Opinion
NOT TO BE PUBLISHED
San Francisco Cty. Super. Ct. No. 437356
Siggins, J.
William F. Garlock was a limited partner in South Van Ness Partners (SVN). Garlock appeals from a judgment for Charles M. Sprincin and Chariot SVN, LLC (Chariot), after the trial court sustained demurrers to Garlock’s second amended complaint for breach of contract, fraud and conversion, and to the cancellation of instrument cause of action in the first amended complaint. The trial court concluded Garlock lacked standing to sue Sprincin and Chariot for damages arising out of Chariot’s contractual dealings with SVN. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
SVN and Chariot entered into a series of agreements relating to SVN’s sale of San Francisco real property to Chariot that Chariot developed as a condominium project. The agreements were negotiated by Sprincin, who was Chariot’s managing member, and James Brennan, the president of American Partnership Services (APS), the general partner of SVN. Garlock, a limited partner in SVN, does not allege that he was personally involved in the negotiations.
One of the agreements between SVN and Chariot related to the sale was a holdback agreement that required the parties to contribute funds to remediate specified soil contamination on the property. Another agreement required Chariot to reimburse SVN for some of the remediation costs if Chariot later received profits from the sale of the planned condominium units (the contingent agreement). The holdback agreement expressly states that it can only be modified in a writing signed by SVN and Chariot. It also specifies that SVN and Chariot are the only parties with rights under the agreement. The contingent agreement also states that it “is not intended to and shall not create rights of any nature in favor of any third parties.”
Escrow apparently closed on the transaction because in early 2000 Chariot authorized and paid monies to SVN from the escrow account pursuant to the holdback agreement. Thereafter, Chariot and SVN began negotiations to fully settle and finalize future monies that could become due under the contingent agreement. Brennan, who was negotiating for SVN, was notified by Garlock’s attorney that he was conditionally authorized by Garlock to negotiate a settlement, subject to Garlock’s receipt of 50 percent of the amount paid by Chariot and a mutual general release. Garlock also alleges that SVN’s lawyers advised Sprincin and Chariot that Garlock’s agreement to the terms of any settlement between Chariot and SVN was required, and that settlement funds were to be paid to the lawyers’ trust account.
SVN rejected Chariot’s initial proposals, and made changes to the settlement and release that included the addition of Garlock’s signature as an individual. Sprincin signed the revised settlement and release as an individual and on behalf of Chariot, but then revoked his approval within half an hour, amended the document and delivered yet another revised document to counsel for SVN. Garlock declined to sign the document received from Sprincin.
Approximately two weeks after the exchange of proposed agreements, a final release agreement was executed by Sprincin, as an individual and on behalf of Chariot, and Brennan, as an individual and on behalf of SVN, APS, and Brennan Garlock, Inc. Pursuant to that final release agreement, Chariot paid SVN and secured a release from all further liability under the various agreements related to the transaction. Garlock was not a party to the final release agreement, and allegedly learned about it approximately six months after it was signed.
Thereafter, Garlock filed suit against Sprincin and Chariot for breach of contract, fraud and conversion. He did not name SVN or Brennan as defendants. Garlock later filed a first amended complaint that added a claim for cancellation of instrument. Sprincin and Chariot demurred on the grounds that, among other things, Garlock had no standing as a limited partner to sue third party defendants, and that Garlock’s claims were barred by the agreements between SVN and Chariot. They also demurred to the cause of action for cancellation of instrument on the ground it did not allege facts sufficient to meet the requirements of Civil Code section 3412, and failed to name SVN as a defendant as a necessary party to the instrument.
The court sustained the demurrer as to the cancellation of instrument cause of action without leave to amend, on the grounds that Garlock was not a party to the contract, the contract had already been performed, and Garlock’s complaint did not name all parties to the contract. The court also sustained the demurrer to the remaining causes of action with leave to amend, in part on the grounds that Garlock lacked standing.
Garlock filed a second amended complaint, which deleted the cancellation of instrument cause of action but reasserted other causes of action. Sprincin and Chariot demurred again, arguing in part, that the second amended complaint failed to state a cause of action and Garlock lacked standing. Garlock opposed. At the hearing on the demurrer, the court identified deficiencies in the complaint and stated it would sustain the demurrer, but was not sure whether it would grant leave to amend.
