Opposition Brief — Richard A. Plehn, Inc. v. Imperial Bancorp

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No. 85-1121 |

In the Supreme Co

t orf SPANIGL, JR.

CLERK

United State}

October Term, 1985'

RICHARD A. PLEHN INC., and RICHARD A. PLFHN,

Petitioners,

IMPERIAL BANCORP and IMPERIAL BANK,

Respondents.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

RICHARDS, WATSON, DREYFUSS & GERSHON

A Professional Corporation

GLENN R. WATSON

ARNOLD SIMON

333 South Hope Street

38th Floor

Los Angeles, California 90071

Telephone: (213) 626-8484

Attorneys for Respondents

IMPERIAL BANCORP and IMPERIAL BANK

Westside Law Publishers Los Angeles, California (213) 477-0491

QUESTION PRESENTED

Whether the United States Court of Appeals for the Ninth

Circuit correctly rejected petitioners’ contention that recent

cases overruled the well-established California statutory and

case law that governs the facts of this case.

TOPICAL INDEX

Question Presented ........ x

Statement Of The Case ......

Summary Of Argument

The Decision Of The Court Of Appeals Herein Was

Grounded On Well-Established California Law,

And Does Not Conflict With The Cases Relied

On By Petitioners In Their Petition For Certiorari.

In Addition, The Court Of Appeals Had Those

Cases Before It, As Well As The Arguments Of

Both Sides Concerning The Same, Before Its Final

Disposition Of This Case. The Present Case Does

Not Present Any Of The Circumstances Which

Mreeeees WU METOMt COTTIOSOF! ............0..00ccccceccncscs

The Court Of Appeals Correctly Held That An Out-

Of-State Corporation, Domiciled In New York

And Never Licensed In California, Is Precluded

By California Law From Acting As A Broker In

California Or Recovering A Commission For

Brokerage Services. The Case Relied On By

Petitioners In Their Petition For Certiorari Does

Not Conflict With That Decision ......................

Ill

The Court Of Appeals Correctly Held That The Statute

Which Prohibits A Plaintiff From Recovering For

Broker's Services Because That Plaintiff Is

Unlicensed Cannot Be Circumvented By Labeling

The Action As Being One In Quanium Meruit Or

For “Fraud”. The Case Relied On By Petitioners

On This Petition For Certiorari Does Not Conflict

In Any Way With That Rule

Conclusion

Appendix \

Appendix B

B |

TABLE OF AUTHORITIES CITED

Cases Page

Asdourian v. Araj, 38 Cal.3d 276, 696 P.2d 95, 211

CON. OON FED CEO. «once s wx's.comnunnaaccelannne pee passim

Estate of Prieto, 243 Cal.App.2d 79, 52 Cal.Rptr. 80

CRIN ho eka vol cease eee eee 8, 21

Fewel & Dawes, Inc. v. Pratt, 17 Cal.2d 85, 109 P.2d

Sere ENO co vis cxhcduauanecokauvabins uouaeneakieeLeueren 21

General Insurance v. Superior Court, 26 Cal.App.3d 176,

POz Cal Rate. S00 (0G rae i cee 18

Haas v. Greenwald, 196 Cal. 236, 237 P. 38 (1925) (aff'd

BES BIseh. TUE i pnsgnheenksnccaeea eee ee 8, 21

Huddleston v. Dwyer, 322 U.S. 232 (1944) .................. 7

In Re Estate of Baldwin, 34 Cal.App.2d 596, 110

Ce Retr. Fre Clare os ons io ites aoe 6, 16

Keely v. Price, 27 Cal.App.3d 209, 103 Cal.Rptr. 531

COW G ED 6 cov ca vecacuacenceecraupia lune kbaeieua cones 22-23

Knapp Development & Design v. Pal-Mal Properties,

Inc., 173 Cal.App.3d 423, __ Cal.Rptr. __ (1985)

vinden c5cy'ea kaa Re pe ee ee nen 19

Kroger v. Baur, 46 Cal.App.2d 801, 117 P.2d 50 (1941)

cwaclvs Ue da eucen s Daman lead na eice GES eae ieee eee 22

Latipac v. Superior Court, 64 Cal.2d 278, 411 P.2d 564,

09 Cal. Rote. GIATIOR... 66 ssesikcears ccc 18

Lewis & Queen v. N.M. Bali Sons, 48 Cal.2d 141, 308

PJ PAS AIO ST bike Shines cies eee 18

Masin v. Drain, 150 Cal.App.3d 714, 198 Cal.Rptr. 367

Rig on Ee ee er Per ME Py emit: 22

People v. Triggs, 8 Cal.3d 884, 106 Cal.Rptr. 408, 506

gt Pied! . 25 | Rigger Meter RIAN icin!) irp 20

Radobenko v. Automated Equipment Corp., 520 F.2d

$40, (th Cle, 197 o8:. nee 4

Schantz v. Ellsworth, 19 Cal.App.3d 289, 96 Cal. Rptr.

PS REUTER vi scp dc vanc cccunce saci ee 16, 17, 19

Shaffer v. Beinhorn, 190 Cal. 569, 213 P. 960 (1923)...... 21

Tenzer v. Superscope, 39 Cal.3d 18, 702 P.2d 212, 216

Cai. Rote. (IO (TSS) 2. me ee Be ee 2 ie

Wise v. Radis, 74 Cal.App. 765,

Statutes

Calitornia Business and Professions Code

§ 10136

§ 10139

§10151.5

$10157....

§10162.....

§10211 ...

Civil Code

§1624(d) .

Rules

Rules of the Supreme Court

Rule 17

24)

9Q (1925)

STATUTES INVOLVED IN THE CASE

California Business and Professions Code §10136:

No person engaged in the business or acting

in the capacity of a real estate broker or a real

estate salesman within this State shall bring

Or maintain any action in the courts of this

State for the collection of compensation for

the performance of any of the acts mentioned

in this article without alleging and proving that

he was a duly licensed real estate broker or

rea! estate salesman at the time the alleged cause

of action arose.

California Business and Professions Code §10139:

Any person acting as a real estate broker or

real estate salesman without a license or who

advertises using words indicating that he is a

real estate broker without being so licensed

shall, upon conviction thereof, if a natural

person, be punished by a fine of not to exceed

one thousand dollars ($1,000), or by imprison-

ment in the county jail for a term not to exceed

six months, or by both such fine and impri-

sonment in the discretion of the court; or if

a corporation, be punished by a fine of not

to exceed ten thousand dollars ($10,000).

California Business and Professions Code §10151.5

(operative July 1, 1985):

(a) An applicant who is not a resident of this

state shall be eligible for a real estate license

provided (1) the applicant qualifies for licensure

under the provisions of this chapter, including

Section 10162, and (2) the state or other

Vill

jurisdiction which is the place of residence of

the applicant permits a resident of California

to qualify for and obtain a real estate license

in that jurisdiction,

(b) A foreign corporation shall be exempt from

the eligibility requirement set forth in clause

(2) of subdivision (a) if, and for so long as,

at least one of the officers of the corporation

who is designated and licensed as a real estate

broker pursuant to Section 10158 or 10211 is

a resident of this state.

license shall, along with his or her application,

file with the Real Estate Commissioner an

irrevocable consent that if in any action

commenced against him or her in this state,

personal service of process upon him or her

cannot be made in this state after the exercise

of due diligence, a valid service may thereupon

be made upon the applicant by delivering the

process to the Secretary of State.

(d) Insofar as possible, the provisions of

Section 1018 of the Code of Civil Procedure

relating to service of process on the Secretary

of State are applicable to this section.

California Business and Professions Code §10157:

No real estate license gives authority to do any

act specified in this chapter to any person, other

than the person to whom the license is issued.

California Business and Professions Code §10162:

Every licensed real estate broker shall have and

maintain a definite place of business in the Siate

of California which shall serve as his office for

the transaction of business. This office shall

be the place where his license is displayed and

where personal consultations wtih clients are

held.

No real estate license authorizes the licensee

to do business except from the location

stipulated in the real estate license as issued

or as altered pursuant to Section 10161.8.

California Business and Professions Code §10211:

If the licensee is a corporation, the license issued

to it entitles one officer thereof, on behalf of

the corporation, to engage in the business of

real estate broker without the payment of any

further fee, such officer to be designated in the

application of the corporation for a license.

For each officer other than the officer so

designated, through whom it engages in the

business of real estate broker, the appropriate

Original! or renewal fee is to be paid in addition

to the fee paid by the corporation.

Other statutes cited are set forth in Appendix B.

No. 85-1121

In the Supreme Court of the

United States

October Term, 1985

RICHARD A. PLEHN, INC., and RICHARD A. PLEHN,

Petitioners,

IMPERIAL BANCORP and IMPERIAL BANK,

Respondents.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

STATEMENT OF THE CASE!

This is an action by petitioners to recover a real estate

brokers’ commission. California law requires real estate

'Petitioners base the “facts” set forth in their statement of the

case on the allegations of the complaint. However, inasmuch as

the case was decided by summary judgment on the evidence,

petitioners cannot rely at this point on what they alleged in the

complaint, but must rely on the facts as found by the court on

the evidence.

brokers to be licensed, provides that acting as a broker without

a California license is a criminal offense, and prohibits any

action for collection of compensation by an unlicensed person.

Petitioner Richard A. Plehn, individually, (“individual

petitioner”) is licensed. (ER t* p. 5, I. 5-6).° The other

petitioner, Richard A. Plehn, Inc. (“corporate petitioner”)

is a New York corporation, does not hold a California real

estate broker’s license, operates in all its California dealings

out of its New York office, sends and receives all its

correspondence at its New York office, and does not maintain

any place of business in California. (ER t* p. 5, 1. 6-8; CR

d 10, p. 13, 1. 11-21; Supp. ER p. 13, 1. 11-21). The individual

and corporate petitioners, jointly, acting as “co-brokers”,

engaged in brokerage activities in seeking to obtain real estate

financing from Metropolitan Life Insurance Company

(“Metropolitan”) for respondents for a proposed building

project. (ER, tl, p.2, line 9 to page 3, line 5; ER, t32, last

exhibit, page 9, lines 12-22.) Some of the brokers’ services

which form the basis of the present lawsuit were performed

by at least one other officer of said corporation. (CR, D

10, Tab 10, p. 31). The negotiations subsequently broke down.

The financing was never furnished. The building was never

built. (ER, t*, p.4, lines 11-24.)

Before the negotiations between respondents and Metro-

politan broke down, petitioners participated in those

negotiations. However, petitioners did not introduce

respondents to Metropolitan, inasmuch as respondents and

Metropolitan had previously discussed financing the proposed

project in a meeting arranged through another mortgage

broker. (ER, t*. p.3. lines 18-21; ER, t32, p.55, line 16 to

p.56, line 18; exhibit 101.)

Following the collapse of the negotiations, petitioners sent

respondents a statement claiming a commission in connection

?References to “ER t” are to the excerpt of record and tab number

indicated. All references to the supplemental excerpt are designated

as “Supp. ER“, and all references to the clerk’s record are designated

as “CR”.

with the defunct project (ER, t*, p.4, line 25, to p.5, line

2.) This statement was sent both on behalf of the individual!

petitioner and on behalf of the corporate petitioner as a

corporation (CR, dl0, p.13, line 27, to page 14, line 3;

Supp.ER, p.13, line 27, to p.14, line 3), and the statement

rendered requested that the commission be made payable

to the corporate petitioner in New York. (CR, d10, p.18;

Supp.ER, p.18).

The petitioners, disregarding the illegality of their

brokerage agreement and the proscription of the licensing

Statute, sued for compensation. The district court, after

completion of discovery, granted respondents’ motion for

summary judgment on the basis of California law. The Court

of Appeals for the Ninth Circuit in an unpublished opinion

affirmed the judgment of the district court. Petitioners now

seek a writ of certiorari, asserting that the court of appeals

disregarded, and that its opinion conflicts with, California

law.

In arguing that the court of appeals did not consider

California law, petitioners fail to mention that the two

California Supreme Court decisions that petitioners now urge

upon this court, were fully argued to the court of appeals

in connection with a petition for rehearing before that court.

In order that this Court may be aware of the consideration

by that court of the very issues which petitioners now bring

to this Court, we attach in Appendix A: the Petition For

Rehearing (By Panel), the respondents’ Motion for Leave

to File Answer to Petition For Rehearing; Memorandum

of Points and Authorities and Declaration of Glenn R.

Watson In Support of Motion; the respondents’ Answer to

Petition For Rehearing; petitioners’ Notice of Motion and

Motion to File Reply to Defendants’ Answer to Petition For

Rehearing, Memorandum of Points and Authorities and

Declaration of Robert P. Mallory In Support Thereof; Reply

to Defendants’ Answer; Petitioners’ counsels’ letter to Clerk,

United States Court of Appeals, dated August 16, 1985 and

respondents’ counsel’s letter to the Acting Clerk, United States

Court of Appeals, dated September I 1, 1985.

Inspection of the 47 pages of Appendix A hereto will

disclose that the petitioners’ contentions made in the instant

petition for certiorari were fully ventilated before the court

of appeals. That court then denied the petition for rehearing

on October |, 1985. Still dissatisfied, petitioners have filed

the instant petition for writ of certiorari rearguing the same

issues.

