Filed 2/19/20 Morn v. Allen 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

ADAM MORN,

Plaintiff and Respondent,

v.

WILLIAM HUBERT ALLEN III,

Defendant and Appellant.

G056605

(Super. Ct. No. 30-2016-00873823)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Nathan R. Scott, Judge. Affirmed.

William Hubert Allen III, in pro. per., for Defendant and Appellant.

Law Office of Drew Petersen and Gordon Andrew Petersen II for Plaintiff and Respondent.

* * *

After failing to receive a real estate commission to which he believed he was entitled, plaintiff Adam Morn sued former brokerage owner, defendant William Hubert Allen III, for damages. Among defendant’s defenses to plaintiff’s fraud based claims was the statute of limitations. The trial court held a bench trial, during which both parties presented evidence and argued their respective positions. It found in plaintiff’s favor, awarding him $812,700 in damages and approximately $6,200 in prejudgment interest. Though neither party requested a statement of decision, the court’s minute order briefly explained its conclusion was largely based on matters previously deemed admitted by defendant due to his discovery violations.

Defendant appeals from the ensuing judgment, contending the trial court violated his procedural due process rights and incorrectly concluded plaintiff’s claims were timely filed. He also argues the damages and prejudgment interest awards are not supported by substantial evidence. We disagree and affirm the judgment.

FACTS

At times relevant to this case, defendant co-owned a real estate brokerage firm, Healstone Investment Real Estate (Healstone). Plaintiff became an independent contractor for Healstone in August 2006. Working as a real estate salesperson, plaintiff would cold call prospective clients to inquire if they were interested in selling their commercial properties. His compensation was purely commission based, with Healstone’s policy manual specifying the compensation formula for various scenarios.

One person to whom plaintiff reached out (the client) expressed interest in selling his City of Long Beach hotel property and using the proceeds to purchase new investment property in a state with no state taxes. Plaintiff spent a significant amount of time searching for available property which fit the client’s preferences. He found four apartment complex properties in the state of Washington and passed confidential financial information onto the client for review.

The client decided to list the sale of his hotel property with Healstone. Three days after plaintiff and defendant’s business partner, Charlie Kennedy, met with the client to get the necessary paperwork signed, defendant fired plaintiff.

Unbeknownst to plaintiff at the time, Healstone followed through with the sale of the hotel and assisted the client in purchasing of some of the Washington state apartment properties. Plaintiff did not receive any commission or other compensation related to those transactions.

In 2014 discussions with Kennedy, plaintiff learned for the first time about Healstone’s completion of the client’s transactions. Roughly two years later, plaintiff filed suit against defendant and Healstone, alleging claims for fraud and conspiracy to commit fraud. Defendant answered the complaint with a general denial.

During the discovery process, plaintiff propounded on defendant requests for admissions and production of documents, as well as special interrogatories. Defendant did not respond to any of the requests, so plaintiff filed a motion to deem the matters in the requests for admission admitted and motions to compel defendant to provide responses to the special interrogatories and produce the requested documents. Following a hearing at which defendant did not appear, the trial court granted all of plaintiff’s discovery motions. Among the matters deemed admitted were that plaintiff never received any compensation from Healstone, defendant conspired with others to conceal the disputed real estate transactions to avoid paying commission to plaintiff, and plaintiff was owed $812,700.

Approximately six months later, plaintiff filed a motion seeking monetary and terminating sanctions against defendant for failure to comply with the court’s orders regarding discovery, and alternatively seeking an order of contempt against him. Defendant appeared at the hearing on the sanctions motion and provided the trial court with certain proposed discovery responses. The court took the matter under submission to allow review of the documents. Thereafter, it partially granted plaintiff’s motion, issuing evidentiary and monetary sanctions against defendant. Regarding the former, it barred defendant from offering evidence at trial on the issues addressed in plaintiff’s special interrogatories and requests for production. Because the court found these sanctions sufficient, it denied plaintiff’s requests for terminating sanctions and a contempt hearing.

With the parties’ agreement, the matter proceeded to a bench trial. At its conclusion, the court took the matter under submission so it could review the parties’ exhibits. It subsequently issued a ruling in plaintiff’s favor. Relying largely on the matters deemed admitted by defendant, the court found “[p]laintiff met his burden to show defendant is liable, either directly or vicariously, for defrauding him out of an $812,700 commission.” The ensuing judgment awarded plaintiff damages in that amount, plus $6,234.41 in prejudgment interest.

After unsuccessfully seeking a rehearing, defendant appealed.

DISCUSSION

Defendant’s challenges to the judgment range from constitutional due process to sufficiency of the evidence. For the reasons detailed below, we find no merit in any of them.

1. Procedural due process

Defendant argues the trial court deprived him of his constitutional right to due process by denying him an opportunity to be heard at trial and to fully present his defense to plaintiff’s claims. We disagree.

