Court Opinion

ID: 8387763
Source: CourtListenerOpinion
Date Created: 2022-10-24 21:02:47.626598+00
Date Added: 2024-06-11T16:46:40.859718
License: Public Domain

Filed 10/24/22 Tran v. GLG Capital CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE

 HOANG TRAN et al.,

      Plaintiffs and Respondents,                                      G060883

           v.                                                          (Super. Ct. No. 30-2018-01017721)

 GLG CAPITAL CORP.,                                                    OPI NION

      Defendant and Appellant.

                   Appeal from a judgment of the Superior Court of Orange County, Tam
Nomoto Schumann, Judge. Affirmed.
                   Fransen and Molinaro and Nathan Fransen for Defendant and Appellant.
                   Law Offices of Dale Washington and Dale E. Washington for Plaintiffs and
Respondents.
                                             *               *               *
              Plaintiffs Hoang Tran, Bac Tran, and Oahn Tran (the Trans) retained
defendant GLG Capital Corp. (GLG) on a nonexclusive basis to obtain financing to
purchase a shopping center. After the Trans obtained funding and were closing on the
sale, GLG demanded a commission. The Trans refused and filed this lawsuit seeking a
declaratory judgment that no commission was owed. Following trial, the lower court
found in the Trans’ favor because an unlicensed GLG agent had been involved in
financing negotiations. Judgment was entered in their favor, which GLG now appeals.
              We affirm. The trial court’s findings are supported by the record and
existing authority.

                                             I
                                          FACTS
              GLG arranges financing for commercial real estate transactions. Nonparty
Gregory Gantman, a licensed real estate broker, was the sole officer and shareholder of
GLG during the relevant time period. In February 2018, GLG and the Trans entered into
a nonexclusive agreement (the agreement), in which GLG agreed to help the Trans obtain
financing to purchase a shopping center. The agreement provided that GLG would
arrange financing “at [the] best rates, terms, and fees. Otherwise [the Trans could] go
with any other funding sources.” But it also specified that the Trans “may not attempt, on
[their] own or through representatives, to raise capital or secure indebtedness from
persons introduced by [GLG]” without paying GLG a commission.
              Per the agreement, GLG introduced the Trans to Fidelity Bancorp Funding
Inc. and Sterk Investments (Fidelity/Sterk). While the financing terms GLG negotiated
with Fidelity/Sterk were the best terms offered to the Trans, they chose a different
financing option. However, GLG claimed the financing obtained by the Trans resulted
from their introduction to Fidelity/Sterk. The specifics of GLG’s theory are not

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                         1
explained by the parties. Regardless, once the Trans entered escrow for the shopping
center sale, GLG demanded a $161,250 commission per the agreement.
               The Trans filed this lawsuit against GLG in September 2018, asserting two
causes of action. First, they sought a judicial declaration that GLG was not owed a
commission. Second, they alleged GLG intentionally interfered with their loan
agreements by demanding its commission from escrow. GLG filed a cross-complaint
against the Trans, alleging claims for breach of the agreement, quantum meruit, and
declaratory relief.
               The case went to trial in summer of 2021. At trial, plaintiffs asserted an
unlicensed associate of GLG, John DeHart, was involved in financing negotiations with
Fidelity/Sterk. Because DeHart engaged in actions that require a broker’s license, the
Trans claimed GLG was not owed a commission. In response, GLG argued it only
introduced the Trans and Fidelity/Sterk, which does not require a license.
               Following trial, the court entered judgment in favor of the Trans. It
awarded them $39,779.13 in damages and found GLG was not entitled to a commission.
While the court did not issue a statement of decision, it attached several findings of fact
and law to the judgment. Among other things, it found DeHart was an agent of GLG and
unlicensed. It also found Gantman and DeHart “did more than just introduce [the Trans]
to [Fidelity/Sterk] as they were both actively involved in funding negotiations.” In
support of its denial of the commission, the court cited Tyrone v. Kelley (1973) 9 Cal.3d 1
and Preach v. Monter Rainbow (1993) 12 Cal.App.4th 1441 (Preach).

