GREENWICH v.WONG







Filed 12/2/10






CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

GREENWICH S.F., LLC, Plaintiff and Respondent, v. DONNA WONG, Defendant and Appellant.

A123670 & A124882 (San Francisco County Super. Ct. No. CGC-06-454625)

STORY CONTINUE FROM PART I….



In Stevens Group Fund IV, supra, 1 Cal.App.4th 886,[1] the buyer contended the trial court had erred both in determining that section 3306 did not authorize the recovery of lost rents as consequential damages and in denying its request for specific performance. (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 888.) The Court of Appeal reversed the trial court’s denial of the buyer’s request for specific performance, but rejected the buyer’s contention that section 3306 authorized the recovery of lost rents and lost profits as consequential damages. (Id. at pp. 889, 892.) The court held that lost rents received from lease of the property were not properly an item of consequential damages “in this case” (id. at p. 892), as the buyer’s experts had included these rents as part of their capitalized income and comparable sales approaches to determining fair market value. Hence, to award market value and also rental profits as consequential damages in the circumstances would have permitted a double recovery. (Id. at pp. 891- 893.)[2] Similarly, the court rejected the buyer’s claim that it was entitled to either the difference between the contract price and fair market value or consequential damages as alternative measure of damages, stating, “[t]he language of the statute is clear. It does not provide for alternative measures of damages.” (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 893.) Stevens Group Fund IV did not hold that lost profits—from rents or otherwise—were not recoverable as consequential damages under section 3306 in an appropriate case.
Nor do we read Reese v. Wong, supra, 93 Cal.App.4th 51, as holding that lost profits may never be awarded in an appropriate case as consequential damages under section 3306. In that case, Division One of this court rejected the buyer’s claim that the trial court had erred in refusing to instruct the jury that the measure of damages for breach of a contract to sell commercial real property under section 3306 was the difference between the contract price and the fair market value of the property at the time of trial, rather than at the time of breach, as specified in the statute. (Id. at pp. 53-54.) The buyer had been denied specific performance of the contract and the property had been sold for a price in excess of the contract by the time of trial. The buyer sought that difference between the contract price and the property value at the time of trial as his damages. The appellate court quoted the statute both before and after its 1983 amendment and observed that “[b]oth versions of section 3306 include the same unambiguous language regarding the price value differential, and courts have consistently read that language according to its plain meaning. [Citations.]” (Id. at pp. 55-56, 60.) The court rejected the buyer’s contention that following the amendment to section 3306 to allow recovery of consequential damages, the appreciation in value of the property from the time of breach to the time of trial constituted consequential damages within the meaning of the statute and the contemplation of the Legislature. (Id. at pp. 59-61.) The court relied upon the courts’ consistent reading of section 3306 according to its plain language specifying the measure of damages as the difference between the price to be paid and the value of the property at the time of the breach. It concluded that in eliminating the bad faith requirement in 1983, the Legislature did not intend to change that measure of damages. (Id. at p. 60.) “[N]othing in the legislative history of the amendment, which was discussed in Stevens Group Fund IV . . . , supra, 1 Cal.App.4th 886, suggests that the Legislature intended the radical change in the measure of damages that appellant espouses. On the matter of including consequential damages, the Stevens court noted a legislative committee report indicating that the provision would conform the measure of damages to the general contract measure specified in Civil Code section 3300. (Stevens Group Fund IV, supra, at p. 892.) One treatise writer has suggested that the amendment means that a buyer’s lost profits could be recovered under appropriate circumstances, if the buyer purchased the property for purposes of resale and the seller was aware of the buyer’s purpose. [Citation.] But the legislative history provides no support for appellant’s theory that by expressly permitting the recovery of consequential damages, the Legislature impliedly intended to establish alternative measures of damages, with the price/market value differential based in some cases on the time of the breach and in others, on the time of the trial. ‘The language of the statute is clear. It does not provide for alternative measures of damages.’ (Stevens Group Fund IV, supra, at p. 893.)” (Reese v. Wong, supra, 93 Cal.App.4th at p. 60.) The court then continued: “We observe that appellant’s theory of damages is incompatible with the principle that contract damages are ordinarily limited to those within the contemplation of the parties when they entered into the contract or to those reasonably foreseeable by them at that time. ‘ “This limitation on available damages serves to encourage contractual relations and commercial activity by enabling parties to estimate in advance the financial risks of their enterprise.” [Citation.]’ [Citation.] Under appellant’s novel theory, contract damages would be dependent not on the reasonable expectations of the parties at the time of their contracts, but on the fluctuations in the real estate market, the existence of congestion in the calendars of trial courts, and the success of the parties in delaying or advancing trial dates, depending on which tactic was to their advantage.” (Id. at pp. 60-61.)
In rejecting the buyer’s “novel theory” of damages, and continuing to read section 3306 as measuring damages for breach as the difference between the contract price and the market value of the property at the date of the breach, Reese v. Wong did not reject the legislative history described in Stevens v. Group Fund IV, supra, 1 Cal.App.4th at page 892, nor the conclusion of Miller and Starr that lost profits may be available as consequential damages in appropriate cases. Rather, it rejected the contention that damages could be measured by the appreciation in the property’s value after the date of the breach. The court also concluded that the buyer’s theory was incompatible with the requirement that contract damages must depend upon the reasonable expectations of the parties at the time of entering the contract, not upon market fluctuations and the vagaries of court calendars. (Reese v. Wong, supra, 93 Cal.App.4th at pp. 60-61.)
In Horning v. Shilberg, supra, 130 Cal.App.4th 197, the appellate court affirmed a judgment in favor of defendant seller on the plaintiff buyer’s claim for breach of contract to convey real property. The buyer contended that the court should have awarded him damages in the amount of lost resale profits based upon the difference between the contract price and the price the seller received when he sold the property to another party after his breach of the contract. The court held that upon the seller’s breach of the contract, the buyer was entitled to damages specified in section 3306. The measure of the buyer’s damages “was the difference between the purchase price and the fair market value of the . . . property on the date of breach (the market-contract differential), plus consequential damages according to proof. [Citations.]” (Id. at p. 206.) However, the buyer failed to introduce evidence of the market-contract differential and so the court’s finding of zero damages was upheld. (Ibid.) Instead, the buyer claimed he was entitled to the difference between the contract price and the price the seller received upon his later sale of the property. (Id. at pp. 206-207.) The court rejected this “alternative measure of damages, relying upon the holding of Reese v. Wong, supra, 93 Cal.App.4th 51, 61, that the unambiguous language of section 3306 did not authorize damages based on the value of the property at the time of trial. (Horning v. Shilberg, at p. 207.)
In Stevens Group Fund IV, supra, 1 Cal.App.4th 886, Reese v. Wong, supra, 93 Cal.App.4th 51, and Horning v. Shilberg, supra, 130 Cal.App.4th 197, the courts rejected the buyers’ attempts to formulate alternative measures of damages to that provided by section 3306. In these cases, buyers did not seek the difference between the contract price and the market price on the date of breach, plus consequential damages. In Stevens Group Fund IV, the buyer sought the contract price-market value differential plus rental profits that had already been incorporated into the market value of the property at the date of breach or, in the alternative, only damages measured by the lost rent that he did not collect in the meantime. In both Reese v. Wong and Horning v. Shilberg, the buyers sought alternative damages measured by the value of the property not at the date of breach, but at a later date. Moreover, in none of the foregoing cases does it appear that the buyer demonstrated the existence of the other requisites for an award of consequential or special damages, i.e., that the seller knew of the buyer’s purpose in purchasing the property and that the anticipated profits were proved with reasonable certainty as to their occurrence and amount. In sum, none of these three cases holds that lost profits may not be recoverable as consequential damages in an appropriate case, in addition to the basic measure of damages of the difference between the contract price and the value of the property at the time of the breach.
