Opinion
D047283
12-14-2006
RICHARD J. MARAZITI, Plaintiff and Respondent, v. JAY GRIFFITHS, Defendant and Appellant.
I.
INTRODUCTION
Defendant Jay Griffiths appeals from a judgment of the trial court in which the court awarded plaintiff Richard Maraziti $ 382,172.10 on his claims of unjust enrichment and benefit had and received. In 1998, Griffiths, along with his business partner Pat Fay, entered into a settlement agreement with Maraziti to dispose of a prior civil lawsuit between the parties. Pursuant to the settlement agreement, Griffiths was to purchase real property and three veterinary practices from Maraziti for the purchase price of $1,000,000 plus interest, to be paid over a number of years. Although the settlement agreement provided that the parties would negotiate and enter into a written agreement setting out in detail the terms of the deal and create a promissory note to record the details of the loan, the parties could not agree on how to structure the transaction. Despite the parties inability to reach agreement on a number of issues, Maraziti transferred possession of the subject real and personal property to Griffiths. Griffiths made a $200,000 down payment for the property and began paying $ 6,000 a month to Maraziti, as contemplated by the settlement agreement.
At some point in 2001, Griffiths wanted to dissolve his partnership with Fay and cease doing business in San Diego. Griffiths indicated to Maraziti his desire to sell his interest in the real and personal property that was the subject of the 1998 agreement. Maraziti had retained title to the parcel of real property that was in Griffithss possession. Maraziti eventually sold the property to a third party and credited Griffiths with the amount Maraziti received from the sale. However, the parties continued to disagree as to the terms of their agreement and specifically, as to how much money Griffiths owed Maraziti under the agreement.
Maraziti filed this action against Griffiths in June 2002. After a bench trial, the court concluded that the parties had abandoned any express contract that existed between them, but that Griffiths had received a benefit from the arrangement, for which he had not fully paid. The court found in Marazitis favor on causes of action for unjust enrichment and benefit had and received.
On appeal, Griffiths raises three challenges to the trial courts judgment. First, Griffiths contends that the judgment is barred by Code of Civil Procedure section 580b, which prohibits deficiency judgments based on purchase money loans, and/or by section 580d, which prohibits deficiency judgments for notes secured by deeds of trust or mortgages. Second, Griffiths contends that Marazitis quasi-contractual claims are barred by the statute of limitations. Third, Griffiths asserts that the trial court improperly awarded Maraziti pre-filing interest on the damage award.
Further statutory references are to the Code of Civil Procedure unless otherwise indicated.
We conclude that neither section 580b nor 580d bars the judgment that was entered in this case. We further conclude that the claims are not barred by the statute of limitations, and that the trial court did not award pre-filing interest. We thus affirm the judgment of the trial court.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual background
Sometime before 1998, Maraziti entered into a transaction with Griffiths and Pat Fay, Griffithss business partner at the time, that involved the sale of several veterinary practices Maraziti owned in San Diego County. That transaction gave rise to a lawsuit by Maraziti against Griffiths and Fay. Among the allegations in that action was the allegation that Griffiths owed Maraziti $136,000 in back rent. On February 27, 1998, the parties resolved that action pursuant to a settlement agreement. A copy of the reporters transcript documenting the terms of that settlement agreement (the 1998 agreement, or settlement agreement) was entered in evidence in this action.
Pursuant to the 1998 agreement, Griffiths and Fay agreed to pay Maraziti a total of $1 million, and to release Maraziti from any claims they had brought against him in the first action. In exchange, Maraziti agreed to release Griffiths and Fay from any claims he had raised in the first action, to sell three veterinary practices to Griffiths and Fay, and to sell and convey title to Griffiths and Fay an improved commercial building in Chula Vista. The purchase price for the Chula Vista property was to be $240,000. The amount Griffiths and Fay agreed to pay for the veterinary practices and the release of the prior amounts claimed due was $760,000. Griffiths contends that his agreement to pay Maraziti a total of $1 million was "to be reflected by a purchase money promissory note secured in part by a deed of trust encumbering the Chula Vista property."
The only evidence in the record regarding the terms of the 1998 agreement is the reporters transcript from February 27, 1998, and testimony from the parties and their attorneys as to their recollections of the agreement. The agreement was never reduced to writing.
At the February 27, 1998 settlement hearing, the parties indicated that it was their intention to begin performing pursuant to the provisions of the agreement on April 1, 1998. However, the parties and their attorneys could not reach agreement as to the specific details of the transaction. Although the parties began to perform pursuant to some of the terms of the agreement, Maraziti never delivered title to the Chula Vista property to Griffiths and Fay, and Griffiths and Fay never prepared and executed a deed of trust encumbering the Chula Vista property.
