Opinion
B312869
10-09-2023
KATE BRAGANTI, Plaintiff, Cross- Defendant, and Appellant, v. RAVINDER S. GREWAL, et al., Defendants, Cross- Complainants, and Respondents.
A. Singer &Associates, Anne Singer, for Plaintiff, Cross Defendant, and Appellant. Graham Law Corp., Alice M. Graham, for Defendants, Cross-Complainants, and Respondents.
NOT TO BE PUBLISHED
APPEALS from a judgment of the Superior Court of the County of Los Angeles, Super. Ct. No. BC601999 Stephanie M. Bowick, Judge. Affirmed.
A. Singer &Associates, Anne Singer, for Plaintiff, Cross Defendant, and Appellant.
Graham Law Corp., Alice M. Graham, for Defendants, Cross-Complainants, and Respondents.
KIM, J.
I. INTRODUCTION
Following a decree dissolving a partnership and the partition by sale of two partnership properties, the trial court issued a final accounting and entered judgment. Plaintiff Kate Braganti appeals from the accounting portion of the judgment, arguing, among other things, that it improperly included decisions on matters not adjudicated in the underlying trial.
Defendants cross-appeal from the judgment, contending that certain evidentiary rulings at trial constituted structural error or prejudicial abuses of discretion. They also maintain that the trial court misinterpreted the parties' partnership agreement and erroneously concluded that there was no prevailing party for purposes of costs. We affirm.
Defendants are Ravinder S. Grewal (Grewal) and Harinder Singh Nagpal (Nagpal).
Because neither plaintiff nor defendants adequately challenge the sufficiency of the evidence in support of the multiple findings of fact made by the trial court in its November 30, 2018, statement of decision, the factual background is based, in part, on those findings.
A. Parties
Plaintiff was a licensed real estate broker and the mother of cross-defendant Ishneet Singh (Singh). She and Nagpal attended high school together. During the time period in issue, Nagpal was often in India, coming to the United States on average about one month a year. Grewal owned and operated several different businesses, including convenience stores, a fast food restaurant, and a number of hotels.
Defendants concede that although Singh was a cross defendant and a defendant in the consolidated unlawful detainer action filed by Grewal, he is not a party to this appeal.
B. Partnership Agreement
Plaintiff and defendants entered into a real estate investment partnership agreement to buy and sell properties for a profit. Pursuant to the terms of the agreement, plaintiff "would be the property manager and Grewal and Nagpal would be the money investors. All three would divide the partnership profits at 33% each." The partnership business, which began operations in May 2014, was called Aarnaa Investments, Inc. (Aarnaa).
To memorialize their agreement, the parties executed a one-page memorandum of understanding (MOU). According to the operative MOU, plaintiff, Grewal, and Nagpal were each one-third partners in Aarnaa. The MOU specified that plaintiff's interest in the partnership was limited to any profits derived from the sale of partnership properties, stating: "Once [a sales transaction] is closed, margins / profit will be split in the following ratio after paying off third party brokerage / other incidental expenses[:] [¶] . . . [¶] Ms[.] Kate Br[a]gant[i] - 33% ...." The MOU further provided that plaintiff would only be entitled to compensation, in return for her efforts on behalf of the partnership, if the properties generated profits or income: "No salary or commission will be paid to any of the principals without the income generated by the business."
Based on that language, the trial court found that plaintiff "agreed to work without salary under the Aarnaa partnership agreement." Thus, "she was only entitled to a commission if the partnership was profitable or generated income, which did not occur."
Grewal and Nagpal both had access to the bank account established for Aarnaa. The MOU required defendants to maintain a balance of $200,000 in the partnership bank account for investment purposes and working capital, but Grewal admitted that was not always the case. Grewal used $125,000 from the Aarnaa bank account to purchase a hotel in Wisconsin that he alone would own.
C. Properties
1. Fullerton condominium
The Fullerton condominium, located on South Pomona Avenue (Fullerton), was purchased by the partnership for $230,000 with cash funds from the partnership account. But title to the property was held in Singh's name.
With the knowledge and approval of defendants, plaintiff transferred management of Fullerton to a management company after it was rented. Because the rental payments from Fullerton were not covering all of the expenses of that property, plaintiff refinanced the property to pay the expenses, including taxes and homeowners association (HOA) fees. Plaintiff informed defendants about the refinancing and certain remodeling done at the property.
Grewal did not make any mortgage payments or timely HOA fee payments on Fullerton. It eventually went into default and was sold for $235,000.
2. Valencia Properties
a. Blacksmith home
The Blacksmith home, located on Blacksmith Drive, Valencia (Blacksmith), was purchased for $761,443. Grewal paid the down payment in the amount of $213,886. Plaintiff contributed $5,000 as a deposit for the Blacksmith purchase transaction and paid the Blacksmith mortgage of $5,130.10 per month for 10 months, for a total of $51,301.90, and HOA fees of $128 per month for 20 months, for a total of $2,560.00. In addition, plaintiff paid for the landscaping and window coverings at Blacksmith. Nagpal knew that plaintiff was making the Blacksmith mortgage payments and that she had moved into the home. Grewal did not make any of the mortgage or timely HOA fee payments. He eventually paid the delinquent HOA fees and, in June 2016, he paid off the delinquent loan.
