Filed 6/17/26 Atiyeh v. Jin and Yu 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ANDY ATIYEH et al.,
Plaintiffs and Appellants, G064278, G064280
v. (Super. Ct. No. 30-2021-
01206191)
JIN AND YU, LLC et al.,
OPINION
Defendants and Appellants.
Appeal from a judgment of the Superior Court of Orange County,
Michael J. Strickroth, Judge. Reversed and remanded for further
proceedings. All motions and requests for judicial notice are denied.
Andy Atiyeh and Lannette Atiyeh, in pro. pers., for Plaintiffs and
Appellants.
Callahan & Blaine, Peter S. Bauman and James M. Sabovich for
Defendants and Appellants.
* * *
In 2018, plaintiff Pup Pup Hooray, LLC (Pup Pup) entered into a
lease with defendants Jin and Yu, LLC (Jin) for commercial property. Pup
Pup’s interest was later assigned to the owners of Pup Pup, Andy and
Lanette Atiyeh (the Atiyehs), who were also named as plaintiffs. This action,1
which follows an unlawful detainer case that ended in Jin’s favor, went to
trial on claims for breach of contract and fraud arising from the condition of
the rental premises and the alleged failure to provide prompt remedial
action. The jury found for the Atiyehs and awarded $634,331.26. Jin filed the
instant appeal after losing motions for new trial and judgment not
withstanding the verdict (JNOV), alleging numerous errors.
With respect to the breach of contract action, we conclude a new
trial should be granted as to the damage award, because the amount awarded
was speculative and not tethered to any recognizable legal theory.
As to the fraud cause of action, JNOV should have been granted
under the economic loss rule because the alleged fraud was not independent
of the breach of contact claim. We therefore reverse and remand for further
proceedings.
In a cross-appeal, the Atiyehs argue they should have been
allowed to pursue punitive damages once the jury found Jin and Bai
(collectively defendants) liable for fraud. Because the fraud cause of action is
reversed, the issue of punitive damages is moot. The remaining issues the
Atiyehs mention in their cross-appeal are improper.
1 The instant action also named Lizhou Bai, a director and member of
Jin, as a defendant.
2
STATEMENT OF FACTS AND PROCEDURAL HISTORY
Neither party provided a concise summary of the facts with
supporting record references. We draw the facts from the record.
A. Background Facts and the Unlawful Detainer Action
On November 15, 2018, Pup Pup entered into a 10-year lease
with Jin for a commercial building in Lake Forest. Pup Pup intended to
operate a dog day care facility. (Jin and Yu, LLC, et al. v. Pup Pup Hooray
LLC (May 12, 2022, G060273) [nonpub. opn.] (Pup Pup).) The lease was a
standard commercial form for a single tenant building. Both parties were
represented by commercial realtors. The agreement was between the two
LLCs, and other than making the Atiyehs the guarantors of Pup Pup’s
performance, the lease did not grant any rights to third parties. Bai signed on
behalf of Jin and the Atiyehs each signed as principals of Pup Pup.
According to the Atiyehs, Bai failed to disclose the true state of
the premises. Bai later testified that the building had been vacant for three
years before Pup Pup entered into the lease. “He acknowledged that he had
not discussed water leaks in the roof, a non-functioning air conditioning
system, non-opening rollup doors, or electrical issues with Pup Pup’s owners
before the lease was signed. He also testified that these defects were fixed by
May 2019.” (Pup Pup, supra, G060273.)
The lease set the base rent at $12,043.50 for the first year, with
increases for each consecutive year, and Pup Pup also agreed to pay owner
association dues of $1,300 per month for the same period.
Pup Pup took possession on January 1, 2019. According to the
Atiyehs, the property was unready for both occupancy and operations. The
Atiyehs claimed they relied on Bai’s representations about the state of the
building and his promises to promptly remedy any defects. They alleged they
3
invested more than $130,000 in improvements and preparations to do
business, and lost those funds when they were evicted. Lanette Atiyeh later
testified that city “signed off” for the premises were received between March
and May 2019. Pup Pup held “a ribbon cutting” on June 14.
On February 26, 2020, Jin served a three-day notice to pay or
quit. On March 6, 2020, Jin filed an unlawful detainer action (the UD action),
alleging past due rent of $49,140, and an alleged fair rental value of $444.78
per day. (Pup Pup, supra, G060273.)
