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Court Finds Listing Agent Can Fight Multiple Owners For Her Commission


Law Offices of Peter N. Brewer

by Law Offices of Peter N. Brewer on March 16, 2017

in Broker/Realtor, Legal Update, Real Estate Law

Recently, the Sixth District Court of Appeals overturned a state trial court order that originally invalidated a listing broker’s claim against multiple sellers of a vacant parcel of land in Marin County.

FACTS:  Licensed broker Bernice Jacobs presented a listing agreement to five owners, only one of which executed the agreement.  The sellers owned a parcel of land in Marin County that Bernice listed at $2.2 million.  The agreement entitled her to a commission of $200,000 if she procured a buyer for the property.

Though only John Locatelli, one of the owners, executed the agreement, Plaintiff claimed that seller Locatelli told her when he was signing the agreement that he was authorized to act on behalf of the other owners. His signature line is also ambiguous, “John B. Locatelli, Trustee of the John B. Locatelli Trust, et al.”  (The last bit, “et al.” suggests that he could be signing on behalf of multiple parties.)

 

Further, Jacobs claimed the other owners were aware of her retention as a broker and that two individual owners acknowledged her employment, were impressed by her performance and inquired about working with her on other projects.

The agent did market the property and within the specified time frame she did procure a buyer for the property.  However, Locatelli asserted that he had been speaking to the prospective buyer, TPL, for three years and he wanted to exempt that buyer from the commission agreements with Jacobs. Jacobs alleged that TPL’s representative claimed not to know Locatelli and had never spoken with him prior to Jacobs’ marketing efforts. Ultimately the owners and the identified buyer TPL did enter into an agreement for that buyer to purchase the property

Jacob file suit against the owners for breach of contract, breach of the implied covenant of good faith and fair dealing, anticipatory breach, and specific performance. The owners demurred. At the trial court level, the owners argued that Jacob’s complaint was barred by the statute of frauds which requires a writing when transacting for real estate.

As to the argument that Locatelli could sign on behalf of the other owners, the other owners alleged that such an agreement must also be in writing pursuant to the equal dignities rule.

Jacobs alleged the owners were joint venturers, and that Locatelli had signed the agreement on behalf of the joint venture. The trial court sustained the owners’ demurrer without leave to amend but did not give a reason. Only Locatelli remained in the action as a defendant.  This appeal followed.

THE HOLDING: The appellate court found that plaintiff has sufficiently alleged in the complaint that Locatelli had a written authority to sign on behalf of the other owners. That is a sufficient allegation at the demurrer stage. Furthermore, the court adhered to the finding of Sterling v. Taylor (2007) 40 Cal. 4th 757 and noted that when there is an ambiguity in the written agreement, extrinsic evidence is admissible to resolve uncertainty. The appellate court found that the trial court should have allowed the case to proceed and allowed the plaintiff to introduce extrinsic evidence and the manner in which Locatelli signed the agreement. Accordingly, the lower court’s order sustaining the demurrer did not conform to the Supreme Court holding in Sterling regarding the admission of parol evidence.

 

WHY THIS CASE IS IMPORTANT: Neither party acted as they should have.  The listing agent is a licensed professional and held to a high standard.  That means the licensee is supposed to have a fully ratified agreement.  However, there appeared to be some unclean hands on the part of the seller, the appellate court seemed inclined to give the listing agent a chance to prove her case and provide evidence of the meaning of “et. al” in the signature line.  Lesson to practitioners, signatory lines should be for single party, with no additional verbiage.

 

[Jacobs v. Locatelli, et al. (Feb. 8, 2017) (Santa Clara County Superior Court)]

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