Opinion
B296887
04-24-2020
RAFAEL HERNANDEZ, Plaintiff and Respondent, v. ROBERTO C. HERNANDEZ, Defendant and Appellant.
Bahar Law Office and Sarvenaz Bahar for Defendant and Appellant. Forry Law Group and Craig B. Forry for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. LC106704) APPEAL from a judgment of the Superior Court of Los Angeles County, Virginia Keeny, Judge. Affirmed. Bahar Law Office and Sarvenaz Bahar for Defendant and Appellant. Forry Law Group and Craig B. Forry for Plaintiff and Respondent.
INTRODUCTION
This action involves two brothers, Rafael and Roberto C. Hernandez. Defendant and appellant Roberto worked as a mechanic and owned and operated RC Automotive. At some point after Roberto started the business, plaintiff and respondent Rafael came to work with him, doing auto body repair work. But the location the brothers worked out of was not zoned for auto body repair, and in 2011, they agreed to buy real property located on Lull Street in Van Nuys (the Property) and relocate their business. Rafael contributed some of the money for the down payment, but because his credit score was low, the loan to purchase the Property was in Roberto's name only, as was title to the Property. Rafael contends Roberto promised to put his name on the title at some point, but it is undisputed that this never happened.
Because the parties share a surname, we refer to them by their first names to avoid confusion.
In 2013, the brothers were not getting along, and decided they would cease working together. Ultimately, the trial court found that the brothers orally agreed in November 2015 that Roberto would buy Rafael out of his interest in both the business and the Property for $350,000: $100,000 would be paid in February 2016, and $250,000 by January 1, 2017. Roberto paid only $100,000. Rafael sued for breach of contract, and following a court trial, the court entered a judgment in favor of Rafael for $250,000, plus interest.
Roberto contends the court erred in finding an enforceable agreement because: (1) there was no meeting of the minds on key terms of the agreement; (2) if there was an agreement, it included a condition precedent -- that payment of the $250,000 was not due until Roberto refinanced the loans on the Property (which never occurred); (3) the oral agreement involved the transfer of an interest in real property and thus is unenforceable because it violates the statute of frauds; and (4) because Rafael asserted in his trial brief that an April 2015 written agreement was the operative agreement, the court was precluded from finding that the November 2015 oral agreement was the operative agreement. As explained below, we find: (1) substantial evidence supports the court's finding that there was a meeting of the minds on key terms of the agreement; (2) the burden was on Roberto to show the existence of a condition precedent, and the court did not err in finding he failed to meet that burden; (3) the statute of frauds is inapplicable because the agreement contemplated no actual transfer of interest in real property and, in any case, Rafael's performance of the agreement bars Roberto from asserting the statute of frauds; and (4) Rafael's trial brief did not preclude the trial court from finding the November 2015 oral agreement was enforceable. We therefore affirm the judgment.
STATEMENT OF RELEVANT FACTS
A. Rafael Sues Roberto
Rafael filed a complaint against Roberto alleging breach of oral agreement, breach of implied-in-fact agreement, and declaratory relief. Rafael alleged that in August 2011, he and Roberto agreed to purchase real property located on Lull Street in Van Nuys, and share ownership equally as part of their agreement to share ownership of the mechanic and body shop business to be operated at the Property. After purchasing the Property, the brothers operated their business, paid expenses out of the proceeds, and shared equally any remaining money. In November 2015, the brothers agreed Roberto would buy out Rafael's ownership interest "in the Property and the Business" for a payment of $100,000 by January 1, 2016, and an additional payment of $250,000 by January 1, 2017. Rafael received $100,000 in February 2016, but was not paid the remaining $250,000.
Roberto demurred to the complaint, arguing the alleged agreement was unenforceable due to the statute of frauds. The court (Judge Paul A. Bacigalupo) overruled the demurrer, and Roberto answered the complaint.
The day before trial, Rafael submitted a trial brief, in which he asserted, among other things, "In April 2015, [Rafael] and [Roberto] agreed to a buy-out of [Rafael]'s ownership interest in the Property and the Business based upon an appraisal of the equity in the Property." The next day, Roberto filed a motion for judgment on the pleadings, arguing that: (a) because Rafael had alleged in his complaint that the parties came to an agreement in November 2015, he should be precluded from presenting evidence that the operative agreement was reached at any other time; and (b) as a matter of law, Rafael's alleged claim was "unenforceable pursuant to the provisions of the Statute of Frauds" because the timing of the second payment was more than a year after the agreement was allegedly made. Rafael opposed and the trial court (Judge Keeny) denied the motion without prejudice to Roberto renewing it "at the time of trial, should the allegedly improper evidence be offered." After trial, the court denied the motion in its final statement of decision, finding Rafael never claimed the November 2015 agreement was the only agreement between the parties.
The trial court found the April written agreement "not separately enforceable, as it was too uncertain as to when the payment would occur."
