Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and postjudgment order of the Superior Court of San Diego County No. 37-2007-00059499-CU-OR-EC, Eddie C. Sturgeon, Judge.
O'ROURKE, J.
Bonnie Lutz appeals from a judgment following a jury trial on her cross-complaint for breach of partnership agreement and unpaid wages against cross-defendants Georgella Sortwell and Harry Donald Sortwell individually and as trustees of the Sortwell Family Trust (collectively the Sortwells). The jury returned a special verdict against the Sortwells awarding Lutz $13,890 in damages, consisting of $13,800 in "sweat equity" damages and $90 on her wage claims. Thereafter, the trial court denied the parties' motions for attorney fees, finding there was no prevailing party. Lutz contends (1) the court erred by excluding the testimony of her valuation expert, Gene Konrad; (2) the attorney fee ruling is contrary to the jury's legal findings; and (3) the jury's special verdict on damages is not supported by the evidence. Lutz asks that we reverse the matter and remand it with an order that the superior court set hearings on her claims for an accounting and dissolution of the parties' investment partnership. We affirm the judgment and postjudgment order denying Lutz attorney fees.
Lutz had initially sued the Sortwells' new manager, Cambridge Management Group, Inc., but the case was settled against that entity. Mr. Sortwell testified he went by the name Donald. We will refer to him hereafter as Donald Sortwell or Mr. Sortwell.
FACTUAL AND PROCEDURAL BACKGROUND
"We state the facts in the light most favorable to the jury's verdict, resolving all conflicts and indulging all reasonable inferences to support the judgment." (Green Wood Indus. Co. v. Forceman Intern. Development Group, Inc. (2007) 156 Cal.App.4th 766, 770, fn. 2; see In re Marriage of Mix (1975) 14 Cal.3d 604, 614; Blanks v. Shaw (2009) 171 Cal.App.4th 336, 346, fn. 2.)
In June 2001, Donald Sortwell and his wife, Georgella Sortwell, purchased an apartment complex in El Cajon known as the Taft Avenue apartments (the property or the Taft apartments). Bonnie Lutz is Donald Sortwell's natural daughter and Georgella's stepdaughter. At the time, the Sortwells expected to buy the property, keep it for three years and then sell it for a profit. While the property was in escrow, the Sortwells discussed with Lutz an arrangement in which the Sortwells would purchase the property, Lutz would manage the apartments, and the Sortwells' son, Matt Sortwell, would do maintenance. For performing her general management duties such as collecting monies, making deposits and preparing monthly reports, Lutz was initially to receive six percent of the monthly deposited rent proceeds, seven percent of those proceeds after one year, and eight percent after taking a certified apartment manager program. They also agreed Lutz would receive free rent for living in an apartment at the property. When the property was sold, Lutz and Matt Sortwell would receive their "sweat equity." In June 2001, the Sortwells and Lutz signed a property management agreement, and the Sortwells considered Lutz to be their agent and employee.
Lutz did not track the time she spent on property manager duties under the six percent arrangement. According to Lutz, to earn her six percent compensation she showed properties, negotiated leases, processed credit reports, supervised the maintenance, negotiated with contractors, met with other nearby property managers and became a member of a resident manager support system that held monthly meetings. She engaged in administrative duties by collecting rents, making deposits, paying utilities and providing monthly reports. At the same time, Lutz was working full time, 40 hours per week, at her regular job as a trauma registrar at Mercy Hospital. Lutz also spent time renovating, gardening and cleaning the apartments as part of her "sweat equity" contribution to the partnership.
In January 2006, the Sortwells advised Lutz that as of the next month they would charge her $850 per month in rent, would continue to pay her six percent of the rental income, and would pay her $20 per hour for her work "above the management task."
They also asked Matt Sortwell and Lutz to put $2,700 into the partnership. Several months later, Lutz and Matt Sortwell asked the Sortwells to designate them as beneficiaries of an irrevocable trust, but the trust proposed by the Sortwells was revocable and otherwise did not comport with Lutz and Matt Sortwell's request. By mid-2006, only seven of the 16 Taft apartments had been renovated, and by January 2007, Donald Sortwell relieved Lutz of her management responsibilities, telling her later that the partnership was failing. The Sortwells hired Cambridge as the new property manager.
Thereafter, the Sortwells filed a complaint against Lutz seeking, among other things, to quiet title to the property and damages for breach of contract, breaches of fiduciary duty, and negligence. Lutz cross-complained against the Sortwells and Cambridge for "breach of partnership agreement, accounting and dissolution, " and ten other causes of action seeking various relief.
The Sortwells obtained summary adjudication in their favor on their quiet title cause of action, resulting in a determination that Lutz did not have any ownership interest in the property, which, by December 2006, the Sortwells had transferred into a family trust. Thereafter, the matter proceeded to trial on Lutz's cross-complaint.
Shortly before trial, the Sortwells applied for an Evidence Code section 402 hearing to determine the admissibility of the testimony of Lutz's certified public accountant expert Gene Konrad. They argued Konrad sought only to make mathematical calculations and therefore his opinion would not assist the jury; Konrad's testimony was based wholly on speculation and a conceded lack of accounting and documentary support; and Konrad failed to disaggregate Lutz's damages and thus did not distinguish among her theories of liability or any alleged wrongful act. The Sortwells further asserted Konrad was not qualified to offer an opinion on lost future profit damages and he used an improper methodology as evidenced by his deposition testimony. The trial court granted the Sortwells' request for an Evidence Code section 402 hearing, during which Konrad testified to his methodology and conclusions. Thereafter, the court excluded Konrad's testimony on grounds it was based on insufficient information and would not aid the jury.
After the close of evidence, Lutz dismissed her third through sixth causes of action for breach of employment agreement, wrongful termination in violation of public policy, breach of the implied covenant of good faith and fair dealing, and unpaid wages. The court granted directed verdicts on Lutz's eighth, tenth, the eleventh causes of action for, respectively, defamation, indemnity, and declaratory relief. The parties stipulated that in exchange for dismissing her unpaid wages cause of action, Lutz could argue she was entitled to be paid an hourly rate of $7.50 for approximately 15 hours per week of work under the parties' partnership agreement, which they stipulated amounted to $5,850 per year. During trial, Lutz had disclaimed recovery of a $20-per-hour wage.
