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Katz v. Ashton

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
Feb 3, 2012
H035003 (Cal. Ct. App. Feb. 3, 2012)

Opinion

H035003

02-03-2012

ROBERT JAY KATZ et al., Plaintiffs and Respondents, v. JASON ASHTON, Defendant and Appellant. RANCHO APTOS PROPERTY OWNERS' ASSOCIATION, Plaintiff, v. ROBERT J. KATZ et al., Defendants.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Santa Cruz County Super. Ct. No. CV152458)


(Santa Cruz County Super. Ct. No. CV153099)

The present case arose out of a neighborhood dispute over the use of a private road by a wireless telecommunication company. When appellant Jason Ashton sought his neighbors' approval of an access agreement with the company, he falsely represented how much money the company was paying him. Respondents Katz Lapides Family Trust and Robert Jay Katz brought a fraud action against him. Following trial, the jury found in favor of respondents. Appellant contends that there was insufficient evidence to support the judgment. We affirm.

The present appeal considers only the issues raised in Robert Jay Katz et al. v. Jason Ashton.

I. Statement of Facts

In 1990, John Jamison and Robert Boyajian were the owners and developers of four parcels in the Rancho Aptos residential subdivision (Rancho Aptos Property). At that time, respondents purchased an undeveloped property that was adjacent to the Rancho Aptos Property.

Shortly thereafter, Jamison and Boyajian built a private road, called the Moon Valley Ranch Road (the road), through the four parcels of the Rancho Aptos Property. The road, which is approximately a mile long, also borders respondents' property. Jamison and Boyajian agreed to give respondents an easement over the road in exchange for $50,000. The parties entered into a written "Easement Agreement," which restricted the right to use the road to the parcels in the Rancho Aptos Property and to respondents' parcel, and provided that the "sale of any lots within [the Rancho Aptos Property] . . . shall be subject to the easement rights created by the Agreement . . . ." The Easement Agreement also provided that the parties would "enter into a maintenance agreement, which agreement shall be included in the sales agreements for any of the parcels of the RANCHO APTOS PROPERTY, and shall provide for the sharing of maintenance expenses for the existing roadway . . . ." The "Road Maintenance Agreement" required that the "[c]osts of maintaining the road . . . shall be borne equally by all parcels having the right to use said road . . . ." Both the Easement Agreement and the Road Maintenance Agreement were recorded in May 1991.

The owners of the lots accessed by the road formed the Moon Valley Ranch Road Association (Road Association), and they began discussing repairs for the road in May 1996. In January 1997, the members of the Road Association agreed to contribute $1,000 each for road repairs. At that time, a sinkhole had developed on the road, and they had received bids of $8,000 to $10,000 for road maintenance. The Road Association also discussed a proposed lease agreement between Pacific Bell and Boyajian and Robert Tarkanian, who had purchased a 10 percent interest in "Parcel 1." This lease agreement allowed Pacific Bell to install a cell phone tower and related equipment on Parcel 1 and to use the road to maintain the equipment. Katz, an attorney, negotiated with Pacific Bell on behalf of the Road Association and the Rancho Aptos Property Owners Association (Owners Association). It was proposed, among other things, that Pacific Bell pay for the repair of the sinkhole and $500 per month for road maintenance in order to have access to Parcel 1. Pacific Bell agreed to these terms. In 1999 and 2000, similar access agreements were negotiated with GTE and Sprint. GTE and Sprint each agreed to pay the Road Association $29,000 and $500 per month.

The members of the Owners Association were the owners of the four parcels in the Rancho Aptos Property and owned the road.

All three access agreements with the telecommunications companies stated that the road was "owned and maintained by the" Road Association. This language originated in the Pacific Bell agreement, which was drafted by the attorneys for Pacific Bell. Katz acknowledged that he and Michael Ryan, whose property also bordered the Rancho Aptos Property, had easement rights and did not own the road.

