Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 07CC04581, David T. McEachen, Judge.
Randall L. Hite & Associates and Randall L. Hite for Defendant and Appellant.
Law Office of William K. Crowe and William K. Crowe for Plaintiffs and Respondents.
OPINION
SILLS, P. J.
This is a substantial evidence appeal from a judgment in a partition action involving rental property owned by two brothers. There being substantial evidence to support the trial court’s determinations that:
(a) the brothers did not have an agreement to give each other veto power over any sale of the property, and particularly did not have an agreement to give each other veto power over a sale pursuant to court-ordered partition;
(b) the brothers did agree that the brother who, at his own expense, constructed a large garage structure on the property would be limited to receiving only the money put into the project (as distinct from the money plus a share in the proportionate increase in value of the property attributable to the structure); and
(c) Robert, the brother who sought partition by sale and division of the proceeds, as distinct from Gary, the brother who wanted partition in kind, did not cheat Gary in accounting for the income from the property,
we affirm the trial court’s judgment requiring sale of the property with the proceeds to be distributed by reimbursing Gary $22,000 and dividing the balance equally.
I. Overview
Robert and Gary Wagner together bought a residence in joint tenancy in Garden Grove back in 1980. Because there is no dispute that each side has a fifty-percent interest in the property (though Robert’s wife would be later added as a joint tenant), we need not trace the history of the title in detail, save to say that the addition was part of a refinance deal and Gary went along with it at the time. The property consisted of a single family residence with an attached two-car garage, with enough room for a second structure to be built by Gary at his own expense in the early 1980’s. The new structure is basically a six-car garage (about 1300 square feet) which has been used by Gary to house “collectable motor vehicles” and parts for restoration and collection of such vehicles. By contrast, the single family residence has been rented out. By mutual agreement Gary managed the property from 1981 to 1998, Robert has managed the property since.
By late 2006, three points of contention between the two brothers came to a head: The main one was the nature of the agreement by which Gary would be compensated for his expense in building the six-car garage: Gary thought that he would receive not only his money back, but a share of the appreciation, which share would be determined by the relation of the money that Gary had put into the building, bore to the sales price of the property. Further, Gary’s money would come off the top of the proceeds of sale; only then would the brothers divide the remainder 50-50. By contrast, Robert thought that Gary would receive only a dollar-for-dollar reimbursement (to be sure, paid off the top) with the remainder split 50-50.
A secondary disagreement arose over just how much money Gary had spent on the six-car garage: Gary thought it was about $30,000, Robert thought it was $17,000.
Finally, Gary was worried that the earlier “inadvertent” addition of Robert’s wife Bobbie Jo to title as a joint tenant would dilute his 50 percent share. That worry would ultimately fade when Robert and Bobbie Jo stipulated that they claimed no more than 50 percent of the property.
She was added as part of a refinancing. At the time, Gary went along with it, not thinking that it might change any share of ownership.
In April 2007 Robert filed a complaint for partition and declaratory relief. Gary responded in July with a cross-complaint charging Robert with having failed to obtain adequate rent during Robert’s management of the property, and for having failed to properly account for the income and expenses of the property, pay obligations on the property, or otherwise provide Gary with his share of the profits. Gary did not seek partition. However, he would later (as he does on appeal now) assert the position that he and Robert had an agreement giving each over veto power over any sale of the property, so that, if the property did have to be partitioned, it could be partitioned only in kind so that he could continue to possess the six-car garage housing his vintage car business.
The trial judge would later conclude it was more of a hobby, and noted that Gary never paid rent on it.
The case was tried to a judge, with only two witnesses testifying, Robert and Gary. Prior to trial, both sides presented the judge with a joint list of eight controverted issues, and after the trial the judge simply went down the line, issue-by-submitted-issue.
The judge found that
(1) Robert was entitled to a partition by sale.
(2) There was no oral agreement whereby each party’s specific consent was required for any sale.
(3) The proceeds of sale were to be distributed this way: Gary had spent $22,000 of his own money for the six-car garage, that $22,000 would come off the top of any sale, and the rest of the proceeds would be split 50-50.
