Court Opinion

ID: 4570328
Source: CourtListenerOpinion
Date Created: 2020-09-28 18:02:25.527293+00
Date Added: 2024-06-11T13:30:05.873624
License: Public Domain

Filed 9/28/20 Stearns v. Chiang CA4/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 ordered published for purposes of rule 8.1115.

                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                 DIVISION ONE

                                         STATE OF CALIFORNIA

RICHARD STEARNS,                                                     D075810

         Plaintiff and Respondent,

         v.                                                          (Super. Ct. No. 37-2016-
                                                                     00025595-CU-BC-CTL)
CHARLES CHIANG,

         Defendant and Appellant.

         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
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

                                        5
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.
                                        6
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.

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