Filed 10/5/26 Thai v. Tran CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
THOMAS THAI,
Plaintiff and Respondent, G065318
v. (Super. Ct. No. 30-2020-
01130155)
NEWTON TRAN,
OPINION
Defendant and Appellant.
Appeal from a judgment of the Superior Court of Orange County,
Gassia Apkarian, Judge. Affirmed.
Martin Adams, Joseph M. Adams and Julie A. Goerlinger for
Defendant and Appellant.
Lew Law Firm and Bill W. Lew for Plaintiff and Respondent.
* * *
Plaintiff Thomas Thai and defendant Newton Tran were partners
in a real estate venture concerning a shopping center. They entered into an
agreement to assign Thai’s interest in the venture to Tran. In the lawsuit
that followed, Thai alleged Tran misrepresented and concealed facts about
the anchor tenant. The jury agreed, finding in Thai’s favor and awarding
$116,854.40 in compensatory damages for intentional misrepresentation,
concealment and false promise causes of action. The jury also determined
that Tran acted with malice, oppression, or fraud and awarded $300,000 in
punitive damages.
Tran contends the trial court erred in several respects. His key
contention is that since the trial court granted him a directed verdict after
finding the parties reached an accord and satisfaction on respondent’s
contract claim, the fraud causes of action were extinguished. Finding none of
Tran’s contentions meritorious, we affirm the judgment.
STATEMENT OF FACTS AND PROCEDURAL HISTORY
Thai bought a 20.5 percent interest in the partnership named
Richmond City Center, L.P. (the Center) in 2012 as a limited partner, which
he understood to be a silent partner or an investor who does not make
business decisions.
The anchor tenant in the Center was Food 4 Less. In early 2019,
Thai told Tran he was considering selling his interest in the Center. Tran
was interested in buying Thai’s interest and the two reached an agreement.
Thai assigned his interest in the Center to Tran, and Tran agreed to pay Thai
$1,767,107.32 for that assignment. Tran signed a promissory note in April
2019 in which he agreed to make a payment toward the purchase of Thai’s
interest of the Center by September 30, 2019. The note could not be modified
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or amended except by written agreement. After the transaction between Thai
and Tran, Tran owned 91 percent of the Center.
A few months later, the Center’s agent/property manager, Ha
Mach, sent an e-mail to Thai: “‘Recently I received a letter from Food 4 Less
about their store in Richmond. They notified us that they found out that since
October 2013 until June 2019, they overpaid for their monthly base rent per
their lease agreement, monthly base rent would lower to $270,000 per
year . . . .’” The e-mail goes on: “Because you owned 20.5% most of the time
during this period until the end of March 2019, I need to calculate your
shares in this refund to F4L.” Thai was told: “Your share is . . . $116,854.40,”
and that his share was to be deducted from the amount Tran owed him for
sale of his interest in the Center. After Mach’s name at the bottom of the e-
mail, it states: “Agent for Richmond City Center, LP.” Handwritten at the top
of the exhibit is: “I broke the news about F4L requested RCC, LC to pay back
over payment of rents over the years.”
Tran testified he first learned in May or June of 2019 that Food 4
Less had been overpaying for its rent. He said that after Food 4 Less had
agreed to accept a certain amount from the Center for what it was owed,
Tran expected Thai to pay 20.5 percent of that amount.
Thai never agreed to a reduction in price. When the next
payment was made by Tran to Thai, the words “partial payment” were
written on the back of the check, which meant to Thai that the payment was
“part of the balance of the promissory note that he owe[d] [me].” Thai
testified he accepted the payment as partial payment toward his sale of his
interest in the Center.
With regard to Tran’s testimony he first knew that Food 4 Less
was overpaying for its rent in May or June 2019, Tran was impeached by a
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stipulation that was read to the jury. The stipulation concerned a lawsuit
against the former manager of the Center for embezzlement. That action was
filed and verified by Tran in 2017. The lawsuit stated that one of the Center’s
major tenants, Food Company, was overpaying its rent.1
Regarding the current action, the parties also stipulated that: “a.
Tran would pay the entire purchase price of $1,767,107.32. [¶] b. Tran would
pay the entire balance by September 30, 2019. [¶] c. Thai had zero percent
equity in the partnership after the assignment . . . .” They further stipulated
that after Food 4 Less was refunded its money, Tran notified Thai he owed
$116,854.40 less than the $1,767,107.32 agreed price.
The special verdict findings by a jury were that Tran made a
false representation to Thai, that he either knew the representation was false
or made it recklessly without regard for its truth and with the intention that
Thai reasonably rely on the representation. The jury also found that Thai
reasonably relied on Tran’s false representation and that Thai’s reliance was
a substantial factor is causing harm to Thai. The jury awarded damages to
Thai in the amount of $116,854.40. The jury also found Tran liable for the
same amount under theories of concealment and false promise.
