This is the second appeal in plaintiff's action against defendant Daniel Boatwright, which alleged numerous violations of the Political Reform Act of 1974 (Gov. Code, § 81000 et seq.;
THE FACTS AND THE LAWSUIT
a. The facts
Viewed in the light most favorable to the judgment, the evidence was as follows. In October 1973, Anthony Ujdur acquired an option to purchase approximately 17 acres located near the intersection of Treat Boulevard and Bancroft Road in Contra Costa County. The property was zoned agricultural and designated as single family residential on the county's general plan, and previous applications for its commercial development had been denied.
Ujdur's acquisition of the option was financed by Ujdur himself and several others: Ygnacio Homes, Inc. (Ujdur's corporation), Anthony Menosse, Joseph Ancona, and Anthony or Ila Shelton. In a written agreement dated October 16, 1973, Ujdur assigned the option to the following, in the share amounts indicated: Ancona, six-sixteenths; Ygnacio Homes, Inc., one-sixteenth; Anthony and Zita Ujdur, four-sixteenths; Forest Simoni, three-sixteenths; Anthony Menosse, one-sixteenth; and Ila Shelton, one-sixteenth. In the fall of 1974, the property was rezoned to permit commercial development.
In December 1974, a written agreement was made between "Countrywood Shopping Center Associates, a partnership, as owners," and Hoffman Construction Company, in which Hoffman agreed to assist in obtaining financing for a shopping center on the Treat Boulevard property and to construct the center. The agreement was signed by Ancona, Anthony Ujdur, Menosse, Simoni, and Arthur Shelton for the partnership. Kenneth Hoffman, president of the construction company, was to receive one share of an owner's interest in Countrywood. Hoffman also agreed to loan the partnership nearly $700,000 to enable them to exercise the option and begin development. Ancona and Ujdur signed a promissory note in that amount on behalf of Countrywood. As security, Hoffman required a deed of trust on the property and a personal guarantee of repayment by each partner; guarantees were signed by Ujdur, Ancona, Simoni, Menosse, and Ila Shelton.
In January 1975, Ancona, Ujdur, Simoni, Menosse, Ila Shelton, and Ygnacio Homes, Inc., by Ujdur, signed a written partnership agreement. It stated that the partnership had been operating under an oral agreement since October 1973, and specified the partnership interest of each consistent with their written agreement of October 1973. The agreement provided that
In February 1975, a partnership statement was recorded as required by Corporations Code section 15010.5. Listed as "all the partners of Countrywood Shopping Center Associates" were Ancona, Ujdur, Simoni, Ila Shelton, and Ygnacio Homes, Inc. Each listed partner signed the statement and a declaration under penalty of perjury that the statement was true. The partnership agreement was amended as of June 8, 1976, to add Hoffman as holder of a one-seventeenth share.
Relations among the partners, and in particular between Ancona and Ujdur, were strained almost from the beginning of their association. In July 1975, Ujdur was removed as managing partner. In December 1975, Ancona offered to sell two of his shares to defendant. Defendant refused the offer because he did not want to become partners with Ujdur. In mid-1976, he changed his mind. He purchased a two-year option on the shares, paying Ancona $24,000, which was to be applied to the purchase price if the option was exercised. The option agreement did not specify the purchase price, but according to Ancona, he promised to sell to defendant at his (Ancona's) cost, $12,000 per share, unless he had to spend additional money before defendant exercised the option.
Defendant, a lawyer as well as a legislator, had long been a friend of Ancona. When the shopping center project was first discussed at meetings in 1973, Ancona asked defendant to attend with him, because he knew other attorneys would be present. Defendant also attended meetings of the investor group in 1974. Although defendant was not practicing law in 1974 and was only closing out his files, he did perform some services which benefited the partnership. He drafted the partnership agreement at the request of Ancona; Shelton, who was also an attorney, reviewed and finalized it. Defendant also participated in negotiations with the two principal tenants for the shopping center, Safeway and Longs Drug Store, and negotiated with Hoffman concerning his agreement with and loan to the partnership. Defendant did not bill Ancona or the partnership for any of these services; he felt obligated to Ancona because of a prior transaction with him in which defendant had realized substantially more profit than anticipated. There was no understanding that defendant would acquire a financial interest in Countrywood for any of his work.
