Continental Sales
Filed
7/18/12 Mendoza v. Continental Sales CA5
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FIFTH APPELLATE DISTRICT
JOSE MENDOZA,
Plaintiff and Appellant,
v.
CONTINENTAL SALES COMPANY et
al.,
Defendants and Respondents.
F061624
(Super.
Ct. No. VCU207573)
JOSE MENDOZA,
Plaintiff and
Appellant,
v.
RAST PRODUCE CO., INC. et al.,
Defendants and
Respondents.
F062749
(Super.
Ct. No. VCU207573)
APPEAL from
a judgment of the Superior Court of
County. Lloyd L. Hicks, Judge.
Williams,
Jordan, Brodersen & Pritchett, Steven R. Williams for Plaintiff and
Appellant.
Rynn &
Janowsky, Lewis P. Janowsky for Defendant and Respondent Continental Sales
Company et al.
Wild,
Carter & Tipton, Russell G. VanRozeboom for Defendants and Respondents Rast
Produce Co., Inc., and John Rast.
-ooOoo-
Plaintiff,
claiming it was underpaid for its 2001 and 2002 pomegranate crop, sued the
commission merchant that sold the fruit and also a dozen businesses that
acquired the fruit from the commission merchant. The businesses obtained a judgment on the
pleadings on the ground that they owed no fiduciary duties to plaintiff because
they were buyers acting on their own behalf and were not subagents of the
commission merchant. In
140 Cal.App.4th 1395 (Mendoza I), we
overturned that judgment, concluding that the businesses’ status as buyers or
subagents could not be decided at the pleading stage of the lawsuit.
After
remand, the trial court held a bench
trial and issued a statement of decision holding the businesses that
obtained pomegranates from the commission merchant had no liability because
they were buyers, not subagents. The
court also held the commission merchant liable to plaintiff for approximately
$24,000 in damages relating to the 2002 crop.
On appeal,
plaintiff contends the trial court erred by determining the businesses that
obtained the pomegranates on price-after-sale (PAS) terms were buyers. In plaintiff’s view, these transactions
should have been viewed as a reconsignment of the fruit, and the businesses
should have been treated as subagents who owed duties to plaintiff. Plaintiff also contends the amount of damages
awarded against the commission merchant was too small.
We conclude
that the question whether the entities were buyers or subagents was a question
of fact, and the trial court’s finding was supported by
failed to demonstrate the trial court committed reversible error in its
calculation of damages involving the 2002 crop.
The judgment is affirmed.
FACTUAL
AND PROCEDURAL HISTORIES
Jose
Mendoza, individually and doing business as San Joaquin Labor Services, is
indentified by the third-amended complaint as plaintiff in this lawsuit. The trial court’s statement of decision
describes plaintiff as San Joaquin Labor Services, a partnership consisting of
three Mendoza brothers—Jose, Alfonso, and Jerry. For purposes of this opinion, we will refer
to plaintiff-appellant as Mendoza.
Mendoza’s
initial complaint named Kenneth Britten, individually and doing business as
Alta Peak Packing (Britten), as a defendant.
Britten, however, is no longer a party to this lawsuit because he was
dismissed after paying Mendoza a settlement of $35,000.
Mendoza
also named Rast Produce Co., Inc., and John Rast (collectively, Rast) as
defendants. Rast marketed Mendoza’s
pomegranates in 2001 and 2002.
Mendoza’s
third-amended complaint referred to the final group of defendants as
“subagents.†From this group, the
following businesses received a judgment in their favor: (1) Continental Sales Company,
(2) CDS Distributing, Inc., (3) Custom Produce Sales, (4) Four
Seasons Produce, Inc., (5) Jacobs, Malcolm & Burtt, Inc., (6) JMB
International, Inc., (7) M. Levin & Company, Inc.,
(8) Andrighetto Produce, Inc., doing business as Shasta Produce,
(9) Shapiro-Gilman-Shandler Co., (10) Val-Pro, Inc., doing business
as Valley Fruit & Vegetable Co., and (11) Royal Banana Company, Inc.
(collectively, the Continental Defendants).
The
following facts are taken from the findings made by the trial court in its
statement of decision. They differ from
those stated in Mendoza I,
pages 1398 through 1401, because our first opinion accepted the facts
alleged in Mendoza’s complaint as true, as required by the standard of review
applicable to orders granting a motion
for judgment on the pleadings. (
Mendoza
engaged in labor contracting, contract farming, farming crops on leased land,
and buying and selling fruit on and off trees.
The Mendoza brothers had many years of experience.
In 2001,
Mendoza bought a crop of pomegranates from Keith Trembly with the intent of
picking the crop with its own crews and selling the crop to Britten. Britten, in reliance on this intended sale to
him, entered into a contract with Rast to market the pomegranates for him. In the contract, Britten represented himself
as an independent contractor and the grower and owner of the fruit Rast was to
market. When Mendoza and Britten were
unable to agree on a price for the pomegranates, they agreed that Britten would
pack the crop and have it marketed by his marketer. Despite this change in the arrangement
between Mendoza and Britten, Britten never told Rast that the pomegranates were
not his fruit.
Mendoza
presented testimony that it was not aware that Britten had contracted with Rast
to market their fruit until it received the year-end accounting, although Jose
Mendoza admitted receiving monthly sales reports on Rast’s letterhead. Thus, the pomegranates were grown on trees
owned by Trembly. Mendoza did the
farming and picking and delivered the pomegranates to Britten. Britten packed the fruit, arranged for cold
storage, and delivered the fruit to the cold storage facility. The facility faxed to Rast lists of pomegranates that Britten delivered and
were available for sale.
