Plotts Real Estate v. Reidy CA4/1 ( 2020 )

Filed 12/14/20 Plotts Real Estate v. Reidy CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PLOTTS REAL ESTATE, LP, et al., D075672
Plaintiff, Cross-defendants and
Respondents,
(Super. Ct. No. 37-2015-
v. 00029139-CU-BC-CTL)
FRANCIS J. REIDY, et al., ORDER MODIFYING
OPINION AND DENYING
Defendants, Cross-complainants REHEARING
and Appellants.
NO CHANGE IN JUDGMENT
THE COURT:
The opinion filed on November 25, 2020, is hereby modified as follows:
1. On page 29, in the first line, add the following new footnote 14
immediately after the parenthesis at the end of the quote (“ ‘ . . . contract.’ ”)
and before the beginning of the case citation (“(Neet v. Holmes . . .”) and
renumber the remaining footnotes:
In a petition for rehearing, Appellants argue that Reidy could not
have waived his right to rescind the Guaranty, because (1) he did not
learn of PRE’s threats related to the availability of the two, five-year
options until April 2014, and (2) the record lacks substantial evidence
to support a finding that, after April 2014, Reidy accepted any benefits
under the Guaranty that would support a waiver of his right to rescind
the Guaranty. Reidy misunderstands the applicability of the doctrine
of waiver. It applies only to Bar West’s waiver of any potential right to
rescind the Lease, not to Reidy’s potential right to rescind the
Guaranty. The trial court did not find, and our opinion does not
suggest, that Reidy waived any right he may have had to rescind the
Guaranty.
2. On page 37, in current footnote 19 (renumbered fn. 20), delete the
last sentence (“Here, Appellants . . .”) and replace it with the following:
Here, in their briefing, Appellants do not discuss section 1717,
subdivision (b)(2)’s pleading requirement; Appellants’ answer to the
first amended complaint does not allege section 1717,
subdivision (b)(2)’s required tender; and by failing to provide copies of
the pleadings in support of and in opposition to their November 2015
application to deposit funds, Appellants again have failed to overcome
the presumption of correctness that attaches to the judgment
(Jameson, supra, 5 Cal.5th at p. 609).
In a petition for rehearing, Appellants argue that they could not
allege in their answer a Civil Code section 1717, subdivision (b)(2)
deposit because the trial court did not allow Bar West’s attempt to
make the deposit into court. Because Appellants misread the statute—
which requires, first, the allegation of a tender in the defendant’s
answer, and second, the deposit of the tender into court (ibid.)—
Appellants fail to establish reversible error. Very simply, Appellants’
failure to have complied with a statutory pleading prerequisite for
making a deposit into court supports the trial court’s ruling.
3. On page 37, after the second line (“. . . prevailing party.”) and
before the new point heading (“D. Prejudgment Interest”), insert the following
paragraph of text:
In a petition for rehearing, Bar West argues that the trial court
erred in not ruling that Bar West was the prevailing party on the tort
claims. According to Bar West, because the jury awarded PRE nothing
2
on its two tort claims against Bar West, and the jury awarded Bar West
$254,228.10 on its tort claim against PRE, Bar West was the prevailing
party, and thus entitled to costs, on both parties’ tort claims. Bar West
presents no authority for its position. That is not surprising, since
awards of costs are statutory (Code Civ. Proc., § 1021 et seq.); Code of
Civil Procedure section 1032, subdivision (4), which defines “prevailing
party,” does not base determination of prevailing party status on a type
of claim (i.e., tort vs. contract); and, as applicable here, the prevailing
party is “the party with a net monetary recovery” (ibid., italics added).
“[W]here both plaintiff and cross-complainant recover money
judgments, a defendant to whom the ‘net result of the judgment’ is
favorable is entitled to recover all his costs.” (Gerstein v. Smirl (1945)
70 Cal.App.2d 238, 240 [under Code Civ. Proc., former § 1032]; accord,
Linton v. Superior Court (1997) 53 Cal.App.4th 1097, 1102 [under
current Code Civ. Proc., § 1032, “the recipient of the net award will be
considered the prevailing party for an award of costs”].) Here, the jury
awarded PRE $486,483.67 against Bar West; the jury awarded Bar
West $254,228.10 against PRE; and, based on the net verdict plus
interest, the court entered a judgment in favor of PRE and against Bar
West in the amount of $344,368.57. In sum, the results of the parties’
respective tort claims are irrelevant to the determination of the
prevailing party; Code of Civil Procedure section 1032, subdivision (4)
requires consideration of only the “net monetary recovery” in the
action.
There is no change in judgment.
Appellants’ petition for rehearing is denied.
McCONNELL, P. J.
Copies to: All parties
3
Filed 11/25/20 Plotts Real Estate v. Reidy CA4/1 (unmodified opinion)
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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PLOTTS REAL ESTATE, LP, et al., D075672
Plaintiff, Cross-defendants and
Respondents,
(Super. Ct. No. 37-2015-
v. 00029139-CU-BC-CTL)
FRANCIS J. REIDY, et al.,
Defendants, Cross-complainants
and Appellants.
APPEAL from a judgment of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Affirmed.
Smaha Law Group, John L. Smaha and Kristen Marquis Fritz for
Defendants, Cross-complainants and Appellants.
Walsh McKean Furcolo LLP, Christopher M. Lea; Law Offices of
David B. Norris and David B. Norris for Plaintiff, Cross-defendants and
Respondents.
In this appeal, we review a judgment following a trial at which the jury
answered questions on special verdict forms and the court issued a statement
of decision on an equitable (nonjury) claim. The underlying dispute involves
the lease for a bar and restaurant formerly located at 959 Hornblend Street,
in the Pacific Beach area of San Diego.
The appellants are Bar West, LLC (Bar West) and Francis J. Reidy
(Guarantor) (together, Appellants); and the respondents are Plotts Real
Estate, LP (PRE), Thomas B. Plotts (Plotts), Paul W. Plotts, and TBP
Financial, Inc. (TBP Financial) (together, Respondents). In the trial court,
the plaintiff was PRE, and the defendants included Guarantor and Bar West;
and the cross-complainants were Guarantor and Bar West, and the cross-
defendants included PRE, Plotts, Paul W. Plotts, and TBP Financial.
Appellants identify the issues on appeal as: Whether the trial court
erred (1) “in vacating the jury’s award against [Plotts] on Bar West’s claim of
intentional interference with prospective economic advantage”; (2) “in
concluding that [Guarantor] was not entitled to rescission of [his personal]
Guaranty”; (3) “in finding that neither [of Appellants] was the prevailing
party on their respective [cross-]claims”; and (4) “in awarding prejudgment
interest to [PRE]” on its recovery under the complaint.
As we explain, Appellants did not meet their burden of establishing
reversible error: (1) the trial court did not vacate the jury’s award against
Plotts;1 and Appellants did not show that (2) the record fails to support the
1 The court ruled that PRE and Plotts were jointly and severally liable to
Bar West in an amount that is half of what Bar West contends the jury
awarded. As to the court’s actual ruling, as we explain, the trial court did not
err in concluding that Bar West suffered only one indivisible harm committed
by a principal and its agent—i.e., PRE and Plotts—who are jointly and
severally liable to Bar West.
2
court’s ruling that Guarantor was not entitled to rescind his guaranty, (3) the
court erred in determining that Appellants were not the prevailing parties, or
(4) the court’s award of prejudgment interest on PRE’s claim for breach of
contract was improper.
Accordingly, we will affirm the judgment.
I. FACTUAL BACKGROUND
In this part of the opinion, we will present the general factual
background. In discussing the various issues at part III., post, we will
provide additional facts as necessary.
A. The Lease
The disputes that resulted in the underlying litigation are between a
landlord (and related parties) and a tenant (and a related party) with regard
to the lease of commercial premises at 959 Hornblend Street in San Diego
(Premises).
Effective January 1, 2007, Paul and Peggy Plotts, as trustees of a trust,
leased the Premises to Westside Bar, LLC. The written lease (Lease),
prepared on an AIR Commercial Real Estate Association form, was for a 10-
year term and contained two, five-year options to extend.
By October 2008, the trust had transferred its interest in the Lease to
PRE, a limited partnership. In October 2008, Westside Bar, LLC, assigned
its interest in the Lease, including the options to extend, to Bar West.2
Michael L. Reidy was the manager of Bar West, the assignee. As part of the
2 At times, Bar West has been referred to as “MLR Bar West, LLC.” At
least some of the trial exhibits refer to Bar West as “Bar West, LLC, a
Delaware limited liability company, doing business in California as MLR Bar
West, LLC.” According to the evidence at trial, they are “one and the same.”
Since the parties do not distinguish between the two names, neither shall we.
