Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 158472
CANTIL-SAKAUYE, J.
The trial court found that Vince Ujdur and Michael Edwards entered into a partnership to split the profits from the sale of used cars and awarded Edwards over $140,000 in damages, plus prejudgment interest and costs, in dissolution of the partnership. Vince Ujdur and Vince Ujdur Motor Sales, Inc. (Ujdur) appeal from the judgment, contending Edwards’s claims are unenforceable because he failed to register with the Department of Motor Vehicles (DMV) as an automobile dealer. Ujdur further contends the court erred: in disallowing an offset against the damages for rental expenses; excluding evidence pertaining to vehicle expenses; giving to Edwards profits that belonged to Teri Ujdur; awarding prejudgment interest; and piercing the corporate veil. We find no merit in any of these contentions and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The Parties
Vince and Teri Ujdur own Vince Ujdur Auto Sales, Inc. Vince is the president and Teri is the secretary and treasurer. Teri’s sister Maureen Elliott, known as Moe, is the company’s bookkeeper. The Ujdurs used corporate funds to pay personal expenses, such as utilities, department store charges, and vacation and concert tickets. They also paid their medical expenses and medical insurance premiums out of corporate funds.
In 2000, the Ujdurs moved to Redding and built a structure to house their Thrifty Car Sales business on East Cypress Avenue. In 2003, they ended the Thrifty franchise and opened Integrity Motors to sell used cars. Vince Ujdur has over 30 years’ experience in buying used cars.
Michael Edwards was also in the business of buying and selling used cars. In 2003, he owned a licensed car repair facility called the Auto Shop. He sold used cars there. The Ujdurs took cars to the Auto Shop for reconditioning.
Reconditioning a used car for sale involves a safety check that is required by the state.
The Partnership
In the summer of 2003, Vince Ujdur and Edwards had discussions about forming a partnership. They agreed they would each deposit $75,000 into a new bank account at North Valley Bank and each would take a monthly draw of $5,000. They would sell cars off the lot at Integrity Motors; each would be reimbursed for his expenses in the cars and the profit on the sale would go into the joint account. The mortgage on the property of about $4,500 would be paid out of the account, as well as all costs of the car lot such as utilities, wages for salesmen, and travel expenses for attending auctions. The profits would be split 50/50.
Edwards’s job was to go to auctions and buy cars, help with reconditioning of cars for sale, and help sell cars if needed. He would also “floor” or finance the purchase of cars. Edwards moved 25 to 28 cars he had at the Auto Shop to Integrity Motors. Both Edwards and Vince Ujdur made wholesale car sales outside of the partnership.
Vince Ujdur and Edwards approached William Lee about taking over Edwards’s lease for the Auto Shop. The property had three stalls or bays for repairing cars and the rent was $2,000 a month. Edwards would keep two stalls and would pay $500 a month; he would use these stalls to perform reconditioning work for Integrity Motors. In January 2004, Edwards relinquished the two stalls to Lee as he was losing money.
Edwards and the Ujdurs never discussed that the business would pay the Ujdurs’ medical expenses. Edwards, however, signed checks on Integrity Motors’s account for the Ujdurs’ medical expenses without objection.
The End of the Partnership
On Friday, February 3, 2006, Vince Ujdur got angry with Edwards because he believed Edwards purchased a truck that Ujdur was interested in buying. After concluding that Edwards was lying and deceitful, Vince Ujdur informed all his business contacts that Edwards was no longer with Integrity Motors.
The next day, Saturday, Edwards called Teri Ujdur and told her he would be late to work. She put Vince on the phone who told Edwards they did not want him back. On Sunday, Edwards tried to retrieve a tire from Integrity Motors, but an employee stopped him. After calling Vince Ujdur, the employee told Edwards that he was not allowed on the property.
The Lawsuits
Edwards filed suit against Vince Ujdur and Vince Ujdur Auto Sales, Inc., claiming he and defendants had “formed an oral partnership called INTEGRITY MOTORS” in the fall of 2003. The complaint was for dissolution of the partnership, an accounting, breach of contract and appointment of a receiver. The suit sought damages and prejudgment interest.
