Filed 8/14/26 Anabi Oil Corp v. Fuel Enterprise CA2/2
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
ANABI OIL CORPORATION et al., B337933, B340224
Plaintiffs, Cross-defendants Los Angeles County
and Appellants, Super. Ct. No.
21STCV43687,
v. 21STCV44841
FUEL ENTERPRISE, INC. et al.,
Defendants, Cross-
complainants and Respondents;
GEORGES INVESTMENTS, INC.,
et al.,
Defendants and Respondents.
APPEAL from a judgment and a postjudgment order of the
Superior Court of Los Angeles County, Maurice A. Leiter, Judge.
Reversed in part, affirmed in part, and remanded with directions.
MFox Law Group, Martin Fox and Ramshin Daneshi for
Plaintiffs, Cross-defendants and Appellants.
Law Office of John Fitzmorris and John P. Fitzmorris for
Defendants, Cross-complainants and Respondents.
_________________________
This appeal arises from a commercial dispute involving a
fuel supplier, the former owners of a gas station, and the
purchasers of that gas station. After a three-day bench trial, the
trial court entered judgment largely in favor of respondents Fuel
Enterprise, Inc., Asaph Guirguis, Morgan Capital Group, LLC,
Fuel Stop, Inc., Georges Investments, Inc., and Kamal Georges
(collectively, Fuel Enterprise), 1 and against appellants Anabi Oil
Corporation (Anabi Oil) and Reem Annabi (collectively, Anabi).
Among other findings, the trial court determined that Reem
Annabi represented to Guirguis that a 2020 supply covenant
contained the same terms as a predecessor 2017 supply covenant,
that Anabi “concealed the changes with intent to defraud,” and
that Guirguis “relied on the misrepresentation and concealment.”
The court ruled for Fuel Enterprise on its cross-claims for fraud,
rescission of the 2020 Supply Covenant, and violation of
Corporations Code section 31125,2 and against Anabi Oil on its
third cause of action for breach of the 2020 Supply Covenant.
The trial court also made separate findings adverse to
Anabi that did not rest on the fraud determination: It accepted
Guirguis’s calculation of liquidated damages under the Retailer
1 We refer to respondents collectively as “Fuel Enterprise”
for ease of reference. Of the six respondents, four, Asaph
Guirguis, Morgan Capital Group, LLC, Fuel Enterprise, Inc., and
Fuel Stop, Inc., were cross-complainants below. The other two,
Georges Investments, Inc., and Kamal Georges, were not parties
to the cross-complaint. When discussing the cross-complaint,
“Fuel Enterprise” refers only to the four cross-complainants
unless the context indicates otherwise.
2 The statement of decision refers to this cause of action in
one place as a violation of “Business and Professions Code
§ 31125” and elsewhere as a violation of Corporations Code
section 31125. The cross-complaint pleaded a violation of
Corporations Code section 31125, and the parties have briefed it
as such. We use that designation.
2
Product Sales Agreement (RPSA), rejected Anabi’s “greater
amount” theory of damages under the Retailer Facility
Development Incentive Program (RFDIP), and found that Anabi
recorded a wrongful Notice of Default overstating the amount
owed. Anabi does not challenge these determinations on appeal.
The principal issue before us is whether the statement of
decision adequately addresses justifiable reliance, an essential
element of the fraud finding and the determinations derivative of
it. We hold that it does not. The trial court addressed Anabi’s
duty-to-read defense but did not clearly disclose whether it found
Guirguis’s reliance justifiable under the circumstances. Anabi’s
objections brought that ambiguity to the trial court’s attention.
Under Code of Civil Procedure section 634, we may not infer the
missing finding.
We do not reach Anabi’s broader contention that justifiable
reliance is foreclosed on this record as a matter of law. The
appropriate remedy is a limited remand for the trial court to
make an express finding on justifiable reliance, drawing on its
existing findings and the trial record. We reverse the judgment
as to the fraud-dependent determinations only; the remainder of
the judgment, including the findings against Anabi on the RPSA,
the RFDIP, and the wrongful Notice of Default, is unaffected.
The postjudgment attorney fees award is vacated pending
redetermination of the prevailing party.
FACTUAL AND PROCEDURAL SUMMARY
A. The 2017 Agreements and the 2020 Sale
In 2010, Anabi Oil began supplying gasoline to a Shell-
branded gas station in Covina owned and operated by Georges
Investments, Inc. In 2017, Anabi Oil and Georges Investments
executed three agreements: the RPSA, under which Georges
Investments agreed to purchase a minimum of 65,000 gallons of
Shell-branded gasoline per month from Anabi Oil through
December 2027 and to pay $0.03 per gallon in liquidated
damages for any shortfall on premature termination; the RFDIP,
3
under which Anabi Oil advanced $122,500 in site-improvement
funds that would be forgiven upon completion of the RPSA term;
and a Memorandum of Right of First Refusal and Supply
Covenant (the 2017 Supply Covenant). The 2017 Supply
Covenant provided that Anabi Oil would remain the “exclusive
supplier of gasoline and motor fuel” to the station for 10 years
from October 6, 2017.
In 2020, Georges Investments sold the station to Fuel
Enterprise. The sale was effected through a Consent to
Assignment Agreement among Anabi Oil, Georges Investments,
and the buying entities, by which Anabi Oil consented to the
assignment of the 2017 agreements. As part of the closing, Fuel
Enterprise also executed a new one-page, four-paragraph supply
covenant (the 2020 Supply Covenant). The 2020 Supply
Covenant differed from its 2017 predecessor in two respects
relevant here: Its term ran to November 2028 rather than
October 2027, and it specified that Anabi Oil’s exclusivity
extended to fuel “regardless of whether the gasoline and motor
fuel are branded or unbranded.”
