Court Opinion

ID: 4665664
Source: CourtListenerOpinion
Date Created: 2021-03-08 18:02:41.69169+00
Date Added: 2024-06-11T08:02:44.467857
License: Public Domain

Filed 3/8/21 Gandolfo v. Noman Medical Corp. CA5

                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

 MICHELLE GANDOLFO et al.,
                                                                                             F078559
           Plaintiffs and Appellants,
                                                                             (Super. Ct. No. 16CECG02562)
                    v.

 NOMAN MEDICAL CORPORATION et al.,                                                        OPINION
           Defendants and Appellants.

         APPEAL from a judgment of the Superior Court of Fresno County. Rosemary T.
McGuire, Judge.
         Law Offices of Gregory L. Myers and Gregory L. Myers for Plaintiffs and
Appellants.
         Borchard & Callahan, Thomas J. Borchard and Janelle M. Dease for Defendants
and Appellants.
                                                        -ooOoo-
         Plaintiff sued for breach of a written contract. The parties disputed the
interpretation of the provision specifying the fee to be paid to plaintiff for her services.
After a court trial, the trial court interpreted the disputed provision, found defendant
admitted it owed payment to plaintiff, but found plaintiff had not established a breach of
contract. It found plaintiff had established a debt defendant owed to plaintiff on an open
book account, however. Plaintiff appeals the adverse judgment on the breach of contract
cause of action. Defendant cross-appeals, contending the operative first amended
complaint did not include a cause of action based on an open book account, so the
judgment is invalid. We conclude the trial court’s factual findings establish a breach of
contract cause of action. We reverse the judgment with directions to enter a new
judgment in favor of plaintiff on the breach of contract cause of action.
                  FACTUAL AND PROCEDURAL BACKGROUND
       On August 28, 2013, plaintiff Michelle Gandolfo, doing business as Central
Valley Healthcare Systems, and Dr. Zaid Noman, on behalf of Xpress Urgent Care, a
fictitious business name (doing business as) of defendant Noman Medical Corporation
(NMC or defendant), entered into a written medical billing services agreement (the
contract). In the contract, plaintiff agreed to provide specified billing and collections
services to defendant. The contract provided defendant would pay plaintiff a fee of “6.0
percent of the total amount collected under this Agreement.” In January 2016, the
contract was orally extended to include Tustin Urgent Care, APC (Tustin).1
       From September 1, 2013, to October 31, 2014, plaintiff billed for her services, and
Dr. Noman paid the bills. Plaintiff did not send defendant bills for services rendered
from November 2014, to June 2016, and defendant made no payments to her during that
time. In August 2015, Dr. Noman asked how much he owed plaintiff and received a
monetary figure higher than the amount he believed was owed. The contract was
terminated on June 16, 2016.
       Plaintiff sued for the amount she believed defendant owed under the contract. Her
original complaint alleged causes of action for breach of contract, open book account,
account stated, and unfair business practices (Bus. & Prof. Code, § 17200) against Dr.
Noman and NMC. The first amended complaint, however, alleged only breach of

1      Tustin was also doing business under the fictitious business name Xpress Urgent Care.

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contract and fraud. The fraud cause of action was later dismissed; Dr. Noman was also
dismissed as a defendant. As a result, the only cause of action of the complaint that was
in issue at trial was the breach of contract claim against NMC. NMC and Tustin cross-
complained against plaintiff, alleging in several causes of action, including breach of
contract, that plaintiff failed to competently perform her billing and collections duties,
causing cross-complainants a loss of income.
       The matter was tried to the court. The parties did not dispute that they entered into
the contract; the issue presented by plaintiff’s complaint was the interpretation of the
language of the fee provision. The trial court issued a statement of decision in which it
found that the parties signed the contract; specifically, plaintiff prepared the contract and
Dr. Noman reviewed and signed it without making changes. After discussing the rules
for interpreting contractual language, the trial court considered the contract and the
testimony regarding each party’s understanding of the fee provision. It interpreted the
provision as Dr. Noman understood it: that the 6 percent fee applied only to the amount
collected by plaintiff through her billing and collection efforts, and did not apply to
amounts paid directly to NMC at its office (cash payments, copayments, or deductibles
paid by the patient at time of service), which involved no action by plaintiff. The trial
court found that Dr. Noman conceded NMC owed plaintiff money but disputed the
amount. It set out its calculation and concluded NMC owed plaintiff a total of
$85,125.64. Without explanation, the trial court then concluded: “[Plaintiff] did not
meet her burden of establishing [that NMC] breached the contract.”
       The trial court went on to find that NMC was liable to plaintiff on an open book
account, calculating damages in the same amount. It found plaintiff had not established
causes of action for an account stated or unfair business practices. On the cross-
complaint, the trial court found in favor of plaintiff. Judgment was entered in favor of
plaintiff on the open book account and on the cross-complaint.