In a special verdict, the jury found Lutz had entered into a contract with the Sortwells; Lutz did all or substantially all of the things required by the contract; all conditions occurred for the Sortwells' performance; the Sortwells failed to do something the contract required them to do; and Lutz was harmed by that failure. It awarded Lutz $13,800 in sweat equity damages and $90 in wages, for a total verdict of $13,890. The court thereafter entered judgment in Lutz's favor.
The parties moved to recover their costs and attorney fees as the prevailing party. Lutz argued she was entitled to recover over $46,000 in attorney fees under Labor Code section 218.5 for her statutory wage claim. The Sortwells argued they were entitled to recover approximately $240,000 in attorney fees under Civil Code section 1717, based on an attorney fee provision in the resident manager employment agreement.
Lutz also moved for a new trial on grounds of irregularity in the proceedings, jury misconduct, accident or surprise, inadequate damages, insufficiency of the evidence to justify the verdict, and error in law. In part, Lutz argued the evidence showed she worked for the Sortwells for approximately 66 months at an agreed rate of $20 per hour and was owed $83,160 in compensation, and that the evidence was "incontrovertible" that the value of her sweat equity as of early 2009 was $200,000. She complained about the trial court's exclusion of Konrad's testimony, suggesting it stemmed from pretrial discovery irregularities. She asked the court to set hearings on her claims and remedies for an accounting and dissolution of the partnership. The court denied Lutz's motion. It also denied the parties' attorney fee motions, finding there was no prevailing party and ordering the parties to pay their own costs.
Lutz appeals from the judgment, postjudgment order denying her motion for new trial, and postjudgment order denying her motion for attorney fees.
DISCUSSION
I. Exclusion of Expert Konrad's Testimony
Lutz contends the trial court erred by excluding Konrad's expert testimony concerning the partnership valuation. She advances somewhat separate points, which we address in turn.
A. Unclean Hands/Discovery Abuses
Lutz argues the Sortwells' in limine motion to exclude Konrad's testimony should have been denied on grounds of their unclean hands in "manipulat[ing] the litigation" and using delay tactics in discovery in order to withhold necessary financial evidence and documentation from her. According to Lutz, the Sortwells objected to her discovery requests for pertinent financial information relating to the property, including profit and loss statements, on privacy grounds and also on grounds the documents were in the custody and control of Cambridge. She points out she had applied ex parte to ask the trial court to reopen discovery on a shortened basis to compel Cambridge to comply and asserts she "exhausted every available remedy" to compel disclosure, but her application was denied, leaving her prejudiced by the cross-defendants' failure to respond. She argues the trial court abused its discretion when it denied her application in view of the cross-defendants' "tactics of delay" and discovery "games...." Lutz characterizes the Sortwells' conduct as intentional withholding or spoliation of evidence, misuse of the discovery process, and willful suppression of evidence, which assertedly prevented her from having a fair trial and constituted prejudicial reversible error.
Lutz's arguments are partly premised on procedural facts in a footnote concerning her discovery motions and consequences stemming from the withdrawal of the Sortwells' attorney, for which Lutz provides no supporting record citations. We disregard unsupported facts and procedural events. (Cal. Rules of Court, rule 8.204(a)(1)(C); McOwen v. Grossman (2007) 153 Cal.App.4th 937, 947; see In re S.C. (2006) 138 Cal.App.4th 396, 406 [party must cite to the record showing exactly where objections in the trial court were made].)
With respect to those facts she does support, the record shows Lutz indeed sought discovery from the Sortwells of financial statements prepared by them or on their behalf (amended request for production No. 19), written agreements, account statements, ledgers, cancelled checks and other forms of payment for property management services (amended request for production No. 12). The Sortwells objected to these requests on grounds of relevance and privacy. There is no indication in the record, however, that Lutz timely sought to compel from the Sortwells further responses to the request for production of those documents. This was her remedy if she claimed their response was unsatisfactory (such as being evasive, incomplete or containing a meritless objection) or they improperly refused to produce requested documents in their possession, custody or control. (Code Civ. Proc., § 2031.310.) Lutz has otherwise provided no authority establishing that the Sortwells' assertion of relevance and privacy objections amounts to improper suppression of relevant evidence.
Though they objected on relevance and privacy grounds, the Sortwells actually responded that they would produce all nonprivileged responsive documents identified in request No. 12 for the period during which Lutz was the property manager.
Further, while Lutz contends the trial court abused its discretion in its ex parte discovery ruling declining to reopen discovery against Cambridge, she has not included in the record before us the transcript of the hearing on her motion reflecting the trial court's reasoning, if any. While Lutz is entitled to review of the court's order on appeal of the final judgment (Sav-On Drugs, Inc. v. Superior Court (1975) 15 Cal.3d 1, 5), if there is not an adequate record to assess the merits of the trial court's discovery ruling, we will presume its correctness. (Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448; see Bennett v. McCall (1993) 19 Cal.App.4th 122, 127.) Here, "[o]ur review of the court's ruling on this motion... has been thwarted by [Lutz's] failure to provide us with a transcript of the hearing on the motion...." (Wagner v. Wagner (2008) 162 Cal.App.4th 249, 259.) "The absence of a record concerning what actually occurred at the hearing precludes a determination that the court abused its discretion." (Ibid; accord, Interinsurance Exchange v. Collins, at p. 1448.)
Nevertheless, the record as it stands before us suggests no abuse of discretion. (Scripps Health v. Superior Court (2003) 109 Cal.App.4th 529, 533 [superior court's discovery orders are reviewed for abuse of discretion].) Where there is a basis for the trial court's ruling and the ruling is supported by substantial evidence, we will not substitute our opinion for that of the trial court. (Ibid.) The court's determination will be set aside only if it is shown that there was "no legal justification" for the order. (Ibid.) Its ruling is presumed to be correct and "[t]he burden of demonstrating error rests on the appellant." (See Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 631-632 and cases cited therein.)