Approximately one year after the sale closed, Fuel
Enterprise debranded the station and tendered to Anabi Oil what
its tender letter described as “check No. 1094 in the amount of
$278,304.51,” comprising the $122,500 RFDIP balance and
$155,804.51 in liquidated damages calculated under the RPSA.
The check itself was written for $278,304.91. The trial court used
the $278,304.51 figure in its statement of decision.
Anabi Oil rejected the tender, contending it was entitled to
additional sums under both the RFDIP’s “greater amount”
provision and the 2020 Supply Covenant. Shortly thereafter,
Anabi Oil recorded a Notice of Default against the station,
claiming $521,697.84 was owed.
B. The Pleadings and Trial
Anabi Oil sued Fuel Enterprise for breach of the RPSA, the
RFDIP, and the 2020 Supply Covenant, along with related
4
claims. Fuel Enterprise cross-complained, alleging eight causes
of action including fraud, rescission of the 2020 Supply Covenant,
violation of Corporations Code section 31125, quiet title, and
declaratory relief. The actions were consolidated.
The fraud cross-claim alleged that Reem Annabi told
Guirguis the 2020 Supply Covenant would have terms identical
to the 2017 Supply Covenant; that the 2020 Supply Covenant in
fact contained materially different terms; and that Guirguis
“reasonably and justifiably relied” on Reem Annabi’s
representations in signing without reading the document. Anabi
answered that Guirguis’s failure to read the 2020 Supply
Covenant before signing barred any finding of justifiable reliance
and that the elements of fraud were not satisfied.
The trial court conducted a three-day bench trial in October
2023. Reem Annabi and Guirguis both testified on the first trial
day, October 10, for which no reporter’s transcript was prepared.
The reporter’s transcript begins on the second day of trial.
C. The Statement of Decision
The trial court issued a statement of decision resolving the
parties’ claims. Several findings were adverse to Anabi and are
not challenged on appeal:
The RPSA. The court accepted Guirguis’s calculation of
$155,804.51 in liquidated damages under the RPSA and rejected
Anabi’s competing figure of $158,680.32.
The RFDIP. The court rejected Anabi’s claim that it was
entitled to a “ ‘greater’ amount” of $363,344.04 under paragraph
6(a)(ii) of the RFDIP, finding that Anabi had not proved it was
required to make payments to Shell because of the debranding
and that, in any event, the terms of the separate Anabi-Shell
agreements were not properly incorporated into the RFDIP as
against Fuel Enterprise. The court held Fuel Enterprise liable
for $122,500 under paragraph 6(a)(i).
The Notice of Default. The court found that Anabi had
recorded a wrongful Notice of Default, claiming $521,697.84 was
5
owed, when in fact only $278,304.51 was owed. The court
awarded Guirguis $195,148 in damages for excess interest he was
required to pay because the wrongful Notice of Default prevented
him from refinancing his loan.
The fraud-related findings are the subject of this appeal.
The statement of decision addresses them in a single paragraph:
“Anabi contends that the two versions of the supply covenant are
substantially the same; they are not. Anabi also argues that
Guirguis should have carefully reviewed the revised supply
covenant before signing it, and therefore it is his fault he did not
notice any changes. This ignores that Anabi represented to
Guirguis that he was purchasing the station on the same terms
Georges had. This representation was false. The Court finds
that Anabi concealed the changes with intent to defraud, that
Guirguis relied on the misrepresentation and concealment, and
Guirguis was injured as a result.”
On the basis of these findings, the court ruled for Fuel
Enterprise on the cross-claims for fraud, rescission of the 2020
Supply Covenant, and violation of Corporations Code section
31125, and against Anabi Oil on its claim for breach of the 2020
Supply Covenant. The court also ordered the 2020 Supply
Covenant, along with the Notice of Default and an associated
Deed of Trust, vacated on Fuel Enterprise’s quiet-title claim. The
court found that Fuel Enterprise and Guirguis were the
prevailing parties.
Anabi filed timely objections. Objection No. 12 challenged
whether Guirguis’s reliance “was reasonable considering the
admitted evidence that the contracts contained integration
clauses to which the parties agreed.”3 The trial court overruled
3 Objection No. 12 states Anabi “objects to the PSD's, that
Defendant Guirguis’s reliance on Plaintiff’s alleged oral
communications was reasonable,” omitting the noun the
possessive modifies. Anabi’s counsel confirmed at oral argument
6
the objections without modifying the relevant findings and
entered judgment for a net $48,156.51 in favor of Anabi Oil. That
figure included the $278,304.51 tender, less the $35,000 security
deposit and the $195,148 in wrongful-Notice-of-Default damages.
The trial court subsequently granted Fuel Enterprise’s
motion for attorney fees, identifying Fuel Enterprise and
Guirguis as the prevailing parties, and denied Anabi’s competing
motion. Anabi timely appealed both the judgment and the
postjudgment fee order. The two appeals were consolidated.4
DISCUSSION
I. The Statement of Decision Does Not Adequately
Resolve Justifiable Reliance
A. The requirement of a statement of decision
Code of Civil Procedure section 632 requires the trial court,
upon timely request, to issue “a statement of decision explaining
the factual and legal basis for its decision as to each of the
principal controverted issues at trial.” The statement need not
address every evidentiary fact, but it must “ ‘fairly disclose[] the
court’s determination as to the ultimate facts and material issues
in the case.’ ” (Thompson v. Asimos (2016) 6 Cal.App.5th 970,
983.) An “ultimate fact” in this context “ ‘generally refers to a
core fact, such as an essential element of a claim.’ ” (Ibid.)