(4) Robert did not breach any fiduciary duty to Gary.
(5) Hence, Gary suffered no damage from any of Robert’s conduct.
(6) And thus also, Gary was not entitled to an accounting.
(7) Moreover, Gary was not entitled to cancel the deed that had added Bobbie Jo to the title.
(8) And Gary was not entitled to any relief by quieting title. The ensuing judgment appointed a referee to conduct the sale (interestingly, the referee’s fees would be deducted second to the reimbursement to Gary), which was to be in the ordinary course of business (the trial judge was concerned about maximizing the proceeds). The court rejected the need to reform the deed to account for the 50-50 stipulation because the court was retaining jurisdiction over the sale; it was clear that if either brother died in the interim, the split would still be 50-50 between Robert’s side and Gary’s. Gary filed a timely notice of appeal in the summer of 2008.
He also complimented the person he appointed as receiver as “the most cost efficient” and “reasonable” person he could appoint.
Hence the judgment is denominated an “interlocutory” judgment. It is, in substance, just as final as any family law judgment that, for example, might contemplate the future sale and disposition of proceeds of property.
II. The Uncontroverted Evidence of An “Agreement” Requiring Consent to Sell
Gary’s primary argument goes this way: There was “uncontroverted evidence” that he and Robert had agreed that each other’s consent would be required for any sale of the property. Ergo, any partition of the property to which Robert otherwise might be entitled had to respect that agreement. And the only way that could be done was partition in kind (presumably Gary would receive the part with the six-car garage on it so he could continue to house vintage cars there) or, at the very least, the trial court was obligated to fashion an order providing for the sale of only Robert’s interest in the property, particularly in light of Robert’s failure to present evidence (hence a failure to carry his burden of proof) that partition in kind would not cause “great prejudice” to the owners.
There are two answers to this argument.
A. Not Quite Uncontroverted
The first answer is that there was substantial evidence that Gary’s major premise is incorrect: Actually, there was no “uncontroverted” evidence of an agreement requiring consent to any sale -- presumably even one ordered by a court.
The passage on which Gary relies to establish the existence of a fixed agreement to require his consent before even a court-ordered sale does not quite do that.
We now set out, fully, the text of the reporter’s transcript dealing with the supposed agreement. All italics have been added. The testimony came from the cross-examination of Robert. The question just before the quotation involved the issue of documentation for Gary’s costs of construction, and the question next after the quotation was the beginning of some questions on the accounting issue:
We begin with a part not quoted in the opening brief:
“Q. And did you and your brother have an understanding when the property was acquired that in order for it to be sold, you and he would both need to agree as to when and how it would be sold?
“A. No, there was no such agreement.
“Q. Well, what understanding did you have when you went into this partnership as to what the duration of the partnership would be?
“A. There was no agreement as to the duration.
“Q. So it was going to be indefinite, then?
“A. It was never discussed. We purchased it. It was going to be sold at some point, but we never discussed when.
“Q. So, then, it was implied in your agreement that it would continue so long as you both wanted it to continue, correct?
“A. That wasn’t my understanding, no.
“Q. What was your understanding?
“A. That it would be sold at some point in the future and that was it.”
Now, here comes a part that is quoted in the opening brief:
“Q. And you would both have to agree to sell it?
“A. Well, if the -- yeah, it was joint ownership. We would both have to agree.”
Then, this question is omitted in the brief:
“Q. So the understanding, then would be that the property is not sold until you both agree to it.
“A. I’m not sure. I’m not sure I understand what your question is.” Next comes this passage, which is quoted in the brief:
“Q. I’ll try to rephrase it.
“So the property wasn’t going to be sold until you both agreed?
“A. Yes.”
And, finally, the next portion of text, also bearing on the existence and nature of any agreement regarding consent, was omitted from the brief as well:
“Q. Right now, both you and he cannot agree, correct?
“A. Well, there was no -- there was no agreement that we would agree to sell it at any certain point or that we both agreed, there was no such conversation is what I’m trying to say.”