Plaintiff and Singh resided at Blacksmith through and including the time of trial, and by that time had been living at the residence for 39 months. There was no rental agreement authorizing plaintiff and Singh to reside at Blacksmith.
b. Steel Lane home
The Steel Lane home, located on Steel Lane in Valencia (Steel Lane), was purchased for $730,000, with $210,596 as a down payment from Grewal. Plaintiff contributed a $5,000 deposit to the Steel Lane purchase transaction and paid the Steel Lane mortgage of $4,959 per month for 10 months, for a total of $49,590, and HOA fees of $128 per month for 20 months, for a total of $2,560.
Grewal did not make any of the mortgage or HOA fee payments. He eventually paid the delinquent HOA fees and, in June 2016, he paid off the delinquent loan.
III. PROCEDURAL BACKGROUND
A. Pleadings
In November 2015, plaintiff filed a complaint against defendants for partition, breach of fiduciary duty, and dissolution of partnership. In the partition cause action, plaintiff sought partition by sale of Fullerton, Blacksmith, and Steel Lane. In the fiduciary duty cause of action, plaintiff alleged, among other things, that defendants' repudiation of the existence of the partnership and conversion of plaintiff's assets to their own use caused her to lose the value of her services to the partnership business and profits that would have been earned but for the breach. And, the dissolution cause of action sought a court decree dissolving the partnership under Corporations Code section 16801 and an accounting of partnership affairs.
Defendants filed a cross-complaint against plaintiff and Singh for breach of contract, breach of fiduciary duty, fraud, and intentional infliction of emotional distress. In the contract cause of action, defendants alleged that plaintiff breached the partnership agreement by not disclosing the details of the purchase transactions, buying Fullerton in Singh's name, and failing to deposit her brokerage fee in the partnership account. In the fiduciary duty cause of action, defendants alleged that plaintiff breached her duty to provide them with documentation for the purchase of the three properties, including mortgage documents showing monthly payments due, principal loan amounts owed, and due dates of monthly installments. In the fraud claim, defendants alleged that plaintiff misrepresented the purchase price of Fullerton by approximately $44,000 and retained that amount, took a commission on the sale of Fullerton in violation of her representations in the partnership agreement, acquired Fullerton in Singh's name without disclosing that fact, and refinanced Fullerton for $176,500 and converted the money for personal use. And, the intentional infliction cause of action alleged that plaintiff's conduct in relation to the partnership business caused defendants emotional distress.
In March 2016, Grewal filed an unlawful detainer action (case no. PC056961) against plaintiff and Singh which was consolidated with the partnership action pursuant to stipulation.
B. Court Trial on Liability
On June 20, 2018, the trial court commenced a bench trial that proceeded over seven days. Plaintiff introduced the testimony of Grewal, Nagpal, and herself. Defendants introduced the testimony of Grewal, Nagpal, their real estate appraisal expert, and their CPA expert.
As explained below, the trial court excluded defendants' documents examiner, limited the scope of the CPA's testimony, and denied defendants' request to call Grewal on rebuttal.
C. November 2018 Decision
On November 30, 2018, the trial court issued its statement of decision (November 2018 decision). Among other things, the court noted that "it did not find Grewal credible regarding many aspects of his testimony, including regarding rent payments and tax payments needed for the Valencia [p]roperties."
1. Complaint
On plaintiff's partition claim, the trial court found that: Fullerton, Blacksmith, and Steel Lane were Aarnaa partnership properties; plaintiff had an interest in those properties by virtue of her entitlement to one-third of the profits from any sale of them; she therefore had proved entitlement to partition by sale; and, because Fullerton had been sold, partition by sale was only available as to Blacksmith and Steel Lane.
On plaintiff's fiduciary duty claim, the trial court found that defendants: breached their duty to maintain the required $200,000 in the partnership account for partnership investments, which affected the success of the partnership and limited its ability to purchase and maintain partnership properties; and used partnership funds for non-partnership investments, including $125,000 for the purchase of Grewal's hotel in Wisconsin.
And, on her dissolution claim, the trial court found that plaintiff had "established fraud, waste, misappropriation or waste by a director or by [a] managing member" warranting judicial dissolution of the partnership under Corporations Code section 17707.03. The court therefore ordered "a full accounting to determine how all of the investments, payments and credits should be allocated."
The trial court also concluded that plaintiff was entitled to damages, as well as an offset of money she may owe defendants against amounts defendants owed her. In addition, it found that plaintiff was entitled to credit for all HOA and mortgage payments she paid on the Valencia properties and reimbursement for expenses and bills paid for the partnership properties; but she was not entitled to a salary for work performed on behalf of the partnership or commissions for property sales or loans obtained. The court summarized the total damages to which plaintiff was entitled as follows: $125,000 owed by Grewal; $57,150 owed by the partnership on Steel Lane; and $28,476 owed by each defendant. The court calculated the total damages due to plaintiff as $210,626.
2. Cross-Complaint
On defendants' breach of contract claim, the trial court concluded that defendants failed to establish breach of contract against plaintiff. Among other things, the court found that: the partnership account had insufficient funds to cover expenses and mortgage payments; plaintiff had difficulty contacting defendants to discuss real estate ventures; plaintiff used the proceeds of the Fullerton loan to remodel the property and defendants had not shown that she "took and wasted" the loan proceeds; and, because defendants were experienced businessmen and had the background to review and understand Aarnaa's business and bank records, they had not been diligent in overseeing the management of the partnership.
