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Furlong Enterprises, Inc. et al v. David Van Bebber et al

July 11, 2011

FURLONG ENTERPRISES, INC. ET AL., PLAINTIFFS AND RESPONDENTS,
v.
DAVID VAN BEBBER ET AL., DEFENDANTS AND APPELLANTS.



(Super. Ct. No. PC20070696)

The opinion of the court was delivered by: Duarte , J.

Furlong Enterprises v. Van Bebber

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

After family members commingled business and personal loans for several years, a divorce severed family ties, eventually leading to this lawsuit. The trial court ultimately entered judgment for plaintiffs based on breach of an oral contract. Before doing so, the trial court suggested a theory of equitable estoppel, which operated in this case to preclude defendants from successfully asserting the two-year statute of limitations against oral contract claims. (Code Civ. Proc., § 339, subd. 1.)

On appeal, defendants contend in part that the trial court erred in declining to sustain their statute of limitations defense because the complaint did not plead equitable estoppel, and no substantial evidence supports equitable estoppel. We agree and shall reverse.

FACTUAL AND PROCEDURAL BACKGROUND

The record on appeal is incomplete and references events not fully explained by the parties. Furlong Enterprises, Inc. (Furlong) and Julie Siebert (Julie)*fn1 were the plaintiffs. The parties generally treated Julie (the president of Furlong) as the sole plaintiff. There were three defendants. One was Julie's sister, Victoria Van Bebber (Victoria), who was at odds with the other two defendants. They were David Van Bebber (David), with whom Victoria was engaged in a protracted divorce proceeding, and Van Bebber, Inc. (Van Bebber), a closely-held family corporation.

On November 26, 2007, Julie sued David, Victoria, and Van Bebber, alleging breach of an oral contract and common counts.*fn2 The complaint alleged on or about January 1, 2003, Julie lent money to and paid bills on behalf of defendants, for a promise "to repay upon demand[.]" An account was stated in 2003, and Victoria "acknowledged the accuracy of the account stated at a time when she was married to and cohabiting with David . . . and was an officer of Van Bebber[.]" Repayment was demanded within the prior two years, but no repayment had been made. The complaint sought damages of $200,000 plus interest from January 1, 2004.

David and Van Bebber generally denied the allegations, and raised affirmative defenses, including the two-year statute of limitations for oral contracts. Victoria's pro per answer conceded the debt.

A court trial began on January 26, 2009. In their trial briefs, David and Van Bebber argued Victoria was in the middle of a lengthy marital dissolution proceeding with David, and acted on behalf of her sister, Julie. David and Van Bebber also argued the suit was barred by the two-year statute of limitations for oral contracts. Julie relied on the four-year statute of limitations applicable to common counts, under which the time runs "from the date of the last entry." (Code Civ. Proc., § 337, subd. 2.)

David, called as an adverse witness, testified Victoria filed for divorce in October 2004. Van Bebber was a logging company, and David and Victoria were its officers and shareholders. Victoria was very involved in the financial aspects of the company before July 2005. In 2000 and 2001, Victoria and Julie prepared the corporate tax returns. In 2003, Van Bebber and David owed money to various creditors, and in November 2003 David sold the "shop property" to Julie for fair market value toward satisfying these debts.

David testified that, pursuant to an order in the divorce case, he took control of Van Bebber in July 2005. A balance sheet prepared for the 2005 corporate taxes showed a loan payable to Julie of $134,662.26, and the loan appears on the corporate tax returns for 2005 and 2007. David testified that he never agreed with the amounts claimed by Julie; however, he admitted that he signed the 2005 and 2007 corporate tax returns (showing the loan amount) under penalty of perjury. The loan was listed in a 2006 corporate appraisal prepared in connection with the divorce. A corporate balance sheet as of December 31, 2001, reflects a loan from Furlong of $87,906.27. David used the Van Bebber bank account and post office box for personal and business purposes.

After David testified, the parties learned Victoria's pro per answer, which apparently could not be located, had conceded liability. The trial court continued the trial to allow Victoria to consult with counsel. The next day, Victoria's family law attorney specially appeared and sought leave on Victoria's behalf to amend the complaint to raise the statute of limitations defense. The trial court continued the trial.

On April 17, 2009, Victoria filed an amended pro per answer, admitting all defendants "owe money to plaintiff" but raising the statute of limitations defense.

Trial resumed on August 10, 2009.

Julie testified she was the president of Furlong, which "operates Ice House Resort." From 2000 to 2004, she and Furlong loaned about $234,600 to defendants. She did not distinguish between the defendants because they commingled their funds. At the end of 2003, she mailed a statement dated December 31, 2003, which was never returned or contested. It was addressed to David, Victoria and Van Bebber, and stated in part: "Balance of monies loaned to business and/or personal as of the 31st of December, 2003. [¶] $234,233.85[.] [¶] This total is monies only. The funds were from both Furlong Enterprises and Julie Wentworth Siebert."

Julie identified a ledger reflecting the individual loans. It was missing the first page, which had been given to the defendants' accountant, in the presence of the defendants. Some loans were payments made to or on behalf of Van Bebber, such as for equipment, and some were made to or on behalf of personal obligations of David and Victoria, such as for house payments and repairs. Julie conceded the penultimate item, a check dated November 6, 2003 for $2,600, had likely been repaid on November 12, 2003, by a check from Van Bebber in the amount of $2,700, and conceded she had failed to note that payment. The last item, dated September 2004, was for a house appraisal, which Julie testified was obtained at Victoria's request, in contemplation of Victoria's divorce from David. Sometimes Julie did not list items if they were repaid immediately, but, except for the one mistake regarding the November 12, 2003 entry, she credited all money received to the loan arrearages. The top of the first remaining page in the ledger contained a notation indicating insurance payments for one year, and the next line reads "plus that amount on financial," which Julie testified referred to the amount on the December 31, 2001, Van Bebber corporate balance sheet. She added the notation to the ledger in 2005, at the request of Victoria's family law lawyer.

Julie testified Victoria usually asked Julie to make payments, but David was sometimes present. She was present in 2003 when David and Victoria spoke with two different bankruptcy lawyers. These meetings followed a meeting with "Mike Peterson" which both David and Victoria asked her to attend, where they discussed resolving the couple's financial problems. In 2003, she considered herself to be a creditor of Van Bebber.

Julie testified that in 2006, Victoria told Julie she would be repaid out of the divorce settlement. Discussions continued into 2007, when Julie was shown a proposed settlement. It would have assigned Julie's debt to Victoria, who would receive some offset from David. Julie testified: "Well, I was led to believe that it would be settled then and it would be repaid. You know . . . because David was supposed to give [Victoria] some money and stuff. [¶] And I was led to believe that it was going to settle in 2006, early part of 2007. I wasn't led to believe. That's what was being talked about, you know. [¶] Q. Okay. And did you rely on those conversations? ...


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