuller's] cite to the e-mail regarding the payment of the security deposit, the request for keys to the property[,] and lack of specific rejection of the counteroffer do not constitute the required 'unequivocal acceptance' of the terms of the counteroffer. Therefore[,] the sole cause of action for breach of written contract fails."
II
A. Standard of Review
"'We review a summary judgment motion de novo to determine whether there is a triable issue as to any material fact and whether the moving party is entitled to judgment as a matter of law. [Citations.] We are not bound by the trial court's stated reasons or rationales. [Citation.] "In practical effect, we assume the role of a trial court and apply the same rules and standards which govern a trial court's determination of a motion for summary judgment." [Citation.] Thus, we independently determine the construction and effect of the facts presented to the trial judge as a matter of law. [Citation.] . . . [¶] When reviewing a trial court's decision granting summary judgment to a defendant, we, '[l]ike the trial court, . . . view the evidence in the light most favorable to the opposing party [i.e., the plaintiff] and accept all inferences reasonably drawn therefrom. [Citation.]' [Citation.] We use the same three-step analysis as the trial court: (1) identifying the issues framed by the pleadings; (2) determining whether the defendant negated the plaintiff's claims; and (3) deciding whether the plaintiff demonstrated the existence of a triable, material factual issue. [Citation.]" (Suarez v. Pacific Northstar Mechanical, Inc. (2009) 180 Cal.App.4th 430, 436-437.)
B. General Principles of Contract Law
In order to form a valid and enforceable contract, it is essential that there be: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient consideration. (Civ. Code, § 1550.) In this case, the parties dispute whether there was mutual assent (or consent) to the Lease.
"The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe. [Citation.] Accordingly, the primary focus in determining the existence of mutual consent is upon the acts of the parties involved." (Meyer v. Benko (1976) 55 Cal.App.3d 937, 942-943; see Civ. Code, §§ 1565, 1580.) The sole issue raised in this case is whether Monogram's conduct qualifies as an unequivocal acceptance of Fuller's counteroffer creating an enforceable contract.
The cases cited by the trial court all related to whether the statute of limitations for a oral contract (two years) or a written contract (four years) applies. We agree this line of cases is very instructive as they explain the legal concept a contract may be "in writing" for statute of limitations purposes even where it is accepted by an act other than signing, however, there still must be an unequivocal acceptance of the writing by the party to be charged.
For example, in Amen, supra, 58 Cal.2d at page 532, our Supreme Court explained that a "contract may be 'in writing' for purposes of the statute of limitations even though it was accepted orally or by an act other than signing." In Amen, the purchaser of real property sued her escrow holder for breach of contract based on the escrow holder's failure to comply with certain written escrow instructions. The escrow holder had prepared the instructions which included a statement that "this escrow is accepted by your [escrow holder] subject to all terms and conditions set forth herein." (Id. at p. 531.) The buyer and seller each signed the instructions, but the escrow holder did not. (Id. at p. 530.) The Supreme Court held that a four-year limitations period applied because "if the escrow holder prepares the instructions, offers to perform them, and the buyer and seller accept the offer, an action for failure to comply with the instructions is on a written contract." (Id. at p. 532.) The court further reasoned that as long as the party to be charged with a written contract "has agreed to the writing, there is no reason to invoke the two-year statute of limitations applicable to oral agreements." (Id. at p. 533.)
A similar result was reached in E.O.C. Ord, supra, 200 Cal.App.3d 1194. In that case. the parties orally agreed to a contract and plaintiff later sent defendant a letter confirming all the terms of the oral agreement. The parties subsequently had a telephone conversation during which defendant stated he agreed to the terms of the letter. (Id. at p. 1197.) The court held the parties' agreement was governed by the four-year statute of limitations for written contracts, explaining, "[t]he requirements are only that there be a writing containing all terms and that there be acceptance by the party to be charged." (Id. at p. 1201.) It concluded defendant manifested his acceptance to the writing when he orally agreed to its terms in the parties' subsequent telephone conversation. (Id. at p. 1202.) The agreement thus "became one that was founded on an instrument in writing." (Ibid.)
In contrast, the court in De Nicholas, supra, 5 Cal.App.3d 421, held the two-year statute of limitations for oral contracts applied to an action where plaintiff confirmed the terms of an oral agreement in a writing to defendant to which the defendant never responded. In that case, defendant orally agreed to pay the plaintiff $10,000 as part of a stock acquisition deal. (Id. at p. 423.) Plaintiff then sent defendant a letter that confirmed the terms of their oral contract but offered to accept $13,000. (Ibid.) Defendant never objected or otherwise responded to that letter. (Ibid.) After defendant made a partial payment of $5,000, plaintiff filed suit for breach of contract. (Ibid.) The court rejected plaintiff's argument the action was subject to a four-year limitations period, stating that any writings tending to show the terms of the agreement were prepared solely by plaintiff, and hence, could not be used to show acceptance by defendant. (Id. at p. 425.) The court further noted that, other than asserting there was an oral agreement confirmed in writing, plaintiff failed to allege any facts to establish defendant ever accepted the terms of that writing. (Ibid.)
