Opinion
NOT TO BE PUBLISHED
Superior Court No. SC044691 County of Ventura, Henry J. Walsh, Judge.
Chris Gauschi, for Appellants.
Lozoya & Lozoya; Frank J. Lozoya IV, for Respondents.
YEGAN, Acting P.J.
This case involves the disputed ownership of a residence in Simi Valley (the residence). Martin D. Strand and C. Gabrielle Strand, appellants, claim that the residence is owned by a partnership. Jeffrey Clark and Jodene Clark, respondents, claim that they are the sole owners of the residence. The Strands have filed two appeals. In the first appeal (B218861), they appeal from the judgment entered in favor of the Clarks after the trial court granted the Clarks' motion for a nonsuit. The nonsuit followed the granting of the Clarks' motion in limine to exclude all evidence showing that the residence was owned by the partnership. In the second appeal (B220396), the Strands appeal from an order after judgment awarding attorney's fees and costs to the Clarks.
In this opinion, we consider only the appeal from the judgment in case number B218861. We agree with the Strands that the trial court erroneously granted the Clarks' motion in limine. Accordingly, we reverse the judgment. By separate opinion filed together with this opinion, in case number B220396 we reverse the order after judgment awarding attorney's fees and costs to the Clarks.
Factual and Procedural Background
The Strands originally owned the residence. They rented the residence to the Clarks. On October 24, 1990, the Strands executed a grant deed conveying the residence without reservation to the Clarks as joint tenants. The deed was recorded on November 2, 1990. Neither the deed nor the escrow instructions refer to a partnership.
Attached to the Strands' complaint is a document signed by the parties and dated November 6, 1990, 13 days after the deed was executed and four days after it was recorded. The document is entitled "Equity-Share Partnership Agreement with Right-to-Purchase Option" (the partnership agreement). The agreement refers to the Clarks as "Partner A" and to the Strands as "Partner B." The agreement provides that the Clarks "agree[] to purchase" the residence from the Strands for $192,200. The Clarks shall make a $1,200 down payment. The balance of the purchase price shall be financed by a $131,250 conventional loan secured by a first deed of trust and a $59,750 loan from the Strands secured by a second deed of trust. As additional consideration for the sale of the residence, the Strands shall receive "a 40% share in the subject property's appreciation from the date of this agreement until the agreement is concluded and satisfied." The "agreement will be concluded and satisfied upon [the Clarks]... and [the Strands] receipt of the percentage share amount(s) previously stipulated, and the pay-off of the remaining balance of the second trust deed to [the Strands]...." The partnership agreement gives the Strands the option to purchase the property under certain conditions.
Jeffrey Clark (Clark) declared that the partnership agreement was revoked pursuant to a " 'new agreement' " that did not involve a partnership. The reason for the revocation was that "the mortgage company would not qualify or close our loan if we purchased the property as a partnership with the Strands under the [partnership agreement]." Clark further declared: "That date [the November 6, 1990 date of the partnership agreement] is a false date.... [T]hat old agreement was entered into in September or October and then we revoked it because [we] could not get a loan and we entered into the new agreement. Thus, the [partnership agreement] that [the Strands] produced is false." Martin Strand, on the other hand, declared that "[t]he partnership was formed on November 6, 1990, " and that he "was present when [the Clarks] signed the partnership agreement."
Clark declared that, pursuant to the new agreement entered into after the partnership agreement had been revoked, the Strands agreed to "hold back [from the purchase price]... the amount of $59,750.00 to be paid in ten years at no interest with forty percent return on any equity at the ten[-]year date." The Clarks claim that the $59,750 loan from the Strands was not secured by a deed of trust. The Clarks obtained a $131,250 loan from Capitol Mortgage Bankers, Inc., secured by a deed of trust.
