Opinion
G048106
06-07-2018
MICHAEL D. KINSMAN, as Trustee, etc., Plaintiff, Cross-defendant and Respondent, v. MICHAEL RODARTE et al., Defendants, Cross-complainants and Appellants.
Law Offices of William J. Kopeny and William J. Kopeny; Quinn Law and Stephane Quinn for Defendants, Cross-complainants and Appellants. Newmeyer & Dillion, Charles S. Krolikowski and Ben P. Ammerman for Plaintiff, Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2010-00374689) OPINION Appeal from a judgment of the Superior Court of Orange County, Michael Brenner, Judge. (Retired judge of the Orange Super.Ct. assigned by the Chief Justice, pursuant to art. VI, § 6 of the Cal.Const.) Affirmed. Respondent's request for judicial notice denied. Law Offices of William J. Kopeny and William J. Kopeny; Quinn Law and Stephane Quinn for Defendants, Cross-complainants and Appellants. Newmeyer & Dillion, Charles S. Krolikowski and Ben P. Ammerman for Plaintiff, Cross-defendant and Respondent.
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Jeffrey P. Rhoades listed his home for sale, but was unable to sell it. Rhoades sued his neighbor, Michael Rodarte, alleging various causes of action, including a claim that Rodarte intentionally interfered with the sale of Rhoades' home. A jury found in favor of Rhoades and awarded him $784,208 in damages, including $194,208 for the tort of intentional interference with prospective economic advantage (IIPEA).
There were other nominal parties designated in the initial lawsuit and they continue to be involved in this appeal (e.g., the Jeffrey P. Rhoades Living Trust). But we will simply refer to the parties as either Rhoades or Rodarte. On May 10, 2018, the attorney for Rhoades filed a Notice of Change of Trustee; we have modified the caption accordingly.
Rodarte appeals, arguing both instructional error and insufficient evidence to support the IIPEA tort. We find that the instructional error has been forfeited and that the jury's verdict is supported by substantial evidence. Thus, we affirm the judgment.
In his opening brief, Rodarte also argued that the punitive award damage was excessive, the trial court committed instructional and evidentiary error by improperly admitting evidence of a judgment in a related case, and that this evidentiary error "infected" the IIPEA instruction and verdict. As we understand Rodarte's reply brief, he has now withdrawn these claims. There is also a companion opinion concerning the related attorney fees (G048842).
I
FACTS AND PROCEDURAL BACKGROUND
In 2005, Rhoades purchased a large, four bedroom home in a small, gated beach community in Dana Point. The community is governed by a homeowners association (HOA), which promulgates certain covenants, conditions, and restrictions (CC&Rs). When Rhoades bought his home, he learned that there was ongoing litigation between the HOA and Rodarte, an owner of a vacant lot across the street from Rhoades' home. The ongoing litigation concerned Rodarte's failure to maintain his lot according to the CC&Rs.
Rhoades filed a request asking us to take judicial notice of the superior court's judicial records and this court's unpublished opinion concerning the prior litigation. (Evid. Code, §§ 452, subd. (d), 453.) These documents are not relevant to the resolution of this appeal; therefore, we deny the request.
In 2006, Rhoades was elected to the HOA board. In that capacity, Rhoades attended a three-week jury trial involving a lawsuit filed by the HOA against Rodarte. The jury found in favor of the HOA. The trial court ordered Rodarte to maintain his property in compliance with the CC&Rs.
In 2008, after Rodarte had failed to comply with the trial court's order, the HOA installed landscaping and began to maintain Rodarte's property. Shortly thereafter, Rodarte confronted Rhoades in the street while Rhoades was walking his dog. According to Rhoades, Rodarte "was very aggressive." Rhoades told Rodarte that he needed to talk to the HOA's attorney or its management company about the landscaping. Four months later, Rodarte "ripped out all the landscaping that the association had put in [and] denuded the entire slope."
