Entered on Docket

November 01, 2010

GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA

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2 Signed and Filed: October 31, 2010

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4 ________________________________________
DENNIS MONTALI
5 U.S. Bankruptcy Judge
________________________________________
6 UNITED STATES BANKRUPTCY COURT
7 NORTHERN DISTRICT OF CALIFORNIA
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In re ) Bankruptcy Case
9 ) No. 09-31941DM
ROBERT G. QUINTERO, dba )
10 CONTINENTAL REALTY SERVICES, ) Chapter 7
)
11 Debtor. )
___________________________________)
12 E. LYNN SCHOENMANN, ) Adversary Proceeding
) No. 10-3019DM
13 Plaintiff, )
)
14 v. )
)
15 PARIMAL BHUPENDRA PATEL, )
BHUPENDRA B. PATEL, RITA PARASNIS, )
16 individually and collectively doing)
business under the fictitious name )
17 of BPR Properties, Inc., )
)
18 Defendants. )
___________________________________)
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MEMORANDUM DECISION FOLLOWING
20 TRIAL TO RECOVER COMMISSION
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I. Introduction
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On September 13, 2010, the court conducted a trial in this
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matter. Plaintiff, E. Lynn Schoenmann, Trustee (“Trustee”),
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appeared and was represented by Dennis D. Davis, Esq., one of her
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attorneys. Defendants appeared and were represented by Patricia
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G. Rosenberg, Esq., one of their attorneys. After the evidence
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was presented and oral argument made, the court requested further
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 1 briefing on one discrete matter. Thereafter, the matter stood
2 ready for decision.
3 For the reasons stated below, the court will reject the
4 Trustee’s contentions and enter judgment in favor of defendants.
5 II. Facts1
6 Robert G. Quintero, dba Continental Realty Services
7 (“Debtor”), is a real estate broker. Defendant Parimal Bhupendra
8 Patel (“Perry”) is well-educated in hotel operations and
9 management, has extensive experience in various aspects of
10 managing and acquiring hotel properties, and is involved in
11 various family businesses, including one known as BPR Properties,
12 Inc. (“BPR”), with his father, Bhupendra B. Patel (“BB”) and his
13 sister, Rita Parasnis (“Rita”).
14 BB is the principal of the various business activities among
15 himself, Perry, Rita and other family members. In fact, he
16 appears to be more like the patriarch of the family, directing the
17 affairs of the businesses and making all final decisions on such
18 matters as property acquisition and financing. Perry does not
19 make crucial decisions without consulting his father.
20 In August, 2006, Perry contacted Debtor about acquiring hotel
21 properties in the San Francisco bay area. Because Debtor was not
22 willing to disclose to Perry or BPR the particulars of any hotel
23 property that might appeal to them without appropriate contractual
24 protection of his own interests, he submitted to Perry, and Perry
25 promptly executed, a Confidentiality and Non-Circumvention
26 Agreement (“Agreement”) dated August 21, 2006.
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The following discussion constitutes the court's findings
28 of fact and conclusions of law. Fed. R. Bankr. P. 7052(a).
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 1 At trial Perry testified that he did not read the Agreement.
2 Even if Perry did not read the Agreement (which is doubtful), he
3 initialed every page. Further, based upon his intelligence,
4 education, and experience, he clearly was able to understand the
5 document; whether or not he actually read it is of no consequence.
6 The Agreement referred generally (without names and
7 addresses) to two hotel properties on the San Francisco peninsula
8 and referenced other properties that would be disclosed upon
9 request. It was Debtor’s intention at all times to make
10 information about hotel properties available to Perry and BPR on a
11 confidential basis, and clearly anticipated serving as a selling
12 agent for BPR if and when it chose to purchase any property
13 disclosed by Debtor if he could not act as listing agent for any
14 seller. He was not a listing agent with reference to any hotel
15 property that he planned to disclose to Perry at the time he
16 prepared and signed the Agreement.
17 The critical language of the Agreement that determines the
18 outcome of this dispute is found in paragraph 4, entitled Non-
19 Circumvention. That paragraph provides, in part:
20 [BPR] agrees that it shall not submit offers, compete, or
interfere in the negotiations, contact the sellers, their
21 agents, representatives or officers, or purchase the property
or properties without the [Debtor’s] prior knowledge and
22 written approval and [BPR’s] agreement, if necessary to pay a
2% brokerage fee unless a formal partnership or other
23 agreement has been reached by the parties to form a
partnership or other arrangement for the properties’
24 acquisition. (Emphasis added.)
25 Debtor hoped to obtain a listing agreement for any hotel
26 Perry might have been interested in and testified that the quoted
27 language was necessary in case he did not obtain such a listing
28 agreement and thus obtain a listing agent’s commission upon any

