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Janet T. Groves v. Raymond L. Groves

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (El Dorado)


November 14, 2012

JANET T. GROVES, PLAINTIFF AND APPELLANT,
v.
RAYMOND L. GROVES, JR., ET AL., DEFENDANTS AND RESPONDENTS.

(Super. Ct. No. PC20050126)

The opinion of the court was delivered by: Mauro , J.

Groves v. Groves CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Janet Groves sued Scott, Raymond, Mary, Mark and Rose Marie Groves*fn1 in a dispute concerning an apartment building owned by the parties as tenants in common. Janet asserted causes of action for partition, breach of fiduciary duty, constructive fraud, imposition of a constructive trust following an accounting, and appointment of a receiver. The trial court awarded Janet $1,071 in damages but ordered her to pay defendants $6,087 in attorney fees.

Janet contends (1) the audit ordered by the trial court did not comply with audit requirements; (2) the trial court erred in limiting the time period for Janet's damages; (3) the trial court violated her right to a jury trial; (4) the judgment did not resolve three of her five causes of action and did not identify the prevailing party on some of the claims; and (5) the trial court erred in awarding attorney fees to defendants without identifying a statutory basis for the award, as requested in Janet's objections to the statement of decision.

We conclude (1) Janet agreed to the reduced procedures used in the accounting; (2) the trial court did not err in limiting the time period for Janet's damages; (3) Janet waived her right to a jury trial; (4) she is correct that the judgment neglects to mention the causes of action for breach of fiduciary duty or constructive fraud, and does not clearly identify the prevailing party on her partition cause of action; and (5) Janet is also correct that despite awarding damages of $1,071 to her, the trial court awarded defendants $6,087 in attorney fees without specifying a basis for the award, and because she objected to the statement of decision on these grounds, we cannot imply findings to support the judgment.

We will reverse the judgment and remand the matter to the trial court for further proceedings.

BACKGROUND

Raymond and Mary, the parents of Scott and Mark, owned an apartment complex known as Blue Oak Manor. In 1991, they gifted undivided 20 percent interests in the property to their sons and their sons' spouses, with 20 percent going to Mark and his wife Rose Marie, 20 percent going to Scott and his wife Janet, and Raymond and Mary retaining a 60 percent interest. A few years later Scott and Janet divorced. Janet was awarded a 10 percent interest in the property.

In a lawsuit brought prior to the present case, Raymond and Mary sued Janet and Scott seeking to foreclose on a deed of trust securing a $400,000 promissory note signed by Scott and Janet when they received their 20 percent share in the apartment complex. Janet cross-complained, contending she was deprived of her 10 percent share of the revenues from the apartment complex. Janet sought an accounting and damages for breach of fiduciary duty, constructive fraud, and conversion.*fn2

The documents in appellant's appendix indicate that the matter was bifurcated, with a jury trial on the promissory note issue and a court trial on the remaining issues. The jury found Janet and Scott were not obligated on the promissory note, as the parties never intended for them to be obligated on the note. Thereafter, the trial court granted Janet's motion for summary adjudication on the accounting cause of action and ordered an accounting of the income and expenses of the property.

While the trial on the remaining causes of action proceeded, the trial court ordered that none of the parties were to receive any of the rental proceeds or use them for their benefit, such as to pay their debts or attorney fees.

The trial court issued its intended decision in May 2003. It found that a tenancy in common existed, with Raymond in control of supervising the apartment manager and collecting the rents, but that Raymond was not entitled to management fees or to offset such fees against income from the apartment. The trial court found that Raymond had a fiduciary duty to Janet, that he had breached this duty by withholding her share of the profits in the amount of $52,660, and that he had done so wrongfully and maliciously, thereby entitling her to punitive damages in the amount of $10,000. The trial court also found that Raymond had committed constructive fraud, but had not converted Janet's property. The trial court entered judgment on December 8, 2003.

On December 9, 2003, Mark took over Raymond's duties and assumed the position of "Asset Manager" of the apartment complex.

In mid-May 2004, Raymond, Rose Marie and Scott filed a motion for full satisfaction of judgment, which Janet opposed. Following a hearing on July 15 2004, the trial court denied the motion. Although the trial court had ordered an expanded accounting because of the trial delays following the initial accounting, an expanded accounting had not been performed. The trial court expressly stated that an accounting between March 30, 2002, and December 8, 2003, "must be prepared in order to fully satisfy the judgment entered."

