Court Opinion

ID: 9959814
Source: CourtListenerOpinion
Date Created: 2024-04-12 17:01:34.201772+00
Date Added: 2024-06-11T08:18:54.583718
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       APR 12 2024
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

AFC REALTY CAPITAL, INC.,                       No.    22-16786

                Plaintiff-Appellee,             D.C. No.
                                                2:18-cv-02389-MCE-JDP
 v.

SUNDEEP S. DALE; et al.,                        MEMORANDUM*

                Defendants-Appellants.

                  Appeal from the United States District Court
                      for the Eastern District of California
                Morrison C. England, Jr., District Judge, Presiding

                      Argued and Submitted February 5, 2024
                            San Francisco, California

Before: R. NELSON, FORREST, and SANCHEZ, Circuit Judges.

      Defendant-Appellants Sundeep S. Dale; Rohit Ranchhod; Dale Investments,

LLC; Sundeep Dale, LLC; California Fruit Building, LLC; and American

Hospitality Services, Inc. (Defendants) appeal the district court’s order granting

summary judgment to Plaintiff-Appellee AFC Realty Capital, Inc. asking us to direct

the district court to grant summary judgment for Defendants instead. Alternatively,

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Defendants argue the cross motions for summary judgment should be denied and the

case remanded for trial. Finally, Defendants challenge the district court’s award of

prejudgment interest. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      We review the district court’s grant of summary judgment de novo. See Idaho

Conservation League v. Poe, 86 F.4th 1243, 1246 (9th Cir. 2023). We review a grant

or denial of prejudgment interest for abuse of discretion. See Acosta v. City Nat’l

Corp., 922 F.3d 880, 885 (9th Cir. 2019).

      1.       Brokerage activities “within this state.” Under California Business and

Professions Code § 10130, “[i]t 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.” “A contract to perform

acts barred by California’s licensing statutes is illegal, void and unenforceable.”

Consul Ltd. v. Solide Enterprises, Inc., 802 F.2d 1143, 1148 (9th Cir. 1986).

California’s licensing statute further expressly prohibits any lawsuit seeking

compensation for unlicensed broker activity occurring “within” California. Cal. Bus.

& Prof. Code § 10136.1 Thus, a plaintiff who performed work as an unlicensed

      1
          The full text of the relevant portion of § 10136 reads as follows:

      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

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broker “within” California has no contract remedy for work performed and cannot

recover in equity. See Castillo v. Barrera, 146 Cal. App. 4th 1317, 1328–29 (2007);

Consul, 802 F.2d at 1151 n.8 (Even “de minimis brokerage activity in California

[without a license] . . . bar[s] recovery under California law” from breach of contract

lawsuits.).

      The parties dispute the meaning of “within this state” as used in § 10130.

There is no published California authority construing what constitutes broker

activities “within this state” under the relevant statutes. But we addressed this

question in Consul. Applying California law, we held that a real estate broker who

was not licensed in California could recover for services relating to property located

in California because he did not perform any regulated acts within the physical

boundaries of California. Consul, 802 F.2d at 1149–51. We explained that absent

California case law directly addressing the issue, we were “hesit[ant] to ignore [the]

plain language” of §§ 10130 and 10136, which clearly “refer to acts within the state.”

Id. at 1149–50.

      Consul has not been undermined by any subsequent California appellate

decision. Therefore, Consul controls given its factual similarity to this case. Like the

brokers in Consul, see id. at 1149, AFC and its president Arthur Fefferman did not

      and proving that he or she was a duly licensed real estate broker or real
      estate salesperson at the time the alleged cause of action arose.

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perform any broker work within the geographic boundaries of California. See Cal.

Bus. & Prof. Code § 10131; see also Tyrone v. Kelley, 9 Cal. 3d 1, 11 (1973) (“[A

broker] enters into the negotiation of the transaction or other activities beyond

introduction.”). Fefferman visited California once to tour the California Fruit

Building. He testified that he did not solicit any lenders during this trip. deposed,

Ranchhod did not recall Fefferman’s visit, and Dale recalled only having dinner with

Fefferman after his tour of the building.2 This record does not establish as a matter

of law that Fefferman sold, negotiated to sell, offered to sell, solicited prospective

buyers or lenders, leased, negotiated loans, or negotiated the purchase of a business

opportunity while he was in California.3 See Cal. Bus. & Prof. Code § 10131.

