Opinion
A145836
02-01-2017
THOMAS J. MURRAY, JR., Plaintiff, Cross-defendant, and Appellant, v. ANOUSHIRAVAN MASSOUMI, Defendant, Cross-complainant, and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco County Super. Ct. No. CGC-13-532235)
In this dispute concerning a condominium located in San Francisco that was purchased as a business investment under a contract entered into between Thomas J. Murray, Jr., and Anoushiravan Massoumi, both parties appeal from the trial court's judgment on their respective complaint and cross-complaint. The principal issues concern the legal effect of a quitclaim deed that Murray filed in favor of Massoumi in January 2012, and the court's conclusion that neither party prevailed on their dueling claims for breach of contract. We reverse the judgment insofar as it fails to accurately conform to the court's statement of decision with respect to Massoumi's cause of action for quiet title. In all other respects, we affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. Background
A. The Business Agreement
On December 14, 2006, Murray, Massoumi, and Massoumi's then wife Sissi Tchehrazi entered into a contractual agreement (Agreement) regarding the acquisition of a condominium located on Lansing Street (Lansing Property) in San Francisco. In the Agreement, the parties agreed that the purchase contract would be executed by Massoumi and Tchehrazi. Massoumi would obtain a loan in his name for 100 percent financing.
Upon close of escrow, the parties were to be placed on title as tenants in common, with Massoumi and Tchehrazi each having a 25 percent interest in the property and Murray having a 50 percent interest. Massoumi and Tchehrazi later divorced, and she voluntarily executed a quitclaim deed transferring all of her interest in the property to Massoumi on May 27, 2011. That deed was recorded on March 6, 2013. For purposes of this opinion, we will treat Tchehrazi's share as belonging to Massoumi.
Within seven months of purchase, the Lansing Property's mortgage would be refinanced to a more favorable interest rate. The loan would be in Massoumi's name only "with no change to the manner in which title is held" unless Murray were to exercise an option for purchase or the contract's default provisions were triggered. The parties were also given the right to obtain a second loan by mutual agreement.
The Lansing Property was purchased in December 2006 for $972,500, though it was appraised at $1,380,000. In March 2007, the condominium was refinanced into a first loan with ING Direct (ING) for approximately $980,000. Massoumi also took out a second mortgage with Triton Funding Group for $250,000. The second mortgage was later acquired by Citibank.
The parties opened a joint bank account (Joint Account) to manage property expenses, with the parties initially contributing $7,500 each. Per the Agreement, Massoumi was responsible for using the Joint Account to pay expenses such as property taxes, mortgages, and homeowners' association (HOA) dues. The parties also agreed that the property would be rented out, with the resulting rental income to be deposited into the Joint Account to help pay down the property expenses. Any expenses not covered by the rent would be divided between the parties in proportion to their ownership interests.
The Agreement provides that the property is to be sold either within 10 years or upon reaching $2 million in value, whichever comes first. At that point the parties are to divide the expenses and the profits of the investment. In the event of a party's default, the other party is required to provide written notice to allow the breach to be cured. If the breaching party fails to cure the default, then the nonbreaching party is to be awarded ownership of the other party's share. The breaching party would be required to execute a quitclaim deed to transfer the ownership to the nonbreaching owner, who could then keep or sell the property at his discretion. The Agreement also provides that "[s]hould any of the Owners desire to occupy the Subject Property for his/her own use, then fair market value of the Subject Property shall be charged for rent, unless otherwise agreed upon by the Owners."
B. The Lease
On March 1, 2007, Murray began residing at the Lansing Property pursuant to a residential lease agreement (Lease) he entered into with Massoumi. The monthly rent was set at $3,995. The rental term was month-to-month "until either party terminates this Agreement by giving the other party written notice as required by law." The Lease specifies that the premises were to be used as a residence for no more than one person. It also states that all the terms from the Agreement applied. Murray signed the Lease both as "Tenant" and as "Owner." On the date the lease was signed, Murray had yet to be added on the deed as an owner of record. A grant deed giving Murray a 50 percent ownership interest was recorded on March 30, 2007.
C. The Parties Stop Making Payments
On July 15, 2010, Massoumi's attorney sent a written notice to Murray raising the rent to $4,500 effective October 1, 2010. Murray responded by continuing to pay the original rent amount of $3,995.
On January 19, 2011, ING sent Massoumi a notice that it had not received the mortgage payment that was due on January 1, 2011.
On February 25, 2011, Murray sent an e-mail message to Massoumi, notifying him that the HOA dues were two months late. Murray asked what was going on, noting that Massoumi was responsible for paying the taxes, the HOA dues, and the mortgages.
On March 15, 2011, Murray made a final deposit into the Joint Account, in the amount of $4,295. According to an e-mail message he sent to Massoumi's assistant, both parties had agreed to stop making mortgage payments in an attempt to get the lenders to work with them on renegotiating the loans' interest rates.
On March 18, 2011, ING sent Massoumi a notice that it had not received the mortgage payment that was due on March 1, 2011.
By April 2011, Murray had stopped paying the monthly rent. Around this time, the mortgage and other expenses were not being paid. Murray, who is a professional mortgage broker, sought and obtained Massoumi's written letter of authorization to sign documents and negotiate the Lansing Property's two mortgages.
On April 19, 2011, ING notified Massoumi that it had not received the mortgage payment that was due on April 1, 2011.
On May 2, 2011, CitiMortgage sent Massoumi a foreclosure notice. It sent another such warning notice on May 24, 2011.
On September 14, 2011, ING issued a notice of default and election to sell under the deed of trust. According to the notice, Massoumi was $28,924 behind on the first mortgage.
On January 12, 2012, Murray paid ING $28,000 by cashier's check.
D. Murray Files the Quitclaim Deed
On January 24, 2012, Murray recorded a quitclaim deed in favor of Massoumi. The deed states: "FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, [¶] [Murray] [¶] do(es) hereby REMISE, RELEASE AND FOREVER QUITCLAIM to [¶] [Massoumi] [¶] [the Lansing Property]."