As the above-cited decisions demonstrate, although a written contract may be accepted by an act other than signing, there still must be an unequivocal acceptance of the writing by the party to be charged. A party's acceptance of the terms of a writing may be manifested in different ways. In Amen, acceptance was shown where defendant prepared the written agreement and unequivocally expressed its consent. (Amen, supra, 58 Cal.2d at p. 532.) Alternatively, in E.O.C. Ord, acceptance was shown where the party to be charged received a copy of the written agreement and then orally accepted its terms. (E.O.C. Ord, supra, 200 Cal.App.3d at p. 1202.) Whatever the manner of acceptance, the conduct of the party must be sufficient to be deemed an acceptance of the terms of the writing itself. In contrast, where the evidence does not reflect an unequivocal acceptance of a written contract by the party to be charged, as was the case in De Nicholas, then the contract formed is founded upon an oral rather than a written agreement.
C. Analysis
As applied to this case, it is undisputed Monogram prepared the Lease, but it included a term the parties had not orally agreed to during negotiations. Fuller admitted his act of crossing out a portion of the preemptive right provision amounted to a counteroffer. The newly proposed written contract did not need to be accepted in writing, but required conduct evidencing an unequivocal acceptance of the terms of the offer. Specifically, we must determine whether Monogram unequivocally accepted the terms of the counteroffer relating to the preemptive right provision no longer having a ten percent discount.
We conclude it cannot be inferred Monogram's actions following the counteroffer amounted to an acceptance. Monogram did not initial or sign Fuller's proposed new term. And contrary to Fuller's contention on appeal, Monogram's silence, inaction, or failure to object to Fuller's counteroffer cannot be deemed an acceptance in this case. (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1385.) While there are some quite limited exceptions to this rule—most notably, when a party remains silent in the face of a duty to act—Fuller has not shown that any exceptions apply. (See Rest.2d Contracts, § 69, com. a, p. 164 (noting exceptions, while reaffirming that "[ordinarily] an offeror does not have power to cause the silence of the offeree to operate as acceptance").)
Moreover, a clear acceptance cannot be objectively or reasonably inferred from Monogram's statements following Fuller's counteroffer. It made promises to pay the security deposit, and it requested a key. Monogram's statements all related to preparations to rent the property and had nothing to do with exercising a future purchase option. Monogram made no statements accepting or denying the proposed preemptive right to purchase counteroffer. There was no outward manifestation of consent to all the Lease terms such as affirmatively taking possession of the property, actually paying the security deposit, or physically taking control of the key.
Finally, Monogram's apology letter officially declining the Lease cannot be construed as evidence the counteroffer was orally accepted. It would be pure speculation to infer Monogram's failure to mention the preemptive right provision counteroffer was because Monogram accepted this term. Monogram specifically stated there were "many factors" that impacted its decision to not enter the Lease. Elimination of the discount was reasonably one of the factors as there was evidence Monogram was interested in purchasing the property and it included several options to buy the home in the Lease. A ten percent discount on a home worth approximately $9 million could have resulted in a $900,000 savings. Applying the objective standard, eliminating this purchase option was a significant change to the Lease. It was essential for the parties to agree on all material terms for a contract to be binding.
Fuller maintains the case Ten Winkel v. Anglo California S. Co. (1938) 11 Cal.2d 707 (Ten Winkel) supports his argument. We find the case factually distinguishable. In that case, plaintiff filed an action to quiet title to an apartment in a community owned apartment building. Many years earlier, plaintiff and her husband offered to exchange their plot of land and pay $15,000 in exchange for owning an apartment in a new complex a developer planned to build on their lot and adjoining property. Plaintiff and her husband executed an "'Agreement to Exchange Real Property.'" (Id. at p. 711.) The developer executed a separate document titled "Acceptance" containing different terms. Relevant to this case, the acceptance required plaintiff's right to the new apartment to be subject to all liens and encumbrances on the building as a whole. Both documents were recorded in the office of the city recorder. Plaintiff and her husband then deposited in escrow their deed and a copy of the exchange agreement. Plaintiff complied with all the terms of the agreement and when the building was completed they moved into the new apartment. (Id. at p. 715.) Many years later, the loan secured by the apartment building went into default and defendant purchased the entire property on foreclosure. Plaintiff alone (her husband was deceased) filed a lawsuit asserting her interest in the property could not be divested by foreclosure of the property's trust deed. (Id. at p. 717.)
