Opinion
H050279
09-18-2023
TOM MCENERY AND JILL MCENERY, Plaintiffs, Cross-Defendants, and Appellants, v. JOHN P. MCENERY, Defendant, Cross-Complainant and Respondent.
NOT TO BE PUBLISHED
(Santa Cruz County Super. Ct. No. 20CV01024)
BROMBERG, J.
Plaintiffs Tom McEnery and Jill McEnery have sued Tom's brother, defendant John McEnery, over a vacation home in Santa Cruz, which the three jointly own. Plaintiffs initially sued defendant for specific performance of an option and for breach of the implied covenant of good faith and fair dealing. In addition, at the end of trial, they amended their complaint to add a partition claim. The trial court issued a judgment denying plaintiffs' claims for specific performance and breach of the implied covenant of good faith and fair dealing, but finding in their favor on the partition claim and ordering further proceedings on that claim.
Plaintiffs have filed a notice of appeal from this judgment. The judgment, however, does not fully resolve plaintiffs' partition claim and therefore is not an appealable final judgment under section 904.1, subdivision (a)(1), of the Code of Civil Procedure. (Subsequent undesignated statutory references are to the Code of Civil Procedure.) In addition, the judgment does not determine the rights of parties with interests in the Santa Cruz property and therefore is not an appealable interlocutory judgment for partition under section 904.1, subdivision (a)(9). Accordingly, we dismiss plaintiffs' appeal.
I. FACTS AND PROCEDURAL BACKGROUND
In the mid-1980s, defendant purchased a beachfront property in Santa Cruz, in which plaintiffs later took a 50 percent interest. The Santa Cruz property has four units, and the plaintiffs and defendant agreed that defendant would have exclusive use of two units and plaintiffs exclusive use of the other two.
In March 2015, plaintiffs entered into an agreement with defendant to lease his two units for five years with an option to buy defendant's ownership interest in the Santa Cruz property. Under this lease/option agreement, plaintiffs agreed to pay $35,000 each year to lease defendant's interest in the property and to take responsibility for the mortgage on the property, property taxes, and insurance as well as regular maintenance and repairs. The agreement also gave plaintiffs an option to purchase defendant's interest in the property.
The lease/option agreement, however, did not specify a price for defendant's interest or a method for determining the price. It simply stated that plaintiffs could purchase defendant's interest "upon a price as mutually agreed upon by the Parties." The agreement also stated that, when an option is exercised, "the parties agree to use their best efforts to agree on a fair market price." Finally, the agreement stated that the option "must be exercised in a writing delivered to the Lessor [defendant]."
Plaintiffs alleged that they exercised their option to purchase the Santa Cruz property in a February 24, 2020 letter sent to defendant by their attorney. In the letter, the attorney stated that "Tom has instructed me that he wishes to exercise the option at this time" and proposed several ways to reach a mutually acceptable price. Defendant, however, allegedly refused to agree with plaintiffs upon a price.
In April 2020, immediately after expiration of their five-year lease of defendant's interest, plaintiffs sued defendant. In their complaint, plaintiffs asserted two claims. First, they claimed breach of the lease/option agreement and requested specific performance requiring defendant to agree on a price for his interest in the Santa Cruz property (and enabling them to purchase that interest). Second, plaintiffs claimed breach of the covenant of good faith and fair dealing implied into the lease/option agreement, and they sought damages caused by that breach. Defendant counterclaimed for a declaration that plaintiffs' option was unenforceable and that they must vacate his portion of the Santa Cruz property.
In January 2022, after defendant's request for an injunction and motion for summary judgment were denied, the case went to trial. At the close of their case, plaintiffs indicated that they planned to request leave to amend their complaint to conform to proof and to add a partition claim and claims for promissory fraud and negligent misrepresentation. Plaintiffs eventually made this request at the end of trial. The trial court granted leave to add the partition claim, which defendant did not oppose, but denied leave to add the promissory fraud and negligent misrepresentation claims, finding it unfair to add such claims at the end of trial.
