Opinion
H024547.
7-14-2003
JESUS PEREZ, Plaintiff and Respondent, v. MAGALYS PEREZ, Defendant and Appellant.
In exchange for her fathers interest in a house in Mountain View, Magalys Perez (Susi) agreed to pay her father, Jesus Perez, $ 17,000 and to satisfy all liens and encumbrances against the property. Before close of escrow, Susi obtained an assignment of a judgment lien that had been recorded against the property based on a judgment that had been entered against Jesus. She then persuaded the court to issue a writ of execution against the $ 17,000 she had agreed to pay her father so that she could use the funds to satisfy the judgment lien. Susi kept the $ 17,000 for herself and never paid her father. He subsequently sued her for fraud, breach of contract, and rescission.
At trial, the court awarded Jesus damages on the breach of contract and fraud causes of action. On appeal, Susi argues that the judgment on the fraud cause of action is barred by the law of the case doctrine and by the statute of limitations. She also argues that the damages awarded for the fraud were excessive and unsupported by the evidence. Finally, she contends that the damages awarded for breach of contract were duplicative of damages awarded for fraud. We agree with the latter contention and will modify the judgment by striking the damages awarded for breach of contract.
FACTS
In 1971, Jesus and Nelida Perez purchased the single family home located at 837 San Luppe Drive in Mountain View (the Property). The Perezes had four children: Magalys Perez Holland (Susi), Mayra Perez Cabrera (Mayra), Isis Mercedes Perez (Taty), and Jesus Perez, Jr. At some point, Jesus Perez, Jr. changed his name to Jason Ashton (Jason). For ease of reference, we shall refer to the family members by their first names or the nicknames designated in parentheses above.
Nelida was diagnosed with terminal cancer in 1978. Shortly thereafter, as part of their estate plan, the Perezes executed a joint will and changed the deed on the Property. Jesus and Nelida originally held title to the Property as joint tenants. In 1979, they executed a deed transferring title in the Property to themselves and their four children as tenants in common. The deed did not specify the percentage of each persons ownership interest in the Property.
The joint will provided that the "the survivor of us shall immediately become possessed of any and all property that the other has or may have at death whether it be personal property or real estate or of whatsoever nature, to have and hold the same for and during the life of the survivor and at the death of the last of us then to go to our children, . . ., share and share alike; provided, however, that the survivor of either of us shall take possession and title of the said estate, subject to the following condition: the said estate, except for that amount necessary for reasonable living expenses, may not be disposed of in any manner whatsoever, without the consent of all of our above-named children." At the time they executed the joint will, Jesus and Nelida also owned real property in Sealy, Texas and San Antonio, Texas.
Nelida passed away in 1982. Thereafter, the family rented the Property to strangers. In 1986, Jason moved into the Property. He lived there with Patty Smith, who he later married. Susi moved in with Jason and Patty in 1987 or 1990 and lived at the property while she attended law school. During the time that the children lived in the Property, Jesus expected that they would pay the mortgages, property taxes, and insurance, the amount of which was less than what Jesus had charged the renters.
In 1988, Jason was convicted of a series of felonies and was sent to prison. His wife, Patty, continued to reside at the Property with Susi.
In 1994, the bank was threatening to foreclose on the second mortgage on the Property. Susi came up with a plan whereby she would refinance the Property and use the proceeds of a $ 198,750 loan to pay off the existing loans and buy out her fathers and her siblings interests in the Property. Susis plan included trading her ownership interest in the family property in Sealy, Texas, where Taty resided, for Tatys interest in the Property, paying off a Texas bank that was about to foreclose on property Mayra owned in Brenham, Texas, and other property transfers. Susi also agreed to pay Jason $ 38,000 for his interest in the Property.
At the time the family members were negotiating the property transfers, the Property was encumbered by first and second mortgages totaling approximately $ 50,000. There was also a judgment lien on the Property in favor of Victor Soto. The original judgment, which was entered against Jesus on August 21, 1985, was for $ 16,252.19. By the time of the property transfers in 1994, the judgment had grown to $ 31,428.72 due to the addition of post-judgment interest. Hereafter, this judgment will be referred to as the "Soto lien."
An escrow account was set up at Gateway Title (Gateway) to process the property transfers. On August 5, 1994, Jesuss attorney sent a letter to Gateway with a copy to Susi indicating that Jesus would be willing to convey his interest in the Property to Susi in exchange for $ 17,000, plus the forgiveness of $ 2,000 Jesus owed to Susis husband, Mervin Holland, and a release from all liability on the Property, including the mortgages and the Soto lien. At the time, Jesus owed $ 17,000 on a mortgage on a house in Katy, Texas. He planned to use the $ 17,000 from the subject transaction to pay off that mortgage so that he could retire.
About the same time, Susi was negotiating with the heirs of Victor Soto regarding an assignment of the Soto lien. Initially, Susi and Sotos heirs agreed that the heirs would remove the Soto lien from the Property, but that they would not retire the judgment. In exchange, Susi would pay the heirs $ 19,000 and provide them with a description of Jesuss assets, anywhere in the United States.