The jury further found that Tran engaged in such conduct with
malice, oppression or fraud, and awarded Thai $300,000 in punitive damages.
DISCUSSION
I.
A. Accord and satisfaction
An accord and satisfaction requires there to be a bona fide
dispute, that the debtor sent a certain sum on the express condition that
1 It was later clarified that Food 4 Less is also known as Food
Company.
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acceptance of it constituted full payment and that the creditor fully
understood the transaction and accepted the sum. (In re the Marriage of
Thompson (1996) 41 Cal.App.4th 1049, 1055.)
1. Directed verdict
The trial court granted Tran’s motion for directed verdict as to
the causes of action for breach of written contract and breach of oral contract
based on an accord and satisfaction. He argues this ruling extinguished
Thai’s fraud claim.
Tran cites Fundin v. Chicago Pneumatic Tool Co. (1984) 152
Cal.App.3d 951, 956, to support his contention that a directed verdict on his
affirmative defense of accord and satisfaction was fatal to Thai’s fraud claim
as a matter of law. However, the issues in that case revolved around
identifying the parties to a contract and whether or not the entity that signed
the contract was an agent for the entity that did not sign it, issues that do not
relate to the instant case. It does not support Tran’s argument that a directed
verdict based on accord and satisfaction precludes a separate fraud claim.
Tran also cites Thompson v. Williams (1989) 211 Cal.App.3d 566,
to show that an accord and satisfaction resolves all claims between the
parties arising out of the contract that was satisfied. In that case: “The
parties ‘haggle[d]’ and ‘dickered’ over their respective positions, each side
moving a bit from their original offers and demands. Finally, Williams offered
$114,000 with the admonition that Thompson ‘take it or leave it,’ and that
‘the top is $114. If you don’t like it, sue me.’ Thompson accepted the $114,000
. . . ,” (id. at p. 570), and subsequently sued the other party for more money.
The Thompson court concluded that all of the “causes of action were premised
on the efficacy of his breach of contract claim.” (Id. at p. 576.) There was no
such compromise between the parties in the case before us. Nor was there a
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fraud claim in Thompson. (Id. at p. 573 [“There was nothing presented to the
trial court to demonstrate that the dispute between the parties here was
fraudulent”].)
Here, Tran has not shown evidence that the circumstances
surrounding the transactions between Tran and Thai support an inference
that Thai’s acceptance of a partial payment of what was due to him under the
contract was intended to compromise his fraud claim.
2. Commercial Code section 3311
Tran argues that under the Commercial Code section 3311,
subdivision (a), “[t]he UCC’s accord and satisfaction provisions apply to any
claim [citation], including a tort claim.” But that section requires that a
person must be acting in good faith when an instrument is tendered. (Com.
Code, § 3311, subd. (a).) Here, the jury found Tran made a false
representation and knew the representation was false or made it recklessly
without regard for its truth and with the intention that Thai reasonably rely
on the representation. Based on the evidence in this record, Tran knew that
money was due and owing to Food 4 Less for overpaying its rent when he
agreed to purchase Thai’s interest in the Center. Thus, the jury could
reasonably infer Tran did not act in good faith when he later informed Thai
the value of the Center was less than the agreed price and that Thai was
responsible for the 20.5 percent of what Tran contended was its lessened
value.
3. Waiver
Tran next contends that under the holding in Oakland Raiders v.
Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th 1175, Thai
waived his fraud claim when he accepted partial payment. The Oakland case
states that “‘“the pivotal issue in a claim of waiver is the intention of the
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party who allegedly relinquished the known legal right.”’” (Oakland Raiders,
supra, at p. 1190.) However, under the facts in the record before us, there is
no indication Thai intended to relinquish anything. He simply accepted part
of the payment due him.
Tran also cites Schmidt v. Mesmer (1897) 116 Cal. 267,
contending that Thai waived his fraud claim when he accepted partial
payment. The gist of the allegation in Schmidt was that the defendant
misrepresented the income of a hotel the year preceding his lease of the hotel
to plaintiff. The plaintiff went on with the contract for over a year, asked for
and received favors with regards to paying rents, and then sued the
defendant for fraud in the inducement. The Schmidt court held that
plaintiff’s acts constituted a waiver of the alleged fraud. (Schmidt, at pp. 268,
272.) Schmidt was disapproved by Bagdasarian v. Gragnon (1948) 31 Cal. 2d
744, 751, wherein the California Supreme Court said: “We think it unjust and
unreasonable to hold as a matter of law that the mere asking of a favor
should deprive an innocent person of rights arising from an unquestionably
fraudulent act, and we therefore disapprove of the language in Schmidt . . . .”