3
same transaction, PRE released the guarantor under the Lease with
Westside Bar, LLC, and entered into a guaranty of the newly-assigned Lease
with Guarantor (Guaranty), Reidy’s father.
Thus, as of and after October 2008, PRE (with general partner Patriot
Capital and limited partner Plotts) was the landlord of the Premises,
Bar West (with manager Reidy) was the tenant of the Premises, and
Guarantor guaranteed Bar West’s obligations under the Lease. A number of
Lease provisions are at issue at this appeal. In general, they include:
• The terms and conditions of and related to the two, five-year options
are contained at paragraph 30 of the Lease and at paragraph 52 of a
Lease addendum. In part, paragraph 30.4(a) provides that the tenant
has no right to exercise an option if the tenant is in breach of the Lease
or if the landlord gives notice of a default and the tenant has not cured.
Consistently, paragraph 30.4(c) provides that an option shall terminate
if the tenant commits a breach of the Lease.
• Paragraph 1.7 of the Lease describes the “Agreed Use” of the Premises
as “conducting sales of alcohol and food for the operation of a
restaurant and bar.” Paragraph 6.1 limits the tenant’s “use and
occup[ancy]” of the Premises to this agreed use and further requires the
tenant’s compliance with “the letter and spirit” of a 2005 injunction
related to the Premises issued in an earlier case. Contained within the
injunction is the requirement that the tenant “[c]omply with all
regulations involving Alcoholic Beverage Outlets as set forth in San
Diego Municipal Code . . . section 141.0502 as well as with all other
applicable San Diego Municipal Code and Department of Alcohol
Beverage Control [(ABC)] regulations.”
4
• Paragraph 6.1 further requires the tenant to provide written
notification to the landlord “within seven (7) days of receipt[] of any
enforcement action undertaken by local, state, or federal police, fire,
health department or enforcement agencies. Specifically, should a
police investigation or enforcement action be conducted on the premises
for failure to comply with City ordinances, or failure to comply with
[ABC] guidelines/regulations,” the tenant is required to “inform[] and
advise[]” the landlord of the particulars.
• Paragraph 13.1 of the Lease provides: “A ‘Default’ is defined as a
failure by the Lessee to comply with or perform any of the terms,
covenants, conditions or Rules and Regulations under this Lease. A
‘Breach’ is defined as the occurrence of one or more of the following
Defaults, and the failure of Lessee to cure such Default within any
applicable grace period . . . .”
Reidy testified that, in compliance with the “Agreed Use” of the
Premises, Bar West obtained a “Type 47” liquor license. According to a trial
exhibit, a Type 47 license requires the licensee to operate and maintain the
licensed premises as “a bona fide eating place” at which the licensee “make[s]
actual and substantial sales of meals, during the normal meal hours” that the
establishment is open.3 “Incidental, sporadic or infrequent sales of meals or
3 In this regard, Business and Professions Code section 23038 defines
“ ‘[b]ona fide public eating place’ ” and “ ‘[m]eals’ ” as follows: “ ‘Bona fide
public eating place’ means a place which is regularly and in a bona fide
manner used and kept open for the serving of meals to guests for
compensation and which has suitable kitchen facilities connected therewith,
containing conveniences for cooking an assortment of foods which may be
required for ordinary meals, the kitchen of which must be kept in a sanitary
condition with the proper amount of refrigeration for keeping of food on said
premises and must comply with all the regulations of the local department of
health. ‘Meals’ means the usual assortment of foods commonly ordered at
5
a mere offering of meals without actual sales is not compliance.” The ABC
“will presume that a licensee is operating as a bona fide eating place if the
gross sales of food prepared and sold to guests on the premises exceeds the
gross sales of alcoholic beverages.”
In Bar West’s petition for its Type 47 license, Reidy expressly
represented that “[t]he quarterly gross sales of alcoholic beverages shall not
exceed the gross sales of food during the same period” (at times, the 50/50
Requirement4), that Bar West would maintain records that separately reflect
the gross sales of food and the gross sales of alcohol, and that such records
would be kept no less frequently than every quarter and made available to
the ABC on demand. According to an ABC representative who testified at
trial, the “main purpose” of a Type 47 license “is for the sales and service of
food[;] . . . alcohol will be secondary to the food sales.”
B. The Parties’ Successful Claims
As we explain post, the jury found in favor of PRE on its contract-based
Lease claims, and the jury found in favor of Bar West on its cross-claim for
intentional interference with prospective economic advantage. In an appeal
from a judgment following a trial, we recite the evidence in a light most
favorable to the judgment. (Phillippe v. Shapell Industries, Inc. (1987) 43
Cal.3d 1247, 1252; Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 286.)
As applied here, therefore, our summary of the evidence related to the
various hours of the day; the service of such food and victuals only as
sandwiches or salads shall not be deemed a compliance with this
requirement.”
4 According to an ABC representative who testified at trial, the 50/50
Requirement is a condition placed on a license “to ensure [that the licensees]
are not selling more alcohol than they are [selling] food.”
6
disputes between the parties will depend on whether the evidence was in
support of the claims on which the jury found in favor of PRE or the claim on
which the jury found in favor of Bar West.
1. PRE: Breach of Lease
In or around September 2012, the ABC began an undercover
investigation of Bar West by visiting and inspecting the Premises. The
investigation continued on additional occasions over the course of the next
few months. The results of the ABC’s investigation were that Bar West was
not acting as a bona fide eating place.
In early 2013, the ABC filed and served Bar West with an “Accusation
under Alcoholic Beverage Control Act [Bus. & Prof. Code, § 23000 et seq.] and
State Constitution” against Bar West (Accusation) based on its inspection
and investigation of the Premises. (Some capitalization omitted.) Citing
Business and Professions Code section 24200 and the California Constitution,
Article XX, section 22, the ABC presented eight counts, each alleging “cause
for suspension or revocation” of Bar West’s “On-Sale General Eating Place”
Type 47 license. The first five counts of the Accusation alleged a violation of
“condition #1 on the license”—namely, the 50/50 Requirement. The
remaining three counts alleged violations of specified statutes, including
Business and Professions Code section 23038 (see fn. 3, ante),5 that required
the Premises to be “regularly and in a bona fide manner used and kept open
for the serving of meals to guests for consumption . . . .”
5 With record references that do not support their statement, Appellants
incorrectly tell us that the Accusation was not based on the violation of a
statute. Both the Accusation and an ABC representative who testified at
trial confirm that the final three counts alleged violations of Business and
Professions Code section 23038.
7
Approximately a week after having been served with the Accusation,
“in accordance with” paragraph 6.1 of the Lease, Bar West notified PRE that
it (Bar West) was “in a spot of trouble [with the ABC]” based on its lack of
food sales.
In mid-March 2013, on behalf of Bar West, Reidy stipulated that
disciplinary action could be taken on all eight counts of the Accusation.
Based on this stipulation, the ABC ruled that: (1) grounds for suspension or
revocation of the license had been established (Cal. Const., Art. XX, § 22; Bus.
& Prof. Code, § 24200, subds. (a) & (b)); (2) Bar West violated or permitted
violation of Business and Professions Code sections 23807, 23038, and 23396;
and (3) Bar West’s license be suspended for 10 days and indefinitely
thereafter until compliance with Business and Professions Code
section 23038. By the end of April 2013, Bar West had complied with
section 23038, and in early May 2013, the 10-day license suspension was
complete.
During the April – August 2013 time period, on multiple occasions,
PRE requested from Bar West documentation and/or information which PRE
believed it was entitled to under the terms of the Lease. The requests were
made orally and in writing by both Plotts and PRE’s attorney, and most were
regarding Bar West’s post-suspension compliance with requirements of the
ABC and the Lease. Bar West and its attorney rarely responded or provided
the requested materials.
In September 2013, PRE’s attorney sent Bar West a demand to cure
three identified defaults and gave notice of one “noncurable” default and
PRE’s remedy under the Lease. In October 2013, PRE’s attorney sent
Bar West a demand to cure an additional identified default. In November
2013, PRE’s attorney sent Bar West a notice that PRE had applied
8
Bar West’s security deposit to expenses related to the various defaults and
demanded that Bar West replenish the security deposit and pay additional
expenses related to the defaults.
In early December 2013, Plotts sent Reidy an email in which he (Plotts)
set forth his position regarding Bar West’s breaches of the Lease and
“outlined options” for the parties under four new proposed Lease terms, each
beginning the next month (Jan. 2014). Plotts concluded his email with the
statement that, if Reidy did not respond to this offer in five days, PRE would
“move forward” with an unlawful detainer action against Bar West and a civil
suit for money damages against both Bar West and Guarantor. Reidy did not
respond, the Lease was never rewritten, and PRE did not proceed with any
litigation.
