IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sutter)
November 7, 2011
GEORGE MURRAY ET AL., PLAINTIFFS AND APPELLANTS,
G. ALLEN MURRAY ET AL., DEFENDANTS AND RESPONDENTS.
(Super. Ct. No. CVCS092976)
The opinion of the court was delivered by: Hoch , J.
Murray v. Murray
NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
This appeal arises from a family dispute involving a father and son that culminated in the termination of the father's employment at a family business, Valley Fair Realty Corporation (Valley Fair). The termination occurred after the father had transferred ownership and control of the family business to his son. As a result, George Murray and his wife, Shirley Murray, (collectively George)*fn1 filed suit against their son, G. Allen Murray, and his wife, Tamara Murray (collectively Allen). George alleged that he transferred his shares of stock in Valley Fair to Allen in exchange for money and benefits for life, and that Allen wrongfully refused to honor the agreement to that effect. A bench trial culminated in the trial court's findings that George was an at-will employee and there was no agreement that Valley Fair would pay money and benefits to George for life.
On appeal, George contends the trial court erred by (1) disallowing George from amending his complaint to allege a cause of action for elder abuse, (2) rejecting the breach of contract claim, and (3) refusing to issue a statement of decision despite his timely request. We find no error and affirm the judgment. First, the trial court did not disallow George from amending his complaint; after striking the form attached to the complaint purportedly alleging a fourth cause of action for elder abuse, George had the opportunity but did not request leave to amend his complaint. Second, as to the breach of contract claim, substantial evidence shows there was no breach of contract because the transfer of stock was an unconditional gift. Third, even though the trial court found George's request for a statement of decision to be defective, the trial court adopted its tentative decision as its statement of decision.
Allen requests that this court sanction George for filing a frivolous appeal. While sanctions may be imposed on appeal, this appeal does not warrant sanctions. We deny the motion for sanctions.
FACTUAL AND PROCEDURAL HISTORY
In 2009, George filed a complaint against Allen to allege a breach of contract, common counts, and fraud. Attached to the complaint was Judicial Council form EA-100: Request for Orders to Stop Elder or Dependent Adult Abuse. Allen moved to strike the form relating to elder abuse, and the court granted the motion. Although George opposed the motion to strike and indicated that he was "willing to file an amended complaint with that designation," the record does not show that he ever requested leave to file an amended complaint. The case proceeded to trial on the remaining three causes of action.
George's Transfer of Stock Shares in Valley Fair
Our statement of facts reflects the rule on appeal that "[w]e must accept as true all evidence and all reasonable inferences from the evidence tending to establish the correctness of the trial court's findings and decision, resolving every conflict in favor of the judgment." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631; see also Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 739.)
The evidence at trial showed that George formed Valley Fair in the mid-1960s and incorporated the business around 1970. His son, Allen, began working for the company in 1995. Allen quickly worked his way up to become company president.
In 2005, Valley Fair had a total of 200 outstanding corporate shares, of which George owned 104. That year, George contacted Timothy Kelleher, an attorney with a practice focusing on estate planning for farmers. As a result of their meeting, Kelleher prepared a memo reflecting "in summary that George wanted to gift his -- all of his shares in Valley Fair  to his son Allen and also possibly to Jason . . . ." Jason is one of George's three children.
George and Kelleher discussed whether any conditions would be imposed on the transfer of shares to Allen. George did not mention a condition on the transfer. Any condition on the transfer of shares would have jeopardized the annual gift tax exemption and adversely affected marketability of the shares. Kelleher structured the transaction to avoid taxation problems that would arise if the transfer of shares were a sale or an exchange. Kelleher understood the gifting of George's shares to be part of his estate planning. Kelleher noted that any employment agreement for George would have to be addressed separately from the transfer of shares.
Kelleher contacted certified public accountant, Leo Alexander. Kelleher stated that George wished to gift his corporate shares and needed Alexander to ascertain their value. Alexander prepared documents for the transfer of all of George's shares to Allen and Jason as a gift. Alexander was not informed of any condition on the transfer of the stock. Had there been any condition on transfer, it would have affected Alexander's valuation of the shares. Alexander understood that George would continue working for Valley Fair, but that the employment was unconnected with the stock gift. The stock was valued at $101,000 for gifting purposes. At trial, deposition testimony was introduced regarding whether George had paid capital gains taxes on the transfer of shares. At his deposition, George answered: "Why would I pay a capital gain on a gift? I didn't sell stock."
