Court Opinion

ID: 9414840
Source: CourtListenerOpinion
Date Created: 2023-08-02 17:04:10.719425+00
Date Added: 2024-06-11T17:18:38.363833
License: Public Domain

Filed 8/2/23 Eddleman v. Jones CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

SANDRA N. EDDLEMAN                                         2d Civ. No. B315360
et al.,                                                 (Super. Ct. No. 16CV-0417)
                                                         (San Luis Obispo County)
     Plaintiffs and Appellants,

v.

JOANN ROEMER JONES,
Individually and as Trustee,
etc., et al.,

  Defendants and
Respondents;

TOM WAGONER, as
Representative, etc.,

     Intervener and Appellant.
       Sandra Eddleman and her daughter, Madelyn,1 are limited
partners in the Morro Bay Ranch Limited Partnership (MBRLP).
In 2016, they filed this derivative action against JoAnn Roemer
Jones and John W. Jones, Jr., Sandra’s mother and brother, and
the general partners of MBRLP. They claim that JoAnn and
John breached a written limited partnership agreement (LPA) as
well as their fiduciary duties to MBRLP by, inter alia, operating
a ranching business on MBRLP’s property without paying rent,
the result of which enriched themselves at MBRLP’s expense.
Plaintiffs also sought an order dissolving MBRLP.
       Following a bench trial, the court entered judgment in
favor of defendants on all claims. Sandra and Madelyn appeal,
asserting that the trial court erroneously admitted parol evidence
to vary the terms of the LPA, and that it erred in finding
plaintiffs were not damaged by the general partners’ performance
of their contractual and fiduciary duties. We affirm.
                    FACTUAL BACKGROUND
       A. The Jones family and Morro Bay Ranch
       Morro Bay Ranch comprises approximately 1,378 acres,
straddling State Highway 1 east of the city of Morro Bay,
California. The ranch has been family-owned for more than 100
years. In the 1950’s, Artilla Bonetti, JoAnn’s grandmother, asked
JoAnn and her husband to move to the ranch and take over its
operation; JoAnn has lived ever since in the historic ranch adobe.
Sandra and John both grew up on the ranch but later took
different paths. After attending college, Sandra moved out of
state when she married Dan Eddleman in 1992. John returned

      1 Because the plaintiffs and the individual defendants

share last names, we refer to them by their first names. No
disrespect is intended.

                                2
to the ranch after he attended college, working there off and on
while he pursued a career as a professional rodeo performer and
occasional movie stunt man. John married Sheree, built a house
on the ranch, and raised two daughters there (defendants
Shannon Jones and Katie Jones Pascoe).
       When JoAnn and her husband moved to the ranch in 1957,
its primary business was a dairy operating under the name
Roemer Jones Dairy (RJD). They incorporated RJD in
approximately 1960, and thereafter all operations on the ranch –
the dairy as well as farming and ranching activities – were
conducted through that entity. By the early 1990’s, JoAnn and
her husband concluded that the dairy was no longer profitable,
and over time they sold their dairy cattle and purchased beef
cattle to graze on the ranch.
       Historically, family members who worked on the ranch did
not pay rent while living there. JoAnn testified that she and her
husband did not pay rent after they moved to the ranch to take
over the dairy operation. John and Sheree paid to build a home
on the ranch, and thereafter lived there rent-free while working
at the ranch. More recently, John’s daughter Katie and her
husband spent $400,000 of their own money to convert an unused
dairy barn into a home. They do not pay rent to MBRLP, and
Katie’s husband works with John to manage the ranch. Sandra
testified that she did not pay rent during the time she lived at the
ranch before marrying Dan Eddleman.
       B. Formation of MBRLP
       In the mid-1990’s, JoAnn decided that it was time to turn
the ranch over to the next generation. At that time, ownership of
the ranch was shared by family members as tenants in common.
The largest single interest was held by JoAnn as trustee of the