On March 3, 2005, Janet filed her complaint in the present action, seeking partition, damages for breach of fiduciary duty and constructive fraud, the imposition of a constructive trust and the appointment of a receiver. Janet alleged that defendants had failed to properly account for the rental income and provide her with her share. She sought to recover rents dating back to before the entry of judgment in the prior action. Janet relied on conduct by defendants that allegedly violated the prior court's orders and judgment to support her assertions that defendants breached their fiduciary duties and defrauded her.

On January 23, 2006, defendants filed a motion in limine, seeking to exclude any evidence of matters related to the prior action under Evidence Code section 352. They maintained, "The Prior Case stands alone and if plaintiff believes there are matters in need of enforcement in such action, plaintiff should undertake appropriate acts to accomplish this."

On February 3, 2006, defendants submitted two offers to compromise under Code of Civil Procedure section 998.*fn3 In one, defendants offered to have judgment imposed for the sale of the property and then divide the net proceeds of sale in accordance with the respective interests of the parties. In the other, defendants offered to have judgment taken against them in the amount of $5,000.

Thereafter, at an issues conference on February 16, 2006, the trial court heard arguments on defendants' motion in limine. The trial court ultimately agreed with defendants, ruling that the accounting would be calculated from December 9, 2003 (the day after the judgment in the prior action) and the damages in the remaining causes of action would be based on defendants' misconduct after that date. The trial court tentatively ruled that there would be no references to the prior litigation, but the ruling was without prejudice to Janet renewing the matter at trial if she demonstrated that certain evidence was necessary to her litigation.

The trial court inquired if the parties could resolve their differences to avoid going to trial the following week. Defense counsel stated that defendants had agreed "a long time ago" to sell the property if Janet wanted to sell, and they would stipulate in court to selling the apartment building. Janet's attorney, Roger Rombro, agreed to join in such a stipulation. The trial court urged the parties to spend the lunch hour examining whether it was worth the expense of going to trial over the remaining issues.

After lunch, counsel stated that they had agreed to sell the property and to have the trial court appoint an accountant to conduct an audit beginning on December 9, 2003. Rombro requested that the trial court appoint Michael Saltsman, who had been the accountant in the prior action. Rombro stated that the parties agreed to waive a jury trial and, following receipt of the audit, the trial court would resolve the remaining causes of action for breach of fiduciary duty, constructive fraud and the imposition of a constructive trust. The trial court stated it would issue a judgment on the basis of the report, but if an objection was filed, the trial court would set a hearing to consider the objections. Only if the trial court deemed it necessary would it consider further evidence before rendering judgment on the remaining causes of action.

The attorneys and the parties agreed on the record to the stipulated settlement terms.

In accordance with the stipulated settlement, the trial court issued an order directing the sale of the property to a third party, with 10 percent of the net proceeds distributed to Janet upon the close of escrow. The trial court would appoint an accountant to audit the records, receipts and disbursements from the apartment complex between December 9, 2003, to June 30, 2006, or to the date of the close of escrow. After the accountant submitted a report to the trial court, the parties would have 30 days to file any objections. The order stated: "If no objections or briefs are filed, the Court will issue a judgment after making its review of the audit. If an objection is filed, the Court will set a hearing date to consider the report and the objections. The Court will consider additional evidence only if it determines additional evidence to be necessary. Upon completion of any further hearing that the Court determines to hold, the Court will enter judgment as the Court determines appropriate on the Complaint." The order also stated: "The parties have agreed to waive a jury trial."*fn4

Thereafter, the trial court appointed Michael Saltsman as the auditor, in accordance with Janet's wishes. Saltsman submitted a draft report to the parties in May 2008, in which he concluded that defendants owed Janet only $1,071.18. Rombro contacted Saltsman three times about alleged errors in the accounting report, and each time Saltsman explained how Rombro's concerns had been addressed and accounted for in the report.

Saltsman submitted his final report to the trial court on July 9, 2008. Janet filed objections to the report on January 2, 2009. The trial court granted Janet relief from default for failing to file objections to the accounting within 30 days as required by the stipulated order, and set the matter for a hearing on any objections to the accounting.