On April 26, 2013, Massoumi recorded a grant deed for the Lansing Property, changing his designation on the title from married man to unmarried man.
On January 31, 2012, Murray paid ING $5,000 and $14,000 by two cashier's checks. These payments, plus the January 12, 2012 payment, brought the ING loan current.
On October 1, 2012, ING sent a notice to Massoumi stating it had been notified that the property taxes had not been paid.
On October 23, 2012, Murray paid ING $40,047 by cashier's check.
On December 28, 2012, CitiMortgage cancelled the second mortgage in the amount of $249,250. Massoumi later received a tax form declaring the amount of the cancelled debt to be his taxable income.
On January 18, 2013, ING sent Massoumi a notice of demand regarding nonpayment of the mortgage installments due for November 2012, December 2012, and January 2013. The mortgage was later assumed by Capital One.
In March 2013, Capital One sent the parties two notices of default. The notices demanded $26,368 to avoid foreclosure.
On April 25, 2013, Murray paid $14,000 and $12,368 to Capital One by two cashier's checks.
On May 16, 2013, Capital One notified Massoumi that the mortgage was again past due.
On June 13, 2013, Capital One sent the parties another notice of default, this time demanding $13,076.
On August 2, 2013, Capital One sent the parties a notice of default demanding $22,080. II. Pretrial Proceedings
A. Murray's Complaint
On June 19, 2013, Massoumi served Murray with a 60-day notice to terminate tenancy. That same day, Murray filed a "Complaint for Cancellation of Deed to Real Property, Breach of Contract, Breach of Fiduciary Duty, and Negligence." In part, he sought to cancel his quitclaim deed, asserting he had executed it "under duress." In his cause of action for breach of contract, Murray alleged Massoumi had breached the Agreement by failing to pay the mortgage, property taxes, and HOA fees. In the causes of action for breach of fiduciary duty and negligence, Murray alleged Massoumi had failed to act as a reasonable business partner when he failed to communicate with Murray, failed to make the required payments, and intentionally let the property fall into foreclosure.
Murray also filed a notice of lis pendens.
In his prayer for relief, Murray asked the court to declare the quitclaim deed void and award him $675,000 for "the value of the property interest that was improperly granted to [Massoumi]." He also asked for a finding that Massoumi had defaulted under the terms of the Agreement and was therefore required to quitclaim his ownership to Murray. Murray also sought $1,350,000 in contract damages, interest from date of breach, contractual attorney fees, and punitive damages.
B. Massoumi's Cross-complaint
On August 2, 2013, Massoumi filed an answer to Murray's complaint. He also filed a cross-complaint against Murray. The cross-complaint contains causes of action for breach of contract, fraud and misrepresentation, negligence, quiet title, accounting, and declaratory relief. Massoumi alleged that Murray had a pattern of paying the rent late, which interfered with Massoumi's ability to pay the mortgage and expenses on time. When Murray stopped paying rent in April 2011, Massoumi became unable to meet the monthly mortgage obligations. He asserted that instead of renegotiating the mortgages, Murray tried to arrange a short sale of the Lansing Property without Massoumi's permission.
Massoumi also alleged Murray did not inform him that he had recorded the quitclaim deed, which occurred the day before the Lansing Property was scheduled for a trustee's sale. In his claims for quiet title and declaratory relief, he sought full ownership based on Murray's quitclaim deed. He acknowledged that after the trustee's sale was continued, Murray paid the outstanding balance to save the Lansing Property from going into foreclosure. In Massoumi's view, the money paid by Murray represented unpaid back rent and late fees. He also complained that Murray had intentionally arranged for relevant communications to be sent to the Lansing Property in order to withhold material financial and ownership information from him.
On August 20, 2013, Massoumi filed an unlawful detainer action against Murray.
On September 6, 2013, Murray filed a motion for a preliminary injunction, seeking to stay the unlawful detainer action pending resolution of the present lawsuit.
On October 9, 2013, the trial court granted Murray's motion for preliminary injunction. He was awarded the right to continue to occupy the property, and was ordered to timely make payments as they became due, including mortgage payments, property taxes, HOA dues, and utility bills. The court also consolidated the unlawful detainer action with this lawsuit, directing that the issue of possession would not be decided until the issue of title was resolved.
The bench trial before Judge James McBride commenced on September 22, 2014. III. Trial
A. Murray's Testimony
Murray is a mortgage broker. He originates loans and also assists current owners seeking to refinance their mortgages. He holds a California broker's license and a federal mortgage loan originator license, and has been in the mortgage industry since 2005. He has resided at the Lansing Property since April 2007. Anthony Campbell, Murray's life partner, moved in with him in October 2007.
Murray first met Massoumi in late 2005, when he refinanced several of Massoumi's properties and helped him finance a purchase or two. Murray learned of the Lansing Property in the summer of 2006 when he was working for Chase Bank, which was one of the preferred lenders on the Lansing Street condominium development. At the time, the fair market value of the Lansing Property was about $1.4 million. Murray was able to secure the unit for $972,500 due to his having a positive business relationship with the seller. Murray testified that he would have qualified for a loan on his own. Massoumi learned of the transaction and approached Murray to become a business partner. The parties then decided to enter into the Agreement.
The Lansing Property is a 1,300-square-foot condominium with an 800-square-foot terrace. It has two bedrooms, two full bathrooms, a full kitchen, a den and a living area. It also has a storage unit, as well as a deeded parking spot.
Prior to the underlying dispute, the parties had a good, friendly business relationship. Per the original Agreement, Massoumi and his wife were the only people on the title. Murray thought "that was a fine idea," with the understanding that the Agreement provided his ownership would be 50 percent, with Massoumi and his wife together owning the remaining 50 percent.
