Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC354412. Elizabeth A. Grimes, Judge.
Law Office of Robert J. Sherman and Robert J. Sherman for Plaintiff and Appellant.
Law Offices of Andrea Breuer and Andrea Breuer for Defendants and Respondents.
DOI TODD, Acting P. J.
Plaintiff and appellant Jim Shai Kolodaro sued defendants and respondents Kathrin Maghen and Jouval Zive on the theory that a joint venture existed among the parties to share equally in the proceeds from the sale of real property, and that Kolodaro had been denied his full share. Following a bench trial, the trial court concluded that no joint venture involving Kolodaro had been formed and that he was not entitled to any particular share of the profits. Judgment was awarded in favor of respondents. Kolodaro contends that the judgment should be reversed because (1) the trial court’s statement of decision is deficient, and (2) there is no substantial evidence to support the judgment. We disagree and affirm. Though we find the appeal to be without merit, we deny respondents’ motion for sanctions for prosecuting a frivolous appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are obtained from the testimonial and documentary evidence presented at trial:
In or around June 2004, Maghen decided to invest in a distressed residential property located on Loma Vista Drive in Beverly Hills, California (the property). The property was encumbered with liens in excess of $16 million, which far exceeded the value of the property. Maghen discussed with her good friend Kolodaro the possibility of jointly purchasing the property. They agreed that Maghen would work on negotiating and reducing the liens against the property and Kolodaro would work on finding financing or investors for the purchase of the property. They never discussed the percentage allocation of profits.
On or about October 6, 2004, Kolodaro and Maghen, as buyers, entered into a purchase and sale agreement with the property’s owner, and opened escrow in their names. Kolodaro did not participate in negotiations with the seller regarding the purchase of the property. In early November 2004, Kolodaro and Maghen formed Premier Realty, LLC (Premier) for the purpose of buying and selling real estate, including the property. In mid-November, Premier was substituted for Kolodaro and Maghen as the buyer for the property. A certificate of cancellation of Premier was later filed in September 2005 with the Secretary of State.
Maghen’s attorney, Elan Baret, who was assisting her in clearing the liens on the property, introduced her to his friend Zive. At that time, Zive had no understanding of the relationship between Maghen and Kolodaro, and thought they were possibly dating. At some point prior to February 5, 2005, Baret suggested to Maghen that Zive invest in the deal to purchase the property, since the property was coming up for auction a second time. Although Kolodaro continued to look for investors, Zive was to be a backup if Kolodaro was unsuccessful. Thereafter, over numerous conversations, Maghen negotiated the terms of the deal with Zive, should he become involved. Kolodaro did not participate substantively in the negotiations between Maghen and Zive. Eventually, Zive agreed that he would receive 33 percent of the profits from the resale of the property and that he would pay the seven origination points, and that Maghen would receive 67 percent of the profits. Zive never entered into any agreement with Kolodaro regarding the purchase or renovation of the property, and never had any discussions with him as to whether Kolodaro had any interest or shares in any profit or loss of the property.
By early February 2005, Kolodaro had failed to find any investors or obtain any financing to purchase the property, which was scheduled to be auctioned off in a few days. Kolodaro and Maghen met at Sassi’s restaurant in Encino, California, and agreed that they had no option other than to have Zive take Kolodaro’s place in the escrow. Maghen told Kolodaro that she “would take care of” him by paying him a fair share, and he said “again and again and again” that he would be happy with whatever amount he got from her.
On February 11, 2005, the seller of the property, along with Maghen, Kolodaro and Zive, signed an escrow modification adding Zive as a buyer along with Maghen, and removing Kolodaro as a buyer. In the escrow modification, Kolodaro represented that he gave his “full consent to the exclusion” of his name on the title to be passed, and he acknowledged that all funds on deposit for credit to the buyers would be assigned to Maghen and Zive. The seller testified that Kolodaro later stated that he had no interest in the property, that he never stated he was a partner in the property, and that he “absolutely” did not say that Maghen was holding in trust any interest for him in the property.
Zive ultimately obtained the financing necessary to purchase the property for $3.24 million. On or about February 22, 2005, Zive and Maghen closed escrow on the property. Title to the property vested in Zive “as to an undivided 33% interest” and to Maghen “as to an undivided 67% interest” as tenants in common. Zive ultimately invested “a good portion” of his life savings into the property.