Griffiths and Fay took possession of the Chula Vista property and took over the three veterinary practices. They made an initial payment to Maraziti in the amount of $200,000 on April 1, 1998, and began making monthly payments of $6,000 beginning on October 1, 1998. Through their attorneys, the parties continued to attempt to document the details of the 1998 agreement. Correspondence between Marazitis counsel, William Rathbone, and Griffithss counsel, Robert Harris, evidences these attempts.
The parties stopped trying to document the terms of the 1998 agreement sometime during 1999. However, Maraziti allowed Griffiths and Fay to retain possession of the property, and Griffiths and Fay continued to pay Maraziti $6,000 per month, until sometime in 2001. Neither party made any further efforts to compel the other to enter into a written agreement as contemplated by the 1998 settlement agreement.
In May 2001, Griffithss new attorney, Randall Wilson, contacted Attorney Rathbone and indicated that Griffiths and Fay were dissolving their business relationship and were considering selling the veterinary practices. Griffiths wanted to sell his interests in the San Diego property and business, and resolve the debt he owed Maraziti.
Witnesses gave conflicting testimony about what occurred next between the parties. According to Maraziti and Rathbone, Maraziti agreed to allow Griffiths to sell the veterinary practices as long as the proceeds would be paid to Maraziti to fulfill, in part, Griffithss debt to Maraziti. According to Maraziti, he and Griffiths agreed that Griffiths would retain approximately $ 110,000 from the sale, and Maraziti would receive $240,000. Maraziti contended that he agreed to allow Griffiths to sell the veterinary practices and retain $110,000 in exchange for an agreement that would allow Maraziti to sell the Chula Vista property and keep the proceeds from that sale, crediting Griffiths with the amount of the sale against the remaining debt under the 1998 agreement. Griffiths contends that he never agreed to allow Maraziti to sell the Chula Vista property, and that in fact, Maraziti had agreed to allow Griffiths to sell the property.
The parties do not dispute the fact that Maraziti sold the Chula Vista property to a third party for just over $285,000 on February 22, 2002. Maraziti credited Griffiths with this amount, reducing Griffithss debt.
After Maraziti sold the Chula Vista property, the dispute between the parties rapidly escalated. Each party claimed that the other was in breach of the 1998 agreement and more recent modifications of the agreement, and disputed the amount, if any, Griffiths owed Maraziti under the 1998 agreement.
B. Procedural background
On June 27, 2002, Maraziti, acting in pro per, filed this action against Griffiths. Nearly a year later, Maraziti filed a first amended complaint. The first amended complaint included a cause of action for judicial foreclosure of "the remaining collateral" after the sale of the Chula Vista property, and sought specific performance compelling Griffiths to perform his obligations under the settlement agreement. Griffiths demurred to the first amended complaint on July 23, 2003, specifically challenging Marazitis claim for judicial foreclosure on the basis that there was no security agreement.
On September 15, 2003, the trial court sustained Griffithss demurrer to Marazitis judicial foreclosure cause of action, but granted Maraziti leave to amend to show the existence of a written security agreement and promissory note. The court also sustained Griffithss demurrer with regard to Marazitis request for specific performance, concluding that a remedy at law would provide adequate relief.
On October 1, 2003, Maraziti filed a second amended complaint. Griffiths answered the second amended complaint on May 21, 2004.
In November 2004, Maraziti moved unsuccessfully for leave to file a third amended complaint.
Maraziti retained counsel, Michael A. Gardiner, on February 2, 2005, and on February 25, Maraziti applied ex parte for an order shortening time to notice a second motion for leave to file a third amended complaint. The trial court denied the motion.
A bench trial began on April 25, 2005. At the close of Marazitis opening statement, Griffiths moved for nonsuit on the ground that Maraziti was seeking a deficiency judgment on a purchase money loan, in violation of section 580b. The trial court denied Griffithss motion for nonsuit.
Maraziti concluded his case-in-chief on May 10, 2005. Prior to resting, Maraziti moved to amend the operative complaint to conform to proof. The trial court granted Marazitis motion to amend and allowed Maraziti to file the proposed third amended complaint.
On May 19, 2005, the parties commenced closing arguments. The matter was submitted on May 23, and the trial court orally announced its tentative decision that same day. The court found against Maraziti on his contract and tort causes of action. The court concluded that the parties had abandoned the 1998 agreement. However, the court found in favor of Maraziti on the 17th and 18th causes of action — unjust enrichment and benefit had and received. The court also rejected all of Griffithss affirmative defenses. Finally, the court directed the parties to submit additional damages calculations so that the court could determine the proper amount of damages.