When significant or substantial property deprivation is at issue, the state and federal Constitutions generally require procedural due process standards of reasonable notice and opportunity to be heard. (Horn v. County of Ventura (1979) 24 Cal.3d 605, 612; see also Dusenbery v. United States (2002) 534 U.S. 161, 167.)

The record is clear the trial court afforded the parties, who both represented themselves at trial, ample opportunity to present their respective evidence and arguments. With plaintiff bearing the burden of proving his claims, the court began by giving him a chance to argue his case and provide supporting evidence. When defendant objected to certain evidence, the court listened to the reasons for the objection, repeated its understanding to confirm its accuracy, and issued a ruling.

After plaintiff finished his presentation, the court turned to defendant and asked for his response. Defendant provided his perspective regarding the shortcomings of plaintiff’s case, including his belief the applicable statutes of limitations “ran out a long time ago.” He also discussed some of the exhibits submitted by plaintiff. Before allowing plaintiff to respond, the court stated its understanding of defendant’s position to ensure there was no misunderstanding. In response, defendant confirmed, “That’s what I said, sir. Thank you.”

In light of the above, and given defendant at no time indicated to the trial court he had more evidence or argument to add, we find no due process violation. (See Los Angeles Police Protective League v. City of Los Angeles (2002) 102 Cal.App.4th 85, 91 [due process requires opportunity to be heard at meaningful time and in meaningful manner].)

2. Statute of limitations

The trial court rejected defendant’s contention plaintiff’s claims were barred by the applicable statute of limitations. Defendant argues that conclusion was error because the evidence showed plaintiff was not diligent in pursuing his claims, preventing him from relying on a delayed discovery theory. Deferring, as we must, to the court’s findings of fact which are supported by substantial evidence, we find no error.

Application of the statute of limitations to undisputed facts is a pure legal question reviewed de novo on appeal. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191.) When relevant facts are disputed, resolution of a statute of limitations issue is instead a question of fact subject to a more deferential standard of review. (People v. Zamora (1976) 18 Cal.3d 538, 565.)

The parties agree the statute of limitations on a fraud cause of action is three years. (Code Civ. Proc., § 338, subd. (d).) And “[a]n action for relief on the ground of fraud . . . is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud.” (Ibid.)

In contrast, the parties disagree about the facts. Because neither party requested a statement of decision, we must presume the trial court made all factual findings necessary to support the judgment for which there is substantial evidence. (LSREF2 Clover Property 4, LLC v. Festival Retail Fund 1, LP (2016) 3 Cal.App.5th 1067, 1076.) In other words, we imply all necessary findings of ultimate fact and the only issue before us is whether the implied findings are supported by substantial evidence. (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 267.)

Among the evidence presented to the trial court was the following: (1) plaintiff’s statement he did not learn of the real estate transactions entitling him to commission until he spoke with Kennedy in October 2014; and (2) an admission from defendant that he used Delaware LLCs to conceal the transactions so plaintiff would not learn of them. This evidence is sufficient to support the trial court’s implied factual finding plaintiff did not learn of the facts constituting the fraud until October 2014. Accordingly, it did not err in concluding plaintiff’s September 2016 complaint was timely filed.

3. Sufficiency of the evidence

The judgment awarded plaintiff $812,700 in damages and $6,234.41 in prejudgment interest. Defendant disputes plaintiff’s entitlement to those amounts, asserting neither is supported by substantial evidence. We disagree.

Regarding damages, we need not look further than the matters deemed admitted due to defendant’s repeated discovery violations. Defendant was deemed to have admitted the amount owed plaintiff as a result of the contested real estate transactions was $812,700. Contrary to defendant’s urging, no additional evidence was necessary to support the court’s damages award. (See Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 979 [“[A] deemed admitted order establishes, by judicial fiat, that a nonresponding party has responded to the requests by admitting the truth of all matters contained therein”].)

Defendant’s argument concerning prejudgment interest fares no better. Civil Code section 3288 provides for the recovery of prejudgment interest on damages in fraud cases, the purpose of which is to compensate a plaintiff for loss of use of his or her property. (See Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1586 (Michelson).) The precise amount of an interest award is left to the discretion of the trier of fact (Civ. Code, § 3288; Michelson, at pp. 1586-1587), and we review its determination for an abuse of discretion (Bullis v. Security Pacific Nat. Bank (1978) 21 Cal.3d 801, 814-815).

There is no conceivable abuse of discretion in the trial court’s prejudgment interest determination. In fraud cases, interest may accrue from the time the plaintiff is damaged on the basis of the defendant’s fraud. (Michelson, supra, 29 Cal.App.4th at p. 1588.) And courts have upheld an annual interest rate of seven percent, for example, in similar situations. (See, e.g., id. at p. 1585; Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 69-70.) Thus, the roughly $6,200 in prejudgment interest the trial court awarded is significantly below other amounts it properly could have chosen to award under the circumstances.

DISPOSITION

The judgment is affirmed. Respondent is entitled to costs on appeal.

THOMPSON, J.

WE CONCUR:

IKOLA, ACTING P. J.

GOETHALS, J.