Roesler v. Nella Terra Cellars CA1/3 ( 2022 )


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  • Filed 3/11/22 Roesler v. Nella Terra Cellars CA1/3
    NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FIRST APPELLATE DISTRICT
    DIVISION THREE
    VEENA ROESLER et al.,                                                    A160574
    Plaintiffs and Respondents,
    v.                                                                       (Alameda County Super. Ct.
    NELLA TERRA CELLARS, INC. et                                             No. RG 17846053)
    al.,
    Defendants and Appellants.
    Veena Roesler, individually and doing business as Palmdale Estates
    Inc. (collectively, plaintiffs), filed a complaint against defendants Nella Terra
    Cellars, Inc. (Nella Terra) and Gerald and Paulette Beemiller arising out of
    their business relationship. They alleged defendants reneged on their
    promise to execute a long-term contract leasing plaintiffs their vineyard to
    operate an event venue. The trial court ultimately determined plaintiffs
    invested in that venture and awarded them two years of anticipated lost
    profits and depreciable assets as a matter of equity. Defendants appeal,
    arguing the statement of decision omits the specific equitable basis for
    awarding damages and fails to explain whether the award is limited to
    plaintiffs’ anticipated lost profits for events that comply with Department of
    1
    Alcoholic Beverage Control (ABC) regulations.1 We affirm in part, reverse in
    part, and remand for the trial court to issue a new statement of decision and
    enter a new judgment.
    BACKGROUND
    Plaintiffs operate a wedding and events business. In 2013, Roesler and
    the Beemillers discussed creating and operating an events venue at Nella
    Terra, the Beemillers’ vineyard, which was largely undeveloped at the time.
    The parties drafted a contract providing plaintiffs with an exclusive lease to
    Nella Terra from January 1, 2014 to December 31, 2025, for $15,000 per
    month for the first two years. After that time, all future payments would be
    dependent on event bookings, but plaintiffs guaranteed defendants $360,000,
    representing the first two years of facility fees. Nella Terra would be the
    exclusive wine supplier for plaintiffs’ events. Nella Terra and the Beemillers
    would receive all of the events’ facility fees and proceeds from wine sales.
    Plaintiffs were entitled to all catering, service, decorations, and other
    miscellaneous rental item fees. At the end of the lease in 2025, plaintiffs had
    1 We reject plaintiffs’ request for judicial notice of an amended
    judgment entered against Nella Terra and the Beemillers, not simply the
    Beemillers as noted in the original judgment. The amended judgment is of no
    substantial consequence to the issue before us — challenges to the statement
    of decision. (Evid. Code, § 459, subd. (c); People ex rel. Lockyer v. Shamrock
    Foods Co. (2000) 
    24 Cal.4th 415
    , 422, fn. 2 [“any matter to be judicially
    noticed must be relevant to a material issue”].) Moreover, both Nella Terra
    and the Beemillers appealed from the original judgment. We have no
    indication defendants have filed a notice of appeal of the amended judgment.
    We also reject defendants’ request to dismiss Nella Terra as a party,
    a request made in a footnote in their opening brief rather than a served and
    filed written motion. (Cal. Rules of Court, rule 8.54 [“a party wanting to
    make a motion in a reviewing court must serve and file a written motion”];
    ReadyLink Healthcare, Inc. v. Jones (2012) 
    210 Cal.App.4th 1166
    , 1174
    [declining to treat request for a stay presented in middle of reply brief as
    a formal motion].)
    2
    the option to extend the lease for five years or to be bought out by one of the
    Beemillers’ children.
    Plaintiffs started to develop an event venue at Nella Terra and paid
    defendants $15,000 for January 2014 rent even though the parties had not
    signed the contract. Roesler also loaned the Beemillers, who had limited
    monetary funds, nearly $100,000 to pay for, among other things,
    improvements to Nella Terra’s roads. In addition, plaintiffs purchased items
    for hosting events, such as a mobile kitchen, bathroom, dance floor, garden
    furniture, trucks for transporting dishes for washing, and catering and dining
    items, totaling over $450,000. Plaintiffs advertised Nella Terra to their
    clients. Meanwhile, using plaintiffs’ monthly $15,000 payments, defendants
    worked on improving Nella Terra and its vineyard. By May 2014, plaintiffs
    hosted their first of 22 events at Nella Terra that year. In 2015, Roesler
    purchased a vacant property and building adjacent to Nella Terra, in part to
    serve as a dishwashing site since Nella Terra did not have any plumbing.