Our Supreme Court upheld the judgment entered in favor of defendant, reasoning, "The written acceptance, in that it varied the terms of the original offer, at most constituted a qualified acceptance and in effect constituted a counter-offer on the part of the original offeree, [the developer]. There is no contention made that there was ever any express written acceptance by the [plaintiff] of this counter-offer, but the fact that [plaintiff and her husband] deposited their deed to the . . . property, together with this 'Exchange Agreement' . . . indicates that they accepted the terms of the counteroffer. [¶] The conclusion that [plaintiff] had knowledge of the written acceptance of [developer] and were cognizant of its terms, although perhaps not fully aware of the possible effect of the inclusion therein of the provision . . . [was] signified their acceptance of said terms by the deposit of said documents in escrow, is strongly fortified by their conduct in the business transactions which occurred subsequent to . . . the date on which the $175,000 encumbrance was placed upon the property." (Ten Winkel, supra, 11 Cal.2d at pp. 717-718.) Plaintiff and her husband received membership certificates to the corporation and entered into written membership holder's leases that recognized the obligation owed against the apartment building. The court noted although these transactions occurred after the lien was placed on the property, "they are convincing corroborative circumstances" plaintiff knew and acquiesced to the developer's counteroffer. (Id. at p. 719.)
In sum, the court concluded plaintiff in Ten Winkel unequivocally accepted the developer's counteroffer to have the certificate of title on plaintiff's new apartment free and clear of all liens except those on the building. (Ten Winkel, supra, 11 Cal.2d at pp. 717-719.) Relinquishing their deed and the exchange agreement to escrow were affirmative actions necessary to acquire their new apartment. This conduct would lead a reasonable person to believe plaintiff and her husband had accepted the developer's counteroffer and proceeding as if the contract was completed. Putting the deed in escrow to exchange it for the apartment was a clear outward manifestation of consent to the exchange agreement. (Ibid.)
In contrast, here Monogram's request for keys and comments about a security deposit were only peripherally related to renting the home. This conduct would not lead a reasonable person to believe Monogram was accepting a lease agreement that no longer contained a favorable future purchase option. On the other hand, actually paying the security deposit, making a rent payment, or possessing the property would all be actions that would lead a reasonable person to believe Monogram accepted the Lease as written. Monogram, unlike the plaintiff in Ten Winkel, did not take any steps suggesting an outward manifestation of consent to the Lease as modified.
The other cases cited by Fuller do not support his contention. The cases all stand for the general legal rule an acceptance of an offer or counteroffer may be manifested by words or conduct, and the contract can be effective without being signed. For instance, in Russell v. Union Oil Co. (1970) 7 Cal.App.3d 110, the parties disputed whether Union Oil Company (Union) had a right to maintain a telephone line on plaintiff's property. Plaintiff proposed a license fee. The court held, "[u]nder the circumstances presented, plaintiff could not have reasonably understood that the combination of Union's failure to reply to his proposal and its continued maintenance of the line, manifested an acceptance of such proposal. He was thereafter expressly informed of this fact when Union replied to his attorney's follow-up letter demanding payment." (Id. at p. 115.) This case supports Monogram's argument Fuller could not have reasonably understood its failure to reply in writing, failure to pay the security deposit, and apology letter as manifesting an acceptance to the counteroffer.
Similarly Standard Iron Works v. Globe Jewelry & Loan, Inc. (1958) 164 Cal.App.2d 108 (Standard Iron Works), and Western Helicopter Operations v. Nelson (1953) 118 Cal.App.2d 359 (Western Helicopter Operations), do not assist Fuller. In Standard Iron Works, supra, 164 Cal.App.2d 108, the court held there was an acceptance by conduct. Defendant had three days to inform plaintiff if they had an agreement to build a three or two-story building. There was evidence defendants "knew that if a two-story building was later contemplated they should have informed plaintiff of that fact and failed to do so; that defendants allowed plaintiff to proceed as if a three-story building had subsequently been agreed upon, by taking out a permit in their name for such a building, by examining plans and specifications for structural steel work furnished by the known subcontractor and by allowing plaintiff to proceed without any objection being made about a three-story structure, and accordingly defendants acquiesced in and ratified plaintiff's action in proceeding, to its detriment, in attempting to fulfill the contract respecting a three-story building. . . . The conduct of an offeree may constitute acceptance. [Citations.]" (Id. at p. 117.) In Western Helicopter Operations, supra, 118 Cal.App.2d 359, defendant advised plaintiff she was signing the agreement according to its terms and she was sending a check for the balance of a down payment. She paid the amount she believed to be due and then consulted an attorney. "Thereafter, she expressed a desire to handle the transaction in another manner. However, this desire appears to be only a request by her for permission to modify the original agreement to that extent. This request was not granted and plaintiff stood on the original agreement as accepted by appellant in the first instance." (Id. at p. 367.) These cases are simply not analogous to the case at hand.
