Lundin v. WKS Restaurant Corp. CA4/3

Filed 8/3/23 Lundin v. WKS Restaurant Corp. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
LEONARD H. LUNDIN et al.,
Plaintiffs and Appellants, G060936, G061455
v. (Super. Ct. No. 30-2018-01027512)
WKS RESTAURANT CORPORATION, OPINION
Defendant and Respondent.
Appeal from a judgment and postjudgment orders of the Superior Court of
Orange County, James L. Crandall, Judge. Affirmed.
Snell & Wilmer, Sean M. Sherlock and Jing (Jenny) Hua; Klapach &
Klapach and Joseph S. Klapach for Plaintiffs and Appellants.
Smith, Steven C. Smith and Stephen C. Biggs for Defendant and
Respondent.
* * *
Defendant and cross-plaintiff WKS Restaurant Corporation (WKS)
purchased an El Pollo Loco business in 2004 (the 2004 sale) from Northridge Foods, Inc.
(Northridge Foods), the predecessor in interest of plaintiff Leonard Lundin. Northridge
Foods owned the restaurant building (the building) but leased the land from a nonparty.
In the 2004 sale, Northridge Foods assigned the ground lease to WKS and executed a
separate agreement with WKS for possession of the building.
A dispute arose in 2018. WKS maintained it had purchased title to the
building in the 2004 sale, while Lundin claimed WKS had only obtained a leasehold
interest. Lundin and several other parties then filed this action against WKS, and WKS
filed a cross-complaint against them. After Lundin and the other plaintiffs had presented
their evidence on the complaint at trial, WKS moved for judgment under Code of Civil
Procedure section 631.8, subdivision (a).1 The trial court granted the motion, finding
WKS owned the building. It entered judgment in favor of WKS on the complaint and the
cross-complaint and awarded WKS fees and costs.
Lundin, along with several other appellants identified below, appeal the
judgment and the fees and costs award. Primarily, they argue the court incorrectly
interpreted the underlying contracts for the 2004 sale in finding that WKS owned the
building. We disagree. The court’s interpretation of these contracts is supported by the
extrinsic evidence admitted during trial, which indicates the parties intended for the 2004
sale to include the building’s title.
Lundin and the other appellants also argue the court made a procedural
error by simultaneously granting judgment on the cross-complaint and the complaint.
But to the extent any error was committed, it was harmless. The court still would have
found that WKS owned the building even without the alleged error.
1
All further undesignated statutory references are to the Code of Civil Procedure.
2
For these reasons, we affirm the judgment. Lundin also asks that we
reverse the court’s orders awarding fees and costs if we reverse the underlying judgment.
Since we affirm the judgment, we also affirm the court’s award of fees and costs.
I
FACTS AND PROCEDURAL HISTORY
A. Background
Lundin and three nonparties – Diane Kolodziejski, Walter Beck, and
William Brusslan – formed Northridge Foods in 1987 to construct and operate an El
Pollo Loco restaurant. Northridge Foods then entered into a ground lease for a vacant
plot of land in Northridge with nonparty Balboa Nordhoff Center (Balboa).2 The initial
term of the ground lease expired on December 31, 2018. The ground lease provided
three five-year options, which, if exercised, would extend the term to December 31, 2033.
After leasing the land, Northridge Foods constructed the building. Per the
ground lease, Northridge Foods held title to the building while the ground lease was in
effect, but title to the building would pass to Balboa upon the ground lease’s expiration.
Northridge Foods sold its interest in the El Pollo Loco business to WKS in
the 2004 sale. The primary dispute in this action is whether WKS purchased title to the
building in the 2004 sale. WKS contends that it did, while Lundin contends WKS only
obtained a leasehold interest.
Prior to the closing of the 2004 sale, WKS and Northridge entered into a
letter of intent confirming the terms of the sale (the letter of intent). The letter of intent
stated WKS would “assume the existing ground lease” and “enter into a new mutually
agreed upon building lease at a total rent of [$48,000] per year.” The letter of intent
further specified WKS would acquire “all the assets involved in the operation” of the El
2
It appears Lundin has an interest in Balboa, but the parties have not explained the
extent of his interest.
3
Pollo Loco restaurant. These assets included, “all furniture, fixtures, leases, leasehold
improvements, small tools, point of sale computer systems, software and hardware,
equipment packages, small wares, signs and licenses used in the operation of the
restaurants.” (Italics added.)