Regardless, Schmidt does not apply here since Thai did not seek new
concessions for favors.
We do not find Thai waived his fraud claim when he accepted
partial payment.
4. Judgment notwithstanding the verdict
Tran contends the trial court erred in denying his motion for
judgment notwithstanding the verdict. But after mentioning general
principles regarding such a motion, Tran does not explain either the alleged
error or cite to the part of the record where it supposedly occurred. (Cal.
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Rules of Court, rule 8.204 (a)(1)(B).) Accordingly, we find Tran forfeited this
argument.
B. Economic loss rule
“The economic loss rule is a device, among others, that courts
have developed to address and protect the often elusive boundary line
between tort and contract law.” (Rattagan v. Uber Technologies, Inc. (2024)
17 Cal.5th 1, 19 (Rattagan).) “‘Whereas contract actions are created to enforce
the intentions of the parties to the agreement, tort law is primarily designed
to vindicate “social policy.”’” (Ibid.) “‘“The law imposes the obligation that
‘every person is bound without contract to abstain from injuring the person or
property of another, or infringing upon any of his rights.’ [Citation.] This duty
is independent of the contract. . . .”’” (Ibid.)
“As a result of this distinction between contract and tort claims,
parties injured solely by a contractual breach have a narrower set of remedies
compared to those available to litigants who suffered tortious injury.
‘Contract damages are generally limited to those within the contemplation of
the parties when the contract was entered into or at least reasonably
foreseeable by them at that time; consequential damages beyond the
expectations of the parties are not recoverable. [Citations.] This limitation on
available damages serves to encourage contractual relations and commercial
activity by enabling parties to estimate in advance the financial risks of their
enterprise.’” (Rattagan, supra, 17 Cal.5th at pp. 19–20.) The damages
available in tort and contract are also different. Emotional distress and
punitive damages are allowed in tort actions, but are not allowed in contract
actions. (Id. at p. 20.)
Under the economic loss rule, “[i]f the alleged breach is based on
a failure to perform as the contract provides, and the parties reasonably
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anticipated and allocated the risks associated with the breach, the cause of
action will generally sound only in contract because a breach deprives an
injured party of a benefit it bargained for. However, if the contract reveals
the consequences were not reasonably contemplated when the contract was
entered and the duty to avoid causing such a harm has an independent
statutory or public policy basis, exclusive of the contract, tort liability may
lie.” (Rattagan, supra, 17 Cal.5th at p. 27.) “A plaintiff may assert a
fraudulent concealment cause of action based on conduct occurring in the
course of a contractual relationship if the elements of the claim can be
established independently of the parties’ contractual rights and obligations,
and the tortious conduct exposes the plaintiff to a risk of harm beyond the
reasonable contemplation of the parties when they entered into the contract.”
(Id. at p. 13.)
In Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th
979, 984, the California Supreme Court was called upon to decide whether
the economic loss rule “applies to claims for intentional misrepresentation or
fraud in the performance of a contract.” In that case, the defendant had
transmitted to the plaintiff false certificates of compliance about the products
involved in the contract. The Supreme Court stated the defendant denied the
plaintiff the opportunity to refuse to accept nonconforming orders, holding
the economic loss rule did not apply under such circumstances. (Id. at pp.
993–994.)
Here, there is also a clear distinction between the breach of
contract claim and the fraud. In the fraud counts, Thai proved that Tran
withheld important information from him when the contract was entered.
Tran knew that Food 4 Less had overpaid its rent for years and was due a
refund. He kept that information from Thai. Thus, under this record, the jury
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could have reasonably inferred that Tran intended to pocket future
overpayments had Food 4 Less not discovered the overpayments. The jury
could have also reasonably inferred that Tran entered his agreement with
Thai with the intent of later deducting 20.5 percent of any refund due Food 4
Less from what he owed Thai. The end result was that, similar to the
situation in Robinson, Tran denied Thai the opportunity to enter into (or
decline to enter into) the agreement with Tran with full knowledge of the
concealed facts.
Additionally, partnership is a fiduciary relationship. “[P]artners
are held to the standards and duties of a trustee in their dealings with each
other. . . . [I]n all proceedings connected with the conduct of the partnership
every partner is bound to act in the highest good faith.” (Bardis v. Oates
(2004) 119 Cal.App.4th 1, 12.) Tran’s concealment of the overpayment of rent
by the anchor tenant was not conduct in the highest good faith owed to a
partner. Accordingly, the economic loss rule does not apply here.