Other states have recognized lost profits as a component of consequential damages for breach of a contract for sale of land. (See 25 Williston on Contracts, supra, § 66:81 and text accompanying fn. 41; 11 A.L.R. 3d 719, §§ 2, 3[a] [most courts considering the issue have followed the general rule of damages and have allowed lost profits if foreseeable].) According to Williston, “[g]enerally, when the vendor under a contract for the sale of real estate wrongfully fails or refuses to convey, the aggrieved purchaser may recover, as general damages for the breach, the difference between the contract price and the market value of the land [citations], plus interest on that amount. [Citations.] This measure gives the purchaser the benefit of the bargain if the property is worth more than the contract price. [Citations.] The aggrieved purchaser may also recover special or consequential damages that are the natural and proximate result of the vendor’s breach, and that may reasonably be supposed to have been within the contemplation of the parties when the contract was made. [Citations.] . . . [T]he breaching vendor may be held liable for profits lost by the purchaser as a result of the breach, such as through an anticipated resale of the property [citations], if they were within the contemplation of the parties at the time of contracting [citations], and they are proven to be more than speculative, remote, or contingent. [Citations.]” (25 Williston on Contracts, supra, § 66:81, italics added, fns. omitted.)
The plain language of section 3306, adding consequential damages to the general damages and other specified damages recoverable for breach of a contract to convey real property, the legislative history of the 1983 amendment acknowledging that the addition of consequential damages would conform the measure of damages to the general contract measure of damages (Stevens Group Fund IV, supra, 1 Cal.App.4th at p. 892), and the generally accepted inclusion of lost profits as a component of consequential or special damages in other breach of contract contexts and by other states in the context of breach of contracts to convey real property, taken together, persuade us that lost profits may be awarded as part of consequential damages under section 3306 upon a proper showing. We turn to the question whether Greenwich S.F. has made such a showing here.
II. Lost Profits—Sufficiency of the Evidence
Appellant contends the evidence was insufficient to support the $600,000 award, as lost profits were not proved with reasonable certainty, and the prospect of profits after renovation was hypothetical and speculative.
A. At the outset, Greenwich S.F. argues that appellant waived her challenge to the sufficiency of the evidence of lost profits by failing to move for a new trial on the ground that the damages were excessive. We disagree.
“Ordinarily, errors are not waived on appeal by the failure to make a motion for new trial. [(See Estate of Barber (1957) 49 Cal.2d 112, 118-119.)] [¶] But there is one significant exception: A claim of excessive or inadequate damages cannot be raised on appeal unless appellant first urged the error in a timely motion for new trial [(Code Civ. Proc., § 657, subd. (5))]. The theory is that trial courts are in a better position than appellate courts to resolve disputes over the proper amount of damages. [(Jamison v. Jamison (2008) 164 Cal.App.4th 714, 719-720; County of Los Angeles v. Southern Calif. Edison Co. (2003) 112 Cal.App.4th 1108, 1121.)]” (Eisenberg et al., Civil Appeals and Writs, supra, ¶ 8:278, p. 8-179, italics omitted.) “A failure to timely move for a new trial ordinarily precludes a party from complaining on appeal that the damages awarded were either excessive or inadequate, whether the case was tried by a jury or by the court. [Citation.] The power to weigh the evidence and resolve issues of credibility is vested in the trial court, not the reviewing court. (Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 919.) Thus, a party who first challenges the damage award on appeal, without a motion for a new trial, unnecessarily burdens the appellate court with issues that can and should be resolved at the trial level. (Ibid.) Consequently, if ascertainment of the amount of damages turns on the credibility of witnesses, conflicting evidence, or other factual questions, the award may not be challenged for inadequacy or excessiveness for the first time on appeal. (County of Los Angeles v. Southern Cal. Edison. Co.[, supra,] 112 Cal.App.4th 1108, 1121.)” (Jamison v. Jamison, supra, 164 Cal.App.4th 714, 719-720, italics omitted.)
However, it is also established that “the failure to move for a new trial does not preclude a party from asserting error in the trial of damages issues—e.g., erroneous evidentiary rulings, instructional errors, or failure to apply the proper measure of damages. [Citations.]” (Eisenberg et al., Civil Appeals and Writs, supra, ¶ 8:279, at p. 8-179.)