Just prior to the close of escrow before any financing had been obtained, one of the lienholders demanded additional funds to compromise his lien. Maghen asked Kolodaro to loan her $50,000 to settle the outstanding lien, and he agreed. Kolodaro also deposited $6,171.83 on Maghen’s behalf into escrow late on a Friday afternoon while Maghen was dealing with the title company. Maghen repaid Kolodaro, plus 15 percent interest.
After escrow closed, Maghen and Zive began to obtain bids for the renovation of the property. Although Kolodaro introduced them to a few subcontractors and was present at a meeting with a contractor, Maghen and Zive made all decisions as to whom to hire. Kolodaro primarily assisted in dealing with the subcontractors, including arriving early at the property, and drinking coffee and reading the newspaper in his car, while waiting to let the subcontractors onto the property. During the renovation, Maghen and Zive met several times to discuss accounting and maintaining the books on the property. Kolodaro, who was aware of these meetings, never participated, and never asked to see the books.
A few months after they purchased the property, Maghen and Zive obtained a $250,000 line of credit on which they were the only borrowers listed. They then opened a Wells Fargo bank account to pay for the work being done on the property; Kolodaro was not a signatory to this account. Maghen and Zive later refinanced the property by obtaining a $5.7 million loan; Kolodaro was not listed as a borrower. Nor was Kolodaro listed on any insurance policies for the property or on any building permits for the renovation of the property.
In March 2006 Maghen and Zive sold the property for approximately $8 million. Kolodaro was not involved in negotiating the sale, marketing or staging of the property; he did not sign the broker’s listing agreement; and he did not participate in escrow or the closing of escrow. Zive netted approximately $770,000 from the sale of the property, and Maghen received approximately $1.5 million. Maghen then gave Kolodaro a check for $350,000, which she felt was a fair amount for his time and efforts. Kolodaro did not voice any objection to the amount at that time. A few days later he complained to Zive and asked to see the disbursements and accounting regarding the property.
In June 2006, Kolodaro sued Maghen and Zive. The first amended complaint (FAC) alleged causes of action for breach of contract, misappropriation and conversion of money, constructive fraud, dissolution and accounting, and intentional infliction of emotional distress. The FAC alleged that (1) Kolodaro and Maghen entered into an oral joint venture to acquire, renovate and sell the property, pursuant to which they would share equally in the profits; and (2) later there was an “expanded joint venture” between Kolodaro, Maghen and Zive, pursuant to which Zive would receive 33 percent of the profits and Maghen would receive 67 percent of the profits, to be divided equally between herself and Kolodaro. The FAC sought damages in the amount of $773,925, plus interest.
Kolodaro also sued Premier, which he later voluntarily dismissed.
The parties proceeded to a court trial. Eleven witnesses, including the parties, testified over several days, and numerous documents were admitted into evidence. Following the presentation of evidence, Zive moved for nonsuit. The court treated the motion as a motion for judgment, and granted it in favor of Zive. The court also granted judgment on the cause of action for intentional infliction of emotional distress on the ground that no evidence supporting this claim had been adduced at trial. The next day, after hearing closing arguments on behalf of Kolodaro and Maghen, the court orally announced its decision, finding there was no joint venture or expanded joint venture and that Kolodaro was not entitled to any share of the profits. The court detailed its reasoning, and ordered entry of judgment on the FAC in favor of Maghen. Kolodaro then requested a statement of decision. The court issued a statement of decision that essentially repeated its oral statements. Kolodaro did not seek clarification or otherwise object to the statement. This appeal followed.
DISCUSSION
I. Statement of Decision.
Kolodaro contends that the judgment is reversible per se because the trial court’s statement of decision failed to explain the factual and legal bases for the court’s conclusion that no joint venture or expanded joint venture existed and that Kolodaro was not entitled to a share of the profits.
As the parties note, Code of Civil Procedure section 632 provides that a trial court “shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial.” But the parties fail to cite Code of Civil Procedure section 634, which provides: “When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court either prior to entry of judgment or in conjunction with a motion under Section 657 or 663, it shall not be inferred on appeal or upon a motion under Section 657 or 663 that the trial court decided in favor of the prevailing party as to those facts or on that issue.”