On August 8, 1994, Gateway sent a letter to Jesuss attorney, advising him that Susi wanted to apply the $ 17,000 that Jesus had demanded to the Soto lien. On August 18, 1994, Jesuss attorney advised Gateway that: "Mr. Perez will not sign the instructions to pay Victor C. Soto out of the $ 17,000.00 that he is to receive. As stated in my previous letter, Mr. Perez is conveying his interest in the [Property] to [Susi] in consideration of the sum of $ 17,000.00 paid to him, the forgiveness of a $ 2,000 debt owed to Mervin Holland and the release of all liability on the [Property]. Mr. Holland told me that he is willing to forgive that debt. By copy of this letter, Mr. Holland is instructed to send the original Promissory Note of Mr. Perez to you, marked `PAID IN FULL. When the transaction is completed, transmit that Note, your check for $ 17,000.00, and proof that Mr. Soto has been paid in full and that all other debts against the property have been satisfied to me for delivery to Mr. Perez."
After receiving that letter, Susi entered into further negotiations with the Soto heirs. They subsequently agreed that the heirs would assign the entire Soto lien to Susi in exchange for $ 21,500. On August 24, 1994, Susi signed escrow instructions prepared by Gateway that provided, among other things, that at the end of the property transfer, $ 17,000 would be paid out of escrow to Jesus and that $ 21,500 would be paid to satisfy the Soto lien.
On August 26, 1994, three days before the escrow was scheduled to close, Susi made an ex parte application to the Superior Court for a writ of execution, seeking to attach the $ 17,000 that was to be paid to Jesus. In her declaration in support of the ex parte order, she used the name "Magalys P. Holland." She did not advise the court that she was Jesuss daughter. She told the court that she was the assignee of the Soto lien. She stated: "I did not give any notice of this motion, if required[,] to the judgment debtor because I believe that to give such notice would defeat the purpose of this motion. I am informed that the judgment debtor refuses to discuss this matter with me or anyone connected with said debt. I have been unable to reach him despite messages left at his home that it was imperative that he contact me regarding this matter. He has never returned my calls, . . . . [P] If this court does not issue a Writ of Execution Order stopping said funds from leaving the State of California, they will be sent to Texas[,] where the judgment debtor resides. . . . He has personally informed me that he has no intention of ever paying this debt at all. [P] Jesus Perez has refused to negotiate any type of settlement regarding this lien, and still refuses to voluntarily pay the amount due Victor C. Soto."
Susi also stated that it would be "practically impossible to reclaim any funds from Jesus Perez. He is a resident of . . . Texas which prohibits any forced sale of his house under their homestead laws. He purchased his house in the last two or three years for $ 18,000.00, which is an insignificant amount considering the amount he already owes to date. To my knowledge, Texas does not allow wage garnishment, so that method of recovery will be unavailable to me." She also asserted that Jesus had no other significant assets, that he owned property in Colombia, and that she feared that any money he received from Gateway would be sent out of the United States. Susi did not tell the trial court that she had previously agreed to pay Jesus the $ 17,000 through escrow or that her request was contrary to the escrow instruction she had signed. She asked that Gateway be ordered to turn over the $ 17,000 that was to be paid to Jesus to the attorney for the Soto heirs to be held in trust. The court granted her request.
After the close of escrow, the $ 17,000 that was supposed to be paid to Jesus was turned over to the attorney for Sotos heirs, to be held in trust. After three months, the money went to Susi as assignee of the Soto lien.
When she first opened up the escrow, Susi expected that Jesus would not claim any interest in the Property. She also believed he was personally responsible for the Soto lien. She admitted, however, that she had agreed to pay the $ 17,000 to Jesus at the close of escrow.
For several months after escrow closed, Jesus believed that Susi would pay him the $ 17,000. By June 28, 1995, he became a little worried that Susi had not paid him. At Jasons suggestion, he retained an attorney to send Susi a letter demanding payment of the funds. Some time after April 21, 1996, Jesus learned that Susi was trying to refinance the Property. He thought she would pay him the $ 17,000 out of the money she received when she refinanced. Susi never paid Jesus.
PROCEDURAL HISTORY
Jesus filed a complaint against Susi for fraud and negligent misrepresentation. After a series of demurrers, Susi answered Jesuss third amended complaint, which contained causes of action for constructive fraud, breach of contract, and rescission.
The case was tried to the court in February of 2002. Disputed factual issues included the value of the Property at the time of the transfer, the extent of Jesuss interest in the Property, and the point in time at which Jesus discovered that Susis conduct might be fraudulent, which was relevant to Susis statute of limitations defense on the fraud cause of action. At the end of the six-day trial, the court concluded that the fraud cause of action was not barred by the statute of limitations. The court found that the Property had a market value of $ 300,000 at the time of the transfer and that Jesus had a 50 percent interest in the Property, consisting of a 25 percent undivided interest which he took outside of the will and a 25 percent interest conveyed as a life estate with the power of invasion after Nelidas death.
