Opinion
G031306.
11-13-2003
EDICK SHAHNAZARIAN, Plaintiff, Cross-defendant and Appellant, v. HOOMAN MOSHAR, Defendant, Cross-complainant and Respondent.
Law Office of Ronald Grzywinski and Ronald Grzywinski for Plaintiff, Cross-defendant and Appellant. Turner, Reynolds, Greco & OHara, Frederick E. Turner, Niall Sweetnam, Glen R. Segal and Keith Van Dyke for Defendant, Cross-complainant and Respondent.
In an action for breach of contract and quantum meruit, a jury returned a general verdict in favor of plaintiff Edick Shahnazarian against defendant Hooman Moshar. The damages line of the general verdict form was marked "no additional compensation." Concluding no damages were awarded, the court ordered Shahnazarian to take nothing under the complaint. A default had previously been entered against Shahnazarian on Moshars cross-complaint. Relying on the evidence adduced at trial to prove-up the default, the court entered judgment against Shahnazarian for $62,500. Shahnazarian contends the judgment cannot be reconciled with the verdict. We agree in part and modify the judgment accordingly. (Code Civ. Proc., § 43.)
I
FACTS
Shahnazarians first amended complaint alleged Moshar breached an oral contract by failing to pay him $147,500 plus expenses for professional consulting services. The same facts were alleged to support a cause of action for quantum meruit.
In a cross-complaint, Moshar alleged he loaned Shahnazarian $37,500 in July and August 2000 and Shahnazarian breached an oral promise to pay it back within six to twelve months. In a second cause of action for "restitution of money received," Moshar alleged that in August 2000, Shahnazarian promised to perform "due diligence" on a piece of property Moshar was buying in Palos Verdes in appreciation of defendants loan, Moshars consideration of Shahnazarian as a potential general contractor, and Moshars referral of potential investors to Shahnazarian. After escrow closed, Shahnazarian demanded money for the consulting work. Moshar agreed to pay him the reasonable value of his services. In November, he gave Shahnazarian $ 25,000 as a retainer and they agreed the value of his services would be determined later, i.e., he would either pay the difference, or Shahnazarian would return the unearned part of the retainer. Moshar alleged the value of Shahnazarians services "was far less than the Retainer amount," and reimbursement in the sum of at least $15,000.
The court granted Moshar leave to file a cross-complaint and deemed it "filed and served" on March 25, 2002. Shahnazarian did not answer the cross-complaint and a default was entered on July 8, 2002. He made no effort to attack service or set aside the default in the trial court.
At trial, Shahnazarian testified he rekindled an old friendship with Moshar at the latters 40th birthday party in March 2000. An engineer at an Orange County chip manufacturer, Moshar boasted he had made millions on company stock and wanted to invest in commercial property. Discussing various projects, Shahnazarian offered to perform due diligence for these ventures in exchange for an ownership position, i.e., "sweat equity." While partnership discussions were pending, Shahnazarian asked Moshar for a $100,000 loan, as his personal business was suffering due to a reduction in his bonding capacity. Moshar ultimately agreed to a $37,500 loan, with an understanding the loan would be paid back within a year. A short time later, Moshar asked Shahnazarian to examine several properties in Palos Verdes. Shahnazarian requested a fee equal to 10 percent of the land value for his services to be performed in both the "due diligence" and preconstruction phases. Moshar replied he was not concerned with the money; he wanted the "best job" because he planned to build a "castle" for his family. Shahnazarian visited six or seven properties and made recommendations. Moshar eventually instructed Shahnazarian to perform due diligence on a property on Via La Cuesta. As part of his due diligence, Shahnazarian ordered a preliminary title report, hired a civil engineer to draw a map, and reviewed a previous geotechnical report. He also hired a geotechnical (soils) expert, reviewed the CC&Rs, and compiled previous architectural renderings, and a property profile for the site. Shahnazarian researched the citys construction requirements, ascertained the previous owners purchase price, prepared a project flow chart, and ascertained where the water and sewer lines were. This information was reported to Moshar on a weekly basis.
