Opinion
NOT TO BE PUBLISHED
APPEAL from the Superior Court of San Bernardino County Nos. BBCHS00838 & BBCHS00865. Frank Gafkowski, Jr., Judge. (Retired judge of the former Mun. Ct. for the Southeast Jud. Dist. of L.A., assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)
Pagano & Kass, James L. Pagano, Ian A. Kass and David Markevitch for Cross-defendant and Appellant.
O’Neill, Huxtable & Abelson and Mary L. O’Neill for Cross-complainant and Respondent.
OPINION
HOLLENHORST Acting P. J.
I. INTRODUCTION
Cross-defendant and appellant Brian Goldberg appeals from judgment in favor of cross-complainant and respondent S.A.C. Enterprises, LLC (S.A.C.) in S.A.C.’s action for fraud in a real estate transaction. Brian contends the amount of damages was excessive, in that the trial court both awarded S.A.C. all the compensatory damages found by the jury and cancelled all the obligations S.A.C. had incurred. We find no error, and we affirm.
For convenience and clarity of reference, and not intending any disrespect, we will use first names to refer to parties who share the same surname.
II. FACTS AND PROCEDURAL BACKGROUND
In December 2004, Stewart Margolis, Antonio Brown, and Cher Mayer entered into an agreement under which they, through S.A.C., a business entity they later formed, would purchase from E. J. Goldberg & Sons, Inc. (EJG&S) two businesses and the real property in Big Bear on which the businesses were located. Mayer, who was a licensed real estate broker, represented both parties in the transaction. During the negotiations and after entering into the contract, Erving J. Goldberg and his son Brian provided financial information on behalf of EJG&S to Mayer about the businesses, and Mayer used information provided by the seller in preparing a market analysis to assist EJG&S in determining an appropriate listing price. Mayer’s market analysis indicated the value of the underlying real property was $532,000. S.A.C. relied on EJG&S’s income and expense statements in deciding to enter the contract.
The parties met to discuss concerns about representations in the profit and loss statement, and the purchase price was reduced from $1.5 million to $1.327 million. The sale closed in February 2005.
In August 2005, S.A.C. filed a complaint against Brian and other defendants who are not parties to this appeal, alleging a cause of action for fraud, among other claims. Erving, individually and as Trustee of the Erving J. Goldberg Revocable Trust, and EJG&S, filed a cross-complaint against S.A.C. and its principals, alleging breach of contract; however, the cross-complaint was not included in the record on appeal. Brian was not a party to the cross-complaint.
Those actions were consolidated for trial with the earlier complaint of an employee of S.A.C. for breach of employment contract and defamation. The employee’s action is irrelevant to this appeal.
At trial, the jury found that the defendants had committed fraud and awarded compensatory damages to S.A.C. in the amount of $516,876, which included $200,000 for the down payment S.A.C. made, $6,380 for closing costs, $66,000 that S.A.C. paid toward the promissory notes, $232,900 for SAC’s losses resulting from the operation of the businesses, and $11,596 that S.A.C. was to receive from EJG&S following the close of escrow for advanced customer deposits. The jury also awarded S.A.C. $300,000 in punitive damages ($59,996 against Brian and $240,004 against Erving).
In entering judgment on the cross-complaint, the trial court cancelled all of the promissory notes arising from the transaction, and S.A.C. retained all the real and personal property it had received in the transaction. Brian was the only party who appealed the judgment.
III. DISCUSSION
Brian contends the award of damages constituted a windfall to S.A.C., in that the trial court both awarded S.A.C. all the compensatory damages found by the jury and cancelled all the obligations S.A.C. had incurred, while allowing S.A.C. to retain all the property it received in the transaction.
A seller of real property has a duty to disclose facts affecting the value of the property. (Sweat v. Hollister (1995) 37 Cal.App.4th 603, 608), disapproved on another ground by Santisas v. Goodin (1998) 17 Cal.4th 599, 609, fn. 5.) “A breach of the duty to disclose gives rise to a cause of action for rescission or damages. [Citation.]” (Karoutas v. HomeFed Bank (1991) 232 Cal.App.3d 767, 771.) Here, S.A.C. elected an award of damages rather than rescission. The jury found that Brian had made material misrepresentations concerning the property.