In 2009, the HOA notified Rodarte that it was going to relandscape his property and "take him back to court again. And that's when [Rodarte] showed up permanently for about a year and a half and didn't really leave." During this time frame (through August 2011), Rodarte installed a pop-up tent and stayed on his vacant property. Rodarte kept various items on the property including tables, a surfboard, beach chairs, and an umbrella. Rodarte also kept trash bags on his property. "They just continued to pile up more and more trash bags all along the top of the slope, so that as you drive down the street, everybody sees them." At some point, Rodarte began sleeping in his car, which he parked on the street. Rodarte also "started exercising at 5:30, 6:00 in the morning, giving yells and shouts and grunts that you could hear all over the neighborhood in the dead of the morning." Rodarte often confronted Rhoades while Rhoades walked his dog. Rodarte would stand "on the sidewalk waiting for me when I turned the corner at 6:00 in the morning. And he just stood there and blocked my way."
On March 29, 2010, Rhoades listed his home for sale. Ten days later, Rodarte moved a ladder, pallets, and other things from a far corner of his property closer to Rhoades' home. While Rhoades' realtor was showing the home to potential buyers, Rhoades took photographs documenting the ongoing conditions on Rodarte's property. During at least one of the 20 real estate showings, Rodarte and his fiancée rode bicycles on his property and made noise. Rhoades eventually took his home off the market.
Additional evidence regarding the IIPEA tort will be covered in the discussion section.
On May 21, 2010, Rhoades filed a complaint against Rodarte for private nuisance, IIPEA, civil harassment, and violation of the CC&R's. Rodarte filed a cross-complaint against Rhoades for breach of fiduciary duty (as an HOA board member), trespass, conversion, and nuisance.
"The covenants and restrictions . . . shall be enforceable as equitable servitudes, . . . these servitudes may be enforced by any owner of a separate interest or by the association, or by both." (Civ. Code, § 5975, subd. (a).)
On October 31, 2012, following a multi-week trial, a jury found in favor of Rhoades and rejected Rodarte's cross-claims. The jury awarded Rhoades $784,208 in damages: $350,000 for nuisance, $194,208 for IIPEA, $110,000 for CC&R violations, and $130,000 in punitive damages.
II
DISCUSSION
Rodarte contends that the trial court gave an erroneous jury instruction regarding the IIPEA tort and there was insufficient evidence to sustain the jury's verdict. We shall address both of these claims. A. Instructional Error Claim (IIPEA)
It is a fundamental precept of appellate practice that a lower court's judgment is presumed correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) An appellant generally has the burden to provide an adequate record demonstrating any alleged errors. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.) Further, in order to preserve an issue for an appeal, the appellant usually must first object in the trial court and then cite the record on appeal showing where the specific objection was made. (Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 737.)
Here, Rodarte contends that the trial court's jury instruction regarding the IIPEA tort was erroneous. But Rodarte has not cited the trial record showing where he objected to the instruction. Indeed, Rodarte has not included any of the written instructions as part of the record on appeal. Neither has Rodarte included a proposed alternative instruction to the purported erroneous IIPEA instruction.
We find that Rodarte has forfeited his instructional error claim. Nevertheless, the merits of the claim (that the IIPEA instruction failed to name the 20 prospective purchasers of Rhoades' home) basically intertwines with Rodarte's sufficiency of the evidence claim. We will address the merits of that claim below. B. Sufficiency of the Evidence Claim (IIPEA)
The standard of review here is well settled. Our review "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." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.) Substantial evidence is reasonable, credible, of solid value, and of ponderable legal significance. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
A judgment will be upheld if it is supported by substantial evidence, even if contrary evidence exists and the trier of fact might have rendered a different result had it believed this evidence. (In re Dakota H. (2005) 132 Cal.App.4th 212, 228.) "The substantial evidence standard of review is generally considered the most difficult standard of review to meet, as it should be, because it is not the function of the reviewing court to determine the facts." (In re Michael G. (2012) 203 Cal.App.4th 580, 589.)
