Filed 6/25/20 Setareh v. Elyaszadeh CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

KAYVAN SETAREH, Individually and as Trustee, etc.,

Plaintiff and Appellant,

v.

SHAHRAM ELYASZADEH,

Defendant and Appellant.

B286643

(Los Angeles County

Super. Ct. No. BC598172)

APPEALS from a judgment of the Superior Court of Los Angeles County, William Fahey, Judge. Affirmed.

Law Offices of Nicholas A. Siciliano and Nicholas A. Siciliano for Plaintiff and Appellant.

The Leichter Firm, Kevin J. Leichter and Andrew E. Hewitt for Defendant and Appellant.

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Defendant borrowed $500,000 from plaintiff’s parents in 2007. Defendant made periodic interest payments on the loan, but never repaid the principal. After plaintiff’s parents’ deaths, plaintiff, as the executor of his parents’ estate and the trustee of his parents’ trust, brought the present action against defendant for breach of contract and account stated to recover the unpaid loan principal and interest. The court found that plaintiff’s breach of contract claim was barred by the statute of frauds, but plaintiff had proved an account stated. It therefore entered a judgment for plaintiff in the amount of $757,933—the unpaid loan balance of $500,000, plus pretrial interest of 10 percent per year.

Both parties appealed from the judgment. Plaintiff contends his breach of contract claim was not barred by the statute of frauds, and thus he was entitled to breach of contract damages—i.e., 16 percent compound interest, plus late fees of 10 percent of the principal balance. Defendant contends the trial court properly found the statute of frauds barred the breach of contract claim, but erred in permitting plaintiff to proceed on his account stated claim.

We find no error. As to plaintiff’s appeal, we conclude that the breach of contract claim was barred by the statute of frauds, and the trial court did not err by precluding the testimony of plaintiff’s handwriting expert. As to defendant’s appeal, we conclude that the trial court did not err in permitting plaintiff to try claims for both breach of contract and account stated, and there was not a material variance between the claim pled and proved. We therefore affirm the judgment in full.

FACTUAL AND PROCEDURAL BACKGROUND

Consistent with our standard of review, we state the facts established by the record in the light most favorable to the judgment. (McPherson v. EF Intercultural Foundation, Inc. 47 Cal.App.5th 243; Los Angeles Unified School Dist. v. Casasola (2010) 187 Cal.App.4th 189, 194, fn. 1.)

A. The Parties

Plaintiff Kayvan Setareh is the son of Rabi Setareh (Rabi) and Jalalet Setareh, who died in 2012 and 2010, respectively. Plaintiff is the executor of his parents’ estate and is the trustee of his parents’ trust, the Pacific Capital Trust.

Prior to his death, Rabi was engaged in the business of making short-term, high-interest loans. Rabi met defendant Shahram Elyaszadeh, also a lender, in 2001 or 2002, and sometime thereafter Rabi began to loan money to defendant.

B. The 2006 Loan of $600,000

In October 2006, Rabi loaned defendant $600,000. The loan was memorialized by a check, dated September 18, 2006, and a promissory note, dated October 1, 2006 (the promissory note). The promissory note provided that defendant would make monthly interest payments of $4,500 (simple interest of nine percent on the principal balance), and would repay the outstanding principal balance and any unpaid interest within 12 months. In the event of a default, a default interest rate of nine percent “plus seven percent . . . compounded monthly” would apply. Defendant had the option to extend the term of the note beyond the maturity date for an additional 12 months at no additional cost.

C. The 2007 Loan of $500,000

On August 6, 2007, Rabi wrote a check to defendant for $500,000. The check bore the notation “Loan.” Defendant did not execute a promissory note in connection with the $500,000 check.

Plaintiff testified that the $500,000 check was a loan, and that he was present when Rabi agreed to make this additional loan to defendant “ ‘under the same terms of the note for $600,000.’ ” Rabi demanded security for the two loans, and defendant assigned Rabi a $1.1 million deed of trust, which was received in evidence at trial.

Defendant testified that the $500,000 was not a loan, but instead was part of a transaction with a third party, Edvin Yeroomian. According to defendant, he loaned Yeroomian $1.1 million and assigned Rabi a $500,000 interest in the loan. When Yeroomian repaid the loan in May 2008, Rabi told defendant to place the $500,000 with another company, Namco, which filed for bankruptcy in 2009.

D. Payoff of the $600,000 Loan; Default on the $500,000 Loan

Through mid-2008, defendant made monthly interest payments of $8,250—i.e., payments of nine percent interest on $1.1 million. ($1,100,000 x .09 = $99,000; $99,000/12 = $8,250.) In May 2008, defendant paid off the $600,000 loan. Thereafter, through the end of 2008, defendant made monthly interest payments of $3,750, i.e., nine percent interest on $500,000. ($500,000 x .09 = $45,000; $45,000/12 = $3,750.)

For the next several years, defendant made periodic past-due interest payments on the outstanding $500,000 loan. In addition, on several occasions defendant gave Rabi checks for $500,000, but those checks were dishonored for insufficient funds.

