ANTHONY DONALD MC CLOY v. BARBARA JOYCE SLATER (2010)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Levinson, Arshonsky & Kurtz, James S. Cooper and Richard I. Arshonsky for Plaintiff and Appellant.

Duran & Cedillo and Manuel Duran for Defendants and Respondents.

Plaintiff Anthony Donald McCloy appeals from the interlocutory judgment entered in this partition action, contending the trial court abused its discretion by failing to value one of the properties in accordance with the parties' stipulation.   We agree and reverse that portion of the judgment setting the amount McCloy owes defendants Barbara Joyce Slater, Dorothy Slater, the Dorothy Slater Trust and the Barbara Slater Trust (the Slaters) and remand the matter with directions for the trial court to reduce the amount by $42,000.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Operative Complaint

On March 5, 2009, McCloy filed the operative first amended complaint against the Slaters for partition of three parcels of real property in El Segundo.   McCloy alleged that he had an undivided one-third interest in the parcels as a tenant in common, and he sought partition by division or, in the alternative, by sale.

2. The Stipulated Facts and the Nature of the Parties' Dispute

The parties agreed that the trial court could decide the matter, without hearing testimony or argument, based on their joint list of stipulated facts and exhibits and trial briefs.   According to the stipulated facts, Barbara Slater is McCloy's mother;  Dorothy Slater is McCloy's great aunt.   Title to the three parcels at issue is held by three tenants in common-McCloy;  Dorothy Slater and Barbara Slater, as trustees for the Dorothy Slater trust;  and Barbara Slater, as trustee for the Barbara Slater trust-each with an undivided one-third interest in the properties.   Parcel no. 1 is approximately 5,130 square feet, improved with a 928-square-foot residence and valued at $376,200;  parcel no. 2 is approximately 5,700 square feet of raw land with no utilities and a value of $338,580, less the cost of bringing utilities to the property, which is $63,000;  and parcel no. 3 is an alleyway of approximately 6,500 square feet allowing access to parcel nos. 1 and 2 and to two other parcels with no value.

The parties also agreed that McCloy was entitled to partition, but they disagreed as to how it should be accomplished.   The Slaters argued that partition by sale would be more equitable because they “want[ed] to sell the [p]roperties and move.”   McCloy, on the other hand, sought partition by division, “not want[ing] to sell the [p]roperties at this time given market conditions.”   McCloy asked that he be awarded parcel no. 2 and a portion of parcel no. 3, with a utility easement over the remainder of parcel no. 3, and that the Slaters be awarded parcel no. 1 and a portion of parcel no. 3, with a utility easement over the remainder of parcel no. 3. McCloy recognized that, because he held title to only a one-third interest in the properties, he would be required under his proposed division to compensate the Slaters for the difference.   McCloy maintained that he should pay the Slaters $58,320, subject to further adjustment for the costs of partition.¹  The Slaters did not contest McCloy's proposed division or his calculations, aside from seeking an additional payment that is not relevant to this appeal.   As a result, the issue left for the trial court's determination was whether partition of the parcels should be accomplished by division or by sale.

3. The Trial Court's Ruling and Entry of the Interlocutory Judgment

After considering the stipulated facts and exhibits and the parties' trial briefs, the trial court issued a ruling on July 17, 2009, concluding that “sale of the entire property and division of the ensuing proceeds is not more equitable than division of the property in kind.  [McCloy's] proposed division of the property is therefore adopted, and he is awarded the entirety of Parcel No. 2. [The Slaters], as tenants in common, are awarded the entirety of Parcel No. 1. Parcel No. 3 is to be divided as recommended, each party being granted an appurtenant easement for utilities.”

