Background
Eric Sanchez sued Nara Al Kadni and Wissam Ali Alghazzi for breach of contract and common counts over the nonpayment of a loan. In April 2023, Sanchez and Al Kadni entered into a written loan agreement under which Sanchez lent $30,000, plus a $5,000 flat fee, to be repaid within 60 to 90 days. Al Kadni entered the agreement on behalf of a business called City Gear, of which Alghazzi is the sole proprietor. Only $3,869 was paid on the loan, leaving the remaining principal sum of $31,131 unpaid.
Al Kadni failed to respond to the complaint, and her default was entered. After a short bench trial, the trial court found that Sanchez reasonably relied on Al Kadni's ostensible or apparent authority to act for City Gear in entering into the loan transaction, and that Alghazzi knowingly permitted or acquiesced in Al Kadni acting on behalf of City Gear in its business dealings. The court concluded that Alghazzi, being City Gear's sole proprietor, was personally liable for the unpaid loan, and judgment was entered against him, jointly and severally with Al Kadni, who did not appeal. The appellate record did not include a transcript of the trial.
The Court’s Holding
The Court of Appeal affirmed. It explained that Alghazzi misunderstood his appellate burden and the applicable standards of review. On appeal, a judgment or order of a lower court is presumed correct, all intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown. The appellant bears the burden of showing reversible error by an adequate record, and if the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed.
The court further explained that the existence of an agency relationship is a factual question for the trier of fact whose determination must be affirmed on appeal if supported by substantial evidence, and whether a party consented to or ratified an agreement is similarly a question of fact reviewed for substantial evidence. Because Alghazzi supplied no reporter's transcript or agreed or settled statement of the bench trial, the court presumed the evidence supported the trial court's findings that Al Kadni acted with apparent authority and that Alghazzi ratified the loan agreement. The court also noted the trial court found Sanchez and his witness Jacqueline Sanchez credible, and found Alghazzi's testimony not credible as 'inconsistent, contradictory, and evasive,' credibility determinations a reviewing court cannot reweigh. The judgment was affirmed and Sanchez was awarded his costs on appeal.
Key Takeaways
- A sole proprietorship operating under a fictitious business name has no legal existence separate from the individual who owns it, a principle Alghazzi accepted, so the owner can be personally liable for the business's debts.
- An appellant who attacks a judgment without supplying a reporter's transcript or agreed or settled statement is precluded from asserting the evidence was insufficient to support the trial court's findings.
- The existence of an agency relationship and whether a party consented to or ratified an agreement are questions of fact reviewed for substantial evidence, not legal questions reviewed de novo.
- Trial court credibility findings—here that the appellant's testimony was 'inconsistent, contradictory, and evasive'—cannot be reweighed on appeal.
- On appeal, all intendments and presumptions are indulged to support a judgment on matters as to which the record is silent; error must be affirmatively shown.
Why It Matters
The decision is a straightforward application of the doctrine that an inadequate appellate record dooms a factual challenge: without a trial transcript, the appellant cannot show the agency and ratification findings lacked evidentiary support. It underscores the practical importance of ordering a reporter's transcript or preparing an agreed or settled statement when intending to contest factual findings on appeal.
The case also illustrates how ostensible agency and ratification theories can reach a sole proprietor who did not personally sign or negotiate a loan, provided the trier of fact finds the principal knowingly permitted an agent to act on the business's behalf. As an unpublished memorandum opinion, it may not be cited in California courts except in limited circumstances.
Read the full opinion (PDF) · Court docket