B. The Court Finds for Rafael After Trial
A bench trial took place over three days in October and November 2018. At the conclusion of trial, the parties submitted a settled statement summarizing the testimony and documents presented. The court then issued a proposed statement of decision and tentative ruling after trial. The proposed statement included the finding that "[t]he parties reached an oral agreement on November 15, 2015 that one half the equity of the Lull Street property was $350,000 and that defendant would pay $100,000 in February 2016 and the remainder no later than January 1, 2017." Roberto objected to the proposed statement arguing, among other things, that it was "ambiguous as to the terms of this agreement because, according to both the Court's findings and [Rafael]'s undisputed testimony, as of November 2015, the amounts of equity and buyout were only estimates." Roberto also objected that the proposed statement of decision did "not resolve whether the November 2015 agreement is enforceable under California law as it lacked essential terms such as the amount of the buy-out." The court overruled these objections, but sustained others, and issued a Final Statement of Decision After Trial. In relevant part, the final statement of decision sets forth the following:
1. Rafael's Testimony
Rafael testified that in 2011, after he and Roberto had been working together for some period of time, they agreed to purchase real property located on Lull Street in Van Nuys and relocate their business. The brothers agreed to buy the Property together, with Roberto stating that if they did so, they would be partners, and would divide the equity that appreciated in the Property on an equal basis, and would also equally divide the net proceeds of the business. In purchasing the Property, the parties agreed that due to Rafael's low credit score, Roberto would be the only one on the title to the Property and the only borrower on the loans so the interest rate would be lower. However, initially, Rafael and Roberto both initialed and signed a counteroffer to the Buyer. Rafael claimed Roberto promised he "would be added to the title later," but this never happened. Roberto purchased the Property for $715,000, subject to two deeds of trust, totaling $643,500. Rafael provided $28,000 of the down payment. While Roberto handled the financial matters and kept the books and records, Rafael was a signatory to the RC Automotive bank account, and Roberto assured him they were each receiving 50 percent of the net income of the business.
Starting in 2013, Rafael grew concerned that Roberto was not equally dividing the net proceeds. The brothers agreed that Roberto would buy Rafael out of the business, but made no formal agreement at the time. In early or mid-2014, Rafael and Roberto again discussed Roberto buying him out, and Rafael told Roberto that he believed the building had doubled in value and that $350,000 would be a fair buy-out figure.
In October 2014, Roberto told Rafael he was unable to get the money to buy him out or refinance the Property, but he would continue trying; Rafael agreed to wait. On April 8, 2015, the brothers agreed that Roberto would buy Rafael's interest in the business and Property for "one-half of the equity in the Lull Street Property." On a "Limited Warranty" form lying around the office, Rafael wrote "I Roberto Hernandez am Buying out Rafael Hernandez out [sic] of property and business of RC Automotive for half of the Equity of property," and both signed it. The brothers did not have the money to appraise the Property, so they continued working together.
In November 2015, Roberto told Rafael he could not get any money until January 2016, and "they agreed that based upon the expected equity of $700,000, [Rafael] would receive one-half in the sum of $350,000." They further agreed that if Roberto "could not pay in full, he would pay $100,000 by January 1, 2016, and the balance by January 1, 2017." Subsequently, a February 2016 appraisal of the Property showed a value of $1,356,000.
Rafael initially testified this discussion took place in October 2015, but on redirect stated it occurred in November 2015.
On February 3, 2016, Rafael received $100,000 from Roberto. On March 2, 2016, the brothers discussed the appraisal and Roberto confirmed the equity in the Property was indeed $700,000. Given that Roberto had already paid $100,000, they "agreed that the balance of the $250,000 would be paid by January 1, 2017 after [Roberto] was able to refinance the loans on the Lull Street Property." In reliance on the agreement that Roberto would pay the additional $250,000, Rafael "began a separate business under his corporation Integrity Auto Body, Inc., and after that date [March 2, 2016], [Rafael] and [Roberto] no longer shared the customers or the receipts." Rafael relied on the agreement to be paid $350,000 in separating his business from Roberto's and ending the partnership.
2. Roberto's Testimony
Roberto testified that he had been operating a mechanic's business in Van Nuys since 2007 but was forced to move when, after Rafael joined him, someone complained about body shop repairs being performed there. Rafael contributed $20,000 toward the purchase of the Property. Rafael and Roberto were partners, but Rafael's share was 20 percent, not 50 percent. "There was no agreement that [Rafael] would be on title to the Lull Street Property."
Contrary to his testimony that Rafael was a 20 percent partner, Roberto also testified that the brothers "never entered into any agreement to become partners in the business" and that he added Rafael to the business account so Rafael could sign checks for business expenses, but "the ownership of the business always belonged to" Roberto.
RC Automotive made the loan payments on the Property, but Roberto personally paid the property taxes without being reimbursed by the business. While Roberto and Rafael each took a $4,000 monthly draw, Roberto gave Rafael the same amount he received only because Rafael was his little brother. Roberto specifically testified that the parties "had an agreement that each month they would each take $4000 from the business, and that if there was not enough for them to take that amount, they would split the profits 50/50."
Roberto claimed that the brothers "verbally agreed on the sum of $100,000 for the buy-out right before they separated in 2015 or 2016" but Roberto "never agreed to pay [Rafael] an additional $250,000." Roberto stated he never saw any appraisal. Roberto also claimed he did not sign the April 2015 agreement (the document written on the "Limited Warranty" form), and did not see it until exhibits were being exchanged for trial.