The trial court then determined that McCloy should pay the Slaters $100,320.   The court valued parcel no. 2 at $338,500, which included the existence of utilities on the property, even though it had no utilities, but did not adjust the compensation for the $63,000 cost of installing utilities.   According to the court, it was “not persuaded that [the amount due from McCloy to the Slaters] should be reduced by the equivalent of what would otherwise be [the Slaters'] share of the cost of installing utilities on Parcel No. 2. There is no indication that the parties previously contemplated such improvements to Parcel No. 2 or that such action would be necessary prior to [the Slaters'] proposed sale of the property.   The anticipated utilities will be of sole benefit to [McCloy];  to require [the Slaters] involuntary participation in the endeavor appears manifestly inequitable.”   The court subsequently issued a second ruling, adjusting the compensation for the costs of partition, and then entered judgment in accordance with its rulings.

McCloy filed a timely notice of appeal.  (Code Civ. Proc., § 904.1, subd. (a)(9) ² [appeal may be taken from “an interlocutory judgment in an action for partition determining the rights and interests of the respective parties and directing partition to be made”].)

DISCUSSION

1. A Trial Court Has Discretion in a Partition Action to Award Compensation to Correct Inequality When a Division of Property Cannot Be Made Equally Among the Parties According to Their Interests

A partition action may be commenced and maintained by an owner of real property where such property is owned by several persons concurrently. (§ 872.210, subd. (a)(2).)  “If the court finds that the plaintiff is entitled to partition, it shall make an interlocutory judgment that determines the interests of the parties in the property and orders the partition of the property and, unless it is to be later determined, the manner of partition,” whether by division or sale of the property. (§§ 872.720, subd. (a), 872.830.)   If the court enters an interlocutory judgment for partition by division, “[w]here division cannot be made equally among the parties according to their interests without prejudice to the rights of some, compensation may be required to be made by one party to another to correct the inequality.” (§ 873.250;  see also § 872.140 [“The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity”].)

The trial court's exercise of its equitable discretion is subject to review only for abuse or for a failure to exercise that discretion.  (Zarrahy v. Zarrahy (1988) 205 Cal.App.3d 1, 4-5;  see also Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 757-765 [reviewing for an abuse of discretion challenges to an interlocutory judgment for partition by division].)

2. The Trial Court Abused Its Discretion By Failing to Follow the Stipulated Facts When Determining the Compensation Due from McCloy to the Slaters

McCloy contends on appeal that the trial court abused its discretion by failing to determine the compensation due from him to the Slaters in accordance with the parties' stipulation that the value of parcel no. 2, which did not have utilities, is $338,580 less the $63,000 cost to install them.   McCloy is correct.

Although concluding it would be “manifestly inequitable” to require the Slaters to share in the cost of bringing utilities to parcel no. 2 when only McCloy would benefit from them, the trial court failed to recognize that the stipulated value of parcel no. 2 at $338,580 includes the existence of utilities on the property.   The stipulated facts provide that “[t]he value of Parcel No. 2 is $338,580, less the cost to bring utilities to Parcel No. 2․  [¶] ․ [¶] The cost of installing utilities on the raw land of Parcel No. 2 (including a 310-foot sewer line, a 1” water line, a gas meter, electrical, telephone and cable services) is $63,000.”  (Italics added.)   Nevertheless, the trial court used the stipulated value of $338,580, an amount assuming the existence of utilities costing $63,000, to calculate McCloy's payment to the Slaters, although no such utilities existed on the property.³  The trial court thus failed to value parcel no. 2 in accordance with the parties' stipulated facts.   That failure constitutes an abuse of its discretion.   Consequently, the amount due from McCloy to the Slaters must be reduced by $42,000-the Slaters' two-thirds' share of the $63,000 cost of bringing utilities to parcel no. 2.