    Plaintiffs continued to pay defendants $15,000 in monthly rent for two years,
    for a sum of $360,000. During this time, Nella Terra became more profitable
    — its 2015 profits were approximately $300,000, and in 2016, $459,000.
    The parties continued to negotiate contract details but were unable to
    finalize an agreement. In June 2014, the Beemillers revised the draft
    contract to give themselves an option to buy plaintiffs out within five years of
    operating — a proposal Roesler rejected. In August 2015, Gerald Beemiller
    proclaimed he was unconcerned the parties had not signed the ten-year
    agreement. Wanting to improve Nella Terra’s cash flow, he offered plaintiffs
    a catering contract if they wanted to remain on the property. Under that
    arrangement, plaintiffs, who were not caterers, would only receive profits
    from catering food at events, while the Beemillers would retain the revenue
    3
    from the more lucrative event planning items, such as decorations and
    coordination fees. This would result in plaintiffs losing $6,500 per event.
    The parties continued to work on negotiating a workable relationship
    but, in March 2016, Roesler terminated their partnership effective December
    31, 2017, so the parties could complete the already-booked 2017 events.
    Shortly after this announcement, the Beemillers began to question plaintiffs’
    compliance with ABC regulations, which capped at 24 the number of events
    per year at which distilled spirits could be served.2 A few months later, the
    Beemillers notified plaintiffs that the parties’ exclusive relationship might
    violate ABC’s tied-house restrictions3 — regulations preventing a wholesaler
    from being “tied” to an exclusive arrangement to sell its wine through an
    events retailer. In 2017, plaintiffs began offering other wines to clients to
    comply with those restrictions. In March 2017, they also obtained a license
    authorizing the sale of distilled spirits. Until that time, plaintiffs did not
    have either a catering permit or a license to serve distilled spirits.
    In January 2017, plaintiffs sued defendants for, among other things,
    breach of oral contract and promissory estoppel. Plaintiffs alleged they
    conferred defendants with a benefit — developing Nella Terra as a wedding
    2 Catering permits authorize the sale of alcoholic beverages at one
    specific premise for at most 24 events in one calendar year “except when
    [ABC] determines additional events may be catered to satisfy substantial
    public demand.” (Cal. Code Regs., tit. 4, § 60.5, subd. (4); see also Bus. &
    Prof. Code, § 23399 [describing caterer’s permit to sell beer, wine, and
    distilled spirits], undesignated statutory references are to the Business and
    Professions Code.)
    3Winegrowers are prohibited from “[f]urnish[ing], giv[ing], or lend[ing]
    any money or other thing of value, directly or indirectly, to, or guarantee[ing]
    the repayment of any loan or the fulfillment of any financial obligation of,
    any person engaged in operating, owning, or maintaining any on-sale
    premises where alcoholic beverages are sold for consumption on the
    premises.” (§ 25500, subd. (a)(2).)
    4
    venue — but without a long-term contract, they lost opportunities to recoup
    their initial investments. At a bench trial, plaintiffs’ expert derived their
    projected gross income for 2017, estimating plaintiffs would hold 70 events
    per year, each securing $20,900 in revenue. Using that metric, he testified
    plaintiffs’ net loss from the severed relationship over 12.3 years, the
    remaining 7.3 years on the proposed lease and the five-year option period,
    was $1,417,534 after mitigating damages. After the trial, plaintiffs amended
    their complaint to conform to proof, adding an unjust enrichment claim. In
    a posttrial brief, defendants conceded plaintiffs were entitled to $55,917 in
    depreciable assets but disputed the lost profits, arguing plaintiffs violated
    various ABC regulations throughout the parties’ working relationship.
    The trial court’s tentative decision concluded plaintiffs were entitled to
    damages based on promissory estoppel and unjust enrichment. It awarded
    plaintiffs $555,917 — plaintiffs’ posttrial request for two years of lost profits
    estimated at $500,000 and $55,917, the defendants’ estimate of plaintiffs’
    start-up costs. It also concluded the ABC violations was not “a deterrent to
    a substantial damages award.” The court noted both parties benefitted from
    this noncompliance.
    Defendants requested a statement of decision that provided the legal
    and factual basis for the court’s damages calculation and explained whether
    the ABC violations affected the damages award. It reiterated these issues in
    their objections to plaintiffs’ proposed statement of decision. Instead of
    addressing these requests, the statement of decision reiterated plaintiffs were
    entitled to equitable relief, rejected the ABC compliance defenses, and
    “acceded to Plaintiff’s request to limit the lost profits to $250,000 per year
    and then adopted Defendants’ depreciable asset analysis from page 1 of their
    post-trial brief.”