After some extended colloquy, Garlock’s counsel stated: “I understand the Court’s position, but I believe it can be addressed.” The court responded: “But, that’s not enough to tell me—simply saying, ‘I can,’ since you’ve already tried and it failed based on the facts that are available to you.”
The court sustained the demurrer without leave to amend and stated: “Plaintiff fails to plead sufficiently his standing to maintain the instant action.” Garlock timely appealed from the resulting judgment.
DISCUSSION
“On appeal from a judgment after a demurrer is sustained without leave to amend, we review the trial court’s ruling de novo, exercising our independent judgment on whether the complaint states a cause of action.” (Lincoln Property Co., N.C., Inc. v. Travelers Indemnity Co. (2006) 137 Cal.App.4th 905, 911.) “ ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.’. . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; accord, Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
Garlock argues that he had standing to sue Chariot because he was initially involved in the negotiations that led up to the final release agreement. Garlock says Chariot was on notice that his personal agreement was required for any settlement and release of the potential claims between Chariot and SVN. But the agreements pertaining to the transaction which gave rise to the disputed claims were between Chariot and SVN, and did not separately include Garlock. Garlock’s status as a limited partner of SVN did not entitle him to make an individual claim against Chariot based on alleged breaches of the agreements between SVN and Chariot to which Garlock was not a party. Except in unusual circumstances not presented here, individual partners lack standing to sue third parties for damage to their beneficial interest in the partnership property. (Mayer v. C.W. Driver (2002) 98 Cal.App.4th 48, 59-60; see also Evans v. Galardi (1976) 16 Cal.3d 300, 307 [“limited partner has no interest in the partnership property by virtue of his status as a limited partner”]; cf. Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411, 429 [limited partners could assert individual claims against general partner based on general partner’s self-dealing]; Kobernick v. Shaw (1977) 70 Cal.App.3d 914, 918-920 [limited partner permitted to file cross-complaint to protect partnership assets when general partner abandoned the partnership]; Linder v. Vogue Investments, Inc. (1966) 239 Cal.App.2d 338, 340-341 [limited partner allowed to intervene in lawsuit to defend partnership when general partner refused to defend].)
The proposed release agreement and the final release agreement provide: “Buyers and Sellers entered into several agreements during the period 1998-2001, inclusive, with respect to the sale to Chariot of that certain real property . . . by SVN Partners. In accordance with the terms of one or more of said agreements by and between Buyers and Sellers, Chariot may sometime hereafter owe additional money to SVN Partners and/or [APS] in full satisfaction of any and all of said agreement(s).”
Garlock relies upon a proposed release agreement that bears his signature to say he had an individual and enforceable interest in the earlier agreements between SVN and Chariot. But the proposed release agreement was never executed by Brennan or SVN, and Sprincin’s initial acceptance was revoked virtually immediately thereafter. Moreover, Garlock cites no relevant authority that would allow us to conclude that he became a party to the earlier agreements between SVN and Chariot because his name was included in the initial paragraph of a proposed release. Nor does the proposed release agreement include express terms to memorialize Sprincin and Chariot’s oral promises to Garlock not to settle with SVN without Garlock’s written agreement, and to make any payment to Honowitz & Shaw’s client trust account, as alleged in the complaint. Instead, payment is to be made to SVN.
The first paragraph of the proposed release agreement stated: “This Release Agreement . . . is entered into as of June 30, 2003, by and between Chariot SVN, LLC, a California limited liability company . . ., Charles M. Sprincin, an individual . . ., sometimes hereinaf[t]er referred to as ‘Buyers’ for convenience, [SVN], [APS], . . . Brennan Garlock, Inc., a California corporation (hereinafter ‘BGI’), James E. Brennan, an individual . ., and William F. Garlock . . . . [SVN], [APS], BGI, Brennan and Garlock are, for convenience, sometimes hereinafter referred to as ‘Sellers.’ ”
Because we conclude the proposed release agreement did not confer standing on Garlock to assert claims that derived from the underlying agreements between SVN and Chariot, we need not address respondents’ additional argument that “the express terms of the agreements attached to the [complaints] bar [Garlock] as an individual from suing for any portion of the funds described in those agreements.”