On February 7, 2022, plaintiffs filed an amended complaint adding a partition claim. They alleged that due to the "acrimonious and bitter relationship" between their family and defendant's, the two families could not live together in the Santa Cruz property and that, because of the many common areas, the property could not be physically divided. Plaintiffs therefore requested a partition by sale. Plaintiffs also sought contribution from defendant for expenses "in an amount no less than $356,448.45" associated with the Santa Cruz property allegedly incurred on defendant's behalf.
On May 10, 2022, after post-trial briefing, the trial court issued a statement of decision. On July 22, 2022, after receiving additional briefing and conducting a hearing, the trial court issued a judgment slightly modifying the findings in the statement of decision.
In the judgment, the trial court found in favor of defendant on plaintiffs' first two claims. It rejected plaintiffs' claim for specific enforcement on the ground that the lease/option agreement was too vague to permit the court to compel specific performance.
The trial court also rejected plaintiffs' claim for breach of the covenant of good faith and fair dealing. The court found unpersuasive plaintiffs' contention that the February 24, 2020 letter from their attorney-which said only that "Tom . . . wishes to exercise the option at this time"-exercised the option. In addition, the court found that defendant's disagreements with plaintiffs over the value of defendant's interest in the Santa Cruz property "do not equate to a breach of the Covenant of Good [F]aith and Fair Dealing." Finally, the trial court ruled that the damages claimed by plaintiffs were not reliance damages.
The trial court, however, denied defendant's request for an order requiring plaintiffs to vacate the Santa Cruz property, and it found in favor of plaintiffs on their partition claim. The court then stated that "Partition by Sale will be ordered." It also stated that the parties "will comply with their relative responsibilities" under statutes governing partition, "including but not limited to California Code of Civil Procedure sections 872.810, 872.820, and 873.210-873.[850]."
On August 10, 2022, less than a month after the judgment was issued, plaintiffs filed a notice of appeal from the judgment. Defendant subsequently moved to dismiss the appeal, but the motion was deferred for consideration with the appeal.
II. DISCUSSION
On appeal, plaintiffs challenge the trial court's rejection of their claim for breach of the covenant of good faith and fair dealing. They argue that the trial court erred in finding that they failed to exercise their option to purchase the Santa Cruz property, in finding that defendant did not breach the covenant, and in ruling that they failed to present evidence of reliance damages. In addition, plaintiffs argue that the trial court abused its discretion in denying their request at the end of trial to add promissory fraud and negligent misrepresentation claims. We do not reach these arguments because we lack jurisdiction over this appeal.
Most civil appeals proceed under subdivision (a)(1) of section 904.1, which authorizes parties to appeal "[f]rom a judgment, except an interlocutory judgment." As the Supreme Court has recognized, this provision codifies a fundamental principle of appellate practice: the one final judgment rule. (See, e.g., In re Baycol Cases I &II (2011) 51 Cal.4th 751, 756.) Under this rule, "an appeal cannot be taken from a judgment that fails to complete the disposition of all the causes of action between the parties ...." (Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 743.)
Consequently, absent an exception authorizing appeals from interlocutory orders or judgments, only "[j]udgments that leave nothing to be decided between one or more parties and their adversaries" are appealable. (Id. at p. 741.)
The trial court's judgment lacks the finality required under the final judgment rule because it did not dispose of all of plaintiffs' claims. First, although the trial court found in plaintiffs' favor on their partition claim, it did not determine the rights of all parties with interests in the Santa Cruz property. The judgment does not indicate how the proceeds of any sale would be apportioned between plaintiffs and defendant. In addition, even though plaintiffs admitted in their amended complaint that there was a lienholder with a mortgage for more than $750,000 on the property, the judgment made no mention of the lienholder. Instead, the judgment ordered the then-current parties to comply with their responsibilities under, among other things, sections 872.810 and 872.820, which require that partitioned properties be divided, or sold and the proceeds divided, "among the parties in accordance with their interests in the property." (§§ 872.810-.820; see also id., § 872.510 [requiring that "all persons having or claiming interests . . . in the estate[s] to which partition is sought" be joined as defendants in a partition action].) Second, the judgment failed to resolve plaintiffs' claim that they are entitled to contribution from defendant for more than $350,000 in expenses allegedly incurred on defendant's behalf. Third, the judgment did not actually order a partition by sale: it stated that "Partition by Sale will be ordered." (Italics added.) Thus, far from finally disposing of the partition claim and qualifying as a final judgment, the trial court's judgment in this case left much to be done.
