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Filed 3/26/14 Wells v. Starelli CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

JAMES RONALD WELLS,

Plaintiff and Appellant,

v.

DANIEL K. STARELLI et al.,

Defendants and Respondents.

C070421

(Super. Ct. No. 34-2008-

00027963-CU-FR-GDS)

Following a jury trial, plaintiff James Ronald Wells appeals from a judgment 

entered in favor of defendants Daniel K. Starelli, Kevin R. Gibbs, and Ennis T. 

Henderson, in plaintiff’s fraud complaint arising from an unsuccessful business venture 

between plaintiff, Gibbs, and Henderson, in which plaintiff agreed to invest in their 

operation of a branch office of Sierra Star Home Loans. Plaintiff alleged defendants 

fraudulently concealed that Gibbs and Henderson were not licensed real estate agents, as 

is required of persons handling real estate loans. Plaintiff sought vicarious liability and 

liability for failure to supervise as against Starelli, who was not a party to the agreement, 
2

but who owned Five Star Ventures, Inc., dba (doing business as) Sierra Star Home Loans

and who employed Gibbs and Henderson. The jury returned special verdicts finding that 

neither Gibbs nor Henderson intentionally failed to disclose an important fact that 

plaintiff did not know and could not reasonably have discovered, and neither Gibbs nor 

Henderson committed fraud (concealment of a material fact). The trial court entered 

judgment in favor of all defendants. 

On appeal, plaintiff argues the evidence does not support the judgment because

(1) a real estate agent’s license is required in order to work under a broker, yet neither 

Gibbs nor Henderson had a license; (2) Gibbs and Henderson had ostensible authority to 

manage the broker’s office for Starelli; and (3) there is no evidence that Gibbs or 

Henderson accounted for the funds used.1 In his respondent’s brief, Starelli argues 

plaintiff forfeits his substantial evidence argument by failing to cite evidence favorable to 

the judgment, and plaintiff fails to show grounds for reversal. Neither Gibbs nor

Henderson, who represented themselves in the trial court, has filed a respondent’s brief 

on appeal.2 We affirm the judgment in favor of all defendants.

 

1

 These three points are made in the body of plaintiff’s appellate brief, but the table of 

contents lists only the first point. Plaintiff has not complied with the rule requiring that 

each argument be raised under a separate heading or subheading. (Cal. Rules of Court, 

rule 8.204(a)(1)(B); In re S.C. (2006) 138 Cal.App.4th 396, 408 (S.C.).) As this court has 

previously observed, “[t]his is not a mere technical requirement; it is “designed to lighten 

the labors of the appellate tribunals by requiring the litigants to present their cause 

systematically and so arranged that those upon whom the duty devolves of ascertaining 

the rule of law to apply may be advised, as they read, of the exact question under 

consideration, instead of being compelled to extricate it from the mass.’ [Citations.]” 

(S.C., supra, at p. 408.) We nevertheless exercise our discretion to address plaintiff’s 

arguments.

2

 If a respondent fails to file a brief, the appellate court may decide the appeal on the 

record, the opening brief, and any oral argument by the appellant. (Cal. Rules of Court, 

rule 8.220(a)(2).) Nevertheless, the judgment is presumed correct on appeal, and it is 

plaintiff’s burden as appellant to show grounds for reversal. (Cal. Const., art. VI, § 13; 
3

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff filed suit alleging three counts plus a claim for punitive damages. The 

first count alleged fraud - intentional misrepresentation against Gibbs and Henderson. 

The second count alleged fraud - concealment against Gibbs and Henderson. The third 

count alleged Starelli was liable for failure to supervise his employees and failure to run a 

background check on Gibbs. 

Trial Evidence

Starelli is a licensed real estate broker and president of Five Star Ventures, Inc., 

dba Sierra Star Home Loans,3 which had five branches, including one on Business Park 

Drive. The Business Park Drive office was a “net branch.” Starelli testified, “A net 

branch is a compensation situation where the gross proceeds come into the company and 

all the expenses are paid by the independent contractor [here, Gibbs and Henderson], and 

what is left over is the profits. [¶] So all the expenses are typically paid by the people 

that I had in the branch.” He further testified that the independent contractors receive the 

majority of the income, and the owner gets a small percentage. After expenses are paid, 

whatever is left -- the “net” proceeds -- is profit to the net branch. Starelli said net 

branches are common in the industry. 