    5
    DISCUSSION
    I.
    Defendants contend the statement of decision is insufficient as a matter
    of law because it does not identify the specific equitable bases for granting
    plaintiffs relief, and it fails to clearly articulate the amount of damages
    awarded. These deficiencies, they argue, require reversal and remand for the
    issuance of a new statement of decision. We disagree.
    Questions of law regarding a judgment based on a statement of decision
    following a bench trial are reviewed de novo, while the trial court’s factual
    findings are reviewed for substantial evidence. (Thompson v. Asimos (2016)
    
    6 Cal.App.5th 970
    , 981.) If requested, a trial court must issue a statement of
    decision explaining the legal and factual bases for its decision on each
    principal controverted issue at trial. (Code Civ. Proc., § 632; In re Marriage
    of Hoffmeister (1987) 
    191 Cal.App.3d 351
    , 358–359.) If there is a timely
    objection to a proposed statement of decision, a court’s failure to make
    necessary factual findings to resolve disputed material issues renders the
    statement of decision inadequate as a matter of law. (In re Marriage of
    Hardin (1995) 
    38 Cal.App.4th 448
    , 453.) And “[e]ven though a court fails to
    make a finding on a particular matter, if the judgment is otherwise
    supported, the omission is harmless error unless the evidence is sufficient to
    sustain a finding in favor of the complaining party.” (Nunes Turfgrass, Inc. v.
    Vaughan-Jacklin Seed Co. (1988) 
    200 Cal.App.3d 1518
    , 1525 (Nunes).)
    We acknowledge the statement of decision simply notes there are
    “equitable bases for [the] decision” rather than identifying a particular
    theory for awarding equitable relief. But that omission does not warrant
    reversal — on this point, the judgment is otherwise supported. (Nunes,
    supra, 200 Cal.App.3d at p. 1525.) We can reasonably infer the statement of
    6
    decision’s “equitable bases for [the] decision” refers to unjust enrichment and
    promissory estoppel — the equitable remedies identified in plaintiffs’
    amended complaint and upon which the tentative decision expressly relies for
    granting relief. (Shaw v. County of Santa Cruz (2008) 
    170 Cal.App.4th 229
    ,
    269 [appellate courts may examine tentative decisions to interpret the trial
    court’s findings or conclusions].) Indeed, defendants concede the statement of
    decision awarded relief based on unjust enrichment.
    The evidence supports granting plaintiffs relief under either theory.
    Under promissory estoppel, “a promisor is bound when he should reasonably
    expect a substantial change of position, either by act or forbearance, in
    reliance on his promise, if injustice can be avoided only by its enforcement.”
    (Youngman v. Nevada Irrigation Dist. (1969) 
    70 Cal.2d 240
    , 249.) Here,
    plaintiffs relied on defendants’ promise of providing them with an exclusive
    right to host events at Nella Terra for at least twelve years. The grounds at
    Nella Terra were largely undeveloped — mostly dirt with a long ravine —
    when the parties began creating an event venue in 2013. Despite the lack of
    a contract, plaintiffs worked with defendants, loaned the Beemillers
    approximately $100,000, purchased event equipment totaling over $450,000,
    and funded defendants’ improvements to Nella Terra’s grounds with their
    monthly $15,000 payments. Plaintiffs advertised Nella Terra to potential
    clients even when it initially lacked any infrastructure to host events,
    resulting in the hosting of 22 events in 2014. Gerald Beemiller ultimately
    refused to sign the draft agreement under which the parties were operating
    — after the parties had established a profitable events venue — and instead
    he offered plaintiffs a catering contract that reduced their revenue to remain
    on the property. As a matter of equity, promissory estoppel authorizes
    7
    relief for plaintiffs. (See, e.g., Signal Hill Aviation Co. v. Stroppe (1979)
    
    96 Cal.App.3d 627
    , 632–633 [awarding plaintiff lost profits under doctrine
    of promissory estoppel].)
    Similarly, unjust enrichment describes circumstances where there is no
    enforceable contract, but plaintiffs nonetheless conferred a benefit on
    defendants that they “knowingly accepted under circumstances that make it
    inequitable for the defendant to retain the benefit without paying for its
    value.”4 (Hernandez v. Lopez (2009) 
    180 Cal.App.4th 932
    , 938.) Plaintiffs
    immediately made monetary investments and purchases, including property
    adjacent to Nella Terra to support its events. Within the next year, Nella
    Terra became more profitable. Defendants thus knowingly benefitted from
    plaintiffs’ monetary investments and professional experience in developing
    a successful events venue at Nella Terra. Under these circumstances, it
    would be inequitable for defendants to retain their benefit — plaintiffs are
    entitled to relief. (Ibid.)