                                 3
Artilla Bonetti Trust, a trust established by JoAnn’s
grandmother. JoAnn also inherited a substantial interest in the
ranch in her own right, which she had inherited from her mother,
Vivian Roemer. Prior to her death, Vivian Roemer had also
gifted small interests in the ranch to John and Sandra.
       JoAnn consulted her attorneys, James and Brian Wagner,
to determine how best to ensure continued family ownership of
the ranch. JoAnn made clear her intentions: she wanted the
ranch to remain in the family, she wanted John to manage the
ranch; she wanted to ensure that Sandra’s husband Dan
Eddleman take no part in operating the ranch; and she wanted to
avoid a situation where, on her death, her heirs would have to
sell all or part of the ranch in order to pay estate taxes.
       At a meeting on January 11, 1994, James Wagner
recommended that JoAnn, John, and Sandra create a “family
partnership” and transfer Morro Bay Ranch to that entity. This
“would provide a vehicle for ease of management,” “would
constitute a hedge on protecting the values in the event of death
because of the discounts available for interests in family held
businesses,” and “would give a vehicle for making gifts of
interests in the partnership as opposed to interests in real
property.” (Underscoring omitted.)
       The Wagners prepared a draft limited partnership
agreement and circulated it among the family members. The
agreement was sent to Sandra on June 9, 1994. The cover letter
accompanying the draft set out the purposes of the proposed
limited partnership: “to provide a management vehicle for the
protection of the property” and to provide “a vehicle for gifting of
partnership interests” to “simplify the making of gifts by [JoAnn]
as time goes on.” Sandra received the draft agreement and,

                                 4
through her mother and brother, passed comments to the
attorneys.
       JoAnn suggested John drive Sandra to meet with the
attorneys so Sandra could pose questions in person. The
agreement went through additional drafts to meet Sandra’s
concerns. Eventually all parties found the agreement
satisfactory and signed it on November 12, 1995. JoAnn and
John are identified in the LPA as the general partners. JoAnn,
John, and Sandra transferred their interests in the ranch to
MBRLP in exchange for limited partnership interests. The ranch
was appraised as part of the transfer to the limited partnership.
The entire ranch was valued at $2,738,000; the value of Sandra’s
tenancy in common interest that she transferred to MBRLP
amounted to $321,866.
       After formation of MBRLP, JoAnn made annual gifts of her
limited partnership interest – that is, the interest she held in her
own right rather than as the trustee of the Artilla Bonetti Trust –
to John, Sandra, and to John and Sandra’s daughters. These
gifts continued annually until 2012, at which time JoAnn had
gifted her personal interest in MBRLP.
       C. Operation of the Limited Partnership
       JoAnn and John assumed the roles of general partner.
RJD was still in existence, although it was no longer operating a
dairy at the ranch. JoAnn and John both testified, and the trial
court found, that all operations on the ranch were conducted
through RJD, and that continued after formation of the limited
partnership. RJD had no lease or other agreement with MBRLP.
It did not pay rent to the limited partnership for use of the ranch;
instead, RJD paid the property taxes and professional fees
incurred annually by MBRLP. In addition, RJD paid virtually all

                                 5
the operating expenses incurred by the ranch, for everything
from electricity to liability insurance. RJD also took
responsibility for maintenance of the ranch and the equipment
and facilities located there. RJD’s financial statement for 2019-
2020 shows total rental income of $159,850, as well as farming
income of $51,709.95. While it is true that these sums were
received by RJD, rather than MBRLP, the trial court found
credible the report prepared by defendants’ forensic accountant,
Susan Thompson, that showed RJD paid the ranch’s operating
expenses from this income and reinvested any profits back into
the ranch in the form of capital improvements.2
       In approximately 2012, JoAnn and John became concerned
that if John were to die, Sheree would be faced with the loss of
the home where she and John had lived since 1983. John and
JoAnn consulted the Wagner firm, who suggested that the
limited partners enter into an agreement that would allow
Sheree to remain in the house, rent-free, in the event of John’s
death.
       The attorneys prepared a draft lease agreement affording
Sheree a life estate in the home and sent it to Sandra for her
consideration. When she received this proposal, Sandra testified
that she grew concerned. She and her husband had
acquaintances who described a life estate on a ranch they owned
as a “nightmare.” Sandra was also concerned that the tenancy
for Sheree would extend beyond the sunset date of the limited
partnership, and that she was being set up to be disinherited
from any further interest in MBRLP. She declined to enter into

     2 In addition to money it received from RJD, MBRLP also

earned income of its own: For example, MBRLP reported gross
rents of $46,400 on its 2019 tax return.

                                6
any agreement for Sheree’s benefit, which led to hard feelings
between her and her mother and brother. Sandra had Tom Filz,
an attorney in Montana, request financial information about
MBRLP from the Wagner firm. It was only at this time, Sandra
testified, that she learned that RJD, not MBRLP, was operating
the Morro Bay Ranch, and that neither John, JoAnn, or RJD was
paying rent to MBRLP.
       D. The Trial and Judgment
       In 2016, Sandra and Madelyn filed this derivative action3
in San Luis Obispo County Superior Court, along with
malpractice and conspiracy claims against the Wagners and their
law firm.4 Prior to trial, plaintiffs filed a motion in limine for an
order barring defendants from introducing parol evidence
“concerning operation of the partnership real property before the
partnership agreement went into effect” to interpret the LPA.
The motion was based on a boilerplate integration clause in the
LPA and on Code of Civil Procedure5 section 1856, subdivisions
(a) and (d).6

      3Shortly before trial, Sandra and Dan decided to divorce,
and Dan was granted leave to intervene as a plaintiff. Dan died
during the pendency of this appeal, and his personal
representative was substituted as an appellant. For simplicity of
reference, we refer to Dan, rather than his personal
representative, as an appellant.