After the Lansing Property was refinanced, the parties decided to take out the second loan to cash out equity and to do upgrades. The second loan was at an interest rate of 8.091 percent with a 10-year interest-only period and a 20-year amortization. It was taken out in Massoumi's name only. The parties each took approximately $95,000 from this second loan for their own personal use.
The parties had planned to rent the unit but had trouble finding a tenant, so Murray agreed to live there and make $3,995 monthly rental payments. All property expenses above that rental amount were to be shared equally by the parties, with expenses paid out of the Joint Account. Murray's rental payments were made directly to the Joint Account. Under the Agreement, Massoumi handled the accounting for the Lansing Property. The parties complied with this arrangement from March 2007 until January 2011, when Massoumi stopped paying his share of the property expenses.
The total monthly property expenses were $4,287 for the first mortgage, $1,685 for the second mortgage, $576 for HOA dues, $40 to $50 for insurance, and $1,000 for property taxes.
When Massoumi's attorney sent Murray the notice to increase rent, Murray felt he had not agreed to an increase and did not believe the higher price reflected fair market rental value. Murray continued to pay the $3,995 rent until early 2011, when Massoumi told him to stop because he was going to stop paying the ING mortgage in order to renegotiate the interest rate. Up until that point, Massoumi had acquiesced to Murray's $3,995 rental payments. He also had apologized for the rent increase notice, "calling it a big misunderstanding."
In 2011, Murray learned Massoumi had not paid two months of HOA dues. He reminded Massoumi of his responsibility to make these payments. Murray ended up paying all the HOA dues himself. He understood that under the Agreement, if a party breaches the contract and does not cure the default in 60 days, ownership of the property vests in the nonbreaching party. This provision was never invoked. Massoumi eventually stopped making mortgage payments, and failed to pay property taxes or the homeowner's insurance.
In March 2011, Massoumi left a voicemail message explaining that he was not making payments because he did not have the money. In April 2011 he left another voicemail message saying he could not pay the second mortgage and asking Murray to work with the lender to renegotiate it. Murray believed Massoumi had decided to let the Lansing Property go into foreclosure. Murray received notices of default and the notice of trustee sale through the mail, which he forwarded to Massoumi by e-mail.
The parties signed a document in April 2011 giving Murray the right to negotiate on Massoumi's behalf regarding the loans. Massoumi authorized Murray to do whatever he could to prevent foreclosure on the property. Murray tried to renegotiate both the ING and the Citibank loans. He also made payments to stop the foreclosure process and tried listing the property for sale.
Murray first listed the property for sale in April 2011. He signed the listing agreement on Massoumi's behalf. The property was listed for $1,195,000 and did not sell. Murray also tried to do a short sale in November 2011, but it did not go through. Campbell had offered $749,000 after an appraisal, but ING had wanted $900,000. He testified that Massoumi was aware of the attempted sales.
A foreclosure sale was set for January 25, 2012. The sale was then rescheduled for the following week. Ultimately, that sale never happened because Murray was able to get enough funds ($47,000) to stop the foreclosure process. Massoumi did not contribute to those funds.
Murray was in "a pretty desperate place" as he was trying to cure the mortgages so there would not be a foreclosure. He also was concerned that having a foreclosure on his record would potentially lead to revocation of his federal professional license. To avoid possibly losing his license, as well as to clear his name from any security interest in the Property, he filed a quitclaim deed to Massoumi the day before the January 25, 2012 scheduled foreclosure sale.
Murray believed he was only conveying his security interest in the property because he also filed a preliminary change of ownership report (PCOR) in which he indicated that the security interest was the only interest being transferred. He also checked the box on the PCOR form stating that his ownership would remain the same after the security interest was transferred to Massoumi.
The property was threatened with foreclosure several more times in 2012. Each time, Murray forwarded the foreclosure notices to Massoumi, who did nothing. It was Murray who pulled the funds together to cure the defaults. He continued to make payments even after executing the quitclaim deed because he believed he had an ownership interest based on the Agreement and the Lease, both of which were in effect prior to his being placed on the title. He also wanted to save the property because it was his home. Since executing the quitclaim deed, he had made all the mortgage payments except for two. Massoumi made two payments after Murray filed this lawsuit in 2013. Murray had also paid all the monthly HOA dues, insurance payments, and payments on property taxes.
As of trial, Murray estimated he had contributed close to $498,000 towards the Lansing Property. He believed he was entitled to full ownership because he had been the only financially responsible party since 2011. He also wanted to be reimbursed for amounts that would have been Massoumi's responsibility to pay under the Agreement.
B. Massoumi's Testimony
Massoumi testified that Murray told him he could not have purchased the Lansing Property himself due to a conflict of interest and insufficient credit status. The parties agreed that the first and second mortgages would be taken in Massoumi's name alone. The Agreement was initially drafted so that Massoumi would be on the title with his wife. Around the time the mortgages were refinanced, Murray was added to the deed as a 50 percent owner and Massoumi agreed to rent the condominium to Murray. After moving in, Murray spent money on property improvements that Massoumi did not agree with, such as turning the second bedroom into a closet. Murray used money from the Joint Account to make these improvements without first consulting Massoumi.
Murray paid rent into the Joint Account from March 2007 to March 2011. He usually paid rent late. In March 2011, they discussed stopping payments on the second mortgage because that mortgage had to be three months late before its terms could be renegotiated. They decided to continue paying the ING mortgage because the rent was enough to cover it. Eventually, Massoumi gave Murray authorization to renegotiate the loans. He did not want to sell the property and never told Murray to stop paying rent.
Murray did not pay rent in April 2011, and Massoumi was worried the property could be foreclosed on because he could not pay the ING mortgage. However, he did not sign any listing documents and did not authorize Murray to sign those documents on his behalf. Murray never told him he was going to record a quitclaim deed and transfer his interest in the property to Massoumi. He did not find out about the quitclaim deed until about seven or eight months later.