1
  It appears that after GLG introduced the two parties, the Trans allegedly negotiated a
different financing scheme with Fidelity/Sterk without GLG’s involvement. The Trans
and their extended family members allegedly obtained 11 loans from Fidelity/Sterk on 11
different properties and used the proceeds from those loans as a down payment for the
shopping center.

                                              3
              GLG appeals the judgment, arguing Preach does not bar it from obtaining a
commission. We disagree.

                                              II
                                       DISCUSSION
A. GLG’s Commission
              We review the trial court’s findings of fact under the substantial evidence
standard and its legal conclusions de novo. (ASP Properties Group, L.P. v. Fard, Inc.
(2005) 133 Cal.App.4th 1257, 1266.) “The trial court’s ruling is presumed to be correct
on appeal, and the burden is on the appellant to affirmatively show error.” (Starcevic v.
Pentech Financial Services, Inc. (2021) 66 Cal.App.5th 365, 374.) Since there is no
statement of decision, the doctrine of implied findings requires us to “presume that the
trial court made all factual findings necessary to support the judgment for which
substantial evidence exists in the record. In other words, the necessary findings of
ultimate facts will be implied and the only issue on appeal is whether the implied findings
are supported by substantial evidence.” (Shaw v. County of Santa Cruz (2008) 170
Cal.App.4th 229, 267 (Shaw).)
              “A real estate broker . . . is a person who, for a compensation or in
expectation of a compensation, regardless of the form or time of payment, does or
negotiates to do one or more of the following acts for another or others: . . . [¶]
(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs
services for borrowers or lenders or note owners in connection with loans secured

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directly or collaterally by liens on real property or on a business opportunity.” (Bus. &
                                                    2
Prof. Code, § 10131, subd. (d), italics added.)
              “It is unlawful for any person to engage in the business of, act in the
capacity of, advertise as, or assume to act as a real estate broker . . . within this state
without first obtaining a real estate license from the department . . . .” (§ 10130.) “No
person engaged in the business or acting in the capacity of a real estate broker . . . 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 or she was a duly licensed real estate broker or . . . at the
time the alleged cause of action arose.” (§ 10136.)
              “The purpose of the licensing requirements is to protect the public from
incompetent or untrustworthy practitioners. [Citation.] To that end, all real estate
brokers in California must be licensed.” (Akopyan v. Wells Fargo Home Mortgage, Inc.
(2013) 215 Cal.App.4th 120, 131.) To further this goal, sections 10130 et seq. “prohibit
an unlicensed real estate broker from collecting compensation earned in the capacity of a
broker.” (See Salazar v. Interland, Inc. (2007) 152 Cal.App.4th 1031, 1036.) Further, “a
real estate broker may not employ or compensate, directly or indirectly, an unlicensed
person to perform acts for which a license is required . . . .” (Preach, supra, 12
Cal.App.4th at p. 1452; § 10137.) The public policy behind the licensing requirement is
so strong that “[i]t is a misdemeanor . . . for any person . . . to pay or deliver to anyone a
compensation for performing any [act requiring a license], who is not known to be or
who does not present evidence to such payor that he is a regularly licensed real estate
broker at the time such compensation is earned.” (§ 10138.)

2
  All further undesignated statutory references are to the Business and Professions Code.
We also note that section 10133.2 clarifies that section 10131 “do[es] not apply to any
stenographer, bookkeeper, receptionist, telephone operator, or other clerical help in
carrying out their functions as such.”

