Filed 1/23/24 Archer v. Johnson CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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 This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

JOHN S. ARCHER, et al.,

Plaintiffs and Appellants,

v.

AARON LEMAR JOHNSON, et al.,

Defendants and Respondents. 2d Civil No. B322083 (Super. Ct. No. 56

- 2019

- 00533922

- CU

- NP

- VTA) (Ventura County)

John S. Archer and Richard Ong ania (appellants) appeal from the judgment following a court trial. A ppellants and respondent entered into an oral partnership agreement to create a computer software system used in home inspection s

. A ppellants filed a complaint against respondent and his limited liability company , AaceSystems LLC, alleging, inter alia, causes of action for b reach of an oral partnership agreement, declaratory2

relief

, and for an accounting. 1 They allege respondent sold the software to users without sharing profits with them.
T he trial court found in favor of appellant s on the breach of oral agreement cause of ac tion

, awarded nominal damages

, and
ordered that partnership law would appl y from that point
forward . It denied appellants ’ cause of action for an accounting. Appellants contend the trial court erred in ruling that partnership law only applied to the partnership “ ‘ moving
forward ’ ” and refusing to order an accounting. We affirm.

Factual and Procedural Background Appellants are certified home inspectors. Prior to 2010, they used an inspection software called “System 2000

. ” T he system allowed users to collect and manage data , including
narratives from home inspectors such as appellants. Those narratives, otherwise referred to in the industry as “comments

, ”
were then used to generate inspection reports. The software was outdated, cumbersome, and not user

friendly. In 2010, appellants hired respondent to mod ernize System 2000

, including add ing new features and i ncorporat ing
the vast library of comments appellants had created over the

years into System 2000’s existing library of comments

. The modernized version of System 2000 was named, “Spectacular.” By March 2011, an operable version of Spectacular was ready for use

. Appellants believed Spectacu lar was so good that they could sell the software to fellow home inspectors

. Although appellants possessed industry

- specific experience

, they lacked the technical capability to modify and further develop
the software

. Appellants contacted respondent and offered him a

1 AaceSystems LLC defaulted in the underlying case and is not a party to this appeal.3

t hree

- way partnership for ownership and operation of Spectacular

. R espo ndent agreed and the parties consummated their agreement with a handshake.
Pursuant to their partnership agreement, appellants were responsible for instructing respondent on the lay out and form of the software to improve usability . They were also responsible for providing the comments, conducting field testing

, and for marketing Spectacular to fellow home inspectors at conferences. Respondent was responsible for developing the software as the
code writer.
A ppellants and respondent met with a legal consultant who advised them to create a limited liability company to hold ownership of the software and the business. The parties agreed to use respondent’s previously formed company, AaceSystems
LLC. Throughout 2011 and 2012, appellants and respondent worked together to improve the functionality of the software.
When S pectacular was ready for sale to home inspectors, appellants and respondent marketed the software at home inspector meetings and conventions

. A ppellants and respondent held themselves out as “partners” and routinely used collective language such as “we”
and “us” in their internal communications, particularly when referring to Spectacular business and future profits. Appellants
also exercised control over the day to day business operations, including setting the price for Spectacular’s licenses and
determ ining user content. In August 2018, respondent gave a presentation at a home inspector meeting where appellants were also present. When an audience member inquired about the number of Spectacular4

sales, respondent stated that he had sold 1500 units. Appellants

were shocked because respondent had indicated to them that business was slow and things were not selling that well

. In October 2018, the parties met at a local café . Mr. Archer informed responden t that he want ed to fund his trust with his

one

- third ownership interest in Spectacular and asked respondent to give him a copy of the LLC agreement with his
name on it to include in the trust . Respondent denied that appellants had any ownership in Specta cular and subsequently
terminated their access to S pectacular

. In September 2019, appellants filed a complaint against respondent and AaceSystems LLC, alleging among other claims,
breach of an oral agreement . Appellants requested declaratory
relief and an accounting. No evidence was produced at trial as to how many units of Spectacular were sold. Following a court trial , the trial court
issued an oral tentative decision. The trial court found in favor of appellants on the ir claim for breach of oral agreement , finding

“ the evidence is very strong that there was some sort of informal formal agreement . . . that they would be partners in this
business. ”
The trial court found the evidence of damages to be “ very spartan ” and awarded onl y nominal damages of $100