      The Wagners and their law firm were granted summary
      4

judgment in January 2020.
      5All statutory references are to the Code of Civil Procedure
unless otherwise stated.
      6   These subdivisions of section 1856 read as follows:

                                   7
       Defendants opposed the motion, arguing that the LPA was
“ambiguous or uncertain,” and that, in order to interpret the
parties’ agreement, “the Court must consider the historical
circumstances of the Ranch and the circumstances at the time of
formation of MBRLP. Absent this information, the Court will not
be able to ascertain the true intent of the parties in executing the
[LPA].” The trial court denied the motion, stating, “I just think
the information regarding how this limited partnership came into
being is incredibly important for the Court to determine
ultimately what you want me to determine in this case. So I
believe the background and history [are] absolutely important.”
       Trial began in October 2020 on causes of action for breach
of the LPA, breach of fiduciary duties, and for dissolution of
MBRLP. The trial court found that “[t]he General Partners of
the MBRLP have not breached their contractual or fiduciary
duties in any manner that caused harm to the MBRLP,” and
awarded no damages on the causes of action for breach of
contract and breach of fiduciary duties. The court denied
plaintiffs’ request to dissolve MBRLP “as it would defeat the
purposes of the Partnership’s formation,” and because the court
found it is “reasonably practicable for the partners of the MBRLP
to conduct the MBRLP in conformity with the LPA.”

    “(a) Terms set forth in a writing intended by the parties as a
final expression of their agreement with respect to the terms
included therein may not be contradicted by evidence of a prior
agreement or of a contemporaneous oral agreement.”
    “(d) The court shall determine whether the writing is intended
by the parties as a final expression of their agreement with
respect to the terms included therein and whether the writing is
intended also as a complete and exclusive statement of the terms
of the agreement.”

                                 8
       Regarding the parties’ intent at the time they formed
MBRLP, the trial court deemed JoAnn’s testimony “credible and
persuasive as to why she wanted to create a mechanism to
protect her family from outside ownership of the Ranch and to
prevent her loved ones from losing the Ranch at her passing.”
The court also found “[James] Wagner’s testimony credible as to
the formation of the MBRLP” as a vehicle for John to manage the
ranch and to preserve his ability to live on the ranch with his
family.
       The trial court did not credit Sandra’s testimony that
because of her learning disability, she did not understand the
LPA when she signed it. The court also considered that Sandra
“knew for almost twenty years that the Ranch continued its
operations with essentially no changes, yet she asked no
questions, and demanded no information,” until presented with
John’s request that his wife be allowed to stay in their home in
the event he predeceased her.
       The trial court concluded that the limited partners of
MBRLP “ ‘knew the reasons for its formation and did not want to
change the way the Ranch had been operating for decades, i.e.,
all finances would go through RJD, no rent would be charged to
partners for living and working on the Ranch, and RJD would
pay the property taxes, insurance and professional fees.’ ”
       The trial court was not persuaded by the testimony of
plaintiffs’ expert witnesses regarding alleged damage to MBRLP.
Joseph Torzewski and Tobin Reiff testified that MBRLP had been
damaged by JoAnn and John’s failure to collect rent from RJD.
Torzewski calculated the annual fair market rental value of the
ranch at $440,000 as of 2019. The court, however, found the
experts’ “calculations and theories as to the alleged damages

                               9
suffered by the MBRLP and the Plaintiffs neither credible nor
supported by the evidence.”
      The trial court found “more credible the testimony from,
and analysis conducted by, defense forensic accounting expert
Susan Thompson.” Thompson presented an analysis of RJD’s
and MBRLP’s financial records showing that MBRLP was in the
same position financially as it would have been had RJD not
operated the ranch. Thompson also testified, and the court
found, that John had reinvested RJD’s proceeds back into the
ranch operations. The court agreed with plaintiffs that JoAnn
and John had not complied with a provision of the LPA requiring
them to disseminate annual financial statements but found that
the error was not intentional and that the plaintiffs had not been
harmed.
      Plaintiffs filed a motion for new trial on the grounds of
inadequate damages. The trial court denied the motion, stating,
“The Court concluded that the Limited Partnership’s general
partners did not breach their contractual or financial duties in a
manner that harmed the Partnership. Because the Court did not
find the Jones Defendants liable for breach, it did not take the
next step of awarding Plaintiffs any damages. [¶] Plaintiffs’
motion is denied.” 7

      7Dan Eddleman filed a separate notice of appeal on
September 29, 2021, the day the new trial motion was denied.
His notice of appeal was timely pursuant to California Rules of
Court, rule 8.108(b)(1)(A) and (g)(1).

