Lutz v. Sortwell
| Decision Date | 29 July 2011 |
| Docket Number | Super. Ct. No. 37-2007-00059499-CU-OR-EC,D055792 |
| Parties | BONNIE LUTZ, Cross-complainant and Appellant, v. GEORGELLA SORTWELL et al., Cross-defendants and Respondents. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from a judgment and postjudgment order of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Affirmed.
Bonnie Lutz appeals from a judgment following a jury trial on her cross-complaint for breach of partnership agreement and unpaid wages against cross-defendants Georgella Sortwell and Harry Donald Sortwell individually and as trustees of the Sortwell Family Trust (collectively the Sortwells).1 The jury returned a special verdict against theSortwells awarding Lutz $13,890 in damages, consisting of $13,800 in "sweat equity" damages and $90 on her wage claims. Thereafter, the trial court denied the parties' motions for attorney fees, finding there was no prevailing party. Lutz contends (1) the court erred by excluding the testimony of her valuation expert, Gene Konrad; (2) the attorney fee ruling is contrary to the jury's legal findings; and (3) the jury's special verdict on damages is not supported by the evidence. Lutz asks that we reverse the matter and remand it with an order that the superior court set hearings on her claims for an accounting and dissolution of the parties' investment partnership. We affirm the judgment and postjudgment order denying Lutz attorney fees.
"We state the facts in the light most favorable to the jury's verdict, resolving all conflicts and indulging all reasonable inferences to support the judgment." (Green Wood Indus. Co. v. Forceman Intern. Development Group, Inc. (2007) 156 Cal.App.4th 766, 770, fn. 2; see In re Marriage of Mix (1975) 14 Cal.3d 604, 614; Blanks v. Shaw (2009) 171 Cal.App.4th 336, 346, fn. 2.)
In June 2001, Donald Sortwell and his wife, Georgella Sortwell, purchased an apartment complex in El Cajon known as the Taft Avenue apartments (the property or the Taft apartments). Bonnie Lutz is Donald Sortwell's natural daughter and Georgella's stepdaughter. At the time, the Sortwells expected to buy the property, keep it for three years and then sell it for a profit. While the property was in escrow, the Sortwells discussed with Lutz an arrangement in which the Sortwells would purchase the property, Lutz would manage the apartments, and the Sortwells' son, Matt Sortwell, would domaintenance. For performing her general management duties such as collecting monies, making deposits and preparing monthly reports, Lutz was initially to receive six percent of the monthly deposited rent proceeds, seven percent of those proceeds after one year, and eight percent after taking a certified apartment manager program. They also agreed Lutz would receive free rent for living in an apartment at the property. When the property was sold, Lutz and Matt Sortwell would receive their "sweat equity." In June 2001, the Sortwells and Lutz signed a property management agreement, and the Sortwells considered Lutz to be their agent and employee.
Lutz did not track the time she spent on property manager duties under the six percent arrangement. According to Lutz, to earn her six percent compensation she showed properties, negotiated leases, processed credit reports, supervised the maintenance, negotiated with contractors, met with other nearby property managers and became a member of a resident manager support system that held monthly meetings. She engaged in administrative duties by collecting rents, making deposits, paying utilities and providing monthly reports. At the same time, Lutz was working full time, 40 hours per week, at her regular job as a trauma registrar at Mercy Hospital. Lutz also spent time renovating, gardening and cleaning the apartments as part of her "sweat equity" contribution to the partnership.
In January 2006, the Sortwells advised Lutz that as of the next month they would charge her $850 per month in rent, would continue to pay her six percent of the rental income, and would pay her $20 per hour for her work "above the management task."They also asked Matt Sortwell and Lutz to put $2,700 into the partnership. Several months later, Lutz and Matt Sortwell asked the Sortwells to designate them as beneficiaries of an irrevocable trust, but the trust proposed by the Sortwells was revocable and otherwise did not comport with Lutz and Matt Sortwell's request. By mid-2006, only seven of the 16 Taft apartments had been renovated, and by January 2007, Donald Sortwell relieved Lutz of her management responsibilities, telling her later that the partnership was failing. The Sortwells hired Cambridge as the new property manager.