Rast sold
pomegranates from the list provided by the cold storage facility. When Rast made a sale, it would prepare an
order form and fax it to the facility.
Once the fruit was loaded on a truck for delivery (always in a mixed
load because of the small quantity), the cold storage facility would fax Rast a
bill of lading with information relating to the transit to the buyer. The facility, as the grower’s agent (not that
of Rast or the buyer), would select the load temperature and determine how the
mix of product was loaded. After receiving the fax of the bill of
lading, Rast would prepare an invoice within 45 days, even if the prices had
not been settled, to protect lien rights under the federal Perishable
Agricultural Commodities Act, 7 United States Code section 499a et seq.
(PACA).
Rast
reported to Britten that there were quality problems with the pomegranates, and
Britten relayed that information to Alfonso Mendoza, the partner directly
involved with the crop. Also, in 2001
Jose Mendoza received from Britten Rast’s “sales items by detail†monthly.
Mendoza and
its partners were aware of general market pomegranate prices, the actual prices
for which their pomegranates sold, and the reported fruit quality problems at
all times during the 2001 and 2002 pomegranate seasons. At the end of the 2001 season, Britten
received Rast’s final accounting, took out his packing expenses and fees, and
paid the rest to Mendoza. Britten also
delivered the final accounting to Mendoza.
Britten
accepted the 2001 final accounting without complaint to Rast. Mendoza accepted the accounting without
complaint to Britten or Rast. Mendoza’s
first complaint regarding prices for the 2001 crop was at a meeting in the
spring of 2003.
In 2002,
Mendoza controlled the same pomegranate acreage and decided to pack the crop
itself and deal directly with Rast for marketing. Rast prepared its standard contract and
presented it, with a consignor’s notice, to Alfonso Mendoza on August 14,
2002. Jose Mendoza later signed the
marketing agreement on behalf of the partnership, dated his signature
August 22, 2002, and delivered it to Rast.
Paragraph 10
of the marketing agreement gave Rast the exclusive right to market and sell
Mendoza’s 2002 pomegranate crop and “the right to market through or sell the
Crops to any organization, if in [Rast’] sole discretion it may receive the
best price by doing so.â€
Paragraph 10 also obligated Rast to make a reasonable effort to
sell the pomegranates F.O.B.
name="_ftnref2" title="">[2] shipping point, but gave Rast the right to
sell “to destination brokers or delivered sales, or joint accounts, or on a
consignment or reconsignment basis, or price after sale†if a better price was
obtainable. In addition, Rast agreed to
“attempt to obtain the best market prices and effect quick sales of the
Crops .…â€
After
August 14, 2002, Mendoza’s cold storage facility faxed inventories to Rast
for Rast to use in selling Mendoza’s fruit.
Rast sold fruit from this inventory on August 16 and 19. None of these transactions are among those
designated as troubled by Mendoza.
Mendoza’s
2002 pomegranates were small, not of top quality, and not the desired red
color. Also, in some instances the fruit
was not graded properly before it was packed.
Bad fruit was included in the pack.
Over 50 percent of the fruit sold resulted in quality complaints,
compared with a normal complaint rate of about five percent.
During the
2002 season, Rast provided Mendoza regular accounts of sales in the agreed
format. Mr. Hirni, representing Rast,
called Alfonso Mendoza regularly regarding the status of sales, as evidenced by
58 cell phone calls and an unknown number of land-line calls from the Rast
office.
Toward the
end of the 2002 season, Mendoza, aware of the difficult market, asked Rast if
it could sell fruit through another broker, Regatta, and Rast agreed. Mendoza was happy with Regatta’s sale prices,
which were, except for one size, less than Rast’s during the same period, and
Rast’s average price was higher.
Pomegranates
are a limited market specialty crop. In
2001 and 2002, large pomegranates sold best and small pomegranates were far
less desirable.
Rast was a
small to medium broker. It did not
handle enough top quality large pomegranates to sell to the big buyers such as
chain supermarkets. Due to the limited
market for Mendoza’s pomegranates, which were mediocre in both size and
quality, they were sold in small quantities (two or three pallets at 88 boxes
per pallet) to so-called terminal markets, such as the Continental Defendants,
across the United States and Canada. The
buyers would arrange shipping in mixed loads with a few pallets of pomegranates
transported with other fruits and vegetables that the buyer was having
delivered from
The
terminal market buyers would take delivery, put the product into cold storage, and resell it to their customers, who generally
were small local and regional markets and food services. Terminal market buyers customarily purchased
perishable commodities from the broker on the basis that the price would be
negotiated after all of a lot was sold, or at least enough of the lot for the
buyer to feel comfortable in setting a price.
fruit generally will not buy F.O.B. at a fixed price and will not take the
fruit on consignment.
After the
terminal market buyer sells a lot, the buyer reports the average price by size
to Rast, less shipping paid by the buyer and negotiates a “spread,†which is
the buyer’s gross margin. Rast pays the
grower that price, less Rast’s 8.5 percent commission, plus palletizing and
precooling charges incurred by the grower.
The palletizing and precooling charges in this case often are given in
the referee’s report as $1.85 per box.
Sometimes the margin on smaller, less valuable, fruit is not enough to
cover the buyer’s handling and storage costs.
The
terminal market buyers typically are not paid by their resale customers until
after the buyers settle with Rast. As a
result, the terminal market buyers bear any collection loss and bear any
adjustment with their resale customers after settlement with Rast.