The parties later entered into several agreements relating to the 2004 sale
(the 2004 sale agreements), including an Asset Purchase Agreement (the purchase
agreement), a Standard Industrial/Commercial Single-Tenant Lease (the building lease),
and an Assignment of and Second Amendment to Lease (the assignment) that transferred
Northridge Foods’ interest in the ground lease to WKS.
Under the purchase agreement, WKS agreed to purchase all “Assets” of
Northridge Foods for $1,080,750. “Assets” was defined to include “all tangible personal
property of any kind located in the Restaurant[] or on the Real Property, including, but
not limited to, equipment, appliances, machinery, tables, chairs, other furniture, bars,
tableware, cookware, utensils, furnishings, signage, leasehold improvements, fixtures,
uniforms, supplies, food and beverage inventory . . . , and advertising and promotional
materials. . . .” (Italics added.)
The building lease utilized a modified American Industrial Real Estate
Association form. Like the ground lease, it expired on December 31, 2018. It also
provided four five-year options, which were synchronized to the ground lease’s options.
The building lease provided for base rent of $4,000 per month, which gradually increased
over the course of the initial term and also increased for each option period, if exercised.
The building lease was accompanied by a two-page Addendum to Lease
(the addendum). The addendum provided, “[t]he [building lease] is supplemented in each
and all of the respects set forth in the Addendum. In the event of any conflict between
the printed portions or other portions of the [building lease] and the Addendum, the
Addendum shall prevail.”
4
In the building lease, the parties crossed out section 7.4, which addressed
ownership of certain alterations and utility installations by WKS. Generally, the deleted
section 7.4 stated that any alterations and utility installations performed by WKS would
be a part of the “Premises,” and would become Northridge’s property at the expiration of
the building lease. The addendum added a new section 7.4 (section 7.4), which stated,
“All Alterations and Utility Installations made by [WKS] shall be the property of [WKS].
On the termination or expiration of the Lease or any extension thereof, the Premises
. . . shall be the property of [WKS].” (Italics added.) “Premises” was defined by the
building lease to mean, “[t]hat certain building including all improvements therein or to
be provided by [Northridge] under the terms of [the building lease].” (Italics added.)
The purchase agreement, the assignment, the building lease, and the
addendum were all signed by Beck and Brusslan for Northridge Foods. They were not
signed by Lundin. Roland Spongberg negotiated the 2004 sale for WKS, while Beck and
Brusslan negotiated for Northridge Foods. Lundin was not directly involved in the
negotiations with WKS.
WKS’s purchase of the El Pollo Loco business closed in December 2004.
The escrow instructions show WKS paid a total of $1,080,750. Of this amount, $650,000
was allocated to “Building/Leasehold Improvements,” and $100,000 was allocated to
“Leasehold Site Improvements.” The remainder of the purchase price was allocated to
furniture/fixtures/equipment, signage, franchise fees, and goodwill.
Before the 2004 sale closed, however, Lundin sued Beck and Brusslan for
embezzlement, fraudulent appropriations of funds, breaches of fiduciary duty, and other
claims. Diane Kolodziejski died while this litigation was pending, and her Northridge
Foods stock was distributed to her children, Christopher and Cynthia Kolodziejski.3
After Diane passed, Lundin, Breck, and Brusslan settled their lawsuit. Under the
3
Since this lawsuit involves multiple people from the Kolodziejski family, we refer to
each member by their first name.
5
settlement, Beck and Brusslan gave up their stock in Northridge Foods. Half of it went to
Lundin, and the other half went to Christopher and Cynthia.
Northridge Foods dissolved in 2008. After it dissolved, WKS made
payments owed under the building lease to Lundin, who distributed it among himself,
Christopher, and Cynthia.
B. This Lawsuit
In April 2018, WKS sent Lundin a letter to remind him of the building
lease’s expiration at the end of 2018. It also asked him to sign a memorandum
confirming that under section 7.4, WKS would own title to the building when the
building lease expired. Lundin refused to sign the memorandum and claimed WKS had
misinterpreted the building lease.
A few months later, WKS exercised its option to extend the ground lease
until December 31, 2023. It did not exercise its option to extend the building lease, and it
stopped paying Lundin rent on December 31, 2018, when the building lease expired.
Prior to the building lease’s expiration, Northridge Foods filed a complaint
against WKS (the complaint) for (1) anticipatory breach of contract, and (2) declaratory
relief. The first claim asserted WKS intended to remain in the building without paying
rent after the building lease expired. The second claim sought a declaratory judgment
stating WKS did not own the building and was required to exercise an option and pay
rent to retain possession. Lundin was later substituted in as plaintiff for Northridge
Foods, and Christopher and Cynthia were also added as plaintiffs (collectively,
plaintiffs).
