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Michael Hat v. Sharon Stevens

November 19, 2012

MICHAEL HAT, PLAINTIFF AND APPELLANT,
v.
SHARON STEVENS, DEFENDANT AND APPELLANT.



(Super. Ct. No. CV033639)

The opinion of the court was delivered by: Blease , Acting P. J.

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NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff Michael Hat appeals from a summary judgment entered in favor of defendant Sharon Stevens in this breach of contract action based on the affirmative defense of unclean hands. Stevens cross-appeals the trial court's denial of her summary judgment motion on the alternative ground that Hat waived his claims against her by executing a general release. We shall dismiss Stevens's cross-appeal because she was not a "party aggrieved" by the summary judgment entered in her favor. (Code Civ. Proc., § 902.) We shall affirm the summary judgment on the alternative ground of waiver -- a theory the parties briefed and argued in the trial court and on appeal -- and thus, need not decide whether the trial court erred in granting summary judgment on the ground of unclean hands. (See California School of Culinary Arts v. Lujan (2003) 112 Cal.App.4th 16, 22 [summary judgment may be affirmed on any correct legal theory, as long as the parties had an adequate opportunity to address the theory in the trial court].) Finally, we shall conclude that we lack jurisdiction to consider whether the trial court erred in denying Hat's motion to compel arbitration of claims related to the release because Hat failed to appeal from the trial court's order denying his motion to stay and compel arbitration as moot.

FACTUAL*fn1 AND PROCEDURAL BACKGROUND

Hat and Stevens were married in 1982 and divorced in 2000. During their marriage, Hat developed three businesses engaged in the farming of grapes and the production of wine or juice: Michael Hat Farming Company; Capello, Inc.; and Grapeco, Inc. These entities held interests in the following assets: Capello Winery; Grissom Ranch Vineyard; Pond Ranch Vineyard; Coastal Ranch Vineyard; Rampage Ranch Vineyard; Arvin Ranch Vineyard; and Sedan Ranch Vineyard. The parties' respective community property interests in these businesses and assets were not resolved during the divorce proceedings or at any time prior to the bankruptcy proceeding discussed below.

In July 2001, Hat, individually and as Michael Hat Farming Company, Capello, Inc., and Grapeco, Inc., filed petitions for chapter 11 bankruptcy protection under the United States Bankruptcy Code (Bankruptcy Code; 11 U.S.C.), and a bankruptcy trustee was appointed. In 2003, when proposed reorganization plans were not accepted by various creditors, the proceeding changed to a liquidation proceeding, and some of the bankruptcy estates' assets were abandoned back to Hat, including the Rampage Ranch Vineyard, Coastal Ranch Vineyard, and Pond Ranch Vineyard.

In mid-2003, Hat and Stevens entered into a verbal agreement to create a joint venture that would (1) seek to acquire additional assets from the bankruptcy estate by abandonment or by the exercise of Stevens's right of first refusal under Bankruptcy Code section 363(i) (section 363(i); 11 U.S.C., § 363(i)),*fn2 and (2) operate, hold, or sell such assets. The parties agreed to share any net profits after expenses and to wind up the joint venture and divide the profits and remaining property between them once the bankruptcy proceeding concluded.

Hat "contributed" the Coastal Ranch Vineyard, Rampage Ranch Vineyard, and Pond Ranch Vineyard to the joint venture, and the parties acquired the Grissom Ranch Vineyard through the exercise of Stevens's right of first refusal under section 363(i) rights. They were not successful in their attempts to acquire the Arvin Ranch Vineyard or Sedan Ranch Vineyard.

In June 2003, the bankruptcy trustee sought the approval of the bankruptcy court to sell the Capello Winery to The Wine Group (TWG). At the hearing on the sale, Stevens asserted her right of first refusal under section 363(i). She later executed a purchase agreement for the Capello Winery, and the bankruptcy court issued an order approving the sale. TWG moved for reconsideration of the order approving the sale, and in June 2004, the bankruptcy court granted the motion and vacated the sale of the Capello Winery to Stevens. (In re Hat (Bankr. E.D.Cal. 2004) 310 B.R. 752, 753.) The bankruptcy court held that the bidding for the Capello Winery "was chilled through collusion between [Stevens] and two potential bidders: PBI*fn3 and Hat" and ordered the trustee to conduct a new sale subject to certain limitations and restrictions regarding the manner in which Stevens could exercise her section 363(i) rights. (In re Hat, supra, 310 B.R. at pp. 758-761.) Stevens and TWG appealed the decision to the district court, which held, in an unpublished decision, that "[t]he finding that PBI and Hat colluded is not clearly erroneous. But the record does not support the finding that [Stevens] herself had the 'intention or objective to influence the price' . . . . Therefore, this finding was clearly erroneous." Stevens and TWG appealed the district court's decision to the Ninth Circuit Court of Appeals.

Meanwhile, in October 2003, Stevens filed a complaint against Hat and the trustee asserting her rights to distribution of the liquidation proceeds or community property in the Hat estate.

In May 2004, TWG filed an administrative expense claim in the bankruptcy proceeding, seeking attorneys' fees and other expenses it incurred in bringing its motion for reconsideration of the order approving the sale of the Capello Winery to Stevens.

In September 2004, the trustee commenced an adversary proceeding against Stevens, Hat, and PBI for damages arising out of their collusion and violations of Bankruptcy Code section 363(n) (section 363(n); 11 U.S.C. § 363(n)) in connection with the sale of the Capello Winery.*fn4

In February 2005, TWG filed a civil action in San Diego Superior Court against Hat, Stevens, and others for intentional interference with contractual relations and prospective economic advantage and ...


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