1. Additional Evidence Concerning the IIPEA Tort
Rhoades testified that on March 29, 2010, he listed his home for sale. Rhoades said that 10 days later, Rodarte moved three items (a ladder, a pallet, and a chair) from a far corner of his property closer to Rhoades' home. Although there was not a "for sale" sign on Rhoades' home, one of the gated community's security guards testified that Rodarte told him that he knew that Rhoades was selling his home.
Real estate broker Raymond Clark Smith testified that he handled the listing of Rhoades' home until "it became apparent that we were not going to be selling it at that time under the circumstances." Asked to describe the circumstances, Smith said that there was "a lot across the street that was in disarray, and . . . it was a situation that was something that was difficult to describe and explain to potential buyers." Smith testified that: "It looked like an ongoing garage sale. There was just debris everywhere. Lean-tos, exercise equipment, shade stuff, umbrellas torn, chairs."
Smith said that Rhoades' home was shown to approximately 20 potential buyers. Smith testified that all of them were prequalified, but each of the potential buyers had concerns regarding the property across the street and none of them came back a second time. Smith said that during the showings, Rodarte "always made himself present when he was there. He would walk back and forth across the property. And a number of times [he] would just simply stand there with his arms across his chest and stare at you."
Smith testified that the condition of Rodarte's property and his actions detrimentally affected Rhoades' ability to sell his home. Smith said that the potential buyers "just couldn't believe that something like that was taking place in any type of an association, especially one of this caliber." Smith testified that he "had one person from Las Vegas that was very interested in the property." However, this person was adamant about the "the situation across the street, why it hadn't been [resolved]." Smith said that the person asked to be contacted once the situation with Rodarte was resolved. Smith testified that he later did so, but by that time "the people in Las Vegas had made other decisions."
2. Analysis of the IIPEA Tort
"'The tort of intentional . . . interference with prospective economic advantage [IIPEA] imposes liability for improper methods of disrupting or diverting the business relationship of another which fall outside the boundaries of fair competition.'" (Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Assn. (2018) 19 Cal.App.5th 399, 429.) The IIPEA tort provides a remedy to those "who suffer[] the loss of an advantageous relationship" due to the actions of "a malicious interloper." (Zimmerman v. Bank of America (1961) 191 Cal.App.2d 55, 57.)
The IIPEA tort is considerably more inclusive than actions for intentional interference with a contract, and therefore IIEPA does not depend on the existence of a valid contract. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1157-1158; Buckaloo v. Johnson (1975) 14 Cal.3d 815, 823, 827 ["the mere fact that a prospective economic relationship has not attained the dignity of a legally enforceable agreement does not permit third parties to interfere"], disapproved of on other grounds in Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1975) 11 Cal.4th 376, 393, fn. 5.)
To establish IIPEA, a plaintiff must prove: (1) an economic relationship between the plaintiff and the third party with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) an intentional act on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 944.) Further, a plaintiff must also show that the defendant's conduct was somehow independently wrongful. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 339.)
Rodarte only challenges the first element. He argues that "no reasonable juror could have found the evidence sufficient to prove there was an existing relationship between [Rhoades] and a buyer that held the probability of future economic benefit for [Rhoades]." We disagree.
Here, the evidence reasonably showed that Rhoades had an economic relationship with approximately 20 prospective buyers. Presumably, none of the prospective buyers had some other type of relationship with Rhoades. Thus, the only relationship between Rhoades and the prospective buyers was an economic one; that is, the prospective economic relationship between a willing seller and a prospective buyer.
Further, the evidence also showed the probability of a future economic benefit to Rhoades: the sale of his home to one of the prospective buyers, each of whom were prequalified. Indeed, there was testimony that one of the prospective buyers (the person from Las Vegas), wanted to be contacted when the situation with Rodarte was resolved. Thus, the jury could reasonably have found that this person was particularly likely to have purchased Rhoades's home, but for Rodarte's intentional interference. In sum, there was sufficient evidence to sustain the jury's verdict.
