Court Opinion

ID: 2649174
Source: CourtListenerOpinion
Date Created: 2014-01-14 20:13:47.685301+00
Date Added: 2024-06-11T12:55:27.333241
License: Public Domain

Filed 1/14/14 Prahm v. Pickford Real Estate CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA

OLE PRAHM,                                                          D062477

         Plaintiff and Appellant,

         v.                                                         (Super. Ct. No. 37-2010-00056983-
                                                                                          CU-BC-NC)
PICKFORD REAL ESTATE, INC.,
                                                                   MODIFICATION ORDER
         Defendant and Respondent.
                                                                   [NO CHANGE IN JUDGMENT]

THE COURT:

         It is ordered that the opinion filed herein on January 8, 2014, be modified as

follows:

         Footnote 2 on page 2 is removed as filed and replaced so that the footnote now

reads:

                 "The California Association of Realtors (CAR), a voluntary trade
         association that develops and publishes standard forms and publications for the
         real estate industry (2 Miller & Starr, Cal. Real Estate (3d ed. 2010) § 4:54, pp. 4-
         187), applied for leave to file an amicus brief, which in part urges this court to
         clarify the proper application of CAR "procuring cause guidelines." This court
         issued an order stating we would consider the application with this appeal. We
         exercise our discretion to deny CAR's request. (Conservatorship of Joseph W.
         (2011) 199 Cal. App. 4th 953, 957, fn. 2.) As Prudential concedes, the procuring
      cause guidelines, which are intended to assist arbitration panelists, are not binding
      on courts. (See, e.g., Solano v. Superior Court (2009) 169 Cal. App. 4th 1361,
      1371-1372 [California District Attorney Association implementation guidelines
      for Proposition 21 "are not authoritative or binding as precedent on the courts."].)

      There is no change in judgment.

                                                                      NARES, Acting P. J.
Copies to: All parties

                                            2
Filed 1/8/14 Prahm v. Pickford Real Estate CA4/1 (unmodified version)
                      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.

                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA

OLE PRAHM,                                                          D062477

         Plaintiff and Appellant,

         v.                                                         (Super. Ct. No. 37-2010-00056983-
                                                                                          CU-BC-NC)
PICKFORD REAL ESTATE, INC.,

         Defendant and Respondent.

         APPEALS from a judgment of the Superior Court of San Diego County, Thomas

P. Nugent, Judge. Reversed and remanded with directions.

         Burkhardt & Larson and Philip Burkhardt for Plaintiff and Appellant.

         Rheinheimer Smigliani Drake and Jane Rheinheimer, Elizabeth Drake for

Defendant and Respondent.

         Following a bench trial on plaintiff and appellant Ole Prahm's complaint for

recovery of a real estate broker's commission, the trial court found Prahm was the
procuring cause of the sales transaction and awarded him $120,210 in damages,

constituting one-half of the commission received by defendant and respondent Pickford

Real Estate, Inc., doing business as Prudential California Realty (Prudential). The court

also awarded Prahm prejudgment interest from the date of the filing of his complaint

under Civil Code1 section 3287, subdivision (b).

       Prahm appeals, contending the court erred by (1) failing to award him the full

$247,225 commission due him under Multiple Listing Service (MLS) rules and pursuant

to section 3302 and (2) computing prejudgment interest from the date of the filing of his

complaint, rather than from December 31, 2007, the date escrow closed and Prahm's

commission was to be paid. He argues his success on either of these contentions will

entitle him to recover an additional $13,134.70 in expert witness fees under Code of Civil

Procedure section 998.

       Prudential cross-appeals. It contends the court erred by awarding Prahm

prejudgment interest from the date Prahm filed his complaint. It also contends there is no

substantial evidence to support the court's finding that Prahm was the procuring cause of

the sales transaction.2

1      Statutory references are to the Civil Code unless otherwise specified.

2      The California Association of Realtors (CAR), a voluntary trade association that
develops and publishes standard forms and publications for the real estate industry (2
Miller & Starr, Cal. Real Estate (3d ed. 2010) § 4:54, p. 4-187), applied for leave to file
an amicus brief, which in part urges this court to clarify the proper application of CAR
"procuring cause guidelines." We issued an order stating we would consider the
application with this appeal. Under California Rules of Court, rule 8.200, a party must
apply for permission to file such a brief "[w]ithin 14 days after the last appellant's reply
                                              2
       We conclude substantial evidence supports the court's finding that Prahm was the

procuring cause of the sales transaction at issue and entitled to a commission, but the

evidence does not support its findings as to Prahm's damages because his entitlement to a

2.5 percent commission was fixed by Prudential's MLS listing, and there is no evidence

the parties' entered into an enforceable modification of that listing. We further conclude

Prahm is entitled to prejudgment interest as a matter of law on the commission amount,

which was payable to him upon the close of escrow on December 31, 2007. We lack

jurisdiction as to Prahm's challenge pertaining to his Code of Civil Procedure section 998

pretrial offer to compromise. Accordingly, we reverse the judgment and direct the trial

court to enter a new judgment described below.

                   FACTUAL AND PROCEDURAL BACKGROUND

       Some of the background facts are taken from the parties' stipulated facts within

their joint trial readiness conference report, and from the trial court's statement of

decision. Because the court found in Prahm's favor on the procuring cause issue, we

view the evidence supporting its finding in the light most favorable to Prahm.

brief is filed or could have been filed under rule 8.212, whichever is earlier . . . ." (Cal.
Rules of Court, rule 8.200(c).) CAR's filing was late under this rule, as the cross-
appellant's reply brief was filed on August 12, 2013, and CAR's application was filed 15
days later on August 27, 2013. We deny CAR's request as untimely. We note that even
if the application was timely filed, we would exercise our discretion to deny it.
(Conservatorship of Joseph W. (2011) 199 Cal. App. 4th 953, 957, fn. 2.)

                                              3
        Prahm is a licensed real estate salesperson under California law and a subscriber to

the MLS.3 In 2006 and 2007, Prahm was an agent of Coldwell Banker, an MLS broker

participant. Prudential is a real estate broker licensed under California law and a broker

participant with the MLS.

        In August 2006, Prudential entered into a written listing agreement with Donald

Sammis in his capacity as a limited partner of a partnership, in which Sammis agreed to

list real property in Rancho Santa Fe, California (the Sammis property or the property)

with Prudential at a list price of between $15,750,000 and $17,750,000, under terms

specified in the agreement. The California Association of Realtors form agreement,

labeled an "Exclusive Authorization and Right to Sell," states in part, "Seller has been

advised of Broker's policy regarding cooperation with, and the amount of compensation

offered to, other brokers . . . by offering MLS Brokers: . . . 2.500 percent of the purchase

price . . . ."

        That same month, Prahm received an email from a family friend who informed

him that her cousin who lived on the East Coast, Janice Joerger, wanted to look at houses

in the Rancho Santa Fe area of San Diego for potential purchase. The next day, Prahm

telephoned Janice Joerger and she emailed Prahm her contact information. Prahm began

taking steps to locate properties within the Joergers' parameters of style, privacy and

3       Section 1087 provides in part: "A multiple listing service is a facility of
cooperation of agents and appraisers, operating through an intermediary which does not
itself act as an agent or appraiser, through which agents establish express or implied legal
relationships with respect to listed properties, or which may be used by agents and
appraisers, pursuant to the rules of the service, to prepare market evaluations and
appraisals of real property."
                                              4
views, starting with about 70 homes and narrowing it down to about 36. During the rest

of the month and into October, Prahm communicated about nine times with the Joergers

via their joint email address concerning several houses in the area and general

information about Rancho Santa Fe.

       In October 2006, Prudential filed Sammis's property with the MLS and by doing

so made a unilateral, contractual offer of compensation to other MLS broker participants

for their services in selling the property. Consistent with the listing agreement, the MLS

listing filed by Prudential specifies the compensation to the buyer's agent as 2.5 percent

of the gross selling price.

