Opinion
E071499
06-18-2020
MIGUEL S. CUENCA, Plaintiff and Respondent, v. ERADIO S. CUENCA, Defendant and Appellant.
Markarian Law Group and Eric A. Forstrom for Defendant and Appellant. Law Offices of Bryant C. MacDonald and Bryant C. MacDonald for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. CIVDS1612233) OPINION APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge. Affirmed. Markarian Law Group and Eric A. Forstrom for Defendant and Appellant. Law Offices of Bryant C. MacDonald and Bryant C. MacDonald for Plaintiff and Respondent.
Defendant and appellant Eradio S. Cuenca appeals the entry of a judgment in the amount of $151,409.60 after a jury trial where the jury found in favor of plaintiff and respondent Miguel S. Cuenca.
This breach of contract action involved the joint ownership of Oak House Restaurant in Yucaipa and the property upon which it was located. In 2005, Miguel was interested in terminating his interest in the Oak House Restaurant. The parties orally agreed that Eradio would pay for Miguel's half share in the Oak House Restaurant. Miguel alleged that Eradio additionally orally agreed to pay off two existing loans that were secured by personal property belonging to Miguel, which were taken out in 1999 to purchase the real property on which the Oak House Restaurant was located. Miguel alleged that Eradio agreed to pay off these two loans in addition to paying for Miguel's share of the Oak House Restaurant. In 2006, Miguel had an agreement entitled "Assumption of Business Debt" (Agreement) prepared to memorialize the oral agreement and it was given to Eradio. Eradio insisted he did not sign the Agreement. Eradio failed to pay off one of the loans, and Miguel filed his complaint for damages for breach of contract (Complaint) against Eradio. The matter was heard by a jury and they reached a verdict of damages in the amount of $151, 409.60 in favor of Miguel.
We refer to parties and witnesses by their first names for east of reference. No disrespect is intended.
On appeal, Eradio contends (1) he did not owe Miguel any money under the Agreement; (2) in the alternative, the judgment should be reversed/vacated because Miguel failed to establish the essential elements of a contract for his breach of contract action based on the ambiguous language in the Agreement; and (3) the trial court failed to properly instruct the jury that it should apportion the damages between Eradio and his wife, Josefina Parra (Josefina) because she was a party to the Agreement.
FACTUAL AND PROCEDURAL BACKGROUND
A. COMPLAINT
On July 27, 2016, Miguel filed his Complaint alleging breach of contract. He alleged that he and his brother, Eradio, owned the Oak House restaurant, and the property upon which it was located, in Yucaipa. During the time that they owned the restaurant, Miguel loaned in excess of $300,000 to purchase the property secured by his own personal property. Around 2006, Miguel and Eradio entered into both an oral and written agreement that Miguel would sell his interest to Eradio. Miguel alleged that the property and the goodwill of the Oak House Restaurant were valued at $1,200,000. Eradio agreed to pay $600,000 partly by cash to Miguel and by paying off the loans secured by Miguel's properties. Eradio failed to pay off one of the loans by ceasing payments. Miguel had to sell his own personal property and the damages totaled $151,409.60.
On September 2, 2016, Eradio filed an answer to the Complaint.
B. TRIAL
The trial took place over four days: July 23, 24, 25 and 26, 2018. This court was not provided with a copy of the reporter's transcript for the final day of trial.
1. PLAINTIFF'S CASE
a. Fermin Ramirez's Testimony
Fermin Ramirez (Fermin) was Miguel's and Eradio's nephew. He was the bookkeeper for the Oak House Restaurant. He was aware that Miguel and Eradio had a partnership in the Oak House Restaurant. Miguel contacted Fermin and advised him that he and Eradio were going to dissolve the partnership and try to sell the Oak House Restaurant. Fermin was not involved the negotiations to dissolve the partnership. When they were unable to sell the restaurant, they agreed that Miguel would sell his interest to Eradio.
