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Oneto v. Kawamura

California Court of Appeals, Sixth District
Aug 20, 2009
No. H031408 (Cal. Ct. App. Aug. 20, 2009)

Opinion


STEVE ONETO, Cross-complainant and Appellant, v. JAMES KAWAMURA et al., Cross-defendants and Respondents. H031408 California Court of Appeal, Sixth District August 20, 2009

NOT TO BE PUBLISHED

Santa Cruz County Super. Ct. No. CV144316

Mihara, J.

Appellant Steve Oneto brought a cross-complaint against respondents James Kawamura and KHR Associates (collectively KHR) for breach of contract and professional negligence. Following a court trial, judgment was entered in favor of KHR. On appeal, Oneto challenges the sufficiency of the evidence. We find no error and affirm the judgment.

I. Statement of Facts

Oneto owns a service station in Santa Cruz County (County). Between 1994 and 2001 Tosco Corporation was the owner of the land and buildings where Oneto’s service station was located. Oneto also had a supply contract with Tosco. In 1992, Oneto considered modernizing the service station and asked Robert Lee to draw a site plan for a convenience store conversion and a car wash. These plans did not include expansion into an adjoining parcel. Oneto paid Lee approximately $3,000 for the preliminary site plans.

The present owner of the property is Conoco-Phillips.

In 1997, Oneto met with Dave Eberly. Eberly was the manager of convenience conversions for Circle K, which was a division of Tosco. They discussed the 1992 site plan minus the car wash. Oneto was told that Tosco would make the improvements on the service station and he would be required to finance the construction of the convenience store. Though Oneto was interested in the Circle K franchise, he preferred a two-parcel development, which would include obtaining a lease on the adjoining property. This property was owned by Norman Bei and T. J. Scott (Bei-Scott). Tosco considered the proposed lease too expensive to pursue at that time.

In 1999, Oneto read two articles by Jack Muellerleile in which he discussed the conversion of service stations into superstations, that is, service stations that included multiple profit centers. Oneto contacted Muellerleile, and they discussed the possibility of converting Oneto’s service station. At this time, Oneto knew that he would need both Tosco’s approval for a superstation and a lease with Bei-Scott.

In July 1999, Oneto hired Muellerleile as the “lead consultant” for the project, which included a feasibility analysis. Oneto paid him $5,000 for a site inspection, an analysis of “the competition,” a review of county regulations, and “a detailed opinion of what [Muellerleile] thought of” the site. Muellerleile’s responsibilities included requesting demographic studies, verifying zoning and land use permits, negotiating the lease with Bei-Scott, securing preliminary financing, negotiating sub-leases, and researching preliminary title reports. Oneto relied “very heavily” on Muellerleile for his opinions during the course of the project.

Muellerleile recommended several individuals to work on the project with Oneto, including Gary Wimmer, a carwash consultant, Michael Muellerleile, an attorney and Muellerleile’s son, and Kawamura.

In September 1999, Oneto and Muellerleile entered into a real estate broker agreement to acquire a lease on the Bei-Scott property. Oneto initially denied that Muellerleile’s responsibility was to complete the project from “start to finish.” However, he was impeached with his prior inconsistent testimony that he hired Muellerleile to “do my station expansion project from start to finish.” Oneto paid $193,354 to Muellerleile for expenses in connection with the superstation project.

Oneto also changed his testimony regarding Michael Muellerleile’s responsibilities on the project. Oneto testified at his deposition that he hired Michael Muellerleile to secure the necessary entitlements regarding the CalTrans and the County property. At trial, Oneto testified that he was confused about the term “entitlement.” However, he was unable to explain an invoice for services from Michael Muellerleile for work reviewing information regarding the CalTrans property.

This amount apparently did not include Muellerleile’s real estate commission on the Bei-Scott property.

Kawamura is a licensed civil engineer as well as a traffic engineer. He is the president of Kawamura Investments, Inc., doing business as KHR Associates. In 1999 or 2000, 50 to 60 percent of KHR’s business involved service stations. In 1997 or 1998, Kawamura met Muellerleile, and Muellerleile introduced him to another individual who had a service station project. However, Muellerleile did not work on that project with Kawamura. In mid-1999, Muellerleile told Kawamura he “had had this idea of putting together this team of consultants that he would then go out and try to solicit projects.” Kawamura did not know anything about Muellerleile’s arrangements with these other individuals. After Oneto contacted Muellerleile, Muellerleile asked Kawamura for a brochure to be given to Oneto. Kawamura then created a brochure about KHR’s services for this purpose. Kawamura never signed any agreement with Muellerleile.

