Response Reply

Cal. Super. - 6th Dist.August 17, 2018

Electronically Filed by Superior Court of CA, County of Santa Clara, on 9/22/2020 9:54 AM Reviewed By: S. Vera Case #18CV333452 Envelope: 4972777 18CV333452 Santa Clara - Civil S. Vera A NONUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gordon J. Finwall, SB#141777 FINWALL LAW OFFICES, APC 1056 Lincoln Avenue San Jose, CA 95125 (408) 350-4041 (phone) (408) 350-4042 (fax) Gordon@Finwalllaw.com Attorneys for Plaintiff IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA RON CASELLI, ) NO. 18-CV-333452 ) Plaintiff, ) REPLY MEMORANDUM OF POINTS AND ) AUTHORITIES IN SUPPORT OF PLAINTIFF’S vs. ) MOTION FOR SUMMARY ADJUDICATION ) SAN JOSE ELKS BUILDING ) COMPANY, a California corporation, ) Date: September 29, 2020 et a1., ) Time: 9:00 a.m. ) Dept: 8 Defendants. ) Judge: Honorable Sunil Kulkarni ) Trial: Not Set A. RON CASELLI Sues for Breach 0fthe ConsultingAgreement, Not a Fictitious Real Estate Brokerage Agreement Imagined by Defendant. Defendant SAN JOSE ELKS BUILDING COMPANY’S first and primary argument is that Mr. CASELLI performed unlicensed activities, thereby rendering the contract void. It refers to purchase offers for the subj ect real property from Pinn Bros., Baywest, and Lennar to SAN JOSE ELKS BUILDING COMPANY. (See Exhibit 3-A to Declaration of Barton G. Hechtman and Exhibit 4-A to Declaration of Joseph W. Brown.) It argues that Mr. CASELLI solicited these offers, that Mr. CASELLI was not supervised by his brokers, and that, therefore Business & Professions Code section 10136 bars Mr. Reply Memorandum of Points & Authorities in Support of Motion for Summarv Adiudication 1 ADJN OOOOVQUI 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASELLI from maintaining this action for compensation.1 Mr. CASELLI anticipated this argument and addressed it at 1 1 : 1 7-1 3 :1 1 ofhis MPA filed June 19, 2020. The fatal flaw with this argument is that Mr. CASELLI does not sue for compensation relating t0 a sale to these developers or any other buyer he procured. Likewise, he does not sue for damages for services rendered in connection with those developers’ offers. Rather, Mr. CASELLI sues for damages for breach of the only contract alleged in the complaint - the consulting agreement. (See Exhibit “G” to Declaration of Chuck Doubleday filed June 19, 2020.) The pleadings serve as the “outer measure of materiality” in a summary adjudication motion, and the motion may not be granted or denied on issues not raised by the pleadings. Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258. The question, therefore, is not whether Mr. CASELLI acted properly in accordance with the various Business & Professions Code sections that govern real estate brokers and salespersons, but whether any ofthe services Mr. CASELLI agreed to perform in accordance with the consulting agreement required him to be a licensed real estate agent. As set forth in the moving papers, none of the services Mr. CASELLI agreed to perform required a real estate license. The consulting agreement did not task Mr. CASELLI with doing anything on behalf ofSAN JOSE ELKS BUILDING COMPANY that required a real estate license in accordance with Business & Professions Code section 10131, such as selling or offering to sell the subject real property, soliciting prospective buyers of the subject real property, or negotiating the sale of the subject real property. Again, the consulting agreement provides that Mr. CASELLI agreed to perform the following and nothing more: Consultant shall furnish the Client with his best advice, information, judgment and knowledge with respect to the services related to and in support of efforts in which Consultant has expertise of which is to be provided in accordance with this Agreement. Specifically, Consultant l While Mr. CASELLI’S real estate license status is not an issue in this case, Mr. CASELLI wishes to point out to the court that he was in fact a licensed real estate agent at the times the developers made their offers. (See Declaration of Summer Goralik, 3:22-4:1 .) Reply Memorandum of Points & Authorities in Qllnnnrt nFMnfinn Fnr anmarv Adindinafinn 7 A owflam 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 shall provide expert analysis of the sale contract from the