B. The standard of review
Where a party identifies an omission or ambiguity in the
statement of decision and timely brings it to the trial court’s
attention, Code of Civil Procedure section 634 precludes implied
that the intended word is “finding.” The omission does not affect
our analysis.
4 Fuel Enterprise filed the initial notice of appeal on
April 19, 2024, which this court dismissed on September 17,
2024, for failure to deposit reporter’s transcript fees. Anabi’s
cross-appeal, filed May 9, 2024, proceeded as the operative
appeal.
7
findings: “[I]t shall not be inferred on appeal . . . that the trial
court decided in favor of the prevailing party as to those facts or
on that issue.” (Code Civ. Proc., § 634; see In re Marriage of
Arceneaux (1990) 51 Cal.3d 1130, 1133–1134.)
The standard of review depends on a threshold question.
Where a party timely brings an omission or ambiguity in the
statement of decision to the trial court’s attention, Code of Civil
Procedure section 634 forecloses implied findings, and we review
the adequacy of the statement of decision independently.
(Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.) Where a
party does not, the reviewing court infers findings favorable to
the prevailing party on all issues necessary to support the
judgment and reviews those implied findings for substantial
evidence. (Fladeboe v. American Isuzu Motors Inc. (2007) 150
Cal.App.4th 42, 59–60.) Fuel Enterprise contends that Anabi’s
Objection No. 12 was not a proper objection and that the
substantial evidence standard therefore governs. Because the
answer determines both the standard of review and whether the
missing finding may be inferred, we take up the objection in part
I.F, post. We conclude that the objection preserved the
deficiency, and we review the statement of decision
independently. A trial court’s error in failing to issue an
adequate statement of decision is subject to harmless error
review under article VI, section 13 of the California Constitution;
reversal is required where the error has resulted in a miscarriage
of justice. (F.P. v. Monier (2017) 3 Cal.5th 1099, 1108.)
C. The record is adequate to present the issue
Fuel Enterprise contends at the outset that the appeal is
barred because no reporter’s transcript was prepared for the first
day of trial, when Reem Annabi and Guirguis testified, and Anabi
supplied no settled or agreed statement in its place. The
contention is misdirected. Whether the statement of decision
resolved a specified controverted issue is answered from the
document itself, which the clerk’s transcript contains in full. (See
8
Whittington v. McKinney (1991) 234 Cal.App.3d 123, 127.) The
missing reporter’s transcript bears on a different question:
whether reasonableness can be resolved as a matter of law on
this record. We address that question in part II, post.
D. Justifiable reliance is an ultimate fact
The elements of fraud under California law are
(1) misrepresentation, (2) knowledge of falsity, (3) intent to
induce reliance, (4) justifiable reliance, and (5) resulting damage.
(Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) The
reliance element has two components: The plaintiff must show
both that he actually relied on the misrepresentation and that his
reliance was justifiable in the circumstances. (OCM Principal
Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007)
157 Cal.App.4th 835, 864.) Justifiable reliance requires that
“ ‘circumstances were such to make it reasonable for [the]
plaintiff to accept [the] defendant’s statements without an
independent inquiry or investigation.’ ” (Ibid.) Actual reliance
and justifiable reliance are distinct inquiries; a plaintiff may
establish actual reliance yet fail on justifiability. (See Hoffman v.
162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1193–1194.)
Justifiable reliance is therefore an essential element of fraud and,
where disputed as it was here, an “ultimate fact” the statement of
decision must address.5
5 Fuel Enterprise’s cross-claim also rests in part on a
concealment theory. Concealment requires a duty to disclose,
and reliance in an omission case is established by showing the
plaintiff would have behaved differently had the suppressed fact
been disclosed. (See Boschma v. Home Loan Center, Inc. (2011)
198 Cal.App.4th 230, 248, 250–251.) Reliance is required under
both theories, though it may be analyzed differently in an
omission case. Because the statement of decision does not
differentiate between affirmative misrepresentation and
concealment, the trial court on remand should clarify whether
the fraud finding rests on one theory or both.
9
E. The statement of decision does not disclose a
finding of justifiable reliance
The trial court’s statement of decision addresses the fraud
claim in a single paragraph. The court found that Reem Annabi
represented the 2020 Supply Covenant was the same as the 2017
Supply Covenant, that this representation was false, that Anabi
“concealed the changes with intent to defraud,” and that Guirguis
“relied on the misrepresentation and concealment.” The court
also expressly engaged with Anabi’s duty-to-read defense,
observing that the argument “ignores that Anabi represented to
Guirguis that he was purchasing the station on the same terms
Georges had.”
The statement of decision does not clearly disclose whether
the trial court made a finding of justifiable reliance. The court’s
finding that Guirguis “relied on the misrepresentation and
concealment” expressly addresses actual reliance. Its discussion
of the duty-to-read defense addresses why Guirguis’s failure to
read did not defeat the fraud claim. It does not clearly disclose,
however, whether that discussion was intended as a finding that
Guirguis’s reliance was reasonable under all the circumstances or
merely as a rejection of Anabi’s contention that the failure to read
necessarily defeated the fraud claim. Actual reliance and
justifiable reliance are distinct requirements. (OCM Principal
Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007)
157 Cal.App.4th 835, 864.)
The court’s stated reason does not supply that
determination. The court observed that Anabi’s argument
“ignores that Anabi represented to Guirguis that he was
purchasing the station on the same terms Georges had.” That
observation explains why Guirguis did not read the 2020 Supply
Covenant: He had been told its terms were unchanged. It
establishes that the representation was made and that it induced
him to sign without reading. Whether a party in Guirguis’s
position acted reasonably in accepting that representation rather
10
than reading the document before signing is a distinct question,
and the court’s explanation does not reach it. A finding that a
false representation induced reliance is not a finding that the
reliance it induced was justifiable.