At trial in the UD action, Pup Pup persistently raised the
condition of the building at the time of the lease. (Pup Pup, supra, G060273.)
The court “remind[ed] counsel that there [was] no warranty of habitability in
a commercial lease.” (Ibid.)
The court ultimately found for Jin and awarded rent owing and
holdover damages, for a total judgment of $128,506.36. (Pup Pup, supra,
G060273.)
Pup Pup appealed, and we affirmed. (Pup Pup, supra, G060273.)
Among numerous other issues, Pup Pup argued that “rent was abated during
any period of delayed possession, and, further, that possession did not start
until all the ‘improvements were in the proper, agreed-upon condition.’”
(Ibid.) We found this argument without merit based on the terms set forth in
the lease. Possession, we concluded, began at least as of January 2019. We
noted: “In the context of a commercial lease, the general rule [is] that a
tenant must pay rent once it occupies the premises, regardless of their
condition. [Citations.] Although a tenant may have claims against a landlord
for failing to provide the premises in a condition that allows the tenant to
conduct its business, these claims do not relieve the tenant from paying rent
4
or from defending against a claim for unlawful detainer based on failure to
pay rent.” (Ibid.)
“Substantial evidence supported the trial court’s conclusion that
Pup Pup was in possession at least as of March 2019 and probably earlier.
Paragraph 3.3 refers to delay in possession, not delay of use.[2] There was no
evidence that Pup Pup’s possession of the premises was delayed past the time
it was assessed for rent. In fact, the evidence suggested that Pup Pup was in
possession well before March 2019 and making tenant improvements at that
time.” (Pup Pup, supra, G060273.) Further, we disagreed with Pup Pup’s
contention that it did not have to pay rent while the premises was
“damaged,” concluding this was not a reasonable interpretation of the lease.
(Ibid.) In sum, this court rejected Pup Pup’s arguments that it was not
2 Paragraph 3.3 of the lease stated: “Delay In Possession. Lessor agrees
to use its best commercially reasonable efforts to deliver possession of the
Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession by such date, Lessor shall not be
subject to any liability therefor; nor shall such failure affect the validity of
this Lease or change the Expiration Date. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers
possession of the Premises and any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by
the acts or omissions of Lessee. If possession is not delivered within 60 days
after the Commencement Date, as the same may be extended under the
terms of any Work Letter executed by Parties, Lessee may, at its option, by
notice in writing within 10 days after the end of such 60 day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said 10 day
period, Lessee’s right to cancel shall terminate. If possession of the Premises
is not delivered within 120 days after the Commencement Date, this Lease
shall terminate unless other agreements are reached between Lessor and
Lessee, in writing.”
5
required to pay rent while in possession of the premises and affirmed the
judgment in Jin’s favor.
B. The Instant Action
On June 17, 2021, while the appeal in the UD action was
pending, Pup Pup and the Atiyehs filed the instant case for damages, alleging
breach of contract, breach of the implied covenant of good faith and fair
dealing, nuisance, constructive fraud, and fraud.
On March 10, 2023, the court granted a motion to be relieved by
Pup Pup’s counsel. The Atiyehs subsequently represented themselves.3 There
is a document dated July 12 which purports to assign Pup Pup’s right to
recover from defendants to the Atiyehs. Pup Pup was dismissed from the case
on July 31. Defendants did not object to this assignment during trial, nor did
it object to the inclusion of the jury instruction explaining the assignment.
(CACI No. 327.)
Prior to trial, the Atiyehs filed motions in limine to exclude
evidence of the outcome of the UD action and this court’s opinion in the UD
action. In its opposition to the motion in limine regarding the outcome of the
UD action, defendants stated: “The documents referred to will not be
introduced in support for the purpose of Res Judicata and/or collateral
estoppel but are part of the overall picture of this case and are relevant to put
the relationship between the parties into context.
Defendants requested the court take judicial notice of the docket
and this court’s opinion in the UD action. The trial court was skeptical of
defendants’ request. In arguing for the relevance of the UD opinion, counsel
3 According to the State Bar of California’s website, Andy Atiyeh was
licensed as an attorney in 2003. He is currently not eligible to practice for
administrative reasons.