Fermin drafted the Agreement for Miguel and Eradio. The original agreement was in Spanish but translated to English. It was signed by Miguel and Librada R. Salazar (Librada), who was Miguel's wife, on March 23, 2006. Eradio and Josefina were also listed on the Agreement but did not sign it. Fermin insisted Eradio and Josefina signed the Agreement.
The Agreement included language that Eradio and Josefina agreed to assume the debt of a loan in the amount of $190,000 at World Savings Bank, and a loan in the amount of $130,000 at Bank of America. The Agreement included the following language: "Such debts shall be taken over as part for the total price of $400,000 for the purchase of the Oak House Restaurant. The accepted debts are personal in nature belonging to Mr. Miguel Cuenca whose funds were used to settle outstanding debts with Pacific Premier Bank and Clyde Hartshorn, amounts ultimately owed by the Oak House Restaurant." Josefina and Eradio had one year to pay or refinance the loans.
The World Savings Bank loan was at some point transferred to Wells Fargo.
Fermin explained the Agreement to Eradio who kept it for four or five days. Fermin insisted that Eradio signed it but there is not a signed copy in the record. Fermin understood the document, and explained it to Eradio, that the amount Eradio owed Miguel was $400,000 plus he was to assume the Wells Fargo and Bank of America loans. Fermin explained that Eradio had no questions about the document and returned it signed. Although Fermin admitted at trial that the Agreement language was ambiguous, he had explained it to Eradio.
Fermin indicated there were two appraisals done on the Oak House Restaurant and the property. A written appraisal, admitted as Exhibit 8, included a value for "Real Estate" in the amount of $745,000 and for "FF&E" totaling $200,000, for a total of $945,000. Fermin believed the $745,000 was for the property and the $200,000 was for other structures on the property. It did not include a goodwill value for the Oak House Restaurant. Fermin believed another appraisal was completed and it showed the value of the goodwill of the Oak House Restaurant and real property was $1,200,000. Fermin did not have copies of the second appraisal. Fermin concluded the total amount owed by Eradio to Miguel was $400,000, plus $130,000 and $190,000 for the loans, a total of $720,000.
b. Miguel's Testimony
Miguel and Eradio found out in 1999 that the Oak House Restaurant was being sold. Eradio was working as a cook at the restaurant at the time. Miguel worked with the owners Clyde and Joyce Hartshorn to purchase the restaurant. The purchase initially only involved the Oak House Restaurant. The purchase price was $75,000 and was paid by Miguel; Eradio did not contribute any money.
Later, Miguel entered into an agreement with Clyde Hartshorn to purchase the property upon which the Oak House restaurant was located. A promissory note in favor of the Hartshorns was signed by both Miguel and Eradio. The purchase price was $360,000. In October 2005, the Hartshorns transferred the real property to Miguel and Librada, and Eradio as an unmarried man. Miguel paid off the loan by taking out loans—the Wells Fargo Bank loan in the amount of $197,000, and the Bank of America loan in the amount of $130,000—on his house. Eradio contributed nothing to the purchase of the property from the Hartshorns.
In 2005, Miguel and his family decided they wanted to move to Arizona. Miguel and Eradio came to an agreement that Eradio would purchase Miguel's one-half interest of the Oak House Restaurant and property. The appraisal was completed; Miguel's understanding of the appraisal was that it only considered the value of "the property and the structures on the property." It only included a valuation of the real estate and not the business. Miguel understood the $745,000 to be the property and the $200,000 was the equipment and structure. The $945,000 did not include a valuation of the business itself. Miguel testified that he and Eradio orally agreed the business was worth $250,000. The value of the business and real estate together was $1,200,000.
Miguel indicated that without the two loans, the equity would be $890,000. Half of that amount would be $445,000. As such, Miguel agreed to take $400,000 plus Eradio was to pay back the loans. Eradio accepted this agreement. Miguel asked Fermin to prepare the Agreement. Miguel understood the Agreement provided that Eradio would pay $400,000 to Miguel and then pay off the loans that Miguel had taken to benefit the business.