Defendant made a final past-due interest payment in August 2012, shortly after Rabi’s death. In a January 2013 telephone call, defendant acknowledged to plaintiff the unpaid $500,000 debt and said he was “ ‘still working on it.’ ” As of the time of trial, the $500,000 debt had not been repaid.

Michelle Mangan, plaintiff’s accounting expert, testified that the unpaid debt, including interest and late charges, was $1,807,559. Mangan explained that she arrived at this number by applying a nine percent simple interest rate through October 1, 2008, and a default 16 percent interest rate, compounded monthly, as of November 1, 2008. She also added a 10 percent late charge of $50,000 on the outstanding principal, and subtracted defendant’s regular and default interest payments.

E. Present Action

Plaintiff, individually and as executor of his parents’ estate and trustee of their trust, filed the present action against defendant on October 19, 2015. The operative first amended complaint (complaint) asserted nine causes of action, including breach of contract and account stated.

F. Trial; Statement of Decision

The case was tried to the court over four days in February and March 2017. At the conclusion of trial, the court issued a statement of decision indicating its intention to enter judgment for plaintiff in the amount of $1,807,559. The court credited plaintiff’s testimony that Rabi’s $500,000 payment to defendant in August 2007 was a loan made on the same terms as the prior $600,000 loan. The court found defendant’s contrary testimony “incredible” and “not believable.” The court also gave “substantial weight” to a ledger showing defendant made interest payments of $8,250 per month (i.e., nine percent on a $1.1 million loan) to Rabi during the first part of 2008, before the $600,000 was repaid, and that defendant continued to pay Rabi interest of $3,750 per month on the then-outstanding $500,000 loan during the second half of 2008. Finally, the court found that plaintiff “persuasively testified” that when pressed, Elyaszadeh continued to make payments for past due interest in later years and acknowledged the $500,000 debt in a telephone call in 2013.

Based on the foregoing, the court concluded that the $500,000 loan was made on the same terms as the $600,000 loan, and that plaintiff therefore was entitled to damages for breach of contract in amount of $1,807,559. In the alternative, the court found plaintiff was entitled to recover on his claim for account stated based on defendant’s repeated admissions of the $500,000 debt.

On July 13, 2017, the court entered judgment for plaintiff in the amount of $1,807,559, plus costs according to proof.

G. Motion for New Trial; Amended Judgment

Defendant filed a motion for new trial, contending that because no writing set forth all the essential terms of the $500,000 loan, the judgment for breach of contract should not have been granted because it was barred by the affirmative defense of the statute of frauds. Defendant further contended that plaintiff’s damages for the account stated claim were limited to $500,000 plus interest. Defendant thus urged the court to grant a new trial or reduce the judgment to $500,000 plus interest.

Plaintiff opposed the motion for new trial. He urged (1) defendant forfeited his statute of frauds claim, (2) the $500,000 check satisfied the writing requirement of the statute of frauds, and (3) defendant was equitably estopped to assert the statute of frauds.

On September 29, 2017, the trial court entered an order amending the statement of decision. It stated as follows:

“Having considered the papers and the argument of counsel, the Court concludes that its Final Statement of Decision was incorrect and that a new and different judgment should be entered. Specifically, the Court failed to consider defendant’s statute of frauds argument as to plaintiff’s breach of contract claim. As defendant argues, the statute of frauds applies to business loans over $100,000. [Civ. Code, § 1624, subd. (a)(7).] The statute requires the writing to state ‘the essential contract terms with reasonable certainty.’ [Sterling v. Taylor (2007) 40 Cal.4th 757, 766.] While extrinsic evidence is admissible to resolve ambiguous terms, such evidence ‘cannot support those required terms.’ (Id. at p. 767.)

“In this case, the check at issue, Exhibit 38, says nothing more than ‘loan.’ No other terms of the alleged contract are set forth, including e.g., the term of the loan, the interest rate, penalty interest, late charges and attorney fees, if any. Contrary to plaintiff’s assertion, defendant did not waive that argument. As a result, plaintiff did not carry his burden of proof on the contract claim.

“On the other hand, plaintiff is entitled to recover on his claim for account stated for the reasons set forth in the Final Statement of Decision.”

On September 29, 2017, the trial court entered an amended judgment for plaintiff in the amount of $500,000, plus prejudgment interest of 10 percent from August 3, 2012 through September 28, 2017, for a total award of $757,933.

Plaintiff appealed, and defendant cross-appealed, from the amended judgment.

STANDARD OF REVIEW

On appeal from a judgment based on a statement of decision after a bench trial, we review the trial court’s conclusions of law de novo and its findings of fact for substantial evidence. (McPherson v. EF Intercultural Foundation, Inc., supra, 47 Cal.App.5th at p. 257; Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) We review the trial court’s evidentiary rulings for an abuse of discretion. (LAOSD Asbestos Cases (2020) 44 Cal.App.5th 475, 485; Mackey v. Board of Trustees of California State University (2019) 31 Cal.App.5th 640, 657.)