Once Rast
and the terminal market buyer settled the price, Rast sent the buyer an invoice
and was paid for the fruit plus reimbursement to the grower for palletizing and
precooling charges. Rast often generated
sales invoices before the price was settled to comply with the PACA’s 45-day
requirement and preserve lien rights in the event the buyer did not pay. Sometimes, these Rast invoices had a “0â€
price. Other times, even on a
price-after-sale transaction, the invoices gave a “target†price, to advise the
buyer what the grower was expecting.
It was
commercially reasonable for Rast to sell the pomegranates on price-after-sale
terms to a long-time trusted buyer with a good blue-book rating because
(1) terminal market buyers refused to buy pomegranates at a fixed price
F.O.B. shipping point; (2) the fruit was perishable and its quality
declined in storage; (3) the cost for cold storage accumulated while the
fruit was unsold; and (4) there was a risk that the pomegranates might not
be sold at all under another arrangement.
The trial
court addressed part of the dispute regarding market prices by finding that the
Unites States Department of Agriculture’s Market News Report was not an
accurate, reliable basis for determining the actual market value of Mendoza’s
pomegranates. This was because the
reports did not cover all of the applicable time periods, was based on asking
prices rather than actual sales, and did not account for quality, variety, age,
or packing style.
On
October 30, 2003, Mendoza filed the complaint that began this
lawsuit. In July 2004, the complaint was
challenged by the Continental Defendants’ motion for judgment on the pleadings,
which asserted that they were buyers and not subject to the duties imposed on
reconsignees. The parties do not dispute
that one of the duties imposed on consignees and reconsignees is the duty to provide
to the consignor an accounting of all sales.
The trial court granted the motion and, in September 2004, entered
judgment in favor of the Continental Defendants.
In June
2006, we filed a decision that reversed the judgment and directed the trial court
to deny the Continental Defendants’ motion as to four causes of action and
grant it with leave for Mendoza to amend as to three other causes of
action. (Mendoza I, supra, 140
Cal.App.4th at pp. 1406-1407.)
Among other things, we stated:
“At the pleading stage of this action, we cannot make a final
determination that all of the transactions were, in fact, sales and not
reconsignments.†(Id. at p. 1403.)
Our
decision led to the filing of a second-amended complaint and, in December 2006,
a third-amended complaint, which was the operative pleading when the case went
to trial. The third-amended complaint
set forth causes of action for breach of contract, breach of the covenant of
good faith and fair dealing, negligence, conversion, accounting, breach of
fiduciary duty, and fraud. Mendoza
claimed it sustained damages in excess of $50,000 and also requested punitive
damages.
The
third-amended complaint included allegations that (1) Rast, under the
guise of an “open price†sale, reconsigned the pomegranates to the Continental
Defendants, who would sell the pomegranates at a high price before negotiating
a final price with Rast, and (2) the Continental Defendants, “by accepting
[the pomegranates] for sale without first contracting for its purchase at a
designated price, became commission merchants with the attendant common law and
statutory duties.â€
In April
2007, the trial court appointed a referee to examine the documents from the
transactions that Mendoza disputed. The
referee was charged with (1) determining which transactions, if any,
failed to comply with Food and Agriculture Code sections 56271 through
56283; (2) identifying each noncomplying transaction and stating the
nature of each noncompliance; (3) determining the loss Mendoza suffered from
each noncompliance and specifying the method used for computing any such loss;
(4) determining which defendant or defendants were liable for any such
loss; and (5) preparing a detailed summary report of his findings and
determinations.
The referee
held conference calls with counsel for the parties, obtained copies of the
documents generated by Rast’s transactions involving Mendoza’s pomegranates,
received position statements from the parties, and issued a 22-page referee’s
report in August 2007. The referee
rejected Mendoza’s argument that the price-after-sale transactions were the
equivalent of consignments. Based on
this determination, the referee concluded that Rast’s customers (the
Continental Defendants) were not liable for damages to Mendoza and had no
responsibility to provide detailed accountings or inspections. The referee also determined that Rast was
responsible to operate in the best interests of Mendoza in negotiating prices
with the Continental Defendants. In
particular, pursuant to Food and Agricultural Code section 56283, the referee
concluded that Mendoza was required to “‘exercise reasonable care and diligence
in disposing of the product in a fair and reasonable manner.’†When the referee determined Rast breached
this duty by settling for too low a price on the transactions challenged by
Mendoza, the referee made a determination of damages based on his calculation
of an average sale price and sometimes referenced prices in the Market News Report.
The referee’s report concluded that Rast was liable to Mendoza for
$38,028.71.
In December
2007, the referee received from Mendoza a list of 85 additional transactions
that the trial court allowed to be submitted for the referee’s review. In January 2008, the referee issued an
amendment to referee’s report and supplemental report.
transactions and increased his determination of Rast’s liability to
$93,105.74.
In February
2008, Mendoza and Rast filed objections to the amended report. Subsequently, the defendants filed a motion
requesting a ruling on the objections to the amended report and a judicial
directive as to the role the amended report would have at trial. In October 2008, the trial court filed an order
ruling on the objections stating that, pursuant to Code of Civil Procedure
section 644, the referee’s recommendations were advisory only and the
court might modify or disregard the amended report.
In November
2009, the trial court conducted a three-day bench trial on the accounting cause
of action and other issues, but excluded Mendoza’s claims for consequential and
punitive damages. Four representatives
of the Continental Defendants were among the witnesses who testified. The parties stipulated to the use of
deposition testimony from other witnesses.