C. Closing Arguments
On October 9, 2014, Murray filed a supplemental closing argument addressing several issues raised by the trial court, including whether a contract that contains unperformed terms and has been breached, but not repudiated, remains in effect. Murray asserted the Agreement was still in effect and would continue until December 27, 2016, when the Lansing Property was to be sold and the profits split in accordance with the Agreement's terms.
Massoumi countered that the Agreement was no longer in effect except to wind down the accounting and address possession. In his view, Murray's quitclaim deed amounted to an express repudiation of the Agreement. In a later brief, he further asserted that he was the only legal owner of the Lansing Property and was therefore entitled to proceed on the 60-day notice to terminate tenancy and recover possession of the condominium.
D. Statement of Decision
On October 23, 2014, Murray requested a statement of decision (SOD). The parties were directed to prepare a joint SOD, indicating the points on which they disagreed.
On December 11, 2014, the trial court ordered an additional hearing on the parties' joint proposed SOD. Further objections and declarations were filed.
On March 5, 2015, Murray's counsel sent a letter to the trial court clerk, noting that Judge McBride had retired from the bench and inquiring about the proper procedure to have a SOD entered.
On May 28, 2015, the trial court filed Judge McBride's SOD. The court found in favor of Murray on his breach of contract claim, ordering Massoumi to pay $47,081 as damages for his unpaid share of property expenses. The court further held the Agreement had been mutually breached by both parties, but concluded the contract had not been repudiated or terminated. The court found against Murray on his claims for breach of fiduciary duty and negligence, and against Massoumi on his claims for fraud and negligence.
As to the quitclaim deed, the court found Murray had failed to establish he executed it under duress. His prayer for cancellation of the quitclaim deed was denied, and the court ordered judgment to be entered quieting legal title in favor of Massoumi. The court also stated, however, that judgment "shall be further entered securing a beneficial interest and leasehold interest in the subject property in favor of Mr. Murray." The court reasoned that while Murray had "modified" the Agreement and Lease by voluntarily transferring "his entire ownership interest (50%) and legal title" to Massoumi, he had retained "an interest in the liabilities and/or benefits relating to the maintenance and any sale" of the Lansing Property, as well as his rights as a tenant under the Lease.
As to Massoumi's request for declaratory relief, the trial court ordered both parties to share equally in the tax consequences arising from the cancellation of the second mortgage. The court also declared: "Mr. Murray's fifty percent (50%) ownership in the subject property establishes an equitable interest in the [Lansing Property]," and ordered that he "shall continue to occupy the premises as an equitable owner under the [Lease.]" As to the unlawful detainer action, the court ruled Murray had "a right of occupancy" as a beneficial owner under the Agreement.
E. Judgment
On September 23, 2015, the trial court granted Murray's motion for entry of judgment and filed his proposed judgment as the judgment after trial. We address the entry of judgment further below.
DISCUSSION
I. Standard of Review
"Our review of questions of law is de novo. [Citation.] However, to the extent [an] appeal implicitly challenges any factual findings of the trial court, we do not disturb the trial court's findings if substantial evidence supports the judgment. Instead, we resolve all conflicts in favor of the judgment . . . ." (Poniktera v. Seiler (2010) 181 Cal.App.4th 121, 130.) II. Massoumi's Appeal
A. Contentions
In his appeal, Massoumi claims the trial court entered inconsistent rulings when it found the quitclaim deed was legally effective while at the same time holding that Murray retained a 50 percent beneficial interest in the property under the terms of the Agreement and the Lease. In arguing that our review must be under the de novo standard, Massoumi's principal argument on appeal is that: "The twin rulings of the trial court: (1) that, on the one hand, the Quitclaim Deed was valid; and (2) that, on the other hand, the Quitclaim Deed did not operate to transfer Murray's equitable interest in the Lansing Property are incompatible and irreconcilable." Alternatively, he asserts that even under a substantial evidence test, "there is no evidence which is reasonable, credible, or of solid value which supports any construction of the Quitclaim Deed which interprets that document to mean anything other than what it says, a complete and unrestricted transfer of Murray's legal and equitable interest in the Lansing Property to Massoumi." Massoumi also contests the amount of damages awarded and challenges the judgment's validity. We disagree with his contentions, but conclude the judgment must be modified to explicitly state that Massoumi has been awarded full legal title.
B. Quitclaim Deeds
"It is well recognized that a quitclaim deed is a distinct form of conveyance and operates like any other deed inasmuch as it passes whatever title or interest the grantor has in the property. [Citations.] It is equally settled that the form of the instrument creates a presumption that the title to the property is held as shown in the instrument. [Citations.] While the presumption arising from the form of the title may be rebutted by evidence of a contrary agreement between the parties, the presumption cannot be overcome solely by tracing the funds used to purchase the property, nor by testimony of an intention not disclosed to the grantee at the time of the execution of the conveyance. [Citation.] Finally, it is axiomatic that the issue of whether the evidence is sufficient to overcome the presumption is a question of fact for the trial court whose determination will not be overturned on appeal if supported by sufficient evidence." (In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 496.)
" '[I]t has been often decided by this court that a quitclaim deed conveys the absolute fee-simple title if the party executing it had such title [citations]; and therefore such deed does not imply any precedent interest or easement in the releasee, or any admission of the releasor to that effect.' [Citation.] 'In this State, from the earliest times, quitclaim deeds have been in every-day use for the purpose of transferring title to land, and have been considered as effectual for that purpose as deeds of bargain and sale.' [Citation.] Indeed, as early as 1854, this court recognized and held a quitclaim deed to effect a transfer of 'all the right and title of the grantor.' " (City of Manhattan Beach v. Superior Court (1996) 13 Cal.4th 232, 239, fn. omitted.)