The court also found that the letter from Jesuss attorney set forth the terms and conditions under which Jesus would convey his ownership interest in the Property to Susi. They included satisfaction of all liens, including the Soto lien, and the payment of $ 17,000. The court concluded that Susi agreed to these conditions when she signed the escrow instructions directing Gateway to pay Jesus $ 17,000 at the close of escrow, thereby creating a contract. The court awarded Jesus $ 17,000 plus interest on the breach of contract cause of action. The court denied Jesus the remedy of rescission, reasoning that it would result in more complications and not benefit Jesus.
The court also found that Susi had committed actual fraud. The court reasoned that Susi had made a material misrepresentation when she told Jesus that he would be paid $ 17,000 upon the close of escrow, that she had no intent of paying him the money, and that he reasonably relied on her representation. The court stated that Jesus would have to make an election between two alternate equitable remedies on the fraud cause of action: a constructive trust regarding a 50 percent ownership interest in the Property or damages. The court calculated Jesuss damages on the fraud claim as $ 103,397.60. The court declined to award Jesus damages for emotional distress or punitive damages. The court also awarded Jesus pre-judgment interest from August 29, 1994, the date that escrow closed, on both the breach of contract and fraud causes of action, for a total judgment of $ 210,694.75. Susi appeals.
The court took the market value of the Property ($ 300,000) less the liens for the first and second mortgages ($ 50,034.81) for a net equity of $ 249,795.19. The court found that since Jesus owned in effect a 50 percent interest in the Property, his share of the equity was $ 124,897.60. The court also concluded that Jesus should be solely responsible for the Soto lien and deducted $ 21,500, resulting in a net award of $ 103,397.60.
DISCUSSION
I. Law of the Case
After Jesus served his original complaint, Susi advised him that she was going to demurrer. Before she could get her demurrer on file, Jesus filed a first amended complaint. Susis demurrer to the first amended complaint was sustained with leave to amend.
On July 26, 1999, Jesus filed a second amended complaint, which contained causes of action for fraud, negligent misrepresentation, constructive fraud, breach of contract, and rescission and cancellation of written instruments. Susi responded to the second amended complaint with another demurrer and a motion to strike. The principal grounds for the demurrer were that the complaint failed to state a cause of action because the fraud allegations were not pleaded with sufficient particularity, that the fraud causes of action were barred by the three-year statute of limitations, that there were insufficient facts to support Jesuss delayed discovery claim, and that the complaint failed to identify the contract that was the subject of the breach of contract claim.
The trial court overruled the demurrer to the breach of contract and rescission causes of action. It sustained the demurrer with leave to amend only as to the constructive fraud cause of action and sustained the demurrer without leave to amend as to the fraud and negligent misrepresentation causes of action. Jesuss third amended complaint, which was the operative complaint at the time of trial, contained causes of action that were labeled "constructive fraud," "breach of contract," and "rescission and cancellation of written instruments." Susi answered the third amended complaint on February 22, 2000.
At trial, the court granted relief on the breach of contract and fraud causes of action. In its oral statement of decision, the court stated: "I simply dont find theres a constructive fraud here. There is actual fraud. I suppose you could say its constructive, given the relationship, but Im satisfied from the evidence that I have heard by a preponderance of the evidence that there is active fraud here, active, material misrepresentation, reasonable reliance at the time of the [sic] representation was made, absolutely no intent to carry through with it, and that [Jesus] suffered financial harm as a result . . . ."
Susi argues that a finding of actual fraud and the award on the fraud cause of action are barred by the "law of the case" doctrine because the trial court had previously sustained her demurrer to the fraud cause of action (as distinguished from the constructive fraud cause of action) without leave to amend. Susies reliance on the law of the case doctrine is misplaced.
As the Supreme Court explained in People v. Shuey (1975) 13 Cal.3d 835, 841, 120 Cal. Rptr. 83, 533 P.2d 211 (Shuey) disapproved of on other grounds in People v. Bennett (1998) 17 Cal.4th 373, 389-390, 949 P.2d 947, footnote 5, the doctrine of law of the case provides that "`where, upon an appeal, the supreme court, in deciding the appeal, states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal, and, as here assumed, in any subsequent suit for the same cause of action, and this although in its subsequent consideration this court may be clearly of the opinion that the former decision is erroneous in that particular." The principle applies to the "decisions of intermediate appellate courts as well as courts of last resort." (Ibid.) "Application of the rule is . . . subject to the qualifications that `the point of law involved must have been necessary to the prior decision, that the matter must have been actually presented and determined by the court, and that application of the doctrine will not result in an unjust decision. [Citations.]" (Id. at p. 842.) The doctrine is exclusively concerned with issues of law and not fact. (Ibid.) "It has long been held that sufficiency of pleadings is an issue subject to foreclosure by law of the case. [Citation.]" (Id. at p. 843.)