Oneto, Muellerleile, and Kawamura participated in a conference call to discuss the two-parcel project. On January 31, 2000, Kawamura sent Oneto a contract to provide preliminary site planning for the superstation. The contract stated that the “proposed project appears to be feasible, although it is difficult to determine with any great degree of certainty that all desired uses can be accommodated in a configuration that meets your need; Tosco’s and the quick serve restaurant (QSR) provider’s needs; the City and/or County development standards; easements and other restrictions; and our design criteria for a successful ‘superstation’ operation.” The contract provided: “It is our understanding that the uses you desire include (in order of preference): a minimum 8 multi-product dispensers (MPDs); a 4,000+/- square foot combination C-store/QSR; propane sales; a 100+/- foot car wash tunnel; and a two-bay smog shop.” The contract further stated that “[a]s an initial step in determining the optimum combination of uses and configurations for the subject project and the two sites it will occupy, KHR Associates proposes to develop preliminary site plans for your consideration. A minimum of two preliminary site plans will be prepared, based on available drawings from Tosco and/or other sources. A site visit will also be made as part of the initial site planning effort. [¶] During the site visit, the City of Santa Cruz and/or County will be contacted regarding applicable development restrictions and/or guidelines (including, but not limited to parking and landscaping requirements, set-backs, restrictions on driveways, etc.) To the extent determinable, these restrictions and/or guidelines will be reflected in the site plan.” (Italics added.) The contract also stated that “optional tasks,” including drawing a preliminary floor plan and preliminary elevations, could be undertaken “once a preferred site plan is selected.” In the event that Oneto requested these optional tasks, the contract stated that a separate proposal outlining fees and reimbursable fees would be provided. KHR’s fee was $3,000.

KHR and Oneto also entered into a separate contract to conduct an American Land Title Association (ALTA) survey. The trial court entered a directed verdict on Oneto’s claims arising out of this contract. Oneto does not challenge this ruling on appeal.

When Oneto executed the contract with KHR, he understood that KHR did not “guarantee” the project. It was also his understanding that KHR would be determining restrictions and guidelines applicable to the project, and would be responsible for determining whether the project was feasible.

Oneto and Kawamura met to inspect the project site. At that time, Oneto told him that CalTrans had an ownership interest in some of the curbs on one of the streets adjoining the site. Oneto also showed Kawamura the Bei-Scott property. According to Oneto, Kawamura told him that there were no zoning issues, and the project might require minor modifications. According to Kawamura, he thought the project would be “a difficult task” and “challenging.” Kawamura was “concerned a little bit” that Oneto’s “wish list” would not be approved, and that concessions would be necessary. He believed that the contract that included everything on this list “was going to be very difficult, if not impossible,” and that the language of the contract conveyed this concept to Oneto. Kawamura also explained that his use of the term “next to impossible” was “in reference at that time to all of the different profit centers that they were throwing at me.... And I said, well, you know, guys, it might be next to impossible to get everything you guys want on your wish list.” However, as Kawamura “got into the project and started working on different site plans, tried to go to some compromise as to the different types of uses on the site, it became evident to [him] that this was very definitely a feasible project.” Kawamura anticipated that he would provide all planning services for the project.

Kawamura subsequently encountered difficulties in working with Oneto and Muellerleile. Kawamura testified that Oneto and Muellerleile “had a wish list of things they wanted to be accommodated on the site, and I tried as best as I could to accommodate those desires and those needs. And in the process of doing so, it became clear that there were things that would either have to go away or [they]’d have to modify them. And I would bring these issues up with both Mr. Oneto and Mr. Muellerleile.” Initially, Kawamura did not “know the arrangements with respect to who was in charge,” but he found some of Muellerleile’s ideas were “crazy.” He explained that there were “three of four different comments that he made which... [he] didn’t know if he was joking.” Kawamura did not “spend a whole lot of time” on Muellerleile’s ideas, which included off-site parking, parking on the roof, and a drive-through restaurant, because they were not “good” ideas. When Oneto sent Kawamura a memo about Muellerleile’s suggestion of off-site parking, Kawamura discussed the matter with Oneto.

According to Kawamura, Muellerleile asked him to do things that he felt were contrary to Oneto’s best interest. Kawamura explained that Muellerleile “asked on several occasions to do things which I didn’t think would ultimately result in something that was feasible; but, nonetheless, we went through the exercise at his direction.” Kawamura noted that this was “some source of friction between” them. He also testified that Muellerleile “kept coming up with different ways to try to get around some of the problems that were obvious, at least in our minds, and we would point these things out to him and say, Well, let’s just -- and he would say, Well, let’s just assume this or let’s just assume that and what if. And we would go ahead and go through that exercise. But after a certain point in time you have to say, Look, [Muellerleile], it’s not going to work. No matter how many different ways you want to try to slice that piece of bread, you can’t slice it.” According to Kawamura, Oneto “was well-aware of [Kawamura’s] reluctance to continue to work with [Muellerleile] on all these ideas that, frankly, were a waste of time.”

