United States District Court, N.D. California
ORDER GRANTING IN PART JOANNA SULLIVAN'S MOTION
FOR PARTIAL SUMMARY JUDGMENT AND DENYING STEPHEN FINN'S
MOTION FOR SUMMARY JUDGMENT Re: Dkt. Nos. 92, 97
WILLIAM H. ORRICK UNITED STATES DISTRICT JUDGE.
case plaintiff JoAnna Sullivan alleges that defendant Stephen
Finn has breached a Stock Purchase Agreement
(“SPA”), signed in 2011, through which Finn
purchased Sullivan's majority shares and partnership in
the Sullivan family's winery. As outlined in the SPA, in
exchange for ownership of the winery Finn agreed to pay
Sullivan $9, 000 a month for the rest of her life (the
“Annuity Obligation”) and to pay an amount not to
exceed $500, 000 toward a life estate in a property of
Sullivan's choice (the “Life Estate
Obligation”), (collectively the “Payment
Obligations”). Sullivan alleges that Finn has failed to
comply with these obligations and brings four claims for
relief: (1) breach of contract because Finn failed to pay
Sullivan at least six of the monthly annuity payments
required under the SPA; (2) declaratory and injunctive
relief, seeking a declaration that Finn is required to pay
Sullivan $9, 000 a month for the rest of her life and an
injunction compelling him to make such payments; (3) breach
of contract because Finn failed to meet his Life Estate
Obligation; and (4) elder abuse because Finn deprived
Sullivan of money and property that Finn knew would likely be
harmful to Sullivan.
parties have filed cross-motions for summary judgment. Finn
seeks summary judgment on all four of Sullivan's claims,
arguing that he was not required to perform the Payment
Obligations under the SPA because Sullivan made various
misrepresentations about the condition of the winery that
excused his performance. There is no legal support for his
arguments, and his motion is DENIED.
moves for summary judgment on her first three claims, arguing
that there are no material facts in dispute to show that Finn
was obligated to perform the Payment Obligations and that he
has failed to do so. Although Finn argues that his ex-wife,
Kelleen, agreed to satisfy his obligation to Sullivan (her
mother), there is no evidence that Sullivan accepted
Kelleen's full performance, which would be necessary
under California Civil Code section 1473 to extinguish his
obligation because it was allegedly being performed by a
third party. Sullivan's motion for partial summary
judgment is GRANTED with regard to liability. She also moves
for summary judgment with regard to damages resulting from
breach of the Annuity Obligation and Life Estate
Obligation. Sullivan's motion for partial summary
judgment is GRANTED with regard to damages owed for breach of
the Life Estate Obligation, as there are no facts in dispute
as to it, but DENIED with regard to damages owed for breach
of the Annuity Obligation because of disputed facts.
Sullivan is Finn's former mother-in-law. Kelleen Decl.
¶2, (Dkt. No. 102). Finn married Sullivan's
daughter, Kelleen Sullivan on June 18, 2011 and the couple
divorced in October 2015. Prior to Finn and Kelleen's
marriage Kelleen's family, the Sullivans, owned a family
winery in Napa County, California that was organized into two
entities, Sullivan Vineyards Corporation (“SVC”)
and Sullivan Vineyards Partnership (“SVP”). JoAnn
Decl. ¶2 (Dkt. No. 101). In 2011, JoAnna was the
majority shareholder of SVC and majority partner of SVP.