While the trial courts decision on the demurrer to the second amended complaint involved the sufficiency of Jesuss pleading, it was not a decision of an appellate court. In order for law of the case to apply, the decision at issue must be a decision of an appellate court. Susi therefore cannot rely on the law of the case doctrine to attack the trial courts finding of actual fraud.
Susi asserts that there is a conflict in the decisions regarding the applicability of the law of the case doctrine to demurrer rulings, citing Shuey, supra, 13 Cal.3d 835 and Valvo v. University of Southern California (1977) 67 Cal. App. 3d 887, 136 Cal. Rptr. 865 (Valvo). The cases she cites do not even address the applicability of the law of the case doctrine to demurrer rulings. Nor do they support the proposition that there is a split of authority on the issue. Shuey, supra, 13 Cal.3d 835 did not involve a ruling on a demurrer. The trial court in Shuey denied the motion of two defendants in a criminal action to suppress evidence. In a writ proceeding, the court of appeal concluded that the evidence had been obtained as a result of an illegal seizure of the defendants apartment and remanded the matter to the trial court to determine certain factual issues. (Shuey, supra, 13 Cal.3d at p. 839.) In Shuey, the Supreme Court examined the effect of the appellate courts first ruling on subsequent proceedings in the trial and appellate courts. (Id. at pp. 839-848.) The court did, however, state generally that appellate rulings regarding the sufficiency of the pleadings might be subject to the law of the case rule. (Id. at pp. 842, 843.)
The court in Valvo observed in a footnote that "until entry of judgment, a ruling on a demurrer is not res judicata and may be reconsidered and changed by the trial court. [Citations.]" (Valvo, supra, 67 Cal. App. 3d at p. 892, fn. 3.) The Valvo court did not discuss the law of the case doctrine, address the applicability of the law of the case doctrine to demurrer rulings, or state a rule that is contrary to the holding of Shuey. The Valvo court stated a rule that applied to the doctrine of res judicata. Furthermore, Susi does not argue that the trial courts finding of fraud is barred by the doctrine of res judicata and such an argument would appear to be precluded by the rule stated in Valvo.
For these reasons we conclude that the trial courts finding of actual fraud was not barred by the law of the case doctrine.
II. Statute of Limitations on Fraud Cause of Action
Without discussing the applicable standard of review, Susi asserts that the damages award on the fraud cause of action must be reversed because Perezs fraud claim is barred by the statute of limitations.
In its oral statement of decision, the trial court stated the following regarding the statute of limitations issue: "There is a relationship between the parties, a blood relationship, father and daughter. There is a presumption in law that this creates a confidential relationship at least sufficient, given Mr. Perez education, given Ms. Perez legal education, that she had superior knowledge and that she knew Mr. Perez would rely on her to make things right. [P] Im satisfied that there were further representations after the close of escrow, [D]ont worry, you will be paid your money, Im going to refinance.[] Mr. Perez accepted these representations and deferred taking any real action in the matter until it became clear these representations were not true. [P] Im satisfied the statute of limitations on the fraud action did not commence to run until the date he paid the check to the lawyer, which was sometime in 1995. [P] I further find that Mr. Perez, in light of the relationship of the parties, as a reasonably prudent person, could rely upon the representations made to him, and that he did."
The statute of limitations on a cause of action for fraud is three years from date of "the discovery . . . of the facts constituting the fraud . . . ." (Code Civ. Proc., § 338, subd. (d).) Jesuss check to his first attorney, Henry Cruz, was dated July 13, 1995. His original complaint was filed on July 13, 1998, exactly three years after the date on the check to attorney Cruz.
Jesus was represented by a series of attorneys in his lawsuit against Susi. He initially sought representation from Attorney Henry Cruz. Attorney Michelle Spencer of the law offices of Peter A. Chang, Jr. filed the original and first amended complaints The second and third amended complaints were field by the law offices of Johnson and James.
Susi argues that even if we accept the trial courts finding and use the date on the check to Attorney Cruz as the date that the three-year period commenced, the action is barred because the three-year period ran on July 12, 1998, the day before the complaint was filed. This argument ignores fundamental rules regarding how time is computed in a civil action. Code of Civil Procedure section 12 provides that in computing time, the first day is excluded and the last day is included, unless it is a holiday. When the day on which an act must be performed falls on a Saturday, Sunday, or a holiday, the time limit for performing the act is extended to the next day that is not a holiday. (Code Civ. Proc., §§ 12a, 135; Gov. Code, § 6700.) These rules apply to the computation of time for statute of limitations purposes. (Society of Cal. Pioneers v. Baker (1996) 43 Cal.App.4th 774, 785, fn. 12.) Under these rules, we exclude the day of the event that triggers the running of the statute of limitations and start counting time the following day. (Ziganto v. Taylor (1961) 198 Cal. App. 2d 603, 607, 18 Cal. Rptr. 229.) Assuming the statute began to run on July 13, 1995, we exclude July 13, 1995, and start counting the following day. Thus, three years from July 13, 1995 is July 13, 1998. Jesuss complaint, which was filed on that day, was therefore timely.