       In March 2007, Prahm met with Janice Joerger to discuss the properties she

wanted to see. He brought several property listings, including for the Sammis property,

which he placed first on his list. Prahm felt the Sammis property had all of the qualities

the Joergers wanted in a house. He printed out the MLS listing for the property, and

made notes on it related to his upcoming March 16, 2007 showing. He also contacted

Kathleen Hawkes, Sammis's selling agent with Prudential, and told her he wanted to

show the property to a prospective purchaser who he had prequalified for his financial

ability to purchase a house of that value. Prahm and Janice Joerger met on March 16,

2007, and toured the Sammis house and other houses. Janice Joerger was impressed with

the Sammis property and felt it had everything they were looking for. By early April,

Kurt Joerger had arrived in San Diego, so Prahm emailed Hawkes to schedule another

viewing of the Sammis property and communicated with the Joergers regarding the

schedule.

                                             5
       On April 12, 2007, Prahm and the Joergers toured several houses, arriving last at

the Sammis property. According to Prahm, they parked separately in the circular

driveway and for about 45 minutes walked through the house room by room, through the

garage to a guest house. The Joergers asked Prahm how to develop the property in view

of the fact it was on two legal parcels, and inquired about the presence of easements, the

homeowners association, remodeling, and the size of the master living room. Kurt

Joerger had asked Prahm about the development potential for the property, and so Prahm

conducted some research with the homeowners association manager and sent a lengthy

email to the Joergers with information from the association, telling them the lot could not

be split and giving them information about the history of lot split attempts, the driveway,

and an open field on the property. Given his conclusion that the property constituted only

one legal lot, Prahm related that he had estimated its value at no more than $10 million.

       After that meeting, Prahm and the Joergers exchanged emails about properties

other than the Sammis property. On April 19, 2007, Prahm emailed the Joergers about

his opinion on the value of the Sammis property, and sought feedback from them about

what they had seen. Kurt Joerger responded by telling Prahm that the Sammis property

was "all positive," and "the only real contender"; his only perceived problems with the

property were road noise, renovation and total cost; and the other properties did not meet

his expectations. During April 2007, Prahm continued to look for properties at Kurt

Joerger's request, and he scheduled appointments for other homes as well as the Sammis

property during high traffic times. On or about April 24, 2007, they went to the Sammis

                                             6
property and assessed the view and road noise. Thereafter, Prahm advised Hawkes that

the Joergers were still interested in the property.

       In early May 2007, Prahm prepared a residential purchase agreement for the

Sammis property at a purchase price of $11,750,000, a number the Joergers had asked

Prahm if Sammis might be willing to accept. Prahm did not present the offer to the

Joergers; he prepared it for his file so he would be ready in the event they became willing

to make an offer. During May 2007, Prahm continued email communications with the

Joergers concerning drawings they had asked him to provide on the Sammis property and

another property, and about finding rental housing in Rancho Santa Fe. Kurt Joerger

thanked Prahm for his time and patience, and told Prahm he had appreciated speaking

directly with Mr. Sammis. Prahm also continued to show the Joergers properties in areas

surrounding Rancho Santa Fe. In late May 2007, Prahm sent the Joergers a sample

residential purchase contract and discussed an exclusive buyer-broker agreement.

Because Prahm was planning a trip out of the country, he also prepared a real estate

agency relationship disclosure form so that he would have the paperwork executed before

he left.

       On June 18, 2007, while Prahm was away, Kurt Joerger sent a letter of intent on

the Sammis property to Cathy Gilchrist, another agent working with Hawkes, offering

$10,000,000 subject to acceptable financing. Joerger added a postscript on his email to

Gilchrist stating, "I will copy [Prahm] on this upon his return." When Prahm returned

from his trip in mid-June 2007, he was surprised to learn about Joerger's offer. On June

23, 2007, Kurt Joerger emailed Prahm, welcomed him back, and acknowledged Prahm

                                               7
and Sammis's agents would be communicating. Prahm understood the Joergers were

trying to get a deal focused on a $10 million price. Joerger told Prahm that the Joergers'

offer expired the next day, and Joerger in fact withdrew the offer on June 24, 2007.

       On June 25, 2007, Prahm emailed a counter offer from Mr. Sammis to the Joergers

for a purchase price of $10,750,000 net of commissions, and Kurt Joerger responded by

faxing Prahm two pages of calculations regarding the property values. Prahm wrote

everything down verbatim and transmitted it to Hawkes and Gilchrist. On June 28, 2007,

at Kurt Joerger's request, Prahm then met with the agents to try to "work out a deal,"

including by cutting commissions. According to Prahm, at the end of the meeting, it was

agreed Sammis would possibly accept $10,495,000 if both Prudential and Coldwell

would agree to reduce their commission from 2.5 to 2 percent. Prahm told Hawkes and

Gilchrist he would need approval from his Coldwell manager to do that. He expected to

hear back from the agents as to whether Sammis would approve a purchase price of

$10,495.000.

       Prahm attempted to contact Sammis's agents on or about July 9, 2007, to follow up

on the matter, but got no response. Thereafter, Prahm picked up a voice message left by

Kurt Joerger on July 5, 2007. In that message, Joerger suggested that Prahm had asked

the Joergers to put an offer on a home Kurt Joerger had never seen, complained that

Prahm did not have the inside real estate connections that he had expected, and told

Prahm not to "interject" himself into or discuss any real estate transaction or business

dealing involving the Joergers in San Diego.

                                             8
       In mid July 2007, Prahm put Sammis, Hawkes and Gilchrist on notice that he had

brought the Joergers to them and was instrumental in their transaction. Joerger responded

by threatening to hold Prahm and Coldwell Banker responsible for any losses or damages

incurred because of Prahm's "interference." Kurt Joerger's communications

"dumbfounded" Prahm; he could not understand why his client would turn against him.

Prahm had no further contact with the Joergers, and Prudential's listing expired in

September 2007.

       In January 2008, Prahm was informed by another agent that the Sammis property

had been sold, but when Prahm checked, the MLS report showed the listing had expired.

Days later, the listing for the property was changed to "active" status, indicating it had

not sold. When Prahm inspected county property records, he learned that on December

31, 2007, the Joergers had purchased the property from Sammis for $9,889,000. The

closing statement indicates the Joergers paid Prudential a $240,420 commission.

       After Coldwell Banker assigned its claims for recovery of commissions to Prahm,

he sued it and Prudential, asserting causes of action for breach of contract, breach of the

implied covenant of good faith and fair dealing, declaratory relief, and for the "reasonable

value of his services."

       The matter proceeded to a bench trial, during which both parties introduced expert

testimony on the issue of whether Prahm was the "procuring cause" of the

                                              9
Joerger/Sammis transaction, and the relevance of MLS rules on the question.4 Prahm's

expert, Frank DiLauro, testified that the MLS rules protected the buyer's agent, and that,

in order to fulfill their requirements, a written signed offer did not need to be submitted at

the time the procuring agent was involved in the transaction. Using the MLS rules as

well as trade industry guidelines for assistance, and asserting the Joergers presented their

letter of intent as a result of Prahm's negotiations, DiLauro testified Prahm was the

procuring cause of the transaction. Prudential's expert Ludlow Keeney agreed that the

MLS rules, particularly rules 7.12 and 7.13, defined the relationship between Prudential

as the listing broker and Coldwell Banker as the cooperating broker.5 However, he

testified the Joergers "procured themselves" as the buyers with the assistance of their

attorney.

       Prudential also presented testimony from Hawkes and Gilchrist about their June

28, 2007 meeting with Prahm. Gilchrist testified she had set up the meeting and that,

knowing Prahm had shown the property to the Joergers, it was the agents' intent to

4      The MLS rules were a trial exhibit but they do not appear in the record. They are
online on Sandicor, Inc.'s website at , as of November 12, 2013.

5       MLS rule 4.9 defines a cooperating broker, for purpose of the MLS rules, in part
as "a broker participant who is also a selling agent as defined in Civil Code Section 1086
who acts in cooperation with a listing broker to accept the offer of compensation and/or
subagency to find or obtain a buyer or lessee. The cooperating broker or selling broker
may be the agent of the buyer or, if subagency is offered and accepted, may be the agent
of the seller." Section 1086 defines a "selling agent" as "an agent participant in a
multiple listing service who acts in cooperation with a listing agent and who sells, or
finds and obtains a buyer for, the property." (Civ. Code, § 1086, subd. (h).)

