Filed 6/24/20 Atalla v. Ambartsumyan CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION SEVEN

EHAB ATALLA et al.,

Plaintiffs and Appellants,

v.

ARTASHES AMBARTSUMYAN,

Defendant and Respondent.

B289498

(Los Angeles County

Super. Ct. No. BC548936)

APPEAL from a judgment of the Superior Court of Los Angeles County, Stephanie M. Bowick, Judge. Affirmed.

Esensten Law, Robert L. Esensten and Randi R. Geffner for Plaintiffs and Appellants.

Papazian Law and Armen F. Papazian for Defendant and Respondent.

____________________________________

Ehab Atalla and Atef Hanna leased their truck stop to Artashes Ambartsumyan. After Ambartsumyan agreed to build a truck wash on the premises, Atalla and Hanna loaned funds to Ambartsumyan to complete construction of the truck wash. Ambartsumyan did not repay Atalla and Hanna.

Atalla and Hanna filed this action to recover the money they loaned Ambartsumyan. When Ambartsumyan filed a cross-complaint and asserted the interest rate was usurious, Atalla and Hanna filed an amended complaint alleging new causes of action to reform the promissory note (and avoid a usurious rate of interest by increasing the note’s principal) and to recover damages for breach of the lease.

After a three-day bench trial, the trial court ruled against Atalla and Hanna on all contested issues and awarded Ambartsumyan attorneys’ fees. Atalla and Hanna appealed. We affirm.

PROCEDURAL AND FACTUAL BACKGROUND

A. Atalla and Hanna Lease Their Truck Stop to Ambartsumyan
B.
Atalla and Hanna own real property in Colton, California. On their property is the Royal Truck Stop, which consists of fueling stations, a restaurant, a convenience store, a truck scale, and a tire shop. In the early 2000’s Atalla and Hanna spent funds planning the development of a truck wash and lube center at their truck stop. On February 18, 2003 Atalla and Hanna leased the truck stop to Ambartsumyan. The lease provided for Ambartsumyan to pay higher rent if Atalla and Hanna completed the truck wash. In January 2004 the parties reached their third in a series of amendments to the lease in which Ambartsumyan agreed to assume responsibility for building the truck wash. Under the January 2004 amendment, Ambartsumyan agreed to “build the whole truck wash and lube center on his own expense” and “compensate [Atalla and Hanna] for all the money [they] paid up to now for it.”

During 2008 the parties entered into two additional amendments to the lease providing that, when Ambartsumyan opened the truck wash, the rent would be adjusted and the lease extended. The latter amendment also provided “clarification” regarding Ambartsumyan’s ability to sublease the truck stop. During 2007 through early 2009, Ambartsumyan spent approximately $150,000 obtaining the required permits and performing grading and other preliminary work for the truck wash. Because he needed further funds to complete the project, Ambartsumyan approached financial institutions, but was unsuccessful obtaining a loan. The parties discussed funding the construction costs.

C. Ambartsumyan Borrows $275,000 from Atalla and Hanna
D.
In 2009 the parties reached an agreement whereby Atalla and Hanna would deposit $275,000 and Ambartsumyan would also deposit $275,000 into an account (for a total of $550,000) controlled by Atalla and Hanna for Ambartsumyan to complete the truck wash. Their agreement was memorialized in a promissory note and loan agreement dated April 1, 2009. The promissory note provided that Atalla and Hanna’s $275,000 loan to Ambartsumyan was due in “one lump sum” on April 30, 2012, with monthly-interest-only payments of $3,000. The loan agreement confirmed the $275,000 loan and set forth a procedure for the $550,000 to be disbursed to Ambartsumyan during construction. Ambartsumyan also executed a general guaranty and a security agreement as security for repayment of the $275,000 loan. The promissory note and related agreements, as well as the two lease amendments executed in 2008, did not mention any amounts owing to Atalla and Hanna under the third amendment.

Using the $550,000 fund, Ambartsumyan constructed the truck wash; it became operational in June 2010. When the promissory note matured in April 2012, Ambartsumyan admitted he could not repay the $275,000. Ambartsumyan testified he continued to make the $3,000 monthly interest payments until Atalla and Hanna filed this action in 2014, for a total of $192,000 in interest payments. For the same period, Atalla and Hanna testified that Ambartsumyan paid only $78,000 in interest. The lease and loan agreement both contain clauses for the prevailing party to recover reasonable attorneys’ fees in any action or proceeding.

E. The Litigation
F.
On June 18, 2014 Atalla and Hanna filed this action against Ambartsumyan, asserting two causes of action, seeking damages, recovery of collateral, and attorneys’ fees based on Ambartsumyan’s failure to pay the “lump sum balloon payment” of $275,000.

On August 8, 2014 Ambartsumyan filed a cross-complaint alleging the promissory note was usurious because the annual interest rate was 13 percent, which exceeded the lawful maximum interest rate of 10 percent. Because the interest rate on the promissory note was usurious, Ambartsumyan sought to recover his $192,000 in interest payments, as well as treble damages under Civil Code section 1916-3 based on the usurious interest payments ($36,000) made during the year preceding filing of the cross-complaint. Ambartsumyan also sought attorneys’ fees.