                                              3.
       Plaintiff appealed; NMC and Tustin cross-appealed. In her appeal, plaintiff
contends the trial court was incorrect in its determination that plaintiff failed to establish
a breach of contract cause of action. She also argues the judgment on an open book
account is proper; alternatively, the judgment could be upheld as a declaratory relief
judgment under the request in the first amended complaint for such other relief as the
court deems just and proper. In their cross-appeal, NMC and Tustin contend a cause of
action on an open book account was not pled in the first amended complaint, which was
the operative pleading at the time of trial, so the judgment in favor of plaintiff on that
cause of action is improper and invalid. There is no challenge to the judgment on the
cross-complaint.
                                        DISCUSSION
I.     Breach of Contract
       A.     Standard of review
       When the trial court has issued a statement of decision, and the parties do not
challenge the sufficiency of the evidence to support the trial court’s findings, we accept
the trial court’s factual findings as set forth in the statement of decision. Our task then is
to determine whether those factual findings support the judgment as a matter of law.
(City of Merced v. American Motorists Ins. Co. (2005) 126 Cal.App.4th 1316, 1322.)
       The parties have not supplied us with a reporter’s transcript of the trial. When no
reporter’s transcript is provided on appeal, “it is presumed that the unreported trial
testimony would demonstrate the absence of error. [Citations.] The effect of this rule is
that an appellant who attacks a judgment but supplies no reporter’s transcript will be
precluded from raising an argument as to the sufficiency of the evidence.” (Estate of
Fain (1999) 75 Cal.App.4th 973, 992.) Accordingly, the parties cannot, and do not,
challenge the sufficiency of the evidence to support the trial court’s findings, and we
accept those findings as established.

                                              4.
       B.     Elements of a breach of contract cause of action
       The elements of a cause of action for breach of contract are the existence of the
contract, performance by the plaintiff or excuse for nonperformance, breach by the
defendant, and damages. (First Commercial Mortgage Co. v. Reece (2001)
89 Cal.App.4th 731, 745.)
       Both parties sued for breach of the same written contract. In their posttrial briefs,
neither party questioned its existence. Both parties argued about the interpretation of the
language of the fee provision. Defendant acknowledged there was “no dispute” that the
parties entered into the contract. In its statement of decision, the trial court found: “On
August 28, 2013, Dr. Zaid Noman and [plaintiff] signed a Medical Billing Services
Agreement (Agreement) on behalf of Xpress Urgent Care and [Central Valley Healthcare
Systems]. The Agreement sets forth the responsibilities and obligations of the parties and
provides that [Central Valley Healthcare Systems] would receive ‘6.0 percent of the total
amount collected under this Agreement.’ (Exh. 201.)” Exhibit No. 201 was the same
contract attached to the first amended complaint and the cross-complaint as the basis of
the parties’ claims.
       The statement of decision discussed the parties’ performance under the contract.
It stated plaintiff billed for her services until October 31, 2014, and Dr. Noman paid the
amounts billed. Plaintiff failed to send invoices for her services for November 2014,
through June 2016, and defendant failed to pay her during that time. Dr. Noman later
inquired about how much he owed plaintiff and thought the figure she gave him was
higher than the amount he owed. The trial court found the contract was terminated on
June 16, 2016.
       The trial court considered the contract itself, as well as extrinsic evidence from the
parties regarding their understanding of the disputed provision. It interpreted the
disputed language of the contract in accordance with defendant’s understanding of that
language. It noted Dr. Noman’s testimony that, under his interpretation of the contract,

