McCausland v. Spencer’s Manufactured
Housing
Filed 8/14/12 McCausland v. Spencer’s Manufactured Housing
CA2/5
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
CONNIE McCAUSLAND,
Plaintiff and Respondent,
v.
SPENCER'S MANUFACTURED HOUSING,
INC.,
Defendant and Appellant.
B233165
(Los Angeles County
Super. Ct. No. KC054260)
APPEAL from
a judgment of the Superior Court of
County.
Robert A. Dukes, Judge.
Affirmed.
Cole
Pedroza, Curtis A. Cole, Cassidy E. Cole; West & Miyamoto, Ian Corzine for
Defendant and Appellant.
Connie
McCausland, in pro. per., for Plaintiff and Respondent.
_______________
Spencer's Manufactured Housing, Inc. appeals from a
judgment entered in favor of respondent Connie McCausland, on her
complaint. We affirm.
Facts
In November
2005, McCausland bought a mobile home from appellant (now known as Community
Manufactured Home Sales) which was also responsible for the installation of the
home in the mobile home park.
McCausland's
evidence was that from the outset the home had a number of problems, which she
brought to appellant's attention.
Attempts to remedy the problems were unsatisfactory, and on August 24,
2006, by letter, she asked to rescind the contract. The request was unsuccessful, and she filed this
lawsuit against appellant and other defendants, seeking rescission and other
damages.
McCausland
moved to have the court try the equitable issue of rescission (as to appellant
only) first, to the court. The court
granted the motion.
After that
trial, the court granted rescission of the sales contract, finding a
"substantial failure of consideration."
McCausland
had presented evidence that appellant had not properly graded the lot,
resulting in water migrating to the area under the home, raising concerns about
erosion, instability, and mold, and voiding the warranty. She also presented evidence that the water
under the home had resulted in differential settlement (that is, one part of
the home settled more than other parts), causing cracks in the drywall and in
the "marriage beam" which tied the two parts of the home together,
making windows and doors difficult to open and close, and creating other
problems. She presented evidence that
this differential settlement would continue in the future.
In finding
failure of consideration, the court found that the grading was improper and
that water had and continued to migrate under the home. The court did not find "extensive major
subsidence at this time . . ." but also found that the crack along the marriage
line was substantial and was based on subsidence under the home, and that
appellant's attempts to fix the crack with a cosmetic fix were "of great
concern to the court."
McCausland
had presented evidence that the sewer line did not have the correct pitch, so
that the plumbing backed up. Indeed,
McCausland testified that she had to use the plunger in the master bathroom's
toilet every day, if not twice a day. In
finding failure of consideration the court cited that evidence, too, finding
McCausland credible in her testimony and that the defect was a substantial
defect.
The court
also found that much of the construction was done without permits, and found
other problems.
The court
found, "The purpose of the contract was, from Ms. McCausland's standpoint,
to obtain a manufactured home that was in a safe and sound condition, properly
installed, substantially free of defects, and complying with all codes. [¶] She
received much less than that. It was not
substantially free of defects. It is
still not substantially free of defects.
It did not comply with all the codes.
In fact, it didn't comply with most of the codes at the time of its
installation."
The court
ordered McCausland to deposit with the clerk all executed documents necessary
to transfer title to appellant and to quit the premises. The court also ruled that the consideration
failed at the moment McCausland moved into the mobile home, and that she was
entitled to be put back in the position she would have been, prior to moving
in. Thus, "in order to make
McCausland whole and restore McCausland to her former position consistent with
equitable considerations," McCausland was awarded her $206,128 purchase
cost, $37,104 in space rent, $4,506 she had paid in insurance, and $5,442 she
had paid in property taxes. She was also
awarded prejudgment interest from the time of her demand for rescission.
McCausland's
post-trial request for a jury trial on additional damages was denied.
proceed on rescission, and having been successful in that claim, McCausland no
longer had the right to seek damages.
Discussion
1. Right to a jury trial
Appellant
first contends that it was entitled to a jury trial on rescission. Our review of the court's decision to try
rescission to the court is de novo. (
v. Offner (2005) 126 Cal.App.4th 12, 23.)