Susi also argues that the action was barred by the statute of limitations because the limitations period began to run on or before July 10, 1995, the day Jesus signed the fee agreement with Attorney Cruz, and Jesuss complaint was not filed until July 13, 1998, more than three years after the retainer agreement was signed.
The limitations period on a cause of action for fraud begins to run upon the discovery of facts constituting the fraud. (Code Civ. Proc., § 338, subd. (d).) The question of when Jesus discovered facts constituting the fraud was disputed at trial. When the trial court has resolved a disputed factual issue, the appellate court reviews that ruling under the substantial evidence standard of review, which provides that the trial courts resolution of disputed factual issues must be affirmed so long as it is supported by substantial evidence. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) "When a trial courts factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination." (Bowers v. Bernards (1984) 150 Cal. App. 3d 870, 873-874, 197 Cal. Rptr. 925, italics omitted.) As long as there is substantial evidence, the appellate court must affirm, even if the reviewing justices personally would have ruled differently if they had presided over the proceedings below and even if other substantial evidence would have supported a different result. (Id. at p. 874.) Viewing this evidence in the light most favorable to Jesus, giving him the benefit of every reasonable inference, and resolving all conflicts in his favor, as we must under the rules of appellate review (In re Marriage of Mix (1975) 14 Cal.3d 604, 614, 122 Cal. Rptr. 79, 536 P.2d 479), we conclude that there is substantial evidence to support the trial courts conclusion that Jesus first discovered facts suggesting Susis fraud on July 13, 1995, the date he signed the check to Attorney Cruz. Our review of the evidence is also influenced by the fact that Susi, as the proponent of the statute of limitations defense, had the burden of proof on that issue. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2002) PP 6:435, 6:436, p. 6-86.)
Susi admitted that in 1994, when they were signing documents to close the escrow, she told Jesus that she would pay him the $ 17,000. By June 28, 1995, Jesus still had not been paid. By then, Jesus was a little worried about the fact that Susi had not paid him. Jason suggested Jesus hire an attorney to send Susi a letter demanding the $ 17,000. Jason found Attorney Cruz. Jason and Jesus signed a fee agreement retaining Cruz on July 10, 1995. Jesus sent Cruz a check for $ 5,000 to cover Cruzs retainer fee. The check was dated July 13, 1995. The record does not reveal when the check was sent to Cruz. However, it appears Cruz received the check on or before July 21, 1995, the day it was deposited in his trust account. The record does not indicate when Jesus first discussed the matter with Cruz or the substance of their discussions, if any, before July 13, 1995.
In a unverified complaint, filed in November of 1998, alleging legal malpractice by Cruz, Jesus alleged that "on or about July 13, 1995, [he] retained and employed" Cruz to represent him "in prosecuting a claim against [Susi], for a fraudulent real property transaction . . . ." At trial, Jesus did not recall filing the lawsuit against Cruz. Furthermore, Susi did not question him regarding the allegations of the complaint or ask him when he first realized that her conduct was fraudulent, as opposed to a mere breach of the promise to pay him $ 17,000. As noted before, Jesus first sought Cruzs services for the purpose of sending a letter to Susi, demanding payment of the $ 17,000. A few months after he hired Cruz, Jesus told Jason that Susi had called him, had asked him not to do anything about the lawsuit, and said that she would pay the $ 17,000. Some time after April 21, 1996, Jesus received a copy of a letter that indicated that Susi was trying to refinance the Property. At that time, he believed that she would pay him the $ 17,000 out of the funds she obtained when she refinanced the Property. In our view, this record is sufficient to support the trial courts conclusion that Jesus had not discovered any facts that supported the fraud cause of action before July 13, 1995, the date on the check to Cruz, and that the lawsuit was therefore not barred by the statute of limitations. In light of our conclusion, we shall not reach Jesuss arguments regarding an alternate discovery date.
III. Amount of Fraud Damages
Susi argues that the amount of the damages awarded on the fraud cause of action is excessive because: (1) the trial court misconstrued the deed when it found that Jesus had a 50 percent ownership interest in the Property; (2) there was no evidence of the value of a life estate with the power of invasion; (3) the trial court should have deducted the total amount of the Soto lien ($ 31,000) rather than the amount she had negotiated to purchase the lien ($ 21,500); (4) the court did not allow an offset for the $ 2,000 note from Mervin Holland; and (5) the court did not consider the amounts Susi spent to maintain the Property (mortgage, taxes, and insurance) to the extent that they exceeded the rental value of the Property. There is no merit to these arguments.