Ujdur cross-complained against Edwards for slander, fraud, declaratory relief that no partnership existed and, if there was a partnership, for its dissolution and an accounting.
Ujdur’s motion for a separate trial on liability was denied. Edwards waived jury trial. The case proceeded to a court trial on all issues except slander and fraud, which were bifurcated.
Evidence on Licensing
At trial, the parties stipulated that Edwards was not licensed with the DMV as an owner of Integrity Motors and that, without a license, one cannot hold himself out as an owner of a car dealership to the public. Edwards testified that while not recognized as such by the DMV, he considered himself a dealer while at Integrity Motors.
Tony Beatrici, a DMV investigator, testified that a party who is not licensed as a dealer cannot hold himself out to the public as an owner of a car dealership business. One could not be a partner in the business without a license; if one was involved in the business, one needed a DMV license. The dealership, however, could do what it wanted with its money and could give a share of the profits to employees.
Edwards testified he discussed the issue of a dealer’s license with Vince Ujdur. Edwards did not get a license or ask Ujdur to put him on the license because it would require a new license which was a lot of work. A major concern in changing the license was that Integrity Motors might lose its participation in the Credit Union Direct Lending (CULD) program, which gave instant information on approval or rejection of financing for a purchaser. Also, there was the concern of losing “flooring.” “Flooring” is financing for purchasing cars wholesale.
In February 2004, Edwards got a salesman’s license. Vince Ujdur asked Edwards to get one to protect them.
Statement of Decision and Judgment
The court found the parties’ agreement and subsequent conduct constituted an agreement to form a partnership to carry on the business of the retail sale of automobiles under the name Integrity Motors. Alternatively, the court found there was at least an oral agreement to share profits. The court determined that Vince Ujdur and Vince Ujdur Auto Sales, Inc., acted as one and the same and that it was appropriate to pierce the corporate veil and hold both Vince Ujdur and the corporation liable.
In calculating damages, the trial court began with the parties’ stipulated profits for the period September 1, 2003, through February 3, 2006, of $235,304.43. The court then deducted certain stipulated amounts to obtain a revised net profit of $189,220.78. The court deducted medical expenses of $45,328.22 because the corporation had historically paid them and Edwards had actual notice of their payment and made no objection. The court found that defendants’ claim for a rent expense beyond the mortgage payment was not credible and was unsupported by the evidence.
The court added $150,000 for the stipulated cash investment of $75,000 by each party and found a total net profit of $293,892.56. Each party was entitled to a 50 percent share or $146,946.28. Finally, the court determined Edwards was entitled to prejudgment interest at the legal rate of 10 percent because defendants wrongfully retained the initial investment and profits.
Ujdur objected to the statement of decision because it did not address the issue of whether the partnership agreement was legal due to Edwards’s lack of a license as an automobile dealer. Ujdur also objected there was no legal basis for prejudgment interest on any amount over the $75,000 initial investment.
The court amended the statement of decision to state that the agreement was to share the profits of the sale of motor vehicles under the business name Integrity Motors. Edwards did not hold himself out to the public as a dealer and there was no determination of an ownership interest in the dealer license. Ujdur was free to share profits with someone who was not licensed.
The judgment awarded Edwards $146,946.28, plus $39,726.25 in prejudgment interest and $14,837.63 in costs.
DISCUSSION
I.
Although Edwards Was Not Licensed as a Dealer, His Claims Are Enforceable
Ujdur contends that because Edwards was not licensed as an automobile dealer, he cannot enforce his claims based on his being a partner in a business that bought and sold used cars. Ujdur contends Edwards’s lack of a dealer’s license makes the partnership agreement void ab initio and unenforceable as an illegal contract.
We agree that Edwards was acting as an automobile dealer, an activity that requires a license. We disagree, however, that his lack of a license precludes his claims. Applying the factors set forth in case law for enforcing an illegal contract, we conclude Edwards can enforce the partnership agreement.
