ANDERSON v. GILLETTE

No. F057654.

BRUCE W. ANDERSON et al., Plaintiffs, Cross-defendants, and Appellants, v. WARD J. GILLETTE et al., Defendants, Cross-complainants, and Respondents.

Court of Appeals of California, Fifth District.


Attorney(s) appearing for the Case

Linn and Blate and David A. Linn for Plaintiffs, Cross-defendants and Appellants.

Law Offices of David M. Hollingsworth and David M. Hollingsworth for Defendants, Cross-complainants and Respondents.


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

OPINION

POOCHIGIAN, J.

STATEMENT OF THE CASE1

On December 11, 2006, plaintiffs and appellants Bruce W. Anderson and Nelly Anderson filed a civil complaint in Mariposa County Superior Court against respondents Ward J. Gillette, Agbor T. Agbor, Tracy Hawker, American Minerals Resource Group, LLC and 50 Doe Defendants. Appellants alleged the following causes of action:

First Cause of Action—declaratory relief (against all defendants); Second Cause of Action—breach of the covenant of good faith and fair dealing and breach of fiduciary duty (against all defendants); Third Cause of Action—breach of contract (plaintiff Bruce W. Anderson against defendant Gillette and Does 1-50); Fourth Cause of Action—quiet title (against all defendants); Fifth Cause of Action—intentional interference with contractual relationship and prospective economic advantage (plaintiffs against defendant Gillette and Does 1-50); Sixth Cause of Action—constructive trust (plaintiffs against defendant Gillette and Does 1-50); Seventh Cause of Action—intentional infliction of emotional distress (plaintiffs against all defendants); and Eighth Cause of Action—defamation (plaintiffs against all defendants).

Appellants prayed for general, consequential, incidental, and exemplary damages, reasonable attorney fees and costs, and declaratory relief, among other things.

On March 6, 2007, respondents Ward and Sharon Gillette, individually and as trustees of the Gillette Family Revocable Trust, and Agbor T. Agbor removed the case to the United States District Court for the Eastern District of California. Respondents filed an answer addressing the material allegations of the complaint filed in superior court and alleged 21 affirmative defenses. On the same date, respondents Gillette and Agbor filed a cross-claim for accounting, declaratory relief, breach of fiduciary duty, specific performance and fraud in U.S. District Court (Case No. 1:07-cv-361).

On April 6, 2007, respondent Tracy Hawker filed a cross-claim for accounting, declaratory relief, breach of fiduciary duty, and fraud in U.S. District Court (Case No. 1:07-cv-0361).

On or about May 4, 2007, the United States District Court granted appellants' motion to remand the federal action (Case No. 1:07-cv-0361) to state court.

On June 19, 2007, appellants filed an answer to the cross-claim in superior court. Appellants generally denied the material allegations of the cross-claim and alleged 12 affirmative defenses.

On August 14, 2007, respondents filed motions to compel responses to discovery and for monetary sanctions; for fees (Corp. Code, § 17106, subd. (a), Code Civ. Proc., §§ 2025.450, subd. (c), 2025.480, subd. (f), and 2023.030, subd. (a)); for the posting of a bond (Code Civ. Proc., § 1031); for removal of appellants as managing members of American Mineral Resources Group, LLC (AMRG), and to compel execution of a recordable quitclaim deed in favor of respondents.

On August 24, 2007, the superior court, over appellants' objections, granted respondents' ex parte application to shorten time to hear the August 14 motions.

On September 4, 2007, appellants' attorney filed a motion to be relieved as counsel for appellants.

On September 10, 2007, the court sanctioned appellants in the sum of $10,000, directed them to file a $50,000 undertaking within 10 days, and directed them to respond to respondents' discovery requests within 10 days.

On October 1, 2007, the court granted the application of appellants' counsel to withdraw as attorney of record.

On October 3, 2007, the superior court awarded respondents $47,394 in attorney fees.

On December 6, 2007, the court reaffirmed its October 3, 2007, order and ordered all documentation received after September 10, 2007, to be stricken.

On February 24, 2008, the court filed a formal order striking appellants' complaint and answer to cross-complaint. The court further ordered appellants to pay $62,064 in attorney fees to respondents and their counsel, directed the clerk of the court to execute a quitclaim deed, removed appellants as managing members of AMRG, set a March 24, 2008, "prove-up, default hearing for evidence on the Cross Complaint," and reaffirmed the $10,000 in sanctions against appellants and their counsel. The court also granted respondents' motion to strike all papers filed by appellants on and after October 22, 2007.

On March 24, 2008, the court conducted a prove-up default hearing regarding damages.

On May 1, 2008, appellants filed a motion to set aside the "March 24, 2008 court `default trial' proceedings."

On June 11, 2008, respondents filed a memorandum of costs (summary) in the total amount of $71,656.60.

On June 16, 2008, appellants substituted Oakhurst attorney David A. Linn as their counsel.

On June 27 and 30, 2008, appellants filed motions to strike the memorandum of costs (Cal. Rules of Court, rule 870(b)(1)).

On July 7, 2008, appellants filed a written reply to respondents' response to the May 1, 2008, set-aside motion.

