Ramon> >Canyon> Assocs. v.
Cunningham





















Filed 5/1313 Ramon Canyon Assocs. v. Cunningham CA4/3





















NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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.





IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA



FOURTH APPELLATE
DISTRICT



DIVISION THREE




>

RAMON CANYON ASSOCIATES, Plaintiff and Appellant, v. TODD S. CUNNINGHAM, Defendant and Respondent.

G046568 (Super. Ct. No. 30-2010-00354568) O P I N I O N

Appeal from a judgment
and orders of the Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Orange
County, Luis A. Rodriguez, Judge. Affirmed.

Lee G. Werner; Mohammed
K. Ghods and William Stahr, for Plaintiff and Appellant.

Strickroth & Parker,
Michael J. Strickroth and Margaret M. Parker, for Defendant and Respondent.

>INTRODUCTION

The
lawsuit underlying this appeal was brought by Ramon Canyon Associates, L.P., a
limited partnership, against Todd Cunningham.
Ramon Canyon
sued Cunningham for fraud, breach of contract, and breach of fiduciary
duty. After the parties had rested, the
trial court granted Cunningham’s motion for nonsuit on fraud and directed a
verdict on breach of fiduciary duty. The
jury returned a defense verdict on the breach of contract claim, the sole cause
of action submitted to it.

Ramon
Canyon appeals from the nonsuit and
the directed verdict. It also disagrees
with the special verdict approved by the trial court. Finally, Ramon
Canyon appeals from the denial of
its motion for new trial.

We affirm. The nonsuit and directed verdict motions were
properly granted; Ramon Canyon
did not present the evidence necessary to support the fraud or breach of fiduciary
duty claims. As to the special verdict,
the court properly overruled the objection Ramon
Canyon made at trial; the objection
to the verdict it is making on appeal was not made in the trial court. Finally, although the trial court erroneously
denied the new trial motion as untimely, the motion was, in fact, properly
denied.

FACTS

Appellant
Ramon Canyon
Associates develops service station properties. Ramon
Canyon’s general partner is CRD
Interests, Inc., a corporation wholly owned by Michael Geyer, who testified for
Ramon Canyon
at trial. In May 2005, Ramon
Canyon sold a car wash, and Geyer
was looking to avoid paying taxes on a gain of $940,000 by making a “1031
exchange.”href="#_ftn1" name="_ftnref1" title="">[1]

Cunningham is a real
estate developer. He operates his
business mainly through limited liability companies. Each development project prompts the
formation of a separate limited liability company, in which one of Cunningham’s
other entities and, generally, a financial partner participate. The limited liability company involved in
this case is Wynfield, LLC.

Geyer contacted
Cunningham, whom he had known for many years and with whom he had done business
once before, to see whether Cunningham knew of any suitable properties for a
1031 exchange. As it happened, Wynfield,
LLC, one of Cunningham’s real estate limited liability companies, was
developing a housing tract in Murrieta.
In mid-2005, Geyer arranged for Ramon
Canyon to exchange the money from
the car wash sale for two of the four model homes in that tract.href="#_ftn2" name="_ftnref2" title="">[2] Ramon
Canyon paid just over $1 million
for one house and approximately $1.2 million for the other.

Wynfield,
LLC, then leased the homes from Ramon
Canyon to use as sales offices for
the development. At first there was a
written lease, but after the lease expired, one of the Cunningham entities
continued to pay Ramon Canyon
as a month-to-month tenant. Cunningham
anticipated that the project would be sold out by early 2007. Although the houses in the development had
sold well during the first two years, Cunningham began to see a change in the
market in late 2006/early 2007. By
September 2007, there were already some foreclosures in the Wynfield
tract. By March 2008, the foreclosures were
dragging down the prices of the remaining homes.

Wynfield, LLC, sold the last
homes in the development in 2008. It did
not sell Ramon Canyon’s
two model homes or offer them for sale. Ramon
Canyon received its last rent check
in April 2008, and Geyer was given to understand that the houses were now his
to deal with. After unsuccessfully
trying to sell the houses, Ramon Canyon
found tenants for them in November 2008.
At the time of trial, Ramon Canyon
was leasing out the houses.

