Adebiyi v. Dynasty Dynamics

Filed 11/28/07 Adebiyi v. Dynasty Dynamics CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Conrad Aragon, Judge. Affirmed.

Stanley Z. White and Associates and Stanley Z. White for Defendant and Appellant.

Onwaeze & Nwabuzor and Ogochukwu Victor Onwaeze for Plaintiff and Respondent.

___________________________

INTRODUCTION

Appellant Dynasty Dynamics, Inc. (Dynasty Dynamics), appeals from a judgment upon special verdicts in favor of respondent Bola Adebiyi, specifically enforcing a real property purchase agreement and awarding damages for fraud.[1] Appellant contends there was no evidence of a writing, signed by officers of Dynasty Dynamics or by an agent authorized to sign on the corporations behalf, sufficient to satisfy the statute of frauds. Appellant also contends the trial court erred in refusing to instruct the jury on the equal dignities rule of the statute of frauds, which requires an agents authorization to be in writing. Finally, appellant contends that the evidence of ostensible agency and ratification was insufficient to overcome the equal dignities rule, and that the evidence of ostensible agency was insufficient to impose liability on appellant for the fraud of an ostensible agent.

As appellant has not provided a record adequate to review the issues regarding contract formation and the statute of frauds, we reject appellants contentions with regard to them. As we conclude substantial evidence supports the jurys imposition of vicarious liability on appellant for the fraud of its ostensible agent, we also reject appellants final contention, and affirm the judgment.

BACKGROUND

Respondent testified that in mid-February 2005, he was interested in buying some real property, and went with his broker, Yomi Adepoju, to view a mixed residential-commercial property on Crenshaw Boulevard. Adepoju had found the property listed on a commercial real estate listing service, LoopNet.com. The listing showed Anthony Calcote as the person to contact, and stated an asking price of $849,500. The seller was not identified in the listing. The name of Calcotes corporation, Cal First Investments Inc. appeared at the top of the listing, but was not identified as agent or seller.

Calcote was not a licensed real estate broker or agent. Jacqueline Green, an officer of defendant Principal Realty Group, doing business as Cal First Investments (but not Cal First Investments Inc.), was the responsible licensed broker in Calcotes office. Green shared office space with Calcote for approximately six weeks in April and May 2005, before disassociating herself from him and his operation.

Adepoju and respondent met Calcote on the property, and Calcote unlocked the commercial space for them, after obtaining the key from a lockbox to which Calcote knew the combination. Calcote told them the price had been reduced to $725,000. Adepoju sent Calcote an offer to purchase the property for that sum on a standard form purchase agreement, and received a counteroffer on a similar form -- both were admitted into evidence as exhibit 2. The seller is not named in the offer, but the counteroffer names the seller as Dynasty Dynamics, and bears a sellers signature. However, the signature is illegible, and neither the name of the person signing for the seller, nor his or her representative capacity appears on the document.

Dynasty Dynamics is owned by two shareholders, Barrington Malcolm and Shwannah Bordenave, who are the corporations president and secretary, respectively. Both officers denied Dynasty Dynamics entered into the contract or gave authority to any agent to do so. They denied having signed the contract, and submitted copies of their drivers licenses and other documents, to show their signatures were markedly different from the sellers signature on the contract.

Respondent accepted the counteroffer February 18, 2005, and Adepoju took the contract to the escrow officer recommended by Calcote, Treva Loop at Fidelity National Title Company (Fidelity). Respondent hired a professional inspector, and he and Adepoju met the inspector and Anthony Calcote on the property. When one of the tenants refused access, Calcote made a telephone call, and Malcolm arrived and spoke to the tenant, who then allowed them in.

After Adepoju sent Calcote a copy of the inspection report, they met to discuss it in Calcotes office in Culver City. Calcote telephoned someone and put him on the speakerphone, and they discussed certain details of the report. Adepoju recognized Malcolms voice on the speaker. Malcolm praised the report, said if he was not going to sell, he would use it to repair the property, and then asked why the buyer wanted him to make repairs, as he was getting [the] property for shit. Eventually, they came to an agreement on some of the items in the report.