In February 2000 the Clarks filed for protection from creditors under Chapter 7 of the United States Bankruptcy Code. According to Clark, they "attempted to contact [the Strands] but were unable to do so because [the Strands] had moved." Clark's counsel advised him that the Strands had "an unperfected loan agreement with no security interest." Therefore, the Clarks' bankruptcy schedule F listed the $59,750 loan as an unsecured personal loan from the Strands, whose address was "unknown." On schedule C, the Clarks claimed the residence to be exempt. The Clarks did not schedule an interest in any partnership.
The bankruptcy "trustee administered the case as a 'no asset' estate." In May 2000 the Clarks were granted a discharge of their debts under section 727 of title 11 of the Bankruptcy Code.
The proceedings that followed the discharge are described in an unpublished memorandum decision of the United States Bankruptcy Appellate Panel of the Ninth Circuit (Apr 3, 2008, BAP No. CC-07-1393-CKMo):
"Six years later, Strands asked that the case be reopened. The bankruptcy court granted the motion." (Slip opinion, p., 3.) "Strands... assert that... the [residence] was sold to a partnership (of which Strands and Clarks were the partners) ('Alleged Partnership') pursuant to which the two parties would share in appreciation above an agreed-upon amount." (Id., at p. 2.)
"... Strands... brought a Motion for Relief from the Automatic Stay.... Strands argued that Clarks' interest in the Alleged Partnership remained property of the estate because it had not been scheduled. As such, Strands requested relief from the automatic stay so that the state court could decide if a partnership existed, and, if so, to have it dissolved, and the rights of the partners determined. [¶]... [¶]... [T]he bankruptcy court granted relief... to determine if the Alleged Partnership existed, to determine its terms, to request its dissolution and to perform an accounting. The bankruptcy court further ruled that any determination regarding the personal liability of Clarks would be made by the bankruptcy court. The bankruptcy court made no determination regarding the truth or falsity of the underlying facts.... [¶]... An appeal was timely filed [by the Clarks]." (Slip opinion, at pp. 4-5.)
The bankruptcy court's order stated in part: "The parties may return to the state court and litigate all issues regarding the existence if any and the effect if any of the alleged partnership, including a determination of what the partnership assets are if any, dissolution of the partnership and disposition of the partnership assets and the right and obligations of the partners. [¶] There shall be no personal liability of the debtors."
The bankruptcy appellate panel affirmed the bankruptcy court's order. It reasoned: "[I]f the Alleged Partnership existed, Clarks' interest in it was property of the estate that was not disclosed. Undisclosed property of the estate does not revert to a debtor upon discharge in a Chapter 7. [Citation.]... Thus, stay relief was required to pursue the matter in state court." (Slip opinion, p. 8, fn. omitted.).
The Strands pursued the matter in state court by filing a verified complaint consisting of two causes of action. The first cause of action is premised on the partnership's ownership of the residence. It alleges that, "[o]n or about November 6, 1990, " the parties entered into the partnership agreement "for the purpose of owning and sharing equity in a single family residence.... The Residence is the sole asset of the partnership and owning, managing and selling the Residence is the sole business of the partnership." The first cause of action seeks the dissolution of the partnership, an accounting of partnership affairs, and the appointment of a receiver "to wind up partnership affairs" and sell the residence. (1CT 6) In the second cause of action, the Strands seek declaratory relief "that the appraisal of the [residence] required by the [partnership] Agreement... shall be as of a present date, not March 30, 2004."
The matter was set for a "5[-]day jury trial." The Clarks made a pretrial motion in limine for "[a]n order precluding [the Strands] from presenting any documentary or testimonial evidence... contending that the [residence] is owned by anyone but [the Clarks], in fee simple." In their supporting points and authorities, the Clarks argued that, pursuant to the parol evidence rule, extrinsic evidence was inadmissible "to try to contradict the Grant Deed that is not susceptible to any meaning except that the CLARKS own the real property in fee simple." The granting of the motion in limine would preclude the Strands from presenting evidence of the partnership agreement to show that the residence was partnership property.