At the hearing on October 22, 2009, Janet asked the trial court to take additional evidence concerning her claims for breach of fiduciary duty and constructive fraud. She also asserted that Saltsman's report failed to comply with the requirements for an audit.

Defendants responded that Janet had agreed to the procedure used, did not complain to the accountant about the procedure used, and failed to demonstrate that the calculations were deficient. They argued that in fact, the report overstated the distributions to defendants by including distributions occurring prior to December 9, 2003, and that using the correct figure Janet had been overpaid and owed defendants around $10,000. Nevertheless, because defendants wanted to end the matter, they sent Janet a check for $1,100. Defendants argued that instead of cashing the check Janet continued to challenge the accounting without demonstrating how the computations were flawed.

On October 26, 2009, the trial court issued a brief tentative decision, accepting Saltsman's report and awarding Janet $1,071.18. The trial court also ordered defense counsel to submit a statement of attorney fees incurred by defendants since January 1, 2009, and to prepare a statement of decision in response to Janet's timely request for one.

Defendants submitted a statement of their attorney fees in the amount of $6,087. They also submitted a statement of decision, which included a statement that they were entitled to costs of suit pursuant to section 998 because their settlement offer was greater than Janet's recovery.

The trial court entered judgment on April 2, 2010. The judgment states that the property was "sold and the proceeds distributed, leaving only the issue of balancing the accounts of the parties." The trial court ordered that Janet recover damages of $1,071 from defendants, and that defendants recover attorney fees in the amount of $6,087. After the amounts were offset, plaintiff owed defendants $5,016. The trial court also awarded defendants their costs of suit in the amount of $11,978.40, which included their $10,000 share of Saltsman's fees.

DISCUSSION

I

Janet contends that Saltsman's report is deficient because it fails to comply with certain statutes applicable to the performance of an audit. (Bus. & Prof. Code, §§ 5062, 5097.)*fn5 In particular, she contends "the audit failed to comply with AICPA, GAAS, [and] GAAP," which respectively refer to the American Institute of Certified Public Accountants, " 'Generally Accepted Auditing Standards,' " and " 'Generally Accepted Accounting Principles.' " (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 377, 381.) She complains that the report did not document the auditor's relevant knowledge or experience, the procedures performed, the evidence obtained, the conclusions reached, or the identities of the individuals who performed the work.

Janet asked the trial court to appoint Saltsman because he performed an accounting in the prior action. Thus, we presume she was aware of his knowledge and experience and was satisfied with his credentials. As we explain below, his letters to the parties and retainer agreement delineated the procedures performed and evidence obtained, and his report sets forth the conclusions reached. Although Saltsman did not disclose whether other associates worked on the audit, Janet does not demonstrate that this rendered the accounting inaccurate or unreliable such that the judgment must be reversed.

Janet agreed to the work performed by Saltsman. It did not technically meet the definition of an audit, which " 'is a verification of the financial statements of an entity through an examination of the underlying accounting records and supporting evidence.' [Citation.] 'In an audit engagement, an accountant reviews financial statements prepared by a client and issues an opinion stating whether such statements fairly represent the financial status of the audited entity.' [Citation.]" (Bily v. Arthur Young & Co., supra, 3 Cal.4th at p. 380.)

On January 5, 2007, Saltsman wrote to the parties concerning the proposed audit. He stated, "The word 'audit' implies that I would examine the financial statements of the property in question. This property does not have 'formal' financial statements but does detail checks written from August 1, 2002 forward. [¶] I believe what the plaintiff and defendant want is for me to prepare a report showing cash receipts and disbursements for the period from December 9, 2003 through the close of sales escrow (approximately June 30, 2006) and to perform agreed-upon procedures on the report." Saltsman explained that the cost of the report would be between $7,500 and $25,000, depending upon the procedures chosen. Saltsman noted that in deciding on the scope of procedures to be performed, it would take errors totaling $37,500 to result in a change significant enough to justify a $7,500 fee, or errors of $125,000 to justify a $25,000 fee. Saltsman listed a menu of procedures that he could perform.