We agree with appellant that the issue here is not a question of excessive damages, but whether the evidence was sufficient to support the award of lost profits in any amount. Unlike Jamison v. Jamison, supra, 164 Cal.App.4th 714, and the other cases relied upon by Greenwich S.F., the question whether substantial evidence supported the award of lost profits in this case does not turn on the credibility of witnesses or conflicting evidence, or other factual questions, but rather, whether under the facts viewed in the light most favorable to Greenwich S.F., the award of any lost profits was unduly speculative and uncertain as a matter of law. We turn to that issue.
B. As our Supreme Court has recognized, where recoverable as consequential damages, lost profits are subject to various limitations. “Not only must such damages be pled with particularity [citation], but they must also be proven to be certain both as to their occurrence and their extent, albeit not with ‘mathematical precision.’ [Citations.]” (Lewis Jorge, supra, 34 Cal.4th at p. 975.)
We conclude that the occurrence and extent of the projected lost profits were not proven with the requisite reasonable certainty in this case. As we have recognized, no published California case of which we are aware has awarded lost profits to the buyer as consequential damages under section 3306 for the seller’s breach of a real property purchase and sales agreement. Those treatises that suggest lost profits may be awarded in an appropriate case describe the appropriate circumstance as one in which the “buyer purchased the property for purposes of resale and the seller was aware of the buyer’s purpose.” (12 Miller & Starr, Cal. Real Estate, supra, § 34:45, pp. 34-160 to 34-161 (rel. 9/2008), fn. omitted; Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions, supra,¶ 11:192, p. 11-47, citing Coger v. Wiltsey, supra, 117 Cal.App. 652 and Horning v. Shilberg, supra, 130 Cal.App.4th at p. 207, fn. 8].) Not only must the lost profits be “within the contemplation of the parties at the time the contract was made” (25 Williston on Contracts, supra, § 66:81, fn. omitted), but they must be “proven to be more than speculative, remote, or contingent [citation..]” (Ibid.) None of the treatises on California law indicate that anticipated profits on a prospective residential redevelopment project such as this are sufficiently certain to be recovered as consequential damages.
Cases in related contexts, where lost profits are recoverable as consequential damages, confirm our conclusion that the evidence here was insufficient to support the award of lost profits. Section 3301 provides that ‘[n]o damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and origin.” “The general rule under this statute is that ‘. . . where the operation of an unestablished business is prevented or interrupted, damages for prospective profits that might otherwise have been made from its operation are not recoverable for the reason that their occurrence is uncertain, contingent and speculative.’ (Grupe v. Glick (1945) 26 Cal.2d 680, 693 [(Grupe)].) However, Grupe . . . also stands for the exception to the rule: ‘[A]nticipated profits dependent upon future events are allowed where their nature and occurrence can be shown by evidence of reasonable reliability.’ (Ibid.)” (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 493-494.)
In Grupe¸ the exclusive agent for resale of defective oil refining machines was awarded lost profits he would have received on resale of the machines. Evidence concerning Grupe’s sales expense and profit on sales of each machine was admissible to show the net profit he would have made on additional sales of the machines. Combined with evidence that he was negotiating for and had offers for five additional machines at a set price, the trial court could properly estimate the prospective net profits he lost on the contemplated resale of the machines. (Grupe, supra, 26 Cal;.2d at pp. 693-694.) Nevertheless, the Supreme Court reversed the lost profits damage award and remanded with directions to determine the reasonable cost of the service agreed to be rendered by Grupe on the sale of each machine to reduce the amount recoverable by him. (Id. at p. 694.)
In Lewis Jorge, supra, 34 Cal.4th 960, the California Supreme Court cited Grupe, supra, 26 Cal.2d 680, as among those cases where lost profits from collateral transactions were awarded as a measure of general damages for breach of contract. (Id. at p. 972.) According to the court, “[l]ost profits from collateral transactions as a measure of general damages for breach of contract typically arise when the contract involves crops, goods intended for resale, or an agreement creating an exclusive sales agency. [Citations.]” (Id. at pp. 971-972.) The Lewis Jorge court held that lost profits a contractor may have earned on future projects it never won because of impaired bonding capacity suffered as a result of the breach of contract by a school district were not recoverable as general damages. (Id. at pp. 965, 973-975.)[3]