In mid-December 2013, Plotts and Reidy met at the Premises
(December 2013 meeting). According to Reidy, Plotts informed him that,
based on “the ABC violations,” Bar West was in breach of the Lease and that,
pursuant to the terms of the Lease, the two, five-year options were no longer
available to Bar West.
Reidy wrote to Plotts in June 2014, explaining that, financially,
Bar West had experienced “some of the worst weeks in our history.” Reidy
further told Plotts that Bar West had been losing money, was “unwilling to
throw good money after bad any longer,” and would not sign a new lease or a
modification of the existing Lease. He suggested to Plotts that “the success of
the location will only be insured by a new operator coming in and a
rebranding of the location.” Reidy proposed that, together, the two of them
could find a new tenant (as assignee of Bar West’s license), so long as PRE
provided “a draft market rate lease with a 10[-]year term and one 5[-]year
option” and other specifics.
9
Reidy’s June 2014 letter closed by stating that, if PRE rejected the
proposal of a new lease with a new tenant, Bar West “will be closing its doors
as early as the end of the summer season[,] but no later than November 1st.”
Bar West stopped paying rent as of November 1, 2014 and abandoned the
Premises effective November 19, 2014.
2. Bar West: Intentional Interference with Prospective Economic
Advantage
In the summer of 2014, Bar West retained a commercial real estate
agent to sell its business, including the transfer of its Type-47 license. The
asking price was $695,000, and Bar West’s agent had a list of terms that PRE
would want in a new lease.
By mid-September 2014, the real estate agent had located a potential
buyer (Buyer). On September 10, the agent prepared two written documents:
(1) a letter of intent setting forth the principal terms and conditions for
Buyer’s purchase of “the business and assets” of Bar West; and (2) a proposal
to PRE, signed by Buyer, for an assignment of the Lease to Buyer with two
options to extend. On September 11, both Bar West and Buyer signed the
letter of intent for a $595,000 cash transaction, and the agent forwarded to
Plotts the signed proposed Lease assignment and extension.
Counsel for Plotts and PRE promptly responded, explaining that,
before beginning its preliminary review of the proposal, PRE was: requesting
a “$500 consideration fee” for a review of the proposal (as provided for in
paragraph 12.2(e) of the Lease); asking for additional information about
Buyer and the proposed personal guarantor; and advising that PRE would
not agree to an assignment of the two options contained in the Lease (as
provided for in paragraph 12.2(g) of the Lease).
Following the offer of the proposed assignment and extension of the
Lease, Bar West, Buyer, and PRE made various counteroffers, demands, and
10
responses. Two weeks after the initial proposal, the parties’ negotiations
concluded when, at the end of September 2014, PRE’s attorney advised
Bar West’s attorney and real estate agent that PRE “ha[d] carefully reviewed,
and rejected” Buyer’s most recent counteroffer.
Reidy accused PRE of being unwilling to offer “a fair market lease for a
successor.” Following his real estate agent’s October 2014 advice, Reidy
discontinued marketing the business. By mid-November 2014, “things . . .
had only gotten worse”; and Reidy closed the business, and Bar West
surrendered possession of the Premises to PRE effective November 19, 2014.
II. PROCEDURAL BACKGROUND6
“The reviewing court will presume that the record in an appeal includes
all matters material to deciding the issues raised.” (Cal. Rules of Court,
rule 8.163.) To this end, the appellant, who has the burden of overcoming the
presumption of correctness (Jameson v. Desta (2018) 5 Cal.5th 594, 609
(Jameson)), has the related duty of providing an appellate court with an
adequate record on appeal. (In re Marriage of Wilcox (2004) 124 Cal.App.4th
492, 498.)
6 In designating their record in this appeal, Appellants elected to proceed
pursuant to California Rules of Court, rule 8.124, by which they committed to
preparing and submitting an appendix in lieu of a clerk’s transcript. In
violation of rules 8.124(b)(1)(A) and 8.122(b)(1)(F), Appellants failed to
include in their appendix a copy of the register of actions. As a “reviewing
court” (Evid. Code, § 459, subd. (a)), we may take judicial notice of “[r]ecords
of . . . any court of this state” (Evid. Code, § 452, subd. (d)). We do so with
respect to the trial court’s register of actions in this case, San Diego County
Superior Court No. 37-2015-00029139-CU-BC-CTL. (Shalabi v. City of
Fontana (2019) 35 Cal.App.5th 639, 641, fn. 1, review granted Aug. 14, 2019,
S256665; D. Cummins Corp. v. United States Fidelity & Guaranty Co. (2016)
246 Cal.App.4th 1484, 1492, fn. 8.)
11
Here, Appellants have not provided us with us with the following
documents: three of four of the operative pleadings on which the case went to
trial; court minutes, including those from the 16 days of trial proceedings;
and at least 10 of the post-verdict pleadings on which all of the rulings
Appellants challenge in this appeal were based.7 To the extent the record
lacks any item necessary to a proper consideration of an issue or argument
Appellants raise on appeal, Appellants necessarily will have failed to
overcome the presumption of correctness that attaches to the judgment on
appeal. (Jameson, supra, 5 Cal.5th at p. 609.)
In August 2015, PRE filed the underlying action.
In March 2016, Appellants filed a cross-complaint against Respondents
and another party who Appellants dismissed prior to trial. In their cross-
complaint, Appellants alleged eight causes of action, including a claim
against Respondents (and the dismissed party) for intentional interference
with prospective economic advantage and Guarantor’s claim against PRE for
rescission of the Guaranty. Because we do not have a copy of any response(s)
to the cross-complaint, we do not know how Respondents responded.
Although the register of actions contains minutes “for Civil Jury Trial”
dating as early as January 19, 2018, the first date of trial proceedings for
which Appellants provided a reporter’s transcript is March 29, 2018.
At trial, following the close of the evidence, the arguments of counsel,
and the court’s final instructions, the jury received two special verdict forms.
7 By supplying copies of only what they submitted to the trial court,
Appellants violated both the letter and spirit of California Rules of Court,
rule 8.124(b)(1)(B)’s requirement that Appellants have included in their
appendix “any item that [Appellants] should reasonably assume
[Respondents] will rely on.”
12
One is entitled “Plaintiff’s Special Jury Verdict Form” and contains 31
numbered questions (PRE’s Special Verdict). Although it does not identify
the parties to or the claims alleged in the operative complaint (which is not in
the record on appeal), PRE’s Special Verdict indicates that the jury
considered PRE’s causes of action for: breach of contract (Lease) (question
Nos. 1-9); breach of the implied covenant of good faith and fair dealing
(Lease) (question Nos. 10-18); intentional misrepresentation (question
Nos. 19-24); and negligent misrepresentation (question Nos. 25-31). The
second form is entitled “Special Verdict Form on Cross-Complaint of Francis
J. Reidy and MLR Bar West, LLC” and contains 26 numbered questions,
some with subparts (Appellants’ Special Verdict). Appellants’ Special Verdict
does not identify the parties or the claims alleged in the operative cross-
complaint, but does indicate that the jury considered claims for: breach of
contract (Lease) (question Nos. 1-6); breach of the implied covenant of good
faith and fair dealing (Lease) (question Nos. 7-12); and intentional
interference with prospective economic advantage (question Nos. 13-26).
By its two special verdicts dated April 24, 2018, the jury made the
following findings with regard to the claims at issue in this appeal. On PRE’s
Special Verdict, the jury found on PRE’s claim for breach of contract (Lease)
that: Bar West breached the Lease; PRE was damaged in the amount of
$486,483.67; and Guarantor was responsible for damages in the amount of
$486,483.67. On Appellants’ Special Verdict, the jury found on Appellants’
cross-claim for intentional interference with prospective economic advantage
that: if the Lease had not been terminated, Bar West would have been able
“to sell its business and liquor license to an incoming tenant of the
[Premises]”; TBP Financial did not wrongfully request potential tenants to
pay certain fees (i.e., TBP Financial did not interfere with these potential
13
tenants’ interest in the purchase of Bar West’s attempt to sell its business
and liquor license); however, PRE and Plotts each knew of Bar West’s intent
to sell its business and liquor license and to assign the Lease, each refused to
negotiate with and/or accept reasonable terms for a new lease with potential
tenants, each intentionally interfered with Bar West’s prospective economic
advantage in the sale of its business and assets, each acted in a manner that
was a substantial factor in causing harm, and each caused “actual damages”
in the amount of $254,228.10.
After discharging the jury, the court set a date for the continued
proceedings, at which the court and counsel agreed on the issues to be
decided by the court, a briefing schedule, and a hearing date in late August
2018.