3. Dennis Giangreco's Testimony
Dennis Giangreco testified that he was friends with Roberto, and Roberto told him in 2015 or 2016 that he and Rafael could no longer work together, and Roberto wanted to pay Rafael $100,000 to buy him out. Giangreco opined that $100,000 was too much, but was willing to (and did) loan Roberto $100,000. Roberto never mentioned another $250,000 payment. Roberto had originally agreed to make monthly payments to Giangreco on his loan, but Giangreco agreed to take repayment in a lump sum once Roberto refinanced the Property.
4. Bart Baggett's Testimony
Bart Baggett testified as a forensic document examiner and handwriting expert. He opined that Roberto neither wrote nor signed the April 2015 agreement.
5. Credibility
The court found Rafael to be "the more credible of the parties" because "[h]is testimony was straightforward, consistent, and not exaggerated." "The court found his testimony to be consistent throughout direct and cross examination that he understood he would be a co-owner of the building, that starting in 2014 Roberto told [Rafael] that he would buy [Rafael] out for one half of the equity in the building, and that, ultimately, Roberto agreed that one half the equity was $350,000."
In contrast, the court found that much of Roberto's testimony "made little sense or was not corroborated by the evidence," giving several examples, such as the fact that "sometimes he stated that he told [Rafael] he was a partner; and elsewhere in his testimony, he denied that he ever told [Rafael] that he was a partner." Based on the offers submitted to the seller of the Property that contained both their names, the court also disbelieved Roberto's denial that the brothers had agreed to purchase the Property together and stated that because Roberto's "testimony with respect to the purchase of the building was plainly false, the court discredited much of his other testimony."
The court placed little weight on Giangreco's testimony, finding it mostly irrelevant or speculative, and noting that the witness had a "clear motive for siding with [Roberto] in this dispute" because "any additional debt imposed on [Roberto] (e.g., by way of a judgment), may jeopardize Mr. Giangreco's ability to get repaid on his loan." The court also "placed little weight" on Baggett's analysis, citing several "inconsistencies or errors in Mr. Baggett's report."
6. Findings
The court then made the following findings:
— Rafael and Roberto "entered into a joint venture to operate a business to provide mechanic and auto body services. Together they agreed to buy the Lull Street property and to operate their auto mechanic and auto body repair business out of that property. The parties agreed to and conducted that business as a 50/50 partnership, paying for the mortgage on the Lull Street property and all expenses out of the business, and sharing the profits of the business 50/50."
— "The parties executed a written agreement, dated April 8, 2015. [Rafael] handwrote the top section of the agreement and both of the parties signed it on that date in each other's presence. [Rafael] did not forge [Roberto]'s signature on that document." The agreement "provided that [Roberto] would buy out [Rafael]'s interest in the business and the Lull Street property for one half the value of the equity in the Lull Street property. At the time they entered into this agreement, the parties placed no date on the planned buy-out." The court found the April 2015 agreement not to be "separately enforceable," because it was "too uncertain as to when the payment would occur."
— "The parties formally agreed to dissolve their joint venture in November 2015. A joint venture may be dissolved by oral agreement and such agreement is not
subject to the statute of frauds. (Simpson v. Winkelman (1964) 225 Cal.App.2d 746, 750.)"
— "The parties reached an oral agreement on November 15, 2015 that one half the equity of the Lull Street property was $350,000 and that defendant would pay $100,000 in February 2016 and the remainder no later than January 1, 2017. The court finds that the parties agreed on these amounts and this payment schedule. While plaintiff later confirmed the equity value by obtaining an appraisal, the parties in November 2015 entered into an enforceable oral agreement for the full sum. The court further finds that all of the essential terms of this oral contract were agreed to by the parties."
— "Because this oral agreement could be completed within one year (as the payment could be made at any time prior to January 1, 2017), the statute of frauds does not apply."
— Roberto "paid $100,000 to [Rafael] on February 3, 2016. The parties confirmed their November 2015 oral agreement on or about March 2, 2016, agreeing that [Roberto] had already paid $100,000 and that an additional amount of $250,000 was due by January 1, 2017. At that time, there was no agreement between the parties that
the repayment was contingent on defendant being able to refinance the Lull Street property." Roberto "has never paid the remaining $250,000 owed to [Rafael], thereby breaching the parties' oral agreement reached in November 2015, setting the full amount owed and the pay-out schedule." Roberto "is liable for breach of contract, causing damages to [Rafael] in the amount of $250,000, plus prejudgment interest pursuant to Civil Code Section 3287 from January 1, 2017 to the time of judgment."
On February 6, 2019, the court entered judgment in favor of Rafael and against Roberto for $250,000 "for breach of an oral contract entered in November 2015" plus interest and costs. On April 4, 2019, the court entered a nunc pro tunc judgment correcting the interest figure from the February 6 judgment.
C. Roberto Appeals
Roberto timely appealed the judgment. He submitted with the trial court a proposed settled statement to be used on appeal, which: (1) asserted that nothing was discussed at the hearing on Roberto's demurrer that did not appear in the parties' pleadings; (2) asserted that nothing was discussed at the hearing on Roberto's motion for judgment on the pleadings that did not appear in the parties' pleadings; (3) reproduced the settled statement summarizing the testimony and documents presented at trial; and (4) included summaries of the parties' closing arguments. The settled statement disclosed that at trial, Roberto's counsel argued that "[t]his is a case of breach of oral contract, but the agreement was for $100,000 . . . not $350,000." His counsel reiterated that "[t]he fact is that the parties reached an agreement for $100,000." His counsel did not argue that the agreement was too uncertain to enforce. Over Rafael's objections, the trial court approved Roberto's proposed settled statement on appeal.