Plaintiffs point to subdivision (a)(9) of section 904.1, which authorizes appeals from "an interlocutory judgment in an action for partition determining the rights and interests of the respective parties and directing partition to be made." (§ 904.1, subd. (a)(9).) The trial court's judgment, however, does not satisfy this provision's requirements. While the trial court's judgment is an "interlocutory judgment in an action for partition," as shown above, it did not "determine[] the rights and interests of the respective parties." Nor did the judgment "direct[] partition to be made." It stated merely that a partition by sale "will" be ordered at some point in the future. As a consequence, the judgment did not sufficiently dispose of the partition claim to qualify as an interlocutory judgment under subdivision (a)(9).
Plaintiffs cite several decisions involving appeals from interlocutory judgments of partition. But in those cases the interlocutory judgment determined the rights of the parties interested in the properties in question. (Oliver v. Sperry (1934) 220 Cal. 327, 329 [dividing property into one-fourth, one-fourth and one-half shares]; Pista v. Resetar (1928) 205 Cal. 197, 198 [dividing property into shares of 82 percent and 18 percent]; Harrington v. Goldsmith (1902) 136 Cal. 168, 169 [dividing property into shares of one-third and two-thirds]; Holt v. Holt (1901) 131 Cal. 610, 611 ["This decree adjudicated and determined the rights and interests of the several parties to the suit in the lot in question ...."].) As a consequence, none of the cases cited by plaintiffs suggests that the trial court's judgment here-which does not determine the rights of the parties with interests in the Santa Cruz property and left other matters unresolved-is an appealable interlocutory judgment under subdivision (a)(9) of section 904.1.
Plaintiffs also contend that the judgment is appealable because the partition claim is severable from their other claims. But it is hard to see how severing the partition claim would help plaintiffs, as they have not appealed the trial court's ruling in their favor on that claim and do not appear to be aggrieved by it.
Nor does Degnan v. Morrow (1969) 2 Cal.App.3d 358 (Degnan), which plaintiffs discussed in their opposition to defendant's motion to dismiss, help them. The appellant in Degnan sought to appeal an interlocutory judgment on partition-which was appealable because, among other things, it divided the property in question into equal shares-as well as rulings concerning an accounting, payments of partnership debts, and other matters. (Id.at p. 362.) However, the Court of Appeal concluded that there was no appealable final judgment because the trial court had not resolved a claim for dissolution of partnership. (Id. at p. 361.) In addition, far from permitting the appellant in Degnan to appeal rulings unrelated to the partition claim, as plaintiffs seek to do here, the Court of Appeal in Degnan concluded that it would be improper to consider matters that were not themselves appealable. (Id. at p. 364.) Accordingly, the Court of Appeal severed the issues concerning partition and dismissed the rest of the appeal, noting that "[a]ny claim of error as to other issues must await appeal from the final judgment, eventually to be entered in the action." (Id. at pp. 364-366.) Thus, Degnan provides no support for plaintiffs' attempt to use subdivision (a)(9) to appeal matters besides their partition claim.
Plaintiffs also assert that, if they are forced to wait to appeal until the Santa Cruz property is sold by partition, it may be impossible to unwind any sale, and they may be deprived of an effective remedy. However, as plaintiffs have not challenged the trial court's ruling that the lease/option agreement is too vague to support specific performance, it is unclear what remedy they contend might be lost. Moreover, while in unusual circumstances a court may treat a defective appeal as a petition for an extraordinary writ (see, e.g., Olson v. Cory (1983) 35 Cal.3d 390, 401), plaintiffs have not asked us to treat their appeal as a writ petition, much less demonstrated the unusual circumstances required to do so.
III. DISPOSITION
The appeal is dismissed. Defendant is awarded his costs on appeal.
WE CONCUR: BAMATTRE-MANOUKIAN, ACTING P.J.