                                10
                             DISCUSSION
       A. The trial court properly admitted parol evidence to
interpret the LPA.
       Plaintiffs’ first contention is that the LPA is a completely
integrated agreement, and that the trial court erred by admitting
parol evidence to interpret the LPA. In plaintiffs’ words, “[T]he
trial court tossed aside the basic terms of the parties’ written
partnership agreement in favor of an alleged contemporaneous
oral agreement that directly contradicted those written terms.”
According to plaintiffs, section 1856, the relevant portions of
which are quoted above, barred the trial court from considering
extrinsic evidence to interpret the LPA. We reject plaintiffs’
interpretation of that statute. Far from introducing new terms
that varied the LPA, or enforcing an inconsistent agreement
made prior to the LPA, the court properly admitted and
considered evidence showing how the parties intended JoAnn and
John to operate the ranch.
       Plaintiffs’ argument ignores subdivision (g) of section 1856,
which reads as follows: “This section does not exclude other
evidence of the circumstances under which the agreement was
made or to which it relates, as defined in Section 1860, or to
explain an extrinsic ambiguity or otherwise interpret the terms of
the agreement, or to establish illegality or fraud.” Thus, even if
the LPA was intended as a “complete and exclusive statement of
the terms of the agreement” within the meaning of section 1856,
subdivision (d), the trial court was permitted to consider extrinsic
evidence to interpret the language agreed on by the parties.
       It means little for plaintiffs to insist that the LPA contains
the “complete and exclusive statement of the terms of the
agreement” where the parties disagree on the meaning of that

                                 11
agreement and a court is called on to determine whether one
party is in breach. “In order to determine initially whether the
terms of any written instrument are clear, definite and free from
ambiguity the court must examine the instrument in the light of
the circumstances surrounding[] its execution so as to ascertain
what the parties meant by the words used.” (Estate of Russell
(1968) 69 Cal.2d 200, 208-209, italics omitted.)
       "The test of admissibility of extrinsic evidence to explain
the meaning of a written instrument is not whether it appears to
the court to be plain and unambiguous on its face, but whether
the offered evidence is relevant to prove a meaning to which the
language of the instrument is reasonably susceptible." (Pacific
Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d
33, 37.) If the trial court decides, after receiving the extrinsic
evidence, the language of the contract is reasonably susceptible to
the interpretation urged, the evidence is admitted to aid in
interpreting the contract. (Winet v. Price (1992) 4 Cal.App.4th
1159, 1165.) “The threshold issue of whether to admit the
extrinsic evidence–that is, whether the contract is reasonably
susceptible to the interpretation urged–is a question of law
subject to de novo review.” (Founding Members of Newport Beach
Country Club v. Newport Beach Country Club, Inc. (2003) 109
Cal.App.4th 944, 955.)
       Our review of the LPA leads us to conclude that the
language describing the powers and duties of the general
partners required interpretation by the court. It was proper for
the trial court to admit extrinsic evidence for that purpose.
       Section 1.4(a) of the LPA states that the purpose of MBRLP
“is to acquire, own, ranch, develop, manage and otherwise
operate and deal with part or all of the Project, including, without

                                12
limitation, obtaining financing and refinancing for the above
purposes, selling, exchanging, transferring, or otherwise
disposing of all or any part of the Project and investing and
reinvesting any funds held in reserve pursuant to the terms of
this Agreement.” In furtherance of these purposes, section 1.4(c)
allows MBRLP to “do all things necessary, in the opinion of the
General Partners and not prohibited by the Agreement or any
law, to accomplish the purpose of the Partnership.” Section V of
the LPA invests the general partners with “ the power and
authority to take such action from time to time as they may deem
to be necessary, appropriate, or convenient in connection with the
management and conduct of the business and affairs of the
Partnership” (id., § 5.1), including the power to “[a]cquire
property, including real or personal property” (id., § 5.1(a));
“[d]ispose of Partnership property (except Partnership real
property) in the ordinary course of business of the Partnership”
(id., § 5.1(c)); “[e]xecute any and all agreements, contracts, leases,
documents, certifications, and instruments necessary or
convenient in connection with the management, maintenance,
and operation of the Partnership or in connection with managing
the affairs of the Partnership” (id., § 5.1(e)); and pay “all
operation expenses incurred in the operation of the Partnership”
(id., § 5.1(h)).
        Section 5.3(a)(1) of the LPA bars the general partners from
“any activity that is not consistent with the purposes of the
Partnership as set forth in this Agreement.” Although plaintiffs
assert that JoAnn and John breached the LPA by failing to pay
the fair rental value of partnership property used by themselves
or by RJD, the LPA is silent on that topic.

