Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC337531. David L. Minning, Judge.
Michael J. Melton for Plaintiff and Appellant.
John P. Vanni and Robert A. Krasney for Defendant and Respondent Ken Busick.
RUBIN, J.
Plaintiff and appellant Karen Thompson appeals from the judgment entered in favor of defendant and respondent Ken Busick after the trial court granted Busick’s Code of Civil Procedure section 631.8 (§ 631.8) motion for judgment on Thompson’s complaint for quiet title, declaratory relief, cancellation of instrument, and conspiracy to defraud. Thompson contends: (1) it was an abuse of discretion to deny Thompson’s mid-trial motion to amend the complaint to add a cause of action of a breach of fiduciary duty to conform to proof at trial, and (2) the judgment is not supported by substantial evidence. We affirm in part, reverse in part and remand with instructions.
FACTUAL AND PROCEDURAL HISTORY
A. The Complaint and Answer
The gravamen of Thompson’s verified complaint was that Busick, who identified himself as a mortgage broker, told Thompson that he could help her avoid foreclosure on her Palmdale home, by the following procedure: “[¶] 18. Defendant Busick advised plaintiff that he would structure a kind of refinance which would facilitate the loan process. [¶] 19. . . . [T]he subject property would go through a sell process but that in reality plaintiff would remain on title together with defendant Busick who (Busick) insisted that his (Busick) being on title would assure the loan. [¶] 20. . . . [T]he subject property would be sold (although actually refinance[d]) for approximately $275,000 from which the existing encumbrance of approximately $84,000 would be paid and that plaintiff’s remaining equity would remain in a reserve account from which mortgage prepayments would be deducted for the benefit of plaintiff. [¶] 21. . . . [F]ollowing the [sale] . . . plaintiff would receive a lease agreement with an option to repurchase which plaintiff could exercise within one year to remove defendant from title. [¶] 22. At the conclusion of the escrow process, plaintiff received a check in the amount of $77,540. Plaintiffs also received a series of documents which among other things, demonstrated that in fact Ken Busick had not refinanced the subject property as plaintiff was induced to believe, but rather had in fact sold the property to himself (at a price which was substantially below market value).”
Although Thompson was in pro. per. when she filed the complaint in August 2005, she was represented by counsel by November 2005, and that same attorney continued to represent her throughout the trial and on appeal.
In a verified answer, Busick denied the allegations of the complaint. He alleged that he entered into an agreement to purchase the property from Thompson. Attached to the answer was an undated letter from Busick to Thompson setting forth the details of the alleged sale. Also attached to the answer were escrow instructions dated April 5, 2005, as well as later dated amended instructions, all signed by Thompson.
B. The Trial
On the first day of trial, February 20, 2007, Thompson filed a trial brief in which she argued that she was entitled to damages as well as rescission of the sale of the property as a result of Busick’s fraud and breach of fiduciary duty as Thompson’s real estate broker. Thompson did not, however, move to amend the complaint to add a cause of action for breach of fiduciary duty.
The evidence adduced at trial established that Thompson acquired the subject property in 1997 or 1998 from her ex-husband as part of a divorce settlement. The property was originally put in the name of the couple’s daughter, Dominique, but Thompson always made the mortgage payments in cash through Western Union. A year later, Dominique quitclaimed the property to Thompson’s relatives. In 2003, Thompson’s new husband, Eddie Bell, moved into the house. That same year, the property was used to secure a loan from Argent Mortgage. Although the borrower was identified as Dominique, Thompson made all of the payments on the Argent mortgage.
Thompson did not want title in her name because it would hinder her from receiving county assistance payments.
In December 2004, Thompson was one month behind on the Argent mortgage. Thompson and Bell discussed refinancing the property to take out $100,000, which they would use both to bring the existing mortgage current and to do some repairs. At the recommendation of a family member, Bell contacted Busick. Bell reported to Thompson that Busick said he could help them obtain a second mortgage on the property. Although Thompson did not participate in the early conversations between Bell and Busick, sometime in December 2004 Busick talked directly to Thompson to tell her that, since (as Busick believed incorrectly) Thompson’s name was on the deed, she would have to sign the loan documents.
Regarding the necessary repairs, Thompson testified that the property was not in bad shape and required only minor repairs, and she also considered adding a pool. Bell estimated that the necessary repairs would cost about $10,000. Busick testified that the appraiser told him the house needed extensive plumbing and electrical work, exterior and interior paint, a new roof and new tile.
Sometime in March 2005, escrow instructions dated February 18, 2005, were faxed to Thompson at the hair salon where she worked (the February instructions). (Trial Exh. No. 6.) When she saw that the February instructions said “sale” and referred to a “Melissa Johnson,” Thompson understood that the document meant Busick wanted to sell her house. Thompson and Bell immediately informed Busick that they were “not in any way, shape, or form trying to sell our house. We wanted just a simple second.” Explaining that there must have been a clerical error by the escrow company, Busick told Thompson and Bell to not worry, just sign the papers and send them back to him and he would get them the correct paperwork. By this time, Thompson was receiving default notices from the bank because she was three months behind on the mortgage and she was afraid the house might go into foreclosure. So, when Busick told her to sign and return the February instructions, she did so.
The record does not include a copy of the February instructions. However, Thompson testified that the instructions she received in April (which were attached to Busick’s answer to the complaint and are thus in the record) looked similar to the February instructions. On the April instructions, the words “SALE ESCROW INSTRUCTIONS” appear in all capital letters and bold print under the name and address of the escrow company at the top of the first page. Accordingly, we can infer that the February instructions also had the words “SALE ESCROW INSTRUCTIONS” in bold at the top of the first page.
Melissa Johnson was Busick’s girlfriend.
But at her deposition, Thompson testified that she never read the February instructions before signing them and faxing them back. It was not until she got home from work that she realized those instructions reflected a sale, not a loan.
Thompson could not explain why she did not make any mortgage payments when the loan process took longer than the 30 days Busick promised. At trial, Thompson testified that she advised the existing mortgage holder about the new loan, but at her deposition Thompson said she never contacted the mortgage company about the defaults.
In addition to calling Busick, Thompson testified that she also called Heidi James, the escrow agent identified on the February instructions, to complain that the transaction was intended to be a loan, not a sale. According to Thompson, James told her that the document reflected a sales transaction because that was how Busick characterized the transaction. When Thompson said they wanted a loan, not to sell their property, James told Thompson that she would talk to Busick and have Busick call Thompson. James, however, testified that Thompson never told James that the wrong document had been sent out or that Thompson wanted a loan, not to sell the property. In any case, this escrow never closed.
James had known Busick for more than 10 years and had handled a number of escrows for him.
Meanwhile, a grant deed dated February 21, 2005 (but notarized on March 21, 2005) indicates a transfer of the property from Thompson’s relatives to Thompson. (Trial Exh. No. 11.) Another grant deed dated the same day (but notarized on March 9, 2005) indicates that Thompson transferred the property to Busick. (Trial Exh. No. 3.) The deed transferring the property to Thompson is stamped “Recording Requested By LandAmerica Commonwealth Title 4/14/05.” The deed transferring the property from Thompson to Busick is stamped “Recording Requested By LandAmerica Commonwealth Title 4/19/05.”
A notice of default on the existing mortgage was filed on March 25, 2005.