Starelli testified Gibbs and Henderson were independent contractors who operated 

the Business Park Drive branch and were responsible for operating expenses. Gibbs and 

Henderson could run the branch as they saw fit, including bringing in investors. Gibbs 

and Henderson also worked at the Business Park Drive branch under employment 

contracts dated December 2005 saying they were salespersons, but Starelli testified Gibbs 

and Henderson worked as unlicensed assistants, who were in training to get their real 

 

Code Civ. Proc., § 475; Benach v. County of Los Angeles (2007) 149 Cal.App.4th 836, 

852.)

3

 The company was initially a named defendant but was dismissed from the action. 
4

estate licenses. Starelli handled any activities requiring a license. It was an “allowable 

situation” to have Gibbs and Henderson assist Starelli as unlicensed assistants in training 

to get licenses while Starelli handled all activities requiring a license. 

Plaintiff, Gibbs, and Henderson knew each other because they all took a training 

class at Cornerstone Mortgage. The students were generally people interested in 

obtaining a real estate license.4 After completing the training program, in December 

2005, Gibbs and Henderson went to work operating the net branch at Business Park 

Drive, and plaintiff loaned them $5,000. The loan agreement stated the loan was between 

plaintiff as lender and Gibbs and Henderson as borrowers, and the borrowers “will also 

extend an opportunity for the Lender to make an investment in the business operations of 

the ‘Rancho Cordova Branch Operations’ for Sierra Star Home Loans (Presently 

Managed and Operated by Ennis T. Henderson and Kevin R. Gibbs). [¶] Note: This 

investment will not gain the Lender any Ownership Interest in Sierra Star Home Loans, 

but will gain him an ‘Agreed upon Interest’ in the Profits earned by this Branch Office, as 

well as a voice in the decision making process for the Branch.” 

In December 2005, plaintiff, Gibbs, and Henderson, entered into a limited 

partnership agreement. A document entitled Limited Partnership Agreement was 

admitted as plaintiff’s exhibit 5, but it is unsigned.5 The limited partnership agreement 

stated it was an agreement between plaintiff, as limited partner, and Gibbs and 

 

4

 According to plaintiff, he was not interested in getting a license but wanted to educate 

himself for real estate investments. 

5

 The parties agree there was a signed agreement but disagree as to whether exhibit 5 is 

it. Plaintiff alternately relied upon or disavowed exhibit 5 as suited his purposes. Gibbs 

said an agreement was signed, but he was not sure if it was exactly the same as the 

unsigned trial exhibit and did not agree to be bound by the unsigned document. Gibbs 

said the signed document had been kept by plaintiff in plaintiff’s office. After the split, 

documents that had been in the office were no longer there. 
5

Henderson, “(Co-Branch Managers and Owner Operators) of the Rancho Cordova 

Branch of Sierra Star Home Loans, a ‘Net Branch of a California Corporation,’ with its 

principal place of business residing at 9960 Business Park Drive, Suite 110, Sacramento, 

California 95827 (General Partners of that Branch), a Net Branch Operation.” The 

contract said, “The purpose of this Partnership is to have [plaintiff] invest in, and become 

a Limited Partner in the second[6] Net Branch Office to be opened within the next 18-24 

months, by Ennis T. Henderson and Kevin R. Gibbs (With Sierra Star Home Loans[)], 

and to do the things essential, advisable, or appropriate in connection with, or incidental 

to, such business.” Gibbs testified they did not need a real estate license to enter this 

partnership agreement in which plaintiff agreed to invest money in the business in order 

to participate in the profits. Gibbs said a real estate salesperson must be licensed to 

handle real estate transactions, but he was not operating in that capacity in making the 

partnership agreement. 

Starelli, Gibbs, and Henderson all testified that Starelli was not part of any 

agreement with plaintiff. Plaintiff admitted he never discussed with Starelli the 

partnership agreement or his investment. 

Plaintiff testified that between 2005 and 2007, he invested about $128,000. 