                                 13
       The trial court could admit parol evidence to interpret this
language in order to put the trial court “in the position of those
whose language [s]he is to interpret.” (§ 1860.) The court
properly resorted to extrinsic evidence to determine how, at the
time the partnership was formed, the parties intended the
general partners to exercise the discretionary powers afforded
them in the LPA.
       Where “[t]he proper interpretation of the parties' written
agreement turns not only on the language of the agreement but
on the proper resolution of conflicting extrinsic evidence and
upon an evaluation of witness credibility,” “we are bound by the
trial court's construction of the agreement if it is reasonably
susceptible to that interpretation." (Glendale Fed. Sav. & Loan
Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal. App.3d 101,
134; see also City of Hope National Medical Center v. Genentech,
Inc. (2008) 43 Cal.4th 375, 395 [“when, as here, ascertaining the
intent of the parties at the time the contract was executed
depends on the credibility of extrinsic evidence, that credibility
determination and the interpretation of the contract are
questions of fact”].) Because the trial court both considered
extrinsic evidence to determine the parties’ intent and made
specific findings regarding the credibility of the testimony of
JoAnn, Sandra, and James Wagner, we defer to the trial court’s
interpretation of the LPA provided that the LPA was “reasonably
susceptible” to that interpretation. We conclude it was.
       Defendants asked the trial court to consider evidence of the
parties’ intent when they formed MBRLP to help the court
understand the parties’ expectations of how JoAnn and John
would manage MBRLP. The parol evidence that the court
considered was limited to that purpose. First, the court admitted

                                14
evidence that JoAnn was motivated to form MBRLP to keep the
ranch in the family and to ensure that, upon JoAnn’s death, it
would not have to be sold in order to pay estate taxes. Second,
JoAnn testified that she wanted to ensure that John would be
able to manage the ranch without interference from Dan
Eddleman or others outside the Jones family. Third, the court
admitted and considered evidence of the historical practice
regarding the role of RJD in operating the ranch, as well as the
well-documented history of members of the family who worked at
the ranch not paying rent to live there.
       The trial court’s conclusions reflect the limited scope of its
inquiry into the parties’ intent. The court did not conclude, as
plaintiffs argue, that the LPA waived the general partners’
fiduciary duties imposed by law. Instead, the court determined
that JoAnn and John operated the ranch in a manner that did
not cause damage to Sandra and Madelyn. For example,
referring to John’s daughter Katie and her husband paying
$400,000 to convert an unused barn into a home, the court
concluded, “The dairy barn upgrade no doubt increased the value
of the Ranch and benefited the MBRLP. The court finds this
‘rent free’ practice consistent with the historic pattern of family
members residing on the Ranch, using their own money to build
new homes or to increase the value of an existing home, yet not
being required to pay rent. Indeed, paying $400,000 to upgrade a
dairy barn owned by another entity is hardly a ‘rent free’
proposition, and the Court finds no harm to the MBRLP.”

                                 15
       B. The trial court correctly found plaintiffs suffered no
damage from a breach of either the LPA or the general partners’
fiduciary duties.
       Plaintiffs’ next contention is that the trial court erred by
concluding that they suffered no damage from a breach by JoAnn
and John of either the LPA, or of JoAnn and John’s fiduciary
duties as the general partners of MBRLP. Plaintiffs argue that
they were damaged by the failure of RJD to pay so-called “fair
market rent” to MBRLP in exchange for its use of the ranch, and
that MBRLP was not profitable because of mismanagement by
JoAnn and John. Damage is an element of the cause of action for
both breach of contract (Richman v. Hartley (2014) 224
Cal.App.4th 1182, 1186) and breach of fiduciary duties (Knox v.
Dean (2012) 205 Cal.App. 4th 417, 432-433).
       “ ‘Whether the defendant breached [a fiduciary] duty
towards the plaintiff is a question of fact.’ ” (Marzec v. Public
Employees’ Retirement System (2015) 236 Cal.App.4th 889, 915,
italics omitted.) Whether a party’s performance under a contract
amounts to a breach of that contract is also a question of fact.
(US Ecology, Inc. v. State of California (2001) 92 Cal.App.4th 113,
136; Cahill Bros., Inc. v. Clementina Co. (1962) 208 Cal.App.2d
367, 380.) We review the trial court’s finding that plaintiffs were
not damaged for substantial evidence. “The substantial evidence
standard of review is applicable to appeals from both jury and
nonjury trials.” (Whitney v. Montegut (2014) 222 Cal.App.4th
906, 912.)
       Under the substantial evidence standard, “[w]hen a trial
court’s factual determination is attacked on the ground that there
is no substantial evidence to sustain it, the power of an appellate
court begins and ends with the determination as to whether, on