Twenty years ago, our Supreme Court made clear in In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, that the above statutes “describe a two-step process: first, a party must request a statement of decision as to specific issues to obtain an explanation of the trial court’s tentative decision ([Code Civ. Proc., ] § 632); second, if the court issues such a statement, a party claiming deficiencies therein must bring such defects to the trial court’s attention to avoid implied findings on appeal favorable to the judgment (§ 634).” (Id. at p. 1134.) Thus, “if a party does not bring such deficiencies to the trial court’s attention, that party waives the right to claim on appeal that the statement was deficient in these regards, and hence the appellate court will imply findings to support the judgment.” (Id. at pp. 1133–1134.)
Because Kolodaro did not bring to the trial court’s attention any claimed deficiencies in the statement of decision, under the doctrine of implied findings, we infer that the trial court made any and all findings necessary to support the judgment, and review the implied findings under the substantial evidence standard. (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 61–62.) However, because the parties did not address Code of Civil Procedure section 634, having instead fully briefed the issue of whether the statement of appeal was defective, we briefly turn to Kolodaro’s contention that the statement of decision was defective.
Kolodaro first complains that the statement of decision did not disclose the legal standard applied by the trial court. According to Kolodaro, there are two possible contradictory standards “to choose from”-the so-called “intentions disregarded standard” and the “objective intent standard.” He bases his first standard on Corporations Code section 16202, subdivision (a), which provides that “the association of two or more persons to carry on as coowners a business for profit forms a partnership, whether or not the persons intend to form a partnership.” He bases his second standard on two cases (Brant v. California Dairies, Inc. (1935) 4 Cal.2d 128, 133 and Hilleary v. Garvin (1987) 193 Cal.App.3d 322, 327), neither of which even mentions “joint venture” or “partners.”
(See Cahill Bros., Inc. v. Clementina Co. (1962) 208 Cal.App.2d 367, 388 [the rights of joint venturers are governed by the same principles and rules as those that govern partnerships].)
There are several problems with Kolodaro’s argument. First, he cites no authority to support his contention that there are two different legal standards from which a court must choose in determining whether a joint venture existed. Second, he cites to no place in the lengthy, overly inclusive record on appeal to establish that he raised the issue of two different standards before the trial court. Third, his request for a statement of decision does not ask the trial court to address these two alleged legal standards. And finally, Kolodaro ignores that Corporations Code section 16202, subdivision (a) does not apply where, as here, the money received was made in “payment of a debt” (i.e., repayment of loans made to Maghen) (Corp. Code, § 16202, subd. (c)(3)(A)), or in “payment for services as an independent contractor” (i.e., services rendered during the renovation of the property) (Corp. Code, § 16202, subd. (c)(3)(B)). Thus, Kolodaro’s argument provides no basis for reversing the judgment.
Kolodaro next complains that the statement of decision is deficient because it omits any disclosure of the court’s reasoning in support of its conclusions. As respondents note, the 12 “controverted issues” identified in Kolodaro’s request for a statement of decision essentially boil down to three issues for the trial court to decide, all of which are addressed in the statement of decision.
The first issue is whether an oral joint venture or oral expanded joint venture existed. In finding that no such ventures ever existed, the trial court did, in fact, explain its reasoning in detail. The court explained that it found Maghen’s testimony to be more credible than Kolodaro’s, that Zive and each third party witness testified that they looked solely to Maghen as the authority on the project, and that Kolodaro did not meet the elements of a joint venturer (as discussed under the next heading).
The second issue is whether there was any agreement between the parties to divide the profits equally. Again, in finding that no such agreement existed, the court set forth in detail those aspects of Kolodaro’s testimony that it did not find credible.
The third issue is whether the $350,000 payment to Kolodaro was, in fact, a share of the profits. In finding that it was not, the court also set forth its reasoning, though more succinctly. But “[a] statement of ultimate, not evidentiary, facts is all that has ever been required.” (Republic Indemnity Co. v. Empire Builders Corp. (1985) 167 Cal.App.3d 1163, 1167.) And “nothing in section 632 requires that a statement of decision specify the particular evidence considered by the trial court in reaching its final determination.” (Aviointeriors Spa v. World Airways, Inc. (1986) 181 Cal.App.3d 908, 913–914.)