Trial Exhibit No. 8 was the undated letter from Busick to Thompson that was attached as an exhibit to the answer. At trial, Busick recalled that he sent it to Thompson sometime in March 2005. It reads: “This letter will confirm our conversation this morning. The sale price of your home is to be $275,000. You will authorize Central Escrow to pay $50,000 from the proceeds of the sale to Melissa Johnson for the cost of repairs needed to the home. I will not buy your home without this money being paid directly to her. As we discussed you may hire contractors you feel comfortable with to complete the repairs to the home. I will reserve the right to make the final decision regarding the repairs. Once the repairs are completed to my satisfaction the balance if any will be refunded to you or may be applied to the cost of buying the home back. [¶] If you are going to stay in the home you need to authorize Central Escrow the payment to Melissa Johnson of $27,500, which is my down payment. You will pay rent in advance of $2,000/month for 12 months, plus a security deposit of $2,000. You will also authorize Central Escrow to pay this money to Melissa Johnson. If you wish to remain in the home[.] [¶] . . . [¶] You will need to sign and date the documents provided to you by Central Escrow and return them ASAP if you wish to complete your request to sell your Clearwood property. [¶] As you discussed with me, you should be able to use your proceeds from this sale to help you build your credit score up to an acceptable level. I would expect this to take at least 12 months based on your current credit score. You may buy the home back from me at any time provided you are able. The home will be sold to you at the appraised value at that time. Please call if you should have any further questions.”
Busick testified that his normal practice is to not date letters he writes.
Thompson testified that the first time she ever saw Trial Exhibit No. 8 was when it was shown to her at the trial, but later clarified that the first time was at her deposition. Thompson’s husband testified that he never saw Trial Exhibit No. 8 prior to trial.
The document was attached as Exhibit A to Busick’s verified answer to the complaint, so Thompson had seen it at least once before her deposition.
In any case, the new escrow instructions and subsequent amendments Thompson received in April 2005 contained terms which were generally consistent with the terms described in Trial Exhibit No. 8. For example, Thompson received by fax at the salon escrow instructions dated April 5, 2005 (the April instructions). (Trial Exhibit No. 7.) These were the same as the February instructions except that the April instructions identified Busick, not Johnson, as the buyer. According to the April instructions, Busick was purchasing the property for $277,750 (consisting of a $2,750 deposit plus a new first trust deed in the amount of $275,000) and Thompson agreed to pay up to $8,250.00 of Busick’s closing costs.
Thompson recalled that the April instructions were faxed to her at the hair salon where she worked despite the fact that she had previously told the escrow officer to fax things to the house, not to the salon.
Thompson testified that, in accordance with Busick’s instructions, she immediately signed the April instructions and faxed them back. She explained that she did not read the April instructions before doing so because she was busy with a client. Thompson still believed that she was getting a loan because Busick had told her that the paperwork was the same for a loan and a sale. When she told Busick that the April instructions had his name on it, Busick told Thompson that it was another mistake by the escrow company and he would fix it.
Thompson also received by fax at the salon a document dated April 5, 2005, and entitled “Amended Instructions to Pay Commission” (the commission instruction). (Trial Exhibit No. 4.) This document instructed the escrow company to pay from the proceeds of the sale “a licensed real estate broker, the sum of $24,750.00[.] [¶] The employment of said broker(s) to affect the sale-mortgage-exchange of the property . . . is acknowledged by [the seller], who agreed to pay said sum to said broker(s) as a commission for services rendered pursuant to said employment.” Thompson inconsistently testified both that she never discussed paying Busick a commission and that Busick told her that the commission was based on the loan. In any case, Thompson signed the commission instruction and faxed it back.
Bell testified that they had agreed to pay Busick a 6 percent commission for his efforts to get them a loan.
Thompson signed an estimated closing statement on April 11, 2005. (Trial Exhibit No. 5.)
The escrow closed on April 18, 2005. After escrow closed, Thompson received by fax at the hair salon a document dated April 20, 2005 and entitled “Amended Escrow Instructions” (the payment to Johnson instruction). (Trial Exhibit No. 1.) This document instructed the escrow company to distribute the sum of $78,600 from the proceeds of the sale to Melissa Johnson. Although she had never discussed with Busick paying any sum to Johnson from the proceeds of the sale, Thompson signed and faxed back this amended instruction, too.
James testified that the closing statement she sent to Busick for review before the proceeds of the sale were distributed included a line item indicating payment to Johnson of $99,500. This was crossed out and the number “$78,600” was written next to it. The amended instruction was sent after Busick reviewed the closing statement. Regarding the fact that the instruction was dated after escrow closed, James recalled that Busick asked her to send Thompson the document after he reviewed the closing statement; James testified that this was not unusual when the parties to a transaction agreed to something after the closing date.
On April 20, 2005, after receiving the signed amendment back from Thompson, the escrow company sent Thompson a final closing statement (Trial Exhibit No. 2) and a check for $77,540.60. (Trial Exh. No. 17.) The check states on its face that it is the “seller[’s] proceeds.” James, the escrow officer, testified that Thompson never contacted James to complain that the escrow documents were wrong and that Thompson wanted loan documents. Had Thompson told James that she wanted a loan and did not want to go through with the sale, James would have immediately stopped processing the escrow.
Thompson testified that she never discussed selling the property with Busick. But she could not explain the inconsistency between her trial testimony and the verified complaint which alleged that Busick told Thompson the property “would go through a sell process” and would be “sold (although actually refinance[d]) for approximately $275,000 . . . .” At trial, Thompson also denied that Busick agreed to give Thompson an opportunity to buy the property back in a year, but she could not reconcile her trial testimony with the allegation of the verified complaint that “following the sell [sic] of [Thompson’s] home, [Thompson] was advised by [Busick] that [Thompson] would receive a lease agreement with an option to repurchase which [Thompson] could exercise within one year.”
Thompson’s husband, Bell, testified that he contacted Busick to discuss obtaining a $100,000 second mortgage on the property, the proceeds of which Bell and Thompson intended to use to bring the first mortgage current and to make improvements to the house. Busick told Bell that Thompson’s credit was not good enough to get the loan, but Busick suggested that Thompson could get a better interest rate if Busick “came on the loan.” Busick promised he could get the loan done in 30 days. Busick never mentioned that he would end up owning the property. By February 2005, Bell and Thompson were waiting to receive “loan docs.” Although Bell instructed Busick to send all documents to Bell, the documents were sent to Thompson at the hair salon where she worked. As a result, Bell did not read the February instructions until after Thompson had signed them and faxed them back to the escrow company. When he read them, Bell realized they incorrectly reflected a sale to Johnson, not a loan. In response to Bell’s concerns, Busick promised to “get on it,” but Busick did not “get on it” right away and Thompson continued to grow further behind in her mortgage payments. Bell also did not read the April instructions until after Thompson had signed them and faxed them back. When Bell read these and realized that Thompson had sold the house to Busick, Bell called Busick and told him to “undo the deal.” Busick promised to come out to the house with the loan papers, but Busick never did so.