Miguel and Librada were paid $308,000 out of the escrow for the purchase of the Oak House Restaurant by Eradio. In addition, Miguel received two cashier's checks from Eradio in the amount of $35,000 and $50,000. Eradio began paying on the two loans. In June 2008, Eradio paid off the Bank of America loan. Eradio made payments on the Wells Fargo loan up through 2015. Eradio stopped paying on the Wells Fargo loan in October 2015. Sometime in 2016, Eradio advised Miguel he was not going to pay off the Wells Fargo loan. Miguel was forced to sell the home on which the debt was secured due to the failure of Eradio to pay the debt. The payoff amount on the debt was $151,409.60. Miguel was seeking damages in this amount.
Miguel acknowledged there was no written appraisal as to the value of the business. Miguel and Eradio orally agreed the value was between $250,00 and $275,000.
2. DEFENDANT'S CASE
Eradio testified he started working as a cook at the Oak House Restaurant in 1996. He and Miguel bought the restaurant for $50,000 in 1998; Eradio paid $25,000. In 1999, they purchased the real property; Miguel took out loans to pay for the property. Eradio was only aware of the appraisal showing the value of the Oak House Restaurant to be $945,000; he did not orally agree the goodwill of the business was an additional $250,000.
Eradio was presented the Agreement by Fermin. Eradio denied that he ever signed the Agreement. From the Agreement, he understood that the total amount he owed to Miguel was $400,000; he was not assuming the loans. He paid Miguel at least $450,000 and paid on the two loans. Eradio paid on the loans for 10 years until he realized by looking back at the Agreement that he only owed $400,000. He had trusted Miguel that he had to pay on the loans based on the agreement to purchase Miguel's interest. He stopped paying on the Wells Fargo loan. In total, he paid $698,400. He understood from the Agreement he only needed to pay $400,000 but did not realize this until 2015. He only paid on the loans because he wanted to help Miguel.
Eradio's testimony abruptly ends during his cross-examination on July 25, 2018. The reporter's transcript does not include any additional trial proceedings after that date. The register of actions provides that Eradio resumed his testimony on July 26, 2018. There was no rebuttal testimony, the jury was given instructions and the parties presenting closing argument. During deliberations, the jury asked a question, which has not been provided to this court. No verdict forms are provided in the clerk's or reporter's transcripts. The jury reached its verdict on July 26, 2018.
C. JUDGMENT
The notice of entry of judgment was initially filed on August 24, 2018. The judgment was entered as follows: "We, the Jury in the above-entitled action, find for the Plaintiff and against the Defendant in the sum of One Hundred Fifty-One Thousand Four Hundred Nine Dollars and 60 Cents ($151,409.60).
On September 7, 2018, Eradio filed both a motion for new trial and judgment notwithstanding the verdict (JNOV). The motion for new trial was based on the claim that there was insufficient evidence presented to justify the verdict based on the payment of $400,000 by Eradio, which was supported by the terms of the Agreement. The JNOV raised similar claims, and added that the jury should have apportioned damages between Eradio and Josefina. The hearing on both the Motion for New Trial and JNOV was held on October 19, 2018. Unfortunately, Eradio has not included the transcript of the hearing. Both were denied. An amended entry of judgment was filed on October 13, 2018. In designating the record on appeal, Eradio only requested the proceedings for July 23, 2018, July 24, 2018, and July 25, 2018, despite a court reporter being present on July 26, 2018.