In late 2000, appellant bought Parcel 1 from Boyajian. All of the telecommunications equipment was located on this parcel. Prior to the sale, Boyajian and Nextel of California, Inc. (Nextel) discussed placing Nextel's equipment on Parcel 1.

In July 2002, the Denmans purchased "Parcel 4." In early 2004, the Tomasellis purchased "Parcel 3." Michelle Ashen and Brooke Bilyear were the owners of "Parcel 2."

Appellant eventually purchased Parcel 2 and owned two of the four parcels of the Rancho Aptos Property at the time of trial.

In March 2004, appellant and Nextel executed a "Communications Site Lease Agreement (Ground)." This agreement provided that Nextel would lease a portion of Parcel 1 and "all access and utility easements necessary or desirable" to Parcel 1 in exchange for a one-time payment of $35,000 and $1,900 per month for up to three five- year periods. The agreement also stated that appellant would obtain the written consent of the Road Association and the Owners Association for Nextel's "sublease of the tower space from Sprint," and that he would be responsible for paying any sums to both Associations "negotiated [by him] or required by the Associations for their consent to sublease and grant of Tenant's access rights, including, but not limited to, any recurring payments or obligations to the Associations . . . ." The agreement stated that appellant and "the Associations shall negotiate the amount of compensation and distribution of the lump sum payment . . . and the monthly compensation to the Associations. [Appellant] has sole authority to approve the amount of compensation to be paid to the Associations both monthly and lump sum." The agreement required that appellant cooperate with Nextel in obtaining any necessary permits, and provided Nextel 18 months to cancel the agreement without penalty.

On August 12, 2004, there was a Road Association meeting to discuss several matters, including appellant's negotiations with Nextel. The Tomasellis, respondents, and appellant were present, but the Denmans were not. Appellant stated that he had been negotiating with Nextel, but he did not disclose that he had already signed an agreement with the company. The Road Association voted to have Katz negotiate an access agreement with Nextel due to concerns that appellant had a conflict of interest in negotiating both a site lease agreement and a road access agreement.

Following the August meeting, Katz was unable to obtain any additional information from either Nextel or appellant. At Road Association meetings, appellant "represented that the best deal he could get was $600 a month, that the landscape had changed, and the $19,000 deals and $500 a month -- those were gone forever." Appellant offered to pay $300 per month to the Road Association.

On December 13, 2004, appellant wrote a letter to the Denmans in which he stated that he had enclosed "the agreement with Nextel and our Road Association." This document purported to be an agreement between Nextel, the Road Association, and the Owners Association. It stated that Nextel would pay $600 per month to appellant, who would then pay $300 to the Road Association for the use of and access to Parcel 1. There was no mention of a one-time payment or that Nextel would be paying an additional $1,300 per month to appellant. The document also required the members of both Associations to support Nextel's application for a conditional use permit and any other permits required by the County of Santa Cruz (County). Appellant asked the Denmans to sign the agreement and forward it to respondents. The Tomasellis, Ashen, Bilyear, Ryan, and appellant had already signed the agreement. Neither the Denmans nor respondents signed the agreement.

On December 14, 2004, Katz wrote to appellant and suggested that he provide all members of the Road Association with a copy of appellant's agreement with Nextel, advise Nextel that Katz would be representing the Road Association's interests, and request a Road Association meeting to discuss the proposed access agreement. About a week later, Katz wrote to Nextel, stating that approvals from the Road Association and respondents were required before Nextel could have access to the road.

In December 2004, the members of the Owners Association hired an attorney, George Kovacevich, to determine who owned the road. Kovacevich also revised the access agreement to provide payment of $300 to members of the Owners Association and $300 to appellant for access to Parcel 1. Appellant did not give Kovacevich a copy of his lease agreement with Nextel, and he did not tell him that this agreement provided him with a one-time payment of $35,000 and $1,900 per month.

In January 2005, the County's "Conditions of Approval" for the Nextel application were recorded. The Conditions of Approval required appellant to obtain the approval of both the Road Association and the Owners Association for access to the project site.

