Edmundson v. Bonilla
| Docket Number | G062039,G062227 |
| Decision Date | 07 December 2023 |
| Parties | TRYAL B. EDMUNDSON et al., Plaintiffs and Appellants, v. JOSE EULOGIO BONILLA, Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
Order Filed Date: 12/15/23
Appeal from a judgment of the Superior Court of Orange County No 30-2019-01117741, Deborah C. Servino, Judge. Reversed in part, affirmed in part, and remanded. Motion for Judicial Notice. Granted.
Law Offices of Sondra S. Sutherland and Sondra S. Sutherland for Plaintiffs and Appellants.
Abir Cohen Treyzon Salo, Boris Treyzon and David S. Bederman for Defendant and Respondent.
It is ordered that the opinion filed on December 7, 2023, be modified as follows:
On page 17, before the very last sentence on the page beginning "We do not address any issue" insert the following:
We remand with directions for the trial court to resolve the declaratory relief cause of action and to issue a declaratory judgment on the issues raised in Plaintiffs' declaratory relief cause of action. As this case was fully tried resolution of the declaratory relief cause of action and the declaratory judgment are to be based only upon the existing evidentiary record; that is the record in this matter to the entry of judgment on August 31, 2022.
On page 35, second line from the top of the page, the word "its" is replaced with "they are" so that the sentence reads: Communications between attorney and client are not only reasonable and necessary, they are required.
Line three and four in the Disposition section, on page 36, delete "grant declaratory relief on the issues raised by Plaintiffs' declaratory relief cause of action;" and insert the following in its place:
based upon the existing evidentiary record, grant declaratory relief and issue a declaratory judgment on the issues raised by Plaintiffs' declaratory relief cause of action;
There is no change in the judgment.
Tryal B. Edmundson, his wife Osbelia G. Edmundson, and Daniel Perales[1] placed money with Jose Eulogio Bonilla in exchange for his promise that he would pay them, out of his share of profits, a total of 10 percent of the net profits of a partnership if he was successful in his lawsuit against his brothers to claim his 20 percent partnership interest. Bonilla won that lawsuit, but he reneged on his promise to pay Plaintiffs. They sued him, and, after an eight-day trial, the jury found Bonilla to be liable for breach of contract. The jury awarded Plaintiffs damages totaling $980,988.83.
Plaintiffs and Bonilla accept the results of the jury verdict. In this appeal, Plaintiffs challenge several rulings and decisions made by the trial court.
We affirm in part and reverse in part. We conclude the trial court did not err by declining to grant specific performance and by denying Plaintiffs' motion for leave to amend to conform to proof at trial. The court erred, however, by denying declaratory relief because the issue raised by Plaintiffs-the rights and responsibilities of the parties going forward-was a proper subject for declaratory relief over which there was an actual controversy. The trial court erred by limiting the scope of a charging order against Bonilla's partnership interest because payments he received in satisfaction of his judgment against his brothers represented net profits of the partnership.
Finally, we reverse the order on Plaintiffs' motion for attorney fees for three reasons. First, the court erred by concluding that not all Plaintiffs were entitled to recover fees. Second, the court set an hourly rate for Plaintiffs' lead counsel that was far lower than the market rate. Third, the trial court did not have a reasonable basis for its dramatic reduction in the number of hours for which Plaintiffs could recover fees.
Bonilla worked as a manager at El Toro Market, which was owned by a family partnership, until he was locked out in early 2007.[2] In March 2007, Bonilla brought a lawsuit against his brothers/partners in the Orange County Superior Court, Case No. 07CC04418 (the Partnership Lawsuit).
In January 2008, Bonilla and his brothers agreed to settle the Partnership Lawsuit. Under the terms of the settlement agreement (the Settlement Agreement), Bonilla received a 20 percent interest in the Market and a corresponding right to 20 percent of its net profits starting on January 7, 2008. Within a few days, Bonilla's brothers reneged on the Settlement Agreement.
