Did you request a statement of decision?
Did you object to the proposed statement of decision?
These are among the first questions I ask after there has been a bench trial. Three recent appellate decisions demonstrate how easy it can be to forfeit strong issues on appeal by failing to request a statement of decision, or even when a statement of decision has been issued, by failing to object to omissions or defects to give the trial court the opportunity to correct them.
By failing any of the procedural steps in perfecting the record on the statement of decision, the deadline "implied findings" doctrine will be invoked, by which the Court of Appeal will simply infer that the trial court quietly implied any and all findings needed to affirm the judgment. That doctrine almost guarantees affirmance.
Failure to Request a Statement of Decision Waives Any Error of Omitted Findings:
Even when no party requests a statement of decision, the trial court typically issues a reasoned decision following a bench trial. What is the significance of the trial court's reasoning?
The answer: Not much.
This is what happened in Ko v. Ly (Jul. 26, 2021 D2d8) no. B303438 (nonpub. opn.), involving a series of business and real estate investment transactions that went sour. After a bench trial, the trial court issued a "partial tentative statement of decision" in favor of the plaintiff. While a tentative decision “may be valuable in illustrating the trial judge's theory,” it will not “be used to impeach the order or judgment on appeal. ... In the absence of a statement of decision, a reviewing court looks only to the judgment to determine error.” (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 268 (Shaw).)
The defendant-appellant argued that the trial court failed to make any findings concerning one of the breach of contract claims at issue, and thus the judgment against the defendant on that claim could not stand. But the appellant could not establish this omission because it had failed to request a statement of decision. In the absence of a formal statement of decision duly demand by the appellant pursuant to Code of Civil Procedure section 632, the reviewing court will “presume that the trial court made all factual findings necessary to support the judgment for which substantial evidence exists in the record. In other words, the necessary findings of ultimate facts will be implied and the only issue on appeal is whether the implied findings are supported by substantial evidence.” (Shaw, supra, 170 Cal.App.4th at p. 267.)
Failure to Object to Missing Finding Creates Implied Finding Against Appellant:
So the appellant has to request a statement of decision. But what happens if the appellant has requested the statement of decision, but on one critical issue, the trial court doesn't make a finding one way or the other? The lesson in Odell v. Salvation Army (Jul. 23, 2021 D2d4) no. B306219 (nonpub. opn.) is that failing to alert the trial court to the omission is probably fatal.
In Odell, the appellant sought to invoke contractual arbitration. There was a dispute whether the plaintiff had signed the contract with the arbitration clause. The appellant argued both that the plaintiff had signed the contract, and that, even if the plaintiff had not signed it, an implied-in-fact contract was created because the plaintiff received the contract document and remaining employed.
The Salvation Army requested a statement of decision (though it neglected to specify the controverted issues on which findings were requested). (Code Civ. Proc., §§ 632, 1291.) But in its statement of decision the trial court stated: "The sole issue" is whether the contract was signed. The court omitted any findings about the appellant's implied-in-fact contract theory. The appellant raised this defect on appeal.
But the challenge did not succeed. Unless an appellant alerts the trial court of an omission in a statement of decision, the Court of Appeal will invoke the implied findings doctrine and infer the trial court intended to make the omitted finding against the appellant:
"Although the statement of decision did not expressly address the Salvation Army's argument that Odell had entered into an implied-in-fact arbitration agreement, the Salvation Army did not object to this omission. Thus, we presume the trial court impliedly found that the Salvation Army failed to prove the existence of an implied-in-fact agreement. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (The Rutter Group 2020) Ch. 8-B ¶ 8:23 [“Appellate courts ... invoke the doctrine of ‘implied findings’ where the parties failed to timely bring alleged deficiencies in a requested statement of decision to the trial court's attention”].)"
To Preserve a Challenge to a Finding, the Appellant Must Request a Statement of Decision Making the Finding, and Object to the Omission:
The appellant gets the statement-of-decision procedure right in Bernstein v. Box-N-Go, LLC (Jul. 27, 2021 D2d3) no. B297863 (nonpub. opn.). But as the lengthy analysis indicates, it is not always easy.
Bernstein dealt with a dispute over company management, with the plaintiff having been ousted from the defendant company by the individual defendants. But in finding for the plaintiff, the trial court found that all defendants were liable for breach of a purchase obligation to the plaintiff, which the operating agreement rather plainly made the obligation of the company alone.
The individual defendant-appellants challenged this finding by requesting a statement of decision, and objecting to the finding in the proposed statement of decision. But the trial court overruled the objection.
When the appellant raised the challenge again on appeal, the plaintiff-respondent argued the appellant still had not done enough to preserve the challenge. The respondent argued the appellant's objection to the proposed statement of decision had focused on the lack of evidence, rather than the finding itself.
The Court of Appeal held the appellants had sufficiently objected to the proposed. While generalized disagreements with a proposed statement of decision are insufficient, the appellants' objections were specific enough because they identified the specific issue that "judgment should only be awarded against [the company] and not the individual defendants."