6
stated: “the appeal talks about many of the same issues that the Plaintiffs
wish to speak about here in this case. And so although we’re not asking for it
for res judicata, we believe that the appeal in itself has relevance.” The court
determined the opinion was not relevant, and ordered “no mention of the
appeal,” effectively granting the Atiyehs’ motion in limine and denying
defendants’ request for judicial notice of the docket in that case. With respect
to the existence of the UD action itself, the court stated issues relating to the
UD action “can be raised by questions and answers but not with documents.”
The court granted defendants’ motion to bifurcate the issue of
punitive damages.
Trial began in late September 2023. By that point, the operative
causes of action were breach of contract and fraud. There was no dispute at
trial that the building was not ready for use in January 2019 and that all
repairs were completed by May. A realtor testified that typical timelines for
tenant improvements were three to four months. Pup Pup was “almost done”
with its improvements in early March.
Evidence demonstrated that Pup Pup’s revenues increased over
time, from $196,639 in 2020 to $410,087 in 2023, with projected income of
$574,123 in 2023. The business was open from June 1, 2019 to April 20, 2023
at the Lake Forest location.
At the conclusion of the Atiyehs’ case, the defense made a motion
for nonsuit due to their failure to demonstrate damages. Andy Atiyeh stated
they “were planning to . . . I thought we had bifurcated the damages.” The
court explained that only punitive damages were bifurcated. The court found
“some evidence regarding damages” had been presented.
The jury returned a verdict in favor of the Atiyehs. For breach of
contract, it awarded $102,473.56 in economic damages. For fraud, the jury
7
awarded $331,857.70 in economic damages and $200,000 in pain and
suffering.
Defendants filed motions for a new trial and JNOV. The court
ultimately denied both motions.
DISCUSSION
I.
PENDING MOTIONS
A. Respondents’ Motion to Dismiss and Request for Judicial Notice
The Atiyehs moved to dismiss the defendants’ appeal4 on the
grounds that “[Defendants’] notice of appeal failed to specify whether they
were challenging the trial court’s denial of their motion for judgment
notwithstanding the verdict (‘JNOV’) or their motion for new trial—only the
latter of which is appealable.”
The Atiyehs are wrong. The very case they cite for this
proposition is clear that a denial of a motion for new trial can be reviewed on
appeal from the underlying judgment. (Walker v. Los Angeles County
Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 19.) Defendants
have appealed from the underlying judgment, as their notice of appeal stated.
This motion is without merit, and is therefore denied. Their
“renewed” motion is further denied. Because the documents listed in the
Atiyehs’ request for judicial notice have no further relevance and were
4 The Atiyehs filed this motion twice. On June 18, 2024, they filed the
initial motion. On July 10, 2024, the parties were advised the motion and
related request for judicial notice would be decided in conjunction with the
appeal. For reasons unknown, on June 23, 2025, the Atiyehs filed a
“renewed” motion. On July 7, 2025, we ordered the parties to refrain from
filing additional motions to dismiss the appeal.
8
unnecessary to deciding the motion, the request is also denied. (See People
ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422–423, fn. 2.)
Defendants requests sanctions against the Atiyehs for filing this
motion, but it has not met the procedural requirements necessary for the
court to consider sanctions. (See Cal. Rules of Court, rule 8.276.)5
B. Motions for Sanctions
The Atiyehs have filed several motions for sanctions in this court,
including one filed before briefing even began. We need not discuss these
motions in detail. We have reviewed them carefully and found they lack any
hint of merit. The motions are denied.
C. Defendants’ Request for Judicial Notice
Defendants’ request this court take judicial notice of a minute
order filed in the UD action. We find no relevance to this order, and because
defendants did not submit points and authorities with their request, they
offer none. We therefore deny the request. (Mangini v. R.J. Reynolds Tobacco
Co. (1994) 7 Cal.4th 1057, 1063.) Counsel is cautioned to submit points and
authorities when requesting judicial notice on appeal in the future. (See rule
8.252 (a).)
II.
STANDARDS OF REVIEW
Defendants claim alternatively that either their motion for new
trial or JNOV should have been granted.