Although Bell instructed Busick to “undo” the sales agreement, Busick never offered to return the money Thompson received from Busick as proceeds of the sale because Bell understood that the money was part of the proceeds of the $100,000 loan they thought they were getting. In fact, when Bell called Busick to complain that $77,000 was less than the agreed upon loan amount, Busick told Bell to keep the $77,000 check and promised to bring the remainder of the loan amount with the loan documents. Subsequently, Thompson received additional checks from Busick and Johnson. Bell testified first that he understood this money was intended to bring the loan proceeds up to $100,000, not to reimburse Thompson for improvements made to the house after the sale was completed. Later, Bell testified that he only saw the first check for $5,000; the other checks went to Thompson and he never received any money, so he did not know to what the checks pertained.
Busick testified that he was a licensed real estate broker, doing business as America West Financial. America West Financial is in the business of buying, selling and leasing real estate. Busick estimated that the company handled between four and eight transactions a month.
Busick recalled that Bell called him in December 2004 to ask for help in solving some title and financial problems Bell and Thompson were having with a property Thompson owned. Bell told Busick that there was a current mortgage of about $90,000 and they wanted to do about $50,000 of repairs to the house, so they wanted a loan for between $150,000 and $200,000. After determining that Thompson’s credit was not adequate to obtain a refinance or purchase money loan on the property, and that there were title problems since the property was not held in Thompson’s name, Busick recommended that they find a family member willing to do a loan or go on title with them and if that was not possible, they would have to consider selling the property.
All of Busick’s contacts with Bell and Thompson were by telephone.
Thompson testified that Busick never told her that the fact that title to the property was not in her name would be an impediment to getting a loan.
Because he wanted to help Thompson and Bell, Busick suggested to Johnson that she purchase the property from Thompson. Johnson agreed to do so after Busick told her that the sellers were friends or relatives of prior clients, that they were in financial trouble and Busick thought he could help them by buying their somewhat run down house. Busick told Johnson the appraised value of the house was somewhere between $250,000 and $350,000. Although Busick’s own opinion was that the house was only worth between $150,000 and $200,000, he suggested to Johnson that they offer to purchase it for $275,000 and Johnson agreed. Busick testified that there was never any listing agreement because he was the buyer, not a listing agent.
Busick told Thompson that Johnson was his girlfriend and “that the terms of our purchase would be forwarded to her. She would be allowed to review those terms. If she did not like the terms, she was welcome to walk away, find another broker, find another family member, find anybody, but on no certain [sic] terms, this was my offer and it was final.” The terms Busick described included payment of a commission to Busick. Thompson and Bell agreed to sell the property to Johnson for $275,000, on the terms set forth by Busick.
Busick wrote the undated letter to Thompson (Trial Exh. No. 8) in March 2005 because for the several months that the transaction had been ongoing, Thompson and Bell had been promising to provide Busick with title documents and cancelled checks reflecting mortgage payments, but had not done so. At the same time, Bell was frequently calling Busick to urge him to complete the transaction. So Busick decided to spell out for Thompson and Bell “in laymen’s terms” the terms of the transaction he was willing to enter into. Busick “felt if I put it down in writing with the exact terms and had the documents from Central Escrow forwarded to them, that they would either A, take the ball and run with it, or B, they would go find somebody else.” Busick testified that Thompson “could have walked away from the deal if she didn’t like the terms. And instead[,] after her receipt of the letter, she went out and did every single thing that we had talked about, and she ratified every single item and instructed escrow to pay the monies.” Busick never gave Thompson a sales contract to sign because the deal was fluid and he believed the signed escrow instructions would be sufficient to set forth the final terms.
Meanwhile, because of the title problems with the property, Johnson was unable to qualify for a loan secured by the property, which was to be investment property. However, the lenders agreed to give Busick such a loan because he was better able to absorb the financial risk presented by the problematic title. About two weeks before escrow closed, Busick told Thompson that: (1) he and not Johnson was going to be the purchaser, (2) there was going to be a 9 percent commission charge, and (3) Johnson was going to be paid about $70,000 out of escrow to cover the down payment, the cost of repairs to the property, one year’s rent in advance and a security deposit equal to one month’s rent.
Busick testified that the payment by the seller of the buyer’s down payment was a “bargaining tool.” He included this term because the sellers wanted to remain in possession of the property. Busick explained that the reason the deal was structured with these disbursements to Johnson, rather than a reduction in the purchase price, was because Thompson wanted to remain in possession of the property. Busick explained that he could not simply reduce the purchase price by the amount of these disbursements and still obtain for Thompson the amount of money she wanted to net out of the sale. The disbursements from escrow were made to Johnson and not Busick to satisfy the lender, but Busick did not know why it mattered to the lender who received the disbursements.
Busick maintained that Bell and Thompson never told him that they wanted a loan, not to sell the property. In retrospect, Busick has come to the conclusion that Thompson and Bell were trying to run a scam on him: obtain $78,000 in cash and live rent and mortgage free for several years.
C. The Motion for Judgment and the Motion to Amend
After Thompson completed presentation of her case, Busick moved for judgment in his favor. The trial court asked how it could reconcile the verified complaint’s allegation that Busick advised Thompson the property would “go through a sell process” with Thompson’s trial testimony that she never discussed selling the property to Busick. Thompson’s counsel replied: “[I]f there is a variance between pleading and proof, if the evidence comes in, then the court is entitled to make a determination in accordance with the evidence that is actually introduced. And if the court is concerned with that at this point, I’d make a motion to amend the pleadings to conform to proof.” Thompson’s counsel sought to amend the complaint to allege a cause of action for breach of fiduciary duty based on Busick’s testimony that he took a commission but did nothing to earn it.
The trial court denied the motion to amend to conform to proof and granted the motion for judgment, observing: “I can’t get over the inconsistencies between plaintiff’s testimony and what is alleged in the verified complaint. I do not find anything in the escrow instructions which talk about a buyback or a rent-free 12 months. [¶] We do have exhibit [8] [the undated letter from Busick to Thompson stating the terms of the sale]. . . . [¶] . . . [¶] . . . Again, Exhibit 8 is questionable, but it does reflect in general terms the allegations set forth in paragraph 20 of the plaintiff’s verified complaint.” According to the written order granting judgment which was entered on March 14, 2007, the court “weighed the evidence finding good cause for an order of judgment, having been shown that the plaintiff could not overcome the inconsistencies between her testimony at trial, and the allegations in her verified complaint and could not therefore meet her burden of proof necessary to support her causes of action . . . .”
Thus, from the similarity of the descriptions of the transaction set forth in the complaint and in Trial Exhibit No. 8 (including terms such as the option to repurchase the property that were not included in any escrow instructions), the trial court appears to have believed Busick’s testimony that he sent the undated letter to Thompson and disbelieved Thompson’s and Bell’s contrary testimony that they never saw that letter.
Thompson filed a timely notice of appeal.
DISCUSSION
A. The Judgment on the Pled Causes of Action Was Supported by Substantial Evidence
Thompson contends the trial court erred in granting Busick’s section 631.8 motion. As we understand her argument, it is not that there was evidence to support a finding in Thompson’s favor on the pled causes of action (quiet title, declaratory relief, cancellation of instruments, fraud), but that there was evidence to support a judgment in her favor on an un-pled cause of action for breach of fiduciary duty; therefore, the trial court should have allowed the amendment and denied the motion for judgment. We conclude that the motion for judgment was properly granted on the pled causes of action but, as we explain in the next section, the trial court erred in denying the motion to amend.