In their statement of the case petitioners assert that the

corporate petitioner “was joined as a co-plaintiff because it

advanced Plehn’s expenses and was to act as his collection

agent.” (p.2). This is contrary to the factual determinations

in the lower courts. In fact, based on uncontradicted evidence,

the district court found that petitioner Plehn himself “averred

that ‘Richard A. Plehn, Inc. did all the work’ and that ‘it

[Richard A. Plehn, Inc.] did it all in its offices in New York.’ ”

(Appendix to Petition, B4). The court of appeals re-examined

this question, and while it disagreed with the trial court’s

reliance on Radobenko v. Automated Equipment Corp., 520

F.2d 540, (9th Cir. 1975), stated that “[w]e find that of no

consequence since it is not disputed on appeal that Richard

A. Plehn, Inc. and Richard A. Plehn individually co-brokered

the transaction.” (Emphasis the court’s). In light of the lower

court’s disposition of this question, petitioners’ current

characterization of the corporate petitioner as merely a

“collection agent” for the individual petitioner must be

disregarded. Indeed, in the very next paragraph of the petition

for certiorari petitioners concede that “they [both petitioners]

entered into an oral [brokerage] contract” with respondents.’

Petitioners assert in their statement of the case that the

California Supreme Court's decision in Asdourian v. Araj,

38 Cal.3d 276, 696 P.2d 95, 211 Cal.Rptr. 703 (1985)

contradicts the Ninth Circuit’s opinion. Respondents’ Answer

to Petition For Rehearing (Appendix, A 24) demonstrated

to the Ninth Circuit that that decision of the California court

was clearly distinguishable and did not change the California

‘Except where otherwise stated, all emphasis herein has been

added

law as determined and applied by the Ninth Circuit. The

court agreed and denied the petition for rehearing. We will

discuss the Asdourian case, infra. (See Point IL.)

Petitioners also assert, incorrectly, that the California

Supreme Court’s decision in Tenzer v. Superscope, 39 Cal.3d

18, 702 P.2d 212, 216 Cal.Rptr. 130 (1985) “invalidated the

Ninth Circuit’s decision”. As we show infra (see Point III)

Tenzer has nothing whatever to do with the California law

proscribing suits for recovery of compensation for unlicensed

and illegal broker activities. The inapplicability of Tenzer

was also demonstrated to the Ninth Circuit by respondents’

counsels’ letter to the court dated September 11, 1985

(Appendix, A 46}, before the court of appeals denied the

petition for rehearing.

SUMMARY OF ARGUMENT

The United States Supreme Court ordinarily accepts the

determination of questions of state law by the intermediate

federal courts, and will not review them except in exceptional

cases. Unless the court of appeals decision can be shown

to be clearly wrong, if there is lack of clarity as to the state

law, the Supreme Court normally leaves the resolution of

such matters to the highest state court.

Petitioners’ argument that the court of appeals disregarded

controlling California law is simply wrong. The court of

appeals decision was grounded on well-established California

Statutory and case law that an agreement by an unlicensed

person to perform real estate brokerage services is illegal and

cannot be the basis of a suit to recover compensation. And

where there is a single brokerage agreement for the services

of both a licensed broker and an unlicensed person, the

agreement is entirely void and unenforceable and neither party

can recover on it. Petitioners do not take issue with these

principles, but seek to evade them through misapplication

and “stretching” of the limited doctrine of substantial

compliance beyond that permitted by California law.

Petitioners misread and seek to misapply the California

Supreme Court opinion in Asdourian vy. Araj. That case held

that the plaintiff substantially complied with the licensing

law where the individual plaintiff held his license in the name

under which he did business as a sole proprietorship, and

plaintiff and the licensee were in fact the same person or

entity. That case does not detract from long established

California statutory and case holding that an unlicensed

corporation cannot recover on a contract requiring a license,

even though an officer of the corporation holds an individual

license. California cases hold that the statute and strong public

policy of California to protect the public through enforcement

of the licensure laws precludes recovery by the unlicensed

corporatron in such cases.

The court of appeals followed established California law

with respect to the limited substantial compliance doctrine

and did not err in rejecting petitioners’ arguments as to the

reading and application of Asdourian v. Araj, supra, and

In Re Estate of Baldwin, 34 Cal.App.2d 596, 110 Cal.Rptr.

189 (1973).

The court of appeals correctly held that under California

law petitioners could not circumvent the statutory prohibition

again.t recovery of compensation by an unlicensed broker

by recasting the claim into alternative counts of quantum

meruit or fraud. The recent decision in Tenzer v. Superscope,

supra, does not change that rule and petitioners’ arguments

concerning the same were correctly rejected by the court of

appeals.

The petition for writ of certiorari is not well taken and

should be denied.

THE DECISION OF THE COURT OF

APPEALS HEREIN WAS GROUNDED ON

WELL-ESTABLISHED CALIFORNIA LAW,

AND DOES NOT CONFLICT WITH THE

CASES RELIED ON BY PETITIONERS IN

THEIR PETITION FOR CERTIORARI. IN

ADDITION, THE COURT OF APPEALS HAD

THOSE CASES BEFORE IT, AS WELL AS THE

ARGUMENTS OF BOTH SIDES CONCERN-

ING THE SAME, BEFORE ITS FINAL DISPO-

SITION OF THIS CASE. THE PRESENT CASE

DOES NOT PRESENT ANY OF THE CIRCUM-

STANCES WHICH WOULD WARRANT

CERTIORARI.

It is of course basic that, in order to warrant review by

certiorari in a diversity case, the decision of the intermediate

federal court must be in clear conflict with the decisions of

the state court of last resort. Rule 17 of the Rules of the

Supreme Court; Huddleston v. Dwyer, 322 U.S. 232 (1944).

The Supreme Court will in fact ordinarily accept, and

therefore not review, save in exceptional cases, the considered

determination of questions of state law by the intermediate

federal appellate courts. (/d. at 237). As we show infra, the

court of appeals decision herein was in full accord with

California law.

Petitioners herein rely on Asdourian v. Araj, 38 Cal.3d

276, 696 P.2d 95, 211 Cal.Rptr. 703 (1985), as having allegedly

overruled the law of California that is applicable to the present

case. Far from overruling those principles, Asdourian in fact

reaffirmed them. This is shown in detail infra (see Point 11).

The court of appeals had the Asdourian opinion, and the

arguments of both sides concerning the same, before it for

some time before its final ruling.

Petitioners also rely on Tenzer yv. Superscope, Inc., 39

core to, . F.7d ——.. Cal. Rptr. _ (1985). As we

also show infra (see Point IIl), Tenzer dealt with circum-

stances in which an agreement may be enforced notwithstand-

ing the statute of frauds, and has nothing whatever to do

with the California law proscribing recovery tor broker's

services rendered illegally. Again, the court of appeals herein

was fully apprised of the contentions of the parties as to

the effect of Tenzer by letters from petitioners and

respondents.

It is clear that the court of appeals carefully considered

the arguments on both sides concerning Asdourian and Tenzer

before rejecting petitioners’ contentions by denying the

petition for rehearing.

THE COURT OF APPEALS CORRECTLY

HELD THAT AN OUT-OF-STATE CORPORA-

TION, DOMICILED IN NEW YORK AND

NEVER LICENSED IN CALIFORNIA, IS

PRECLUDED BY CALIFORNIA LAW FROM

ACTING AS A BROKER IN CALIFORNIA OR

RECOVERING A COMMISSION FOR BROK-

ERAGE SERVICES. THE CASE RELIED ON

BY PETITIONERS IN THEIR PETITION FOR

CERTIORARI DOES NOT CONFLICT WITH

THAT DECISION.

Under California law, where there is a single brokerage

agreement to employ the services both of a licensed broker

and of an unlicensed person, the agreement, being joint, is

entirely void and unenforceable and neither party may recover

thereupon. Haas v. Greenwald, 196 Cal. 236, 237 P. 38 (1925)

(aff'd 275 U.S. 490). Wise v. Radis, 74 Cal.App. 765, 242

P.90 (1925), Estate of Prieto, 243 Cal.App.2d 79, 52 Cal.Rptr.

80 (1966).

It is undisputed that, in the present case, the individual

petitioner was licensed, and the corporate petitioner was not.

In addition, petitioner Richard A. Plehn testified that

petitioners scrupulously maintained the separate identity of

the corporate petitioner, and that the individual petitioner

and the corporate petitioner “co-brokered the transaction,”

as they had done on previous deals. The district court so

found and the court of appeals pointed ovt in its opinion

that this was not disputed on appeal (nor do petitioners take

issue with that finding now).

Indeed, the record before the court on the summary

judgment motion shows that Mr. Plehn declared under

penalty of perjury:

“4. Plehn, Inc. - New York and Plehn, Inc.

California are maintained on an ongoing basis as

separate corporations, in compliance with the

separate laws of each of their respective states of

incorporation. Each files separate income tax

returns and in all respects, maintains its own

corporate identity.

“5. All dealings with the defendants to this

action, as stated in the complaint filed herein on

February 3, 1983 were between myself, as an

individual, Plehn, Inc. - New York and the

defendants. This is consistent with the manner in

which I conduct most of my real estate transactions.

Usually, in joint venture deals, such as in this case,

I co-broker the transaction as an individual, along

with Plehn, Inc. - New York. In mortgage deals,

Plehn, Inc. - California brokers the transaction in

most cases.

“6. In this connection, al// correspondence to my

knowledge, was between the defendants on one side

and Plehn, Inc. - New York or myself as an

individual on the other side. There was no

correspondence between the defendants and Plehn,

Inc. - California.

“7. All billing in the transaction involved in this

suit was done by myself as an individual and by

_——— ee

Plehn. Inc. - New York. Plehn, Inc. - California

is not now. nor has it ever been, involved in the

collection of the fee involved herein.

“8. 1, Richard A. Plehn, personally am licensed

by the State of California to act as a real estate

broker in California. As such, | am able to conduct

) real estate transactions in California as an

individual, as | did in this case in conjunction with

Plehn, Inc. - New York. In no way ai all was Plehn,

Inc. - California involved in this transaction.

“9 It is my belief that Plehn, Inc. - California

has no connection at all with the transaction sued

upon in this action. It was solely myself as an

individual and Plehn, Inc. - New York who

performed services for the defendants in connection

with the transaction involved herein.”

Mr. Plehn also stated the following facts under oath:

“As stated in my previous declaration filed with

plaintiff's memorandum of points and authorities

in opposition to defendant's motion to dismiss, In

my dealings with the defendants in this matter, |

was acting on behalf of Richard A. Plehn, Inc.

a New York corporation.

“To my knowledge, a// correspondence with the

defendants regarding this joint venture deal

emanated from the offices of Richard A. Plehn,

Inc., a New York corporation. Furthermore, to my

knowledge, all correspondence from the defendants

was addressed to the offices of Richard A. Plehn,

Inc., a New York corporation.”

and the following:

“The billing for the services performed by the

plaintiffs in this action was made on behalf of myself

as an individual and on hehalf of Richard A. Plehn,

Inc., a New York corporation. This billing ts

attached to this declaration as Exhibit ‘B.”

Furthermore, in the following sworn responses to

interrogatories, petitioners state that Mr. Plehn (the

individual) and Plehn, Inc. (the corporation) jointly

undertook employment as real estate brokers. With reference

to the agreement which petitioners contended they had made

with respondents tor a commission, petitioners were asked

to identify the parties to that agreement, and to set forth

its terms:

RESPONSE TO INTERROGATORY NO. 17:

b) [Parties:] Richard A. Plehn, Richard A.

Plehn, Inc. of New York, Imperial Bancorp, and

Imperial Bank.

e) [Terms:] The plaintiffs agreed to procure a

lender and joint venture partner for a commercial

building project (‘the project’) to be constructed

on the defendants’ property, located at or near the

northwest corner of Wilshire and Figueroa in Los

Angeles, California. In other words, the plaintiffs

agreed to progide financing for the project. In

return for this, the defendants agreed to pay

plaintiffs a commission equal to one point, or one

percent (1%), of the amount of the financing

committed by the lender and joint venture partner

located hy plaintiffs. Richard A. Plehn and Richard

A. Plehn, Inc., a New York corporation, had had

prior similar dealings with George M. Eltinge and

George Graziadio, as individuals and partners, in

which the plaintiffs were compensated in.a similar

manner for similar services rendered.”

And Mr. Plehn testified as follows concerning the role that

the New York corporation played in the transaction:

“Q Well, were all the things that you did in

connection with this proposed transaction done in

behalf of Richard A. Plehn, Inc., as a corporation?

BEST AVAILABLE COPY.

“A | beheve that Richard A. Plein, Inc., did

all the work.

“Q What work did it do”

“A Jt wrote the letters; it did the computations

It did it all in its offices in New York City.”

