Alamo Group IX v. Tabaie























Filed 4/4/13 Alamo Group IX v. Tabaie CA1/5

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>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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







IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



FIRST
APPELLATE DISTRICT



DIVISION
FIVE




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ALAMO GROUP IX, LLC, Plaintiff and Respondent, v. BEHNAM TABAIE, Defendant and Appellant.

A133376 (Contra Costa County Super. Ct. No. MSC09-01657)

Behnam
Tabaie was sued by Alamo Group IX, LLC (Alamo) and
obtained a judgment in his favor following a href="http://www.fearnotlaw.com/">bench trial. He then sought an award of attorney fees on
the basis that he had been required to prove facts at trial that Alamo had
denied in response to his requests for admissions (Code Civ. Proc.,
§ 2033.420).href="#_ftn1" name="_ftnref1"
title="">[1] The court denied the motion. Tabaie has not provided a sufficient record
to establish error by the trial court and we affirm.

I. Background

In
June 2009, Alamo filed a complaint against Kassra Tavakoli and several Doe
defendants for breach of contract, breach
of fiduciary duty, conversion, fraud, money had and received, and an
accounting. Alamo, whose managing member
is Donald Gaube, alleged that it entered into a href="http://www.mcmillanlaw.com/">written agreement with Tavakoli and the
Doe defendants in 2007 to form Reno Investors, LLC (Reno Investors), which
would operate a furniture store leased from another entity (Lessor) managed by
Gaube. Pursuant to an alleged oral
agreement, Alamo loaned Tavakolihref="#_ftn2" name="_ftnref2" title="">[2]
$500,000 to purchase store inventory in the form of a capital contribution to
Reno Investors, with the understanding that Alamo would
transfer ownership units in Reno Investors to Tavakoli as Tavakoli repaid the
loan, until Tavakoli owned the company in full.
Alamo alleged that Tavakoli breached this oral agreement, failed to
account for the $500,000 loaned by Alamo, failed to repay the loan, failed to
pay rent to Lessor, and abandoned the company.
Alamo alleged that it was damaged as a result of >defendants’ actions and that all
defendants were therefore liable under all five cause of action.

According
to the register of actions, Tavakoli did not answer the complaint and a default
was entered against him. The register of
actions also reflects that Alamo filed amended complaints naming Tony Rashidi
and Tabaie as Doe defendants. Rashidi
failed to answer and a default was entered against him. Tabaie answered with a general denial, and
also filed a cross-complaint against Gaube and Rashidi. Neither the amended complaints naming Rashidi
and Tabaie as defendants nor the cross-complaint is in the appellate record.

A court
trial on Alamo’s claims against Tabaie took place over six days in
March 2011. Tabaie has elected to
provide for the appellate record only a single portion of the reporter’s
transcript of that trial—the testimony of Donald Gaube. In the partial transcript, Gaube testifies
that he is the managing member of FADCO E-1 Associates (Lessor), a $20 billion
investment fund that acquired leasehold interests in 87 properties, including a
retail location in Reno, Nevada that was operated as a successful furniture
store from 1997 to about 2007. When the
owner of that store decided to retire, Lessor sought a new tenant and
approached Tavakoli, who was already leasing two other Lessor-owned locations
for a mattress business and a furniture store.
Tavakoli was interested in the new opportunity but said he needed
financing assistance. Gaube agreed to
form a new entity (Reno Investors) with Tavakoli and to invest $500,000 to help
get the business going. They executed a
written operating agreement for Reno Investors, and Reno Investors signed a
sublease agreement with Lessor. Reno
Investors was to use income from the store first to pay rent and other
operating expenses, and second to repay the $500,000 loan with interest. No rent or loan payments were ever made. Eventually, Tavakoli introduced Gaube to
Tabaie, who Gaube understood “was going to be coming in as [Tavakoli’s] partner
or agent to operate the store.”href="#_ftn3"
name="_ftnref3" title="">[3] In subsequent conversations, Tabaie advised
Gaube that the business was not profitable and had no money to pay rent or
repay the loan. Beginning in July 2008,
Tabaie sent financial statements to Gaube showing an absence of profits. In 2009, Lessor lost its leasehold interest
in the Reno property because of its failure to pay rent to the property owners,
which in turn was caused by Reno Investors’ failure to pay rent to Lessor. In July 2009, Gaube discovered through a
store employee that the store had actually been making a large profit.