Griffiths requested that the trial court prepare a written statement of decision. The court ultimately directed Marazitis counsel to prepare a proposed statement of decision. Maraziti submitted the proposed statement of decision on June 16, 2005. On July 1, Griffiths filed a written objection to the proposed statement of decision, arguing that it did not fairly explain the basis for the courts rejection of his affirmative defenses.
After receiving Griffithss objections, the court requested further briefing from the parties on the issue of prejudgment interest. The court asked the parties to submit revised calculations that omitted prefiling interest. On August 8, the court heard argument on the issue of prejudgment interest, and subsequently prepared its own statement of decision and judgment, awarding Maraziti $382,172.10. The court determined that Maraziti should recover the principal balance that would have been due on February 22, 2002, under the 1998 agreement if that agreement had not been abandoned. In reaching this decision, the trial court adopted the financial summary Griffiths had submitted. The court entered judgment on August 9, 2005.
Griffiths timely filed a notice of appeal on October 4, 2005.
III.
DISCUSSION
A. The judgment does not fall within the terms of sections 580b or 580d
1. Section 580b does not bar the judgment in this case
"In California, as in most states, a creditors right to enforce a debt secured by a mortgage or deed of trust on real property is restricted by statute. Under California law, the creditor must rely upon his security before enforcing the debt. [Citation.] If the security is insufficient, his right to a judgment against the debtor for the deficiency may be limited or barred by sections 580a, 580b, 580d, or 726 of the Code of Civil Procedure. [Citation.]" (Walker v. Community Bank (1974) 10 Cal.3d 729, 733.) A "deficiency judgment is a personal judgment against the debtor for the difference between the debt and the proceeds received by the creditor from the sale of the security at a . . . foreclosure [or extrajudicial] sale. [Citation.]" (Coppola v. Superior Court (1989) 211 Cal.App.3d 848, 866.)
Section 580b prohibits personal judgments against a debtor arising from a purchase money loan:
"No deficiency judgment shall lie in any event after a sale of real property or an estate for years therein for failure of the purchaser to complete his or her contract of sale, or under a deed of trust or mortgage, given to the vendor to secure payment of the balance of the purchase price of that real property or estate for years therein . . . ."
Griffiths contends that section 580b bars any personal judgment against him for amounts Maraziti claims were owed Maraziti under the parties 1998 settlement agreement. Griffithss argument rests on the assertion that the parties entered into a purchase money loan. A purchase money loan, Griffiths contends, "is created where credit is extended by a seller to a buyer to finance the purchase of real property and the parties secure the credit relationship by that property." Griffiths maintains that this definition of a purchase money loan "applies to both installment sale contracts, where the seller retains title while the debt is paid, and conventional transactions, where title is transferred at origination and the loan is secured with a formal mortgage or deed of trust."
As support for his argument that the transaction in this case constitutes a purchase money loan, Griffiths points to the fact that the transaction involves a "loan" given for the purchase of both real and personal property, and asserts that the loan was secured by the "mixed" collateral of real and personal property.
Section 580b does in fact prohibit a deficiency judgment even where a loan is secured by mixed collateral:
"Where both a chattel mortgage and a deed of trust or mortgage have been given to secure payment of the balance of the combined purchase price of both real and personal property, no deficiency judgment shall lie at any time under any one thereof if no deficiency judgment would lie under the deed of trust . . . ."
The issue of "mixed collateral" is inapposite, however, because the evidence does not establish that the transaction in this case involved a secured loan. There is no evidence of the existence of either an installment sale contract or a more conventional seller financed property transaction as to the real property, nor is there evidence of a "chattel mortgage."
a. The parties never completed the paperwork necessary to create a "conventional" transaction
There is no evidence in the record to establish that the parties entered into a conventional seller financed real property sale transaction. In every case Griffiths cites in support of his argument that the parties in this case entered into a purchase money loan, there was an actual written contract, mortgage, or promissory note and deed of trust from which the court could determine that the parties had, in fact, secured a loan with real property. (See, e.g., DMC, Inc. v. Downey Savings & Loan Assn. (2002) 99 Cal.App.4th 190, 196; Costanzo v. Ganguly (1993) 12 Cal.App.4th 1085, 1090; Venable v. Harmon (1965) 233 Cal.App.2d 297, 300-301 (Venable).) There are no such documents here.
In this case, the parties entered into what amounted to an oral contract pertaining to the property at issue (i.e., the 1998 settlement agreement). The terms of the oral agreement contemplated that the parties would enter into at least one additional transaction, i.e., a seller financed sale of the property, which would be evidenced by a promissory note and a deed of trust (or similar security instrument). If the parties had fulfilled their obligations under the 1998 agreement, there would have been at least two contracts in operation: (1) the 1998 agreement, which included a number of promises and obligations, and (2) a promissory note and accompanying security instruments.
