Filed 9/28/20 Stearns v. Chiang CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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or ordered published for purposes of rule 8.1115. 

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

RICHARD STEARNS,

Plaintiff and Respondent,

v.

CHARLES CHIANG,

Defendant and Appellant.

 D075810

(Super. Ct. No. 37-2016-

00025595-CU-BC-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, 

Timothy B. Taylor, Judge. Affirmed.

Small Law and William F. Small for Defendant and Appellant.

No appearance for Plaintiff and Respondent.

I

INTRODUCTION

Plaintiff Richard Stearns and Defendant Charles Chiang entered into 

an oral agreement requiring Stearns to refer a financial lender to Chiang in 

return for a finder’s fee. Stearns referred a suitable lender to Chiang, but 

Chiang did not pay the promised finder’s fee to Stearns. Stearns filed suit 
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against Chiang for breach of contract and, after a one-day bench trial, the 

trial court entered judgment in favor of Stearns. 

Chiang appeals the judgment. He asserts Stearns acted at all times 

relevant to the dispute as an agent of Stearns’s company, Thornton & 

Stearns, Inc. dba Carmel Valley Capital (Carmel Valley Capital). Because 

Stearns allegedly acted as a mere agent of Carmel Valley Capital, Chiang 

contends Stearns was not a real party in interest with standing to pursue the 

breach of contract cause of action against Chiang. 

We reject Chiang’s contention and affirm the judgment.

II

BACKGROUND

Stearns and co-plaintiff Jason Kishaba filed a single cause of action for 

breach of contract against Chiang and related corporate entities. They 

alleged the defendants desired to refinance commercial real estate in or about 

November 2015. The parties allegedly entered into an oral agreement 

whereby the plaintiffs would seek out and refer funding sources to the 

defendants in exchange for a specified percentage of any refinancing loan the 

defendants obtained as a result of the plaintiffs’ efforts. According to the 

plaintiffs, they referred a funding source to the defendants and the 

defendants obtained a refinancing loan from the funding source; however, the 

defendants never paid the plaintiffs the agreed-upon finder’s fee. 

The case proceeded to a one-day bench trial. After the plaintiffs’ case in 

chief, the defendants moved for judgment of nonsuit under Code of Civil 

Procedure section 581c,1 or, in the alternative, for judgment under 

section 631.8. They argued the plaintiffs were not real parties in interest 

with standing to sue because “all actions they took were on behalf of their 

1 All further statutory references are to the Code of Civil Procedure.
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employers ....” Stearns was the sole employee and sole principal of his 

company, Carmel Valley Capital. Kishaba was an employee of a separate

company called Got Mortgage, Inc. The trial court deferred resolution of the 

defendants’ motion. 

After trial, the court issued a minute order finding in favor of Stearns

as to his claim against Chiang. The minute order states in pertinent part as 

follows: “The court finds that the evidence preponderates in favor of a finding 

that Stearns was the procuring cause of the loan ultimately made by [the 

lender] in the amount of $1.5 million. [Citation.] The court finds that the 

evidence preponderates in favor of a finding that Charles Chiang individually 

promised to pay a brokerage commission of at least 2% to Stearns. 

Mr. Stearns so testified, and the court believed his testimony. Mr. Chiang 

did not come to court to deny it, and it is unlikely he actually believed 

Mr. Stearns would do the work he did and use the lender contacts he had 

developed and deliver a ready, willing, and able lender ... all for nothing in 

terms of recompense.”

In its minute order, the court also denied the defendants’ motion for 

judgment of nonsuit or, in the alternative, motion for judgment, as applied to 

Stearns. The court found Stearns provided credible and unrebutted

testimony that he was the sole principal of Carmel Valley Capital and, 

“[w]hile his decision to sue in his own name may have been improvident in 

terms of his tax liability or in terms of maintaining corporate formalities,”

Stearns nonetheless had standing to sue for breach of contract.2

2 The court denied recovery to co-plaintiff Kishaba because the court

found Kishaba failed “to carry his burden to prove an entitlement to a 

commission” or to “establish he (as opposed to Got Mortgage, his former 

employer) was the real party in interest.” The court also found that liability 

attached only to Chiang and not to his corporate entity. 
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The trial court designated the minute order as its statement of decision 

under section 632 and entered judgment in favor of Stearns. 

III

DISCUSSION

Chiang contends we must reverse the judgment because Stearns was 

not the real party in interest entitled to sue for breach of the oral agreement. 

Stearns did not file a respondent’s brief. We do not treat Stearns’s failure to 

file a respondent’s brief as an admission of error; rather, we consider the 

record and Chiang’s arguments to determine whether reversal of the 

judgment is required. (In re Marriage of Rifkin & Carty (2015) 234 

Cal.App.4th 1339, 1342, fn. 1; Cal. Rules of Court, rule 8.220(a)(2).) 