The lawsuit centers on
what kind of deal Ramon Canyon
had with Cunningham. Geyer insisted that
the deal was a partnership. Ramon
Canyon would buy the two houses,
which Wynfield, LLC, would lease to use as offices while the sales were taking
place in the tract. The models would be
sold when the project was completed, with the partners participating in either
the profit or the loss on the sales.
Cunningham testified there was no partnership and no such deal. Ramon
Canyon bought the houses, and
Wynfield, LLC, leased them to use during the sales period. Wynfield, LLC, would sell the model homes if Ramon
Canyon asked it to do so after the
leases expired, but it was expecting to be paid something when the houses sold,
to compensate it for using its resources to maintain and market the properties.href="#_ftn3" name="_ftnref3" title="">[3] Any losses were Ramon
Canyon’s problem.

Ramon
Canyon sued Cunningham, Wynfield,
LLC, and Wynfield III, LLC,href="#_ftn4"
name="_ftnref4" title="">[4]
for breach of contract, breach of
fiduciary duty, fraudulent promise, and negligent misrepresentation. The entity defendants were dismissed after
the court granted their motion for summary judgment.

The case was tried to a
jury over six days. At the close of
evidence, the court granted a nonsuit as to the promissory fraud and negligent
misrepresentation causes of action and a directed verdict on the breach of
fiduciary cause of action. The breach of
contract cause of action went to the jury, which returned a defense
verdict. Judgment was entered on December 29, 2011.

Ramon
Canyon made a motion for a new
trial. The trial court erroneously
denied the motion as untimely.href="#_ftn5"
name="_ftnref5" title="">[5] The court later realized its mistake, vacated
its initial order, and purported to rule on the merits of the motion, but by
then the 60-day time limit of Code of Civil Procedure section 660 had expired.href="#_ftn6" name="_ftnref6" title="">[6]

Ramon
Canyon appeals from the orders
granting the directed verdict and the nonsuit.
It also appeals from the denial of its motion for new trial and from the
use of a special verdict it asserts confused the jury.

DISCUSSION

>I. Nonsuit
and Directed Verdict

> Code
of Civil Procedure section 581c, subdivision (a) permits a defendant to make a
motion for nonsuit after the plaintiff has completed its opening statement or
after it has presented its evidence to the jury. Code of Civil Procedure section 630,
subdivision (a), permits any party to move for a directed verdict after all
parties have presented their evidence to the jury. The criteria for deciding these motions are
the same. The court may not weigh the
evidence or consider the credibility of witnesses. Evidence favoring the non-moving party must
be accepted as true, all inferences must be drawn in the non-moving party’s
favor, and conflicting evidence must
be disregarded. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291
[nonsuit]; Wolf v. Walt Disney Pictures
& Television (2008) 162 Cal.App.4th 1107, 1119 [directed
verdict].) A mere “‘scintilla’” of
evidence is not enough to defeat the motion, however. The non-moving party must have presented substantial
evidence to create a conflict for the jury’s resolution. (Nally
v. Grace Community Church, supra, 47 Cal.3d at p. 291, quoting> 2 Witkin, Cal. Procedure (3d ed. 1985)
Trial, § 410, p. 413; Adams v. City
of Fremont (1998) 68 Cal.App.4th 243, 263 [same standard for nonsuit and
directed verdict].)

On appeal from a
nonsuit, we independently review the order, “evaluating the evidence in the
light most favorable to the plaintiff and resolving all presumptions,
inferences and doubts in his or her favor.
[Citations.] ‘Although a judgment
of nonsuit must not be reversed if plaintiff’s proof raises nothing more than
speculation, suspicion, or conjecture, reversal is warranted if there is “some
substance to plaintiff’s evidence upon which reasonable minds could differ. . .
.”’ [Citation.] In other words, ‘[i]f there is substantial
evidence to support [the plaintiff’s] claim, and if the state of the law also
supports the claim, we must reverse the judgment.’ [Citation.]” (Wolf
v. Walt Disney Pictures & Television, supra, 162 Cal.App.4th at pp.
1124-1125; see also Barnes, Crosby,
Fitzgerald & Zeman, LLP v. Ringler (2012) 212 Cal.App.4th 172,
179.) We use the same method to review
an order granting a directed verdict. (>Margolin v. Shemaria (2000) 85
Cal.App.4th 891, 895.)

A. Promissory Fraud

> The
elements of promissory fraud are a promise made without any intention of
performing it; intent to induce reliance; justifiable reliance; and resulting
damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638; see also Civ.
Code, § 1710, subd. (4).) Mere failure
to perform is not sufficient to establish promissory fraud. (Tenzer
v. Superscope (1985) 39 Cal.3d 18, 30.)