Plaintiff opened an American Express account on which Gibbs and Henderson were 

allowed to make charges; the bill was sent to the Business Park Drive office. Gibbs and 

Henderson used the money mainly for office expenses, furniture, and equipment. 

Plaintiff said he expected Gibbs and Henderson to drum up business by advertising, cold 

calls, door-to-door distribution of promotional materials, etc., and they did expend some 

such efforts but in plaintiff’s view not enough. Plaintiff said he was at the office three or 

 

6

 The parties do not make clear what or where the “second” branch was. No second 

branch ever opened, and plaintiff’s money was used for the Business Park Drive branch. 
6

four days a week. Initially, plaintiff said he was there to supervise Gibbs and Henderson. 

He then said he was there to observe them. 

Around September 2006, Starelli severed ties with Gibbs and Henderson because 

of their failure to acquire licenses. But Starelli still had the remainder of a two-year lease 

on the Business Park Drive office, so he subleased it to Gibbs and Henderson. 

Gibbs testified he did not obtain his license because mortgage companies were on 

the decline because of market conditions. Henderson and Gibbs tried to shift gears and 

operate under a licensed financial lender for which they would need no license, and they 

attempted another venture which is not the subject of this lawsuit. Henderson left in mid2007, and Gibbs and plaintiff later parted ways. 

Gibbs testified he did not do an accounting. Although plaintiff testified he asked 

for an accounting and was told it was none of his business, Gibbs testified plaintiff “never 

asked me for an accounting because [plaintiff] was right there every day. He saw with 

his own eyes where the money was being spent.” 

Plaintiff testified that, when he entered the partnership agreement, he thought 

Gibbs and Henderson had real estate licenses “because they were working in a broker’s 

office” as branch managers. He claimed he learned Gibbs and Henderson were 

unlicensed after he made the investment, when Starelli visited the office in mid- to late2006 and said they needed to get a license. 

Plaintiff claimed he would not have invested his money had he known they were 

unlicensed.7 

 

7

 Plaintiff’s appellate briefing suggests an additional fact was concealed in that he was 

not told that Gibbs had a felony conviction for spousal abuse. However, plaintiff fails to 

cite any evidence that he would not have invested had he known about the criminal 

conviction. And our review of the record does not reveal that he ever testified to this 

effect. In any event, we may disregard points unsupported by citation to the record. 

(Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) 
7

However, plaintiff himself provided conflicting evidence about whether he 

previously knew Gibbs and Henderson were unlicensed. When cross-examined as to 

why plaintiff himself did not get a license within 90 days of December 12, 2005, which 

he conceded was an express requirement of the partnership agreement, plaintiff testified 

he never really intended to get a license but was merely “thinking of taking the exam. I 

was not sure if I was going to. I was waiting for you [Henderson] and Mr. Gibbs to take 

the exam, also.” 

Additionally, plaintiff testified, in response to a question from the jury, as follows: 

“THE COURT: [¶] . . . [¶] This question goes to your assumption that Gibbs and 

Henderson had licenses since -- even though such were not posted next to Mr. Starelli’s

. . . and so this juror asks: To what extent you attempted to ascertain whether Mr. Gibbs 

or Mr. Henderson did, in fact, have a license when you saw the Starelli license but no 

other licenses?” Plaintiff admitted it “was [his] assumption” that Gibbs and Henderson

had licenses, because he had learned through a real estate class he took at Cornerstone 

Realty that if a person is working for a real estate broker doing real estate transactions, he 

or she would need a license. Another juror question was “Did you attempt, through any 

public records, to ascertain the licensing status of Mr. Gibbs or Mr. Henderson?” 

Plaintiff answered, “No.” 

The jury returned special verdicts answering “No” to each of the following 

questions:

“Did Defendant Gibbs intentionally fail to disclose an important fact that Plaintiff 

Wells did not know and could not reasonably have discovered?”

“Did Defendant Henderson intentionally fail to disclose an important fact that 

Plaintiff Wells did not know and could not reasonably have discovered?”

