Opposition Brief — Masin v. Drain

Supreme Court, U.S,

FILED

No. 85-985

JAN 9 1986

IN THE JOSEPH F. SPANIOL, JR.

SUPREME COURT OF THE UNITED STATESR«

October Term, 198

JOSEPH MASIN and EVA MARIA MASIN,

Petitioners,

vs.

VINCENT DRAIN and RUTH DRAIN,

Respondents.

RESPONDENTS BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

THOMAS R. SHERIDAN

Attorney for Respondents

MICHAEL R. ROGERS

CYNTHIA G. AZTERBAUM

Of Counsel

Suite 400

2404 Wilshire Boulevard

Los Angeles, CA 90057

(213) 380-3330

January, 1986

QUESTION PRESENTED

Is it error as a matter of law,

in an action alleging housing

discrimination under the Federal

Fair Housing Act, 42 U.S.C. §3601

et seg., to give a jury instruc-

tion that states discrimination

must be one "Significant factor"

to impose liability rather than

an instruction that states dis-

crimination must be a "motivating

factor" to impose liability (as

was approved by this Court in

Village of Arlington Heights v.

Metropolitan Housing Dev. Corp.)

TABLE OF CONTENTS

Page

QUESTION PREBRINTED. « 6Xi chek ees oe

TABLE OF COMDPEUESE, « «sss 03% eueennees Ee

TABLE OF AUTHORITION. 6:6ickkucdecurae EO

STATEMENT OF THE CASE. 6 casccaedcs =

REASONS TO DEMY WRIT. .cssunssaccexe @

1. THE ISSUE AS PRESENTED

TO THIS COURT BY

PETITIONERS WAS NOT

RAISED IN THE DISTRICT

COURT OF APPEAL AND

THUS NEVER ADDRESSED..... . 6

2. PETITIONERS DO NOT

PROPERLY REQUEST THIS

COURT TO REVIEW THE

DECISIONS - BOG. a cu eaea ccs 7

3. THE DISTRICT COURT OF

APPEAL DECISION IS NOT

IN CONFLICT WITH THE

PRINCIPLES SET FORTH

BY THIS COURT IN

ARLINGTON HEIGHTS......... 9

4. THE DECISION BELOW

DOES NOT CONFLICT

WITH DECISIONS OF THE

CIRCUIT COURTS OF APPEAL.. 12

atin

TABLE OF CONTENTS (cont.)

5. THIS CASE DOES NOT

PRESENT AN IMPORTANT

QUESTION OF NATIONAL

SIGNIFICANCE BECAUSE

THIS CASE WAS DECIDED

ON A PARTIAL RECORD;

FURTHER, CALIFORNIA HAS

ITS OWN HOUSING DIS-

CRIMINATION ACT..........

GRRE MIE CR ees eocdeessecscceseces

PPPEMUACESe cess cceseseseassecsccer

Appendix A - Bob Jones v.

Vincent Drain and Ruth

Drain, 149 Cal.App.3d 484

bo se ee ear

Appendix B - Joseph Masin

and Eva Masin v. Vincent

Drain and Ruth Drain, 150

Cel. apD.s0 714 (1984) ...--0-+-2s

-iii-

15

17

TABLE OF AUTHORITIES

Cases

Colon v. Tompkins Square

Neighbors, Inc., 289 F.Supp.

204 (D.C. B.Y. 1968)... cvccsess

Denny v. Hutchinson, 649 F.2d

S16 (C.A. Col. 19BL) cc cccccccess

McLaurin v. Brusturis, 320 F.

Supp. 190 (D.C. Wis. 1970)......

United States v. Pelzer Realty

Co., Inc., 484 F.2d 438 (5th

Cir. 1973), cert. denied, 416

U.S. 936 fae eG cheeses ser © ee eee ee

Village of Arlington Heights

v. Metropolitan Housing

Dev. Corp., 429 U.S. 252 (1977).

Statutes

Federal:

42 U.S.C. §3604(a) .. cee eer ennnes

42 U.S.C. §3610 (dG)... ccc cccccees

State:

California Government Code

GL ZOSS (a) acc nwccencscacesesecns

atye=

No. 85-985

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1985

JOSEPH MASIN and EVA MARIA MASIN

Petitioners,

vs.

VINCENT DRAIN and RUTH DRAIN

Respondents.

RESPONDENTS' BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

Respondents Ruth Drain and Vincent

Drain respectfully request that this

Court deny the petition for writ of

certiorari, seeking review of the de-

cision of the California Court of Appeal,

Second Appellate District.

STATEMENT OF THE CASE

On April 12, 1978 Respondent Ruth

Ae

Drain entered into an exclusive listing

contract with Sears Realty to sell her

home in Santa Barbara County for $775,000.

Respondent Vincent Drain, husband of Re-

spondent Ruth Drain, had no ownership in

the home and no legal authority to sell

the home.