. As the trial court explained, “I certainly don’t have evidence that 1500 units were sold at $599 per unit, and it would really be speculation as to what the appropriate damages would be .” The trial court denied appellant’s ca use of action for an accounting . As the trial court explained :

“ T here isn’t sufficient evidence to rely on to order an accounting of

- - I mean, I don’t know what has been done5 in the past, and we really didn’t establish the damages other than, as I said, nominal damages. So I am not going to order an accounting to be done

. So what we are left with is the declaratory relief request, which I’m granting, and that is that a partnership does exist. It’s a third, a third, a third partnership. Partnersh ip law will apply from this point forward.”
Discussion 2 Appellants contend the trial cour t should have ordered that the partnership was created in 2011 or 2012 when the parties made their handshake agreement

. Appellants also contend the
trial court should have sustained the cause of action for an accounting and ordered respondent to account for the profits and
losses he derived from Spectacular from the time of the partnership’s formation. As we shall explain, appellants’
contentions are without merit. “A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness. [ Citations.]” ( In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 ( Arceneaux

) .) We review the trial court’s findings of fact for substantial
evidence and its denial of an accounting for abuse of discretion

. ( People v. Cromer (2001) 24 Cal.4 th 889, 893

- 894; Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4 th 1367, 1392 ( Heller ) .)

2 No respondent ’ s brief was filed. Accordingly, the appeal is submitted on appellants’ opening brief, the record, and any oral argument by appellants. (Cal. Rules of Court, rule 8.220(a)(2).)6

Trial Court’s Order Partnership Law Governs Moving Forward Appellants do not challenge the trial court’s finding of a
three

- way partnership for the ownershi p and sale of Spectacular

. H owever, they contend the trial court erred when it found that the partnership only began to exist for profit division purposes as

o f the time of trial. Appellants contend this finding was “unsupported by evidence and defies co mmon sense” where “ [ a ] ll
of the acts, words and conduct that the trial court relied on as evidencing an agreement occurred years prior, culminating in a handshake between the parties in 2011 or 2012.” Here, t he trial court issued its oral tentative decision pursuant to California Rules of Court, rule 3

. 1590(c). The
tentative decision expressly stated

, “[p]artnership law will apply from this point forward.” The trial court instructed the parties
that the tentative decision would beco me the statement of decision unless, within 10 days , a party specifie s those principal controverted issues as to which the party is req uesting a statement of decision or makes proposals not included in the tentative decision. ( Id., subd

, (c)(4). )
A ppellant s did not file any response or object to the trial
court’s tentative decision

. Consequently, they have forfeited their right to raise the issue now. (See Arceneaux

, supra , 51 Cal.3d at pp. 1133

- 1134 .)
The forfeiture rule applies with special force when the appealing party received the judge’s tentative ruling and raised no objection to it. “It is axiomatic that a party may not complain on appeal of rulings to which it acquiesced in the lower court

. . . . It is unfair to the trial judg e and the adverse party to attempt to take advantage of an alleged error or omission on appeal when the error or omission could have been, but was not, brought to the7

attention of the trial court in the first instance. [Citation.] . . . . [¶] It follows that when a trial court announces a tentative decision, a party who failed to bring any deficiencies or omissions therein to the trial court’s attention forfeits the right to raise such defects or omissions on appeal.” ( Porterville Citizens for Responsibl e Hillside Development v. City of Porterville (2007) 157
Cal. App.4 th 885, 912 , citing Arceneaux

, supra , 51 Cal.3d at p.
1134

. )
Even if we were to reach the merits on this is sue , appellants fail to show that the alleged error resulted in a miscarriage of justice. (See Lundy v. Ford Motor Co. (2001) 87 Cal.App.4 th 472, 479; Cal. Const., art. VI, § 13.) Here, t here is no evidence that appellants are entitled to

two

- thirds of the profits going back to 2011 or 2012. Rather, the
evidence shows that appellants intended for respondent to keep at least some of the profits as compensation for his work on Spectacular. As Mr. Archer explained during his testimony, “We never asked for a cut . . . Richard and I, considered us three

- way partners from the ons et. And we never asked for money because [respondent was] developing the product as it progressed. So . . . any profits that were made, we just figured we would let [ respondent ] keep because of [his] work.” When respondent quit his job to focus on Spect acular full time, appellants continued to allow him to keep the profits of Spectacular sales to “compensate him for the amount of income that he was foregoing by giving up his job.”
We conclude reversal is not warranted on this issue

.

