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Behne v. Chodur

Behne v. Chodur
09/27/09



Behne v. Chodur



Filed 9/24/09 Behne v. Chodur CA4/1



NOT TO BE PUBLISHED IN OFFICIAL REPORTS











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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.



COURT OF APPEAL, FOURTH APPELLATE DISTRICT



DIVISION ONE



STATE OF CALIFORNIA



BARBARA BEHNE,



Plaintiff and Respondent,



v.



PHILIP CHODUR, et al.,



Defendants and Appellants.



D052416 (Consolidated with



D053551)



(Super. Ct. No. GIC859501)



APPEAL from a judgment and orders of the Superior Court of San Diego County, Yuri Hoffman, Judge. Affirmed as modified.



Plaintiff and respondent Barbara Behne (Behne) and defendant and appellant Philip Chodur (Chodur) are siblings who worked together for many years on various business and development projects. This action involves a dispute over two particular business arrangements between them, beginning in 1992, to develop two separate parcels of real property (the projects). Behne acted as a real estate agent and Chodur as a real estate developer, and each party performed various services and contributed funds in various forms toward completion of the projects.



In 2004, Behne filed this action against Chodur, his wife, and several business entities he established, seeking damages for breach of partnership agreements or specific performance, as well as an accounting, declaratory relief, or a constructive trust.[1] Construction was still ongoing and when it was completed, all proceeds were placed in a blocked account. Chodur raised affirmative defenses such as estoppel and unclean hands, and each party was seeking credits and reimbursements for expenditures they made toward the projects.



The matter went to a bifurcated court trial in March 2006. After Phase I, the court issued a tentative statement of decision that determined the key issue of the nature of the business arrangements, ruling that the parties had entered into a joint venture for both projects and had agreed to split the net proceeds 50-50. At a status conference shortly after that phase of trial, the court discussed objections filed by Chodur and ruled that the issues of credits for expenses incurred by the parties would be clarified in the final ruling on the initial trial.



Before the second phase of trial began, the parties encountered difficulty during discovery of financial and accounting records, which were mostly in Chodur's possession. After numerous hard fought motions and hearings taking place from April through September 2006, the parties agreed that the court should appoint an accounting referee to determine the net proceeds of the projects. (Code Civ. Proc.,  639, subds. (a)(1)-(2), (d)(6).) For over a year, discovery disputes continued.



In December 2007, the court conducted Phase II of the trial, receiving evidence and testimony from the accounting referee, Cary Mack, CPA, and the parties. At the conclusion of trial, the court recited its tentative ruling on the record on the accounting issues. Both parties filed objections and argument, and requested a hearing. The court issued a minute order stating it had reviewed and considered these objections and argument, and declined to set additional hearings for further argument, "in that it is unnecessary." This final order and judgment incorporated the court's Phase I findings and accepted the referee's accounting decision, as adjusted in several respects. The court set forth the disbursements to be allowed, respectively, from the proceeds of sale of the projects, which were in the blocked account.



On appeal, Chodur asserts that his share of the net proceeds was too small and he is entitled to further reimbursement, because the trial court failed to make essential findings on certain material issues, regarding the nature of the contributions that the parties were to make to the joint venture. (Corp. Code,  16401, subd. (a); all further statutory references are to the Corporations Code unless stated.) He seeks reversal of the judgment to allow for further findings and an award of interest on his contributions, both those for development and construction. ( 16401, subd. (e).) He also argues that because of the nature of the work he performed for the joint venture, he is entitled to an award of a contractor's fee of a 35 percent markup for the construction-related charges incurred.



Further, Chodur argues the court abused its discretion by denying him leave to file a cross-complaint, in between the two phases of trial. (Code Civ. Proc.,  426.50.) He also claims the court erred in awarding the fees of the accounting referee as costs to Behne, and other costs. (Code Civ. Proc.,  639, 645.1, 1023, 1032, 1033.5.)



Our analysis of the record leads us to conclude that the trial court's express and implied findings over the course of the two phases of trial and posttrial proceedings were more than adequate to decide all material issues presented at trial, concerning the nature of the joint venture agreement between the parties regarding their respective contributions of capital and services. Chodur has no basis to complain that essential findings were omitted, nor to seek to relitigate issues that were decided against him, even in the reshaped form of his current arguments on appeal about different kinds of contributions he made.



Moreover, there was no abuse of discretion in the denial of leave to file the cross-complaint, and the trial court did not err in its cost awards, with one exception to be explained, regarding costs attributable to the codefendant, Warburton. We strike that $90 cost item, and as so modified, the judgment and orders are affirmed.



FACTUAL AND PROCEDURAL BACKGROUND



A.Transactions: First Street Project



Testimony at the first phase of trial showed that for many years, Behne and Chodur were involved in various real estate and other business projects together. In some of these projects, Behne acted as a lender to Chodur. Usually, no writings were prepared to memorialize the business arrangements, and usually Behne would provide the money and Chodur would develop the properties. According to Behne, that was "the way we did things."