Attempting to avoid the necessary adjustment to the compensation, the Slaters argue that McCloy forfeited his right to claim on appeal that the compensation is excessive because he did not move for a new trial in the trial court.   Although the Slaters are correct that a party arguing excessive or inadequate damages ordinarily must move for a new trial in the trial court to preserve the right to raise the issue on appeal, that rule applies only when “the challenge turns on the credibility of witnesses, conflicting evidence, or other factual questions.”  (County of Los Angeles v. Southern Cal. Edison Co. (2003) 112 Cal.App.4th 1108, 1121;  see also Jamison v. Jamison (2008) 164 Cal.App.4th 714, 719-720;  Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d. 101, 122) Here, the trial court's determination of compensation did not depend on the credibility of witnesses, conflicting evidence or other factual questions, but rather on a straightforward application of the parties' stipulated facts, which conclusively set the values of the parcels, including the value of parcel no. 2, with and without utilities.  (See Robinson v. Workers' Comp. Appeals Bd. (1987) 194 Cal.App.3d 784, 790 [stipulation is binding on the parties and the trial court, unless a party is permitted to withdraw from it or it is contrary to law, court rule or policy].)   Contrary to the Slaters' claim, this case thus is not like Jamison v. Jamison, supra, 164 Cal.App.4th at page 720, where the appellate court held the plaintiffs could not challenge on appeal the equitable adjustment in a partition action because it turned on a factual question of the property's value and they had not moved for a new trial arguing excessive damages.   McCloy's failure to move for a new trial, therefore, does not preclude him from arguing on appeal that the compensation is excessive.

The Slaters also contend that the trial court, sitting in equity, had the discretion to choose not to account for the cost of installing utilities on parcel no. 2 and “could have taken into consideration ․ the fact that [McCloy] received his interest as a gift from his very elderly aunt and did not pay any money for his interest.”   Even assuming the court would be entitled to consider that fact, the court's stated reason for not accounting for utility installation on parcel no. 2 was that only McCloy would benefit from the utilities, not that McCloy's interest in the properties was a gift.   Indeed, the court concluded, in connection with its decision to order partition by division, that the manner in which McCloy acquired title is of no significance.   Thus, McCloy's receipt of his interest as a gift does not ameliorate the court's abuse of discretion in failing to value parcel no. 2 in accord with the parties' stipulation.

DISPOSITION

That portion of the interlocutory judgment setting the amount due from McCloy to the Slaters is reversed, and the matter is remanded with directions for the trial court to reduce the amount by $42,000.   The judgment is otherwise affirmed.   McCloy shall recover his costs on appeal.

NOT TO BE PUBLISHED.

We concur:

FOOTNOTES

FN1. McCloy's computation to support the proposed compensation of $58,320 was as follows:  (1) the value of parcel no. 1 of $376,200, was added to the value of parcel no. 2 of $338,580, for a total value of $714,780;  (2) that total value was then divided by three to represent a one-third interest in the properties, which amounted to $238,260;  (3) because McCloy was receiving parcel no. 2, valued at $338,580, he owed the Slaters the difference of $338,580 less $238,260, or $100,320, minus $42,000, representing the Slaters' two-thirds' share of the cost of installing utilities on parcel no. 2, for a total of $58,320..  FN1. McCloy's computation to support the proposed compensation of $58,320 was as follows:  (1) the value of parcel no. 1 of $376,200, was added to the value of parcel no. 2 of $338,580, for a total value of $714,780;  (2) that total value was then divided by three to represent a one-third interest in the properties, which amounted to $238,260;  (3) because McCloy was receiving parcel no. 2, valued at $338,580, he owed the Slaters the difference of $338,580 less $238,260, or $100,320, minus $42,000, representing the Slaters' two-thirds' share of the cost of installing utilities on parcel no. 2, for a total of $58,320.

FN2. Statutory references are to the Code of Civil Procedure..  FN2. Statutory references are to the Code of Civil Procedure.

FN3. What the trial court should have done based on the stipulated facts was either to (1) subtract $42,000-the Slaters' two-thirds' share in the cost of bringing utilities to parcel no.   2-from the $100,320 difference between McCloy's receipt of parcel no. 2 and his one-third interest in the properties;  or (2) deduct $63,000 from the $338,580 stipulated value of parcel no. 2 before calculating the compensation..  FN3. What the trial court should have done based on the stipulated facts was either to (1) subtract $42,000-the Slaters' two-thirds' share in the cost of bringing utilities to parcel no.   2-from the $100,320 difference between McCloy's receipt of parcel no. 2 and his one-third interest in the properties;  or (2) deduct $63,000 from the $338,580 stipulated value of parcel no. 2 before calculating the compensation.

MALLANO, P. J. CHANEY, J.