SCVWD. Work with our Architect in estimated costs for building a new Lodge including his expertise in interior decorations, including kitchen and bar facilities. Ron will provide information to the selected appraiser and bring necessary sales information to the appraiser for review. He will coordinate with City planners to approve lodge construction permits. He will assist us in all phases of construction of the new Lodge. (Exhibit “G” to Declaration of Chuck Doubleday filed June 19, 2020.) While it is true Mr. CASELLI was a licensed real estate agent during the relevant time period, there is no basis for arguing that such license and his solicitation ofoffers not governed or required by the consulting agreement somehow void the consulting agreement. SAN JOSE ELKS BUILDING COMPANY did not hire Mr. CASELLI to be its real estate agent. SAN JOSE ELKS BUILDING COMPANY was not looking for a buyer or for someone to negotiate a sale and purchase agreement. Rather, in March 201 5, SAN JOSE ELKS BUILDING COMPANY was deep into negotiations to sell the real property t0 the Santa Clara Valley Water District, which had threatened to take the property by eminent domain, and SAN JOSE ELKS BUILDING COMPANY’S attorney, Barton G. Hechtman, was negotiating the transaction. (See Declaration of Barton G. Hechtman, 1:26-22.) l. Even Assuming, Arguendo, Mr. CASELLI Provided Services in the Performance 0fthe Consulting Agreement that Required a Real Estate License, the Consulting Agreement Remains Enforceable. SAN JOSE ELKS BUILDING COMPANY does not argue that the consulting agreement, on its face, obligated Mr. CASELLI to provide services that required a real estate license. Rather, it argues that Mr. CASELLI illegally performed the consulting agreement by soliciting offers for the purchase of the property. Even assuming, arguendo, Mr. CASELLI did solicit the offers in the performance of the consulting agreement, such services do not deem the agreement unenforceable. If an agreement which does not provide for a method of accomplishing its purpose can be accomplished by any legal method, it must be assumed that such method was contemplated when the contract was made and will be pursued, and it will not be presumed that the parties intended to perform in an illegal manner. West Covina Entegprises, Inc. v. Chalmers (1958) 49 Ca1.2d 754, 759; Platt v. Wells Fargo Bank American Trust Co. Reply Memorandum of Points & Authorities in Sunnort 0f Motion for Summarv Adiudicarinn 3 #9.) \OOONQUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (1963) 222 Cal.App.2d 658, 666. Moreover, “[w]here a contract can be performed in a legal manner as well as an illegal manner, it will not be declared void because it was in fact performed in an illegal manner.” Gardiner v. BLket (1935) 3 Cal.App.2d 666, 670. B. The Inability ofSAN JOSE ELKS BUILDING COMPANY’S Membership to Reach Consensus regarding the New Lodge Does Affect Its Obligation t0 Pay Mr. CASELLI. SAN JOSE ELKS BUILDING COMPANY makes the curious argument that the inability of its membership to reach a consensus about the scope and nature of the new lodge construction proj ect justifies the failure to pay Mr. CASELLI a fee in accordance with the consulting agreement, i.e., that Mr. CASELLI should not get paid until he finishes providing consulting services relating to construction of the new lodge. Again, SAN JOSE ELKS BUILDING COMPANY ignores the plain language of the consulting agreement, which provides that SAN JOSE ELKS BUILDING COMPANY’S obligation to pay Mr. CASELLI 2% ofthe sales proceeds was “due on completion ofescrow.” (Exhibit “G” to Declaration of Chuck Doubleday filed June 19, 2020.) SAN JOSE ELKS BUILDING COMPANY’S quarrel with the express language of the signed contract is that payment on “completion ofescrow” means that Mr. CASELLI shall be paid before completion of all of the consulting services contemplated by the consulting agreement. It is true that the contract’s due date for payment was after the completion of some services and before the completion of others. However, there is nothing wrongful about a contract requiring payment in advance. Such contracts are commonplace. And, requiring payment to be made in accordance with the consulting agreement does not leave SAN JOSE ELKS BUILDING COMPANY