In her capacity as a real estate agent in 1992, Behne listed an El Cajon property for sale. Chodur agreed to purchase it, and the parties began to develop the "First Street" project. Behne gave Chodur a check in the amount of approximately $70,000 to cover initial development costs.



The parties then agreed to buy a neighboring parcel to "make a better project." Behne provided some funds toward the down payment, and she and Chodur borrowed an additional $12,000 from their sister Monica to cover the remaining amount. A promissory note was executed to document the loan transaction. Behne was managing the premises by collecting rents and dealing with tenants and maintenance. Behne also arranged to purchase a 12-inch strip of land adjoining the First Street parcels, and Chodur put up the money. Chodur put title of these properties into defendant Calle Las Palmas, LLC, a business entity that he had organized for himself and Behne. However, she never signed the LLC's operating agreement because of their disputes about control of its operations.



Meanwhile, the parties pursued redevelopment financing for the project as low income housing, and each attended some planning and zoning hearings. They arranged for the existing residences to be demolished and removed, and rent payments were no longer being collected. However, there were extensive delays in the planning process, and ultimately, the nature of the project was changed from low income to conventional housing. Both parties paid various expenses related to the properties, while they continued to work on a new map for the project. Behne paid taxes and expenses of an indemnity agreement, in the name of the LLC, while they sought city approval on the new map. Behne believed that she would be reimbursed for her expenses when construction was completed and the property sold.



B.Transactions: 547 Hart Drive Project



Meanwhile, in 2000, the parties decided to pursue another project, the "Hart Drive" project, while the First Street project was stalled. Chodur had agreed to purchase the Hart Drive property in October 1999, and he sought assistance from Behne to obtain approximately $150,000 to close escrow. After Behne agreed to help fund the project, Chodur told her that she needed to pay various school fees and water district fees (approximately $125,000) immediately, "or else you are out of the project." Behne made the payments. Meanwhile, Behne also attempted to rent the premises and clean them up. The parties alternated payment of mortgage and other expenses.



According to Chodur's testimony, Behne was making loans to him so he could proceed with the project. The property was placed in the name of defendant Les Arts du Feu, a corporation he had organized. He also advanced monies for both projects. At trial, Chodur distinguished between development costs and construction costs, regarding the types of contributions he had made.



Between 2000 and 2004, the parties' relationship deteriorated. Behne believed that Chodur was refusing to provide her with documentation reflecting their agreement and information regarding the structure of ownership and title of the properties. This lawsuit followed.



C.Behne Files Suit in 2004; Phase I of Trial Begins in 2006



In December 2004, Behne filed a complaint against Chodur for breach of partnership agreements or specific performance, as well as an accounting, declaratory relief, or a constructive trust. Chodur continued to work on the projects and they were ultimately completed before judgment, and the proceeds placed in a blocked account.



The court accepted the stipulation of the parties that the trial should be bifurcated, with the controverted issue of the nature of their business relationship to be tried first. Later, the accounting issues would be resolved at a time and in a manner to be decided. Behne's position was that she and Chodur and his companies were partners or joint venturers in the two real estate development projects he was developing. Chodur claimed she was an unsecured lender for the projects.



The first phase of the bench trial began in March 2006. Both parties testified, as did other percipient witnesses, including Chodur's son, who had worked on the project, and their sister Nancy. At the conclusion of Behne's case-in-chief, the court granted codefendant Warburton's motion for judgment. (Code Civ. Proc.,  631.8.) Behne brought a motion to tax her memorandum of costs. It was granted in part and denied in part, since the court decided to allocate costs between Warburton and her husband Chodur, when his liability was ultimately decided. The court issued a separate judgment in favor of Warburton. (See pt. III, post.)



D.Court's Tentative Decision After Phase I of Trial; Status Conference



In April 2006, the court issued its tentative statement of decision after trial, reviewing the evidence and making a finding that the parties had formed a joint venture as to the First Street project and the Hart Drive project, and had agreed that the net proceeds would be split 50/50. The tentative decision summarized the evidence and concluded: "The Court finds that Behne's version of the relevant events, described above, is credible. Not only did Behne herself present as a credible witness, but the documentation supports her testimony." The decision also said, "Chodur's utter lack of recollection and vague testimony regarding most of these events was not helpful to the Court, especially in comparison with Behne's detailed testimony about the relevant events. For example, Behne's payments made on behalf of the projects or their loan from their sister Monica were only grudgingly conceded by Chodur, when faced with the relevant documentation. It is unclear why Chodur mistrusts Behne, particularly in light of the fact that Behne has lent him substantial funds (unrelated to these two projects) over the years. Chodur's unsupported position is simply that any funds Behne paid to him, or on behalf of the First Street and Hart Drive projects, are unsecured loans with 8% interest and no due date."



The tentative statement of decision concluded that a joint venture was formed by Behne and Chodur as to the First Street and Hart Drive projects, and that pursuant to that joint venture, Behne and Chodur had agreed to split the net proceeds of these projects 50/50.