On August 20, 2015 Atalla and Hanna filed an amended complaint alleging, in addition to Ambartsumyan’s failure to pay the promissory note, causes of action seeking to reform the promissory note, loan agreement, and security agreement and to recover damages for breach of the third amendment to the lease. Atalla and Hanna’s new causes of action were based on allegations that, prior to January 1, 2004, Atalla and Hanna spent over $90,000 “in their efforts to construct the truck wash and lube center” (e.g., “plans, permits, construction experts, and pre-construction costs”). In their reformation cause of action, Atalla and Hanna alleged that, because of a “mutual mistake,” these $90,000 expenditures were not included in the promissory note and accompanying agreements. The parties “intended to consolidate all amounts due” to Atalla and Hanna in the promissory note. Atalla and Hanna therefore alleged the principal amount of the $275,000 promissory note should be increased by $90,000, to $365,000. Atalla and Hanna also sought in a breach of contract cause of action to recover their $90,000 in expenditures as damages based on Ambartsumyan’s failure to pay them under the third amendment. Atalla and Hanna sought attorneys’ fees.

G. The Trial
H.
The case was tried in a three-day bench trial. The parties testified. After close of evidence, on October 26, 2016 the trial court granted Ambartsumyan’s motion for judgment pursuant to Code of Civil Procedure section 631.8 on Atalla and Hanna’s cause of action for breach of the third amendment to the lease seeking recovery of their alleged $90,000 in expenditures. Relying on Clark v. Tide Water Associated Oil Co. (1950) 98 Cal.App.2d 488 (Clark), the trial court ruled Atalla and Hanna’s compliance with the lease’s provisions for written notice and an opportunity to cure were conditions precedent to Atalla and Hanna’s ability to sue for breach of the third amendment. Atalla and Hanna argued, although they admitted not sending a written notice, filing the complaint was adequate notice of their claims under the lease. Rejecting this argument, the trial court held “I’m going to grant the motion with respect to . . . [the] third cause of action, finding that . . . there was no evidence presented by the plaintiff of notice as set forth in 13.1 of the lease agreement, which is currently Exhibit 1, and the third lease attachment, Exhibit 4, is part of that lease agreement, and the court would find any provision in 1 would be applicable to Exhibit 4. . . . [t]he court is going to grant that motion as to the third cause of action in favor of the defendant and against the plaintiff for failure to provide notice required under the lease agreement.” The trial court did not reach Ambartsumyan’s other grounds for judgment on this cause of action, statute of limitations and failure of proof.

I. The Trial Court’s Rulings
J.
In its tentative decision issued on January 31, 2017, the trial court found Ambartsumyan failed to make the $275,000 payment due under the promissory note, but the note’s interest provision was usurious. Finding Ambartsumyan made all interest payments he described in his testimony ($192,000), the trial court offset these usurious payments to the principal, which reduced the amount owing to $83,000. In finding against Atalla and Hanna on their cause of action for reformation of the promissory note and related agreements, the trial court ruled: (i) there was no “mistake, justifying reformation”; (ii) the evidence failed to establish a common intention supporting the inclusion of the $90,000 in the amount borrowed; (iii) there were no documents providing that the parties agreed the principal amount borrowed was $365,000; and (iv) there was “insufficient itemization or documentation” of the alleged expenses Atalla and Hanna sought to consolidate in the promissory note. In connection with this final reason, the trial court found that “[Atalla and Hanna’s] testimony was not credible in certain respects, and they changed their testimony or were vague in areas.” The trial court also declined to award treble damages under section 1916-3, finding “in light of the circumstances surrounding this transaction, giving [d]efendant a credit for the amount of interest paid to [Atalla and Hanna] is sufficient.” The trial court also found Ambartsumyan was not unjustly enriched and was the prevailing party in the litigation.

After receiving objections to its tentative decision and holding a hearing, the trial court on July 21, 2017 issued a statement of decision expanding its findings. In providing its reasoning for denying Atalla and Hanna’s claim for unjust enrichment, the trial court ruled that the claim was “improper” because it was not contained in Atalla and Hanna’s operative complaint and Atalla and Hanna did not make the claim until asserting it in their post-trial closing brief. Turning to the merits, the trial court found Atalla and Hanna failed to establish unjust enrichment because they did not demonstrate the benefit conferred on Ambartsumyan and provide necessary details regarding the expenses Atalla and Hanna incurred. The trial court also awarded Atalla and Hanna interest at the legal rate from the date of maturity on the reduced balance of the promissory note. Finally, diverging from the tentative decision, the trial court imposed a penalty of $36,000 under section 1916-3 against Atalla and Hanna, ruling “[i]n light of the Court’s finding that the interest was usurious, as a remedy, the Court also awards treble damages in light of the circumstances surrounding this transaction.” The $36,000 penalty equaled the interest Ambartsumyan paid during the last year before he filed his cross-complaint. Atalla and Hanna did not file objections to the statement of decision.

