Filed 8/31/26 Cal Continental Capital v. 1502 Rockwood CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
CAL CONTINENTAL CAPITAL, B331098, B334747
INC.,
(Los Angeles County
Plaintiff, Cross-defendant Super. Ct. No. BC651574)
and Appellant,
v.
1502 ROCKWOOD, LLC,
Defendant, Cross-complainant
and Appellant.
APPEALS from a judgment of the Superior Court of
Los Angeles County, Kristin S. Escalante, Judge. Affirmed.
Law Offices of Michael C. Murphy, Michael C. Murphy
and Michael C. Murphy, Jr., for Plaintiff, Cross-defendant and
Appellant.
Law Offices of A. Scott Brown and A. Scott Brown for
Defendant, Cross-complainant and Appellant.
In a dispute over the sale of real property, the buyer appeals
from a judgment that awarded the buyer’s broker no commission.
We conclude that although the original purchase agreement called
for a brokerage commission, the parties entered into a modified
agreement that omitted reference to the commission.
In a separate appeal from the same judgment, the seller
contends the trial court erroneously denied the seller’s request for
attorney fees. We conclude the seller was not entitled to attorney
fees.
Accordingly, we affirm the judgment.
BACKGROUND
A. Parties
Because all parties received their rights by assignment, we
will sort them out first.
1. Cal Continental Capital, Inc. (Seller)
Crown Hill LLC, which owned property located at 1502-1510
Rockwood Street in Los Angeles, assigned its rights to Cal
Continental Capital, Inc. (CCCI). For ease of reference, we
will designate the seller simply as CCCI.
Charles Jeannel owned and controlled CCCI.
2. 1502 Rockwood, LLC (Buyer) and YBM, Inc.
(Broker)
NMB, LLC, purchased the property from CCCI and assigned
its rights to 1502 Rockwood LLC, (Rockwood). We will designate
the buyer as Rockwood.
Rockwood’s real estate broker was YBM, Inc. YBM assigned
its rights to Rockwood as well.
Yair Ben-Moshe owned and controlled both Rockwood and
YBM. YBM is not a party to this action.
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B. Purchase Agreement and Initial Escrow
Instructions
In June 2013, CCCI agreed to sell the property to Rockwood
for $1.175 million, and to pay YBM a $75,000.00 brokerage
commission.1
The purchase agreement stated that the parties would
mediate any dispute arising out of the agreement or any resulting
transaction before resorting to legal action. Joint escrow
instructions incorporated the terms of the purchase agreement,
and escrow opened in June 2013.
C. Modified Agreement and Instructions
On March 12, 2014, after environmental studies revealed
hydrocarbon contamination on the property, CCCI and Rockwood
modified the purchase agreement. Among other financial
arrangements, Rockwood agreed to pay $925,000 for the property
and provide a payment stream and $100,000 bonus to CCCI if
certain conditions were met.
The modified purchase agreement said nothing about a
broker’s commission or mediation.
Regarding attorney fees, the modified purchase agreement
stated: “None of the parties shall . . . recover costs [or]
attorneys’ fees incurred in connection with any of the matters
described herein, or in the negotiation and documentation of
this agreement. . . . If any proceeding is undertaken to interpret
or enforce this agreement, the prevailing party shall be entitled
to reasonable attorney fees and costs incurred in such dispute.”
(Capitalization omitted.)
1 Despite a typographical error indicating that YBM
represented CCCI (the seller), the parties understood that it
represented only Rockwood.
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The joint escrow instructions were revised, and expressly
incorporated both the original and modified purchase agreements.
Despite there being no mention in the modified agreement of
a brokerage commission, on March 17, 2014, Ben-Moshe sent an
email to the escrow manager (and copied to Jeannel) stating, “I
reserve all of my [(sic): YBM’s] rights [to a commission], but we
need not hold up the closing [to] deal [with that].”
D. Complaints
1. Original Complaint and Mediation
In 2016, CCCI, the seller, sued buyer Rockwood for breach of
contract and fraudulent concealment, alleging Rockwood failed to
pay CCCI the bonus or payment stream required by the modified
purchase agreement, and made false statements that had induced
CCCI to reduce the purchase price.