“Did Defendant Gibbs and/or Defendant Henderson commit fraud (i.e., 

concealment of a material fact) against Plaintiff Wells?” 
8

On January 13, 2012, the trial court entered judgment in favor of defendants 

pursuant to the jury’s verdict. Plaintiff appeals from the judgment.8 

DISCUSSION

I. Licensing

Plaintiff argues a real estate agent’s license is required in order for a person to 

work under a real estate broker, and “There is no disputing that neither Gibbs nor 

Henderson was licensed. There is no disputing that Plaintiff Wells was not informed of 

that fact.” Under a separate heading about ostensible authority, plaintiff argues Starelli is 

liable because Gibbs and Henderson had ostensible authority to manage the Five Star 

branch, which would have included acquiring funds, and Starelli, as the licensed broker,

was responsible for supervising the branch and protecting those who did business there. 

Plaintiff then argues, “It is undisputed that Starelli, for the benefit of his company Five 

Star Ventures, opened the branch office and installed both Gibbs and Henderson to 

manage it. Conspicuous at the Branch was the Five Star signage, and Starelli’s posted 

license.” 

Insofar as plaintiff wants to talk about licensing or ostensible authority, he forfeits 

those matters by failing to provide any analysis or authority that Gibbs or Henderson 

needed a real estate license to enter the contract that is the subject of this appeal. 

(Landry v. Berryessa Union School Dist. (1995) 39 Cal.App.4th 691, 699-700 [“When an 

 

8

 In a footnote in his appellate brief, plaintiff claims that, after the jury rendered its 

verdict, he told the trial court outside the jury’s presence that he “will be moving for a 

new trial, and the court responded that motion is denied.” Plaintiff acknowledges that no 

such exchange appears in the record. His footnote claims an intent to move for correction 

of the record, but we denied his motions for such correction. Thus, there is nothing for us 

to review regarding a motion for new trial. Moreover, we may disregard points raised in 

a footnote rather than being properly presented under a discrete heading with appropriate 

analysis. (Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 160.)
9

issue is unsupported by pertinent or cognizable legal argument it may be deemed 

abandoned and discussion by the reviewing court is unnecessary”].) 

Plaintiff simply refers us to sections 10130 and 10132 of the Business and 

Professions Code. Business and Professions Code section 10130 states, in pertinent part,

“It is unlawful for any person to engage in the business of, act in the capacity of, 

advertise as, or assume to act as a real estate broker or a real estate salesman within this 

state without first obtaining a real estate license from the [Department of Real Estate]

. . . .” Business and Professions Code section 10132 defines a “real estate salesman” as 

“a natural person who, for a compensation or in expectation of a compensation, is 

employed by a licensed real estate broker to do one or more of the acts set forth in

Sections 10131 [authorized activities of brokers], 10131.1 [real property sales contracts 

or promissory notes secured by realty], 10131.2 [collecting advance fees for sale or lease 

of realty or business opportunity]

9

, 10131.3 [securities transactions], 10131.4 

[transactions involving mineral, oil, or gas property], and 10131.6 [sale of mobile 

homes].” 

However, these statutes do not require a license for every act performed in 

connection with a real estate office. (MKB Management, Inc. v. Melikian (2010) 

184 Cal.App.4th 796, 802 [license was not required for management duties such as 

causing repairs to be made, decorating, and general maintenance].) Plaintiff cites no 

evidence or authority that Gibbs or Henderson performed any activities for which a 

license was required or that the statutes he cites afford him the remedy he seeks in this 

 

9

 “Business opportunity” includes “the sale or lease of the business and goodwill of an 

existing business enterprise or opportunity” (Bus. & Prof. Code, § 10030) and “the 

transfer of those assets so essential that a business cannot continue without them” 

(Salazar v. Interland, Inc. (2007) 152 Cal.App.4th 1031, 1038).
10

case. Moreover, plaintiff cites no authority that a license was required for Gibbs and 

Henderson to enter the partnership agreement for plaintiff’s investment.

Plaintiff fails to show grounds for reversal based on licensing or ostensible 

authority. 

II. Substantial Evidence

In essence, plaintiff’s argument is that no evidence supports the jury’s verdict, 

though plaintiff does not clearly present it as such. He argues he was denied due process 

by a biased jury that rendered a decision inconsistent with purportedly undisputed facts. 