The court granted the
nonsuit on fraudulent promise in part because of the lack of any evidence of
intent not to perform. We agree with the
trial court. Even assuming that Ramon
Canyon and Cunningham had entered
into an agreement to share profits and losses when the model homes were sold, Ramon
Canyon presented no evidence to
establish Cunningham’s intent not to perform at the time he entered into the
agreement. The overwhelming evidence
showed that the event precipitating the abandonment of Ramon
Canyon’s model homes was the
housing market’s crash, which occurred two to three years after the purported
agreement. Ramon
Canyon presented no evidence to
establish any sinister intent on Cunningham’s part at the time Ramon
Canyon bought the homes in 2005.

B. Negligent Misrepresentation

> Negligent
misrepresentation is a form of deceit that does not require intent to deceive,
an indispensible element of other kinds of fraud. (Oakland
Raiders v. Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th
1175, 1184.) Negligent misrepresentation
is “[t]he assertion, as a fact, of that which is not true, by one who has no
reasonable ground for believing it to be true.”
(Civ. Code, § 1710, subd. (2).)
To state a cause of action for negligent misrepresentation, a plaintiff
must still allege facts establishing the other elements of fraud: a false statement of fact, justifiable
reliance, and resulting damages. (>Melican v. Regents of University of
California (2007) 151 Cal.App.4th 168, 181.) Moreover, the false statement must be one of
a past or existing material fact; not a promise or a prediction of something to
happen in the future. (>Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, 158.)

And the defendant must make a “‘positive
assertion’”; an implied assertion is not good enough. (Wilson
v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298, 306, quoting
Civ. Code, § 1572, subd. (2).)

The same insufficiencies
in the evidence of fraudulent promise are present here. Ramon Canyon presented no evidence of an
untrue statement of past or existing facts made without a reasonable ground for
believing it to be true when the homes were purchased or at any other
time. It also presented no evidence of
reliance on any such untrue statement.
The motion for nonsuit was correctly granted on the negligent
misrepresentation claim.

C. Breach of Fiduciary Duty

Whether Cunningham
breached a fiduciary duty depends first of all on whether he was Ramon Canyon’s
partner. The California Revised Uniform
Partnership Act defines a partnership as “an association of two or more persons
to carry on as coowners a business for profit . . . .” (Corp. Code, § 16101, subd. (9).)href="#_ftn7" name="_ftnref7" title="">[7] A partner unquestionably owes a fiduciary
duty to both the partnership and the other partners. (Corp. Code, § 16404.) Although it is not necessary for a
partnership to involve sharing profits (Holmes
v. Lerner (1999) 74 Cal.App.4th 442, 453-454), a person receiving a share
of the profits of a business is presumed to be a partner. (Corp. Code, § 16202, subd. (c)(2).) The question therefore becomes whether the
court could direct a verdict for the defendant on the issue of the existence of
a partnership.

We conclude the court
properly directed a verdict on this issue.
Ramon Canyon presented no evidence of any business of which it and
Cunningham were

co-owners.
Ramon Canyon’s evidence showed that it acquired two houses by means of a
1031 exchange and leased them to Wynfield, LLC, to use in marketing the homes
in the Murrieta project. Neither
Cunningham nor any of his entities shared ownership of the houses with Ramon
Canyon after the sale. Ramon Canyon was
not involved in selling homes, which was Wynfield, LLC’s business. Similarly, Cunningham was not involved in
Ramon Canyon’s gas station or car wash enterprises. Geyer testified that when the houses would
be sold was entirely up to Cunningham.
There was no business in which both Cunningham and Ramon Canyon could
participate as coowners. (See >Spier v. Lang (1935) 4 Cal.2d 711, 716
[joint participation in conduct of business essential element of
partnership].)

The
sole connection between Ramon Canyon and Cunningham was that Ramon Canyon owned
two houses leased to one of Cunningham’s entities. Ramon Canyon was Wynfield, LLC’s landlord,
not Cunningham’s partner.

II. Special Verdict

> The
trial court used a modified form of CACI’s special verdict form 303 – Breach of
Contract – Contract Formation at Issue.
The first question of the CACI special verdict form states, “Were the
contract terms clear enough so that the parties could understand what each was
required to do?” The special verdict
form used at trial modified the CACI form to insert the names of the parties
and made some minor alterations: “Were
the terms to the disputed oral contract clear enough so that Ramon Canyon
Associates, LP, and Todd Cunningham, an individual, could understand what each
was required to do?”href="#_ftn8"
name="_ftnref8" title="">[8]

Apparently the court and
counsel first discussed jury instructions and the special verdict form in
chambers, which discussion was not recorded.
On the record the court stated, “With regard to the verdict form, the
court will use and find appropriate applicable [sic] –as disputed – contested issue of disputed fact; specifically,
the use of special verdict 303, as set forth in CACI, and which addresses an
issue of contract formation as to the jury.”
The court then invited Ramon Canyon’s counsel to put the objections he
had made in chambers on the record.