After briefing regarding a proposed judgment and a related hearing on November 1, 2017, the court on November 17, 2017 issued an amended statement of decision. In its amended statement of decision, the trial court repeated verbatim the language of the statement of decision and clarified that the treble damages of $36,000 “are separate from the $192,000 reduction of the Promissory Note stated above. The $192,000 reduction does not include the treble damages awarded here.”

In the amended statement of decision, the trial court found Atalla and Hanna were the prevailing parties on their cause of action for breach of the promissory note because they recovered $83,000 plus interest at the legal rate from maturity. The trial court ruled Ambartsumyan prevailed on Atalla and Hanna’s causes of action for reformation and breach of the third amendment. Ambartsumyan also prevailed on his affirmative claims; establishing usury, offsetting $192,000 in interest payments against the note’s principal balance, and obtaining a $36,000 penalty under section 1916-3. The trial court found Ambartsumyan “is the overall prevailing party in these actions” under section 1717(b)(1).

K. The Trial Court Awards Ambartsumyan Attorneys’ Fees as the Prevailing Party
L.
After cross-motions for attorneys’ fees, in accordance with section 1717 and the loan agreement’s prevailing party provision, the trial court on January 18, 2018 granted Ambartsumyan’s motion awarding attorneys’ fees and costs of $46,175 as the prevailing party under the loan agreement. The trial court ruled, “The Court once again finds [Ambartsumyan] is the prevailing party and entitled to attorney’s fees pursuant to section 1717, in light of the Court’s finding that 1) reformation of the promissory note was note [sic] warranted, 2) the amount of the promissory note was reduced, and 3) treble damages were awarded to [Ambartsumyan], all contrary to the relief requested by Plaintiff.” The trial court denied Atalla and Hanna’s motion for attorneys’ fees.

On March 21, 2018 the trial court entered judgment in the amount of $49,738.74 in favor of Atalla and Hanna. Atalla and Hanna timely appealed.

DISCUSSION

A. Atalla and Hanna Have Not Demonstrated Reversible Error Regarding the Trial Court’s Usury Rulings
B.
Atalla and Hanna on appeal argue that the trial court abused its discretion in awarding Ambartsumyan “treble damages” of $36,000 and by refusing to apply equitable estoppel to preclude Ambartsumyan from asserting the usury defense.

1. The Trial Court Did Not Err in Awarding a $36,000 Penalty

a. Ambartsumyan paid interest within the year before he filed the cross-complaint

In support of their argument that the trial court abused its discretion in imposing a penalty under section 1916-3, Atalla and Hanna assert Ambartsumyan “had not actually ‘paid’ any interest at all” because “all payments which the Court found to have been made by [Ambartsumyan] are credited against the principal balance of $275,000.” According to Atalla and Hanna, a “borrower has not paid any usurious interest until the total of all payments made exceeds the principal amount of the loan.” Atalla and Hanna argue, as long as principal is being reduced by usurious interest payments, “such payments are not interest at all, but are payments of principal.” According to Atalla and Hanna, without any usurious interest payments, there is nothing to treble under section 1916-3.

We review the trial court’s ruling independently. (See Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 912 [“[i]t is true that the application of law to undisputed facts ordinarily presents a legal question that is reviewed de novo”]; Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 801.)

Atalla and Hanna’s argument is contrary to well-established usury law. When a lender charges illegal usurious interest, it “renders the interest provisions of the note void.” (Mark McDowell Corporation v. LSM 128 (1989) 214 Cal.App.3d 1427, 1431; see Civ. Code § 1916-2 [usurious provisions “shall be null and void”].) Under a common law remedy, “[b]orrowers may therefore bring an action for money had and received to recover usurious interest paid within two years of the suit.” (Stock v. Meek (1950) 35 Cal.2d 809, 817 (Stock).) Further, because principal remains owing to the lender, “‘payments of usurious interest may be set off against the principal debt in actions brought to collect the latter.’” (Hardwick v. Wilcox (2017) 11 Cal.App.5th 975, 992 (Hardwick).) “‘[T]he instant a payment is made of usurious interest it is applied to the principal, and the principal indebtedness at the time of such payment is reduced to the extent thereof. ” (Ibid.) As explained in Hardwick, “the set off [is] not an award of affirmative relief to [the borrower], but a defense to [the lender’s] causes of action to recover on [the] notes.” (Ibid.) Therefore, in “‘“an action to recover an indebtedness, none of the usurious payments, . . . are barred by limitation so as to preclude their use in the reduction of the principal debt.”’” (Ibid.)