In a nonjury trial, Code of Civil Procedure section 631.8 provides a mechanism for the trial court to grant judgment in favor of a moving party after the opposing party has completed his presentation but before the moving party has presented any evidence. “The court may consider all evidence received, provided, however, that the party against whom the motion for judgment has been made shall have had an opportunity to present additional evidence to rebut evidence received during the presentation of evidence deemed by the presenting party to have been adverse to him, and to rehabilitate the testimony of a witness whose credibility has been attacked by the moving party.” (§ 631.8, subd. (a).) “If it appears that the evidence presented supports the granting of the motion as to some but not all the issues involved in the action, the court shall grant the motion as to those issues and the action shall proceed as to the issues remaining.” (Id., subd. (b).)
“The purpose of [the statute] is to dispense with the need for the defendant to produce evidence where the court is persuaded that the plaintiff has failed to sustain its burden of proof. [Citation.]” (Combs v. Skyriver Communications, Inc. (2008) 159 Cal.App.4th 1242, 1262 (Combs), internal quotations omitted.) In ruling on the motion, the trial court assesses witness credibility and resolves conflicts in the evidence. (Kinney v. Overton (2007) 153 Cal.App.4th 482, 487.) The court may consider defense evidence presented out of order with the plaintiff’s consent. (People v. Mobil Oil Corp. (1983) 143 Cal.App.3d 261, 271.)
“We apply the substantial evidence standard of review to a judgment entered under Code of Civil Procedure section 631.8, reviewing the record in the light most favorable to the judgment and making all reasonable inferences in favor of the prevailing party . . . . [Citation.] We will not reverse the trial court’s order granting the motion if its findings are supported by substantial evidence, even if other evidence in the record conflicts. [Citation.] (Combs, supra, 159 Cal.App.4th at p. 1263.)
Here, in ruling on the section 631.8 motion, the trial court had before it substantial evidence that Busick told Thompson and Bell that the transaction he was proposing was a sale of the property from Thompson to Busick on the terms set forth in the escrow instructions, and that Thompson agreed to those terms. This evidence included Busick’s testimony as well as the signed escrow instructions and amendments. Although Thompson presented conflicting evidence, the trial court apparently credited Busick’s evidence and discredited Thompson’s. This evidence was sufficient to support the trial court’s judgment on the pled causes of action.
B. Denial of the Motion to Amend Was an Abuse of Discretion
Thompson contends the trial court abused its discretion by denying her motion to amend to add a cause of action for breach of fiduciary duty according to proof at trial. We agree.
The general rule is that the trial court’s exercise of its broad discretion whether to allow amendments of pleadings at any stage of the pleadings, up to and including trial, will be upheld absent a showing of a manifest or gross abuse of that discretion. An unwarranted delay in presenting an amendment may be a valid reason for denial. (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175.) However, “ ‘Where a party is allowed to prove facts to establish one cause of action, an amendment which would allow the same facts to establish another cause of action is favored, and a trial court abuses its discretion by prohibiting such an amendment when it would not prejudice another party. [Citations.] A variance between pleading and proof does not justify the denial of an amendment to conform pleading to proof unless the unamended pleading “misled the adverse party to his prejudice in maintaining his action or defense upon the merits.” [Citations.]’ [Citations.] [¶] As a general rule, where the evidence to support the cause of action in the amendment is already before the court, the opposing party will not experience prejudice if the amendment is allowed. [Citation.]” (County Sanitation Dist. No. 2 of Los Angeles County v. County of Kern (2005) 127 Cal.App.4th 1544, 1618.)
Here, the issue is whether the trial court erred in denying Thompson’s midtrial motion to amend the complaint to add a cause of action for breach of fiduciary duty. The elements of such a claim are (1) the existence of a fiduciary relationship; (2) a breach of the fiduciary duty; and (3) damage proximately caused by that breach. A real estate broker engaged to market property has a fiduciary relationship with the owner of the property. That fiduciary relationship continues even if the agent himself becomes the buyer of the property and thus a principal in the transaction. “In other words, ‘[o]nce an agency relationship has been created between the agent and the seller, the agent is not absolved of fiduciary duties merely because he or she is also buying or selling as a principal.’ [Citation.]” (Roberts v. Lomanto (2003) 112 Cal.App.4th 1553, 1562 (Roberts).) “Where an agent to sell property buys it himself, the burden is upon him to show affirmatively that he acted in the highest good faith and without concealment. [Citation.] ‘The rule that an agent employed to sell the principal's property may not, without the principal's full knowledge and consent, become the purchaser is aimed at an indirect or collusive sale or transfer, as well as a direct sale or transfer to the agent, and extends to a sale to the agent's spouse, or an indirect or collusive sale to some other relative of the agent, or to his partner or employee.’ ” (Batson v. Strehlow (1968) 68 Cal.2d 662, 674-675 (Batson), fn. omitted.) A real estate broker will not be permitted to retain anything that might otherwise derive from participation in the transaction, including a commission, unless the agent fully discloses the nature and amount of the benefit and receives the approval of the principal. (Roberts, supra, at pp. 1563-1564.)
In Roberts, the seller’s broker offered to buy the property and the parties executed a purchase agreement with a stated price of $11 million. With the seller’s consent, the agent-buyer assigned the contract to a third party. The agent disclosed that the third party was paying her an assignment fee, but would not disclose the amount of the fee or the price the third party agreed to pay for the assignment. The agent received a $110,000 commission from the sale. After the sale was completed, the seller learned that the agent received an assignment fee of $1.2 million from the third-party buyer, as well as the $110,000 commission, and that the third party had agreed to pay $12.2 million for the property. (Robert, supra, 112 Cal.App.4th at pp. 1556-1557, 1560.) Finding no breach of fiduciary duty, the trial court granted summary judgment in favor of the agent. The appellate court reversed, finding the agent breached her fiduciary duty to the seller by failing to disclose the amount of the commission. (Id. at pp. 1557, 1563, 1566.)
Here, there was evidence presented at trial from which a reasonable trier of fact could find each of the elements of a breach of fiduciary duty. First, there was no dispute that Busick was a licensed real estate broker. Although there was no real estate listing agreement between Thompson and Busick, that Busick was nevertheless employed to act as a real estate broker in the transaction can be inferred from the evidence that Busick received a commission in accordance with the “Amended Instructions to Pay Commission” which states: “The employment of said broker(s) to affect the sale-mortgage-exchange of the property . . . is acknowledged by [the seller], who agreed to pay said sum to said broker(s) as a commission for services rendered pursuant to said employment.” Thus, there was evidence that there existed a fiduciary relationship between Thompson and Busick.