On July 30, 2008, the court conducted a hearing and denied without prejudice the appellants' motions to set aside default and to strike the memorandum of costs.

On August 21, 2008, appellants filed a new motion for relief "from the default entered in this Court on February 24, 2008."

On September 10, 2008, respondents moved for entry of judgment.

On October 30, 2008, respondents requested the court take judicial notice of appellant Bruce Anderson's guilty plea for felony securities fraud (Utah Code Ann. §§ 61-1-1, 61-1-2) in an unrelated matter in the First Judicial District of Cache County, State of Utah (Case No. 061101081 FS).

On November 3, 2008, the court conducted a contested hearing on appellants' motion to set aside default and respondents' motion for entry of judgment. The court heard the arguments of counsel and took the matter under submission.

On January 9, 2009, the court filed a formal order denying appellants' motion for relief from default and granting judgment in favor of respondents.

On March 9, 2009, appellants filed a notice of appeal from the January 9, 2009, judgment in favor of respondents.2

On November 17, 2009, this court denied the respondents' motion to dismiss the appeal and the parties' mutual requests for attorney fees and sanctions.

STATEMENT OF FACTS3

On March 29, 1996, respondent American Minerals Resources Group, LLC (AMRG) was chartered as a limited liability company (No. LLC7151-1996) in the State of Nevada, with appellants Bruce W. Anderson and Nelly Anderson, two Idaho residents, as the managing members and William M. Somers of Las Vegas as resident agent. The AMRG administrative offices were located in Aberdeen, Idaho, and the company's major property—the WYOD ("Work Ye Old Devil") South Diltz Mine—was located on the southern end of the old 49er Golden Chain along Highway 49, near Mariposa, California. The mine, consisting of approximately 35 acres of patented land, was specifically located off of Yosemite Highway 140 at 6092 West Sherlock Road in Midpines (Assessor's Parcel No. 008-343-006). AMRG allegedly owned 70 percent of the WYOD South Diltz Mine and Bruce-Leigh, LLC owned the remaining 30 percent.

On January 15, 2003, appellants executed an operating agreement for AMRG effective March 29, 1996. The agreement purported to bind "each person who shall hereafter be admitted to the Nevada limited liability company known as American Minerals Resources Group, LLC...." The agreement set forth the primary character of the business to be "mining and milling" and granted the managing members the "exclusive right to control and manage the affairs and operations of the company."

On January 15, 2003, AMRG drafted a business plan to raise $525,000 in equity capital for exploration and drilling of the WYOD South Diltz Mine. The Plan offered Idaho residents equity positions of up to 35 percent of AMRG at $15,000 per one percent ownership interest. Respondents Ward J. Gillette and Sharon M. Gillette loaned $90,000 to AMRG between May 13 and June 26, 2003. By early July 2003, the ownership of the AMRG portion of the WYOD South Diltz mine was as follows:

Idaho Partners 11 percent Advanced Technology Feasibility Group, LLC 4 percent Impact Industries International, Ltd. 2 percent Nevada, Washington partners 2 percent Bruce W. Anderson 81 percent

On July 1, 2003, the Gillettes wrote appellant Bruce W. Anderson and proposed to invest an additional $690,000 from a pending sale of Walnut Creek real estate. This proposal was subject to a number of conditions, including the Gillettes' acquisition of a 44 percent ownership interest in AMRG (and 31 percent ownership interest in the WYOD South Diltz Mine property).

Effective July 4, 2003, the Gillettes, as trustees of their family trust, and Bruce W. Anderson entered into a formal agreement to convert the Gillettes' total loan of $780,000 into a 44 percent ownership interest in AMRG (and thus a 31 percent ownership interest in the WYOD South Diltz Mine). Among other things, the agreement provided that Anderson would retain management of AMRG except upon "joint review" decisions and that a quitclaim deed would be executed to reflect the Gillettes' 31 percent interest in the WYOD South Diltz Mine. The agreement also provided that all company records would be available upon request, would be kept in an electronic format when possible, and would be available for review on a quarterly or annual basis.

Respondent Tracy Hawker invested $15,000 in AMRG between March 26 and May 31, 2003, in order to obtain a one percent interest in AMRG. Despite phone calls and e-mails to the Andersons, Hawker did not receive accountings, tax returns, stock certificates, operating agreements, or shareholder meeting documents for the enterprise. Respondent Agbor T. Agbor invested $100,000 in AMRG on November 25, 2003. According to Agbor, appellant Bruce Anderson promised him a three percent interest in AMRG. Agbor was unaware that Anderson had promoted and sold one percent interests in AMRG for $15,000 each. After making the investment, Agbor repeatedly asked Bruce Anderson for status reports, bank and financial records of the enterprise, and the identity of AMRG's accountants or bookkeeper, but Anderson ignored the requests and never explained what happened to Agbor's money. Although counsel for respondents made multiple demands for financial records and tax returns of AMRG prior to August 2007, the appellants refused to provide such information.