In October 1976, Ujdur, Simoni and Menosse, who together had a majority interest in the partnership, joined forces and voted to give themselves as a management committee the authority to sell, lease, or dispose of the property. As a result, Ancona, Hoffman and Shelton filed an action seeking a dissolution of the partnership and other relief.
b. The litigation
As we discussed in Community Cause v. Boatwright, supra, 124 Cal. App.3d at page 898, the PRA requires specified public officials to make periodic disclosures of investments, interests in real property, and income. (§§ 87200-87210.) At the time of this action, section 82030, subdivision (a), of the PRA defined income as "income of any nature from any source, including ... any ... gift, [or] discount in the price of anything of value ...." Section 82028 defined gift as "any payment to the extent that consideration of equal or greater value is not received...."
In his December 1976 statement of economic interest, defendant reported acquisition on June 30, 1976, of an option to purchase a partnership interest in Countrywood, and valued the option as in excess of $100,000, the highest value listed on the disclosure schedule; he also reported the exercise of that option on November 15, 1976, and valued the partnership interest as in excess of $100,000.
Section 91004 of the PRA authorizes the Fair Political Practices Commission (the Commission) or a local resident to bring a civil action for damages against one who intentionally or negligently violates its provisions.
After a court trial, the court issued a lengthy statement of decision summarizing the evidence, setting forth its findings, and explaining its conclusion that defendant was entitled to judgment. The court's findings and analysis will be discussed in more detail in conjunction with our evaluation of plaintiff's contentions.
ACQUISITION OF THE COUNTRYWOOD INTEREST
As we have stated, plaintiff alleged that defendant acquired his interest in Countrywood before November 1976, and either negligently or intentionally failed to report that interest in his December 1975 and March 1976 statements of economic interest. Plaintiff repeats that allegation on appeal, but its arguments ignore the trial court's findings and the applicable standard of review.
Plaintiff's unfocused arguments about the timing of defendant's acquisition are an attempt to have this court reweigh the evidence and draw inferences which the trial court rejected. Based on what it described as the "overwhelming weight of the evidence," the trial court found that defendant first invested in Countrywood and became a partner in 1976. The
FAILURE TO REPORT INCOME OR GIFT
Plaintiff urged at trial that defendant paid only $24,000 for his Countrywood partnership shares, that the shares were worth at least $200,000, and that defendant violated the PRA because he did not report the difference between those two amounts as income or a gift on his December 1976 statement of economic interest. Plaintiff repeats those allegations on appeal, but again, its arguments are unfocused. The trial court's decision in favor of defendant on the income reporting issue rested on alternative grounds: (1) defendant did not violate the PRA; or (2) if there was a violation, plaintiff was not entitled to damages because any violation was inadvertent rather than intentional or negligent. Plaintiff fails to discuss separately or even acknowledge these alternatives, but if the court's ruling was correct on either ground, it must be sustained on appeal. (See Melendres v. City of Los Angeles (1974) 40 Cal.App.3d 718, 728 [115 Cal.Rptr. 409].)
a. No violation of the PRA
Defendant testified that in addition to the cash price he paid for his Countrywood interest, he believed his share of an anticipated shortfall in construction money would be approximately $60,000 and his potential liability for attorney fees in the partnership dissolution action would be at least $25,000. The trial court found that defendant's $24,000 cash payment and those identifiable liabilities which he had assumed equalled a total consideration of at least $115,963. It also found, however, that uncertainties as to the partnership's liabilities and the extent to which defendant did or would have assumed his share of those liabilities made it impossible to determine with precision the amount of consideration paid.