There was also evidence from which it could be inferred that Busick breached his fiduciary duties by taking a 9 percent commission from the proceeds of the sale. Busick admitted that he did nothing which would entitle him to a broker’s commission. He nevertheless maintained that, although he was acting as the buyer and not a broker, he was entitled to commission. Busick explained: “I used my real estate commission as a bargaining tool. I did a lot of work on this file.” When pressed for clarification by Thompson’s counsel, Busick stated: “I stand by my answer. I used my real estate commission, which I’m allowed by law to use, as a bargaining tool.” Busick did not tell Thompson about the commission until 10 days or two weeks before the close of escrow. The reason he gave Thompson for charging a 9 percent commission was that “[w]e tried to get Melissa Johnson approved to purchase the property. Due to the numerous flaws in the title, each and every lender I took Melissa Johnson to – although she is a perfect borrower, 750 credit score, she did not have the depth that the lender was looking for to take the risk on an investment property. [¶] And furthermore, each and every lender that I took her to said there is no way that she will have the ability to handle this type of risk. She is not an investor. You need somebody stronger. [¶] And that is why at the end of the transaction, I put myself in that position as the buyer, because I had developed over the years an inventory of real estate that would be acceptable to my lenders, and the lenders would say, absolutely, if Mr. Busick wants to get involved in an investment property with this great risk, he would probably be the one that would be able to handle it.” From this evidence, a reasonable trier of fact could conclude that Busick did not fully disclose to Thompson the nature and amount of the benefit Busick was to receive in the form of commission. (Roberts, supra, 112 Cal.App.4th at pp. 1563-1564.)
Finally, a reasonable trier of fact could conclude Thompson suffered damages in the amount of the commission that was paid to Busick.
Thus, Thompson adduced evidence sufficient to establish a cause of action for breach of fiduciary duty by Busick. Accordingly, the trial court abused its discretion by prohibiting Thompson from amending her complaint to add such a cause of action. That such proof was at a variance with some of the allegations of the complaint did not justify denial of the amendment inasmuch as the unamended pleading did not mislead Busick to his prejudice in maintaining his action or defense upon the merits. (County Sanitation Dist. No. 2 of Los Angeles County v. County of Kern, supra, 127 Cal.App.4th at p. 1618.)
Our opinion and the dissent do not diverge significantly. The dissent suggests that Thompson’s allegations in the complaint that were at odds with her trial testimony essentially disqualify her from the right to amend. We agree that the trial court properly could have disbelieved Thompson. But once the trial court found that the transaction was a sale after all, the facts admitted by Busick were that he charged a 9 percent real estate commission for which he did no work. Since the trial court rejected Thompson’s version that the deal was a loan and Busick was a loan broker, there was nothing to refute the obvious: Busick acted as a real estate broker, as reflected in the escrow instructions; he charged Thompson a 9 percent commission, which he admitted was unearned; and the commission was used as a “bargaining tool” (for what it is not clear). Although Busick testified that he “did a lot of work on this file,” such work does not necessarily equate with earning a commission: any purchaser would engage in due diligence before acquiring a six figure piece of real estate.
DISPOSITION
The judgment is reversed and the matter is remanded to the trial court. The orders underlying the judgment are reversed in part and affirmed in part as follows:
The order granting Busick’s section 638.1 motion for judgment on the declaratory relief, cancellation of instrument, conspiracy to defraud and quiet title causes of action is affirmed.
The trial court is directed to vacate its order denying Thompson’s motion to amend the pleading to add a cause of action for breach of fiduciary duty and to enter a new order allowing that amendment. Following the amendment, the trial court is vested with broad powers as to how to conduct the remainder of the trial, including, if appropriate, hearing a new section 638.1 motion on the breach of fiduciary duty claim.
Each party shall bear their own costs on appeal.
I CONCUR: COOPER, P. J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
See footnote on page 1.
I respectfully dissent. Plaintiff and appellant Karen Thompson alleged one factual and legal theory in her verified complaint. She put on evidence of a very different factual and legal theory at trial. The trial court properly concluded – at the end of the trial – that Thompson had not proved her case. The majority now proposes a third legal theory of possible recovery for Thompson, and concludes that the trial court abused its discretion in not permitting Thompson to amend at the end of the case to allege that theory. The problem is that the testimony of Thompson and of her husband, under oath at trial, not only does not support but flatly contradicts the majority’s proposed theory. I would affirm the judgment of the trial court.
SUMMARY
Thompson appeals from a judgment entered in favor of defendant and respondent Ken Busick after the trial court granted his motion for judgment under Code of Civil Procedure section 631.8. Thompson contends the court erred by granting the motion and abused its discretion by denying her leave to amend “to conform to proof.” On appeal, by failing to offer any relevant argument or citation to authority supporting her claim, Thompson has waived the issue of whether the trial court erred by entering judgment for Busick. Moreover, in my view, the trial court did not abuse its discretion in denying leave to amend. The proposed amendment would have contradicted the allegations of the verified complaint that Thompson herself wrote and filed. Thompson neither showed that the factual allegations of her verified complaint resulted from mistake or inadvertence nor explained why she had not sought to amend the complaint before trial. And, even if the trial court had permitted Thompson to amend to state a cause of action for breach of fiduciary duty, her own evidence at trial did not support that claim. The majority concludes that the trial court should have permitted Thompson to proceed on a theory that Busick breached his duty as her real estate broker, but both Thompson and her husband insisted at trial that they hired Busick as a loan broker only and that there never was any discussion whatsoever of him acting as a real estate broker to sell Thompson’s house.
FACTS AND PROCEDURAL HISTORY
a. Thompson’s verified complaint and Busick’s answer
On August 1, 2005, Thompson, acting in propia persona, filed a verified complaint against Busick, America West Realty, Central Escrow, Inc., and all persons claiming a right or interest in specified real property (the property) in Palmdale. Thompson alleged that she acquired “an ownership interest” in the property in October 1997. Her complaint alleged that Exhibit A was a grant deed “evidencing” this ownership interest. (Complaint, ¶ 11.) However, Exhibit A was dated February 21, 2005. Thompson further alleged that she executed a note secured by a deed of trust on the property on July 2, 2003. She was about $3,000 behind on the payments when she met defendant Busick in January, 2005. (Complaint, ¶¶ 12-16.)
The complaint alleged that Busick said he was a mortgage broker and would help Thompson save her home from foreclosure by “structur[ing] a kind of refinance which would facilitate the loan process.” (Complaint, ¶¶ 17-18.) Busick told Thompson that the property “would go through a sell process but that in reality plaintiff would remain on title together with defendant Busick who (Busick) insisted that his (Busick) being on title would assure the loan.” (Complaint, ¶ 19.) He told Thompson that the property “would be sold (although actually refinance [sic]) for approximately $275.00 [sic] from which the existing encumbrance of approximately $84,000 would be paid and that plaintiff’s remaining equity would remain in a reserve account from which mortgage prepayments would be deducted for the benefit of plaintiff.” (Complaint, ¶ 20.) Busick told Thompson that, after the property’s sale, she “would receive a lease agreement with an option to repurchase which plaintiff could exercise within one year to remove defendant from title.” (Complaint, ¶ 21.)
The complaint alleged that after escrow closed Thompson received a check for $77,540 and “a series of documents which[,] among other things, demonstrated that in fact defendant Ken Busick had not refinanced the subject property as plaintiff was induced to believe, but rather had in fact sold the property to himself, (at a price which was substantially below market value).” (Complaint, ¶ 22.) Thompson “discovered” from a document Busick mailed her that he “had induced plaintiff to execute a grant deed rather [than] a joint deed, in favor of” Busick and that he had obtained a new loan encumbering the property. (Complaint, ¶ 23.) Thompson’s complaint said she was attaching escrow documents as Exhibit D. (Complaint, ¶ 24.) However, Exhibit D consists of documents concerning a different Palmdale property owned by someone else.