A. Motion for New Trial
Motions for new trial are purely statutory and must be based on
an identified statutory ground in Code of Civil Procedure section 657. “A trial
5 Subsequent references to rules are to the California Rules of Court.
9
court’s broad discretion in ruling on a motion for new trial is accorded great
deference on appeal. [Citation.] However, particularly when reviewing an
order denying a new trial, the appellate court is required to review the entire
record to determine independently whether the error on which the new trial
motion is based is prejudicial.” (Plancarte v. Guardsmark (2004) 118
Cal.App.4th 640, 645.)
B. JNOV
“‘A motion for judgment notwithstanding the verdict may be
granted only if it appears from the evidence, viewed in the light most
favorable to the party securing the verdict, that there is no substantial
evidence in support.’ [Citations.] On appeal from the denial of a motion for
judgment notwithstanding the verdict, we determine whether there is any
substantial evidence, contradicted or uncontradicted, supporting the jury’s
verdict. [Citations.] If there is, we must affirm the denial of the motion.
[Citations.] If the appeal challenging the denial of the motion for judgment
notwithstanding the verdict raises purely legal questions, however, our
review is de novo.” (Wolf v. Walt Disney Pictures & Television (2008) 162
Cal.App.4th 1107, 1138; see TRC Operating Co., Inc. v. Chevron USA, Inc.
(2024) 102 Cal.App.5th 1040, 1102.)
III.
ISSUES RELATING TO BREACH OF CONTRACT CLAIM
A. Issue Preclusion
Defendants first contention is that the Atiyehs argued repeatedly
at trial that they were not required to pay rent at all until repairs of the
property were complete. This argument, which defendants refer to as the “No
Rent Theory,” was considered and rejected by this court in the UD Action.
Therefore, defendants claim, the Atiyehs should not have been allowed to
10
argue it, and accordingly their motion for new trial or JNOV should have
been granted.
Prior to trial, in the context of one of the Atiyehs’ motions in
limine and defendants’ request for judicial notice, the defense expressly
stated it was not seeking preclusive effect of the UD action. In their
opposition to the motion in limine, they stated: “The documents referred to
will not be introduced in support for the purpose of Res Judicata and/or
collateral estoppel but are part of the overall picture of this case and are
relevant to put the relationship between the parties into context.” Counsel
repeated this argument in court with respect for the request for judicial
notice: “[T]he appeal talks about many of the same issues that the Plaintiffs
wish to speak about here in this case. And so although we’re not asking for it
for res judicata, we believe that the appeal in itself has relevance.”
Thus, defendants represented to the court at least twice that they
were not seeking any preclusive effect of the UD Action. They do not cite to
any point in the record where they raised this issue again until their posttrial
motions. Whether viewed as invited error or forfeiture, the result is the same.
If defendants wanted the trial court to consider collateral estoppel, it should
have raised the issue prior to trial rather than waiting until a posttrial
motion, after the parties and the court had incurred the time and expense of
a jury trial.
Although most of the authority in this area relating to forfeiture
is in the context of issues that were not raised at all below, the same logic
applies to situations where an argument that should have been raised prior
to trial was not raised until afterward. “[F]airness is at the heart of a waiver
claim. Appellate courts are loath to reverse a judgment on grounds that the
opposing party did not have an opportunity to argue and the trial court did
11
not have an opportunity to consider. [Citation.] In our adversarial system,
each party has the obligation to raise any issue or infirmity that might
subject the ensuing judgment to attack. [Citation.] Bait and switch on appeal
not only subjects the parties to avoidable expense, but also wreaks havoc on a
judicial system too burdened to retry cases on theories that could have been
raised earlier.” (JRS Products, Inc. v. Matsushita Electric Corp. of America
(2004) 115 Cal.App.4th 168, 178.)
The situation here is actually worse than failing to raise an issue
at all. It is not as if defendants were not aware that issue preclusion could be
an issue in this case. Rather, at least twice, defendants explicitly stated they
were not seeking a ruling that issue preclusion applied. We can only assume
this was a deliberate strategic decision made for good reasons. Leading the
court and the other party down the garden path prior to trial and then
asserting error after the jury’s verdict is simply a waste of everyone’s time
and resources, including the court’s. This argument was forfeited.6
We would reach the same result under the doctrine of invited
error. “[W]hen a party by its own conduct induces the commission of error, it
may not claim on appeal that the judgment should be reversed because of
that error.” (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 212.) If the
failure to apply claim preclusion was an error, it was one that defendants
invited by explicitly stating they were not seeking its application in this case.