The parties
submitted posttrial briefing and, in June 2010, the trial court filed an
intended decision stating that (1) the Continental Defendants were buyers
and had no liability, and (2) Rast was liable to Mendoza for net damages
of $23,198.64. Mendoza filed objections
to the intended decision.
In July
2010, the trial court filed its statement of decision. The trial court restated its determinations
that the Continental Defendants were buyers and had no liability to Mendoza,
Rast had no liability to Mendoza in connection with the marketing of the 2001
crop, and Rast was liable to Mendoza for damages involving the 2002 crop.
On
October 21, 2010, the trial court filed an interlocutory judgment stating
that the “Continental Defendants, and each of them, have no liability to
[Mendoza] and [Mendoza] shall take nothing … as to the Continental
Defendants.†It also provided that
(1) Rast had no liability to Mendoza for the 2001 crop year; (2) Rast
breached its duty as a commission merchant as to certain sales concerning the
2002 crop year; and (3) Mendoza’s direct damage from this breach of duty
was $23,932.45, a sum constituting the direct damages on all causes of
action.
In December
2010, Mendoza filed a notice of appeal concerning the interlocutory
judgment. The appeal became case
No. F061624 in this court and involved the Continental Defendants as
respondents.
In May
2011, Mendoza and Rast filed a stipulated pro forma judgment as to Rast after a
bifurcated trial and stipulated to the dismissal of remaining consequential and
punitive damages claims. Mendoza and
Rast agreed that Mendoza retained the right to reassert such damage claims if
the interlocutory judgment was reversed or remanded for further proceedings
against Rast.
In June
2011, Mendoza filed a notice of appeal from the May 2011 judgment. The appeal became case No. F062749. Shortly after the second appeal, the parties
requested the consolidation of case Nos. F061624 and F062749. In September 2011, we granted the request,
consolidated the appeals for all purposes, identified case No. F061624 as
the lead case, and set the date on which appellant’s opening brief was
due.
DISCUSSION
I. Continental Defendants as buyers, not subagents
The trial
court considered the liability of the Continental Defendants and framed the
question as whether “the evidence adduced at trial prove[d] that the
Continental Defendants were [Mendoza’s] agents.†The statement of decision provided a description
of price-after-sale transactions before answering the question by finding:
“While
the PAS sale practice here certainly has some characteristics of a consignment,
it does not have all. It was, as between
Rast and the Continental Defendants, intended as a sale, and consistent with
industry practice.
“Thus,
the PAS contracts with the Continental Defendants were not consignments, and
[t]he Continental Defendants were not sub-agents with fiduciary duties to
[Mendoza]. The Continental Defendants
were buyers, and have no liability to [Mendoza].â€
The interlocutory judgment implemented these findings by
stating that the Continental Defendants, and each of them, had no liability to
Mendoza.
On appeal,
Mendoza challenges the trial court’s determination that the Continental
Defendants were buyers and not subagents.
The parties
disagree on the standard of review applicable to the trial court’s
determination of the buyers-versus-subagents issue. Mendoza argues for an independent (i.e., de
novo) standard of review. Mendoza
contends questions of law are subject to independent review and also
asserts: “Because there is dispute over
the events of this case, the proper standard of review is de novo.†The Continental Defendants contend there is a
presumption that the judgment of the trial court is correct and that the de
novo standard of review does not apply.
We conclude
that, when an appellate court reviews a statement of decision issued after a
bench trial, the trial court’s findings of fact are reviewed under the
substantial evidence standard, and the trial court’s resolution of a question
of law is subject to independent review.
(Brewer v. Murphy (2008) 161
Cal.App.4th 928, 935.) Thus, the trial
court’s findings of fact will be upheld if there is substantial evidence to
support the finding. (
In evaluating the support for a finding, we view the evidence in the
light most favorable to the prevailing party, giving it the benefit of every
reasonable inference and resolving all conflicts in its favor. (Ibid.) In addition, evidence is defined as
“substantial†for purposes of this standard of review if it is of ponderable
legal significance, reasonable in nature, credible, and of solid value. (Id.
at pp. 935-936.)
Appellants
challenging a finding of fact under the substantial evidence standard bear the
burden of demonstrating that the record does not contain sufficient evidence to
sustain the challenged finding of fact.
(Boeken v. Philip Morris, Inc.
(2005) 127 Cal.App.4th 1640, 1658.) “In
furtherance of its burden, the appellant has the duty to fairly summarize all
of the facts in the light most favorable to the judgment. [Citation].â€
(Ibid.) In other words, the appellants are required
to include in their brief all the material evidence on the point and not merely
their own evidence. (
(1971) 3 Cal.3d 875, 881.) California
Rules of Court, rule 8.204(a)(2)(C), provides that an “appellant’s opening
brief must: [¶] … [¶] [p]rovide a summary of the significant facts
limited to matters in the record.†The
failure to meet these requirements results in the forfeiture of the claim of
error. (Foreman & Clark Corp., supra, at p. 881;
414-415.)
for substantial evidence
The
parties’ dispute concerning the applicable standard of review requires us to
decide whether the trial court’s determination that the Continental Defendants
were buyers and not subagents is a finding of fact or a legal conclusion.
“The
existence of an agency relationship is a factual question for the trier of
fact, whose determination must be affirmed on appeal if supported by
substantial evidence. [Citations].†(Garlock
Sealing Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148
Cal.App.4th 937, 965 (Garlock).) Based on this precedent, we conclude that the
trial court made a finding of fact when it decided the Continental Defendants
were buyers and were not part of an agency relationship. It follows that the substantial evidence
standard of review applies to this finding.