On July 28, 1978, Petitioners,

through their real estate broker, Bob

Jones Realty, made an offer to purchase

the home for $700,000. The offer was

rejected because it was insufficient in

price and because the terms of the sale

had negative tax consequences for Re-

spondents.

Respondent Ruth Drain was concerned

about the tax ramifications of a sale of

the home in 1978 and required that any

offer to purchase meet the following con-

ditions: (1) an option to purchase would

be executed, to be exercised on or after

January 1, 1979; (b) option price would

be $100,000 cash, to be applied to the

purchase price; (3) escrow would not

open prior to January 1, 1979; and (4)

all documents would be prepared by at-

torneys for Ruth Drain and approved by

Sears Realty and Ruth Drain's tax attor-

neys. ;

'

On August 24, 1978, Respondent Ruth

Drain met with David Boggs who offered

to purchase the property for $775,000 and

agreed to the terms and conditions as set

forth above. Respondent Ruth Drain and

Mr. Boggs entered into an oral contract

for the sale of the home, and also agreed

to reduce the contract to writing on Aug-

ust 29, 1978. The agreement was reduced

to writing and the sale was completed.

On August 26, 1978 and August 28,

1978, Bob Jones Realty, on behalf of

Petitioners, presented another offer to

Respondent Ruth Prain which was rejected

because Respondent Ruth Drain had already

accepted Mr. Boggs' offer

Petitioners thereafter filed suit

against Respondents and their real es-~-

tate agents for, among other things,

violating the Federal Fair Housing Act.

Respondents and real estate agents

moved for partial summary judgment which

was granted. Petitioners appealed that

grant to the same District Court of

Appeal which, in a separate opinion,

affirmed the grant of summary judgment.

A copy of said opinions are included

. - 3 be *

herein as Appendix A and B No review

sf c 1a c 5 WwW : -Ouaht

Of Said dex Hp sions wWwaS SOUCNDC.

Thereafter the case proceeded to

trial on the balance of the complaint.

under the Federal Fair Housing Act were

etitioners' offers of Augus 26, 1978

nd August 28, 1978.

During trial both Ruth Drain and

Vincent Drain testified but their testi-

mony was not transcribed and not made a

part of the record on appeal.

Petitioners brought up less than a

full record on appeal. When Respondents

attempted to augment the record on ap-

peal, Petitioners opposed it and the court

denied Respondents’ motion without pre-

judice. Thus, the appeal was on less

than a full record.

After trial, a nine to three jury

verdict was rendered in favor of Respon-

dents.

On appeal, Petitioners claimed

error with respect to the trial court's

instruction to the jury that "[i]t is a

viclation of law if national origin is

one significant factor in rejecting an

offer that meets the terms on which the

owner is willing to sell."

The California Court of Appeal for

the Second Appellate District upheld the

jury verdict. While the District Court

ul

+

of Appeal found the phrase "a motivating

factor" more consistent with this Court's

holding in Village of Arlington Heights

v. Metropolitan Housing Dev. Corp.,: 429

U.S. 252 (1977), and preferable to either

"an element" or "one significant factor",

it also found that che distinction among

the three phrases was not sufficiently

Significant to assign error to the trial

court's choice.

The California Supreme Court deniec

Petitioners' petition for review.

REASONS TO DENY WRIT

1. THE ISSUE AS PRESENTED TO THIS

COURT BY PETITIONERS WAS NOT

RAISED IN THE DISTRICT COURT OF

APPEAL AND THUS NEVER ADDRESSED

At page ® of Petitioners' Petition,

Petitioners state "[t]he issue which

this Court is requested to resolve is

whether discrimination need only be ‘a

factor' in a defendant's refusal to

provide housing, or whether it must be a

substantial factor' before liability

can be imposed."

On appeal, however, Petitioners con-

tended only that the trial court errone-

ously instructed the jury when it stated

"{i]t is a violation of law if national

Origin is one significant factor in

rejecting an offer that meets the terms

on which the owner is willing to sell."

At no time did Petitioners raise the

issue as to the use of a "substantial

factor" on appeal.

2. PETITIONERS DO NOT PROPERLY REQUEST

THIS COURT TO REVIEW THE DECISIONS

BELOW

In their amended complaint in the

cause of action dealing with housing dis-

crimination, Petitioners alleged discrim-

ination with respect to their offers to

purchase of August 26 and 28, 1978.

During trial on this cause of action,

the offers tried as to the alleged basis

of iiability were the offers of August

26 and 28, 1978.

Yet, according to Petitioners’

Statement of the Case, Petitioners have

shifted to a different offer which .they

never claimed was rejected on grounds of

discrimination and thus was not even

tried at the trial court level.

This different offer only became an

issue in the District Court of Appeal

after Respondents had filed their oppo-

Sition brief. This different offer did

not meet the terms required by Respon-

dent Ruth Drain and was never the subject

of a claim of discrimination under the

Federal Fair Housing Act.