WKS filed a cross-complaint (the cross-complaint) asserting three claims
against cross-defendants Northridge Foods, Lundin, Lundin Development Co.,
Christopher, Cynthia, the Lundin Living Trust dated March 26, 1998 (the Lundin trust),
and the Cynthia Irene Kolodziejski Living Trust dated April 14, 2006 (Cynthia’s trust).
6
First, WKS sought to quiet title to the building in its favor. Second, WKS sought a
declaratory judgment that it owned the building as of December 31, 2018. Third, WKS
alleged Northridge Foods had breached the purchase agreement by claiming ownership to
the building.
A bench trial began in May 2021. The primary dispute at trial was whether
WKS owned the building. WKS asserted that Northridge Foods had transferred the
building’s title to WKS either in 2004, at the 2004 sale’s closing, or in 2018, following
the building lease’s expiration. Because the court found the terms of the 2004 sale
agreements were ambiguous, it allowed plaintiffs to introduce extrinsic evidence.
After plaintiffs presented their evidence, WKS moved for judgment on the
complaint under section 631.8, subdivision (a). The court then allowed plaintiffs to
reopen their case and present additional evidence. After plaintiffs closed their case for a
second time, the court orally pronounced that WKS owned the building and granted its
motion for judgment. Among other things, the court noted, “it does appear . . . this whole
deal was focused on buying the business and the building.”
The court stated it would grant WKS’s motion for judgment on the
complaint, and the court and the parties turned to the cross-complaint. WKS dropped its
request for damages and rested its case on the cross-complaint. It then requested
judgment on the cross-complaint as to the sole remaining issue – the building’s
ownership. Based on its findings on the complaint, the court granted judgment to WKS
on the cross-complaint. No one argued that judgment on the cross-complaint was
improper.
The court entered judgment in favor of WKS on September 15, 2021 (the
judgment). The judgment pronounced that (1) WKS owned the building subject to the
ground lease’s terms; (2) title to the building was quieted in favor of WKS;
(3) Northridge Foods and its successors had no interest in the building as of December
7
31, 2018; and (4) Lundin and the other cross-defendants had breached the building lease
by failing to transfer the building’s title to WKS after the lease expired.
The court later issued a statement of decision, summarizing the evidence
and findings supporting its judgment granting WKS ownership of the building.
Significantly, it declined to address WKS’s theory that the building’s title had transferred
to WKS in 2004, at the close of the 2004 sale. The court found this issue to be
immaterial to the outcome of the case. The relevant question was whether WKS owned
the building as of December 31, 2018, when it stopped paying rent. As the court
explained, “a finding that the transfer occurred on any date before December 31, 2018
would have no meaningful impact on the Parties or the case and is therefore moot.”
WKS subsequently filed a motion for attorney fees and costs. The court
granted the motion and awarded WKS $68,646.63 in costs and $346,313 in fees (the fees
and costs award).
Two appeals were filed in this action by different plaintiffs and cross-
defendants. The first appeal (G060936) seeks reversal of the judgment (the judgment
appeal). It argues the trial court incorrectly found that WKS owns the building. The
second appeal (G061455) challenges the fees and costs award (the fees and costs appeal).
It asks that we reverse the fees and costs award if we reverse the judgment.
II
DISCUSSION
A. Lundin’s Motion for Substitution of Appellants
The judgment appeal was filed by Lundin, Christopher, Cynthia, and
Cynthia’s trust (the judgment appeal). The fees and costs appeal was filed by Lundin
Development Co., the Lundin trust, and Lundin for himself and purportedly as assignee
of the interests of Christopher, Cynthia, and Cynthia’s trust. We consolidated the two
appeals.
8
Lundin moves to substitute himself for Christopher, Cynthia, and Cynthia’s
trust (the Kolodziejski parties) in the consolidated appeal. He asserts the Kolodziejski
parties assigned him their claims in the underlying action and their rights in this appeal.
WKS opposes the motion as to the fees and costs appeal. First, WKS contends the
Kolodziejski parties are not parties to the fees and costs appeal because they did not file a
notice of appeal as to the fees and costs award. It likewise maintains that Lundin’s
attempt to file a notice of appeal on their behalf is invalid. Second, WKS asserts that
even if the Kolodziejski parties are parties to the fees and costs appeal, it is unnecessary
to grant Lundin’s substitution. We agree with WKS’s second argument. As such, we
grant Lundin’s motion for substitution as to the judgment appeal but deny it as to the fees
and costs appeal.