As the complete quotation shows, in context and at most, Robert was simply acknowledging that the joint tenancy ownership form of title would, as a practical matter, require Gary to agree to the eventual sale that both brothers contemplated at the time of acquisition. It certainly does not establish an “uncontroverted” agreement that would preclude even a court in a partition action from ordering a sale. In fact, as we have just seen, immediately prior to and just after the passage in the opening brief there is evidence directly controverting the idea of any such agreement.
B. And Impractical In Any Event
We need only add that Gary’s theory that the property could be partitioned in kind is utterly unrealistic given the circumstances of this case. It is a reasonable inference that there is no market for investors who want to purchase a rental property with a secondary structure consisting of a six-car garage if they are not able to obtain the whole thing: Who is going to want to own half a rental house, while Gary retains the large garage for himself? (See generally Priddel v. Shankie (1945) 69 Cal.App.2d 319 [court may infer from character of property itself that physical partition is a bad idea].)
Under cross-examination, when Gary had just opined that Robert could sell “his half to anyone he wants,” he was asked:
“Q. What if he can’t find anybody to buy his half? Then he’s stuck?
“A. I guess.”
The testimony of a single witness is enough to constitute substantial evidence. (Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1208 [“The testimony of a single credible witness -- even if a party to the action-may constitute ‘substantial evidence.’”].) Because Robert was clear there was no agreement to preclude court-ordered partition by sale, and because of the schizophrenic use of the property, with one of the owners retaining a large garage to keep vintage cars and the rest rented out, the trial court was easily within its discretion to order partition by sale rather than partition in kind. (See Code Civ. Proc., § 872.820 [discretion to order sale when circumstances make sale and division more equitable than division].)
III. The Value of Gary’s Contribution
Gary complains that the trial judge should have used the fair market value of the six-car garage instead of awarding him $22,000.
There is a passage in Klein v. Maddox (1943) 59 Cal.App.2d 141, 145, to the effect that a joint owner who voluntarily undertakes, at his or her own expense, an improvement of the jointly held property is entitled to the fair market of the improvement at the time of trial. However, Klein did not involve any overriding contrary agreements between the co-owners, so the court had no occasion to consider the effect of any agreement to limit the improver simply to his or her dollar costs. We set forth the passage in the margin. (Interestingly enough, the issue that was before the court was whether the trial court was obligated to take into account a hypothesized depreciation of the improvements.)
Here is the salient passage:
In alluding to the rule, the Klein court relied on a 1917 Kentucky Court of Appeals case that made it into the American Law Reports, Farley v. Stacey (1917) 197 S.W. 636 [1 A.L.R. 1181], and that court simply articulated a rule that someone who voluntarily makes improvements on land (in that case, ownership was disputed), is limited In recovery to “the extent the improvements enhance the vendible value of the property, not in excess of the value of the improvements, and if the improvements do not add to the value of the property [and in Farley they didn’t, as one finds out later in the same passage] he cannot recover anything for them.” (Farley, supra, 197 S.W. at p. 640.) Like Klein, Farley did not involve a case where there was a clean agreement between the improver and any owner or co-owner to be limited to simple dollar-for-dollar recovery.
Note that such an agreement would protect the improver from the possibility that the improvements might depreciate, or cause a depreciation in the overall value of the property.
Which there was here. Robert testified on direct examination about the nature of the reimbursement agreement with Gary:
“Q. And why, as far as you know, was a detached garage built?
“A. Gary had asked to construct the garage for storage, and he asked that when the property was sold that he would recover the building costs of the garage, and I agreed to that.”
While it may be that, absent an agreement, fair market value would be the appropriate common law rule for recovery of improvements, we divine nothing in the law that requires a recovery of fair market value if the parties agree to some other measure of recovery.
That leaves only the matter of the trial court’s splitting the difference between Robert’s testimony that the costs were $17,000 and Gary’s claim the figure was $27,000. Since the trial court was free to disbelieve Gary entirely (indeed, he was explicitly found to be the less credible witness), Gary cannot complain that the trial court added about $5,000 to the figure it impliedly did find credible as a reasonable factor to account for the lack of records.