This offset remedy, available to a borrower when defending an action based on a usurious promissory note, does not mean that the borrower “did not actually pay any usurious interest.” Rather, the very basis for voiding the promissory note’s interest provision is the borrower’s payment of usurious interest; offsetting the usurious payments against the principal is one of the remedies for the usury. Section 1916-3, another remedy, requires that the borrower “shall have paid” usurious interest and filed an action “within one year after such payment” to recover “treble the amount of the money so paid.” Ambartsumyan paid unlawful interest within the year before filing his cross-complaint, giving the trial court discretion to award treble damages under section 1916-3. (Janisse v. Winston Investment Co. (1957) 154 Cal.App.2d 580, 581 [court entered judgment “reducing the principal of the note by the amount of the interest paid and by treble the amount of interest paid during the year preceding the filing of this action”]; see Anderson v. Lee (1951) 103 Cal.App.2d 24, 28 [“[s]ince usury was established it was proper for the court to strike from the note the amount of the bonus and to award the plaintiffs the treble of the interest payments actually made”].) In Gibbo v. Berger (2004) 123 Cal.App.4th 396, relied on by Atalla and Hanna, the court eliminated the note’s principal balance by offsetting the usurious interest payments and allowed the borrower to recover the usurious interest paid in excess of the note’s principal. The court also remanded for the trial court to address the borrower’s request for treble damages. (Id. at p. 404.) There was no discussion in Gibbo that offsetting the usurious interest payments against principal impacts a borrower’s right to recover treble damages.

b. The trial court did not err in issuing a final statement of decision different from the tentative decision

A “tentative statement of decision is not binding on the trial court and can be modified or changed as the judge sees fit before entry of judgment.” (FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1284; accord, California Rules of Court, rule 3.1590 [“The tentative decision does not constitute a judgment and is not binding on the court. A tentative decision cannot be relied on to impeach the judgment on appeal”]; Taormino v. Denny (1970) 1 Cal.3d 679, 684 [“A memorandum opinion is not a decision. Although it may purport to decide issues in the case, it is merely an informal statement of the views of the trial judge”].)

Atalla and Hanna argue that, “without any discussion, and without the issue even being raised before the Trial Court, the Court reversed itself and awarded treble damages to [Ambartsumyan] in the Amended Statement of Decision with no explanation or supporting facts substantiating this complete reversal.” Atalla and Hanna correctly point out that the tentative statement of decision “denied [Ambartsumyan’s] request for treble damages” because “giving [Ambartsumyan] a credit for the amount of the interest paid to [Atalla and Hanna] is sufficient,” while the amended statement of decision grants a $36,000 penalty “in light of the circumstances surrounding this transaction.” Atalla and Hanna argue the trial court’s awarding the $36,000 penalty was “reversible error” because its “findings are contradictory on material issues.”

Because the tentative decision was not binding, the trial court had the ability to award a penalty under section 1916-3 in its final decision. There are no conflicting rulings, and the tentative decision cannot be used to impeach the judgment. (Horning v. Shilberg (2005) 130 Cal.App.4th 197, 203 [“a court ‘may enter a wholly different judgment than that announced’ in its statement of intended decision”]; Canal-Randolph Anaheim, Inc. v. Wilkoski (1978) 78 Cal.App.3d 477, 494 [“it is fundamental that a court is not bound by its statement of intended decision and may enter a wholly different judgment than that announced”], superseded by statute on other grounds as recognized in WDT-Winchester v. Nilsson (1994) 27 Cal.App.4th 516, 526.)

In addition, although Atalla and Hanna mention in their opening brief the statement of decision issued on July 21, 2017, they fail to explain the trial court ruled in the statement of decision, the “Court awards $36,000 treble damages for the one year of interest paid prior to the filing” of Ambartsumyan’s cross-complaint. Atalla and Hanna thus had sufficient notice and opportunity to object to the $36,000 penalty initially imposed in late July 2017, but there is no evidence in the record that they objected. Further proceedings ensued in the trial court involving the proposed judgment including written objections and a hearing on November 1, 2017. The final amended statement of decision was issued on November 17, 2017 and final judgment was entered on March 21, 2018. During this time, Atalla and Hanna failed to object to the $36,000 penalty awarded in the statement of decision. A “litigant who fails to bring to the attention of the trial court alleged deficiencies in the court’s statement of decision waive[s] the right to complain of such errors on appeal.” (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1132; see Code Civ. Proc., § 634.) For this separate reason, Atalla and Hanna are precluded from now complaining about the lack of an explanation for the trial court’s “complete reversal” regarding the penalty.

c. The trial court did not abuse its discretion in imposing a $36,000 penalty

California has a strong and well-defined public policy against usury. (See, e.g., Mencor Enterprises, Inc. v. Hets Equities Corp. (1987) 190 Cal.App.3d 432, 440; Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 287.) Indeed, the law of usury is based on the California Constitution, as well as a voter initiative measure adopted in 1918. (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2008) 168 Cal.App.4th 185, 198.) “The theory of [the usury] law is that society benefits by the prohibition of loans at excessive interest rates, even though both parties are willing to negotiate them.” (Stock, supra, 35 Cal.2d at p. 817.) Section 1916-3, part of the initiative measure adopted in 1918, provides “[e]very person . . . who for any loan . . . shall have paid [usurious interest] . . . may . . . recover . . . treble the amount of the money so paid . . . providing such action shall be brought within one year after such payment.” Section 1916-3 “added a statutory remedy to aid the borrower and penalize the lender” and is cumulative to the common law remedies allowing the recovery of the usurious interest. (Stock, at pp. 816-817; see Taylor v. Budd (1933) 217 Cal. 262, 266 [“[t]he penalty of treble interest specified in the act has been held in this state to be cumulative, and not to abrogate the common-law remedy to recover money paid under illegal provisions of a contract]”.)