“Substitution of parties in an appeal or original proceeding must be made
by serving and filing a motion in the reviewing court.” (Cal. Rules of Court, rule
8.36(a).) The rule permitting substitution “is based on case law which deals with routine
substitutions of parties pending appeal, made necessary by an objective event such as
death of a party or transfer of his interest.” (Hollaway v. Scripps Memorial Hospital
(1980) 111 Cal.App.3d 719, 724, fn. 1 (Hollaway), italics added; Eisenberg et al., Cal.
Practice Guide: Civil Appeals and Writs (The Rutter Group 2023) ¶ 5:228 ([party can
move for a substitution “[i]f a substitution of parties in a pending appeal is necessitated
by a party’s death or transfer of interest”].)4
Lundin has not shown it is necessary to substitute himself for the
Kolodziejski parties on the fees and costs appeal. It is undisputed the Kolodziejski
parties remain liable for any fees and costs awarded against them. They have not
4
Hollaway cited California Rules of Court, rule 48, which is the predecessor to rule 8.36.
(Hollaway, supra, 111 Cal.App.3d at p. 724, fn. 1; Cal. Rules of Court, rule 8.36,
formerly rule 48, adopted, eff. Jan. 1, 2005. Renumbered rule 8.36, eff. Jan. 1, 2007, as
amended, eff. Jan. 1, 2018.)
9
assigned any such liability to Lundin. Rather, Lundin has only agreed to indemnify them
for any such fees and costs. Since the Kolodziejski parties still remain liable to WKS for
any fees and costs awarded, the proposed substitution is unnecessary. As such, we deny
Lundin’s motion for substitution as to the fees and costs appeal. (See Hollaway, supra,
111 Cal.App.3d at p. 724, fn. 1.)
The judgment appeal solely concerns the building’s ownership. The
Kolodziejski parties have assigned Lundin “any and all right, title, and interest, he, she,
or it has in any claim related to Northridge Foods, the assets of Northridge Foods, the
Action, and the Appeal.” (Italics added.) Since the Kolodziejski parties have assigned
whatever interest they may have in the building and the related claims to Lundin, he may
substitute in for them as to the judgment appeal. (See Hollaway, supra, 111 Cal.App.3d
at p. 724, fn. 1.) Due to this ruling, Lundin is now the only appellant as to the judgment
appeal.
B. Ownership of the Building
1. Standard of review
The judgment appeal asks whether the trial court correctly ruled that WKS
owns the building. The parties agree the answer turns on contractual interpretation, but
they dispute the applicable standard of review for interpreting the relevant contracts.
Lundin argues we should review them de novo. WKS contends we should apply the
more deferential substantial evidence standard since the court considered extrinsic
evidence. We agree with WKS.
De novo review applies when a trial court interprets a contract based solely
on its text. (People v. International Fidelity Ins. Co. (2010) 185 Cal.App.4th 1391,
1395.) But the standard of review may change if the contract’s text is ambiguous and the
court considers extrinsic evidence. “[T]he substantial evidence standard of review
applies when . . . conflicting extrinsic evidence is admitted to assist the court in
10
interpreting the contract. [Citation.] However, if interpretation of the contract does not
turn on the credibility of conflicting extrinsic evidence, the trial court’s interpretation of
the contract is a question of law we review de novo, or independently.” (Tribeca
Companies, LLC v. First American Title Ins. Co. (2015) 239 Cal.App.4th 1088, 1110;
Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 527 [“‘It is solely a judicial function to
interpret a written contract unless the interpretation turns upon the credibility of extrinsic
evidence, even when conflicting inferences may be drawn from uncontroverted
evidence’”].)
Here, it is undisputed the trial court considered extrinsic evidence when
interpreting the 2004 sale agreements. Lundin argues there are no credibility conflicts in
the relevant extrinsic evidence, thus, we must apply de novo review. We disagree.
To determine the building’s owner, the court reviewed the 2004 sale
agreements. It allowed extrinsic evidence concerning whether WKS and Northridge
Foods intended for the 2004 sale to include the building’s title. As explained in the
statement of decision, there was conflicting evidence on this point from Lundin and
Spongberg. Lundin testified Northridge Foods’ shareholders intended to keep title to the
building and only give WKS a leasehold interest. In contrast, Spongberg testified the
parties intended to transfer the building’s title to WKS through the 2004 sale. He
explained the building lease was a financing mechanism for the purchase and there was
no obligation for WKS to make payments on the building after the building lease expired.
The court found Spongberg’s account to be more credible than Lundin’s.