6 Defendants’ argument that the trial court’s evidentiary ruling on this
issue was an abuse of discretion is premised on the notion that the Atiyehs
were collaterally estopped from raising the No Rent theory. They also argue
the court did not do its duty to interpret the contract because the No Rent
theory should have been rejected. Because defendants conceded this issue at
trial, we find no reversible error.
12
B. Contractual Interpretation
Defendants contend that the Atiyehs should not have been
allowed to argue their interpretation of the contract. This argument relates
primary to sections 2.2 and 2.3 of the lease.
In relevant part, section 2.2 stated: “Lessor shall deliver the
Premises to Lessee broom clean and free of debris on the Commencement
Date or the Early Possession Date, whichever first occurs . . . [and] warrants
that the existing electrical, plumbing, fire sprinkler, lighting, heating,
ventilating, and air conditioning systems . . . and all other such elements in
the Premises, other than those constructed by Lessee, shall be in good
operating condition on said date and that the surface and structural elements
of the roof, bearing walls and foundation of any buildings on the Premises . . .
shall be free of material defects , . . . If a non-compliance with said warranty
exists as of the Start Date, or if one of such systems or elements should
malfunction or fail within the appropriate warranty period, Lessor shall, as
Lessor’s sole obligation . . . promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such non-
compliance, malfunction, or failure, rectify same at Lessor’s expense.” Section
2.3 was essentially similar, except it warranted compliance with codes and
applicable laws.
Defendants’ cite to trial testimony that they contend misstated
the extent of the warranty, claiming that rather than a limited obligation to
repair, these sections were a guarantee “of the condition of the Building and
the different systems therein.”
“When no extrinsic evidence is introduced, or when the competent
extrinsic evidence is not in conflict, the appellate court independently
construes the contract.” (Founding Members of the Newport Beach Country
13
Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955.)
“We begin our review with some basic principles of contract interpretation.
We must interpret a contract so as to give effect to the mutual intent of the
parties at the time the contract was formed. (Civ.Code, § 1636.) ‘The
language of a contract is to govern its interpretation, if the language is clear
and explicit, and does not involve an absurdity.’ (Civ.Code, § 1638.) Courts
must also endeavor to give effect to every part of a contract, ‘if reasonably
practicable, each clause helping to interpret the other[s].’ (Civ.Code, § 1641.)”
(Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC (2010) 185 Cal.App.4th
1050, 1060.)
Defendants claim it was error to allow the Atiyehs to present
sections 2.2 and 2.3 as a “guarantee,” but that is exactly what they were. In
its simplest form, section 2.2 stated: “Lessor . . . warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating, and air
conditioning systems . . . shall be in good operating condition on said date and
that the surface and structural elements of the roof, bearing walls and
foundation of any buildings on the Premises . . . shall be free of material
defects . . . .” Indeed, section 2.2 refers to itself as a warranty: “If a non-
compliance with said warranty exists . . . .” Defendants offer no meaningful
distinction between “warranty” and “guarantee” in this context.
Defendants complain that “Sections 2.2 and 2.3 are extremely
limited duty-to-repair provisions, not general guarantees of condition at the
time of the contracting.” But this is belied by the plain language of these
provisions. Defendants are correct that they were not immediately in breach,
but the evidence and argument the Atiyehs offered on this point does not
claim that.
14
During opening statements, Andy Atiyeh said: “So they
guarantee that if they’re not in operating condition, they’ll—we will notify
them, and they’ll promptly repair them. That sounds really good. That
sounds like the kind of guarantee we need to move forward.” Other parts of
the Atiyehs’ opening statement included: “[B]ecause we were getting the
building, we just wanted them to guarantee the building.” After possession
was delivered, the Atiyehs found “problem, after problem, after problem that
were guaranteed to us to be in good shape and that they were going to be
taken care of.” None of these statements reflects an unreasonable
interpretation of the warranty provision.
The only actual testimony defendants point to is a statement by
Lanette Atiyeh, who testified that if certain things had not been guaranteed,
she would not have signed the lease. Defendants argue the Atiyehs claim the
failure to deliver the property in compliance with sections 2.2 and 2.3 was a
breach of the lease, but fail to point to any argument or testimony that
actually says as much. The Atiyehs’ arguments and single piece of testimony
can be viewed as relating to defendants’ delay in repairing the premises. We
simply find no error here, much less reversible error.