Notwithstanding the above testimony, petitioners assert in

their petition for certiorari (as they did below) that the two

petitioners should be viewed as a “single person” for purposes

of the law.4 That argument flies in the teeth of the facts,

including the fact that the corporation was not authorized

to render brokerage services in California, the fact that it

had an officer other than Mr. Plehn engaged in brokerage

activities on the present matter, the fact that petitioners sent

respondents a statement for the claimed commission on behalt

of Mr. Plehn as an individual and on behalf of the corporate

petitioner as a corporation, and requested that the commission

be paid to the corporate petitioner at its New York office,

and the fact that, far from considering itself ‘the same entity”

as the individual petitioner, the corporation joined in the

present lawsuit as a separate plaintuff,

The case relied on by petitioners on their petition for

certuiovari is Asdourian v. Araj, 38 Cal.3d 276, 696 P.2d 955,

211 Cal.Rptr. 703 (1985). in that case, Mr. Asdourian took

out a contractor’s license, and had it issued in the name of

“Artko Remodeling and Construction”, which was the name

of his sole proprietorship. It is elemeptary that a sole

proprietorship is not an entity separate from the sole

proprietor in any sense of the word, and merely constitutes

the use of a fictitious name or “dba”. Nevertheless. Mr

Asdourian’s name and signature appeared on the license as

the “responsible managing party” (a requirement of California

law which petitioners in the present case have totally

disregarded)

‘Potitioners also use the term “person” ambiguously, glossing

over Whether it refers to a legalbentity or to @ natural persen

The problem in Asdourian arose because plaintiff's license

was in his fictitious business name rather than his persona!

name. Mira is al! dhae was ue uke aa Accocdingly athe

California Supreme Court had no difficulty applying the so-

called “substantial comphance” doctrine. In so doing, the

Supreme Court emphasized time and again that there was

only one entity, that no corporate entity was involved, that

the business entity (namely Mr. Asdourian as an individual

proprietorship) was precisely the same as that to which the

license had been issued, and that, in essence, Mr. Asdourian

was Artko. Thus the court stated (at p. 288):

“Although he used a different name and should

have obtained a separate license to comply with

section 7028.5, his qualifications did not change,

nor did the status or form of his business. He was

simply using a different name for the same sole

proprietorship.”

Interestingly, the Supreme Court in Asdourian pointed out

that a different situation would have been presented if Mr.

Asdourian had incorporated Artko (as he had originally

intended).> The Supreme Court stated (at p. 284-285):

“In this case, plaintiff obtained a license for his

sole proprietorship under the name Artko.

Plaintiff's name was on the license as the responsible

managing pariy. At the time the license was issued,

he intended to incorpo ate Artko. Had he done

so, Artko would have become an entity separate

from plaintiff. However, the incorporation never

took place, and the business remained a sole

proprietorship. Plaintiff wes personally responsible

for all debts and responsivilities incurred by the

business, and the assets o: the business were

‘There was of course no suggestion that Mr. Asdourian had had

eM plans to operate with an unlicensed out-of-state corporation

not disclosed to the Cahtornia Commissioner, as the petitioners

did in the present cause

plaintiff's assets. In essence, plaintiff was Artko.”

{emphasis by the court]

The Supreme Court emphasized that an additional license

in Mr. Asdourian’s personal name would not have provided

any different information. concerning the status or solvency

of plaintiffs business, because such additional license would

necessarily have been issued to the same entity as the existing

license. The Supreme Court stated (at 287):

“Nor would it [the additional license] have

provided any different information concerning the

status or solvency of plaintiffs business. The

business entity was precisely the same as that to

which the license had been issued.”

In the present case, we are not dealing with a single entity,

but with two separate entities, each with its own status and

solvency (or insolvency). Here the unlicensed petitioner which

claimed a commission was an out-of-state corporation®

engaged in the brokerage business in California illegally and

totally beyond the reach of the California Real Estate

Commissioner.

In that connection, petitioners repeatedly assert in their

petiticn thai Mr. Plehn was “the only person” who performed

the services giving rise to the present action. [Emphasis by

petitioners]. However, the undisputed evidence was otherwise:

the declaration of Richard M. Staff, executive vice-president

of the unlicensed New York corporation, states that Mr. Staff

met with Imperial’s board chairman on June 2, 1982 and

discussed the proposed financing of construction on Imperial’s

property.

The circumstances of the present case highlight the

legislative concerns underlying the licensing statutes. Section

10157 of the California Business and Professions Code

(“B&PC™) provides that:

‘In Asdourian, the plaintiff of course operated entirely in

Caliormnia

“No real estate license gives authority to do any

act specified in this chapter to any person, other

than the person to whom the license is issued.”

and B&PC §10211 provides that, where the licensee is a

corporation, that license entitles “one officer thereof” to act

as a real estate broker on behalf of the corporation (if that

officer can personally qualify), and that such officer must

be designated in the application of the corporation.

Obviously, in the present case, neither the individual

petitioner nor anyone else was so designated, nor was any

license for the corporation even applied for.

The California legislature has expressed special concern

lest out-of-state corporations operate in California without

complying with the safeguards provided by the California

real estate broker licensing laws. B&PC §10162 specifically

provides in relevant part that every broker

“shall have and maintain a definite place of business

in the State of California which shall serve as his

office for the transaction of business”

and that such broker shall not do business except from that

location.

Although the above requirements of B&PC §10162 (which

have been in effect since 1943) in any event clearly applied

to the corporate petitioner herein, the legislature amended

B&PC §10151.5, effective July 1, 1985, to emphasize

specifically that a foreign corporation which renders broker’s

services in California must comply with B&PC §10162.

Although the amendment became effective subsequent to the

operative events in the present case, its enactment certainly

shows the legislature’s concern about the conduct of the

brokerage business by unlicensed corporations operating from

out-of-state.

In contrast to the Asdourian case, supra, in which plaintiff

Asdourian satisfied all the concerns underlying the licensing

statutes, plaintiffs in the present case operated in such manner

as to wolate all of these tmportant concerns:

(a) Neither the individual petitioner nor any other

person was designated as the responsible officer

for the out-of-state corporate petitioner;

(b) The out-of-state corporate petitioner never applied

for a license:

the present transaction through the services (in

addition to Mr. Plehn) of another officer of the

corporation, Mr. Richard M. Staff, who was never

designated as responsible officer, whose existence

was never disclosed to the Commissioner of Real

Estate, and who does not appear to have been

licensed at all;

(d) The out-of-state corporation failed to maintain a

place of business in the State of California (thus

violating the statute), and operated its California

business out of New York, and not California (thus,

further violating the statute).

Contrary to what petitioners assert in their petition, the

Asdourian case does not “diametrically conflict” with the prior

California law. On the contrary, the prior law was identical

in holding that, where the licensee merely did business under

a fictitious name, the concerns of the legislature were satisifed.

Indeed, those were the precise facts of Schantz v. Ellsworth,

19 Cal. App.3d 289, 96 Cal.Rptr. 783 (1971), which was cited

by both petitioners and respondents in the court below for

the doctrine that recovery may be had under some

circumstances in the absence of a second license for the same

individual at a second address and under a fictitious name.’

The Supreme Court in Asdourian, supra, highlighted the

"Similarly, the court of appeals observed that in /n re Estate

of Baldwin, 34 Cal. App.3d 596, 110 Cal. Rptr. 189 (1973), a licensed

individual was permitted to recover for brokerage services where

the court made a factual finding that the individual “was merely

doing business under a fictitious name.” The court of appeals

rejected petitioners’ contention that the case authorized recovery

by an unlicensed corporation.

importance of Schantz, supra, in controlling the result of

Asdourian, because both cases involved nothing more than

a different name for a single licensee (at p. 288):

“ This case is more similar to Schantz v. Ellsworth

(1971) 19 Cal.App.3d 289 [96 Cal.Rptr. 783]. In

Schaniz, the plaintiff was personally licensed as

a real estate broker. He also did business under

the fictitious name ‘Investment Trends.’ ”

The Supreme Court also stated (ibid.):

“The plaintiff in Schantz was allowed to bring

an action under a contract made and performed

while using the fictitious name. The Court of

Appeal held that all section 10136 ‘literally’ requires

is proof that the plaintiff was a ‘duly licensed’ real

estate broker. Therefore, it ‘does not preclude

maintenance of [an] action by one who holds a

valid real estate broker's license but who has failed

to obtain .. . a license for the use of a fictitious

name.’ "[Deletion by the Court. ]

The Asdourian court further stated (at p. 288):

“The policy considerations here are indistin-

guishable from those in Schaniz. Plaintiff obtained

a license under the name ‘Artko’. In connection

with the issuance of that license, his qualifications

were examined and approved. Although he uses

a different name and should have obtained a

separate license to comply with section 7028.5, his

qualifications did not change, nor did his status

or form of his business. He was simply using a

different name for the same sole proprietorship. ”

Thus, the California court, in Asdourian, broke no new

ground in holding that the plaintiff, as owner of his sole

proprietorship business, and thus in fact licensed, could

recover compensation.

Petitioners also vastly overstate and misinterpret the

Asdourian v. Araj opinion, asserting that it “disapproved

in all material respects” and “expressly disapproved the

holding in” General Insurance vy. Superior Court, 26

Cal.App.3d 176, 102 Cal.Rptr. 541 (1972). Both assertions

reflect a misreading of Asdourian. The opinion did chide

the General Insurance court for citing the dissent in Latipac

v. Superior Court, 64 Cal.2d 278, 411 P.2d 564, 49 Cal. Rptr.

676 (1966), and noted that it “was not free to disregard”

the rule announced by the majority. However, the Asdourian

court carefully limited it treatment of General Insurance as

disapproval only “to the extent that [it] rests on the logic

of the Latipac dissent.” (38 Cal.3d at 288). Contrary to

petitioners’ assertions, the holding in General Insurance was

not disapproved, nor did the court modify its own opinion

in Lewis & Queen v. N.M. Ball Sons, 48 Cal.2d 141, 150-

ISI, 308 P.2d 713 (1957) relied on by General Insurance:

“Section 7031 [10136] represents a legislative

determination that the importance of deterring

unlicensed persons from engaging in the contracting

[brokerage] business outweighs any harshness

between the parties, and that such deterrence can

best be realized by denying violators the right to

maintain any action for compensation in the courts

cf the state.”

Petitioners would have this Court believe that the district

court and court of appeals did not consider the substantial

compliance doctrine. The record is otherwise. In its

Memorandum of Decision and Order the district court held

that the substantial compliance doctrine could be considered,

and proceeded to consider it. (Appendix B to petition for

certiorari, p. B8):

“Defendants argue that the General Insurance

case forecloses application of plaintiffs’ substantial

compliance theory in brokerage license cases

also.... Thus, contrary to the assertions of

defendants, General Insurance does not automat-

jeally forcelose plaintiffs’ substantial compliance

argument in brokerage licensing cases.”

Thus the trial court recognized that in limited circumstances

the substantial compliance doctrine may apply, but the trial

court simply found that the undisputed facts did not warrant

application of the substantial compliance doctrine here.

Petitioners were given full consideration by the district court

of the very doctrine they now urge should have been

considered, and the court of appeals affirmed the district

court's judgment.

The Asdourian case is simply inapposite, and cannot

provide any basis for a writ of certiorari from this court.’

8In an apparent attempt to get around this fact, petitioners have

cited a decision of the intermediate California appellate court,

Knapp Development & Design v. Pal-Mal Properties, Inc., 173

Cal.App.3d 423, —— Cal.Rptr. —— (1985). Although Knapp

involved a corporation and an individual, the case does not help

petitioners herein. This is because of the unusual fact that the

unlicensed corporation and the owner of the property for whom

the services were rendered in Knapp were controlled by the same

individual. Thus, acknowledging that the rule of Schantz and

Asdourian would not normally apply to a separate unlicensed

corporation (such as the present case), the court of appeal pointed

out that these concerns were overcome by the fact that the contractor

and its customer were in fact controlled by the same person (at

p. 432):

“Inasmuch as Joan Knapp represented both parties

to the contract and was the managing officer or partner

of both entities, there was no problem of the other party

to the contract being inisled as to the responsibility or

competence of the contractor due to unawareness of

the contractor's unlicensed status.”

and (at p. 435):

“Moreover, the party contracting with plaintiff, RHC,

could not have been misled as to plaintiffs solvency

or financial condition inasmuch as both parties were

controlled by the same individual.”

Aside from the above, Knapp of course is only a decision of

the intermediate court of appeal, and the California Supreme Court

has subsequently denied a hearing in the case. Such denial is not

an expression of the Supreme Court on the merits. This point was

recently reemphasized in the “Report and Recommendations of

THE COURT OF APPEALS CORRECTLY

HELD THAT THE STATUTE WHICH PRO-

HIBITS A PLAINTIFF FROM RECOVERING

FOR BROKER’S SERVICES BECAUSE THAT

PLAINTIFF IS UNLICENSED CANNOT BE

CIRCUMVENTED BY LABELING THE

ACTION AS BEING ONE IN QUANTUM

MERUIT OR FOR “FRAUD”. THE CASE

RELIED ON BY PETITIONERS ON THIS

PETITION FOR CERTIORARI DOES NOT

CONFLICT IN ANY WAY WITH THAT RULE.

