Case Name: Vinh Duc Nguyen, et al. v. Peter Pau, et al.

Case No.: 16CV302578

Motion for Summary Adjudication [continued from December 13, 2018 as to sixth cause of action only]

Factual and Procedural Background

Plaintiff Vinh Duc Nguyen aka Vince D. Nguyen, individually and doing business as Newton Law Group (“Nguyen”), is a licensed California real estate broker. (Second Amended Complaint (“SAC”), ¶2.) In July 2011, plaintiff Nguyen and his wife, Teri Ha (“Ha”), entered into discussions with the principals of Vallco Shopping Mall, LLC (“VSM”), owners of real property known as the Vallco Fashion Mall located at 10123 North Wolfe Road in Cupertino (“Subject Property”), to exclusively represent VSM in connection with the sale of the Subject Property. (SAC, ¶¶7 – 8.)

On or about August 2, 2011, VSM and plaintiff Nguyen entered into an exclusive right to sell agreement entitled “Owner-Broker Agreement-Vallco Shopping Center” (“Listing Agreement”). (SAC, ¶9.) Pursuant to the Listing Agreement, VSM agreed plaintiff Nguyen would have the exclusive right to list and sell the Subject Property and procure a buyer to purchase the Subject Property with a minimum sale price of $100 million. (SAC, ¶10.) Specifically, VSM agreed that “[t]he first Buyer who submits the purchase contract, or a Letter of Intent to Seller, with proof of financial ability to buy the [Subject Property], together with a deposit amount earlier than the others has the right to buy the [Subject Property].” (Id.) Pursuant to the Listing Agreement, VSM agreed to pay plaintiff Nguyen and his associates a six percent (6%) commission based on the sale price, which also included the commission for the buyer’s broker. (Id.)

On August 9, 2011, plaintiff Nguyen entered into an agent/ sub-agent type agreement entitled “Broker Cooperation Agreement” with Marcus & Millichap (“M&M”) whereby plaintiff Nguyen agreed to pay a certain percentage of his commission to M&M in the event M&M was successful in assisting plaintiff Nguyen in procuring a buyer of the Subject Property. (SAC, ¶11.) M&M assigned Jeffrey John Taughinbaugh (“Taughinbaugh “) and Anh Stovall (“Stovall”) to work with plaintiff Nguyen. (Id.)

By the end of August 2011, M&M and plaintiff Nguyen obtained nine potential buyers each of whom executed a “Non-Circumvent Agreement” agreeing not to circumvent plaintiff Nguyen in purchasing the Subject Property. (SAC, ¶12.) On August 11, 2011, defendant Peter Pau (“Pau”), individually and doing business as Sand Hill Property Company, and Taughinbaugh executed a non-circumvent agreement (“NCA”) which repeatedly referenced Newton Law Group as one of the brokers for the owner of the Subject Property. (SAC, ¶15.) In the NCA, defendant Pau agreed that if he closed the purchase of the Subject Property, M&M and Newton Law Group would be “compensated the agreed upon fee in the Contract executed with the Owner on 8/2/2011.” (Id.) Defendant Pau also agreed that all negotiations would be conducted through M&M and acknowledged that defendant Pau “is not working with any other broker or agent in connection with the Property.” (Id.) Defendant Pau’s obligations under the NCA applied to a twelve month period beginning on the date of execution. (Id.)

Under the terms of the NCA, defendant Pau requested “Offering Materials” which M&M provided while assisting with negotiations. (SAC, ¶16.) Defendant Pau asked for additional information which plaintiff Nguyen provided along with assistance to defendant Pau. (Id.) Other people assisted plaintiff Nguyen in serving as VSM’s exclusive listing agent, including Ha, who is a licensed real estate agent; Tammy Pham (“Pham”), who worked for plaintiff Nguyen as an independent contractor; and Kham Tran (“Tran”), Ha’s cousin living in Vietnam. (SAC, ¶17.) Pursuant to VSM’s instructions, Ha and Pham contacted Mike Rohde (“Rohde”) for due diligence documents relating to the Subject Property, but Rohde did not cooperate. (Id.) In response to pressure from defendant Pau and other interested buyers for further due diligence documents, plaintiff Nguyen, Ha, Pham, and Stovall went to Vietnam to meet with VSM’s principals. (SAC, ¶18.)