Thus, the petition seeks a review

of a rejected offer which was never al-

leged in the complaint nor tried in the

trial court but was addressed by the

appellate decision.

3. THE DISTRICT COURT OF APPEAL

DECISION IS NOT IN CONFLICT

WITH THE PRINCIPLES SET FORTH

BY THIS COURT IN ARLINGTON

HEIGHTS

In Village of Arlington Heights v.

Metropolitan Housing Dev. Corp., 429

U.S. 252 (1977), a real estate developer

sued a municipality because of its

alleged refusal to rezone land on which

the developer intended to build low and

moderate income housing. The developer

alleged that the municipality's conduct

was racially discriminatory in violation

of the Fair Housing Act. This Court

noted that when there is proof that a

discriminatory purpose has been a

motivating factor in the decision,

judicial deference to legislative deci-

sions is inappropriate.

Petitioners allege that the Dis-

trict Court of Appeals' countenance of

"significant factor" in place of "moti-

vating factor" as used by this Court

renders the District Court of Appeal

decision in conflict with this Court's

decision in Arlington Heights.

Since there are no relevant re-

ported decisions which specifically

define the words "factor," "motivating,"

"Significant," or "substantial,"

reference is made to Webster's New

Collegiate Dictionary for the meaning

of these words.

"Factor" is defined as ". . . 2 a:

something that actively contributes to

the production of a result: ingredient

"Active is defined as

1 : characterized by action rather than

by contemplation or speculation

"Contribute" is defined as ". .. b: to

play a significant part in bringing about

an end or result... ‘

"Significant" is defined as

3 a: having or likely to have influence

or effect: important, weighty b

10.

probably caused by something other than

mere chance... F

"Motive" is defined as ". ..1

something (as a need or desire) that

causes a person to act. .

"Substantial" is defined as

l a: consisting of or relating to

substance . .. Cc: important, es-

sential . .. ." (Emphasis added.)

As can be seen from the definitions

of these words, a common theme of cause

and effect runs through these words.

Likewise, this common theme is present

when the words are combined in the

phrases "motivating factor", "signifi-

cant factor" and "substantial factor."

There does not appear to be a

clear distinction or definitional dif-

ference between "motivating factor" as

used by this Court and "significant

factor" as used by the District Court

of Appeal in this case or even "sub-

Ade

stantial factor" referred to by Petition-

ers.

Petitioners' alleged conflict with

this Court's decision in Arlington

Heights is not one of law but of seman-

tics.

4. THE DECISION BELOW DOFS NOT CONFLICT

WITH DECISIONS OF THE CIRCUIT COURTS

OF APPEAL

Petitioners assert in their Petition

that there is a conflict amongst the

Circuit Courts of Appeal because the

Fifth Circuit Court of Appeal is the only

circuit which has adopted "the ‘substantial

factor’ test.”

Petitioners further assert that this

standard was first enunciated in United

States v. Pelzer Realty Co., Inc., 484

F.2d 438 (5th Cir. 1973, cert. denied,

416 U.S. 936 (1974).

The standard described by the court

in Pelzer was the significant factor test

oe

and not the substantial factor test.

Petitioners, by their own misstatements,

appear to be creating conflicts that do

not exist.

Moreover, Petitioners obfuscate the

issue in this case when in footnote 2

in their Petition they submit that "'a

motivating factor’ and ‘a factor' are in

essence the same standard, and that they

each represent a standard quite different

from that of ‘a substantial factor.'"

As noted by the District Court of

Appeal in this case:

"Cases involving the Fair

Housing Act, .. . are not

consistent in their terminol-

ogy. Many Fifth Circuit cases

continue to use ‘a significant

factor' or ‘one significant

factor', e.g., Woods-Drake v.

Lundy (1982) 667 F.2d 1198

which lists other cases using

that phrase. Other courts

use ‘a motivating factor' or

‘competing consideration', e.g.

Atkins v. Robinson (DCA Va.

1982) 545 F.Supp. 852; United

States v. City of Parma, Ohio

(1981) 661 F.2d 562; United

£3.

ENA ta ER

"States v. City of Birming-

ham, Mich. (1982) 538 F.Supp.

S19. Still others empioy the

terms 'a part', ‘any part',

‘a consideration', 'some role',

or ‘an element', e.c., Bishop

v. Pecsok (Ohio 1976) 431 F. .

Supp. 34; Jordan v. Dellway

Villa of Tenn., Ltd. (6th Cir.

1981) 661 F.2d 588; United

States v. Mitchell (5th Cir.

1978) 580 F.2d 789, 791: Zuch

v. Hussey, supra, 394 F.Supp.

1028; Shaw v. Cassar (E.D.

Mich. 1983) 558 F.Supp. 303.

A close reading of the cases

cited reveals that almost all

hark back to Smith v. Sol D.