DISCUSSION
A. The Court Did Not Err in Finding a Meeting of the Minds
The trial court found that Rafael and Roberto "reached an oral agreement on November 15, 2015 that one half the equity of the Lull Street property was $350,000 and that [Roberto] would pay $100,000 in February 2016 and the remainder no later than January 1, 2017. The court finds that the parties agreed on these amounts and this payment schedule. While [Rafael] later confirmed the equity value by obtaining an appraisal, the parties in November 2015 entered into an enforceable oral agreement for the full sum. The court further finds that all of the essential terms of this oral contract were agreed to by the parties."
Roberto argues that the November 2015 agreement was unenforceable because there was no meeting of the minds as to "the amount of equity in the property which would in turn determine the amount of plaintiff's buy-out" or as to "the method for determining a fair and mutually acceptable market value for the property." He acknowledges the court found that the parties had agreed on "the amount of equity and the payment schedule," but argues this finding is "contrary to the record which . . . makes clear that the $700,000 equity value in November 2015 was at best an estimation and that the parties did not agree on the actual amount of equity until March 2016 when defendant saw the appraisal for the first time and apparently agreed to proceed based on this appraisal." We disagree.
We reject Rafael's contention that Roberto forfeited this argument by failing to raise it below. At trial, Roberto did not dispute the existence of an agreement with Rafael to buy Rafael out of RC Automotive -- the dispute was over the amount agreed upon. But after the trial court issued a proposed statement of decision finding that "[t]he parties reached an oral agreement on November 15, 2015 that one half the equity of the Lull Street property was $350,000," Roberto objected that the record supported only the conclusion that $350,000 was an estimate, and therefore could not be the basis of an enforceable contract. On appeal, he similarly argues that "there was no enforceable contract between the parties as of November 2015 because there was no meeting of the minds on . . . the amount of equity in the property which would in turn determine the amount of [Rafael]'s buy-out" and "on the method for determining a fair and mutually acceptable market value for the property." On this record, Roberto did not forfeit this argument.
First, while Roberto is correct that the court made no finding as to whether or how the parties agreed on a method for determining a mutually acceptable market value for the Property, this was unnecessary for a binding agreement. The essential elements of a contract are: "(1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration." (Marshall & Co. v. Weisel (1966) 242 Cal.App.2d 191, 196, citing Civ. Code, § 1550.) If, as the court found, the parties agreed on an amount of consideration, it is irrelevant how they arrived at that amount.
As to Roberto's argument that the court's finding that the parties agreed on the equity and payment schedule was "contrary to the record," we review the court's finding for substantial evidence. (See Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624,632 ["When the trial court has resolved a disputed factual issue, the appellate courts review the ruling according to the substantial evidence rule"].) "'When a trial court's factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination.'" (Millikan v. American Spectrum Real Estate Services California, Inc. (2004) 117 Cal.App.4th 1094, 1105, quoting Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)
Here, Rafael testified that "[o]n November 15, 2015, plaintiff and defendant agreed that plaintiff would be paid $350,000 for the buy-out of his interest in both businesses and the Lull Street property." Additionally, on cross-examination, Rafael affirmed that in November 2015, he and Roberto "agreed to a buy-out of [Rafael]'s ownership interest in the Property and the Business whereby [Rafael] would receive $100,000 by January 1, 2016, and an additional $250,000 by January 1, 2017." Setting aside any contradictory evidence in this case as we must, this testimony is substantial evidence supporting the court's finding that in November 2015, the parties had agreed on the amount of equity and the payment schedule. We find no error in the court's finding that the parties had a meeting of the minds as to the amount of payment and payment schedule.
B. The Court Did Not Err in Finding No Condition Precedent
After finding that Roberto and Rafael "confirmed their November 2015 oral agreement on or about March 2, 2016, agreeing that defendant had already paid $100,000 and that an additional amount of $250,000 was due by January 1, 2017," the court expressly found "there was no agreement between the parties that the repayment was contingent on defendant being able to refinance the Lull Street property."
Roberto argues that "the trial court's characterization of what happened in March 2016 as a 'confirmation' of the terms already agreed to by the parties in November 2015 is not reasonable," because the parties agreed to new key terms in March 2016. Specifically, Roberto argues that "[i]n March 2016, the parties for the first time agreed to: (1) proceed based on the appraisal obtained by plaintiff, (2) calculate the amount of equity in the property based on this appraisal to be $700,000, and (3) defendant would pay plaintiff for half the equity in the amount of $350,000 and would pay the outstanding balance of $250,000 by January 1, 2017 on the condition that defendant was able to refinance the loans on the property." Roberto also argues that the trial court's rejection of his contention that "under [Rafael]'s version of events, the parties agreed in March 2016 to make defendant's payment of $250,000 contingent on refinancing . . . is [not] supported by the evidence." Roberto appears to be arguing that the court erred by finding that the parties first entered into an agreement in November 2015 (as opposed to March 2016 when the equity was formally calculated), and in finding that Roberto's payment obligations were not contingent upon his ability to refinance the loans on the Property.