Respondent also obtained an appraisal, a copy of which he sent to Calcote. After receiving the appraisal, Calcote telephoned respondent, and said the seller was no longer willing to sell the property for $725,000, but wanted $800,000 instead. Respondent refused to pay an increased price. Weeks passed, but respondent heard no more from Calcote or Malcolm, and Adepoju received no escrow instructions. Adepoju telephoned Calcote, who gave responses such as, Oh, yeah, I talked to Treva Loop. Its going to be -- the courier is going to be overnighted to you. However, no instructions arrived. Finally, Adepoju telephoned Fidelity and learned that it had no record of an escrow for the property, and that Loop had left the company, taking the file with Calcotes consent. Fidelity retrieved the file, and assigned it to escrow manager Kristi Dilworth, who opened an escrow and prepared escrow instructions, assigning a new closing date, as the closing date stated in the contract had passed.

Adepoju received the instructions April 25, 2005, approximately one week after the original closing date had passed. Soon afterward, Adepoju received a letter from Calcote, erroneously dated February 8, 2005, stating his client intended to cancel the transaction because the closing date had passed, but that he was willing to sell on different terms, including a $75,000 price increase. Respondent again refused to pay an increased price. When Fidelity received no signed instructions, and the new closing date passed, Dilworth tried to contact both agents, but they never responded, and after approximately one year, she obtained a court order to cancel escrow, and released the buyers deposits to him. This action ensued.

The jury returned special verdicts finding that appellant entered into a contract to sell the Crenshaw property, breached the contract and ratified Calcotes misrepresentation which had induced respondent to enter into the contract. The jury found respondent had been damaged in the sum of $40,750, for [p]ast economic loss, out of pocket expenses, lost profits, [and] lost investment opportunity. The trial court assessed damages in the amount found by the jury, and ordered specific performance of the purchase contract. Judgment was entered November 14, 2006 against all defendants, and appellant Dynasty Dynamics timely filed a notice of appeal December 11, 2006.

DISCUSSION

1. First Cause of Action -- Breach of Contract

A. Substantial Evidence

Appellant contends the judgment on the contract cause of action is unsupported by substantial evidence, because there was no evidence that either of the two officers of Dynasty Dynamics signed the contract, or that an authorized agent signed on the corporations behalf. Appellant invokes that part of the statute of frauds known as the equal dignities rule. (See McGirr v. Gulf Oil Corp. (1974) 41 Cal.App.3d 246, 252, 254, fn. 4.) Under the statute of frauds, a contract for the sale of real property or some memorandum of its terms, must be in writing and signed by the party to be charged. (Civ. Code,  1624, subd. (a)(3).)[2] Under the equal dignities rule, a contract for the sale of real property if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged. (Ibid.; see also 2309.) No written authorization is required when a corporations contract has been signed by an executive officer of the corporation. (Jeppi v. Brockman Holding Co. (1949) 34 Cal.2d 11, 16-17.) Thus, if the signature on the contract is that of one of the two officers, Malcolm or Bordenave, there was no need for a written agency authorization.

The record is insufficient to determine who respondent put forward as the signatory of the purchase agreement. The first amended complaint (FAC) does not state who signed the contract other than the defendants. The signatory is not identified in the opening statement of respondents counsel, and the closing arguments were not transcribed. No witness testified to signing the contract or observing someone signing the contract. No witness identified the signature as belonging to either of the officers of Dynasty Dynamics or Calcote or other agent. No witness testified that Calcote or another agent signed the purchase agreement.

There is no exhibit in the record on appeal with a signature that resembles the sellers signature. However, appellant did not have all the exhibits brought up. A copy of Bordenaves drivers license and several grant deeds were admitted into evidence and made a part of the record on appeal. Bordenave testified the signatures on the license and on some of the grant deeds were her usual signature. Other grant deeds were admitted into evidence, but are not part of the record on appeal. Bordenave testified her signature on some of the missing exhibits differed from her signature on those in evidence. Bordenave identified Malcolms signature on one of the missing exhibits.

The party challenging a judgment has the burden of showing reversible error by an adequate record. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575.) We must presume missing exhibits support the judgment. (Maguire v. Lees (1946) 74 Cal.App.2d 697, 709.) In particular, the jury was authorized to compare the signature on the purchase agreement with the signatures on the missing exhibits to determine which were genuine and whether the purchase agreement was signed by one of the officers; we must presume the jury decided the issue against appellant. (See People v. Weiskopf (1943) 60 Cal.App.2d 214, 218 [The exhibits have not been brought up in the record, so we cannot say from inspection what the result of such a comparison might be; we must, therefore, presume that it shows identity of handwriting on the two papers and thus supports the jurys finding].)