Fuel Enterprise argues the trial court’s express fraud
finding necessarily includes a finding of justifiable reliance
because justifiability is an element of the cause of action. A
statement of decision must allow the parties and the reviewing
court to identify “the precise facts found by the court and the
exact grounds upon which the judgment rests.” (Whittington v.
McKinney, supra, 234 Cal.App.3d at p. 127.) The trial court’s
brief discussion of the duty-to-read defense does not satisfy that
requirement on this record. The court explained why it rejected
the duty-to-read defense. It did not explain whether it separately
regarded Guirguis’s reliance as reasonable under the
circumstances.
Our colleague agrees the statement of decision is deficient
in its treatment of reasonable reliance. (Conc. & dis. opn. of
Richardson, J., post, at p. 1.) The panel divides only on whether
Anabi preserved that deficiency, which we take up next.
F. Objection No. 12 preserved the ambiguity
concerning justifiable reliance
Anabi brought that ambiguity to the trial court’s attention.
Objection No. 12 was directed at the proposed decision’s
treatment of whether Guirguis’s reliance on the alleged oral
communications “was reasonable considering the admitted
evidence that the contracts contained integration clauses to
which the parties agreed.” The reasonableness of that reliance
was in controversy before judgment. Anabi argued in its closing
brief that Guirguis could not establish justifiable reliance
because he failed to read the 2020 Supply Covenant before
signing it. The trial court addressed that contention in its
proposed decision. Anabi then objected that the reliance the
court had described was not reasonable. The trial court thus had
11
before it a dispute over the reasonableness of Guirguis’s reliance,
and its own proposed decision engaged that dispute.
That the issue was controverted is not itself enough. Code
of Civil Procedure section 634 requires that the record show the
omission or ambiguity, and not merely the underlying issue, was
brought to the trial court’s attention. The question is whether
the record shows the court was alerted that its treatment of
reasonable reliance required clarification.
Code of Civil Procedure section 634 applies where “the
record shows that the omission or ambiguity was brought to the
attention of the trial court.” The statute directs attention to what
the record shows, not to the form of words the objecting party
selected. No particular wording is required, but the claimed
omission or ambiguity must be identified with sufficient
particularity to permit correction. (Ermoian v. Desert Hospital
(2007) 152 Cal.App.4th 475, 498 [objections allow the court to
focus on issues the party contends were not resolved “or whose
resolution is ambiguous”].) The main purpose of an objection to a
proposed statement of decision “is not to reargue the merits, but
to bring to the court’s attention inconsistencies between the
court’s ruling and the document that is supposed to embody and
explain that ruling.” (Heaps v. Heaps (2004) 124 Cal.App.4th
286, 292.)
Objection No. 12 served that purpose. The contrast is
textual. The proposed decision found that Guirguis “relied on the
misrepresentation and concealment.” Objection No. 12 was
directed at a determination that his reliance “was reasonable.”
The objection introduced the term the proposed decision did not
use and attributed its resolution to a document that does not
contain it. Directed at a statement of decision that does not
clearly make the finding it presupposed, the objection exposed
the very inconsistency section 634 exists to surface. The court
could have confirmed the finding, added it, or explained that it
had resolved the matter on some other basis. Any of the three
12
would have disclosed what the statement of decision leaves
ambiguous. The court did none of them; it overruled the
objection without clarification.
Fuel Enterprise contends that Objection No. 12 was not a
proper objection and that the doctrine of implied findings
therefore applies. Read one way, the objection attacks a finding
the trial court made rather than identifying an omission or
ambiguity, and so falls within the exclusion recognized in Duarte
Nursery, Inc. v. California Grape Rootstock Improvement Com.
(2015) 239 Cal.App.4th 1000, 1012, and applied in Slone v. El
Centro Regional Medical Center (2024) 106 Cal.App.5th 1160,
1171, and Oakland Bulk and Oversized Terminal, LLC v. City of
Oakland (2025) 112 Cal.App.5th 519, 543. Those decisions hold
that Code of Civil Procedure section 634 is not triggered when an
objection merely cites contrary evidence or disputes the legal
basis of a finding the statement of decision unambiguously made.
Objection No. 12 was not free of merits content. In
invoking the integration clauses, it advanced a reason why
Guirguis’s reliance was not reasonable. But the objections in
those cases were directed at the support for ultimate findings the
statements of decision expressly and unambiguously made. This
objection was not.
The proposed decision expressly found only that Guirguis
“relied”; it made no express finding that his reliance was
reasonable. By objecting to a reasonableness determination the
proposed decision does not contain, Objection No. 12 did more
than dispute the support for a finding. It placed before the trial
court whether the decision’s duty-to-read discussion was intended
to resolve that separate ultimate issue. The question is not
whether Objection No. 12 was a model Code of Civil Procedure
section 634 objection. It is whether, in the form counsel chose, it
conveyed sufficient notice of the ambiguity. It did.
The exclusion recognized in those decisions serves a
purpose. It prevents a party from using Code of Civil Procedure
13
section 634 to relitigate an issue the trial court resolved, by
recasting disagreement with a finding as a claim that the finding
is missing. That purpose has no application where the statement
of decision resolved nothing. Where the trial court did not
expressly determine the issue, an objection directed at that issue
does not relitigate a resolved question; it asks whether the
question was reached. Nor does presupposition alone preserve a
claim of omission. What preserves the claim here is
presupposition together with a statement of decision that does
not contain the presupposed finding. An objection directed at a
finding the trial court expressly made remains a merits objection,
whatever it presupposes.