As to the value of the shares, the trial court accepted the testimony of appraiser Noel Atkinson, which we will discuss in more detail later, that the value of each partnership share when defendant's option was exercised was at least $100,000, but it also concluded that the PRA does not require a public official to employ an appraiser to satisfy his or her financial disclosure obligations. More importantly, it found that at the time defendant
Although it is an appellant's burden first to show error and then to establish prejudice from error, plaintiff has neither specified the errors it apparently perceives in the trial court's analysis nor articulated the legal issues it wishes this court to consider. Plaintiff does not appear to disagree with the trial court's statement of the reporting requirements of the PRA. Instead, in what we understand as an attack on the reasonableness of defendant's conduct, plaintiff broadly contends that defendant was "chargeable with knowledge that the shares were worth many times what he paid for them."
Plaintiff's argument is based on the testimony of appraiser Noel Atkinson, who testified that he had appraised the fair market value of the proposed shopping center in May 1974 for the purposes of obtaining construction and take-out loans. In late 1976, when the shopping center was completed and many of its stores were leased, at Ujdur's request he again appraised the property and estimated its fair market value at between approximately $6.8 million and $8.4 million.
Plaintiff reasons that defendant could and should have referred to the Atkinson appraisals when preparing his 1976 statement. Had defendant done so, plaintiff seems to argue, defendant would have realized that his shares were worth far more than any consideration paid.
Plaintiff's argument ignores the nature of those appraisals. As we have discussed in some detail, neither the 1974 nor the 1976 appraisal valued individual shares. It was only at trial that Atkinson even tried to determine a "general estimate" of their value, and that estimate was to some extent conjecture. Neither the 1974 nor the 1976 appraisals standing alone would have enabled defendant to determine the fair market value of his shares. The trial court found that at the time defendant prepared his disclosure statement, neither he nor anyone else (i.e., including the appraiser) could have determined the precise or even the approximate actual value of those shares. The evidence is ample to support that finding, and plaintiff points to no evidence in the record which indicates otherwise.
To summarize, we conclude that the evidence amply supports the trial court's conclusions that there was no reasonable basis for determining whether defendant realized any income upon the exercise of his option and that under these circumstances, defendant did not violate the reporting requirements of the PRA.
In an argument which seems directed at the finding that defendant acted in good faith, plaintiff challenges the court's findings with respect to the consideration paid by defendant for his shares, and, in particular, objects to the inclusion of liabilities assumed by defendant in calculating that consideration. Plaintiff argues that a new partner is liable for partnership obligations only to the extent they can be satisfied out of partnership property. That argument ignores the court's finding that as a practical matter, defendant had either to assume the prior debts or risk the total loss of his $24,000 investment. Plaintiff also argues that it is "unlikely" that the hazard of paying construction cost overruns to Hoffman figured in defendant's calculation of the value of his shares, but that contention is an attack on the credibility of the defendant. Evidence of the subjective belief of defendant was inherently probative of whether any violation was inadvertent, negligent, or deliberate. (See Thirteen Committee v. Weinreb (1985) 168 Cal.App.3d 528, 537 [214 Cal.Rptr. 297].) The trial court believed defendant, and this court will not reweigh the evidence. Plaintiff also argues that there were buy-out provisions in the partnership agreement which would have protected defendant from losing his investment, but overlooks the court's finding that the buy-out provision was not mandatory.
Plaintiff has not established any error in the proceedings below. The trial court found that even if defendant received more than he paid for his shares of Countrywood, any failure to declare that difference was inadvertent rather than intentional or negligent, and that he made a good faith effort to comply with the reporting requirements of the act. Given the uncertainties in the liabilities which defendant faced and the difficulty in determining the actual value of a minority share in the partnership at the time, the evidence supports the trial court's findings.