Kawamura drafted preliminary site plans; one of which showed the closure of a driveway. However, Oneto wanted all driveways to remain open. Kawamura and Oneto discussed “at length” that it was “very possible” that the government agency would require the closure of driveways or curb cuts. Kawamura explained that “the County standard doesn’t say you shall lose your driveways. They don’t specify that. They say they prefer you to have a minimum number of cuts.” Kawamura and Oneto decided “the right strategy, was to try to maximize those driveways, because there was also always the possibility that we could get them.” Kawamura “made it pretty clear” to Oneto that CalTrans would require closure of the “pin corner driveways.”

Oneto testified that Kawamura never told him that “it would be extremely difficult or very difficult, if not impossible to get approval of curb cuts as shown in the preliminary site plans,” because CalTrans had a right-of-way on the property. Oneto testified that he would not have proceeded with the project if Kawamura had provided him with this information.

According to Oneto, he and Kawamura had “ongoing” discussions regarding the various profit centers. For example, Kawamura recommended removing a proposed detail center so that there would be adequate room for other profit centers, and Oneto agreed to this recommendation. However, Oneto later requested that the auto detail center be included in the plan. According to Kawamura, Oneto “understood... we would have to have some constraints there,” and his “task became trying to balance the needs of... Oneto, with the standards the county was going to impos[e] on us at some point.”

Kawamura and Oneto also discussed a conversation that Kawamura had with Bill Borg regarding Tosco’s reservations as to Tosco’s involvement in the two-parcel project.

Meanwhile, both Oneto and Muellerleile were negotiating with Tosco for its approval of the two-parcel project. However, even though Tosco had not yet approved the lease, Oneto entered into a long-term lease with Bei-Scott on July 17, 2000. Oneto conceded that Kawamura was not responsible for negotiating Tosco’s approval of the plans.

In 1999 or 2000, Richard Mathews, a real estate site developer for Tosco, was present at a meeting during which Tosco representatives discussed Oneto’s plans. The real estate representatives considered the two-parcel proposal problematic, but the operations representatives were more supportive. The consensus, however, would have been conversion to a Circle K franchise.

On December 20, 2000, Kawamura sent Muellerleile a memo in which he outlined “the projected costs for completing entitlement work and construction documents” and the payment schedule for Oneto’s superstation. Kawamura testified that Muellerleile “in a need to try to somehow convince [Oneto] to continue on with this project, asked me to put together a kind of sequence, an optimistic one, at that, of what the next steps in this -- might be in this process and to try to assign some type of dollar values that, you know, he wouldn’t go, wow, this is not going to work. [¶] So I did this innocently enough, just to try to at least give him what he was asking for.” In this memo Kawamura assumed that there was be no further changes in the “basic layout and/or design” of the project. However, Kawamura continued drafting preliminary site plans until July 2002.

When Muellerleile “was out of the picture,” Kawamura and Oneto were able to develop a “more realistic” plan. Kawamura explained that a preliminary site plan was prepared that included “almost everything that they asked for,” that is, propane on-site, eight dispensers for the canopy, a convenience store, and a quick-serve restaurant, though “not as large as they wanted,” and an express rather than a full-service car wash. They were unable to include the detail shop that had been originally suggested by KHR.

Oneto paid $3,000 to KHR after KHR provided two preliminary site plans. Oneto acknowledged that as the project went forward, KHR would have submitted a more detailed proposal “to cover entitlements, design, and construction document processes,” and Oneto would have expected another contract for these services However, KHR and Oneto did not enter into a contract for these services.

Pursuant to oral contracts, Oneto paid KHR $12,000 to $13,000 for several other preliminary site plans.

Oneto never selected a site plan to submit to the County. Thus, the project never progressed beyond the preliminary planning stages. According to Oneto, the project also failed, in part, due to lack of financing and Tosco’s lack of commitment as to the capital improvements it would have provided. Tosco never approved any of the site plans.

Several expert witnesses testified at trial regarding the appropriate standard of care. John Van Zander testified as an expert in civil engineering. He testified that the purpose of a preliminary plan is “to put the ideas of what the owner... wants to accomplish working with his team, the architect, the engineer, any other consultants, traffic engineers.” He explained that the preliminary plan is a “talking point plan,” and is not the final plan that is submitted to the government agency. When a preliminary plan is adopted, then it becomes “a more refined plan that meets the jurisdiction requirements.” According to Van Zander, an engineer does not present a plan to the government agency without client consent. Van Zander reviewed the plans that had been prepared by KHR and noted that they detailed zoning and parking requirements, exits, movements of traffic, the public right-of-way, and truck turning radius. In his opinion, the preliminary site plans met the standard of care for an engineer, because they reflected the restrictions that the government agency would impose, and the plans were adequate to present to the government agency. Van Zander also testified that it was not below the standard of care for a civil engineer to draft a preliminary plan that included curb cuts that the government agency might not approve. In his view, the applicant should advocate the benefits of such a plan. According to Van Zander, owner approval is a prerequisite to seeking approval from the County, and thus Tosco, as the owner of the property, would have had to have approved the plan before it could be submitted to the County.