August 12, 2011, Finn entered into the SPA with SVC, SVP,
JoAnna, and the Sullivan Family Revocable Living Trust,
according to which Finn became the majority shareholder of
SVC and the majority partner of SVP. Finn Decl. Ex. A,
(“SPA”) (Dkt. No. 94-1). In exchange, the SPA
provided that Finn was required to pay JoAnna as follows:
1.2 Consideration for Interests. Subject to the
terms and conditions of this Agreement and in consideration
of the acquisition, sale, conveyance, assignment, transfer
and delivery by Seller of the Interests to Buyer, and the
execution and delivery of this Agreement by SVC, SVP and
Seller to Buyer, Buyer shall deliver to Seller on the Closing
Date the following aggregate purchase price (collectively,
the “Purchase Price”):
(a) Buyer Obligation to Make Annuity Payments. Buyer
shall pay to Seller JoAnna Sullivan $9, 000 within one week
following the completion of her move from the house located
at 1090 Galleron Road, St. Helena, CA 94754 (the
“Galleron Property”), and $9, 000 per
month thereafter on the monthly anniversary of the first $9,
000 payment for the remainder of her life (the
“Annuity”) . . .
(b) Buyer Obligation with Respect to Residence;
Establishment of Trust. On the third annual anniversary
of JoAnna C. Sullivan completing her move from the Galleron
Property, Buyer shall pay an amount not to exceed $500, 000
towards a life interest in a personal residence of JoAnna C.
Sullivan's choice. Such life interest in such residence
shall be evidenced by a Trust Agreement (the “Trust
Agreement”). Buyer and JoAnna C. Sullivan hereby
agree to enter into the Trust Agreement in connection with
the purchase of such residence. Buyer and JoAnna C. Sullivan
will pay all property taxes, insurance, maintenance, home
owner association costs, and all other costs associated with
such residence during her life time, and to the extent not
paid, Buyer shall have the right to offset and deduct the
amount of such payments from the Annuity payments.
SPA § 1.2.
Section 2 of the SPA, JoAnna made a number of representations
and warranties about the financial and operating condition of
the winery. SPA § 2. These representations were
supplemented and clarified by Schedule 2, which was
incorporated into the SPA at its execution. Finn Decl. Ex. B
(Dkt. No. 94-1).
the execution of the SPA, Finn began making the $9, 000
monthly annuity payments to JoAnna. JoAnna Decl. ¶7. In
the summer of 2014, JoAnna, her children, and Finn attempted
to find a property that would suit JoAnna to satisfy the Life
Estate Obligation. Eventually, JoAnna selected a property
located at the Del Mesa Community in Carmel, with a purchase
price of $558, 000. Id. Because the purchase price
exceeded $500, 000, Finn, Kelleen, and JoAnna entered into an
agreement, memorialized by a letter, regarding how the funds
would be contributed to purchase the property. Warden Decl.,
Ex. C at 4 (Dkt. No. 118-3). The letter states that
“Kelleen Finn agrees to add $10, 000 cash to the
purchase amount, making $510, 000 of the $557, 000 purchase
price, paid in full by Stephen and Kelleen Finn per the
[SPA].” Id. It also states that JoAnna would
contribute $16, 710 in cash and the remaining $31, 290
“by allowing Stephen Finn to deduct $1, 000 a month
from [her] monthly annuity towards the remainder of the
balance until paid in full.” Id. Starting in
November, 2014, Finn reduced his monthly annuity payments to
JoAnna by $1, 000, paying her $8, 000 a month. JoAnna Decl.
October 22, 2014, Finn wrote Kelleen a check for $500, 000.
Kelleen Decl. Ex. C. In the memo line on the check Finn wrote
“Prenup Agreement.” Id. Under the
marriage agreement between Finn and Kelleen, Finn was
obligated to pay Kelleen $500, 000 a year for the first ten
years of their marriage. Kelleen Decl. Ex. A. Finn told
Kelleen to purchase the Del Mesa property with these funds.
Kelleen Decl. ¶16. Kelleen used these funds to purchase
the Del Mesa property at the end of October, 2014 as her sole
and separate property. Warden Decl., Ex. G. In connection
with the purchase of the Del Mesa property, the title
insurance company suggested that Kelleen use the following
language to indicate that the property was being purchased to
establish a life estate for her mother:
An agreement exists between Kelleen Sullivan Finn, and JoAnna
C. Sullivan, in which a Life Estate is to be established for
JoAnna Sullivan. This letter confirms that at this time,
Kelleen has entered into a purchase contract on the property,
157 Del Mesa, Carmel, CA 93921, which is being purchased to
establish this life estate.