                                             5.
defendant owed plaintiff approximately $119,000 for her services from November 2014,
to June 2016, but had overpaid by approximately $30,000 for earlier services. The trial
court calculated plaintiff’s damages in accordance with its interpretation of the fee
provision, and concluded defendant owed plaintiff $85,125.64.
       The trial court made findings of fact satisfying each element of the breach of
contract cause of action. Nonetheless, without explanation, it concluded plaintiff “did not
meet her burden of establishing [that defendant] breached the contract.”
       In its discussion of the breach of contract cause of action, the trial court noted
plaintiff was required to establish mutual assent of the parties; it cited cases concluding
that uncertainty and indefiniteness render a contract unenforceable. Based on this
discussion, the parties construed the trial court’s decision that plaintiff failed to establish
her breach of contract cause of action to mean it determined the contract was so vague
and uncertain that mutual assent to the contract was lacking.
       C.     Mutual assent
       To prove the existence of a contract, the plaintiff must establish: parties who are
capable of entering into a contract, their mutual consent, a lawful object, and sufficient
cause or consideration. (Civ. Code, § 1550; Stewart v. Preston Pipeline, Inc. (2005)
134 Cal.App.4th 1565, 1585–1586.) An essential element of a contract is assent or
consent. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811.)
“The ‘consent’ must be ‘mutual.’ [Citations.] ‘Consent is not mutual, unless the parties
all agree upon the same thing in the same sense.’ ” (Ibid.)
       “ ‘ “The existence of mutual consent is determined by objective rather than
subjective criteria, the test being what the outward manifestations of consent would lead a
reasonable person to believe.” ’ ” (Monster Energy Co. v. Schechter (2019) 7 Cal.5th
781, 789.) It is not determined by the unexpressed intentions or understandings of the
parties. (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173.) “It is
fundamental … that ‘there need not be a subjective meeting of the minds; in the absence

                                               6.
of fraud, mistake, etc. … , the outward manifestation or expression of consent is
controlling. In other words, mutual consent is gathered from the reasonable meaning of
the words and acts of the parties, and not from their unexpressed intentions or
understanding.’ ” (Rodriguez v. Oto (2013) 212 Cal.App.4th 1020, 1027, italics omitted.)
“Under the objective test, a ‘meeting of the minds’ is unnecessary, and a party may be
bound though he misunderstood the terms of a proposed contract and actually had a
different undisclosed intention.” (Myers v. Carter (1963) 215 Cal.App.2d 238, 241.)
       “In the absence of fraud, mistake, or another vitiating factor, a signature on a
written contract is an objective manifestation of assent to the terms set forth there.”
(Rodriguez v. Oto, supra, 212 Cal.App.4th at p. 1027.) There is nothing in the record to
indicate either party claimed any fraud, mistake, or other vitiating factor precluded
mutual assent of the parties. Both parties signed the contract, objectively manifesting
consent to its terms.
       A proposal cannot be accepted so as to form a contract unless the terms of the
contract are reasonably certain; they are reasonably certain if they provide a basis for
determining the existence of a breach and for giving an appropriate remedy. If the
proposed terms are not reasonably certain, there is no contract. (Weddington
Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 811.)
       “ ‘Vagueness of expression, indefiniteness and uncertainty as to any of the
essential terms of an agreement, may prevent the creation of an enforceable contract . . .
Vagueness, indefiniteness, and uncertainty are matters of degree, with no absolute
standard for comparison. It must be remembered that all modes of human expression are
defective and inadequate . . . In considering expressions of agreement, the court must not
hold the parties to some impossible, or ideal, or unusual standard. It must take language
as it is and people as they are. All agreements have some degree of indefiniteness and
some degree of uncertainty . . . [P]eople must be held to the promises they make. The
court must not be overly fearful of error; it must not be pedantic or meticulous in