Legally,
appellant relies on the rule that determining whether an action for
rescission is legal or equitable "depends in
large measure upon the mode of relief to be afforded," as
"ascertained from the gist of the action as framed by the pleadings and
the facts in the case" (Paularena
v. Superior Court (1965) 231 Cal.App.2d 906, 911) and that where the equitable relief sought is "merely incidental
to the recovery of a money judgment," the action is one at law. (Id.
at p. 914.)
None
of that authority establishes that appellant was entitled to a jury trial here.
First, appellant did not really ask for a jury trial. During oral argument on McCausland's motion
to try rescission to the court, the court informed counsel that it was inclined
to grant the motion. Appellant's counsel
said, "I like your suggestion," but asked for additional time to
research the issue and to talk to his client to see whether the client would
stipulate to the court trial. The court
did not grant the request for more time, noting that a stipulation was not
necessary, but we cannot see that appellant truly opposed the motion.
Further,
we do not see that the court's ruling was in error. It is true that, as appellant argues, after
the court granted rescission, McCausland sought damages to repair the mobile
home, but the court found that McCausland had elected to proceed in equity and
could not additionally seek compensatory
damages and denied the request. The
court's initial decision to hold a court trial on rescission cannot have been
rendered erroneous by McCausland's later, unsuccessful attempt to obtain
additional damages.
It
is also true that the complaint sought a variety of damages, but again, we do
not see that that fact means that the action was other than equitable. In determining whether an action is
essentially one in equity, the prayer for relief is not conclusive and the fact
that damages is one of many possible remedies does not guarantee the right to a
jury.
(C & K Engineering
Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 9.)
Nor do we see that the equitable damages were "merely
incidental" to a money judgment.
Instead, McCausland sought rescission, and only later attempted to
supplement the rescission with a money judgment.
Appellant
also cites the rule that "a rescinding plaintiff who does seek to recover
money paid as consideration for a contract may not deprive the defendant of a
jury trial merely by framing the complaint as an action in equity asking for
judicial rescission." (
152 Cal.App.4th 954, 963.) That is not what happened here.
The
issue at the trial was purely equitable, and appellant was not entitled to a
jury trial.
2. Sufficiency of the evidence
Appellant
next contends that the evidence did not support the judgment, because there was
no evidence of differential settlement.
McCausland's
expert, Christopher Krall, testified that through testing and observation, he
concluded that grading problems meant that water collected underneath the
house, that that condition caused differential settlement, and that
differential settlement caused cracks in walls and ceilings, and that he
observed such cracks in McCausland's home.
Other witnesses confirmed the existence of grading problems, and the
existence of cracks in the home. This is
sufficient to support the judgment.
Appellant's
reliance on a statement made by Krall on cross-examination is misplaced. In the cited portion of his testimony, he
said that "my conclusion is that those increased moisture conditions
underneath the home are impacting the support of the home at least in part and
creating the potential for this differential settlement. And that's evidenced by the cracking in the
home. [¶] So it appears that a portion of this home, most likely the northeast
corner . . . is impacted by settlement, and that's causing the distress that we
see in the structure of the home."
This, along with the rest of his testimony, is not a mere statement that
differential settlement might occur at some point in the future, but is
evidence that the mobile home was affected by differential settlement.
Appellant
also cites its own expert's testimony that there was no differential
settlement, and the evidence that McCausland's mobile home and its installation
passed inspection. However, on a substantial evidence review, our power as an appellate
court "
Bernards (1984) 150 Cal.App.3d 870, 873–874.) The fact that the appellant's expert
disagreed is of no moment. We say the
same about the evidence that the home passed inspection, particularly because
the inspector was a defense witness at trial, and the court found that although
the inspector was credible, his inspection was by sight, not by measurement.
Appellant
also cites Murphy
v. Sheftel (1932) 121 Cal.App. 533, for the
proposition that "where the defect is not such a
failure to perform as renders the performance of the rest of the contract a
thing different in substance from what was contracted for, and the loss
occasioned is capable of compensation in damages, there is a substantial
performance [citations]." (
expert that the defects proven at the trial court could have been addressed
with an award of the cost of repair, and contends that rescission was not
appropriate. Murphy also held that "The defects must not be so essential as
to substantially defeat the object which the parties intended to accomplish; and
whether defects or omissions are substantial is generally a question of
fact." (Ibid.) The trial court was
the finder of fact here, and on the evidence presented by McCausland, found that
the defects did render the sales contract "a thing different in substance
from what was contracted for."