C. Whether Murray Retained a Beneficial Interest
Massoumi first claims the trial court failed to apply the legal inferences applicable to written instruments in concluding Murray retained a beneficial interest in the Lansing Property. He relies on Evidence Code section 662, which provides: "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." Essentially, he asserts the court erred in treating the Agreement and the Lease "as if the Quitclaim Deed had never been executed," and claims "the net effect of the trial court's ruling was to render the Quitclaim Deed a nullity." His argument ignores the extent of the court's equity jurisdiction in a quiet title action where "the court has jurisdiction to hear and determine all issues necessary to do complete justice." (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 741; see Westerholm v. 20th Century Ins. Co. (1976) 58 Cal.App.3d 628, 632, fn. 1 ["a court of equity will administer complete relief when it assumes jurisdiction of a controversy"]; see also Code Civ. Proc., § 760.040, subd. (c) ["Nothing in this chapter [governing actions to quiet title] limits any authority the court may have to grant such equitable relief as may be proper under the circumstances of the case."].)
In arguing that Murray did not retain any equitable interest in the property after he recorded the quitclaim deed, Massoumi relies on a series of inapposite cases, beginning with Rosenthal v. Landau (1949) 90 Cal.App.2d 310 (Rosenthal). In that case, a husband had purchased a home through the Department of Veterans Affairs (Department). (Id. at p. 311.) He subsequently twice quitclaimed his interest in the property to his ex-wife in settlement of their marital property rights. He did not first obtain requisite consent from the Department. (Id. at pp. 312-313.) The ex-wife occupied the property and made all payments to the Department, as well as paying property taxes and insurance. She did not record the quitclaim deeds. Fifteen years later, the husband tried to record a deed of trust on the same property after he paid off the Department. (Id. at p. 312.) The trial court quieted title in the ex-wife. On appeal, the husband contended that since he did not have title to the property at the time he executed the relevant quitclaim deed (because title had not yet been transferred to him by the Department), the quitclaim deed had not vested the after-acquired title in his former spouse. (Ibid.) The Court of Appeal disagreed, holding that the quitclaim deed was effective to pass his equitable interest in the property, including his right to complete his title by paying off the balance of the purchase price. (Id. at p. 313.)
Rosenthal is distinguishable from the present case in that the parties had not executed any contracts setting forth their respective rights prior to the execution of the quitclaim deeds. To the contrary, it was undisputed that the husband had intended to relinquish the property to his ex-wife at the time he gave her the deed. (Rosenthal, supra, 90 Cal.App.2d at pp. 311-312.) Thus, the case does not stand for the proposition that a party forfeits all of his or her independent, preexisting contractual rights relating to a parcel of real property upon executing a quitclaim deed. Further, unlike the husband in Rosenthal, Murray never evidenced any intention to relinquish his rights with respect to the property. We also note that the parties here executed the Agreement and the Lease before Murray was even placed on the title, and the parties' contracts were not explicitly or implicitly conditioned on Murray thereafter remaining on the title.
Massoumi also relies on Soares v. Steidtmann (1955) 130 Cal.App.2d 401 (Soares). In Soares, a surviving widow who would have been entitled to have a small estate set aside to her under former Probate Code section 645, conveyed by quitclaim deed, after such right had accrued to her by her husband's death, all her interest in property she inherited. Some years later she conveyed the property to another party by grant deed, seeking to make the second deed effective by applying to have the estate set aside to her under the Probate Code. The second holder had actual notice of the earlier quitclaim deed. (Id. at p. 402.) The trial court ruled in favor of the second holder, reasoning that the widow had acquired a new title through the probate proceeding, which did not pass under the quitclaim deed. (Id. at p. 403.) The appellate court reversed, holding that the widow had waived her rights under the Probate Code when she executed the prior holder's quitclaim deed. (Id. at pp. 403-404.) Again, the present case is distinguishable because Murray's contractual rights were not dependent on his having title to the property. Rather, his rights arose from the preexisting contractual provisions set forth in the Agreement.
In Howard Homes, Inc. v. Guttman (1961) 190 Cal.App.2d 526 (Howard Homes), another case cited to by Massoumi, the defendant adjacent property owners appealed from the decision of the trial court in a homebuilder's declaratory relief action, wherein the court held that the homebuilder's construction plans did not violate restrictive covenants. In that case, the defendants had acquired certain properties by a grant deed containing restrictive covenants including a prohibition against the erection of any fence, wall, or hedge in excess of five feet above the level of the ground. These covenants were to run with the land. Subsequently, the defendants sold three of the lots after obtaining a quitclaim deed from the original owners. The quitclaim deed did not retain the "fence, wall, or hedge" restriction. The homebuilder thereafter acquired the three lots and successfully sought a judicial declaration that it had the right to build above the height restriction. (Id. at pp. 529-530.)
The appellate court affirmed, finding the quitclaim deed effectively purged the express height limitation contained in the prior deed. (Howard Homes, supra, 190 Cal.App.2d at pp. 530-531.) The case itself stands for the uncontroversial proposition that a quitclaim deed "passes whatever interest, legal or equitable, that the grantor possesses at the time of its execution." (Id. at p. 530.) By contrast, again, Murray's contractual rights here were not contingent on any element of the deed that he quitclaimed to Massoumi. Again, Massoumi's legal premise is not supported by the authority upon which he relies.
Finally, Massoumi cites to Klamath Land & Cattle Co. v. Roemer (1970) 12 Cal.App.3d 613 (Klamath). In Klamath, the owner of real property surface rights filed a complaint against several holders of subsurface oil and mineral interests. One of the defendants brought a cross-complaint to quiet title to an undivided one-fourth interest in the subsurface rights. (Id. at p. 616.) The trial court found that the relevant title document was a quitclaim deed that had not conveyed an after-acquired title to the property rights claimed by the defendant. (Id. at pp. 617-618.) The appellate court reversed, concluding that the document was actually a grant deed, and therefore it had conveyed the after-acquired title. (Id. at p. 618.) Alternatively, the court concluded that even if the instrument were determined to be a quitclaim deed, it would have passed the after-acquired title because it had passed the equitable interest, defined as "the right to complete title by paying off the balance of the purchase price under a contract of sale." (Id. at pp. 618-619.)