Neither party has produced a written document establishing the terms of the 1998 agreement. As noted above, the only evidence in the record as to the terms of that agreement is a transcript of the hearing during which the parties announced the settlement to the trial court, and the testimony of the parties and their attorneys as to their understanding of the terms of the settlement agreement.
Contrary to Griffithss assertions, the 1998 agreement did not, in and of itself, create a loan secured by property. Rather, that agreement contemplated that the parties would complete the paperwork necessary to create such a loan at some time in the future. However, there is no evidence that the parties ever did so. There is no evidence of a promissory note, a formal mortgage, or a deed of trust, nor is there anything else in the record to which Griffiths can point that establishes the creation of a security interest.
In Sherwood-Trimble Medical Group v. 10001 Venice Boulevard Partnership (1999) 75 Cal.App.4th 872, 882, the existence of a single promissory note for the entire loan amount was central to the appellate courts conclusion that section 580b applied to prevent a deficiency judgment for a loan secured by both real and personal property. The Sherwood-Trimble court concluded "that Sherwood-Trimble, as a vendor of personal property, who along with a vendor of real property, sold its property in a transaction in which both vendors took back from the buyer a single purchase money promissory note secured by a deed of trust on the real property and, by a security agreement, by the personal property, is barred from seeking a deficiency judgment against the buyers under section 580b." (Ibid., italics added.) In this case, there is no promissory note.
Griffiths attempts to gloss over this requirement, asserting that "the abandoned 1998 agreement called for the sale of real and personal property by Maraziti to Griffiths and Fay in exchange for a purchase price of one million dollars." While Griffiths claims this agreement was "reflected by a single promissory note and secured, in part, by the real property to be conveyed," and cites to portions of the record as supporting these assertions, there is no citation to an actual promissory note or to any other document establishing a secured transaction. Further, the trial testimony established that there never was a security instrument pertaining to the Chula Vista property.
Griffithss assertions regarding the existence of a secured transaction are directly contrary to the position he took in demurring to Marazitis cause of action for judicial foreclosure. Griffiths successfully demurred to Marazitis cause of action for judicial foreclosure on the basis that Maraziti failed to show the existence of the necessary security instrument. In briefing on the demurrer, Griffiths stated that the reporters transcript regarding the 1998 agreement "is obviously neither a promissory note, nor [is it] a security agreement or document creating a security interest in personal property." Griffiths further argued that Maraziti "makes no other claim as to the existence of these documents. Indeed, elsewhere in plaintiffs complaint he asserts they were never created."
b. There was no installment sale contract similar to the contract at issue in Venable, supra, 233 Cal.App.2d at page 300
Because the parties failed to abide by the terms of the 1998 agreement, only one contract—the 1998 agreement—was formed. Griffiths appears to suggest that if the 1998 agreement did not constitute a secured transaction, then it was the functional equivalent of an installment sales contract, such that the 1998 agreement, on its own terms, constituted a purchase money loan. The record does not support this contention.
In an installment sales contract, the buyer makes a down payment followed by periodic payments, and the seller retains title or a security interest until all payments have been received. (Blacks Law Dictionary (8th ed., 2004).) "Conceptually, a land sale contract may thus be viewed as a seller-financed conveyance whereby the seller takes back a deed of trust from the buyer encumbering the property sold. Sellers under a land sale contract are essentially treated the same as a purchase money seller/lender under a conventional sale. [Citations.]" (Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2006) ¶4:114.) The antideficiency statutes apply to prohibit deficiency judgments arising out of breaches of installment sales contracts. (See Venable, supra, 233 Cal.App.2d at p. 300.)
This type of transaction is sometimes referred to by other names, such as a land sales contract, land contract, or contract for deed. (See Blacks Law Dictionary (8th ed., 2004); see also Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2006) ¶4:112.) For purposes of simplicity, we will refer to this type of transaction as an "installment sales contract."
Because there is no document evidencing any formal sale transaction in this case and because the parties do not argue that any such document ever existed, the only "contract" on which Griffiths could base his contention that the parties entered into an installment sales contract is the 1998 settlement agreement.
There are at least two reasons why the 1998 agreement is insufficient to support Griffithss claim that the antideficiency statutes prohibit a personal judgment against him. First, there can be no installment sales contract because the court found that the parties abandoned the 1998 agreement. It is clear that in the absence of any contract, Maraziti had no security interest in the land. Second, even if the parties had not abandoned the 1998 agreement, Griffiths cannot establish that the 1998 agreement constituted an installment sales contract or the functional equivalent of such a contract.