PLAINTIFF’S APPEAL

I.

Statute of Frauds

California’s statute of frauds provides that certain classes of contracts “are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged.” (Civ. Code, § 1624, subd. (a).) As relevant here, contracts subject to the statute of frauds include those “to loan money . . . in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit.” (§ 1624, subd. (a)(7).)

Plaintiff concedes the statute of frauds applies to the present case, but he urges the statute did not render the loan agreement unenforceable for three reasons—(1) the $500,000 check constituted a writing sufficient to take the agreement out of the statute of frauds, (2) plaintiff fully performed under the contract, and (3) defendant is equitably estopped from raising the statute of frauds. As we discuss, none of these contentions has merit.

A. The $500,000 Check Was Not a Writing Sufficient to Remove the Loan from the Statute of Frauds

1. The Writing Requirement of the Statute of Frauds

Our Supreme Court has explained that the “ ‘primary purpose’ ” of the statute of frauds “ ‘is evidentiary, to require reliable evidence of the existence and terms of the contract and to prevent enforcement through fraud or perjury of contracts never in fact made. . . .’ (Rest. 2d Contracts, § 131, com. c, p. 335, italics added; accord, Seaman’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, at pp. 764–765.)” (Sterling v. Taylor (2007) 40 Cal.4th 757, 766–767 (Sterling).)

Consistent with this purpose, a memorandum satisfies the statute of frauds “if it identifies the subject of the parties’ agreement, shows that they made a contract, and states the essential contract terms with reasonable certainty. [Citation.] ‘Only the essential terms must be stated, “ ‘details or particulars’ need not [be]. What is essential depends on the agreement and its context and also on the subsequent conduct of the parties. . . .” ’ ” (Sterling, supra, 40 Cal.4th at p. 766, italics added.)

If ambiguous terms in a memorandum are disputed, extrinsic evidence is admissible to resolve the uncertainty—i.e., “to explain essential terms that were understood by the parties but would otherwise be unintelligible to others.” (Sterling, supra, 40 Cal.4th at p. 767.) However, “[b]ecause the memorandum itself must include the essential contractual terms, it is clear that extrinsic evidence cannot supply those required terms.” (Ibid.) Whether a memorandum complies with the statute of frauds is a question of law subject to the appellate court’s independent review. (Id. at pp. 771–772.)

In Sterling, supra, 40 Cal.4th 757, our Supreme Court considered whether a memorandum concerning the sale of three apartment buildings was enforceable under the statute of frauds. The court explained that the essential terms of a contract for the sale of real property are the buyer, the seller, the price, and the property. (Id. at p. 772.) The memorandum at issue identified the parties and the properties, but it did not clearly identify the price alleged by the plaintiff. The court therefore concluded the agreement was unenforceable. It explained: “The statute of frauds demands written evidence that reflects the parties’ mutual understanding of the essential terms of their agreement, when viewed in light of the transaction at issue and the dispute before the court. The writing requirement is intended to permit the enforcement of agreements actually reached, but ‘to prevent enforcement through fraud or perjury of contracts never in fact made.’ (Rest. 2d Contracts, § 131, com. c, p. 335.) . . . [¶] . . . [¶] Here, . . . the extrinsic evidence offered by plaintiffs is at odds with the writing . . . . Therefore, the evidence is insufficient to show with reasonable certainty that the parties understood and agreed to the price alleged by plaintiffs. The price terms stated in the memorandum, considered together with the extrinsic evidence of the contemplated price, leave a degree of doubt that the statute of frauds does not tolerate.” (Id. at pp. 775–776.)

2. The Sufficiency of the $500,000 Check

What terms must be in writing because they are “essential” to a contract “ ‘depends on the agreement and its context and also on the subsequent conduct of the parties. . . .’ ” (Sterling, supra, 40 Cal.4th at p. 766.) The essential terms of a loan include, at a minimum, the parties, loan amount, interest rate, and repayment terms. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174 [“[t]ypically, a contract involving a loan must include the identity of the lender and borrower, the amount of the loan, and the terms for repayment”]; Peterson Development Co. v. Torrey Pines Bank (1991) 233 Cal.App.3d 103, 115 [“[t]he material terms of a loan include the identity of the lender and borrower, the amount of the loan, and the terms for repayment”]; Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 60 [essential terms of the claimed loan agreement are “the amount of the loan, the rate of interest, the terms of repayment, applicable loan fees and charges”]; Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 891 [no enforceable loan contract where “essentials are absent, namely, payment schedules for each loan, identification of the security, prepayment conditions, terms for interest calculations, loan disbursement procedures, and rights and remedies of the parties in case of default”]; see also Rest. 2d Contracts, § 131, com. g.)