C. Damages
The jury awarded the Atiyehs $102,473.56 in damages for their
breach of contract claim. As we noted above, the Atiyehs did not present any
specific evidence on damages. They claim to have “presented their damages
at trial, and they ranged from money that they spent on improvements,
expecting to open soon, to loss of income, to stress of not opening and stress of
being broke as a result, the stress from realizing that they were fooled but
not before making large financial commitments in reliance.” The Atiyehs,
however, do not provide record references for any of this alleged evidence. It
15
is not clear, either in this court or in the trial court, what damages they were
actually seeking or under what legal theory those damages were calculated.
Was it for lost profits due to a delay in opening, which would be a permissible
theory? Or was it for an impermissible theory, such as loss of the total
investment due to the eviction, or lost profits due to the eviction? Or
something else? We cannot tell. The special verdict form only asked the jury
which party prevailed, and if the Atiyehs prevailed, to fill in an amount of
“economic damages.” The $102,473.56 the jury awarded does not appear to be
tethered to any legal theory of recovery, and the Atiyehs offer nothing helpful
here.
Pup Pup’s gross income for 2020 was $196,639. If the jury was
attempting to award lost profits based on a delay in opening, the amount
awarded was excessive. At most, the evidence at trial showed the delay was
no more than three months, based on the time frame necessary for the
Atiyehs to complete its own construction work. That would equate to
approximately $98,000 gross income, less expenses. The Atiyehs do not cite to
evidence of their expenses over those months, so the amount the jury should
have awarded under this theory was unclear and speculative.
Similarly, if the jury’s award was based on the legally
unsupported notion that Pup Pup was not required to pay rent while the
repairs were incomplete, the award should bear some relation to the first
year’s rent of $12,043.50 per month plus $1,300 in owner association dues. If
the jury’s award was based on some other theory, the damage award may be
excessive, based on an unlawful theory, or both. It is simply impossible to tell.
As noted, defendants moved for a new trial. One of the stated
grounds was excessive damages. “‘[A]lthough the trial court “is accorded a
wide discretion in ruling on a motion for new trial and . . . the exercise of this
16
discretion is given great deference on appeal . . . we are also mindful of the
rule that on an appeal from the judgment it is our duty to review all rulings
and proceedings involving the merits or affecting the judgment as
substantially affecting the rights of a party . . . including an order denying a
new trial. In our review of such order denying a new trial, as distinguished
from an order granting a new trial, we must fulfill our obligation of reviewing
the entire record, including the evidence, so as to make an independent
determination as to whether the error was prejudicial.”’” (Piscitelli v.
Friedenberg (2001) 87 Cal.App.4th 953, 969.)
Our review of the entire record here amply supports the
contention that a new trial on the issue of damages for breach of contract
should have been granted for excessive damages. (Code Civ. Proc., §657, par.
5.) “Whatever [the measure of damages is] in a given case, it is fundamental
that ‘damages which are speculative, remote, imaginary, contingent, or
merely possible cannot serve as a legal basis for recovery.’” (Piscitelli v.
Friedenberg, supra, 87 Cal.App.4th at p. 989.)
Neither the trial court’s order nor the Atiyehs’ opposition below
or briefing in this court sets forth any coherent legal theory as to why the
Atiyehs are entitled to $102,473.56. The trial court noted the evidence as to
“damages was somewhat fuzzy,” but did not find it speculative. We disagree.
Without some recognized, applicable legal theory to tie to the number
awarded, we conclude the damages awarded were indeed speculative and
therefore excessive.
Accordingly, we direct the trial court to grant a new trial on the
issue of damages for breach of contract only. Upon remand, it is incumbent
upon the Atiyehs to prove both the existence and amount of damages for
17
breach of contract. The damages awarded must be tethered to a permissible,
recognized legal theory of recovery.
IV.
THE ASSIGNMENT
Defendants next argue the assignment of Pup Pup’s rights to the
Atiyehs was either improper as a fraudulent transfer or could not be used to
avoid the pro se representation prohibition. What Defendants do not do is
offer any record citation for their objections to the assignment prior to trial.
Again, this is an issue they raised for the first time in posttrial motions. For
the same reasons discussed above with respect to issue preclusion, we
conclude defendants have forfeited this issue on appeal for failure to timely
raise it in the trial court.