On the fiduciary duty claim, the trial court concluded that defendants had not established a breach of loyalty with respect to Fullerton. Plaintiff updated Nagpal about the property, including the accounts, refinancing, and remodeling, and defendants were aware she was hiring a management company. And, the court found credible plaintiff's explanation that she put Singh on title to facilitate financing. The court further found that plaintiff did not breach any duty to Grewal as his real estate broker and that Grewal was not credible concerning his assertions that he did not receive tax statements on the Valencia properties. In addition, the court reiterated that defendants had failed to fund the partnership as required, used partnership funds for non-partnership ventures, and had received updates regarding accounts and financial documents.
On the fraud claim, the trial court concluded that defendants had failed to establish any of the elements of that claim as to Fullerton. According to the court, there was no evidence that plaintiff did not intend to perform at the time the partnership was formed or when Fullerton was purchased. Defendants also failed to show specific false representations and detrimental reliance. Grewal knew from documentation he signed that title to Fullerton would be taken in Singh's name and that the property was repaired and refinanced. As for the Valencia properties, defendants were provided documentation concerning the purchase and loan transactions and they did not show that they requested other documentation. Defendants also had access to bank accounts, property records, and partnership documents and had failed to exercise diligence with respect to such documentation. In addition, the court did not find defendants' accounting expert credible or persuasive concerning alleged accounting fraud.
On the intentional infliction claim, the trial court found that plaintiff's conduct was not outrageous and it was not a substantial factor in causing any emotional distress.
Although the trial court did not award any damages to defendants, it noted that Grewal had paid off the defaulted loans on the Valencia properties in the amount of $1,201,196 and that it would review an accounting to determine the proper distribution of partnership assets after partition and apply appropriate credits for loan payoffs, investments, and contributions.
This appears to be a typographical error and the figure should be $1,210,196, as reflected in trial exhibit no. 689 and eventually in the trial court's final judgment.
3. Unlawful Detainer Action
On the unlawful detainer action, the trial court denied Grewal's request for possession of Blacksmith because that property was part of the partnership. But, the court also found that plaintiff and Singh had "improperly moved into the property as their residence" and they owed the partnership $3,000 per month back rent for 41 months for a total of $123,000. The court ordered them to vacate the property within 60 days.
D. Partition Sale and Accounting Proceedings
On December 12, 2018, the trial court held a hearing on the partition and accounting issues and entered an order dissolving the partnership and requiring the sale of Blacksmith and Steel Lane. The court stated that it would set a hearing on a final accounting once the two properties had been sold.
In an April 2019 status report, the parties advised that both properties had been listed for sale, that Blacksmith was in escrow, and that there were no offers pending on Steel Lane. On May 6, 2019, the trial court issued an order that all sales proceeds from the two properties were to be held in escrow pending a further court order as to the disposition of funds. On July 23, 2020, plaintiff reported that Steel Lane had been sold and that the proceeds from the sale of the two properties in the amount of $1,533,066 were being held in trust.
On August 6, 2020, the trial court held an initial hearing on the accounting it had ordered in its original statement of decision. During that hearing, defendants' counsel argued that plaintiff was not entitled to any amount from the sales proceeds of the Valencia properties that remained after crediting Grewal for the loan payoffs. According to counsel, because there was no profit from either of those sales, plaintiff was entitled to "zero" on her one-third partnership interest in those properties. In response, the court agreed that "there weren't really any profits that the court found from Aarnaa;" queried why plaintiff would be entitled to one-third of the amount remaining in escrow; and ordered the parties to meet and confer on the issue. Later in the hearing, defendants' counsel stated that her clients' cash investments should be credited before determining profits from the sales and that plaintiff was entitled to one-third of the profits, not one-third of the sales proceeds. Following argument, the court ordered the parties to meet and confer and submit a proposed judgment, but the parties were unable to agree on the form of judgment and therefore submitted their own proposed judgments.
Between September 2020 and January 2021, the trial court held five more hearings on the accounting and received various briefs and submissions from the parties on accounting issues, including two declarations from plaintiff with exhibits and declarations from defendants on their capital contributions with exhibits. On November 30, 2020, the trial court held a hearing on the parties' respective objections to the proposed judgments. It posed certain questions to the parties regarding accounting issues and specifically asked defendants to "define and calculate their return of capital contributions and the amount requested." It also asked plaintiff to advise the court about her "thoughts about contributions from [her] end and how the court is supposed to take that into account ...." It ordered further briefing, including supporting declarations, and set the matter for further hearing on December 14, 2020. The next day, the court issued an amended final statement of decision.
The parties thereafter filed the court-ordered briefs and declarations and, on December 14, 2020, the trial court continued the matter to January 12, 2021, and granted plaintiff leave to file further briefs and a declaration with exhibits. Following further briefing from the parties, the court held a January 22, 2021, hearing at which it took the issues concerning entry of judgment under submission.
On February 5, 2021, the trial court issued a minute order regarding its proposed ruling on the final form of judgment, in which it concluded that defendants' "capital contributions should be considered as part of the accounting" and that amounts owed to plaintiff for "management contributions, down payments and expenses for the Valencia properties, and expenses for the partnership office" also should be considered. The court found that Grewal should be reimbursed for the loan payoffs in the amount of $1,201,196 [sic] and that there was not enough cash from the sale proceeds of the Valencia properties "to make each partner whole ...." According to the court, there was insufficient cash remaining in trust to reimburse defendants for "any original capital contributions or investments ...." The court also declined to award plaintiff a salary for her contributions in the form of "management and real estate agency work," but did not charge her for $92,476 in commissions she had received, and found it proper for her to reimburse the partnership $123,000 for back rent on Blacksmith. The court therefore concluded that the remaining partnership cash assets of $322,870 should be split three ways, with each partner to receive $107,623.