It is established law in California that an unlicensed person

cannot bring an action to recover for broker’s services

rendered without a broker’s license. Section 10136 of the

Business and Professions Code explicitly so provides. Where

the Advisory Committee to Implement Proposition 32” (a recent

Constitutional amendment revising the applicable procedures),

which stated (at pp. 21-22):

“It has long been established in California law that

Court on the merits of the cause. [Citations omitted].

Adoption of the new ‘review’ procedure does not affect

this legal doctrine, and denial of review will not be an

expression of the opinion of the Supreme Court on the

correctness of the judgment of the Court of Appeal or

on the correctness of any discussion in the Court of

Appeal opinion.”

The California Supreme Court itself stated this principle as

follows, in People v. Triggs, 8 Cal.3d 884, 890, 106 Cal.Rptr. 408,

506 P.2d 232 (1973) (overruled on other issues):

“Preliminarily we declare that our refusal to grant

a hearing in a particular case is to be given no weight

insofar as it might be deemed that we have acquiesced

in the law as enunciated in a published opinion of a

Court of Appeal when such opinion ts in conflict with

the law as stated by this court.” [Emphasis by the Court]

there is a single brokerage agreement to employ the services

both of a licensed broker and an unlicensed person, the entire

contract is illegal and recovery by either of the licensees is

precluded by the statute. Haas v. Greenwald, 196 Cal. 236,

237 P. 38 (1925) (aff'd 275 U.S. 490), Estate of Prieto, 243

Cal.App.2d 79, 52 Cal.Rptr. 80 (1966).

It is equally well-established law in California that an

unlicensed person who is thus precluded from recovering on

such an illegal contract because that person is unlicensed,

cannot recover for those services on any theory which requires

that person to disclose the illegal contract or transaction as

an element of his case. Wise v. Radis, 74 Cal.App. 765, 242

P. 90 (1925), Fewel & Dawes, Inc. v. Pratt, 17 Cal.2d 85,

109 P.2d 650 (1941).

Petitioners rely in their petition for certiorari on Tenzer

v. Superscope, Inc., 39 Cal.3d 18 (1985), 702 P.2d 212, 216

Cal.Rptr. 130 (1985). Petitioners assert that Tenzer has

abrogated the above rule. Tenzer does nothing of the kind.

Tenzer was not an action for a broker’s fee, but for a

finder’s fee. The distinction is crucial, because, while a broker

must be licensed in California in order to receive a

commission, a mere finder who performs no brokerage

services is exempt from any licensing requirement. Shaffer

v. Beinhorn, 190 Cal. 569, 213 P. 960 (1923).

The problem faced by the plaintiff in Tenzer was that his

finder’s fee agreement had not been reduced to writing, and

thus did not comply with the statute of frauds, Civil Code

§1624, subdivision (d) of which specifically requires a finder’s

fee agreement to be in writing.’ It is elementary law that,

in contrast to the brokers’ licensing laws, wnich make the

rendering of broker’s services by an unlicensed person i/legal,!°

9In Tenzer, there was also an issue as to whether Tenzer, who

was admittedly unlicensed, had acted as a broker or as a mere

finder. In the present case. both the trial court and the court of

appeals found that broker's services had been rendered, and no

issue concerning the same is presented on this petition.

"B&PC §10139 makes the rendering of such services by an

unlicensed person a criminal offense.

failure to comply with the statute of frauds does not make

the finder’s fee contract illegal, but merely unenforceable.

Masin v. Drain, 150 Cal. App.3d 714, 198 Cal. Rptr. 367 (1984).

In Tenzer \. Superscope, supra, the plaintiff finder contended

that the defendant should be estopped to assert the staute

of frauds in an action based on unjust enrichment and fraud.

The Supreme Court held that the doctrine of estoppel to

plead the statute of frauds may be applied where necessary

to prevent either unconscionable injury or unjust enrichment

where the brokers’ licensing law is not involved.

On the fraud point, the court referred to the so-called

“Kroger” rule, based on Kroger v. Baur, 46 Cal.App.2d 801,

117 P.2d 50 (1941), which the court in Tenzer characterized

as follows (at p. 29):

“A series of cases have held that an action for

fraud cannot be maintained where the allegedly

fraudulent promise is unenforceable as a contract

due to the statute of frauds.”

The California Supreme Court in Tenzer then simply

disapproved the so-called Kroger rule, at least on the facts

of Tenzer, which did not involve any licensed broker.

Respondents’ citation to the court of appeals of the earlier

decision of the intermediate California appellate court in

Tenzer v. Superscope is irrelevant in view of the established

case law on brokers’ licensing, which remains unchanged.

It is clear that the subsequent opinion of the California

Supreme Court in Jenzer dealt only with the statute of frauds,

and that it did not touch in the slightest the rule that an

unlicensed person who performs broker's services cannot

overcome the illegality of those services by any other legal

theory which still requires him to disclose the illegal

transaction as an element of the case.

Furthermore, the California Supreme Court in Tenzer

made clear that its holding, even as to the statute of frauds,

only applied to finders, and not to brokers. Thus, the court

cited a long series of California cases (starting with Keely

bho

v. Price, 27 Cal. App.3d 209, 103 Cal.Rptr. 531 (1972)) which

hold that real estate brokers wiil be held strictly to the statute

of frauds (“Keely v. Price” rule), and simply stated that it

declined to extend the scope of the Keely v. Price rule to

unlicensed finders such as Tenzer. In doing so, the court

emphasized the importance of the rigorous application of

the statute of frauds to brokers (at pp. 27-28):

“The rationale for rigorous application of the

statute of frauds to bar claims by licensed real estate

brokers is related to the statutory licensing

requirements. Real estate brokers are licensed as

such only after they have demonstrated a knowl-

edge of the laws relating to real estate transactions

[citations], and it would seem that they would thus

require less protection against pitfalls encountered

in transactions regulated by those laws.”

The court also made it clear that, in allowing Mr. Tenzer

to seek enforcement notwithstanding the statute of frauds,

it was not holding that a contract for brokerage services would

be similarly favored. The court stated (at p. 29):

“The law has traditionally had little sympathy

with the broker who has failed to sign up his client.”

Petitioners’ posture throughout this appeal has been that

the two plaintiffs in this action were but a single person,

and that the court should therefore treat them as fully qualified

and licensed real estate brokers. Aside from the fact that

Tenzer does not in any event deal with the broker licensing

statutes, petitioners should: not now be heard to portray

themselves as unsophisticated finders such as the plaintiff

in Tenzer.

The decision in the court of appeals in the present case,

was, and remains, in full accord with California law, and

provides no basis for review on certiorari.

CONCLUSION

The decision of the court of appeals was in all respects

in full accord with the long-established California law. That

court had before it on the petition for rehearing the two

cases relied on by petitioners on the present petition, and

received the briefs and arguments of both sides as to the

applicability of those cases to the facts of this case and as

to whether those cases modify the applicable California law

regarding real estate broker licensure. The court of appeals

was correct in its determination that its decision remains in

full accord with California law and in denying the petition

for rehearing.

There is no basis for granting review in this case.

The petition for certiorari should be denied.

Dated: January 31, 1986

Respectfully submitted,

GLENN R. WATSON

ARNOLD SIMON

RICHARDS, WATSON, DREYFUSS & GERSHON

A Professional Corporation

Glenn R. Watson

Attorneys for Respondents

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RICHARD A. PLEHN INC., and

RICHARD A. PLEHN, CASE NO. 84-5905

DC NO. CV 83-678

RJK (GX)

Plaintiffs

and Appellants,

IMPERIAL BANCORP, and

IMPERIAL BANK,

Defendants

and Appellees.

i a i

PETITION FOR REHEARING

(BY PANEL)

PETTIT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN.

2049 Century Park East

Suite 2150

Los Angeles, California 90067

(213) 553-2145

Attorneys for Plaintiffs and

Appellants

TABLE OF CONTENTS

Page

FABLE OF AUTHORITTLES te ie .

NIRGHUCTION 0. 2 eee | |

THE CALIFORNIA SUPREME COURT'S RECENT

DECISION IN ASDOURIAN v. ARAJ MANDATES

THAT THE DOCTRINE OF SUBSTANTIAL COM-

PLIANCE BE APPLIED IN THIS CASE ............... 2

REJECTION OF THE DISTRICT COURT'S APPL I-

CATION OF RADOBENKO v. AUTOMATED

EQUIPMENT CORP. PRODUCES MATERIAL

FACTS WHICH MAKF THE “CO-BROKER”™ RULE

TNAPPUN AGL ... 6st eee eee 1]

CRP OSMIN |. a eee eee 14

APPENDIX A ...... aR ee 1S

TABLE OF AUTHORITIES

State Cases

Asdourian y. Araj

85 Daily Journal D.A.R. 914 (1985)............ 2-14

General Insurance v. Superior Court

26 Cal. App. 3d !76, 102 Cal. Rptr. 541 (1972)

PR acl oe Meee. ......... 2, 7-9, 12

In re Estate of Baldwin

34 Cal. App. 3d 596 110 Cal. Rptr. 189 (1973)

ahi ee ot = , Ae ee. F, ©, 81, 12

In re Guardianship of Estate of Prieto

243 Cal. App. 2d 79, 52 Cal. Rptr. 80 (1966)

Se ike. c eee. 2, 11-13

Latipac, Inc. v. Superior Court

ee 4-6, 9, 10

Schantz v. Ellsworth

19 Cal. App. 3d 289, 96 Cal. Rptr. 783 (1971)

iv. ssaccsescessecnce. 1, 9-12

Federal Cases

Cox v. American Fidelity & Cas. Co.

ear BW O7),...................... 12

Mardirosian vy. Lincoln National Life Ins. Co.

Pee EES) ......................... |

Radobenko vy. Automated Equipment Corp.

Dae eaten oe eee Gr. 1975).................... Rea2

INTRODUCTION

Plainutfts and Appellants respectfully petition this

Court for rehearing (by Panel) pursuant to Rule 40 of

the Federal Rules of Appellate Procedure, on two

separate grounds. First, a decision of the California

Supreme Court announced after this appeal was

submitted, compels reversal of the district court’s entry

of a summary judgment. Second, this Court’s Memo-

randum of decision suggests it misapprehended the legal

effect of its determination that the district court

misapplied Radobenko v. Automated Equipment Corp.,

520 F.2nd 540 (9th Cir. 1975), and therefore failed to

consider material facts.

THE CALIFORNIA SUPREME COURT'S

RECENT DECISION INASDOURIAN V. ARAJ

MANDATES THAT THE DOCTRINE OF

SUBSTANTIAL COMPLIANCE BE APPLIED

IN THIS CASE

This is a diversity case, in which California law is

controlling. Mardirosian v. Lincoln National Life Ins.

Co., 739 F. 2d 474, 476 (9th Cir. 1984).

Calitornia’s substantial compliance doctrine provides

that “the licensing law should not be so literally construed

to require exact compliance if it would transform the

statute into an unwarranted shield for the avoidance

of a just obligation.” In re Estate of Baldwin, 34 Cal.

App. 3d 596, 605, 110 Cal. Rptr. 189 (1973). Plaintiffs

argued in their briefs that under Baldwin, supra, and

Schantz v. Ellsworth, 19 Cal. App. 3d 289, 96 Cal. Rptr.

783 (1971), which present facts that are closest to those

In this case, the substantial compliance doctrine permits

them to recover a commission on a loan commitment

notwithstanding their lack of literal compliance with

California’s real estate broker licensing law.

Plaintiffs based this contention on the undisputed facts

that: (1) Richard A. Plehn held a valid California real

estate broker's license; (2) Plehn was the only person

physically performing services for defendants in this

transaction; and (3) no different services were provided

to defendants by Plehn’s wholly owned, closed

corporation, Plehn, Inc., than the services provided by

Plehn himself. This Court declined to apply the

substantial compliance doctrine because Plehn had

stated that he “co-brokered” the transaction with his

corporation Plehn, Inc, which did not have a California

real estate broker’s license. The Court reasoned that

Plehn’s statement brought the case within the rule of

In re Guardianship of Estate of Prieto, 243 Cal. App.

2d 79, 52 Cal. Rptr. 80 (1966), where recovery of a

brokerage commission was forclosed because one of two

separate and unrelated parties who were jointly

providing brokerage services was unlicensed.

This Court’s ruling is fundamentally inconsistent with

the recent decision of the California Supreme Court in

Asdourian v. Araj, 85 Daily Journal D.A.R. 914

(announced March I1, 1985) (copy annexed as Appendix

A). In Asdourian the Supreme Court disapproved in

all material respects the single most important case relied

on by defendants, General Insurance v. Superior Court,

26 Cal. App. 3d 176, 102 Cal. Rptr. 541 (1972); and

reaffirmed with force and clarity the rule that in

California, the lack of literal compliance with a licensing

statute will not preclude a party from recovering for

services rendered where the legislative purpose of the

licensing statute is satisfied. The Asdourian decision ts

indistinguishable trom this case, and requires a reversal

of the district court's summary judgment,

The plaintutt in) Asdourian was a contractor who

performed extensive construction work for defendant

which included the conversion of a garage into a

restaurant on one piece of property and the remodeling

of another. When the defendant refused to pay for these

services plaintiff brought suit for breach of contract and

won a judgment in the trial court.