In fraud cases involving the “purchase, sale or exchange of property, ” the “out-of-pocket, ” not the “benefit-of-the-bargain” measure of damages applies. (Civ. Code, § 3343.) “[T]he victim of a fraudulent tortfeasor should not profit by the fraud; he should merely be made whole.” (Mercantile Acceptance Corp. v. Globe Indem. Co. (1962) 210 Cal.App.2d 636, 642.) Consistent with Civil Code section 3343, the trial court instructed the jury to “determine the fair market value of what Plaintiff gave and subtract from the amount the fair market value of what it received.” The trial court further instructed the jury that S.A.C. “may also recover amounts that it reasonably spent in reliance on Defendant’s false representation of those amounts would not otherwise have been spent.” On appeal, Brian does not dispute the jury’s finding that he committed fraud.
“(a) One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction, including any of the following:
As noted, in entering judgment, the trial awarded S.A.C. compensatory and punitive damages against Brian (and others) on S.A.C.’s fraud claim and also cancelled outstanding promissory notes and deeds of trust in the cross-complaint. Thus, S.A.C. obtained different remedies against different parties. Brian contends he is entitled to an offset for the value of the real property and inventory S.A.C. obtained in the transaction.
S.A.C. claims Brian never raised the argument in the trial court and did not request any determination of the value of the real property and inventory in the special verdict form, and he is therefore foreclosed from raising the argument on appeal. Because S.A.C. has nonetheless addressed the issue on the merits, we will do likewise.
Brian relies primarily on Garrett v. Perry (1959) 53 Cal.2d 178 (Garrett), in which the plaintiff recovered damages of approximately $200,000 for fraud in inducing the purchase of a ranch. The plaintiff had made a down payment of $100,000 and made payments of $59,000 before defaulting on the $600,000 in notes he had given for the balance. (Id. at p. 181.) The property was returned to the defendant through foreclosure. (Ibid.) The trial court found that the value of the ranch property, for which the plaintiff had paid $700,000, was only $530,000. The trial court awarded the plaintiff the difference in value, $170,000, plus approximately $30,000 in consequential damages. (Ibid.) On review, the Supreme Court found the damages award excessive because the plaintiff had paid only $159,000, and the award therefore provided him a windfall of $11,000. (Id. at p. 185.) The Supreme Court modified the judgment and reduced the damages award accordingly. (Id. at p. 187.)
Garrett is distinguishable on its facts. Unlike the present case, Garrett did not involve any additional parties or additional claims. Here, in contrast, the trial court separately addressed the claims in the complaint and in the cross-complaint brought by other parties. In short, Garrett does not support relieving Brian from the consequences of his fraud on the basis of a judgment against another party.
In other cases, courts have permitted plaintiffs to pursue different remedies against different parties, at least when the claims arise from different operative facts. (E.g., Waffer Internat. Corp. v. Khorsandi (1999) 69 Cal.App.4th 1261, 1268 [assignee’s obtaining an attachment against the buyer of computer monitors did not bar the assignee from pursuing its tort claims against the individual officers of the buyer corporation]; Baker v. Superior Court (1983) 150 Cal.App.3d 140, 145-146 [when causes of action for fraud in the inducement and breach of contract arose from different obligations and different operative facts, the trial court erred in applying the election of remedies doctrine].)
Here, as noted, Brian has not included the cross-complaint in the record on appeal, and the cross-complainants have not appealed. We must presume in support of the judgment that the claims asserted in that action arose from different facts and circumstances than the fraud action and that independent damages were therefore appropriate. (E.g., Chapala Management Corp. v. Stanton (2010) 186 Cal.App.4th 1532, 1535 [we presume the trial court’s judgment is correct and draw all inferences and presumptions in support of it].) We conclude that Brian has failed to demonstrate error.
IV. DISPOSITION
The judgment is affirmed. Costs shall be awarded to cross-complainant and respondent.
We concur: MCKINSTER J., RICHLI J.
“(1) Amounts actually and reasonably expended in reliance upon the fraud. [¶]... [¶]
“(4) Where the defrauded party has been induced by reason of the fraud to purchase or otherwise acquire the property in question, an amount which will compensate him for any loss of profits or other gains which were reasonably anticipated and would have been earned by him from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud....” (Civ. Code, § 3343.)