Based on provisions “permitting recovery of treble interest and making usury a crime on the part of the lender,” the Supreme Court held that “the borrower is not to be treated as equally culpable with the lender.” (Stock, supra, 35 Cal.2d at p. 818.) Thus, “[i]n the absence of fraud by the borrower, the parties to a usurious transaction are not in pari delicto.” (Heald v. Friishansen (1959) 52 Cal.2d 834, 837.)

Against this background, the “granting of treble damages upon a finding of usury is a matter within the trial court’s discretion.” (Burr v. Capital Reserve Corp. (1969) 71 Cal.2d 983, 994; see Creative Ventures, LLC v. Jim Ward & Associates (2011) 195 Cal.App.4th 1430, 1450 [“civil penalty is left to the discretion of the trial court”].) The award of treble damages “depends upon the relative guilt of the parties in initiating the transaction.” (Golden State Lanes v. Fox (1965) 232 Cal.App.2d 135, 142; see White v. Seitzman (1964) 230 Cal.App.2d 756, 764 (White) [“In California, rather than prohibiting the courts from weighing the relative guilt of the parties, the Legislature has demanded such an inquiry by the provisions of section 3517 of the Civil Code, supra, ‘[n]o one can take advantage of his own wrong’”].) Courts have thus denied treble damages to blameworthy borrowers. (White, at p. 761 [in denying treble damages to a wrongdoing borrower who created sham agreements to evade the usury laws and giving “priority to the maxim that no man [or woman] should profit by his [or her] own wrong,” the court held “to reward him with treble damages by invoking the provisions of the very law which he sought so furtively to evade would make a mockery of the law”].)

Under the authorities, the parties here are not in pari delicto. Ambartsumyan was a completely innocent and needy borrower. After financial institutions refused to lend, and he had made a substantial investment in the truck wash, Ambartsumyan required funds so he could finish the project. Atalla and Hanna set the 13 percent usurious interest rate with $3,000 interest-only monthly payments, collecting $192,000 in usurious payments over a five-year period. Ambartsumyan continued to make the usurious interest payments for over two years after the promissory note matured; he only sought relief after Atalla and Hanna sued him on the promissory note. Further, under section 1916-3, the trial court had the ability to award a $72,000 penalty against Atalla and Hanna. Using its discretion and still furthering the purposes of California’s usury laws, the trial court awarded a modest penalty of $36,000.

Atalla and Hanna rely on Buck v. Dahlgren (1972) 23 Cal.App.3d 779 (Buck), which concludes a blameworthy borrower is not entitled to treble damages. In Buck, the borrower, a real estate developer, fraudulently induced a lender, a recent immigrant who “did not know much English and could not write in that language,” to make a series of loans and extensions of the loans. The borrower had no intention of repaying the loans and misrepresented the value of the security. After foreclosing on several real properties, the immigrant lender sustained substantial losses. (Id. at p. 789.) After setting forth the general rule, “[i]n order to effectuate the statutory policy of protection, the courts have also regularly held a borrower and a lender are not in pari delicto in a usurious transaction,” the court in Buck refused to award treble damages because of the borrower’s fraudulent conduct. (Id. at pp. 787-788.)

Here, with an innocent borrower and a penalty calibrated to fit the situation, and given the strong public policies embodied in section 1916-3, Atalla and Hanna have not carried their burden to demonstrate the trial court abused its discretion in imposing the $36,000 penalty. (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773 [“‘The scope of discretion always resides in the particular law being applied, i.e., in the “legal principles governing the subject of [the] action . . .” Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an “abuse” of discretion. [Citation.] . . . [¶] The legal principles that govern the subject of discretionary action vary greatly with context. [Citation.] They are derived from the common law or statutes under which discretion is conferred’”]; see In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682 [“Generally, where a trial court has discretionary power to decide an issue, an appellate court is not authorized to substitute its judgment of the proper decision for that of the trial judge. The trial court’s exercise of discretion will not be disturbed on appeal in the absence of a clear showing of abuse, resulting in injury sufficiently grave as to amount to a manifest miscarriage of justice. . . . The burden is on the complaining party to establish abuse of discretion”].)

2. The Evidence Does Not Compel a Finding in Favor of Atalla and Hanna on Their Assertion of the Estoppel Doctrine

Atalla and Hanna argue the estoppel doctrine precludes Ambartsumyan from raising usury. As such, Atalla and Hanna had the burden to prove an estoppel. (See generally Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 33-34; Eisen v. Tavangarian (2019) 36 Cal.App.5th 626, 647.) “On appeal from a determination of failure of proof at trial, the question for the reviewing court is “‘whether the evidence compels a finding in favor of the appellant as a matter of law.’”” (Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 769; accord, Eisen, at p. 647; Juen v. Alain Pinel Realtors, Inc. (2019) 32 Cal.App.5th 972, 978; Dreyer’s Grand Ice Cream, Inc v. County of Kern (2013) 218 Cal.App.4th 828, 838.)