                                                5
              As GLG argued in the trial court, there is a “finder[’s] exception” to the
licensing requirement. “[O]ne who simply finds and introduces two parties to a real
estate transaction need not be licensed as a real estate broker. Such an intermediary or
middleman is protected by the finder’s exception to the real estate licensing laws.”
(Tyrone v. Kelley, supra, 9 Cal.3d at p. 8.) “The line between brokers and finders is
based on whether the person in question has engaged in any negotiating to consummate
the transaction. . . . ‘If the broker takes any part in the negotiations, no matter how slight,
he is not a middleman but a broker.’” (Preach, supra, 12 Cal.App.4th at p. 1452.)
              GLG does not argue for application of the finder’s exception on appeal.
Further, the trial court found DeHart was involved in funding negotiations, which
requires a license. (§§ 10131, subd. (d), 10130, 10136.) This factual finding must be
affirmed if it is supported by substantial evidence. (ASP Properties Group, L.P. v. Fard,
Inc., supra, 133 Cal.App.4th at p. 1266.) The record submitted by GLG does not allow
us to assess this finding. It does not contain any of the evidence submitted at trial, nor
does it include a trial transcript. GLG’s failure to provide an adequate record on this
issue “requires that the issue be resolved against [GLG].” (Hernandez v. California
Hospital Medical Center (2000) 78 Cal.App.4th 498, 502 (Hernandez).)
              On appeal, GLG argues the trial court erred by relying on Preach. Rather,
it maintains this case and Preach involve different facts, which require different
outcomes. While there are distinctions between the cases, Preach’s reasoning applies
                                                         3
here and precludes GLG from receiving a commission.
              In Preach, the plaintiff was a licensed real estate broker. He agreed to
procure a tenant for the defendants’ real property in exchange for a broker’s commission.

3
  GLG does not contend Preach was incorrectly decided. We also note that neither side
argued whether GLG was entitled to a commission under the agreement. Even it were,
however, the Trans promise to pay the commission was unenforceable, which we explain
below.

                                               6
(Preach, supra, 12 Cal.App.4th at p. 1446.) Nonparty Ralph Singer (Singer) informed
the plaintiff that a business, Home Club, was looking to lease property. (Id. at pp. 1446-
1447.) Though Singer was not a licensed broker, he had access to many high-ranking
people at Home Club. So, the plaintiff offered to pay Singer a third of his commission if
Home Club leased the defendants’ property. (Ibid.) Singer engaged in various activities
requiring a broker’s license, including lease negotiations. (Id. at pp. 1448-1449, 1451.)
The defendants and Home Club eventually entered into a lease, but the defendants
refused to pay the bulk of the plaintiff’s commission, causing him to file suit. (Id. at pp.
1446, 1449.) The trial court later entered summary judgment against the plaintiff. It
found the defendants’ “promise to pay [the] plaintiff a broker’s commission was
unenforceable because [the] plaintiff’s right of compensation was based on activities
unlawfully performed by Singer.” (Id. at p. 1454.)
              On appeal, the plaintiff argued his agreement with Singer was completely
separate from his agreement with the defendants. Thus, even if Singer performed acts
requiring a license, that should not affect the defendants’ promise to pay him a
commission. (Preach, supra, 12 Cal.App.4th at p. 1455.) The appellate court disagreed.
It explained, the “[p]laintiff cannot insulate his agreement with [the] defendants from the
Business and Professions Code’s proscription against brokers sharing their commissions
with unlicensed persons who perform acts for which a license is required by the artifice
of making one agreement with Singer and another with defendants. There would be no
deterrent to a real estate broker employing unlicensed persons if the only consequence
was that the unlicensed person would not be paid by the broker but the broker would
receive his or her full fee.” (Ibid.) It continued, “[t]he purpose of the real estate licensing
statutes is to protect the public from the perils incident to dealing with incompetent or
untrustworthy real estate practitioners. [Citations.] This purpose would not be served by
adopting the theory of [the] plaintiff . . . that regardless of the unenforceability of his
contract with Singer, [the] plaintiff’s contract with defendants was unaffected.” (Ibid.)