As discussed above, substantial evidence supports the court's finding that the parties entered into an agreement in November 2015 that Roberto would buy out Rafael for $350,000. Thus, whether the equity in the Property was officially calculated in March 2016 or at some other time is irrelevant, because the parties had already agreed that the amount to be paid to Rafael would be $350,000.
As to Roberto's contention that substantial evidence does not support the court's failure to find that the agreement was modified to add a condition precedent, he misunderstands the standard. Because Roberto was the party alleging the agreement had been modified, it was his burden to prove the existence of that modification. (See, e.g., Brenneke v. Smallman (1905) 2 Cal.App. 306, 311 ["The burden of proving any modification which would afford a defense to the action on the original contract was upon the defendant"]; Evid. Code, § 500 ["Except as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting"].) In finding that in March 2016, "there was no agreement between the parties that the repayment was contingent on defendant being able to refinance the Lull Street property," the court found Roberto did not meet his burden of proof. "'[W]here the issue on appeal turns on a failure of proof at trial, the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law. [Citations.] Specifically, the question becomes whether the appellant's evidence was (1) "uncontradicted and unimpeached" and (2) "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding." [Citation.]'" (Dreyer's Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838, quoting In re I.W. (2009) 180 Cal.App.4th 1517, 1528.)
Here, the only evidence of the supposed modification was Roberto's own testimony. But "'[i]t is not the law that a trial court must accept as true the testimony of witnesses that is uncontradicted. Their interest in the result of the case, their motives, and the manner in which they testify may be such to justify the court in disbelieving their testimony.'" (Bazaure v. Richman (1959) 169 Cal.App.2d 218, 222; see also Roesch v. DeMota (1944) 24 Cal.2d 563, 571 [even if testimony is "uncontradicted and unimpeached, . . . it would not necessarily follow that it was of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a [favorable] finding"].) In its Final Statement of Decision After Trial, the court found that much of Roberto's testimony "made little sense or was not corroborated by the evidence." It also found that "[b]ecause defendant's testimony with respect to the purchase of the building was plainly false, the court discredited much of his other testimony." Therefore, Roberto's only evidence -- his testimony -- was not "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding . . . ." (Roesch v. DeMota, supra, 24 Cal.2d at 571.)
Roberto also points out that Rafael testified that the parties "agreed that the balance of the $250,000 would be paid by January 1, 2017 after [Roberto] was able to refinance the loans on the Lull Street Property." But this evidence did not compel the court to find that refinancing was a condition of repayment, rather than simply a statement of when payment was intended to occur. "'[C]onditions precedent are not favored in the law [citations], and courts shall not construe a term of the contract so as to establish a condition precedent absent plain and unambiguous contract language to that effect.'" (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1183, quoting Frankel v. Board of Dental Examiners (1996) 46 Cal.App.4th 534, 550.)
C. The November 2015 Agreement Does Not Violate the Statute of Frauds
The court found that "[t]he parties formally agreed to dissolve their joint venture in November 2015. A joint venture may be dissolved by oral agreement and such agreement is not subject to the statute of frauds." The court also found that "[b]ecause this oral agreement could be completed within one year (as the payment could be made at any time prior to January 1, 2017[)], the statute of frauds does not apply."
Roberto argues that "[p]ursuant to the statute of frauds, the November 2015 oral contract for the sale of plaintiff's interest in the Lull Street Property to defendant is invalid because it is not in writing." Rafael counters that: (1) the statute of frauds is inapplicable because he was not on title to the Property and therefore the agreement did not involve a transfer of interest in real property; (2) his performance of the agreement bars Roberto from asserting the statute of frauds; and (3) the statute of frauds does not apply to the dissolution of a joint venture. In reply, Roberto argues that: (1) Rafael "contended at trial and the trial court found that [Rafael] had a 50 percent interest in the Lull Street Property even though he was not on title and that the parties agreed that [Rafael] would sell his interest to [Roberto]"; (2) Roberto was not barred from asserting the statute of frauds for a variety of reasons; and (3) the statute of frauds applies to the dissolution of joint ventures if they involve the sale of real property.
As our Supreme Court has observed, "We must, of course, apply the California statute of frauds to a situation which is precisely covered by the language of the statute. If the extent of coverage is unclear, however, we know of no policy reasons which compel a resolution of the ambiguity in favor of its wide application." (Sunset-Sternau Food Co. v. Bonzi (1964) 60 Cal.2d 834, 838.) As explained below, we find the statute of frauds inapplicable because, regardless of what the parties contended, it is undisputed that Rafael had no actual interest in the Property. We further find that even if the statute of frauds applied, Rafael's performance of the parties' agreement precludes Roberto from asserting it. We therefore need not consider whether an oral agreement to dissolve a joint venture involving real property is enforceable.
1. The Statute of Frauds is Inapplicable Here Because There Was No Sale of an Interest in Real Property
Civil Code section 1624, subdivision (a), states: "The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent: . . . (3) An agreement . . . for the sale of real property, or of an interest therein . . . ." In its statement of decision, the trial court found that "[o]n November 15, 2015, plaintiff and defendant agreed that plaintiff would be paid $350,000 for the buy-out of his interest in both businesses and the Lull Street property." Roberto argues that the parties' agreement was subject to the statute of frauds because it involved a sale of an interest in real property. We are unpersuaded.