Van Zander disagreed with testimony by one of Oneto’s expert witnesses that the preliminary plan should have identified certain “constraints,” including that CalTrans was the owner of the public right-of-way. Van Zander distinguished a feasibility study, which requires identifying any constraints that would affect the viability of a project as soon as possible, from a preliminary site plan, which identifies the client’s concept.

Keith Higgins testified as an expert in traffic engineering. According to Higgins, a “preliminary site plan” is the “first site plan analysis in terms of locating all of the uses that you’re attempting to develop on that particular site.” Higgins agreed with Van Zander that the standard of care requires client consent to a preliminary site plan prior to submitting the plan to the government agency. In Higgins’s view, the final preliminary site plan drafted by KHR met the standard of care in terms of driveway locations, parking, flow of traffic, site distance, pedestrian circulation, and car wash queuing. Higgins showed this plan to John Presleigh and Jack Sohriakhoff at the County Department of Public Works. They told him that it was an “excellent site plan,” and suggested minor adjustments, such as turning some parking into angled parking. He also showed it to Jerry Busch at the County Planning Department, who told him it was a “fine site plan.” According to Higgins, the project was “very feasible.”

Oneto’s expert witnesses testified that KHR breached the standard of care in advising Oneto that the project appeared to be feasible, in failing to inform Oneto more promptly that the project with all the desired uses and driveways did not appear to be feasible, and in failing to include constraints, guidelines, and restrictions in the preliminary site plans.

II. Statement of the Case

Muellerleile brought an action against Oneto for the recovery of his real estate commission in connection with the Bei-Scott lease. Muellerleile sought “close to a million dollars.” Oneto then filed a cross-complaint against Muellerleile doing business as Site Location Solutions, Wimmer, and KHR. In the operative fifth amended cross complaint Oneto alleged causes of action for professional negligence and breach of contract against KHR. He alleged that KHR breached the standard of care for an architect, land surveyor, traffic engineer, “and/or commercial development” consultant when KHR “failed to produce a feasible site plan for the Superstation Project, failed to advise Oneto on the feasibility of the traffic plan contained or implied in the Site Plan, failed to advise Oneto on the feasibility of the curb cuts described in the Site Plan.” Oneto also alleged that KHR breached its duty by falsely representing that “there were no obstacles to obtaining approval of the Site Plans based on traffic or access limitations or other limitations.” Oneto alleged that KHR breached its duties under the contract by failing to produce a feasible site plan for the project and by failing to advise Oneto on the feasibility of the traffic plan and curb cuts in the site plan.

Oneto alleged causes of action against Muellerleile for negligence, breach of fiduciary duty, fraud, conspiracy, breach of contract, and rescission. He alleged causes of action against Wimmer for constructive fraud, conspiracy, breach of contract, negligence, and negligent representation. Oneto did not name Michael Muellerleile as a cross-defendant. Prior to trial, Oneto settled his claims against Muellerleile for the amount of his real estate commission. He also settled with Michael Muellerleile for $325,000 and with Wimmer for $15,000.

Following trial, the court entered judgment in favor of KHR. In its statement of decision, the trial court found that KHR was not professionally negligent, because “[t]here was no guarantee by KHR that a plan would be developed. Despite the numerous preliminary plans and drawings produced by KHR, Oneto failed to use any of the plans and the project stalled. Based on the testimony at trial, the court finds that KHR’s work fell within the standard of care for a civil engineer with respect to preliminary plans.” Regarding the breach of contract claim, the trial court found that “KHR fully performed all of its obligations.” The trial court also noted that “[a]lthough counsel for Oneto raises multiple theories and factual interpretations to make KHR a legally responsible party for the failure of the Superstation expansion, none of them is convincing to the court after listening and weighing the testimony of all of the expert and non-expert witnesses as well as reviewing the documentary evidence.”

Oneto filed a motion for new trial, claiming the evidence was uncontradicted that KHR participated in concealing and promoting Muellerleile’s malfeasance, that KHR agreed to serve as the project planner and provide a feasibility study, and that KHR failed to inform him that the project was difficult if not impossible. The trial court denied the motion.

III. Discussion

Oneto challenges the sufficiency of the evidence to support the judgment.