Upon Rockwood’s demand, the parties attempted to resolve
the dispute in mediation, which was unsuccessful.
2. Second Complaint
In February 2017, CCCI filed a second, identical lawsuit
against Rockwood. A week later, it dismissed the original lawsuit.
3. Cross-Complaint
In July 2017, Rockwood, the buyer, cross-complained against
seller CCCI for breach of contract, alleging CCCI failed to pay
a $75,000.00 brokerage commission to broker YBM (which had
assigned its rights to Rockwood). (Despite designating the cause
of action as alleging breach of contract, Rockwood did not allege any
agreement between YBM and any other party, not even Rockwood
itself.)
Rockwood’s cross-complaint also asserted causes of action for
(1) fraudulent concealment, alleging CCCI misrepresented in its
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disclosures that three oil wells on the property had been capped;
and (2) conspiracy to commit fraud, alleging CCCI made intentional
misstatements in its complaint against Rockwood. Rockwood
dismissed these fraud claims before trial.
E. Trial
CCCI’s causes of action for breach of contract and fraud and
Rockwood’s cross-action for breach of contract went to bench trial.
Jeannel, CCCI’s principal, testified that Ben-Moshe, YBM’s
principal, agreed that after CCCI reduced the purchase price on
the property, it would not owe YBM a brokerage commission.
Ben-Moshe testified that CCCI owed YBM a commission
despite modification of the purchase agreement. He acknowledged
that Jeannel disputed this claim, but Ben-Moshe opted to wait until
after escrow closed to resolve the dispute rather than risk losing
Rockwood’s deposit.
F. Judgment
On CCCI’s complaint, the court found that Rockwood
did not breach the modified purchase agreement but it fraudulently
induced CCCI to reduce the purchase price by $200,000. The
judgment awarded CCCI nothing on its breach of contract claim but
$200,000 plus interest on its fraud claim. No party appealed from
this portion of the judgment.
On Rockwood’s cross-complaint, the court found no support
for a $75,000 brokerage commission owed to YBM (and by
assignment to Rockwood) because the modified purchase agreement
contained no reference to one and there was no evidence that YBM
agreed to provide or actually provided brokerage services.
The court accordingly entered judgment against Rockwood on
its cross-complaint. Rockwood appeals from the judgment insofar
as it rejected Rockwood’s claim for a commission.
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G. Attorney Fees
CCCI moved for attorney fees incurred in its successful
defense against Rockwood’s breach of contract cross-claim, its direct
fraud claim, and its defense against Rockwood’s dismissed fraud
cross-claims.
The court found CCCI was not entitled to attorney fees on
its direct fraud claim because it failed to seek mediation before
filing its lawsuit, which the original purchase agreement had
required. Although the modified agreement was silent about
mediation, the court found CCCI conceded that the mediation
requirement from the original agreement carried over to the
modified agreement.
The court invited supplemental briefing for CCCI to identify
which attorney fees it incurred defending specifically against
Rockwood’s breach of contract cross-claim. CCCI failed to do so,
but instead made a request for relief under Code of Civil Procedure
section 473 and offered supplemental briefing on its entitlement to
fees for its successful defense of Rockwood’s dismissed fraud cross-
claims. The court rejected this request and briefing and denied
CCCI any defense fees.
CCCI appeals from the judgment insofar as it denied attorney
fees.
We consolidated Rockwood’s and CCCI’s appeals.
DISCUSSION
A. Rockwood’s Appeal
Rockwood, the buyer, contends that the court erred in finding
no evidence supported seller CCCI’s obligation to pay YBM (and
by assignment Rockwood) a brokerage commission. We disagree.
CCCI contends Rockwood had no standing to sue for recovery
of the commission because it was not a licensed broker. The point is
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irrelevant because Rockwood seeks recovery of the commission not
as a broker but as an assignee. A broker may assign its right to an
earned commission to a third party. (Schaffter v. Creative Capital
Leasing Group, LLC (2008) 166 Cal.App.4th 745, 756.)