On appeal the defendant argued, inter alia, that

plaintiff was not licensed as a contractor under the

contractor licensing law (Business & Professions Code

Section 703!) and therefore could not brifig suit to

recover compensation for his work. The plaintiff had

obtained acontractor’s license in the name of his business

“Artko Remodeling and Construction,” but had failed

to obtain a license in his own name. Plaintiff's name

and signature appeared on the Artko license as “the

responsible managing party.” Asdourian, supra, 85

D.A.R. at 914. However, since the plaintiff had used

his own name in the transaction the defendant argued

that plaintiff was not duiy licensed and could not

Maintain suit.

The Supreme Court rejected defendant's contention

that plaintiff could not recover for his services, ruling

that the substantial compliance doctrine was applicable.

At the outset of its analysis the Court stated the basic

rationale underlying the substantial compliance doctrine

in licensing cases: “[w]Je have not insisted on literal

compliance in the situation in which the party seeking

to escape his obligation has received the full protection

which the [licensing] statute contemplates.” Asdourian,

supra, 85S D.A.R. at 914, quoting Latipac, Inc. \.

Superior Court, 64 Cal. 2d 278, 279-280 (1960).

The Supreme Court proceeded to apply three factors

originally developed in Latipac, supra, to determine

whether a finding of substantial compliance was

warranted. The Latipac factors which support a finding

of substantial compliance are: “(1) the fact that plaintiff

held a valid license at the time of contracting, (2) that

plaintiff readily secured a renewal of that license and

(3) that the responsibility and competence of plaintiff's

managing officer were officially confirmed throughout

the period of performance of the contract.” Latipac,

supra, 64 Cal. 2d at pp. 281-282. Before applying these

factors the Supreme Court noted: “{if] the facts clearly

indicate substantial compliance which satisfies the policy

of the Contractors License Law, the failure to establish

all of the Latipac factors should not defeat plaintiff's

claim.” Asdourian, supra, 85 D.A.R. at 915. As shown

below the Supreme Court’s analysis of the Latipac

factors is equally applicable to this case and compels

the conclusion that the plaintiffs here have substantially

complied with California’s real estate licensing law.

With respect to the first Latipac factor (whether

plaintiff holds a valid license) the Court observed that

the plaintiffs firm “Artko” held a valid license at the

time the contract was executed. Asdourian, supra, 85

D.A.R. at 915. Since this license “provided sufficient

evidence of plaintiff’s qualifications,” the Court reasoned

that a separate license in plaintiffs own name would

“not prevent defendant from receiving the full and

effective protection of the statute.” /d.

This reasoning directly applies here. Plehn held a valid

California real estate brokers license and indisputably

was the on/y person who performed the service of finding

a mortgage lender for Imperial’s real estate project. The

procedure for licensing Plehn’s corporation, Plehn, Inc..

would have involved no more than the payment of a

A&s

$165.00 fee. As in Asdourian, the fact that Plehn, Inc.

lacked a separate license in its own name “did not prevent

defendant from receiving the full and effective protection

of the statute.” /d.

The Supreme Court determined that the second

Latipac factor (whether plaintiff had renewed his license)

was irrelevant because as Artko’s license had never

expired. /d. As noted in Asdourian, the Court of Appeals

in Latipac stated that the purpose of this consideration

was to confirm “plaintiff's continuing competence and

responsibility during the period of performance.”

Latipac, supra, 64 Cal. 2d at p.283. The Supreme Court

reasoned that this purpose was satisfied by the existence

of a valid license issued to Artko. Asdourian, supra,

85 D.A.R. at 915. As above, this reasoning apphes here

since Plehn’s license, like Artko’s, never expired.

Moreover, since Plehn’s license is in Ais own name it

confirms Plehn’s “competence and responsibility” even

more directly than Artko’s license confirmed these

attributes of the plaintiff in Asdourian.

Finally, the Supreme Court stated that the plaintiff

in Asdourian clearly met the third Latipac factor, “which

requires official confirmation of the responsibility and

competence of plaintiff's managing officer throughout

the period of performance of the contract.” Asdourian,

supra, 85 D.A.R. at 915, quoting Latipac, supra, 64

Cal. 2d at p.282. The Court’s reasoning regarding this

factor merits quotation in full:

Here, the competence and experience of

plaintiff Asdourian formed the basis of the

license issued to Artko. “(A)ny matters which

might form the basis of legitimate inquiry by

the licensing board in determining the fitness

of (Asdourian) to enjoy a license were

‘necessarily considered’ and resolved in

connection with the issuance of the license to

(Artko).” (Citations omitted.)

Issuance of a license to Asdourian in his own

name would not have provided defendant with

any greater assurances that he was dealing with

an experienced and competent contractor. Nor

would it have provided any different informa-

tion concerning the status of solvency of

plaintiff's business. The business entity was

precisely the same as that to which the license

has been issued. The work would have been

performed by the same employees, and

supervised by the same person. Defendant

would have obtained no better protection, and

no different performance, had he contracted

with Artko.

Asdourian, supra, at 915. As evidenced by this language,

it is absolutely certain that the California Supreme Court

endorses the position plaintiffs have repeatedly asserted

in this case: the fact that Plehn held a valid license and

was the only person who performed services under the

agreement with Imperial warrants application of the

substantial compliance doctrine. To use the Supreme

Court’s own words: “[i]ssuance of alicenseto. . .[Plehn,

Inc.] would not have provided defendant[s] with any

greater assurance that [they were] dealing with an

experienced and competent [broker]. . . The work would

have been performed by the same employee, and

supervised by the same person.” Asdourian, supra, 85

D.A.R. at 915. Clearly the California Supreme Court

would direct a finding of substantial compliance in this

Case.

Moreover, the Supreme Court expressly disapproved

the holding in General Insurance Co. v. Superior Court,

ALO

26 Cal. App. 3d 176(1972), which Imperial itself asserted

was “virtually identical” and factually “on all fours with

the present case.” [ Appellees’ Brief, p. 14.] Imperial relied

entirely on General Insurance to distinguish Estate of

Baldwin, supra, where the Court of Appeal applied the

doctrine of substantial compliance to permit a licensed

real estate broker who operated through an unlicensed

fictitious business entity named Skyline Realty, Inc. to

recover a brokerage commission. Imperial argued that

in General Insurance a licensed individual was rendering

services on behalf of an unlicensed corporation, whereas

in Baldwin the services were rendered on behalf of the

individual and “the corporation was a mere dba or

fictitious name for the individual.” [Appellees’ Brief, p.

17 (emphasis by Imperial).] This Court in its memo-

randum of decision similarly distinguished Ba/dwin on

the ground that the individual there “was merely doing

business under a fictitious name.” [Memorandum p. 2,

quoting Estate of Baldwin, supra, 110 Cal. Rptr. at 194.]

Asdourian makes it clear that this distinction between

Baldwin and the present case, if it does exist, is not

relevunt to application of the substantial compliance

doctrine. The Supreme Court in Asdourian was fully

cognizant that in General Insurance: (1) the unlicensed

entity Was a separate corporation and not a mere dba:

(2) the contract for services was entered into in the

unlicensed name of the corporation; and (3) the licensed

contractor was ostensibly acting on behalf of the

corporation. This is manifest from the Supreme Court's

recitation of the facts of General Insurance:

Defendants rely primarily on the case of

General Ins. Co. v. Superior Court... In that

case, the individual performing the work was

duly licensed. However, he formed a corpo-

ration of which he was the sole owner,

All

president, chairman of the board and respon-

sible managing officer. The corporation did not

obtain a license because of the mistaken belief

that the personal license was sufficient. The

corporation entered into a contract: with

defendant and completed performance.

Asdourian, supra, p. 915 (emphasis added).

Despite the Supreme Court's appreciation of the facts

that the unlicensed entity in General Insurance was a

separate corporation which had “entered into a contract

. and completed performance,” the Court reasoned

that these facts did not foreclose application of the

substantial compliance doctrine. The Court determined

that the result in General Insurance was based on the

Court of Appeal’s erroneous assumption that it was “not

free to weigh ... [equitable] considerations 2

Asdourian, supra, 85 D.A.R. at 915. The Supreme Court

assumed that the General /nsurance court had improp-

erly relied on the dissent in Latipac when it should have

followed “the clear rule announced by the majority.”

Id. As the Court stated:

It has now been almost five decades since

the doctrine [of substantial compliance] was

first applied. The Legislature has manifested

no disapproval. In the limited and extraordi-

nary circumstances in which it is applied, the

policies underlying the doctrine remain

compelling. ... To the extent that General

Insurance, supra, 26 Cal. App. 3d 176 rests

on the logic of the Latipac dissent, it is

disapproved.

Asdourian, supra, 85 D.A.R. at 91S.

The Supreme Court’s discussion of the substantial

compliance doctrine was not limited to cases involving

Al2

the contractor licensing law. In support of its conclusion

that the contractor was entitled to recover his services,

the Court discussed in detail ..f..u2 v. Ellsworth, 19

Cal. App. 3d 289 (1971), a case ti.volving the real estate

licensing law. In Schanrz, the Court of Appeal held that

a licensed real estate broker was permitted to recover

a brokerage commission notwithstanding that he had

failed to obtain a license for the fictitious business name

under which he was operating. The Supreme Court

quoted the reasoning of the Schantz court in full:

[T]he purpose of the licensing requirement is

to protect the public from the perils incident

to dealing with incompetent or untrustworthy

real estate practitioners, (Citati> ys.) The

statutory purpose, insuring the competcncy and

trustworthiness of real estate pracitioners, is

satisfied by proof of plaintiff's valid real estate

broker's license. It was in connection with the

application for and issuance of that license that

his competency and trustworthiness were

examined.

Asdourian, supra, 85 D.A.R. at 915, quoting Schaniz,

supra, 19 Cal. App. 3d at pp. 292-293. In quoting this

Schantz language the Supreme Court confirmed that

in all licensing cases it is not the form of a transaction

which determines whether the substantial compliance

doctrine will be applied, but whether “the policy of the

licensing statute has been effectively realized, and

defendant has received in full measure the protection

intended by the legislature.” Asdourian, supra, 85

D.A.R. at 91S, quoting Latipac, supra, 64 Cal. 2d at

p. 281.

Plaintiffs respectfully submit that the Supreme Court's

approach to the licensing issue in Asdourian diamet-

Al3

rically conflicts with the analysis of the Court in this

case. This Court’s memorandum of decision indicates

that the Court did not consider whether the purpose

of Califormia’s real estate broker licensing law was

satisfied. Rather, the Court denied recovery under the

rule of Estate of Prieto simply because Plehn admitted

that he “co-brokered™ the transaction with his wholly

owned corporation, Plehn, Inc. In essence the Court's

ruling was based on the external appearance or “style”

of the transaction. By contrast, Asdourian holds that

whether a party will be allowed to recover for services

rendered notwithstanding a technical violation of a

licensing statute depends entirely upon whether the

policy goal of the statute is effectuated.

REJECTION OF THE DISTRICT COURT'S

APPLICATION OF RADOBENKO vy. AUTO-

MATED EQUIPMENT CORP. PRODUCES

MATERIAL FACTS WHICH MAKE THE “CO-

BROKER” RULE INAPPLICABLE

it is undeniable that the statutory goal of “protecting

the public from the perils incident to dealing with

incompent or untrustworthy real estate brokers” was

satisfied here. Baldwin, supra, at 605. Plehn holds a

valid California real estate license which directly

confirms his “compentence and responsibility” as a

broker. Asdourian, supra, 85 D.A.R. at 915. He had

previously provided brokerage services to the same

officers of Imperial with whom he contracted in this

case. Further, as in Asdourian, Baldwin, and Schantz,

only one individual, Plehn himself, was physically

rendering services under the commission agreement. As

Plehn averred in his declaration of February 24,

19X84: “All dealings between plaintiffs and defendants in

Al4

issue here were between defendants and myself... .

In no sense did the corporation [Plehn, Inc.] render

different or separate services to defendants.” [E.R., to

34, pp. 25-26.] Since this Court expressly disagreed with

the district court’s decision to reject this declaration

under Radohenko yv. Automated Equipment Corp., 520

F. 2d 540 (9th Cir. 1975), these material facts cannot

now be ignored. Cox v. American Fidelity & Cas. Co.,

249 F. 2d 616, 618 (9th Cir. 1957). It is clear from these

facts that a separate license in the name of Plehn, Inc.

would not have provided defendants with any greater

protection against incompetent brokers under Califor-

nia’s real estate licensing law.

Applying Asdourian, even if Plehn, Inc. had been the

only contracting entity and the on/y entity in whose name

services were performed, the substantial compliance

doctrine would not be foreclosed. These were the very

facts of General Insurance, which was disapproved by

the California Supreme Court. It would therefore be

anomolous to adopt a rule of law under the holding

in Estate of Prieto, supra, which precludes application

of the substantial compliance doctrine where a licensed

individual and his unlicensed closely held corporation

are deemed to act jointly in a transaction.