C. Damages
Tran also contends the trial court erred in instructing the jury
about damages. He argues: “Instructing the jury on expectation damages was
contrary to and expressly prohibited by the plain, unambiguous language of
[Civil Code] Section 3343 (b)(1).” That section states: “Nothing in this section
shall do . . . the following: [¶] (1) Permit the defrauded person to recover any
amount measured by the difference between the value of property as
represented and the actual value thereof.” (Civ. Code, § 3343, subd. (b)(1).)
The fact that the amount sought both under the contract and for fraud were
the same does not detract from the fact that breach of contract and fraud are
separate and different causes of action. Tort damages are permitted when a
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contract was fraudulently induced. (Robinson Helicopter v. Dana Corporation,
supra, 34 Cal.4th at pp. 989–990.)
D. Jury instruction
Tran contends the trial court erred in not instructing the jury
that the promissory note had been extinguished by accord and satisfaction.
The instruction he requested reads: “In this case, it has been conclusively
established that Thomas Thai and Newton Tran entered into an accord and
satisfaction regarding the promissory note. [¶] The effect of this accord and
satisfaction is that the promissory note is extinguished and there is no
remaining balance owed by Newton Tran to Thomas Thai on the promissory
note.”
However, while Tran states in his opening brief that the trial
court rejected this requested instruction, he does not cite to where in the
reporter’s transcript that rejection occurred. Thus, we don’t know what, if
anything, the trial court considered in allegedly rejecting this instruction.
Nor do we know if Tran explained to the trial court if and how he would be
prejudiced if the instruction were not given because no citation to the record
on this point was given. An erroneous jury instruction does not warrant
reversal unless it caused actual prejudice. (Soule v. General Motors Corp.
(1994) 8 Cal.4th 548, 556.)
A party must cite to the record showing exactly where an
objection or argument was made. “[A]n appellate court need not search
through the record in an effort to discover [a] point purportedly made.” (In re
S.C. (2006) 138 Cal.App.4th 396, 406–407.) We deem this argument forfeited.
We conclude that even were we to find the court erred in not
instructing the jury there was an accord and satisfaction, and we do not make
that finding, Tran has not shown there was a miscarriage of justice by that
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alleged error. “No judgment shall be set aside, or new trial granted, in any
cause, on the ground of misdirection of the jury, or of the improper admission
or rejection of evidence, or for any error as to any matter of pleading, or for
any error as to any matter of procedure, unless, after an examination of the
entire cause, including the evidence, the court shall be of the opinion that the
error complained of has resulted in a miscarriage of justice.” (Cal. Const., art.
VI, § 13.)
E. Punitive damages
Tran also contends punitive damages were not justified in this
case. He argues Thai failed to prove by clear and convincing evidence that
Tran was guilty of malice, oppression or fraud.
“In an action for the breach of an obligation not arising from
contract, where it is proven by clear and convincing evidence that the
defendant has been guilty of oppression, fraud, or malice, the plaintiff, in
addition to the actual damages, may recover damages for the sake of example
and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).)
In Conservatorship of O.B. (2020) 9 Cal.5th 989, 995, the
California Supreme Court granted review in order to clarify how an appellate
court is to review the sufficiency of the evidence associated with a finding
made by the trier of fact pursuant to the clear and convincing standard. The
Supreme Court concluded that “when reviewing a finding that a fact has been
proved by clear and convincing evidence, the question before the appellate
court is whether the record as a whole contains substantial evidence from
which a reasonable fact finder could have found it highly probable that the
fact was true.” (Id. at pp. 995–996.)
Tran testified he first learned in May or June of 2019 that Food 4
Less had been overpaying for its rent. As noted above, the evidence permitted
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the jury to infer that Tran’s knowledge of Food 4 Less’s overpayments had
been known by Tran since 2017 when he verified a complaint that accused a
former property manager of overcharging Food 4 Less and stealing the
overage. That was two years before Thai and Tran’s agreement. There was
also evidence from which the jury could conclude Tran concealed knowledge
of the overpayments in order to profit from them. But once Food 4 Less
demanded compensation for overpaying its rent, the jury could reasonably
infer Tran had at first concealed those overpayments from Thai and then
later tried to pressure Thai into contributing toward compensating Food 4
Less.
Thus, applying the standard set forth in Conservatorship of O.B.,
we conclude that the record as a whole contains substantial evidence from
which the jury could find it highly probable that Tran acted with malice,
oppression, or fraud.
DISPOSITION
The judgment is affirmed. Thai is entitled to his costs on this
appeal.
MOORE, J.
WE CONCUR:
MOTOIKE, P. J.
GOODING, J.
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