Our
application of the substantial evidence standard to this case produces two
grounds for affirming the judgment in favor of the Continental Defendants. First, Mendoza’s appellate briefing did not
fairly summarize the evidence in the light most favorable to the judgment. The description of the evidence contained at
pages 11 through 16 of Mendoza’s opening brief takes the opposite
approach—presenting evidence favorable to Mendoza’s position and omitting
evidence favorable to the judgment. In
addition, Mendoza’s presentation of the evidence was not corrected in a
subsequent brief as Mendoza filed no reply brief. As a result, we conclude Mendoza has failed
to carry the burden of demonstrating reversible error imposed on appellants who
challenge the sufficiency of the evidence.
The failure to carry the burden that results from failing to set out all
material evidence on the point has been described as a waiver of the error (
recently, as a forfeiture of the error (In
re S.C., supra, 138 Cal.App.4th
at pp. 414-415).
Second, the
record contains substantial evidence that supports the finding that the
Continental Defendants were buyers, not subagents. Under California law, the formation of an
agency relationship is a bilateral matter—both the principal and the agent must
manifest their consent to the creation of the relationship through words or conduct. (van’t
Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 571; see Rest.3d
Agency, §§ 1.01, 1.03.) Whether
someone who receives goods from another for resale to a third party is an agent
for the purposes of resale or is a buyer, depends upon whether the parties
agree that his or her duty is to act primarily for the benefit of the person
delivering the goods to him or her or is to act primarily for his or her own
benefit. (Rest.2d Agency, § 14J; see
Garlock, supra, 148 Cal.App.4th at p. 965.) For instance, “if the person takes the goods
as the property of the principal, subject to the latter’s control and right of
recall, and the latter has the right to receive the proceeds when sold less the agent’s commission, there is an agency.
[Citations.]†(4 Witkin, Summary
of Cal. Law (10th ed. 2005) Sales, § 2, p. 24.)
The
testimony of the representatives of the Continental Defendants demonstrates
that they did not consent to the creation of an agency or subagency
relationship when they agreed with Rast to acquire the pomegranates in a
price-after-sale transaction. For
example, Robert Hamada, an employee of Custom Produce Sales located in Parlier,
California, testified that he was familiar with fixed-price sales,
consignments, and price-after-sale transactions. Hamada was aware that in a consignment
arrangement his employer would handle the product for the account of the grower
and would have a fiduciary duty to provide a detailed accounting of the sales. In contrast, in price-after-sale transactions,
Hamada and his employer would not provide an accounting of sales. Hamada also testified that sometimes the
price he paid in a price-after-sale transaction would be set before he sold all
of the product, which would increase the risk involved in a price-after-sale
transaction. Nothing in Hamada’s
testimony indicated that, when he and Rast entered a price-after-sale
transaction, he was consenting to being a subagent with a duty to act primarily
for the benefit of the grower.
Similarly,
Mark Levin of M. Levin & Company, Inc., a fruit and vegetable wholesaler
located in Philadelphia, testified about the difference between
price-after-sale transactions and consignments.
Levin estimated that between 25 and 35 percent of his business was done
on a price-after-sale basis. Also, Levin
dealt with only one shipper on a consignment basis at the time of his
testimony. Levin testified that the
documentation for consignments was different from that of sales, with
consignments involving an accounting of sales.
Levin indicated that the pomegranates came in on a price-after-sale
basis. Nothing in his testimony about
his dealings with John Rast regarding pomegranates indicated that Levin was
consenting to a consignment or to the formation of an agency relationship.
Based on
our review of the testimony of the representatives of the Continental
Defendants, we conclude that substantial evidence supports the finding that
Continental Defendants were not subagents because the testimony shows that they
did not consent (either through words or actions) to handling the pomegranates
as subagents rather than as buyers.
II. Damages awarded against
Rast
Mendoza’s
opening brief contends that the trial court erred in assessing damages against
Rast on several levels. The asserted
errors involve the trial court’s (1) determination of the party
responsible for shipping conditions, (2) allowing improper chargebacks,
and (3) inconsistent use of criteria for determining damages.
Rast
contends that Mendoza has not challenged the factual or legal basis for the
trial court’s conclusion that Rast had no liability for its handling of the
2001 crop and, therefore, any claims of error regarding the 2001 crop are
abandoned. Rast also contends that the
trial court’s findings of fact relating to the damages question are supported
by substantial evidence, and Mendoza’s arguments have not demonstrated that the
trial court committed legal error in determining the damages.
The parties
dispute who is responsible for damage to the pomegranates caused by being
shipped at the wrong temperature or with incompatible products.
A
publication by the
States Department of Agricultural (USDA) recommended 41 degrees Fahrenheit
as the carrying temperature for pomegranates.
Another USDA publication indicated that pomegranates are susceptible to
chilling injuries below that temperature, which injuries can lead to rind pitting,
brown discoloration, and increased susceptibility to decay.
Mixed-load
incompatibility can involve products with different carrying temperatures or
other incompatibility. For instance,
sulfur dioxide is used on grapes to retard decay, but sulfur dioxide enhances
damage in pomegranates.
Mendoza
contends Rast should be liable for damages from improper shipping conditions
and cites the referee’s report for support.
For example, the referee’s discussion of Rast invoice No. 23291
stated:
“As the party contributing pomegranates to a mixed load,
Rast was responsible for assuring that the various products were compatible as
to recommended carrying conditions. In
an FOB sale the buyer is responsible for any damages caused by abnormal transit
conditions only when not caused or contributed to by the shipper. I find Rast was responsible for the condition
problems, and therefore is liable to Mendoza for the original invoice amount of
$1,909.60.†(Fn. omitted.)