On September 25, 2011, VSM’s principals insisted on being provided with the identities of the prospective buyers. (SAC, ¶19.) In reliance on his rights under the Listing Agreement, plaintiff Nguyen provided names of five potential buyers to VSM. (Id.) On September 26 – 27, 2011, plaintiff Nguyen, along with Ha, Tran, Pham, and Stovall, met with VSM’s principals in Saigon. (SAC, ¶20.) Among the VSM principals present were Be Tram, Cuu Nguyen (representing a silent but powerful partner), Ngan Tram (Be Tram’s son), and Hoa Tran (Be Tram’s younger son). (Id.) The VSM principals promised to have due diligence documents to plaintiff Nguyen within seven days and instructed plaintiff Nguyen to work directly with Cuu Nguyen in obtaining the due diligence documents. (Id.) After the meetings, VSM demanded information about the identities of the remaining potential buyers before releasing due diligence documents. (SAC, ¶21.)

On October 3, 2011, VSM requested plaintiff Nguyen release the remaining list of nine potential buyers and, in exchange, VSM would provide updated financial documents to plaintiff Nguyen. (SAC, ¶22.) Plaintiff Nguyen and his associates provided information regarding the remaining potential buyers, but VSM did not provide plaintiff Nguyen with updated financial documents. (Id.)

In the meantime, plaintiff Nguyen and M&M identified another potential buyer, Catalina Investment Company (aka The Irvine Company) (“Catalina”). (SAC, ¶23.) On or about October 17, 2011, Catalina signed a non-circumvent agreement with M&M and plaintiff Nguyen. (Id.)

On November 16, 2011, plaintiff Nguyen received a letter from Walter Merkle of Kay & Merkle (“Merkle”) claiming to represent VSM and purporting to terminate the Listing Agreement on the false basis that plaintiff Nguyen did not have a real estate broker’s license. (SAC, ¶24.) Plaintiff Nguyen reported this letter to Cuu Nguyen who assured plaintiff the letter was unauthorized. (Id.) Cuu Nguyen instructed plaintiff Nguyen to ignore the letter and continue working with VSM. (Id.) In reliance on Cuu Nguyen’s assurances coupled with the fact that VSM continued working with plaintiff Nguyen and his assistants, plaintiff Nguyen continued working on obtaining the sale of the Subject Property. (SAC, ¶25.)

At defendant Pau’s request, plaintiff Nguyen and M&M organized an international telephone conference call (“ITC”) for April 10, 2012 to allow Pau to speak directly with VSM members in Vietnam and confirm plaintiff as the listing agent because Pau had received communications from individuals unassociated with plaintiff who were soliciting Pau to purchase the Subject Property. (SAC, ¶26.) Before agreeing to participate in the ITC, defendant Pau demanded proof that the participants in the ITC were, in fact, authorized representatives of the owner of the Subject Property. (SAC, ¶27.) Stovall provided defendant Pau with business cards for the principals of VSM. (Id.) Plaintiff sent Pham to Vietnam to help set up the ITC and to translate during the ITC because VSM’s principals do not speak English. (SAC, ¶28.)

Before the scheduled ITC, defendant Pau induced Taughinbaugh to conditionally release Pau from the NCA by representing that “if the owners confirm to me that they have only authorized [M&M] to represent them and no other brokerage firm is involved, then I will work with you.” (SAC, ¶29.) Trusting Pau, Taughinbaugh conditionally released defendant Pau from the NCA without plaintiff Nguyen’s knowledge or authorization. (Id.) The ITC occurred on April 10, 2012 during which Be Tram confirmed VSM’s intent to sell the Subject Property and plaintiff Nguyen was the only agent with exclusive authority to sell the Subject Property on VSM’s behalf. (SAC, ¶¶30 – 31.) At the conclusion of the ITC, Pau expressed his satisfaction and stated his intent to prepare an offer to submit to M&M and plaintiff Nguyen to hand carry to Vietnam. (SAC, ¶31.) With Be Tram’s confirmation that plaintiff Nguyen (and sub-agent M&M) was the only listing agent, the terms of the conditional “release” were not met, thereby rendering it void. (SAC, ¶32.)

After the ITC, on April 27, 2012, Cuu Nguyen confirmed VSM would continue working with plaintiff Nguyen to complete the sale of the Subject Property to Pau and assured plaintiff would be entitled to the commission in the Listing Agreement. (SAC, ¶33.)