Escrow closed around October 11 on the $2.675 million property. A few weeks later, Moshar refused to pay Shahnazarian or to sign a contract he had drafted. But Moshar eventually wrote several checks to cover expenses related to the due diligence, and gave Shahnazarian a $25,000 check with the word "retainer" written on it. Dissatisfied, Shahnazarian sought a fee equal to five percent of the land cost because Moshar did not use him for the preconstruction phase.
Moshar testified Shahnazarian proposed a limited real estate investment partnership, but explained his financial difficulties would prevent him from contributing anything other than his engineering expertise. While mulling over Shahnazarians partnership proposal, Shahnazarian asked Moshar for a $100,000 loan, claiming his family was suffering due to recent financial setbacks. Moshar balked at the amount, but eventually agreed to a $37,500 loan, to be paid back from the proceeds of a contract Shahnazarian anticipated receiving.
At Moshars request, Shahnazarian accompanied him to help evaluate several properties in the Palos Verdes area. Settling on a particular site to construct his future home, Moshar requested Shahnazarians assistance in performing due diligence. Shahnazarian explained the process in detail, estimated it would take 30-40 days, and responded it "would be his moral duty and his honor" to help because of all that Moshar had done for him. There would be "no cost to [Moshar] and the best he should hope for is a long relationship. And should the day come that he build this property, I would choose him as the general contractor."
On August 26, Moshar, Shahnazarian, and Bender, an attorney, met at the real estate agents office to review and present an offer to buy the property. Shahnazarian participated in the discussions and agreed to review a soils report. The seller accepted the offer on August 30, with a 45-day escrow. In the interim, Moshar and Shahnazarian met regularly on Saturdays. On one occasion, Shahnazarian showed him a preliminary survey and brought some architectural books.
Near the close of escrow, Moshar asked Shahnazarian if he had "done all [his] findings." Shahnazarian claimed he had and they met at the attorneys office on October 9, the night before escrow closed. Shahnazarian reported his investigation had not uncovered any problems with the property, but failed to provide a written report. Moshar agreed he was relying on Shahnazarians expertise and acknowledged receiving some benefit from the work he performed.
In mid-October, Shahnazarian advised Moshar there were outstanding bills for the soil and survey engineers. Moshar wrote four checks totaling approximately $7,000; one check for $1,200 was payable to Shahnazarian for incidentals he had incurred. As he had at previous meetings, Shahnazarian mentioned the possibility of a partnership agreement, but Moshar reiterated he was not interested.
The next week, Shahnazarian demanded compensation for his work on Moshars property. Insisting his efforts were worth a great deal of money, Shahnazarian promised to submit an itemized description of his services. In the interim, Moshar learned from several experts that due diligence was typically charged on an hourly basis, and builders generally did not charge owners for land acquisition services if they were hired to perform construction work on the property.
Shahnazarian sent Moshar an e-mail document designated "master contract," indicating Moshar had retained Shahnazarians company (Shaw International) and owed $267,000. Moshar informed Shahnazarian this was ridiculous. In early November, Shahnazarian showed up at Moshars office and requested five percent of the purchase price as compensation. Moshar responded Shahnazarian had agreed to do the due diligence for free, and noted he had done some research: "if anything at all needed to be charged, it would be anywhere from [$5,000] to $30,000 on the very extreme case." Shahnazarian offered to settle for $80,000. When Moshar refused, Shahnazarian explained he was in a desperate financial situation. He was traveling to Iran for his fathers funeral, and had been forced to borrow $ 15,000 to pay back taxes. Eventually, Moshar sent a $25,000 check to Shahnazarian. Moshar selected $25,000 because that was "the range [$5,000-30,000 he] knew." He wrote "retainer for acquisition of" the property on the check and pointed out he still had not received a description of Shahnazarians work. Moshars understanding of the payment was "helping him so he could get his life straightened out."
