Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

STATEMENT OF ISSUE The issue is the main point on which the case is determined. It should be stated as a one sentence question. It

STATEMENT OF ISSUE The issue is the main point on which the case is determined. It should be stated as a one sentence question. It is the central question of debate between the parties and focuses on the main point of contention between the parties. Narrow the issue down to the specific question the court had to answer in order to decide the case. RULES The rules are the law(s) that the court found applicable to the case. Rules may consist of Constitutional Law, statutes (codes) and other previous cases. Identify the rules that the court found to be the most relevant in deciding the case. ANALYSIS The analysis is that part of your brief where you describe how the court applied the rules to the facts of the case being considered. Discuss the factors that the court found to be most important in deciding the case. Show how the law interfaced with the facts of the case. CONCLUSION This is the ultimate result reached by the court. After the court applies the law to the facts of the case, the court comes to a logically determined result. The conclusion includes a statement of the holding (decision) in the case. Century 22 Region V., Inc. v. Rockton Realty, Inc. Appellate Department, Superior Court, Los Angeles. CENTURY 22 REGION V., INC., Plaintiff and Respondent, v. ROCKTON REALTY, INC., Defendant and Appellant OPINION WOODS, J. Statement of the Case Appellant is a California corporation licensed to act as a real estate broker. Defendant, Nick Rockton, is the sole stockholder and principal operating officer of Rockton Realty, Inc. Nick Rockton was engaged as a real estate broker for Rockton Realty, Inc. Respondent, Century 22 Region V., Inc. (Century 22 or respondent herein), is a California corporation engaged in franchising real estate brokerage offices throughout California. Respondent and appellant corporation entered into a franchise agreement under which appellant operated a real estate brokerage office in Santa Ridge Springs, California. The franchise agreement consisted of a printed form prepared by respondent, and, with a specific exception for income from property management services, provided in pertinent part as follows: "Franchisee [appellant] agrees to pay ... a 'service fee' equal to 6 percent of Franchisee's gross income derived from all transactions for which a real estate license or securities license is required . At the franchise location covered by the agreement, in addition to negotiating real estate sales and purchases for clients, appellant also maintained an escrow department which represented to the public at large that it was operating under a Century 22 franchise. Appellant charged its sellers and buyers separate and distinct fees for escrow services

from fees collected on sales commissions. Appellant was not licensed to act as an escrow agent under the general provisions of Financial Code section 17000 et seq. (the Escrow Law). However, appellant did act as an escrow agent under an exception to the Escrow Law -- Financial Code section 17006, subdivision (d). The terms of the franchise agreement provided that appellant corporation was to maintain certain prescribed records and report to respondent those transactions for which a service fee was payable. During the time of the agreement, appellant failed to report any transactions or income received from the operation of its "escrow" business. Upon the termination of the franchise agreement, respondent conducted an audit of the books and records of appellant's franchise. The audit was authorized by the franchise agreement. During the audit, respondent discovered that appellant had not paid a service fee for the income derived from escrow services. Respondent demanded payment from appellant, and from defendant, Nick Rockton. Appellant and defendant Nick Rockton refused to pay since they did not think that the agreement covered income derived from escrow services. This alleged underpayment was the basis for respondent's complaint. The trial court determined that the franchise agreement included an obligation by appellant and defendant Nick Rockton to pay respondent a 6 percent service fee for income derived from escrow fees. Appellant filed a timely appeal of the judgment. Discussion The franchise agreement between appellant corporation and respondent provides that respondent shall be paid "a 'service fee' equal to 6 percent of Franchisee's [appellant's] gross income derived from all transactions for which a real estate license or securities license is required . Appellant contends that, under this agreement, a "service fee" based on payment for escrow services rendered by appellant corporation is not properly chargeable under the franchise agreement since only income derived from transactions which require a real estate license should be included, and a real estate license is not a necessary prerequisite to act as an escrow holder. Appellant argues that since Civil Code section 1654 provides that any uncertainty in interpreting a contract should be interpreted against the party causing the uncertainty, the provision in the franchise agreement for a "service fee" should not be interpreted to include escrow fees. We are not persuaded that there is any uncertainty in the agreement. Under Financial Code section 17006, subdivision (d), appellant was exempt from the "Escrow Law" because it had a real estate license and was "performing acts in the course of or incidental to a real estate transaction in which the broker is an agent ... and in which the broker is performing an act for which a real estate license is required. Otherwise, appellant would have been required to be licensed as an escrow agent by the Commissioner of Corporations in order to perform escrow services. (Fin. Code, 17200.)

The franchise agreement provides for a "service fee" based on all transactions for which a real estate license is required. Although it could be argued that the agreement is not clear and unambiguous on its face as to just which transactions require a real estate license, read in conjunction with the "Escrow Law," it is clear that a real estate license was required for appellant to perform escrow services. Looking at the agreement as a whole, it is reasonable to interpret "service fee" to include income derived from escrow fees collected by the appellant corporation. Grubb v. Ranger Ins. Co. (1978) 77 Cal.App.3d 526, 529 [143 Cal.Rptr. 558], follows a lengthy line of decisions which hold that: "Generally, all applicable laws in existence when an agreement is made necessarily enter into the contract and form a part of it, without any stipulation to that effect, as fully as if they were expressly referred to and incorporated in its terms." Where no intrinsic evidence has been introduced, the interpretation placed upon the contract by the trial court will be accepted by the reviewing court if such an interpretation is reasonable or if the interpretation is one of two or more reasonable constructions to the contract. (Prickett v. Royal Ins. Co. Ltd. (1961) 56 Cal.2d 234, 237 [14 Cal.Rptr. 675, 363 P.2d 907, 86 A.L.R.2d 711]. The trial court's interpretation of the franchise agreement was reasonable under the circumstances. Accordingly, the judgment is affirmed. Respondent to recover costs on appeal. Newman, Acting P. J., and Roberson, J., concurred. ________________________________________________________________________ Financial Code section 17006 provides in relevant part: "This division does not apply to any broker licensed by the Real Estate Commissioner while performing acts in the course of or incidental to a real estate transaction in which the broker is an agent or a party to the transaction and in which the broker is performing an act for which a real estate license is required." Civil Code section 1654 provides as follows: "In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist." Financial Code section 17200 provides: "It shall be unlawful for any person to engage in business as an escrow agent within this State except by means of a corporation duly organized for that purpose licensed by the commissioner as an escrow agent.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial management theory and practice

Authors: Eugene F. Brigham and Michael C. Ehrhardt

12th Edition

978-0030243998, 30243998, 324422695, 978-0324422696

More Books

Students also viewed these Finance questions