The first element of a claim for breach of contract is the
existence of a contract. (Oasis West Realty, LLC v. Goldman (2011)
51 Cal.4th 811, 821.)
Rockwood did not allege and no evidence supported that
YBM entered into any agreement with CCCI. (The court found
there was no agreement between YBM and any party.) The only
alleged contract was between CCCI and Rockwood. Although under
some circumstances a nonparty to a contract may bring an action
for its breach (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817,
826–827), Rockwood identifies no such circumstance here. It
has never contended, for example, that YBM was a third party
beneficiary of the purchase agreement, a concept that appears
nowhere in the record below or briefing on appeal.
Rockwood argues that the brokerage commission “became a
debt” before modification of the purchase agreement, which could
not be superseded without YBM’s consent. But Rockwood cites
no authority, and we know of none, holding that parties to an
agreement need third party consent, even third party beneficiary
consent, before modifying an agreement.
Rockwood argues that in modifying the purchase agreement,
the parties removed only “a method and timing of payment” of the
commission, not the commission itself. We disagree. By omitting
reference to the commission, the modification removed it.
We conclude that substantial evidence supported the
trial court’s finding that YBM was not entitled to a brokerage
commission from CCCI. Rockwood’s assignment-based contractual
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claim therefore failed. Given this result, we need not reach the
parties other arguments about the commission.
B. CCCI’s Appeal
CCCI, the seller, prevailed on one breach of contract claim—
buyer Rockwood’s unsuccessful cross-claim for breach of contract—
and three fraud claims: CCCI’s direct fraud claim and Rockwood’s
two dismissed fraud cross-claims. CCCI contends it was entitled to
attorney fees on each of these four claims.
Unless specifically provided for by statute, an attorney
fee award must be based on agreement between the parties. (Code
Civ. Proc., § 1021.) We independently review the legal bases for
attorney fees. (Lange v. Schilling (2008) 163 Cal.App.4th 1412,
1416.)
Here, the modified purchase agreement stated that attorney
fees were available only in a proceeding to “interpret or enforce” the
agreement. It expressly stated that no party could recover attorney
fees incurred in connection with substantive matters described in
the agreement or negotiations.
1. CCCI’s Successful Defense against
Rockwood’s Contract Cross-Claim
CCCI would normally be entitled to attorney fees for
successfully defending against Rockwood’s cross-claim for breach of
contract, i.e., the commission claim, but it failed to identify which
attorney fees were incurred specifically in this defense. CCCI
intimated at oral argument that it requested relief from this default
under Code of Civil Procedure section 473, but that request sought
relief only as to the fraud cross-claims that Rockwood dismissed.
Because CCCI failed to identify what fees it incurred in defending
against Rockwood’s commission claim, the court acted within its
discretion by denying them.
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2. CCCI’s Fraud Claim and Rockwood’s
Dismissed Fraud Cross-Claims
CCCI prevailed on its direct claim that Rockwood
fraudulently induced it to reduce the purchase price of the property
by $200,000. Rockwood dismissed its cross-claims that CCCI made
false allegations in its complaint and misrepresented in its
disclosures that three oil wells on the property had been capped.
CCCI sought fees for litigating these three fraud claims.
CCCI identifies no statutory or contractual basis for an
award of attorney fees incurred in litigating fraud claims. On
the contrary, the modified purchase agreement permitted recovery
of fees incurred only to interpret or enforce the agreement, and
expressly prohibited recovery of fees arising out of extracontractual
matters. Accordingly, the trial court properly denied attorney fees
on the parties’ fraud claims.
CCCI argues that a broad attorney fee provision can entitle
a prevailing party to fees incurred in litigating a fraud claim.
We agree in principle. (See Orozco v. WPV San Jose, LLC (2019)
36 Cal.App.5th 375, 411 [fees available on a fraud claim where
agreement provided for fees arising out of or “in connection with”
the agreement]; Maynard v. BTI Group, Inc. (2013) 216 Cal.App.4th
984, 989 [fees available on a fraud claim where agreement provided
for fees in the litigation of “any dispute” between the parties].) But
here, the attorney fee provision was narrow, authorizing attorney
fees only in a proceeding to “interpret or enforce” the modified
purchase agreement. CCCI’s claim for fraudulent inducement
and Rockwood’s claims for affirmative misrepresentations were
not commenced to interpret or enforce any agreement.
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DISPOSITION
The judgment is affirmed. Both sides shall bear their own
costs on appeal.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur:
BENDIX, J.
M. KIM, J.
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