The terms of the 1998 agreement make clear that it is not covered by section 580b. In Venable, supra, 233 Cal.App.2d at page 300, a case Griffiths cites in support of his position, the court had to determine whether the contract at issue was a "security device and not just a preliminary contract to sell the land." The Venable court explained:
"If the section [580b] is to apply to the instant case, it must appear that the agreement in question is a security device and not just a preliminary contract to sell the land. In the strictest sense of the word, the ordinary land sales contract is not a security device. The vendor, in most instances, is not loaning money to the vendee and receiving a lien on the property as security, as is ordinarily the case with a trust deed or mortgage. However, it does appear to be well settled that . . . a contract for the sale of land in return for installment payments, title to be retained by the vendor until all or a large part of the purchase price is paid, serves the function of a security device, similar to a mortgage. The transaction is so similar to a purchase money mortgage that the consequences attributed to such a deal are substantially identical with those characteristic of a mortgage relation. [Citations.] (Venable, supra, 233 Cal.App.2d at p. 300 (original italics omitted, additional italics added).)
Unlike the contract at issue in Venable, the 1998 agreement did not grant Maraziti the right to retain title of the Chula Vista property until Griffiths made all the payments for the property. The fact that Maraziti retained title to the property and eventually sold the property to a third party does not bring this case within the holding of Venable. In that case, the agreement between the parties specifically contemplated that the seller would retain title to the property while the buyer made payments. Under these circumstances, the Venable court held that the sellers retaining title served the same function as a security device. Here, in contrast, the parties agreed that Maraziti would transfer title to Griffiths and Fay, and that Maraziti would retain a separate security interest in the property. However, those events never transpired. The fact that Maraziti never transferred title to Griffiths and Fay, in contravention of the terms of their agreement, does not convert the transaction in this case into an installment sales contract like the contract in Venable.
The trial court specifically found that Maraziti wrongfully withheld title to the Chula Vista property, in violation of the settlement agreement.
The transaction in this case is not one that can be deemed the equivalent of a secured transaction (i.e., an installment sales contract). Griffithss attempts to cobble together authority to establish that the parties entered into a "purchase money contract" fail.
c. The court will not infer the existence of a purchase money loan from the parties intention to create one at some time in the future
In an attempt to overcome the lack of evidence of a contract that can be considered to be a purchase money contract, Griffiths asks this court to look to the parties intent and infer the existence of such a contract. Griffiths asserts that "[t]he issue is thus one of intent, and when the parties contract reflects an intent to create a seller financed transaction secured at least in part by the real property to be conveyed, a personal judgment is barred."
If there existed even a faulty or erroneously drafted mortgage or trust deed, the court could look to the intent of the parties to create an equitable mortgage. Courts have imposed equitable mortgages in cases involving installment land sale contracts, a borrowers written promise not to transfer or encumber real property given as security for repayment of loan, and deeds that convey land, while reserving a lien to secure payment of purchase price. (Petersen v. Hartell (1985) 40 Cal.3d 102, 119.) However, there is no basis in this case to infer the existence of a security interest by way of a mortgage or deed of trust because there are no documents establishing that the parties ever attempted to create a mortgage, or deed of trust, or other security instrument.
2. Section 580d does not require reversal of the trial courts judgment
Griffiths contends that the "public policy underlying" section 580d bars the judgment against him. Section 580d provides in pertinent part:
"No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust."
Griffiths asserts that by selling the Chula Vista property, Maraziti in effect utilized a "power of sale," and that Maraziti should not also be allowed to obtain a deficiency judgment against Griffiths. Griffithss argument is again foreclosed by the fact that Maraziti had no power of sale within the meaning of 580d because he had no security interest in the property.
Recognizing that the transaction in this case does not fall within the plain words of section 580d because there was no mortgage, no note, and no deed of trust, Griffiths argues that "other forms of transactions between parties that reflect a mortgage substitute are considered to come within the operation of the statute."
Griffiths cites Jensen v. Friedman (1947) 79 Cal.App.2d 494, 498-501 (Jensen), Wilson v. Anderson (1930) 109 Cal.App. 467, 474-476 (Wilson), and Hamud v. Hawthorne (1959) 52 Cal.2d 78, 84 (Hamud), in support of his argument that "courts should look to the substance of the transaction, rather than its form" in determining whether section 580d applies. None of these cases assists Griffiths, however, because in each, there was a transaction that included a formal document establishing the transfer of interests and evidence of a security obligation.
Jensen, supra, 79 Cal.App.2d at page 498, involved an executed deed absolute. The Jensen court attempted to ascertain whether the parties had intended that the deed absolute secure a debt or obligation—i.e., whether the deed absolute should be considered a mortgage—for purposes of the application of sections 580a and 580c:
A "deed absolute" is a "deed that conveys title without condition or encumbrance." (Blacks Law Dictionary (8th ed. 2004).)