Adler Realty Company, supra,

or more recently to Arlington

Heights, supra. Moreover, the

persuasive theme in all the

cases (even those in the sus-

pect Fifth Circuit) is that

race is an impermissible con-

Sideration in a real estate

transaction (Moore v. Townsend

(7th Cir. 1975) 525 F.2d 482,

485) and that race need not be

the sole motivating factor in

a denial that has discrimina-

tory effect in order for

plaintiff to succeed in a

claim under the Fair Housing

Act (Robinson v. 12 Lofts

Realty, Inc. (2nd Cir. N.Y.

1979) 610 F.2d 1032, 1042).

A denial violates the statute

if race is even one of the

motivating factors. (Ibid.)"

14.

5. THIS CASE DOES NOT PRESENT AN

IMPORTANT QUESTION OF NATIONAL

SIGNIFICANCE BECAUSE THIS CASE

WAS DECIDED ON A PARTIAL RECORD ;

FURTHER, CALIFORNIA HAS ITS OWN

HOUSING DISCRIMINATION ACT

Petitioners argue that this case

presents an important question of nation-

al significance in the area of federal

Civil rights law.

Yet Petitioners fail to point out

that this case was decided in the Dis-

trict Court of Appeal on a partial

record only, thereby Significantly

diminishing this case's importance and

Significance. One of the items that was

not included in the record on appeal was

the trial testimony of Respondents Ruth

Drain and Vincent Drain.

Further, California has its own

housing discrimination act which states

in pertinent part:

"It shall be unlawful:

(a) For the owner of any

aS.

Fair

part:

"housing accommodation to

discriminate against any

person because of the race,

color, religion, sex, marital

Status, national origin, or

ancestry of such person.

(b) For the owner of any

housing accommodation to make

Or to cause to be made any

written or oral inquiry

concerning the race, color,

religion, sex, marital status,

national origin, or ancestry

of any person seeking to

purchase, rent or lease any

housing accommodation

California Government Code

section 12955

42 U.S.C. §3610(d) of the Federal

Housing Act provides, in pertinent

"

» « »« no such civil action

may be brought in any United

States district court if the

person aggrieved has a judicial

remedy under a State or local

fair housing law which provides

rights and remedies for alleged

discriminatory housing practices

which are substantially

equivalent to the rights and

remedies provided in this sub-

chapter. .. . -

Since California Government Code

§12955(a) and (b) is substantially

equivalent to 42 U.S.C. §3604(a), under

42 U.S.C. §3610(d), it is questionable

whether this case was properly brought

under the Federal Fair Housing Act.

see, @.g., McLaurin v. Brusturis, (1970)

320 F.Supp. 190 (D.C. Wis.); Color v.

289 F.Supp. 104 (D.C.N.Y.); Denny v.

Hutchinson, (1981) 649 F.2d 816 (C.A.

Col.) «

CONCLUSION

For these reasons, the petition

for a writ of certiorari should be

:

aenied.

THOMAS R. SHERIDAN

Attorney for Respondents

APPENDICES

149 Cal.App.3d 484

BOB JONES doing

business as BOB

JONES REALTY,

PLAINTIFF and

RESPONDENT

Vv.

VINCENT DRAIN and

RUTH DRAIN, DEFENDANTS

and APPELLANTS.

Civ. 67286

Court of Appeal,

Second District

Division 6

December 2, 1983

Hearing Denied

February 16, 1984

Appendix A

FACTS

STONE, Presiding Justice.

The appellants entered into an ex-

clusive listing contract with Sears

Realty for the sale of their home in

Santa Barbara County. Sears Realty

entered into an oral contract with

respondent, Bob Jones Realty, in which

the respondent agreed to act as a

cooperative broker to find a purchaser

for the Drain property. Bob Jones lo-

cated a potential purchaser that sub-

mitted an offer on July 28, 1978. MThis

offer was rejected because of potential

adverse tax consequences for the Drains.

On August 24, 1978, the appellants

received an oral offer from David Roggs

which was accepted. The parties agreed

to meet August 29, 1978, to reduce the

agreement to writing. In the meantime,

the Drains received written offers from

a purchaser obtained by Bob Jones Realty.

These offers were rejected because the

Drains had previously agreed to sell the

property to Boggs.

Bob Jones Realty and its purchaser,

the Masins, filed suit against the

Drains and Sears Realty alleging: (1)

Housing Discrimination, (2) Misrepre-

sentation, (3) Breach of Contract, and

(4) Declaratory Relief. The first two

causes of action were decided at trial

in favor of Sears Realty and the appel-

lants, the Drains. The trial court

granted summary judgment on the third

and fourth causes of action in favor of

the appellants and Sears Realty.

The fourth cause of action was

appealed to this court and the ruling of

the trial court was affirmed. (See

Masin v. Drain, 150 Cal.App.3d 714, 198

Cal.Rptr. 367.) However, Vincent and

Ruth Drain have brought this appeal

contesting the trial court's order

taxing the attorney's fees request from

its memorandum of costs.