Lewis Jorge, supra, 34 Cal.4th 960, also concluded that those lost potential profits were not recoverable as special or consequential damages either. (Id. at pp. 975-977.) The contractor had sought to prove the extent of its lost future profits on unidentified construction projects, relying on its profitability during the four years preceding the breach and the testimony of its expert financial analyst. The financial analyst projected the loss at $95 million in gross revenue for future contracts that, based on its past history, the contractor would likely have been awarded at profit of about six percent of revenue, discounted to present value. (Id. at p. 966.) The Supreme Court recognized that lost profits are “frequently denied as too speculative” in circumstances where a contractor seeks lost profits it might have earned on unawarded contracts as special damages. (Id. at p. 975.) “These cases bar recovery of profits lost on future contracts not because the amount of the lost profits is speculative or remote, but because their occurrence is uncertain. [Citations.] [¶] California, likewise, has not upheld as special damages a contractor’s unearned profits after breach of the construction contract. . . .” (Id. at p. 976.) Even in a case where the lost profits claim was for a sum certain and flowing from a particular project that the contractor would likely have won as low bidder, lost profits were rejected where the evidence was insufficient to enable the jury to conclude it was reasonably probable that the contractor would have earned a profit in the claimed amount. (Id. at pp. 976-977, citing S.C. Anderson v. Bank of America (1994) 24 Cal.App.4th 529, 536-538.) Despite testimony that the contractor’s bonding capacity was reduced by its surety after termination of the contract and expert testimony projecting the amount of those lost profits based on past experience, the Supreme Court concluded that “the profits Lewis Jorge claimed it would have made on future construction projects were uncertain and speculative.” (Id. at p. 977.)
Lost profits were similarly found to be uncertain and speculative in Kids’ Universe v. In2Labs (2002) 95 Cal.App.4th 870 (Kids’ Universe), in which the court affirmed summary judgment on the ground the plaintiffs could not establish damages where their Web-based toy store was a new venture and they did not demonstrate that a triable controversy existed as to a reasonable certainty that the e-business would have made a profit. The plaintiffs presented evidence that they had five years of experience as toy retailers and their expert witness projected they would have made a healthy profit by comparing the proposed Web site with the success of another toy company operating on the internet and similarly positioned to the plaintiffs at the time plaintiffs expected to launch their web site. (Id. at pp. 876-877.) The appellate court concluded the evidence was insufficient to raise a triable issue of material fact as to whether plaintiffs would have realized net profits from the operation of their on-line business. (Id. at pp. 887-888.)[4]
In Parlour Enterprises, Inc. v. Kirin Group, Inc. (2007) 152 Cal.App.4th 281 (Parlour Enterprises), an action for breach of an agreement to subfranchise Farrell’s Ice Cream Parlors, the Court of Appeal similarly found the evidence speculative and insufficient to show lost profits were reasonably certain to occur or the extent of any lost profits for three proposed restaurants. (Id. at pp. 288-289.) Specific plans for opening three of the restaurants had been developed, but they were not established businesses. Expert projections of lost profits did not support the lost profits award where the projections were not based on actual operations and the evidence of comparable businesses failed to show the profit and loss experience of these businesses were sufficiently similar to the subject Farrell’s restaurants. (Id. at p. 290.)
The evidence in this case was insufficient to show that either Chan or Greenwich S.F. were established businesses or had track records of successfully developing or redeveloping properties. Chan testified to only two projects he worked on with Wong. On both projects it appears he acted as a contractor, and was paid as such, not as part of a development “team.” He did not testify that either project made a “profit.” Greenwich S.F. was a new venture, created for the purpose of buying the Greenwich Street property. Chan testified that only one of the three renovation projects he previously had undertaken with Lee had made a profit. He admitted he had no expectations about the certainty of any profit or the amount of any profit from renovation of the Greenwich Street property, stating repeatedly that he could not estimate what the profits would be, and that it would depend upon what square footage the City of San Francisco would approve. Asked what he expected to earn “as a contractor” (italics added) on the project, Chan stated, “[w]e based the calculation on the footage. Usually is $160 to $180 per square foot.” He also stated, “the bigger the better, but it all depends on the approval from the City.” He could not provide a “best estimate” of anticipated profits on the property after renovation, stating, “[i]t is useless to approximate because it all depends when you sell the structure.”