Action for an A ccounting As we have indicated, w e review the trial court’s denial of an accounting for an abuse of discretion. ( Heller

, supra , 508

Cal.App.4 th at p. 1392.) “‘“The term [judicial discretion] implies the absence of arbitrary determination, capricious di sposition or whimsical thinking. It imports the exercise of discriminating judgment with in the bounds of reason.

. . . ” ’” ( Estate of Gilkison (1998) 65 Cal.App.4 th 1443, 1448

- 1449.) A “‘showing on appeal is wholly insufficient if it presents a state of facts, a consideration of which, for the purpose of judicial action, merely affords an opportunity for a difference of opinion. An appellate tribunal is
neither authorized nor warran ted in substituting its judgment for the judgment of the trial judge

. . . .’ ” ( I bid .) “A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defend ant that requires an accounting, and that some ba lance is due the plaintiff that can only be ascertained by an accounting. [Citations.]” ( Teselle v. McLoughlin (2009) 173 Cal.App.4 th 156,

1 79 ; Sass v. Cohen (2020) 10 Cal.5 th 861, 869 ( Sass ) .) It is a “‘species of disclosure predicated upon the plaintif f’s legal inability to determine how much money, if any, is due.’” ( Teselle

, at p. 180
, italics added.) Here, t he trial court expressly found there was insufficient evidence to rely on to order an accounting. As t he trial court explained in its tentative decision, “I don’t know what has been
done in th e past, and we really didn’t establish the damages other than . . . nominal damages .” Appellant s contend the trial court applied the wrong legal
standard because “[n]either knowl edge of what was ‘done in the past’ nor prospective establishment of damages, are recognized as necessary elements to establish appellants’ entitlement to an accounting.” Instead, t hey contend all they ha d to show was (1) a relationship between the partie s requiring an accounting , and (2)9

some balance is due to them that “ ‘ can only be ascertained by an accounting

. ’ ” ( Citing Sass

, supra , 10 Cal.5 th at p. 869 and Corp. Code, § 16405, subd. (b) .)
But appellants have not sufficiently demonstrated that any
balance was due or that it could only be ascertained by an accounting and not through some other ordinary means of discovery. To be sure, a ppellants had the opportunity to conduct discovery to develop the evidence o f damages or “some balance
due.” The record reflects that appellants filed a motion to compel discovery and requested sanctions , h owever, it is unclear how the
trial court resolved the matter and on what basis . A ppellants’ appendix does not include the motion to compel discovery, the opposition filed by respondent , or the trial court’s ruling

. “The burden of demonstrating error rests on the appellant. [Citation.]” ( Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4 th 624, 632.) To meet this burden, the appellant must provide an adequate appellate record to assess error. “Failure to provide an adequate record on an issue requires that the issue be resolved against” the appellant. ( Hernandez v. California Hospital Medical Center (20 00) 78 Cal.App.4 th 498, 502.) Notwithstanding any discovery dispute, appellants had the opportunity to examine respondent under oath . They presented
evidence that at least some units of Spectacular were sold . But, Spectacular can be bought for a day, a single use, a month, the entire year, or as a renewal at a discounted price. Like the trial court, we have no evidence as to how many units of Spectacular were sold , or in what form, and at what price. Appellants are not now entitled to an accounting based on their own failure to carry their burden of proof in the first instance. (See Evid. Code, §500 [a party has burden of proof as to10

facts essential to his or her claim for relief]; 1 Witkin, Cal. Evidence (6 th ed. 2023) Burden of Proof and Presumpti ons, § 10, p. 166 [same].) The trial court considered all of the evidence presented, found it “very spartan” and insufficient to show that any “past damages” occurred. It was not an abuse of discretion for the trial

court to then conclude that appellants’ failure to prove past damages necessarily precluded them from demonstrating some
balance was due. Disposition The judgment is affirmed.
NOT TO BE PUBLISHED

.

YEGAN, A cting P. J.

We concur:

BALTODANO, J.

CODY, J.Benjamin F. Coats, Judge Superior Court County of Ventura

______________________________

Ferguson Case Orr Paterson and Joshua S. Hopstone

, Morgan T. Lynch

, for Plaintiffs and Appellants

.

No appearance for Respondent s

.