ANALYSIS

The sole issue on appeal is whether

Or not the trial court correctly denied

the appellants’ claim for attorneys'

fees.

The appellants argue that Civil

Code section 1717 provides authority for

the attorney's fees award. That section

states in pertinent part: "(a) In any

action on a contract, where the contract

specifically provides that attorney's

fees and costs, which are incurred to

enforce the provisions of that contract,

shall be awarded eitner to one of the

parties or to the prevailing party, then

the party who is determined to be the

prevailing party, whether he or she is

the party specified in the contract or

not, shall be entitled to reasonable

attorney's fees in addition to costs and

necessary Gisbursements." It is the

appellants' contention that since the

respondent brought suit against the

Drains for breach of contract which

contained an attorney's fee provision,

that the appellants should be able to

recover their legal fees as the prevail-

ing party. The respondent asserts that

the Drains should not be allowed to re-

cover their costs because the trial

court found, as a matter of law, that no

contract existed between Bob Jones

Realty and the Drains.

The issue by the respondent was

considered in the case of Babcock v.

Omansky (1973) 31 Cal.App.3d 625, 107

Cal.Rptr. 512. In that case a wife was

sued for breach of four promissory notes

executed by her husband. The court held

that the wife was not a party to the

notes and that the breach of contract

action brought by the plaintiff was

without merit. - The wife, as the success-

ful party to the litigation, was granted

attorney's fees and costs pursuant to

Civil Code section 1717 because the

plaintiff, in the underlying action, had

sought to recover attorney's fees under

the provisions of the promissory note

contract. The court in ruling for the

wife stated: "As the language of the

statute expressly indicates, a party

need not be a signatory to the contract

inorder to recover attorney's fees as

the prevailing party~--as such prevailing

party he becomes entitled to fees

‘whether he is the party specificed in

the contract or not.'"

This issue was also considered in

Care Construction, Inc. v. Century

Convalescent Centers (1976) 54 Cai.App.

3d 701, 126 Cal.Rptr. 761. In Care the

Gefendant was sued for breach of a lease

contract and successfully defended its

case on the theory that the laws was

invalid. The court in awarding the

defendant attorney's fees stated: "To

summarize, we hold that where there is

an action on a purported lease which

contains a provision for attorney's fees

for the lessor that the lessee is

entitled to attorney's fees under Civil

Code, section 1717, if he succeeds in

defending on the theory that there was

no valid or enforceable lease."

The seminal case destine with

attorney's fees on contract causes of

action is Reynolds Metal Co. v. Alperson

(1979) 25 Cal.3da@ 124, 158 Cal.Rptr. 1,

599 P.2d 83. In that case the

California Supreme Court held that

"Section 1717 was enacted to establish

mutuality of remedy where a contractual

provisions makes recovery of attorney's

fees available for only one party."

(supra, p. 128, 158 Cal.Rptr. 1, 599 P.2a

A-6

83.) The court went on to state, "Its

purposes require section 1717 be inter-

preted to further provide a reciprocal

remedy for a nonsignatory defendant,

sued on a contract as if he were a party

to it, when a plaintiff would clearly be

entitled to attorney's fees should he

prevail in enforcing the contractual

obligation against the defendant."

(supra, p. 128, 158 Cal.Rptr. 1, 599 P.

2d 83.) (Emphasis added.)

The critical issue to be addressed

in this case is whether or not the

plaintiff, Bob Jones Realty, clearly

would have been entitled to attorney's

fees had it prevailed in enforcing the

contract against the defendants Drains.

In considering the question of the

clarity of the entitlement to attorney's

fees we must decide whether this issue

is to be resolved based upon the plead-

ings or based upon the evidence. We

believe that the issue must turn on the

A-7

pleadings.

The respondent's third cause of ac-

tion against the appellants was for

breach of a written contract containing

an attorney's fees provision. The

appellants prevailed on this cause of

action when their motion for summary

judgment was granted and the respondent

failed to appeal the ruling. Conse-

quently, the appellants satisfied all of

the elements set forth in Civil Code

section 1717 for the recovery of attor-

ney's fees.

The respondent argues there was no

possibility that it could have recovered

attorney's fees against the appellants

because the respondent was not a party

to or a beneficiary of the contract.

This argument is disingenuous to say the

least. The essence of the respondent's

position is that its cause of action

was so devoid of merit that there was

A-8

no possibility that it ever could have

prevailed. As a consequence, the re-

spondent contends that there was no

likelihood that it could ever obtain a

judgment for breach of contract and as

a result, it could never obtain an award

of attorney's fees against the appel-

lants. Given this scenario, the respon-

dent asserts that the mutuality of

attorney's fees provision of Civil Code

section 1717 should not be involved.

The respondent cites several cases

which it asserts supports its position.

The first of these is Canal-Randolph

Anaheim, Inc. v. Wilkoski (1978) 78 Cal.