IV. Fiduciary Duty Claim
The trial court made explicit findings that Robert had not breached any fiduciary duty to Gary, and had not caused Gary any damages during his period of management of the property.
As we perceive Gary’s argument on appeal concerning fiduciary duty, it goes like this: Since it was uncontroverted that Robert only deposited half the rental income into the property account, Robert must have been paying expenses on the property from Gary’s half of the income, ergo the trial court was required to find that Robert had breached a fiduciary duty to his brother.
As set forth, Gary’s argument is necessarily one that the evidence would admit of no other conclusion but that Robert had stolen from his brother in the management of the property. But Gary’s brief does not give us an adequate summary of the evidence on the issue, and we therefore deem it waived. (See In re Marriage of Rothrock (2008) 159 Cal.App.4th 223, 230 [“An appellant contending some particular finding is not supported must set forth in his or her brief a summary of the material evidence upon that issue, and, if that is not done, the error is waived.”]; see also In re Marriage of Fink (1979) 25 Cal.3d 877, 887 [“‘It is incumbent upon appellants to state fully, with transcript references, the evidence which is claimed to be insufficient to support the findings.’”].) We need only note -- as set forth in the respondent’s brief -- that there was evidence that Robert never took money out of the joint account without his brother taking a like amount, and never took any money that belonged to his brother.
V. Accounting
Next, Gary asserts the trial court should have provided for an accounting of the profits and losses during the period Robert was managing it. This argument too has been waived for lack of development: (For example, we don’t learn that Gary took money out of the joint account in early 2007 to pay his legal fees until the respondent’s brief.) Gary’s brief asserts that “Substantial evidence existed of significant accounting issues,” but fails to give us any record references or identify with particularity any of those issues.
Moreover, there was testimony from Robert (again, believed by the trial court) that he had already provided hand-delivered yearly accountings to Gary, and Gary never disputed any of them. An accounting is an equitable action, subject to equitable principles. (E.g., AB Group v. Wertin (1997) 59 Cal.App.4th 1022, 1028 [“... a proceeding for a partnership dissolution and accounting is an equitable matter and that his claim must be tested under equitable principles” (italics in original].) Given the testimony that Robert hand-delivered yearly accountings to Gary and Gary never objected, the trial judge was within his equitable powers to conclude that Gary was not entitled to an accounting.
VI. Deed Reformation
Given the order for the supervised sale of the property under the watchful eye of a referee, there was no need to reform the deed. The parties stipulated that Robert and Bobbie Jo only had a 50 percent interest (subject to Gary’s recovery of building costs, as explained above). Should any of three persons on title die before the sale is completed, the respective interests are clear, and Gary (or heirs or beneficiaries) need not fear that his 50 percent will somehow be diminished by the form of title.
VII. Disposition
The judgment is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: RYLAARSDAM, J. IKOLA, J.
“The only other point urged by defendants is that the court failed to find on a certain issue which it is contended was vital to the validity of the order appealed from. This point is based on the following theory: It is the law that where one cotenant has improved the property, and a sale is ordered in a partition suit, the cotenant who has constructed the improvements is entitled to an allowance based on the then value of such improvements. (See annotation 1 A.L.R. p. 1189, where the cases are collected.) In the present case the referee was directed to find the value of the improvements exclusive of the land, and the value of the land without the improvements. He found the value of the improvements to be $20,000 and the value of the property to be $2,000, and this report has been confirmed by the court. There can be no doubt that he was directed to find, and did find, present values rather than the original cost of the improvements. Present values admittedly constitute the proper basis for the allowance. Defendants urge that these improvements may have depreciated the value of the real estate without the improvements, and that in the absence of a finding that there was no such depreciation the order appealed from cannot stand. Since there is no showing that evidence of such depreciation was introduced, defendants have made no showing that a finding on that issue, if made, would have been favorable to them. Hence, they are in no position to complain of the absence of such a finding. Moreover, where the evidence is not set forth in the record, an appellate court will not consider an objection that the trial court failed to find upon an issue, even if the issue be a material one. [Citations.].” (Klein, supra, 59 Cal.App.2d at pp. 145-146.)