On May 15, 2012, defendant Pau represented to M&M that he would make an offer to purchase the Subject Property but needed more time to prepare the offer. (SAC, ¶34.) Without plaintiff Nguyen’s knowledge or involvement, defendant Pau hired his own broker, Efi Luzon, and involved his financial partner, Abu Dhabi Investment Authority (“ADIA”), to negotiate and finalize the purchase of the Subject Property directly with VSM in violation of the terms of the NCA. (SAC, ¶¶35 and 39.) In May 2012, VSM started dealing directly with Pau in circumventing plaintiff Nguyen as the listing agent. (SAC, ¶39.)

In or about May 2013, plaintiff learned that Pau had made an offer to buy the Subject Property directly from VSM and one of the conditions of the offer was a credit to Pau for the 6% commission VSM would save by not having to pay plaintiff and his associates. (SAC, ¶37.) Based upon this and other information, plaintiff Nguyen filed a complaint on May 6, 2013 against VSM for breach of contract and other causes of action in Santa Clara County Superior Court case number 1-13-CV-245854 (“Vallco Litigation”). (Id.)

To hide their wrongful acts from plaintiff Nguyen, Pau and ADIA formed one or more entities that would act as a mere shell, instrumentality, or conduit to purchase the Subject Property. (SAC, ¶40.) In June 2014, Pau formed Commercial Real Properties-CA 173 LLC (“CA 173 LLC”) to act as a straw buyer of the Subject Property. (Id.) In the same month, CA 173 LLC presented a letter of intent (“LOI”) to buy the Subject Property which Ngan Tram signed on behalf of VSM. (Id.) In July 2014, pursuant to the terms of the LOI between CA 173 LLC and VSM, ADIA deposited $116 million into escrow on behalf of CA 173 LLC. (SAC, ¶41.)

In or about October 2014, Pau or defendant Vallco Property Owner, LLC (“VPO”) purchased properties adjacent to the Subject Property for approximately $200 million. (SAC, ¶44.) Pau’s plan from the beginning was to purchase the Subject Property and adjacent properties in order to redevelop the entire Vallco Shopping District. (SAC, ¶¶44 – 45.)

As early as February 2012, before the ITC and during the non-circumvention period under Pau’s NCA with plaintiff and M&M, Pau opened escrow on the Subject Property. (SAC, ¶46.) Pau worked with M&M and plaintiff Nguyen in order to obtain contact with the owners of the Subject Property and deal with them directly. (Id.) After Be Tram learned of Pau’s identity as the potential buyer, he recruited plaintiff’s assistant to help carry out his scheme to deal directly with Pau to avoid payment of the commission to plaintiff and his associates. (SAC, ¶¶47 – 51.)

On July 3, 2012, Pau submitted an offer to buy the Subject Property directly to VSM. (SAC, ¶49.) For the two years that followed, Pau continued working with VSM. (SAC, ¶52.) When it appeared Pau’s master plan to purchase the entire Vallco Shopping District might collapse, Pau agreed to close the deal for a $116 million purchase price, no contingencies, and a quick closing. (Id.) The purchase and sale agreement was entered into on November 3, 2014 and the grant deed conveying the Subject Property to VPO was recorded on November 12, 2014. (SAC, ¶53.)

In the meantime, plaintiff joined Pau as a co-defendant in the Vallco Litigation. (SAC, ¶54.) Pau’s attorney aggressively sought Pau’s dismissal by filing a motion for sanctions. (Id.) In support of that motion, Pau made various false statements. (SAC, ¶¶56 – 59.) Trusting Pau would not lie under oath, plaintiff agreed to dismiss Pau from the Vallco Litigation without prejudice. (SAC, ¶55.)

On November 10, 2016, plaintiff Nguyen filed a complaint against Pau, individually and doing business as Sand Hill Property Company, Sand Hill Property Management, LLC, and VPO asserting causes of action for:

(1) Breach of Contract
(2) Breach of Implied Covenant of Good Faith and Fair Dealing
(3) Intentional Interference with Contractual Relations
(4) Intentional Interference with Prospective Economic Advantage
(5) Fraud-Deceit
(6) Violation of Business & Professions Code §17200, et seq.

On January 6, 2017, plaintiff Nguyen filed a first amended complaint (“FAC”) asserting the same six causes of action.

On March 30, 2017, defendants Pau, individually and doing business as Sand Hill Property Company (“SHPC”), Sand Hill Property Management, LLC, and VPO filed a demurrer to plaintiff Nguyen’s FAC.