3. Damages
Appellant
argues that the damages were excessive in three ways, contending that the court
failed to award it a set off for the five years in which McCausland lived in
the home, that the award of damages for rent, insurance, and property taxes was
improper because it did not cause those damages, and that prejudgment interest
should not have been awarded on the damages for rent, insurance, or property
taxes.
Appellant
called an appraiser, Victoria Bryant, who testified that the reasonable market
rent for similar substitute housing was $2,100 a month. She did not base her calculation on data
concerning mobile homes, testifying that there was no such data, but instead
compared McCausland's mobile home to a single-family home. Based on this evidence, appellant asked the
court to offset the damages by $2,100 a month for the five years in which
McCausland lived in the mobile home.
The court
denied the request for two reasons, first finding that "there's a failure
of proof as to the value of the rent," noting that Bryant had compared the
mobile home to a single-family home on a large lot, and finding that the
comparison was not valid, and also noting the absence of testimony concerning
reasonable rentals of condominiums, which might be more relevant, or other
mobile homes.
The court
also found that "I don't feel any setoff in this instance is appropriate
because the unit was not appropriately habitable from the date Ms. McCausland
took possession of the unit and would not have been appropriately inhabitable
by another person. And to make her
reimburse for a reasonable rental value under equity . . . is not a proper
measure of damages in this case. So the
court declines to offset the damages as indicated by any fair rental
value."
Appellant
cites authority for the proposition that when rescission is ordered, a seller
is entitled to a credit for the reasonable rental value of the property during
the rescinding buyer's occupancy (Miller & Starr, Cal. Real Estate (2011) §
34.9) and argues that because its evidence on fair market value was the only
evidence on the subject, the trial court was bound to accept it. We have no quarrel with the legal principle,
in general, but it does not establish trial court error here.
The court
was not bound to credit Bryant's testimony.
Given Bryant's own testimony about the basis for her valuation, there
was substantial evidence for the court's finding that appellant had not
established fair rental value.
Nor do we
agree with appellant that the court's ruling resulted in an unjust enrichment
to McCausland. In its alternate ground
for denying the set off, the court found that the mobile home was so deficient
that a set off would be inequitable.
Again, there was substantial evidence for the ruling.
Interest
Here, appellant argues that it
did not cause those damages, in that McCausland would have made payments for
those items even if she had lived somewhere else. That is not necessarily so. She could, perhaps, have lived in a rented
home, and not paid property taxes, or with a family member, and not paid
rent. More to the point, in equitable actions
such as rescission, "'the court should do complete equity between the parties'
and to that end 'may grant any monetary relief necessary' to do so. [Citation.]
It is the purpose of rescission 'to restore both parties to their former
position as far as possible' [citation]."
(Runyan v. Pacific Air Industries, Inc.
(1970) 2 Cal.3d 304, 316, Civ. Code, § 1692.)
The damages
of which appellant complains put McCausland into a status quo ante position,
and were proper rescission damages.
Appellant also contends that
some of the sums for rent, insurance, and taxes did not exist as of the
"time of rescission," by which appellant means, by the time of
McCausland's request for rescission, and thus were not "certain or capable
of being made certain," so that prejudgment interest was not awardable. (Civ. Code, § 3287,
573.)
This contract was not rescinded
until the trial court made its order.
Moreover, in this equitable action, prejudgment interest was a proper
measure of damages.
At oral
argument, McCausland informed us that the contract has not yet been rescinded
or the damages paid. We are confident
that on remittitur to the trial court, both parties will take the necessary
steps to satisfy the judgment in this case.
Disposition
The
judgment is affirmed. The matter is
remanded to the trial court for all further proceedings necessary for execution
of that court's orders.
Respondent
to recover costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ARMSTRONG,
Acting P. J.
We concur:
MOSK,
J.
KRIEGLER,
J.
appellant's insurance, saying that "[s]ubsequent to the equitable trial, .
. . the benefits of that have evaporated due to exclusion contract terms that
exclude the coverage." The court
found that appellant's insurance was not relevant.
found that McCausland could not prove damages against the remaining defendants.