On January 12, 2007, Saltsman sent his engagement letter, stating he had been appointed to perform an "audit" (the quotes are his), but outlining parameters to be used to reduce the scope of work performed. Saltsman proposed to (1) determine the reasonableness of the rental income by comparing bank deposits with rent rolls for the property; (2) review all disbursements to vendors in excess of $250 by comparing them to canceled checks and invoices; and (3) prepare a listing of all checks issued to or on behalf of any person with the last name Groves for specific review by the parties' attorneys prior to issuance of his report. Each side would pay 50 percent of the fees, with an initial retainer of $20,000, or $10,000 each.

Defendants' attorney urged Rombro to focus Saltsman's investigation so that money would not be wasted. One week later Rombro responded that Janet had executed the engagement letter and paid her $10,000 share of Saltsman's fees.

Saltsman submitted a draft report to the parties in May 2008, in which he reiterated the parameters agreed upon by the parties to reduce the scope of work performed. He concluded that defendants owed Janet $1,071.18.

Rombro wrote to Saltsman, expressing concern that payments from the rental proceeds for defendants' legal fees and personal expenses had not been accounted for appropriately. Saltsman explained that he had included the challenged amounts in the "Distributions to Defendants" schedule, which was then used in the "Recap of Capital Contributions and Distributions" schedule in which Saltsman calculated whether defendants had distributed more than 90 percent of the net revenue to themselves. In other words, he did not allow the legal and personal expenses to be written off as legitimate business expenses. Saltsman invited Rombro to let him know if he would like Saltsman to include more detail and documentation.

Rombro wrote another letter, again questioning the legal fees and asking for clarification and/or documentation for other items in the accounting. Saltsman provided the requested clarification and documentation, and once again demonstrated that he had not deducted any unauthorized legal fees as business expenses.

Rombro sent Saltsman a third letter questioning legal fees, and Saltsman explained for the third time that the fees were debited against defendants' distributions, not deducted from revenues as legitimate business expenses.

At no time did Rombro complain to Saltsman that the report was inadequate because it did not comply with statutory requirements for an audit or with generally accepted accounting principles.

Thus, the evidence in the record discloses that a formal audit could not be performed and that Janet agreed to the procedure used by Saltsman. In addition, Saltsman demonstrated that he did not deduct defendants' legal fees and personal expenses from the apartment building revenues, which would have impermissibly reduced the profits available for distribution to the co-tenants. Saltsman's report is straightforward, easy to follow and demonstrates that Janet received all of the money owed to her except for $1,071.

Janet fails to demonstrate any errors in Saltsman's calculations. However, she appears to ask us to review de novo all of the objections to the accounting that she proffered with respect to the proposed statement of decision.

Under established appellate rules, the trial court's judgment is presumed correct and it is the appellant's burden to establish otherwise with legal analysis and references to evidence in the record supporting any factual assertions. (Equilon Enterprises LLC v. Board of Equalization (2010) 189 Cal.App.4th 865, 881; Duarte v. Chino Community Hospital (1999) 72 Cal.App.4th 849, 856; Badie v. Bank of America, supra, 67 Cal.App.4th at pp. 784-785.) Here, the trial court found the report adequate and entered judgment based on the report. Janet merely reiterates her 39 undeveloped objections to the proposed statement of decision, without any supporting legal analysis or references to evidence in the record. This is not sufficient to preserve her numerous objections for appellate review.

II

Janet contends the trial court lacked authority to limit her damages to the time period following judgment in the prior case. She maintains the trial court violated her right to due process by making this ruling "without even prior notice from [defendants] by way of a motion in limine."

Contrary to Janet's assertion, defendants filed a motion in limine seeking to exclude evidence of defendants' alleged failure to comply with the judgment and orders in the prior action. Defendants maintained that if Janet believed there were matters in need of enforcement in the prior case, she should take appropriate action in that case, not this one. At the hearing on the motion, defendants emphasized that the trial court in the prior case said an accounting between March 30, 2002, and December 8, 2003, "must be prepared in order to fully satisfy the judgment entered." They asserted that if they failed to provide Janet with an accounting as ordered in the prior case, then the appropriate recourse was for her to move for contempt in that action, not to seek damages in the present case. Defendants argued that the present action should be based solely on an accounting from December 9, 2003, forward and on their misconduct, if any, from that date forward.

Janet filed a written opposition to the motion in limine, stating, "[t]he present litigation concerns the rental proceeds from the operation of the apartment building, and it addresses the defendants' inappropriate conduct as fiduciaries in the handling of the rent." The issues were "predicated, in part, upon [the trial court's] findings and orders in the prior litigation." At the hearing on the motion, Janet maintained that she was entitled to base her breach of fiduciary duty and constructive fraud causes of action on defendants' misconduct prior to December 9, 2003.