The trial
court disagreed with the referee’s determination that Rast was responsible for
damages caused by the conditions under which the pomegranates were
shipped. The court found: “Cold storage, as [Mendoza’s] agent, would
select the load temperature and determine how the mix of product was loaded.†Based on this finding, the court’s damage
calculations “deleted the transactions identified [by the referee’s report] as
temperature damaged fruit, because this was the fault of [Mendoza’s] other
agents, not Rast.â€
Mendoza
challenges the trial court’s decision on the issue of damages related to
shipping conditions by arguing it should not have been charged with the errors
caused by the buyers or Rast in establishing the shipping conditions. Mendoza further argues that if an error was
attributable to the trucker, whoever hired the trucker would have a claim
against the trucker, but Mendoza should have been paid for its produce.
It is
difficult to analyze Mendoza’s challenge to the trial court’s refusal to hold
Rast liable for damages caused by shipping conditions because Mendoza’s opening
brief does not contain a legal theory explaining why the refusal was
v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 70 [burden rests on appellant
“to affirmatively demonstrate the error which it assertsâ€].) Ordinarily, an appellant begins its attempt
to carry the burden of demonstrating reversible error by indentifying the type
of error that occurred. For example, if
an appellant is asserting that an error of fact occurred, it will argue the
evidence was insufficient to support the trial court’s findings. Alternatively, if an appellant is asserting
that an error of law occurred, it usually will argue that the trial court
either (1) applied the wrong rule of law to the facts of the case or
(2) misapplied the correct rule of law.
In this
case, Mendoza contends that the errors in shipping conditions were caused by
Rast but has ignored the explicit findings of the trial court that Mendoza’s
other agents would select the load temperature and determine how the mix of
product would be loaded. As a result, it
is unclear whether Mendoza is claiming that substantial evidence does not
support the trial court’s findings that (1) the cold storage facility was
Mendoza’s agent or (2) the facility would select the load temperature and
determine how the mix of product was loaded.
Further, we cannot determine if Mendoza is claiming an error of law
occurred because Mendoza has not expressly identified a rule of law that it
contends is applicable and argued that the trial court applied a different rule
or misapplied the correct rule.
It is well
settled that a party challenging a judgment has the burden of showing
reversible error by an adequate record.
(Ballard v. Uribe (1986) 41
Cal.3d 564, 574.) Here, Mendoza has
failed to meet that burden because it has not identified the basis for the
reversible error. Even if we assume that
Mendoza is challenging the sufficiency of the evidence underlying the trial court’s
findings that the cold storage facility, not Rast, was responsible for load mix
and temperature, Mendoza still has failed in its “duty to fairly summarize all
of the facts in the light most favorable to the judgment. [Citation].â€
(Boeken v. Philip Morris, Inc.,
supra, 127 Cal.App.4th at
p. 1658.) Consequently, Mendoza is
deemed to have forfeited any claim of error regarding the sufficiency of the
evidence. (Foreman & Clark Corp. v. Fallon, supra, 3 Cal.3d at p. 881.)
Alternatively,
if we assume that Mendoza is claiming that the trial court committed an error
of law by applying the wrong legal principle or by misapplying the correct one,
Mendoza still has not met its burden of showing reversible error. When an appellant asserts a point, “but fails
to support it with reasoned argument and citations to authority, we treat the
point as waived.†(Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.) The section of Mendoza’s opening brief that
discusses shipping conditions does not cite any statutes, regulations, cases,
or secondary authority and does not contain a reasoned argument to support the
position that the trial court committed legal error in its treatment of the
issues concerning shipping conditions.
Therefore, we conclude Mendoza has failed to demonstrate that a
prejudicial error occurred.
price-after-sale transaction
Under the
heading “Improper Chargebacks to Grower†in its opening brief, Mendoza argues
that its losses in price-after-sale transactions should have been calculated
using the highest market value for the pomegranates.
agreement between Rast and Mendoza that authorized Rast to sell the
pomegranates in price-after-sale transactions if “a better price is obtainable
by selling [on that basis]†and argues that Rast either was required to show
that the contractual condition was satisfied in each price-after-sale
transaction or be held liable for the loss.
Mendoza contends the loss is measured by the value of the produce at the
time of delivery to and acceptance by the buyer and, in cases involving
perishable product, this value is the highest value on the day of the
event. Mendoza supports the use of
highest value by citing Civil Code section 3336 and Elliott v. Federated Fruit & Vegetable Growers (1930) 108
Cal.App. 412. Mendoza further contends
that the highest value can be determined from the Market News Report or the
highest reported resale price for similar produce.
Mendoza’s
arguments raise the question whether California law provides for use of the
highest market value in computing the damages for which Rast was liable. In Elliott v.
Federated Fruit & Vegetable Growers, supra, 108 Cal.App. 412, the plaintiffs prevailed on
their claim that the defendants converted plaintiffs’ grapes. The appellate court affirmed the judgment,
concluding that market reports showing sale prices and the testimony of two
witnesses regarding market values on the dates the grapes were delivered were
sufficient to establish the market value of the grapes at the time they were
converted by the defendants. (
conversion of personal property set out in subdivision 1 of Civil Code
section 3336, which, at that time, provided: “‘The value of the property at the time of
the conversion with the interest from that time, or, where the action has been
prosecuted with reasonable diligence, the highest
market value of the property at any time between conversion and the
verdict, without interest, at the
party.’†(Elliott v. Federated Fruit & Vegetable Growers,
added.)