““‘“Specifically, the question becomes whether the appellant’s evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.”’”” (Patricia A. Murray Dental Corp. v. Dentsply Internat., Inc. (2018) 19 Cal.App.5th 258, 270; accord, Petitpas v. Ford Motor Co. (2017) 13 Cal.App.5th 261, 302-303.) “‘Where, as here, the judgment is against the party who has the burden of proof, it is almost impossible for him to prevail on appeal by arguing the evidence compels a judgment in his favor. That is because unless the trial court makes specific findings of fact in favor of the losing plaintiff, we presume the trial court found the plaintiff’s evidence lacks sufficient weight and credibility to carry the burden of proof. [Citations.] We have no power on appeal to judge the credibility of witnesses or to reweigh the evidence.’” (Patricia A. Murray Dental Corp. v. Dentsply Internat., Inc., supra, at p. 270; accord, Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486.)

Atalla and Hanna fail to meet their “almost impossible” burden. Indeed, far from meeting their burden, Atalla and Hanna did not cite any relevant evidence to support an estoppel. Thus, they did not show Ambartsumyan engaged in any wrongdoing or even knew the promissory note was usurious. Atalla and Hanna contend Ambartsumyan approached Atalla and Hanna seeking financing, he agreed to pay the $3,000 monthly interest payments, or he stated the interest payments were “fair.” These circumstances are irrelevant for estoppel purposes. In denying an estoppel in the absence of the borrower contriving a “fraudulent scheme,” the court in Janisse v. Winston Investment Co., supra, 154 Cal.App.2d at p. 587 held “these same cases establish that the borrower and lender are not in pari delicto in a usurious transaction, and that an estoppel does not arise simply because the borrower knew of the usurious nature of the transaction, took the initiative in seeking the loan, and paid usurious interest without protest.” (See Golden State Lanes v. Fox, supra, 232 Cal.App.2d at pp. 140 141 [initiating the transaction and “[working] out the arrangement between the parties, . . . are irrelevant to usury, for it makes no difference whether the borrower or the lender takes the initiative in the transaction, or prepares the instrument involved. If a loan is usurious, the law applies”].)

Much more is needed to establish estoppel, as shown by Atalla and Hanna’s further reliance on Buck, supra, 23 Cal.App.3d 779. In Buck, given the borrowers’ “avaricious machinations” and the “particular and unusual equities,” the court held the borrower “was properly estopped from recovering both the amount of usurious interest paid and treble damages thereon.” (Id. at pp. 788-791.) The court also pointed out the longstanding principle, “the lender may not assert an estoppel against the borrower simply because the borrower took the initiative in seeking the loan, knew of the usurious nature of the transaction, and paid usurious interest without protest.” (Id. at p. 787.)

B. The Trial Court Did Not Err in Ruling Atalla and Hanna Had the Burden To Show Compliance with the Lease’s Notice and Cure Provisions

In reaching its decision to enforce the written notice and opportunity to cure requirement against Atalla and Hanna, the trial court relied on Clark, supra, 98 Cal.App.2d 488, which held a landlord’s compliance with a similar notice and opportunity to cure provision in a lease “was a condition precedent to the right to sue.” (Id. at p. 489.) The court in Clark held a “motion for nonsuit should have been granted [in favor of the tenant] on the ground that [the landlords] failed to state or prove their cause of action for breach of contract.” (Id. at p. 491.) Faced with similar lease provisions, and Atalla and Hanna’s concession they did not give Ambartsumyan written notice, the trial court granted judgment in favor of Ambartsumyan on Atalla and Hanna’s cause of action for breach of the third amendment.

We independently review the trial court’s ruling. (See Boling v. Public Employment Relations Bd., supra, 5 Cal.5th at pp. 912-913; Ghirardo v. Antonioli, supra, 8 Cal.4th at p. 801.)

Atalla and Hanna do not contest the trial court’s ruling that the lease and the third amendment required written notice to Ambartsumyan after default and an opportunity to cure. Rather, Atalla and Hanna argue the trial court abused its discretion by allowing Ambartsumyan to assert the lack of notice “affirmative defense” because Ambartsumyan “did not plead this as an affirmative defense, nor did he disclose this defense or any facts supporting it in his” discovery responses. In making these arguments, Atalla and Hanna do not cite authority for the proposition that compliance with the lease’s notice and opportunity to cure requirements is an affirmative defense, nor do they attempt to distinguish Clark’s holding that compliance with lease provisions such as these is a condition precedent to their right to maintain the cause of action. Rather, Atalla and Hanna generally contend a “party’s answer to a complaint ‘shall contain’ a statement of any new matter constituting a defense.” Because Ambartsumyan’s answer “did not contain an affirmative defense based on the purported lack of notice,” Ambartsumyan “should have been precluded from relying on that defense.”