Monogram in no way acquiesced or ratified Fuller's counteroffer to eliminate the ten percent discount on the purchase offer. Moreover, Monogram did not actually pay the security deposit or take possession of Fuller's house. At best it can be inferred Monogram's actions were to stall and delay possession. Its failure to timely pay the security deposit and e-mail stating the real estate agent would not be happy "the wire did not make it out today" reasonably indicate Monogram was leaning towards not accepting the counteroffer.
D. Discovery Issues
Fuller's final argument is the court erred in failing to grant a continuance or deny summary judgment based on Monogram's delay in producing discovery. Specifically, on August 13, 2010, Monogram produced one document in response to Fuller's demand for inspection of documents relating to the dispute. Fuller complained about the lack of production and urged Monogram to conduct a more thorough review of all their records. Two weeks later, on September 1, 2010, Monogram served a revised response and produced 200 pages of documents.
Approximately a week later, on September 12, 2010, Fuller's real estate agent, Fransen, produced an e-mail he received from Sanders, on behalf of Monogram, stating "the wire did not make it out today," referring to the security deposit Monogram had promised to pay Fuller. This e-mail was not produced by Monogram. Fuller asserts the discovery of this e-mail occurred just days before his opposition to the motion for summary judgment was due. Fuller argued he lacked enough time to pursue the issue further and determine if Monogram possessed other probative documents. In the opposition, filed September 16, 2010, Fuller requested summary judgment be denied in part pursuant to Code of Civil Procedure section 437c, subdivision (h) [if it appears facts essential to justify opposition my exist but cannot be presented the court may deny the motion or order a continuance].)
"We review the court's decision under the abuse of discretion standard. [Citations.] Notwithstanding the court's discretion in addressing such continuance requests, 'the interests at stake are too high to sanction the denial of a continuance without good reason.' [Citation.]" Thus, '[t]o mitigate summary judgment's harshness, the statute's drafters included a provision making continuances—which are normally a matter within the broad discretion of trial courts—virtually mandated "'upon a good faith showing by affidavit that a continuance is needed to obtain facts essential to justify opposition to the motion.' [Citation.]" [Citation.] . . . [There is] little room for doubt that such continuances are to be liberally granted.' [Citations.]" (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 100-101.)
Applying this liberal standard, we conclude the trial court did not abuse its discretion by denying Fuller's request. Code of Civil Procedure section 437c, subdivision (h), requires counsel's supporting declaration include "facts essential to justify opposition may exist." In support of the opposition, Fuller's counsel concluded "it is probable that more probative documents exist within Monogram's possession, which have not yet been produced." This statement is based on the premise counsel (1) found it extremely suspicious Monogram failed to produce the critical e-mail send to Fransen, and (2) believed Monogram had a history of non-production of documents. We conclude counsel's declaration there was a "probability of more probative documents" was based on nothing more than pure speculation.
Before the hearing, Monogram dispelled any "suspicion" about its failure to produce Sander's e-mail to Fransen. It produced evidence that after the events of this case Sander's computer crashed and its contents were lost. Monogram was only able to locate and produce e-mails Sanders sent to other people working for Monogram. Fransen, who was Fuller's agent, presumably could have provided any relevant e-mails he received sooner than two days before the opposition was due. Fuller does not explain why he could not have obtained the documents from Fransen earlier.
More importantly, none of the documents revealed in Monogram's second production or the e-mail produced by Fransen were particularly probative or essential to the opposition. As aptly noted by Monogram, none of the documents it produced were attached to support the opposition. Moreover, the e-mail to Fransen stating the security deposit was not being sent simply did not support the argument Monogram intended to accept the Lease counteroffer. Rather, it suggested Monogram was not proceeding with the deal. Indeed, the motion was properly denied because Fuller did not offer any logical reason to believe there existed documents showing the counteroffer was initialed or Monogram possessed another document showing it accepted the counteroffer. We conclude Fuller failed to give the court any reason to believe there existed additional facts essential to opposing the motion. "It is not sufficient under the statute merely to indicate further discovery or investigation is contemplated. The statute makes it a condition that the party moving for a continuance show 'facts essential to justify opposition may exist.'" (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 548.)
Monogram notes the produced documents were not attached to the opposition because they did not help Fuller's case. For instance, there is an e-mail from Sanders to Preiser pointing out, "There is one place on the addendum where [Fuller] struck out the 10 [percent] discount that needs your initial, and then we are done with this part of the process." Preiser did not initial the change or otherwise agree to accept the Lease as written. There were no documents relating to whether Monogram intended to accept the counteroffer.
III
The judgment is affirmed. Appellant shall recover costs on appeal.
O'LEARY, ACTING P. J. WE CONCUR: MOORE, J. FYBEL, J.