On September 1, 2006, appellant Bruce Anderson executed a corporate resolution issuing Advanced Technology Feasibility Group, LLC (AFTG) an additional 40 ownership units of AMRG at the rate of $15,000 per unit in recognition that "ASFTG has stepped up to the plate and provided the needed funding and financial support to keep AMRG alive over the years" and pursuant to AFTG's demand that "their position be increased to be able to act in a fiduciary capacity to protect its position from the open hostile acts against the interest of the company ...." The concluding paragraph of the corporate resolution stated: "Current accounting of the membership units is now: ATFG 44 units, Idaho group 11 units, Ken Moore 1 unit, Michael Ashley 1 unit, Impact 2 units, Bruce W Anderson Trust 34.7 units, Agbor 3.3 units, and Gillette Family Trust 44 units — pending the completion of Gillette `Partnership Agreement.'"

According to a declaration filed by respondent Ward Gillette, appellants were removed as managing members of AMRG effective September 15, 2006. The removal of appellants was embodied in a written consent of the members of AMRG "being the holders of more than fifty-five percent of the interest in the above-named company ...." That document was executed by respondents Agbor T. Agbor and DeAnna M. Agbor and indicated that Ward J. Gillette, Agbor T. Agbor, and Doyle Hawker were elected as managers of AMRG effective September 16, 2006, "to serve until their successors are elected and qualify."

On December 11, 2006, appellants filed a complaint against respondents for declaratory relief in Mariposa County Superior Court. On March 6 and April 6, 2007, respondents filed cross-claims in the United States District Court for the Eastern District of California (Case No. 1:07-cv-0361). On or about May 4, 2007, the U.S. District Court granted the motion of appellants and remanded the cross-claims to state court.

On October 1, 2007, Inter-County Title Company, trustee of a deed of trust encumbering the WYOD South Diltz Mine property, recorded a notice of trustee's sale in the official records of Mariposa County (Instrument No. 2075528). On October 30, 2007, Inter-County Title Company recorded a notice of rescission of the notice of default and election to sell under deed of trust (Instrument No. 2076045).

On January 9, 2009, the trial court filed a judgment against appellants and in favor of respondents. Specifically, the court (1) awarded respondents Gillette their investment of $780,000 plus interest at the rate of 10 percent per annum from July 15, 2004; (2) granted the Gillettes specific performance of their agreement with appellants and directed the clerk of the court to execute a quitclaim deed in favor of the Gillettes "to an undivided 31% interest in said real property as security for recovery of the Gillette Investment of $780,000"; (3) awarded respondent Tracy Hawker the sum of $15,000 plus 10 percent per annum from the date of his investment; (4) awarded respondent Agbor T. Agbor the sum of $100,000 plus interest from November 25, 2003; (5) awarded respondents attorney fees in the sum of $65,036 (Corp. Code, § 17106, subd. (a); Code Civ. Proc., §§ 2025.450, subd. (c), 2025.480, subd. (f), and 2023.030, subd. (a)); (6) reaffirmed a prior award of $10,000 in sanctions in favor of respondents and against appellants; (7) found appellants "disabled from acting in the capacity of Managing Member of American Mineral Resources Group" and prohibited them from remaining in control of the investment interests which they promoted and sold to respondents4; and (8) dismissed the complaint the appellants filed on December 11, 2008.

DISCUSSION

I. THE TRIAL COURT DID NOT COMMIT REVERSIBLE ERROR BY DENYING APPELLANTS' MOTIONS FOR RELIEF FROM DEFAULT

Appellants contend the trial court abused its discretion and committed legal error by denying their motions for relief from default on September 24, October 1, and October 3, 2008, and January 9, 2009.

Appellants contend:

"The court entered plaintiffs' default by ex parte order, without prior hearing, on February 24, 2008. [Citation.] The court conducted the prove-up hearing on March 24, 2008. [Citation.] Plaintiffs, in pro per, filed their initial motion for relief from default on May 1, 2008, and called it a `Motion To Set Aside March 24, 2008 Court "Default Trial" Proceedings.' [Citation.] The pro per plaintiffs did not provide legal authority for the relief they requested, but they clearly based their motion on their failure to receive notice of the March 24 hearing.... Although plaintiffs might also have requested that the February 24, 2008 default be set aside, there is nothing in the superior court file to show they had knowledge of the February 24 proceedings. In fact, the record shows the contrary.... In any event, the court's May 5, 2008 order specifically characterizes plaintiffs' motion as a `Motion to Set Aside Default.' [Citation.] And even though plaintiffs may not have been entitled to notice of the March 24, 2008 hearing or appear at that hearing because of their default status, the failure of notice is paramount, and it reinforces the likelihood that plaintiffs did not receive notice of the February 24 default order, either .... [N]either the superior court file nor the court's docket entries reflect service of the February 24, ex parte default order upon plaintiffs...."

A review of the superior court file reveals a signed proof of service attached to the February 24, 2008, order for attorney fees and costs, dismissing complaint, striking answer to cross-complaint, removing managing members and for execution of quitclaim deed. That proof of service indicated that one Vanessa Smith served the order on respondent Bruce Anderson by United States mail. The order stated: "A prove-up, default hearing for evidence on the Cross Complaint is hereby scheduled for 3-24-08 (to be set by the Court).; 1:30 p.m." Where the record speaks as to what was done on the subject of service, it will not be presumed that something other, different, or additional was done. (Steuri v. Junkin (1938) 27 Cal.App.2d 758, 760.)