DISCUSSION
Eradio claims on appeal that (1) the jury award of $151,409.60 is not supported by the evidence because he did not owe Miguel any money under the Agreement; (2) in the alternative, the judgment should be reversed on the grounds that Miguel failed to establish the essential elements of a contract because the Agreement was ambiguous; and (3) the jury should have been advised that they should apportion damages between him and Josefina because Josefina was a party to the Agreement. Initially, Eradio's claims fail based on the record before this court because the contract between the parties was an oral agreement, not the Agreement. As such, the Agreement does not form the basis for the breach of contract action. Moreover, even if this court were to consider that Eradio argued to the jury that the Agreement was the contract, we cannot consider this claim due to the inadequacy of the record.
A. ADDITIONAL FACTUAL BACKGROUND
As noted ante, the reporter's transcript does not contain the remainder of the cross-examination of Eradio. Moreover, it does not contain the jury verdict or the final instructions that were given to the jury. There is some discussion of the jury instructions in the record and the potential verdicts for the jury in this case. After Miguel rested his case, the trial court noted that the matter was not going to finish that day. The trial court also noted that the instructions provided by the parties were "a mess." There were instructions in the packet that had nothing to do with the case. The parties and the trial court reviewed the instructions.
The trial court referred to CACI No. 303, essential factual elements of breach of contract. The trial court noted that the instruction drafted by the parties and given to the trial court was not the same as the standard CACI No. 303; it instructed the parties they would have to meet and revise the instruction.
The trial court then addressed CACI No. 305, implied in fact contract. The trial court asked the parties, "[I]sn't the claim that this was an oral contract?" Miguel's attorney responded, "Well, it's an oral contract subject to interpretation based on post-contractual behavior." The trial court stated that this was not an implied in fact contract and took out CACI No. 305.
CACI No. 305 provides, "In deciding whether a contract was created, you should consider the conduct and relationship of the parties as well as all the circumstances of the case. [¶] Contracts can be created by the conduct of the parties, without spoken or written words. Contracts created by conduct are just as valid as contracts formed with words. [¶] Conduct will create a contract if the conduct of both parties is intentional and each knows, or has reason to know, that the other party will interpret the conduct as an agreement to enter into a contract."
The trial court then discussed CACI No. 314, disputed words in a written contract. The trial court stated, "[T]here's been considerable confusion because the assumption of debt document that Mr. Ramirez prepared has been referred to a lot during the testimony as the contract, the implication being this is the contract between the Cuenca brothers and it isn't. The contract between the Cuenca brothers was made at some earlier time and it was oral. [¶] Now, that document that [Fermin] created may or may not accurately reflect the terms of the oral agreement. That's the question that the jury will need to decide. But, please, let's make sure that we're not going to confuse the jury by referring to the assumption of debt document as the contract that's at issue in this case. It isn't."
Eradio's counsel responded, "That's the only thing we have in writing, that this memorializes the terms of the assumption of the debt, which includes the purchase of the—" The trial court cut counsel off stating that Eradio testified he did not sign the Agreement and "could not have it both ways" claiming the Agreement was the contract. The trial court also noted the Agreement was only evidence of what the parties previously agreed to orally.
Eradio's counsel then stated it was proceeding on the theory that the Agreement was the contract and included that Eradio only owed Miguel $400,000. The trial court then asked when the oral agreement was made. Miguel's counsel stated the oral agreement was reached in late 2005 and the Agreement was signed in March 2006. The trial court then stated, "Hang on a second. Do you agree that when Miguel and Eradio shook hands and said we're going to sell the business, Eradio is going to buy out Miguel on the following terms, . . . That was an enforceable agreement right then?" Eradio's counsel responded, "Sure." The trial court continued, "Right. And the jury will need to decide what Miguel and Eradio agree to on that day?" Eradio's counsel stated, "Correct."
The trial court additionally stated, "But that document [, the Agreement,] is not the contract between Miguel and Eradio. In fact, Eradio never signed it. [¶] The agreement, the contract between the brothers happened in 2005, a year earlier."