                                              7.
interpretation of expressions . . . If the parties have concluded a transaction in which it
appears that they intend to make a contract, the court should not frustrate their intention,
if it is possible to reach a fair and just result, even though this requires a choice among
conflicting meanings and the filling of some gaps that the parties have left . . . The
application of such a rule as this is believed to come nearer to attaining the purpose of the
contracting parties than any other, to give more business satisfaction and to make [a]
contract a workable instrument.’ ” (Rivers v. Beadle (1960) 183 Cal.App.2d 691, 695–
696.) “ ‘[T]he modern trend of the law favors carrying out the parties’ intentions through
the enforcement of contracts and disfavors holding them unenforceable because of
uncertainty.’ ” (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1192.)
       In Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761 (Ladas),
insurance sales representatives sued their employer for breach of contract. The plaintiffs
signed contracts in which the employer agreed to pay them commissions on sales and
renewals of policies. (Id. at pp. 766–767.) The plaintiffs alleged that, orally and in
written materials, the employer promised to pay them at the same level as other similarly
situated insurance sales representatives, so the plaintiffs could maintain compensation
parity in keeping with industry standards. (Id. at pp. 767–768.) Company handbooks and
memoranda stated it was the company’s “ ‘aim,’ ” “ ‘policy,’ ” or “ ‘practice’ ” to adjust
sales representatives’ salaries periodically to maintain income levels comparable to those
of similar employees in comparable organizations. (Id. at pp. 768–769.)
       The court found the alleged promise by the employer to consider parity in setting
commission rates was too vague and indefinite to give rise to an enforceable contractual
duty. It stated:

              “The vague nature of the alleged duty to pay parity is best illustrated
       by appellants’ counsel’s comments … : ‘The plaintiffs concede that the
       contract as written does not—does not expressly state that the agents will
       be paid exactly what State Farm, Farmers or Allstate agents receive as
       commissions. Plaintiffs are not asking for that. [¶] We have all along

                                              8.
       merely been proposing this evidence solely so that it could be offered as
       one of the factors that the company would consider when it adjusted the
       unit value .… [¶] … I am merely asking that [commission rates paid by
       other insurers] be taken into consideration by the company or that there
       was an obligation or a promise … a company policy and practice that they
       would take that into consideration.’ (Italics added.)

              “An amorphous promise to ‘consider’ what employees at other
       companies are earning cannot rise to the level of a contractual duty.
       Appellants were paid according to a precise unit value system detailed in
       the comp plan. By what standard would a court or a jury determine that the
       company failed to meet its obligation to ‘consider’ commissions earned by
       competitors? What would be the relevant market on which such a duty
       would be predicated? [The employer’s] four major competitors? All
       insurers in the state? Eighty companies nationwide? How would
       ‘damages’ be calculated? By totalling up all yearly commissions earned by
       other agents, averaging them and subtracting the difference? By coming up
       with an ‘industry standard’ factor and increasing [the employer’s] unit
       value ratio by that factor? The nature of the obligation asserted provides no
       rational method for determining breach or computing damages.” (Ladas,
       supra, 19 Cal.App.4th at pp. 770–771.)
       In Scott v. Pacific Gas & Electric Co. (1995) 11 Cal.4th 454, the court upheld the
trial court’s finding that the employer and its employees entered into an implied
contractual agreement not to demote employees without cause. (Id. at p. 465.) It rejected
the defendant’s argument, based on Ladas, that such an agreement was too vague to be
enforced. (Id. at pp. 466–467.) “The Ladas court thus applied the well-established
principle that ‘ “[a]lthough the terms of a contract need not be stated in the minutest
detail, it is requisite to enforceability that it must evidence a meeting of the minds upon
the essential features of the agreement, and that the scope of the duty and limits of
acceptable performance be at least sufficiently defined to provide a rational basis for the
assessment of damages….” ’ ” (Id. at p. 467.) The trial court, having found an implied
agreement not to demote for good cause, only needed to apply the term “good cause” in
accordance with definitions used in wrongful discharge cases. “The term ‘good cause’
‘[e]ssentially … connote[s] “a fair and honest cause or reason, regulated by good faith on
the part of the party exercising the power” ’ [citation], as opposed to one that is ‘trivial,