                                16
the entire record, there is substantial evidence, contradicted or
uncontradicted, which will support the determination, and when
two or more inferences can reasonably be deduced from the facts,
a reviewing court is without power to substitute its deductions for
those of the trial court.” (Bowers v. Bernards (1984)
150 Cal.App.3d 870, 873-874.) An appellate court is without
power to judge the effect or value of the evidence, weigh the
evidence, consider the credibility of witnesses, or resolve conflicts
in the evidence or in the reasonable inferences that may be
drawn therefrom. (Leff v. Gunter (1983) 33 Cal.3d 508, 518.) We
apply the usual rule on appeal that the trier of fact is not
required to believe the testimony of any witness, even if
uncontradicted. (Sprague v. Equifax, Inc. (1985) 166 Cal.App.3d
1012, 1028.) This applies to expert as well as to lay witnesses.
(People ex rel. Brown v. Tri-Union Seafoods, LLC (2009) 171
Cal.App.4th 1549, 1567.)
             1. Fair market rent
       Plaintiffs’ contention that MBRLP was damaged by the
general partners’ failure to collect a “fair” rent from RJD is based
on the testimony of their expert witnesses Torzewski and Reiff.
Those experts’ conclusion was that the fair market rental value of
the Morro Bay Ranch was $440,000 at the time of trial. The trial
court concluded that plaintiffs’ experts’ “calculations and theories
as to the alleged damages suffered by the MBRLP and the
Plaintiffs [are] neither credible nor supported by the evidence.
The Court is not persuaded that a ‘fair market rent’ approach is
appropriate in this case, given the historic operations of the
Ranch, including after formation of the MBRLP.”
       Torzewski’s testimony established several flaws in his
methodology. First, Torzewski testified that the fair market

                                 17
rental value for the ranch was premised on “a hypothetical lease
between a willing tenant and a willing landlord, and what would
be the market rental rate for the property as a whole.” However,
Torzewski also testified that properties such as Morro Bay Ranch
“don’t generally rent as a whole. They rent more piecemeal. And
then it doesn’t incorporate everything.” The exception to that
rule is rentals from “one family member to another or one entity
to another.” In short, plaintiffs’ expert was basing his
determination of fair market rent–the value paid by a willing
tenant to a willing landlord–on a market that did not exist,
except for transactions between family members.
       Torzewski’s determination of the “fair market rent” paid by
a hypothetical tenant of Morro Bay Ranch was no more
convincing. He calculated the “fair market rent” for Morro Bay
Ranch by applying a capitalization rate to the appraised value of
the ranch and adding to that “net operating income” figure
estimates for property taxes and other operating expenses. The
problem with this methodology is that the ranch never generated
operating income in the amounts Torzewski calculated. For
example, under Torzewski’s model, the ranch should have earned
$210,000 in “net operating income” in 1995 on annual rent of
$228,000.
       James Wagner testified, however, that at that time MBRLP
was formed, the ranch was losing money and had to be subsidized
by JoAnn and John. Using the same model, Torzewski
determined that the “fair rental value” of the ranch in 2019 was
$440,000 per year, a sum which greatly exceeds the combined net
income of both RJD and MBRLP. Torzewski was unable to
explain why a tenant would pay more in rent than he could earn
by operating the ranch, other than to say that “revenues being

                               18
generated by the operations at the ranch aren’t necessarily
relevant” to the rents he calculated. Plaintiffs’ other damages
expert, Reiff, testified that there was no evidence that the Morro
Bay Ranch had ever generated sufficient income to pay $440,000
in annual rent. In other words, plaintiffs’ damage theory was
that a hypothetical tenant would have paid MBRLP rent in an
amount greater than it could possibly earn by operating the
ranch, and that JoAnn and John breached their fiduciary duties
by not collecting that amount of rent from RJD. It is not a breach
of fiduciary duties for JoAnn and John not to charge RJD rent in
an amount MBRLP could not earn in the relevant market.
       Plaintiffs argue that, even if the trial court found
Torzewski’s and Reiff’s testimony unpersuasive, “there was other
evidence of fair market rent that was not disputed by defendants
or criticized by the court.” Our review is limited to whether there
was substantial evidence supporting the trial court’s conclusion
that plaintiffs’ “fair market rent” approach was inapplicable to
the facts of this case. Having concluded that there is substantial
evidence supporting the trial court’s conclusion, we do not
consider whether there was other evidence that, if believed,
might have led the court to reach a different result. (Bowers v.
Bernards, supra, 150 Cal.App.3d at p. 874.)
       Plaintiffs rely on Enea v. Superior Court (2005) 132
Cal.App.4th 1559 in support of their contention that JoAnn and
John breached their fiduciary duties owed to MBRLP. The
plaintiff in Enea held a one-third interest in a partnership that
owned a commercial office building. Daniels, another member of
the partnership, occupied an office in the partnership’s building
and paid “significantly less than fair market value” for the space.
When Enea confronted Daniels about paying less than market