Thereafter, the Sortwells filed a complaint against Lutz seeking, among other things, to quiet title to the property and damages for breach of contract, breaches of fiduciary duty, and negligence. Lutz cross-complained against the Sortwells and Cambridge for "breach of partnership agreement, accounting and dissolution," and ten other causes of action seeking various relief.
The Sortwells obtained summary adjudication in their favor on their quiet title cause of action, resulting in a determination that Lutz did not have any ownership interest in the property, which, by December 2006, the Sortwells had transferred into a family trust. Thereafter, the matter proceeded to trial on Lutz's cross-complaint.
Shortly before trial, the Sortwells applied for an Evidence Code section 402 hearing to determine the admissibility of the testimony of Lutz's certified public accountant expert Gene Konrad. They argued Konrad sought only to make mathematical calculations and therefore his opinion would not assist the jury; Konrad's testimony was based wholly on speculation and a conceded lack of accounting and documentarysupport; and Konrad failed to disaggregate Lutz's damages and thus did not distinguish among her theories of liability or any alleged wrongful act. The Sortwells further asserted Konrad was not qualified to offer an opinion on lost future profit damages and he used an improper methodology as evidenced by his deposition testimony. The trial court granted the Sortwells' request for an Evidence Code section 402 hearing, during which Konrad testified to his methodology and conclusions. Thereafter, the court excluded Konrad's testimony on grounds it was based on insufficient information and would not aid the jury.
After the close of evidence, Lutz dismissed her third through sixth causes of action for breach of employment agreement, wrongful termination in violation of public policy, breach of the implied covenant of good faith and fair dealing, and unpaid wages. The court granted directed verdicts on Lutz's eighth, tenth, the eleventh causes of action for, respectively, defamation, indemnity, and declaratory relief. The parties stipulated that in exchange for dismissing her unpaid wages cause of action, Lutz could argue she was entitled to be paid an hourly rate of $7.50 for approximately 15 hours per week of work under the parties' partnership agreement, which they stipulated amounted to $5,850 per year. During trial, Lutz had disclaimed recovery of a $20-per-hour wage.
In a special verdict, the jury found Lutz had entered into a contract with the Sortwells; Lutz did all or substantially all of the things required by the contract; all conditions occurred for the Sortwells' performance; the Sortwells failed to do something the contract required them to do; and Lutz was harmed by that failure. It awarded Lutz$13,800 in sweat equity damages and $90 in wages, for a total verdict of $13,890. The court thereafter entered judgment in Lutz's favor.
The parties moved to recover their costs and attorney fees as the prevailing party. Lutz argued she was entitled to recover over $46,000 in attorney fees under Labor Code section 218.5 for her statutory wage claim. The Sortwells argued they were entitled to recover approximately $240,000 in attorney fees under Civil Code section 1717, based on an attorney fee provision in the resident manager employment agreement.
Lutz also moved for a new trial on grounds of irregularity in the proceedings, jury misconduct, accident or surprise, inadequate damages, insufficiency of the evidence to justify the verdict, and error in law. In part, Lutz argued the evidence showed she worked for the Sortwells for approximately 66 months at an agreed rate of $20 per hour and was owed $83,160 in compensation, and that the evidence was "incontrovertible" that the value of her sweat equity as of early 2009 was $200,000. She complained about the trial court's exclusion of Konrad's testimony, suggesting it stemmed from pretrial discovery irregularities. She asked the court to set hearings on her claims and remedies for an accounting and dissolution of the partnership. The court denied Lutz's motion. It also denied the parties' attorney fee motions, finding there was no prevailing party and ordering the parties to pay their own costs.
Lutz appeals from the judgment, postjudgment order denying her motion for new trial, and postjudgment order denying her motion for attorney fees.
Lutz contends the trial court erred by excluding Konrad's expert testimony concerning the partnership valuation. She advances somewhat separate points, which we address in turn.
Lutz argues the Sortwells' in limine motion to exclude Konrad's testimony should have been denied on grounds of their unclean hands in "manipulating] the litigation" and using...
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