In preparation for the continued proceedings on August 30, 2018, the
court issued a tentative ruling based on the issues identified in the parties’
post-verdict briefing. The court entertained lengthy oral argument and took
the matter under submission, with the understanding that Appellants’
counsel would be requesting a statement of decision.
On November 8, 2018, in a “Final Statement of Decision” (FSOD), the
court ruled on the issues that the parties raised in the post-verdict briefing.
As relevant to the issues on appeal, the court’s rulings included:
• The damages awarded by the jury on Appellants’ cause of action for
intentional interference with prospective economic advantage total
$254,228.10, jointly and severally against PRE and Plotts;
• Guarantor is not entitled to relief on his cause of action for rescission of
the Guaranty;
• Neither Bar West nor Guarantor is the prevailing party; and
14
• PRE is entitled to an award of prejudgment interest, calculated at the
rate of 10 percent per year.
In late January 2019, the trial court filed its judgment. Containing a
full recitation of PRE’s Special Verdict, Appellants’ Special Verdict, and the
FSOD, the judgment awarded: damages in favor of PRE, jointly and
severally against Bar West and Guarantor; $254,228.10 in favor of
Appellants and against PRE and Plotts, jointly and severally; and a judgment
in favor of Paul W. Plotts and TBP Financial on Appellants’ cross-complaint.
The judgment further deemed PRE to be the prevailing party in the action as
against Appellants, and Paul W. Plotts and TBP Financial as the prevailing
parties on Appellants’ cross-complaint.
Appellants timely appealed from the judgment.
III. DISCUSSION
Appellants raise four issues on appeal, arguing that the trial court
erred in: (1) awarding Appellants $254,228.10, jointly and severally against
PRE and Plotts, as opposed to $254,228.10 against PRE and $254,228.10
against Plotts; (2) ruling against Guarantor on his cause of action for
rescission of the Guaranty; (3) not finding Bar West and Guarantor to be
prevailing parties; and (4) awarding PRE prejudgment interest. As we
explain in discussing each of these issues, Appellants did not meet their
burden of establishing reversible error as to any of them.
A. Joint and Several Liability for Damages Awarded Against Respondents
Appellants argue that the trial court erred in ruling that PRE and
Plotts were jointly and severally liable to Bar West for damages in the
amount of $254,228.10.
15
1. Additional Facts
In response to separate sets of questions in Appellants’ Special Verdict,
the jury found in favor of Appellants and against both PRE and Plotts on
Appellants’ claim for intentional interference with prospective economic
advantage. The underlying premise for this claim was the jury’s finding that,
if the Lease had not been terminated, Bar West “would . . . have been able to
sell its business and liquor license to an incoming tenant of the [Premises].”
At issue on appeal are the jury’s identical findings against two individual
cross-defendants: PRE caused actual damages to Bar West in the amount of
$254,228.10, and Plotts caused actual damages to Bar West in the amount of
$254,228.10.8
In its FSOD, the trial court concluded that “the amounts awarded on
[Appellants’] cross-complaint should not be aggregated.” The court explained
that “Bar West suffered only one single harm for intentional interference
with prospective economic advantage as against the cross-defendants, [PRE
and Plotts,] in the total amount of $254,228.10.”
8 In two separate sets of identical questions, one directed to cross-
defendant PRE’s involvement and one directed to cross-defendant Plotts’s
involvement, Appellants’ Special Verdict read as follows at questions Nos. 21
and 23:
a. Did PRE and did Plotts “know of [Bar West’s] intention to sell its
business and liquor license and to assign its Lease? [¶] Yes X No ___”
b. Did PRE and did Plotts “refuse to negotiate with and/or accept
reasonable lease terms from potential tenants? [¶] Yes X No ___”
c. Did PRE and did Plotts “intentionally interfere with [Bar West’s]
prospective economic advantage in the sale of its business and assets?
[¶] Yes X No ___”
d. “Was the above conduct [of PRE and of Plotts] a substantial factor in
causing harm to [Bar West]? [¶] Yes X No ___”
Question Nos. 22 and 24 read as follows: “What are [Bar West’s] actual
damages” caused by PRE and caused by Plotts? “$ 254,228.10 .”
16
The trial court analyzed the issue as follows. Plotts was a partner of
PRE, and Appellants presented no evidence either that PRE acted separately
from Plotts or that Plotts ever acted in a capacity outside that of a partner of
PRE. Thus, to the extent Plotts interfered with Bar West’s prospective
economic advantage—and the jury so found—he did so as a partner of PRE.
In its cross-complaint, Bar West alleged only one theory of intentional
interference with prospective economic advantage against PRE and Plotts;
and, consistently, at trial Bar West presented “the same exact evidence”
against both PRE and Plotts. The award of $254,228.10 was “a clearly
calculated finite special damage,” not an award of general damages; and to
allow a recovery of $508,456.20, as argued by Appellants, would amount to
“[d]ouble or duplicative recovery for the same items of damage,” which is
prohibited.
2. Analysis
a. Law
The measure of damages for intentional interference with prospective
economic advantage is the “economic harm proximately caused by the
defendant’s action.” (Roy Allan Slurry Seal, Inc. v. American Asphalt South,
Inc. (2017) 2 Cal.5th 505, 512; see CACI No. 2202.) This “includes ‘[t]he
financial loss of the benefits of the [contract] [or] [the prospective economic
relationship].’ ” (Sole Energy Co. v. Petrominerals Corp. (2005) 128
Cal.App.4th 212, 233 (Sole Energy).) The “ ‘ “ ‘expectancies’ ” ’ ” protected are
based on “ ‘ “a background of business experience” ’ ” from which “ ‘ “it is
possible to estimate with some fair amount of success both the value of what
has been lost and the likelihood that the plaintiff would have received it if the
defendant had not interfered.” ’ ” (Roy Allan Slurry Seal, at p. 515, italics
omitted.)
17
A special verdict is one “by which the jury find[s] the facts only, leaving
the judgment to the Court.” (Code Civ. Proc., § 624; accord, Shaw v. Hughes
Aircraft Co. (2000) 83 Cal.App.4th 1336, 1347, fn. 7.) The purpose of a special
verdict is for the jury to determine the ultimate facts of each claim in the
case, so that “nothing shall remain to the Court but to draw from them
conclusions of law.” (Code Civ. Proc., § 624.)
To the extent there is an ambiguity in the special verdict that is not
raised before the jury is discharged, the court must “ ‘interpret the verdict
from its language considered in connection with the pleadings, evidence and
instructions.’ ” (Woodcock v. Fontana Scaffolding & Equipment Co. (1968) 69
Cal.2d 452, 456 (Woodcock); accord, Fuller v. Dept. of Transportation (2019)
38 Cal.App.5th 1034, 1038 (Fuller) [consider pleadings, evidence,
instructions, and arguments]; Oxford v. Foster Wheeler LLC (2009) 177
Cal.App.4th 700, 718-719 [consider evidence, instructions, and arguments].)
Because a “ ‘ “special verdict’s correctness must be analyzed as a matter
of law” ’ ” (Orthopedic Systems, Inc. v. Schlein (2011) 202 Cal.App.4th 529,
543), on appeal we review de novo the trial court’s interpretation of the
special verdict (Fuller, supra, 38 Cal.App.5th at p. 1038). Only where the
special verdict is “hopelessly ambiguous” will the judgment be reversed.
(Woodcock, supra, 69 Cal.2d at p. 457; accord, Fuller, supra, 38 Cal.App.5th
at p. 1038 [court interprets special verdict so long as it “is not ‘hopelessly
ambiguous’ ”].)
As we explain, because Appellants have not attempted to apply the
proper standard—i.e., Appellants have not suggested how the pleadings,
evidence, instructions, and argument of counsel support the interpretation
Appellants advance (Woodcock, supra, 69 Cal.2d at p. 456; Fuller, supra, 38
Cal.App.5th at p. 1038)—they cannot establish reversible error.
18
b. Appellants’ Arguments
Appellants’ primary argument is that the trial court erred in reaching
the legal conclusion that PRE and Plotts are jointly and severally liable to
Appellants in the amount of $254,228.10. According to Appellants, PRE and
Plotts are each independently liable for Appellants’ financial loss of the
benefits of the prospective economic relationship with a buyer of the business
and/or assignee of the Lease in the amount of $254,228.10 each—for a total
award of $508,456.20.
In support of their argument, Appellants rely on the Restatement Third
of Torts, which provides: “Each person who commits a tort that requires
intent is jointly and severally liable for any indivisible injury legally caused
by the tortious conduct.” (Rest.3d Torts, Apportionment of Liability, § 12.)
Appellants then cite to California authorities that preclude apportioning
liability for a party that commits an intentional tort. (E.g., Code Civ. Proc.,
§ 875, subd. (d) [“There shall be no right of contribution in favor of any
tortfeasor who has intentionally injured the injured person”]; Kesmodel v.