During
trial, Tabaie (in the words of the trial court) “moved for judgment in his
favor on the grounds that this lawsuit was brought by [Alamo] who was not the
real party in interest and thus had no standing to bring this action; that, in
fact, [Reno Investors] is the proper party plaintiff.” In May 2011, the court entered the
following judgment: “1. Original
Plaintiff [Alamo] is determined not to be the real party in interest and thus
lacked standing to bring this lawsuit.
However, based on [sections] 473 and 576, Plaintiff shall be
allowed to file an amended complaint to conform to proof elicited during the
trial, substituting [Reno Investors] as the proper party plaintiff. [¶]
2. Defendant Tabaie shall have 30 days from the date of this Order to
respond to the Amended Complaint.
Without a predetermination on the merits, Defendant is not precluded
from filing a motion for change of venue or other motions which may be filed
with an initial response to a complaint. [¶] 3. Judgment is entered in
favor of Defendant Tabaie and against Plaintiff [Alamo].”

Request for Fees

After entry
of judgment against Alamo, Tabaie moved for an award of attorney fees pursuant
to section 2033.420, subdivision (a).
Section 2033.420 provides:
“(a) If a party fails to admit the genuineness of any document or
the truth of any matter when requested to do so under this chapter, and if the
party requesting that admission thereafter proves the genuineness of that
document or the truth of that matter, the party requesting the admission may
move the court for an order requiring the party to whom the request was
directed to pay the reasonable expenses incurred in making that proof,
including reasonable attorney’s fees. [¶] (b) The court shall make this
order unless it finds any of the following: [¶] (1) An objection to the
request was sustained or a response to it was waived under Section 2033.290.
[¶] (2) The admission sought was of no substantial importance. [¶]
(3) The party failing to make the admission had reasonable ground to
believe that that party would prevail on the matter. [¶] (4) There was
other good reason for the failure to admit.”

Before
trial, Tabaie asked Alamo to admit the following facts: (1) Tabaie and Alamo “never entered into
a written agreement to form a limited liability company known as” Reno
Investors; (2) Tabaie and Alamo “never entered into a written agreement at
any time”; (3) Alamo “never agreed to loan [Tabaie] $500,000 so [Tabaie]
could purchase inventory for a new furniture store that [Tabaie] was opening”;
(4) Tabaie “never converted to his own use any of [Alamo’s] personal
property”; (5) Tabaie “never converted to his own use any of [Alamo’s]
assets”; and (6) Alamo is “not owed any money by” Tabaie. Alamo responded with a denial of these facts.

In his
initial moving papers, Tabaie did not cite to the evidence he had submitted in
proof of these facts at trial. Instead,
he noted that the court had entered judgment in his favor against Alamo, and he
argued that none of the exceptions provided under section 2033.420,
subdivision (b) applied to the case.
He argued that imposing a fee award would further the purpose of section 2033.420—to
expedite or shorten trials—because “had plaintiff Alamo admitted the truth of
[the] Request for Admission . . . that [Tabaie] did not owe Alamo any
money, a trial would not have even been necessary in this matter.” He sought attorney fees for all of the time
his attorney spent litigating the case from the date Alamo denied the requests
for admissions, including time spent litigating the fee motion itself, for a
total of $58,660 in fees.

In
opposition, Alamo argued that Tabaie “conflates the Court’s entry of judgment
against [Alamo] on procedural grounds, i.e., [Alamo] was not a real party in
interest, with a finding by the Court that [Tabaie] has proven the truth of the
matters requested to be admitted. In
fact, the Court has not made any findings of fact with respect to the
dispute. [Tabaie’s] motion for
attorney’s fees must therefore be denied because [Tabaie] did not prove
the truth of the matters requested to be admitted.” Alamo also argued the motion should be denied
under section 2033.420, subdivision (b)(3) because Alamo had a
reasonable ground to believe that it would prevail on the matter. “[Alamo] fervently argued, and still
believes, that as the managing member of [Reno Investors] it was a real party
in interest. [Tabaie] himself did not
raise the issue until . . . the fourth day of trial. [Citation.]
Moreover, the Court was not immediately convinced that [Alamo] was not a
real party in interest . . . .”