A. Construction of the Deed
The 1979 grant deed conveyed the Property from Jesus and Nelida to "JESUS PEREZ and wife, NELIDA PEREZ and MAGALYS PEREZ, MAYRA PEREZ, ISIS MERCEDES PEREZ and JESUS PEREZ, JR. as tenants in common." The joint will executed by Jesus and Nelida provided that "the survivor of us shall immediately become possessed of any and all property that the other has or may have at death whether it be personal property or real estate or of whatsoever nature, to have and hold the same for and during the life of the survivor and at the death of the last of us then to go to our children, . . ., share and share alike; provided, however, that the survivor of either of us shall take possession and title of the said estate, subject to the following condition: the said estate, except for that amount necessary for reasonable living expenses, may not be disposed of in any manner whatsoever, without the consent of all of our above-named children."
Susi argues that this language is plain on its face, unambiguous, and does not require the introduction of extrinsic evidence in order to interpret the deed. She asserts that since the deed does not specify the ownership interest of the six grantees, that they each acquired a one-sixth interest in the Property. She asserts further that upon her mothers death, her mothers one-sixth interest passed to her father, who then owned a one-third interest in the Property (his original one-sixth interest plus Nelidas one-sixth interest). Hence, Susi argues, the trial courts finding that Jesus held a 50 percent interest in the Property is incorrect.
Grants are to be interpreted in the same manner as contracts in general, except as otherwise provided in the Civil Code. (§ 1066.) The fundamental goal of contract interpretation is "to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful." (§ 1636.) "For the purpose of ascertaining the intention of the parties to a contract, if otherwise doubtful, the rules given in [sections 1635 through 1663] are to be applied." (§ 1637.)
All further statutory references are to the Civil Code.
Pertinent rules following section 1637 provide as follows: "The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (§ 1638.) "When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this Title." (§ 1639.) "The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." (§ 1644.) "Technical words are to be interpreted as usually understood by persons in the profession or business to which they relate, unless clearly used in a different sense." (Civ. Code, § 1645.) "A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates." (§ 1647.) "If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it." (§ 1649.) "Words in a contract which are wholly inconsistent with its nature, or with the main intention of the parties, are to be rejected." (§ 1653.) "In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist." (§ 1654.)
Where the parties dispute what mutual intention existed at the time of contracting, the courts will follow the rules of interpretation and ultimately make findings of fact as to the parties mutual intention. In this case the parties disputed Jesus and Nelidas intentions with regard to the percentage of the property interest granted to each of the grantees in 1979.
Lack of ambiguity on the face of a written instrument is not a bar to admissibility of extrinsic evidence to prove a meaning different from the apparent one. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37, 40, fn. 8, 69 Cal. Rptr. 561, 442 P.2d 641.) "Although extrinsic evidence is not admissible to add to, detract from, or vary the terms of a written contract, these terms must first be determined before it can be decided whether or not extrinsic evidence is being offered for a prohibited purpose. . . . [P] Accordingly, rational interpretation requires at least a preliminary consideration of all credible evidence offered to prove the intention of the parties. [Citations.] Such evidence includes testimony as to the `circumstances surrounding the making of the agreement . . . including the object, nature and subject matter of the writing . . . so that the court can `place itself in the same situation in which the parties found themselves at the time of contracting. [Citations.] If the court decides, after considering this evidence, that the language of a contract, in the light of all the circumstances, `is fairly susceptible of either one of the two interpretations contended for . . . [citations], extrinsic evidence relevant to prove either of such meanings is admissible." (Id. at pp. 39-40, fns. omitted.) In short, "ambiguity may be exposed by extrinsic evidence that reveals more than one possible meaning." (Id. at p. 40, fn. 8.)
The trial courts factual findings in the face of claimed ambiguity as to the intention of the parties regarding the 1979 grant deed are subject to review under the substantial evidence standard. In this case, the parties disputed the meaning of the language in the deed. Susi asserted that the deed gave each of the grantees a one-sixth interest in the Property. Jesus contended that the deed granted Jesus and Nelida a 50 percent interest in the Property (25 percent each) and the children a 50 percent interest in the Property (12.5 percent each). The trial court agreed with Jesus and concluded that he owned a 50 percent in the Property composed of his 25 percent under the grant deed plus a life estate with the power of invasion in his wifes 25 percent interest.
Extrinsic evidence was properly admitted to both expose the ambiguity in the language of the deed and determine the intention of the parties at the time the instrument was created. Furthermore, the courts finding as to the percentage of ownership is supported by substantial evidence. Jesus testified that when they executed the will and changed the deed in 1979, he and his wife intended that one half of the Property would go to the parents and one half would go to the children. Jason testified that he had discussed the will and the grant deed with his mother and that she had advised him that his "father would own fifty percent of the property" and that he and his sisters "would own the other fifty percent of the property." He also testified that during the negotiations prior to the property transfer in 1994, Susi told him that Jesus would get one-half of the value of the house so that he could retire. Mayra testified that Nelida told her she wanted everyone to "share and share alike and [to be] equal." On cross-examination, she admitted that she might have told Jesuss lawyer that Jesus got 50 percent and that the kids owned the other 50 percent. Jasons ex-wife testified that Susi told her that she had a 12.5 percent interest in the Property and that Jesus owned one-half of the Property.