In general, an “action must be prosecuted in the name of the real party 

in interest ....” (§ 367.) The purpose of this rule is “to protect a defendant 

from harassment by other claimants on the same demand.” (Redevelopment 

Agency of San Diego v. San Diego Gas & Electric Co. (2003) 111 Cal.App.4th 

912, 921.) “ ‘ “A real party in interest ordinarily is defined as the person 

possessing the right sued upon by reason of the substantive law,” ’ ” which in 

this case is contract law. (Doe v. Lincoln Unified Dist. (2010) 188 Cal.App.4th 

758, 765; Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516, 525 [“ ‘The real 

party in interest has “ ‘an actual and substantial interest in the subject 

matter of the action,’ and stands to be ‘benefited or injured’ by a judgment in 

the action.” ’ ”].) 

Chiang contends Stearns was not the real party in interest with 

standing to sue because Stearns allegedly acted as an agent of Carmel Valley 

Capital. (See Cohen v. TNP 2008 Participating Notes Program (2019) 31 

Cal.App.5th 840, 856 (Cohen) [“ ‘an agent for a party to a contract not made 

with or in the name of the agent is not a real party in interest with standing 
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to sue on the contract’ ”].) Chiang argues Stearns’s alleged agency is 

apparent from an excerpt in the settled statement, which provides as follows: 

“[Stearns] testified that he is the only principal of [Carmel Valley Capital]”

and “all work he did was on behalf of that entity.” Chiang argues the agency

is also evident based on certain trial exhibits that reference Carmel Valley 

Capital in passing, including an executive loan summary and conditional loan 

quote allegedly prepared by Stearns and a letter of intent allegedly prepared 

by the lender. 

We are not convinced the judgment must be reversed. According to the

settled statement, Stearns testified he performed his “work” on behalf of 

Carmel Valley Capital, evidence from which the court might reasonably have 

found the existence of an agency relationship. However, Stearns’s testimony, 

the trial exhibits identified by Chiang, and the statement of decision do not 

indicate that Carmel Valley Capital—as opposed to Stearns—was the party 

that entered the oral agreement with Chiang. The identity of the contracting 

parties matters for purposes of determining standing because even an agent 

may “sue on a contract which has been entered into in his own name ....” 

(Earl Fruit Co. v. Herman (1928) 90 Cal.App. 640, 644–645 (Earl Fruit).) 

When the “agent contracts directly with a third person, the law allows the 

agent, treated as a principal, to sue on the contract in his own name ....” (Id.

at p. 645; 4 Witkin, Cal. Procedure (5th ed. 2020) Pleading, § 141 [“Where the 

contract is actually made in the agent’s name as a promisee, the agent may 

sue even though he or she has no beneficial interest and is under no liability 

to the principal.”].) Thus, Stearns would have standing to sue, even as an 

agent, if he entered the oral agreement in his own name.

As noted, the statement of decision was silent as to the identity of the 

contracting parties, but concluded that Stearns had standing to sue in his 
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own name. To the extent Chiang suggests there is a defect or ambiguity in 

the statement of decision, we are required to draw all inferences in favor of 

Stearns—i.e., to infer Stearns entered the oral agreement in his own name—

because there is no indication in the record that Chiang objected to the 

statement of decision. (Uzyel v. Kadisha (2010) 188 Cal.App.4th 866, 896 [“If 

an omission is not brought to the trial court’s attention as provided under the 

statute ... the reviewing court will resolve the omission by inferring findings 

in favor of the prevailing party on that issue.”].) Our inference that Stearns 

entered the oral agreement in his own name is a sufficient basis for us to 

affirm the judgment. (See Earl Fruit, supra, 90 Cal.App. at pp. 644–645.)

Even if Stearns entered the oral agreement as an agent of Carmel 

Valley Capital and in the name of Carmel Valley Capital, Stearns would have 

standing to sue. In the statement of decision, the trial court found that 

“Charles Chiang individually promised to pay a brokerage commission of at 

least 2% to Stearns.” (Italics added.) It did not find that Chiang promised to 

pay a brokerage commission to Carmel Valley Capital.3

The trial court’s finding that Chiang promised to pay a brokerage 

commission to Stearns establishes that Stearns stood to realize a direct

financial gain from the oral agreement. Based on this finding, we conclude 

the trial court appropriately determined that Stearns had a beneficial 

interest in the litigation entitling him to sue for breach of contract. (Civ. 

Code, § 1559 [“A contract, made expressly for the benefit of a third person, 

may be enforced by him at any time before the parties thereto rescind it.”]; 

4 Witkin, Cal. Procedure (5th ed. 2020) Pleading, § 141 [“If the plaintiff, 

though an agent acting on behalf of a principal, actually has some beneficial 

3 In his opening brief, Chiang recites the general standard of review 

applicable to our review of factual determinations, but does not challenge the 

sufficiency of the evidence supporting any of the trial court’s factual findings. 
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interest in the subject matter, he or she is allowed to sue.”]; accord, Cohen, 

supra, 31 Cal.App.5th at p. 856 [“An agent acting on behalf of a principal 

might have standing to sue ... if the agent ‘has some beneficial interest in the 

subject matter.’ ”].)

IV

DISPOSITION

The judgment is affirmed. The parties are to bear their own costs on 

appeal.

McCONNELL, P. J.

WE CONCUR:

HUFFMAN, J.

O’ROURKE, J.