The property at issue was lot 70 of tract number 455382 in Palmdale (Complaint, ¶ 10), but Exhibit D concerns lot 21 of tract number 46037 in Palmdale.
The complaint sought declaratory relief, cancellation of the grant deed from Thompson to Busick, a judgment quieting title to the property, and actual and punitive damages for fraud.
The complaint erroneously refers to Exhibit A, not Exhibit C, as the deed Thompson wanted cancelled.
Busick apparently was the only defendant who appeared in the case. He answered on September 14, 2005. He attached a letter, escrow instructions, amended escrow instructions, and a copy of a check to Thompson to his answer.
Busick’s answer indicated that America West Realty was merely a “dba.”
b. The trial testimony
The case was tried to the court on February 20 and 21, 2007.
Thompson’s husband, Eddie Bell, testified that they were one month behind on their mortgage payments in December 2004. The named borrower on the loan and trust deed was actually Dominique Sears. Thompson and Bell wanted a second mortgage to “take care of the delinquency” and make some home improvements. Bell called Busick, whose name he got from a family member. Bell told Busick they were interested in a loan of about $100,000. Busick checked their credit and told Bell they would not be able to get a loan. Busick suggested that if he were “on the loan,” they could get a loan and a lower interest rate. Bell understood that he and Thompson would “pay in advance 12 months against it” and assume the loan afterwards. Bell and Busick never discussed a sale of the property, and Busick never said he would “end up being the owner of the property.”
Both February 21, 2005 grant deeds pertaining to the property attached to the complaint reflect Thompson was “a single woman.”
Bell testified that Busick sent escrow instructions for Thompson to sign. Bell and Thompson concluded that “the paperwork was wrong” because it reflected a sale of the house to a Melissa Johnson. Bell knew the escrow instruction was wrong because it was “a sale document.” Bell called Busick and told him the documents were wrong. Busick said “that this particular document supports -- is all the same in terms of a sale as well as a loan.” Bell expressed misgivings, and Busick said he would “get on it.” Despite repeated calls from Bell to Busick, no new documents were issued. Because Bell and Thompson were getting default notices, Thompson eventually signed the escrow instructions and returned them to Central Escrow, Inc.
Bell testified that in March, 2005, he and Thompson received another set of escrow instructions “mirroring the same thing,” but with Busick’s name in place of Johnson’s. Bell “read everything.” Bell called Busick and told him that the new documents were incorrect because they did not reflect a loan. Busick said he would “get right on it.” Bell also testified that Busick promised to come out to the house and explain the documents to them. Thompson signed and returned them nevertheless.
Bell admitted he and Thompson had agreed to pay Busick a six percent commission. But they never discussed with Busick a payment to Melissa Johnson and they never agreed to this term. When Bell questioned Busick about the payment to Johnson, Busick promised to come out to the house and explain it. Bell denied ever having seen a letter to Thompson from Busick addressing the sale of the house and payment of $50,000 to Johnson for the cost of needed repairs. Johnson made no repairs to the house. No one made $50,000 worth of repairs to the home. If Bell or Thompson had seen that letter, they would have stopped dealing with Busick.
Bell also denied there ever had been a discussion about repaying Busick for his down payment or paying him rent or a security deposit.
Bell testified that at some unspecified time “after the second set of escrow papers came in,” he realized the house had been sold. He called Busick and demanded that “he undo the deal.” Busick promised to “come out with the right documents.”
Bell testified that Thompson received a check for about $78,000 from Central Escrow, Inc. She told Bell the check was “short” because they asked for $100,000. Bell called Busick and told him the amount of the check was wrong. Busick told Bell to keep the check, and promised to fix the error to “bring us to the amount that we agreed on with the loan” and send loan documents. Thompson later received and cashed a check for $5,000 from Johnson, but she did not receive any loan documents. In May and June of 2005, Thompson received -- and apparently cashed -- two checks for $1,000 each and one check for $3,000 from America West Financial. Bell admitted that the June check was for repairs to the house.
Thompson called Busick as a witness under Evidence Code section 776. Busick testified that American West Financial was a dba for Kenny Financial Corporation, of which he was the sole shareholder. America West was in the business of buying and selling real estate. It bought properties to resell or lease.
Busick testified that Bell called him in December 2004. Bell first said he owned property in Palmdale, but later said his girlfriend owned it. Bell told Busick there were problems with the title and making payments. Bell initially said they wanted to get a loan. He said his own credit was “shot.”
After his initial conversation with Bell, Busick obtained a credit report on Thompson and discovered that her credit was too poor to enable her to refinance or purchase. Busick told Thompson this; he explained that if she wanted to do anything with the property, she needed to find a relative who could “come on title or do a loan.” Otherwise, she would have to consider selling the property. Thompson and Bell sent Busick a February 2005 grant deed by Alise Unzueta and Linett Shellmire in favor of Thompson. Busick forwarded the deed to a title company to review. The title company declined to insure the title. Busick reported this to Thompson and Bell and told them they needed a notarized declaration of uninsured deed. Thompson eventually provided this. Busick also asked for, but never received, 12 months of cancelled checks to establish that Thompson and Bell were the people paying the mortgage on the property.
Busick testified that he originally structured the sale as one to his girlfriend, Melissa Johnson, for $275,000, but he could not find a lender willing to make the loan. He told Thompson or Bell that the property would be sold to Johnson, and they found that acceptable. Two to three weeks before escrow was to close, Busick told Thompson that he -- not Johnson -- would be buying the property. About 10 days before the close of escrow, Busick told Thompson that he would be paid a real estate commission of nine percent. Busick admitted at trial that he did no work in the transaction that entitled him to a broker’s commission. Busick also told Thompson that she would have to pay Johnson money from the sale proceeds to cover the cost of repairs to the property, a return of the down payment, and payment in advance of rent for one year, plus a security deposit. Thompson agreed to all of these terms. Busick faxed Thompson a letter (Exhibit 8) that stated the sale price and the terms regarding repayment of the down payment and advance payment of rent and security deposit. Neither Thompson nor Bell ever complained about the transaction or expressed surprise or dissatisfaction with the escrow instructions for a sale of the property.
Neither party moved into evidence the documents that were marked as exhibits at trial. The trial court noted this omission, adding “so I’m just assuming that both counsel want me to view these exhibits as evidence.” Neither attorney responded.
Busick testified that after escrow closed, he and Johnson wrote checks to Thompson to pay for repairs to the property. Thompson and Bell seemed completely satisfied and never complained before Thompson filed her lawsuit.
Heidi James, an escrow agent who worked for named defendant Central Escrow, Inc., testified that the first escrow for Thompson’s property concerned a sale to Melinda Johnson, but it did not “go through.” James mailed “all of the normal documents” including a grant deed and escrow instructions to Thompson. James received the original documents back with a signature and the initials “K.T.” on every page. Thompson never complained to James or told James that she had sent the wrong type of documents.
The defense called James out of order with Thompson’s consent.