It is suggested that Anabi elsewhere objected that the
proposed decision “fail[ed] to address” particular matters, and
that its use of different language in Objection No. 12 shows it did
not regard the reasonableness of reliance as unresolved. Code of
Civil Procedure section 634 does not turn on whether a party’s
objections follow a uniform drafting convention. The statute asks
what the record shows the trial court was alerted to. A party who
files 15 objections does not forfeit one of them by phrasing it
differently from the others, and an objection’s sufficiency is
measured by the notice it conveyed, not by its consistency with
the party’s other filings.
Code of Civil Procedure section 634 does not condition relief
on the objecting party’s correct diagnosis of the defect. The
statute applies both when a statement of decision “does not
resolve a controverted issue” and when “the statement is
ambiguous.” A party confronting an ambiguous statement of
decision often cannot know which of the two it faces; the
ambiguity is what deprives it of that knowledge. To require the
objecting party to characterize the defect correctly would
withdraw the statute in the very circumstance its second clause
addresses.
14
This conclusion does not require a trial court to address
every evidentiary fact bearing on reliance. The defect is not the
court’s failure to discuss separately the integration clauses, the
document’s length, Guirguis’s sophistication, or the parties’
course of dealing. The defect is that the statement does not
clearly disclose whether the court found the distinct ultimate fact
of justifiable reliance at all. Justifiable reliance was a principal
controverted issue at trial and an ultimate fact that Code of Civil
Procedure section 632 required the statement of decision to
resolve. The integration clauses, by contrast, are evidentiary
considerations bearing on that issue. Under Code of Civil
Procedure section 634, we therefore may not resolve the
ambiguity by implying a finding of justifiable reliance.
G. The deficiency is prejudicial
A trial court’s error in failing to issue an adequate
statement of decision is subject to harmless error review; reversal
is required where the error has resulted in a miscarriage of
justice. (Cal. Const., art. VI, § 13; F.P. v. Monier, supra, 3
Cal.5th at p. 1108.) The deficiency here is prejudicial. The
justifiability of Guirguis’s reliance was the central dispute
concerning the fraud claim. Anabi argued that Guirguis’s failure
to read a one-page, four-paragraph document foreclosed
reasonable reliance as a matter of law and offered authority in
support. Fuel Enterprise contended that Reem Annabi’s
affirmative misrepresentation excused the failure to read in the
circumstances of an established commercial relationship. The
trial court was required to resolve this dispute under the correct
legal standard. The statement of decision’s silence on justifiable
reliance “precludes this court from reviewing the evidence in the
record to determine whether it supports the trial court’s findings
chiefly because we do not know what those findings were.” (Alafi
v. Cohen (2024) 106 Cal.App.5th 46, 70.)
The consequences of these findings are substantial. On the
strength of the fraud determination, the trial court rescinded the
15
2020 Supply Covenant and vacated it on Fuel Enterprise’s quiet-
title claim, extinguishing an exclusive supply right running to
November 2028. The same determination defeated Anabi Oil’s
third cause of action for breach of that covenant and supported
the finding of a violation of Corporations Code section 31125. It
also informed the trial court’s identification of the prevailing
party and the fee award that followed. That the statement of
decision assigned no damages specific to the fraud claim does not
render the omission harmless. Prejudice is measured by whether
the judgment would have been the same had the finding been
made, not by whether the omitted finding carried its own award.
Because the omission concerns a core fact on which Fuel
Enterprise’s fraud claim and the determinations derivative of it
depend, and because Code of Civil Procedure section 634
forecloses inference of the missing finding, reversal of the affected
portions of the judgment is required.
II. The Appropriate Remedy Is a Limited Remand
Anabi urges us not only to reverse the judgment but to
direct entry of judgment in its favor on the affected causes of
action, contending that justifiable reliance is foreclosed on this
record as a matter of law. We decline.
Whether reliance is justifiable is generally a question of
fact. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226,
1239.) It becomes a question of law only where reasonable minds
could reach but one conclusion. (Guido v. Koopman (1991) 1
Cal.App.4th 837, 843.) Anabi relies on the well-established rule
that a party who signs a contract is generally bound by its terms
regardless of whether the party read it. (E.g., N.A.M.E.S. v.
Singer (1979) 90 Cal.App.3d 653, 656; Randas v. YMCA of
Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163.) The
rule is not absolute. It yields to fraud, overreaching, or excusable
neglect. (Randas, supra, at p. 163.) Whether the present case
falls within such an exception is fact-intensive. Our Supreme
Court has noted, but expressly declined to resolve, “the degree to
16
which failure to read the contract affects the viability of a claim
of fraud in the inducement.” (Riverisland Cold Storage, Inc. v.
Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169,
1183, fn. 11.)
The record before us does not permit confident resolution of
the issue as a matter of law. The reporter’s transcript begins on
the second day of trial. The testimony of Reem Annabi and
Guirguis, the two witnesses whose accounts most directly bear on
the circumstances of the alleged misrepresentation, was given on
the first day, for which no transcript was prepared and no settled
or agreed statement was provided. We are reluctant to declare
reasonableness foreclosed as a matter of law without the
testimony bearing most directly on the question. The trial court,
having heard that testimony, is the appropriate body to resolve
the issue in the first instance.
Fuel Enterprise argues that the trial court’s findings on
Reem Annabi’s affirmative misrepresentations are sufficient to
support the fraud judgment under the “lulling doctrine,” which
holds that a defendant who lulls a plaintiff into inaction by false
assurances cannot defeat the plaintiff’s claim by pointing to the
plaintiff’s failure to investigate. (See Brownlee v. Vang (1965)
235 Cal.App.2d 465, 474; Hartong v. Partake, Inc. (1968) 266
Cal.App.2d 942, 966.) The doctrine does not resolve this appeal.