In its final totals, the trial court tentatively awarded: (1) plaintiff $42,192 from the asset distribution, $139,238 against Grewal, and $14,238 against Nagpal; (2) Grewal $1,361,250 from the asset distribution; and (3) Nagpal $129,624 from the asset distribution.
The parties then each filed responses to the proposed final accounting, and on March 12, 2021, the trial court issued a minute order on the accounting and a proposed judgment.
That same day, the trial court issued an amended final statement of decision, which provided that its rulings on "final distributions and respective judgments" were set forth in its the March 12, 2021, minute order. On March 22, 2021, plaintiff filed her opposition and objections to the court's March 12 ruling and proposed judgment; on March 26, defendants responded; and, that same day, plaintiff replied.
E. April 2021 Decision and Final Judgment
On April 6, 2021, the trial court issued a minute order regarding entry of final judgment (April 2021 decision). The court stated that there was $1,533,066 held in trust from the sales proceeds of the Valencia properties, and ruled that (1) Grewal should be reimbursed for the Valencia loan pay-offs in the amount of $1,210,196; and (2) that each partner's capital contributions should also be returned before any remaining cash proceeds were distributed to the parties. The court determined that Grewal had contributed $723,509 in cash; Nagal had contributed $125,000 in cash; and plaintiff had contributed $150,338 in down payments, mortgage payments, HOA payments, and office expenses. But the court offset that amount by the $123,000 plaintiff owed the partnership for back rent on Blacksmith and therefore determined that she had capital contributions of $27,338. The court also refused to offset $92,000 in commissions plaintiff had earned against her capital contributions. Given that there was only $322,870 in cash proceeds remaining (after crediting Grewal for the loan payoffs) and $750,846 in total capital contributions, the court awarded each partner 33 percent of his or her individual capital contributions as follows: Grewal-$257,362; Nagpal-$53,752; and plaintiff-$11,756. The court concluded that the parties were entitled to a final judgment awarding Grewal a total of $1,467,558; Nagpal a total of $53,752; and plaintiff $11,756. That same day, the court entered a judgment reflecting the amounts in the April 6 minute order.
F. Appeals
On May 14, 2021, plaintiff filed her notice of appeal from the judgment. On June 3, 2021, defendants filed their notice of cross-appeal.
IV. APPEAL
A. Failure to Make Findings: Capital Contributions
In her first argument heading, plaintiff contends that "the trial court's failure to make findings on material issues prior to judgment requires that the case be reversed ...." (Emphasis omitted). The only failure about which plaintiff specifically complains, however, is the court's purported failure to make findings on the capital contributions made by each party. Plaintiff's contention is meritless, as the court made findings about each party's capital contributions in the April 2021 decision, and plaintiff does not challenge the sufficiency of the evidence to support them.
Plaintiff nevertheless maintains that it was error for the trial court not to make a determination of the partners' respective capital contributions in its November 2018 decision, complaining that "no findings were made as to 'capital contributions' of any of the parties." She also suggests a due process violation, namely, that she was denied a fair opportunity at trial to present evidence of the value of her "'sweat equity.'"
As plaintiff concedes, the amount or value of the parties' capital contributions was not an issue at trial; it only became relevant once the Valencia properties were sold, the proceeds were in escrow, and a decision was required regarding disbursement. Thus, it was not error for the trial court to omit specific findings on the parties' capital contributions in its original statement of decision.
We also reject plaintiff's contention that she was unfairly denied an opportunity to present evidence about her sweat equity at trial. Plaintiff testified that she expended time and energy on behalf of the partnership by, among other things, "accumulat[ing] paperwork;" preparing loan applications; and leasing the properties. She therefore argued that she was entitled to a monthly salary of $5,000 for her efforts. But the trial court expressly rejected that argument, finding that plaintiff had agreed she was not entitled to salary or a commission, unless the partnership was profitable or generated income, neither of which occurred.
To the extent plaintiff suggests that she was entitled to a one-third interest in the underlying properties purchased by the partnership, she has not fairly challenged the sufficiency of the evidence supporting the trial court's rejection of that theory. Even if she had, the express language of the partnership agreement provided plaintiff a 33% interest in "margins / profit" of the partnership, and the court's finding that plaintiff was entitled to only a portion of the "partnership profits" was therefore well supported by the evidence.
The trial court also stated, in the November 2018 decision, that plaintiff "was to receive a 1/3 interest in any properties purchased by the Aarnaa Investments. This is undisputed." But this statement cannot be viewed in isolation as a finding that plaintiff's interest in the partnership exceeded the one-third interest in profits established by the MOU. Instead, we view that statement in the context of the court's other findings and conclusions, which, when read as a whole, establish that plaintiff's interest in the Valencia properties was derivative of her partnership interest and therefore limited to a one-third interest in profits. (In re Ins. Installment Fee Cases (2012) 211 Cal.App.4th 1395, 1429-1430 ["'The true measure of an order . . . is not an isolated phrase appearing therein, but its effect when considered as a whole. [Citations.] In construing orders they must always be considered in their entirety, and the same rules of interpretation will apply in ascertaining the meaning of a court's order as in ascertaining the meaning of any other writing. If the language of the order be in any degree uncertain, then reference may be had to the circumstances surrounding, and the court's intention in the making of the same'"].)