Appellants summarily maintain this proof of service was deficient because it referred to service of the document on February 21, 2008, while the order was signed and filed on February 24, 2008. Therefore, appellants imply that only a proposed order was served upon them on February 21, 2008. A careful review of the record on appeal and the superior court file contradicts this claim. We particularly note the following pleadings: (1) the proposed order that respondents' counsel served upon appellants on October 3, 2007; (2) the court's December 6, 2007, minute order that directed respondents' counsel to prepare an order after hearing, a copy of which minute order was served on appellants; (3) a second proposed order that respondents' counsel served upon appellants on December 26, 2007; and (4) appellants' pleading filed January 2, 2008, under the caption: "Declaration of Bruce W. Anderson IN OPPOSITION TO HOLLINGSWORTH'S PROPOSED ORDER; CORRECTION TO FACTUAL ERRORS; MOTION FOR A HEARING."

As to the March 24, 2008, prove-up hearing, appellants acknowledge on appeal:

"[E]ven though plaintiffs may not have been entitled to notice of the March 24, 2008 hearing or to appear at that hearing because of their default status, the failure of notice is paramount, and it reinforces the likelihood that plaintiffs did not receive notice of the February 24 default order either."

Once again, appellants' claimed lack of notice is belied by the proof of service set forth in the record on appeal.

On May 1, 2008, appellants moved to set aside the March 24, 2008, proceedings on the grounds of lack of notice. As respondents point out, that motion was defective because it was not supported by a required memorandum of points and authorities. (Cal. Rules of Court, rules 3.1112(a)(3), 3.1113(a).) Even if the May 1 motion had been procedurally sufficient, it could not be deemed a motion for reconsideration as nothing in the record suggests that appellants acted "within 120 days after service ... of written notice of entry of the order and based upon new or different facts, circumstances, or law ...." (Code Civ. Proc., § 1008.)

To the extent that appellants' May 1, 2008, motion to set aside was based upon Code of Civil Procedure section 473, subdivision (b), we note a court may, upon any terms as may be just, relieve a party from a judgment, dismissal, order or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. A party seeking relief under Code of Civil Procedure section 473 bears the burden of proof. (Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1205.) On appeal, appellants contend they were seeking relief under section 473 even though they did not identify section 473 as their authority.

Mistake is not a ground for relief when the court finds the "mistake" was the result of general ignorance of the law or unjustifiable negligence in discovering the law. "Surprise" refers to a situation in which the party is unexpectedly placed to his or her injury, without any default or negligence of his or her own, which ordinary prudence could not have guarded against. To warrant relief under Code of Civil Procedure section 473, the inadvertence or neglect must have been the act of a reasonably prudent person under the same circumstances. Under California law, it is the duty of every party desiring to participate in a judicial proceeding to take timely and adequate steps to retain counsel or act on his or her own behalf. The only occasion for the application of Code ov Civil Procedure section 473 is where a party is unexpectedly place in a situation to his or her injury without fault or negligence on his or her part and against which ordinary prudence could not have guarded. (Hearn v. Howard, supra, 177 Cal.App.4th at p. 1206.)

On July 30, 2008, the court denied appellants' motion to set aside default and motion to strike respondents' memorandum of costs without prejudice. The court stated: "Mr. Linn [appellants' new counsel] will file a proper motion to set aside default. The motion filed in propria persona was not in proper form or filed on behalf of both parties." Thus, the trial court essentially gave appellants an additional opportunity to apply for an order to set aside the default and to strike respondents' memorandum of costs. (Code Civ. Proc., § 1003.)

On August 21, 2008, attorney Linn filed a motion for relief from default on the ground the default judgment was entered as a result of mistake, inadvertence, surprise, and/or excusable neglect. In the points and authorities in support of the motion, appellants argued that Nevada law should apply to their case, the imposition of a bond pursuant to Code of Civil Procedure section 1030 was inappropriate, that terminating sanctions were inappropriate and that there was no cross-complaint in the case. Despite these many assertions, appellants failed to explain how the judgment or order was taken against them as a consequence of their purported mistake, inadvertence, surprise, or excusable neglect. Once again, a party seeking relief under Code of Civil Procedure section 473 bears the burden of proof. (Hearn v. Howard, supra, 177 Cal.App.4th at p. 1205.)

In their opening brief, appellants contend the court shall grant relief under Code of Civil Procedure section 473, subdivision (b) if their motion "is accompanied by an attorney's sworn affidavit attesting to his or her mistake inadvertence, surprise, or neglect." Appellants contend their prior attorney admitted to the court at the September 24 hearing that his failure to file opposition to respondents' motions was due to his misunderstanding of the nature of the September 24 hearing. Without citing to the reporter's transcript, appellants argue: "The attorney admission to the court, on the record, as part of his oral motion for relief, certainly falls within the ambit of section 473(b), liberally construed." Appellants essentially equate their counsel's statement in the courtroom with the sworn affidavit required by Code of Civil Procedure section 473, subdivision (b).