In the present case, plaintiff introduced into evidence a copy of the front of the $500,000 check, which showed the payor (Rabi), the payee (defendant), the payment amount ($500,000), and the word “LOAN.” The check therefore arguably identified the lender, the borrower, and the loan amount. The check did not, however, identify the interest rate or the repayment terms. As in Sterling, therefore, the check was “insufficient to show with reasonable certainty that the parties understood and agreed to” the interest and repayment terms alleged by plaintiff—i.e., a one-year term, an initial interest rate of nine percent, and a default interest rate of 16 percent compounded monthly. (Sterling, supra, 40 Cal.4th at p. 775.)

Further, although the $500,000 check was signed by Rabi, it was not signed by defendant. It therefore was not “subscribed by the party to be charged,” as the statute of frauds requires. (§ 1624, subd. (a); Nicholson v. Barab (1991) 233 Cal.App.3d 1671, 1683 [agreement not signed by defendant was unenforceable under statute of frauds]; Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 877 [same].)

Plaintiff concedes that the portion of the check in evidence does not include defendant’s signature, but he urges that the trial court should have concluded defendant signed it because the check was deposited into defendant’s bank account. We do not agree. Although it was undisputed that defendant deposited the check into his bank account, at trial plaintiff did not offer any evidence or legal authority for the proposition that a deposit would have required defendant’s signature. Plaintiff does not cure this defect on appeal—to the contrary, he merely asserts, without any authority, that “the check had to have been signed to be deposited.” (Contra, Stenseth v. Wells Fargo Bank (1995) 41 Cal.App.4th 457, 461 [checks deposited “with plaintiff’s endorsement stamp”]; Fireman’s Fund Ins. Co. v. Security Pacific Nat. Bank (1978) 85 Cal.App.3d 797, 810 [check deposited with “typewritten indorsement rather than a written signature”].) The trial court therefore was not required to conclude that the check bore defendant’s signature or was otherwise “subscribed” by him.

Plaintiff also contends that defendant’s signature was not required for the check to constitute an enforceable writing under the statute of frauds because defendant accepted the benefits of the loan. But the case plaintiff cites for the proposition that a lender’s acceptance of benefits is sufficient to bind the lender under the statute of frauds—Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49 (Lueras)—does not support his position. To the contrary, the Lueras court concluded that the defendant had not properly raised the statute of frauds by demurrer, and thus the issue had been forfeited. (Id. at p. 71.) In the alternative, the court held that the statute of frauds did not apply to the forbearance agreement at issue because the forbearance agreement did not modify the note or deed of trust, and thus it was not subject to the statute of frauds. (Ibid. [“[W]hile a forbearance agreement that modifies a note and deed of trust is subject to the statute of frauds [citation], here, in contrast, the Forbearance Agreement states: ‘No Modification. I understand that the Agreement is not a forgiveness of payments on my Loan or a modification of the Loan Documents.’ (Original boldface.)”].) In short, Lueras simply has no applicability here.

Finally, plaintiff contends that the $500,000 check was sufficient to satisfy the statute of frauds because although it did not reflect the interest rate and repayment terms, those terms were supplied by plaintiff’s testimony and the parties’ subsequent conduct. Not so. As we have said, although extrinsic evidence is admissible to resolve a dispute about the meaning of essential terms in a writing, “[b]ecause the memorandum itself must include the essential contractual terms, it is clear that extrinsic evidence cannot supply those required terms.” (Sterling, supra, 40 Cal.4th at p. 767.) Thus, the check did not satisfy the writing requirement of the statute of frauds because it did not include all of the essential terms of the loan agreement.

B. Defendant Is Not Estopped from Asserting the Statute of Frauds

As a general rule, one party’s full performance of an oral agreement estops the other party from asserting the statute of frauds. “ ‘Where the contract is unilateral, or, though originally bilateral, has been fully performed by one party, the remaining promise is taken out of the statute [of frauds], and the party who performed may enforce it against the other.’ (1 Witkin, Summary of Cal. Law, supra, Contracts, § 370, p. 414, and authorities cited.)” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 556 (Secrest); see also Zakk v. Diesel (2019) 33 Cal.App.5th 431, 454 [plaintiff’s allegation that he fully performed all of his obligations under an alleged oral contract was sufficient to take the contract out of the statute of frauds]; Dougherty v. California Kettleman Oil Royalties (1937) 9 Cal.2d 58, 81 [where oral agreement had been fully executed by plaintiff, defendant was “estopped to plead the statute”].)

However, this general rule has been held not to apply when “performance” consists entirely of the payment of money.