Eradio's attorney responded that the Agreement included the terms of the contract between him and Miguel. The trial court inquired, "We're on the same page. But that doesn't make it the contract, does it? It just makes it evidence of the contract." Eradio's counsel responded, "Correct." Eradio then stated that the Agreement provided that he only owed $400,000. "That's what it says." The trial court responded, "It would be as though, say, Miguel and Eradio reached this oral agreement in 2005, and a year later Miguel writes a letter to Eradio saying, you know, we don't have anything in writing, here's a letter summarizing the terms. And your client doesn't respond to that or says, yeah, those [are] the terms, whatever the case may be . . . . [T]hat would be some evidence . . . [¶] . . . [¶] . . . [o]f the existence of the oral agreement. The [Agreement] is the same. It sets forth the terms. Nobody corrected it, so there's going to be some evidence for the jury to consider that in fact these were the terms of the oral agreement." Eradio's counsel responded, "That's our position."
The trial court reiterated that the jury must be made aware that the Agreement was not the contract; it was only some evidence of the oral contract that the brothers entered into in 2005. Eradio's counsel then noted that there was no testimony as to the date that the oral contract was made. The trial court admonished that Eradio should be asked the date of the oral agreement. The parties were than advised to meet and work out the instructions that would be given to the jury.
The trial court warned the parties if the instructions and argument were not clear, then it may additionally advise the jurors that, "Miguel and Eradio claimed to have an oral agreement to sell this partnership interest. You need to decide what the terms of that oral agreement are. Some of the things that you can look at in making that decision would be, you know, the testimony of each of the two gentlemen, their course of conduct afterwards, perhaps the wording of the [Agreement]. They can look at all of these factors." The reporter's transcript then ends. As such, this court does not know what instructions were actually given to the jury.
The parties submitted a joint list of jury instructions on July 23, 2018. However, we have no way of knowing if these were the instructions that were given to the jury and there is no record on appeal of the actual instructions given.
According to the registrar of actions, on July 26, 2018, there was further discussion of the jury instructions. There was a court reporter present. The jury was instructed and both parties argued to the jury.
B. INADEQUACY OF THE RECORD AND ARGUMENT
All three of Eradio's claims on appeal are based on the Agreement. First, he claims that he did not owe money to Miguel under the Agreement and that such review of the claim is de novo as this court can interpret the Agreement for the first time on appeal. Second, in the alternative, he claims the Agreement was ambiguous and must be rejected. Absent such contract, there can be no judgment in favor of Miguel for breach of contract. Finally, he claims that since Josefina was a party to the Agreement, the trial court failed to properly instruct the jury it should determine their comparative fault or apportion damages between Eradio and Josefina.
"[A] judgment or order of the trial court is presumed correct and prejudicial error must be affirmatively shown." (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 187.) " ' "A necessary corollary to this rule is that if the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed." ' [Citation.] 'Consequently, [appellant] has the burden of providing an adequate record. [Citation.] Failure to provide an adequate record on an issue requires that the issue be resolved against [appellant].' " (Ibid.)
Further, on appeal, a party challenging an order has the burden to show error by making coherent legal arguments, supported by authority, or the claims will be deemed waived. (Kaufman v. Goldman (2011) 195 Cal.App.4th 734, 743 ["Every argument presented by an appellant must be supported by both coherent argument and pertinent legal authority"].)
Here, Eradio insists in the first and second arguments that he does not owe any money under the Agreement. He claims that review in this case is de novo because the question of contract ambiguity is a question of law. He insists that no money was owed under the Agreement because it was ambiguous in its meaning. Further, based on the written appraisal valuing the Oak House Restaurant at $945,000, and the language of the Agreement, no additional money was owed to Miguel because Eradio paid more than $400,000 to Miguel.