"Whether a deed absolute in form be a mortgage, is a question of intention to be inferred from all the facts and circumstances of the transaction in which the deed was executed, taken in connection with the conduct of the parties after its execution. [Citation.] The rule is established in California and elsewhere that a deed absolute on its face may in equity cases be shown by parol evidence to have been intended as security for a debt or obligation. [Citation.] Beeler v. American Trust Co. [1944] 24 Cal.2d 1, shows how far the courts have gone on this subject. In that case the debtor gave the bank a deed absolute in form, and, in addition, an affidavit to the effect that the deed was an absolute conveyance, reserving to the grantor only a lease and option to purchase. The court held that it was proper to admit parol evidence to show that in spite of the terms of the affidavit, the deed was actually a mortgage."
Similarly, in Wilson, supra, 109 Cal.App. at page 474, an appellate court had to determine whether a deed should be considered a mortgage:
"The plaintiff in this action holds a deed which is, in legal effect, only a mortgage. We do not need to cite authorities, which are numerous, to the effect that if a grant, bargain and sale deed is taken as security for the payment of a debt, the instrument, though couched in the form of an absolute conveyance, is, in truth and in fact, nothing more than a mortgage, and for the foreclosure of which only one action can be prosecuted, as provided for by section 726 of the Code of Civil Procedure. Thus, the right of the plaintiff in this action was not for a judgment quieting title, which would exclude the appellants from any right of redemption or from the opportunity of making payment of the sums due the plaintiff, and, therefore, the judgment as entered herein cannot stand"
In Hamud, supra, 52 Cal.2d at page 84, the Supreme Court held that an executory deed provided in lieu of foreclosure on a property had the same effect as a combined mortgage and advance foreclosure, and was prohibited by statutes voiding any attempt to restrain the right of redemption from a lien. Thus, in all three of the cases Griffiths cites as supporting his contention that this court should look to the substance, rather than the form, of the transaction, there was a deed that could be interpreted to be a mortgage. There is no such document here.
As Griffiths states, courts look to the "substance of the transaction rather than its form" so that parties cannot evade the antideficiency rules "by the use of labels or false structures." Here, however, no labels have been used, and there are no false structures to pierce. We do not know how the parties would have structured the ultimate sale and loan transaction because they never finalized the transaction. What we are left with is an abandoned agreement by which the parties had agreed to enter into a transaction in a particular manner. That transaction never took place. What did occur is that Griffiths paid Maraziti a portion of the $1 million he had agreed to pay for the Chula Vista property, property in Northern California, the veterinary practices and the release of prior claims, and Griffiths took possession of the real and personal property. His ownership interest was never recorded. Most importantly, there is no evidence that any loan Maraziti made to Griffiths was secured by the Chula Vista property. Indeed, the court found that Maraziti had no right to sell the property; such a finding is inconsistent with Maraziti having retained a power of sale security interest in the property.
B. Marazitis quasi-contract claims are not barred by the statute of limitations
Griffiths contends that Marazitis quasi-contract causes of action were time barred at the time Maraziti filed his original complaint, because the two-year time period that applies to quasi-contract claims had expired. According to Griffiths, the limitations period for implied in law contract claims begins "on the date when the materials or services for which compensation is sought were delivered." Griffiths argues that the statute of limitations began to run when Maraziti transferred possession of the personal and real property to Griffiths on April 1, 1998—more than four years prior to June 27, 2002, the date on which Maraziti filed the original complaint.
The trial court concluded that the action was timely. Griffiths suggests that the trial court did not make sufficient findings to support its rejection of his argument that the claims were time barred. He contends that the trial courts explanation was inadequate because the court did not specifically find that the abandonment of the contract occurred on February 22, 2002, the date on which Maraziti contends the court found the abandonment to have occurred.
Griffiths cites Employers Casualty Co. v. Northwestern Nat. Ins. Group (1980) 109 Cal.App.3d 462, 473-474 (Employers Casualty ), disapproved on different grounds in In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1137, to suggest that this court cannot imply any finding favorable to Maraziti on this issue. In Employers Casualty, the appellate court determined that the trial court had not provided sufficient findings of fact for it to determine how the trial court had reached an independently ambiguous legal conclusion that coverage under an insurance policy existed:
"The findings of fact of the trial court do not reveal the basis for the conclusion reached by the trial court that coverage exists under the terms of Employers policy. Rather, the findings of fact on this issue merely state that Employers policy . . . provides coverage to Remic industries for any liability which it may have to the plaintiffs . . . arising out of the accident in question. Findings in terms of the bare ultimate fact of coverage as were here found by the trial court make it extremely difficult if not impossible for the reviewing court to ascertain the basis for the trial courts conclusion that coverage existed." (Employers Casualty, supra, 109 Cal.App.3d at p. 473.)