For these reasons, we conclude that the courts findings regarding the parties percentage of ownership is supported by substantial evidence and that the court did not err when it concluded that Jesus had a 50 percent interest in the Property.
B. Value of a Life Estate With a Power of Invasion
Interpreting both the deed and the will, the trial court concluded that "the intent of the grantors was to convey fifty percent of the property to husband and wife and an undivided twelve point five percent interest to each of the four children." The court found that upon the death of Nelida, Jesus enjoyed a 25 percent undivided interest, which he took outside the will, and a life estate with a power of invasion regarding the 25 percent interest that had previously belonged to his wife. The court stated: "When that is added up, its not fifty percent ownership[.] I dont know what valuation one places upon a life estate with a power of invasion. However, it is about as close to an absolute interest as one could get." For the purpose of calculating the damages, the court assumed that Jesuss interest was a 50 percent undivided interest.
Susi argues that there was no evidence of the value of Jesuss interest in the Property, since there was no evidence of the value of a life estate with the power of invasion. She asserts that the evidence presented at trial must support the courts factual findings and that Jesus had the burden of establishing the value of a life estate with the right of invasion.
Both sides provided the court with evidence regarding the value of the Property. Jesus relied on the testimony of Stanley Tish, an appraisal expert. Tish opined that the market value of a fee simple interest in the Property in September 1994 was $ 350,000 using a comparable sales analysis and $ 320,000 using the replacement cost approach. He considered the comparable sales approach more reliable. On cross-examination, Susi did not ask Tish about the value of any interest in the Property other than a fee simple interest.
Susi relied on the report of Michael Craighead, the appraiser who had evaluated the Property on behalf of the lender in 1994. Although Susi had arranged for Craighead to testify at trial, Craighead was not in the courtroom at the time he was scheduled to testify. Rather than hold up the proceedings, the parties stipulated that Craigheads report could come into evidence without his testimony.
According to Craigheads report, the market value of the Property was $ 265,000 as of July 9, 1994. Craigheads report did not contain information regarding the value of a life estate with the right of invasion. Susi did not attempt to elicit testimony regarding the value of such an interest from Craighead or any other witness. Tish did not review Craigheads report. Susi did not argue that the value of the Property was less than the market values that the appraisers had assigned. She made no mention of any estate in property less that a fee simple interest. The trial court concluded that the fair market value of the Property was $ 300,000. The court also reasoned that a life estate with the right of invasion is as close as one can get to an absolute right of ownership and calculated the value of Jesuss interest based upon his percentage ownership interest.
We find no error in the trial courts conclusions regarding the value of Jesuss interest in the Property. Neither party sought to introduce evidence of the value of a property interest lesser than a fee interest. The trial courts conclusion regarding the market value ($ 300,000) was based on substantial evidence of a range of values ($ 265,000 to $ 350,000) and the court concluded, as a matter of law, that a life estate with a power of invasion is as close as one can get to a fee interest.
C. Alleged Errors in Calculation
The remaining calculation errors advanced by Susi are equally without merit. The courts ruling was designed to place Jesus "in the same position he would have been in had the contract been fulfilled, that is, from the date of the close of escrow."
Susi argues that the trial court did not deduct enough from the award for the cost of satisfying the Soto lien. The original judgment plus interest exceeded $ 31,000. Prior to the close of escrow, counsel for Sotos heirs had agreed to accept $ 21,500 in full satisfaction of the lien. Susi argues that the trial court erred in deducting $ 21,500 rather than $ 31, 000. Since the agreement to reduce the lien was made before the close of escrow and the court sought to place the parties in the same position they were in at the close of escrow, we find no error in using the lesser number.
Susi also argues that the court erred in not deducting $ 2,000 from Jesuss recovery to offset the Holland loan. However, Mr. Holland had agreed, before the close of escrow to waive the $ 2,000 debt. We therefore perceive no error relative to the Holland loan.
Finally, Susi argues that the court erred in failing to allow her a credit for the amounts she spent on mortgage, property taxes, insurance, and maintenance expenses, to the extent that they exceeded the fair rental value of the Property. However, nothing in the record indicates that Susi requested such an offset in the trial court.
We begin by reviewing the evidence relevant to the offset claim. The testimony was disputed as to the time that Susi first started living at the Property. She claimed it was 1990; her brother claimed it was 1987. Jesus expected that whoever lived in the house would pay the property taxes, mortgage and insurance. Susi claimed she spent $ 800 per month on the property taxes and insurance when she lived in the house and asserted that this amount was comparable to the cost of rent for a similar house. Jesus testified that he could have charged $ 1,450 per month in rent and that the last time they had renters, the renters paid $ 1,450 per month. Jesus testified that the payments on the first and second mortgages totaled $ 680 per month in 1994. During the period from 1987 through 1991, the owners got behind on the property taxes. Even with penalties added, the cost of the property taxes during that time was less than $ 100 per month. There was evidence that Susi paid $ 708.53 in delinquent property taxes in 1991 and $ 1,496.95 in April of 1994. In addition, other parties lived in the house and contributed to the expenses. A couple was paying an undisclosed amount in rent when Susi first moved in. Jasons wife, Patty Ashton, lived there from 1986 until 1992. She and Susi split the bills after Jason went to prison, although Patty often had trouble paying her share because of Jasons legal and telephone expenses. According to Patty, Jesus paid some of the expenses while she was living in the house.