Eradio cannot prevail on these claims based on the record before this court. At the end of the provided reporter's transcript, the trial court makes it clear the contract between the parties was the oral agreement reached between Miguel and Eradio, and the jury was tasked to find the terms of the oral agreement. The Agreement was only one piece of evidence of the terms of the oral agreement. As such, the ambiguity in the language of the Agreement does not establish that the jury verdict must be reversed because it was not the contract that was the subject of the breach of contract action. Any amounts allegedly owed pursuant to the Agreement or the language of the Agreement were only one piece of the evidence of the contract, which was the oral agreement between the parties. Eradio has not supported his argument by proper reference to the facts in the lower court as he fails to acknowledge this oral agreement. (See People ex. rel. Reisig v. Acuna (2010) 182 Cal.App.4th 866, 879 [each factual reference must be supported by record citation].) Simply put, Eradio has failed to provide evidence that the basis of the breach of contract action was the Agreement. As such, this court need not look at whether the Agreement contained ambiguous language, or if the jury verdict was valid based on the money owed under the Agreement.
Additionally, based on the record before this court, the jury was likely instructed that they were to determine the terms of the oral agreement that was entered into between Miguel and Eradio. The jury reasonably could have decided that the oral agreement included that the Oak House restaurant and the goodwill of the business totaled $1,200,000 based on Miguel's testimony. Further, the jury could have concluded that the parties also agreed that Eradio would pay off the Wells Fargo and Bank of America loans. Since we do not have the verdict forms or the instructions that were given to the jury, we have no reason to conclude the jury was instructed the contract was actually the Agreement or the jury verdict was based on it finding the terms of the Agreement were the contract. "We cannot presume error from an incomplete record." (Christie v. Kimball (2012) 202 Cal.App.4th 1407, 1412.) As such, the jury reasonably could have concluded that the terms of the oral agreement required Eradio to pay damages to Miguel as reflected in the verdict. The record before this court supports the jury verdict.
As for Eradio's final claim, he insists the jury was improperly instructed as to damages because it was not asked to apportion damages between him and Josefina. He insists that since Josefina was a party to the Agreement, she should have been responsible for a portion of the damages. Initially, Eradio bases this argument on the supposition that Josefina was responsible because she was named on the Agreement. However, as stated, the contract between the parties in this breach of contract action was not the Agreement, but rather, the oral agreement between Miguel and Eradio. Nothing in the record supports that Josefina was part of the oral agreement.
Moreover, Eradio refers to the joint list of instructions on damages, which was filed prior to trial to prove the jury was improperly instructed. There simply is no evidence that these were the instructions given to the jury. The trial court noted that the proffered instructions were a "a mess." The parties were instructed that they should meet together to modify the instructions. There is no further discussion of the instructions, nor is there a record of the final instructions given to the jury provided in the record. As such, we cannot presume error on this record. (Foust v. San Jose Construction Co., Inc., supra, 198 Cal.App.4th at p. 187.)
At oral argument conducted on June 9, 2020, Eradio's counsel requested that he be allowed to augment the record on appeal to include the last day of trial, the verdict form and the jury instructions. In the notice designating record on appeal he did not request the last day of trial be included; there was no request for the jury verdict form; and no request for the final jury instructions. The appellate record in this case was filed on April 9, 2019, and defendant filed his opening brief on June 19, 2019. This court sent defendant the tentative opinion on February 26, 2020. Eradio's counsel had notice when the record was filed of the missing records but did not request an augment of the record. In addition, Eradio's counsel failed to request an augmentation after receiving this court's tentative opinion. Defendant's motion to augment was denied at oral argument." --------
The record on appeal establishes that the breach of contract action was based on the oral agreement between Eradio and Miguel. The fact that the parties later memorialized the oral agreement in the Agreement was only evidence of the terms of the oral agreement. Eradio cannot meet his burden of showing error or prejudice by relying upon the language of the Agreement.
DISPOSITION
We affirm the judgment. Respondent, as the prevailing party, is awarded his costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MILLER
J. We concur: RAMIREZ
P. J. CODRINGTON
J.