Rand (2004) 119 Cal.App.4th 1128, 1144, fn. 37 [“ ‘a party who commits
intentional misconduct should not be entitled to escape responsibility for
damages based upon the negligence of the victim or a joint tortfeasor’ ”];
Thomas v. Duggins Construction Co., Inc. (2006) 139 Cal.App.4th 1105, 1112
[“an intentional tortfeasor’s liability to the plaintiff is not subject to
apportionment (i.e., reduction) where the negligence of one or more third
party tortfeasors contributed to the injuries”]; id. at pp. 1108, 1111 [Prop. 51,
which in part abolished joint liability for noneconomic damages based on
principles of comparative fault (Civ. Code, § 1431.2, subd. (a)), did not alter
existing principles governing intentional joint tortfeasors joint and several
liability to the injured party].)
19
None of these authorities, however, is applicable to the present case,
since each involves contribution by a negligent joint tortfeasor; whereas, with
intentional torts, as here, the proper focus is on the injury to the victim, not
comparative fault. Under Appellants’ principal authority, joint and several
liability applies “for any indivisible injury legally caused by the
[intentionally] tortious conduct.” (Rest.3d Torts, Apportionment of Liability,
§ 12.) The issue, and thus the relevant inquiry, is whether Appellants
suffered an “indivisible injury.” (Id. at § 7, com. e.) An injury is indivisible
only if “each relevant person caused the entire injury.” (Ibid.) As the
Restatement explains:
“(b) Damages can be divided by causation when the
evidence provides a reasonable basis for the factfinder to
determine:
“(1) that any legally culpable conduct of a party or other
relevant person to whom the factfinder assigns a
percentage of responsibility was a legal cause of less
than the entire damages for which the plaintiff seeks
recovery and
“(2) the amount of damages separately caused by that
conduct.
“Otherwise, the damages are indivisible and thus the injury
is indivisible.” (Id. at § 26, italics added.)
“The concept, at bottom, is one of legal causation (that is, are multiple
tortfeasors responsible for the plaintiff’s injuries) . . . . As the Supreme Court
explained in American Motorcycle [Assn. v. Superior Court (1978)] 20 Cal.3d
[578,] 587, ‘[T]he “joint and several liability” label . . . simply embodies the
general common law principle . . . that a tortfeasor is liable for any injury of
which his [tort] is a proximate cause.’ ” (Henry v. Superior Court (2008) 160
Cal.App.4th 440, 454.) “[U]nless damages can be divided by causation, ‘the
20
damages are indivisible and thus the injury is indivisible.’ ” (Ibid., quoting
Rest.3d Torts, Apportionment of Liability, § 26.)
Under this standard, the trial court properly analyzed the issue, ruling
in relevant part:
“[U]nder California law . . . a party can only recover once
for a single harm. . . . Bar West presented the same exact
evidence at trial against both [Plotts] and [PRE]. It is clear
by the [Appellants’ Special Verdict] that Bar West alleged
only one theory of intentional interference with prospective
economic advantage against two interrelated parties. The
jury found [Plotts’s] actions on behalf of [PRE] resulted in
one harm to Bar West in the amount of $254,228.10. . . .
The court finds the two awards of $254,228.10 are special
damages under one theory of recovery, and therefore, they
are not awarded twice under the facts presented in this
case.
“At trial, the jury was informed [Plotts] was a partner in
[PRE]. Bar West did not offer any evidence [Plotts] ever
acted in a capacity outside his official capacity as a partner
of [PRE]. There was some evidence that [Plotts] allegedly
interfered with Bar West’s sale of the business. . . . [PRE]
could not have acted separate and apart from the actions of
[Plotts] . . . . The liability of [PRE] can only be established
through the actions of [Plotts]. As such, the amounts
awarded on the cross-complaint should not be aggregated,
as there was only one action and one harm.” (Italics added.)
In this latter regard, in their cause of action for intentional interference
with prospective economic advantage, Appellants did not differentiate
between PRE and Plotts or between what either of them did or did not do.
For example, in their cross-complaint, Appellants pleaded: “In this case, a
prospective business relationship existed between BAR WEST and potential
purchasers of its business as a going concern, for which there was a
‘probability of future economic benefit’ from a business relationship. Cross-
Defendants, and each of them, did in fact cause injurious interference in that
21
protective economic advantage. [¶] . . . [T]he conduct of Cross-Defendants
was wrongful in and of itself . . . .” In addition, at trial, Appellants (through
counsel) stipulated: (1) “that all substantive matters relating to the Lease,
including without limitation negotiations or discussions concerning the
Lease, the assignment of the Lease to Bar West, or any options to extend the
Lease, were handled by [Plotts] while acting as an agent [for PRE]”; and
(2) “that [Plotts] was authorized by [PRE] to act on its behalf at all times, and
[PRE] is bound by the testimony and actions of [Plotts] in this case, without
exception, and no assertions of ultra vires conduct will be made by [PRE].”9
In summary, therefore, the trial court properly analyzed the issue in
terms of the (in)divisibility of Appellants’ injuries caused by PRE and Plotts;
and Appellants have not argued otherwise, despite having relied on the
Restatement Third of Torts.
Nor are we persuaded by Appellants’ remaining arguments.
Appellants argue that “[s]ubstantial evidence supports” a finding that
PRE and Plotts “caused damages to Bar West totaling $508,456.20.” (Bolding
omitted.) In support of their argument, Appellants cite to the following
9 In their reply brief on appeal, Appellants tell us that “the Jury also
heard evidence of wrongful and tortious conduct by [Plotts] that was outside
of his role as agent for [PRE].” Appellants’ failure to properly raise this
argument in their opening brief forfeits its consideration in reply. (Golden
Door Properties, LLC v. County of San Diego (2020) 50 Cal.App.5th 467, 518
[“ ‘ “ ‘Obvious considerations of fairness in argument demand that the
appellant present all of his points in the opening brief’ ” ’ ”].) In any event,
the allegedly “tortious conduct” Appellants describe (Plotts’s alleged threats
to Reidy and his family) is irrelevant to the interference with, as described in
Appellants’ Special Verdict, Bar West’s prospective economic advantage in
either “rebrand[ing] and continu[ing] successful operation of its business” or
“sell[ing] its business and liquor license to an incoming tenant of the
property.”
22
evidence: Bar West listed its business and liquor license for sale for $695,000
in the summer of 2014; Bar West and Buyer entered into a letter of intent for
the sale of the business and liquor license to Buyer for $595,000 in September
2014;10 and Reidy offered to sell the license to Plotts for $600,000 in July
2015. However, that evidence, without more, does not establish damages. At
best it is evidence of the potential price a buyer might pay for the business
and license or for the license alone, not evidence of the financial loss of the
benefits of a prospective economic relationship, as required to establish
damages. (Sole Energy, supra, 128 Cal.App.4th at p. 233.) Moreover, in
closing argument, the only mention of damages on Appellants’ claim for
intentional interference with prospective economic advantage was from
Appellants’ counsel, who suggested to the jury that, based on the evidence
from Appellants’ expert, “if Bar West had been able to sell its business and
liquor license in January of 2014, its damages are $1,794,577.” (Italics
added.)
Next, without a record reference, Appellants tell us in their opening
brief that “the Jury was instructed that it would be asked to decide whether
10 Actually, Appellants tell us that “Bar West reached an agreement to sell
its business and liquor license to [Buyer] for $595,000.” (Italics added.) That
statement misrepresents the evidence that Appellants submitted and relied
on at trial and which they cite in their appellate brief. The “Letter of Intent
to Purchase the Business Assets of MLR Bar West, LLC,” trial exhibit
No. 572, prepared by Bar West’s broker, concludes in uppercase bold font:
“[T]his proposal is not a purchase/sale agreement . . . . [O]nly a fully
executed purchase/sale agreement shall constitute an agreement for the
business. Broker makes no warranty or representation to seller or purchaser
that acceptance of this proposal will guarantee the execution of a purchase
and sale agreement for the business. The final purchase/sale agreement
shall incorporate . . . any other provisions upon which both parties may
mutually agree.”
23
each of the [Cross-]Defendants are liable for causing harm to Bar West for
lost profits and business value and, if so, the amount of harm that was
caused by each.” However, as we learn from their reply brief, where
Appellants quote from and provide a record reference for the instructions on
which they rely, the statement in their opening brief misrepresents the
record. Contrary to Appellants’ initial presentation, the instructions do not
direct the jury to determine—and, indeed, do not even mention consideration
of—“the amount of harm that was caused by each [cross-defendant].”