On May 9, 2017, the court sustained, in part, and overruled, in part, the defendants’ demurrer to plaintiff Nguyen’s FAC.

On May 24, 2017, plaintiff Nguyen filed the operative SAC against Pau, individually and doing business as SHPC, and VPO. The SAC now asserts the following causes of action:

(1) Breach of Contract
(2) Breach of Implied Covenant of Good Faith and Fair Dealing
(3) Intentional Interference with Contractual Relations
(4) Intentional Interference with Prospective Economic Advantage
(5) Fraud-Deceit
(6) Quasi-Contract/ Unjust Enrichment
(7) Violation of Business & Professions Code §17200, et seq.
(8) Conspiracy to Commit Fraud, to Interfere with Contractual Relations and Interfere with Prospective Economic Advantage

On July 14, 2017, defendants Pau, individually and doing business as SHPC, and VPO filed an answer and a demurrer to the fifth and seventh causes of action in plaintiff Nguyen’s SAC. On September 26, 2017, the court issued an order overruling the demurrer to the fifth cause of action but sustaining, without leave to amend, the demurrer to the seventh cause of action.

On September 28, 2018, defendants Pau, individually and doing business as SHPC, and VPO filed the motion now before the court, a motion for summary adjudication of the first, second, third, fourth, and sixth causes of action in plaintiff Nguyen’s SAC.

On December 14, 2018, the court issued an order denying defendants’ motion for summary adjudication of the first, second, third, and fourth causes of action. The court continued the motion for summary adjudication as to the sixth cause of action only.

I. Defendants’ motion for summary adjudication of the sixth cause of action [quasi-contract/ unjust enrichment] in plaintiff Nguyen’s SAC is GRANTED.

Plaintiff Nguyen’s sixth cause of action is entitled, “Quasi-Contract/ Unjust Enrichment,” and alleges, in part, “By demanding and receiving the approximately $7 million credit against the actual purchase price for the Mall for the commission owed to Plaintiff, Defendants, by their wrongful conduct, appropriated the commission rightfully owed to Plaintiff for their own gain and benefit.” (SAC, ¶104.)

In moving for summary adjudication, defendants rely on select portions of the court’s September 26, 2017 ruling with regard to defendants’ demurrer to the fifth and seventh causes of action to argue that plaintiff Nguyen has not adequately alleged a claim for restitution under an unjust enrichment theory. Specifically, defendants cite the following:

…paragraph 52 of the SAC which alleges, in relevant part, “Pau agreed to close the deal for a stated $116 million purchase price…. However, on information and belief, the actual purchase price for the Mall was $130 million because and VPO demanded two items of credit to close the purchase and sale, to which the Seller agreed. The first item was a rent credit in the amount of approximately $7 million, and the second item was a credit in the amount of approximately $7 million for the amount of the commission owed to Plaintiff, which Pau and VPO represented they would pay.”

This allegation remains insufficient to support a claim for restitution.

However, the court wrote this in addressing defendants’ demurrer to the seventh cause of action for violation of Business and Professions Code section 17200 (“UCL”) and whether plaintiff had alleged a proper claim for restitution since UCL plaintiffs are “generally limited to injunctive relief and restitution.’ ” (Korea, supra, 29 Cal.4th at p. 1144.) Since the court’s earlier ruling only specifically addressed plaintiff Nguyen’s seventh cause of action, it is not dispositive of the sixth cause of action.

Alternatively, defendants contend the factual basis for this claim of unjust enrichment, i.e., that defendants received a credit of $7 million at close of escrow for the commission owed to plaintiff Nguyen, simply is not true and that defendants did not receive a credit of $7 million (or any other amount) for the amount of the commission owed to plaintiff.

In opposition, plaintiff Nguyen contends there is a triable issue of material fact as to whether defendant received a credit of around $6,900,000 to pay plaintiff’s commission. Plaintiff Nguyen contends there is evidence of at least 10 drafts of an agreement between the seller and Pau and prior to the final agreement, the draft agreement(s) contained a provision for a $6,500,000 set aside to be deposited into escrow by seller at close of escrow to provide for the lawsuit (Vallco Litigation) for Plaintiff’s commission. Yet, plaintiff concedes this provision was omitted in the final agreement. Based on this concession, plaintiff’s evidence does not present a triable issue of material fact.