The trial court ruled that the accounting would be calculated from December 9, 2003, and the damages in the remaining causes of action would be based on defendants' misconduct, if any, occurring after that date. The trial court tentatively ruled that there would be no references to the prior litigation in the opening statements and Janet could not question witnesses about the prior litigation, but the ruling was without prejudice to Janet renewing the matter at trial if she demonstrated that certain evidence was necessary to her litigation.

Janet fails to demonstrate that the trial court prejudicially erred. As defendants pointed out at the hearing, Janet's recourse for their alleged failure to provide an accounting in compliance with the prior court's order was to seek relief in that action. The prior court had jurisdiction over its orders and had the authority to enforce them. (§ 128, subd. (a)(2) & (4).)

Moreover, despite the trial court's ruling, Saltsman's accounting included pre-December 9, 2003 distributions defendants received in violation of the prior court's order prohibiting defendants from using the rental proceeds to pay management and attorney fees. Saltsman expressly stated that the accounting included unauthorized checks paid to defendants between August 6, 2002, and December 8, 2003, in the amount of $111,127.21. These checks were taken from Rombro's analysis of unauthorized payments, which Rombro provided when he retained Saltsman. But even including these unauthorized distributions, Janet had been underpaid by only $1,071 between August 6, 2002, and September 30, 2006. The trial court ordered defendants to pay Janet this amount. Thus, Janet obtained an accounting, and damages based thereon, for a period of time prior to the December 9, 2003 date selected by the trial court.

As for Janet's causes of action for breach of fiduciary duty and constructive fraud, Janet fails to explain how the trial court's ruling "denied [her] the heart of her damages" or "crippled [her] case" as she alleges. The causes of action were based solely on defendants' failure to account for and deliver her 10 percent share of the rental proceeds, and their unauthorized dilution of the rental proceeds by using them to pay management fees and attorney fees in violation of the prior court's orders and/or judgment. The trial court did not rule that Janet could not rely on the prior court orders to prove defendants' misconduct, only that the amount of damages would be calculated based on their misconduct after December 9, 2003. Given that defendants failed to pay Janet only $1,071 in rental proceeds between August 6, 2002, and September 30, 2006, it is not reasonably probable that the challenged evidentiary ruling affected the outcome of the fiduciary duty and constructive fraud causes of action.

III

Janet contends the trial court violated her right to a jury trial. As best we can discern, she maintains she agreed to waive a jury trial in the future, but this never actually occurred because the agreement was not reduced to a stipulation or entered in the court minutes. (§ 631, subd. (d)(3).) According to Janet, "The right to a jury trial is favored in the law, and there is nothing in the record to reflect that [Janet] individually, or by her attorney, intended to completely waive her right to jury." We disagree.

During the course of settlement discussions on February 16, 2006, Rombro advised the trial court that to facilitate the audit and subsequent hearing, "each party would waive their right to a jury trial, and the matter would be resolved by the Court, sitting without a jury." Rombro continued that the trial court would resolve the breach of fiduciary duty, constructive fraud, and constructive trust allegations in the complaint, and would have the authority to render any judgment or grant any relief on these causes of action. Defense counsel reiterated this understanding later in the hearing, and Rombro stated he was in agreement. Janet was present at the hearing and, when the stipulation was placed on the record, agreed to waive a jury trial. Rombro requested the return of Janet's posted jury fees, and the trial court granted the request.

Thus, the record amply demonstrates that Janet waived her right to a jury trial by oral consent, in open court. (§ 631, subd. (d)(3).) To the extent Janet contends this is insufficient because it was not entered in the minutes, she fails to meet her appellate burden of providing an adequate record supporting her contention. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.) Her appellant's appendix does not include the minute order from February 16, 2006, the date of the hearing at which she consented to waive a jury trial. Janet's failure to provide an adequate record on an issue requires that the issue be resolved against her. (Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.)