Garlock’s claim for breach of oral contract alleges that “it was verbally agreed within the City and County of San Francisco amongst Sprincin individually and on behalf of Chariot SVN, Brennan individually and on behalf of [SVN], and Garlock that the release of any portion of amount due under the Agreements [between SVN and Chariot] and any consideration flowing to the parties there from required the written agreement of all three individuals in their various capacities, namely Sprincin, Garlock, and Brennan. It was further verbally agreed amongst the above-named parties that any such release of funds would be deposited in the trust account of Honowitz and Shaw located in San Francisco, California.” Garlock alleged that “Sprincin and Chariot SVN breached the oral agreement, by entering into a secret arrangement with Brennan, without Garlock’s knowledge or consent, whereby $100,000 of the amounts due or to become due pursuant to the Contingent Agreement were paid by Sprincin and Chariot SVN to Brennan in consideration for a purported release as to the remaining portions due under the Agreements.” Thus, Garlock alleged he suffered resulting damages in excess of $100,000, apparently based on one-half of the funds that potentially could have been due SVN from Chariot under the contingent agreement, if the final release agreement had not been executed. Similar allegations were made in the causes of action for fraud and conversion.
As the trial court observed during argument on the demurrer to the second amended complaint, Garlock did not allege that he ever communicated directly with Sprincin during the negotiations regarding the settlement and release agreements. Nor does Garlock claim that he suffered damages resulting from the alleged breach of oral contract in excess of the amounts allegedly owed to the partnership based on the underlying agreements between SVN and Chariot relating to the sale of the property. It is clear from these allegations that Garlock is seeking to recover for damage or diminution in value to his limited partnership interest. This is exactly what he cannot do. (See Evans v. Galardi, supra, 16 Cal.3d 300.)
Moreover, the facts alleged in Garlock’s complaint seem to be at most an agreement to agree upon a final settlement, and do not appear to allege a binding contract. (See Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 213.) Nor, as Garlock agreed at argument, could he legally claim any more than a portion of the monies due SVN under the agreement with interest as damages for breach of contract. (Civ. Code, § 3302.)
Garlock also suggests the court improperly sustained the demurrer to the cancellation of instrument cause of action in his first amended complaint, but does not adequately address the grounds of the court’s ruling. The issue is mentioned briefly in the preliminary sections of Garlock’s opening brief, but is not the subject of a separate argument. Nor do Garlock’s briefs argue the statutory basis for his claim. (Civ. Code, § 3412.) The court sustained the demurrer to the cause of action for cancellation of the final release agreement on several grounds: (1) Garlock was not a party to the contract, (2) the contract was already fully performed, and (3) Garlock did not name all parties to the contract. While Garlock now advances a conclusory and unsupported argument that he was not required to name Brennan and SVN as parties, and that he could amend his complaint to correct any such omission, he does not challenge additional grounds the court relied upon to sustain the demurrer. Garlock has made no showing that the defects in his cause of action for cancellation of instrument could be cured by amendment, or that the trial court abused its discretion when it denied him leave to amend. (See Hendy v. Losse (1991) 54 Cal.3d 723, 742 [when plaintiff has not shown a reasonable possibility that a defect in the complaint can be cured by amendment, the trial court does not abuse its discretion by denying leave to amend]; accord, Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 790.) Nor has Garlock shown error in the court’s rulings sustaining the demurrer to his second amended complaint without leave to amend.
Thus, we need not address respondents’ argument that Garlock waived this issue on appeal because he failed to request leave to amend in the trial court. Respondents point out that Garlock made no arguments in support of the cancellation of instrument cause of action in his opposition to the demurrer to the first amended complaint, and made only a single brief comment on the matter at argument on the demurrer.
Garlock also says that the demurrer to the second amended complaint should have been overruled because of a clerical error in respondents’ moving papers.
DISPOSITION
The judgment is affirmed.
We concur: McGuiness, P.J., Horner, J.
Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Respondents filed a corrected pleading in the trial court. Garlock cites no authority to support his position that an alleged technical rule violation would require that the demurrer be overruled under these circumstances, nor does he argue that he was prejudiced by the initial clerical error.