Finally, Appellants argue that the trial court’s “statements are not
supported by substantial evidence” and “[a]re contrary to the substantial
evidence.” (Some bolding omitted.) However, Appellants do not tell us which
“statements” of the court they contend lack substantial evidence. Moreover,
in the procedural context of how the issue arises in this case—i.e., given
Appellants’ Special Verdict—we are not reviewing on appeal any factual
findings made by the trial court. The jury made all the necessary factual
findings, and the court then “dr[e]w from them conclusions of law” in the form
of a judgment. (Code Civ. Proc., § 624.) To the extent Appellants contend
that factual findings are unsupported by substantial evidence, their
contention must be directed to the jury’s findings of fact, not to the court’s
conclusions of law.
Based on our de novo review of the pleadings, evidence, instructions,
and closing arguments of counsel, the trial court’s interpretation of the
damages awarded on Appellants’ Special Verdict is not hopelessly ambiguous.
For this reason, Appellants did not meet their burden of establishing that the
trial court erred in ruling that the amounts awarded on Appellants’ claim for
intentional interference with prospective economic advance “should not be
24
aggregated” and that, instead, PRE and Plotts should be jointly and severally
liable in the amount of $254,228.10.
B. Rescission
Guarantor argues that the trial court erred in denying him relief based
on the cause of action for rescission of the Guaranty alleged in the cross-
complaint.
1. Additional Facts
The Guaranty is a two-page commercial real estate form pursuant to
which Guarantor “unconditionally and irrevocably guarantee[d] the prompt
payment by [Bar West] of all rents and all other sums payable by [Bar West
to PRE] under said Lease and the faithful and prompt performance by
[Bar West] of each and every one of the terms, conditions and covenants of
said Lease to be kept and performed by [Bar West].”
In the second cause of action of the cross-complaint, Guarantor sued
PRE for rescission of the Guaranty. In part, Guarantor alleged that, despite
the language of the Lease regarding the two, five-year options (after the
initial 10-year term), PRE had a “hidden intention to assert that the options
were not exercisable by Bar West”; and had Guarantor known of this hidden
intention, he would not have provided the Guaranty.
In a post-verdict filing, Guarantor requested a ruling from the court
“that he has no further financial obligations related to the Lease or the jury’s
award of damages to [PRE].”11 In the request, Guarantor explained his
11 Guarantor does not tell us why the court was ruling on the issue of
rescission. We assume the reason is that a cause of action for rescission of a
contract is an equitable claim for which there is no right to a jury trial.
(Nmsbpcsldhb v. County of Fresno (2007) 152 Cal.App.4th 954, 962-963 [no
right to jury trial on claim for rescission, because it is an equitable action].)
25
position as follows: The two, five-year options to extend the Lease were
“essential” to his willingness to provide the Guaranty; the “undisputed
evidence” from the trial established that, without the options, Guarantor
would not have signed the Guaranty; further “undisputed evidence” from the
trial established that PRE “terminated the options in the Lease and voided
the Lease in its entirety at the December 2014 [sic] meeting”; and, thus, “it is
undisputed that the consideration for [Guarantor’s] financial promises failed
and the Guaranty was rescinded by [PRE]’s conduct.”
As to Guarantor’s rescission claim, the trial court’s tentative decision
provided in full, “The court denies Bar West’s [sic] request for rescission.”
Appellants timely requested a statement of decision “explaining the factual
and legal bases for the Court’s tentative decision . . . regarding . . . [¶] . . . [¶]
. . . [w]hether [Guarantor] is entitled to Judgment of rescission of the
Guaranty.” In the FSOD, the court ruled that PRE did not prematurely (or
otherwise) terminate the options, as contended by Appellants; i.e., neither
PRE nor Plotts repudiated the Lease at the December 2013 meeting.
Instead, by vacating the Premises and failing to pay rent as of November
2014, Bar West (1) was in breach of the Lease, and (2) would not be the
tenant at the prescribed time for exercising the first option two years later.12
2. Analysis
On appeal, Appellants argue that, contrary to the trial court’s ruling in
the FSOD, PRE repudiated the Lease when, according to Reidy: (1) in early
12 Paragraph 39.4(a) of the Lease provides that Bar West “shall have no
right to exercise an Option” during a period of time in which “(ii) . . . any Rent
is unpaid” or “(iii) . . . [Bar West] is in Breach of this Lease[.]”
Paragraph 1.3 of the Lease provides that the original term ends on
December 31, 2016; and paragraph 52.A.(i) of the Lease requires that, “[i]n
order to exercise an option to extend, [Bar West] must give written notice of
26
December 2013, Plotts sent Reidy an email that (a) described Bar West’s
breaches of the Lease and offered general terms for four possibilities to
replace the Lease beginning January 2014, none of which contained options
to extend, and (b) threatened litigation against Bar West and Guarantor if
Reidy did not respond to this offer in five days; (2) at the December 2013
meeting, Plotts told Reidy both that the Lease was “null and void” and that
the two, five-year options were no longer available; and (3) nine months later,
in September 2014, PRE’s attorney stated that, even if Bar West were able to
assign the Lease to a new tenant, the two, five-year options would not be
included. Appellants’ argument concludes with the contention that this (and
other related) conduct “removed the consideration for the Guaranty.”
As potentially applicable in this case, a guaranty may be terminated by
rescission (Civ. Code, § 1688), if the consideration for the guaranty fails
through no fault of the guarantor (id., § 1689, subd. (b)(2)).13 Here, with
regard to consideration, Guarantor testified that he would not have signed
the Guaranty had the Lease not contained the two, five-year options.
Appellants essentially argue that, based on Plotts’s early December
2013 email, Plotts’s statements at the December 2013 meeting, and PRE’s
counsel’s letter nine months later—in particular, the communication that the
two, five-year options were no longer available—the trial court was required
to rule that PRE’s conduct anticipatorily repudiated the Lease. Appellants’
such election to [PRE]” between April 1 and October 1, 2016—“time being of
the essence.”
13 Although Civil Code section 1689 provides for, and in the cross-
complaint Guarantor alleges, other grounds on which a contract like the
Guaranty may be terminated by a rescission, on appeal Appellants argue,
and thus we consider, only a failure of consideration (id., § 1689, subd. (b)(2)).
27
argument continues: Since the two, five-year options contained in the
repudiated Lease were the consideration to Guarantor for his Guaranty, the
court was required to rule that Guarantor is entitled to rescind the Guaranty
because the consideration for the Guaranty failed.
However, Appellants’ argument does not take into consideration the
trial court’s explanation of its reasoning for ruling that “there was not a legal
repudiation of the [L]ease by [Plotts] or [PRE] at the December 2013 meeting
with [Reidy].” In finding that “[PRE] and Bar West both continued to affirm
the [Lease] and [G]uaranty by [Guarantor] after the December 2013
meeting,” the court relied on the following facts: “[N]either party took any
legal action following the December 2013 meeting. Bar West continued to
pay the rent due under the [L]ease. [Plotts] continued to accept the rent.
[Guarantor] testified in trial that none of the terms of the [L]ease had
changed following the December 2013 meeting.” (Italics added.)
An injured party may waive its right to rescind a contract “by conduct
(such as retention of benefits) indicating an election to affirm the contract.”
(1 Witkin, Summary of Cal. Law (11th ed. 2020) Contracts, § 969, p. 1019,
italics added.) This is not a new concept. More than 100 years ago, our
Supreme Court described as “too familiar to require the citation of authority”
the following rule: “[I]f a person entitled to rescind goes on, after he discovers
the facts which give him the right and knows that he has the right, to deal
with the property involved as if the contract . . . were still in effect, he affirms
the contract . . . [, then] his right to rescind it is gone.” (Bancroft v.
Woodward (1920) 183 Cal. 99, 111.) Reaffirming Bancroft more than 75
years ago, our high court summarized: “Waiver of a right to rescind will be
presumed against a party who, having full knowledge of the circumstances
which would warrant him in rescinding, nevertheless accepts and retains
28
benefits accruing to him under the contract.” (Neet v. Holmes (1944) 25
Cal.2d 447, 458.) The facts in Bancroft, although the converse of those in the
present appeal, are remarkably similar. There, after a landlord was fully
aware of his rescission rights and had sued to rescind a lease, he continued to
collect rents. (Bancroft, at p. 111.) Because the collection of rents “was [an]
unequivocal affirmance of the lease,” it “destroyed whatever right of
rescission he might theretofore have had.” (Neet, at p. 458, citing Bancroft.)
“ ‘Whether or not a person has . . . elected to affirm [a contract] rather
than to rescind it, depends primarily upon his intention, and this is shown by
his declarations, his acts, or his conduct, which . . . is therefore, a question of
fact . . . .’ ” (Esau v. Briggs (1948) 89 Cal.App.2d 427, 438 (Esau).) Thus, we
review for substantial evidence the trial court’s finding that both PRE and
Bar West “continued to affirm” the Lease after the December 2013
meeting.14 We then review for an abuse of discretion the trial court’s
decision whether to grant relief based on rescission. (Orozco v. WPV San
Jose, LLC (2019) 36 Cal.App.5th 375, 401.)