B. Statement of Basis for Return of Capital Contributions
Plaintiff's second argument heading states, "the court's statement of decision must be reversed [because] it fails to explain the factual and legal basis for the court's decision that resulted in all monies being awarded to the losing parties." (Emphasis and capitals omitted.) In that section of her brief, plaintiff argues that the trial court's "final conclusion that capital contributions shall be returned first, was not addressed at trial, [or] in any of the statements or associated documents other than written as a final conclusion of what the court intended to do." According to plaintiff, an explanation of the factual and legal basis for the court's decision was required as "'an essential element of a statement of decision.'" Plaintiff therefore concludes that the judgment must be reversed.
To the extent plaintiff contends that the trial court, in its November 2018 decision, was required to calculate and make findings on the exact amount of each partner's capital contribution, we have addressed that argument in the section above.
If plaintiff's contention is that she had no notice, during the accounting phase of the proceedings, that the trial court would return the capital contributions first, her contention is meritless. During the August 26, 2020, initial hearing on the accounting, defendants argued that their "cash investments" should be returned to them prior to a division of sales proceeds. And, on November 30, 2020, the court directed the parties to calculate capital contributions and explain how those amounts should be handled during the accounting.
Finally, if plaintiff's argument is that the trial court was required to explain, in further detail, why it was returning capital contributions first, that argument also is without merit. A statement of decision explains the legal and factual basis of a trial court's decision. (Code Civ. Proc. § 632.) "'The court's statement of decision is sufficient if it fairly discloses the court's determination as to the ultimate facts and material issues in the case.'" (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 983 (Thompson).) '"Ultimate facts are distinguished from evidentiary facts and from legal conclusions.'" (Ibid.) Thus, "'[i]t is axiomatic that a statement of decision is required only as to issues of fact decided by the trial court (. . . § 632: "upon the trial of a question of fact by the court"), not as to issues of law.'" (Young v. Fish &Game Com. (2018) 24 Cal.App.5th 1178, 1192.) Moreover, there is no requirement that a trial court issue any statement explaining its decision, unless a party makes a formal request for one specifying the principal controverted issue or issues upon which it seeks such an explanation. (§ 632.) Here, the record does not contain a request by plaintiff for a statement of decision specifying that she wanted an explanation of the legal and factual basis for the court's decision to return capital contributions first. She therefore waived any objection to the court's decision on that procedural basis. (Thompson, supra, 6 Cal.App.5th at p. 983.) And, even assuming plaintiff made a timely request for such an explanation, the court stated that the partnership did not have sufficient cash to make each partner whole and that it would therefore return capital contributions before distributing the remaining partnership assets. Thus, it provided the ultimate facts supporting its conclusion on the decision to return capital contributions first, and plaintiff was not entitled to any further explanation of what appears to be an exercise of the court's equitable discretion.
All further statutory references are to the Code of Civil Code unless otherwise indicated.
Indeed, plaintiff concedes that she did not request any statement of decision.
Finally, even if we assume that the trial court erred as claimed, plaintiff was still required to affirmatively demonstrate prejudice from the court's alleged failure to adequately explain its ruling on the capital contributions issue. (F.P. v. Monier (2017) 3 Cal.5th 1099, 1116.) Prejudice in this circumstance required a showing that there was sufficient evidence to sustain a finding in her favor "which would have the effect of countervailing or destroying other findings." (Hellman v. La Cumbre Golf &Country Club (1992) 6 Cal.App.4th 1224, 1230.) As noted, however, plaintiff does not challenge the sufficiency of the evidence in support of any of the court's findings, including those supporting its decision to return capital contributions first.
C. Reimbursement for Improvements
Plaintiff next contends that the trial court erred in failing to find that she should have been reimbursed for sums she expended on improvements to the Valencia properties before any return of the partners' capital contributions. According to plaintiff, such priority reimbursement was mandated under the partition claim pursuant to section 873.220.
A partition action is governed by broad principles of equity. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035; § 872.140 ["The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity"].) A court sitting in equity has "broad powers and comparatively unlimited discretion to do equity without being bound by any strict rules of procedure." (Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 766.) A trial court's rulings based on such equitable principles are reviewed for abuse of discretion. (Lin v. Jeng (2012) 203 Cal.App.4th 1008, 1025.)
Section 873.220 does not mandate a priority reimbursement to plaintiff of amounts expended in improving both properties, before allocating the remainder of the sales proceeds among the partners. Rather, the language of that section is consistent with the broad equitable principles that governed the trial court's accounting and does not operate to restrict the court's exercise of discretion in fashioning a fair result under all of the circumstances.
Section 873.220 provides: "As far as practical, and to the extent it can be done without material injury to the rights of the other parties, the property shall be so divided as to allot to a party any portion that embraces improvements made by that party or that party's predecessor in interest. In such division and allotment, the value of such improvements shall be excluded."
In the April 2021 decision, the trial court explained that each partner's capital contributions should be considered first as part of the accounting. It therefore calculated the total amount allotted to plaintiff for amounts expended on Blacksmith and Steel Lane and concluded that plaintiff was entitled to total capital contributions of $150,337.90. But the court then offset that amount by the $123,000 in back rent that plaintiff owed the partnership and therefore found that her total capital contribution was $27,337.90. We find no abuse of discretion in the court's accounting method.
Although the trial court credited plaintiff with $27,338 in capital contributions, it ultimately awarded her only 43 percent of that amount-$11,756-because there was insufficient cash remaining in trust after reimbursing Grewal for the Valencia loan pay offs.
D. April 2021 Decision /Judgment Unsupported by the Evidence
Plaintiff's last argument on appeal is that the trial court's April 2021 decision and judgment contained "changes" which were not supported by the facts or evidence presented at trial. According to plaintiff, the court's April 2021 decision on the accounting phase "radically altered in multiple ways" the court's November 2018 decision following the first phase of the trial.