without a remedy; if Mr. CASELLI still has an obligation to provide additional consulting services and he fails to provide them, SAN JOSE ELKS BUILDING COMPANY would have a cause of action for breach of contract. It is SAN JOSE ELKS BUILDING COMPANY’S choice whether to build a new lodge or not. It may never build a lodge and instead invest the $20,000,000 in another way. However, its inability to make that decision does not excuse its obligation t0 pay Mr. CASELLI in accordance with the consulting agreement. As stated in the moving papers, Mr. CASELLI is ready, willing and able t0 Reply Memorandum of Points & Authorities in Snnnnrt nanfinn fnr Snmmarv Adiudimfinn 4 AL») \OOOQQUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 perform. C. Chuck Doubleday Had Authority t0 Sign the Consulting Agreement on behalf of SAN JOSE ELKS BUILDING COMPANY. While the preceding section of this brief addresses SAN JOSE ELKS BUILDING COMPANY’S argument that its own inability to make a decision excuses the payment obligation, this section addresses SAN JOSE ELKS BUILDING COMPANY’S argument that its failure to follow its own governing rules excuses the payment obligation. As discussed in the moving papers, Chuck Doubleday had actual and ostensible authority to sign the consulting agreement. SAN JOSE ELKS BUILDING COMPANY argues Mr. Doubleday did not have ostensible authority because Mr. CASELLI, “having knowledge of the Elk processes and the Grand Lodge requirements, should have ascertained Mr. Doubleday’s authority.” (Defs Opp. MPA, 10: 12-1 3.) “Ostensible authority is such as a principal intentionally or by want ofordinary care, causes or allows a third person to believe the agent possesses.” Civil Code section 23 1 7; see, also, Chicago Title Ins. Co. v. AMZ Ins. Services. Inc. (2010) 188 Cal.App.4th 401 , 426-427. This definition, which is the embodiment of a well-established common law principle that has been called the foundation of the law ofagency, is based upon the equitable notion that a principal who, by its conduct, had led others to believe that it has conferred authority upon an agent, should not be heard to assert, as against third persons who have relied thereon in good faith, that he did not intend to confer such power. Freitas v. Marsh (1945) 7O Cal.App.2d 711, 714. There is no question that SAN JOSE ELKS BUILDING COMPANY led Mr. CASELLI to believe that Mr. Doubleday had authority to sign the consulting agreement. The Board ofTrustees and members approved the consulting agreement and, on that basis, Mr. CASELLI and Mr. Doubleday signed it. Mr. CASELLI was given no indication that approval from the Grand Lodge would be necessary, and there being no disclosure, Mr. CASELLI proceeded with performance in the good faith belief there was a binding and enforceable agreement. In addition, it appeared that SAN JOSE ELKS BUILDING COMPANY itselfwas in the dark about the need for Grand Lodge approval until some time during the course of this litigation. There Reply Memorandum of Points & Authorities in lennrf nf‘ Mnfinn Fnr Qummarv Adindirnfinn q OONQ \O 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 is nothing in the minutes ofthe Board ofTrustees and membership meetings that references a requirement for additional approval and no approval was sought; there is nothing in the hundreds ofemails exchanged between the parties about additional approval; there is nothing in the written communications between the parties shortly before and after the close of escrow that mentioned lack of Grand Lodge approval as an excuse; rather the excuse was that there is regular change in leadership and the present leadership’s lack of knowledge of the consulting agreement; even SAN JOSE ELKS BUILDING COMPANY’S attorney Barton Hechtman’s email on June 29, 2018 (Exhibit “C-3” to Declaration of Gordon J. Finwall) to Fidelity National Title Company made n0 mention of Grand Lodge approval. SAN JOSE ELKS BUILDING COMPANY first mention ofthe Grand Lodge approval requirement was in its answer to Mr. CASELLI’s complaint filed in this action. (Exhibit “C-Z” t0 Declaration of Gordon J. Finwall.) Arguing, under these circumstances, that Mr. CASELLI should have figured out that Building Committee, Board ofTrustees and membership approval ofthe agreement and