Chodur filed objections to the tentative statement of decision, contending that the court had not adequately defined each party's required contribution to the joint venture, and it was necessary to do so to determine the proper disbursement of funds from the sale of the properties. He asked, "In other words, is Behne required to reimburse Chodur for the development expenses he incurred before drawing a 50% share of the net proceeds, or are Chodur and Behne to split 50% of the net proceeds based upon their respective contributions to the development costs?"



The court addressed these objections at a status conference on April 21, 2006, by ruling that the issues of credits for expenses incurred by the parties would be clarified in the final ruling on the initial trial. The court originally scheduled Phase II to begin in May 2006, but that was not to be, as we next explain.



E.Continuing Discovery and Litigation; Appointment of Referee;



Denial of Leave to File Cross-Complaint



Between April and December 2006, the parties had great difficulty dealing with each other about obtaining records of the transactions. Finally, Behne brought a motion to appoint an accounting referee. Although Chodur originally opposed it, ultimately, the parties stipulated to the appointment of an accounting referee, Cary Mack, CPA. The court's order determined that appointment of a referee was necessary within the meaning of Code of Civil Procedure section 639, subdivision (a)(1) and (2), and that the parties were each economically able to pay a pro rata share of the referee's fee. (Code Civ. Proc.,  639, subd. (d)(6).) The court's order stated that the accounting was necessary to assist the court in determining the amount of "net proceeds" to be disbursed to the parties.



In April 2007, Chodur brought a motion for leave to file a cross-complaint that would allege causes of action seeking damages for breach of contract or fiduciary duty, or intentional interference with contract or prospective economic advantage. He contended that these theories were consistent with his existing affirmative defenses (estoppel and unclean hands). (Code Civ. Proc.,  426.50.)



The court denied the motion as untimely and made a finding that it had not been brought in good faith. The court noted that the tentative statement of decision had been in existence for a year, the claims in the complaint had never been changed, and the court had already found the joint venture existed and the parties had agreed to split the net proceeds of the project, 50/50. The court observed that the proposed cross-complaint nevertheless denied the existence of that joint venture, and it therefore essentially sought to relitigate the issues already decided by the court, and this was improper. The court stated that the long history of litigation between the parties was another factor militating against the granting of the motion.



The referee and his staff continued to review the books and records of the projects. This process was not without difficulty, lasting over a year from September 2006 through December 2007, and including discovery disputes and extensive court supervision. At various times, the parties were requesting sanctions, contempt findings, appointment of an elisor, orders for disbursements from the blocked account, etc. Shortly before the Phase II trial was to begin, the court ordered that the parties meet and confer with the referee.



F.Phase II Rulings; Objections to Court's Statement of Decision; Judgment



The trial of Phase IIbegan in December of 2007. The court received the referee's summary of his report into evidence, along with supporting documents, such as the parties' expense lists. Testimony from the parties and the referee was presented. The court put its tentative decision on the record, to the effect that the referee's report was accepted, with some detailed monetary adjustments about certain contributions made (summarized below). Chodur's requests for cash advances (reimbursement), contractor's profit, and certain disbursements were expressly denied. The court ordered that the referee's fees be paid out of the approximately $3 million remaining in the blocked account.



Chodur requested a statement of decision, which the court prepared. The parties filed these objections: "Plaintiff Behne's Objections to Proposed Statement of Decision and Request for Hearing, Defendant Chodur's Objections to Plaintiff Behne's Amended Objections and Defendant Chodur's Supplemental Argument Re: Statement of Decision." The court issued its final statement of decision and judgment by minute order, ruling that although the court had reviewed and considered those objections and arguments, "[t]he Court declines to set further hearings for further argument in that it is unnecessary." Judgment was prepared, reviewing the procedures used and making the following findings (reproduced here only as pertinent to the issues on appeal):



"The Court finds that the accounting provided by Cary Mack is reasonable, thorough, and rationally based. It is supported by a preponderance of the evidence and the Court adopts the Summary of Accounting Decision subject to the following adjustments: [] 1. The Court disallows Defendant Chodur's Outstanding Claims for Interest for Cash Advanced and for Contractor Profit. These were not part of any agreement of the parties and are not supported by the evidence. [] 2. The Court disallows Defendant Chodur's claimed disbursements [] . . . [] Conclusion: [] Therefore, the Court shall allow the following disbursements from the Balance of Held Funds at Union Bank: [] To Plaintiff Behne $430,244, [] To Defendant Chodur $989,813 [] The Court orders that expenses associated with the accounting provided by Cary Mack be paid forthwith. [] The remaining balance is to be distributed to Plaintiff and Defendant 50/50."



By the time of judgment, the clerk's transcript shows that the parties had requested and the trial court held at least 30 separate clusters of contested hearings, and issued related orders, during the period between July 2006 and January 2008, when the final statement of decision was issued.