Finally, Kolodaro complains that “the statement was provided under circumstances discouraging any challenge.” In light of Code of Civil Procedure section 634’s requirement that a party must raise objections to the statement below in order to preserve them on appeal, this last complaint wholly lacks merit.
We are satisfied that the trial court’s statement of decision provides no basis for reversing the judgment.
II. Substantial Evidence.
Kolodaro next contends that there is insufficient evidence to support the trial court’s judgment. For the reasons that follow, we disagree.
A. Standard of Review
The court in Escamilla v. Department of Corrections & Rehabilitation (2006) 141 Cal.App.4th 498 comprehensively set forth our standard of review: “‘When the trial court has resolved a disputed factual issue, the appellate courts review the ruling according to the substantial evidence rule. If the trial court’s resolution of the factual issue is supported by substantial evidence, it must be affirmed.’ [Citation.] In applying the substantial evidence standard of review, ‘“the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, ” to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor in accordance with the standard of review so long adhered to by this court.’ [Citation.] ‘The substantial evidence standard applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial. [Citation.]’ [Citation.] ‘“Substantial evidence” is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.] “Substantial evidence... is not synonymous with ‘any’ evidence.”... [Citations.] The focus is on the quality, rather than the quantity, of the evidence.’ [Citation.] ‘It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact.’ [Citation.] Alternatively stated, we do not evaluate the credibility of the witnesses or otherwise reweigh the evidence. [Citation.] Rather, ‘we defer to the trier of fact on issues of credibility. [Citation.]’ [Citation.]” (Id. at pp. 514–515.)
B. Elements of a Joint Venture
“A joint venture is ‘an undertaking by two or more persons jointly to carry out a single business enterprise for profit. [Citations.]’... ‘Like partners, joint venturers are fiduciaries with a duty of disclosure and liability to account for profits.’” (Weiner v. Fleischman (1991) 54 Cal.3d 476, 482.) Both a partnership and a joint venture may be formed orally or “‘assumed to have been organized from a reasonable deduction from the acts and declarations of the parties.’” (Id. at pp. 482–483.)
“‘A joint venture exists where there is an “agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control.” [Citations.] An essential element of a partnership or joint venture is the right of joint participation in the management and control of the business. [Citation.] Absent such right, the mere fact that one party is to receive benefits in consideration of services rendered or for capital contribution does not, as a matter of law, make him a partner or joint venturer. [Citations.] An agreement by a landowner to share with another profits to be derived from the sale of land does not, without more, create a partnership or joint venture relationship. [Citations.]’” (Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586.) “Whether a partnership or joint venture exists is primarily a factual question to be determined by the trier of fact from the evidence and inferences to be drawn therefrom.” (Bank of California v. Connolly (1973) 36 Cal.App.3d 350, 364.)
C. Evidence Adduced At Trial
Substantial evidence supports the trial court’s findings that no joint ventures existed and that Kolodaro was not entitled to share in the profits.
First, the evidence showed that Kolodaro had no right to manage or control the property enterprise. He was not involved in negotiations with the original seller of the property. Once renovations began at the property, he had no authority to make any decisions regarding construction, the hiring of subcontractors, the choice of materials, or payments to the workers. Though he would sometimes make suggestions regarding the renovation of the property or potential subcontractors, all decisions were ultimately made by Maghen and Zive. He did not participate in any financial decisions relating to the property. While he knew that Maghen and Zive had meetings regarding the accounting and financials for the property, he did not participate in these meetings or ask to examine the books. His name was not on any documents that would suggest any right to control the property. He was not listed on utility bills, agreements with the subcontractors, letters from real estate brokers, or anything else. Once the property was ready to be resold, he had no authority to deal with the real estate agents, or to make decisions involving marketing or staging of the property, and he was not involved in negotiations with the buyer.
Second, the evidence showed that Kolodaro did not face exposure for any potential losses with respect to the property. He admitted that he did not make any capital investment in the property. The two personal loans he made to Maghen totaling approximately $56,000 were repaid with interest. To the extent he made any construction-related payments, he was also reimbursed by Maghen. He did not obtain financing or refinancing on the property. He was not listed as a borrower on any loan or credit line obtained by Maghen and Zive. He was not on the title to the property. He was not listed on the insurance for the property or on any permits issued for the property. He was not responsible for paying any bills or taxes on the property. As respondents point out, if foreclosure had occurred, Kolodaro’s credit rating would not have been affected. And if a natural disaster had occurred, Maghen and Zive would have faced potential financial ruin, not Kolodaro. In short, unlike Maghen and Zive, Kolodaro did not bear any financial risk regarding the property.