In April 2005, the members of the Owners Association signed the revised access agreement. The Denmans, the Tomasellis, and respondents were not aware of the terms of the March 2004 agreement between Nextel and appellant at this time. Katz testified that if he had known the terms of this agreement, he would have asked his neighbors if they were aware of its terms when they signed the revised access agreement. He would have also informed the County that the access agreement had been obtained by fraud.

The record contains an unsigned copy of this access agreement, and a notary book signature page, dated April 20, 2005, with the signatures of Thomas Tomaselli and John Denmam.

In 2006, Nextel began making monthly payments of $1,900 to appellant, including back payments from September 2005. Appellant also received the one-time payment of $35,000 in early 2006. Appellant did not give any portion of these payments to the Denmans, Tomasellis, or respondents.

II. Statement of the Case

In August 2007, respondents filed a first amended complaint for, among other things, fraud and declaratory relief. The Denmans and the Tomasellis also pursued claims against appellant.

Following a three-week trial, the jury returned its verdicts. It found that appellant was liable to respondents for fraud and awarded respondents $36,701 in compensatory damages. The jury also found appellant was liable to the Denmans and the Tomasellis for fraud and breach of fiduciary duty. The jury awarded them the same amount in compensatory damages.

On April 30, 2009, the trial court made findings on the parties' requests for declaratory relief. It found that the 1997, 1999, and 2000 contracts with the wireless telecommunication companies were valid, and that the Road Association and respondents did not own the road.

Following a hearing, the trial court denied appellant's motion for judgment notwithstanding the verdict or for a new trial. Appellant then filed a timely notice of appeal.

III. Discussion

"The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage." (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.)

A. Standard of Review

" 'When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.' " (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) " '[W]e have no power to judge the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.' " (Leff v. Gunter (1983) 33 Cal.3d 508, 518.) Our role is limited to determining whether the evidence before the trier of fact supports its findings. (Reddy v. Gonzalez (1992) 8 Cal.App.4th 118, 123.)

B. Misrepresentation

Appellant challenges the sufficiency of the evidence to support the first element of fraud. He argues that he did not owe a duty to Katz to disclose the terms of his lease with Nextel. He maintains that there was insufficient evidence that he had either a confidential relationship to Katz or that he had partially disclosed facts to him, thereby triggering a duty to disclose all the terms of the Nextel agreement.

However, as respondents point out, appellant has not disputed that he misrepresented the terms of his agreement with Nextel. We note that appellant does not challenge the jury's instructions on the elements of fraud. Since the parties stipulated that the court reporter would not transcribe the jury instructions, the record does not establish which theories as to the first element, that is, false representation, concealment, or nondisclosure, were presented to it. Given this record, appellant is not arguing, nor could he, that the jury found misrepresentation on a concealment or nondisclosure theory. An appellant "has the burden of showing reversible error by an adequate record." (Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) Moreover, in denying appellant's motion for judgment notwithstanding the verdict or for a new trial, the trial court stated in response to appellant's arguments regarding concealment and nondisclosure: "Of course, you appreciate that we're beyond nondisclosure o[r] concealment in this matter. . . . There was evidence of active misrepresentation." Based on this record, we must presume that the jury was properly instructed pursuant to a false representation theory of misrepresentation. At issue then is whether there was substantial evidence of a false representation to support the jury's finding as to the first element of fraud.

Here, appellant "represented [at Road Association meetings] that the best deal he could get was $600 a month, that the landscape had changed, and the $19,000 deals and $500 a month those were gone forever." Appellant also presented the members of the Associations with an agreement that purported to be between the Associations and Nextel. Pursuant to this agreement, Nextel would pay $600 per month to appellant, who would then pay $300 to the Road Association, in exchange for the use of and access to Parcel 1. These representations were false because appellant had already entered into an agreement with Nextel in which he would receive $35,000 and $1,900 per month. Thus, there was substantial evidence to support the jury's finding of misrepresentation.