G.Posttrial Procedure;Memorandum of Costs; Motions



Behne filed a memorandum of costs requesting that Chodur bear her share of the referee's fees, amounting to $38,220. She also requested reporter's fees of $646 (apparently for the deposition of the referee or Chodur) and $90 in costs associated with the codefendant, Warburton.



Chodur brought a motion to tax, arguing the referee's fees were not awardable as costs, because the court had earlier made orders about sharing his fees. (Code Civ. Proc.,  639, subd. (d)(6).) He also argued the reporter's fees were not shown to be incurred pursuant to a court order, and were therefore not appropriate costs. He also contended that Warburton had obtained her own costs award as prevailing party, so Behne should not be able to recover a motion fee or service fee associated with Warburton.



The court denied Chodur's motion to tax, stating that according to its two previous statements of decision, Behne was the prevailing party who was therefore entitled to her costs of suit under Code of Civil Procedure section 1032. The court ruled that the costs sought in Behne's memorandum of costs appeared to be proper under Code of Civil Procedure section 1033.5, "and are both reasonable in amount and reasonably necessary to the conduct of the litigation, especially considering the litigious nature of this action and Defendant's consistent failure to cooperate with court orders regarding the provision of accounting documents to the referee. Therefore, Defendant has the burden of showing that Plaintiff is not entitled to the claimed costs or the claimed costs were not reasonable or necessary. Defendant has failed to meet that burden, and thus the motion is denied."



Judgment was issued accordingly, with Behne to recover costs against Chodur in the sum of $41,577.80. Chodur appeals.



DISCUSSION



The format of the final statement of decision and judgment reflected the bifurcation of the proceedings, in which the court first addressed the controverted issue of the nature of the business relationship between the parties. At that time, Chodur was claiming that Behne was an unsecured lender for the projects, not a partner or joint venturer, but the court ruled against Chodur's position. At the status conference shortly thereafter, the court indicated it would be clarifying the issue of credits for expenses, when the final ruling on the initial trial was issued. The Phase II trial implemented that joint venture finding and analyzed the accounting issues.



On appeal, Chodur represents that he is not disputing the joint venture finding, but many of his substantive arguments nevertheless seem to attack it in a slightly different manner, by seeking to differentiate between some of the monetary amounts that he contributed (construction costs versus development costs, or loans). He frames his new arguments in terms of a lack of essential, material findings about the nature of his contributions. (See generally In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134 (Arceneaux).)



We accordingly must resolve the scope and extent of the statements of decision issued, and then turn to the substantive claims about reimbursement. Our inquiry is whether the procedure used by the trial court met statutory and rule standards, and whether its findings of fact and conclusions of law are supported by substantial evidence. We will then discuss the discretionary and factual issues raised by the denial of the motion to file a cross-complaint, and the costs issues.



I



ADEQUACY OF COURT'S STATEMENTS OF DECISION



A. Principles of Review



The general rule on appeal is that judgments and orders of the lower courts are presumed correct. (Arceneaux, supra, 51 Cal.3d 1130, 1133.) Where a judgment is issued following a statement of decision by the trial court, special rules apply. Code of Civil Procedure section 632 requires a party to request a statement of decision as to specific issues, to obtain an explanation of the trial court's tentative decision. In its statement of decision a trial court "is required only to state ultimate rather than evidentiary facts." (People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 524 (Casa Blanca); disapproved on other grounds in Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 184-185.) The statement of decision is adequate if it fairly and completely sets forth the factual and legal basis for the court's decision, by listing all the ultimate facts necessary to decide the issues placed in controversy by the pleadings. (Ibid.)



It is not required that a statement of decision address all the legal and factual issues raised by the parties, and rather, it should state simply the grounds upon which the judgment rests, without necessarily specifying the particular evidence considered by the trial court in reaching its decision. (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1124-1125 (Muzquiz).) It need only state "ultimate rather than evidentiary facts because findings of ultimate facts necessarily include findings on all intermediate evidentiary facts necessary to sustain them." (In re Cheryl E. (1984) 161 Cal.App.3d 587, 599; accord, Akins v. State of California (1998) 61 Cal.App.4th 1, 35, fn. 29). "In other words, a trial court rendering a statement of decision is required only to set out ultimate findings rather than evidentiary ones." (Muzquiz, supra, at p. 1125.)



In this context, reversible error is found where a statement of decision fails to make findings on a material issue, as required to fairly disclose the trial court's determination. "Even then, if the judgment is otherwise supported, the omission to make such findings is harmless error unless the evidence is sufficient to sustain a finding in the complaining party's favor which would have the effect of countervailing or destroying other findings. [Citation.] A failure to find on an immaterial issue is not error. [Citation.]" (Hellman v. La Cumbre Gulf & Country Club (1992) 6 Cal.App.4th 1224, 1230.)