      2
         We deny AFC’s motion to take judicial notice of excerpts from the
depositions of Ranchhod and Dale [Dkt. 30]. The district court granted AFC’s
motion to correct the record on appeal, see Order, AFC Realty Cap., Inc. v. Dale,
No. 2:18-cv-02389 (E.D. Cal. June 17, 2022), ECF No. 96, which included excerpts
from these deponents’ depositions. See id. ECF Nos. 93-3, 93-4. Those excerpts are
thus part of the record on appeal. See Fed. R. App. P. 10(a); see also 9th Cir. R. 10-
2 (contents of the record on appeal). And judicial notice of documents filed with the
district court is unnecessary. Asvesta v. Petroutsas, 580 F.3d 1000, 1010 n.12 (9th
Cir. 2009). In reaching its decision, this court does not rely on deposition testimony
outside of the excerpts presented in the district court.
       3
         Defendants argue that the difference in procedural posture between Consul
and this case is material. If anything, this cuts against Defendants’ arguments
because the district court here had a developed summary judgment record that lacked
any evidence that Fefferman engaged in broker activities in California. In contrast,
the district court in Consul had only pleadings and was required to take the
nonmovant’s factual allegations as true. See Hanagami v. Epic Games, Inc., 85 F.4th
931, 938 (9th Cir. 2023). More importantly, the procedural posture has no effect on
the precedential authority of statutory interpretation.

                                          4
      Defendants suggest that, at a minimum, there are triable issues of fact that

defeat both parties’ competing motions for summary judgment. But Defendants offer

no explanation or description of the material facts that they contend are in dispute,

and as the district court correctly stated, there is “no dispute that all relevant work

was performed by Fefferman in New York, where he had a broker’s license, and not

in California.” The dispute presented is a legal question, grounded in statutory

interpretation, about whether the agreed-upon facts of Fefferman’s activities outside

California are sufficient to invoke California’s real estate licensing statutes requiring

that brokers “within the state” be licensed by California. See United States v.

Marbella, 73 F.3d 1508, 1515 (9th Cir. 1996) (stating statutory interpretation is a

legal question). This is properly resolved at summary judgment.

      Moreover, Defendants neither questioned AFC’s performance nor offered any

argument challenging the district court’s conclusion that Defendants breached their

contract with AFC. Therefore, the district court did not err in resolving the cross

motions in favor of AFC and finding no dispute of material fact as to whether AFC

or Fefferman performed broker activities “within” California and Defendants

breached their contract.

      2.     Judicial Admission. Defendants also argue the district court erred by

not addressing that AFC’s first amended complaint sought a “finders” fee rather than

broker compensation. According to Defendants, the reference to a “finder’s fee” is

                                           5
a judicial admission that binds AFC and AFC cannot recover fees as a broker. This

argument fails for two reasons. First, as a procedural matter, Defendants waived this

issue by not raising it to the district court despite having ample opportunities to do

so after AFC filed its first amended complaint. See Tarpey v. United States, 78 F.4th

1119, 1126 (9th Cir. 2023) (“[A]n issue will generally be deemed waived on appeal

if the argument was not raised sufficiently for the trial court to rule on it.” (citation

omitted)). Second, on the merits, in this context a “finder” is a legal category (as is

“broker”) rather than a factual assertion. See Cal. Bus. & Prof. Code § 10131. As a

result, AFC’s reference to a “finder’s fee” is not a judicial admission. See, e.g., Am.

Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988) (judicial

admissions are factual assertions).

      3.     Prejudgment Interest. Finally, Defendants argue that the district court

erred in awarding prejudgment interest “from the time that the Stonehill Term Sheet

was signed, rather than the date of breach and/or the date of closing of the loan.”

California caselaw clearly states that prejudgment interest accrues from the day “the

amount of damages become certain or capable of being made certain, not the time

liability to pay those amounts is determined.” Evanston Ins. Co. v. OEA, Inc., 566

F.3d 915, 921 (9th Cir. 2009) (discussing Cal. Civ. Code § 3287(a)). AFC’s damages

became certain in August 2017 when the parties signed the Term Sheet and Stonehill

stated the amount it would loan Defendants. Because AFC’s fees are based on a

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percentage of the “loan commitment amount,” the district court appropriately

awarded prejudgment interest on AFC’s restitution claims from the date that the loan

agreement between Defendants and the lender that AFC procured was signed.

      AFFIRMED.

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