Plaintiff cites no evidence indicating the jury was biased. Apparently, his theory is that 

the jurors must have been biased because the verdicts are inconsistent with his view of

the state of the evidence. 

“ ‘[W]here the issue on appeal turns on a failure of proof at trial, the question for a 

reviewing court becomes whether the evidence compels a finding in favor of the 

appellant as a matter of law. [Citations.] Specifically, the question becomes whether the 

appellant’s evidence was (1) “uncontradicted and unimpeached” and (2) “of such a 

character and weight as to leave no room for a judicial determination that it was 

insufficient to support a finding.” ’ [Citation.]” (Sonic Manufacturing Technologies, 

Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 466, italics added.)10 Plaintiff has 

failed to meet this standard.

 

10 Insofar as plaintiff claims the evidence does not support the verdict, we could 

resolve this matter on the ground that plaintiff has forfeited the claim by failing to 

present it under a discrete heading with proper argument (Cal. Rules of Court, rule 

8.204(a)(1)(B)); S.C., supra, 138 Cal.App.4th at p. 408), and by failing to set forth 

evidence favorable to the judgment (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 

875, 881 [substantial evidence review is waived if appellant fails to cite evidence 

favorable to the judgment]). We nevertheless address the issue of whether the evidence 

compels a finding in favor of plaintiff as a matter of law.
11

The elements of fraud by deceit are (1) misrepresentation by false statement, 

concealment, or nondisclosure (2) with defendant’s knowledge of the misrepresentation, 

(3) defendant’s intent to deceive, (4) plaintiff’s justifiable reliance on the defendant, and 

(5) damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Plaintiff’s appellate brief, under the heading “STATEMENT OF FACTS,” merely 

cites evidence he considers favorable to himself, e.g., that Gibbs and Henderson should 

have had licenses in their work with Starelli, that they had no licenses, and that they spent 

plaintiff’s money without providing an accounting. Plaintiff fails to acknowledge the 

following evidence supporting the verdict: (1) the deal with Gibbs and Henderson was a 

separate business venture for which licensing was a nonissue; (2) neither Gibbs nor 

Henderson told plaintiff they had a license; (3) Gibbs and Henderson did not know 

plaintiff thought they were licensed and did not intend to deceive him; (4) plaintiff knew 

Gibbs and Henderson were unlicensed; and (5) even if plaintiff did not know, he failed to 

show the reasonable reliance necessary for fraud because he admitted at trial that he 

simply assumed Gibbs and Henderson were licensed and did not bother to check. We 

also note that the jury could have inferred that plaintiff was on notice that neither Gibbs 

nor Henderson were licensed from the fact that only Starelli’s license was displayed in 

the office. Indeed, it appears from one of the jury questions that this inference was drawn 

by the jury. 

The evidence does not compel a finding in favor of plaintiff as a matter of law. 

Accordingly, we conclude plaintiff has failed to establish grounds for reversal based on 

the evidence. 

III. Accounting 

Plaintiff argues there is no evidence that Gibbs or Henderson accounted for the 

funds used. However, plaintiff fails to show why this compels reversal of the judgment, 

because plaintiff’s complaint did not make a claim for an accounting. 
12

An action for an accounting is equitable in nature “to which no right to jury trial 

attaches.” (DeGuere v. Universal City Studios, Inc. (1997) 56 Cal.App.4th 482, 507; 

5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 819, p. 236.) In order to make a 

claim for an accounting, the plaintiff must allege that an accounting is needed to ascertain 

the balance owed. (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) 

Here, plaintiff did not ask the court to order an accounting, and therefore the 

absence of an accounting does not compel reversal of the judgment. Moreover, it does 

not appear plaintiff was claiming that an accounting was needed to determine the amount 

owed to him; he sought to recover all the money he invested. 

We conclude plaintiff fails to show grounds for reversal of the judgment as to any 

of the defendants. We therefore affirm the judgment in favor of all defendants.

DISPOSITION

The judgment in favor of all defendants is affirmed. Defendants are entitled to 

recover costs on appeal under California Rules of Court, rule 8.278.

 MURRAY , J.

We concur:

 HULL , Acting P. J.

 DUARTE , J.