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 1 sale.
2 Perry did not disclose the existence of the Agreement to BB
3 or Rita after he executed it. Three days after execution,
4 however, Debtor provided Perry with information concerning the
5 availability of the Shattuck Hotel (“Hotel”) in Berkeley,
6 California. Perry expressed interest in the Hotel, asked Debtor
7 to arrange an inspection, and then indicated that he intended to
8 make an offer on it. Debtor arranged with the general manager of
9 the Hotel for Perry to visit and make a site inspection; instead
10 Perry posed as a guest and visited the Hotel on his own.
11 After inspecting the Hotel, Perry asked for and Debtor
12 prepared a Letter of Intent regarding purchase of the Hotel for
13 $14,700,000 and payment of a 2% commission by the seller to
14 Debtor.
15 The Letter of Intent was not signed, and when Perry disclosed
16 to BB that the Hotel was available, BB informed Perry immediately
17 that he had been dealing with another person and family friend,
18 Bipin, who was acting as an intermediary with the owner of the
19 Hotel (“Kakkar”). Perry terminated his discussions with Debtor
20 and later, in April, 2007, BPR acquired Hotel for $13,750,000.
21 In connection with BPR’s acquisition of Hotel, Kakkar paid the
22 Bipin a “finder’s fee” of $200,000.
23 Debtor filed Chapter 7 on July 13, 2009. On February 5,
24 2009, Trustee sued Perry, BB and Rita to recover a commission in
25 the sum of $275,000 in accordance with paragraph 4 of the
26 Agreement. According to the Trustee’s Trial Brief, BPR agreed to
27 pay a 2% brokerage fee to Debtor if it circumvented Debtor and
28 dealt directly with sellers of properties covered by the Agreement

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 1 without Debtor’s prior knowledge and written approval.
2 III. Discussion
3 Defendants raise several defenses, including that the
4 Agreement is vague and ambiguous, and thus enforceable; that there
5 was no breach of the Agreement; that paragraph 4 of the Agreement
6 is an unenforceable, invalid penalty; and that Debtor was not the
7 procuring cause of BPR’s acquisition of the Hotel.
8 Because defendants asserted for the first time in their Trial
9 Brief that portions of the Agreement constituted an invalid
10 penalty, Trustee maintained that such an affirmative defense had
11 been waived because it had not been raised in an answer to the
12 complaint defendants filed. Both sides briefed the issue after
13 trial.
14 While there is no question that BPR did not comply with
15 Paragraph 4 of the Agreement when it submitted the offer to Kakkar
16 and thereafter acquired the Hotel, the ambiguous provisions of
17 that Agreement must be construed against Debtor as the drafting
18 party, and therefore, against Trustee. There was no listing
19 agreement, and therefore Debtor’s only source of remuneration was
20 an agreement to pay a 2% brokerage fee. But there was no such
21 agreement. It is fundamental law, and no citation is needed, that
22 an agreement to agree is unenforceable and while it may well be
23 that Debtor intended to obtain 2% of any selling price from the
24 buyers of any disclosed property if Debtor could not obtain a
25 listing agreement and thus be paid a traditional listing agent
26 commission, the ambiguity in the language and the clear indication
27 that there needed to be an agreement (there was none) before
28 defendants could be obligated to pay Debtor anything, is fatal to

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 1 Trustee’s case.
2 Defendants are correct in pointing out that the absence of
3 such an agreement, coupled with the lack of precision as to what
4 the “brokerage” fee would be calculated upon constitutes the
5 omission of an essential element, thus rendering the Agreement
6 unenforceable.
7 Based upon this conclusion, the court does not need to reach
8 the questions of whether Debtor provide anything of value to the
9 defendants; whether there was a breach of the Agreement; or
10 whether the Agreement includes an enforceable penalty.
11 Perry knew what he was getting into when he signed the
12 Agreement. Once he learned of BB’s involvement with Bipin and
13 interest in the Hotel he was in a difficult position vis-a-vis
14 Debtor because he had signed the Agreement. He had no choice but
15 to carry out his father’s instructions and terminate his dealings
16 with Debtor. Had BB not been dealing with Bipin it seems
17 reasonable to presume that BPR would have continued to work with
18 Debtor and acquired the Hotel, resulting in either payment to
19 Debtor of a listing commission by Kakkar, or execution of some
20 sort of agreement that would have produced a commission for
21 debtor.
22 That sort of speculation, however, is not enough to bind
23 defendants to an agreement to agree. Plain and simple, the
24 Trustee has tried to make “a silk purse out of a sow’s ear”,
25 relying on sloppy, inartful and imprecise language. Unfortunately
26 for the Trustee and the estate, the quoted language is not enough
27 and defendants are entitled to judgment in their favor.
28 IV. Conclusion

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 1 Counsel for defendants is to submit a form of judgment in
2 favor of all defendants for the reasons set forth in this
3 Memorandum Decision, and awarding them their costs.
4 **END OF MEMORANDUM DECISION**
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