Richmond v. Dart Industries, Inc.

• Citation: 242 Cal.Rptr. 184,196 Cal.App.3d 869
• Court: California Court of Appeals Court of Appeals
• Decision Date: 02 December 1987
• Parties: Harold RICHMOND et al., Plaintiffs and Appellants, v. DART INDUSTRIES, INC., Defendant and Respondent. C000097.

Page 184

242 Cal.Rptr. 184

196 Cal.App.3d 869

Harold RICHMOND et al., Plaintiffs and Appellants, v. DART INDUSTRIES, INC., Defendant and Respondent.

C000097.

Court of Appeal, Third District, California.

Dec. 2, 1987.

Certified for Partial Publication ^*

Review Denied Feb. 17, 1988.

Harold A. Berliner, Nevada City, Heller, Ehrman, White & McAuliffe, Weyman I. Lundquist, Peter A. Wald, and Jonathan P. Hayden, San Francisco, for plaintiffs and appellants.

Severson, Werson, Berke & Melchior, Kurt W. Melchior, Jan T. Chilton, John K. Vincent, Laurie J. Nicholson, San Francisco, Kronick, Moskovitz, Tiedemann & Girard, Adolph Moskovitz, and James E. Thompson, Sacramento, for defendant and respondent.

SIMS, Associate Justice.

Plaintiffs Harold Richmond and his class of 2,600 purchasers of land at Tahoe-Donner subdivision appeal from a judgment entered in favor of defendant Dart Industries, Inc., following a four month jury trial. The jury returned a general verdict for defendant on plaintiffs' claims that defendant committed fraud and violated the Subdivided Lands Act (Bus. & Prof.Code, § 11000 et seq.) by misrepresenting the availability of water and sewer services at Tahoe Donner. (All further statutory references are to the Business and Professions Code unless otherwise indicated.) Following the jury verdict the trial court declined to rule on plaintiffs' tenth cause of action premised upon the Unfair Practices act (§ 17200 et seq.). Faced with the same arguments asserted here, the trial court also refused to enter a judgment notwithstanding the verdict.

Plaintiffs contend that uncontroverted evidence establishes defendant violated the Subdivided Lands Act as a matter of law. Plaintiffs also contend the trial court erroneously found that they waived a court trial of their tenth cause of action. In this

published portion of the opinion, we hold that plaintiffs waived the principal theory of recovery asserted on appeal by failing to argue the theory with reasonable clarity to the jury. In an unpublished portion of the opinion, we conclude plaintiffs' remaining contentions are without merit. We therefore affirm the judgment.

FACTS AND PROCEDURAL BACKGROUND

Tahoe Donner is a recreational home subdivision with approximately 6,000 lots near Truckee in Nevada County. (See Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 466, 174 Cal.Rptr. 515, 629 P.2d 23.) Defendant is the successor in interest to Lakeworld Development Corporation, the original developer of Tahoe Donner. Defendant opened the subdivision in 1971 and sold approximately 2,600 lots by 1976 when this action was filed. (Id., at p. 466, 174 Cal.Rptr. 515, 629 P.2d 23.)

Plaintiff land purchasers brought this action as a class action on behalf of all purchasers similarly situated. ¹

Plaintiffs contended defendant misrepresented the availability of water and sewer service to the Department of Real Estate (DRE) and lot purchasers by concealing and failing to disclose information.

Plaintiffs contended defendant should have told purchasers that provision of water was contingent upon defendant's installing and deeding to the Truckee Donner Public Utilities District (TDPUD) a pipe on the bed of Donner Lake to supply water to the subdivision. After defendant began constructing the pipe pursuant to agreements with those owning the water rights, the State Lands Commission asserted the need for a permit and sued defendant for trespass. Defendant suspended sales of lots between July and November 1973.

Defendant's defense was that it made truthful, timely disclosures to the DRE and to purchasers. Defendant presented evidence showing the assertion by the State Lands Commission to a proprietary interest in the bed of Donner Lake was unprecedented and unexpected. Defendant's evidence showed it got conflicting advice on the need for a permit from the Lands Commission, and defendant's independent legal counsel had advised no permit was necessary. Defendant responded to the Donner Lake impasse by developing ground water wells that were ultimately deeded to TDPUD. It is undisputed that no lot at Tahoe Donner was ever without water.

Plaintiffs also contended defendant concealed and misrepresented the availability of sewer service by the Truckee Sanitary District (TSD) by failing to disclose that (a) sewer connection fees would be required for lot hook-ups; (b) the subdivision's needs could be satisfied only if a new treatment plant were built; and (c) the new plant would be paid for by lot purchasers through greatly increased connection fees. In 1973, the Lahontan Regional Quality Control Board prohibited all within its region from making any new sewer connections. Defendant brought its sewage disposal difficulties to the DRE's attention and in June 1975, the DRE banned lot sales at all subdivisions in the area, including Tahoe-Donner. DRE's sales ban was lifted eight months later, in February 1976.