In the statement of decision, the court observed that even if Lundin did not want to sell
the building, “‘it appears that Beck and Brusslan entered into an agreement that sold the
building or lease.’” Further, during trial, the court noted that Lundin admitted he “wasn’t
part of the [2004 sale] transaction,” and that Beck and Brusslan, who were allegedly
cheating Lundin, may not have been honest with him about their intentions. Because the
court’s interpretation of the 2004 sale agreements relied on the resolution of credibility
11
issues, the substantial evidence standard applies. (Tribeca Companies, LLC v. First
American Title Ins. Co., supra, 239 Cal.App.4th at p. 1110.)
In response, Lundin argues the above testimony from Lundin and
Spongberg regarding the intent of the parties is irrelevant to the judgment appeal. He
believes the only relevant evidence is (1) the building lease, (2) the fact that the building
lease’s options run in sync with the ground lease’s options, and (3) Spongberg’s
testimony that he requested the options for the building lease. Lundin asserts this
evidence is uncontested, therefore, de novo review applies.
Lundin’s argument is based on a gross misreading of the judgment and the
statement of decision. As discussed above, WKS advanced two theories at trial as to
when it acquired title to the building: (1) in 2004, after the 2004 sale closed; or (2) on
December 31, 2018, after the building lease expired. Based on these two theories,
Lundin divides the evidence into categories: evidence relevant to the first theory and
evidence relevant to the second theory. The court declined to rule on the first theory
because the outcome would be the same regardless of whether title passed in 2004 or
2018. Because the court declined to rule on the first theory, however, Lundin argues we
should not consider any evidence relevant to the first theory. Rather, we only need
consider evidence relevant to the second theory. Lundin believes the testimony from
himself and Spongberg and all other evidence concerning the parties’ intent behind the
2004 sale is only relevant to the first theory. Thus, he asserts it is irrelevant to this
appeal. He maintains the only evidence relevant to the second theory is the three pieces
of evidence cited above, therefore, it is the only evidence we need to consider.
Lundin’s argument is untenable. While the court declined to rule on
whether title passed in 2004, it did not reject this theory. Nor does its failure to rule on
this theory render it irrelevant to the court’s ruling. The opposite is true. The statement
of decision shows the court’s analysis on the ownership issue primarily focused on
whether the parties intended to include the building in the 2004 sale.
12
For instance, the statement of decision provides, “[t]he Court finds the
parties intended to transfer the El Pollo Loco Building to WKS when Section 7.4 of the
Building Lease was removed by the parties” and replaced with section 7.4 in the
addendum. It further explains, “WKS agreed to a ‘Building Lease’ of $48,000 per year
only as a means to finance the purchase of [Northridge Foods’] assets. The ‘Building
Lease’ was only a mechanism of financing. . . . This financing arrangement . . . was to
terminate [on December 31, 2018,] when no further payments were due to the Sellers by
WKS. There was no obligation for WKS to pay the Building Lease payments past
. . . December 31, 2018. The Building Lease provides that the assets were to be
transferred to WKS at the end of 14 years and upon faithful payment of the Building
Lease payments, the assets were WKS’ and no one else could make a claim to the
assets.”5
Moreover, the statement of decision contains a “Findings” section, which
lists the court’s findings supporting its ruling. The evidence listed in this section contains
far more than the three pieces of evidence Lundin identifies above. For example, the
court found the parties’ conduct after the 2004 sale shows they intended to transfer the
building’s title to WKS in the sale. The court also credited Spongberg’s testimony “that
he thought WKS bought the building in 2004, and wanted to make it clear that at the end
of 2018 WKS owned the building.” The court expressly “accept[ed] these statements as
true.”
Lundin claims the court “‘decline[d] to rule’ on [the] theory” that the building lease
5
was used as a financing vehicle for the purchase of the building. (Quoting the statement
of decision.) This mischaracterizes the statement of decision. The full quote reads,
“[t]he Court declines to rule on [WKS’s] claim that the Building transferred in 2004
because it finds and accepts the testimony that the Building is the property of WKS on
and after December 31, 2018.” (Italics added.) Nothing from this passage shows the
court declined to rule on the financing-vehicle theory. Indeed, the court accepted this
theory in the statement of decision.
13
Given the statement of decision, Lundin’s position that this appeal turns
solely on the text of the building lease and evidence concerning the building lease’s
options is not well taken. This argument is easily disproved by the 21-page statement of
decision explaining the court’s reasoning for granting WKS ownership of the building.
In short, Lundin has failed to show the court’s ruling “does not turn on the credibility of
conflicting extrinsic evidence.” (Tribeca Companies, LLC v. First American Title Ins.