                                19
rent, Enea was “disassociated” from the partnership. The trial
court granted Daniels’ summary adjudication of Enea’s cause of
action for breach of fiduciary duties, but the Court of Appeal
issued a writ of mandate directing the trial court to vacate its
order. The “sole question presented” in Enea is whether the
defendants could lease partnership property to themselves “at
less than it could yield in the open market.” (Enea, at p. 517.)
       Enea is inapplicable. Unlike the office building at issue in
Enea, the testimony of plaintiffs’ own experts established that
there is no established rental market for properties similar to
Morro Bay Ranch. Another distinction is that JoAnn and John
reinvested the income from RJD back into the ranch for the
benefit of MBRLP. In that regard JoAnn and John’s roles are
distinguishable from that of Daniels, who did not invest his
windfall for the partnership’s benefit. Finally, and again unlike a
mere tenant, John actually manages and maintains MBRLP
property, the value of which has increased significantly as a
result of that management.
             2. Mismanagement by JoAnn and John
       In the alternative, plaintiffs argue that they were damaged
by JoAnn and John’s mismanagement of the ranch. As plaintiffs
argue in their brief, “If RJD were truly unable to derive a profit
from its operation of the Ranch while getting a sweetheart deal
on rent, then RJD was either incompetently managed or was
managed with intent not to make money because John and
Sherrie wanted nothing more than to fund their family’s lifestyle
and hobbies on the Ranch. In either case, the Ranch should have
been leased to a third party if RJD was unwilling to pay fair
market rent.”

                                20
       This contention fails for three reasons. First, as discussed
above, plaintiffs’ expert witnesses made clear that it was entirely
speculative that there was a third party who would pay “fair
market rent” for the ranch. It is not a breach of fiduciary duties
for JoAnn and John to fall short of earning returns that were
unavailable in the market. Second, far from being
“incompetently managed,” the evidence shows that the fortunes
of MBRLP improved markedly under the management of the
general partners. Plaintiffs’ experts valued the ranch at
$11,700,000 as of December 31, 2019, a significant increase in its
value at the time MBRLP was formed. Third, there is no
evidence of incompetent management by John; in fact, the
evidence is that he was a good manager. Plaintiffs’ expert,
Torzewski, testified that the ranch was well-maintained and kept
in good repair. He was unable to identify “any of the property
that [he] felt was being under-utilized,” possibly because
plaintiffs did not ask him to evaluate whether the ranch was
being operated “in a maximally productive fashion.” Sandra
testified that, as far as she observed, John had a “work ethic, and
he deserved everything he ever wanted,” and believed that “[her]
mom and brother were running the ranch the best they could,”
even if it was not making enough money to pay distributions to
the limited partners.
       The evidence also belies the second part of plaintiffs’
contention, namely, that the ranch was “managed with an intent
not to make money.” To the contrary, as James Wagner testified,
the ranch was not profitable long before MBRLP was formed.
“There was very little income being generated by the ranch, and
John was using his own money to help operate it. And JoAnn
was having to help subsidize it as well.” According to James

                                21
Wagner, the fact that “the ranch did not operate at a profit” was
“very clearly discussed” with Sandra during their meeting
regarding forming a limited partnership.
       The need to subsidize the ranch continued after MBRLP
was formed. MBRLP’s balance sheet for the year ending
December 31, 2017, showed accrued loans from JoAnn in excess
of $646,000. At trial, defendants’ expert witness, Thompson,
presented an analysis showing that loans to MBRLP from the
general partners exceeded $1 million as of 2020. Far from being
bled by JoAnn and John, their money was keeping MBRLP
afloat.
       Defendants introduced evidence of JoAnn and John’s efforts
on behalf of the ranch that went beyond what was required under
the LPA. For example, although the last sentence of section
5.8(d) of the LPA provides that “[n]one of the Partners shall be
obligated to make any loan or advance to the Partnership,” the
evidence shows that JoAnn advanced significant funds to
MBRLP. Section 5.6 of the LPA also provides that the general
partners are “not obligated to devote full time to the affairs of the
Partnership,” yet the evidence shows that John was a full-time
manager. Finally, although section 5.8(c) of the LPA authorizes
the general partners to receive compensation for services
performed for the partnership, neither JoAnn nor John ever took
advantage of this provision of the LPA.
       Finally, the evidence does not support plaintiffs’ contention
that the general partners operated the ranch to fund their
respective “lifestyle and hobbies.” To the extent that John’s rodeo
activity constitutes a “hobby,” his unrebutted testimony was that
any income from rodeo activities and movie stunt work was
reinvested in the ranch. Plaintiffs did not meet their burden to