B. Application: Phases of Trial



This trial was bifurcated, and under California Rules of Court, rule 3.1591(a) ("separate trial of an issue"; all further rule references are to the California Rules of Court), the court was required not to "prepare any proposed judgment until [all] the other issues are tried . . . ." Chodur repeatedly sought to challenge the trial court's Phase I joint venture rulings, and the final statement of decision and judgment notes that the court received and considered such objections. After Phase I, the court had postponed resolving the issue of credit for expenses incurred by the parties. In the final statement of decision, the objections were overruled, by way of the court's denial of Chodur's requests for cash advances (reimbursement), contractor's profit, and certain disbursements.



Chodur contends that ruling was inadequate, and further, that no implied findings can support the judgment in this case, because he does not believe that the court adequately answered all the objections he made, or reached all the issues that Chodur deemed "material." However, the record shows that the court did reach all the material issues presented at trial, and ruled upon them in a complete manner, as outlined above. The court did what it said it would do, by clarifying in the final statement of decision what credits for expenses were to be allowed.



That is, the subject of Phase I of the trial was to determine the application of the principles of section 16401, subdivision (f), that "[e]ach partner has equal rights in the management and conduct of the partnership business." The court determined that the agreement of the parties was for a joint venture, requiring contributions of their services and funds, as available to them. The court analyzed the evidence as not supporting Chodur's contention that Behne was merely a lender of money, while he was to contribute only construction and development services. Rather, the evidence showed that each party contributed both money and services over a lengthy period of time, as they were able to do to keep the projects going. The court's legal conclusions were expressly based upon its analysis of the evidence, and impliedly incorporated findings about the types of contributions made by each partner.



In Phase II, the court followed up on the groundwork it had laid in Phase I, regarding the respective contributions of each party. The statement of decision comports with the statutory mandate by simply setting out the trial court's ultimate findings, rather than its evidentiary ones. It was not proper for Chodur to continue to reword his relief requests in such a manner as to indirectly obtain an evidentiary rehearing. (See Casa Blanca, supra, 159 Cal.App.3d at pp. 525-526; Muzquiz, supra, 79 Cal.App.4th at p. 1126.)



Thus, the court complied with the procedures in rule 3.1590(f), by receiving the objections to the proposed statements of decision. Under rule 3.1590(i), it was discretionary with the court whether to order a hearing on those proposals or objections to the proposed statement of decision. The court declined to do so, and this was not an abuse of discretion in light of the lengthiness of the trial proceedings and the trial court's extreme familiarity with the case and the arguments. As noted before, a multitude of hearings took place between the two phases of trial, and the trial court issued numerous orders governing discovery of the records of the projects. The court was well aware of the respective parties' positions, which they continually placed before the court, on the nature of their agreement.



Merely because Chodur does not agree with the trial court's findings does not mean that they are incomplete. Specifically, this statement of decision complies with the underlying purpose of such a statement, fully to explain the factual and legal basis for the trial court's decision. It is deemed sufficient when it addresses those determinations with which the appellant takes issue and which are relevant to the judgment. (Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424-425; Miramar Hotel Corp. v. Frank B. Hall & Co. (1985) 163 Cal.App.3d 1126, 1130.)



With these conclusions in mind about the actual scope of the statements of decision, which we deem to resolve all material issues actually raised at trial, we next analyze whether the findings are supported by the evidence. We consider whether the relief awarded was insufficient in some respect, upon the entire record.



II



PARTNERSHIP ACCOUNTS



A. Introduction and Standards of Review



We next outline Chodur's arguments that the trial court erred by dividing the net proceeds of the projects as it did. He is essentially arguing that the trial court misinterpreted the requirements of section 16401, which sets forth requirements and definitions regarding partners' accounts, shares of profits, rights to reimbursement, and conduct of partnership business. Generally, we review the court's interpretation of a statute under the de novo standard of review. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.)



At trial, Chodur apparently relied on section 16401, subdivision (e), to support his claim that the funds he advanced during the development of the projects amounted to loans to the joint venture. (Ibid. ["A payment or advance made by a partner that gives rise to a partnership obligation under subdivision (c) or (d) constitutes a loan to the partnership that accrues interest from the date of the payment or advance."].) Pursuant to section 16401, subdivision (c), "[a] partnership shall reimburse a partner for payments made and indemnify a partner for liabilities incurred by the partner in the ordinary course of the business of the partnership or for the preservation of its business or property." Also, under subdivision (d), "A partnership shall reimburse a partner for an advance to the partnership beyond the amount of capital the partner agreed to contribute."



Chodur thus appears to argue that under section 16401, subdivision (a), more reimbursement was due because his partnership account was incorrectly evaluated, even if a joint venture did exist, and the court failed to recognize that he made greater contributions, both capital and services, within the meaning of that section: "(a) Each partner is deemed to have an account that is subject to both of the following: [] (1) Credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner's share of the partnership profits." ( 16401, subd. (a)(1).)