Co., supra, 239 Cal.App.4th p. 1110.) As such, the substantial evidence standard applies.
(Ibid.)
Under the substantial evidence standard, “‘we must accept any reasonable
interpretation [of the relevant contracts] adopted by the trial court.’” (ASP Properties
Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1266–1267.) We must also
“‘consider all of the evidence in the light most favorable to the prevailing party, giving it
the benefit of every reasonable inference, and resolving conflicts in support of the
[findings].’” (Id. at p. 1266.)
2. Merits
As set forth above, Lundin has taken a very narrow view of the evidence
relevant to this appeal. Consequently, his briefs omit nearly all the evidence discussed by
the trial court in its statement of decision. WKS argues that since he has failed to set
forth all the material evidence supporting the court’s judgment, he has waived any
argument that the judgment is unsupported by sufficient evidence. We agree.
“When appellants challenge the sufficiency of the evidence, all material
evidence on the point must be set forth and not merely their own evidence. [Citation.]
Failure to do so amounts to waiver of the alleged error and we may presume that the
record contains evidence to sustain every finding of fact.” (Jordan v. City of Santa
Barbara (1996) 46 Cal.App.4th 1245, 1255.) The waiver theory arises from the principle
that “[t]he judgment is presumed to be correct. [Citation.] And we presume that the
14
record contains evidence to sustain every finding of fact. [Citation.] It is the appellant’s
burden to demonstrate that it does not.” (Boeken v. Philip Morris, Inc. (2005) 127
Cal.App.4th 1640, 1658.)
Here, Lundin has not attempted to address the sufficiency of the evidence.
He only argues our review should be de novo. But, as set forth above, this position is
untenable given the statement of decision. Indeed, Lundin fails to discuss most of the
evidence contained in the statement of decision’s “Findings” section, which lists specific
findings relevant to the court’s ruling. The evidence in this section generally shows the
parties intended the 2004 sale to include ownership of the building:
• Plaintiffs never purchased insurance on the building, and WKS never
demanded that it do so.
• WKS made substantial improvements between 2004 and 2018 without
plaintiffs’ consent, and plaintiffs never demanded preapproval for
improvements.
• The escrow instructions indicate WKS bought the building for $750,000 of the
allocated purchase price.
• Northridge Foods did not depreciate the building after 2004, nor did it show its
failure to do so was for any reason other than the sale of the building.
• Some of the WKS’s 1099’s indicated its payments to Lundin “were for non-
employee compensation,” while others indicated the payments were for “rent.”
• The 1099’s that Lundin sent to Christopher and Cynthia stated “the payments
were for non-employee compensation,” not rent.
• “The evidence was unrefuted that the building lease terminated by its own
terms” at the end of 2018.
• WKS was not required to exercise any of the building lease’s options.
• “The building lease options were not tied to the ground lease other than to have
co-terminus dates if exercised.”
15
• Spongberg believed WKS bought the building in 2004, and wanted to make
clear that WKS owned the building at the end of 2018.
• Spongberg testified he wanted options for the building lease in case he sold the
restaurant.
• The plain language of section 7.4 supported WKS’s belief that title to the
building passed to WKS after the building lease expired.
Since Lundin failed to include most of this evidence in his briefs, he has
waived any claim that the judgment is unsupported by the record. (Jordan v. City of
Santa Barbara, supra, 46 Cal.App.4th at p. 1255.)
Even though we are not required to do so, given Lundin’s waiver of the
argument, we briefly summarize the evidence supporting the trial court’s decision. First,
section 7.4 states, “[o]n the termination or expiration of the [building lease] or any
extension thereof, the Premises . . . shall be the property of Lessee.” “Premises” is
defined in the building lease to include the building. Second, the letter of intent and the
purchase agreement specify the 2004 sale included all “leasehold improvements” and
“fixtures,” which can be reasonably interpreted to include the building. (See Civ. Code,
§ 660 [a building that permanently rests on the land is affixed to it].) Third, the extrinsic
evidence bullet pointed above supports the trial court’s finding that the parties intended
the 2004 sale to include title to the building. Fourth, as stated in the preceding section,
Spongberg testified that the parties intended to include the building’s title in the 2004
sale. He likewise testified the building lease was meant to be a financing vehicle for
WKS’s purchase of the building. Based on this evidence, the court’s ruling that WKS
owns the building is supported by substantial evidence, and the court’s interpretation of
the 2004 sale agreements is reasonable. Thus, we affirm the judgment. (See Burch v.
Premier Homes, LLC (2011) 199 Cal.App.4th 730, 742.)