Architectural engineer Randall Evers testified for Moshar. Reviewing the work performed by Shahnazarian, he concluded it was not useful. He faulted Shahnazarian for not supplying written materials to Moshar before the close of escrow and not preparing a written report of his conclusions and opinions. He also testified most building consultants charged fees on an hourly figure and not a percentage basis. He would not have charged Moshar more than $25,000.
During closing arguments, Moshars lawyer referred to the unpaid $37,500 loan. Shahnazarians counsel objected, arguing repayment of the loan formed the basis of the cross-complaint and was therefore an issue solely for the trial court. After listening to argument, the trial court instructed the jury "the 37 five and the 25 are not part of this lawsuit. You dont need to pay attention to them. That is a matter which the court and counsel will handle outside your jurisdiction."
Moshars lawyer had argued, "Shahnazarian came here wasting our time, wanting to shake down Mr. Moshar for money, stabbing him in the back after he was lent all of that sum. Still doesnt want to repay that." Shahnazarians counsel objected at side-bar, "there is a cross-complaint . . . . [W]e did not deduct the 37 five [loan] because we thought it was dealt with in the cross-complaint." Moshars lawyer explained: "There was a cross-complaint which has essentially . . . two claims . . . . One for the repayment of the [$37,500]. [& para;] Secondly, for restitution of the $25,000. Now, the default has been entered with respect to both of those. You [the court] have obviously heard the evidence which serves as a prove-up. And so whatever the jury may do in terms of the plaintiffs complaint, we have one outcome already if you want to be satisfied by the proof and that is an order for [$67,500]. [¶] So it seems to me what the jury should be asked to consider is in a vacuum, in other words, without reference to the 37, without reference to the 25, the cross-complaint as it stands. And then lets assume that the jury comes back with a hundred thousand dollars, then that is the . . . verdict. [¶] And then your honor is drawing up the judgment will have a hundred thousand dollar jury verdict. [$62,500] default judgment, net balance 37 five." The judge indicated that was "kind of [his] understanding." Shahnazarians lawyer argued he should be able to tell the jury he was not trying to claim the $37,500 as part of the compensation.
The jury received a general verdict form. During deliberations, the jury (through the foreperson) asked, "The wording of the jury verdict says that `We find in favor of the plaintiff. Does that mean we find an oral contract?" The judge replied, "Not necessarily. Well, you would find either an oral contract or youre just finding in favor of the plaintiff, either on the worth of his time or the contract, either count." The foreperson said, "I think that clears things up for us." The jury returned the following verdict: "We, the jury in the above-entitled action, find in favor of plaintiff . . . and against defendant . . . and award damages in favor of plaintiff as follows: [& para;] $ No Additional Compensation." The court sought clarification: "So your verdict is actually zero. Is that agreed? Everybody?" Moshars lawyer requested the jury be polled and asked "a question with respect to the 37 five. [¶] . . . [¶] [A]dditional compensation, additional to 25 and 37 five." The court refused, indicating "[w]e can talk about that later. But I dont think that is appropriate to talk to them about." The court then asked the clerk to poll the jury, "And I read this as zero, no additional compensation. Is that correct? Okay. If that is your verdict, say yes when your name is called." All but one juror answered affirmatively. The judgment ordered that plaintiff take nothing by his complaint and awarded Moshar $62,500 on the cross-complaint, plus prejudgment interest.
II
DISCUSSION
Shahnazarian argues the judgment is inconsistent with the jurys intent: "The award of `no additional compensation indicates an understanding by the jury that Shahnazarian had received a total of $62,5000.00 from Moshar, as established by the evidence, and that it was felt that this constituted sufficient payment for the value of the due diligence performed . . . ."