Finally, the evidence supported the trial court’s finding that the parties never made an agreement to share in the profits from any sale of the property. The evidence established that at all times the property enterprise was risky and uncertain, and there was no guarantee of any profits. Zive did not step in with financing until the last minute, at which point Kolodaro removed himself as a buyer of the property. In its statement of decision, the trial court did “not believe that Ms. Maghen asked plaintiff to be a 50–50 partner, ” and “accept[ed] as true the testimony of Ms. Maghen that she and plaintiff trusted each other, and they never reached any agreement as to what amount of money Ms. Maghen would pay plaintiff or any formula for calculating what amount he would receive.” The trial court repeated this credibility finding elsewhere in its statement, and set forth the testimony by Kolodaro that it found to be “figments” of his imagination. In large part, the determinations in this case were based on credibility, and the trial court determined that Maghen was more credible than Kolodaro. We are bound by the trial court’s credibility findings and do not reweigh the evidence. (Escamilla v. Department of Corrections & Rehabilitation, supra, 141 Cal.App.4th at p. 515.)
Moreover, the evidence also supports the finding that Zive and Kolodaro never reached an agreement as to the percentage allocation of the profits. Kolodaro did not participate in the multiple negotiations between Maghen and Zive regarding Zive’s allocation share of the profits and his obligation to pay the seven origination points. Indeed, Zive testified that he never had any conversations with Kolodaro regarding whether Kolodaro would share in the profits or losses.
In making his substantial evidence challenge, it appears that Kolodaro misunderstands our standard of review. The question is not whether Kolodaro presented any evidence that would arguably support his case. Rather, it is whether, based on our review of the record, there is substantial evidence to support the findings made by the trial court. Here, we are satisfied that substantial evidence exists.
III. Motion for Sanctions.
Respondents have filed a motion for sanctions for prosecuting a frivolous appeal against Kolodaro and his attorney. They seek an award of $10,306.87, representing their fees and costs. (Code Civ. Proc., § 907; Cal. Rules of Court, rule 8.276.)
Our Supreme Court has concluded that there are two standards for finding an appeal frivolous: subjective and objective. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649.) The subjective standard looks to the motives of the appellant and his or her counsel. Thus, when an appeal is taken solely to harass the respondent or delay the effect of an adverse judgment, sanctions are appropriate. (Ibid.) The objective standard looks at the merits of the appeal from a reasonable person’s perspective, i.e., whether any reasonable attorney would agree that a significant part of the appeal is totally and completely without merit. (Ibid.) “The two standards are often used together, with one providing evidence of the other. Thus, the total lack of merit of an appeal is viewed as evidence that appellant must have intended it only for delay.” (Ibid.)
Respondents contend that Kolodaro’s appeal is frivolous under both standards. They argue that Kolodaro and his attorney: (1) knew there were no reasonable or possible grounds for reversal; (2) make arguments on appeal that lack both coherence and any valid factual or legal authority; and (3) improperly ask this court to reweigh the evidence and the credibility of witnesses. Respondents argue that the only conclusion to be drawn is that “the purpose of this appeal is harassment and delay in both payment of the costs owed by Kolodaro to Maghen and Zive, but also of Zive’s malicious prosecution action.”
While there is some validity to respondents’ arguments, “we are well aware of the strong public policy in favor of the peaceful resolution of disputes in our courts and that attorneys must not be deterred from pursuing their client’s remedies for fear of sanctions against them and/or their clients.” (Maple Properties v. Harris (1984) 158 Cal.App.3d 997, 1010.) “An appeal that is simply without merit is not by definition frivolous and should not incur sanctions.” (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.) Thus, our Supreme Court has cautioned that the punishment of sanctions “should be used most sparingly to deter only the most egregious conduct.” (Id. at p. 651.) Though we find Kolodaro’s appeal to be without merit, we do not find it to be so egregious as to warrant sanctions. Accordingly, respondents’ motion for sanctions is denied.
DISPOSITION
The judgment is affirmed. Respondents are entitled to recover their costs on appeal.
We concur: ASHMANN-GERST, J., CHAVEZ J.