    Finally, calculating plaintiffs’ damages based on profits they would
    have received had the contract been made was appropriate under either
    theory. (Hernandez v. Lopez, supra, 180 Cal.App.4th at pp. 938–939 [unjust
    enrichment authorizes paying amounts necessary to place plaintiffs in as
    good a position as they would have been if the contract had been made];
    4 There is some debate about whether unjust enrichment is a
    cause of action in California. (Levine v. Blue Shield of California (2010)
    
    189 Cal.App.4th 1117
    , 1138 [finding no cause of action for unjust
    enrichment]; Prakashpalan v. Engstrom, Lipscomb & Lack (2014)
    
    223 Cal.App.4th 1105
    , 1132 [stating elements of an unjust enrichment
    claim].) Neither party raised this issue and we need not resolve the debate
    here. We simply note that unjust enrichment is synonymous with restitution.
    (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 
    223 Cal.App.4th 221
    , 231
    [construing unjust enrichment claim as a quasi-contract claim seeking
    restitution].)
    8
    Toscano v. Greene Music (2004) 
    124 Cal.App.4th 685
    , 692 [damages under
    promissory estoppel are “ ‘measured by the extent of the obligation assumed
    and not performed’ ”].) To the extent the statement of decision fails to fully
    identify the amount of damages awarded, that omission similarly does not
    warrant reversal. (Nunes, supra, 200 Cal.App.3d at p. 1525.) The decision
    states “the Court acceded to Plaintiff’s request to limit the lost profits to
    $250,000 per year and then adopted Defendants’ depreciable asset analysis
    from page 1 of their post-trial brief.” There is evidence in the record that
    plaintiffs ultimately requested $500,000, representing two years of lost
    profits, and that defendants proposed $55,917 for plaintiffs’ depreciable
    assets. (Shaw v. County of Santa Cruz, supra, 170 Cal.App.4th at p. 269
    [appellate courts do not ignore the record when interpreting the lower court’s
    findings and conclusions].)
    In sum, the statement of decision’s failure to clearly identify the
    equitable basis and amount of relief does not constitute reversible error.
    II.
    Defendants next contend the statement of decision should be reversed
    and remanded because it fails to fully explain how the parties’ violations of
    the ABC regulations — requiring a license to serve distilled spirits,
    prohibiting a tied-house arrangement, and limiting caterers to serving
    distilled spirits at 24 events per year — impact the calculation of plaintiffs’
    lost profit award. (§§ 23300, 23399 [requiring a caterer permit for sale of
    distilled spirits “for consumption on the premises where sold”], 25500, subd.
    (a)(2); Cal. Code Regs., tit. 4, § 60.5, subd. (4).) We conclude the decision
    adequately addresses the distilled spirts license and tied-house violations.
    But we agree the decision fails to adequately address the impact of the 24-
    9
    event limit in ABC regulations on its calculation of plaintiffs’ anticipated lost
    profits.5
    At the outset, the decision appears to broadly reject the ABC
    compliance issues. It explains defendants raised those issues after plaintiffs
    had already invested funds to create an event venue. On the issue of
    plaintiffs’ serving distilled spirits without a license, the decision states
    plaintiffs obtained the appropriate license in 2017. The record supports this
    conclusion. As defendants acknowledge, plaintiffs had a license in 2017 —
    the year upon which the lost profits are calculated.
    The decision further discusses the impact of the tied-house restrictions
    — requiring separation between wine manufacturers, wholesalers, and
    retailers like plaintiffs — on plaintiffs’ lost profits. (§ 25500, subd. (a)(2);
    California Beer Wholesalers Assn., Inc. v. Alcoholic Bev. etc. Appeals Bd.
    (1971) 
    5 Cal.3d 402
    , 407.) It acknowledges plaintiffs’ expert calculated their
    total anticipated lost profits through the remaining proposed lease and option
    period, approximately 12 years, at $1,417,534. The decision continues, noting
    the expert considered “the ABC noncompliance argument,” and reduced
    plaintiffs’ lost profits by $299 per event, or $20,930 based on plaintiffs
    hosting 70 events.6 The decision considered and addressed the tied-house
    restrictions.