App.3d 477, 144 Cal.Rptr. 474. In that

case the court stated: “Moreover, even

where a contractual provision for

recovery of attorney fees is one-sided

and Civil Code section 1717 applies, re-

covery of and liability for attorney fees

is restricted to parties to the contract.

(Arnold v. Browne (1972) 27 Cal.App.3d

386, 398, 103 Cal.Rptr 775; Boliver v.

Surety Co. (1977) 72 Cal.App.3d Supp. 22

at pp. 28-29, 140 Cal.Rptr. 259.) To

the extent the decision in Babcock v.

Omansky (1973) 31 Cal.App.3d 625, 107

Cal.Rptr. 512, indicates the contrary, it

is incorrect . . ." (Canal-Randolph

Anaheim, Inc. v. Wilkoski, supra, 78

Cal.App.3d p. 485, 144 Cal.Rptr. 474.)

The respondent's reliance upon

Canal-Randolph is misplaced. The Canal-

Randolph court relied exclusively upon

the Arnold and Boliver cases to support

its proposition that one must be a party

to the contract to recover attorney's

fees under Civil Code section 1717. The

Arnold case was expressly disapproved by

the California Supreme Court in Reynolds

Metals Co. v. Alperson, supra, 25 Cal.3d

A-10

124, 129, 158 Cal.Rptr. 1, 599 P.2d 83.

Furthermore, the Reynolds ccurt also en-

dorsed the holding of Babcock |. Omansky

{[Citation.] which the Canal-Randolph

court so vigorously disapproved. The

language of Reynolds clearly indicates

that the reasoning of Babcock is the

correct analysis. “Had plaintiff pre-

vailed on its cause of action claiming

defendants were in fact the alter ego?

of the corporation [Citation.], defen-

dants would have been liable on the notes.

Since they would have been liable for

attorney's fees pursuant to the fees pro-

vision had plaintiffs prevailea, they may

recover attorney's fees pursuant to

section 1717 now that they have prevailed."

(Reynolds Metals Co. v. Alperson, supra,

25 Cal.3d 124, 129, 158 Cal.Rptr. 1, 599

P.2d 83.)

The respondent relies heavily upon

A-1il

%

Boliver v. Surety Co., supra, 72 Cal.App.3d

Supp. at p. 22, 140 Cal.Rptr. 259. This

case rejects the Babcock analysis in

favor of Arnold v. Crowne, supra, 27

Cal.App.3d 386, 103 Cal.Rptr. 775.

Given the Supreme Court's disapproval of

Arnold and the adoption of Babcock in

the Reynolds case, the Boliver holding

provides little, if any, support for the

respondent.

Star Pacific Investment, Inc. v.

Oro Hills Ranch, Inc. (1981) 121 Cal.App.3d

447, 176 Cal.Rptr. 546 was also cited by

respondent. The court in that case in-

correctly adopted the position that re-

covery of attorney's fees under Civil

Code section 1717 must be limited to the

parties to the contract. This holding is

in direct contradiction to the Babcock

and Reynolds cases.

The respondent also places a great

A-12

deal of reliance on Saucedo v. Mercury

Savings & Loan (1980) 111 Cal.App.3d

309, 168 Cal.Rptr 552. The Saucedo

court erroneously attempts to draw a

distinction between parties to the con-

tract and parties to the litigation

based on the contract. Nevertheless,

the court in Saucedo reiterated an

equitable estoppel theory first set

forth in Pas v. Hill (1978) 87 Cal.App.3d

521, 151 Cal.Rptr. 98, which runs com-

pletely contrary to the respondent's

position. The court stated, in con-

curring that the result in the Babcock

case was correct, that "[t]he plaintiffs

having alleged and attempted to prove

the defendant wife was a party to the

notes as a joint venturer and that she

was liable under the notes' attorney fee

provisions and having caused defendant

wife to defend against such liability,

were estopped to deny defendant wife was

a party to the contract for the remedial

purposes of Civil Code section 1717."

(Pas v. Hill, supra, 87 Cal.App.3d at

535-536, 151 Cal.Rptr. 98.)

What the respondent ignores is

that had it prevailed in its cause “f

action against the appellants it would

have been entitled to attorney's fees.

This issue became somewhat obscured in

the trial court because of the fact that

the respondent's case was so completely

without merit. However, even though the

respondent possessed no evidence to sup-

port its cause of action it was capable

of alleging sufficient facts in its

pleadings to force the appellants to

wage a defense.

The courts have consistently held

that the award of Civil Code section 1717

contractual attorney's fees is to be

governed by equitable principles.

(International Industries, Inc. v. Olen

(1978) 21 Cal.3d 218, 145 Cal.Rptr. 691,

577 P.2d 1031; Lewis v. Alpha Beta Co.

(1983) 141 Cal.App.3d 29, 189 Cal.Rptr.