In early 2005, George told Allen "that he was going to take care of his estate for the reasons that he wanted to divide his estate up between his kids so -- in fact he didn't want his kids fighting like his brothers and sisters did during the passing of his mom and dad." In September or October 2005, George showed Allen the memorandum prepared by Kelleher, which characterized the transfer of shares as a gift. George never mentioned any restriction on the transfer and did not "indicate to [Allen] that he expected that he would be paid income for life as well as benefits in connection with the transfer of the stock."
For tax purposes, George's shares were transferred in separate transactions in 2005 and 2006. By the end of 2006, Allen had 98 of the 200 shares outstanding in Valley Fair. Allen received another three shares from his wife, Tammy, so that he acquired a controlling interest in the company. Jason received a total of 12 shares from George.
After the transfer of shares, George asked Allen to have Valley Fair pay the remaining balance on his car. After the board of directors agreed, Valley Fair paid the balance "as a courtesy."
Also after completion of the stock transfer, George announced that he was not ready to retire. Allen readily agreed and made George head property supervisor with additional responsibilities for special projects. George signed an employment form acknowledging that he was an at-will employee of Valley Fair. Each month, Valley Fair paid George a salary of $3,000. As did other Valley Fair employees, George received health benefits for himself and his spouse. George worked as an employee for Valley Fair until 2008.
In 2008, the relationship between George and Allen became strained and they did not speak to each other. In August 2008, George had an attorney prepare a memorandum of understanding to the effect that Valley Fair would pay $3,000 per month for his life, and if he should predecease Shirley, that she should receive $3,000 for the rest of her life. Allen refused to sign the memorandum. Although George was angry that Allen did not sign the document, George did not mention anything about the demand being linked to his transfer of shares to Allen.
Sale of the Building in Which Valley Fair was Located
George owned the building at 508 Forbes Avenue in Yuba City. In July 2009, George asked Tamara if Allen still wished to purchase the building. Allen was interested and secured a loan to purchase the building. Allen paid the fair market value of $620,000 for the property.
George's Termination of Employment with Valley Fair
On November 25, 2009, George was at work in his Valley Fair office and making "unflattering comments" about Tamara and Samantha Murray. Samantha was married to George's grandson, George Allen Murray, Jr., who was known as AJ. In a loud voice, George said, "This [expletive] company is going down the tubes. . . . When I gave this company to Allen he turned around and gave it to Tammy and she is running it into the ground." George added, "Tammy has got a daughter-in-law that is not much better than she is." AJ overheard George's comments and called his parents, Allen and Tamara. AJ's parents told him not to confront George, and AJ followed their advice. AJ then called Shirley to tell her that he and Samantha would not be coming to the Thanksgiving dinner she and George were hosting the next day.
George went over to AJ and said, "We need to talk, boy." AJ replied that he did not want to talk to George at that moment. George yelled, "You will talk to me now." AJ, who had been on his cell phone talking with Allen, handed the phone to George and said: "Here, talk to him." George took the phone and Allen told him that he would come down from Oregon and "would take care of the situation." George loudly responded, "Who the [expletive] do you think you are talking to, hotshot?" George threw the phone at AJ, hitting him in the chest. AJ told George that he was going to call the police. However, it was someone else who actually reported the incident to the police. Shortly thereafter, Allen terminated George's employment for cause.
Adoption of Tentative Decision as Statement of Decision
After trial, the court issued a tentative statement of decision in which it found:
"The transfers by George Murray of his stock in Valley Fair Realty to G. Allen Murray in December 2005 and February 2006 were unconditional gifts, for [George's] tax and estate planning purposes. At no time did [Allen] make any representation or promises to [George] to convince George Murray to make that gift. The gifts of stock were not conditioned on George Murray's future employment with [Allen] or Valley Fair Realty. Thereafter, George Murray became an at-will employee of Valley Fair Realty with no fixed term of employment. He was never employed by [Allen]. George Murray was never promised any lifetime benefits, salary, or employment by [Allen] or Valley Fair Realty and had no contract, express or implied, with anyone for such compensation. There was no express or implied-in-fact contract with [Allen] not to terminate George Murray without good cause.
"As a result of George Murray's improper conduct on November 25, 2009, he was fired by Valley Fair Realty for cause, although no cause was required, given his status as an at-will employee. His termination violated no statute or public policy and was lawful in all aspects. George Murray was fired December 7, 2009 and paid through December 12, 2009, by Valley Fair Realty.