Mr. Doubleday’s signature 0n the agreement were not enough t0 form a binding agreement belies common sense. Mr. CASELLI was not amember ofthe Elks organization, had no access to their internal governing documents and was given no reason, based on his knowledge and experience, to question Mr. Doubleday’s authority. Simply pointing to some benign language in the consulting agreement that Mr. CASELLI was familiar with Elks processes and requirements that SAN JOSE ELKS BUILDING COMPANY did notknow about and abide by themselves is not reasonable and does not create a triable issue of material fact. See, e.g., Joseph E. Di Loreto. Inc. V. O’Neill (1 991) 1 Cal.App.4th 149, 161; Annod Com. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1298-1299. D. The Consulting Agreement Is Not Ambiguous. SAN JOSE ELKS BUILDING COMPANY argues that “the timing and the scope and nature of Plaintiff’s construction services...are uncertain and cannot be enforced.” (Def.’s Opp. MPA, 1 1:17-19.) SAN JOSE ELKS BUILDING COMPANY offers no evidence in support of this contention other than the consulting agreement itself. This argument also fails. The court must give a contract susceptible to different interpretations an interpretation that will make the contract lawful, operative, definite, reasonable, and capable 0fbeing carried into effect, ifthe court can give it that construction without violating the intention Reply Memorandum of Points & Authorities in Qllnnnrt nFMnfinn Fnr Qnmmanl Adhlrfinqfinn 6 AL») OOOVGUI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of the parties. Civil Code section 1643; see Apra v. Aureguy (1961) 55 Cal.2d 827, 831. Whether a contract is sufficiently definite to be enforceable is a question of law for the court. Ladas v. California State Automobile Assn. (1993) 19 Cal.App.4th 761, 770, fn. 2. CACI 302 provides that the first element of contract formation is the following: “That the contract terms were clear enough that the parties could understand what each was required to d0.” Again, SAN JOSE ELKS BUILDING COMPANY offers no testimony that it could not understand what Mr. CASELLI was required to do. On the other hand, Mr. CASELLI knew what he was required t0 d0 and he performed. As set forth in the consulting agreement, Mr. CASELLI had broad experience in business, real estate and construction. For example, the first paragraph under “WITNESSETH,” of the consulting agreement provides, in part, that due to Mr. CASELLI’S construction experience gained by owning several Applebee’s restaurants, Mr. CASELLI “is associated with several contractors to provide quality construction at a minimum cost.” (Exhibit “G” to Declaration ofChuck Doubleday filed June 19, 2020.) Mr. CASELLI has always and remains ready, willing and able to assist with construction ofthe new lodge and made inquiries to SAN JOSE ELKS BUILDING COMPANY about its readiness to move forward. While the consulting agreement does not specify in great detail what Mr. CASELLI was expected to do, it could not because the future had not yet played out? But, as the project moved forward, both parties were governed by an implied covenant ofgood faith and fair dealing, and Mr. CASELLI knew in general terms that he would be providing consulting services in the areas ofhis expertise: business, real estate and construction. He provided those services until the breach and there was never a contention that Mr. CASELLI was not performing or had not performed as agreed. In fact, Mr. Doubleday states that Mr. CASELLI “performed in accordance with the consulting agreement” and describes in detail the services he provided. (Declaration of Chuck Doubleday filed June 19, 2020, 4:28-5:10.) In addition to the consulting agreement not being ambiguous, the SAN JOSE ELKS BUILDING COMPANY is estopped from arguing ambiguity in the description ofconsulting services Mr. CASELLI agreed to perform after the breach, i.e., after the failure to pay the fee upon the June 29, 2018 2 Defendant’s undisputed material fact number 35 is the following: “At the time the Consulting Agreement was prepared and signed by Mr. Doubleday in 201 5, Defendant had not yet determined the scope and nature of the construction of a new lodge.” Reply Memorandum of Points & Authorities in Sunnort 0f Motion for Summarv Adiudicatinn 