C. Reliance

Appellant next contends that there was insufficient evidence that Katz relied on Ashton's misrepresentation.

"It is settled that a plaintiff, to state a cause of action for deceit based on a misrepresentation, must plead that he or she actually relied on the misrepresentation. [Citations.]" (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1088.) "Whether reliance is justified is a question of fact for the determination of the trial court [or the jury]; the issue is whether the person who claims reliance was justified in believing the representation in the light of his own knowledge and experience. [Citations.]" (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 503.)

Appellant argues that the facts in the present case "leave no room for a reasonable difference of opinion about whether Katz relied or whether his reliance could be deemed reasonable." He points out that Katz did not trust appellant and tried many times to obtain information from Nextel.

Where a plaintiff performs some independent investigation to verify information provided by a defendant, he or she may still rely on a defendant's misrepresentation. (Linden Partners v. Wilshire Linden Associates (1998) 62 Cal.App.4th 508, 529.) Here, Katz had no basis for concluding that appellant's representations as to the amount of the Nextel payments were false. The jury could have reasonably found that though Katz did not trust appellant and he was unable to verify information with Nextel, he reasonably relied on the terms outlined in the purported agreement between the Associations and Nextel, which were consistent with appellant's prior oral representations.

Appellant also focuses on respondents' failure to sign the purported agreement between Nextel and the Associations. This fact, however, is not dispositive. Katz testified that if he had known the terms of appellant's agreement with Nextel, he would have asked his neighbors if they were aware of its terms when they signed the revised access agreement and he would have informed the County that the access agreement had been obtained by fraud. Appellant dismisses this evidence as "self-serving." As previously stated, however, the issue of a witness's credibility is determined by the trier of fact, not this court. (Leff v. Gunter, supra, 33 Cal.3d at p. 518.)

Appellant next argues that Katz opposed Nextel's application for permits. He relies on Katz's appearance on December 17, 2004, at a zoning commission hearing at which he stated that the agreements with the wireless telecommunications companies required approval by the Road Association. He also relies on Katz's letter to Nextel a few days later that repeated his position, and Katz's letter to Supervisor Ellen Pirie in October 2005 in which he stated that he had filed a declaratory relief action in response to appellant's position that he had "the right to add additional commercial tenants to his property, and to grant them easements over Moon Valley Ranch Road, without obtaining the approval of Katz-Lapides." However, this evidence does not advance appellant's position that Katz did not rely on his misrepresentations. The Nextel agreement, the purported agreement between Nextel and the Associations, and the County's Conditions of Approval required approval by the Road Association, and Katz restated this term. As previously stated, Katz relied on appellant's misrepresentations regarding the amount of Nextel's payments, and thus he did not notify the other members of the Associations or the County regarding appellant's false representations. Thus, the jury's finding of reliance was supported by substantial evidence.

D. Causation

Appellant also contends that there was insufficient evidence that his false representations were a proximate cause of harm to respondents. He asserts that even if Katz had persuaded the Denmans and the Tomasellis not to sign the access agreement, Nextel was not required to obtain their consent.

"Under California law, a party asserting fraud must establish that its damages are the 'proximate' or 'legal' result of the fraudulent conduct. [Citations.]" (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 869-870.)

Appellant claims that Nextel did not receive the proposed access agreement and it did not consider whether the Owners Association approved the access agreement in continuing its lease with appellant. He claims that Nextel "operated on the premise that as a successor in interest to Sprint after the merger, Nextel had a valid right of access to the property under the Sprint access agreement." Appellant also asserts that John Denman was aware of this fact.

However, appellant's citations to his testimony do not support his claims. Appellant testified that he did not know whether Nextel was aware that the revised access agreement was signed. He also testified that he did not know whether Nextel would have made payments after the merger with Sprint without the Owner Association's approval. He further conceded that he "probably" told the County that he had obtained the approvals from the Associations.