Defendants contend the rule against pro se representation for
entity litigants is not waivable, and we agree. But this is more than a simple
application of the rule that an entity cannot be represented by a nonlawyer.
It involves an assignment to which defendants did not object. The legality
and propriety of the assignment was an issue that could be and was waived
by defendants.
V.
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
18
property of another, or infringing upon any of his rights.’ (Sec. 1708, Civ.
Code.) 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
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,
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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.)
Here, the fraud alleged by the Atiyehs was identical to the breach
of contract, not independent of it. In the breach of contract cause of action,
the complaint alleged: “[Jin] failed to do things that the Lease required it to
do. The Lease provides that [Jin] would deliver the Property in such a
condition whereby the existing electrical, plumbing, fire sprinkler, lighting,
heating, HVAC, loading doors, sump pumps, and other elements shall be in
good operating condition on said date and that the surface and structural
elements of the roof, bearing walls and foundation of any building on the
Property shall be free of material defects. [Jin] also covenanted that the
Property was in compliance with building codes, applicable laws, covenants
or restrictions of record, regulations and ordinances. Despite repeated notices
to [Jin] (starting prior to the commencement date), [Jin] failed to follow
through on this covenant.”
In the fraud cause of action, the Atiyehs alleged that defendants
made a promise without the intent to perform it “by way of the Lease” and
intended that Pup Pup “relied on the representations set forth in the Lease.”
“Thus prior to entering into the Lease with [Pup Pup], Defendants were fully
aware that the subject Property was not in a condition which would enable
[Pup Pup] to be able to operate the business contemplated under the Lease.
Prior to entering into the Lease, Defendants failed to advise Plaintiffs they
knew the subject Property was not in a condition which would enable [Pup
Pup] to be able to operate the business contemplated under the Lease. As set
forth above, the subject Property was not in a suitable condition . . . . It took
[Pup Pup] nearly 6 months to get the subject Property in a condition whereby
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it would be permitted able to run as a business that was called for under the
Lease.” In short, the complaint alleged that defendants committed fraud by
not meeting the obligations of the lease.
These allegations fail to establish a tort cause of action
independent of the parties’ contractual obligations, and the harm alleged was
within the reasonable contemplation of the parties when they entered into
the contract. (Rattagan, supra, 17 Cal.5th at pp. 19–20.) This is not a close
call—there is not a single allegation of fraud here that does not arise directly
from the contract. Accordingly, the court should have granted JNOV on the
fraud claim.7
VI.
THE CROSS-APPEAL
A. Punitive Damages
Because JNOV should have been granted on the fraud cause of
action, any issues surrounding punitive damages, which can only be attached
to the fraud cause of action, are moot.
B. Remaining Issues
The Atiyehs also purport to raise a host of additional issues
including the appeal bond, sanctions, and other matters. None of these are
the subject of an appealable order identified and cited to by the Atiyehs, nor
do they provide proper briefing. “It is the appellant’s affirmative duty to show
error by an adequate record.” (Osgood v. Landon (2005) 127 Cal.App.4th 425,
435.) The appellant must “present argument and authority on each point
made” (County of Sacramento v. Lackner (1979) 97 Cal.App.3d 576, 591; rule
7 Because we are reversing the fraud claim without remand, we need
not consider defendants’ arguments regarding double recovery or the
propriety of awarding pain and suffering damages.
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8.204(a)(1)(B)), and cite to the record to direct the reviewing court to the
pertinent evidence or other matters in the record that demonstrate reversible
error (Rule 8.204(a)(1)(C); Guthrey v. State of California (1998) 63
Cal.App.4th 1108, 1115). The Atiyehs have not met these requirements.
Accordingly, we need not consider these purported errors any further.
DISPOSITION
The Atiyehs’ motions to dismiss are denied. The Atiyehs’ motions
for sanctions are denied. The Atiyehs’ request for judicial notice is denied.
Defendants’ request for judicial notice is denied.
The judgment is reversed and the matter remanded for further
proceedings in accordance with this opinion. Because Bai was not a named
defendant in the breach of contract cause of action, he is dismissed from the
case. Defendants are entitled to their costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
SANCHEZ, J.
SCHWARM, J.*
*Judge of the Orange County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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