In reply,
Tabaie specifically argued that he had proved at trial that Alamo had never
entered into a written agreement with
him and that Alamo had never loaned him money, citing his attorney’s cross
examination of Gaube.href="#_ftn4"
name="_ftnref4" title="">[4] He also wrote, “[B]efore the Court ruled that
Alamo was not the real party in interest, the Court ruled in favor of Tabaie on
the breach of contract cause of action based on the testimony that the Court
had heard during the trial. How can
Alamo now claim that Tabaie did not prove that there was never any written
agreement between Tabaie and Alamo?”
Tabaie argued that Alamo had no reasonable ground to deny this fact or
the fact that Alamo had never loaned Tabaie $500,000, which he argued had
“nothing to do with whether Alamo was the real party in interest.” Tabaie argued he had also proved at trial
that he owed no money to Alamo and that he had never converted Alamo’s property
to his own use. He again suggested proof
of these matters was implicit in the judgment entered in his favor and against
Alamo. Tabaie asserted that “[i]It
matters not that judgment was ultimately given to Tabaie based on the fact that
Alamo was not a real party in interest—what matters is that the Court heard
testimony and received evidence that proved the truth of those matters on which
Tabaie is basing his motion far attorney’s fees. It is indisputable that Tabaie proved the
truth of all those matters during the trial.”

The trial
court denied the motion. “Defendant did
not prove nor did this court find that he had proven the truth of the matters
requested by [Tabaie] to be admitted by [Alamo]. It was not obvious to the Court until
following trial, arguments, etc. that Alamo was not the real party in
interest. It goes without saying that
Alamo by filing the lawsuit and pursuing the matter through trial was of the
same mind.”

II. Discussion

Tabaie
argues the trial court erred in ruling both that he did not prove the truth of
the matters denied by Alamo and that Alamo had good reason to deny the requests
for admission. Tabaie has not provided a
sufficient record for us to determine that the trial court erred in either
respect.

If the
trial court determines that facts denied in response to a request for admission
were subsequently proved at trial and that none of the exceptions in
section 2033.420, subdivision (b) apply, an award of fees is
mandatory. (See Haseltine v. Haseltine (1962) 203 Cal.App.2d 48, 60 [discussing
former §§ 2033, 2034, subd. (c)].)
However, a trial court’s determination that one or more of the
exceptions applies is reviewed for abuse of discretion. (Ibid.;> Brooks v. American Broadcasting Co.
(1986) 179 Cal.App.3d 500, 508 (Brooks).)

“It is a
fundamental principle of appellate review that we presume that a judgment or
order is correct. [Citations.] Moreover, it is the appellant’s burden of
providing a record that establishes error, and where the record is silent, we
must indulge all intendments and presumptions to support the challenged
ruling. [Citations.] From these principles, courts have developed
the doctrine of implied findings by which the appellate court is required to
infer that the trial court made all factual findings necessary to support the
order or judgment. [Citations.]” (Laabs
v. City of Victorville (2008) 163 Cal.App.4th 1242, 1271–1272 (>Laabs).)
“Where the party fails to furnish an adequate record of the challenged
proceedings, his claim on appeal must be resolved against him. [Citations.]”
(Rancho Santa Fe Assn. v.
Dolan-King (2004) 115 Cal.App.4th 28, 46.)

Here,
Tabaie has not provided an adequate record to assess the trial court’s alleged
errors. Tabaie must establish on appeal
both that he proved certain facts at trial and that Alamo had no reasonable
grounds for denying those facts. Yet
Tabaie has provided only a portion of one volume of the reporter’s transcripts
for the six-day trial leading up to entry of judgment against Alamo. Moreover, the parties’ dispute about whether
Alamo was the real party in interest in the action clearly affected the trial
court’s ruling on Tabaie’s fee motion, yet Tabaie has included almost none of the
proceedings on that issue in the record.
The record includes neither the parties’ written or oral arguments on
the issue nor the court’s oral or written statement of reasons for its decision
the issue; it includes only the court’s resulting order.