The holding in Estate of Prieto must be viewed in

the context of the facts of that case. In Estate of Prieto

two separate and unrelated parties “were associated in

a joint effort to effect a lease.” Estate of Prieto, supra,

243 Cal. App. 2d at 86 (emphasis added). The record

contained “no evidence that either of them was a licensed

real estate broker during the time in question.” /d. at

83. It “affirmatively appear[ed]” that one of the parties

“was an attorney-at-law and not a licensed real estate

broker.” /d. Under these facts - which are dramatically

different than the facts before this court - it Is

AIS

understandable why a court would decline to apply the

doctrine of substantial compliance would not be applied.

The “competence and responsibility” of the attorney to

act as a real estate broker had never been confirmed.

Therefore, even if the attorney’s partner in the

transaction (“Dunlevie Associates”) held a real estate

license (which was not disclosed by the record), it could

not be said that the client received the full protection

the licensing statute contemyg ated. The license of

Dunlevie Associates, if it did exist, had no bearing

whatsoever on the attorney’s capabilities as a real estate

broker. Unlike the facts of Asdourian, Baldwin, Schantz

and the case now before this Court, the attorney in Estate

of Prieto would have been required to take the real estate

brokers examination to obtain a valid brokers license.

There is simply no basis for concluding that the rule

of Estate of Prieto may bar a finding of substantial

compliance, where the purpose of the California real

estate licensing law has been satisfied. The substantial

compliance rationale governed the holdings of Asdour-

ian, Baldwin and Schantz. Application of this rationale

in the holdings of those cases would not have been altered

in any way, had plaintiffs (or any of them) stated that

they acted “joint/y” with their unlicensed business

entities. The “co-broker” rule would still not block

recovery.

Under the criteria announced in Asdourian plaintiffs

have substantially complied with California’s real estate

licensing law. To ignore this inescapable conclusion

based only on Plehn’s statement that he co-brokered

the transaction with Plehn, Inc., would be to elevate

the form of a transation over the substantive policy

concerns of the California legislature; and to disregard

controlling California decisiona! law.

Al6

CONCLUSION

For the foregoing reasons plaintiffs respectfully

request that their Petition for Rehearing be granted.

DATED: April 15, 1985

PETTIT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

Robert P. Mallory

Attorneys for Plaintiffs and

Appellants.

Al?)

APPENDIX A

[ Note: Appendix A to the petition for rehearing consists

solely of the text of the Asdourian opinion, 38 Cal. 3d

276, 696 P. 2d 95 (1985). That opinion is therefore not

reproduced herein]

GLENN R. WATSON

ARNOLD SIMON

MITCHELL F. ABBOTT of

RICHARDS, WATSON, DREYEUSS & GERSHON

A Professional Corporation

333 South Hope Street

Thirty-Eighth Floor

Los Angeles, California 90071

Telephone (213) 626-8484

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Case No. 84-5905

DC NO. CV 83-678

RJK (Gx)

MOTION FOR LEAVE

TO FILE ANSWER TO

PETITION FOR

REHEARING,

MEMORANDUM OF

POINTS AND

AUTHORITIES

AND DECLARATION

OF GLENN R. WATSON

IN SUPPORT OF

MOTION

RICHARD A. PLEHN INC., and

RICHARD A. PLEHN,

Plaintiffs and Appellants,

IMPERIAL BANCORP AND

IMPERIAL BANK,

— — ~_— —_— ~~ — — _—

Defendants and Appellees.

Defendants and appellees, Imperial Bancorp and

Imperial Bank, hereby respectfully move the court for

an order granting leave to file an answer to the petition

for rehearing filed by appellants herein on or about April

15, 1985.

This motion is made pursuant to Federal Rules of

Appellate Procedure, Rules 27(a) and 40(a) on the

A19

grounds that, in their peti’ on, appellants have

misconstrued and misstated the recent decision of the

California Supreme Court in Asdourian y. Araj, 38

Cal.3d 276 (March I1, 1985), appellees have had no

prior Opportunity to address that case, and the court

should have the benefit of appellees’ answer in ruling

on the petition for rehearing. The proposed answer to

the petition for rehearing is being lodged with the court

concurrently herewith.

The motion will be based upon this document, the

attached memorandum of points and authorities and

declaration of Glenn R. Watson, and upon all the briefs

and papers contained in the court’s file in this case.

WHEREFORE, defendants and appellees respectfully

request that their motion for leave to file an answer

to the petition for rehearing be granted as prayed and

that the answer to petition for rehearing lodged with

the court concurrently herewith be accepted for filing.

DATED: April 24, 1985

GLENN R. WATSON,

ARNOLD SIMON,

MITCHELL E. ABBOTT, of

RICHARDS, WATSON, DREYFUSS &

GERSHON

A Professional Corporation

Glenn R. Watson

Attorneys for Defendants and

Appellees, Imperial Bancorp and

Imperial Bank

A20

MEMORANDUM OF POINTS AND AUTHORITIES

Federal Rule of Appellate Practice 40(a) provides that

ordinarily an answer to a petition for rehearing will not

be accepted for filing unless it has been requested by

the court. In this case, however, the petition is based

exclusively on a recent decision of the California

Supreme Court, decided after the case before this court

was briefed, argued and submitted, which appellants

have seriously misconstrued. Appellees have never had

an opportunity to argue the effect of that decision to

this court. In order that the court might have the benefit

of appellees’ analysis of this new case, appellees seek

leave to file their answer to the petition for rehearing

now. Granting the motion may serve to expedite the

complete consideration and determination of the petition

for rehearing and the delay which may otherwise result

if the filing of an answer were deferred until a request

were received from the court. Appellees believe that their

answer to the petition for rehearing would contribute

an analysis and new material that should be useful to

the court.

Respectfully submitted,

GLENN R. WATSON,

ARNOLD SIMON,

MITCHELL F. ABBOTT, of

RICHARDS, WATSON, DREYFUSS &

GERSHON

A Professional Corporation

Glenn R. Watson

Attorneys for Defendants and

Appellees, Imperial Bancorp and

Imperial Bank

A2l

DECLARATION OF GLENN R. WATSON

I, GLENN R. WATSON, hereby declare:

fam an attorney at law duly admitted to practice

before this court and before all of the courts of the

State of California. | am a senior member of RICHARDS.

WATSON, DREYFUSS & GERSHON, A Professional

Corporation, with offices in Los Angeles, California.

[ am the member of that firm principally responsible

for representing the defendants and appellees in the

above-entitled appeal. | have personal knowledge of the

matters and facts set forth herein and, if called as a

witness, could testify competently thereto.

On April 16, 1985, I received the petition for rehearing

filed by the attorneys for plaintiffs and appellants herein.

That petition (apart from a rather weak subsidiary

argument to the effect that this Court erred in certain

of its conclusions), is based almost exclusively on a recent

decision of the California Supreme Court entitled

Asdourian v. Araj, 38 Cal.3d 276 (1985), decided after

the case at bench was argued and submitted. Unfor-

tunately, in their extensive argument regarding

Asdourian, appellants manage to gloss over the single

salient fact to which the Supreme Court referred again

and again in its opinion, namely that the plaintiff

contractor in that case was engaged in business as a

sole proprietorship, not a separate ccoperate entity. It

seems clear that the California Supreme Court decision

was based on the fact that the licensed business was

a “dba” of the individual and not a separate, corporate

entity. This point is likewise emphasized in the

concurring opinion of Justice Kaus. In the present case,

of course, substantial brokerage activities were

performed not only by Richard A. Plehn, but also by

A2?2

the co-broker, Richard A. Plehn, Inc., an unlicensed

corporate entity,

The answer to petition for rehearing which I have

prepared and which is being lodged with the court

concurrently herewith analyzes the Asdourian opinion

and demonstrates that it has no impact on the correctness

of this court’s decision. | have had no prior opportunity

to present an analysis of that opinion to this court. In

order to avoid delay in the disposition of-the petition

for rehearing and to provide an opportunity to be heard

on the new decision, | request that the answer which

I have lodged be accepted for filing.

i declare under penalty of perjury under the laws of

the State of California that the foregoing is true and

correct.

Executed on April 24, 1985

GLENN R. WATSON

ORDER

Upon the motion of defendants and appellees, and

for good cause shown, now therefore.

IT IS HEREBY CRDERED that the motion of defendants

and appellees for leave to file an answer to the petition

for rehearing is GRANTED and the answer to petition

for rehearing heretofore lodged with the clerk is accepted

for filing as of this date.

DATED:

Circuit Judge

A2Q4

GLENN R. WATSON

ARNOLD SIMON

RICHARDS, WATSON, DREYEUSS & GERSHON

A Professional Corporation

333 South Hope Street

Thirty-Eighth Floor

Los Angeles, California 90071

Telephone (213) 626-8484

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RICHARD A. PLEHN INC.

and RICHARD A. PLEHN,

Case No. 84-5905

DC NO.

Plaintiffs and Appellants, CV 83-678 RJK

IMPERIAL BANCORP AND

IMPERIAL BANK,

Defendants and Appellees.

mee mee eee ee”

ANSWER 10 PETITION

FOR REHEARING

Appellants eagerly seize upon the recent California

Supreme Court decision in Asdourian v. Araj, 38 Cal.3d

276 (1985) and baldly assert that it compels a rehearing.

In so doing, appellants ignore the fundamental

distinction between that case and the case at bench.

In Asdourian the plaintiff, an individual, was a

licensed contractor. He took the license in the fictitious

A25S

name Artko Remodeling and Construction, which the

Supreme Court pointed out, was “simply using a

different name for the same sole proprietorship” (38

Cal.3d at p. 238).' However, plaintiff contracted in his

personal name to do certain work for defendant rather

than contracting in the fictitious name under which he

held the license. Later he brought an action in his

individual name for recovery for the construction work

which he performed. The defendant raised the fact that

the license was not in Asdourian’s personal name as

a defense.

There was no separate legal entity, no corporate party.

Mr. Asdourian merely did business under a fictitious

name. As the Supreme Court itself pointedly observed

(in language which appellants ignore in their petition

for rehearing):

“Here, the form of plaintiff's business did not

change at all. /t remained a sole proprietorship.

Plaintiff simply used a different name for the

business.” (38 Cal.App.3d at 284)

The court held that these facts brought the case within

“the limited and extraordinary circumstances” (Id. at

287) in which the doctrine of substantial compliance

could be applied. Plaintiff was actually licensed,

although the license was in his fictitious name, and the

ultimate statutory purpose of protecting the public

against the actions of an unlicensed person was satisfied.

The crucial distinction between that case and the case

before this court is manifest. Here the New York

corporation, Richard A. Plehn, Inc., was a separate legal

entity. It was not licensed. The corporate entity

undertook joint/y with Richard A. Plehn, an individual,

‘Except where otherwise stated, all emphasis herein has been

added

A26

to “co-broker™ the transaction. The corporation, an out-

of state corporation, billed for ity brokerage activities

which required a license, It sought to have the funds

paid to its New ° ‘jce where it was domiciled,

It joined as a plas. in a lawsuit which it cannot

maintain in the teeth of the statutory prohibition against

an unlicensed person bringing or maintaining an action

for the collection of compensation for acts undertaken

as a broker. (Bus. & Prof. Code 10136). Nothing in

the Asdourian opinion suggests that such facts even come

close to the “limited and extraordinary circumstances”

required for the narrow substantial compliance doctrine

to apply.

Appellants advance the argument that this court's

analysis of Jn re Estate of Baldwin, 34 Cal.App.3d 596,

110 Cal.Rptr. 189, 194 (1973) in its memorandum is

somehow undercut by the California court’s decision

in Asdourian. This court's memorandum distinguished

the case at hand from Baldwin, in which recovery was

allowed to the plaintiff, pointing out that:

“The Baldwin decision was based upon the trial

court's factual finding that all of the brokerage

services were performed by the individual and

that the individual was merely doing business

under a fictitious name. 110 Cal. Rptr, at 194.”

Appellants suggest that this distinction is not “relevant”

in considering the applicability of the substantial

compliance doctrine, as indeed they must in view of

the fact that in Asdourian that was precisely the situation

before that court: Mr. Asdourian was merely doing

business under a fictitious name. That tact distinguishes

both Baldwin and Asdourian trom the situation betore

this court, in which a separate legal entity, an unlicensed

out-ol-state corporation, jointly entered into a brokerage

A2?

contract and engaged in brokerage activities for which

it seeks compensation. Rather than undercutting this

courts analysis of Baldwin, the Asdourian court's

holding ts consistent with it and falls into the same

category as Baldwin.

Appellants would also have this court believe that

the Asdourian court's approval of Schantz v. Ellsworth,

19 Cal. App.3d 289, 96 Cal. Rptr. 783, is contrary to this

court's memorandun *ecision. On the contrary, Schantz

is similar to Baldwin in that Mr. Schantz was a licensed

real estate broker who conducted his business from two

offices both located on Katella Avenue in Anaheim,

California. Although he held a valid broker's license,

he did not get an additional license for the branch office.

In these circumstances the court said:

“Literally, all that section 10136 requires is that

the plaintiff prove ‘that he was a duly licensed

real estate broker.’ There is literally no

requirement in section 10136 that, as a

prerequisite to the maintenance of his action,

he prove that he had a branch office license

for the branch office from which the services

were performed or a fictitious name license

authorizing the use of the fictitious name under

which his services were performed.”

