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La Minerva Di Chiodini Mario S.R.L v. Norcal Sales and Service

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (San Joaquin)


August 31, 2011

LA MINERVA DI CHIODINI MARIO S.R.L., PLAINTIFF AND RESPONDENT,
v.
NORCAL SALES AND SERVICE, INC., DEFENDANT AND APPELLANT.

(Super. Ct. No. 39-2008-00196045-CU-CL-STK)

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

La Minerva di Chiodini Mario v. Norcal

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NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Defendant Norcal Sales and Service, Inc. (Norcal) appeals from a judgment entered after the trial court granted the motion for summary judgment filed by plaintiff la Minerva di Chiodini Mario s.r.l. (La Minerva). Norcal claims the motion should have been denied due to the existence of triable issues of material fact, and that the trial court abused its discretion when it overruled Norcal's objection to evidence. Finding no merit in these claims, we shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

La Minerva, an Italian corporation, sold and delivered food processing and packaging equipment to Norcal in March 2007, for which Norcal was charged $20,650 euros (then equivalent to $26,560.60 U.S. dollars). When Norcal failed to pay for the equipment, La Minerva filed a complaint alleging open book account, account stated, and unjust enrichment, seeking payment of $26,560 plus interest.

Norcal's answer to La Minerva's complaint denied each cause of action and alleged 11 affirmative defenses. In particular, the fourth affirmative defense alleged that, assuming the existence of a contract as alleged in the complaint, Norcal's "duty to perform its obligations under said contract, if any, has been excused by Plaintiff's material breach of said contract and/or cancellation thereof and/or because there has been a failure of consideration in that Plaintiff has failed to perform as the contract requires Plaintiff to perform."

Thereafter, Norcal paid La Minerva $5,075.43, but refused to make any further payments, claiming La Minerva failed to (1) honor its agreement to make Norcal its exclusive United States distributor, (2) issue warranties on equipment already sold to Norcal, and (3) sell additional parts to Norcal to service that equipment.

La Minerva filed a motion for summary judgment supported by copies of relevant invoices, statements of account, and discovery responses propounded by Norcal, as well as several declarations and a separate statement of undisputed material facts (separate statement). The separate statement set forth seven undisputed material facts: (1) La Minerva sold and delivered equipment to Norcal; (2) Norcal failed to pay for that equipment; (3) Norcal informed La Minerva nonpayment was "due to cash flow problems as well as an internal embezzlement by a former employee" of Norcal; (4) La Minerva sent Norcal statements of account; (5) Norcal made partial payments of $5,075.43 to La Minerva, which amount was credited to Norcal's account; (6) there remained $21,485.17 due and owing on Norcal's account; and (7) interest was accruing on Norcal's account at the rate of $5.89 per day from and after June 9, 2007.

One of the declarations filed in support of La Minerva's motion was that of Elisabetta Salati Chiodini, La Minerva's export and administration manager, who attested to the fact that La Minerva sold equipment to Norcal on an open account basis, that Norcal paid only $5,075.43 of the $26,560.60 due on the account, and that "[Norcal] informed [La Minerva] reasons for non-payment were due to cash flow problems as well as an internal embezzlement by a former employee of [Norcal]."

Norcal's opposition to the summary judgment motion,*fn1 filed November 10, 2009, relied in large part on the declaration of Norcal's president, Greg Lambert, in which Lambert attested to discussions between himself and Alessandro Barrucco, a representative of La Minerva, regarding the issue of Norcal being an exclusive distributor for La Minerva products in the United States. In particular, Lambert stated that, "In one of the discussions I had with Alessandro Barrucco, it was agreed that [Norcal] would be the exclusive distributor for [La Minerva] products in the United States." Lambert also discussed visits by La Minerva representatives to the Norcal facilities in Tracy, California, during which the representatives "approved the facilities as being adequate for the purposes of being [La Minerva's] exclusive distributorship," as well as trade organization meetings Lambert attended in Palm Springs, California, during which "representatives of [La Minerva] introduced [him] to [trade organization] members . . . as [La Minerva's] exclusive United States distributor." Lambert declared that Norcal would not have ordered the equipment from La Minerva in the absence of an exclusive United States distributorship agreement.

Lambert's declaration also stated that Norcal ceased making payments to La Minerva because, after Norcal purchased "substantial amounts of equipment and spare parts" from La Minerva, La Minerva refused to issue written confirmation of the exclusive distributorship agreement and further refused to issue warranties for the equipment sold to Norcal or sell Norcal additional parts to service the equipment. Paragraph 11 of Lambert's declaration states: "[Norcal] would not have purchased the equipment and spare parts from [La Minerva] if [Norcal] had not been granted an exclusive U.S. distributorship. As a result of [La Minerva's] refusal to honor the agreement made with [Norcal], [Norcal] has in its possession, custody and control equipment and spare parts purchased from [La Minerva] that are worth approximately $55,000.00 based upon the invoice amounts from [La Minerva]. These sums more than offset the entire amount currently claimed by [La Minerva,] which is the sum of $21,485.17."