As a result, the court held that "we cannot infer that the trial court intended to make an alter ego finding when the record shows the court declined to do so after defendants objected to the proposed statement of decision on that specific ground." (Code Civ. Proc., § 634; Culbertson v. Cizek (1964) 225 Cal.App.2d 451, 465–466 (Culbertson); In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133–1134 (Marriage of Arceneaux).)
Although unpublished, the opinion provides a good summary of the applicable published authorities on the procedures for requesting and objecting to statements of decision. These authorities are pasted below for you to clip-and-save:
Code of Civil Procedure section 632 directs the trial court, upon the trial of a question of fact, to “ ‘issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial. ’ ” This requirement “ ‘is for the benefit of the court and the parties.’ ” (Whittington v. McKinney (1991) 234 Cal.App.3d 123, 126.) “ ‘To the court it gives an opportunity to place upon [the] record, in definite written form, its view of the facts and the law of the case, and to make the case easily reviewable on appeal by exhibiting the exact grounds upon which judgment rests. To the parties, it furnishes the means, in many instances, of having their cause reviewed without great expense.’ ” (Id. at pp. 126–127.)
Because the statement of decision reflects the trial court's resolution of disputed factual issues, it necessarily affects the scope of appellate review. (See Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2020) ¶¶ 16:197 to 16:216.5.) “Where [the] statement of decision sets forth the factual and legal basis for the decision, any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision.” (Marriage of Hoffmeister, supra, 191 Cal.App.3d at p. 358.) But “[w]hen a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court ..., it shall not be inferred on appeal ... that the trial court decided in favor of the prevailing party as to those facts or on that issue.” (Code Civ. Proc., § 634.) Under this mandate, a proper objection to a proposed statement of decision avoids the doctrine of implied findings, and we will not presume that the trial court made a factual finding necessary to sustain the judgment unless the finding was explicitly stated. (See Culbertson v. Cizek (1964) 225 Cal.App.2d 451, 465–466 (Culbertson); see also In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 (Marriage of Arceneaux) [“if omissions or ambiguities in the statement are timely brought to the trial court's attention, the appellate court will not imply findings in favor of the prevailing party”].)
Thus, “[w]ritten findings are required on all material issues raised by the pleadings and evidence, unless they are waived, and if the trial court renders judgment without making findings on all material issues, the case must be reversed on appeal. [Citations.] Reversal is compelled if there was evidence introduced on such issues and this evidence was sufficient to have sustained [a] finding in favor of the party complaining.” (Duff v. Duff (1967) 256 Cal.App.2d 781, 785 (Duff).)
A party is not required to object to legal errors appearing on the face of the statement of decision, as such errors are not waived. (United Services Auto. Assn. v. Dalrymple (1991) 232 Cal.App.3d 182, 186.) And, where a statement of decision clearly expresses the legal and factual basis for the trial court's resolution of controverted issues, we will not imply findings that the trial court did not make. (See Paterno v. State of California (2003) 113 Cal.App.4th 998, 1015 [“ ‘When the record clearly demonstrates what the trial court did, we will not presume it did something different’ ”].)
And on the subject of properly preserving objections to the statement of decision:
Code of Civil Procedure section 634 “does not specify the particular means that the party may use to direct the court's attention to the claimed defects in the statement [of decision].” (Marriage of Arceneaux, supra, 51 Cal.3d at p. 1134.) Nonetheless, when read together with rule 3.1590 of the California Rules of Court, the statute “clearly contemplate[s] any defects in the trial court's statement of decision must be brought to the court's attention through specific objections to the statement itself, not through a proposed alternative statement of decision served prior to the court's issuance of its own statement.”2 (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1380 (Golden Eagle); see also Marriage of Arceneaux, at p. 1138 [a party may not “avoid the presumption [of correctness] merely by asking for findings on an issue without challenging the findings when actually made”].) Beyond this directive, the objecting party needs only to identify the alleged omission or ambiguity “with sufficient particularity to allow the trial court to correct the defect.” (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 498 (Ermoian); Golden Eagle, at p. 1380 [an objection is sufficient if it “allows the court to focus on the facts or issues the party contends were not resolved or whose resolution is ambiguous”]; cf. Marriage of Arceneaux, at p. 1138 [“it would be unfair to allow counsel to lull the trial court and opposing counsel into believing the statement of decision was acceptable, and thereafter to take advantage of an error on appeal although it could have been corrected at trial”].)
Finally, I note that one of my most satisfying appellate wins came almost entirely as a result of perfecting the record on a statement of decision, which crystallized the fact that the trial court had indeed omitted findings on essential issues.
Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. His appellate practice covers all of California's appellate districts and throughout the Ninth Circuit, with appellate attorneys in offices in Orange County and Monterey County. Contact Tim at firstname.lastname@example.org or (714) 641-1232.