Plaintiff's contention ignores that the trial court conducted two phases of the trial. First, it determined liability. Then, it conducted an accounting to determine how much money each party was owed, following the dissolution of the partnership. In her only specific example of a purported change in findings, plaintiff suggests that the court made a finding in its November 2018 decision on the total amount of defendants' capital contributions and that the court was thereafter bound by that finding in rendering its subsequent accounting.
Given that the first phase of trial did not involve final accounting issues-which only arose posttrial, after the sale of the two properties-we reject plaintiff's contention that the court made a final determination on the parties' capital contributions, for final accounting purposes, when making its initial ruling on plaintiff's right to partition, dissolution, and damages for breach of fiduciary duty in November 2018.
Furthermore, to the extent that plaintiff is contending there was insufficient evidence presented during the accounting phase to support the trial court's calculation of defendants' capital contributions, she does not cite to or discuss the evidence, favorable and unfavorable, that was presented on that issue. "[W]hen a losing party challenges the verdict for a lack of substantial evidence, they 'must set forth, discuss, and analyze all the evidence on that point, both favorable and unfavorable. [Citation.]' (Italics added.) [Citation.] Appellants' 'fundamental obligation to this court, and a prerequisite to our consideration of their challenge' [citation], is to 'set forth the version of events most favorable to [respondent]' [citation]. 'Accordingly, if . . . "some particular issue of fact is not sustained, they are required to set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error is deemed to be waived."' [Citation.]" (Pope v. Babik (2014) 229 Cal.App.4th 1238, 1246.) Absent such a showing by plaintiff here, we presume the court made all necessary implied findings in support of its calculation of defendants' capital contributions.
Plaintiff goes on to complain that there are "numerous other conclusions and mischaracterizations in the subsequent [s]tatements [of decision] . . . which indicate a bias or other change in position that ha[ve] nothing to do with the facts and evidence." But other than noting that the judgment incorrectly states that it was made "in favor of [defendants]'" and omits to mention that she prevailed on the cross-complaint, plaintiff does not provide any reasoned analysis of or otherwise elaborate on her generalized complaints. And, as to those two purported inaccuracies in the judgment, she does not explain how she was prejudiced.
V. CROSS-APPEAL
A. Evidentiary Rulings
1. Orders Excluding and Limiting Expert Testimony
Defendants maintain that the trial court abused its discretion when it excluded all testimony from their proffered expert about forged signatures on certain documents and when it limited their expert CPA's testimony to accounting issues only. According to defendants, the court's rulings "left [them] unable to present their case for . . . fraud and embezzlement" by plaintiff.
a. Background
On the last day of trial, defendants called Jacqueline Sloan, a real estate appraiser, as an expert witness. Sloan testified that the fair market value of Fullerton was $240,000 on May 2, 2017, and $290,000 in June 2018.
Following Nagpal's testimony, defendants' counsel informed the trial court that she intended to call Kurt Kuhn to testify about the authenticity of signatures on certain documents introduced at trial. In response, the court asked counsel to explain which of defendants' cross-claims were based on allegations of forgery, prompting a prolonged colloquy on that issue and whether an amendment to the cross-complaint was required.
After the lunch recess, the discussion about Kuhn's testimony continued, and the trial court ultimately ruled that it would not allow an amendment to the cross-complaint to add allegations of forgery. Defendants do not challenge this ruling on appeal. The court also ruled that, absent a claim based on forgery allegations, it would not allow any testimony about forgery. Defendants did not call Kuhn.
Following the trial court's ruling on Kuhn's testimony, defendants called Maryellen Sebold, a CPA. After she testified about her qualifications, background, and experience, Sebold explained that among other documents, she reviewed two different appraisals for the Fullerton property. Defendants' counsel then sought to elicit an opinion from Sebold "regarding the Fullerton investment[.]" Following an objection by plaintiff, the court asked Sebold what, specifically, defendants had asked her to do. Sebold explained that defendants had asked her, among other things, to opine about whether defendants had "actually lost out on [their] investment" in the properties. Sebold explained that her testimony would be based, in part, on appraisal values.
When the trial court asked defense counsel, "is she going beyond a number-crunching analysis?", defense counsel responded, "I don't think so. She's not going to analyze appraisals."
After further colloquy, the trial court observed that defense counsel had not submitted a copy of defendants' expert designation of Sebold and therefore the court did not know what had been included in that designation. Defense counsel did not provide a copy of the designation or describe its contents. After more back and forth with defense counsel, the court stated, "Unless you can show me her designation that she was going to be analyzing lost profits by way of researching and looking at appraisal documents and other real estate records and considering investment vehicles, et cetera. That's not what I understand a CPA, Fraud Certified Public Accountant, so to speak, does." Defense counsel initially responded, "I think I understand, Your Honor."
Defense counsel nonetheless sought to elicit Sebold's testimony about lost rental income for the Blacksmith property between July 2015 and July 2018. When the trial court asked whether Sebold's testimony was based on any accounting records, defense counsel observed that the court appeared to be "taking a slightly narrow view of what a CPA does." The court invited defendants to explain "what you said she was going to do" in the expert designation. Rather than accept the invitation, defense counsel stated that Sebold would base her opinion on plaintiff's testimony about rent and that Sebold would "just add[ ] up the numbers for the court." The court responded that, if defense counsel provided the number of monthly payments plaintiff failed to make, the court could calculate the total amount of rent due on its own.