The Employers Casualty court went on to say:
"Section 632 of the Code of Civil Procedure requires the trial court to make findings of fact which fairly disclose the courts determination of all issues of fact. California Rules of Court, rule 232(e), contains the same language and further adds among other things that the findings shall be concisely stated whenever practicable. . . . The reviewing court must rely on such findings of fact and conclusions of law from which to glean the basis for the trial courts judgment, and where the trial court fails to make findings of fact on material issues which would fairly disclose such determination by the trial court, such failure amounts to reversible error. [Citations.]" (Employers Casualty, supra, 109 Cal.App.3d at pp. 473-474.)
We disagree with Griffithss suggestion that the trial courts decision does not fairly disclose the trial courts determination of all material issues of fact. By stating that the action was timely because it was filed on June 27, 2002, the court implicitly found that the filing date was within two years of the date on which the quasi-contract actions accrued. There is substantial evidence to support this finding. Further, the court made additional findings that support its determination that the action was timely filed.
Griffiths fails to acknowledge that the time of accrual of a cause of action may be dependent upon notice to the plaintiff of the existence of the facts underlying the cause of action. "A plaintiff must bring a claim within the limitations period after accrual of the cause of action. [Citations.] In other words, statutes of limitation do not begin to run until a cause of action accrues. [Citation.]" (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox).) "The statute of limitation begins to run on a cause of action based on an implied or quasi contract when the cause of action accrues, and depends largely on the facts of each particular case. [Citations.]" (Lazzarevich v. Lazzarevich (1948) 88 Cal.App.2d 708, 720.) "Generally speaking, a cause of action accrues at the time when the cause of action is complete with all of its elements. [Citations.]" (Fox, supra, 35 Cal.4th at pp. 806-807.) However, accrual of a cause of action is postponed until the plaintiff discovers, or has reason to discover, the cause of action. (Id. at p. 807.)
"A plaintiff has reason to discover a cause of action when he or she has reason at least to suspect a factual basis for its elements. [Citations.] . . . In so using the term elements, we do not take a hypertechnical approach to the application of the discovery rule. Rather than examining whether the plaintiffs suspect facts supporting each specific legal element of a particular cause of action, we look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them." (Fox, supra, 35 Cal.4th at p. 807.)
Maraziti could not have known that he would not be fully compensated for the real and personal property that was in Griffithss possession until there was some indication that Griffiths was not going to pay. Although it is true that neither party lived up to all of his obligations under the 1998 settlement agreement, Maraziti did give up possession of the real and personal property to Griffiths, and Griffiths had been making monthly payments to Maraziti for the value of that real and personal property in a manner to which the two had apparently agreed. The unjust enrichment became apparent only when there were sufficient facts to establish that Griffiths was not going to pay Maraziti the agreed-upon amount for the property he received. This happened, at the earliest, in 2001, and at the latest in 2002, when Griffiths failed to make the monthly payments.
The court could have found that Maraziti had reason to discover a cause of action when Griffiths indicated, through his attorney, that his partnership with Fay was not going well and that he wanted to sell his interest in the real and personal property. This occurred in May 2001, which was just over a year prior to the time the action was filed.
The trial court observed that "the parties stopped performing under [the 1998] agreement, without complaint from either for a long period of time. The agreement was effectively abandoned by the parties . . . ." Later, in discussing the calculation of damages, the court cited February 22, 2002, as the date from which the damages calculation should be made. The court stated, "After February 22, 2002, Dr. Griffiths made only 17 payments of $1904.17 each, apparently as (partial) interest payments, and he did not repay the principal of $324,482.26." One can infer from the fact that the court used this date to calculate damages that the court found that as of February 22, 2002, Griffiths had stopped paying pursuant to the agreement and the parties had abandoned the contract. It is not necessary that the court determine that the parties wholly abandoned the contract on that date—a finding Griffiths asserts would not be supported by the record. Rather, it is necessary only that the court determine that at some time within the two years prior to Marazitis filing of the action, Griffiths indicated his intention to abandon his promise to pay. The courts ruling indicates that it made such a finding.
Griffiths further argues that Marazitis causes of action accrued on April 1, 1998 because "Maraziti understood he was providing assets of substantial value to Griffiths and that he did so in the absence of both Griffithss and his compliance with the terms of the 1998 agreement." (Italics omitted.) According to Griffiths, because Maraziti also was not complying with the terms of the 1998 agreement, "his remedies at that time included the ability to plead a claim based upon an implied in law contract seeking recovery of the benefit conferred." However, as noted above, even though neither party was fulfilling each and every promise envisioned by the 1998 agreement, Griffiths did pay Maraziti the initial $200,000 as provided under that agreement, and continued to pay Maraziti an additional $6,000 each month, until late 2001. Maraziti thus could not have known on April 1, 1998 that Griffiths was not going to pay the agreed upon purchase price for all of the property.