An ambiguous verdict "should be interpreted so as to uphold it and to give it the effect intended by the jury, as well as one consistent with the law and the evidence." (7 Witkin, Cal. Procedure (4th ed., 1996) Trial, § 375, p. 427.) A verdict is sufficiently certain if it can be made so by reference to the pleadings, the evidence, or the record. (Snodgrass v. Hand (1934) 220 Cal. 446; Crain v. Sumida (1922) 59 Cal.App. 590.) If the trial judge interprets the verdict incorrectly, the appellate court will, if possible, provide its own correct interpretation to uphold the verdict. (Woodcock v. Fontana Scaffolding & Equipment Co. (1968) 69 Cal.2d 452, 457.)
Here, it is apparent the jurys verdict of "no additional compensation" is ambiguous. One possible interpretation is the jury found Shahnazarian did not incur any damages. But another, equally plausible construction is that the panel deemed the retainer, expense reimbursement, and personal loan, either separately or in combination, was sufficient compensation for any damages Shahnazarian suffered.
Complicating matters further, the trial court unsuccessfully attempted to clarify the ambiguity. The court polled the jury on the following question: "And I read this as zero, no additional compensation. Is that correct? Okay. If this is your verdict, say yes when your name is called." Thus, the courts inquiry failed to clarify whether "zero" damages or no additional damages were awarded. The distinction is important.
In All-West Design, Inc. v. Boozer (1986) 183 Cal.App.3d 1212, the jury returned a special verdict finding plaintiff had been damaged by the cross-defendants fraud, but awarded "No Further Damages." The appellate court held "[t]he language `No Further Damages is not equal to `zero damages. [Citation.] The language by the jury is an implicit finding of actual damages for which no further monetary award was made. We conclude the jury was of the opinion the full actual damages suffered had been awarded under earlier issues found to be true. As a result, the jury was attempting to prevent double recovery." (Id. at pp. 1222-1223.) Here, the jury reached a similar result in finding Shahnazarian was not entitled to "additional compensation" beyond that which he had previously received.
We are mindful the court instructed the jury the $37,500 loan and $25,000 retainer fee were "not part of this lawsuit. You dont need to pay attention to them." No further clarifying instructions were given. During closing arguments, however, Shahnazarians lawyer informed the jury, without objection, they should "deduct the $25,000" fee in computing the damage award. Under these circumstances, the jury arguably followed the courts imprecise admonition when it awarded no additional damages.
We next consider whether the jury could have found Shahnazarians compensation consisted of the retainer fee, reimbursement of expenses, or the $37,500 personal loan. We are persuaded the jury did not consider Moshars reimbursement of Shahnazarians expenses as the equivalent of payment for services rendered. Nor is it plausible the $37,500 personal loan was viewed as compensation. No evidence was offered to support such findings and the parties informed the jury this was a separate issue. On the other hand, the $25,000 retainer was payment for Shahnazarians due diligence services, the subject of the lawsuit. Shahnazarians lawyer implicitly conceded his client considered the retainer fee partial compensation when he told the jury to deduct this amount in calculating damages. Thus, it is apparent the jury concluded Shahnazarian was entitled to the $25,000 retainer fee, but "no additional compensation."
The trial court awarded Moshar $62,500 on the cross-complaint following the jury trial; $37,500 for Shahnazarians failure to repay the loan and $25,000 for failing to return the retainer fee. Because the jury found Moshar liable on Shahnazarians claim, and determined damages did not exceed the $25,000 retainer fee, the trial courts damage award is inconsistent with the jurys determination. (Hughes v. Dunlap (1891) 91 Cal. 385, 388; see Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2002) [¶] 2:166, p. 2-29.) Accordingly, the judgment must be modified to reduce the damage award to $37,500.
III
DISPOSITION
The judgment is modified to reduce the damage award in favor of cross-complainant Moshar to $37,500. As modified, the judgment is affirmed. Each side shall bear its own costs on appeal.
WE CONCUR, OLEARY, ACTING P. J., IKOLA, J.