In its response to La Minerva's separate statement, Norcal did not dispute the fact that La Minerva sold and delivered the equipment to Norcal, or that Norcal received the statements of account and paid La Minerva only $5,073.43. Norcal did, however, dispute all of the remaining facts, relying on its objection to evidence to dispute fact No. 3 regarding Norcal's alleged reason for nonpayment as stated in Chiodini's declaration, and relying on paragraph 11 of the Lambert declaration to dispute the rest.

The trial court issued its tentative ruling granting the summary judgment motion. Following oral argument by all parties, the court affirmed its tentative ruling, awarding La Minerva the amount of the claimed principal plus accrued interest and costs. Thereafter, the court issued a written order setting forth its findings, including that La Minerva established all of the elements of its claims by virtue of the sales invoice and billing statements, the Chiodini declaration attesting to the partial payment made by Norcal, and Norcal's admission that it received the equipment and did not pay for it in full. The court overruled Norcal's objection to evidence on the grounds that the offending statement "is a party admission" under Evidence Code section 1220, and is "regarded as undisputed" given Norcal's failure to submit evidence to dispute it. The court further found that Norcal "failed to file a substantive opposition to the allegations of the complaint" and instead asserted that La Minerva breached an exclusive distributorship agreement resulting in damages in an amount that offset the amount due from Norcal for the equipment. In short, the trial court found there was no dispute that Norcal purchased the equipment from La Minerva and failed to pay the balance due of $21,485.17. The court noted that, while Norcal relied on the distributorship agreement as an affirmative defense, the affirmative defenses alleged in Norcal's answer to the complaint "did not raise the issue of the distributorship agreement, or any other relevant agreement, or the issue of offset." As such, "the distributorship agreement and its alleged breach by Plaintiff is not a part of this lawsuit." The court stated that, even assuming Norcal properly raised the issue of breach of the distributorship agreement and offset, Norcal failed to present evidence to support its affirmative defense and, in particular, failed to present evidence of damages resulting from the alleged breach of the distributorship agreement from which an offset could be calculated.

The court entered judgment in favor of La Minerva on February 2, 2010. Notice of entry of judgment was filed on February 16, 2010. Norcal filed a timely notice of appeal.

DISCUSSION

I. No Triable Issues of Disputed Material Fact

A. Standard of Review

The standard of review for summary judgment is well established. The motion shall be granted if the papers submitted show there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c).)

We independently review an order granting summary judgment, viewing the evidence in the light most favorable to the nonmoving party. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768; Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1001.) In performing our independent review of the evidence, "we apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue." (Chavez v. Carpenter (2001) 91 Cal.App.4th 1433, 1438.)

In determining whether there is a triable issue of material fact, we consider all the evidence set forth by the parties except that to which objections have been made and properly sustained. (§ 437c, subd. (c); Roe v. McDonald's Corp. (2005) 129 Cal.App.4th 1107, 1113.) We accept as true the facts supported by the opposing party's evidence and the reasonable inferences therefrom (Sada v. Robert F. Kennedy Medical Center (1997) 56 Cal.App.4th 138, 148), resolving evidentiary doubts or ambiguities in favor of the opposing party (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142). However, we will affirm summary judgment on any ground supported by the record. (Oliver v. AT&T Wireless Services (1999) 76 Cal.App.4th 521, 528; see also Wiz Technology, Inc. v. Coopers & Lybrand (2003) 106 Cal.App.4th 1, 11.)

B. Analysis

Norcal argues there are triable issues of fact as to La Minerva's claims of open book account and account stated.*fn2 We disagree.

As defined in section 337a, "[t]he term 'book account' means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner . . . ." (§ 337a; Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 752, fn. 3 (Maggio); see also Biltmore Press v. Usadel (1970) 6 Cal.App.3d 896, 900 ["A necessary element is that the book shall show against whom and in whose favor the charges are made."].)

Similarly, an account stated arises where one party provides goods or services to another on account, and the parties reach an agreement that all items of the account are true and the balance struck is due and owing. (Gleason v. Klamer (1980) 103 Cal.App.3d 782, 786-787; Trafton v. Youngblood (1968) 69 Cal.2d 17, 25.) "The acknowledgement of a debt consisting of a single item may form the basis of a stated account." (Maggio, supra, 196 Cal.App.3d at p. 753.) "Actions on accounts stated frequently arise from a series of transactions which also constitute an open book account." (Ibid.)

It is undisputed that La Minerva sold and delivered equipment to Norcal, that Norcal received the statements of account from La Minerva regarding the purchase, and that Norcal paid La Minerva only $5,075.43 for the equipment purchased and thereafter "ceased making payments." It is also undisputed that Norcal has in its possession La Minerva equipment and spare parts, the value of which Norcal claims is $55,000.

With respect to the remaining elements of La Minerva's claims--that Norcal owes La Minerva $21,485.17 plus interest for the equipment, and that Norcal has not paid all or any portion of that amount--Norcal claims triable issues of material fact exist, relying exclusively on the Lambert declaration as such evidence. In particular, Norcal cited paragraph 11 of the Lambert declaration, which states that Norcal would not have purchased equipment from La Minerva had it not been granted an exclusive United States distributorship, and that Norcal has in its possession equipment purchased from La Minerva worth an amount that will "more than offset" the $21,485.17 claimed by La Minerva.

