California
Appeals
Standard of Review
Damages

Standard of Review-Damages-Sanders v. Lawson

2.  The trial court erred in declining to factor in the mortgage on the Santa Barbara property when fixing the property’s value.

            “The amount of damages is a fact question, committed first to the discretion of the jury and next to the discretion of the trial judge on a motion for new trial.  [Citations.]  All presumptions favor the trial court’s ruling, which is entitled to great deference because the trial judge, having been present at trial, necessarily is more familiar with the evidence and is bound by the more demanding test of weighing conflicting evidence rather than our standard of review under the substantial evidence rule.  [Citations.]  [¶]  We must uphold an award of damages whenever possible [citation] and ‘can interfere on the ground that the judgment is excessive only on the ground that the verdict is so large that, at first blush, it shocks the conscience and suggests passion, prejudice or corruption on the part of the jury.’  [Citations.]  [¶]  In assessing a claim that the jury’s award of damages is excessive, we do not reassess the credibility of witnesses or reweigh the evidence.  To the contrary, we consider the evidence in the light most favorable to the judgment, accepting every reasonable inference and resolving all conflicts in its favor.  [Citation.]”  (Westphal v. Wal-Mart Stores, Inc. (1998) 68 Cal.App.4th 1071, 1078.)

            In her new trial motion, Cheryl contended that the trial court ordered excessive damages because it valued the Santa Barbara property without reference to the amount of the mortgage.  She argued that the court awarded damages against her in the amount of one-half of the value of the Santa Barbara property based on the courts’ valuation of the property at the time of trial at $1,025,000.  She contends on appeal that the court neglected to take into account the mortgage on the property, which mortgage reduced the equity in the property by the amount of that encumbrance.

            Equity or interest in real property is valued by subtracting the amount of encumbrances from the fair market value.  (See, e.g., Code Civ. Proc., § 680.190 [“ ‘Equity’ means the fair market value of the interest of the judgment debtor in property, . . . over and above all liens and encumbrances on the interest superior to the judgment creditor’s lien.”].)

            Here, we have been provided with no authority for valuing the senior Lawsons’ interest in the Santa Barbara property in any fashion other than by first reducing the $1,025,000 fair market value by the amount of the mortgage lien, and only then dividing the result in half.  Plaintiffs simply argued that where the mortgage was in Cheryl’s name alone, any amount by which the mortgage may reduce the value of the equity in the property should only affect Cheryl’s interest.  Yet, the bank or mortgagee is the holder of the interest in the encumbrance, not the Trust or Cheryl.  That encumbrance reduced the equity value of the entire property and so a calculation of the trust’s interest in the property that divides the fair market value in half before factoring in the encumbrance provides the Trust with a windfall.  The damages must be reversed to afford the trial court the opportunity to properly calculate the property’s value.

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