To apply these statutory provisions to this record, we first outline the criteria for establishment of a joint venture, and then review the trial court's conclusions in applying those criteria to the evidence about the terms of the parties' agreements, regarding the nature of their contributions. We digress, however, first to reject Chodur's argument that a simple abuse of discretion standard of review is appropriate, merely due to the historical origins of partnership actions as equitable in nature. He relies on the statement in Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1392: "[I]t is well settled that '[e]quitable principles apply in determining the rights of the parties to an action for an accounting between partners, for dissolution of the partnership, and settlement of its affairs.' [Citation.]" However, it is also well established that joint venture disputes may be properly resolved in actions for damages, as well as through equitable actions for accounting. (9 Witkin, Summary of Cal. Law (10th ed. 2005) Partnership, 12, p. 588.) Accordingly, the ordinary rules of review apply regarding the trial court's findings in the statement of decision, for the legal support for its conclusions of law and the substantial evidence support for its factual findings. (Casa Blanca, supra, 159 Cal.App.3d at pp. 525-526.)



B. Joint Venture Criteria



A joint venture having no corporate or partnership designation is "an undertaking by two or more persons jointly to carry out a single business enterprise for profit. [Citations.]" (Nelson v. Abraham (1947) 29 Cal.2d 745, 749 (Nelson).) "The elements necessary for its creation are: (1) joint interest in a common business; (2) with an understanding to share profits and losses; and (3) a right to joint control. [Citations.]" (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 819 (April Enterprises).) " 'Such a venture or undertaking may be formed by parol agreement [citations], or it may be assumed as a reasonable deduction from the acts and declarations of the parties [citations].' [Citation.] Whether a joint venture actually exists depends on the intention of the parties. [Citation.]" (Ibid.)



Where the evidence is disputed, the existence or nonexistence of a joint venture is a factual issue to be determined by the finder of fact. (April Enterprises, supra, 147 Cal.App.3d 805, 820.) For purposes of this appeal, Chodur claims he is not disputing the joint venture finding. However, he believes the court incorrectly characterized the nature of his contributions. That issue depends upon the terms of the joint venture agreement, as found by the court. Normally, "a joint venture is formed for a single transaction or series of transactions, thus being more limited in both scope and duration" than a partnership. (9 Witkin, Summary of Cal. Law, supra, Partnership, 9, pp. 583-584; see, e.g., Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 285 [joint venture depends on intention of parties; little formality is required].) The parties may have had different ideas about how they intended to share in the profits, losses and the management and control of the enterprise. (See Bank of California v. Connolly (1973) 36 Cal.App.3d 350, 364; Nelson, supra, 29 Cal.2d 745, 750.) The trial court must make findings of fact about their objectively demonstrated contractual intent. (Brant v. California Dairies, Inc. (1935) 4 Cal.2d 128, 133.)



With respect to the terms of a joint venture agreement, an implied in law obligation is imposed about the manner of sharing losses, to the same extent and the same proportion as the agreement allowed for sharing profits. (9 Witkin, Summary of Cal. Law, supra, Partnership, 11, pp. 586-587.) The court in In re Marriage of Geraci (2006) 144 Cal.App.4th 1278, observes that a partnership is created where the parties' "actions and behavior demonstrate an intent to engage in business together." (Id. at p. 1292.) " 'The question of the existence of a partnership depends primarily upon the intention of the parties ascertained from the terms of the agreement and from the surrounding circumstances. [Citations.] Ordinarily the existence of a partnership is evidenced by the right of the respective parties to participate in the profits and losses and in the management of the business. [Citations.]  . . .  It is the intent to do the things which constitute a partnership that usually determines whether or not that relation exists between the parties. [Citation.]' " (Id. at pp. 1292-1293.)



Before applying these criteria, we turn to the cross-complaint issues that the court resolved before Phase II of the trial began.



C. Denial of Leave to File Cross-Complaint



For reasons that are similar to his attacks on the statements of decision, Chodur argues the denial of his motion to file a cross-complaint was an abuse of discretion. He argues that motions for leave to file a claim should be liberally construed and his motion, brought about a year after the first tentative decision was issued, should not have been deemed to be untimely. He is correct that "[a] policy of liberal construction of [Code Civ. Proc.] section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith." (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99 (Silver).) Such a finding of bad faith must be supported by substantial evidence. (Ibid.; also see Gherman v. Colburn (1977) 72 Cal.App.3d 544, 559 (Gherman).) On review, an appellate court should consider all of the circumstances that surrounded the motion to file a cross-complaint. (Silver, supra, at pp. 99-100.)



On this record, we think that the trial court's conclusion that Chodur was acting in bad faith in this respect is well supported by substantial evidence. At the time this motion was brought, the trial court had already made its finding of a joint venture, based upon the evidence of the dealings between the parties. The nature of the credits to be allowed for expenses incurred by the parties was to be addressed during the accounting phase of the proceedings, according to the ruling at the status conference. It is a fair reading of the proposed cross-complaint that it continues to challenge the existence of the alleged joint venture, and goes well beyond the affirmative defenses already pled (e.g., estoppel and unclean hands). It amounted to allegations that Chodur, as one partner, should be able to exclude the other, repudiating "the very existence of the partnership and convert[ing] all of the partnership assets. . . ." (Gherman, supra, 72 Cal.App.3d 544, 557-558).