Instead, where one party’s full or partial performance under the contract consists entirely of the payment of money, “[h]is remedy is in a cause of action for the return of the benefits received by the defendant.” (Paul v. Layne & Bowler Corp. (1937) 9 Cal.2d 561, 565; see also Smyth, supra, 31 Cal.App.5th at p. 198 [“payment of money is not ‘sufficient part performance to take an oral agreement out of the statute of frauds’ ”]; Secrest, supra, 167 Cal.App.4th at p. 555 [“ ‘The payment of money is not “sufficient part performance to take an oral agreement out of the statute of frauds” [citation], for the party paying money “under an invalid contract . . . has an adequate remedy at law” ’ ”]; Anderson v. Stansbury (1952) 38 Cal.2d 707, 715–716 [plaintiffs could not invoke the doctrine of part performance to overcome the bar of the statute of frauds: “The payment of money is not ‘sufficient part performance to take an oral agreement out of the statute of frauds’ [citation] for the party paying money ‘under an invalid contract . . . has an adequate remedy at law’ ”]; Woerner v. Woerner (1915) 171 Cal. 298, 301 [“[Plaintiff] has done nothing more, in part performance, than to render the full consideration . . . . For this she has an adequate remedy by an action to recover the value of the personal and property rights she relinquished”]; Hines v. Copeland (1913) 23 Cal.App. 36, 41–42 [“That mere payments on the purchase price of the land are not sufficient to take an oral agreement for the sale of land out of the statute of frauds, is well settled. . . . For money paid under an invalid contract, the party who pays has an adequate remedy at law’ ”].)

Thus, in Secrest, supra, 167 Cal.App.4th 544, the Court of Appeal held that although homeowners had partially performed under an oral forbearance agreement by making a $13,422.51 down payment, their mortgage company was not estopped to assert the statute of frauds as a defense to the homeowners’ action alleging breach of the agreement. The court explained that payment of money “ ‘is not “sufficient part performance to take an oral agreement out of the statute of frauds” [citation], for the party paying money “under an invalid contract . . . has an adequate remedy at law.” ’ ” (Id. at p. 555.) Thus, because the action plaintiffs took in reliance on the forbearance agreement was purely monetary, plaintiffs “failed as a matter of law to establish estoppel to assert the statute of frauds.” (Id. at p. 557.)

Similarly, in Shive v. Barrow (1948) 88 Cal.App.2d 838, the court held unenforceable an oral agreement between a husband and wife, on the one hand, and the wife’s adult children, on the other. Under the terms of the alleged oral agreement, the children agreed to pay the costs of building a home on the wife’s property, and the couple agreed that the children would inherit the property upon the death of the husband and wife. The wife predeceased the husband; he remarried and, on his death, devised the property to his second wife. The children sued the second wife, seeking to enforce the oral agreement that the property would be left to them upon the husband’s death. (Id. at pp. 840–843.) The court held that, notwithstanding the children’s performance under the contract, the second wife was not estopped from asserting the statute of frauds as a defense to the children’s action for breach of oral contract because the children “had an adequate remedy at law for moneys advanced and for the value of the services rendered and procured.” (Id. at p. 847.)

In the present case, plaintiff asserts that because his father fully performed under the oral agreement by loaning defendant $500,000, defendant should be estopped from asserting the statute of frauds. As in the cases cited above, however, plaintiff’s sole performance under the contract was the payment of money. Thus, as in those cases, his remedy is return of the money paid, not enforcement of the oral agreement. (Secrest, supra, 167 Cal.App.4th at p. 555; Paul v. Layne & Bowler Corp., supra, 9 Cal.2d at p. 565.)

Plaintiff contends that defendant should be estopped from asserting the statute of frauds as a defense to his breach of contract claim because defendant “used the $500,000 loan proceeds for his benefit without repaying [them],” and as such “was unquestionably unjustly enriched.” We do not doubt that defendant would be unjustly enriched were he permitted to keep the $500,000 he borrowed from Rabi. But as we have said, under the circumstances of the present case, plaintiff is entitled to return of the loan proceeds plus interest. Our failure to enforce the oral agreement, therefore, will not cause defendant to be unjustly enriched.

Plaintiff contends finally that defendant should be estopped from asserting the statute of frauds because he “did more than simply loan money to [defendant]; [he] serviced the loan for years.” Plaintiff cites no authority for the proposition that “servicing” a loan removes an oral agreement from the statute of frauds, and thus we do not consider it.

For all of these reasons, we conclude that the trial court did not err in finding plaintiff’s breach of contract action barred by the statute of frauds.

II.

The Trial Court Did Not Abuse Its Discretion

by Excluding the Testimony of

Plaintiff’s Handwriting Expert

Plaintiff contends the trial court abused its discretion by excluding the testimony of his handwriting expert, A. Frank Hicks (Hicks). As we discuss, the claim is without merit.

A. Facts Relevant to the Exclusion of Plaintiff’s Handwriting Expert

The parties exchanged initial witness lists on January 13, 2017. Plaintiff’s witness list included a number of fact witnesses and an accounting expert, Michelle Mangan, but did not include a handwriting expert.

The court held a final status conference on January 23, 2017. The court ordered the parties to file joint pretrial documents and continued the final status conference to February 3.

On February 1, 2017, plaintiff’s counsel served notice that he intended to call Hicks as a handwriting expert at trial. Eight days later, on February 9, 2017, plaintiff’s counsel advised defendant’s counsel by email that Hicks would testify “that the signature on the Guarantee Agreement (Ex 44) was probably written by the writer of the known signature” and that Exhibit 44 and Exhibit 2 “appear to be prepared from the same template.”