Here, the record shows that approximately six weeks before trial, Lutz sought to reopen discovery under Code of Civil Procedure section 2024.050 after she and Cambridge rescinded a tentative settlement agreement they had reached in October 2008. In opposition to Lutz's motion, Cambridge's counsel pointed out that Lutz had not responded to six letters attempting to finalize the settlement, and then served Cambridge with discovery requests and a deposition notice on January 9, 2009. Lutz's counsel finally sent a draft settlement agreement on January 30, 2009. However, the parties then disputed whether Cambridge had satisfied a discovery cooperation clause in the settlement. In mid-February 2009, Cambridge produced financial statements relating to the property for a two-year period, but declined to produce bank statements and ledgers without the Sortwells' permission. Lutz refused to deem this Cambridge's satisfaction of the settlement agreement's cooperation clause, and as of March 4, 2009, the settlement fell apart.
Code of Civil Procedure section 2024.050 provides in relevant part: "(a) On motion of any party, the court may grant leave to complete discovery proceedings, or to have a motion concerning discovery heard, closer to the initial trial date, or to reopen discovery after a new trial date has been set. This motion shall be accompanied by a meet and confer declaration under Section 2016.040. [¶] (b) In exercising its discretion to grant or deny this motion, the court shall take into consideration any matter relevant to the leave requested, including, but not limited to, the following: [¶] (1) The necessity and the reasons for the discovery. [¶] (2) The diligence or lack of diligence of the party seeking the discovery or the hearing of a discovery motion, and the reasons that the discovery was not completed or that the discovery motion was not heard earlier. [¶] (3) Any likelihood that permitting the discovery or hearing the discovery motion will prevent the case from going to trial on the date set, or otherwise interfere with the trial calendar, or result in prejudice to any other party. [¶] (4) The length of time that has elapsed between any date previously set, and the date presently set, for the trial of the action."
In ruling on Lutz's ex parte application, the trial court was required to consider various factors including Lutz's diligence or lack of diligence and the reasons her requested discovery was not completed or that the discovery motion was not heard earlier; the likelihood that reopening discovery to set Lutz's proposed discovery motion would prevent the case from proceeding to the April 24, 2009 trial date; and the length of time that had passed from the earlier, November 2008, trial date. (Code Civ. Proc., § 2024.050, subd. (b); see footnote 3, ante; McCoy v. Gustafson (2009) 180 Cal.App.4th 56, 97 ["Discovery can be reopened on motion by any party for good reasons when it is necessary, the party seeking further discovery has been diligent, and there will be neither prejudice to the opponent nor impact on the scheduled trial date"].) On this record, the court was well within its discretion in concluding Lutz had not shown diligence in her pursuit of discovery, as she had waited approximately three months to serve Cambridge with discovery requests, only to reach a dispute concerning its responses several weeks before trial. The court also could reasonably conclude, and we infer it did conclude, that reopening discovery would prevent the case from being tried on April 24, 2009, and would require another continuance of the trial date. We cannot say Lutz has shown the court's discovery ruling " ' " 'exceeds the bounds of reason, all of the circumstances before it being considered.' " ' " (Velez v. Smith (2006) 142 Cal.App.4th 1154, 1160-1161.)
B. The Court Did Not Manifestly Abuse Its Discretion in Excluding Konrad's Opinion as Speculative and Lacking Foundation
Lutz's challenge to the trial court's Evidence Code section 402 ruling excluding Konrad's testimony is in part premised on the Sortwells' asserted "unclean hands" and willful suppression of evidence, claims that we have rejected above. Lutz further argues she laid a sufficient foundation for Konrad's expert opinion based on Cambridge's 12-month cash flow report, rendering the court's ruling an abuse of discretion. The Sortwells counter that two events affected the viability of Konrad's testimony: a pretrial summary adjudication that Lutz had no legal or equitable interest in the Taft apartments and Konrad's deposition admission that he had premised his valuation of Lutz's sweat equity on the belief she maintained a fifty percent interest in the partnership. They argue Konrad's opinions were either premised on Lutz's erroneous ownership interest or completely lacking in evidentiary support.
Lutz also suggests the court's ruling excluding Konrad's testimony prevented her from relying on the inferences allowed by Evidence Code section 413, regarding a party's willful suppression of evidence relating to the case. We construe this as an argument that Konrad's testimony somehow provided support for an instruction to the jury regarding those inferences. (See Moore v. Preventative Medicine Medical Group, Inc. (1986) 178 Cal.App.3d 728, 744 [party is entitled to have the jury instructed on his theory of the case if it is reasonable and finds support in the pleadings and evidence or inferences properly drawn from the evidence].) Konrad, however, merely testified he had provided a list of financial documents to Lutz's counsel but none were provided to him. In any event, the jury was instructed as Lutz suggests when the court read the following instruction: "You may consider whether one party intentionally concealed or destroyed evidence. If you decide that a party did so, you may decide that the evidence would have been unfavorable to that party."
1. Evidence Code Section 402 Hearing
At the section 402 hearing, Konrad, a certified public accountant, testified he had generated a summary of damages reflecting that Lutz was entitled to a "one-half interest in the partnership appreciation" — or one-half interest in the business's appreciation of value for her breach of partnership cause of action. Konrad explained he had calculated the appreciation for the increase in value of the property overall using an income approach, but that the documentation of net income for the property was "very limited." His analysis was based on two documents showing net income: a one-year projected cash flow analysis from Cambridge for February 2009 and an actual cash flow analysis for 2006 prepared by Donald Sortwell. He did not separate any appreciation of fair market value caused by general market conditions from that caused by Lutz's services.
Konrad testified he had requested 11 categories of financial information from Lutz's counsel that could have been helpful in reaching his opinions, but had not received any of those documents. He admitted testifying in his deposition that the absence of those documents left him "guessing." Though Konrad stated in his deposition that he had used alternate sources for the requested information, he agreed some of the categories did not have reliable alternatives. When asked if he would be leaving the jury guessing or relying on a guess, Konrad responded that his reliance on the two documents in his possession to show income flow "was not really a good test, but it was the test I used because that's all I had available." Konrad testified he was nevertheless able to look at the apartment complex's revenue based on emails and documents between Lutz and the Sortwells.