When certain contentions based upon [missing] exhibits are made in appellants briefs, it may be assumed that [it] has abandoned these contentions since [it] has not desired to arrange to have these exhibits sent here as a part of the record.(Brown v. Copp (1951) 105 Cal.App.2d 1, 9.) Thus, as appellant has failed to provide an adequate record, we assume it has abandoned its substantial evidence contention with regard to the first cause of action.

B. Instructional Error

Appellant contends the trial court erred in refusing to instruct the jury on the equal dignities rule. Appellant requested the following instruction based upon section 1624, subdivision (a)(3): An agreement for the sale of real property, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent, or some note or memorandum thereof, is in writing, subscribed by the party sought to be charged.[3]

Appellant contends that because Malcolm and Bordenave testified they did not sign the contract or authorize anyone to do so, the court should have instructed the jury that the contract was invalid without proof of the written authority of an agent to sign it on Dynasty Dynamicss behalf. Respondent counters that the instruction was not warranted by the evidence, as neither he nor appellant presented evidence or argument that Calcote signed the contract.

We need not reach appellants contentions, as the record is inadequate to determine prejudice, if any. Wrongly omitted instructions warrant reversal only where the error was prejudicial. (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 579 (Soule).) Instructional error in a civil case is prejudicial where it seems probable that the error prejudicially affected the verdict. [Citations.] (Id. at p. 580.) Actual prejudice must be assessed in the context of the individual trial record. For this purpose, the . . . court must . . . evaluate (1) the state of the evidence, (2) the effect of other instructions, (3) the effect of counsels arguments, and (4) any indications by the jury itself that it was misled. (Id. at pp. 580-581, fn. omitted.)

Applying the Soule factors, we are unable to assess prejudice in the context of the trial record. As previously discussed, we must presume the missing exhibits were sufficient to show the purchase agreement was signed by one of the officers. (See People v. Weiskopf, supra, 60 Cal.App.2d at p. 218.) Further, we are unable to evaluate the effect of counsels arguments, because they were not transcribed. Nor are we able to consider the probability the jury was misled, because the proceedings following the jury instruction conference were not transcribed. (See Soule, supra, 8 Cal.4th at pp. 580-581.)

It was appellants burden to present a sufficiently complete record, in order to establish that it did not invite the claimed instructional error, and in the absence of such a showing, the issue may not be considered on appeal. (Phillips v. Noble (1958) 50 Cal.2d 163, 168-169; Mayes v. Bryan (2006) 139 Cal.App.4th 1075, 1091.)

2. Second Cause of Action: Intentional Misrepresentation --

Substantial Evidence

Appellant contends there was insufficient evidence to hold Dynasty Dynamics vicariously liable for Calcotes misrepresentations on a theory of estoppel or ratification. The FAC alleged that the misrepresentations consisted of Calcotes false assertion of authority to enter into the purchase agreement on behalf of appellant. A principal may become vicariously liable for the fraud of an agent through the doctrine of respondeat superior, if the fraud was committed in the scope of the agents employment. (Garton v. Title Ins. & Trust Co. (1980) 106 Cal.App.3d 365, 375-376.) Vicarious liability may be imposed for the fraud of an ostensible agent. (Clark Equipment Co. v. Wheat (1979) 92 Cal.App.3d 503, 521.) Liability of the principal for the fraud of an ostensible agent rests on the doctrine of estoppel. (Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 747.)

If the principal places the agent in a position to defraud, and the third person relies upon his apparent authority to make the representations, the principal is liable even though the agent is acting for his own purposes. [Citation.] The theory is that the agents position facilitates the consummation of the fraud, in that from the point of view of the third person the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business confided to him. It is immaterial that the principal receives no benefits from the transaction. [Citation.] (Alhino v. Starr (1980) 112 Cal.App.3d 158, 174, italics omitted.) Thus, where the principal actually or apparently authorizes representations about a matter related to the agents duties, and the agent has knowledge of their falsity, this knowledge may be imputed to the principal, even though the agent is acting adversely. [Citations.] (Ibid., italics omitted.)

When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact. [Citations.] (Foreman & Clark Corp. v Fallon (1971) 3 Cal.3d 875, 881, italics omitted.) We view the evidence in the light most favorable to the verdict (Hauter v. Zogarts (1975) 14 Cal.3d 104, 110), and we draw all reasonable inferences in favor of the prevailing party. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.) Viewing the evidence in this way, we conclude the evidence was sufficient to support a finding of vicarious liability.