Moreover, not all of the indicia of bad faith by Chodur had to be found, such as "dishonest purpose, moral obliquity, sinister motive, furtive design or ill will." (Silver, supra, 217 Cal.App.3d 94, 100.) The court could have instead found, appropriately, that Chodur's efforts to challenge, through a back-door proceeding, the same issues that had previously been thrashed out at trial on the merits, where both parties were heard, amounted to a bad faith attempt to undo findings already made. The proposed filing was legally indefensible and was antithetical to judicial economy. The trial court did not abuse its discretion in denying the motion to file the cross-complaint, because there is substantial evidence that the motion was brought in bad faith.



D. Merits of Reimbursement Arguments



We turn to an analysis of the evidentiary support for the trial court's findings about the nature of the parties' contributions to the joint venture, and the reimbursements ordered. The terms of the joint venture agreement were never written down, and could only be demonstrated by the parties' behavior. (Nelson, supra, 29 Cal.2d 745, 750.) These parties did not have well defined divisions of labor. As the finder of fact, the court essentially impliedly found that the agreement required the parties to make any appropriate contributions that were necessary to carry forward the projects. Both parties had essential skills for such projects, whether property management, construction and/or development know how. The court interpreted the testimony about the parties' different versions of their dealings with each other, which spanned a long period of time and many professional activities, and the court expressly found that Behne's version was more credible and was supported by the documentation.



The court next impliedly found that Chodur had wrongfully repudiated or breached the agreement and failed to comply with his obligations. (See Gherman, supra, 72 Cal.App.3d 544, 567.) Chodur's arguments that he only intended to make certain types of contributions were impliedly rejected by the court, as were his arguments that he made different categories of contributions that were entitled to different accounting treatment. Here, as in Gherman, "[w]e cannot embrace appellants' argument without redeciding an issue of fact which we have no power to do." (Ibid.)



Instead, the resolution of the facts by the trial court was that the dealings between the parties exhibited the essential characteristics of a joint venture set forth in Nelson, supra, 29 Cal.2d at page 749, and April Enterprises,supra, 147 Cal.App.3d at page 819. They were pursuing common business and must have impliedly agreed to share profits and losses, as well as control. (Ibid.) They intended to accomplish the business of the joint venture by doing the necessary work and funding, as they were able to do. (See In re Marriage of Geraci, supra, 144 Cal.App.4th at pp. 1292-1293.) In assessing the nature of the different kinds of contributions made by each party, the court had substantial evidence to determine that each was to contribute either services or capital, as appropriate to meet the ordinary demands of the planning, construction, development, and financing processes involved. "When a trial court's factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination . . . ." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, italics omitted.)



The court's conclusions were drawn from the evidence of the parties' course of dealing and conduct over a period of years. The evidence here substantially supported the conclusion that the parties did not intend a borrower-lender relationship. We accordingly conclude that the trial court correctly rejected any theory that there was an express agreement, or agreement to be implied as a matter of fact from the conduct of the parties, that only certain types of contributions were to be made by the parties, or that Chodur's contributions were to be valued more highly, within the standards of section 16401, subdivision (a). Chodur cannot show that there was evidence to support his claims for an award of interest on the contributions he made, nor that his claims for an additional "contractor's profit" were valid (35 percent markup). (16401, subd. (e).) Rather, the record demonstrates that the various types of contributions the parties made were all contemplated to be within the scope of their original agreement, no special types of credits were intended, and neither party was exempt from the 50-50 net proceeds division. The trial court gave the parties a complete hearing, and its final decision correctly analyzed and adopted the accounting findings of the referee, with appropriate adjustments under all the circumstances.



III



COSTS AND FEES



A. Standard of Review



Where items claimed in a memorandum of costs appear, on their face, to be proper charges, the memorandum is prima facie evidence of their propriety, and the burden is on the party seeking to tax costs to show they were unreasonable or unnecessary. (Ladas v. CaliforniaState Auto. Ass'n (1993) 19 Cal.App.4th 761, 774.) Whether a cost item is " ' "reasonably necessary to the conduct of the litigation" is a question of fact for the trial court, whose decision will be reviewed for abuse of discretion. [Citations.]' " (Baker-Hoey v. Lockheed Martin Corp. (2003) 111 Cal.App.4th 592, 605; El Dorado Meat Co. v. Yosemite Meat and Locker Service, Inc. (2007) 150 Cal.App.4th 612, 617.) "[I]t is not enough for the losing party to attack submitted costs by arguing that he thinks the costs were not necessary or reasonable. Rather, the losing party has the burden to present evidence and prove that the claimed costs are not recoverable." (Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1557.)



