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Janet T. Groves v. Raymond L. Groves

November 14, 2012


(Super. Ct. No. PC20050126)

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

Groves v. Groves CA3


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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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.


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 ...

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