James testified that when the first escrow “failed to go through,” she opened a second escrow for a sale from Thompson to Busick. Johnson’s name as grantee on the grant deed was covered with correction fluid and replaced with Busick’s name. James mailed Thompson escrow instructions with Busick’s name on them. James received a return of the signed and initialed escrow instructions by fax. The signature on the new escrow instructions appeared to James to be the same as that on the original instructions for a sale to Johnson. James also received a return of signed copies of two amended escrow instructions dated April 5 and April 6, 2005. The signatures on both amended instructions looked the same as on the earlier escrow instructions. The escrow file also contained an estimated closing statement dated April 15, 2005 that was signed with a signature that appeared to be consistent with those on the other documents. The Thompson-Busick escrow closed on April 18, 2005. James sent a final closing statement and check to Thompson by Federal Express on April 20, 2005. Thompson cashed the check and never complained to James about the transaction.
It appears there was a third amended escrow instruction, marked for identification as Thompson’s exhibit 1 at trial and described as an amended escrow instruction dated April 20, 2005. A document entitled “Amended Escrow Instructions” attached as an exhibit to Busick’s answer also bears a date of April 20, 2005.
Thompson testified that she had lived in the property since August 1998. The property initially was in her daughter’s name. (Bell suggested that this was so that Thompson could receive county assistance, which she would not have been eligible for as a homeowner.) At some point, title was transferred to Thompson’s aunt, Lynette Shellmire, and sister, Alise Unzueta. Thompson had made the payments in cash each month since 1998. Busick never told Thompson that the fact the house was not in her name would be an obstacle to getting a loan. Nor did he ask her for proof that she had made the mortgage payments.
Thompson was a month behind on payments on the property in December 2004. She and Bell wanted to refinance the property and get money to make some minor repairs. She did not want to sell the property. Bell contacted Busick about obtaining a second mortgage. (Bell’s and Thompson’s testimony was inconsistent about whether they wanted to refinance or whether they wanted to get a second mortgage, leaving the first in place. Nor did Thompson suggest how she could service a second mortgage if she was behind in her payments on the first, existing mortgage.) Bell told Thompson that Busick said he could help them get a loan.
In February 2005, Thompson and Bell received an escrow document from Heidi James that referred to a sale to Melissa Johnson. Thompson called James to ask why James had sent it to her. James told Thompson that Busick told her Thompson was selling her house. Thompson told James it was “the wrong paper” because they were “asking for loan docs.” James told Thompson it might be a misunderstanding and she would ask Busick to call Thompson. Thompson and Bell phoned Busick and told him they did not want to sell the property; they just wanted a second mortgage. Busick told them James had sent the wrong papers. He told Thompson to return the papers to him and he would send them the right papers. She signed and initialed the escrow papers because Busick told her to.
At her deposition, however, Thompson testified that she did not bother to read the escrow instructions before she signed and returned them. She realized they were incorrect only when she got home from work.
Thompson’s trial testimony also contradicted her deposition as to whether she ever contacted the existing lender, Countrywide, after receiving the notice of default.
In April of 2005, Thompson received another set of escrow papers listing Busick as the buyer. James faxed the papers to her at the hair salon where she worked. Busick told her that “all the paperwork was basically the same with a loan.” He told her to initial and sign them and to “hurry up and get it back to him,” and said he would “personally correct it.” Thompson did not have time to read through the papers because she was busy at the salon.
Thompson testified that Busick never said he was buying the property. He told Thompson that they would be paying him a real estate commission based on the loan that they were requesting, but they did not talk about a nine percent commission. Busick and Thompson never discussed paying any money to Melissa Johnson. Until her deposition, Thompson had never seen the letter in Exhibit 8.
Thompson admitted that she wrote the complaint herself and verified it. But when defense counsel read paragraphs 19 and 21 to her, she denied the allegations she had written. She insisted she and Busick never spoke of a sale and that she only wanted a loan.
At the close of Thompson’s case, Busick moved for a nonsuit. Plaintiff’s counsel argued that paragraphs 19 through 21 of the complaint said what they did because Thompson was self-represented at the time. So, he argued, the complaint was not “binding on the plaintiff” and “open to interpretation.” He also moved to amend the complaint to conform to proof. Plaintiff’s counsel also argued that Busick had breached a fiduciary duty arising from the broker-client relationship with Thompson.
The court granted the nonsuit motion. It explained its reasoning:
“I can’t get over the inconsistencies between plaintiff’s testimony and what is alleged in the verified complaint. I do not find anything in the escrow instructions which talk[s] about a buyback or a rent-free 12 months. [¶] We do have Exhibit [8], which I have some real questions [about] . . . . [¶] But from what I know of this case having worked with you for many months on this matter, it appears that there was a 12-month rent-free period. There was some question, as I recall.” Plaintiff’s counsel noted that rent was prepaid, not free. The court continued, “Well, prepaid, meaning it comes out of that 78 grand. And if it is 2,000 a month plus $2,000 security, that’s 26,000. That leaves 52, of which 10,000 was paid to the plaintiff, leaving 42,000. [¶] This whole question of whether or not the amounts would be refunded or not, I have Mr. Busick’s testimony and I have Exhibit 8. Again, Exhibit 8 is questionable, but it does reflect in general terms the allegations set forth in paragraph 20 of the plaintiff’s verified complaint. [¶] Plaintiff has failed to meet [her] burden on the four causes of action.” The court added that it would deny the motion to amend as untimely and added that “the facts are almost diametrically opposite between [the] verified complaint and the testimony of the plaintiff. [¶] And clearly, the complaint contemplates a sale arrangement. And yet the testimony I’ve heard today and yesterday would seem to indicate that sale was never mentioned. [¶] You just can’t reconcile that. And the plaintiff [has] the burden.”
The court entered judgment in favor of Busick. Thompson timely appealed.
DISCUSSION
1. Thompson has failed to present relevant argument and citations to authority, so she has waived the issue of whether the trial court erred by entering judgment for Busick.
In a court trial, Code of Civil Procedure section 631.8 permits the court to enter judgment in the defendant’s favor if the court concludes the plaintiff has not sustained its burden of proof. In ruling on a motion under section 631.8, the trial court assesses witness credibility and resolves conflicts in the evidence. (Kinney v. Overton, supra, 153 Cal.App.4th at p. 487.) “The court may consider all evidence received, provided, however, that the party against whom the motion for judgment has been made shall have had an opportunity to . . . rebut evidence . . . deemed . . . adverse to him . . . .” (§ 631.8, subd. (a).) Thus, the court has discretion to consider defensive matters brought out during plaintiff’s case-in-chief, including the testimony of the plaintiff’s witnesses on cross-examination and defense exhibits introduced during cross-examination of the plaintiff’s witnesses. (People v. Mobil Oil Corp., supra, 143 Cal.App.3d at p. 271; Eddy v. Gallaway (1970) 11 Cal.App.3d 185, 192.) The court also may consider the testimony of defense witnesses called out of order with the plaintiff’s consent. (People v. Mobil Oil Corp., supra, 143 Cal.App.3d at pp. 271-272.)
Unless otherwise noted, all further statutory references are to the Code of Civil Procedure.
On appeal, the court must view the evidence in the light most favorable to the judgment. (Kinney v. Overton, supra, 153 Cal.App.4th at p. 487.) The appellate court is bound by the trial court’s findings that are supported by substantial evidence, but not by the trial court’s interpretation of the law. (Ibid.)