In the present case, whether Murray has an "equitable interest," as that term is used in Klamath and other case discussed above, is not determinative. Again, his interest in the Lansing Property does not arise out of any of the property's recorded title documents. Rather, his interest arises out of the Agreement and the Lease. Further, it is undisputed that Murray did not execute the quitclaim deed under the terms of the Agreement that require the defaulting party to execute a quitclaim deed after failing to cure. Massoumi never invoked that provision of the Agreement and he does not allege that the Agreement was ever repudiated by the parties. Accordingly, because the authority relied upon by Massoumi is unpersuasive, we conclude the quitclaim deed did not terminate Murray's rights and obligations under the terms of the Agreement and the Lease.
D. The Judgment Is Inconsistent with the SOD
Even though we conclude the quitclaim deed did not terminate Murray's contractual rights, the judgment must be reversed to the extent it is inconsistent with the SOD. In discussing both Murray's action to cancel the quitclaim deed and Massoumi's cause of action for quiet title, the SOD states: "Mr. Murray's prayer for cancellation of the Quitclaim deed is DENIED and JUDGMENT shall be entered quieting legal title in favor of Mr. Massoumi." In contrast, the judgment states: "On [Massoumi's] Fourth Cause of Action for Quiet Title, judgment shall be entered securing a 50% beneficial interest in the [Lansing Property] in favor of [Murray]. Further a leasehold interest in the [Lansing Property] shall be secured in favor of [Murray]." There is nothing in the judgment to reflect the SOD's holding that legal title was to be quieted in favor of Massoumi.
Murray was also directed to withdraw the lis pendens recorded against the Lansing Property.
While the SOD with respect to the declaratory relief action states that "Mr. Murray's fifty percent (50%) ownership in the subject property establishes an equitable interest in the Subject Property," as to the cause of action for quiet title the SOD specifies that legal title must be quieted in favor of Massoumi. We remand this point to the trial court so that the judgment on the quiet title cause of action can be modified to conform to the SOD.
The SOD also specifies that "JUDGMENT shall be further entered securing a beneficial interest and leasehold interest in the subject property in favor of Mr. Murray." In our view, this holding is not inconsistent with the ruling on Massoumi's claim for quiet title, and instead reflects the trial court's exercise of its equitable jurisdiction.
E. The Trial Court's Accounting
The trial court concluded Massoumi owes Murray $47,081 for his share of the property expenses due from December 2006 to September 2014. On appeal, Massoumi does not disagree with the court's accounting methodology. However, he asserts his indebtedness should be reduced by $39,800 based on the October 9, 2013 injunction order that required Murray to pay all expenses of the Lansing Property pending trial as a condition for his continued occupancy of the condominium.
In his reply brief on appeal, Massoumi concedes he did not make any arguments to the trial court as to the financial consequences of the preliminary injunction order. A party who fails to alert the trial court to an issue that has been left unresolved forfeits the right to raise that issue on appeal. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134; Bullock v. Phillip Morris USA, Inc. (2008) 159 Cal.App.4th 655, 678-679.) In any event, we agree with Murray that " the 'granting or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy.' (Froomer v. Drollinger (1960) 183 Cal.App.2d 787, 789) . . . ." We therefore find no error in the accounting.
F. Failure to Timely Object to Proposed Form of Judgment
Massoumi claims the trial court erred in failing to grant him relief from his failure to timely object to Murray's proposed form of judgment. We disagree. We set forth the sequence of events below.
On July 9, 2015, Murray's attorney sent a proposed judgment to Massoumi's attorney.
On July 17, 2015, Massoumi's attorney objected to the proposed judgment. Thereafter, Murray's attorney incorporated all of Massoumi's proposed changes and, on August 5, 2015, sent a revised proposed judgment to Massoumi's attorney, who thereafter failed to respond.
On July 27, 2015, Massoumi filed an appeal from the statement of decision. That same day, Murray, acting in pro. per., filed a notice of appeal, also from the statement of decision.
On August 14, 2015, Murray filed a notice of cross-appeal, this time explicitly stating that the appeal was being taken from the May 28, 2015 statement of decision.
On September 8, 2015, Murray filed an ex parte application for entry of judgment, or, in the alternative, for an order shortening time. In his application, he noted that both parties had filed appeals even though no judgment or notice of entry of judgment was on file. He asserted even though Judge McBride was retired and unavailable, the trial court could properly enter judgment under Code of Civil Procedure section 635.
On September 9, 2015, the trial court, by Judge Ernest H. Goldsmith, granted Murray's application for an order shortening time. The motion to have judgment entered was set for September 23, 2015.
On September 10, 2015, Murray filed a motion for entry of judgment.
On September 16, 2015, Massoumi filed an opposition to the motion for entry of judgment, complaining that the proposed form of judgment was inaccurate and incomplete. He attached an alternative proposed form of judgment. He also asserted the law and motion department was without jurisdiction to hear the matter because the case had not been referred by the presiding judge per Code of Civil Procedure section 635. Murray's reply brief argued the matter was properly set because the presiding judge of law and motion qualifies as a "designated" judge under the statute and under the Superior Court of San Francisco County, Local Rules of Court, rule 8.1.
On September 23, 2015, the trial court granted Murray's motion for entry of judgment and filed Murray's proposed judgment as the judgment after trial. The trial court found that good cause did not exist to excuse Massoumi from his noncompliance with California Rules of Court, rule 3.1590(j), which required him to have objected to Murray's form of judgment within 10 days of service. (See Cal. Rules of Court, rule 3.1590(m).) On appeal, Massoumi claims his failure to object should have been excused due to various matters, including the retirement of Judge McBride, various delays, and Murray's premature filing of notices of appeal.