Konrad testified that using an income approach and an average capitalization rate of 5.8 percent obtained from several sources, he determined the partnership business had appreciated to a value of $1,643,000. Under the court's questioning, Konrad confirmed he had divided his appreciation figure to reach a total appreciation of $648,000, which would then be divided between Lutz and her brother, and possibly her parents. Konrad admitted his figure was "total appreciation, not just sweat equity" and that his analysis included the appreciation of both the land and the property. He did not include the Sortwells' down payment or the improvements they put into the property, but claimed that did not "necessarily" impact his final conclusion under an income approach. Konrad also admitted that he had no information as to Lutz's "capital account" or individual interest in the partnership, typically reflected by a partner's initial contribution, withdraws and share of the net income and losses. He admitted he would typically want to know Lutz's capital account information to perform a partnership evaluation.
Based on its consideration of the evidence and counsel's arguments, the trial court excluded Konrad's testimony, finding he "probably didn't have enough information to make a judgment in the case" and that his testimony would not aid the jury.
2. Analysis
"Broadly speaking, an appellate court applies the abuse of discretion standard of review to any ruling by a trial court on the admissibility of evidence." (People v. Waidla (2000) 22 Cal.4th 690, 717; San Lorenzo Valley Community Advocates for Responsible Educ. v. San Lorenzo Valley Unified School Dist. (2006) 139 Cal.App.4th 1356, 1414.) The standard applies to decisions regarding the admissibility of expert opinion evidence on grounds there is no reasonable basis for the opinion. (Dee v. PCS Property Management, Inc. (2009) 174 Cal.App.4th 390, 403; In re Lockheed Litigation Cases (2004) 115 Cal.App.4th 558, 564; see Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1599.) As with any other issue reviewed under this standard, we will not disturb the trial court's ruling unless it "exceeds the bounds of reason, all of the circumstances before it being considered" (Denham v. Superior Court (1970) 2 Cal.3d 557, 566) or it can fairly be said that no judge would reasonably make the same order that he or she did. (DiCola v. White Brothers Performance Products, Inc. (2008) 158 Cal.App.4th 666, 679.) We are not authorized to substitute our judgment of the correct result for the trial court's decision. (Ibid.)
" 'The value of opinion evidence rests not in the conclusion reached but in the factors considered and the reasoning employed. [Citations.] Where an expert bases his conclusion upon assumptions which are not supported by the record, upon matters which are not reasonably relied upon by other experts, or upon factors which are speculative, remote or conjectural, then his conclusion has no evidentiary value.' " (In re Lockheed Litigation Cases, supra, 115 Cal.App.4th at p. 563; see also People ex rel Brown v. Tri-Union Seafoods, LLC (2009) 171 Cal.App.4th 1549, 1567; Stephen v. Ford Motor Co. (2005) 134 Cal.App.4th 1363, 1371-1373; Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114 Cal.App.4th 1108, 1117.) The trial court is free to reject the testimony of a party's expert as long as it does not do so arbitrarily. (People ex rel. Brown, at p. 1568.)
The capitalization of income approach is a method of property valuation that " 'estimates current fair market value of a property by attempting to determine the amount that an investor would be willing to pay for the right to receive the future income the property is projected to produce.' " (Freeport-McMoran Resource Partners v. County of Lake (1993) 12 Cal.App.4th 634, 640; see also De Luz Homes v. County of San Diego (1955) 45 Cal.2d 546, 555 [under capitalization of income method, the value of property is the sum of anticipated future installments of net income from the property, less an allowance for interest and the risk of partial or no receipt]; Watson Cogeneration Co. v. County of Los Angeles (2002) 98 Cal.App.4th 1066, 1071, citing Cal. Code Regs., tit. 18, § 3, subd. (e).) The method is concerned with the present worth of future income stream from a particular property, and depends upon the size, shape and duration of the estimated net income stream and upon the capitalization rate at which future income is discounted to its present worth. (Watson, at p. 1071.) Lutz does not set out with any meaningful detail how this valuation method is typically applied under these specific circumstances or some other analogous situation. She has not provided any authority showing whether it has been applied to determine a partner's "sweat equity" interest in a partnership.
In De Luz, supra, 45 Cal.2d at pages 565-556, the California Supreme Court explained: "The first step in the [capitalization of income valuation] process is to determine prospective net income and this is done by estimating future gross income and deducting therefrom expected necessary expenses incident to maintenance and operation of the property. In instances in which future income cannot be estimated with reasonable accuracy or is not ascribable entirely to the property, prospective net monetary income is imputed in an amount equal to a minimum reasonable return on estimated market value. [Citation.] Since it is generally accepted that a person who agrees to receive payment in the future is entitled to interest both for waiting and the risk of partial or no receipt, the second step is to discount each future installment of income by a rate of interest that takes into account the hazards of the investment and the accepted concepts of a 'fair return.' The sum of the discounted installments is the present value of the property."
Here, Konrad's income approach, which did not determine the value of Lutz's sweat equity interest in the partnership but rather the general appreciation of the business, relied on isolated evidence of the property's income stream. Indeed, he admitted in his deposition that its accuracy was limited by the absence of documentation and data he had requested from Lutz's counsel. The accuracy of Konrad's valuation opinions are dependent upon the data from which they were derived. Lutz correctly points out an expert may rely upon inadmissible matters and reliable hearsay. Lutz further points out that Konrad derived a capitalization rate from various sources including large brokerage firms dealing in apartment buildings and relied upon Cambridge's 12-month projected cash flow report, the admissibility of which was stipulated by the parties. But Lutz does not explain how — in view of his deposition admissions — Konrad's analysis was a reasoned application of the income approach and its potentially complicated mathematical procedures, or why Konrad's ultimate valuation conclusion was not merely speculative given the limited information available. As we have stated, an abuse of discretion is not shown merely because a different trial court might have reasonably ruled differently in this case.
In sum, Lutz has not affirmatively demonstrated the trial court plainly exceeded the bounds of reason by its ruling excluding Konrad's expert testimony. It was manifestly reasonable for the trial court to conclude, based on Konrad's deposition testimony, that without the detailed financial documentation he had requested from Lutz's counsel, he was essentially guessing at the appreciated value of the family partnership, and that his opinion on that matter — which did not address Lutz's sweat equity contribution — would not assist the jury.