First, though Rafael claimed that Roberto agreed to put him on title to the Property, it is undisputed that Roberto never did so. Therefore, whatever Roberto was buying from Rafael, it could not have been Rafael's nonexistent interest in the Property. If the sale did not involve the transfer of interest in real property, the statute of frauds does not apply. Roberto cites no authority -- and we have found none -- holding that a promise to put a non-titleholder on title creates an interest in real property in the non-titleholder. Indeed, over a century ago, a grantor's request that a grantee not record a grant deed until after the grantor's death was held not to give the grantor "any interest in the property granted." (Lewis v. Brown (1913) 22 Cal.App. 38, 44.) Similarly, Rafael's request -- even with Roberto's agreement -- that he be put on title to the Property gave Rafael no "interest in" the Property.
None of Roberto's cases address a situation similar to the one here: Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 588-589 ["Because there was ample evidence from which the jury could have concluded that the contract, even if it created a joint venture, provided for a sale of land from one venturer to the other, instructions on the statute of frauds should have been given"]; Bates v. Babcock (1892) 95 Cal. 479, 486 [because the parties agreed to sell land belonging to plaintiff and split the proceeds, the court found the statute of frauds inapplicable because this was "only a pecuniary interest resulting from the sale and a right to have the land sold, rather than an interest in the land itself"]; Dutton v. Interstate Inv. Corp. (1941) 19 Cal.2d 65, 69-70 [because "the agreement did not contemplate that plaintiff was to receive a one-third interest in the oil and gas produced under the lease [but instead] . . . one-third of the net profits ultimately realized by the Interstate Investment Corporation . . . [s]uch an agreement to share the profits from a transaction involving real estate is not required to be in writing"].
Moreover, no party contends that Roberto's alleged promise to put Rafael on title was in writing. Rafael testified at trial that Roberto told him he "would be added to the title later," while Roberto testified "[t]here was no agreement that [Rafael] would be on title to the Lull Street Property." Therefore, any interest Rafael had in the Property arose from an oral agreement he had with Roberto. "A right in property which arises by an oral agreement may be released by an oral agreement, or its equivalent, as by an oral request to convey or release." (Lowenthal v. Kunz (1951) 104 Cal.App.2d 181, 184.)
We therefore find that the statute of frauds was inapplicable to the November 2015 agreement. While we recognize that the trial court found the statute of frauds inapplicable for other reasons, "[o]n appeal, we review the correctness of the lower court's decision, not its rationale." (Gilbert v. Cal. (1990) 218 Cal.App.3d 234, 240, fn. 4.)
2. Rafael's Performance Bars Roberto from Asserting the Statute of Frauds
Even were we to find that Rafael had an interest in the Property, we would find his performance of the agreement -- relinquishing both his interest in RC Automotive and any claim he had to the Property -- bars Roberto from asserting the statute of frauds. As Rafael argues in his brief, "[w]here a contract has been fully performed by one party and nothing remains to be done except the payment of money by the other party, the statute of frauds is inapplicable." This is known as the doctrine of "part performance."
We find McGlasson v. Blythe (1956) 143 Cal.App.2d 152 informative. In McGlasson, plaintiff and defendants agreed to swap houses. Specifically, plaintiff and her husband were living in a house "under a sales agreement from the former owners, who retained title pending installment payments of the purchase price," while defendants lived in a house that defendants owned, subject to a deed of trust. (Id. at 153-154.) The parties agreed that: (1) defendants would pay off the remaining amounts owed on plaintiff's house in exchange for title to plaintiff's house; and (2) plaintiff and her husband would obtain title to defendants' house, subject to the deed of trust. (Ibid.) Defendants performed completely: they paid off the amounts owed on plaintiff's house, obtained a deed to plaintiff's house from the house's former owners, and deeded their house to plaintiff and her husband. (Ibid.) Five months later, plaintiff demanded her former house back, stating "she had not signed anything." (Ibid.) Plaintiff subsequently forcibly moved back into her former house and filed a claim to quiet title. (Id. at 155.) Defendants cross-complained to quiet title in their name. (Ibid.) The court "concluded that there was such performance of the oral agreement as to take the case out of the operation of the statute of frauds, that [plaintiff] was estopped from invoking the statute . . . ." (Ibid.) The court found that "[w]hen it is accepted that a definitive oral exchange agreement had been made, according to which respondents would obtain title to the [plaintiff's] property directly from the original sellers, then the evidence showed full execution of said agreement, which takes it out of the statute of frauds." (Id. at 155-156.)
Roberto counters that the statute of frauds still applies because: (a) the doctrine of part performance applies only when a buyer takes possession of real property after paying the purchase price or improves the property, neither of which happened here; (b) Rafael failed to demonstrate that the assertion of the statute of frauds would cause an unjust or unconscionable loss; (c) Rafael's performance sheds no light on whether the agreed upon price was $350,000 or $100,000; and (d) there is no evidence that Rafael fully performed his agreement. We address his arguments in turn.