                                             10
discuss what they could do to make the deal work. According to Gilchrist, they discussed

"possibly reducing our commissions to get us closer to meeting of the minds." Hawkes

testified that at the meeting she, Gilchrist and Prahm "all agreed we would reduce our

commission."

       Thereafter, the trial court issued a proposed statement of decision. Summarizing

the facts and discussing the MLS rules on which the experts relied, the court ruled that

under the circumstances, Prahm was the procuring cause of the transaction and entitled to

the commission on the Sammis property. The court then addressed the legal effect of

Prudential's decision to accept a commission different from the 2.5 percent commission

provided in its listing agreement. Reasoning that the parties had agreed to reduce and

share equally in the commission, which ultimately became a lump sum, it awarded Prahm

one-half of the gross commission reduced by the cost of a survey paid by Prudential.

       Prahm objected to the court's proposed statement of decision, challenging the

factual and legal basis for several of its conclusions.6 Thereafter, the trial court issued its

6       In his opening brief, Prahm does not identify any material issues or ultimate facts
left unaddressed by the court's final statement of decision, nor does he address the effect,
if any, of his objections on our appellate review. " ' "The court's statement of decision is
sufficient if it fairly discloses the court's determination as to the ultimate facts and
material issues in the case." ' " (Pannu v. Land Rover North America, Inc. (2011) 191
Cal. App. 4th 1298, 1314, fn. 12.) The trial court is not required to make an express
finding of fact on every factual matter controverted at trial, where the statement of
decision sufficiently disposes of all the basic issues in the case. (In re Marriage of
Burkle (2006) 139 Cal. App. 4th 712, 736-737, fn. 15.) Though Prahm objected to both
the legal and factual bases of the trial court's decision, he has not given us any basis to
conclude the statement of decision did not sufficiently address the ultimate facts and
material issues. Prudential did not object to the court's statement of decision.
Accordingly, in assessing the parties' contentions, we will imply findings to support the
                                              11
final statement of decision, including detailed findings of fact and modifying its

reasoning about the parties' agreement concerning the commission. Finding "[t]he stated

reasons for the [Joergers'] termination of Prahm's agency were obviously pretextual" and

"not justified," the court again ruled Prahm was the procuring cause of the

Joerger/Sammis transaction. Observing that a vested position cannot be unilaterally

revoked, it further ruled: "The parties had previously agreed to reduce and share equally

in the commission presumably if that is what it would take to close the deal. At the time

it was finally agreed to, the listing agents had been directed to no longer communicate

with the plaintiff whose position as a procuring cause had vested. Ultimately, the

commission took the form of a lump sum; not a percentage of the purchase price. . . .

[T]he decision to accept this negotiated sum, undoubtedly necessary to close the deal, had

the legal effect of modifying the gross commission proceeds available to the competing

parties, and that an equal division of the commission is consistent with their

understanding." (Footnote omitted.) The court awarded Prahm $120,210, one half of the

commission. It thereafter entered judgment accordingly, providing the parties were to

address prejudgment interest by noticed motion.

       Prahm moved to vacate the judgment and enter a different judgment, arguing (1)

he was entitled to recover the principal sum of $247,225 pursuant to section 3302, the

MLS listing, and MLS rules and (2) the trial court should have awarded him prejudgment

interest under section 3287, subdivision (a) from December 31, 2007, the date of close of

judgment where appropriate. (Heaps v. Heaps (2004) 124 Cal. App. 4th 286, 292, quoting
In re Marriage of Arceneaux (1990) 51 Cal. 3d 1130, 1133.)

                                             12
escrow, or alternatively, if awarded under section 3287, subdivision (b), from the date he

filed his complaint.

       Ultimately, the trial court denied Prahm's motion to vacate the judgment and

denied his request for prejudgment interest under section 3287, subdivision (a).

However, it granted Prahm's request for prejudgment interest under section 3287,

subdivision (b), awarding Prahm such interest at 10 percent per annum from July 1, 2010,

the filing of his complaint.

       Prahm filed this appeal, challenging the court's calculation of damages and

prejudgment interest, which he asserts impacts his ability to recover expert witness fees

as costs. Prudential cross-appeals from the judgment and also the postjudgment order

awarding Prahm prejudgment interest. It likewise challenges the court's interest

calculation, and its finding that Prahm was the procuring cause of the Joerger/Sammis

transaction.

                                      DISCUSSION

                                  I. Standards of Review

       The parties dispute the applicable standards of review. Prahm contends his appeal

involves the proper interpretation of "contractual rights which are set forth in writing"

and statutes relating to the trial court's awards of damages and prejudgment interest,

requiring independent review. He asserts the relevant facts are not in dispute, and that

because the court's awards are based on erroneous legal rulings and not conflicting

evidence, the substantial evidence rule does not apply.

                                             13
       Prudential disagrees, maintaining that each of the trial court rulings Prahm

challenges presents a different standard of review. As for computation of Prahm's earned

commission, Prudential argues the court made a factual finding as to contract

modification based on conflicting evidence, requiring application of the substantial

evidence standard of review. It argues the court's award of prejudgment interest presents

a question of law, and its denial of Prahm's request for expert witness fees is reviewed for

abuse of discretion.

       As for Prudential's own appeal, Prudential does not squarely address the relevant

standard of review for the court's finding that Prahm was the procuring cause of the

transaction. Prahm argues the court made a factual finding that is governed by the

substantial evidence standard of review. The parties agree that we review for abuse of

discretion the court's calculation of prejudgment interest under section 3287, subdivision

(b).

       The issues presented in these appeals are interdependent and implicate several

standards of review. We set out those review standards briefly here, and more fully

below in connection with each argument. The trial court's finding that Prahm was the

procuring cause of the transaction, challenged by Prudential, as well as its finding that the

parties agreed to modify their agreement and reduce the commission, challenged by

Prahm, are both subject to review for substantial evidence as they resolved disputed facts

and inferences, and rest on the credibility of witnesses. (Buckaloo v. Johnson (1975) 14
Cal. 3d 815, 821, fn. 2, disapproved on other grounds in Della Penna v. Toyota Motor

Sales, U.S.A., Inc. (1995) 11 Cal. 4th 376, 393, fn. 5; Watson v. Wood Dimension, Inc.

                                             14
(1989) 209 Cal. App. 3d 1359, 1364, fn. 5 [question of which broker was the procuring

cause of a sale is one of fact]; Rancho Santa Fe Assn. v. Dolan-King (2004) 115
Cal. App. 4th 28, 43; ASP Properties Group v. Fard, Inc. (2005) 133 Cal. App. 4th 1257,

1266; Weber v. Jorgensen (1971) 16 Cal. App. 3d 74, 81 [whether a written contract has

been modified by an executed oral agreement is a question of fact].) If the appeal

involves conclusions of law based on factual findings, we review those conclusions of

law de novo. (E.g., ASP Properties Group, at p. 1266.)

       To the extent Prahm's entitlement to a commission or its calculation is dependent

on an interpretation of the written MLS listing, such interpretation is one of law for this

court to determine anew, unless the interpretation turns on the credibility of extrinsic

evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal. 2d 861, 865; ASP

Properties Group v. Fard, Inc., supra, 133 Cal.App.4th at pp. 1266-1267.) Our

independent review extends to the interpretation, if any is necessary, of MLS rules or

guidelines. (See, e.g., Batt v. City and County of San Francisco (2010) 184 Cal. App. 4th
163, 169 & fn. 1 [interpretation of tax collector's interpretative guidelines presents a

question of law not requiring the reviewing court's deference].)