Lundin argues the court’s interpretation of section 7.4 conflicts with the
existence of the building lease’s options, which grant WKS four five-year options that
16
run concurrently with the ground lease’s options. He argues there would be no reason to
include these options if the parties had intended to transfer title to the building after the
initial term expired in 2018. If anything, this evidence conflicts with the above evidence
showing the parties intended to include the building’s title in the 2004 sale. We do not
reweigh these conflicts and disputes on appeal. (ASP Properties Group, L.P. v. Fard,
Inc., supra, 133 Cal.App.4th at p. 1266.) Under substantial evidence review, “‘it is of no
consequence that the trial court believing other evidence, or drawing other reasonable
inferences, might have reached a contrary conclusion.’” (Jameson v. Five Feet
Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143, italics omitted.)
Further, the trial court explained why it was not swayed by this argument:
“[W]hile there were options granted to WKS under the building lease, the options were
not required to be exercised by WKS. The building lease options were not tied to the
ground lease other than to have co-terminus dates if exercised. The methods and dates of
exercise of the options (when compared between the ground lease and the building lease)
were not the same. Roland Spongberg essentially testified that he thought he wanted the
options on the building lease so that he could sell the operating restaurant which was then
situated in a market which his company did not service.” Lundin does not explain why
these findings are unsupported by the evidence.
Finally, Lundin argues the court improperly relied on testimony from
plaintiffs’ own expert witness. Their expert witness admitted during cross-examination
that under section 7.4, the building became WKS’s property at the expiration of the
building lease. Lundin asserts this expert testimony was inadmissible because it provided
a legal interpretation of a contract. (Citing Kasem v. Dion-Kindem (2014) 230
Cal.App.4th 1395, 1401.) This argument is unpersuasive for two reasons.
First, none of the plaintiffs objected to the testimony. “To obtain reversal
based on the erroneous admission of evidence, the record must show a timely objection
making clear that specific ground. [Citation.] Lack of such objection deprives the
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proponent of the evidence an opportunity to establish a better record or some alternative
basis for admission.” (Duronslet v. Kamps (2012) 203 Cal.App.4th 717, 726.) Lundin
argues there was no need to object because the court later acknowledged that some of the
expert’s opinions were improper legal conclusions. But Lundin fails to cite any authority
stating the court’s later recognition of improper testimony absolves plaintiffs of their
obligation to object.
Second, even if the evidence was inadmissible, there was no miscarriage of
justice. (Evid. Code, § 353, subd. (b).) A miscarriage of justice occurs when the
reviewing court believes “it is reasonably probable that a result more favorable to the
appealing party would have been reached in the absence of the error.” (Huffman v.
Interstate Brands Corp. (2004) 121 Cal.App.4th 679, 692.) “[A] ‘probability’ in this
context does not mean more likely than not, but merely a reasonable chance, more than
an abstract possibility.” (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704,
715, italics omitted.) As shown above, the trial court’s ruling was supported by
substantial evidence. The expert’s testimony was cumulative. Indeed, the expert’s
testimony is not cited in the “Findings” section of the statement of decision. Thus, even
if the evidence had been excluded, it is not reasonably probable that Lundin would have
obtained a better result.
C. Judgment on the Cross-Complaint
During a bench trial, section 631.8, subdivision (a), allows a party to move
for judgment after the adverse party has presented its evidence.6 As Lundin reads this
6
“After a party has completed his presentation of evidence in a trial by the court, the
other party, without waiving his right to offer evidence in support of his defense or in
rebuttal in the event the motion is not granted, may move for a judgment. The court as
trier of the facts shall weigh the evidence and may render a judgment in favor of the
moving party . . . or may decline to render any judgment until the close of all the
evidence. . . . Such motion may also be made and granted as to any cross-complaint.”
(§ 631.8, subd. (a).)
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statute, after the plaintiff has presented its case, a defendant/cross-complainant can only
move for judgment on the complaint. It must then present evidence on the cross-
complaint and allow the plaintiff/cross-defendant an opportunity to put on its defense.
Lundin contends the court erred by simultaneously granting WKS’s motion for judgment
as to the complaint and the cross-complaint. He asserts this error was structural and
requires automatic reversal.
We are not aware of any published cases addressing whether a
defendant/cross-complainant can simultaneously move for judgment on the complaint
and the cross-complaint. But we need not address this issue. Even if the court erred by
granting judgment on the cross-complaint, the error was not structural and Lundin has not
shown a miscarriage of justice.