II. Attorney Fees Under Labor Code Section 218.5
Lutz contends the trial court erred when it denied her request for attorney fees under Labor Code section 218.5. That section provides in part: "In any action brought for the nonpayment of wages... the court shall award reasonable attorney's fees and costs to the prevailing party if any party to the action requests attorney's fees and costs upon the initiation of the action." Lutz maintains the jury's $13,890 verdict reflected a net monetary recovery to her, and thus she was the prevailing party as a matter of law under Labor Code sections 201 and 202. Her argument is premised on her statement that "[t]he only causes of action on [her] cross-complaint that went to the jury were her implied partnership agreement and statutory nonpayment of wage causes of action, namely, the First and Sixth Causes of Action, respectively...."
Lutz's assertion concerning her sixth cause of action for unpaid wages is contradicted by the record. In fact, the trial court dismissed Lutz's sixth cause of action alleging various Labor Code violations, and the parties stipulated she would instead pursue her claim for unpaid wages under the remaining first cause of action for breach of partnership agreement. At trial, Lutz maintained the partnership agreement was reflected by the parties' various oral and written communications, including the resident manager employment agreement, which assertedly contained an attorney fee clause entitling the prevailing party to recover attorney fees "in any dispute regarding this Agreement." However, Lutz did not seek to recover attorney fees under Civil Code section 1717 in the trial court, nor does she on appeal. She has forfeited any claim of entitlement to fees under section 1717. (Newton v. Clemons (2003) 110 Cal.App.4th 1, 11 [reviewing court will not ordinarily consider claims, arguments, authority and facts presented for the first time on appeal that could have been but were not presented to the trial court].)
Lutz's dismissal of her statutory cause of action is not dispositive, however, on the question of whether Labor Code section 218.5's attorney fee provision applies to her claims. The relevant inquiry is whether Lutz's cause of action for breach of partnership agreement was "an action brought for nonpayment of wages" within the meaning of Labor Code section 218.5. The applicability of Labor Code section 218.5 to Lutz's claims is a legal question subject to de novo review. (Californians for Population Stabilization v. Hewlett-Packard Co. (1997) 58 Cal.App.4th 273, 294 (Californians) ["The interpretation of this attorney's fees statute [§ 218.5] and its application to the circumstances in this case are questions of law, subject to independent review on appeal"], overruled on other grounds in Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 175-177.) The parties stipulated that Lutz would assert her claim for unpaid wages in connection with her breach of partnership agreement cause of action, and she requested reasonable attorney fees "upon the initiation of the action, " i.e., in the prayer of her cross-complaint. Under these circumstances, we conclude Lutz's action was one for nonpayment of wages subject to Labor Code section 218.5's mandatory attorney fees provision.
We turn then to the question of whether the trial court erred in concluding Lutz was not a prevailing party in view of the jury's award to her of $90 in unpaid wages in its special verdict. Lutz relies on Code of Civil Procedure section 1032, subdivision (a)(4), which defines " '[p]revailing party' " as including "the party with a net monetary recovery...." This definition, however, pertains to the recovery of costs. It is not applicable in determining who is the prevailing party under an attorney's fee statute that does not define "prevailing party." (See Galan v. Wolfriver Holding Corp. (2000) 80 Cal.App.4th 1124, 1128 [addressing attorney fees provision within Civil Code section 1942.4 and observing Civil Code section 1032 "begins with the phrase '[a]s used in this section[.]' "].)
Labor Code section 218.5 does not define the term "prevailing party." "Accordingly, in deciding prevailing party status..., the court should adopt a pragmatic approach, determining prevailing party status based on which party succeeded on a practical level." (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 150; see Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574.) This determination "is a matter left to the discretion of the trial court." (Galan, supra, 80 Cal.App.4th at p. 1128; Heather Farms, at p. 1574 [a trial court's prevailing party determination "should be affirmed... absent an abuse of discretion"].)
Here, Lutz had argued she was entitled to a substantial amount of damages in unpaid wages, approximately $32,000 during trial and $83,000 in her new trial motion. She plainly did not receive everything she sought in her complaint, and the Sortwells did not succeed in completely defending against her claims. Under these circumstances, Lutz has not shown the trial court manifestly abused its discretion in concluding, as a practical matter, neither party prevailed for purposes of an attorney fee award under Labor Code section 218.5.
On appeal, Lutz claims she was entitled to wages for approximately 66 months, about five years and five months. In closing arguments, Lutz's counsel argued the evidence showed Lutz was to be paid at an hourly rate of $7.50, and worked an average of 15 hours per week over 52 weeks each year, for $5,850 each year. He asserted the partnership had ended in January 2007. In Lutz's motion for new trial, Lutz argued the evidence showed she was entitled to wages of $20 per hour and worked an average of 15 hours per week for 277.2 weeks, for total unpaid wages of $83,160.
III. Sufficiency of the Evidence
Lutz contends the jury's special verdict on damages is not supported by substantial evidence in the record. She points out the jury unanimously found she had a contract with the Sortwells and the Sortwells breached that contract, but the jury's award of $90 in wages ignores unrefuted testimony that Lutz was the Sortwells' employee and was not paid an agreed $7.50 hourly wage for her resident manager and property manager work averaging 15 hours per week for approximately 66 months. Lutz further argues there was "overwhelming" evidence establishing her sweat equity in the family partnership was worth $200,000, and that the Sortwells conceded this value.
Interspersed in Lutz's claim is a suggestion that the trial court erred by refusing to give her proposed jury instruction concerning "Nonpayment of Overtime Compensation – Proof of Overtime Hours Worked." But Lutz dismissed her cause of action for breach of her employment agreement and her trial counsel disclaimed any right to overtime wages when he advised the judge, "There is no overtime, and I'm not going to argue that to the jury."