(a) Part Performance Is Not So Limited
Citing In re Marriage of Benson (2005) 36 Cal.4th 1096, Roberto argues that the part performance doctrine is limited to situations where "the buyer [of real property] has taken possession of the property and either makes a full or partial payment of the purchase price or makes valuable and substantial improvements on the property in reliance on the oral [agreement]." Because Rafael did not take possession of or make improvements to the Property in reliance on an oral agreement, Roberto argues the doctrine of "part performance" is inapplicable.
The flaw in Roberto's argument is revealed in the case he cites: while, as Roberto argues, "[t]he [part performance] doctrine most commonly applies in actions involving transfers of real property . . . part performance also has been used to enforce other contracts that violate the statute of frauds in Civil Code section 1624(a)." (Benson, supra, 36 Cal.4th at 1108-1109; see, e.g., Estate of Wilson (1980) 111 Cal.App.3d 242, 249 ["Part performance of an oral contract to adopt a child 'will take the contract out of the statute of frauds . . . .'"]; Dutton v. Interstate Inv. Corp., supra, 19 Cal.2d at 67 [plaintiff's performance of obligation to secure lease for oil development operated to "remove the bar of the statute" of frauds].) That Rafael did not take possession of real property does not render the "part performance" doctrine inapplicable.
(b) If an Unjust Loss Is Necessary , One Exists
Quoting Anderson v. Stansbury (1952) 38 Cal.2d 707, 715-716, Roberto argues that "'[b]efore a party can be estopped to assert the statute [of frauds] due to the other's part performance, it must appear that a sufficient change of position has occurred so that the application of the statutory bar would result in an unjust and unconscionable loss, amounting in effect to a fraud.'" He further argues that whether Rafael suffered such a loss is a question of fact which the trial court failed to reach, and that we "cannot resolve." Finally, he argues that "the uncontroverted evidence establishes that no unjust or unconscionable loss would occur if the oral contract was held to be invalid" because there was evidence that Rafael was operating his separate business at the Property, and any harm Rafael suffered in separating his business from RC Automotive, could "be compensated for in damages."
Preliminarily, we note the tendency of case law to "conflate[] the doctrines of equitable estoppel and part performance." (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1071-1072.) Some cases, like Byrne, maintain that "[t]he doctrines of part performance and equitable estoppel are . . . separate grounds for avoiding a statute of frauds." (Id. at 1072; see also Paul v. Layne & Bowler Corp. (1937) 9 Cal.2d 561, 564-565 [considering the doctrines of part performance and equitable estoppel as separate defenses to the statute of frauds].) In these cases, the only requirement for the application of the doctrine of part performance appears to be that "the part performance must relate to the transaction involved . . . ." (Paul v. Layne & Bowler, supra, at 564.) These cases also note that "[a]ll that is required for an equitable estoppel is a 'serious' change of position and 'unconscionable' injury." (Byrne v. Laura, supra, 52 Cal.App.4th at 1072, quoting Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623.) Other cases, like Anderson v. Stansbury cited by Roberto, appear to equate the two doctrines, and find that before a party "can be estopped to assert the statute [of frauds] due to the other's part performance," there must be an unjust and unconscionable loss. (Anderson v. Stansbury, supra, 38 Cal.2d at 715.)
We need not resolve whether an unjust and unconscionable loss is a necessary element of the part performance doctrine because we find that permitting Roberto to use the statute of frauds to escape his obligations would work an unjust and unconscionable loss. The trial court found that Rafael agreed to sell his interest in RC Automotive and relinquish any claim he might have in the Property for a total of $350,000. Permitting Roberto to avoid his payment obligation because this agreement was not in writing would mean that Rafael would receive less than 29 percent of the amount he bargained for. Such a result would be unjust and unconscionable.
Nor need we resolve any issues of fact to reach this conclusion. "We review the trial court's resolution of disputed facts for substantial evidence and decide de novo whether the facts, as so found, constitute unconscionability." (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) As set forth above, substantial evidence supports the court's finding that Rafael was not paid $250,000 of the $350,000 price agreed upon by the parties. We may independently determine whether permitting Roberto to avoid paying this amount would be unconscionable.
Lastly, we reject Roberto's argument that Rafael would suffer no real loss if Roberto were permitted to shirk his payment obligations because Rafael continues to operate his new business out of the Property. Preliminarily, we note that Rafael disputes that he still operates out of the Property, claiming in his brief that he "mov[ed] his auto body repair portion of the joint venture from the Lull Street property and start[ed] a new business." In any case, the loss that Rafael would suffer is the relinquishment of his 50 percent interest in RC Automotive, as well as his claim to be put on title to a Property worth $1,356,000 with equity of $700,000, for less than 29 percent of the price Roberto agreed to pay him. Where Rafael is operating his business is irrelevant.
Roberto's citation to Contreras v. Loya (1961) 192 Cal.App.2d 176 is inapposite. In Contreras, plaintiff claimed that he and the decedent -- his ex-wife with whom he had reconciled -- had entered into an oral agreement in which plaintiff would pay the decedent some amount of money and live with her as "husband and wife" in exchange for the decedent deeding certain real property to plaintiff and herself as joint tenants. (Id. at 177-178.) The court found that plaintiff's cash payment did not permit him to invoke part performance to defeat the statute of frauds because that cash payment could be "compensable in damages." (Id. at 178.) Here, Rafael paid no money to Roberto, and instead relinquished his interest in RC Automotive and any claim to the Property, which is not compensable in damages. (See, e.g., Fonteno v. Wells Fargo Bank, N.A. (2014) 228 Cal.App.4th 1358, 1380 ["damages are not typically an adequate remedy when the contract involves unique real property"].)