While the parties and the trial court appear to have relied exclusively on the testimony of the DMV investigator as to the licensing requirements, we look instead to the law. Vehicle Code section 11700 provides in part that, “[n]o person shall act as a dealer... without having first been issued a license as required in Section 11701....” Vehicle Code section 11701 requires every dealer in vehicles that are subject to registration to make an application to the DMV for a license. A dealer is defined, in part, as one who is “engaged wholly or in part in the business of selling vehicles or buying or taking in trade, vehicles for the purpose of resale.” (Veh. Code, § 285, subd. (b).)
The trial court initially found the partnership agreement was to engage in the business of selling cars. The amended statement of decision found the partnership was to share the profits from the sale of cars. The evidence, however, showed that Edwards was engaged in the business of selling cars, not merely entitled to a share of the profits. In addition to overseeing the reconditioning of cars as the “re-con” manager, Edwards went to auctions and bought cars, he floored 100 cars at a cost of over $1 million, and did some sales from the retail lot. He transferred over two dozen cars he owned at the Auto Shop to be sold at Integrity Motors. He signed checks for the company, fired a salesperson, and kept an eye on how the business was doing by checking the log sheet that recorded sales. Since Edwards was engaged, at least in part, in the business of selling cars, he was required to have a dealer’s license. (Veh. Code, § 11700.)
There is an exception to the statutory definition of a dealer for one who is “regularly employed as a salesperson” by a licensed dealer. (Veh. Code, § 286, subd. (c).) While Edwards obtained a sales license in February 2004, the trial court found he was not employed as a salesperson. The evidence supports this finding. Edwards acted like an owner, not a sales employee; for example, like Vince Ujdur, he did not take a commission for sales.
It was undisputed that Edwards did not have a dealer’s license while at Integrity Motors. In considering the effect of his lack of a license and its impact on the partnership to sell used cars, we find Wald v. TruSpeed Motorcars, LLC (2010) 184 Cal.App.4th 378 (Wald), instructive.
In Wald, the complaint alleged Wald and TruSpeed had an oral agreement under which Wald would find used cars for TruSpeed to sell and would receive a finder’s fee of at least $500 for each car. (Wald, supra, 184 Cal.App.4th 378, 382-383.) When TruSpeed reneged on the deal, Wald sued. TruSpeed filed a demurrer based on Wald’s lack of a dealer’s license. The trial court sustained the demurrer, finding Vehicle Code section 11711.3 precluded recovery under the oral agreement. (Wald, supra, at p. 384.) Under Vehicle Code section 11711.3, an unlicensed dealer cannot enforce a security interest or bring or maintain an action to recover from the purchaser or lessee of a vehicle.
Vehicle Code section 11711.3 provides: “A person acting as a dealer, who was not licensed as a dealer as required by this article, or a person acting as a lessor-retailer, who was not licensed as a lessor-retailer as required by Chapter 3.5 (commencing with Section 11600), may not enforce any security interest or bring or maintain any action in law or equity to recover any money or property or obtain other relief from the purchaser or lessee of a vehicle in connection with a transaction in which the person was, at the time of the transaction, required to be licensed as a dealer or a lessor-retailer.”
The appellate court reversed. First, it found Wald was TruSpeed’s salesman, not a dealer, so Vehicle Code section 11711.3 did not apply. (Wald, supra, 184 Cal.App.4th at pp. 389-390.) While salesmen were also required to be licensed, there was no statutory bar to paying them for sales. Rather, an unlicensed salesperson’s right to payment was determined under case law involving illegal contracts. (Id. at p. 390.) The court looked to Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63 Cal.2d 199, Asdourian v. Araj (1985) 38 Cal.3d 276, and California Physicians’ Service v. Aoki Diabetes Research Institute (2008) 163 Cal.App.4th 1506, to determine when one was permitted to use the courts to collect on an illegal contract.