Norcal argues La Minerva failed to submit evidence to dispute the allegations contained in Lambert's declaration, that is, La Minerva failed to present evidence disputing the existence of the exclusive distributorship agreement "even though they were informed early on in discovery responses that Norcal was taking the position that the failure of [La Minerva] to honor the exclusive distributorship agreement was a material breach of the agreement to purchase the equipment and spare parts and excused Norcal's performance." Norcal's claim is misguided.

Plaintiff's initial burden of proof in moving for summary judgment does not include disproving any affirmative defenses asserted by defendants. "[S]section 437c, subdivision (p)(1) provides a plaintiff meets the burden of showing there is no defense to a cause of action 'if that party has proved each element of the cause of action.' Upon meeting that burden, the burden shifts to the defendant 'to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.'" (Oldcastle Precast, Inc. v. Lumbermens Mutual Casualty Co. (2009) 170 Cal.App.4th 554, 564-565; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2008) ¶ 10:235, p. 10-89 (rev. #1, 2006).)

La Minerva met its burden with evidence showing it sold and delivered equipment to Norcal for which Norcal received statements of account but paid only $5,075.43, leaving $21,485.17 due and owing. Having done so, the burden shifted to Norcal to present facts with regard to its affirmative defenses.

Assuming, without deciding, that Norcal's affirmative defenses properly raised the issue of an alleged exclusive distributorship agreement, it nonetheless failed to carry its burden to show a triable issue of fact exists as to that defense. The only evidence offered by Norcal in its response to La Minerva's separate statement is paragraph 11 of the Lambert declaration, which states that Norcal would not have purchased the equipment and spare parts from La Minerva in the absence of an exclusive distributorship agreement, but is devoid of any evidence demonstrating that the parties entered into an agreement in the first instance.

Other portions of Lambert's declaration not cited in Norcal's response to the separate statement make general reference to the exclusive distributorship agreement, yet none are sufficient to show a triable issue of disputed material fact. For instance, paragraph 5 of the Lambert declaration states that, "[i]n one of the discussions" Lambert had with La Minerva's Alessandro Barrucco, "it was agreed that [Norcal] would be the exclusive distributor for [La Minerva] products in the United States." Paragraph 7 states that La Minerva introduced Lambert to trade organization members as La Minerva's exclusive United States distributor. Conspicuously absent from these attestations are the specific details necessary to render them credible and without which the statements lack evidentiary value.

Norcal offered no credible evidence, documentary or otherwise, that an exclusive distributorship agreement existed between Norcal and La Minerva. Instead, Lambert's declaration admits that Norcal "has in its possession, custody and control equipment and spare parts purchased from [La Minerva]," and that Norcal "ceased making payments to [La Minerva] for the equipment and parts [Norcal] had ordered" (italics added), thus establishing the fact that Norcal owes La Minerva $21,485.17 plus interest for the equipment, and that Norcal has not only failed to pay that amount, but has also failed to return that equipment to La Minerva, apparently retaining possession in an attempt to offset La Minerva's claims.

With respect to the defense of offset, that issue was neither raised as an affirmative defense in Norcal's answer to the complaint, nor was it raised in substance in its discovery responses submitted in support of its opposition to the motion. It is also worth noting that, even if it had been, Norcal's claim of offset is premised on equipment it admittedly received from La Minerva but neither paid for nor returned. Norcal has not met its burden to show a triable issue of material fact exists with regard to its defense of offset.

Considering all of the evidence set forth by the parties, no triable issues of material fact exist. The trial court did not err in granting La Minerva's motion for summary judgment.

II. Denial of Norcal's Objection to Evidence

The Chiodini declaration submitted by La Minerva in support of the motion for summary judgment contains a statement by Chiodini that "[Norcal] informed [La Minerva] reasons for non-payment were due to cash flow problems as well as an internal embezzlement by a former employee of [Norcal]." Norcal's objection to evidence argued Chiodini's statement lacked foundation and personal knowledge pursuant to Evidence Code section 702, and constituted hearsay pursuant to Evidence Code section 1200. The trial court overruled the objection, finding Chiodini's statement referred to an admission by a party (Evid. Code, § 1220), and that the statement was otherwise undisputed.

Norcal contends the trial court abused its discretion when it overruled the objection because the statement fails to identify both the individual who made the representation on Norcal's behalf and the individual at La Minerva to whom the statement was made, and lacks "any details or foundation." Norcal also contends the statement "lacks personal knowledge" as required by Evidence Code section 702.*fn3

We need not decide whether the trial court erred in overruling Norcal's objection to evidence because Chiodini's statement regarding nonpayment is immaterial. Norcal does not dispute that, after paying La Minerva $5,075.43, it elected not to make any further payments. Therefore, whether the refusal to make further payments was the result of Norcal's cash flow problems and employee embezzlement or something else is unimportant. Norcal's nonpayment was voluntary. As such, any potential error in admission of Chiodini's statement was harmless.

DISPOSITION

The judgment is affirmed.

We concur: RAYE , P. J. HOCH , J.


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