At the hearing conducted on the motion in limine, the Clarks argued: "[U]nder the parol evidence rule[, ]... where the grant deed is absolutely clear on its face, not subject to dispute, [the Strands] cannot introduce any existing prior or post agreement. [¶] That's exactly what they are trying to do."
The Strands made an "offer of proof... that a written partnership agreement signed by Mr. and Mrs. Clark dated November 6, 1990, ... specified all the rights and obligations of the parties and what they meant." The Clarks asserted that the November 6, 1990 date "is not accurate." The Strands told the court: "[T]here is a dispute as to the [Clarks'] claim that it was signed at some other time, that [the Strands] filled in the date. So that is a disputed issue, when it was signed."
The court asked the Clarks if, after the execution of a grant deed, "the parties subsequently agree, we want to enter into this type of partnership whereby we share equity..., how would they accomplish that and not be subject to the argument that you are making... that once a grant deed is signed and recorded, you can't modify it?" The Clarks replied: "[T]here would have to be a second deed transferring [the residence] from [the Clarks] to the partnership." "[I]f [the Strands] Complaint is that the partnership owns the property, it cannot own it but by grant deed. And the grant deed, the only vesting document we have, is the individual ownership."
In granting the Clarks' motion in limine, the court reasoned: "There is no ambiguity in them [the deed and escrow instructions], no language that is subject to another agreement or another condition. [¶] [The partnership agreement] is dated November 6, 1990. It is a week afterwards. It doesn't mention the state of the title of this property anywhere within its four corners. [¶] It may operate to define other rights between the parties, but the property transfer was unequivocal. There is no offering or showing of mistake or fraud."
The trial court told the Strands that, pursuant to its ruling, "the partnership ownership of the property can't be established." The court then stated to the Clarks, "If you make a nonsuit motion as to the two causes of action..., I will grant it." The Clarks made the motion, and the court granted it.
Standard of Review
"A motion in limine is made to exclude evidence before the evidence is offered at trial, on grounds that would be sufficient to object to or move to strike the evidence. The purpose of a motion in limine is 'to avoid the obviously futile attempt to "unring the bell" in the event a motion to strike is granted in the proceedings before the jury.' [Citations.]" (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 26.) "In contrast to the usual motion in limine, which seeks to keep particular items of evidence from a jury, " the Clarks' motion in limine sought "to end the trial without the introduction of evidence." (Ibid.) The granting of the motion in limine precluded the Strands from presenting any evidence showing that the partnership owned the residence. In the absence of such evidence, the Strands could not prevail on their causes of action.
A similar situation occurred in Edwards v. Centex Real Estate Corp., supra, 53 Cal.App.4th 15. In Edwards the trial court granted the respondents' motions in limine to exclude evidence pursuant to the parol evidence rule and the litigation privilege of Civil Code section 47, subdivision (b). The "motions in limine were not directed to particular items of evidence." (Id., at p. 27.) The evidence "excluded by the trial court's grant of these motions constituted the bulk of the evidence upon which appellants base[d] their causes of action...." (Ibid.) The appellate court declared: "[B]ecause... the trial court granted these motions at the outset of trial with reference to evidence already produced in discovery, they may be viewed as the functional equivalent of an order sustaining a demurrer to the evidence, or nonsuit." (Ibid.) The appellate court concluded: "[T]he trial court's grant of the motions in limine was tantamount to a nonsuit.... Therefore, on this appeal we must view the evidence most favorably to appellants, resolving all presumptions, inferences and doubts in their favor, and uphold the judgment for respondents only if it was required as a matter of law." (Id., at p. 28.)