Applying four factors drawn from those cases, the appellate court determined Wald’s case should proceed. First, car dealers, such as TruSpeed, were not the class of intended beneficiaries of California’s car dealer licensing scheme. (Wald, supra, 184 Cal.App.4th at p. 392.) Second, the greater moral fault was TruSpeed’s. It had knowledge of the licensing scheme and sought to reap a windfall by taking advantage of Wald’s work and then denying him compensation. There was no moral turpitude on the part of Wald and permitting him to receive compensation was not malum in se. Third, TruSpeed would be unjustly enriched by the value of Wald’s efforts; Wald found cars for TruSpeed and TruSpeed wanted to deny him the agreed upon compensation. (Ibid.) Finally, the court found the deterrent policy of the law regulating dealerships would be best realized by allowing Wald’s claim to proceed. This dealer-salesman dispute did not implicate the policy behind the licensing statutes, which was to protect the public. (Id. at p. 393.)
Here, of course, Edwards was a dealer, not a salesman as in Wald. He is not, however, seeking to enforce a security agreement or recover from a purchaser or lessee of a motor vehicle so Vehicle Code section 11711.3 does not apply. Ujdur does not rely on that section in arguing Edwards cannot enforce his claim; instead, Ujdur relies simply on Edwards’s failure to have the proper license, claiming the alleged partnership agreement was illegal and cannot be enforced. In this respect, the effect of the failure to have the appropriate license on enforcement of an agreement not involving a purchaser or lessee of a vehicle, Wald is on point.
Applying the four factors outlined in Wald, we find Edwards is entitled to recover on his claim. Ujdur, as a car dealer, is not an intended beneficiary of the licensing scheme. The dominant purpose of this scheme is “protecting the purchaser from the various harms which can be visited upon him by an irresponsible or unscrupulous dealer.” (Merrill v. Department of Motor Vehicles (1969) 71 Cal.2d 907, 920.) Greater moral fault lies with Ujdur. He was aware of the licensing requirements; he told Edwards to get a salesman’s license to protect them. Edwards’s failure to get a dealer’s license benefitted Ujdur because putting Edwards on the license might have jeopardized the CULD program and financing. At the very least, it would have required action by Ujdur to amend his business documents, likely causing some uncertainty and delay. Nothing in the record indicates that Edwards’s conduct involved moral turpitude and the illegality of being a car dealer without a license is malum prohibitum not malum in se. Under these circumstances, Ujdur would be unjustly enriched if able to retain profits that were promised to and properly belonged to Edwards. Lastly, the deterrent policy of the law to protect purchasers and lessees would not be furthered by denying recovery to Edwards. Instead, as in Wald, denying recovery because Edwards lacked a license would permit a dealer to use the licensing scheme to avoid an obligation. (Wald, supra, 184 Cal.App.4th at p. 393.) That would turn the purpose of the licensing scheme, which was intended to protect the public, on its head.
Under the partnership agreement, Edwards acted as a dealer of motor vehicles; therefore, Vehicle Code section 11700 required him to have a dealer’s license. The failure to have the proper license, however, does not bar enforcement of his claim against Ujdur for his agreed upon share of the profits. Equitable considerations favor recovery by Edwards. The trial court did not err in allowing the unlicensed Edwards to recover under the partnership agreement.
II.
The Trial Court Properly Denied an Offset for Unpaid Rental Liabilities
At trial Ujdur presented evidence that the rent expense for Integrity Motors was greater than just the mortgage payment. The mortgage covered only the cost of the bare land. After buying the land, Ujdur built the facility housing Integrity Motors. Ujdur’s accountant testified the rent expense should be adjusted to reflect the fair market rent of the improved property; she used Vince Ujdur’s understanding of fair market rent and provided a rental adjustment by year. The trial court denied this adjustment.
Ujdur contends that by denying this adjustment, the trial court was rewarding Edwards for his lack of diligence in determining the true expenses of the business. Edwards testified he never looked at the books of Integrity Motors.
We disagree with Ujdur’s characterization of the court’s ruling. Edwards testified that the partnership agreement provided that the mortgage payment would be paid out of the partnership account. There was no evidence of an agreement to pay any greater amount for rent on the buildings. The trial court did not err in denying the adjustment.