    5After oral argument, plaintiffs submitted a request to file a
    supplemental brief. The issues identified in the court’s focus letter were
    addressed in the parties’ briefs, and both counsel had the further opportunity
    to address the identified issues at oral argument. The request to file
    a supplemental brief is denied.
    6 The expert used plaintiffs’ income and profits from 2017 to calculate
    plaintiffs’ future lost profits. In 2017, plaintiffs began complying with tied-
    house rules offering clients non-Nella Terra wines at their events, which the
    expert testified reduced plaintiffs’ revenue by $299 per event, or a 1.5 percent
    reduction in their overall total revenue.
    10
    But the statement of decision does not explain whether these projected
    lost profits comply with title 4 of the California Code of Regulations, section
    60.5. Under that section, an entity with a catering permit is authorized to
    sell alcohol at one specific premise for at most 24 events in one calendar year
    “except when [ABC] determines additional events may be catered to satisfy
    substantial public demand.” (Cal. Code Regs., tit. 4, § 60.5, subd. (4); see also
    § 23399 [describing caterer’s permit to sell beer, wine, and distilled spirits].)
    Determining whether plaintiffs’ lost profit projections were based on 24
    events was a principal controverted issue at trial. Moreover, defendants
    identified this issue in both their request for and objections to the proposed
    statement of decision. (In re Marriage of Hoffmeister, supra, 191 Cal.App.3d
    at p. 359.) The statement of decision nonetheless appears to award plaintiffs
    lost profits based on 70 events per year — the number of events plaintiffs’
    expert assumed would be held at Nella Terra each year. While the decision
    states “the undisputed evidence presented showed that defendants crafted an
    arrangement with another vendor which allowed them to host 45 events in
    2018 and 59 in 2019,” the relevance of those third party events to calculating
    plaintiffs’ lost profits is unclear, especially because the other vendor did not
    supply alcohol to the events at all.
    On this record, we cannot determine whether substantial evidence
    supports awarding plaintiffs their requested amount of lost profits. (Nunes,
    supra, 200 Cal.App.3d at p. 1525.) Plaintiffs’ expert testified there were
    discussions regarding whether plaintiffs were limited to hosting 24 events
    but he assumed plaintiffs were allowed to host 70 events and calculated the
    estimated lost profits accordingly. Although plaintiffs assert they did not
    serve distilled spirits at all Nella Terra events — to which the 24-event limit
    does not apply — they do not identify, and we cannot determine, the number
    11
    of those events. Plaintiffs further argue they had two licenses at two
    locations, and believed they could host 48 events per year at which distilled
    spirits could be served. Even assuming this is accurate, plaintiffs’
    nonetheless lacked any authorization to host 70 events. That plaintiffs hired
    a vendor with the appropriate license to serve distilled spirits at events that
    exceeded 48 also does not assist plaintiffs, contrary to their assertions. The
    testimony plaintiffs cite in support of this argument simply details their
    service of distilled spirits through an alcohol distributor when they first
    operated at Nella Terra in 2014 and did not have a license. The record does
    not indicate whether this practice continued through 2017, the year upon
    which plaintiffs’ lost profits are calculated.
    At minimum, the trial court should have explained why it based
    plaintiffs’ lost profit award on a number of events that are unauthorized
    under ABC regulations. (Guan v. Hu (2017) 
    12 Cal.App.5th 406
    , 420
    [“ ‘ “court of equity will never lend its aid to accomplish by indirect means
    what the law or its clearly defined policy forbids to be done directly” ’ ”].)
    Because the court’s explanation concerning the amount of plaintiffs’ lost
    profit award is inadequate, we remand with directions for the trial court to
    issue a complete statement of decision addressing how the 24-event limit for
    caterers set forth in California Code of Regulations, title 4, section 60.5
    impacts the damages award. (Dart Industries, Inc. v. Commercial Union Ins.
    Co. (2002) 
    28 Cal.4th 1059
    , 1067 [noting reversal of judgment and remand to
    the trial court to address certain additional issues in a new statement of
    decision and to enter a new judgment based thereon].)
    DISPOSITION
    The judgment is affirmed in part and reversed in part. The matter is
    remanded with directions to the trial court to issue a new statement of
    12
    decision addressing California Code of Regulations, title 4, section 60.5’s
    impact on plaintiffs’ lost profit award, and entering a new judgment based on
    that statement of decision. The parties shall bear their own costs on appeal.
    13
    _________________________
    Rodríguez, J.
    WE CONCUR:
    _________________________
    Tucher, P. J.
    _________________________
    Fujisaki, J.
    A160574
    14