Rhoades argues that there was no evidence of any named third parties, largely relying on Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507 (Westside), in support of his argument. But that case is somewhat inapposite because it had to do with a "market theory" of recovery. (Ibid.) In Westside there was a dispute between Westside, a company that owned part of a shopping center, and Safeway, which occupied an anchor position in the center. At issue was whether Westside could recover on a general market theory of liability for Safeway's alleged interference with all "possible" or "potential" buyers of the property. There was no indication that there were any prospective buyers whatsoever. (Id. at pp. 520, 523.) The court held that: "Without an existing relationship with an identifiable buyer, [Westside's] expectation of a future sale was 'at most a hope for an economic relationship and a desire for future benefit.'" (Id. at p. 527.)
In this case, unlike Westside, Rhoades was not relying on a market theory to support the IIPEA tort. Rather, Rhoades relied on evidence that Rodarte intentionally interfered with the sale of Rhoades' home to approximately 20 identified—albeit unnamed—prospective buyers. It is a requirement of the IIPEA tort that a prospective third party be identified, but the third party does not have to be named. (See, e.g., Ramona Manor Convalescent Hospital v. Care Enterprises (1986) 177 Cal.App.3d 1120, 1133, italics added [a defendant/lessee decided "to hold over beyond the termination of the lease . . . with the knowledge that such action would frustrate the legitimate contractual expectations of a specific, albeit unnamed, new lessee. That is all [the defendant/lessee] was required to know to incur liability" under an IIPEA claim].)
In his opening brief, Rodarte states that "the evidence must establish 'both that there were several actual buyers for the company and the amounts they were willing to pay.'" (Original boldface omitted.) He cites Westside, supra, 42 Cal.App.4th at page 528, and its internal reference to Lowell v. Mother's Cake & Cookie Co. (1978) 79 Cal.App.3d 13, 17 (Lowell), in support of that proposition. But the quotation in Rodarte's brief is taken out of context and the citation is therefore misleading.
Again, in Westside, supra, 42 Cal.App.4th at pages 523-527, the appellate court held that the potential loss of revenue under a general market theory could not establish an IIPEA claim. The Westside court distinguished its facts from those in Lowell, supra, 79 Cal.App.3d 13. In Lowell, a different appellate court found that a plaintiff adequately pleaded an IIPEA claim where the defendant interfered with the plaintiff's sale of a company to an identified and named third party at an amount the buyer was willing to pay. But neither Westside nor Lowell established a rule that a plaintiff and a third party buyer must have first agreed upon a contract price in order to establish an IIPEA claim. The particular facts in one published opinion do not ordinarily establish a threshold requirement for all future cases. Once more, the IIPEA tort simply requires "the probability of future economic benefit to the plaintiff." (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 241, italics added.) The title of the IIPEA tort is meaningful and telling; a prospective economic advantage does not require the certainty of a contractual relationship.
Finally, Rodarte argues that "not one of these prospective buyers was sufficiently interested in the home to view it a second time" and "none of the prospective buyers testified at trial." But these arguments really go the quantum of proof rather than the sufficiency of the evidence. That is, Rodarte's arguments are more properly directed to a jury rather than to an appellate court.
Here, the jurors were instructed that in order to find IIPEA, they needed to find by a preponderance of the evidence: "That [Rhoades] and prospective purchasers were in an economic relationship that probably would have resulted in an economic benefit to [Rhoades]." The jurors necessarily made that factual finding. There is credible, ponderable (i.e., substantial) evidence to support it. Thus, we must defer to the jury's factual determination even if we might have been persuaded otherwise. (See Bowers v. Bernards, supra, 150 Cal.App.3d at pp. 873-874.)
The court orally read the instruction to the jury, therefore it was captured in the reporter's transcript. --------
III
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to Respondent.
MOORE, ACTING P. J. WE CONCUR: IKOLA, J. THOMPSON, J.