Although there was no direct evidence that Dynasty Dynamics placed the LoopNet listing showing Calcote as the contact person, Malcolm involved himself in ways that belied his claim that he had not authorized Calcote to act as his agent in selling the property.[4] Despite his contention that the property was not for sale, that the commercial portion of the property had been listed for lease only and that the residential portion had been rented out, Malcolm nevertheless took part in the inspection of the property, assisting respondent in gaining access to an occupied residential unit. It is unlikely the jury believed that Malcolms purpose in allowing inspection of the entire property and facilitating access to a residential unit was to obtain a lease for the commercial portion only. Although Calcote had the combination to the lockbox, Malcolm was present at the inspection, which lasted four or five hours. Malcolms arrival on the property was in response to a telephone call from Calcote, whom he admitted having known for 20 years. The negotiation regarding the repair of items in the inspection report took place in Calcotes office, with Adepoju present and Malcolm on the speakerphone. It was Calcote who telephoned Malcolm and put him on the speaker, and Malcolm participated in the negotiation.

Finally, and most telling, Malcolm admitted that he knew Calcote wanted to sell the property for him, and that Calcote had told him he had buyers willing to pay a certain amount. Thus, when Malcolm participated in the inspection and negotiation, he knew Calcote was acting as someones agent, and as the buyers agent was present during these events and Malcolm had known Calcote for many years, the jury could reasonably infer either that Calcote was, in fact, appellants authorized agent, or that Malcolm knew Calcote was purporting to act as appellants agent.

Appellant argues that assuming Malcolm was the person on the speakerphone, it may be inferred from his comments that he did not know there was a signed contract. Malcolm praised the inspection report, saying that if he was not going to sell the property to these guys he would still use the report to repair it. Of course, as it is equally reasonable to infer from Malcolms comment that he intended to sell to these guys, we may not substitute appellants deduction for that apparently drawn by the jury. (See Nichols v. Mitchell (1948) 32 Cal.2d 598, 600-601.) Further, appellant ignores another comment appearing on the same page in the record, which makes appellants inference less reasonable. Adepoju quoted Malcolm as having said: Why are they asking us to do all these repairs, anyway? Theyre getting this property for shit.

We conclude that Malcolms words and actions provided sufficient evidence that appellant clothed Calcote with the apparent authority to act as its agent, and placed Calcote in a position to defraud respondent, making appellant liable for Calcotes fraud in the course of that ostensible agency. (See Clark Equipment Co. v. Wheat, supra, 92 Cal.App.3d 503, 521.)

3. Attorney Fees

Respondent requests attorney fees on appeal, pursuant to section 1717. He should file a noticed motion in the trial court. (Code Civ. Proc., 1033.5, subd. (c)(5); see generally Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 925-927.)

DISPOSITION

The judgment is affirmed. Respondent shall have his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

MANELLA, J.

We concur:

EPSTEIN, P. J.

SUZUKAWA, J.

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line Lawyers.

[1] Respondents first amended complaint (FAC) named Dynasty Dynamics, Principal Realty Group, doing business as Cal First Investments, and Anthony Calcote. It set forth two causes of action -- the first for breach of contract, and the second alleging fraud. The FAC alleged Dynasty Dynamics breached a real estate purchase contract which respondent had been fraudulently induced by Dynasty Dynamicss agent to enter. The only remedy sought for the alleged breach of contract was specific performance, and the only remedy sought for the fraud was compensatory damages. Dynasty Dynamics is the only appellant. Neither Principal Realty Group nor Calcote is a party to this appeal. Calcotes default was entered prior to trial.

[2] All further statutory references are to the Civil Code, unless otherwise indicated.

[3] Appellant also requested an instruction regarding another provision of the statute of frauds requiring a written agency authorization, viz., section 1624, subdivision (a)(4), which requires a written memorandum of [a]n agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate . . .  for compensation or a commission. It applies to an action by an agent to recover a commission. (See, e.g., Phillippe v. Shapell Industries (1987) 43 Cal.3d 1247, 1258.) Respondent contends that it was irrelevant to any issue raised at trial and on appeal. We agree. As this was not an action to recover a commission, it had no possible application here, and was properly refused. (See Young v. Carlson (1954) 128 Cal.App.2d 743, 744, 750 [instruction properly refused absent any reasonable basis for its application to the facts].)

[4] Malcolm denied that Dynasty Dynamics had ever intended to sell the property. He denied knowing about the purchase agreement, the LoopNet listing or any of Calcotes efforts to sell the property. Malcolm denied he was at the property during the inspection. He claimed he was out of town buying property, but presented no corroborating evidence, such as purchase documents or airplane tickets. The jury was not required to believe his testimony. (Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 67-68.)