At this juncture, the court previously granted plaintiff Nguyen’s request for continuance to allow plaintiff Nguyen an opportunity to conduct discovery to be able to fend off this motion. Plaintiff Nguyen filed a supplemental reply on February 14, 2019. In the supplemental reply, plaintiff Nguyen contends the recent decision of Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230 (Professional Tax) supports denial of defendants’ motion for summary adjudication. The court is not persuaded. The court in Professional Tax reversed a trial court ruling which sustained a demurrer to a cause of action for unjust enrichment. The plaintiff in Professional Tax “entered a contract with the owner of vacant land by which plaintiff agreed on a contingent fee basis to seek 2009 and 2010 property tax reductions. The property tax appeals succeeded in reducing the assessed value of the vacant land by millions of dollars, with a reduction in taxes (and associated fees and penalties) of almost $140,000. Plaintiff was to receive 30 percent of the reduction, or almost $42,000, when the property owner received the tax refund or when the refund was applied to pay delinquent property taxes.” (Professional Tax, supra, 29 Cal.App.5th at p. 233.) But before the tax refund was paid, the property was acquired in a nonjudicial foreclosure sale by the defendant who paid the reduced property tax amount achieved by plaintiff’s successful tax appeals. Plaintiff brought an action for unjust enrichment, among other claims, but the trial court sustained defendant’s demurrer to the unjust enrichment claim.

In reversing, the Professional Tax court began its discussion with the recognized principle that, “The elements of a cause of action for unjust enrichment are simply stated as ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’ [Citation.]” (Id. at p. 238.) “Defendants do not meaningfully contest there are facts stating a benefit conferred. Rather, defendants, as they successfully argued below, contend there are insufficient facts showing that the retention of that benefit was unjust. We are not persuaded.” (Id. at p. 239.) The lack of a contractual relationship between the claimant and the defendant does not bar a claim for unjust enrichment.

In such circumstances, restitution is required “only if the following three conditions are met: [¶] (a) Liability in restitution may not subject the defendant to a forced exchange …. This condition is likely to be satisfied if the benefit realized by the defendant [¶] … [¶] … saves the defendant an otherwise necessary expense …. [¶] (b) Absent liability in restitution, the claimant will not be compensated for the performance in question, and the defendant will retain the benefit of the claimant’s performance free of any liability to pay for it. [¶] (c) Liability in restitution will not subject the defendant to an obligation from which it was understood by the parties that the defendant would be free.” (§ 25, subd. (2), p. 368, citation omitted.)

Plaintiff has alleged sufficient facts to establish these three elements. Defendants obtained the benefit of plaintiff’s services by paying less in delinquent taxes than they would have been required to pay upon acquiring the property. Due to plaintiff’s work in procuring the refund, defendants saved over $40,000 in delinquent taxes they otherwise would have had to pay. Plaintiff’s work saved them an otherwise necessary expense of assuming ownership of the property. Moreover, “it is not inequitable to require [defendants] to pay money” for those benefits despite the lack of a prior agreement. (§ 25, com. c, p. 373.) Even if defendants are required to pay plaintiff its fee, they will still have saved $97,000 in property taxes that would have been owed had plaintiff not procured the refunds for the prior owner. Plaintiff has no remedy at law against the former owner because the foreclosure proceedings in which defendants acquired the property left the former owner with no assets. And, there are no facts showing any agreement between the parties that defendants would be free of any obligation to pay plaintiff.

(Ibid.)

Plaintiff Nguyen’s reliance on Professional Tax is misplaced since Professional Tax concerns the adequacy of pleading. Here, plaintiff Nguyen is facing summary adjudication and must provide some evidence in order to raise a triable issue. Defendants’ evidence is, as noted above, that defendants did not receive a credit of $7 million (or any other amount) for the amount of the commission owed to plaintiff. In other words, defendants did not receive the alleged benefit. As noted above, plaintiff’s evidence in opposition does not present a triable issue of material fact. Plaintiff has not offered any additional evidence in supplemental opposition after being given an opportunity to conduct further discovery.

In supplemental opposition, plaintiff now requests leave to amend the sixth cause of action to assert defendants received some other benefit (not the $7 million credit). Plaintiff’s request for leave to amend made in a supplemental opposition is improper and is, therefore, DENIED.

Defendants’ motion for summary adjudication of the sixth cause of action in plaintiff Nguyen’s SAC is GRANTED.