Greenwich S.F. relied upon the existence of detailed and specific architectural plans for the renovation. The plans themselves underwent several revisions, perhaps most significantly changing in scope from a two-unit building to a single family residence after the sales agreement was signed. The plans were not completed until nearly two years after the sales contract was signed. The existence of plans for a development does not supply substantial evidence that the development is reasonably certain to be built, much less that it is reasonably certain to produce profits. (See Parlour Enterprises, supra, 152 Cal.App.4th at pp. 288-290; Kids’ Universe, supra, 95 Cal.App.4th at pp. 887-888.)
Miller’s April 2008 “plans and specs” appraisal depended upon the nearly 4,000-square-foot residence being constructed according to the plans prepared by Li, without any changes. She acknowledged that she was not an expert with regard to development entitlements, but stated that “when there’s a property sitting on a parcel in San Francisco and someone wants to improve, that they are allowed to improve it. It just might be not to the size of property that they might originally want.” (Italics added.) Her “plans and specs” appraisal necessarily was built on a hypothetical condition and it did not address the financial viability of the project. Miller herself acknowledged that the property’s substandard lot would mean the developers would have to jump through “more hoops.” Although it appears a permit was obtained in 2005, Lee testified that plaintiffs never paid for the permit because they never received the property. By the time of trial, the City’s building department had sent the plans back for revision and the permit had expired. Greenwich S.F. never obtained a construction loan and no evidence was presented regarding the likelihood of obtaining such or the probable cost or terms of such a loan.
The dates of the Miller appraisals also present problems. The “as is” appraisal of the property and the “plans and specs” appraisal valued the property or proposed development as of April 2008. The passage of time between the signing of the sales contract in 2003 and the breach of the agreement by appellant, which occurred at the latest in 2005 when she refused Chan’s request to transfer the property, render the valuation of the property in these appraisals unduly remote and speculative. (Plaintiffs’ counsel conceded that the latest breach of contract date was March 2006.) The April 2008 “plans and specs” appraisal necessarily incorporated into its estimation of market value, the appreciation in value (of both the land and the hypothetical residence) that had occurred from the date of the breach to the date of trial. Under Reese v. Wong, supra, 93 Cal.App.4th 51, that appreciation was not a proper component of the damages because the “contract damages would be dependent not on the reasonable expectations of the parties at the time of their contracts, but on the fluctuations in the real estate market, the existence of congestion in the calendars of trial courts, and the success of the parties in delaying or advancing trial dates, depending on which tactic was to their advantage.” (Id. at pp. 60-61.) Miller’s testimony that the prices of real estate in San Francisco and the particular neighborhood had been increasing over time, focuses on appreciation of property values, rather than estimating the value of the property at the date of breach. This testimony was insufficient to support an award of lost profits on an unconstructed residence that possibly would have been sold to an unidentified and hypothetical purchaser more than two years after the breach of contract.
Furthermore, as the court here properly instructed the jury, to determine the amount of any lost profits, the jury must determine the gross amount the plaintiffs would have received had the contract been performed and then subtract from that amount the costs, including the value of the property, that plaintiffs would have incurred had the contract been performed. Although the amount of lost profits need not be proved with mathematical precision, there must be a reasonable basis for computing the loss.