Following trial, the court concluded that Sebold "was not credible or persuasive" and explained the reasons for the court's findings, including that in conducting her accounting, she had relied solely on evidence provided to her by defendants, had not conducted any cross-referencing for her conclusions, had not considered any monetary contributions by plaintiff, and did not consider certain evidence that had been submitted at trial.
b. Legal Principles
We review a trial court's "ruling excluding or admitting expert testimony for abuse of discretion. [Citations.] A ruling that constitutes an abuse of discretion has been described as one that is 'so irrational or arbitrary that no reasonable person could agree with it.' [Citation.] But the court's discretion is not unlimited, especially when, as here, its exercise implicates a party's ability to present its case. Rather, it must be exercised within the confines of the applicable legal principles." (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773 [finding trial court properly excluded expert testimony].)
When a party designates an expert who has been retained "for the purpose of forming and expressing an opinion in anticipation of the litigation or in preparation for the trial of the action, the designation of that witness shall include or be accompanied by an expert witness declaration under Section 2034.260." (§ 2034.210, subd. (b).) This declaration must contain, among other items, a "brief narrative statement of the general substance of the testimony that the expert is expected to give." (§ 2034.260, subd. (c)(2); see also § 2034.300 [authorizing trial courts to exclude expert testimony for failure to comply with section 2034.260].)
"It is well settled that an expert may be precluded from testifying at trial on a subject that was not described in his expert witness declaration." (DePalma v. Rodriguez (2007) 151 Cal.App.4th 159, 164.) As our Supreme Court explained in Bonds v. Roy (1999) 20 Cal.4th 140 (Bonds), the purpose of expert witness discovery "is to give fair notice of what an expert will say at trial." (Id. at p. 146.) Thus, where an expert witness declaration "fails to disclose the general substance of the testimony the party later wishes to elicit from the expert at trial," a trial court may properly limit the scope of the expert's testimony to the general substance of what was previously described in the expert witness declaration. (Id. at p. 149.)
c. Analysis
(i) Kuhn
The trial court did not abuse its discretion when it precluded Kuhn from testifying about the authenticity of signatures. As the court observed, defendants' cross-complaint did not allege that plaintiff forged signatures in support of either their fiduciary duty or fraud claims.
Defendants' fiduciary duty claim was instead based on allegations that plaintiff, acting in her capacity as a real estate and loan broker, failed: (1) to disclose to defendants "all material facts"-presumably about the real estate transactions she handled for the partnership-and (2) to provide defendants with all the documentation relating to the loans she procured on their behalf. Those allegation do not suggest or imply that plaintiff, while acting in a fiduciary capacity on behalf of defendants, breached her duty of loyalty to them by forging signatures on real estate or loan documents.
The fraud claim was based on specific allegations of misrepresentation and concealment concerning Fullerton: plaintiff knowingly overstated the purchase price of Fullerton by $44,000 and "pocketed the difference"; she earned commissions on the purchase without disclosing that fact to defendants; she acquired title to that property in her son's name without disclosing that fact; and she refinanced Fullerton for $176,500 without disclosing that fact and then converted the loan proceeds for her personal use. But none of those misrepresentations or concealments were based on allegations of forged signatures.
Given the allegations of the cross-complaint, it was not unreasonable for the trial court to conclude that the forgery issue had not been properly pleaded and that it was too late to amend the complaint to assert claims based on such conduct by plaintiff. The court therefore did not abuse its discretion by excluding Kuhn's testimony.
(ii) Sebold
We find no abuse of discretion in the trial court's ruling limiting Sebold's testimony to accounting issues. The court invited defense counsel, on numerous occasions, to demonstrate that defendants had designated Sebold as an expert who would opine on lost income from the properties. Defendants neither provided the expert designation nor provided a proffer about its contents. Thus, the court was entitled to limit Sebold's testimony on this basis alone. (Bonds, supra, 20 Cal.4th at p. 149.) Further, defendants have failed to explain how they were prejudiced by the court's ruling. The court offered to conduct the calculation (of adding numbers) on its own. Finally, given that the court found Sebold was not a credible expert, a finding that defendants do not address on appeal, defendants cannot demonstrate that any testimony Sebold would have provided about lost income would have been credited by the court.
2. Structural Error
Defendants contend that the combination of two of the trial court's evidentiary rulings constituted structural error warranting automatic reversal without a showing of prejudice. According to defendants, by excluding any testimony from Kuhn (discussed above) and denying their request for ten minutes of rebuttal testimony from Grewal, the court committed an error that constituted a structural defect in the trial, as opposed to an error in the trial process itself.
a. Background
Following the testimony of Sebold, defendants' counsel informed the trial court that she "would like to have ten minutes with Mr. Grewal for a quick rebuttal," but she did not explain the issue or issues upon which he would testify. The court replied: "[L]et's finish up [with] what the court needs to finish up with, and then we'll see. I don't know if we are going to have time for that right now." The court and counsel then discussed issues with certain documentary exhibits and agreed upon a schedule for submission of closing briefs.