A. Standard of Review

“[W]e are bound by the rule that when ‘a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’ [Citations.]” (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 503.) “Credibility is an issue for the fact finder. As we have repeatedly stated, we do not reweigh evidence or reassess the credibility of witnesses. ‘ “We have no power to judge the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.’ ” When, as here, ‘the evidence gives rise to conflicting reasonable inferences, one of which supports the findings of the trial court, the trial court’s finding is conclusive on appeal.’ ” (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622-623, internal citations omitted.)

B. Breach of Contract

Oneto contends that the trial court ignored both the ordinary meaning of the contract terms as well as the parties’ interpretation of them in finding that KHR’s obligation under the contract was to produce two preliminary site plans. Oneto claims that “the court’s ignoring KHR’s judicial admissions concerning the scope of his duties was an abuse of discretion and reflects the court’s lack of weighing of the substantial evidence.”

In interpreting a contract, the trial court must “give effect to the mutual intention of the parties as it existed at the time of contracting,...” (Civ. Code, § 1636.) “[T]he intention of the parties is to be ascertained from the writing alone, if possible....” (Civ. Code, § 1639.) However, extrinsic evidence may be introduced “to prove a meaning to which the language of the instrument is reasonably susceptible.” (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37.) “[W]here extrinsic evidence has been properly admitted as an aid to the interpretation of a contract and the evidence conflicts, a reasonable construction of the agreement by the trial court which is supported by substantial evidence will be upheld.” (In re Marriage of Fonstein (1976) 17 Cal.3d 738, 746-747.)

The January 31, 2000 contract stated that the “SUBJECT” of the contract was a “PROPOSAL TO PROVIDE PRELIMINARY SITE PLANNING FOR 76 ‘SUPERSTATION’ IN SANTA CRUZ, CALIFORNIA.” The “[s]cope of [w]ork” portion of the contract stated in relevant part that “[a]s an initial step in determining the optimum combination of uses and configurations for the subject project and the two sites it will occupy, KHR Associates proposes to develop preliminary sites plans for your consideration. A minimum of two preliminary site plans will be prepared, based on available drawings from Tosco and other sources. A site visit will also be made as part of the initial site planning effort. [¶]... [After Oneto’s review of these plans] it is expected that a single preliminary site plan will be found preferable over all others. This preferred site plan will be refined and prepared as a final ‘deliverable’ for this phase of the development process.” KHR agreed to provide these services for $3,000. Thus, the parties’ contract provided that KHR would prepare two preliminary site plans in exchange for $3,000.

Oneto, however, relies on Kawamura’s testimony to claim that the scope of KHR’s duties under the contract was much broader. According to Oneto, the parties viewed the contract as “making Mr. Kawamura the project planner for all purposes,” and that KHR breached its duties by failing to produce a feasible site plan and failing to advise him of the feasibility of the project.

Oneto first relies on the following colloquy at trial: “Q Mr. Kawamura, isn’t it true that project planning includes more than simply -- than simply drawing preliminary site plans? [¶] A Absolutely. [¶] Q And when you wrote your proposal to Steve Oneto, in fact, what you were agreeing to undertake as opposed to drawing -- the drawing of a minimum of two preliminary site plans, weren’t you essentially telling him that you were -- that the proposal was for preliminary site planning for a superstation? [¶] A Yes.” Oneto also relies on Kawamura’s testimony that a project planner’s duties included informing his client as early as possible of the feasibility of the project. In his deposition testimony, Kawamura defined “project planning” as requiring the identification of any restrictions that might prevent the project from going forward.

Oneto also claims that Kawamura acknowledged that “as the project planner that part of [his] responsibility was to... determine the optimum combination of uses and configurations.” Kawamura, however, disputed this claim, and testified: “I don’t think I said -- if you read the sentence [in the contract], I’m not saying that it’s our responsibility to determine the optimum combination of uses. I said: [¶] ‘As an initial step in determining the optimum combination of uses and configurations for the subject project and the two sites it will occupy, KHR proposes to develop preliminary site plans for your consideration.’ ”

Contrary to Oneto’s claim, this testimony does not contradict Kawamura’s position that the contract required KHR to prepare two preliminary site plans in exchange for $3,000. Kawamura testified that 60 to 70 percent of KHR’s projects were “conception to completion projects.” Thus, in drafting the contract, Kawamura anticipated that KHR would provide planning services through all phases of the project. However, here, the contract specifically stated that “to keep upfront costs down,” it was “limited to the preliminary site planning effort.” The contract then defined this effort as the preparation of at least two preliminary site plans. The contract also expressly stated that a separate contract would be negotiated for services other than the preparation of the two preliminary site plans. Moreover, Oneto understood that if the project went beyond the preliminary stage, there would be another contract to cover such items as “the entitlements, design, and construction documents processes,” and he would be required to pay for these services. Oneto did not expect that KHR “was going to take [him] from the preliminary plans all the way through the final plan approval by the county [and] CalTrans” in exchange for $3,000. In fact, Oneto had paid approximately $3,000 to Lee for preliminary site plans several years earlier. That KHR’s obligations under the contract were limited to preparing two preliminary site plans is also supported by evidence that Oneto hired Muellerleile to take the project from “start to finish.” Oneto hired Muellerleile to conduct a feasibility analysis and to function as the “lead consultant” for the project. Muellerleile’s responsibilities included requesting demographic studies, verifying zoning and land use permits, negotiating the lease with Bei-Scott, securing preliminary financing, negotiating sub-leases, and researching preliminary title reports. Accordingly, there was substantial evidence to support the trial court’s findings that KHR’s obligation under the contract was to provide two preliminary site plans and that KHR did not breach the contract.