The current
version of Civil Code section 3336 provides that the “detriment caused by
the wrongful conversion of personal property is presumed to be: [¶] … [t]he value of the property at the time
of the conversion .…†Since the
statute now refers to the value of the property and not the highest market
value of the property, we reject Mendoza’s position that California law
required the trial court to calculate the damages using the highest value on
the day of the event.
The trial
court’s statement of decision addressed Mendoza’s damages by stating: “The question of what amount of money is
required to bridge the gap between sales price and market turns on what is
found to be ‘market.’†We conclude that
the use of market value as the price that Mendoza would have received if Rast
had performed its duties is a legally correct way to calculate Mendoza’s
damages.
With
respect to the trial court’s finding of market value in the various
transactions, that finding has not been shown to be erroneous. The court noted that the experts disagreed
and that determinations of the market were not simple because of the many
characteristics that affected the price of pomegranates. Ultimately, the trial court often used an
average sales price calculated by the referee from the transactions not
questioned by Mendoza. Since Mendoza has
not challenged the use of this average sales price on the ground that it is not
supported by substantial evidence and Mendoza’s view of the law is incorrect,
we conclude that Mendoza has not demonstrated that the trial court committed
error by using the average sales price as the market value when it calculated
damages.
Mendoza’s
contention that the trial court should have used prices from the USDA’s Market
News Report also fails to establish error because Mendoza has not challenged
the trial court’s express finding that the Market News Report was not an
accurate, reliable basis for determining the actual market value of Mendoza’s
pomegranates. The court found the report
did not cover all of the applicable time periods, was based on asking prices
rather than actual sales, and did not account for quality, variety, age, or
packing style. In light of these
unchallenged findings, the trial court did not err in rejecting the prices
contained in the Market News Report.
chargebacks
Mendoza
argues that Rast allowed chargebacks on sales where the risk of loss had passed
to the buyer, and that by allowing those chargebacks Rast was not protecting
the best interests of its client.
Mendoza’s opening brief describes four transactions that it contends involved
improper chargebacks.
Three of the transactions
involved invoices from 2001:
(1) Rast’s invoice No. 41358, dated August 28, 2001,
concerning the sale of 88 boxes of pomegranates to Shin Produce;
(2) Rast’s invoice No. 11513, dated October 3, 2001, covering
320 boxes of pomegranates; and (3) Rast’s invoice No. 31246, dated
August 29, 2001, concerning the sale of 616 boxes of pomegranates.
The statement of decision
includes a section labeled “Liability of Defendants for 2001 Crop.†In that section, the court stated that
Mendoza gave Britten full authority to handle the sale of its 2001 crop,
including the authority to agree to fruit sales prices. Because Britten, as Mendoza’s agent,
knowingly agreed and accepted the prices reported by Rast, the court concluded
that Mendoza’s remedy was against Britten and not Rast.
Mendoza’s failure to challenge
the finding that Rast had no liability for transactions involving the 2001 crop
appeal leads us to conclude that Mendoza cannot establish the trial court erred
when it did not award damages for allegedly improper chargebacks allowed by
Rast in 2001. (Ballard v. Uribe, supra,
41 Cal.3d at p. 574 [appellant has burden of showing reversible
error].)
The fourth
transaction mentioned in Mendoza’s opening brief occurred in 2002. Rast’s invoice No. 23300, dated
August 30, 2002, involves the F.O.B. sale of 352 boxes of Granada
pomegranates to D. J. Forry Co. of Novato, California, for $4,171.20. The pomegranates were dumped due to
discoloration. Rast granted D. J. Forry
Co. a credit for the purchase price.
The
referee’s amended report addressed the topic of Rast’s allowing adjustments to
2002 invoices as follows:
“[Mendoza] submitted for consideration 13 invoices on
which Rast granted reductions to its customers off of the original agreed FOB
prices. Of these there are 11 (Invoices
… 23300 …) where, applying the criteria laid out in my original report, I find
the terms of the contract between Rast and Mendoza justified the allowances
Rast granted its customers.
Consequently, I find no further liability by Rast to Mendoza for these
transactions.â€
Mendoza’s February 2008 objections to the referee’s amended
report did not include an objection to the referee’s treatment of the 13
invoices to which Rast made adjustments in 2002 or, more specifically, to his
treatment of invoice No. 23300.
Mendoza’s
January 2009 closing trial brief did not mention invoice No. 23300 or
Rast’s adjustments or chargebacks to 2002 transactions. The brief, however, did include the general
contention that Mendoza should be awarded damages for 2002 in the amount of
$122,936.57 in accordance with a summary of the damages calculated by its
expert. The declaration of Darin T. Judd
in support of Mendoza’s closing trial brief included as an exhibit a copy of
the summary of damages calculated by Mendoza’s expert for the 2002 pomegranate
crop with the referee’s corresponding damage figures. Line 26 of the summary for 2002 addressed invoice
No. 23300 and indicated that the referee determined no damages should be
awarded for that transaction while Mendoza’s expert calculated the damages at
$7,392.00. The summary also
cross-referenced the page of the expert’s written analysis of the transaction. That analysis included the expert’s opinion
that Rast sold to D. J. Forry Co. below market.
(Mendoza’s expert concluded that the market price was $21 per box,
rather than the $11.85 per box charged by Rast.) In addition, the expert opined that Rast and
the buyer were responsible for not protecting the product from cold temperature
during shipping.