The day after plaintiff’s counsel disclosed the substance of Hicks’s proposed testimony, defendant’s counsel offered to “stipulate to what you proposed. Specifically, we will stipulate for purposes of trial that the signature on the Guarantee Agreement (Ex 44) is a probable match for Elyaszadeh, and that Exs 2 and 44 appear to be prepared from the same template.” Defendant’s counsel suggested that his proposed stipulation “eliminates the dispute over your late addition of the witness, and the need to file briefs.” The same day, plaintiff’s counsel said he would “consider [the] proposed stipulation,” but that he intended to file a brief regarding the admissibility of Hicks’s testimony. The appellate record does not reflect that plaintiff’s counsel further responded to defendant’s counsel’s offer to stipulate to the substance of Hicks’s testimony.

On February 10, 2017, plaintiff filed a brief arguing that there was good cause to allow Hicks to testify because plaintiff was not aware until defendant’s January 31, 2017 deposition that defendant would deny signing the 2007 guarantee. The supporting declaration of plaintiff’s counsel stated that he had attempted to take defendant’s deposition in mid-December 2016, but the deposition had been continued to January 10, 2017 because defendant’s counsel represented that defendant was unavailable on the date scheduled. Defendant did not appear for his deposition until January 31, 2017, at which time plaintiff’s counsel determined that he would need to engage a handwriting expert for trial. Plaintiff’s counsel retained expert Hicks on February 1, 2017, and transmitted a “brief summary of his proffer” to defendant on February 9, 2017.

Defendant moved to preclude Hicks from testifying, urging that plaintiff had not included Hicks in his initial witness list and had not advised defendant’s counsel which documents Hicks would offer testimony about until February 9. Defendant thus urged that Hicks had not been timely designated and there was no good cause to allow him to testify.

On February 24, 2017, the court granted defendant’s motion to preclude Hicks from testifying. The court explained: “On or about January 4th of this year, the defendant responded to plaintiff’s request for admission, and in a verified response the defendant denied that he had signed the guarantee . . . . The court concludes that that put the plaintiff on notice that there was a genuine issue as to certain handwriting, especially [as to the guarantee]. Nevertheless, in the plaintiff’s original witness list filed on or about January 16th of this year, there was no designation of a handwriting expert, either Mr. Hicks or anyone else. The record also should reflect that on February 2nd, a new witness list was submitted, where for the first time Mr. Hicks, as plaintiff’s handwriting expert, was disclosed. [¶] The defendant’s objection that this was a late disclosure, not in compliance with the court’s case management order or the rules of court, is well taken.”

B. Analysis

The Los Angeles County Superior Court Rules provide that all counsel must serve and file trial witness lists at least five days prior to the final status conference. (Super. Ct. L.A. County, Local Rules, rule 3.25, subd. (f)(1).) Failure to timely exchange and file a trial witness list “may result in not being able to call witnesses.” (Ibid.)

We review a trial court’s ruling on a motion to exclude expert testimony for an abuse of discretion. (San Francisco Print Media Co. v. The Hearst Corp. (2020) 44 Cal.App.5th 952, 962 (Print Media); Cottini v. Enloe Medical Center (2014) 226 Cal.App.4th 401, 418–419.) “ ‘ “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.” ’ ” (Pina v. County of Los Angeles (2019) 38 Cal.App.5th 531, 545.) The appellant has the burden on appeal to show an abuse of discretion. (Print Media, at p. 963.)

On the present record, the trial court’s order precluding Hicks’s testimony was not an abuse of discretion. There appears to be no dispute that plaintiff did not disclose his intention to call Hicks as a witness by January 18, 2017, five days prior to the January 23, 2017 final status conference. The disclosure therefore was untimely. There also is no dispute that in defendant’s January 6, 2017 responses to plaintiff’s requests for admission, defendant denied that he initialed or signed the guarantee agreement. Although plaintiff contended that the denial did not sufficiently put him on notice that defendant would deny having initialed or signed the agreement , the trial court was well within its discretion in concluding otherwise.

The cases plaintiff relies on do not compel a contrary conclusion. In Du-All Safety, LLC v. Superior Court (2019) 34 Cal.App.5th 485 (Du-All), plaintiffs and defendants made simultaneous expert witness disclosures; 18 days later, defendant Du-All served a supplemental exert witness disclosure, identifying additional expert witnesses Du-All intended to call to rebut plaintiff’s expert witnesses. (Id. at p. 491.) The trial court granted plaintiff’s motion to strike Du-All’s supplemental disclosure, and Du-All filed a writ petition, urging that the order striking Du-All’s supplemental witness disclosure was an abuse of discretion. The Court of Appeal agreed and granted the petition. (Id. at p. 494.) It explained that Code of Civil Procedure section 2034.210 permits any party to demand a simultaneous exchange of the names of expert witnesses that the parties expect to call at trial. Thereafter, pursuant to Code of Civil Procedure section 2034.280, within 20 days of the initial disclosure, a party may file a supplemental expert witness disclosure identifying additional witnesses “ ‘who will express an opinion on a subject to be covered by an expert designated by an adverse party to the exchange, if the party supplementing an expert witness list has not previously retained an expert to testify on that subject.’ ” (Du-All, at p. 496.) In the case at issue, there was no dispute that Du-All made a timely initial disclosure of its experts. There also was no dispute that Du-All designated its rebuttal experts within 20 days of the initial disclosures. (Id. at p. 497.) Thus, the court said, “Du-All complied with the express language of the expert designation statutes. That ends it.” (Ibid., italics added.)