Bonilla needed funds to pay for legal fees to pursue the Partnership Lawsuit and enforce his right to 20 percent of the Market's net profits. He turned to Plaintiffs because he believed they had the needed funds. He presented his request for funds as an investment opportunity.
Perales was a good friend of Bonilla. Bonilla approached him in October 2008, made an "investment pitch," and presented him with a proposed investor agreement. In November 2008, Bonilla and Perales entered into an agreement by which Bonilla agreed to give Perales 5 percent of the Market's net profits (to be paid out of Bonilla's 20 percent interest) in exchange for a $100,000 investment from Perales. A document titled "Receipt for Investment" states, "Daniel (Dan) Perales is investing $100,000 (one hundred thousand dollars) to Jose (Joe) Eulogio Bonilla, Sr. for El Toro Market &Tortilla Factory ...."
In December 2008, Bonilla and Perales modified this agreement to give Perales 2.5 percent of the Market's net profits in exchange for a $50,000 investment. This agreement had no termination date. As agreed, Perales paid Bonilla $50,000. Bonilla told Perales that payments for his stake in the Market's net profits would continue for Perales's lifetime and Perales would be able to pass his stake to his heirs.
Bonilla met with Tryal in November 2008 and offered him an investment opportunity. Bonilla said his brothers had reneged on a settlement agreement that made him a 20 percent owner of the Market and he needed money to pursue litigation against them. Bonilla offered to pay Tryal 1 percent of the Market's net profits (to be paid out of Bonilla's 20 percent interest) in exchange for a $20,000 investment from Tryal. Tryal agreed and paid Bonilla $20,000 in exchange for 1 percent of the Market's net profits.
A document titled "Receipt for Investment" states, "Tryal Edmundson is investing $20,000 (twenty thousand dollars) for 1% (one percent) of Jose (Joe) Eulogio Bonilla's partnership interest at El Toro Market &Tortilla Factory. The receipt for investment also states:
During 2010 and 2011, Tryal invested an additional $68,566.10 (for a total investment of $88,566.10) and in exchange received 5.5 percent interest in the Market's net profits, accumulating from November 6, 2008. Bonilla and Tryal signed two "Promissory Notes", one dated June 30, 2011 and the other dated March 31, 2012. (We refer to these contracts together as the Tryal Contracts.) Both contracts state, "On various dates between 2008 and 2010, Payee [Tryal] invested various amounts of money to Makers to eventually amount to a 5½% (five and one half percent) stake in the net profits of El Toro Market."
The June 30, 2011 contract recites that Bonilla promises to pay $324,831 which represented 5.5 percent of Bonilla's accumulated proceeds from the settlement of the Partnership Lawsuit for the years 2008 through 2011 "based upon a 5.5% (five and one-half percent) ongoing interest" in the Market. (Italics added.) The March 31, 2012 contract similarly recites that Bonilla promises to pay $122,788 which represented 5.5 percent of Bonilla's accumulated proceeds from the settlement of the Partnership Lawsuit for July 1 to December 31, 2011 "based upon a 5.5% (five and one-half percent) ongoing interest" in the Market. (Italics added.)
Both Tryal Contracts state: (Italics added.) Both Tryal Contracts have an attorney fees clause stating,
In May 2010, Bonilla approached Osbelia, who is the sister of his wife, and offered her an investment that would give her 2 percent of the Market's net profits in exchange for "funding and services." At that time, Osbelia had been working for about a month setting up an office for Bonilla at a warehouse he had leased to provide storage for the Market. Bonilla told her the offer was "just like Tryal's" meaning that she would receive 2 percent of the Market's net profits (to be paid out of Bonilla's 20 percent interest), accumulating upon acceptance of the offer, if he was successful in the Partnership Lawsuit. In exchange, Osbelia would provide Bonilla clerical and litigation support services without pay after May 1, 2010.
Osbelia accepted the offer. She made her financial investment by paying $24,753.76 of the start-up and operating expenses for the warehouse. For two years she worked without pay at the...
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