A. Standard of Review
In assessing Lutz's challenge to the evidence supporting the jury's damage awards, "we are bound by the familiar and highly deferential substantial evidence standard of review. This standard calls for review of the entire record to determine whether there is any substantial evidence, contradicted or not contradicted, to support the findings below. We view the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences and resolving all conflicts in its favor." (People ex rel. Brown v. Tri-Union Seafoods LLC, supra, 171 Cal.App.4th at p. 1567.) A substantial evidence review is not properly a challenge to the weight and credibility of the testimony presented, and this court may not reweigh evidence or reappraise the credibility of witnesses. (Eidsmore v. RBB, Inc. (1994) 25 Cal.App.4th 189, 195; see OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 866.) Further, the jury is not required to reject all of a witness' testimony, even if parts of it were inconsistent or conflicting: "It is well settled that the trier of fact may accept part of the testimony of a witness and reject another part even though the latter contradicts the part accepted." (Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 67.)
In making its final determination as to damages, the jury has the power to give whatever weight it chooses to the evidence. (San Diego Metropolitan Transit Development Bd. v. Cushman (1997) 53 Cal.App.4th 918, 931.) "The question as to the amount of damages is a question of fact. In the first instance, it is for the jury to fix the amount of damages, and secondly, for the trial judge, on a motion for a new trial, to pass on the question of adequacy. Whether the contention is that the damages fixed by the jury are too high or too low, the determination of that question rests largely in the discretion of the trial judge. The appellate court has not seen or heard the witnesses, and has no power to pass upon their credibility. Normally, the appellate court has no power to interfere except when the facts before it suggest passion, prejudice or corruption upon the part of the jury, or where the uncontradicted evidence demonstrates that the award is insufficient as a matter of law. In determining whether there has been an abuse of discretion, the facts on the issue of damage most favorable to the respondent must be considered." (Gersick v. Shilling (1950) 97 Cal.App.2d 641, 645.)
A reviewing court must uphold an award of damages whenever possible, drawing all presumptions in favor of the judgment. (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 508.) "There is insufficient evidence to support a [damage] verdict 'only when "no reasonable interpretation of the record" supports the figure....' " (San Diego Metropolitan Transit Development Bd. v. Cushman, supra, 53 Cal.App.4th at p. 931 .)
B. Sweat Equity Damages
Lutz's sufficiency of the evidence challenge to the sweat equity damages verdict ignores the testimony of her brother, Matt Sortwell, who testified on behalf of the Sortwells that he had done more physical labor than Lutz had, and he believed the value of his sweat equity was worth between $20,000 and $30,000. Further, Lutz testified she did not track her time spent on the Taft apartments and actually only wrote down her time between February 2, 2002, and February 20, 2002, which amounted to 39.5 hours for all of her efforts on the apartments, most of which she was compensated for via rent and an hourly wage. Though Lutz testified she believed the value of her sweat equity interest was $200,000, she admitted that her figure was vaguely based on some "financial documents" from 2005; she did not refer to any notes or base it on the amount of money the Sortwells put into the property or any of the hours Matt Sortwell contributed. The jury was not bound by Lutz's testimony as to the value of her sweat equity; it had the opportunity to observe Lutz and was entitled to reject her testimony and conclude — based on Matt Sortwell's testimony — that she did not put in more time or effort than her brother on improving or renovating the apartments.
In challenging the sweat equity damages verdict, Lutz does not explain how the jury was to legally measure a sweat equity contribution, refer us to relevant jury instructions, or cite case law measuring such an interest. She points to testimony from Donald Sortwell, who she claims admitted that an approximately $500,000 to $600,000 increase in value in the Taft apartments from 2001 to 2005 could be attributed to Lutz and her brother's sweat equity, and that the value of Lutz's sweat equity as of February 2009 was approximately $200,000. The fact there is evidence — even abundant evidence — from which the jury could have reached a different damages verdict is irrelevant on our substantial evidence review. But Lutz's characterization of the testimony is not supported by the record. At trial, Donald Sortwell testified he believed the property value had increased by not only Lutz and Matt Sortwell's efforts, but also from "the marketplace." He otherwise could not testify or opine what percentage of the enhanced value of the property could be attributed to Lutz and Matt Sortwell's sweat equity efforts. He did not unambiguously agree Lutz's partnership interest had a $200,000 value; though he stated he had valued Lutz's interest at approximately $200,000 in February 2009, he then clarified, "No figure was ever settled on in my mind or my wife's mind, but spending $200,000 through legal expenses was just not to be subtracted from my other children. It had to be her expense." Mr. Sortwell then stated the $200,000 was "more than what was hers [Lutz's partnership interest]."
Further, Lutz acknowledged during cross-examination that she was compensated for her property manager duties with free rent, she was to be paid an hourly rate for resident manager duties, and only the additional work she performed in renovating, gardening and cleaning was her sweat equity contribution. After considering Lutz was additionally working a full-time job, the jury could reasonably conclude that Lutz's sweat equity contribution for five years of work on the Taft apartments was minimal.
Under the circumstances, we cannot say there is " ' "no reasonable interpretation of the record" ' " (San Diego Metropolitan Transit Development Bd. v. Cushman, supra, 53 Cal.App.4th at p. 931) that will justify the jury's $13,800 award. The evidence as a whole may justify a larger verdict than that rendered, but this does not require reversal, as conflicts in the evidence are to be resolved by the jury. (Graf v. Marvin Engh Truck Co. (1962) 207 Cal.App.2d 550, 556.) We have no basis to conclude the jury's award was outside the reasonable range of the evidence or that as a matter of law the $13,800 award of sweat equity damages was inadequate.
C. Damages for Unpaid Wages
1. Trial Evidence
At trial, Donald Sortwell testified that as a condition to purchasing the Taft apartments, he was required to enter into a resident manager employer agreement, and signed such an agreement in June 2001 indicating that Lutz would be paid $7.50 an hour. Though the hourly compensation was intended to be in addition to Lutz's percentage of the monthly deposited rent, according to Donald Sortwell, Lutz never requested the hourly compensation; she never told him how many hours she worked or how much money she wanted. Under his arrangement with Lutz, in July 2002, Lutz was to receive seven percent of the monthly rents and did so when the rents increased. Other than two $600 checks issued to Lutz by Matt Sortwell for July and August 2001 property management (paid when Lutz was not living at the apartments) and a $337.50 check for apartment cleaning, he did not pay Lutz cash to manage the property. He testified he paid Lutz $600 and offset that amount by the rent for her apartment.