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capricious, unrelated to business needs or goals, or pretextual ….’ ” (Ibid.) Accordingly,
the court concluded the implied promise not to demote without good cause was not
unenforceably vague. (Ibid.)
       In Brant v. California Dairies, Inc. (1935) 4 Cal.2d 128, the plaintiff, owner of a
dairy ranch, contracted with the defendant for the defendant to provide services
marketing and distributing the plaintiff’s milk. (Id. at p. 129.) The plaintiff and Carver, a
representative of the defendant, negotiated new terms for the contract in a series of
letters. The plaintiff contended the letters resulted in a contract for the defendant to
increase the amount of milk it handled, and the contract could be terminated only on one
year’s notice. The defendant contended the arrangement was for a trial period and the
contract could be terminated if it became burdensome to the defendant. (Id. at p. 130.)
The defendant later refused to distribute the plaintiff’s milk, and the plaintiff sued for
damages for breach of contract. (Ibid.)
       The trial court found there was no meeting of the minds, based on Carver’s
testimony about his interpretation of the contract terms proposed by the plaintiff. The
Supreme Court rejected that testimony and the trial court’s conclusion, stating, “it is now
a settled principle of the law of contract that the undisclosed intentions of the parties are,
in the absence of mistake, fraud, etc., immaterial; and that the outward manifestation or
expression of assent is controlling. This is the ‘objective’ standard, established by the
modern decisions .…” (Brant v. California Dairies, Inc., supra, 4 Cal.2d at pp. 132–
133.) Carver’s testimony about his intention was in direct conflict with the plain
meaning of the written language of the contract and was therefore inadmissible. (Id. at
p. 133.) The court construed the contract according to the plain meaning of the terms
used in the writings that constituted the contract. (Ibid.)
       Here, the parties objectively manifested agreement to the contract by signing the
writing prepared by plaintiff. In the contract, the parties agreed on the services plaintiff
would render; in exchange, defendant would pay plaintiff “6.0 percent of the total amount

                                              10.
collected under this Agreement.” The trial court admitted extrinsic evidence concerning
the intent of the parties in agreeing to the fee provision. It gave the language a reasonable
construction, based on the contract terms and the extrinsic evidence. The trial court
agreed with defendant’s interpretation of the provision; it concluded the 6 percent applied
to “the amount collected by [plaintiff] through her billing and collection efforts and [did]
not include monies paid directly to [defendant] at the office that involved no action by
[plaintiff].” The trial court found the contract’s description of plaintiff’s obligations
supported this interpretation, because it contained nothing regarding plaintiff’s
involvement in “collection of cash, copays or deductibles that a patient paid at the time of
the visit.” The trial court then applied its interpretation of the fee provision and
calculated the amount to which plaintiff was entitled under the contract.
       Plaintiff’s claim that, at the time the contract was executed, she subjectively
intended the fee provision to mean something other than what it objectively appeared to
mean is irrelevant to determining whether the contract was sufficiently certain for
enforcement. Plaintiff objectively manifested agreement to the contract as written. The
trial court construed the contract according to its objectively reasonable meaning.
       As construed by the trial court, the contract was certain. There was no dispute the
parties intended to create a contract; both parties believed they had a contract and sued to
enforce it. The contract provided the basis for determining the existence of a breach: it
set out the services plaintiff was obligated to perform, and the fees defendant was
obligated to pay, in terms definite enough they could be understood and applied. The
trial court was able to construe the alleged ambiguity in the fee provision, based on the
objectively reasonable meaning of the words used. The contract was also certain enough
for the trial court to provide an appropriate remedy for the breach: it was able to
calculate the amount of damages to which plaintiff was entitled based on the unpaid fees.
       “Whether a contract is certain enough to be enforced is a question of law for the
court.” (Patel v. Liebermensch (2008) 45 Cal.4th 344, 348, fn. 1.) Accepting the facts as