As the trial court here recognized, the granting of the Clarks' motion in limine was also tantamount to a nonsuit. Accordingly, "we shall treat the trial court's order granting [the Clarks'] motion in limine to exclude all evidence [of the partnership's ownership of the residence] as a nonsuit. 'Therefore, on this appeal we must view the evidence most favorably to [the Strands], resolving all presumptions, inferences and doubts in [their] favor, and uphold the judgment for [the Clarks] only if it was required as a matter of law.' [Citation.]" (Mechanical Contractors Assn. v. Greater Bay Area Assn. (1998) 66 Cal.App.4th 672, 677; see also Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th 1238, 1252 ["We consider... that the order granting the motion in limine to an entire category of pertinent evidence was tantamount to a dismissal of the second cause of action and is to be reviewed under the same standard as any other judgment of dismissal"].)
We reject the Clarks' contention that the Strands' failure to request a statement of decision severely limits their argument on appeal. "[T]he express language of [Code of Civil Procedure] section 632 requires a trial court to issue a statement of decision only after a 'trial of a question of fact by the court.' No such trial occurred in this case. Rather, the trial court only granted [the Clarks'] motion in limine to exclude all evidence [of the partnership's ownership of the residence]. The general rule is that a trial court need not issue a statement of decision after a ruling on a motion. [Citation.]" (Mechanical Contractors Assn. v. Greater Bay Area Assn., supra, 66 Cal.App.4th at p. 677-678.)
Parol Evidence Rule Does Not Bar Evidence Of The Partnership Agreement
"The parol evidence rule... establishes that the terms contained in an integrated written agreement may not be contradicted by prior or contemporaneous agreements. In doing so, the rule necessarily bars consideration of extrinsic evidence of prior or contemporaneous negotiations or agreements at variance with the written agreement. '[A]s a matter of substantive law such evidence cannot serve to create or alter the obligations under the instrument.' [Citation.]" (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 344.) "The crucial issue in determining whether there has been an integration is whether the parties intended their writing to serve as the exclusive embodiment of their agreement." (Masterson v. Sine (1968) 68 Cal.2d 222, 225.)
Viewing the evidence in the light most favorable to the Strands, judgment for the Clarks was not required as a matter of law. Even if the grant deed is considered to be a fully integrated agreement, the parol evidence rule did not require the exclusion of evidence of the partnership agreement, which was signed 13 days after the deed was executed and 4 days after it was recorded. The parol evidence rule excludes extrinsic evidence of an agreement made prior to or contemporaneously with an integrated written agreement. It does not prohibit the admission of extrinsic evidence of a subsequent agreement. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 186; Conley v. Matthes (1997) 56 Cal.App.4th 1453, 1465.)
Although legal title to the residence was in the name of the Clarks, it is reasonable to infer from the partnership agreement that the residence was actually partnership property. The Clarks were wrong in advising the trial court that, if "the partnership owns the property, it cannot own it but by grant deed." (RT 40) "Title to land may, of course, be held by the entity itself [citation], but it is not required that real estate stand in the partnership name to be considered partnership property. [Citation.]... [¶] [I]t is the intent of the partners which must govern, provided it can be determined. [Citation.]" (Cochran v. Board of Supervisors (1978) 85 Cal.App.3d 75, 81-82; see also Pluth v. Smith (1962) 205 Cal.App.2d 818, 826 ["Whether or not real property standing in the names of individual partners is partnership property is a question of fact"].) "If a partnership is formed and real property is dedicated to partnership use and is used by the partnership for its sole benefit, the fact that title was acquired by one or more of the partners with their private funds or was owned by them as tenants in common prior to the formation of the partnership will not necessarily defeat the claim of the partnership to ownership of the property in the absence of an express agreement that it should remain property of those in whose names title stood. Under such circumstances the owners of the legal title hold the property in trust for the partnership. [Citation.]" (Swarthout v. Gentry (1943) 62 Cal.App.2d 68, 78; see also Chapman v. Hughes (1894) 104 Cal. 302, 305 [partners who retained legal title to land "held the legal title in trust for the partnership use"].)
However, there is a rebuttable presumption that property is not partnership property, "even if used for partnership purposes, " if the property is "acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person's capacity as a partner or of the existence of a partnership and without use of partnership assets...." (Corp. Code, § 16204, subd. (d).)