The present case is distinguishable from Du-All. As plaintiff concedes, neither plaintiff nor defendant made a disclosure demand pursuant to Code of Civil Procedure section 2034.210, which requires disclosure of expert witnesses “50 days before the initial trial date, or 20 days after service of the demand, whichever is closer to the trial date.” (Code Civ. Proc., § 2034.230, subd. (b).) Instead, the parties disclosed their trial witnesses pursuant to Local Rule 3.25, which does not require parties to disclose their witnesses until “five days prior to the final status conference,” but makes no provision for a supplemental disclosure. (Super. Ct. L.A. County, Local Rules, rule 3.25, subd. (f)(1).) Du-All, therefore, has no application here.

Staub v. Kiley (2014) 226 Cal.App.4th 1437 (Staub) also does not assist plaintiff. Staub was an action for medical malpractice, in which the plaintiff alleged that defendants’ untimely diagnosis of his medical condition caused him extensive and permanent injuries. (Id. at pp. 1440–1441.) As in Du-All, the Staub defendants served a demand for exchange of expert witnesses pursuant to Code of Civil Procedure section 2034.210. (Staub, at p. 1442.) Plaintiffs did not provide their expert witness designation until two weeks after the disclosure date, and defendants thereafter moved to preclude plaintiffs from calling any expert witnesses. (Ibid.) The trial court granted the motion and, subsequently, granted defendants’ motion for nonsuit, finding that plaintiffs’ lack of expert witness testimony prevented plaintiffs from establishing a prima facie case on any cause of action. (Id. at pp. 1443–1444.)

The Court of Appeal reversed, concluding that defendants lacked standing to seek to exclude the testimony of the plaintiffs’ experts because defendants themselves had not fully complied with the statute, and, in any event, the plaintiffs had not so unreasonably failed to comply with the defendants’ expert witness demand as to warrant the exclusion of all expert testimony. (Staub, supra, 226 Cal.App.4th at pp. 1445–1446.) The court noted that its conclusion was “bolstered by the fact that the order excluding plaintiffs’ experts from testifying at trial was in effect a terminating sanction, as it eviscerated plaintiffs’ case. The ‘general rule [is] that a terminating sanction may be imposed only after a party fails to obey an order compelling discovery. . . .’ [Citation.] Here, there was no history of discovery abuse by plaintiffs which would warrant the imposition of a terminating sanction. This case is not remotely on a par with the type of case in which a sanction of this type is warranted.” (Id. at p. 1448.)

As we have said, in the present case neither party demanded simultaneous expert witness disclosure pursuant to Code of Civil Procedure section 2034.210, and thus Staub has no direct application. Moreover, here the trial court’s exclusion of plaintiff’s handwriting expert did not eviscerate plaintiff’s case and require the entry of nonsuit; to the contrary, the present case was tried and, at the conclusion of trial, the trial court entered a significant judgment for plaintiff. Thus, Staub does not suggest that the trial court here abused its discretion by excluding plaintiff’s handwriting expert.

For all of these reasons, we conclude that the trial court did not abuse its discretion by excluding the testimony of plaintiff’s handwriting expert.

DEFENDANT’S CROSS-APPEAL

In his cross-appeal, defendant contends the trial court erred by allowing plaintiff (1) to proceed simultaneously on claims of breach of contract and account stated, and (2) to advance a unpled theory of account stated at trial. We reject both contentions.

“ ‘An account stated is an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing. [Citation.] To be an account stated, “it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing.” [Citation.]’ (Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 752–753.)

“ ‘The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. [Citations.]’ (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.)” (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)

“ ‘[A]n element essential to render the account stated is that it receive the assent of both parties, but the assent of the party sought to be charged may be implied from his conduct.’ (Hansen v. Fresno Jersey Farm Dairy Co. (1934) 220 Cal. 402, 408 (Hansen).)” (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 968.) “When an account stated is ‘ “assented to, either expressly or impliedly, it becomes a new contract.” ’ [Citation.] ‘The theory of an account stated is that it becomes a contract between the parties for payment of the amount computed to be due without proof of the specific items included therein.’ [Citation.] Accordingly, an action on an account stated is not based on the parties’ original transactions, but on the new contract under which the parties have agreed to the balance due.” (Ibid.)