Lutz testified that she was to be compensated under "two separate hats:" six percent of the rental income for managing the apartment complex offsite and then, when they learned an onsite manager was required, an hourly rate of $7.50 for onsite manager duties. Lutz took issue with the fact her father was offsetting the full amount of her pay in rent, but she did not protest or abandon the job because they were "in a project together" and she did not want to leave her father "high and dry." Lutz testified she tracked her time and hours of the work she performed for all of her roles as property manager, resident manager, and for extra work, but only actually wrote down her time for 15 days — between February 2, 2002, and February 20, 2002 — which amounted to 39.5 hours. Those 39.5 hours pertained to not only her work as the property manager and resident manager, but also for her "additional" or extra work. Lutz estimated she spent 15 to 20 hours a week on resident manager work for which she was to be paid $7.50 an hour.
On cross-examination, Lutz was presented with her own sworn deposition testimony in which she was asked how many hours she worked from November 2001 and January 2007, and answered, "I can't guess" and, "I don't know." Counsel impeached Lutz with her prior deposition in which she admitted there was no agreement between her and the Sortwells that she would be paid $7.50 an hour; she did not have a written agreement with the Sortwells and did not present them with any written agreement; and she did not sign the written agreement that the Sortwells had presented to her. At her deposition, Lutz admitted that any hours she worked at the Taft apartments would have been part of her contribution to the partnership; that in November 2001 when she moved into the Taft apartments, "there was no hourly dollar figure at that point." Lutz conceded that even after the Sortwells agreed in 2006 to pay Lutz $20 an hour for her work outside her management duties (an amount for which Lutz disclaimed recovery at trial), she did not track her time, submit any bills, or expect to be paid that hourly rate because Donald Sortwell "yelled" at her for submitting one bill. At that point, she believed any other time spent working outside her regular management duties was her contribution to the partnership; she had no expectation of being paid an hourly rate.
2. Analysis
In challenging the jury's verdict of $90 in unpaid wages, Lutz points out that the Sortwells had admitted in their verified pleadings they had agreed to compensate Lutz for her services at $7.50 per hour, and had confirmed their agreement in writing in the property management agreement. She argues, without record citation, that it is "unrefuted" she worked as an employee 15 hours per week every month for five years. For this same proposition, Lutz later cites to the parties' stipulation that the amount of wages at that rate for those hours was $5,850 per year, and Lutz's counsel's closing argument referencing that stipulation.
Under the applicable review standard, " '[w]hen 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.' [Citations.] [¶] 'It is well established that a reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact.' " (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.)
Here, the question is whether there is any evidence from which the jury could reasonably reject Lutz's trial testimony that she and the Sortwells entered into an agreement to pay her an hourly rate of $7.50, or, even assuming they credited her testimony about such an agreement, whether they could nevertheless reject Lutz's estimate that she worked 15 to 20 hours per week on resident manager duties. (People v. Smith (2005) 37 Cal.4th 733, 739 [it is the exclusive province of the jury to determine the credibility of a witness and the truth or falsity of the facts on which that determination depends].) On appeal, Lutz does not address the abundant impeachment evidence from her sworn deposition concerning her entitlement to a $7.50 hourly wage, and her admissions that she did not know how many hours she worked; that all of her extra work was part of her contribution to the partnership; and that there was no agreement that she would be compensated by the hour for her "extra" work. On this record, the jury was entitled to disregard Lutz's trial testimony in view of her inconsistent deposition testimony. (See In re Marriage of Ananeh-Firempong (1990) 219 Cal.App.3d 272, 279.) Lutz's deposition admissions constitute substantial evidence from which the jury could conclude either Lutz and the Sortwells had no agreement to pay Lutz an hourly wage (thus awarding her a de minimus amount for the few hours she in fact documented in February 2002), or that Lutz was not credible as to her estimate at trial, and did not actually work any more than a few hours (either 12 hours at an hourly rate of $7.50, or 4.5 hours at an hourly rate of $20) over and above her property management duties.
IV. Dissolution and Accounting
Pointing out her prayer for relief sought dissolution of the partnership and an accounting but the special verdict did not resolve those issues, Lutz asks for an order that the trial court "schedule follow up hearing(s) to address the partnership dissolution and accounting." Lutz cites to general principles of partnership law from the Uniform Partnership Act of 1994 (UPA, Corp. Code, 16100, et seq.) providing that partners are deemed to have accounts credited with a share of partnership profits and losses (Corp. Code, § 16401, subd. (a)), entitling partners to an equal share of partnership profits but charging them with their proportional share of losses (Corp. Code, § 16401, subd. (b)) and entitling a partner to be indemnified by the partnership for liabilities incurred for preservation of the business or property and reimbursed for payments made for such purpose (Corp. Code, § 16401, subd. (c)). Lutz argues she invoked a proper remedy by bringing an equitable action for dissolution and accounting, which was properly combined with her action at law, and that the court "conceded that it would consider this request for equitable relief after the hearing on attorney's fees" but "failed and refused" to hold a hearing or make a decision on the matters.
The Sortwells point out that in denying Lutz's new trial motion, the court rejected Lutz's assertions, finding "the verdict resolved all the issues." They maintain that after the court summarily adjudicated the question of Lutz's interest in the Taft apartments, and the jury resolved the issues of Lutz's partnership interest and the question of her unpaid wages, Lutz had no remaining equitable or legal interests in the property to be resolved. They characterize Lutz's request to the trial court as an attempt to "revisit the jury's award."
To the extent Lutz complains of the absence of special findings in the special verdict on her request for an accounting and dissolution, we observe there is no indication in the record that Lutz advised the trial court before closing argument that she wished to present issues or questions relating to her right to an accounting or dissolution to the jury. (Cal. Rules of Court, rule 3.1580.) Lutz forfeited any claim of error regarding the verdict form. (Kelly v. CB & I Constructors, Inc. (2009) 179 Cal.App.4th 442, 451.)