"The sale of [George's] real property at 508 Forbes Avenue, Yuba City to [Allen] was not connected in any way with the gift of stock and/or employment by George Murray at Valley Fair Realty. That unconditional sale was an 'arm's length' transaction for fair market value."
The tentative decision further stated: "Within the time requirements imposed by the Code of Civil Procedure and the California Rules of Court, counsel are allowed to specify controverted issues or make proposals not covered in the Tentative Decision. If a Statement of Decision is requested, counsel for defendants shall prepare, serve, and submit it, along with a proposed Judgment. If a Statement of Decision is not requested, this Tentative Decision shall become the Statement of Decision."
George timely filed a request for a statement of decision, in which he asked the court to make 40 findings of fact in his favor. Allen opposed the request on grounds that George's request "simply sets forth a litany of minute facts, specific testimony, points of law, and utterly fails to identify any of the princip[al] controverted issues in the lawsuit that were the subject of the court trial."
The trial court denied the request for a statement of decision as defective because "it fail[ed] to specify those controverted issues as to which the party is requesting a statement of decision." The court adopted the tentative decision as its statement of decision, explaining:
"Since I have treated [George's] request for a Statement of Decision as waived, I consider that to be the same as if a Statement of Decision had not been requested. Therefore, I conclude that my Tentative Decision has now become a Statement of Decision."
George then filed a "notice of motion to settle statement of decision." At the hearing on the motion, the motion seems to have been "dropped" and the court indicated that it would proceed to issue a judgment. A judgment in favor of Allen followed two weeks later.
Elder Abuse Cause of Action
George contends "the trial court erred in not allowing [him] to file an amended complaint" to state a cause of action for elder abuse. In support of his contention, George asserts that he "offered to file an Amended Complaint adding a fourth cause of action, that of elder abuse, by incorporating the information contained in [Judicial Council form] EA-100 into an Amended Complaint." We reject George's contention.
George filed an opposition to Allen's motion to strike his pleading of an elder abuse cause of action in which he stated: "As a preliminary matter, [George] concede[s] that EA-100 should have been labeled the Fourth Cause of Action. [George is] willing to file an amended complaint with that designation, for the future convenience of court and counsel." Despite his professed willingness to amend, George did not request leave to amend his complaint.
For lack of a request for leave to amend the complaint, George has forfeited the issue on appeal. A trial court must be given an opportunity to rule on a request for leave to amend a complaint before an appellant may challenge the issue on appeal. (Jansen Associates, Inc. v. Codercard, Inc. (1990) 218 Cal.App.3d 1166, 1170.) Here, George did not give the trial court an opportunity to consider whether he should be allowed to set forth a cause of action for elder abuse.
Breach of Contract
George contends the trial court erred in concluding that there was no agreement to pay George money and benefits for life in exchange for Allen's receipt of shares in Valley Fair. We deem the argument forfeited for failure to provide a single citation to the appellate record in support of George's attack on the credibility of the witnesses who testified that the transfer of shares was an unconditional gift. (Cal. Rules of Court, rule 8.204(a)(1)(B)*fn2 ; Miller v. Superior Court (2002) 101 Cal.App.4th 728, 743 [failure to cite to the record forfeits a claim of error on appeal].)
Even if not forfeited, we would reject George's argument because we do not reweigh evidence on appeal. (Rufo v. Simpson (2001) 86 Cal.App.4th 573, 622.) That George may believe their credibility was undermined by "conflicts of interest" or ulterior motives does not undermine the testimony as substantial evidence sufficient to support the judgment. "To warrant the rejection of the statements given by a witness who has been believed by a trial court, there must exist either a physical impossibility that they are true, or their falsity must be apparent without resorting to inferences or deductions. [Citations.] Conflicts and even testimony which is subject to justifiable suspicion do not justify the reversal of a judgment, for it is the exclusive province of the trial judge or jury to determine the credibility of a witness and the truth or falsity of the facts upon which a determination depends." (Evje v. City Title Ins. Co. (1953) 120 Cal.App.2d 488, 492.)
Here, ample testimony by Allen, Kelleher, and Alexander established that George transferred his stock as an unconditional gift.
Statement of Decision
George contends we must reverse the judgment because the trial court failed to issue a statement of decision despite a timely and proper request. We disagree because the trial court did issue a statement of decision.