Relying on Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634 (Roddenberry), Oneto argues that when a party makes “admissions against interest concerning what the contract in issue meant, neither subsequent contradictory testimony concerning what the contract meant, nor expert testimony concerning the contract’s meaning, would constitute substantial evidence.” Oneto has misinterpreted Roddenberry. In Roddenberry, the issue was whether a marital settlement agreement entitled the plaintiff to her former husband’s postdivorce profits on Star Trek. (Roddenberry, at p. 640.) The appellate court concluded that the trial court properly ignored or rejected the plaintiff’s trial testimony regarding her interpretation of the parties’ intent when they entered into the marital settlement agreement, because it was contrary to the express language of the agreement and inconsistent with other evidence. (Roddenberry, at pp. 643, 649.)

Here, Kawamura’s testimony, even assuming that it can be interpreted as acknowledging that KHR had greater responsibilities under the contract than preparing two preliminary site plans, would be contrary to the express terms of the contract and inconsistent with other evidence. A trial court may accept as true part of a witness’s testimony and disregard other parts, and a reviewing court must accept the part of the testimony that supports the judgment. (People v. Hrisoulas (1967) 251 Cal.App.2d 791, 796.) Thus, under Roddenberry, the trial court could have properly ignored or rejected these portions of Kawamura’s testimony.

Oneto’s reliance on D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 21-22, Roth v. Rhodes (1994) 25 Cal.App.4th 530, 545, Visueta v. General Motors Corp. (1991) 234 Cal.App.3d 1609, 1613, Rivera v. Southern Pacific Transportation Co. (1990) 217 Cal.App.3d 294, 299, Nunez v. R’Bibo (1989) 211 Cal.App.3d 559, 563, Thompson v. Williams (1989) 211 Cal.App.3d 566, 573-574, and Leasman v. Beech Aircraft Corp. (1975) 48 Cal.App.3d 376, 382, is also misplaced. These cases discussed the substantial evidence rule in the context of summary judgment.

Oneto next argues that KHR “unquestionably breached the January 2000 contract irrespective of whose interpretation of the contract is correct,” because KHR breached the implied covenant of good faith and fair dealing.

Oneto is not arguing that KHR is liable in tort for the breach of the covenant of good faith and fair dealing.

“In every contract there is an implied covenant of good faith and fair dealing that neither party will do anything which injures the right of the other to receive the benefits of the agreement.... The covenant imposes upon each of the contracting parties the affirmative duty to do ‘everything the contract presupposes they will do to accomplish its purpose.’ ” (Wagner v. Benson (1980) 101 Cal.App.3d 27, 33, internal citations omitted.)

Oneto’s claim that KHR’s December 2000 memo breached the implied covenant of good faith and fair dealing has no merit. As previously stated, the purpose of the January 2000 contract was to implement the “initial step” of the planning process for the superstation by preparing two preliminary site plans in exchange for $3,000. However, the December 2000 memo provided “optimistic” estimates of “the projected costs for completing entitlement work and construction documents” and the payment schedule for the superstation based on the assumption that there would be no further changes to “the basic layout and/or design” of the project. These projected costs and anticipated dates of payments would occur only after Oneto selected a preliminary site plan, which never occurred. Since KHR’s memo to Muellerleile was unrelated to the purpose of the January 2000 contract and played no role in Oneto’s right to receive the benefits of the January 2000 contract, there was no breach of the implied covenant of good faith and fair dealing.

Oneto also argues that Kawamura’s silence about his doubts as to Muellerleile’s “crazy” ideas constituted a breach of the implied covenant of good faith and fair dealing. Oneto’s argument is refuted by the record. Though Kawamura believed that some of Muellerleile’s ideas, such as off-site parking, parking on the roof, and a drive-through restaurant, were “crazy,” Oneto was aware of Kawamura’s reluctance to work with Muellerleile on these ideas that were “a waste of time.”

In conclusion, we find that there was substantial evidence to support the trial court’s finding that KHR fully performed its obligations under the contract.