7 L») U! \OOOVON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 close of escrow. That is because by materially breaching the agreement Mr. CASELLI is excused from performing the remainder ofhis obligations under a contract. (See further discussion in P1.’s MPA, 10:8- 18 and section E below.) In other words, the nature of the consulting services Mr. CASELLI agreed to provide after the close of escrow is irrelevant. E. Damages Should Not Be Apportioned. SAN JOSE ELKS BUILDING COMPANY argues that Mr. CASELLI’s damages should be limited to the value of the services he performed through the close of escrow and that, therefore, the court should rewrite the contract, i.e., the court should award Mr. CASELLI something less than 2% of the sales proceeds. However, by failing to pay the fee upon the close ofescrow, disassociating itselffrom Mr. CASELLI and not allowing Mr. CASELLI to complete performance, who is ready, willing and able to perform, the argument fails. A party to a contract who voluntarily prevents the performance of some act on which an obligation depends is precluded from setting up such nonperformance as a defense in an action to enforce the obligation. Parsons v. Bristol Development Co. (1 965) 62 Cal.2d 861 , 868; Sloan v. Steams (1 955)1 37 Cal.App.2d 289, 295. Consequently, one who prevents the performance ofa condition precedent cannot take advantage ofthe nonperformance ofthe condition. Unruh V. Smith ( 1 954) 123 Cal.App.2d 43 1 , 437. SAN JOSE ELKS BUILDING COMPANY cut offall communication with Mr. CASELLI and prevented him from continuing performance. Also, a party to a contract is excused from performing his obligations under a contract if the other party commits a “material” breach of the contract. Generally speaking, a material breach is one which deprives the non-breaching party of a substantial benefit he was to receive under the contract, as opposed to an incidental benefit which causes little or no harm. Whitney Inv. Co. v. Westview Dev. Co. (1969) 273 Cal.App.2d 594, 601-602; Brown v. Grimes (201 1) 192 Cal.App.4th 265, 277-278 (“When a party’s failure to perform a contractual obligation constitutes a material breach ofthe contract, the other party may be discharged from its duty to perform under the contract”). SAN JOSE ELKS BUILDING COMPANY breached the following material provision of the consulting agreement: “This lump sum is due on completion of escrow.” (Exhibit “G” to Declaration of Chuck Doubleday filed June 19, 2020.) Reply Memorandum of Points & Authorities in Sunnnrr nf‘ Mnrinn fnr anmarv Adindimtinn R \OOONON 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The payment obligation arose on completion of escrow, not on the completion of all services, and such breach excused Mr. CASELLI from continuing performance of the consulting agreement. Since Mr. CASELLI’S performance stopped because of SAN JOSE ELKS BUILDING COMPANY’S decision not to proceed with the project and through no fault of his own, there is no legal justification for discounting the fee. DATED: September 22, 2020 FINWALL LAW OFFICES, APC/_\ / / / '01 Plaifib ’ Reply Memorandum of Points & Authorities in Cnnnm-r n?Mnmm rm Q....... Amnmmum O 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I, the undersigned, say: That I am now, and at all times mentioned, a citizen of the United States, over the age of eighteen years, a resident of Santa Clara County, California; I am not a party to the within action or cause; that my business address is 1056 Lincoln Avenue, San Jose, California 95 125; that I served a copy of the Reply Memorandum of Points and Authorities in Support of Motion for Summary Adjudication by placing said documents in an envelope addressed to: Jaemin Chang FOX ROTHSCHILD LLP 345 California Street, Suite 2200 San Francisco, CA 94101 and placing said copies for collection and mailing on September 22, 2020 at San Jose, California, following our ordinary business practices. I am readily familiar with this business’ practice for collecting and processing documents for mailing. On the same day that document is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. I declare under penalty of perjury that the foregoing is true and correct. Executed on September 22, 2020 at San Jose, California. fl/MMA K CONNIE YOUNG