The most substantial of the evidence in support of the court’s principal
finding is that, regardless what Plotts said or PRE did from December 2013
14 Appellants tell us that “[t]he Trial Court’s findings of fact are contrary
to the substantial evidence.” (Underscoring omitted.) However, “ ‘the power
of the appellate court begins and ends with a determination as to whether
there is any substantial evidence, contradicted or uncontradicted, which will
support the [factual finding made].’ ” (Western States Petroleum Assn. v.
Superior Court (1995) 9 Cal.4th 559, 571, quoting Crawford v. Southern Pac.
Co. (1935) 3 Cal.2d 427, 429.) The fact that the record may contain
substantial evidence in support of the finding Appellants wanted the court to
make is irrelevant to our role, which is limited to a determination of the
sufficiency of the evidence in support of the judgment actually made.
(Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631.)
29
forward: As of December 1, 2013, Bar West was current on its rent; from
December 2013 through October 2014, Bar West paid rent; and, according to
Reidy, the terms and conditions of the Lease all “stayed in place.” In part,
Guarantor agreed; Plotts’s statements and PRE’s actions from and after the
December 2013 meeting did not change the rent or language in the Lease. In
addition, if we consider the actions of Plotts and PRE, they further
substantiate the finding that the parties affirmed the Lease after the
December 2013 meeting: At all times from and after the December 2013
meeting until Bar West surrendered possession of the Premises in November
2014, Plotts believed and proceeded with the understanding that the Lease
was in full force and effect; PRE never again mentioned preparation of a new
lease; and PRE never instituted litigation.
Accordingly, we have no difficulty concluding that the record contains
substantial evidence to support the court’s finding that Bar West and PRE
“both continued to affirm the [Lease] and [G]uaranty by [Guarantor] after the
December 2013 meeting.”
Based on this finding, we also have no difficulty concluding that the
trial court did not abuse its discretion in ruling that “there was not a legal
repudiation of the [Lease] . . . at the December 2013 meeting . . . .” That is
because, to constitute an express repudiation as Appellants argue, Plotts’s
statement or PRE’s conduct “must amount to an unequivocal refusal to
perform[.]” (Taylor v. Johnston (1975) 15 Cal.3d 130, 140 (Taylor).) “ ‘A mere
declaration, however, of a party of an intention not to be bound will not of
itself amount to a breach, so as to create an effectual renunciation of the
contract; for one party cannot by any act or declaration destroy the binding
force and efficacy of the contract. To justify the adverse party in treating the
renunciation as a breach, the refusal to perform must be of the whole contract
30
. . . and must be distinct, unequivocal and absolute.’ ” (Ibid.) Thus, contrary
to the premise of Guarantor’s argument, PRE’s statement regarding the
enforceability of the Lease generally or the availability of the options
specifically did not “destroy the binding force and efficacy” of the Lease.
(Ibid.)
In support of his argument that PRE repudiated the Lease, Guarantor
tells us that his case “is factually similar to” McWilliams v. Holton (1967) 248
Cal.App.2d 447. We disagree; in fact, McWilliams illustrates why, in this
case, the trial court properly ruled that PRE did not repudiate the Lease. In
McWilliams, the landlord gave the tenant a 30-day notice to quit and
surrender possession of the premises, thereby formally “cancelling the lease
agreement” and “complet[ing the landlord’s] repudiation of the lease” (id. at
pp. 451-452)—i.e., a distinct, unequivocal, and absolute refusal to perform.
By contrast, here all we have is evidence of what the landlord threatened he
might do at some later date (which he did not do).
Moreover, even if we were to assume that PRE repudiated the contract,
then Bar West immediately faced an “election of remedies” after the
December 2013 meeting. (Taylor, supra, 15 Cal.3d at p. 137.) Bar West was
required to “treat the repudiation as an anticipatory breach and immediately
seek damages for breach of contract, thereby terminating the contractual
relation between the parties, or [to] treat the repudiation as an empty threat,
wait until the time for performance [of the exercise of the options] arrive[d]
and exercise [its] remedies for actual breach if a breach d[id] in fact occur at
such time.” (Ibid.) Here, because Bar West elected to treat the Lease “as still
in force,” any potential repudiation was “nullified,” and Bar West was “left
with [its] remedies, if any, invocable at the time of performance.” (Id. at
pp. 137-138.)
31
We are not persuaded by Guarantor’s arguments to the contrary, as we
explain.
The FSOD contains a number of factual findings. Guarantor argues
first that the following three findings, while not verbatim from the FSOD, are
unsupported by substantial evidence:
1. “Reidy agreed Bar West was in breach of the [L]ease”;
2. “[T]here was no evidence presented that [Plotts] ever manifested an
unequivocal refusal to perform under the Lease”; and
3. “[Guarantor] testified in trial that none of the terms of the Lease had
changed following the December 2013 meeting.”
Because Guarantor tells us nothing else about the evidence, his presentation
is what the Supreme Court describes as “manifestly deficient” and results in
forfeiture of appellate review of his substantial evidence issue and argument.
(In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) Unless the “party who
challenges the sufficiency of the evidence to support a finding . . . set[s] forth,
discuss[es], and analyze[s] all the evidence on that point, both favorable and
unfavorable,” the reviewing court may deem the substantial evidence
contention to have been waived or forfeited. (Doe v. Roman Catholic
Archbishop of Cashel & Emly (2009) 177 Cal.App.4th 209, 218, italics added;
accord, Fink, at p. 887; Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875,
881.) Indeed, “ ‘the burden to provide a fair summary of the evidence “grows
with the complexity of the record.” ’ ” (Estes v. Eaton Corp. (2020) 51
Cal.App.5th 636, 650.)
In any event, whether “Reidy agreed Bar West was in breach of the
[L]ease” (i.e., the first finding) is irrelevant to the analysis that resulted in
the determination that PRE did not repudiate the Lease. The second finding,
that “there was no evidence presented that [Plotts] ever manifested an
32
unequivocal refusal to perform under the Lease,” directly challenges how the
trier of facts weighed and credited the evidence of what Appellants describe
as the “unequivocal refusal to perform under the Lease.” As a reviewing
court, we “may not weigh the evidence or consider the credibility of
witnesses.” (Campbell v. General Motors Corp. (1982) 32 Cal.3d 112, 118.)
Finally, as to the finding that “Guarantor testified . . . that none of the terms
of the Lease had changed following the December 2013 meeting,” Guarantor’s
assertion that the finding lacks substantial evidence directly contradicts
Guarantor’s testimony at trial.15
The FSOD also contains a number of legal conclusions. Guarantor
argues next that the following three statements, while not verbatim from the
FSOD, are erroneous conclusions of law by the trial court:
1. “The [L]ease required Bar West to comply with the ABC”;16
2. “The breach made the options unavailable pursuant to the lease; the
ABC breach by Bar West rendered the options void; the options were
no longer available to Bar West since it was in breach of Section 39 of
the [L]ease”; and
3. “[PRE] and Bar West both continued to affirm the contract and
[G]uaranty after the December 2013 meeting,” and “neither party took
any legal action following that meeting.”
15 Specifically, Respondents’ counsel asked Guarantor whether, as a
result of the December 2013 meeting, any provisions of the Lease changed.
Guarantor answered, “No words changed in the Lease,” which certainly
substantiates the court’s finding.
16 Guarantor also challenges the legal conclusion “that Bar West was in
breach of the Lease for failing to comply with the ABC,” while nonetheless
acknowledging that such a conclusion is “not stated expressly.”
33
Since we have based our conclusion that the court did not abuse its discretion
in ruling that PRE did not repudiate the Lease on the substantiated finding
that both Bar West and PRE affirmed the Lease after the December 2013
meeting, there is no need to reach—and we express no opinion on—
Guarantor’s first two claimed errors.
Guarantor’s third claimed error is that PRE and Bar West affirmed the
agreements, and that neither party took legal action. Guarantor argues that,
because “the parties attended two mediations to attempt to resolve these
disputes” concerning alleged defaults under the Lease after the December
2013 meeting, PRE “unequivocally refused to perform.” As we set forth ante,
the determination whether PRE and/or Bar West affirmed the Lease are
questions of fact, not law (Esau, supra, 89 Cal.App.2d at p. 438), and the
record here contains more than substantial evidence to support the court’s
express finding that both PRE and Bar West “continued to affirm” the Lease
after the December 2013 meeting. Likewise, the determination whether
either party “took any legal action following that [December 2013] meeting” is
a question of fact; and as we explained ante, the finding that neither party
took any legal action is supported by the uncontradicted evidence that no
lawsuit was filed until August 2015 (i.e., this action), nine months after
Bar West surrendered possession of the Premises.17
As a final argument, at oral argument, Guarantor’s counsel suggested
that, because the jury found that the Lease had been terminated, the court
erred in not ruling, as a matter of law that PRE had repudiated the Lease. In
17 With no litigation to disavow the Lease pending, attendance at a
mediation does not suggest, let alone require, the legal conclusion that the
parties did not affirm the Lease.