Code of Civil Procedure section 473, subdivision (b) expressly states:

"Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect. The court shall, whenever relief is granted based on an attorney's affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties."

Although appellant Bruce Anderson and attorney David Linn filed declarations in support of the August 21, 2008, motion for relief from default, the motion was not accompanied by the sworn affidavit of appellant's prior counsel "attesting to his or her mistake, inadvertence, surprise, or neglect." Appellant Anderson and attorney Linn have not cited, and we have been unable to find, any case authority equating a former counsel's oral statement in a courtroom with the sworn affidavit required by Code of Civil Procedure section 473, subdivision (b). Appellants' motions for relief from default did not satisfy the requirements of Code of Civil Procedure section 473, and the trial court properly denied relief.

II. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION BY DENYING APPELLANTS' REQUEST FOR A CONTINUANCE ON SEPTEMBER 10, 2007

Appellants contend the trial court abused its discretion by denying their purported September 10, 2007, "request" for a two-week continuance to respond to the motions of respondents.

On August 14, 2007, respondents filed motions and supporting papers (1) to compel responses to discovery and for monetary sanctions; (2) for fees pursuant to Corporations Code section 17106, subdivision (a), Code of Civil Procedure sections 2025.450, subdivision (c), 2025.480, subdivision (f), and 2023.030, subdivision (a); (3) for posting of bond pursuant to Code of Civil Procedure section 1030; (4) for removal of appellants as managing members of AMRG; and (5) for an order compelling execution of a recordable quitclaim deed to the WYOD South Diltz Mine in favor of respondents.

On August 24, 2007, respondents filed a declaration and application for order shortening time to file and serve the foregoing motions. On the same date, appellants filed written opposition to the ex parte application to shorten time, stating:

"The moving defendants have put the horse before the cart [sic]. They have simultaneously filed an application for an order to shorten time, a motion to compel responses to discovery, a motion for sanctions, a motion for the posting of a bond, a motion to remove plaintiffs as managing members, and a motion compelling the execution of a quit claim deed. They seek to have all their motions, and their application to shorten time, heard at the same time. Essentially, therefore, their application is to shorten time from the required 16 court days (CCP § 1005(b)) to instantaneously. Obviously this cannot be done. "The proper procedure is to file the application to shorten time along with copies of the motions the moving parties plan on filing and serving. The court then either grants the motion and sets a hearing and briefing schedule in its order, or it denies the motion and the moving parties must follow the statutory notice procedures. The motions, however, are not heard at the same time as the ex parte hearing. The only issue is whether the time can be shortened to eventually hear the motions."

On September 10, 2007, the court conducted a hearing on the ex parte application. Appellants' counsel understood "the only thing on calendar is an ex parte motion to shorten time to be able to hear the other motions." Appellant's counsel stated he had filed written opposition to the ex parte application on August 21, 2007.5 Respondents' counsel argued the ex parte application had become moot "because this court has ordered expressly that the motions that were asked to be set much earlier were set for this date [September 10, 2007]."6 Respondents' counsel explained the superior court had taken the application for ex parte order under submission and then ordered that "all of these matters were scheduled for hearing on this date." Counsel argued that if appellants had any legitimate opposition, "it should have been filed in writing and we would have responded in writing." The court acknowledged, "That's my understanding. Also this court did issue an order." The court further noted the ex parte application was filed in the court on August 14, 2007. The court advised appellants' counsel: "I did not shorten time, but you were served in adequate time to respond." The court ultimately imposed a sanction against appellant Bruce Anderson, ordered appellants to file a $150,000 undertaking, and directed appellants to respond to pending discovery requests within ten days. The court also set a further hearing date of October 1, 2007.

Our review of the reporter's transcript for the September 10, 2007, hearing does not reveal an express request for a continuance by appellants' counsel. Appellant's written opposition to respondents' ex parte application to shorten time, filed August 24, 2007, stated: "[T]he court must limit itself to ruling only on whether defendants can have their 5 motions heard on shortened notice. The motions themselves, however, should not be ruled upon until such a time as they are properly before the court and plaintiffs are given sufficient time to prepare their opposition." Appellants' written opposition does not equate to a request for a continuance and appellants' then-counsel did not expressly request a two-week continuance.

In any event, at the conclusion of the September 10, 2007, hearing, the superior court set a further hearing date of October 1, 2007. By setting such a date, the court thus granted appellants in excess of two weeks to respond to the pending motions of respondents. Appellants' claim that the trial court denied their request for a continuance must be rejected in light of the record on appeal.

III. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION ON OCTOBER 1, 2007, BY GIVING APPELLANTS ONLY TWO DAYS TO LOCATE NEW COUNSEL AND PREPARE WRITTEN OPPOSITION TO RESPONDENTS' DISCOVERY MOTIONS

Appellants contend the trial court abused its discretion on October 1, 2007, by giving them only two days to locate new counsel, file opposition to respondents' motions, and represent appellants at a hearing during which respondents would request additional affirmative relief.