Further, the jury was not asked to find, nor did it find, the parties had entered into a partnership agreement, only that they had entered into a contract and that as a result of the Sortwells' failure to perform, Lutz was entitled to damages. We are not entitled to imply additional findings from the jury's special verdict in Lutz's favor. (Vanderpol v. Starr (2011) 194 Cal.App.4th 385, 396; City of San Diego v. D.R. Horton San Diego Holding Co., Inc. (2005) 126 Cal.App.4th 668, 678 [observing this to be one of the " ' "recognized pitfalls" ' " of a special verdict].) The trial court could not conclude as a matter of law that the parties' contract was a partnership agreement entitling Lutz to remedies under the UPA, as the question of whether or not a partnership was formed is a question of fact. (Nelson v. Abraham (1947) 29 Cal.2d 745, 750 ["Whether the agreement to share profits is merely to provide a measure of compensation for services or for the use of money, or whether it extends beyond and bestows ownership and interest in the profits themselves so as to constitute the undertaking a partnership or a joint venture, presents primarily questions of fact"].) Indeed, an inference could be drawn from the evidence that Lutz and her parents did not form a partnership. "The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner, but the inference is not drawn if the profits were received in payment as wages of an employee." (Nelson v. Abraham, 29 Cal.2d at p. 750.) In view of the jury's special verdict finding, the court was not compelled to apply the provisions of the UPA.
Even assuming arguendo the jury's verdict found the existence of a partnership governed by the UPA, Lutz's theory at trial was that she had been wrongfully excluded from the partnership, which was dissolved and repudiated by the Sortwells (see Gherman v. Colburn (1977) 72 Cal.App.3d 544, 563-564 [explaining the difference between a theory of breach versus repudiation of a partnership agreement].) Her counsel argued to the jury Lutz's agreement with the Sortwells entitled her to a partnership distribution in the form of the "value" of her sweat equity — which she argued was worth between $200,000 and $250,000 based on the percentage increase in the fair market value of the apartments over the three years of the partnership's anticipated existence — and sought an award of money damages for this sum and her unpaid wages. Once Lutz elected to pursue damages out of the Sortwells' repudiation of the partnership and the jury awarded her the value of her partnership interest (her claimed sweat equity), "then as between the parties the cause of action for judicial dissolution and an accounting in equity became moot." (Gherman v. Colburn (1977) 72 Cal.App.3d 544, 565; see also Navarro v. Perron (2004) 122 Cal.App.4th 797, 801-802 [where a partner repudiates a partnership's existence and converts the partnership assets, the aggrieved partner may elect his or her remedies and sue for damages without seeking dissolution].)
Indeed, in closing arguments, Lutz's counsel pointed out that Lutz was excluded from the partnership as of mid-January 2007 to the present, and that the partnership was terminated as of January 2009. He told the jury, "So we certainly know the partnership was terminated, and we are down to how do we allocate those profits and losses and the sweat equity?" Lutz's counsel also pointed out to the jury that in March 2007, the Sortwells had responded to his letter on Lutz's behalf seeking to resolve the partnership issues by denying the existence of any partnership.
In Gherman v. Colburn, decided under the former Corporation Code section 15038, the plaintiffs had sued the defendants for "tortious exclusion of joint venturer" as well as accounting and dissolution, but dismissed their second cause of action seeking dissolution and accounting before trial. (Gherman v. Colburn, supra, 72 Cal.App.3d at p. 553.) The defendants unsuccessfully sought leave to file a cross-complaint for judicial dissolution and an accounting (ibid.) and challenged the court's order, among other things, on appeal. (Id. at p. 554.) In rejecting defendants' challenge, the court stated: "Where a partner or joint venturer wrongfully repudiates the partnership or joint venture agreement and converts the assets of the partnership or joint venture to his own use and benefit, the victim at least has alternative remedies: he may waive the tort or breach and sue to specifically enforce the partnership or joint venture agreement, including the remedy of a judicial dissolution and an accounting and if necessary (as an auxiliary remedy) to impress a trust on partnership or joint venture property, or the victim may submit to the repudiation and sue for damages for conversion of his interest in joint venture assets [citation]; or the victim may submit to the repudiation and sue for damages for breach of the joint venture agreement (including 'profits which might have been made') the same as any other action for damages for breach of any other contract [citations] or he may sue in tort." (Id. at pp. 564-565.) Gherman observed that under former Corporations Code section 15038, the remedies were cumulative, but the plaintiffs in that case had waived their right to an accounting. (Id. at p. 564, fn. 12.) Here, Lutz submitted to the Sortwells' repudiation of the partnership and pursued damages, that is, the monies she claimed she was entitled to under the partnership agreement. The jury's special verdict awarding her breach of contract damages gave her all the relief to which she was entitled under her breach of contract cause of action. Even assuming dissolution and accounting are cumulative, not alternative, remedies to breach of contract damages, that does not mean Lutz may obtain dissolution and accounting where the relief is unnecessary. (See Prince v. Harting (1960) 177 Cal.App.2d 720, 734-735 [citing cases in which an accounting and dissolution were deemed unnecessary in the event of a money judgment].)
The authorities cited by Lutz do not compel us to conclude differently. In Barlin v. Barlin (1956) 145 Cal.App.2d 390, for example, the appellate court observed that ordinarily, a joint adventurer may not sue his associate for the return of money contributed to the joint venture except by an action for dissolution and an accounting. (Id. at p. 393.) However, in that case, the trial court (as the trier of fact) found that no accounting was necessary, and that the respondent could thus sue his co-joint venturer at law for the breach of contract. (Id. at pp. 393, 394.) In Barlin, the parties terminated their joint venture by mutual consent. (Id. at p. 392.) Because the court could determine by reason of the joint venture's method of doing business the respondent was due a sum certain, he was entitled to sue at law for that sum and the trial court did not err in adjudging that an accounting was unnecessary. (Id. at p. 394.)
Here, we may reasonably infer in favor of its new trial order that the trial court impliedly concluded a dissolution or accounting were not necessary because Lutz sought as her partnership distribution only her share of the sweat equity and wages, which was determined by the jury and awarded as damages. Lutz has not given us a reasoned basis to disturb the trial court's implied finding.
DISPOSITION
The judgment is affirmed.
WE CONCUR: McINTYRE, Acting P. J., IRION, J.