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Dismissed Appeal

Judgment Reversed Because Statement of Decision Omitted Material Issues

Tim Kowal     October 28, 2021

One of the nice things about bench trials is that there is no need for jury instructions and verdict forms, which can be very laborious to prepare. In a bench trial, instead of a verdict turned in by the jury, the parties get a statement of decision turned in by the judge. But what happens when the judge fails to make findings on material issues in the case?

A helpful illustration of how to set up a strong technical argument on appeal is found in Legendary Builders Corp. v. Grovewood Properties, LLC (D2d4 Oct. 5, 2021) 2021 WL 4550995 (nos. B297299, B301777) (nonpub. opn.). By raising an omission in the statement of decision in the trial court, the appellant was able to obtain a reversal on appeal.

One of the nice things about bench trials is that there is no need for jury instructions and verdict forms, which can be very laborious to prepare. In a bench trial, instead of a verdict turned in by the jury, the parties get a statement of decision turned in by the judge. But what happens when the judge fails to make findings on material issues in the case?

A helpful illustration of how to set up a strong technical argument on appeal is found in Legendary Builders Corp. v. Grovewood Properties, LLC (D2d4 Oct. 5, 2021) 2021 WL 4550995 (nos. B297299, B301777) (nonpub. opn.). By raising an omission in the statement of decision in the trial court, the appellant was able to obtain a reversal on appeal.

Following a 15-day bench trial in a dispute between a general contractor and a condominium developer, the trial court issued a statement of decision denying the contractor-appellant recovery. But the statement of decision failed to make any specific findings on the appellant's discrete claims based on two months' work for which the respondent-developer never paid.

The Appellant Preserved the Omission in the Statement of Decision by Raising It at the Hearing on the Tentative:

The respondent argued the omission was waived. The omission in the statement of decision was not brought to the trial court's attention, and besides, the trial court addressed this exact point during oral comments at a hearing concerning the tentative decision.

The Court of Appeal reversed. The court noted that the record reflected that the asserted deficiency in the Statement of Decision “was brought to the attention of the trial court ... prior to entry of judgment” as required under Code of Civil Procedure section 634. (Code Civ. Proc., § 634; see also In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134.)" Specifically, at the hearing on the tentative Statement of Decision, counsel for the appellant stated: “One thing the tentative doesn't address are the moneys due to Legendary ... [on] Pay Applications 21 and 22.”

Raising this omission at the hearing concerning the tentative was sufficient. Accordingly, the issue in dispute was not forfeited, and the doctrine of implied findings did not apply. (See In re Marriage of Arceneauxsupra, 51 Cal.3d at pp. 1133-1134.)

(Note: The reason this caught my eye is because it was not clear to me that raising an omission orally was sufficient — my practice is to raise them in a written request for a statement of decision, and also in objections to the statement of decision. The court here held it was sufficient to raise the omission just once, and orally. I found that surprising.)

The Trial Court's Oral Comments Do Not Modify the Statement of Decision:

The respondent next argued that the trial court adequately addressed the omission by its statements at the hearing on the tentative. The Court of Appeal categorically rejected this.

"We acknowledge the trial court's remarks from the bench suggest it was not inclined to award Legendary relief on Pay Applications 21 and 22 based on its “evaluation of the credibility of evidence presented by Legendary.” Those “oral comments,” however, “were not final findings” on the matter. (Key v. Tyler (2019) 34 Cal.App.5th 505, 539, fn. 16.) “This is because a trial court retains inherent authority to change its decision, its findings of fact, or its conclusions of law at any time before entry of judgment and then the judgment supersedes any memorandum or tentative decision or any oral comments from the bench. [Citations.] Thus, a trial court's pre-judgment oral expressions do not bind the court or restrict its power to later declare final findings of fact and conclusions of law in the judgment. [Citation.]” (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 268.)"

Finally, the court held that the omitted findings were “findings on a material issue which would fairly disclose the trial court's determination[.]” (Hellman v. La Cumbre Golf & Country Club (1992) 6 Cal.App.4th 1224, 1230.) The court concluded they were.

An Important Practical Note on Remand:

The court reversed and remanded, directing the trial court to determine, "upon the existing evidentiary record," whether the appellant was entitled to findings in its favor. Given the judge's prior comments, likely no one expects the judge to cure the omission in a manner favorable to the appellant. A successful appellant may make a peremptory challenge to the trial judge following reversal on appeal under Code of Civil Procedure section 170.6(a)(2), but only where the same judge is assigned to conduct a new trial. Here, no new trial was directed by the appellate court.

So while omitted findings may be a strong technical to raise on appeal, as a practical matter, the appellant needs to be prepared to win the issue on the merits.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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