                                               7
              The appellate court then explained that, denying the plaintiff a commission
was proper under three scenarios, but each of them involved issues of fact that could not
be resolved at summary judgment. First, it was unclear whether the plaintiff had helped
the defendants obtain the lease. (Preach, supra, 12 Cal.App.4th at pp. 1454-1455.) If he
had not, “then his commission [would] be denied for failure of consideration.” (Id. p.
1457.) Second, there were issues of fact as to whether the plaintiff and Singer were
engaged in a joint venture. If so, “knowledge of Singer’s unlawful activities would be
imputed to [the] plaintiff. Under such circumstances [the] plaintiff would be unable to
enforce [the] defendants’ promise to pay him a commission.” (Id. at pp. 1457-1458.)
Third, “if [the] defendants [were] unable to establish the existence of a joint venture, but
[were] able to persuade the trier of fact that [the] plaintiff knew of Singer’s unlawful
activities, [the] defendants’ agreement to pay [the] plaintiff a commission would be
unenforceable for the reasons stated” (i.e., the analysis set forth in the preceding
paragraph of this opinion). (Ibid.)
              This case implicates the third scenario. If GLG knew DeHart was
unlicensed and negotiating finance terms, then the Trans’ agreement to pay GLG a
commission is unenforceable for the policy reasons above. The record does not show
whether the trial court made such a finding. But we must infer it did under the doctrine
of implied findings. (Shaw, supra, 170 Cal.App.4th at p. 267.) And given the
inadequacy of the record, we must conclude this finding is supported by substantial
evidence. (Hernandez, supra, 78 Cal.App.4th at p. 502.)
              GLG argues, unlike Preach, there is no evidence it agreed to give any
portion of the commission to DeHart. Again, the doctrine of implied findings and the
incomplete record resolve this issue against GLG. (Shaw, supra, 170 Cal.App.4th at
p. 267; Hernandez, supra, 78 Cal.App.4th at p. 502.)
              Finally, GLG contends that under Preach, a licensed broker only forfeits its
commission when it is in a partnership or joint venture with the unlicensed actor, which is

                                              8
not the case here (the court found DeHart was GLG’s agent). But Preach’s holding was
not so limited. As set forth above, Preach held that in the absence of a joint venture, a
licensed broker’s commission is unenforceable if it knew the unlicensed broker was
performing work requiring a license. (Preach, supra, 12 Cal.App.4th at pp. 1457-1458.)
This holding stems from Preach’s observation that knowingly retaining an unlicensed
person to perform such work violates the public policy behind licensing: protecting the
public from incompetent practitioners. To discourage this practice, a licensed broker
cannot receive any portion of its commission if it knows an unlicensed employee is
performing work requiring a license. (Id. at pp. 1455, 1457-1458.) Because GLG knew
DeHart was unlicensed and engaged in financing negotiations, it is precluded from
receiving any commission.

B. Sanctions
               The Trans request we sanction GLG for filing a frivolous appeal. They
assert the appeal is frivolous because (1) GLG’s arguments completely lack merit, and
(2) GLG failed to provide an adequate record. We deny the request.
               “[A]n appeal should be held to be frivolous only when it is prosecuted for
an improper motive—to harass the respondent or delay the effect of an adverse
judgment—or when it indisputably has no merit—when any reasonable attorney would
agree that the appeal is totally and completely without merit.” (In re Marriage of
Flaherty (1982) 31 Cal.3d 637, 650.) Courts must “avoid a serious chilling effect on the
assertion of litigants’ rights on appeal. Counsel and their clients have a right to present
issues that are arguably correct, even if it is extremely unlikely that they will win on
appeal. An appeal that is simply without merit is not by definition frivolous and should
not incur sanctions. Counsel should not be deterred from filing such appeals out of a fear
of reprisals.” (Ibid.)

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               While we are unpersuaded by GLG’s arguments, they are not so
preposterous as to warrant sanctions. And though the record was far from complete, it
was sufficient to understand the contours of the trial court’s judgment and the facts
animating this lawsuit. We also made several factual findings in favor of the Trans due
to the incomplete record. This is a sufficient penalty, and further sanctions are
unnecessary.

C. The Trans’ Request for Relief
               The Trans briefly note the trial court denied their request to hold Gantman
jointly and severally liable for the judgment on an alter ego theory. We deny their
request to reverse this ruling. “‘As a general matter, “‘a respondent who has not appealed
from the judgment may not urge error on appeal.’” [Citation.] “To obtain affirmative
relief by way of appeal, respondents must themselves file a notice of appeal and become
cross-appellants.”’” (Celia S. v. Hugo H. (2016) 3 Cal.App.5th 655, 665.) The Trans
have not done so. Nor have they argued any exception to this rule.

                                             III
                                      DISPOSITION
               The judgment is affirmed. The Trans are entitled to their costs on appeal.

                                                   MOORE, ACTING P. J.

WE CONCUR:

SANCHEZ, J.

MOTOIKE, J.

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