C. Professional Negligence

Oneto next contends that all of the expert witnesses testified that KHR’s conduct fell below the standard of care for a civil engineer, and thus there was no substantial evidence to support the trial court’s finding on this issue.

In order to prevail on a cause of action in tort for professional negligence, the plaintiff must prove: “ ‘(1) the duty of the professional to use such skill, prudence and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional’s negligence.’ ” (Turpin v. Sortini (1982) 31 Cal.3d 220, 229-230, quoting Budd v. Nixen (1971) 6 Cal.3d 195, 200.)

Here, the record establishes that KHR did not breach its duty to use the skill, prudence and diligence commonly used by other civil engineers. Both Van Zander and Higgins testified that the preliminary site plans prepared by KHR met the standard of care for an engineer. When Higgins showed one of the final preliminary site plans to employees of the Department of Public Works, they stated that it was an “excellent” plan. An employee of the Planning Department stated that the plan was “fine.” Van Zander also explained that it was not below the standard of care for a civil engineer to draft a preliminary site plan that included curb cuts that the government agency might not approve, because it was reasonable for an applicant to advocate the benefits that the curb cuts would provide. Van Zander disagreed with Oneto’s expert witness that KHR’s failure to include a number of “constraints” in the preliminary site plans fell below the standard of care. According to Van Zander, an engineer is not required “to anticipate all the potential issues or changes that a government entity may want during the point in time where he’s preparing a preliminary site plan.”

Oneto argues, however, that the responses of Van Zander and Higgins to several hypothetical questions established that KHR violated the standard of care. On cross-examination, Van Zander testified that it would be a breach of the standard of care for a civil engineer to fail to inform his client if one of the parcel owners of the two-parcel project had told him that the owner would not participate in the project. However, the evidence did not support Oneto’s hypothetical question. According to Kawamura, Borg contacted Kawamura and indicated that Tosco “didn’t really like” the superstation project, and “didn’t really particularly care for the idea of expanding the site and being tied in with Oneto on a project that included a property that they did not control or own.” Kawamura and Oneto then discussed Kawamura’s conversation with Borg. Moreover, Oneto was also aware of Tosco’s position, because Oneto and Muellerleile, not Kawamura, were negotiating with Tosco to obtain its approval of the project.

Oneto next focuses on Van Zander’s testimony that it would be a breach of the standard of care if Kawamura actually “believed that this project was going to be extremely difficult, if not impossible to accomplish,” and then informed the client that the project “appeared to be feasible.” Again, Oneto failed to establish the factual basis for the hypothetical question. Kawamura testified that he believed that the contract conveyed to Oneto that a project that included everything on this list “was going to be very difficult, if not impossible.” Nevertheless, Kawamura believed that the project was a “very good idea” and “worth pursuing” before he drafted the contract. Kawamura explained that his use of the term “next to impossible” was “in reference at that time to all of the different profit centers that they were throwing at me. They were saying, we want this, we want this, we want this. And I said, well, you know, guys, it might be next to impossible to get everything you guys want on your wish list.” At various stages in the preparation of the preliminary site plans, Kawamura discussed the need for these modifications with Oneto.

Noting that Higgins’s testimony regarding his understanding of the purpose of the contract included both preliminary site planning and providing two preliminary site plans, Oneto also asserts that Higgins’s testimony was “contrived and devoid of credibility.” First, Oneto takes Higgins’s testimony out of context. Second, as previously discussed, both the contract language and the parties’ understanding of the contract terms supported the trial court’s finding that the contract required KHR to provide two preliminary site plans. Thus, any interpretation of the contract by Higgins was irrelevant.

Oneto next focuses on various hypothetical questions that required Higgins to assume that KHR had been hired to perform a feasibility study. Higgins qualified his responses by defining a feasibility study as a determining “the ability to actually incorporate these uses onto the site.” Higgins testified that a client should be informed “as quickly as possible” whether a project was feasible, and that if Kawamura actually believed that it was impossible and told his client it appeared feasible, it would be a breach of the standard of care. As previously discussed, Kawamura informed Oneto that the project was feasible with some modifications.

Oneto claims that Higgins testified that “relying on a real estate broker, such as Muellerleile, for technical traffic engineering data would be a breach of the standard of care.” There is no merit to this claim. Higgins testified that it would be a breach of the standard of care in performing a feasibility study to rely on data provided by someone with no qualifications in terms of traffic analysis, site planning, locations, and circulation. However, Oneto never established that KHR was hired to perform a feasibility study, that Muellerleile provided inaccurate data, and that KHR did not rely on data from other sources. Moreover, as previously stated, Kawamura recognized Muellerleile’s limited knowledge on certain aspects of the project, and rejected his input in drafting the preliminary site plans.