Counsel stated, first,
that he had asked for a general verdict, which request the court had
denied. “Then the plaintiff also
objected to the modifications of – I believe it’s verdict form – special
verdict form 303. [¶] So plaintiff would submit that to simplify
it, rather than specifying the parties, if the instruction – if the verdict
form 303 is going to be used, that it should be used as written.” Counsel and the court then engaged in a
lengthy discussion about the wording of later questions in the form, a
discussion evidently caused by a mistake in transcribing from the CACI
book. This transcription error was
corrected before the verdict form went to the jury.

On appeal, Ramon Canyon
argues that form 303 confused the jury and that the form applies only “to those
cases with factual issues involving a written contract with ambiguous disputed
performance terms . . . .” Ramon Canyon
then argues that there was no evidence to support a contention that Cunningham
did not know what he was supposed to do under the contract. Finally, Ramon Canyon asserts it objected to
the use of the modified verdict form.

It is well settled that
a party must object to a verdict form in order to preserve the issue on
appeal. (Lynch v. Birdwell (1955) 44 Cal.2d 839, 851; Fransen v. Washington (1964) 229 Cal.App.2d 570, 574.) In this case, the only objection Ramon Canyon
made to the special verdict at trial was to the substitution of the names of
the parties for the word “parties” in the form from the book. It did not object on the ground the verdict
form was limited to written contracts.
It also did not object on the ground later questions were confusing; the
discussion about questions 4, 5, and 6 on the form in front of the court were
based on a mistake in transcription that was corrected. And, in any event, the jury did not answer
questions 4, 5, and 6 on the verdict form, so if the questions confused it, the
confusion could not have affected the outcome.


Whether a contract to
share profits and losses was formed was hotly contested at trial. Indeed, by the time the case reached the
jury, it was the fundamental question.
We cannot see how inserting the names of the parties could have confused
anyone, and we conclude the court correctly overruled Ramon Canyon’s objection
to substituting the names of the parties for “parties” in special verdict form
303.

III. Motion
for New Trial

Code of Civil Procedure
section 660 provides in pertinent part, “If such motion [for new trial] is not
determined within said period of 60 days, . . . the effect shall be a denial of
the motion without further order of the court.”
The court vacated its first, erroneous, order regarding Ramon Canyon’s
motion for new trial, but by that time its power to determine the motion had
expired. The effect is therefore a
denial of the motion without further order of the court. (See also Wenzoski
v. Central Banking System, Inc. (1987) 43 Cal.3d 539, 542 [order granting
or denying motion for new trial exhausts court’s jurisdiction].)

We review an order
denying a motion for a new trial for abuse of discretion, examining the entire
record to assess independently whether the motion should have been granted. (ABF
Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 832.) A trial court may grant a new trial for
insufficient evidence or inadequate damages only when, “after weighing the
evidence the court is convinced from the entire record, including reasonable
inferences therefrom, that . . . the jury clearly should have reached a
different verdict . . . .” (Code Civ.
Proc., § 657.)

The grounds upon which
Ramon Canyon moved for a new trial are the same as those upon which it appealed
– the granting of the nonsuit or directed verdict and the use of the special
verdict. It also moved for new trial on
substantial evidence grounds. (Code Civ.
Proc., § 657, subd. (6).)

We have already
subjected the nonsuit/directed verdict issue to a comprehensive review of the
record, and we do not find any error in denying a motion for new trial on these
grounds. After reviewing the record with
respect to the special verdict, we conclude the only objection Ramon Canyon
made in the trial court was properly overruled.
Finally, we do not think the trial court should have granted a new trial
on the basis of insufficient evidence to support the verdict. Geyer’s testimony regarding contract
formation was candid but weak. At one
point, he acknowledged that he was not sure Cunningham heard him when Geyer
asserted they would share both the profits and losses on the sale of the model
homes.href="#_ftn9" name="_ftnref9" title="">[9] At another point he told the jury he did not
know who Ramon Canyon’s partner was. The
lack of any formal documentation for a partnership involving over $2 million in
assets is also hard to get around. When
coupled with Cunningham’s testimony, the evidence to support a defense verdict
was clearly sufficient.

DISPOSITION

The judgment is
affirmed. Respondents are to recover
their costs on appeal.







BEDSWORTH,
J.



WE CONCUR:







O’LEARY, P.
J.







ARONSON, J.