The evidence submitted on the cost to construct the proposed residence was sparse, at best. No expert testified directly as to the cost to construct the proposed residence. The “plans and specs” appraisal prepared by Miller stated that “[v]alues were established by both the limited available land sales and extrapolation (removing building values from the total value of similar properties in the area) using local builder estimates as well as Marshall Swift data.” The “plans and specs” appraisal had a 2008 cost of $495 per square foot for 3,907 square feet of dwelling; $250 per square foot for 570 square feet of garage; and $100,000 for decks, landscape, etc.; for a total of $2,176,465. This estimated replacement cost new was then “depreciated” by $30,000. Miller acknowledged that there should not be any depreciation on new construction. However, the computer program required it and “we can’t take it out.” Miller testified that the Marshall Swift cost data were usually low and that despite referring to this source in the appraisal, she did not actually look at the data in connection with the specific appraisal. Rather, Miller consulted with two local builders and her son, who was in the business of building bridges and tunnels. Neither of the other two local builders she contacted had looked at the plans for the residence. Miller herself had never done a cost budget for construction. Miller maintained that errors in the cost approach data did not harm the ultimate value of the appraisal based on the comparable sales approach. However, the only evidence presented as to the possible actual cost of construction (aside from the amounts expended by Greenwich S.F. to plan for development and to obtain necessary permits) was the cost per square foot estimate contained in the cost approach of the appraisal. Even if the “plans and specs” appraisal were considered to be a reasonable estimate of what the market value of a residence constructed according to the plans would be in 2008, the admitted problems with the cost approach would render the amount of lost profits completely speculative, as those costs of construction and related costs (and the value of the land itself) would need to be deducted from the market value of the property to arrive at an estimate of the amount of lost profits.[5]
Miller also admitted that the majority of the “plans and specs” type appraisals she had done over the years were for lenders. The vast majority had approved plans in place, upon which she based her opinion. She thought she might have done one or two others, but she could not remember specifically any particular appraisal that she might have done without approved plans. There was no “approved plan” in place in 2008.
The lost profits claim was based on the assumption that Greenwich S.F. would have constructed the residence according to the plans and specifications without changes and that the venture would have been profitable. These assumptions were inherently uncertain, contingent, unforeseeable and speculative. The proposed real estate development project here involved numerous variables that made any calculation of lost profits inherently uncertain.[6] We conclude the evidence was insufficient to show lost profits with reasonable certainty.
III. Award of $60,000 for Escrow Deposit
Appellant next contends the jury’s award of $60,000 as damages for sums plaintiffs had deposited into escrow was erroneous, as the escrow was cancelled by mutual agreement and there was no evidence that the money was ever in appellant’s possession or control. Evidence was presented that plaintiffs deposited a check written by Lee for $60,000 into escrow. The instructions cancelling escrow instructed the escrow company “to disburse funds held by you in escrow, in the amount of $60,000 . . . to Greenwich SF, LLC.” No evidence was presented as to what happened to the funds following the cancellation of escrow. However, it has never been suggested that the money was returned to Greenwich S.F. During jury deliberations, the parties stipulated that “[i]n the event that the jury awards damages under item 9b, the $60,000 [deposited in escrow], it is agreed by the parties that if payment of the $60,000 is received by plaintiff from the title company which holds the money, that [appellant] will receive full credit for that payment.” Given this stipulation, appellant cannot show she was prejudiced by the award. If the money is returned to Greenwich S.F., appellant will receive full credit for the payment. If not, “the price paid”—here plaintiffs’ $60,000 deposit—is a proper component of damages pursuant to section 3306.