Where the statute is not explicit, problems

such as that now confronting us are to be

resolved by reference to the statutory purpose.”

(19 Cal.App.3d at 292).

The statute iy explicit in providing that a person or

entity must be licensed in order to recover compensation.

[Bus. & Prof. Code 10136). The Supreme Court in

Aydourian took pains to point out that no separate

A2’

corporate entity was involved in that case. The Supreme

| Court stated (at pages 284-285):

: “In this case, plaintiff obtained a license for

his sole proprietorship under the name Artko.

Plaintiff's name was on the license as the

responsible managing party. At the time the

license was issued, he intended to incorporate

Artko. Had he done so Artko would have

become an entity separate from plaintiff.

However, the incorporation never took place,

and the business remained a sole proprietor-

ship. Plaintiff was personally responsible for

all debts and responsibilities incurred by the

business, and the assets of the business were

| plaintiff's assets. In essence, plaintiff was

Artko.”

And the court repeatedly emphasized that Asdourian

did not involve a separate entity, but merely a different

name for the same sole proprietorship, (at p. 288):

“This case is more similar to Schantz v.

Ellsworth (1971) 19 Cal.App.3d 289 [96

Cal.Rptr. 783]. In Schantz, the plaintiff was

personally licensed as a real estate broker. He

also did business under the fictitious name

‘Investment Trends.’

The plaintiff in Schantz was allowed to bring

an action under acontract made and periormed

while using the fictitious name. The Court of

Appeal held that all section 10136 “literally”

requires is proof that the plaintiff was a “duly

licensed” real estate broker. Therefore, it “does

not preclude maintenance of [an] action by one

ee ee

A29

who holds a valid real estate broker’s license

but who has failed to obtain... a license for

the use of a fictitious name.” (Schantz, supra,

19 Cal. App.3d at p. 288.)

The Asdourian court further stated:

“The policy considerations here are indistin-

guishable from those in Schantz. Plaintiff

obtained a license under the name ‘Artko’. In

connection with the issuance of that license,

his qualifications were examined and approved.

Although he uses a different name and should

have obtained a separate license to comply with

section 7028.5, his qualifications did not

change, nor did his status or form of his

business. He was simply using a different name

for the same sole proprietorship.” (1d. at p.

288)

The Supreme Court’s repeated emphasis on the fact

that Asdourian did not involve a corporation, or any

other change in the “status or form” of the business

and its equating the case with Schaniz, shows clearly

that the Supreme Court recognized the distinction

between a sole proprietorship using a mere fictitious

name and the performance of services by a separate

unlicensed corporation. Thus, the California court, in

Asdourian, broke no new ground in holding that the

plaintiff as owner of his sole proprietorship business

and thus in fact licensed, could recover compensation.

That is not, of course, the case before this court, where

the out-of-state corporate plaintiff had no license.

Appellants vastly overstate and misinterpret the

Asdourian \. Araj opinion, asserting that it “disapproved

in all material respects” and “expressly disapproved the

A30

holding in” General Insurance v. Superior Court, 26

Cal.App.3d 176, 102 Cal.Rptr. 541 (1972). Both

assertions are mischaracterizations which reflect a

misreading of the opinion. The opinion did chide the

General Insurance court for relying on the dissent in

Latipac y. Superior Court, 64 Cal. 2d 278, and noted

that it “was not free to disregard” the rule announced

by the majority. However, the Asdourian court carefully

limited its treatment of General Insurance as disapproval

only “to the extent that [it] rests on the logic of the

Latipac dissent.” (38 Cal.3d at 288). Contrary to

appellants’ assertions in their petition for rehearing, the

holding in General Insurance was not disapproved, nor

did the court modify its own opinion in Lewis & Queen

v N.M. Ball Sons, 48 C 21 141, 150-151, relied on by

General Insurance:

“Section 7031 [10136] represents a legislative

determination that the importance of deterring

unlicensed persons from engaging in the

contracting [ brokerage] business outweighs any

qarshness between the parties, and that such

deterrence can best be realized by denying

violators the right to maintain any action for

compensation in the courts of the state.”

Indeed, Asdourian emphasizes that the purpose of

enforcing the license law “is accomplished by denying

. access to the courts to recover for the fruits of

[the unlicensed person’s] labor . . . when he violates the

statute.” (39 Cal.3d at 282). As we read Asdourian, the

court is saying that in limited and exceptional

circumstances the court may consider whether the

Latipac tests are met and the doctrine of substantial

compliance applied. Thar is precisely what the district

court did in the case before this court.

A3|

In its Memorandum of Decision and Order the lower

court rejected defendants’ argument that the substantia!

compliance doctrine could not be considered:

“Defendants argue that the General Insur-

ance case forecloses application of plaintiffs’

substantial compliance theory in brokerage

license cases also... Thus, contrary to the

assertions of defendants, General Insurance

does not automatically foreclose plaintiffs’

substantial compliance argument in brokerage

licensing cases.” (Appellants’ Excerpts of

Record Tab 41, pg. 9, In. 3-18.)

Thus the lower court recognized the very principle

urged by appellants. Then the court went on to find

that the undisputed facts did not warrant application

of the substantial compliance doctrine here. Thus,

appellants were given full consideration of the very

doctrine they now urge should have been considered.

Although appellants suggest that this court’s Memo-

randum “misapprehended the legal effect of its

determination”, nothing in the court’s Memorandum

provides any basis for this misperception on the part

of Appellants.

Finally, it is mecessary to correct an erroneous

Statement of fact repeatedly asserted in the petition for

rehearing. Appellants assert that Plehn “indisputably

was the only person who performed the service of finding

a mortgage lender for Imperial’s real estate project”

(Petn. pg. 5) and was “the only person physically

performing services” (Petn. pg. 2). The declarations filed

by plaintiffs in this case at a time when they were show:ng

the importance of the corporation’s role include the

declaration of Richard M. Staff, executive vice-president

of the unlicensed New York corporation, Richard A.

A32

Plehn, Inc.. That declaration states under penalty of

perjury that Executive Vice-President Staff met with

Imperial’s board chairman in New York on June 2 .

1982 and discussed the proposed Metropolitan Lite

financing of the proposed construction on Imperial’s

property. (Clerk’s Record, docket item 10, Tab !0, page

31.) Thus, appellants’ assertions are contrary to their

own sworn evidence which stands undisputed !n the

record. The unlicensed corporation clearly acted through

someone else in addition to Mr. Plehn.

CONCLUSION

Appellants’ have striven mightily to justify a rehearing

but have fallen short of the mark. Neither the record

nor the recent California Supreme Court decision

supports their contentions. The lower court carefully

considered the substantial compliance doctrine and

found that this case fails to meet the requirements for

its application. The petition for rehearing should be

denied.

Datea: April 24, 1985

GLENN R. WATSON

ARNOLD SIMON

RICHARDS, WATSON, DREYFUSS &

GERSHON 7»... '

A33

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUTI

RICHARD A. PLEHN

INC., and

RICHARD A. PLEHN, ) CASE NO. 84-5905

) DC NO. CV 83-678 RJK (GX)

Plaintiffs Suen ae .

and Appellants, , NOTICE OF MOTION AND MOTION

’ ) TO FILE REPLY TO DEFENDANTS’

) ANSWER TO PETITION FOR

IMPERIAL BANCORP, ) REHEARING; MEMORANDUM OF

and ) POINTS AND AUTHORITIES AND

IMPERIAL BANK. ) DECLARATION OF ROBERT P.

MALLORY IN SUPPORT THEREOF:

Defendants ) REPLY TO DEFENDANTS’ ANSWER

and Appellees. ) (ATTACHED)

PETTIT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

2049 Century Park East

Suite 2150

Los Angeles, California 90067

(213) 553-2145

Attorneys for Plaintiffs and

Appellants

A34

TO DEFENDANTS AND THEIR ATTORNEYS OF

RECORD:

Plaintiffs-Appellants, Richard A. Piehn and Richard

A. Plehn, Inc. hereby respectfully move this Court for

an order granting leave to file a reply to Defendants’

answer to Plaintiffs’ petition for rehearing.

This motion is made pursuant to Federal Rules of

Appellate Procedure, Rule 27(a), and the verbal

instructions of the Clerk for the United States C art

of Appeals for the Ninth Circuit; and will be based upon

this notice of motion and motion, the attached

memorandum of points and authorities, the declaration

of Robert P. Mallory and upon all the pleadings, briefs

and papers in the Court’s file.

DATED: April 30, 1985

PETTIT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

ic MhSeliley

Attorneys for Plaintiffs and

Appellants

MEMORANDUM OF POINTS AND AUTHORITIES

On April 15, 1985, Plaintiffs filed a petition for

rehearing pursuant to Rule 40 of the Federal Rules of

Appellate Procedure on the grounds that a recent

decision of the California Supreme Court, Asdourian

v. Araj, —— Cal.3d —_, 211 Cal. Rptr. 703 (1985),

compels reversal of the district court’s entry of a

summary judgment in this action. On or about April

24, 1985, Defendants filed a motion for leave to file

an answer to Plaintiffs’ petition for rehearing and

concurrently lodged an answer to the petition under

separate cover. Defendants should not have lodged their

answer until their motion had been granted. Rule 40(a)

of the Federal Rules of Appeliate Procedure explicitly

States: “[n]o answer to a petition for rehearing will be

received unless requested by the court... .”

However, Plaintiffs do not oppose Defendants’

motion. They merely wish to preserve their right to reply

to Defendants’ answer, in which Defendants contend

that the Supreme Court’s decision in Asdourian is

distinguishable from this case. Defendants impart

significance to the fact that Asdourian involved a sole

proprietorship and not a privately held, closed

corporation. In their reply, a copy of which is attached,

Plaintiffs conclusively demonstrate by reference to the

California Supreme Court’s decision in Latipac, Inc. v.

Superior Court, 64 Cal. 2d 278, 49 Cal. Rptr. 676 (1966),

which was the basis of the Court’s decision in Asdourian,

that this distinction has no significance whatsoever.

Plaintiffs were instructed by the Clerk of this Court

that filing this motion, and attached reply, was the

appropriate procedure to respond to Defendants’

answer.

A36

DATED: April 30, 1985

PETTITT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

By: ue (AD the LID.

Robert P. Mallory

Attorneys for Plaintiffs and

Appellants

IT IS HEREBY ORDERED that the motion of Plaintiffs

and appellants for leave to file a reply to Defendants’

answer to petition for rehearing is granted and that the

reply to the answer, attached hereto, is accepted for filing.

DATED:

Circuit Judge

A37

DECLARATION OF ROBERT P. MALLORY

I, Robert P. Mallory, do hereby declare:

|. | am an attorney duly admitted to practice in all

the courts in California, including this Court. | am a

member of Pettit & Martin, attorneys of record for

Plaintiffs herein. Except as otherwise indicated, I have

personal knowledge of the matters set forth below and,

if called as a witness, could and would competently testify

thereto.

2. On April 25, 1985 | received Defendants’ motion

for leave to file an answer to Plaintiffs’ petition fcr

rehearing and also Defendants’ answer to petition, served

under separate cover.

3. At my instruction, my associate Peter M. Bransten

contacted the Clerk of the United State Court of Appeals

for the Ninth Circuit to inquire about the proper

procedure to file a reply to the Defendants’ answer to

the petition. Mr. Bransten was instructed by the Clerk

to file a motion for leave to file a reply to the answer

with the reply brief attached.

4. Plaintiffs’ reply addresses the contention in

Defendants’ answer that Asdourian vy. Araj, —— Cal.3d

—___, 211 Cal. Rptr. 703 (1985), is distinguishable from

this case.

| declare under penalty of perjury that the foregoing

is true and correct.

Executed on April 30, 1985 at Los Angeles, California.

[obo Mitelloug.

Robert P. Mallory

A38

UNTTED STATES COURT OF APPEALS

FOR THE NINTH CIRCUTI

RICHARD A. PLEHN INC., and

RICHARD A. PLEHN,

Plaintiffs

and Appellants,

CASE NO. 84-5905

DC NO. CV 83-678

RJK (GX)

IMPERIAL BANCORP, and

IMPERIAL BANK,

Defendants

and Appellees.

REPLY TO DEFENDANTS’ (APPELLEES’) ANSWER

TO PETITION FOR REHEARING

PETTIT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

2049 Century Park East

Suite 2150

Los Angeles, California 90067

(213) 553-2145

Attorneys for Plaintiffs and

Appellants

A39

MEMORANDUM OF POINTS AND AUTHORITIES

Defendants’ answer to Plaintiffs’ petition for rehearing

is Significant not because of what it contains, but rather

because of what it omits.

APPARENTLY DEFENDANTS HAVE CON-

CEDED THAT THE POLICY UNDERLYING

CALIFORNIA’S BROKER LICENSING LAW,

AS ARTICULATED BY THE CALIFORNIA

SUPREME COURT, HAS BEEN MET

Defendants do not even attempt to demonstrate that

the policy of California’s real estate broker licensing law

was somehow violated or disserved in this case, as

required under the California Supreme Court's decision

in Asdourian v. Araj, —— Cal. 3d —_, 211 Cal. Rptr.