Brownlee and Hartong themselves analyzed whether the
plaintiff’s reliance was reasonable under the circumstances; they
did not dispense with the element of justifiable reliance but
applied it. (See Brownlee, supra, at p. 476 [further
representations “designed to allay the suspicions of the plaintiff,
were themselves misrepresentations calculated to deceive”];
Hartong, supra, at p. 966 [reliance reasonable where defendant
“allays his doubts with further assurances”].) Whether the
lulling doctrine excuses Guirguis’s failure to read the 2020
Supply Covenant in the present circumstances is itself a question
17
about the reasonableness of his reliance that the trial court must
address on remand.
The conventional remedy in these circumstances is to
reverse the affected portions of the judgment and remand with
directions to the trial court to issue an amended statement of
decision making an express finding on the omitted issue.
(Karlsen v. Superior Court (2006) 139 Cal.App.4th 1526, 1531.)
That is the remedy we adopt here, with one modification:
Because the trial court has already made findings on the
underlying facts and rejected Anabi’s duty-to-read defense on its
merits, the trial court need not retry the issue if it can resolve the
question on the record already before it. It is being asked to
clarify whether, in light of its existing findings and the trial
record, Guirguis’s reliance was justifiable under the correct legal
standard. In making that finding, the trial court should take into
account the applicable framework for affirmative
misrepresentation or concealment, as the analytical framework
for justifiable reliance may differ between the two theories.
That remedy assumes the judge who tried the matter
remains available. Where the judge who heard the case is no
longer available, no other judge can complete the statement of
decision, and a new trial is the appropriate remedy. (Karlsen,
supra, 139 Cal.App.4th at p. 1531 [“If the trial judge who
originally presided over the trial has become incapacitated or has
died, no other judge can perform the task and the matter must be
retried”]; Wallis v. PHL Associates, Inc. (2013) 220 Cal.App.4th
814, 827 [where the judge who heard the case was no longer
available, “the only appropriate appellate remedy” was remand
for a new trial].) Here, the testimony of Reem Annabi and
Guirguis was given on the first day of trial, for which no
reporter’s transcript, settled statement, or agreed statement was
prepared. We express no view on whether the finding can be
made on the existing record. That determination is for the trial
court in the first instance. We hold only that if the finding
18
cannot be made on the record as it stands, the trial court shall
order a new trial limited to the causes of action we reverse.
Two of Fuel Enterprise’s arguments warrant brief
comment. Fuel Enterprise devotes a substantial portion of its
brief to the proposition that an integration clause does not
categorically bar fraud claims, citing Riverisland Cold Storage,
Inc. v. Fresno-Madera Production Credit Assn., supra, 55 Cal.4th
1169, and the line of cases addressing the parol evidence rule’s
fraud exception. (See, e.g., Thrifty Payless, Inc. v. The Americana
at Brand, LLC (2013) 218 Cal.App.4th 1230; IIG Wireless, Inc. v.
Yi (2018) 22 Cal.App.5th 630.) Anabi does not contend otherwise,
and the trial court’s findings do not turn on any categorical
integration-clause bar. The question before us is not whether the
parol evidence rule or an integration clause forecloses Fuel
Enterprise’s fraud claim (it does not), but whether the statement
of decision adequately resolved the distinct element of justifiable
reliance. Our holding does not foreclose the trial court from
considering the Riverisland framework or the surrounding case
law on remand when addressing whether reliance was justified.
Fuel Enterprise also argues that the appeal should be
denied because reasonable reliance is not an element of several of
the cross-claims on which it prevailed below (including the claims
for breach of contract, rescission, quiet title, declaratory relief,
and violations of various statutory provisions) and contends
Anabi has forfeited any challenge to those claims by not
separately analyzing their elements. The argument
misapprehends the appeal. Anabi does not challenge any cross-
claim that is independent of the fraud finding; we reverse them
because they rest on the same factual predicate, not because
justifiable reliance is independently an element of each. The
cross-claims that rest on independent grounds, such as the
wrongful-Notice-of-Default theory and the quiet-title claim as it
relates to the Notice of Default and Deed of Trust, remain
undisturbed for the reasons set forth below.
19
III. Scope of the Reversal
The scope of our reversal is narrower than Anabi seeks.
A. Determinations reversed
Fuel Enterprise contends that Anabi has forfeited any
challenge to the determinations other than the fraud finding
because Anabi neither demonstrates nor could demonstrate that
reasonable reliance is an element of rescission, quiet title,
declaratory relief, or a violation of Corporations Code section
31125. The contention misapprehends the basis of the reversal.
These determinations are not reversed because justifiable
reliance is an element of each. They are reversed because the
trial court rested each of them on its fraud finding: the rescission
of the 2020 Supply Covenant, the Corporations Code section
31125 determination, the judgment against Anabi Oil on its third
cause of action for breach of that covenant, the quiet-title order
insofar as it vacates the covenant, and the tender-refusal ground
of the breach-of-contract finding, which turns on the covenant’s
enforceability. A determination the trial court derived from a
finding we cannot review does not become independent of that
finding because the elements of the claim, considered in the
abstract, omit reliance.
Nor did Anabi confine its challenge as Fuel Enterprise
suggests. The opening brief identified the fraud finding as the
foundation of the judgment on Anabi Oil’s third cause of action
and on the rescission and Corporations Code section 31125 cross-
claims, cited the portions of the record establishing that
dependence, and argued that the derivative determinations
cannot stand once the foundation is removed. That presented the
question.
The fraud finding and the determinations dependent on it
rest on the same factual predicate: The determination that Anabi
made an actionable misrepresentation or concealment on which
Guirguis was entitled to rely in signing the 2020 Supply
Covenant. These are:
20
1. The finding in favor of Fuel Enterprise on the second cause
of action of the cross-complaint for fraud.