On September 4, 2007, appellants' counsel—the Modesto firm of Crabtree, Schmidt & Jacobs—filed a notice of motion and motion to be relieved as appellants' attorneys. Counsel served the documents on appellants via certified mail and regular mail on August 29, 2007. In a declaration in support of the motion, appellants' counsel stated:

"Plaintiffs retained counsel's law firm in September of 2006 to represent their interests in this matter. Good cause exists to be removed as counsel, pursuant to Professional Code of Conduct, rule 3-700(C)(1)(d) and (f), because the conduct of plaintiffs have rendered it unreasonably difficult for counsel's firm to carry out their employment effectively and plaintiffs have breached the agreement and obligation to counsel's firm as to expenses and fees. Counsel's firm previously sent plaintiffs a Substitution of Attorney form which was not returned."

The notice of motion and supporting declaration set forth a hearing date of October 1, 2007. On October 1, 2007, the parties appeared before Assigned Judge H.N. Papadakis. The parties advised the court that the Honorable Wayne Parrish, judge of the Mariposa Superior Court, had made some rulings in the case and had taken other matters under submission. The parties also advised that appellants' counsel was seeking to withdraw from the case. The court advised counsel that Judge Parrish was unable to preside at the October 1, 2007, hearing because of health considerations of several family members. The court initially advised the parties, "Actually, it would be inappropriate for me to take any action at this time because basically he's [Judge Parrish is] in the middle of the hearing."

After conducting an in camera hearing with appellants' counsel, the court was satisfied a conflict had arisen between client and counsel and granted the motion to withdraw. The court noted it was not the trial judge of the case and declined to rule on other pending motions but set a status hearing before Judge Parrish on October 3, 2007. The court explained, "Judge Parrish will make his rulings on the motions he's got under submission."

On October 3, 2007, Judge Parrish conducted a contested hearing on pending motions. When the court granted appellant Bruce Anderson, the non-moving party, an opportunity to speak, Anderson blamed respondent Gillette for interfering with the operations of AMRG. When Anderson asked to seek new counsel, the court noted that appellant had been represented at the prior hearing and that Judge Papadakis had allowed prior counsel to withdraw from representation after an extended in camera hearing. The court observed: "I appreciate the frustration at not having an attorney but that is, No. 1, not my fault. And No. 2, it's not Mr. Hollingsworth's [respondents' counsel's] fault that you don't have an attorney. That motion was granted." The court further noted that depositions had been set by stipulation and that other discovery was requested but there was no response to the requests, despite appellants' representation by counsel at the time.

In a declaration in support of the September 4, 2007, motion to withdraw as counsel for appellants, attorney Walter J. Schmidt stated: "Counsel's firm previously sent plaintiffs a Substitution of Attorney form which was not returned." From the motion to withdraw and supporting declaration of attorney Schmidt, it appears appellants were well aware of their attorneys' intent to withdraw for at least a month. The implication that appellants had just a few days—from the date of Judge Papadakis's October 1, 2007, hearing to the date of Judge Parrish's October 3, 2007, hearing—to secure new counsel is not supported by the record.

IV. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION ON OCTOBER 3, 2007, BY REJECTING APPELLANTS' OFFERS OF PROOF

Appellants contend the trial court abused its discretion by rejecting their offers of proof at the October 3, 2007, hearing.

Appellants specifically contend (1) they were unrepresented at the time of the hearing and the court's prior orders had not given them any real opportunity to retain new counsel; (2) there was no written opposition to respondents' motions in the court's file; (3) there was no longer any urgency for a ruling on respondents' motions because the threat of foreclosure of the security instruction on the WYOD South Diltz Mine property had dissipated; (4) the court summarily dismissed appellants' offers of proof; and (5) the court refused to allow accountant Robert Hughes to testify about the respondents' misuse of altered corporate records.

Once again, appellants' original trial attorneys—the Modesto firm of Crabtree, Schmidt & Jacobs—filed a motion to be relieved as appellants' attorneys. Counsel served the documents on appellants via certified mail and regular mail on August 29, 2007. In a declaration in support of the motion, appellants' counsel stated:

"Plaintiffs retained counsel's law firm in September of 2006 to represent their interests in this matter. Good cause exists to be removed as counsel, pursuant to Professional Code of Conduct, rule 3-700(C)(1)(d) and (f), because the conduct of plaintiffs have rendered it unreasonably difficult for counsel's firm to carry out their employment effectively and plaintiffs have breached the agreement and obligation to counsel's firm as to expenses and fees. Counsel's firm previously sent plaintiffs a Substitution of Attorney form which was not returned."

From the motion to withdraw and supporting declaration, it appears appellants were well aware of their attorneys' intent to withdraw for at least a month. The implication that appellants had just a few days—from the date of Judge Papadakis's October 1, 2007, hearing to the date of Judge Parrish's October 3, 2007, hearing—to secure new counsel is not supported by the record. As to the trial court's rejection of appellants' purported "entreaties and offers of proof," the court repeatedly noted that appellants' assertions were not documented or supported by credible evidence within the normal course of litigation.

The trial court did not err in rejected appellants' purported offers of proof.

V. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION ON FEBRUARY 24, 2008, BY STRIKING APPELLANTS' FILED DOCUMENTS AND ENTERING TERMINATING SANCTIONS

Appellants contend the superior court abused its discretion and denied appellants basic due process by striking their previously-filed documents on December 6, 2007, and February 24, 2008, and by entering terminating sanctions on February 24, 2008.

The court's order of December 6, 2007, stated:

"The Court originally issued its ruling on September 10, 2007, and reaffirmed its ruling on October 3, 2007. [¶] All documentation received after September 10, 2007 is ordered stricken. Mr. Hollingsworth [counsel for respondents] is ordered to prepare and file an Order after Hearing with the Court in accordance with the Court's order on or before twenty (20) days from the date of this order."

Appellants' appendix does not clarify what, if any, documents were received by the superior court between September 10, 2007, and the date of the December 6, 2007, order. Appellants suggest such stricken documents "presumably included the written opposition which plaintiffs' prior attorneys had filed in response to defendants' five motions, as well as other documents which they may have filed on plaintiffs' behalf."

A judgment or order is presumed correct and error must be affirmatively shown. Appellant has the burden of overcoming the presumption of correctness and must provide an adequate appellate record demonstrating the alleged error. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.) If the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed. (Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416.) We cannot ascertain from a review of appellants' appendix what documents were received by the superior court between the dates September 10 and December 6, 2007, and thus have no basis for evaluating their contention.

Appellants further contend they did not receive a copy of the superior court's proposed order for attorney fees and costs and dismissing the complaint prior to the date of the hearing. Appellants also suggest they did not receive service of the proposed order, and appellant Bruce Anderson claimed he did not receive a copy of the signed order "until much later, after his attorney brought it to his attention." Appellants' claims of ignorance are belied by the fact that appellant Bruce Anderson filed written opposition to attorney Hollingsworth's proposed order on January 2, 2008, and on February 19, 2008.

Appellants further contend that terminating sanctions for discovery abuse are permitted only in extreme circumstances, e.g., where a litigant persists in refusing to comply with discovery. On August 11, 2007, respondent Tracy Hawker executed a declaration in support of a number of motions, including a motion to compel responses to discovery and for monetary sanctions. On August 14, 2007, respondents' counsel filed and served the declaration on appellants' then-counsel by mail. Counsel also arranged for personal service of a number of discovery documents upon appellants' then-counsel. Personal service was effected on August 14, 2007, and the served documents included the motion to compel responses to discovery and monetary sanctions, points and authorities in support of that motion, a declaration and application for ex parte order shortening time to file and serve such motion, and the declarations of respondents Gillette and Hawker in support of the motion to compel responses.

According to the superior court file, more than seven months elapsed from the time the discovery documents were served on appellants' then-counsel to the time of the February 24, 2008, order embodying the terminating sanctions. "Although it is a commonly stated axiom that discovery sanctions `should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery'... the trial court has wide discretion to order discovery and broad powers to enforce those orders. Although such powers are not unlimited, they are presumed correct and will not be disturbed in the absence of an abuse of discretion." (Hartbrodt v. Burke (1996) 42 Cal.App.4th 168, 175 [affirming terminating sanctions].) "It is appellants' burden to affirmatively demonstrate error and, where the evidence is in conflict, this court will not disturb the trial court's findings. [Citations.]" (Laguna Auto Body v. Farmers Ins. Exchange (1991) 231 Cal.App.3d 481, 487, disapproved on another point in Garcia v. McCutchen (1997) 16 Cal.4th 469, 478, fn. 4.)

The superior court's order of February 24, 2008, stated in pertinent part:

"Cross Defendants [appellants] did not provide any such requested and required information and refused to do so, including failing and refusing to respond to detailed written requests for basic financial information by the attorneys for Cross Plaintiffs [respondents]. [¶] After the action was filed, Cross Defendants refused to respond to written discovery and refused to attend their own depositions after the same had been duly scheduled on three separate occasions for their convenience at the offices of their own attorneys. Cross-Defendants have persistently misused the discovery process in violation of C.C.P. Secs. 2025.450[(c)], and [(d)]; 2025.480(f) and (g) and 2023.030(a) and (d). Further Cross Defendants failed to comply with discovery orders to provide financial information al[r]eady made mandatory by Corp. Code Secs. 17106 and 17058."

Appellant has not affirmatively demonstrated error in the instant case and we will not disturb the trial court's findings.

VI. THE ORDERS AND JUDGMENT OF THE SUPERIOR COURT WERE SUPPORTED BY SUBSTANTIAL EVIDENCE

Appellants contend the substantive orders and judgment of the trial court are not supported by substantial evidence and must be reversed.

Appellants summarily contend (1) there is no substantial evidence in the record to support the court's award of fees in any amount arising from the failure to post a $150,000 bond pursuant to Code of Civil Procedure section 1030; (2) the fact the bond was not posted should not have any effect on respondents' "alleged Cross-Complaint"; (3) the January 9, 2009, award of prejudgment interest was erroneous because respondents' cross-claim did not request it and because the declarations of Hawker and Agbor were not properly sworn; and (5) "[t]he balance of the court's January 9, 2009 order and judgment (and the courts other orders which plaintiffs have challenged on this appeal) entirely lack proper evidentiary support."