Section 91012 provides that the court may award to a plaintiff or defendant who prevails in an action under the PRA his or her costs of litigation, including reasonable attorney fees. In its statement of tentative decision, the court ordered that defendant should recover costs and reasonable attorney
On its face, section 91012 contains no such limitation, but People v. Roger Hedgecock for Mayor Com. (1986) 183 Cal.App.3d 810 [228 Cal.Rptr. 424], decided during the pendency of the instant appeal, supports plaintiff's interpretation of the statute. In Hedgecock the district attorney filed an action under the PRA alleging that defendants failed to report various campaign contributions. After the Commission filed a similar but more inclusive action, the district attorney's action was voluntarily dismissed, and defendants requested attorney fees. The trial court denied the request, on the ground that a voluntary dismissal did not make defendants prevailing parties within the meaning of the fee award statute. The appellate court found it unnecessary to decide that question. Instead, it held that a prevailing defendant in an action under the PRA could be awarded fees only if the plaintiff's suit was "frivolous, unreasonable or without foundation," and affirmed the denial of fees on that basis. (Id., at p. 815.)
The Hedgecock court reasoned that the use of the word "may" in the attorney fee statute indicates legislative intent to retain judicial discretion in defining the circumstance in which fees will be awarded. (Id., at p. 815.) To delineate the scope of that discretion with respect to prevailing defendants, the court relied heavily on Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412 [54 L.Ed.2d 648, 98 S.Ct. 694], in which the Supreme Court held that prevailing defendants in a title VII civil rights action are not entitled to
The statute at issue in Christiansburg was similar to section 91012 in that it contained no limitation on a prevailing defendant's right to fees: "In any action or proceeding under this title the court, in its discretion, may allow the prevailing party ... a reasonable attorney's fee...." (42 U.S.C. § 2000e-5(k).) Nevertheless, the Supreme Court rejected an argument that the plain meaning of the statute entitled a prevailing defendant to fees on the same basis as a prevailing plaintiff. Instead, it noted the discretionary language of the statute, and pointed out the factors favoring a fee award to a prevailing title VII plaintiff that are absent when defendant prevails. First, plaintiff in a civil rights action is the "chosen instrument of Congress to vindicate `a policy that Congress considered of the highest priority.'" Second, an award of fees to a prevailing plaintiff is an award against a violator of federal law. (Christiansburg, supra, 434 U.S. at p. 418 [54 L.Ed.2d 648 at p. 655].) The Supreme Court also pointed out that a rule which routinely awarded fees to prevailing defendants "... could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success." (Id., at p. 422 [54 L.Ed.2d 648 at p. 657].)
The Hedgecock court found the Supreme Court's analysis persuasive and concluded that the Christiansburg standard should be applied to a claim by a prevailing defendant for fees in an action under the PRA. (People v. Roger Hedgecock for Mayor Com., supra, 183 Cal. App.3d at pp. 816-817.)
We next consider whether remand is required because the court failed to apply the proper standard. In People v. Roger Hedgecock for Mayor Com., supra, 183 Cal.App.3d 810, the trial court had not applied the Christiansburg standard in denying attorney fees, but the appellate court found it unnecessary to remand in order to affirm. It took judicial notice of the outcome of a related criminal action involving several of the same defendants and the same underlying facts. The results of that action made it impossible to conclude that the plaintiff's civil action was frivolous, unreasonable, or groundless. (Id., at pp. 817-818.)
In this case we have also concluded as a matter of law that plaintiff's action cannot be considered groundless or unreasonable. When it awarded fees, the trial court stated, "While it cannot be said that the action was wholly frivolous, a person of ordinary intelligence with competent legal
In light of our conclusion, we need not consider plaintiff's contention that the court had no jurisdiction to award attorney fees because defendant's motion for fees was untimely.
Insofar as the judgment awards costs and attorney fees, it is reversed, and the court is directed to enter an order denying defendant's request for attorney fees and costs. In all other respects, judgment is affirmed. Each party to bear its own costs.
White, P.J., and Barry-Deal, J., concurred.
Appellant's petition for review by the Supreme Court was denied December 22, 1987.