When a party submits a proposed judgment to the court, any party affected by the judgment may, within 10 days after service of the proposed judgment, serve and file objections to it. (Cal. Rules of Court, rule 3.1590(i)-(j).) A plaintiff's failure to object to the form of the judgment precludes a claim of error on appeal. (Miller v. San Francisco Church Exten. Soc. (1932) 125 Cal.App. 85, 89; Altvater v. Breckenridge (1959) 174 Cal.App.2d 790, 795.)
As noted above, Murray assented to all of Massoumi's objections to the first proposed judgment and served a second proposed judgment on August 5, 2015, that incorporated all of Massoumi's proposed changes. Massoumi's counsel then failed to respond, a failure that cannot reasonably be attributed to the grounds raised in his appeal. We conclude the trial court did not err.
G. Whether Judge Goldsmith Was Properly Appointed to Enter Judgment
Massoumi renews his contention that because there had been no referral of the matter by the presiding judge to the law and motion department under Code of Civil Procedure section 635, Judge Goldsmith was without jurisdiction to hear the matter. That statute provides: "In all cases where the decision of the court has been entered in its minutes, and when the judge who heard or tried the case is unavailable, the formal judgment or order conforming to the minutes may be signed by the presiding judge of the court or by a judge designated by the presiding judge." Even if Judge Goldsmith had not been properly designated, because Massoumi failed to file timely objections to the proposed judgment, the error, if any, was not prejudicial.
We also note that Massoumi admits he has no knowledge as to whether the presiding judge designated Judge Goldsmith to enter judgment. His stance thus turns appellate review on its head. " ' "A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. This is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error." ' " (Yu v. University of La Verne (2011) 196 Cal.App.4th 779, 787.) Significantly, we have not been supplied with the reporter's transcript from the hearing on September 23, 2015, which is when this issue should have been addressed. The record's silence on this point does not substantiate Massoumi's claim of error.
H. Whether Murray Had a Right to Sublet to Campbell
Finally, Massoumi challenges Judge McBride's finding in the SOD that Murray "as an Owner under the lease agreement had authority under page 1 section 5 to allow additional persons to reside with him." Significantly, he acknowledges that this finding is not contained in the judgment from which he appeals. Accordingly, the issue is not before us and we therefore decline to address it. III. Murray's Cross-appeal
A. Trial Court's Failure to Award Attorney Fees
Murray claims the trial court erred when it failed to recognize him as the prevailing party with respect to the entitlement to contractual attorney fees pursuant to Civil Code section 1717. This statute pertains to the award of attorney fees in cases involving contract disputes where the contract between the parties "specifically provides" for such fees. (Civ. Code, § 1717, subd. (a).) The attorney fees clause in the Agreement states, in relevant part: "In the event any action is brought by any party hereto to enforce this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs in addition to all other relief to which that party or those parties may be entitled . . . ."
"When a contract contains a provision granting either party the right to recover attorney fees in the event of litigation on the contract, Civil Code section 1717 . . . gives the 'party prevailing on the contract' a right to recover attorney fees, whether or not that party is the party specified in the contract. It defines the phrase 'party prevailing on the contract' as 'the party who recovered a greater relief in the action on the contract,' and it provides that a trial court 'may also determine that there is no party prevailing on the contract for purposes of this section.' " (Hsu v. Abbara (1995) 9 Cal.4th 863, 865 (Hsu).) In determining whether there is a prevailing party on the contract, "the trial court is to compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources." (Id. at p. 876.)
The trial court's determination that there is no prevailing party on a contract is an exercise of discretion. We will disturb it only if there has been a clear showing of an abuse of that discretion. (See Nasser v. Superior Court (1984) 156 Cal.App.3d 52, 59; Smith v. Krueger (1983) 150 Cal.App.3d 752, 756-757.) Such an abuse occurs only when the trial court acts in an " ' " 'arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice.' " ' " (Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 615-616.)
Murray first appears to argue that Code of Civil Procedure section 1032 (section 1032) mandates that he be granted his attorney fees because he received a net monetary award. However, that statute applies to costs only. The apparent premise for his argument, that a litigant who prevails under this cost statute is necessarily the prevailing party for purposes of attorney fees, has been uniformly rejected by the courts of this state. (See McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn. (1991) 231 Cal.App.3d 1450, 1456 (McLarand) ["We emphatically reject the contention that the prevailing party for the award of costs under section 1032 is necessarily the prevailing party for the award of attorneys' fees."].) Furthermore, section 1032, subdivision (a) only defines " '[p]revailing party' " as the term is used "in [that] section." It does not purport to define the term for purposes of other statutes.
Code of Civil Procedure section 1033.5 provides that attorney fees are allowable as costs under section 1032 when they are authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Significantly, however, the standard for determining the prevailing party under section 1032 is not the same as that under Civil Code section 1717. (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1143; McLarand, supra, 231 Cal.App.3d at p. 1456.) Section 1032 supplies four definitions for "prevailing party": "[i] the party with a net monetary recovery, [ii] a defendant in whose favor a dismissal is entered, [iii] a defendant where neither plaintiff nor defendant obtains any relief, and [iv] a defendant as against those plaintiffs who do not recover any relief against that defendant." (§ 1032, subd. (a)(4).) Generally, under section 1032, when a party falls within one of the four designated definitions of "prevailing party," "that party is entitled to recover costs as a matter of right." (Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 188.) In situations other than the four specified, the trial court determines which party is the prevailing party. In those circumstances, "the court, in its discretion, may allow costs or not . . . " (§ 1032, subd. (a)(4).)
With respect to the parties' causes of action for breach of contract, the judgment states that neither party was found to be the prevailing party "for the reasons stated in the statement of decision dated May 28, 2015." The SOD does not actually state specific reasons as to why the court made the prevailing party determination. Instead, after finding the Agreement "has been mutually breached by Murray and Massoumi," the court held the Agreement would remain in force. It then set forth the parties' duty to share equally in the Lansing Property's expenses and obligations. Ultimately, Murray recovered $47,081 on his breach of contract claim, accounting for the fact that he had contributed more to the Lansing Property's expenses than Massoumi had at the time of trial.