       Our review of the trial court's award of prejudgment interest is dependent on our

determination of whether the trial court correctly found Prahm entitled to damages, and if

so, whether those damages are unliquidated (§ 3287, subd. (b)), or certain or capable of

being made certain. (§ 3287, subd. (a).) If the relevant facts are undisputed, "we

independently review whether and when . . . damages were certain or capable of being

made certain by calculation." (KGM Harvesting County. v. Fresh Network (1995) 36

                                             15
Cal. App. 4th 376, 390-391; see also Employers Mutual Casualty Co. v. Philadelphia

Indemnity Ins. Co. (2008) 169 Cal. App. 4th 340, 347 [denial of prejudgment interest

under section 3287, subdivision (a) presents a question of law for reviewing court's

independent review].) If the facts are disputed as to whether damages are "liquidated" so

as to entitle Prahm to prejudgment interest under that subdivision, we review the court's

determination for substantial evidence. (See generally, ASP Properties Group v. Fard,

Inc., supra, 133 Cal.App.4th at p. 1266.)

       We review for abuse of discretion a court's award of prejudgment interest on

unliquidated damages under section 3287, subdivision (b). (Employers Mutual Casualty

Co. v. Philadelphia Indemnity Ins. Co., supra, 169 Cal.App.4th at p. 347, fn. 9.) "A trial

court's exercise of discretion will be upheld if it is based on a 'reasoned judgment' and

complies with the '. . . legal principles and policies appropriate to the particular matter at

issue.' " (Bullis v. Security Pac. Nat. Bank (1978) 21 Cal. 3d 801, 815.)

       II. Prudential's Appeal of the Trial Court's Procuring Cause Finding

A. Legal Principles Regarding a Broker as a Procuring Cause

       " 'A broker is the "procuring cause" of a . . . transaction if he finds a purchaser

who is ready, willing, and able to buy the property on the terms stated and he obtains a

valid contract obligating the purchaser on these terms. If the broker cannot secure a

written offer from the purchaser, he is still considered the "procuring cause" if he brings

the principal and the purchaser together so that they may enter into such a contract. In

other words, if the broker's efforts result in a "meeting of the minds" between the buyer

and the seller but the final negotiations and the conclusion of the sale are conducted by

                                              16
them without the aid of the broker, he will still earn his commission.' " (Buckaloo v.

Johnson, supra, 14 Cal.3d at p. 820, fn. 2.) Evidence that a broker merely called the

attention of a prospective purchaser to property and urged the desirability of purchase,

however, is not sufficient to support recovery of a commission. (See Hill v. Knight

(1930) 209 Cal. 14, 25; accord, Fitzpatrick v. Underwood (1941) 17 Cal. 2d 722, 725-726,

729-733 [evidence supported finding that real estate broker was not "efficient" cause of

the sale where he informed a purchaser the property was for sale and exhibited it to him;

the purchaser and seller had already known each other for years, and only discussed a

possible sale after casually meeting on the street and not by reason of the broker; and

broker had no part in the negotiations]; Neiswender v. Campbell (1932) 119 Cal. App.
504, 506-507.)

       "Where several agencies have been active in bringing about a sale, it may happen

that each has contributed something without which the result would not have occurred.

One may have found a buyer who would otherwise have been overlooked, and yet that

buyer may actually make his bargain through a different instrumentality. In such case,

the crucial question is, which was the predominating efficient cause? . . . [¶] To

constitute himself . . . the predominating effective cause, it is not enough that the broker

contributes indirectly or incidentally to the sale by imparting information which tends to

arouse interest. He must set in motion a chain of events, which, without break in their

continuity, cause the buyer and seller to come to terms as the proximate result of his

peculiar activities." (Sessions v. Pacific Improvement Company (1922) 57 Cal. App. 1,

17; see also Nelson v. Mayer (1954) 122 Cal. App. 2d 438, 445.)

                                             17
       Nevertheless, it is not " 'always necessary that the purchaser should be actually

introduced to the owner by the broker provided it appears affirmatively that the purchaser

was induced to apply to the owner through the instrumentality of the broker, or through

means employed by the broker. It is sufficient if the sale is effected through the efforts of

the broker or through information derived from him.' [¶] . . . [¶] So when the broker is in

fact the primary procuring cause, the law will not deprive him of his commission because

the negotiations were completed through someone else, and even perhaps without the

broker having himself met or communicated personally with the buyer." (Sessions v.

Pacific Improvement Company, supra, 57 Cal.App. at p. 18; Chamberlain v. Abeles

(1948) 88 Cal. App. 2d 291, 296-297.) In some cases, where a broker procures a buyer, he

is entitled to his commission even though the final negotiations take place between the

buyer and the seller and the purchase is consummated after expiration of the listing

agreement. (E.A. Strout Western Realty Agency, Inc. v. Lewis (1967) 255 Cal. App. 2d
254, 258 (E.A. Strout), citing Wilson v. Roppolo (1962) 207 Cal. App. 2d 276, 280-281

[broker was procuring cause even though the sale was consummated after the listing

agreement expired and some of the sale terms varied from the listing] & Oaks v. Brahs

(1955) 132 Cal. App. 2d 182, 184 ["Upon that sale being consummated, even though the

final consummation resulted from negotiations directly between the buyer and seller, the

commission had been earned and must be paid"]; see also Rose v. Hunter (1957) 155
Cal. App. 2d 319, 325.) "The principal cannot escape his liability to the agent where he

revokes the agent's authority, after a prospective purchase for the property has been

procured, in bad faith and for the purpose of avoiding the payment of the agreed

                                             18
commission." (Rose v. Hunter, at pp. 324-325; see also Palmtag v. Danielson (1947) 30
Cal. 2d 517, 521 [if a broker procures a purchaser willing to pay a lower price than the

asking price, the owner cannot deprive the broker of his commission by conducting the

final negotiations himself and selling at a lower figure to the purchaser procured by the

broker].)

       In E.A. Strout, the court held there was substantial evidence to support the trial

court's finding that a broker was entitled to a commission as the " 'primary procuring

cause, and the predominate effective cause of the sale.' " (E.A. Strout, supra, 255

Cal.App.2d at pp. 259-260.) The broker had procured a prospective buyer, James, who

was unable to finance the property's purchase and who ultimately brought his brother

together with the sellers to purchase the property directly from the sellers after the listing

agreement had expired. (Id. at pp. 255-257.) Setting aside as irrelevant the parties'

arguments as to a possible joint venture and enforceability of the purchase contract, the

appellate court found "the crux of the case is whether plaintiff can be said to be the

'procuring cause' of the sale by reason of the initial contact with James and [his wife]

Lucille, by arousing their interest in the property through its advertising material, by

introducing James and Lucille to defendant owners, and by the many conversations with

and services rendered to the Davises [sic] by plaintiff's agent." (Id. at p. 258.) The

evidence supported an inference that the brother bought the property because of James

and for James's benefit. (Id. at p. 259.) The court held it "immaterial" that the brother

and sellers themselves engaged in final negotiations or that they consummated the sale

after expiration of the listing. (Id. at pp. 258, 259.)

                                               19
B. Prudential's Contentions

       Prudential contends the trial court erred when it found Prahm was the procuring

cause of the Joergers' purchase of the Sammis property. Asserting the Joergers severed

their relationship with Prahm in July 2007, it maintains the evidence demonstrates

Joerger and Sammis did not enter into a cognizable purchase agreement until October

2007 and the transaction was not consummated until three months later following further

negotiations, threatened cancellations of escrow, and changes to the essential terms of the

purchase agreement. In view of this evidence, Prudential suggests Prahm's contribution

was incidental or merely " 'one in a chain of causes' "; that Prahm's activities were not the

predominant cause in bringing about the Joergers' purchase because he "did not bring the

parties to an agreement" and thus his right to a commission on the eventual purchase did

not accrue. According to Prudential, the only document that could constitute Prahm's

acceptance of Prudential's unilateral offer of compensation was the Joergers' June 18,

2007 letter of intent prepared without Prahm's assistance, but it maintains the letter is not

an enforceable offer to purchase and is irrelevant to the determination since Joerger

revoked it before Sammis responded.