Thompson contends the trial court erred by granting Busick’s motion for judgment under section 631.8. Thompson’s opening brief neither asserts nor attempts to demonstrate that she met her burden of proof on any cause of action. Instead, it addresses whether there was a material variance between pleading and proof and the timeliness of her motion to amend the complaint. These arguments concern the trial court’s denial of Thompson’s motion to amend to conform to proof. To the extent Thompson intended to raise the issue of the evidence’s sufficiency to support the court’s ruling on the motion, she has waived it by failing to support the claim with reasoned argument and citations to authority. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
Even if Thompson had not waived the issue, I would find substantial evidence supporting the trial court’s ruling. Bell’s testimony and some of Thompson’s testimony showed she realized before she signed the escrow instructions that they provided for the property’s sale, but she signed and returned them anyway. Thompson’s conduct was consistent with Busick’s testimony that he told Thompson and Bell that they could not get a loan, but would have to sell the property if they wanted his help. Busick’s testimony on this point was at least partially consistent with the allegations of paragraphs 19 through 21 of the complaint, while the testimony of Thompson and Bell contradicted the very complaint Thompson herself wrote and verified. The court was entitled to disbelieve the trial testimony of Thompson and Bell about Busick’s advance disclosure of the nature and terms of the transaction. The court’s statement that it could not “get over the inconsistencies between plaintiff’s testimony and what is alleged in the verified complaint” strongly suggests the court did not find Thompson or Bell credible. The court also noted that Exhibit 8 – the purported letter from Busick to Thompson setting forth the terms of a property sale with an option to repurchase – (assuming that it was in evidence) generally was consistent with the allegations in paragraph 20 of the complaint, even if its authenticity was somewhat questionable. And, even without Exhibit 8, Thompson and Bell admitted that Thompson knowingly signed and returned two sets of escrow instructions that clearly reflected a sale of the property. She also did not deny the authenticity of the grant deed she executed and provided to Central Escrow, Inc., or Busick. Although Central Escrow, Inc., apparently changed the name of the grantee from Johnson to Busick at some point, Thompson did not testify that when she signed the deed Johnson rather than Busick was listed as grantee. In sum, when the evidence is viewed in the light most favorable to the judgment, substantial evidence showed that Thompson was not deceived. Instead, she knowingly sold the property to Busick on terms that were disclosed to her through the escrow instructions, Busick’s oral statements, and perhaps also Exhibit 8.
2. The trial court did not abuse its discretion by denying Thompson leave to amend the complaint.
Thompson contends the trial court abused its discretion by denying her motion for leave to amend the complaint to conform to proof at trial.
The trial court has wide discretion in granting leave to amend a pleading and may do so even at the conclusion of trial. (Stockton v. Ortiz (1975) 47 Cal.App.3d 183, 194.) However, “a long deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court’s denial of the amendment.” (Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 136.) “Time and knowledge are important factors” for the court to consider. (Stockton v. Ortiz, supra, 47 Cal.App.3d at p. 194.)
Furthermore, “a proposed amendment which contradicts allegations in an earlier pleading will not be allowed in the absence of ‘very satisfactory evidence’ upon which it is ‘clearly shown that the earlier pleading is the result of mistake or inadvertence.’ ” (American Advertising & Sales Co. v. Mid-Western Transport (1984) 152 Cal.App.3d 875, 879.) “The absence or presence of good faith on the part of the moving party certainly bears on the exercise of the court’s discretion in granting or denying leave to file an amended complaint [citation]; especially one which constitutes an about-face from the position originally taken by the plaintiff and steadfastly maintained through law and motion and discovery proceedings.” (Id. at pp. 879-880.)
Absent a clear abuse of discretion, a ruling denying a motion to amend to conform to proof will not be disturbed on appeal. (Stockton v. Ortiz, supra, 47 Cal.App.3d at p. 194.)
All of Thompson’s claims for relief were based on the same allegations, which she incorporated by reference in each cause of action. She alleged that Busick told her (1) the property “would go through a sell process” that would result in him being on the title to the property with her (complaint, ¶ 19); (2) the property “would be sold (although actually refinance [sic]) for approximately $275.00 [sic] from which the existing encumbrance of approximately $84,000 would be paid and that plaintiff’s remaining equity would remain in a reserve account from which mortgage prepayments would be deducted” (Complaint, ¶ 20); and (3) she would receive a lease with a one-year option to repurchase the property (Complaint, ¶ 21). She further alleged that after escrow closed, she received documents showing that Busick had “induced” her to execute a grant deed to him, “rather [than] a joint deed” and that he had “sold the property to himself, (at a price which was substantially below market value)” instead of refinancing it. (Complaint, ¶¶ 22-23.)
At trial nearly 19 months later, Bell and Thompson contradicted Thompson’s own allegations in her complaint. They testified, in effect, that Thompson received the escrow instructions before closing and realized before signing the instructions that they provided for the property’s sale. Nonetheless, Thompson signed and returned the escrow instructions. This testimony completely contradicted the allegations in paragraphs 22 and 23 of the complaint that Thompson only discovered the true nature of the transaction after escrow closed. Thompson and Bell testified at trial that Busick never told them there would be a sale and responded to their complaints about the escrow instructions by promising to “fix” the paperwork and give them loan documents. This testimony contradicted the allegations of paragraphs 19 through 21 of the complaint that Busick told Thompson the property would be sold and she would hold title jointly with Busick and would receive a lease with an option to repurchase the property.
Thompson neither explained her delay in seeking leave to amend nor showed that the complaint’s contradictory allegations were the result of mistake or inadvertence. Because she -- not her lawyer -- wrote the complaint, these very significant factual discrepancies cannot be attributed to a mistake by counsel or miscommunication between counsel and client. Nor can Thompson’s status as a layperson account for these factual discrepancies. She certainly knew what she told Busick, what Busick told her, what documents she received, and when she received them. In short, Thompson plainly knew what happened to her; indeed, she knew more about that than anyone else did. Thompson’s lawsuit had been pending for nearly 19 months before trial, and she never made any attempt to plead the “correct” facts. Given Thompson’s failure to make the required showings, denial of leave to amend was not an abuse of discretion. Moreover, the trial court properly could consider Thompson’s credibility in deciding whether to permit a late and contradictory amendment. (American Advertising & Sales Co. v. Mid-Western Transport, supra, 152 Cal.App.3d at pp. 879-880.)
Finally, while Thompson’s attorney proposed an amendment to state a cause of action for breach of fiduciary duty, all of the sworn testimony that both Thompson and her husband Bell gave at trial contradicted any such theory. On both direct and cross-examination, Thompson and Bell repeatedly and vigorously denied that either of them ever had any conversation with Busick in which they retained him as a real estate broker to sell Thompson’s house. They insisted that Busick’s only job was to get them a loan, to help them refinance the house. There never was any listing agreement by which Thompson or Bell retained Busick to act as a real estate broker or to sell the house. In short, even if the trial court had permitted the proposed amendment, there was no “proof” to which it could conform.
I would affirm the judgment of the trial court.
EGERTON, J.*
Once Busick prevailed on his sale theory, left unresolved was whether his 9 percent commission breached the fiduciary duties that he owed Thompson. The propriety of the commission was at play from the outset of the case, and the basic facts underlying the claim were those that Busick advanced. Hence, no prejudice could possibly befall him if Thompson were allowed to amend to argue the commission should be returned. Whether Busick actually breached his fiduciary duties is a factual matter which we do not resolve but one which the trier of fact will decide on remand.