III.
The Trial Court Did Not Err in Excluding Evidence of Discrepancies in Vehicle Expenses
Ujdur contends the trial court erred in excluding evidence of discrepancies in Edwards’s claimed vehicle expenses. Specifically, Ujdur contends the trial court erred in excluding testimony of Maureen Elliott and Kristen Kirk that purported to compile or summarize inventory information to show that Integrity Motors paid $55,000 more for vehicle expenses for cars Edwards brought to Integrity Motors than was supported by the information in the vehicles’ jackets.
When Edwards brought cars over to Integrity Motors from the Auto Shop, he provided information of the vehicle expenses for each vehicle. Some of this information was contained in the vehicle’s jacket; a vehicle’s jacket contains certain information about the vehicle, including the safety report, the smog certificate, the title, and the wholesale report, auction sheet or other buy slip reflecting the price paid. The jacket information is used for DMV purposes. Edwards testified not all receipts for vehicle expenses go into the jacket and he used his best efforts to accurately record the expenses for each car.
Elliott and Kirk were prepared to testify that they had compiled or summarized inventory information to show Edwards’s vehicle expenses were not supported by the information in the jacket for each vehicle. They provided exhibits setting forth the discrepancies. In particular, one page of exhibit H showed a vehicle expense discrepancy for vehicles brought over from the Auto Shop of over $55,000.
When Elliott began to testify about exhibit G, entitled “Inventory List Discrepancies, ” Edwards objected to this evidence on the basis that it was expert testimony on accounting issues and Elliott had not been designated as an expert. The court indicated it did not know yet what “discrepancies” referred to, but it sounded like the witness might be asked to interpret documents and then express an opinion. Also there was the issue of laying a foundation for each document. As the questioning continued, the court ruled Elliott would not be allowed to give expert testimony to interpret documents.
After a few more questions to Elliott, Ujdur called Kirk as a witness. The court and the parties discussed her expected testimony. Edwards objected, on the basis of improper opinion, to the summation showing Integrity Motors paid $55,000 more than the jackets indicated. The court indicated it would sustain the objection, noting a foundation had to be laid for each figure on the documents. Edwards also raised the relevancy of the claimed discrepancy since the jackets did not contain all the expense information. At that point, Ujdur decided to move on to the next witness.
Ujdur has failed to show any error in the court’s ruling. First, Ujdur appears to have abandoned the attempt to introduce this evidence when confronted with objections. Second, Ujdur made no attempt to lay a proper foundation for the figures on the exhibits. Third, Ujdur fails to show the relevance of this evidence, or the prejudice in excluding it, since there was testimony that the jackets did not contain all the vehicle expense information.
IV.
The Trial Court Did Not Err in Awarding Edwards a Portion of Teri’s Profits
Ujdur contends the trial court erred in awarding Edwards 50 percent of the profits of the business without taking into account that Teri Ujdur was a part owner of the business. Ujdur argues the partnership agreement was between Edwards and Vince Ujdur alone, not Edwards and Vince and Teri Ujdur, and there was no evidence to support the conclusion that Edwards was entitled to a share of the profits belonging to Teri Ujdur.
Teri Ujdur was not a party to the lawsuit, other than as a shareholder of Vince Ujdur Motor Sales, Inc., and she made no claim on the profits from sales at Integrity Motors. There was no evidence that any percentage of the profits was outside the partnership as Teri’s share of the profits. Instead, there was evidence Teri knew that Edwards was to receive 50 percent of the profits. In her deposition, Teri’s sister Elliott testified Teri told her that Vince was talking about forming a partnership with Edwards. Edwards testified Teri once told him she could not believe she had to give half the profits to him. Further, the trial court found neither Edwards nor Ujdur made any distinction between Vince Ujdur and Vince Ujdur Motor Sales, Inc., and that Vince Ujdur treated the corporation as himself. Vince Ujdur used the corporation as his alter ego and both Vince Ujdur and the corporation were liable to Edwards.