       In making these arguments, Prudential selects and characterizes the evidence in a

manner favorable to its contentions; it has not summarized all of the evidence favoring

Prahm, or even all of the evidence relied upon by the trial court to support its procuring

                                             20
cause finding.7 It also makes assertions unsupported by the record.8 This arguably

results in a forfeiture of the claim. " 'It is well established that a reviewing court starts

7       Though Prudential quotes from the statement of decision, it does not include many
of the trial court's factual findings in its statement of facts, nor does it pass upon the
sufficiency of the evidence of several of the court's findings. Prudential ignores the trial
court's finding that Joerger's reasons for terminating his agency relationship with Prahm
were "obviously pretextual." It does not discuss whether the evidence supports the
court's findings that Prahm accepted the Joergers' request for help to search for a
residence; Prahm "immediately engaged in direct communications with the Joergers";
"Prahm's activities included ascertaining the desired property characteristics and an
acceptable price range"; Prahm created a list of several properties and "at the earliest
opportunity" arranged for Mrs. Joerger to physically inspect it; that "[i]t was apparent to
all that Mrs. Joerger was impressed with the property"; and Prahm's "activities also
included researching and analyzing the property sufficiently for him to determine that
notwithstanding the $15 to $17 million offering price, the value of the property did not
exceed $10 million . . . , the exact number that Mr. Joerger, approximately two months
thereafter, offered in a letter of intent prepared at a time when Prahm was known to be
out of the country." Additionally, Prudential selectively characterizes Kurt Joerger's
April 19, 2007 email responding to Prahm's request that Joerger set out his pros and cons
about the various properties, omitting Joerger's statement that the Sammis property was
"all positive, and the only real contender at present . . . ." Prudential asserts Prahm and
the Joergers did not view properties during rush hour on April 24, 2007, after Prahm set
up an appointment to do so, but in fact Prahm testified that the viewing took place.
Prudential mischaracterizes Prahm's April 24, 2007 email regarding his efforts on the
Joergers' behalf, and it ignores Prahm's correspondence with Kurt Joerger in early May
2007 regarding Joerger's interest in obtaining drawings of the Sammis property with the
idea of developing it. Prudential also includes extraneous facts that are not supported by
record citations, such as the statement, "To everyone's surprise, escrow closed on the
Joergers' purchase of the subject property on December 31, 2007." (Italics added.)
Prudential cites only the purchase agreement for this statement.

8      Prudential states: "Throughout Prahm's involvement with the Joergers, the
Joergers continued to view numerous other properties—both with and without the
assistance of Prahm." (Italics added.) As support for this assertion, it cites to Prahm's
testimony that in April 2007 Kurt Joerger had told him the Joergers did not need to spend
much time at the Sammis property until Sammis became realistic in price. Prahm was
asked: "It is true, is it not, that you continue to show the Joergers multiple properties in
addition to the Sammis property throughout the time period before you left on your
vacation to Denmark, correct?" Prahm responded, "That's correct." There is no
                                               21
with the presumption that the record contains evidence to sustain every finding of fact' "

(Foreman & Clark Corp. v. Fallon (1971) 3 Cal. 3d 875, 881), accordingly, the recitation

of only evidence favorable to the appellant "is not the 'demonstration' contemplated under

the above rule." (Ibid.) To effectively challenge the sufficiency of the evidence, it is

Prudential's burden as cross-appellant to present " 'all of the evidence touching upon the

question involved. When the appellant fails to abide by this well established and

necessary rule of appellate practice, the appellate court is entitled to indulge in a

presumption that the evidence sustains the determination of the trial court.' " (Fox v.

Federated Department Stores, Inc. (1979) 94 Cal. App. 3d 867, 872-873, fn. 3; see also

Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal. App. 4th 547, 557 [an

appellant challenging factual findings by a judge in a nonjury trial must "marshal all of

the record evidence relevant to the point in question and affirmatively demonstrate its

insufficiency to sustain the challenged finding"].)

C. The Court's Procuring Cause Finding is Supported by Substantial Evidence

       Despite the deficiencies in Prudential's arguments, we nevertheless conclude the

evidence amply supports the trial court's procuring cause finding. As indicated, whether

Prahm was a procuring cause of the Joerger/Sammis transaction is a question highly

dependent on the facts. (See Buckaloo v. Johnson, supra, 14 Cal.3d at pp. 820-821, fn. 2;

Colbaugh v. Hartline (1994) 29 Cal. App. 4th 1516, 1526; Jones v. Foster (1931) 116
Cal. App. 102, 108.) Where the evidence conflicts on the issue, the conclusion as to the

indication at the cited portion of the record that the Joergers viewed other properties
without Prahm in that time frame.
                                              22
procuring cause is one for the trial court and will not be disturbed on appeal. (Willson v.

Turner Resilient Floors (1949) 89 Cal. App. 2d 589, 595, citing Jones v. Foster, at p. 108;

Chamberlain v. Abeles, supra, 88 Cal.App.2d at p. 296 [same]; Brea v. McGlashan

(1934) 3 Cal. App. 2d 454, 465-466 [same].)

       In assessing the trial court's procuring cause finding for substantial evidence, we

view the evidence and indulge every reasonable inference from it in Prahm's favor.

(SFPP v. Burlington Northern & Santa Fe Ry. County. (2004) 121 Cal. App. 4th 452, 461-

462; E.A. Strout, supra, 255 Cal.App.2d at p. 258.) "When a trier of fact's resolution of

disputed facts is challenged on the ground that there is no substantial evidence to sustain

it, the power of the appellate court begins and ends with the determination as to whether

on the entire record there is substantial evidence contradicted or uncontradicted that

supports the finding. [Citation.] This standard, however, does not require us to blindly

seize any evidence in support of the trier of fact's findings in order to affirm the

judgment. [Citation.] Rather, it compels us to determine whether a reasonable trier of

fact could have found for the respondent based on the entire record. [Citation.] This is

so because 'substantial' is not synonymous with 'any' evidence, but refers to the quality,

not the quantity of the evidence. [Citation.] So, after reviewing the whole record, we

must determine whether there exists substantial evidence, which is evidence of

ponderable legal significance that is reasonable, credible and of solid value, supporting

the challenged findings of the trier of fact." (Quigley v. McClellan (2013) 214
Cal. App. 4th 1276, 1282-1283.)

                                              23
       DiLauro's opinion testimony, which is unchallenged on appeal by Prudential, itself

constitutes substantial evidence to support the trial court's finding. (See Leung v.

Verdugo Hills Hosp. (2012) 55 Cal. 4th 291, 308-309; Leslie G. v. Perry & Associates

(1996) 43 Cal. App. 4th 472, 487; Wise v. DLA Piper LLP (US) (2013) 220 Cal. App. 4th
1180, 1193.) But setting that aside, the evidence shows Prahm, at the Joergers' request,

expended extensive effort on their behalf in researching and locating desirable properties,

and ultimately introduced them to the Sammis property, culminating in Kurt Joerger

sending Sammis a letter of intent at the very price—$10,000,000—Prahm had advised the

Joergers the property was worth. There is no dispute Prahm originally brought the

Joergers and Sammis together (see Williams v. Kinsey (1946) 74 Cal. App. 2d 583, 593),

and via his efforts, they eventually came to consider the Sammis property their "only

contender" to the extent of putting in an informal offer in June 2007, which led to further

negotiations and the ultimate deal in December 2007. This evidence is sufficient to

support the court's conclusion that Prahm's efforts were, in fact, the "effective cause" of

the transaction. (Accord, E.A. Strout, supra, 255 Cal.App.2d at pp. 255-257; Wilson v.

Roppolo, supra, 207 Cal.App.2d at p. 280; Chamberlain v. Abeles, supra, 88 Cal.App.2d

at p. 296 [originating cause, which ultimately led to the conclusion of the transaction, is

held to be the procuring cause].) This is so despite Kurt Joerger's attempt to exclude

Prahm in July 2007, which the trial court found, without challenge by Prudential on

appeal, was merely a pretext to avoid paying any additional commission. (Rose v.

Hunter, supra, 155 Cal.App.2d at pp. 324-325.) This is not a situation where Prahm

                                             24
merely called the Sammis property to the Joergers' attention and did nothing further, as in

Hill v. Knight, supra, 209 Cal. 14.