The Clarks contend that the Strands "are estopped from denying fee simple transfer of the [residence] via their Escrow instruction and Grant Deed." The Clarks rely on the following passage from Pinsky v. Sloat (1955) 130 Cal.App.2d 579, 587-588: "A grantor is estopped by his deed; he is not permitted to contradict it. He is estopped to assert that his deed, if its terms are sufficiently comprehensive, did not convey his estate in the land described; and he cannot subsequently claim title thereto. [Citation.]" But the Strands do not dispute that the grant deed conveyed their estate in the residence to the Clarks. Nor do they claim title to the residence. The Strands contend that, pursuant to the partnership agreement executed after the recording of the grant deed, the parties intended that the residence be an asset of the partnership. The doctrine of estoppel, therefore, is inapplicable here.
Even if we were to assume that the partnership agreement was entered into before or contemporaneously with the execution of the grant deed, the parol evidence rule would not operate to exclude evidence of the partnership agreement. The parol evidence rule applies only when a writing is integrated. (Masterson v. Sine, supra, 68 Cal.2d 222, 225.) "[I]ntegration cannot be determined from the writing alone...." (Id., at p. 231.) Earlier decisions "based on the belief that the question of admissibility had to be decided from the face of the instrument alone" were "a product of an outmoded approach to the parol evidence rule...." (Id., at p. 231, fn.3.) "Faced with deciding whether the parties intended a written instrument to be the exclusive repository of their agreement, courts may consider all the surrounding circumstances, including prior negotiations, and may examine the collateral agreement itself to ascertain if it was meant to be part of the bargain. [Citations.] However, the collateral agreement will be looked to only insofar as it does not directly contradict the express terms of the writing. Further, it must be an agreement which, in the normal course of events, might be made as a separate contract. Spun somewhat differently, are the parol terms such that, if agreed upon, they most certainly would have been included in the writing? [Citations.]" (Software Design & Application, Ltd. v. Price Waterhouse (1996) 49 Cal.App.4th 464, 470; accord, Wagner v. Glendale Adventist Medical Center (1989) 216 Cal.App.3d 1379, 1386.)
In Masterson v. Sine, supra, 68 Cal.2d at p. 226, our Supreme Court concluded that examination of the collateral agreement is mandatory, not permissive: "Any such collateral agreement itself must be examined... to determine whether the parties intended the subjects of negotiation it deals with to be included in, excluded from, or otherwise affected by the writing." (Italics added.)
Viewing the evidence in the light most favorable to the Strands, the grant deed was not integrated because the parties did not intend it "to serve as the exclusive embodiment of their agreement." (Masterson v. Sine, supra, 68 Cal.2d at p. 225.) The partnership agreement was meant to be part of the bargain by which the residence was deeded to the Clarks. The partnership agreement does not directly contradict the express terms of the grant deed. Pursuant to the partnership agreement, the Clarks agreed to purchase the residence from the Strands. The grant deed effectuated that purchase. The partnership agreement does not state that title to the residence shall be held in the name of the partnership. Furthermore, in the normal course of events, the partnership agreement would have been made as a separate contract. "[T]he difficulty of accommodating the formalized structure of a deed to the insertion of collateral agreements makes it less likely that all the terms of such an agreement were included. [Citations.]... This case is one, therefore, in which it can be said that a collateral agreement such as that alleged 'might naturally be made as a separate agreement.' A fortiori, the case is not one in which the parties 'would certainly' have included the collateral agreement in the deed." (Masterson v. Sine, supra, 68 Cal.2d at pp. 228-229, fn. omitted.)
Thus, the trial court erroneously granted the Clarks' motion in limine to exclude all evidence of the partnership's ownership of the residence. The judgment ensuing from the granting of the motion must be reversed.
Disposition
The judgment is reversed. The Strands shall recover their costs on appeal.
We concur: COFFEE, J., PERREN, J.