After a bench trial, a party is entitled to a statement of decision on timely request under Code of Civil Procedure section 632.*fn3 "In rendering a statement of decision under Code of Civil Procedure section 632, a trial court is required only to state ultimate rather than evidentiary facts; only when it fails to make findings on a material issue which would fairly disclose the trial court's determination would reversible error result. (In re Marriage of Garrity and Bishton (1986) 181 Cal.App.3d 675, 686-687; Nunes Turfgrass, Inc. v. Vaughan-Jacklin Seed Co. (1988) 200 Cal.App.3d 1518, 1525.) . . . The trial court need not discuss each question listed in a party's request; all that is required is an explanation of the factual and legal basis for the court's decision regarding the principal controverted issues at trial as are listed in the request. (Nunes at p. 1525.)" (Hellman v. La Cumbre Golf & Country Club (1992) 6 Cal.App.4th 1224, 1230.)
Rule 3.1590(c)(4) provides that a trial court "in its tentative decision" may "[d]irect that the tentative decision will become the statement of decision unless, within 10 days after announcement or service of the tentative decision, a party specifies those principal controverted issues as to which the party is requesting a statement of decision or makes proposals not included in the tentative decision."
We reject George's contention that the trial court "failed to ever issue a Statement of Decision . . . ." The trial court followed rule 3.1590 by expressly stating that the tentative decision would become its statement of decision in the absence of a party's identification of unaddressed controverted issues. Although the court rejected George's request for a statement of decision on grounds that it was defective, the court later expressly adopted its tentative decision as its statement of decision. Thus, the trial court actually issued a statement of decision in this case.
Although George argues that his request for a statement of decision was both timely and proper, he does not contend that the tentative decision -- which we conclude constitutes the trial court's statement of decision -- failed to address the issues necessary to resolve his claims. The court found that Allen did not agree or promise to pay George money and benefits for life as part of transfer of shares in Valley Fair and the sale of the building in which Valley Fair was located. The court was not required to respond to each of the 40 factual assertions listed in George's request for a statement of decision. "The trial court is required only to state ultimate rather than evidentiary facts." (People v. Dollar Rent-A-Car Systems, Inc. (1989) 211 Cal.App.3d 119, 128.) The trial court's statement of decision adequately addressed the principal controverted issues at trial.
Allen's Motion for Sanctions on Appeal
Allen requests that this court sanction George for filing a frivolous appeal.
Sanctions may be imposed on appeal. (Code of Civ. Proc., § 907; rule 8.276(a).) However, sanctions are warranted "only when [the appeal] is prosecuted for an improper motive -- to harass the respondent or delay the effect of an adverse judgment -- or when it indisputably has no merit -- when any reasonable attorney would agree that the appeal is totally and completely without merit." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 (Flaherty).) "The two standards under Flaherty are often used together, with one providing evidence of the other." (Doran v. Magan (1999) 76 Cal.App.4th 1287, 1295.)
Allen urges us to sanction George for misstating evidence in the record, asking us to reweigh the evidence adduced at trial, and for an appeal prosecuted for improper purpose and motive. Allen characterizes George's appeal as frivolous and entirely devoid of merit.
We deny the motion for sanctions. As the California Supreme Court has explained, "Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal. An appeal that is simply without merit is not by definition frivolous and should not incur sanctions." (Flaherty, supra, 31 Cal.3d at p. 650.) The Flaherty court cautioned that the use of sanctions may have "'a serious chilling effect on the assertion of litigants' rights on appeal.'" (Ibid.) For that reason, the high court concluded, appellate sanctions should be imposed only in the clearest and most egregious cases. (Id. at pp. 650-651.) This is not a case warranting imposition of sanctions.
Although George's statement of facts presents the evidence in a light favorable to his arguments, his brief does acknowledge the testimony by Allen, Kelleher, and Alexander about the stock transfer being an unconditional gift. Contrary to Allen's assertion, this appeal does not appear to be taken for purposes of delay or harassment. George did not seek a single extension of time to file his briefs and his briefing is free from ad hominem attacks. And, while we find a number of George's contentions to be forfeited for failure to preserve the issue for appeal, his briefing sets forth reasoned argument with citations to legal authority in support of his contentions.
Allen's request for sanctions on appeal is denied.
The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (5).)
We concur: RAYE , P. J. NICHOLSON , J.