2. The finding in favor of Fuel Enterprise on the third cause of
action of the cross-complaint for rescission of the 2020
Supply Covenant.
3. The finding in favor of Fuel Enterprise on the fifth cause of
action of the cross-complaint for violation of Corporations
Code section 31125.
4. The finding against Anabi Oil on its third cause of action
for breach of the 2020 Supply Covenant.
5. The finding in favor of Fuel Enterprise on the sixth cause of
action of the cross-complaint for quiet title, but only to the
extent it vacates the 2020 Supply Covenant.
6. The finding in favor of Fuel Enterprise on the first cause of
action of the cross-complaint for breach of contract, but only
to the extent it rests on Anabi Oil’s refusal of Fuel
Enterprise’s tender.6
B. Determinations not disturbed
Several substantial portions of the judgment rest on
independent factual and legal grounds and are unaffected by the
issue on appeal:
The RPSA finding. The trial court found that Anabi was
entitled to $155,804.51 in liquidated damages under the RPSA
and rejected Anabi’s competing calculation of $158,680.32. This
finding does not depend on the fraud determination, and Anabi
does not challenge it on appeal.
The RFDIP finding. The trial court rejected Anabi’s
“ ‘greater’ amount” theory under paragraph 6(a)(ii) of the RFDIP
and held Fuel Enterprise liable only for the $122,500 amount
under paragraph 6(a)(i). This finding rests on the court’s
independent determinations that Anabi failed to prove what it
6 The breach-of-contract finding rests on two independent
grounds; only one is fraud-dependent. (See part III.B, post.)
21
was required to pay Shell and that the separate Anabi-Shell
agreements were not properly incorporated into the RFDIP.
Anabi does not challenge these determinations on appeal.
The wrongful Notice of Default. The trial court found that
Anabi recorded a wrongful Notice of Default and awarded
Guirguis $195,148 in damages for excess interest payments that
resulted. This finding rests on the court’s determinations that
the RFDIP “ ‘greater’ amount” theory failed and that the amount
claimed in the Notice was therefore overstated. It does not
depend on the fraud finding, and Anabi does not challenge it on
appeal.
The remaining cross-claims. The trial court found in
Anabi’s favor on the fourth and eighth causes of action of the
cross-complaint for violation of Business and Professions Code
sections 21148 and 17200, concluding that Fuel Enterprise did
not prove the elements of either claim. The court found in favor
of Fuel Enterprise on the seventh cause of action for declaratory
relief, but the declaratory relief consisted of the court’s recitation
of the rights of the parties as determined under the other claims
and is therefore derivative of those claims rather than an
independent ground of recovery. Neither side challenges the trial
court’s disposition of these claims, and we leave them
undisturbed. We do not independently reverse the declaratory
relief determination; on remand, any declaratory relief should
conform to the amended judgment and the trial court’s findings
on justifiable reliance.
The quiet-title judgment as to the Notice of Default and
Deed of Trust. The trial court ordered the Notice of Default and
associated Deed of Trust vacated. That order rests on the
independent finding that the Notice of Default was wrongful, not
on the fraud finding. It is unaffected by our reversal.
The breach-of-contract finding against Anabi on the cross-
complaint. The trial court found that Anabi breached the parties’
contracts on two independent grounds: Refusing Fuel
22
Enterprise’s tender of $278,304.51, and recording the wrongful
Notice of Default. The first ground, the refusal of the tender,
depends on whether the $278,304.51 tender was sufficient, which
in turn depends in part on whether the 2020 Supply Covenant is
enforceable. If on remand the trial court finds justifiable reliance
lacking, the 2020 Supply Covenant remains enforceable and the
tender-refusal theory of breach must be reconsidered. The second
ground, the wrongful Notice of Default, rests on the independent
RFDIP-related findings and is unaffected.
We therefore affirm the breach-of-contract finding to the
extent it rests on the wrongful Notice of Default. The tender-
refusal ground is reversed, and whether it can be sustained will
depend on the trial court’s determination on remand.
C. The damages calculation
The judgment awarded Anabi Oil a net $48,156.51,
calculated as the $278,304.51 tender amount less the $35,000
security deposit and the $195,148 in wrongful-Notice-of-Default
damages. The $35,000 offset and the $195,148 wrongful-Notice-
of-Default damages flow from determinations we leave
undisturbed. The $278,304.51 figure represents the amount Fuel
Enterprise tendered. On remand, the only damages question
that could be revisited is whether Anabi was entitled to
additional sums under the 2020 Supply Covenant, that is,
whether the trial court’s rejection of Anabi Oil’s third cause of
action for breach of the 2020 Supply Covenant was correct. The
damages calculation on the other components is not disturbed.
IV. The Attorney Fee Award
The trial court awarded attorney fees to Fuel Enterprise as
the prevailing party. “An order awarding attorney fees ‘ “falls
with a reversal of the judgment on which it is based.” ’ ”
(Gunther v. Alaska Airlines, Inc. (2021) 72 Cal.App.5th 334, 358.)
Even though our reversal is partial, we cannot say with certainty
that the trial court “would exercise its discretion in the same
manner” had the affected causes of action been decided
23
differently. (Ventas Finance I, LLC v. Franchise Tax Board
(2008) 165 Cal.App.4th 1207, 1233–1235 [partial reversal “could
conceivably also affect the court’s discretionary determination” of
prevailing-party status].)
The fee award is vacated. On remand, after entry of an
amended judgment, the trial court shall redetermine the
prevailing party and the amount of attorney fees, if any, to which
that party is entitled.
