Opinion
NOT TO BE PUBLISHED
Super. Ct. No. YCSCCVCV05-0000616
BLEASE, J.
Plaintiff Loretta Coursey, in her capacity as trustee of the Loretta Coursey Revocable Trust of 1991, appeals from the judgment of the trial court in favor of defendants Lomo Receiving Company, Inc., John Micheli, and Marysville Mini Storage Partnership (hereafter collectively defendants). The judgment was entered after the trial court granted defendants’ motion for judgment pursuant to Code of Civil Procedure section 631.8, subdivision (a) after the completion of the evidence.
Plaintiff is suing because she claims her capital account as a partner in Marysville Mini Storage Partnership (the partnership) was not properly credited with the correct dollar value of the leasehold contributed to the partnership. Plaintiff’s only objective in this action was to have her capital account increased by $75,000. The dispute arises because plaintiff’s percentage interest in the partnership is greater than the percentage of partnership capital allocated to her account.
The reason for the dispute is unclear. The ordinary purposes to be served by a capital account are to calculate the dollar value of the partner’s interest on termination of his or her interest in the partnership (see fn. 2, infra), and to calculate the partner’s gain for purposes of the income tax on the sale of the partner’s interest. Neither appears to be at issue in the lawsuit.
Plaintiff’s two arguments on appeal are: (1) the subsequent conduct of parties to a partnership agreement was not admissible to explain the terms of the agreement, and (2) defendants’ memorandum of costs following the judgment was invalid because the trial court granted defendants additional time to correct the verification attached to the memorandum. Neither of these arguments has merit, and we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff is the owner of a 22.44 percent interest in the partnership by virtue of her divorce settlement with her ex-husband, Gene Coursey. Four of the partners, including Gene Coursey, contributed cash to the partnership in exchange for a percentage interest in the partnership. In addition to the cash contributions, Gene Coursey and Mildred Fletcher contributed a leasehold, for which they received a percentage interest in the partnership.
The partnership agreement, dated September 17, 1981, provided that each partner was entitled to receive an interest in the partnership equal to his or her pro rata share of the total capital contributions. Gene Coursey and Fletcher each received a partnership interest equal to 10.56 percent for their contribution of the ground lease upon which the business was located. Gene Coursey also contributed cash in the amount of $84,300, for which he received an 11.88 percent interest in the partnership, for a total interest of 22.44 percent.
The total amount of cash contributions set forth in the partnership agreement was $560,000, accounting for 78.88 percent of the total interest in the partnership. Plaintiff argues that if $560,000 was the equivalent of 78.88 percent of the total interest in the partnership, then the value the partners must have assigned to the ground lease, for which Gene Coursey and Fletcher together received 21.12 percent of the total interest, was $150,000.
The total amount of cash contributed, $560,000, is 78 percent of $709,939.15, and 21.12 percent (the combined percentage interest for the leasehold allocated to Gene Coursey and Fletcher) of $709,939.15 is $149,939.22, or rounding up, $150,000.
The issue before the trial court was whether the value of the ground lease was properly credited to plaintiff’s capital account. The partnership agreement does not assign a dollar value to the ground lease. The subject of the capital accounts of the partners is mentioned in only two sections of the partnership agreement, and neither of these sections explains how the leasehold is to be valued for purposes of the capital accounts.
Paragraph 11.2.6 of the partnership agreement provides that the partners have the right to amend the partnership agreement to reflect the reduction of capital accounts upon the return of capital to the partners. Section 14 of the partnership agreement provides that upon the termination of a partner, the partner shall receive: (1) the credit balance in the partner’s capital account, (2) any debt owed by the partnership to the partner, (3) the proportionate share of profits not yet reflected in the capital account, and (4) an adjustment to the credit balance of the capital account in proportion to the increase in the Consumer Price Index.
The partnership did not maintain capital accounts for the partners separate and apart from the capital accounts that were reported on the partnership tax return. Thus, the partners’ capital accounts are those shown on the tax returns.
Evidence was presented that Gene Coursey and Fletcher decided to place a dollar value of $150,000 on the ground lease because that was how much money they decided they wanted to be compensated for their efforts. However, they never had an agreement with any of the other partners that their capital accounts would each be credited with half that amount, they never intended their capital accounts to be credited with that amount, and in fact their capital accounts were never credited with that amount.
The depreciation schedule on the partnership’s 1982 tax return showed a total cost or other basis attributable to the lease of $50,000. Gene Coursey stated that was the amount he thought should be attributed to capital for the value of the leasehold. The tax returns showed $15,000 of the lease was placed into service in 1981, and $35,000 of the lease was placed into service in 1982. The 1981 tax returns indicated the $15,000 of the leasehold interest placed into service in 1981 was allocated to all five of the partners’ capital accounts based on their percentage ownership in the partnership. Gene Coursey’s capital account was allocated $3,366 of the leasehold amount. The 1982 tax returns show that the capital accounts of Fletcher and Gene Coursey were each allocated half of the $35,000 placed into service in 1982. Thus, in 1982 both Fletcher and Gene Coursey’s accounts were augmented in the amount of $17,500. Gene Coursey was actively involved in preparing the tax returns for the partnership in 1981 and 1982, and approved the returns prepared by the partnership’s accountant before they were filed.
Years later, in 2002 or 2003, plaintiff’s accountant questioned why the balances in the capital accounts of the partners were so different from the percentages of ownership of the individual partners. Plaintiff hired Joe Lopez to determine the reasons for the discrepancy. In September 2004, Lopez told plaintiff he found the lease contribution of $75,000 each for Gene Coursey and Fletcher had not been reflected in the partnership books. Lopez admitted at trial that someone handwrote on the partnership agreement an amount for Gene Coursey’s and Fletcher’s interests, and that he acted under the assumption the value was correct. He did not go back to the 1981 tax return to determine whether the leasehold was reflected in the capital accounts.