Finally, with regard to Griffithss contention that Maraziti argued in the trial court that Griffiths had been unjustly enriched from the time he took possession of all of the property, such an argument does not mean that Maraziti was aware that Griffiths did not intend to pay Maraziti for the reasonable value of the property at the time Griffiths took possession of the property. Thus, Marazitis argument that Griffiths was unjustly enriched beginning at the time he took possession does not necessarily conflict with Marazitis argument regarding when the statute of limitations started to run on his claims.
On this record, we conclude that the trial court did not err in determining that Marazitis quasi-contractual claims were not barred by the statute of limitations.
C. The trial court did not award prejudgment interest
Griffiths contends that the trial courts determination of damages "amounted to" the awarding of pre-filing interest, which he claims is improper as to claims that seek unliquidated damages. Griffiths asserts that the trial court violated Civil Code section 3287, subdivision (b), which prohibits a court from awarding interest from a date prior to the filing of an action on an unliquidated contract claim. Civil Code section 3287, subdivision (b) provides:
Griffiths also asserts that pre-filing interest was not permitted under section 3287, subdivision (a), because that subdivision applies only to liquidated claims. That section provides in pertinent part: "Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt. . . ." (Civ. Code, § 3287, subd. (a).) Griffiths argues that the amount of damages in this case was not "certain, or capable of being made certain by calculation . . . ." (Ibid.) We need not address whether the damages were or were not certain or capable of being made certain, because we conclude that the court did not award "pre-filing interest."
"Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed."
The trial court did not award pre-filing interest. Rather, it awarded Maraziti pre-judgment interest from the date on which the action was filed. The judgment states in part, "The Court awards Dr. Maraziti 9% interest from June 27, 2002 (the date Dr. Maraziti filed this action) on the amount due him from Dr. Griffiths . . . ." The fact that the court limited the award of interest to the time between the filing of the action and the entry of judgment establishes that the trial court did not violate Civil Code section 3287, subdivision (b).
Griffiths suggests that the value of the award for unjust enrichment and benefit had and received "amounted to" the improper awarding of pre-filing interest. Griffithss argument is not about "pre-filing interest." Rather, it is a challenge to the dollar amount of the trial courts award for Marazitis claims of unjust enrichment and benefit had and received. Griffiths is challenging the fact that the trial court awarded Maraziti an amount that, when combined with the amounts previously credited to Griffiths, was more than the original $1 million to which the parties agreed in the 1998 settlement agreement. The award exceeded this figure because it included interest Griffiths was to pay Maraziti in exchange for not having to pay the full purchase price upon taking possession of the real and personal property. Thus, Griffithss true complaint is that the trial courts damage calculation "effectively awarded Maraziti the benefit of [the 1998 agreements] bargain" rather than awarding damages in line with "the reasonable value of the assets Griffiths received in 1998, less subsequent credits."
Griffiths argues that restitution is the appropriate remedy for a quasi-contract claim for unjust enrichment. According to Griffiths, restitution "is designed to restore the aggrieved party to his former position by return of the goods or services delivered, or its equivalent in money . . . ." This measure, he contends, is "typically described as the fair market value of the assets or services measured at the time and place of delivery." Griffiths next asserts that the remedy for a breach of contract is the "benefit of the bargain," which allows the court to place the parties "in the position they would have enjoyed had the contract been fully performed." Because the court awarded Maraziti damages based on quasi-contract claims and not contract claims, Griffiths contends that restitution is the appropriate remedy here.
Griffiths charges that the court erroneously awarded Maraziti the balance due in 2002 under the abandoned 1998 agreement, which, he maintains, is not consistent with the remedy for restitution: "Despite this express finding [of abandonment of the contract], the lower court effectively awarded Maraziti the benefit of the bargain. . . .This result was wrong, as it substituted a measure of damages—benefit of the bargain—at odds with the principle of restitution." According to Griffiths, "[T]he court should have awarded Maraziti the reasonable value of the assets Griffiths received in 1998, less subsequent credits, not the balance due in 2002 under the abandoned 1998 agreement."
It appears that Griffithss complaint focuses on the manner in which the court calculated damages. Griffiths attempts to equate the courts computation of damages, or what Griffiths terms the "confusion of remedies," with the "inclusion in the award of what amounted to prejudgment interest contrary to Civil Code section 3287, subdivision (b)." However, it is clear that that the court did not award statutory interest for any period of time prior to the time the action was filed. Because Griffiths has failed to establish that the trial court awarded pre-filing interest in contravention of Civil Code section 3287, subdivision (b), we affirm the trial courts damages award.
IV.
DISPOSITION
The judgment of the trial court is affirmed.
We Concur:
McCONNELL, P. J.
BENKE, J.