Susis offset claim presents several problems. First, Susi did not claim an offset in the trial court. As a general rule, theories not raised in the trial court cannot be asserted for the first time on appeal. (Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316.) Second, while there was evidence that Susi paid some of the expenses of maintaining the home, she never itemized the amounts paid or requested a specific amount as an offset. Third, there was substantial evidence from which the trial court could have concluded that the costs of the mortgage, taxes, and insurance did not exceed the fair rental value of the home. Thus, even if Susi had articulated a specific offset claim, it does not appear that she would have been entitled to it. For these reasons, we find no error in the trial courts failure to award an offset for the amounts that Susi spent on the Property.
IV. Duplicative Damages
Susi argues that the trial court awarded duplicate damages when it awarded Jesus $ 103,397 on the fraud cause of action and $ 17,000 on the breach of contract cause of action. She asserts that the fraud award represented the total value of Jesuss interest in the Property as of the close of escrow, that the breach of contract award represented the amount he was willing to accept to give up that interest, and that he is not entitled to both elements of damages. We agree.
"Regardless of the nature or number of legal theories advanced by the plaintiff, he [or she] is not entitled to more than a single recovery for each distinct item of compensable damage supported by the evidence. [Citation.] Double or duplicative recovery for the same items of damage amounts to overcompensation and is therefore prohibited. [Citation.] [P] Thus, for example, in a case in which the plaintiffs only item of damage was loss of commissions, two awards of damages identical in amount-one for breach of contract and the other for bad faith denial of the same contract-could not be added together in computing the judgment. Plaintiff was entitled to only one of the awards. [Citations.] [P] In contrast, where separate items of compensable damage are shown by distinct and independent evidence, the plaintiff is entitled to recover the entire amount of his [or her] damages, whether that amount is expressed by the jury in a single verdict or multiple verdicts referring to different claims or legal theories. [Citations.]" (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1158-1159, 847 P.2d 574, italics omitted.)
In this case, the damages awarded for the fraud and the breach of contract causes of action were both based on the value of Jesuss interest in the Property at the close of escrow. The greater amount represented the total value of Jesuss interest. The lesser amount represented the reduced figure Jesus was willing to accept to assist his daughter with the property transfer. Since both awards were based on the value of Jesuss interest, they are duplicative.
Susi seems to argue that the court required Jesus to make an election between the contract damages and fraud damages and that he elected damages on the contract theory. As to the election, Susi is mistaken. What the court said is that Jesus would have to make an election between two alternate remedies on the fraud cause of action: (1) a constructive trust regarding a 50 percent ownership interest in the Property or (2) monetary damages and declaration of an equitable lien on the Property in the amount of those damages. Jesus elected the latter remedy. The court did not offer Jesus an election between contract damages and fraud damages.
V. Findings of Actual Fraud and Constructive Fraud
The judgment contains the following language: "The Court finds with regard to the issue of fraud, that [Susi] committed both actual fraud and constructive fraud against [Jesus]." Susi argues that the finding of constructive fraud should be reversed or stricken, because the trial court found actual fraud and did not find constructive fraud. As noted previously, the court stated: "I simply dont find theres a constructive fraud here. There is actual fraud. I suppose you could say its constructive, given the relationship, but Im satisfied from the evidence that I have heard by a preponderance of the evidence that there is active fraud here."
"In its generic sense, constructive fraud comprises all acts, omissions and concealments involving a breach of legal or equitable duty, trust, or confidence, and resulting in damage to another. . . . Constructive fraud exists in cases in which conduct, although not actually fraudulent, ought to be so treated-that is, in which such conduct is a constructive or quasi fraud, having all the actual consequences and all the legal effects of actual fraud." (Estate of Arbuckle (1950) 98 Cal. App. 2d 562, 568, 220 P.2d 950.)
Although it appears the court erred in signing a judgment that included findings of both actual and constructive fraud, any error in that regard was harmless since the court did not make a separate damages award for the constructive fraud.
DISPOSITION
Having concluded that the damages are duplicative, we shall strike the damages on the breach of contract cause of action ($ 17,000 plus $ 12,750 in interest). The judgment is modified to reduce the amount of damages awarded to Jesus to $ 103,397.60 plus simple interest at the rate of 10 percent from August 29, 1994, in the amount of $ 77,547.75. As so modified, the judgment is affirmed. Each party shall bear his or her own costs on appeal.
WE CONCUR: Bamattre-Manoukian, Acting P.J., and Mihara, J.