       We cannot say the evidence demonstrates a clear break in the chain of events

sufficient to render the court's procuring cause finding without support. Hawkes testified

that in October and November 2007, Joerger and Sammis continued to engage in

negotiations, albeit turbulent; Joerger had trouble with financing and was "in constant

contact" with her and Gilchrist about his lenders. According to Hawkes, during this time

the Joergers walked away from the deal several times. The trial court assessed credibility

and either rejected Hawkes's testimony, or found these difficulties did not change Prahm's

status as the predominate cause of Joerger and Sammis's eventual deal. Nor is the court's

procuring cause finding invalidated by the passage of several months from the time

Prahm was asked to desist his involvement in July 2007 and the ultimate sale in

December 2007. (Accord, Vidler v. De Bell (1954) 125 Cal. App. 2d 326, 329 [evidence

amply supported trial court's conclusion that broker's sales agent was the procuring cause

of a sale where he introduced the purchaser to the seller and was in touch with purchaser

for about one month, the seller then told the sales agent to "leave [the purchaser] alone"

and the seller "[would] take care of him," and the agreement to purchase was executed

some four months after the broker's last contact with them; "[t]he interpretation was for

the trial court as to whether or not this was a break in the chain of events"].) To the

extent there was any break in Prahm's effort, it was only the consequence of Kurt

Joerger's ruse to exclude him from the transaction so as to obtain a more favorable

purchase price. Under these circumstances, where Prahm's efforts brought the Joergers

                                             25
and Sammis together and they eventually consummated their transaction, it is not fatal to

the court's procuring cause finding that Prudential's MLS listing expired in September

2007. (E.A. Strout, supra, 255 Cal.App.2d at p. 259; Wilson v. Roppolo, supra, 207

Cal.App.2d at pp. 280-281.)

       Prudential seeks to distinguish E.A. Strout, supra, 255 Cal. App. 2d 254 and

characterizes it as inapposite, pointing out the case predates the current MLS system and

involves a non-exclusive "open" listing, as well as a procuring cause claim by a listing

agent against the seller. Prudential does not, however, explain the legal significance of

the different listing agreements on the procuring cause analysis,9 or whether the MLS

system changes that analysis merely because Prahm was not seeking a commission as a

listing agent, but as a cooperating broker. Rather, Prudential simply focuses on the facts

and characterizes them in its favor, asserting this case involves "a claim by an agent who

was not involved in the sale, who never presented any signed document in furtherance of

9       Section 1086 defines the types of listings. An exclusive right to sell listing "is a
listing whereby the owner grants to an agent, for a specified period of time, the exclusive
right to sell or to find or obtain a buyer for the property, and the agent is entitled to the
agreed compensation if during that period of time the property is sold, no matter who
effected the sale, or the listing agent receives and presents to the owner any enforceable
offer from a ready, able, and willing buyer on terms authorized by the listing or accepted
by the owner. The exclusive right to sell listing may provide for compensation of the
listing agent if the property is sold within a specified period after termination of the
listing to anyone with whom the agent has had negotiations before that termination."
(§ 1086, subd. (f)(1).) An open listing "is a listing which grants no exclusive rights or
priorities to the listing agent, and a commission is payable to the agent only if the agent
procures and presents to the owner an enforceable offer from a ready, able, and willing
buyer on the terms authorized by the listing or accepted by the owner, before the property
is not otherwise sold either through another agent or by the owner directly and before the
listing expires by its terms or is revoked." (§ 1086, subd. (f)(3).)
                                             26
the sale, who had no agency agreement with the buyer, and with whom the ultimate buyer

unequivocally severed his relationship." It has not established any distinction rendering

E.A. Strout's procuring cause discussion inapplicable.

           II. Prahm's Appeal of the Trial Court's Determination of Damages

       Prahm contends that pursuant to section 3302 and MLS rules 7.12 and 7.13, he

was entitled to recover the full amount of the 2.5 percent commission offered in the MLS

listing advertised to brokers and other MLS participants, including Coldwell Banker. He

argues the trial court's finding underlying its reduction in damages—that the parties had

agreed to reduce their commission and share it equally in order to close the deal—is not

supported by any evidence. Prahm maintains his testimony was that he would need

approval from Coldwell Banker to implement such a reduction and the testimony from

agents Hawkes and Gilchrist did not establish Coldwell Banker's agreement to be paid

less than two percent of the selling price. Further, Prahm argues the agents were not

parties to the contract, and as a consequence lacked authority to make any agreement

regarding the cooperating broker commission. Thus, Prahm argues, even if the facts

supported the trial court's finding as to an agreement by the agents to reduce their

commission, those facts could not support a modification of the MLS listing agreement as

a matter of law.

       Prudential concedes that by listing the Sammis property on the MLS, it extended a

unilateral offer of compensation to participating MLS brokers, which would be accepted

by any broker who procured an eventual purchaser for the property. It argues, however,

that the MLS rules, specifically MLS rule 7.16, gives listing brokers the right to

                                             27
unilaterally change the offer of compensation to all broker participants, and that

substantial evidence supports the court's finding that the parties here modified

Prudential's unilateral compensation offer so as to facilitate the transaction.

A. The Applicable MLS Rules

       The parties agreed at trial, in accord with their respective experts' testimony, that

the MLS rules applied to the parties' relationship and were by definition incorporated by

reference into their contract.10 Thus, with respect to the MLS rules, we apply the

analogous principle that " '[a]pplicable law becomes part of the contract as fully as if

incorporated by reference . . . .' " (City of El Cajon v. El Cajon Police Officers' Assn.

(1996) 49 Cal. App. 4th 64, 71.)

       Prudential's concession about the contractual nature of its listing is consistent with

MLS rule 7.12, entitled Unilateral Contractual Offer, which provides in part: "In filing a

property with the MLS, the broker participant makes a blanket unilateral contractual offer

of compensation to the other MLS broker participants for their services in selling the

10      Even if the parties had not agreed that the MLS rules were incorporated by
reference, the court would have properly considered them as evidence of industry custom.
The custom and practice in an industry is relevant to the interpretation of a contract and
may inform its meaning, where no contrary intent appears from the contract terms.
(Howard Entertainment, Inc. v. Kudrow (2012) 208 Cal. App. 4th 1102, 1114; Ecco–
Phoenix Electric Corp. v. Howard J. White, Inc. (1969) 1 Cal. 3d 266, 271; Midwest
Television, Inc. v. Scott, Lancaster, Mills & Atha, Inc. (1988) 205 Cal. App. 3d 442, 451.)
If evidence regarding custom and practice is not in conflict and there is no other conflict
in the extrinsic evidence, the interpretation of a contract in light of the custom and
practice, and in light of any other extrinsic evidence, is a question of law for the court
alone to decide. (See City of Hope Nat. Medical Center v. Genentech, Inc. (2008) 43
Cal. 4th 375, 395; Parsons v. Bristol Development Co., supra, 62 Cal.2d at p. 865; City of
El Cajon v. El Cajon Police Officers' Assn., supra, 49 Cal.App.4th at p. 71.)

                                              28
property. Except as set forth in Rule 7.15 below or pursuant to California Civil Code

Section 1087, a broker participant must specify some compensation to be paid to the

buyer's agent or a subagent and the offer of compensation must be stated in one, or a

combination of, the following forms (1) a percentage of the gross selling price; or (2) a

definite dollar amount. The amount of compensation offered through the MLS may not

contain any provision that varies the amount of compensation offered based on conditions

precedent or subsequent or on any performance, activity or event."

       MLS Rule 7.13, entitled Acceptance of Contractual Offer, provides in part: "The

broker participant's contractual offer (with or without subagency) is accepted by the

participant/selling broker by procuring a buyer which ultimately results in the creation of

a sales or lease contract. Payment of compensation by the participant/ listing broker to

the participant/cooperating broker under this section is contingent upon either (1) the

final closing or (2) the participant/listing broker's receipt of moneys resulting from the

seller's or buyer's default of the underlying sales or lease contract. Notwithstanding this

section, the listing broker and/or cooperating broker shall still retain any remedies they

may have against either the buyer or seller due to a default under the terms of the

purchase agreement, listing agreement or other specific contract."