840.) We believe that it is extraordi-

narily inequitable to deny a party who

successfully defends an action on a con-

tract, which claims attorney's fees and

costs simply because the party initiat-

ing the case has filed a frivolous law-

Suit. As a consequence, we find that a

prevailing defendant sued for breach of

contract containing an attorney's fees

provision and having had to defend the

contract cause of action, is entitled

to recover its own attorney's fees and

costs therefor, even though the trial

court finds no contract existed.

The judgment of the trial court in

regards to attorney's fees is reversed

A-15

and remanded for a hearing to determine

the appellants' attorneys' fees and

costs.

ABBE and GILBERT, JJ., concur.

'

ea cy: 7

ues BM,

150 Cal.App.3d 714

JOSEPH MASIN and

EVA MARIA NASIN,

husband and wife,

et al., Plaintiffs

and Appellants,

V.

VINCENT DRAIN and

RUTH DPAIN, husband

and wife, et al.,

Defendants and

Respondents.

Civ. 67347

Court of Appeal,

Second District,

Division 6

January 10, 1984

Hearing Denied

April 18, 1984

APPENDIX B

STONE, Presiding Justice.

Bob Jones Realty, the plaintiff

below and appellant herein appeals from

an order of the Santa Barbara Superior

Court granting respondent Sears Realty's

motion for summary judgment.

FACTS

This case involves Bob Jones

Realty's attempt to obtain a portion of

the commission paid to Sears Realty for

the sale of a home in Santa Barbara

County. The appellant contends that it

is entitled to this commission because it

produced a ready, willing and able pur-

chaser prior to the date on which the

property was sold.

Cn April 12, 1978, Ruth Drain

entered into an exclusive listing con-

tract with the respondent, Sears Realty,

to sell her home. Appellant, Bob Jones

Realty, worked as a cooperative broker

with Sears Realty and showed the Drain

B-1

property to the Masins, who were German

nationals. The Masins liked the Drain

home and submitted an offer on July 28,

1978, which was rejected because the

terms offered had negative tax conse-

quences for the seller.

The Drains were concerned about the

tax ramifications of selling their home

in 1978 and therefore required that any

offer to purchase the property meet the

following conditions: (1) An option to

purchase would be executed, to be exer-

cised on or after January l, 1979; (2)

Option price would be one hundred

thousand dollars ($100,000.00) cash, to

be applied to purchase price; (3) Escrow

would not open prior to January 1, 1979;

and (4) All documents would be prepared

by attorneys for Mrs. Drain and approved

by Sears Realty and Nrs. Drain's tax

attorneys.

On August 24, 1978, the Drains met

B-2

with David Boggs who offered to purchase

the property and agreed to the terms and

conditions set forth above. The Drains

and Boggs entered into an oral option

contract for the sale of their property

and agreed to reduce the contract to

writing on August 26, 1978. On August

26, 1978, agents for Bob Jones Realty de-

livered a written offer to purchase the

Drain property to Sears Realty. This

offer was rejected because the Drains had

already accepted the Bogcs' offer. A

virtually identical offer was personally

delivered to Vince Drain on August 28,

1978. This offer was also rejected.

The appellant and the Masins filed

Suit against Sears Realty and the Drains

alleging: (1) Housing Discrimination,

(2) Fraudulent Misrepresentation, (3)

Breach of Contract, and (4) Declaratory

Relief. A motion for summary judgment

was filed by Sears Realty on the fourth

B-3

cause of action, which was granted. Bob

Jones Realty appeals the trial court's

ruling on this issue.

The declaratory relief cause of

action required that the trial court

determine Bob Jones Realty's rights to

the commission paid to Sears Realty pur-

Suant to the listing contract. The

respondent, Sears Realty, filed a motion

for summary judgment against this cause

of action based upon two theories. First,

it contended that the Drains had entered

into an oral option contract prior to

receiving the Masin offers. Secondlv,

it argued that the offers were invalid

and unenforceable because of their

failure to comply with the statute of

frauds. The trial court did not specify

which theory it accepted in granting the

summary judgment. The appellant exam-

ines both issues on appeal.

THE AUGUST 26 and 28 OFFERS

B-4

The appellant contends that it is

entitled to share in the commission for

the sale of the Drain property because

it produced a ready, willing and able

buyer prior to the creation of the op-

tion contract with David Boggs. The _

appellant does acknowledge that, “had

the Drains sold the property to Boggs

prior to the written offers to purchase

by Eva Masin on August 26 and 28, 1978,

Bob Jones Realty would not be entitled

to any portion of the broker's commis-

sion."

In analyzing the trial court's

actions in granting a summary judgment

motion we must review all of the docu-

ments attached to the moving papers.

(Jacobs v. Retail Clerks Union, Local

No. 1222 (1975) 49 Cal.App.3a 959, 123

Cal.Rptr. 309). The respondents' motion

contained declarations of Ruth Drain,

‘Arthur Bromfield and Ann Little. Mrs.