Plaintiff’s complaint was for an accounting and declaratory relief. Defendants made a motion for judgment on the pleadings on the grounds no accounting could be had because the complaint sought to recover a sum certain, and the claims were barred by the statute of limitations. The trial court denied the motion. Prior to the taking of evidence, plaintiff abandoned all claims except to have her capital account increased by $75,000.
Defendants made a motion for nonsuit at the end of plaintiff’s evidence, which the court deemed a motion for judgment pursuant to Code of Civil Procedure section 631.8. The trial court declined to rule on the motion until all of the evidence was heard. At the close of defendants’ evidence, the trial court granted the section 631.8 motion. Judgment was entered in defendants’ favor, and costs were awarded in an unstated amount.
Section references to an undesignated code are to the Code of Civil Procedure.
Defendants filed a memorandum of costs in the amount of $5,734.51. The memorandum was submitted on a Judicial Council form. Above the attorney’s signature line, the form stated: “I am the attorney, agent, or party who claims these costs. To the best of my knowledge and belief this memorandum of costs is correct and these costs were necessarily incurred in this case.” (Italics added.)
Plaintiff filed a motion to strike the memorandum of costs, attacking the amounts claimed. Six days later, plaintiff filed a “supplement” to the motion to strike, arguing that California Rules of Court, rule 3.1700 requires the cost memorandum to be verified to the best of the attorney’s knowledge, and that because the form verification was to the best of the attorney’s knowledge and belief, the entire memorandum was hearsay and unavailing for any purpose. The trial court sustained plaintiff’s objection to the verification, but allowed defendants 10 days to file a proper verification. Upon the filing of the verification, the trial court granted plaintiff’s motion to tax costs in the amount of $928.90.
DISCUSSION
I
Parol Evidence Rule
Plaintiff’s argument with respect to the interpretation of the partnership agreement is that the agreement was clear as to the value to be attributed to the leasehold for purposes of her capital account, and Gene Coursey’s testimony contradicting the clear wording of the agreement was inadmissible under the parol evidence rule. Both assertions are wrong.
As previously noted, the partnership agreement did not assign a dollar value to the lease. The agreement did not indicate how much money would be allocated to the capital accounts of either Gene Coursey or Fletcher. Plaintiff argues Corporations Code section 16401 supplies the missing terms of the partnership agreement. It does not. That section, at subdivision (a)(1), provides that each partner is deemed to have an account that is: “Credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner's share of the partnership profits.” Here, plaintiff had a capital account, and it was credited with the value of the leasehold Gene Coursey contributed to the partnership. Plaintiff’s complaint is that the value assigned to the leasehold for purposes of her capital account is not the amount she thinks it should be. Corporations Code section 16401 does nothing to supply the amount at which the leasehold should be valued, and the partnership agreement is silent on the matter. The parol evidence rule, section 1856, subdivision (a), states: “Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.” However, terms set forth in a writing, “may be explained or supplemented by course of dealing or usage of trade or by course of performance.” (§ 1856, subd. (c).)
In this case, since the partnership agreement was silent as to the value of the leasehold to be allocated to Gene Coursey’s and Fletcher’s capital account, the testimony of Gene Coursey did not contradict the terms of the partnership agreement, but explained it. Furthermore, the evidence admitted through the partnership’s 1981 and 1982 tax returns showed how the partners treated the capital accounts through the course of performance of the partnership. Because the tax returns were prepared after the agreement was executed, they were not prior or contemporaneous agreements, and were therefore admissible.
II
Memorandum of Costs Verification
Plaintiff argues the trial court had no discretion to allow defendants an extension of time to file a new verification for their memorandum of costs. We disagree.
Plaintiff reasons that Rules of Court, rule 3.1700 requires the prevailing party to serve and file a memorandum of costs within 15 days of the mailing of the notice of entry of judgment, and that the memorandum of costs must be verified. Since the verification was not signed under penalty of perjury, the entire memorandum of costs was “unavailing for any purpose.” She argues that although the trial court may extend the time for filing the cost memorandum, such extension may not exceed 30 days. (Cal. Rules of Court, rule 3.1700(b)(3).) The amended verification here was filed well after that time, thus, plaintiff argues, the court had no discretion to allow it to be filed.
We disagree with plaintiff’s assertion that the memorandum of costs was filed late. It was not. It was filed within the statutory 15 day limit. The trial court determined the verification was defective, and such a defect may be cured by amendment even after the time for filing the memorandum has passed.
The time provisions for filing a memorandum of costs are mandatory, but they are not jurisdictional. (Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co. (1990) 223 Cal.App.3d 924, 929.) The verification of the memorandum of costs is analogous to a verified complaint, where a defect in the verification is an irregularity that does not affect jurisdiction and that may be cured by amendment. (United Farm Workers of America v. Agricultural Labor Relations Bd. (1985) 37 Cal.3d 912, 915.) This is true even when the amendment is submitted after the statute of limitations has run. (Ibid.)
Here, even though the amended verification was submitted after the time for filing the memorandum of costs, it related back to the filing of the memorandum, which was timely.
The purpose of a verification is an evidentiary one--to assure the statements that are the subject of the verification are made in good faith. (Frio v. Superior Court (1988) 203 Cal.App.3d 1480, 1498.) Plaintiff does not assert that defendants’ counsel made the statements in bad faith, rendering her contention meritless. (Ibid.)
DISPOSITION
The judgment is affirmed.
We concur: SCOTLAND , P. J. BUTZ , J.