                                             11.
found by the trial court, we conclude the contract was certain enough to be valid and
enforceable. The promises made by the parties were contained in a written contract.
They were not so vague and amorphous as to defy reasonable interpretation and
application, like those in Ladas. The trial court was able to interpret them according to
their reasonable meaning. As so interpreted, the contract was sufficiently certain to
enable a court to determine breach and damages. Because the trial court determined facts
that established all elements of plaintiff’s breach of contract cause of action, we conclude
it erred in determining that plaintiff failed to prove that cause of action.
II.    Open Book Account
       Defendant challenges the judgment in favor of plaintiff on an open book account.
It asserts the judgment is improper because the first amended complaint, the operative
pleading at the time of trial, did not contain such a cause of action, even though the
original complaint did. In its statement of decision, the trial court stated: “Plaintiff
asserts causes of action against Defendants for breach of contract, open book account,
account stated and violation of Business and Professions Code § 17200, et seq.” It
appears the trial court mistakenly looked to the original complaint to determine the
causes of action in issue, rather than the first amended complaint.
       “[A]n amended complaint supersedes all prior complaints. [Citations.] The
amended complaint furnishes the sole basis for the cause of action, and the original
complaint ceases to have any effect either as a pleading or as a basis for judgment.”
(State Compensation Ins. Fund v. Superior Court (2010) 184 Cal.App.4th 1124, 1130–
1131.) “It is elementary that a party cannot recover on a cause of action not in the
complaint.” (Griffin Dewatering Corp. v. Northern Ins. Co. of New York (2009)
176 Cal.App.4th 172, 179.) A plaintiff must recover, if at all, on the cause of action
alleged in the complaint, not on some other cause of action disclosed by the evidence.
(Ibid.; Tri-Delta Engineering, Inc. v. Insurance Co. of North America (1978)

                                              12.
80 Cal.App.3d 752, 760.) “ ‘A judgment that goes beyond the issues litigated is void
insofar as it exceeds those issues.’ ” (People v. Toomey (1985) 157 Cal.App.3d 1, 11.)
       A trial court, however, has discretion to permit amendment of a pleading in
furtherance of justice, even during trial. (Garcia v. Roberts (2009) 173 Cal.App.4th 900,
909.) Generally, in determining whether to grant leave to amend during trial, the trial
court considers: “(1) whether facts or legal theories are being changed and (2) whether
the opposing party will be prejudiced by the proposed amendment.” (City of Stanton v.
Cox (1989) 207 Cal.App.3d 1557, 1563.) The trial court may also consider the moving
party’s diligence, and whether the amendment was requested after a long, unexplained
delay. (Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1377.) The trial court’s
decision regarding whether to allow an amendment to conform to the proof is reviewed
for abuse of discretion. (Id. at p. 1378.)
       The minute orders reflecting the proceedings at trial do not contain any indication
the trial court granted a motion to amend to conform to proof, and plaintiff does not
contend it did. Instead, plaintiff asks that the trial court’s decision on an open book
account “should be viewed in the same fashion as the amendment of a lawsuit during
trial.” We decline to do so. The operative first amended complaint did not allege a cause
of action on an open book account. Plaintiff seems to acknowledge she made no motion
to amend to conform to proof. There is no indication the trial court exercised its
discretion to permit or deny amendment. There is no indication it considered the relevant
factors and exercised its discretion to allow amendment. Rather, it appears the trial court
mistakenly believed an open book account was already alleged in the operative first
amended complaint.
       Under these circumstances, plaintiff was limited to recovery on the causes of
action alleged in the first amended complaint. An open book account was not alleged in
that pleading. Consequently, the judgment on the open book account cause of action is
void because it was in excess of the issues before the trial court.

                                             13.
                                     DISPOSITION
       The judgment is reversed with directions to the trial court to vacate the existing
judgment and enter a new judgment in favor of plaintiff and against NMC (the only
remaining defendant named in the first amended complaint) on the cause of action for
breach of contract only, in accordance with the factual findings in the statement of
decision. The parties are to bear their own costs on appeal.

                                                                                 HILL, P.J.
WE CONCUR:

DETJEN, J.

SNAUFFER, J.

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