It is well settled under California law that, pursuant to the Statute of Frauds, see Civil Code Section 1624, a real estate broker's listing agreement must be the subject of a signed writing in order for there to be an enforceable commission arrangement.
However, a question that arises is where there are multiple owners of a parcel and less than all of the owners sign the listing agreement. Can the partially executed listing agreement be enforced against the owners which did not sign the listing agreement based on a joint venture theory (absent a power of attorney)? That question has been answered in part in the recent California Court of Appeal decision in Bernice Jacobs v. John B. Locatelli (2017) DJDAR 1186 ("Jacobs case"). In the Jacobs case, Bernice Jacobs, a licensed California real estate broker, signed a "Vacant Land Listing Agreement" under which she was granted the "exclusive and irrevocable right" to sell a parcel of real property in Marin County with a listing price of $2,200,000. The term of the listing agreement was for one year from the date of the signing of the listing agreement, which in this case would have been to April 9, 2014. Jacobs signed the listing agreement. John B. Locatelli, one of the owners of the property, signed as "Trustee of the John B. Locatelli Trust." There were signature lines for five additional owners. However, none of the additional five owners ever signed the listing agreement, even though there were blanks for their signatures on the listing agreement. Jacobs claimed that Locatelli told her that, when he was signing the listing agreement, he was authorized to act on behalf of the other owners. Jacobs then found a buyer. However, the owners, including Locatelli, later claimed that they did not owe a commission because five of the six owners did not sign the listing agreement and Locatelli even claimed he was not liable under the listing agreement because it could not be enforced unless all of the owners had signed the agreement. Jacobs in turn claimed that there was a written agency agreement between Locatelli and the other owners (although she was not able to locate that and claimed she could develop that in discovery).
Jacobs then sued the six owners of the Marin County property plus the potential purchaser. The owners of the Marin County property demurred on the basis that the listing agreement could not be enforced based upon the Statute of Frauds. They also argued, under what is known as the Equal Dignities Rule, that Jacobs could not pursue a
The Morrison Law Journal
February 2017
Volume XII, Edition 2
When It Does Not Have To Be Signed – Court Of Appeal Permits Real Estate Broker's
Unpaid Fee Claim To Proceed Against Owners Of Real Property Who Did Not Sign
Listing Agreement
By: Edward F. Morrison, Jr., Esq.
Larry A. Schwartz, Esq.
1
claim that Locatelli had signed the listing agreement on behalf of the others unless Jacobs had written proof of Locatelli's "supposed agency" citing Civil Code Section 2309.
On Appeal, the Court of Appeal reversed. The Court ruled that neither the Statute of Frauds itself nor the Equal Dignities Rule was directly applicable. The Court of Appeal ruled that the "real issue" was whether Jacobs' allegation that Locatelli signed on behalf of the other five owners could form the basis for liability based on a joint venture theory and, if so, would that satisfy the Statute of Frauds. Based on the facts set forth in the pleadings, the Court of Appeal ruled that Jacobs had in fact framed an argument which would satisfy the Statute of Frauds.
The holding in the Jacobs case is important not only in real estate broker cases, but perhaps other matters in which one of many owners of real property sign an agreement and that a service provider, based upon the signature of less than all of the owners, provides services.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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