Mendoza’s
March 2010 trial brief did not mention invoice No. 23300 or, more
generally, Rast’s allowance of chargebacks or adjustments to 2002 invoices. The brief did include (1) a general
assertion that Rast failed in its responsibility to keep Mendoza informed of
market prices, quality of crops, or adjustments and (2) a request for the
court to award the money damages reported by Mendoza’s expert.
The trial
court’s 31-page intended decision did not address invoice No. 23300 or the
claim involving chargebacks against invoices in 2002. In addition, the decision’s discussion of
Rast’s breaches of duties mentioned no breach of duty resulting from Rast’s
allowance of improper adjustments or chargebacks.
Mendoza’s
June 2010 objections to the intended decision did not assert that it should
have addressed whether Rast breached a duty to Mendoza by allowing improper
chargebacks or adjustments in 2002.
Mendoza’s objections did assert that the court’s damage figures were
ambiguous because the court did not show how it arrived at those figures.
Mendoza’s
failure to object to the intended decision’s failure to resolve whether Rast
breached a duty to Mendoza by allowing improper chargebacks results in this
court presuming that the trial court impliedly found that Rast did not breach
any duty in allowing the chargebacks. (
Cal.3d 1130, 1133-1134; Code Civ. Proc., § 634.) To establish error with respect to the 2002
invoices, including invoice No. 23300, Mendoza must demonstrate the
implied finding that no breach occurred.
To carry that burden, the law requires Mendoza to set out all evidence
material to the implied finding of no breach.
(Foreman & Clark Corp. v.
Fallon, supra, 3 Cal.3d at
p. 881.) Since Mendoza’s opening
brief does not describe all of the material evidence, it follows that Mendoza
has not demonstrated a reversible error involving improper chargebacks.
Mendoza
contends that the trial court was inconsistent in using the criteria set by the
court for damages. Mendoza contends that
the trial court’s use of the average sale price, as calculated by the referee,
in computing the damages “effectively ignored the fact that different varieties
of pomegranates were produced by Mendoza and sold by Rast yet all varieties
were effectively lumped together.â€
Mendoza’s
opening brief contends: “Inexplicably
all of the 2001 damage determinations made by the referee were omitted from the
court, even those where Rast admitted liability.†Mendoza lists 18 invoices involving 2001
transactions in which it contends Rast failed to meet its duties and yet the
trial court awarded no damages.
As
described earlier, the trial court found that Rast had no liability in
connection with the 2001 crop. (See part
II.C.1, ante.) The trial court’s determination of no
liability explains why the court did not address damages regarding the 2001
crop. Since Mendoza has not acknowledged
and challenged the underlying determination of no liability, we reject its
contention that the trial court erred in not awarding damages in connection
with transactions involving the 2001 crop.
Mendoza
argues that the damages awarded for 2002 are suspect when compared to the trial
court’s stated criteria for damages.
Mendoza requests a remand so the trial court can correct the errors
resulting from the misapplication of the standard the court adopted for
assessing damages.
With
respect to invoice No. 23420, Mendoza notes that the trial court awarded
the same damages as the referee, and the referee’s assessment was based on a
price from the Market News Report, a source disavowed by the trial court.
transaction, “sales were insufficient to allow for the calculation of an
average sales price.†This argument,
which concedes the average sales price could not be calculated and used as the
market value for calculating damages, fails to demonstrate how the court
committed prejudicial error by determining the market value by an alternate
method—a method used by the referee and agreed to by Rast.
With
respect to invoice No. 23537, Mendoza asserts that the trial court awarded
damages when the F.O.B. price was within both the price from the Market News
Report and the average sales price.
Unlike the trial court, the referee concluded no damages resulted from
this transaction. The referee determined
that the price obtained met his criteria with regard to average sales price and
the prices in the Market News Report. In
light of the referee’s determination of no damages and Mendoza’s failure to demonstrate
how it was prejudiced by the trial court’s award of $18.24 in damages, we
conclude that Mendoza has failed to demonstrate that a reversible error
occurred. (Vaughn v. Jonas (1948) 31 Cal.2d 586, 601 [appellant must
affirmatively show error and also show error is prejudicial].)
Similarly,
Mendoza’s argument that the record does not include an invoice No. 23460,
for which the court awarded $125.28, fails to show how Mendoza was prejudiced
by the award.
title="">[7]
DISPOSITION
The
judgment is affirmed. Respondents shall
recover their costs on appeal.
_____________________
Wiseman, Acting P.J.
WE CONCUR:
_____________________
Levy, J.
_____________________
Detjen, J.
name="_ftn1" title=""> [1]Respondents’
brief filed on behalf of the Continental Defendants includes Morita Produce Co.
& Nuthouse and River City Produce Co., Inc.
These entities were respondents in the first appeal (
in the subsequently filed third-amended complaint, but were not listed among
the Continental Defendants in the interlocutory judgment filed on
October 21, 2010.
name="_ftn2" title=""> [2]“F.O.B.â€
means free on board. (Cal. U. Com. Code,
§ 2319, subd. (1).) An
agreement using the term “F.O.B. seller’s place of business†is known as a
shipment contract, and the risk passes to the buyer when the goods are
delivered to the carrier. Conversely, an
agreement using the term “F.O.B. buyer’s place of business†is referred to as a
destination contract, and the risk does not pass to the buyer until the goods
are tendered to the buyer at the place of destination. (1 White & Summers, Uniform Commercial
Code (5th ed. 2006) § 5-2, p. 339.)