                                 22
prove that the general partners pursued their individual
interests at the expense of the interests of MBRLP or the limited
partners, or that any lack of profitability of the ranch was due to
mismanagement on the part of the general partners.
      C. Dissolution of MBRLP
      Plaintiffs’ eighth cause of action in their third amended
complaint was a request that the trial court order the dissolution
of MBRLP. Corporations Code section 15908.02, subdivision (a),
provides, in pertinent part, that on request by a partner the trial
court “may order dissolution of a limited partnership if it is not
reasonably practicable to carry on the activities of the limited
partnership in conformity with the partnership agreement.”
      The trial court denied this request: “Here, the Court finds
that based upon the evidence, the Ranch is still operating in
conformance with the intended purposes stated in the LPA,
which does not require that it operate at a profit or disseminate
distributions to the limited partners. As general partners, the
evidence showed that John and JoAnn had the right to manage
the Ranch the way it had historically been run, or even to make
changes to the operation.” For those reasons, the court found
“that there is no reason to dissolve the MBRLP at this juncture,
and Plaintiffs have not met their burden of establishing that
dissolution is appropriate per [Corporations Code] Section
15908.02.”
      An action for judicial dissolution of a partnership is an
equitable action. (Oliker v. Gershunoff (1987) 195 Cal.App.3d
1288, 1306.) We review the trial court’s exercise of its equitable
powers for abuse of discretion. (Robin v. Crowell (2020) 55
Cal.App.5th 727, 738.) “The appropriate test for abuse of
discretion is whether the trial court exceeded the bounds of

                                23
reason. When two or more inferences can reasonably be deduced
from the facts, the reviewing court has no authority to substitute
its decision for that of the trial court.” (Shamblin v. Brattain
(1988) 44 Cal.3d 474, 478-479.)
       The trial court properly refused to order dissolution of
MBRLP. Substantial evidence supports the court’s findings that
MBRLP may continue to operate in conformity with the LPA.
These findings include that neither JoAnn nor John breached
either the LPA or their respective fiduciary duties as general
partners of MBRLP. Far from enriching themselves at the
expense of MBRLP, the evidence shows that John reinvested the
proceeds of operations back into the ranch, that JoAnn loaned
MBRLP significant amounts of money, and that neither one took
advantage of the provision in the LPA that allowed the general
partners to be paid for their work on behalf of the partnership.
The evidence also confirms that the general partners managed
the ranch in a manner that significantly enhanced the value of
the property, while maintaining family ownership according to
JoAnn’s wishes. Plaintiffs’ experts acknowledged that the ranch
assets were well maintained and were utilized appropriately.
Given those facts, it necessarily follows that plaintiffs failed to
meet their statutory burden of showing that it was impracticable
to carry on the activities of MBRLP in conformity with the LPA.
The court’s exercise of its discretion not to dissolve MBRLP did
not “exceed the bounds of reason,” and we will not set it aside.

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                            DISPOSITION
             The judgment is affirmed. Defendants are to recover
their costs on appeal.
             NOT TO BE PUBLISHED.

                                    GILBERT, P. J.
We concur:

             YEGAN, J.

             BALTODANO, J.

                               25
                     Tana L. Coates, Judge

           Superior Court County of San Luis Obispo

                ______________________________

      Ferguson Case Orr Paterson, Wendy C. Lascher and John
A. Hribar for Plaintiffs and Appellants Sandra N. Eddleman and
Madelyn Lue Eddleman.
      The Law Office of Greg May and Greg May for Appellant
Tom Wagoner, as Representative of the Estate of Warren Dan
Eddleman.
      Tardiff Law Offices, Neil Tardiff; Andre, Morris & Buttery,
James C. Buttery and Elizabeth A. Culley for Defendants and
Respondents Joann Roemer Jones, individually and as Trustee of
the Artilla Bonetti Trust; John W. Jones, Jr., Shannon Jones and
Katie Jones Pascoe.
      Glick Haupt Marino and Michael D. Haupt for Defendant
and Respondent The Morrow Bay Ranch Limited Partnership.

                               26