Contrary to Oneto’s claim, Higgins did not testify that providing “overly optimistic projections” was a breach of the standard of care. After reading Kawamura’s deposition testimony, Higgins testified that he was unclear as to the context of the statement. He explained that a client might be “very discouraged” about a project, and he would try to give “a pep talk” if he believed that the project could be approved.

Oneto also contends that even in the absence of expert testimony, the trial court erred in failing to find that KHR breached the standard of care for an engineer. According to Oneto, “Kawamura, all the while disregarding his duty of loyalty and full disclosure, by his own admission put together a set of time and cost estimates which were misleadingly ‘optimistic,’ all in an effort to help Muellerleile keep Oneto as a client. Furthermore, Kawamura did so after having concluded that Muellerleile was acting contrary to Oneto’s interests and was engaging in conduct which would never result in a feasible project.... Was Kawamura’s providing a ‘crazy’ man with ‘optimistic’ projections conduct falling within the standard of care? To ask the question is to answer it.”

There is no merit to this contention, since Oneto has misrepresented Kawamura’s testimony. Kawamura informed Oneto that some of Muellerleile’s ideas were “crazy” and a “waste of time.” Kawamura also concluded that the project was feasible. It was within this context that Kawamura provided the December 2000 memo that outlined an “optimistic” projection of costs and a payment schedule with the assumption that Oneto and Tosco would approve the most recently prepared site plan. Under these circumstances, expert testimony as to the appropriate standard of care was required, and Higgins provided such testimony in favor of KHR.

In sum, the testimony provided by Van Zander and Higgins supported the trial court’s finding that KHR met the appropriate standard of care, and thus was not liable for professional negligence.

D. Joint and Several Liability

Oneto argues that “the court’s disregard for Kawamura’s admitted complicity in Muellerleile’s wrong-doing not only reflects a failure to weigh the substantial evidence, it constitutes an abuse of discretion.” He claims that “the trial court made an explicit finding of ‘malfeasance’ ” by “ ‘the Muellerleile Group,’ ” and “this finding directly implicates Kawamura and KHR if they participated with ‘the Muellerleile Group’ in either deliberately or negligently misleading Oneto concerning the feasibility of the Superstation project” under the doctrine of joint and several liability.

The trial court summarized the facts in its statement of decision. This summary provides in relevant part: “Steve Oneto contracted in 1999 with J. R. Muellerleile, a Superstation expert, to provide project management, conduct feasibility, traffic and demographic studies and due diligence with the County of Santa Cruz and CalTrans, and to secure financing and project permits for a proposed Oneto Superstation Project. [¶] Oneto hired Attorney Michael Muellerleile (son of the Superstation expert) to provide legal advice regarding the ground lease for the property adjacent to 1500 Soquel Avenue, known as the Bei-Scott property. Michael Muellerleile was also to provide legal advice regarding the CalTrans easement which was adjacent to the Oneto property along Commercial Way and obtain project permits. Oneto also hired Gary Wimmer as a carwash consultant. The Muellerleile father-son combination only succeeded in contractually obligating Oneto to a long term lease of the adjacent Bei-Scott parcel without approval of the lease or consent to the expansion by Tosco. The Muellerleile group also obtained no preliminary approval by the County of Santa Cruz or CalTrans, but despite all of their malfeasance, brought an action to recover monetary damages against Oneto.”

“A joint tortfeasor includes joint, concurrent, and successive tortfeasors whose actions combine to cause the plaintiff’s injury.” (Newhall Land & Farming Co. v. McCarthy Construction (2001) 88 Cal.App.4th 769, 773.) Joint tortfeasors are jointly and severally liable for all economic damages. (Buttram v. Owens-Corning Fiberglas Corp. (1997) 16 Cal.4th 520, 527.)

We first note that the trial court did not include KHR as part of the Muellerleile group, and thus did not find that KHR engaged in malfeasance. Moreover, as previously discussed, there was substantial evidence to support the trial court’s finding that KHR did not breach any duties to Oneto. Since KHR was not a tortfeasor, the doctrine of joint and several liability was inapplicable.

IV. Disposition

The judgment is affirmed. Costs are awarded to KHR.

WE CONCUR: Bamattre-Manoukian, Acting P. J., Duffy, J.


Summaries of

Oneto v. Kawamura

California Court of Appeals, Sixth District
Aug 20, 2009
No. H031408 (Cal. Ct. App. Aug. 20, 2009)
Case details for

Oneto v. Kawamura

Case Details

Full title:STEVE ONETO, Cross-complainant and Appellant, v. JAMES KAWAMURA et al.…

Court:California Court of Appeals, Sixth District

Date published: Aug 20, 2009

Citations

No. H031408 (Cal. Ct. App. Aug. 20, 2009)