       MLS rule 7.16, entitled Changes to Offer of Compensation By Listing Broker to

All Broker Participants, provides: "The listing broker participant may, from time to time,

adjust the published compensation offered to all MLS broker participants with respect to

any listing by changing the compensation offered on the MLS or providing written notice

to the MLS of the change. Any change in compensation will be effective after the change

                                             29
is published in the MLS, either through electronic transmission or printed form,

whichever occurs first. The listing broker may revoke or modify the offer of

compensation in advance as to any individual broker participant in accordance with

general contract principles but in no event shall the listing broker revoke or modify the

offer of compensation without the cooperating broker's consent later than the time the

cooperating broker (a) physically delivers or transmits by fax or email to the listing

broker a signed offer from a prospective buyer to purchase the property for which the

compensation has been offered through the MLS, or (b) notifies the listing broker in

person or by telephone, fax or email that the cooperating broker is in possession of a

signed offer from a prospective buyer to purchase the property for which compensation

has been offered through the MLS and is awaiting instructions from the listing broker as

to the manner of presentation or delivery of that offer. Any independent advance

revocations, modifications of the offer or agreements between real estate brokers are

solely the responsibility of such brokers and shall not be submitted to, published by, or

governed in any way by SANDICOR, Inc."

B. Legal Principles Regarding Contract Interpretation, Unilateral Contracts and

Modification

       "The interpretation of a contract term presents a question of law we review

independently. [Citation.] 'We infer the parties' intent from the written provisions of the

contract. [Citation.] The written provisions of a contract "are to be understood in their

ordinary and popular sense, rather than according to their strict legal meaning; unless

used by the parties in a technical sense, or unless a special meaning is given to them by

                                             30
usage . . . ." [Citation.] [¶] "Thus, if the meaning a lay person would ascribe to contract

language is not ambiguous, we apply that meaning." [Citation.] "An ambiguity arises

only if '. . . there [is] more than one construction in issue which is semantically

permissible . . . . ' " ' " (Schaffter v. Creative Capital Leasing Group, LLC (2008) 166
Cal. App. 4th 745, 751.)

       "In a unilateral contract, there is only one promisor, who is under an enforceable

legal duty. [Citation.] The promise is given in consideration of the promisee's act or

forebearance." (Asmus v. Pacific Bell (2000) 23 Cal. 4th 1, 10, citing 1 Corbin on

Contracts (1993) § 1.23, p. 87.) This is so in the context of a listing filed with the MLS:

" 'When [a] listing is filed with the Multiple Listing Service there is an express offer to

pay compensation to a member of the Service who procures a buyer; the amount of the

compensation is stated as a specific sum or a percentage of the sales price of

the property.' " (Colbaugh v. Hartline, supra, 29 Cal.App.4th at p. 1523, fn. 3, quoting

(1 Miller & Starr, Cal. Real Estate (2d ed.1989) § 2:30, p. 621.)

       A contract that is unilateral at inception, may, through the acts of the parties, ripen

into a bilateral contract. (Los Angeles Traction Co. v. Wilshire (1902) 135 Cal. 654, 658

["The contract at the date of its making was unilateral, a mere offer that, if subsequently

accepted and acted upon by the other party to it, would ripen into a binding, enforceable

obligation"]; see Baumgartner v. Meek (1954) 126 Cal. App. 2d 505, 508; Caldwell v.

Dalaray Mines (1945) 68 Cal. App. 2d 180, 183.) A written listing that is an offer of a

unilateral contract to be accepted by performance of a requested act results in a

contractual relation: "Though the basic offer to pay a commission for the procuring of a

                                             31
purchaser ready, able and willing to buy can still be accepted only by performance,

nevertheless it has been held that these restrictive stipulations bind the owner and subject

him to liability if he refuses to abide by them." (Baumgartner, at p. 509.)

       Proof that parties orally modified the written listing must meet the test of section

1698. (Coldwell Banker & Co. v. Pepper Tree Office Center Associates (1980) 106
Cal. App. 3d 272, 279, disapproved as to clear and convincing proof standard in Barrett v.

Bank of America (1986) 183 Cal. App. 3d 1362, 1371.) A written contract may be

modified by another written contract. (§ 1698, subd. (a).) It may be modified by an oral

agreement to the extent it is "executed by the parties" (§ 1698, subd. (b)), or supported by

new consideration and the statute of frauds is satisfied. (§ 1698, subd. (c).) Additionally,

a written contract can be modified by an oral agreement under the doctrines of rescission,

waiver, novation and substitution, estoppel and independent or collateral agreements.

(§ 1698, subd. (d); Coldwell Banker, at p. 279.)

C. The MLS Listing Bound Prudential to Pay Prahm a 2.5 Percent Commission as the

Procuring Cause; There is No Substantial Evidence of an Enforceable Modification of

the Written Listing

       The contents of Prudential's MLS listing, which here includes the MLS rules,

determine the parties' rights. (See, e.g., Colbaugh v. Hartline, supra, 29 Cal.App.4th at

p. 1526; Howard Gitlen & Associates, Inc. v. Ameri (1989) 208 Cal. App. 3d 90, 95; see 2

Miller & Starr, Cal. Real Estate (3d ed. 2011) § 5:26, p. 5-116.) Under the plain terms of

the listing, as supplemented by MLS rules 7.12 and 7.13, Prahm accepted Prudential's

unilateral contractual offer of compensation—and the offer ripened into a binding,

                                             32
enforceable obligation—when he procured the Joergers as buyers, and payment of a

commission to him was "contingent upon . . . a final closing . . . ." (MLS rule 7.13.)

Having upheld the trial court's finding that Prahm procured the Joergers, and in view of

the undisputed evidence that Sammis and Joergers consummated their transaction in

December 2007, the listing agreement entitled Prahm to 2.5 percent of the $9,889,000

purchase price, or $247,225.

       Here, however, the trial court found that the "parties had previously agreed to

reduce and share equally in the commission . . . " and that "the decision to accept this

negotiated sum . . . had the legal effect of modifying the gross commission proceeds

available to the competing parties . . . . " (Footnote omitted.) MLS rule 7.16 gives

Prudential the ability to modify its offer of compensation to all MLS broker participants

if it publishes the change in the MLS. The rule also gives Prudential the ability to modify

its offer in advance as to any individual broker participant but only "in accordance with

general contract principles . . . ." (MLS rule 7.16, italics added.) Thus, with respect to

Prahm's commission, any modification of the listing agreement had to comport with

section 1698, in that, if the modification was oral as it was purported to be here, it either

had to be supported by consideration, or be fully executed. (§ 1698, subds. (b), (c).)

       The evidence of Prahm's June 28, 2007 meeting with Hawkes and Gilchrist does

not meet the legal standards for modification. We interpret the term "executed" as that

term is normally used in contract law, that is, in order to be executed, the agreement

"must be fully performed on both sides." (Lockheed Missiles & Space Co. v. Gilmore

Industries, Inc. (1982) 135 Cal. App. 3d 556, 559; see also § 1661 ["An executed contract

                                              33
is one, the object of which is fully performed"]; Coldwell Banker & Co. v. Pepper Tree

Office Center Associates, supra, 106 Cal.App.3d at p. 280 [an oral agreement not to

perform is executed by not performing].) Here, the three agents merely discussed

reducing the commission generally and, viewing the testimony in the light most favorable

to the trial court's finding, agreed to drop it from 2.5 percent to 2 percent. But that

agreement was never carried out by Prudential by either publishing the change in the

MLS in accordance with MLS rule 7.16, or by actually paying Prahm the reduced

commission upon the close of escrow.

       Further, the MLS listing—as an "agreement authorizing . . . an agent . . . or any

other person to . . . procure, introduce, or find a purchaser . . . of real estate"—is subject

to the statute of frauds. (§ 1624, subd. (a)(4); Phillippe v. Shapell Industries (1987) 43
Cal. 3d 1247, 1255.) Thus, an oral modification is precluded by the statute of frauds.