Generally, a reviewing court will not set aside a judgment due to a trial
court error unless “it resulted in a miscarriage of justice,” also known as harmless error
analysis. (Cal. Const., art. VI, § 13; F.P. v. Monier (2017) 3 Cal.5th 1099, 1108.) This
general rule contains an exception for structural errors. When an error is structural,
“reversal is required without regard to the strength of the evidence or other
circumstances.” (Conservatorship of Maria B. (2013) 218 Cal.App.4th 514, 534.)
“Structural errors affect ‘the framework within which the trial proceeds,
rather than simply an error in the trial process itself.’ [Citation.] Such errors are not
subject to the conventional harmless error analysis because they affect the entire conduct
of the trial from beginning to end. [Citations.] ‘In the civil context, structural error
typically occurs when the trial court violates a party’s right to due process by denying the
party a fair hearing. [Citation.] Structural errors requiring automatic reversal include
denying a party’s request for a jury trial [citation] and violating a party’s right to present
testimony and evidence [citation].’” (Aulisio v. Bancroft (2014) 230 Cal.App.4th 1516,
1527.) “Structural errors require per se reversal ‘because it cannot be fairly determined
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how a trial would have been resolved if the grave error had not occurred.’” (Severson &
Werson, P.C. v. Sepehry-Fard (2019) 37 Cal.App.5th 938, 950–951.)
“But ‘[c]ategorization of an error as structural represents “the exception and
not the rule.”’ [Citation.] ‘[A] strong presumption’ exists against finding that an error
falls within the structural category, and ‘it will be the rare case’ where an error—even ‘a
constitutional violation’ — ‘will not be subject to harmless error analysis.’” (F.P. v.
Monier, supra, 3 Cal.5th at p. 1108.)
Lundin was not deprived of a fair hearing on WKS’s cross-complaint.
After WKS dropped its damages claim, the cross-complaint raised the same issue as the
complaint: who owns the building? Lundin was given a fair opportunity to litigate this
question when presenting plaintiffs’ case on the complaint. Plaintiffs were even allowed
to reopen their case and present additional evidence. Thus, there is no reason the alleged
error should be categorized as structural. (See Aulisio v. Bancroft, supra, 230
Cal.App.4th at p. 1527.)
Under the harmless error standard, “[r]eversal is justified ‘only when the
court, “after an examination of the entire cause, including the evidence,” is of the
“opinion” that it is reasonably probable that a result more favorable to the appealing party
would have been reached in the absence of the error.’” (In re J.S. (2011) 196
Cal.App.4th 1069, 1078.) That standard has not been met. Lundin has not cited any
evidence that plaintiffs could have introduced in defending against the cross-complaint
that they could not have introduced when trying the complaint. Had the court tried the
cross-complaint, there is no basis to believe it would have found that WKS did not own
the building.
Lundin also argues the trial court lacked subject matter jurisdiction to quiet
title to the building because it is in Los Angeles County, not Orange County. Citing a
100-year-old case, he argues that a quiet title action must be filed in the county where the
real property is located as a matter of jurisdiction. (Citing Maguire v. Cunningham
20
(1923) 64 Cal.App. 536, 540 [“It is the settled policy of the state that actions to quiet title,
and certain others which affect real property, shall be commenced in the county in which
the real property is situated”].)
We generally have no issue with older authority. But older authority must
be carefully reviewed to ensure the principle cited is still valid law. That did not happen
here. The jurisdictional requirement set forth in Maguire v. Cunningham, supra, 64
Cal.App. 536, was based on two sources: section 78 and article VI, section 5 of the
California Constitution. These authorities were repealed decades ago. The former in
1953. (Former § 78, repealed by Stats.1953, ch. 206, § 7, pp. 1341-1342.) The latter in
1966. (Childs v. Eltinge (1973) 29 Cal.App.3d 843, 851.) More recent case law has
stated the real property’s location is relevant to venue, not jurisdiction. (MacKinder v.
OSCA Development Co. (1984) 151 Cal.App.3d 728, 737-738; Douglas v. Donner Pines,
Inc. (1977) 73 Cal.App.3d 268, 271; Nelson v. Crocker National Bank (1975) 51
Cal.App.3d 536, 540; Childs, at p. 851.) Lundin has not argued that venue was incorrect.
D. Fees and Costs Appeal
The fees and costs appeal asks that we reverse the fees and costs award if
we reverse the underlying judgment. Since we have affirmed the judgment, we also
affirm the fees and costs award.
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III
DISPOSITION
The judgment and the fees and costs award are both affirmed. WKS is
entitled to its costs on appeal.
MOORE, ACTING P. J.
WE CONCUR:
GOETHALS, J.
MOTOIKE, J.
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