DISPOSITION
The judgment is reversed as to (1) the second cause of
action of the cross-complaint for fraud; (2) the third cause of
action of the cross-complaint for rescission of the 2020 Supply
Covenant; (3) the fifth cause of action of the cross-complaint for
violation of Corporations Code section 31125; (4) the third cause
of action of the complaint for breach of the 2020 Supply
Covenant; (5) the sixth cause of action of the cross-complaint for
quiet title, but only to the extent it vacates the 2020 Supply
Covenant; and (6) the first cause of action of the cross-complaint
for breach of contract, but only to the extent it rests on Anabi
Oil’s refusal of Fuel Enterprise’s tender. In all other respects, the
judgment is affirmed.
The postjudgment order awarding attorney fees is vacated.
The matter is remanded with directions for the trial court
to (1) issue an amended statement of decision making an express
finding on whether Guirguis’s reliance on Reem Annabi’s
representation regarding the 2020 Supply Covenant was
justifiable in the circumstances, taking into account the trial
court’s existing findings and the applicable framework for
affirmative misrepresentation or concealment; (2) if the trial
court determines that the finding cannot be made on the existing
record, order a new trial limited to the causes of action identified
above; (3) enter a new judgment on the reversed causes of action
consistent with the finding made or the verdict returned; and (4)
24
redetermine the prevailing party and any award of attorney fees
following entry of the amended judgment.
The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED.
LUI, P. J.
I concur:
CHAVEZ, J.
25
Anabi Oil Corporation et al. v. Fuel Enterprise, Inc., et al.
B337933, B340224
RICHARDSON, J., Concurring in Part and Dissenting in
Part.
I agree with the majority’s conclusion the trial court erred
in failing to make a finding on whether Defendant Asaph
Guirguis’s actual reliance was also reasonable reliance, as set
forth in the discussion part I.E. of the majority opinion. However,
I respectfully dissent from the majority’s holding in part I.F. that
Plaintiffs Anabi Oil Corporation and Reem Annabi (together,
Anabi) adequately brought the omission to the attention of the
trial court as required by Code of Civil Procedure section 634.1
“To bring defects in a statement of decision to the trial
court’s attention within the meaning of section 634, objections to
a statement of decision must be ‘specific.’ [Citation.] The alleged
omission or ambiguity must be identified with sufficient
particularity to allow the trial court to correct the defect.”
(Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 498.)
Objection No. 12 reads verbatim as follows, with all errors
in the original: “Plaintiff herein objects to the PSD’s[2], that
Defendant’s Guirguis’s reliance on Plaintiff’s alleged oral
communications was reasonable considering the admitted
evidence that the contracts contained integration clauses to
which the parties agreed.”
1 Undesignated statutory references are to the Code of Civil
Procedure.
2 The acronym “PSD” stands for “proposed statement of
decision.”
1
Anabi’s counsel conceded at oral argument that the word
“finding” was omitted after “PSD’s.”
Although I agree no particular wording is necessary,
I cannot read Objection No. 12 as an objection that the trial court
had failed to make a finding that the reliance was reasonable.
Rather, Objection No. 12 is an objection to the court’s conclusion
that the reliance was reasonable, considering the integration
clauses.
By way of comparison, Anabi also pressed several
objections to findings it claimed had been omitted by the trial
court. For example, Objection Nos. 1 and 5 through 7 objected to
the PSD on the grounds that it “fail[ed] to address” various
issues, and Objection No. 15 “object[ed] to the PSD as it omit[ted]
legal analysis regarding” another issue. Objection No. 12,
however, and all the others, specifically objected to various
findings of the court. Rather than giving notice to the court that
it had failed to make a finding, Objection No. 12 only
communicated Anabi’s interpretation that it had made such a
finding, but contrary to the evidence.
Although that basis is sufficient to affirm, I disagree with
the majority’s conclusion Objection No. 12 is even a valid
statutory objection. Instead, I would find Objection No. 12 falls
into that category of “objection” that merely expresses
disagreement with a trial court’s finding, pointing to evidence
that it contends would support a contrary finding. (See Duarte
Nursery, Inc. v. California Grape Rootstock Improvement Com.
(2015) 239 Cal.App.4th 1000, 1012 [disregarding objections that
merely disagreed with the trial court].) Here, the objection does
so by its very terms, objecting to the finding that reliance was
reasonable, “considering the admitted evidence that the contracts
2
contained integration clauses to which the parties agreed.”3 Such
an objection is not proper under section 634, which does not apply
“ ‘when the party attacks the legal premises or claims the trial
court’s findings are irrelevant or unsupported by evidence.’ ”
(Oakland Bulk & Oversized Terminal, LLC v. City of Oakland
(2025) 112 Cal.App.5th 519, 543.)
For these reasons, I would infer findings favorable to the
prevailing party on the issue of reasonable reliance, and proceed
to review those findings for substantial evidence. (Fladeboe v.
American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 59–60.)
But because Anabi failed to provide us with a reporter’s
transcript from the first day of trial, during which both Reem
Annabi and Guirguis testified, Anabi is “precluded from raising
an argument as to the sufficiency of the evidence.” (Estate of Fain
(1999) 75 Cal.App.4th 973, 992.) “The burden of demonstrating
error rests on the appellant.” (Winograd v. American
Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.) I would
therefore affirm the trial court’s ruling on the fraud claim and on
all claims that relied on its fraud finding.
I thus respectfully dissent from the majority opinion to the
extent it reverses the portions of the judgment resting on the
fraud finding, and vacates the order awarding attorney fees.
I concur in the remaining holdings, which affirm all other
portions of the judgment. I would simply affirm in full.
RICHARDSON, J.
3 At oral argument, Anabi’s counsel conceded that the
integration clauses were irrelevant to the issues on appeal.
3