On this
record, we cannot conclude that the trial court erred in ruling that Tabaie
failed to prove the truth of the matters denied by Alamo. Tabaie cites testimony that appears to prove
(or admit) the truth of at least some of those facts.href="#_ftn5" name="_ftnref5" title="">[5] But we cannot assume the absence of any other
evidence presented at trial that disproved those facts or prevented a finding
that the matter was proved by a preponderance of evidence. As noted, Tabaie argued in the trial court
that the court’s ruling on Alamo’s breach of contract claim necessarily implied
a finding on the disputed facts in Tabaie’s favor. There is a single reference in the register
of actions to a statement by the court, after Tabaie moved for a nonsuit, that
“[t]he court thinks pltf has failed to prove breach of contract/fiduciary duty
claims.” There is, however, no
indication in the record of any subsequent ruling on that motion, no record of
the hearing or the parties’ arguments on the motion, and nothing in the court’s
ultimate decision or judgment which would allow us to draw that
conclusion. The fact that the court
instead permitted plaintiff to amend its complaint to properly identify the
real party in interest, without any apparent limitation on the claims or causes
of action to be asserted, would indicate otherwise.

In any
event, even if we could conclude that the matters denied by Alamo >were proved at trial based entirely on
Gaube’s testimony, we would not be able to conclude on this partial record that
the trial court abused its discretion in holding that Alamo had reasonable
grounds for denying the facts. “In
evaluating whether a ‘good reason’ exists for denying a request to admit, ‘a
court may properly consider whether at the time the denial was made the party
making the denial held a reasonably entertained good faith belief that the
party would prevail on the issue at trial.’
[Citation.]” (>Laabs, supra, 163 Cal.App.4th at
p. 1276.) The trial court
apparently found Alamo reasonably (if ultimately unsuccessfully) took the
position during trial that, as managing member of Reno Investors, it stood in
the shoes of Reno Investors and had standing to sue. The partial record suggests that Tavakoli at
one point claimed that Tabaie was his “partner” or his “agent” in the operation
of the furniture store, that Tabaie met with Gaube at the store, and that
Tabaie was providing Gaube with the income and payable statements of the
store. Thus, the trial court might also
have found that Alamo reasonably took the position that Tabaie had at least
some responsibility for Tavakoli’s business liabilities. We do not suggest that these matters >are established by the record before
us. Rather, we simply cite >possible inferences to illustrate why,
in the absence of a complete record, we cannot conclude that the trial court
abused its discretion in its implied ruling that Alamo had reasonable grounds
for responding to Tabaie’s requests for admission with denials.

Tabaie
argues the trial court abused its discretion because it did not apply the
appropriate legal standards to the question before it. To support this argument, he claims that
Gaube’s testimony (specifically, his testimony that Alamo had no written
agreement with Tabaie) demonstrates that the trial court obviously erred when
it ruled that Tabaie had not proven the denied facts at trial. As discussed ante, however, we do not find it obvious on this record that the
cited fact was proven at trial by Tabaie.
Tabaie also argues the trial court’s discussion of the real party in
interest issue demonstrates the court did not understand the question before
it, because the real party in interest issue was irrelevant to the motion. Tabaie himself argued in the trial court that
the good faith exception in section 2033.420, subdivision (b)(3) was
not applicable because “[i]t was obvious that plaintiff Alamo was not the real
party in interest in this matter and, not being the real party in interest,
there were no reasonable grounds for Alamo to believe that it would prevail on
the matters that were denied in the Requests for Admission
. . . .” It is difficult
for Tabaie to legitimately argue now that the issues were unrelated.




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>III. Disposition

The order
denying Tabaie’s request for fees under section 2033.420 is affirmed. Tabaie shall pay Alamo’s costs on appeal.







_________________________

Bruiniers,
J.





We concur:





_________________________

Jones, P. J.





_________________________

Needham, J.