Decl. Ex. J at 4. Kelleen executed a letter containing this
language prior to closing. Warden Decl. Ex. K at 4.
she was not on the title to the property and received no life
estate deed, following closing, JoAnna was concerned that she
had not received a life estate in the Del Mesa property.
JoAnna Decl. ¶12. To help address this issue, on April
10, 2015 Kelleen created a revocable trust that included the
As soon as practicable after my death, even if my husband
survives me, if my mother, JoAnna Sullivan, survives me and
is living at the time property becomes distributable under
this Section and is then occupying the Carmel Property
(defined below) as her primary residence, my Trustee shall
set aside (i) any interest held or received by my trust at my
death in the Carmel Property, including any improvements
thereon, all insurance policies thereon and related claims
under such policies, and free of all liens and encumbrances
thereon, and (ii) the sum of fifty thousand dollars ($50,
000) to be held in trust for the benefit of JoAnna Sullivan
as described below. For all purposes of this agreement,
references to the ‘Carmel Property' means the
residence located at 157 Del Mesa, Carmel, California 93921.
Such trust shall be referred to as the Carmel Property Trust
. . . If my mother predeceases me, this gift shall lapse and
the Carmel Property shall be administered as part of my
remaining trust property as provided in Article Seven.
Warden Decl. Ex. S.
October 7, 2015, a Colorado court entered a divorce decree,
ending Finn and Kelleen's marriage. Kelleen Decl.
¶24. Because the marriage agreement between Kelleen and
Finn provided that Kelleen would acquire any interest in the
Sullivan winery upon the dissolution of the couple's
marriage, the Colorado court ordered that Finn's
interests in the Sullivan winery be transferred to Kelleen.
Id. Following the dissolution of marriage Finn
stopped making annuity payments to JoAnna. JoAnna Decl.
of her ongoing concern that she did not have a life estate in
the Del Mesa property, and because Finn had stopped making
annuity payments, in late 2015 JoAnna Sullivan hired an
attorney to help her obtain a life estate deed memorializing
a life estate in the Del Mesa property and enforce the
Annuity Obligation. Warden Decl. Ex. F at 132:3-17. JoAnna
filed a lawsuit against Finn in Monterey County Superior
Court on December 2, 2015, to enforce the Payment Obligations
under the SPA. Warden Decl. Ex. H. She voluntarily dismissed
the case without prejudice on December 31, 2015. Id.
never took possession of the Del Mesa property and Kelleen
ultimately rented it out to another tenant. Warden Decl. Ex.
F at 150:9-152:20. Kelleen sold the Del Mesa Property in
October of 2016 for approximately $640, 000. Warden Decl. Ex.
I at 34:18-23. Following the sale, Kelleen paid JoAnna $19,
500, which included the $17, 000 JoAnna had paid for the
property with her own cash, plus $2, 500 in rental proceeds.
Warden Decl. Ex. I at 122:22-123:16.
judgment on a claim or defense is appropriate “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). In order to
prevail, a party moving for summary judgment must show the
absence of a genuine issue of material fact with respect to
an essential element of the non-moving party's claim, or
to a defense on which the non-moving party will bear the
burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
made this showing, the burden then shifts to the party
opposing summary judgment to identify “specific facts
showing there is a genuine issue for trial.”
Id. The party opposing summary judgment must then
present affirmative evidence from which a jury could return a
verdict in that party's favor. Anderson v. Liberty
Lobby, 477 U.S. 242, 257 (1986).
summary judgment, the Court draws all reasonable factual
inferences in favor of the non-movant. Id. at 255.
In deciding a motion for summary judgment,
“[c]redibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the
facts are jury functions, not those of a judge.”
Id. However, conclusory and speculative testimony
does not raise genuine issues of fact and is ...