In any event, after the parties entered their stipulated agreement, the trial court issued an order that states in relevant part: "The parties have agreed to waive a jury trial." Janet did not object or claim the order was erroneous. Following the submission of the accountant's report, she sought leave to introduce evidence concerning her remaining causes of action before the trial court rendered judgment. She did not claim she was entitled to a jury trial. Indeed, she did not request a jury trial until after the trial court's decision was unfavorable to her. That was too late. Litigants "cannot play 'Heads I win, Tails you lose' with the trial court." (Tyler v. Norton (1973) 34 Cal.App.3d 717, 722.) In other words, Janet could not proceed with a court trial and then, after losing, raise the procedural issue of noncompliance with the statutory jury waiver provisions. (Ibid.)

In her reply brief, Janet intimates that her waiver of a jury trial was not voluntary because it was coerced by the trial court's ruling limiting her damages.

"Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument." (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453; see also Garcia v. McCutchen (1997) 16 Cal.4th 469, 482, fn. 10; Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-765.) Furthermore, Janet fails to point to any evidence in the record supporting her assertion that the trial court's ruling prompted her to waive her right to a jury trial. Nor does she explain how the ruling limiting her damages to those incurred after December 9, 2003, had any rational bearing on her decision to forgo a trial by jury.

For all the aforementioned reasons, Janet has not demonstrated that the trial court violated her right to a jury trial.

IV

Janet contends the trial court judgment is infirm for various reasons.

She asserts the judgment is fatally uncertain because it does not "identify the property either by its address or its legal description." The judgment simply states, "The parties have advised the court that the property that was the subject of the dispute has been sold and the proceeds distributed, leaving only the issue of balancing the accounts of the parties." However, the judgment necessarily relates to Janet's complaint, which clearly identified the property in question. This is sufficient. "That is certain which can be made certain." (Civ. Code, § 3538.)

Janet also contends the trial court failed to address the causes of action for breach of fiduciary duty, constructive fraud and the imposition of a constructive trust. Initially, she objected to the tentative decision on this ground, and requested a statement of decision. The trial court directed defendants to prepare one, but the proposed statement of decision did not respond to Janet's objections. Accordingly, she objected again.

"Ordinarily, when the court's statement of decision is ambiguous or omits material factual findings, a reviewing court is required to infer any factual findings necessary to support the judgment. [Citations.] This rule 'is a natural and logical corollary to three fundamental principles of appellate review: (1) a judgment is presumed correct; (2) all intendments and presumptions are indulged in favor of correctness; and (3) the appellant bears the burden of providing an adequate record affirmatively proving error.' [Citation.] [¶] In order to avoid the application of this doctrine of implied findings, an appellant must take two steps. First, the appellant must request a statement of decision pursuant to Code of Civil Procedure section 632 . . . ; second, if the trial court issues a statement of decision, 'a party claiming omissions or ambiguities in the factual findings must bring the omissions or ambiguities to the trial court's attention' pursuant to section 634. [Citation.]" (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 494.)

Janet specifically objected as follows: "The proposed statement of decision failed to state the ultimate facts upon which judgment is to be entered" on plaintiff's cause of action "which alleged damages for defendants' breach of defendants' fiduciary duties owed to plaintiff . . . ." In addition, she objected: "The proposed statement of decision failed to state the ultimate facts upon which judgment is to be entered on plaintiff's fourth cause of action for damages due to defendants' constructive fraud, and for plaintiff's prayer for imposition of a constructive trust . . . ."

At the hearing on her objections, Janet admitted that the issue of a constructive trust was moot because the property had been sold. Under the circumstances, there was no need for the trial court to address a moot issue in its statement of decision. However, Janet's other objections, which the trial court overruled, were sufficient to bring the trial court's omission to its attention as required under section 634. Hence, we may not imply findings favorable to the judgment on her causes of action for breach of a fiduciary duty and constructive fraud.*fn6

In light of the fact defendants failed to pay Janet only $1,071 over a multi-year period of time, the trial court may have found defendants had not breached their fiduciary duties or committed constructive fraud. It is also possible that it found there was a breach of duty, but that punitive damages were not warranted; Janet was entitled only to the money owed to her under the accounting. However, it is also possible that the trial court simply neglected to rule on this issue at all, given that there is no mention of the causes of action in the judgment. Because we cannot tell how or if the trial court ruled on these two causes of action or who prevailed, we must remand the matter for the trial court to address and clarify this issue.