When the trial court finished with the exhibit and briefing issues and announced that the matter would be deemed submitted upon receipt of the last brief, defendants' counsel interjected, "So, Your Honor, you're not going to-there's no opportunity for Mr. Grewal's rebuttal testimony?" The court responded, "No. I'm sorry. We've run out of time, .... So if it's in evidence, you can refer to it as part of your [written] rebuttal [argument]." Without objection, an offer of proof, or a request for a continuance, defendants' counsel stated, "All right. Thank you, Your Honor." At that point, the court deemed evidence closed.
b. Legal Principles
"In the civil context, structural error typically occurs when the trial court violates a party's right to due process by denying the party a fair hearing. [Citation.] Structural errors requiring automatic reversal include denying a party's request for a jury trial [citation] and violating a party's right to present testimony and evidence [citation]." (Conservatorship v. Maria B. (2013) 218 Cal.App.4th 514, 534.) But, as the court in Soule v. General Motors Corp. (1994) 8 Cal.4th 548 observed (in the context of a civil jury trial), "if a civil litigant was permitted to introduce evidence, cross-examine witnesses, and present argument before a fairly selected jury that rendered its honest verdict on the trial record, there has been no 'structural [defect] in the constitution of the trial mechanism' that might call for automatic reversal of a civil judgment without consideration of actual prejudice." (Id. at p. 579.) c. Analysis
We find no structural error. As to the denial of Kuhn's testimony, defendants do not contend that they were prevented from proving a claim without that testimony. Rather, they argue the trial court's ruling prevented them "from fully presenting their case." As we discuss above, Kuhn's proffered testimony was not relevant to defendants' fraud and breach of fiduciary duty claims as pleaded. Further, both Grewal and Nagpal provided percipient testimony on those claims. Accordingly, the court's exclusion of Kuhn's expert testimony did not prevent defendants from proving those claims. (See Gordon v. Nissan Motors, Co. Ltd. (2009) 170 Cal.App.4th 1103, 1115.)
For similar reasons, we reject the suggestion that the trial court's denial of Grewal's rebuttal testimony constituted structural error. Grewal testified for over three days on direct and cross-examination. At the end of trial, his counsel requested ten minutes for some unspecified rebuttal testimony. But counsel never explained on which issues Grewal would provide further testimony; nor did she claim defendants could not prove one or more of their cross-claims without that rebuttal. (Evid. Code, § 354, subd. (a); People v. Morrison (2004) 34 Cal.4th 698, 711 ["'As a condition precedent to challenging the exclusion of proffered testimony, Evidence Code section 354, subdivision (a), requires the proponent make known to the court the "substance, purpose, and relevance of the excluded evidence ...."' [Citation.]]".)
B. Interpretation of Partnership Agreement
Defendants argue that the trial court misinterpreted the MOU by concluding that it required defendants to maintain a balance of $200,000 in the partnership account "at all times." According to defendants, this interpretation was "not advanced by any of the parties." Defendants also suggest that certain payments awarded to plaintiff were not provided for under the MOU.
Defendants do not develop this argument or support it with citations to the record and authority, and it is not clear that they raised it below. We therefore do not address it further.
According to defendants, the express language of the MOU, which stated that "[a] pool of [$]1,00,000 [sic.] USD will be created by [Grewal] and [Nagpal]", meant that Grewal and Nagpal were required to deposit a total of $200,000 on one occasion. The MOU, however, is silent on the parties' obligations regarding the "pool" of money. And, where, as here, a contract term is ambiguous on its face, a court must interpret the terms according to the mutual intention of the parties. (Breathe Southern California v. American Lung Assn. (2023) 88 Cal.App.5th 1172, 1181.) Contrary to defendants' position on appeal, Grewal conceded at trial that the $200,000 was to serve "as operating income as promised by the MOU" and that he would make more funds available as needed. Thus, defendants' contention on appeal is meritless.
Specifically, Grewal testified as follows: "Q. Did Aarnaa Investment ever had [sic] $200,000 in the Aarna Investment account as operating income as promised by the MOU?' "A. Yes, we had. "Q. All the time? "A. Not all the time. "Q. So how was the partnerships needs to survive if the money was not there? "A. We had more than $200,000 when we needed it."
C. Prevailing Party Issue
1. Background
Following the entry of judgment, defendants filed a cost bill seeking $23,784 as the prevailing party. On April 15, 2021, plaintiff responded with a motion to tax costs, setting a hearing for September 21, 2021. She argued, among other things, that she was the prevailing party entitled to costs, not defendants.
On April 27, 2021, the trial court held a hearing at which it found that there was no prevailing party in the consolidated actions and therefore that no party was entitled to recover costs.
2. Analysis
Defendants contend that the trial court erred in declining to award them costs as the prevailing party. In their view, because they obtained a net monetary recovery that was greater than that obtained by plaintiff, they were the prevailing parties as a matter of law. Defendants' contention ignores the fact that plaintiff obtained substantial non-monetary relief, that is, partition, dissolution of the partnership, and an equitable accounting. It also ignores the court's ruling in plaintiff's favor on each of defendants' cross-claims. Moreover, at trial, defendants argued that plaintiff had no ownership interest in Blacksmith and Steel Lane, the two properties in dispute that had the greatest market value. The court ruled in favor of plaintiff on that issue, rejecting Grewal's claim that he was the sole owner of both properties, and recognizing her one-third interest in each property. Under these circumstances, the court had the discretion under section 1032, subdivision (a)(4) to determine which party, if any, prevailed. (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 188, overruled on other grounds in DeSaulles v. Community Hospital of Monterey Peninsula (2016) 62 Cal.4th 1140, 1156.) Given the mixed results obtained by the parties both at trial and on the accounting, we conclude the court did not abuse its discretion in ruling that there was no prevailing party.
VI. DISPOSITION
The judgment is affirmed. The parties are to bear their own costs on appeal.
We concur: BAKER, Acting P. J. MOOR, J.