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) Further, “[i]t is elementary a plaintiff suing for breach of contract must prove it has performed all conditions on its part or that it was excused from performance.” (Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380.)

The provisions requiring Atalla and Hanna to give Ambartsumyan written notice and an opportunity to cure are in the contract (i.e., lease and third amendment) Atalla and Hanna alleged Ambartsumyan breached, causing them to lose $90,000 in expenditures. As the trial court held, Atalla and Hanna had to prove performance of these conditions to succeed on their breach of contract cause of action. (See Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 592 [“[A] party’s failure to perform a condition precedent will preclude an action for breach of contract. [Citation.] Where one party’s obligation is dependent on the prior proper performance of the other party, and that other party does not perform, the obligation is excused”]; Cline v. Yamaga (1979) 97 Cal.App.3d 239, 247 [when a condition precedent is adopted by the parties to a contract, the court will not find a party liable for its failure to perform if the condition was not met].)

Code of Civil Procedure section 431.30, subdivision (b), provides that an answer shall contain in addition to a “general or specific denial” of the complaint’s allegations, “[a] statement of any new matter constituting a defense.” “New matter” is any issue on which Ambartsumyan bears the burden at trial. (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 239 [“[i]t has long been held that ‘if the onus of proof is thrown upon the defendant, the matter to be proved by him is new matter’”].) Because Atalla and Hanna had the burden to establish performance of the lease’s written notice and opportunity to cure provisions as part of their breach of contract cause of action, there was no “new matter,” and hence, Ambartsumyan was not required to plead or prove an affirmative defense. Atalla and Hanna’s argument has no merit.

C. The Evidence Does Not Compel a Finding in Favor of Atalla and Hanna on Their Unjust Enrichment Claim

Atalla and Hanna’s operative complaint did not allege an unjust enrichment or restitution cause of action. Atalla and Hanna based their trial presentation on the causes of action for breach of the third amendment and reformation of the promissory note and related agreements. After evidence closed at trial, Atalla and Hanna orally sought leave to amend to add several claims, stating “restitution is what [we’re] seeking to amend to obtain is relating to the unjust enrichment of this $90,000.” Although briefly stated, Atalla and Hanna’s oral motion to amend was based on the same $90,000 in expenses they sought under their cause of action for breach of the third amendment. Finding Atalla and Hanna’s motion to amend was “prejudicial and inappropriate after the close of evidence at this time in light of the facts of the case and the allegations of the complaint,” the trial court denied the motion. Atalla and Hanna do not challenge the trial court’s ruling. Atalla and Hanna therefore forfeited any argument the trial court abused its discretion in finding the unjust enrichment claim improper. (See Sweetwater Union High School Dist. v. Julian Union Elementary School Dist., supra, 36 Cal.App.5th at p. 987; Holmes v. Petrovich Development Co., LLC, supra, 191 Cal.App.4th at p. 1064, fn. 2.)

Because the trial court went on to address the merits of Atalla and Hanna’s unjust enrichment claim, we evaluate the claim’s merits. The elements of a claim for unjust enrichment are (1) receipt of a benefit and (2) unjust retention of the benefit at the expense of another. (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769; see Van de Kamp v. Bank of America (1988) 204 Cal.App.3d 819, 854-855 [“Under the theory of unjust enrichment, the law implies a promise to return money wrongfully obtained. [Citation.] The basis of the action is the equitable principle ‘a person should not be allowed to enrich himself at the expense of another’”].) “Under the law of restitution, an individual may be required to make restitution if he is unjustly enriched at the expense of another. [Citation.] A person is enriched if he receives a benefit at another’s expense. . . . Even when a person has received a benefit from another, he is required to make restitution ‘only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.” (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51.)

Because Atalla and Hanna had the burden of proof to establish unjust enrichment, the issue is not whether the trial court abused its discretion, as Atalla and Hanna argue, but whether their uncontradicted and unimpeached evidence compels a finding in Atalla and Hanna’s favor on the unjust enrichment claim. (See In re R.V. (2015) 61 Cal.4th 181, 201 [where a trial court has determined a party has failed to meet its burden on an issue, “the inquiry on appeal is whether the weight and character of the evidence . . . was such that the . . . court could not reasonably reject it”]; Almanor Lakeside Villas Owners Assn. v. Carson, supra, 246 Cal.App.4th at p. 769 [same].)

Atalla and Hanna have not carried their burden. Atalla and Hanna testified they paid expenses to several vendors in the early 2000’s in connection with developing the truck wash. However, fatal to their unjust enrichment claim, Atalla and Hanna did not connect their expenditures with any benefit conferred on Ambartsumyan. Atalla and Hanna testified they made payments to third parties, but failed to offer admissible evidence that any expenditures actually benefitted Ambartsumyan. Atalla stated only that Ambartsumyan “used my work,” without offering any supporting evidence. In fact, Ambartsumyan denied receiving any benefit as a result of these expenditures because, among other reasons, he was required to change the location of the truck wash on the truck stop premises from where Atalla and Hanna had planned to construct it. Consequently, according to Ambartsumyan, he “had to start from the scratch and get approval, . . . everything is scratch.”