34
particular, counsel relied on the jury’s answers to question Nos. 13 and 20 of
Appellants’ Special Verdict, which provide as follows:
“Question 13. If the Lease had not been terminated, would
[Bar West] have been able to rebrand and continue
successful operation of its business? [¶] Yes X No ”
“Question 20. If the Lease had not been terminated, would
[Bar West] have been able to sell its business and liquor
license to an incoming tenant of the property? [¶] Yes X
No ”
Guarantor did not assert this argument in his appellate briefing; thus, by
raising it for the first time at oral argument, he forfeited appellate review.
(Bayramoglu v. Nationstar Mortgage LLC (2020) 51 Cal.App.5th 726, 738,
fn. 4, quoting Kinney v. Vaccari (1980) 27 Cal.3d 348, 356, fn. 6.) Even if we
were to reach the merits, however, the result would be no different, because
in neither of the two special verdict questions was the jury asked to
determine—nor did the jury find—that the Lease had been terminated (and,
if so, by whom and when). The question tells the jury, first, to assume that
the Lease had been terminated and, second, to make a factual finding
whether Bar West would have been able either to rebrand and continue or to
sell the business and license. Counsel’s suggestion otherwise misrepresents
both what the jury was asked to do and what it did.
In summary, substantial evidence supports the trial court’s finding that
the Lease, including the applicability of the terms and conditions for the
exercise of the options, remained in full force and effect until Bar West
surrendered possession in November 2014. Thus, the court did not err in
concluding that there was no failure of the consideration to Guarantor (i.e.,
the terms of the Lease, including options) in entering into the Guaranty.
For these reasons, the trial court did not abuse its discretion in denying
Guarantor’s cause of action for rescission.
35
C. Prevailing Party
As a general rule, “a prevailing party is entitled as a matter of right to
recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).)
Code of Civil Procedure section 1032, subdivision (a)(4) defines a “prevailing
party” to include: “[T]he party with a net monetary recovery, a defendant in
whose favor a dismissal is entered, a defendant where neither plaintiff nor
defendant obtains any relief, and a defendant as against those plaintiffs who
do not recover any relief against that defendant. If any party recovers other
than monetary relief and in situations other than as specified, the ‘prevailing
party’ shall be as determined by the court, and under those circumstances,
the court, in its discretion, may allow costs or not and, if allowed, may
apportion costs between the parties on the same or adverse sides pursuant to
rules adopted under Section 1034.”
Here, the trial court ruled that PRE was “the prevailing party against
[Guarantor] and Bar West[.]”18 On appeal, Appellants contend that the trial
court erred in this determination.
Appellants begin their six-page argument with the following
introduction: “After it vacated a portion of the Jury’s verdict in favor of Bar
West, the Trial Court concluded, based entirely on its prior erroneous rulings,
and the amount recovered at Trial by [PRE], that [PRE] was the prevailing
party.” (Italics added.) The premise for Appellants’ argument is that the
trial court based its prevailing party determination on “prior erroneous
rulings.” However, because Appellants have not demonstrated any prior
18 Although the judgment does not contain an award of costs in favor of or
against Plotts, it determined that Paul W. Plotts and TBP Financial were
each a prevailing party on Appellants’ cross-complaint. There are no issues
on appeal as to costs related to Plotts, Paul W. Plotts, or TBP Financial.
36
erroneous rulings by the trial court,19 Appellants have not met their burden
of establishing trial court error in determining the prevailing party.
D. Prejudgment Interest
Civil Code section 3287 provides for an award of prejudgment interest
to a claimant who is entitled to recover damages. Subdivision (a) entitles the
claimant to an award of interest from the time a right to recover arises where
the damages are “certain, or capable of being made certain by calculation.”
Subdivision (b) allows an award of interest, in the court’s discretion, “but in
no event earlier than the date the action was filed” if the damages are “based
upon a cause of action in contract where the claim was unliquidated.”
Here, the trial court ruled that PRE “is entitled to prejudgment interest
from November 2013 through August 2018.” The court calculated PRE’s net
damages ($182,210.57) and set the annual rate at 10 percent simple interest.
As to entitlement, Appellants argue that, since “[PRE] is not the
prevailing party on any of the claims in this action, it was in error for the
19 Nor have Appellants made a sufficient showing of any sort of
“contemporaneous” error in the court’s prevailing party determination.
Appellants argue that the court did not properly consider what they
characterize as their Civil Code section 1717, subdivision (b)(2) tender of, and
attempt to deposit in court, “the full amount to which [the plaintiff] was
entitled” at the beginning of the case. However, by the limited record before
us, Appellants have failed to overcome the presumption of correctness that
attaches to the judgment on appeal. (Jameson, supra, 5 Cal.5th at p. 609.)
To prevail on a Civil Code section 1717, subdivision (b)(2) claim, the
defendant must “allege[] in his or her answer that he or she tendered to the
plaintiff the full amount . . . .” Here, Appellants do not mention this
requirement in their briefing, and by failing to provide a copy of their answer
to PRE’s complaint (or copies of the pleadings in support of and in opposition
to their November 2015 application to deposit funds), Appellants again have
failed to overcome the presumption of correctness that attaches to the
judgment. (Jameson, at p. 609.)
37
Trial Court to award it prejudgment interest.” (Italics added.) Once again,
however, because Appellants cannot establish the premise of their argument,
their conclusion necessarily fails.
Appellants next argue that, even if PRE is entitled to prejudgment
interest, because PRE “fail[ed] to mitigate its damages, [PRE] is not entitled
to an award [of] prejudgment interest.” However, Appellants’ unsupported
statement regarding PRE’s failure to mitigate its damages is contradicted by
the record. At trial, PRE’s expert provided opinion testimony as to “[PRE’s]
responsibility to mitigate” damages, including the date on which PRE’s duty
to mitigate first arose, and PRE’s compliance with this responsibility.20
Further, Appellants contend that the trial court erred in using
November 2013 as the date on which the interest began accruing. Relying on
Civil Code section 3287, subdivision (b), Appellants argue that, because PRE
did not file this action until August 2015, “the proper calculation of
prejudgment interest must be based upon a specific fixed point in time for
breach that cannot be earlier than the date the action was filed.”
Significantly, however, there is no indication that the trial court awarded
interest pursuant to Civil Code section 3287, subdivision (b), which applies
only to unliquidated contract claims. The court did not provide the statutory
basis for its award, and Appellants have not provided a record on appeal that
contains copies of the arguments and evidence presented to the court during
20 More specifically, Appellants argue that PRE “could have [mitigated its
damages] by allowing Bar West to assign its Lease and liquor license to
[Buyer] in September [of] 2014.” Regardless of the accuracy of that
statement, Appellants have provided no authority—and we are unaware of
any—that allows the breaching party to dictate how the injured party must
respond to mitigate damages properly.
38
the post-verdict proceedings at which the interest was awarded.21 Thus,
Appellants have failed again to overcome the presumption of correctness that
attaches to the judgment on appeal. (Jameson, supra, 5 Cal.5th at p. 609.)
Finally, we reject Appellants’ complaint that the record of proceedings
lacks factual findings regarding the interest award, since there is no
requirement that the court make findings in these post-verdict proceedings.
(Code Civ. Proc., § 632 [statement of decision may be requested in any “trial
of a question of fact”]; Maria P. v. Riles (1987) 43 Cal.3d 1281, 1294 [“a
statement of decision is not required upon decision of a motion”; attorney fees
motion].)
For the foregoing reasons, Appellants did not meet their burden of
establishing that the trial court improperly awarded prejudgment interest to
PRE.
21 At oral argument, Respondents’ counsel told us that, in fact, PRE
sought prejudgment interest pursuant to the terms of the Lease, not
pursuant to Civil Code section 3287. All that matters to us is that
Appellants, as the parties challenging the trial court’s ruling, have not
included in the record on appeal the documents from which we can determine
whether the court erred. (Jameson, supra, 5 Cal.5th at p. 609.)
39
IV. DISPOSITION
The judgment is affirmed. Plotts and PRE are entitled to their
respective costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
IRION, J.
WE CONCUR:
McCONNELL, P. J.
BENKE, J.
40