Even if that were not the case, we see nothing in the evidence indicating there was any

performance in addition to that already bargained for that might serve as consideration

for a modification (see Goodman v. Citizens Life & Cas. Ins. Co. (1967) 253 Cal. App. 2d
807, 817-818; M/V American Queen v. San Diego Marine Const. Corp. (9th Cir. 1983)

708 F.2d 1483, 1489) or forbearance sufficient to constitute consideration. (Coldwell

Banker & Co. v. Pepper Tree Office Center Associates, supra, 106 Cal.App.3d at pp.

279-280.)

       Though it acknowledges the court's modification finding must be supported by

substantial evidence, Prudential's arguments do not convince us that such evidence exists.

It quotes the relevant portions of the court's statement of decision, then complains about

                                              34
the possible loss of its own portion of the commission: "Prahm asked the trial court, and

is asking this court, to award him the full commission set forth in the original listing

agreement. If the court were to grant Prahm his requested relief, the result would be to

deny Prudential any compensation whatsoever for its lengthy listing and marketing of the

subject property. This would defeat the parties' intentions as the evidence shows that the

parties never intended to deprive Prudential, the listing agent, of its earned commissions."

Ignoring the court's procuring cause finding and discussing evidence tangential to the

modification issue, Prudential further asserts Prahm was "fired by the Joergers months

before they ever submitted an offer to purchase"; that the Joergers "instructed Prudential

that Prahm was no longer [their] agent"; "Prudential continued to represent the sellers

only throughout the ensuing months of their off-and-of negotiations with the Joergers";

and Prudential, when instructed to do so, "communicated with the Joergers' representative

of choice, [their] attorney . . . ."

       The only pertinent argument made by Prudential as to the modification is that the

court "look[ed] at the mutual intent of the agents" in determining that the commission

agreement was modified. Though Prudential states contract interpretation principles

require this analysis, it maintains "no such contract exists here, as Prudential made a

unilateral offer which the court found Prahm accepted by introducing at least one of the

eventual purchasers to the subject property." Prudential says the issues are "complicated

by the fact that Prahm was not involved with the Joergers' purchase of the subject

property at the time they finally submitted an offer on September 29, 2007" and so it was

the June 28, 2007 meeting that reflects the modification agreement: "[T]he court found

                                             35
that the agents recognized the need to cut the proposed broker compensation amount in

order to be in a potential position to earn any commissions at all" and "determined that

the transaction would not and could not have been consummated had the commissions

not been reduced." Finally, Prudential asserts: "Contrary to Prahm's assertions at trial,

there was no evidence that Prudential purposefully exclude Prahm [sic] from any of the

commission negotiations. Rather, the evidence clearly supported the trial court's finding

that Prudential was instructed by the Joergers not to deal with Prahm. The evidence

supports the court's ruling that had the commission structure not been adjusted

downward, the transaction would never have happened."

       These arguments are unavailing in view of the foregoing principles governing an

enforceable modification. Absent evidence of a viable modification of the listing

agreement, we must reverse the judgment as to Prahm's damages.

                         III. Prejudgment Interest Determination

       The trial court ruled Prahm's damages were subject to calculation under section

3287, subdivision (b) and awarded him prejudgment interest from the July 1, 2010 filing

date of his complaint. This ruling was premised on the court's finding that the parties had

modified the written MLS listing and negotiated a lesser commission, a factual finding

that is not supported by the evidence.

       Section 3287 provides for prejudgment interest on damages recoverable when the

amount due is capable of ascertainment. Subdivision (a) provides in pertinent part:

"Every person who is entitled to recover damages certain, or capable of being made

certain by calculation, and the right to recover which is vested in him upon a particular

                                            36
day, is entitled also to recover interest thereon from that day . . . ." (§ 3287, subd. (a).)

Under section 3278, subdivision (b), the trial judge has discretion to award prejudgment

interest on "a cause of action in contract where the claim was unliquidated."

       To recover prejudgment interest under section 3287, subdivision (a), it must be

shown that the defendant knew the amount due, or could have computed it from

reasonably available information. (Chesapeake Industries, Inc. v. Togova Enterprises,

Inc. (1983) 149 Cal. App. 3d 901, 907.) The rationale is that a defendant should not be

liable for interest on sums he could not have determined without a trial. (KGM

Harvesting Co. v. Fresh Network (1995) 36 Cal. App. 4th 376, 391.) Thus, prejudgment

interest is allowable where the amount due a plaintiff is fixed by the terms of a contract.

(Great Western Drywall, Inc. v. Roel Construction Co., Inc. (2008) 166 Cal. App. 4th 761;

National Farm Workers Service Center, Inc. v. M. Caratan, Inc. (1983) 146 Cal. App. 3d
796, 809.)

       "If damages are 'certain,' interest must be awarded as a matter of right. [Citations.]

Moreover, '[damages] are deemed certain or capable of being made certain within the

provisions of subdivision (a) of section 3287 where there is essentially no dispute

between the parties concerning the basis of computation of damages if any are

recoverable but where their dispute centers on the issue of liability giving rise to

damage.' " (National Farm Workers Service Center, Inc. v. M. Caratan, Inc., supra, 146

Cal.App.3d at p. 809; North Oakland Medical Clinic v. Rogers (1998) 65 Cal. App. 4th
824, 828.)

                                              37
       As we have concluded above, Prahm's commission as the cooperating broker was

readily ascertainable from the MLS listing, and was set at 2.5 percent of the property's

sales price. That agreement became an enforceable bilateral obligation when Prahm

procured the Joergers, contingent and payable on the close of the Joerger/Sammis sales

transaction. At trial, Prudential disputed Prahm's status as a procuring broker, and his

entitlement to any commission for his efforts. But that dispute over liability does not

impact the prejudgment interest analysis. Because the amount of Prahm's commission

was a matter of arithmetic and capable of calculation at the time the Joergers and Sammis

closed escrow on the Sammis property, Prahm is entitled as a matter of right to

prejudgment interest on the principal amount of $247,225 from December 31, 2007.

(Accord, McDonald v. Bernard (1927) 87 Cal. App. 720; McKinley v. Lagae (1962) 207
Cal. App. 2d 284, 294.)

    IV. Recovery of Expert Witness Fees Under Code of Civil Procedure Section 998

       Before trial, Prahm served Prudential with a Code of Civil Procedure section 998

offer to compromise by having a judgment entered in his favor for $166,999.00 including

costs. Prudential apparently rejected the offer.

       After trial, Prahm filed a cost memorandum seeking, in part, to recover $13,134.70

in expert witness fees. Prudential moved to tax Prahm's requested costs, including the

expert fees, arguing the court did not order expert testimony in the case, Prahm did not

obtain a more favorable judgment than his $166,999.00 offer, and he had not provided

backup evidence of payment for any of his costs. Prahm did not oppose Prudential's

motion with respect to his expert fees, and on October 12, 2012, the trial court,

                                             38
acknowledging Prahm's silence that issue, granted Prudential's motion in part, awarding

Prahm $8,466.39 in costs.

       Prahm challenges the trial court's ruling as to his expert fees, on grounds he is now

entitled to those fees because the judgment for his commission should have been more

favorable than his offer. We conclude we lack jurisdiction over this challenge because,

while Prahm appealed from the May 14, 2012 judgment and the July 13, 2012 order

awarding prejudgment interest, he did not separately appeal from the trial court's October

12, 2012 order granting in part and denying in part Prudential's motion to tax. (Pfeifer v.

John Crane, Inc. (2013) 220 Cal. App. 4th 1270, 1315-1318.)

                                      DISPOSITION

       The judgment is reversed and the matter remanded with directions that the trial

court enter a new judgment awarding Ole Prahm $247,225, plus prejudgment interest on

that amount from December 31, 2007. Prahm is entitled to recover his costs on appeal.

                                                                            O'ROURKE, J.

WE CONCUR:

NARES, Acting P. J.

HALLER, J.

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