Appellant claims that Greenwich S.F. relinquished its claim for return of its deposit by agreeing in the escrow cancellation instructions that “Buyer(s) and Seller(s) hereby mutually agree to release one another and First American Title Company from any and all liability in connection with this escrow.” Appellant has waived any such claim by failing to raise it in the trial court below. (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3; Eisenberg et al., Civil Appeals and Writs, supra,¶¶ 8-229, 8-231, pp. 8-155, 8-156.) Appellant argues that the issue is one pertaining only to a question of law on undisputed facts that may be raised for the first time on appeal. (Eisenberg et al., Civil Appeals and Writs, at ¶ 8:237, p. 8-157.) It appears to us that the parties’ vigorous dispute over the effect of cancelling the escrow make it less than clear that the issue would entail purely a question of law. Moreover, the issue is one within our discretion, and we are not required to consider this new theory, even if it raised a pure question of law. (Id. at ¶ 8:240.1, pp. 8-159 to 8-160; Hussey-Head v. World Savings & Loan Assn. (2003) 111 Cal.App.4th 773, 783, fn.7.)[7]
IV. Award of $90,000 Expended Toward Renovation
Appellant contends the evidence of amounts expended by Greenwich S.F. toward renovation of the property was insufficient to support the award of $90,000 damages for sums paid as costs in preparation for renovation of the property. Here, appellant acknowledges that there was testimony by Lee regarding payments Greenwich S.F. and Chan had made, along with Lee’s handwritten notes regarding costs. Nevertheless, appellant challenges each item making up the $90,000 award on the grounds that there was no evidence other than Lee’s handwritten account supporting the award or that Lee’s testimony was not otherwise supported by cancelled checks or the like. Thus, appellant’s challenge is based on a claim of excessive damages. In this instance, appellant’s failure to move for a new trial on the issue of the sufficiency of damages waives this challenge to the excessiveness of the $90,000 award for prerenovation costs. (Schroeder v. Auto Driveaway Co., supra, 11 Cal.3d 908, 919; Jamison v. Jamison, supra, 164 Cal.App.4th 714, 719-720.)
Were we to conclude otherwise, we would find the $90,000 damage award supported by substantial evidence, including Lee’s testimony and his handwritten itemization, described above. The testimony of one witness may provide substantial evidence. (Eisenberg et al., Civil Appeals and Writs, supra, ¶ 8:52, p. 8-23.) Cancelled checks or official documentation of the costs incurred are not required to support the jury’s award. The absence of such documentation goes to the weight of the evidence and the credibility of the witness. Those determinations are for the jury.
V. Attorney Fees
On appeal from the attorney fee award (case No. A124882), appellant asks that if the judgment is reversed, the attorney fee award be reversed as well. She has challenged neither the amount nor the legal bases for the fee award should the judgment be affirmed. We here reverse the award of $600,000 for lost profits. As this constitutes the bulk of the damages awarded, the trial court should have the opportunity to reconsider its award of attorney fees. We are not suggesting that the remaining damages awarded to Greenwich S.F. would not support the amount of attorney fees awarded, a question we do not address. However, this determination is for the trial court to make in the first instance.
Greenwich S.F. seeks its attorney fees on appeal, contending that even were the judgment reversed in part, it was still the prevailing party for costs and attorney fee purposes if it retained a net monetary recovery. (Code Civ. Proc., §§ 1032, 1033.5, subd. (a)(10); Civ. Code, § 1717.) On appeal, Greenwich S.F. retained only $150,000 of its $750,000 jury verdict, 20 percent of that award, not including attorney fees. In the interest of justice, we conclude that the parties should each bear their own costs and attorney fees in connection with these appeals.
DISPOSITION
The judgment (case No. A123670) is reversed insofar as it awards lost profit damages to Greenwich S.F. We order the judgment modified to correct the clerical error so that the judgment reflects that respondent Greenwich S.F. was the sole plaintiff as of the date the verdicts were rendered and thereafter. In all other respects the judgment is affirmed. The award of attorney fees (case No. A124882) is reversed and the case is remanded to the trial court to allow it to redetermine the amount of attorney fees to Greenwich S.F. as the prevailing party below. In the interest of justice, the parties are to bear their own costs and attorney fees in connection with both these appeals.




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Kline, P.J.


We concur:


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Lambden, J.


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Richman, J.









Trial Court: San Francisco Superior Court

Trial Judge: Hon. Nancy L. Davis

Attorneys for Appellant: Wendel, Rosen, Black & Dean LLP
Les A. Hausrath
Thiele R. Dunaway

Attorneys for Respondent: Law Office of John Derrick
John Derrick

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