B-5

ed

Drain's declaration specifically asserts

the existence of an oral contract with

Boggs on August 24, 1978. The declara-

tions of both Bromfield and Little, who

are agents for Sears Realty, indicate

that they were informed on August 25,

1978, that an oral option contract for

the sale of the Drain property had been

made.

The fact that the option contract

was oral does not invalidate the agree-

ment. The statute of frauds, set forth

in Civil Code section 1624, has not been

interpreted as making such agreement

null and void. It is the general rule

that a contract falling within the oper-

ation of the statute, but made in con-

travention thereof, is not invalid in

the sense that it is void. It is merely

voidable. The statute is said to relate

to the remedy only and not to affect the

validity of the oral contract. (Offeman

B-6

v. Robertson-Cole Studios, Inc. (1926)

80 Cal.App. 1, 12, 251 P. 830; Warder v.

Hutchison (1924) 69 Cal.App. 291, 295,

231 P. 563; Durbin v «man (1920) 50

Cal.App. 377, 379, 195 P. 274; O'Brien

v. O'Brien (1925) 197 Cal. 577, 586, 24)

P. 861.)

When affidavits in support of a mo-

tion for summary judoment state facts

which would sustain a judgment and coun-

ter affidavits do not contradict them,

summary judgment is proper. (City of

Los Angeles v. City of Artesia (1977) 73

Cal.App.3d 450, 140 Cal.Rptr. 864). The

affidavits submiited by the appellant in

opposition to the summary judgment mo-

tion contained only the declaration of

Paul O'Keeffe and Lawrence Linn. These

brokers declared that the agents for the

Drains continued to negotiate the sale

of the property on August 26, 1978.

The appellant contends that Sears

B-7

Realty's efforts in continuing to facil-

itate a sale to the Masins raises the

inference that an option contract for

the sale of the property was not actual-

ly created on August 24, 1978. Tne

appeilant argues that the existence of

this inference raises a triable issue

of fact. If a material factual issue

was before the court at the time the sum-

mary judgment was granted reversibie er-

ror was committed. (Fosgate v. Gonzales

(1980) 107 Cal.App.3d 951, 166 Cal.Rptr.

233).

We do not believe that the appeli-

ant has been successful in demonstrating

the existence of a triable issue of fact.

Although the appellant has admitted af-

fidavits indicating that Sears Realty

continued to negotiate a sale of the

Drain property on August 26, 1978, this

evidence does not refute Ruth Drain's

B-8

declaration that an oral option contract

was created on August 24, 1978. The

appellant did not demonstrate that the

Drains had any knowledge of the acts of

Sears Realty. Furthermore, the appell-

ants clearly have not presented evidence

that Sears Realty was instructed by the

Drains to continue negotiations.

Therefore, even when we accept the

facts alleged in the appellant's affi-

davits as being true, as required by

Blaustein v. Burton (1970) 9 Cal.App.3d

161, 88 Cal.Rptr. 319, the most the ap-

pellant can prove is that Sears Realty

continued to act independently after the

August 24, 1978 oral option contract

was created. This fact, in and of itself,

is insufficient to rebut the respon-

dent's evidence that the property was

sold August 24, 1978. Therefore, we

conclude that the Drain property was

effectively removed from the market

B-9

prior to the receipt of the August 26

and 28 offers from Bob Jones Realty's

purchasers, the Masins. In light of

this fact the appellant, Bob Jones Realty

could not be entitled to any commission.

As a consequence, the trial court cor-

rectly granted the motion for summary

judgment.

The judgment of the lower court is

affirmed.

ABBE and GILBERT, JJ., concur.

Hearing denied; MOSK, J. dissent-

ing.

10

tw

t

PROOF OF SERVICE BY MAIL

I am a citizen of the United States and a resident of the City

and County of Los Angeles; I am over the age of eighteen

years and not a party to the within action; my business

address is: 3550 Wilshire Boulevard, Suite 916, Los Angeles,

California. On this date, _January 9, 1986

I served the within RESPONDENTS' BRIEF IN

OPPOSITION TO PETITION FOR WRIT OF

CERTIORARI in re. "Joseph Masin and Eva

Maria Masin vs. Vincent Drain and Ruth

Drain" in the U.S. Suoreme Court, October

Term, 1985, No. 85-985,

on the persons interested in said action by placing 3__ true

copies thereof enclosed in sealed envelopes with first class

postage prepaid, in the United States post office mail box at

Los Angeles, California, addressed as follows:

FRANCES E. KOMOROSKE

831 State Street

Santa Barbara, CA 93101

All varties required to be served

have been served.

I certify (or declare) under penalty of perjury that the

foregoing is true and correct.

Executed on January 9, 1986

at Los Angeles, CaJifornia.

Fit low Ki hha hick

Lawyer's Brief Service, Inc. / Legal Publishers / (213) 383-4457