703 (1985). Defendants do not assert that they were in

fact denied the full protection of the licensing statute.

or even articulate a theory to suggest how they might

have been denied such protection. Instead, Defendants

continue to avoid this fundamental issue, and to rely

entirely on their argument that (for some unstated

reason) Plehn Inc.’s status as a corporation necessarily

precludes application of the substantial compliance

doctrine. No matter how creative this argument may

be, it is not supported by California law; it is contrary

to the concept of substantial compliance; and is

fundamentally illogical.

A40

II.

APPLICATION OF THE SUBSTANTIAL COM-

PLIANCE DOCTRINE DOES NOT TURN

ULPON THE “FORM” OF UNLICENSED

ENTITY INVOLVED

The doctrine of substantial compliance is not

foreclosed where the unlicensed entity in a transaction

is a corporation. The Supreme Court's decision in

Latipac, Inc. v. Superior Court, 64 C. 2d 278, 49 Cal.

Rptr. 676 (1966), which provided the foundation for

its recent decision in Asdourian, supra, makes this clear.

In Latipac the plainiiff, a corporation named “J.W. Lee

& Co.,” brought an action to recover for labor and

materials furnished to defendant pursuant to a contract.

The record disclosed that J.W. Lee & Co. was not

licensed as a contractor for almost a one year period

of time during which the contract was partially

performed and completed. Latipac, supra, 64 Cal. 2d

at 285. However, throughout the period of the contract,

valid licenses existed in the names of other corporations

through which the managing officer of J.W. Lee & Co.

~(“J.W. Lee”) operated. /d. These other corporations had

obtained their licenses based on the confirmed

qualifications of J.W. Lee. On these facts the California

Supreme Court reasoned that the policy of the

contractor's licensing statute was satisfied:

Plaintiffs’ “responsible managing officer” is

J.W. Lee. It is by virtue of Mr. Lee's

qualifications that plaintiff secured and holds

its contractor’s license. Mr. Lee and his

associates conduct their affairs through a

number of related corporations. The qualifi-

cations of Mr. Lee form the basis for the

licenses of a number of these corporations. One

of them, San Leandro Rock Co., possessed a

Ad}

valid contractor's license throughout the period

that plaintiff was performing its contract with

defendant. The existence of this license

necessarily evidences an official determination

of the experience and competence of Mr. Lee,

the same experience and competence which

would have been in issue in a consideration

of plaintiffs’ application for renewal of its

license. This official confirmation of Mr. Lee's

qualifications throughout the period of

performance should exorcise any remaining

doubt that the policy of the statute has been

satisfied in this case.

Id. at 285-286 (emphasis in original).

Latipac immediately and unequivocally reveals that

the doctrine of substantial compliance is not precluded

simply because the unlicensed entity is a corporation.

To the contrary, the Latipac test for substantial

compliance expressly assumes such a situation. As the

Supreme Court stated in Asdourian, the third factor

of the Latipac test “requires official confirmation of ‘the

responsibility and competence of plaintiff's managing

officer .. . . throughout the period of performance of

the contract.’ " Asdourian, supra, 211 Cal. Rptr. at 709,

quoting Latipac, supra, 64 Cal. 2d at p. 282. Clearly

the term “managing officer” pertains to a corporation,

not a mere fictitious business name or sole proprietor-

ship. If the Supreme Court in Asdourian had meant

to exclude corporations from the doctrine of substantia!

compliance it would not have expressly quoted this

language from Latipac.

In sum, to resolve the issue of substantial compliance

it is irrelevant whether the unlicensed entity is a

corporation (Latipac, supra): a sole proprietorship

A42

(Asdourian, supra) a partnership (Heinfelt v. Arth, 135

Cal. App. 445, 27 P.2d 420 (1933)): an unspecified

fictitious business entity (/n re Estate of Baldwin, 34

Cal. App. 3d 596, 110 Cal. Rptr. 189 (1973)); or a “dba”

(Schantz v. Ellsworth, 19 Cal. App. 3d 289, 96 Cal.

Rptr. 783 (1973)). The question in all such cases is

whether the policy of the licensing statute has been

served. Asdourian, supra, 211 Cal. Rptr. at pp. 709-

711. Plaintiffs have established and Defendants do not

deny that such policy was served in this case.

Moreover, there is no rational basis for distinguishing

between an unlicensed corporation and an unlicensed

“dba” in applying the substantial compliance doctrine

where the purpose of the license statute has been satisfied.

Under the California real estate license law the existence

of a valid license issued to an individual is the basis

on which a license is issued to a business entity, whether

that entity is a corporation or a fictitious name. Business

& Professions Code § 10150 er seq. In either situation

the license is issued to the business entity as a matter

of course.

III.

THE SUBSTANTIAL COMPLIANCE DOC-

TRINE DOES NOT REQUIRE THAT THE

LICENSED PARTY ACT ALONE

As a parting shot, Defendants attempt to resurrect

the assertion that Plaintiffs have contradicted their sworn

testimony. (Answer, p. 10.) This is not so. Plaintiffs

contend that Richard Plehn was the only individual

engaged in the activity of finding a mortgage lender for

Imperial’s real estate project. Nothing in the record,

including the declaration of Richard M. Staff,

controverts this contention. It is obvious that Defendants

themselves accord little significance to their single

———

A43

contact with an employee of Plehn, Inc. other than Mr.

Plehn, since they completely ignored it until now.

Moreover, nowhere is it revealed in the substantial

compliance cases that if the licensed individual receives

assistance from an employee, the doctrine no longer

applies. Under Asdourian the central prong of the test

for substantial compliance is whether the responsibility

and competence of the “managing officer” of the

unlicensed entity were officially confirmed throughout

the period of contract performance. This is indisputably

the situation here, where Richard Plehn—himself

licensed--wholly owns and manages the unlicensed

corporation.

IV.

CONCLUSION

The law in California is clear that the doctrine of

substantial compliance applies whether the unlicensed

entity in a transaction is a corporation, a partnership,

a sole proprietorship or a “dba.” Defendants’ efforts

to distinguish Asdourian must be rejected. The doctrine

applies under the facts before this Court, and the case

should be remanded for trial.

DATED: Apri! 30, 1985

PETTITT & MARTIN

ROBERT P. MALLORY

PETER M. BRANSTEN

By: 7! | | Sie e

Robert P. Mallory

Attorneys for Plaintiffs and

Appellants

A44

August 16, 1985

Clerk, United States Court of Appeals

P. O. Box 547

San Francisco, California 94101

Re: Richard A. Plehn Inc., etc. vs. Imperial

Bancorp, etc.

CA No. 84-5905

Dear Sir/ Madam:

On April 16, 1985 plaintiffs and appellants Richard

A. Plehn Inc. and Richard A. Plehn filed a petition

for rehearing by the panel in the above-referenced action

on the ground that the California Supreme Court’s

decision in Asdourian y. Araj, —— Cal.3d —_, 211 Cal.

R ptr. 703 (1985), decided after oral argument and before

the Court’s Memorandum was filed, compels a reversal

of the trial court’s entry of a summary judgment. This

petition is currently pending before the Court.

On July 25, 1985 another California Supreme Court

decision was issued which, like Asdourian, has a material

impact on the issues in this appeal. In Tenzer vy.

Superscope, 85 D.A.R. 2661 (1985), a copy of which

is attached, the Supreme Court ruled that the plaintiff

could maintain a claim for fraud regardless of whether

the statute of frauds rendered his oral contract with the

defendant unenforceable and reversed the trial court’s

entry of a summary judgment. The Supreme Court’s

decision vacates the decision of the Court of Appeals

in Tenzer v. Superscope, Inc., 48 Cal. App. 3d 430, 195

Cal. Rptr. 881 (1983) which was cited by defendants

and appellees on pages 30 and 31 of their brief and

in the Court’s Memorandum dated April 2, 1985 on

page 3. Appellants respectfully submit that the Supreme

Court’s decision in Tenzer supports their argument at

A4S

pages 30 through 35 of their opening brief. Appellants’

desire to bring this precedent, which invalidates authority

expressly relied upon by the panel, to the attention of

Justice Jerome Farris, Justice Betty B. Fletcher and

Justice Mary M. Schroeder and hereby submit the

original and three copies of this letter for presentation

to the panel in accordance with Rule | of the Rules

of the United States Court of Appeal for the Ninth

Circuit.

Sincerely yours,

Peter M. Bransten

PMB:Im

Attachment

cc: Glenn R. Watson, Esq.

A46

September I 1, 1985

Ms. Kathy Catterson

Acting Clerk, United States Court of Appeals

P.O. Box 547

San Francisco, California 94101

Re: Richard A. Plehn, Inc., etc. et al

vs. Imperial Bancorp, etc. et al

No. 84-5905

Dear Ms. Catterson:

Peter M. Bransten, Esq., of Petit & Martin, attorneys

for plaintiffs/ appellants, directed a letter to you dated

August 16, 1985 attaching a copy of the California

Supreme Court’s opinion in Jenzer v. Superscope, Inc.,

39 Cal.3d 18 (1985), and requested that this case be

brought to the attention of Judges Schroeder, Fletcher

and Farris. Certain comments in the letter require a

response.

Counsels’ August 16, 1985 letter says that plaintiffs’

appellants’ petition for rehearing currently pending

before the court is on the ground that the California

Supreme Court decision in Asdourian v. Araj, 38 Cal.3d

276 (1985) compels a reversal. Defendants’) appellees’

motion for leave to file an answer to the petition for

rehearing also pending before the court, and the

proposed answer lodged with the motion, point out that

the Asdourian decision does not detract from the validity

of the trial court’s judgment or this court’s affirmance

of the judgment and does not warrant a rehearing.

Tenzer v. Superscope, Inc. supra, now cited by

plaintiffs, appellants, unlike the case at bench, is a

Statute of Frauds case in which the court considered

whether pleading estoppel or fraud could get around

the reyuirement of a writing. In the case at bench the

A47

Statute of Frauds is not involved, but rather an illegal

contract by an unlicensed person in violation of the real

estate brokers’ licensing law. In such a case, the licensing

statute can not be thwarted by pleading estoppel or other

theory of relief (Business & Professions Code 10136);

Wise v. Rados, 74 Cal. App.765 (1925); Fewel & Dawes,

Inc. v. Pratt, 17 Cal.2d 85 (1941); Franklin v. Nat C.

Goldstone Agency 33 Cal.2d 628 (1929). The correctness

of the judgment in the case at bench is not affected

by its reference to the earlier state court of appeal opinion

in Tenzer v. Superscope, Inc. 48 Cal.App.3d 430.

It is requested that if plaintiffs’/ appellants’ counsel’s

letter of August 16, 1985 is brought to the attention

of Judge Schroeder, Judge Fletcher and Judge Farris,

that this letter also be brought to their attention if it

is not inappropriate to do so.

Respectfully,

Glenn R. Watson

GRW/:lat

cc: Peter M. Bransten, Esq.

APPENDIX B

California Civil Code §1624:

The following contracts are invalid, unless

they, or some note cr memorandum thereof,

are in writing and subscribed by the party to

be charged or by the party’s agent:

(a) An agreement that by its terms is not

to be performed within a year from the making

thereof.

(b) A special promise to answer for the debt,

default, or miscarriage of another, except in

the cases provided for in Section 2794.

period than one year, or for the sale of real

property, or of an interest therein; such an

agreement, 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.

(d) An agreement authorizing or employing

an agent, broker, or any other person to

purchase or sell real estate, or to lease real estate

for a longer period than one year, or to procure,

introduce, or find a purchaser or seller of real

estate or a lessee or lessor of real estate where

the lease is for a longer period than one year,

for compensation or a commission.

(e) An agreement which by its terms is not

to be performed during the lifetime of the

promisor.

(f) An agreement by a purchaser of real

property to pay an indebtedness secured by a

mortgage or deed of trust upon the property

purchased, unless assumption of the indebted-

ness by the purchaser is specifically provided

for in the conveyance of the property.

PROOF OF SERVICE BY MAIL

State of California

SS.

County of Los Angeles

I, the undersigned, say: | am and was at all times

herein mentionea, a citizen of the United States and

a resident of the County of Los Angeles, over the age

of eighteen (18) years and not a party to the within

action or proceeding; that my business address is 11333

lowa Avenue, Los Angeles, California 90025; that on

January 31, 1986, | served the within Brief in Opposition

to Petition for Writ of Certiorari in said action or

proceeding by depositing true copies thereof, enclosed

in a sealed envelope with postage thereon fully prepaid,

in the United States mail at Los Angeles, California,

addressed as follows:

Clerk, United States Pettit & Martin

Supreme Court Robert P. Mallory

One First Street, N.W. Peter M. Bransten

Washington, D.C. 20543 2049 Century Park East

(Original and forty copies) Suite 2150

Los Angeles, California 90067

I declare under penalty of perjury that the foregoing

is true and correct. Executed on January 31, 1986, at

Los Angeles, California.

Joy Rivelli Miller

(Original signed)

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.