Ujdur has failed to demonstrate that the court erred in awarding Edwards profits that allegedly belonged to Teri Ujdur.
V.
The Trial Court Did Not Abuse its Discretion in Awarding Prejudgment Interest
Ujdur contends the trial court erred in awarding prejudgment interest because the amount of damages was not certain. Ujdur contends the damages could not be calculated because there were disputed issues as to offsets for rent and discrepancies in the vehicle expenses for the vehicles Edwards brought over from the Auto Shop.
Civil Code section 3287, subdivision (a) provides in relevant part: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt.” (Italics added.) “The policy underlying authorization of an award of prejudgment interest is to compensate the injured party--to make that party whole for the accrual of wealth which could have been produced during the period of loss.” (Cassinos v. Union Oil Co. (1993) 14 Cal.App.4th 1770, 1790.)
That Ujdur denied liability did not make the damages uncertain under Civil Code section 3287. (Continental Bank v. Blethen (1970) 7 Cal.App.3d 178, 187.) “[T]he certainty requirement of section 3287, subdivision (a) has been reduced to two tests: (1) whether the debtor knows the amount owed or (2) whether the debtor would be able to compute the damages.” (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 911.) Here Ujdur was able to compute the profits due Edwards based on the financial records. Indeed, the trial court calculated damages based on figures stipulated to by the parties.
The uncertainty as to damages arose only from Ujdur’s claimed offsets, which the trial court denied. The claim of an offset does not defeat the award of prejudgment interest. “‘[Where] the amount of the demand in itself is sufficiently certain, the fact that there is an unliquidated setoff or counterclaim will not prevent an award of interest on the claim due to plaintiff.’ [Citations.]” (General Insurance Co. v. Commerce Hyatt House (1970) 5 Cal.App.3d 460, 475.) “The injured party’s right to prejudgment interest is further protected by the rule that the legal interest allowable under section 3287 cannot be defeated by setting up an unliquidated counterclaim as an offset. [Citations.]” (Chesapeake Industries, Inc. v. Togova Enterprises, Inc., supra, 149 Cal.App.3d 901, 907.)
The trial court did not err in awarding Edwards prejudgment interest on his share of the profits.
We recognize that the trial court awarded prejudgment interest on the basis that Ujdur wrongfully withheld profits rather than that the amount of damages could be calculated with certainty. We review the court’s result, not its reason. (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843.)
VI.
Ujdur Has Failed to Show that the Trial Court Erred in Piercing the Corporate Veil
The trial court found it appropriate to pierce the corporate veil so that both Vince Ujdur and the corporation were liable to Edwards for the judgment. The court found that Vince Ujdur used the corporation as his alter ego; he used corporate funds for his personal expenses, failed to advise Teri Ujdur, a coshareholder, of the partnership with Edwards, and told her his dealings with Edwards were none of her “damn business.” Additionally, Vince Ujdur testified the Board of Directors of the corporation was “moot” and in his deposition he did not know who the directors were.
On appeal, Ujdur contends the court improperly pierced the corporate veil because it was unclear there was a need to do so and nothing in the record indicated Vince Ujdur was required to inform his wife of his business dealings. Ujdur does not contend, however, that there is insufficient evidence to support the court’s determination to pierce the corporate veil or that the court erred in applying the law.
The reason to pierce the corporate veil in this case is clear. The record indicates Vince Ujdur’s assets are kept in the corporation; he paid his personal bills from the corporate account. Applying the alter ego doctrine and piercing the corporate veil is appropriate where “in the particular case presented, justice and equity can best be accomplished and fraud and unfairness defeated by disregarding the distinct entity of the corporate form. [Citations.]” (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993.) That is the case here. Ujdur has failed to show the trial court erred in treating Vince Ujdur and Vince Ujdur Motor Sales, Inc. as one so that the assets of both are available to pay the judgment.
DISPOSITION
The judgment is affirmed. Edwards shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (a)(2).)
We concur: NICHOLSON, Acting P. J. HULL, J.