Here, in its statement of decision, the trial court found plaintiff had established a claim for account stated. It said: “[P]laintiff is entitled to recovery on his claim for an account stated. . . . An admitted debt of a party can be the basis for a claim based on an account stated. The Court concludes that Elyaszadeh admitted his debt of $500,000 on multiple occasions, both orally and by providing to Rabi and plaintiff NSF [nonsufficient funds] checks in the amount of $500,000. The several interest checks are further evidence of Elyaszadeh’s admission of his debt. His contrary testimony was unbelievable and is rejected.” (Internal record citations omitted.)

Defendant contends the trial court erred by permitting plaintiff to pursue theories of both breach of contract and account stated at trial because according to defendant, “an account stated claim merges all contracts into a new one.” The claim is without merit. Defendant’s contention appears to be based entirely on stray language from cases to the effect that an account stated “constitutes a new contract which supersedes and extinguishes the original obligation.” (See Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 604.) But defendant cites no authority, and we know of none, for the proposition that a plaintiff therefore may not pursue both breach of contract and account stated claims. To the contrary, there are many cases in which plaintiffs have done precisely that. (E.g., Jade Fashion & Co., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4th 635, 641–643; Allied Interstate, Inc. v. Sessions Payroll Management, Inc. (2012) 203 Cal.App.4th 808, 815; Murray’s Iron Works, Inc. v. Boyce (2008) 158 Cal.App.4th 1279, 1283, fn. 1.)

Moreover, pleading “alternative factual allegations relying on alternative legal theories” has long been deemed permissible under both the common and statutory law. (Williams v. Southern California Gas Co. (2009) 176 Cal.App.4th 591, 598.) Indeed, “[a] plaintiff may plead inconsistent, mutually exclusive remedies . . . in the same complaint.” (Walton v. Walton (1995) 31 Cal.App.4th 277, 292.) That “plaintiffs [cannot] recover on both theories does not mean they may not plead both theories. Plaintiffs are entitled to plead inconsistent causes of action, and to submit to the trier of fact any theory which is supported by the evidence.” (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 881.) “Since, then, inconsistent causes of action may be pleaded, it is not proper for the judge to force upon the plaintiff an election between those causes which he has a right to plead. Plaintiff is entitled to introduce his evidence upon each and all of these causes of action, and the election, or in other words the decision as to which of them is sustained, is, after the taking of all the evidence, a matter for the judge or the jury.” (Tanforan v. Tanforan (1916) 173 Cal. 270, 274; see also Grudt v. City of Los Angeles (1970) 2 Cal.3d 575, 586 [“[T]here is no prohibition against pleading inconsistent causes of action stated in as many ways as plaintiff believes his evidence will show, and he is entitled to recover if one well pleaded count is supported by the evidence”].) The trial court did not err, therefore, in permitting plaintiff to present evidence on both breach of contract and account stated.

Defendant further contends that there was a material variance between the account stated claim pled and proved at trial, and that the trial court erred by permitting plaintiff to proceed at trial on his “entirely new and unpled theory of account stated.” We conclude that defendant forfeited any claim of error arising from the purported variance between pleading and proof by failing to raise it in the trial court. Defendant does not identify anywhere in the trial court record where his counsel objected to plaintiff’s evidence on the ground that it was not relevant to the account stated claim pled; to the contrary, defendant concedes that he did not make such an objection. Nor did defendant object in his motion for new trial to the purported variance between pleading and proof: Instead, defendant’s motion conceded that there was evidence to support the account stated claim, but urged that damages for account stated should be “limited to $500,000 plus interest.” Defendant thus has forfeited any claim of error arising from the asserted variance between pleading and proof. (See People v. Maury (2003) 30 Cal.4th 342, 427 [“defendant has forfeited his right to object to an alleged variance between the pleading and the proof by failing to raise the objection in the trial court”]; see also People v. Meraviglia (1925) 73 Cal.App. 402, 407 [“A defendant may not be permitted to submit to a trial on the merits without objection, taking his chances of obtaining a favorable verdict, and reserve, in the event of an adverse judgment, any objection which he may have to mere irregularities in the form of indictment or pleading, for an attack in the appellate court for the first time”].)

In any event, we perceive no fatal variance between the account stated claim plaintiff pled and proved. The complaint alleged that each of defendant’s payments of interest on the $500,000 was an “acknowledgement of the loans,” and that defendant had failed to repay the loan “[d]espite repeated and continued promises, representations, and assurances of remittance, payment, and full satisfaction of the Loan together with interest . . . .” The eighth cause of action for account stated incorporated these allegations by reference and further alleged that “[a]n account was stated between plaintiff and defendant[],” which defendant “agreed to pay.” Plaintiff’s proof at trial was consistent with these allegations: As the trial court found, plaintiff presented evidence that defendant acknowledged and promised to repay a $500,000 debt. The court thus did not err in entering judgment for plaintiff on the account stated claim.

 

DISPOSITION

The judgment is affirmed. Each party shall bear his own appellate costs.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EDMON, P. J.

We concur:

LAVIN, J.

DHANIDINA, J.