Janet also contends the trial court failed to state who was the prevailing party with respect to her other causes of action for an accounting and partition. Because the judgment awards her damages in the amount suggested by the accountant's report, it is implicit that Janet prevailed on the accounting cause of action. (Minehan v. Silveria (1933) 131 Cal.App. 317, 319 [where the identity of the party in whose favor a judgment was rendered may be ascertained from the record, the judgment is sufficiently certain].)

The prevailing party is less clear in the partition action, because the property was sold pursuant to a mutual stipulation. The resolution of this issue is essential to the award of attorney fees, which we explain more fully in part V. Thus, for the reasons discussed in part V, we will remand the matter for the trial court to designate the prevailing party and reconsider the award of attorney fees.

V

Janet's last contention concerns the trial court's award of fees and costs. The trial court awarded Janet damages of $1,071, but ordered her to pay a portion of defendants' attorney fees in the amount of $6,087, and also ordered her to pay defendants $11,978.40 for their costs, which included Saltsman's fees. Janet maintains that the trial court erred in awarding attorney fees to defendants because there is no statutory basis for the award and they were not the prevailing parties.

"California follows the 'American rule,' under which each party to a lawsuit ordinarily must pay his or her own attorney fees." (Musaelian v. Adams (2009) 45 Cal.4th 512, 516.) Section 1021 provides that except where attorney fees are authorized by statute, such compensation is left to agreement of the parties. Section 1021 gives individuals a rather broad right to " 'contract out' " of the American rule by executing such an agreement. (Trope v. Katz (1995) 11 Cal.4th 274, 279.)

Here, none of the causes of action were based on a contract with an attorney fee clause. Defendants intimate otherwise by asserting that the parties' stipulation provided that the "Court will enter judgment as the Court determines appropriate on the Complaint," thereby evidencing an agreement to permit the trial court to award attorney fees. Not so. The stipulation did not include an attorney fee clause; it simply authorized the trial court to enter judgment as it deemed appropriate in accordance with governing law. Absent agreement of the parties, governing law requires a statutory basis to award fees.

Defendants indicate that they were entitled to fees and costs as the prevailing party because the $1,071 amount awarded to Janet was less than their section 998 offer to compromise for $5,000.*fn7 But this offer related to Janet's accounting and tort causes of action, for which there is no statutory basis for awarding fees. "[S]section 998 does not grant greater rights to attorney's fees than those provided by the underlying statute. Section 998 instead merely expands the group of those who are treated as prevailing parties and who therefore may be entitled to attorney's fees as prevailing parties under the relevant statute." (Mangano v. Verity, Inc. (2008) 167 Cal.App.4th 944, 951.)

Defendants say they also prevailed on the partition action for which attorney fees may be awarded to a prevailing party in proportion to their interest in the property. (Finney v. Gomez (2003) 111 Cal.App.4th 527, 545-548; §§ 874.010, 874.040.)*fn8 They claim prevailing party status because they made a section 998 offer to compromise and sell the property on February 3, 2006, prior to the parties' agreement to do so on February 16, 2006. However, defendants fail to demonstrate that the section 998 statutory prerequisites were met such that they necessarily prevailed. (See § 998, subds. (b) & (c).)

Furthermore, we cannot make an implied finding that the trial court awarded defendants their attorney fees on this basis because Janet expressly objected to the proposed statement of decision. She said it failed to state the basis upon which defendants were entitled to an award of attorney fees, "either upon the evidence presented or upon authority provided by the law of this state." The trial court asserted that it would "take a look at" Janet's objection and "get [the parties] a brief statement with regards to the attorney's fees." There is nothing in the record indicating that the trial court did so. Nor is there any evidence that the trial court limited the award of fees to those incurred in the partition action, which was resolved either by the parties' stipulation on February 16, 2006, or when the property was sold and escrow closed in July 2006. Indeed, there is no explanation why the trial court selected the date of January 1, 2009, forward for the calculation of attorney fees if the award was based on the partition action and the section 998 offer.

Under the circumstances, we will remand the matter to the trial court for it to reconsider the award of attorney fees and to clarify the basis, if any, for such an award.

DISPOSITION

The judgment is reversed, and the matter is remanded to the trial court for further proceedings in accordance with the views expressed in parts IV and V of this opinion.

The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278, subd. (a)(5).)

We concur: RAYE , P. J. NICHOLSON , J.


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