(c) The Part Performance Need Not Establish the Other Terms of the Agreement
Roberto claims the part performance doctrine is based on the performance "satisf[ying] the evidentiary function of the statute of frauds by confirming that a bargain was in fact reached." (Benson, supra, 36 Cal.4th 1096, 1109.) He argues that Rafael's separating his business from RC Automotive does not clearly relate to the parties' agreement, and does not inform the court whether the parties agreed to $350,000 or $100,000.
Roberto cites no authority holding that "part performance" applies only when one can deduce the other terms of the agreement from the performance, and cases have applied the doctrine where a party's performance by itself sheds no light on the matter. (See, e.g., Warren v. Merrill (2006) 143 Cal.App.4th 96, 113 [finding plaintiff's "part performance of the oral contract by paying $77,000 for the down payment on the condominium would satisfy the statute of frauds" even though that payment by itself provides no information on other terms of agreement]; Dutton v. Interstate Inv. Corp., supra, 19 Cal.2d at 70 [finding plaintiff's full performance of his obligation to secure lease for oil development operated to "remove the bar of the statute" of frauds, though plaintiff's act in securing lease provides no insight into terms under which plaintiff so acted].)
(d) Evidence Supports That Rafael Fully Performed
Finally, Roberto argues the part performance doctrine is inapplicable because "[t]here is no evidence that plaintiff has fully performed his obligations under the November 2015 contract because, as discussed above, the evidence does not establish that he moved his separate business out of the Lull Street property which would have been required under the contract." Though Rafael contends he did move his business from the Property, this is a dispute of fact we need not resolve, as Roberto fails to cite anything in the record to support his contention that Rafael was required to move his business from the Property as part of the parties' agreement. Rafael testified that the agreement was that his interest in RC Automotive and the Property would be purchased by Roberto for $350,000. Roberto testified that they "settled on the sum of $100,000 for the buy-out of [Rafael]'s interest." Neither said that Rafael was required to move his own business elsewhere, and the trial court did not so find.
Rafael testified that he separated his business from RC Automotive and ended the partnership. Roberto agrees that Rafael left the RC Automotive business in 2016, took out his own business license, and started running his own business separate from RC Automotive. The record thus establishes that Rafael fully performed the agreement to relinquish his interest in RC Automotive and any claim to be put on title to the Property. Accordingly, Roberto is barred from asserting the statute of frauds.
D. Rafael's Trial Brief Did Not Preclude the Court From Finding That the Parties Entered Into an Agreement in November 2015
Rafael asserted in his trial brief that "[i]n April 2015, [Rafael] and [Roberto] agreed to a buy-out of [Rafael]'s ownership interest in the Property and the Business based upon an appraisal of the equity in the Property. Based upon the appraisal of the equity as approximately $700,000, the parties agreed that [Rafael] would receive $100,000 by January 1, 2016, and an additional $250,000 by January 1, 2017." Citing Franklin v. Appel (1992) 8 Cal.App.4th 875, 893, fn. 11; Mangini v. Aerojet General Corp. (1996) 12 Cal.4th 1087, 1097-1098; and DeRose v. Carswell (1987) 196 Cal.App.3d 1011, 1019, fn. 3, Roberto argues that "[t]hese assertions in [Rafael]'s briefs and by [Rafael]'s counsel are binding and foreclose any contrary holding by the trial court." He is mistaken. As the trial court stated when it denied Roberto's motion for judgment on the pleadings taking the opposite tack -- that because Rafael had alleged in his complaint that the parties came to an agreement in November 2015, he could not proceed to trial on the theory stated in his trial brief that the parties came to an agreement in April 2015 -- "[t]he complaint nowhere states that [the November 2015 agreement] was the 'only' agreement of the parties, as [Roberto] claims." Similarly, we find that Rafael's trial brief nowhere states that the April 2015 agreement was the "only" agreement of the parties.
Roberto's cited authority stands simply for the proposition that a court may accept as the party's position what the party states in a pleading. Roberto cites no authority holding that if a court does not adopt a party's position in a pleading, that court is barred from awarding relief on a different ground.
(Franklin v. Appel, supra, 8 Cal.App.4th at 893, fn. 11 ["While briefs and argument are outside the record, they are reliable indications of a party's position on the facts as well as the law, and a reviewing court may make use of statements therein as admissions against the party"]; DeRose v. Carswell, supra, 196 Cal.App.3d at 1019, fn. 3 [same]; Mangini v. Aerojet General Corp., supra, 12 Cal.4th 1087, 1097-1098 ["The concessions appear in plaintiffs' closing argument to the jury and in their appellate brief, both of which may be taken as admissions against the party"].)
DISPOSITION
The judgment is affirmed. Respondent is awarded his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
MANELLA, P. J. We concur: WILLHITE, J. COLLINS, J.