The trial court further held that Atalla and Hanna “fail[ed] to explain or provide details as to each claimed ‘expense’ incurred by [Atalla and Hanna] [and] . . . fail[ed] to provide any details as to how the unspecified total was calculated based upon the testimony and exhibits admitted at trial.” Regarding Atalla and Hanna’s alleged expenditures, the trial court found “[Atalla’s and Hanna’s] testimony was not credible in certain respects, and they changed their testimony or were vague in many areas.” The trial court was entitled to discredit Atalla’s and Hanna’s testimony. (See Wright v. Best (1942) 19 Cal.2d 368, 379-380 [“the weight of the testimony and the credibility of the witnesses [are] matters wholly within the exclusive province of the trier of fact, whose determination upon them will not be disturbed by an appellate court”]; Hawkins v. City of Los Angeles (2019) 40 Cal.App.5th 384, 393 [credibility is the exclusive province of the trier of fact].)

Accordingly, Atalla and Hanna have not carried the burden to show their evidence was uncontradicted and unimpeached, which compels a finding in their favor.

D. The Trial Court Did Not Abuse its Discretion in Finding Ambartsumyan was the Prevailing Party and Awarding Him Attorneys’ Fees

Section 1717, subdivision (a), authorizes the trial court to award reasonable attorneys’ fees and costs to the prevailing party in a contract action if the contract provides for such an award. (See Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 523-524.) ‘“[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.”’ (Civ. Code, § 1717, subd. (b)(1).) “[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 (Hsu); accord, Roberts v. Packard, Packard & Johnson (2013) 217 Cal.App.4th 822, 834.) In Hsu, the Supreme Court held, “We agree that in determining litigation success, courts should respect substance rather than form, and to this extent should be guided by ‘equitable considerations.’ For example, a party who is denied direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its main litigation objective.” (Hsu, at p. 876.)

“‘“On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion.”’” (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1213; accord, Willard v. Kelley (2015) 238 Cal.App.4th 1049, 1053; Wohlgemuth v. Caterpillar Inc. (2012) 207 Cal.App.4th 1252, 1258 [“‘[g]enerally, the trial court’s determination of the prevailing party for purposes of awarding attorney fees is an exercise of discretion, which should not be disturbed on appeal absent a clear showing of abuse of discretion’”].)

Atalla and Hanna challenge the trial court’s ruling that Ambartsumyan was the prevailing party under section 1717 and the loan agreement’s attorneys’ fee provision, arguing they “obtained a victory” on their cause of action for breach of the promissory note, while Ambartsumyan “did not actual [sic] obtain a recovery from [Atalla and Hanna] on any of his causes of action; at best he received a reduction in the principal balance, not a net recovery.” Atalla and Hanna’s arguments are unpersuasive because they disregard the substance of the results of the trial.

Atalla and Hanna filed this action to recover the $275,000 balance due under the promissory note and unpaid interest. Not disputing he owed the $275,000, Ambartsumyan filed a cross-complaint alleging usury, seeking return of $192,000 in interest payments and treble damages. In their amended complaint, Atalla and Hanna sought to defeat Ambartsumyan’s usury allegations by increasing the promissory note’s principal balance by $90,000 based on a “mutual mistake,” and also recover the $90,000 under a cause of action for breach of the third amendment. Both causes of action were unsuccessful. The trial court also found the note’s interest rate was usurious and reduced the note’s principal by $192,000, rejecting Atalla and Hanna’s contention that Ambartsumyan only paid $78,000 in interest. Ambartsumyan further prevailed by obtaining a $36,000 penalty under section 1916-3.

In sum, Atalla and Hanna sought $561,551, including over $262,000 in interest on the promissory note; after trial, they were awarded $95,913.74. While Atalla and Hanna did obtain a net recovery on the promissory note, Ambartsumyan prevailed on all contested issues. He established the note’s interest rate was usurious, secured the $192,000 reduction, obtained a $36,000 penalty, and defeated Atalla and Hanna’s causes of action seeking reformation and the $90,000 expenditures. Under the totality of the circumstances and from a practical point of view, Ambartsumyan achieved his overall litigation objectives at trial. Atalla and Hanna have not shown an abuse of discretion. (See Sharif v. Mehusa, Inc. (2015) 241 Cal.App.4th 185, 192 [“‘[P]revailing party status should be determined by the trial court based on an evaluation of whether a party prevailed ‘“on a practical level,”’ and the trial court’s decision should be affirmed on appeal absent an abuse of discretion.’ [Citation] ‘Among the factors the trial court must consider in determining whether a party prevailed is the extent to which each party has realized its litigation objectives. [Citations]’”].)

DISPOSITION

The judgment is affirmed. Ambartsumyan is to recover his costs on appeal.

DILLON, J.*

We concur:

PERLUSS, P. J.

FEUER, J.