A party that challenges the sufficiency of the evidence to support a finding must set forth, discuss, and analyze all the evidence on that point, both favorable and unfavorable. (Doe v. Roman Catholic Archbishop of Cashel & Emly (2009) 177 Cal.App.4th 209, 218.) In California, it is the burden of appellant, not the reviewing court, to identify and establish deficiencies in the evidence. A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence and show how and why it is insufficient. The appellant has the duty of setting forth a fair and adequate statement of the evidence that is claimed to be insufficient and cannot shift this burden onto the respondent or the reviewing court. (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409.)

Appellants' summary assertion of insufficiency of the evidence in the instant case does not provide evidence sufficient to meet the foregoing standards and their contention must be rejected.

VII. THE SUPERIOR COURT DID NOT ERRONEOUSLY APPLY CALIFORNIA LAW RATHER THAN NEVADA LAW IN INTERPRETING THE UNDERLYING CONTRACT BETWEEN THE PARTIES

Appellants contend the superior court committed reversible error by applying California rather than Nevada law to the issues in the instant case.

Article 9.1(c) of the March 29, 1996, Operating Agreement for AMRG, LLC stated in relevant part:

"This Operating Agreement . . . (c) shall be construed in accordance with, and governed by the laws of the State of Nevada ...."

Appellants specifically argue:

"In this case, the controlling law is expressly defined and stated in the contract. The contract clearly states that the law of the State of Nevada shall govern. Consequently, any action that arises out of that agreement, the related contracts and documents associated with it, and with any litigation which flows from those agreements must be determined pursuant to Nevada law. Had the superior court applied Nevada law to decide the matters before it, it is unlikely it would have dismissed this case. (See, e.g., Bill Young v. Johnny Ribeiro Building, Inc. (1990) 106 Nev. 88, 787 P.2d 777.) Furthermore, plaintiffs did not waive this issue. Their new counsel raised it at the first opportunity, the first time he filed substantive paperwork in the case. [Citation.] Consequently, the judgment and all orders made in this case on the basis of California law should be set aside."

An appealed judgment is presumed to be correct. A reviewing court will indulge all intendments and presumptions to support the judgment on matters as to which the record is silent and prejudicial error must be affirmatively shown. (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 267.) We need not consider points unsupported by legal analysis or authority . (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785; In re Marriage of Nichols (1994) 27 Cal.App.4th 661, 672-673, fn. 3.) "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived [forfeited]. [Citations.]" (Badie v. Bank of America, supra, 67 Cal.App.4th at pp. 784-785.) Here, appellants assert reversible error arising from the failure to apply Nevada law. However, they fail to explain how the alleged error was prejudicial or affected their substantial rights. (Code Civ. Proc., § 475.) Thus, their contention must be deemed waived.

Assuming the alleged error is somehow preserved, we note appellants do not affirmatively show that the substantive law of Nevada governs here or that reversible error occurred by the failure of the trial court to apply such law. Appellants' contention must be rejected.

DISPOSITION

The judgment is affirmed. Costs awarded to respondents.

WE CONCUR:

Levy, Acting P.J.

Kane, J.

FootNotes


1. Appellants have filed an appendix in lieu of a clerk's transcript on appeal (Cal. Rules of Court, rules 8.120(a)(1)(B) and 8.124). Respondents have filed an appendix in lieu of clerk's transcript on appeal.
2. Appellants' notice also purported to appeal from a number of other orders. The statement of appealability in appellant's opening brief provides: "The appeal is from a final judgment, and it is expressly authorized by California Code of Civil Procedure section 904.1, subdivision (a)." An appealable judgment or order is essential to appellate jurisdiction. (Caruso v. Snap-Tite, Inc. (1969) 275 Cal.App.2d 211, 213.) In view of appellants' statement of appealability, we will not address the appealability of the collateral orders mentioned in the notice of appeal.
3. Appellants' amended opening brief does not offer a summary of the material facts underlying the instant appeal. Rather, appellants offer a detailed procedural history of the case leading up to the notice of appeal. An appellant's opening brief "must" provide a summary of the significant facts limited to matters in the record. (Cal. Rules of Court, rule 8.204(a)(2)(C).) A chronological description of events that occurred in the trial court does not satisfy this rule. (See In re S.C. (2006) 138 Cal.App.4th 396, 402.) Nevertheless, we have independently reviewed and summarized the material facts underlying this action.
4. We note that respondent Ward J. Gillette filed a declaration on August 14, 2007, stating: "Even without further action by the Court, Plaintiffs have already been removed as managing members effective September 15, 2006, pursuant to procedures taken by the shareholders according to the rules drafted by Plaintiffs and their attorney."
5. The written opposition was actually signed on August 21, served on August 22, and filed on August 24, 2007.
6. In an August 23, 2007, letter to the superior court, respondents' counsel acknowledged: "[I]t now appears impossible to meet the briefing schedule proposed in the Ex Parte Application notwithstanding the fact that there has been a meaningful opportunity to prepare a response."

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