Odening v. Evans

Filed 3/22/06 Odening v. Evans CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from judgments of the Superior Court of the County of Los Angeles, Patricia L. Collins, Judge. Affirmed in part, reversed in part and remanded.

Martin E. Jacobs, Inc. and Martin E. Jacobs for Defendant and Appellant Roger Evans.

Bennett & Erdman, Jeffrey W. Erdman and Julie S. Pearson; Dunn Koes, Pamela E. Dunn and Daniel J. Koes for Plaintiffs and Respondents Campbell M. Odening and Debra L.K. Odening.

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Rogers Evans appeals from an interlocutory judgment for partition of real property entered in favor of Campbell M. Odening and Debra L. K. Odening after a bifurcated court trial and from the final judgment entered after the court granted the motion for summary adjudication filed by the Odenings resolving the legal claims remaining after the partition trial. We affirm in part, reverse in part and remand.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Parties' Agreements Regarding Purchase and Management of the Santa Monica Property

The Odenings and Evans purchased a four-unit apartment building in the City of Santa Monica in 1992. The Odenings jointly held a 50 percent undivided interest in the property; Evans held the remaining 50 percent undivided interest. Before escrow closed, the Odenings and Evans orally agreed Evans would live in unit D, a two-bedroom apartment; the Odenings would live in units A and B, one-bedroom units the parties intended to convert to a single unit; and units A and B were equal in value to unit D, inclusive of garages. Unit C was to be a rental unit with the rent deposited into a joint checking account to pay for expenses. Because the rent from unit C would not cover the property's full expenses, the Odenings and Evans agreed they would share equally in the additional expenses.

Evans moved into unit D after escrow closed. However, the tenant in unit B refused to leave; and the Odenings were unable to move into units A and B as planned. The Odenings and Evans agreed Evans would contribute to the partnership[1] an amount equal to the combined monthly rent collected from the tenants in units A and B and the parties would pay all costs associated with the property from the rent paid by the tenants and Evans.[2] They further agreed any net profits or losses after payment of all costs would be shared equally except for any amounts to be retained for future capital expenditures.

2. Evans's Refusal to Cooperate in Efforts to Resolve Recurring Financial Problems

Beginning in May 1992 the Odenings maintained the checkbook for the property, collected rent and paid the bills. Later in 1992 Evans took over the collection and accounting functions. Evans also acted as the on-site manager although Campbell Odening assisted with repairs. For parts of 1996, 1999 and 2000, however, Evans was incapacitated by depression and alcoholism. During those periods the Odenings managed the units and handled all financial matters for the property.

When the Odenings resumed responsibility for the financial affairs of the building in 1996, they learned Evans had separately rented unit A's garage for $115 per month beginning in April 1996 but had failed to inform the Odenings of the additional income. Additionally, although Evans had contributed amounts to the joint checking account roughly equal to the rent from units A and B until January 1996, after that date he began missing payments or making payments substantially less than the amount received for units A and B; Evans refused to communicate with the Odenings to work out a resolution.[3]

In January 1999 Santa Monica initiated rent decontrol. As a result the rent for unit B, which had been vacated at the end of 1998, more than doubled. Despite the increase in unit B's rent, Evans refused to contribute an amount equal to the rent received for units A and B and made only a few small payments to the joint checking account.

In early 2000 Evans stopped contributing any money to the joint checking account. In approximately January 2001 Evans instructed the tenants to pay all rents directly to him and took exclusive control of the financial management of the property, denying the Odenings access to the property's bank accounts and refusing to provide them information about the property or its finances. In response the Odenings made repeated attempts to develop a mutually acceptable plan for the property and revise the partnership agreement, but Evans refused to cooperate.

3. The Odenings' Complaint and Evans's Cross-complaint

The Odenings filed an action against Evans in March 2001 for partition of the property, an accounting and constructive trust, breach of contract, breach of fiduciary duty and fraud. The Odenings alleged Evans failed to pay monthly rent for unit D in an amount equal to the rent received for units A and B; failed to deposit all rent received into the common account; failed to account for all income and expenses associated with the property; converted funds received from tenants for his personal use; and failed to fulfill other responsibilities in connection with the property. The Odenings sought partition by sale, requesting their proportionate share of the sale's net proceeds after receiving allowance or contribution based on the accounting sought in the complaint, imposition of a constructive trust, general damages, interest, attorney fees and expenses, costs of suit and punitive damages.

Evans answered the Odenings' complaint and filed a cross-complaint with causes of action that mirrored those in the Odenings' complaint and made similar charges of misconduct.

4. The Bifurcated Trial on the Causes of Action for Partition and Accounting

The trial court bifurcated the equitable causes of action for partition and accounting and conducted a bench trial beginning on May 22, 2002. At the conclusion of the bifurcated trial, the court found â€