In Hsu, supra, 9 Cal.4th 863, the Supreme Court made it clear that a single "action" can involve multiple contract "claims." There, the court considered the scope of a trial court's discretion to determine that no party prevailed on the contract. (Id. at p. 871.) The court explained: " '[T]ypically, a determination of no prevailing party results when both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.' [Citation.] By contrast, when the results of the litigation on the contract claims are not mixed . . . a trial court has no discretion to deny attorney fees to the successful litigant." (Hsu, at pp. 875-876.) In Hsu, the Supreme Court determined the trial court had no discretion to conclude there was no prevailing party on the contract, because the defendants won on the only contract claim in the lawsuit. (Id. at p. 876.)
Here, Murray is the "ostensibly prevailing party." However, he received only a fraction of the relief he sought in his complaint (he had sought $1,350,000). Additionally, he was found to have been in breach of the same contract upon which he had based his claims against Massoumi. Because Murray obtained a mixed result, we are unable to conclude that the trial court abused its discretion when it declined to designate Murray as the prevailing party on the contract claims.
B. The Determination that Murray Committed Forgery
Murray asserts the trial court erred in determining that he committed forgery when he signed Massoumi's name on purchase and sale agreements for the Lansing Property. This finding was made in the SOD in addressing, and ultimately denying, Massoumi's cause of action for fraud.
A finding, disconnected from an appeal of an order or judgment, is not a proper subject for appeal. Code of Civil Procedure section 904.1 states that an appeal must be from a judgment or an order made appealable by statute. Because the court ruled in favor of Murray on the fraud claim (a ruling that Massoumi does not contest) the cause of action is not before us and we do not have the authority to issue the limited relief sought by Murray.
C. Denial of Award of Prejudgment Interest
Finally, Murray claims the trial court erred in denying him an award of prejudgment interest. Civil Code section 3287, subdivision (b) provides: "Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may . . . recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed." (Italics added.) As the italicized language indicates, an award of prejudgment interest under this subdivision is discretionary, not mandatory. In contrast, if the damages are certain or capable of being made certain, prejudgment interest pursuant to subdivision (a) of Civil Code section 3287 is obtainable as a matter of right. (Lewis C. Nelson & Sons, Inc. v. Clovis Unified School Dist. (2001) 90 Cal.App.4th 64, 70 (Lewis C. Nelson).)
Murray asserts he was entitled to interest because the $47,081 he recovered is an amount certain and constituted a favorable net monetary judgment in his breach of contract cause of action. However, here the damages were unliquidated in that the amount was made certain only after " 'a judicial determination upon conflicting evidence as to the amount due . . . .' " (George v. Double-D Foods, Inc. (1984) 155 Cal.App.3d 36, 46.) Thus, interest could only have been recoverable under Civil Code section 3287, subdivision (b).
Added to the statute in 1967 (Stats. 1967, ch. 1230, § 1, p. 2997), Civil Code section 3287, subdivision (b) created a limited exception to the "general rule prohibiting prejudgment interest when the damages in issue are not capable of being made certain when due." (Lewis C. Nelson, supra, 90 Cal.App.4th at p. 71.) The statutory addition was to permit the trial court to add interest from an appropriate date "if the parties have a legitimate dispute over how much is due . . . ." (Id. at p. 71, fn. 17, citing legis. hist.) Pursuant to this subdivision, prejudgment interest may be awarded on unliquidated contract claims, in the exercise of the trial court's discretion. (Id. at pp. 70-71; North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828-829.)
"By allowing an award of prejudgment interest, but only for a limited time period and only if the trial court finds it reasonable in light of the factual circumstances of a particular case, Civil Code section 3287, subdivision (b), seeks to balance the concern for fairness to the debtor against the concern for full compensation to the wronged party." (Lewis C. Nelson, supra, 90 Cal.App.4th at p. 69.) It attempts to do equity according to the nature and circumstances of the obligation owed. (Id. at p. 71, fn. 17, citing legis. hist., & p. 72.) One of the factors the trial court should consider in exercising its discretion under subdivision (b) is whether equity requires that prejudgment interest be awarded between the filing of the action and the entry of judgment. Stated another way, the trial court should ask and answer the following question: Is the award of prejudgment interest necessary in order to make the plaintiff whole?
While Murray claims the record supports the conclusion that the trial court intended to award him prejudgment interest, we are not convinced. He relies on the court's December 11, 2014 order for further hearing on the parties' proposed statement of decision. Our review shows the court crossed out the relevant column at the bottom of page 10 of the parties' proposed SOD, but did not continue the deletion through the top of page 11, wherein Murray's proposed prejudgment interest calculation appears. It is thus unclear to us that the court actually intended to include prejudgment interest in the final SOD.
Additionally, on March 6, 2015, Murray filed an objection to Massoumi's proposed SOD, which excluded prejudgment interest. Thereafter, the trial court failed to include any such award in the final SOD. We must assume the court was aware of Murray's objection, and are therefore unable to conclude that the court's failure to include such an award was inadvertent. "An award of prejudgment interest is not automatic." (Lewis C. Nelson, supra, 90 Cal.App.4th at p. 69.) Murray fails to persuade us that court abused its discretion in excluding prejudgment interest.
DISPOSITION
The judgment is reversed with respect to Massoumi's fourth cause of action for quiet title only. The case is remanded so the trial court can order legal title in the Lansing Property quieted in favor of Massoumi. In all other respects, the judgment is affirmed. The parties are to bear their own costs and attorney fees on appeal.
/s/_________
Dondero, J. We concur: /s/_________
Humes, P. J. /s/_________
Banke, J.