Appellant's reliance on documentary evidence is not persuasive. He refers to an e-mail dated August 16, 2004, in which a Nextel representative noted that "a simple amendment to the Sprint contract allowing an increase in height of 14 feet is all that is required. Nextel would simply use the Sprint ingress & egress contract to allow Nextel access to the site." However, other portions of the e-mail fail to support appellant's position. The e-mail also stated that the representative had provided appellant with a copy of a revised Sprint agreement in draft form to show the members of the Associations the proposed changes. More importantly, the representative stated, "Please let me know when you have agreement and we can move forward." Thus, the representative did not believe that the merger of Sprint and Nextel eliminated the need for the Associations' approval.

We further note that the evidence at trial did not establish when the Sprint/Nextel merger occurred. John Denman's e-mail in December 2004 indicated that the newspaper and radio were reporting that Sprint and Nextel were going to merge. Thus, the merger occurred some time after December 2004, which was before appellant presented the access agreement to the Associations and the County. Nextel also began paying appellant after the Owner Association's approval, thereby indicating that the approval of an access agreement was required by Nextel in order for the Nextel agreement to become effective.

This court has granted respondents' motion to augment the record, which included a request for judicial notice filed by counsel for the Denmans and the Tomasellis. The request for judicial notice contained a declaration from counsel that the merger occurred on August 12, 2005.

In sum, appellant has failed to show that the evidence of the Sprint/Nextel merger eliminated appellant's obligation under the March 2004 agreement to obtain the Associations' approval of access to the site. Thus, there was substantial evidence to support the jury's finding of causation.

Appellant has also cited to arguments made during a posttrial hearing to support his claims. Argument is not evidence, and thus we need not consider these citations to the record.

E. Damages

Appellant contends that the award of damages was "pure speculation" and there was insufficient evidence that respondents were harmed by his false representations.

Reliance on the misrepresentation must cause damage to the plaintiff. (See Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 989.) Damages that are speculative cannot serve as the basis for an award. (Ibid.)

Here, the jury awarded damages of $36,701 to respondents. This amount was equal to the present value of one-sixth of both the $35,000 one-time payment and one-half of the $1,900 per month fee.

Appellant asserts that since respondents did not own the road, their approval was not was required for access, and thus they had no right to access fees, and consequently no damages. Though respondents did not own the road, and assuming that they had no right to give or withhold approval of access by Nextel, it does not follow that they suffered no damages as the result of appellant's false representations. Pursuant to the Road Maintenance Agreement, respondents were required to pay a portion of the costs of maintaining the road. The jury could have reasonably concluded that Nextel's use of the road would have resulted in greater costs to maintain it, thereby increasing the costs for respondents. In determining the amount of damages, the jury appears to have relied on the three prior access agreements. These agreements provided that the companies would make payments to the Road Association. Since the Road Maintenance Agreement provided that the six parcels shared the costs of road maintenance, the jury could have reasonably found that respondents were entitled to one-sixth of the Nextel payments to appellant to cover their increased costs. Thus, there was substantial evidence to support the jury's award of damages.

Appellant argues, however, that there is "no guarantee that [he] would have entered the lease" with Nextel if he had been required to pay respondents a portion of the one-time payment and the monthly fee. However, appellant has failed to cite any evidence in the record to support this argument. Accordingly, it is rejected.

IV. Disposition

The judgment is affirmed.

______

Mihara, J.
WE CONCUR:

____________

Elia, Acting P. J.

______

Walsh, J.

Judge of the Santa Clara County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
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Summaries of

Katz v. Ashton

COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
Feb 3, 2012
H035003 (Cal. Ct. App. Feb. 3, 2012)
Case details for

Katz v. Ashton

Case Details

Full title:ROBERT JAY KATZ et al., Plaintiffs and Respondents, v. JASON ASHTON…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT

Date published: Feb 3, 2012

Citations

H035003 (Cal. Ct. App. Feb. 3, 2012)