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George Murray et al v. G. Allen Murray et al

November 7, 2011

GEORGE MURRAY ET AL., PLAINTIFFS AND APPELLANTS,
v.
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

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NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

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 ...


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