Defendant's defense was that it had obtained a will-serve letter from TSD, that neither connection fees, the construction of new facilities, nor the sewer hook-up ban were originally foreseeable, that the $250 per lot hook-up fee imposed in 1971 was standard in the business and did not have to be disclosed to DRE, and that, when known, connection fees were disclosed to purchasers.

With respect to a subclass of those who purchased lots and never sold them, defendant presented an additional defense: that they were not damaged because their lots increased in value.

With respect to a subclass of those who rescinded or whose lots were foreclosed upon, defendant presented evidence that the named representative plaintiffs did not stop their purchases because of water and sewer problems but rather because of personal problems and expectations they would recover in the then-pending lawsuit against defendant.

Further facts will be recited as necessary.

DISCUSSION

I

Plaintiffs may not change their theory of the case on appeal.

Plaintiffs impliedly concede substantial evidence supports the jury's verdict on their causes of action premised on common-law misrepresentation. They argue the evidence shows without dispute that they are entitled to damages and/or restitution because defendant violated the Subdivided Lands Act. Plaintiffs acknowledge their contention is a recasting of the argument that no substantial evidence supports the defense verdict.

Plaintiffs claim uncontradicted evidence establishes defendant violated that act by falsely representing to plaintiffs that: (1) water service to the subdivision was provided by TDPUD when, in fact, TDPUD was not providing water to the subdivision and had not accepted defendant's water supply facilities for maintenance and service; and (2) TSD would provide sewage treatment service to the subdivision when, in fact, defendant knew TSD's ability to serve the 6,000-lot subdivision depended on construction of a new regional sewage treatment plant that had yet to be funded or constructed and that would be paid for by lot purchasers. (See § 11022; Cal.Admin.Code, tit. 10, § 2799.1.) These claims are premised on representations contained in a "fact book" distributed to prospective purchasers of lots. It stated in pertinent part: "Water: Water is provided by the Truckee-Donner Public Utility District." "Sewage Disposal: Approximately 60 miles of sewer lines will be installed by the Developer. The property is served by the Truckee Sanitary District."

Defendant contends plaintiffs are asserting on appeal a new theory of recovery never properly tendered in the trial court. We agree.

"The rule is well settled that the theory upon which a case is tried must be adhered to on appeal. A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant. [Citation.]" (Ernst v. Searle (1933) 218 Cal. 233, 240-241, 22 P.2d 715; see Bogacki v. Board of Supervisors (1971) 5 Cal.3d 771, 780, 97 Cal.Rptr. 657, 489 P.2d 537; Bank of America v. Cory (1985) 164 Cal.App.3d 66, 78, fn. 4, 210 Cal.Rptr. 351; 9 Witkin, Cal.Procedure (3d ed. 1985) Appeal, §§ 316-323, pp. 327-334.) "Application of the doctrine may often be justified on principles of estoppel or waiver." (9 Witkin, op.cit. supra, § 316, p. 328.) The doctrine has been applied where a plaintiff on appeal asserts liability premised on a different negligent act from that at issue at trial. (See, e.g., Eger v. May Department Stores (1953) 120 Cal.App.2d 554, 561, 261 P.2d 281; Mattson v. Hollywood Turf Club (1950) 101 Cal.App.2d 215, 220, 225 P.2d 276.) Whether the rule is to be applied is largely a question of an appellate court's discretion. (Canaan v. Abdelnour (1985) 40 Cal.3d 703, 722, fn. 17, 221 Cal.Rptr. 468, 710 P.2d 268.)

Here, as we shall explain, plaintiffs' theory on appeal is at variance from their theory at trial in the following respects: (a) on appeal plaintiffs assert misrepresentations are located in statements in a "fact book" distributed to purchasers whereas at trial plaintiffs relied on different statements in public subdivision reports; and (b) on appeal plaintiffs assert a misrepresentation may be located in the statement that water To set the stage for plaintiffs' claims at trial, we review certain pre-trial procedural matters.

was provided by TDPUD, whereas at trial plaintiffs contended defendant misrepresented the availability of water without focus on whether a public or private entity was to supply it.

Plaintiffs' sixth amended complaint, on which the case went to trial, pled two claims under the Subdivided Lands Act (hereafter Act). Plaintiffs pled statutory violations specifically throughout their complaint. In their first claim under the Act, plaintiffs pled in detail that defendant had supplied false information to the DRE and such information was relayed to the public in DRE subdivision reports, all in...