An appellate court does not disturb discretionary rulings of the trial court, unless the appellant can demonstrate a clear abuse of discretion amounting to a miscarriage of justice. (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.) Abuse of discretion " 'implies . . . capricious disposition or whimsical thinking.' " (In re Cortez (1971) 6 Cal.3d 78, 85.) Discretion is abused only where it appears that the trial court "exceed[ed] the bounds of reason, all of the circumstances before it being considered." (Loomis v. Loomis (1960) 181 Cal.App.2d 345, 348.)



B. Analysis



In its order, the court determined that Behne was the prevailing party in this case and entitled to her costs of suit under Code of Civil Procedure section 1032. Costs recoverable under this statute are restricted to those that are both reasonable in amount and reasonably necessary to the conduct of the litigation. (Code Civ. Proc.,  1033.5, subd. (c)(2), (3).) Under that section, allowable costs may include fees of expert witnesses ordered by the court, and transcripts of court proceedings ordered by the court. (Code Civ. Proc.,  1033.5, subd. (a)(8), (9).)



Chodur contends that it was an abuse of discretion to award Behne costs representing her share of the referee's fees, amounting to $38,220. He also challenges the reporter's fees award of $646 (apparently for the deposition of Chodur or the referee), as not shown to be incurred pursuant to a court order. He also complains about the $90 in costs associated with the codefendant, Warburton (a motion fee for Behne's motion to tax her costs, and a service fee on Warburton).



First, we conclude that the trial court was justified in allowing the referee's fees as costs. The referee was appointed for his expertise necessary to resolve this dispute, as the court correctly determined under Code of Civil Procedure section 639, subdivision (a). It is well established that fees for payment of a court appointed assistant necessary for the conduct of civil litigation, including an accountant, may constitute statutory costs to be awarded to the prevailing party. An "entire referee's fee will, like other recoverable costs, be borne by the losing party. (Most Worshipful Lodge v. Sons etc. Lodge (1956) 140 Cal.App.2d 833, 835.)" (DeBlase v. Superior Court (1996) 41 Cal.App.4th 1279, 1285; Estrin v. Fromsky (1942) 53 Cal.App.2d 253, 255 [accountant].)



Also, Code of Civil Procedure section 1033.5, subdivision (c)(4) allows the court discretion to award costs items not mentioned in the section. Such fees need not be defined as those of court appointed "experts" under Code of Civil Procedure section 1033.5, subdivision (a)(8). (ABC Egg Ranch, Inc. v. Abdelnour (1963) 223 Cal.App.2d 12, 19, abrogated on other grounds in Weiner v. Fleischman (1991) 54 Cal.3d 476, 485; Estrin v. Fromsky, 53 Cal.App.2d at p. 255.) There is nothing in the sections that otherwise provide for the parties to agree upon a referee's fees, where possible, that would controvert the propriety of this costs award. (Code Civ. Proc.,  1023, 645.1.)



With respect to the award of reporter's fees, Chodur contends that Behne failed to show they were proper, as court ordered. However, the court found that all the costs she sought appeared proper under Code of Civil Procedure section 1033.5, "and are both reasonable in amount and reasonably necessary to the conduct of the litigation, especially considering the litigious nature of this action and Defendant's consistent failure to cooperate with court orders regarding the provision of accounting documents to the referee. Therefore, Defendant has the burden of showing that Plaintiff is not entitled to the claimed costs or the claimed costs were not reasonable or necessary. Defendant has failed to meet that burden, and thus the Motion is denied." There is nothing in the record to show this ruling was incorrect.



Finally, we agree with Chodur that since Warburton had obtained her own costs award as a prevailing party, Behne should not be able to recover a motion fee or service fee associated only with Warburton, at this time, from Warburton's husband Chodur. We will strike those costs but affirm the remainder of the judgment and orders as so modified.



DISPOSITION



The $90 cost item attributable to codefendant Warburton is stricken, and as so modified, the judgment and orders are affirmed. The trial court shall prepare an amended judgment. Costs on appeal are awarded to respondent.





HUFFMAN, J.



WE CONCUR:





BENKE, Acting P. J.





McINTYRE, J.



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[1] Defendant Rosalyn Warburton is Chodur's wife. She obtained judgment in her favor pursuant to Code of Civil Procedure section 631.8 after trial, and the court issued a separate judgment for her costs; see part III, post. Certain artificial entities named as defendants played no material part at trial, as will be further explained.





Description Plaintiff and respondent Barbara Behne (Behne) and defendant and appellant Philip Chodur (Chodur) are siblings who worked together for many years on various business and development projects. This action involves a dispute over two particular business arrangements between them, beginning in 1992, to develop two separate parcels of real property (the projects). Behne acted as a real estate agent and Chodur as a real estate developer, and each party performed various services and contributed funds in various forms toward completion of the projects.
Moreover, there was no abuse of discretion in the denial of leave to file the cross-complaint, and the trial court did not err in its cost awards, with one exception to be explained, regarding costs attributable to the codefendant, Warburton. Court strike that $90 cost item, and as so modified, the judgment and orders are affirmed.


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