Banyan Limited Partnership v. Baer
Filed 8/12/13
Banyan Limited Partnership v. Baer CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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opinion has not been certified for publication or ordered published for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.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE
DISTRICT
DIVISION THREE
BANYAN LIMITED PARTNERSHIP et al.,
Plaintiffs and
Respondents,
v.
DAN W. BAER,
Defendant and
Appellant.
G045797
(Super. Ct.
No. 764271)
O P I N I O
N
Appeal from a postjudgment
order of the Superior Court
of
County, Thierry P. Colaw, Judge. Motion to dismiss denied; order reversed.
Enterprise Counsel
Group, Benjamin P. Pugh, Teddy Davis, and David A. Robinson; Schadrack &
Chapman and C. Michael Chapman for Defendant and Appellant.
Law Offices of Dennis
Hartmann and Dennis Hartmann; The Dressler Law Group and Thomas W. Dressler;
Snell & Wilmer, Richard A. Derevan and Todd E. Lundell for Plaintiffs and
Respondents.
Dan W. Baer
appeals from a postjudgment order in favor of Banyan Limited Partnership
(Banyan), Pear Tree Limited Partnership (Pear Tree), and Orange Blossom Limited
Partnership (Orange Blossom) (hereafter referred to collectively as the Grammer
Limited Partnerships). In a court trial,
the Grammer Limited Partnerships obtained a judgment totaling about $1.1
million against two corporations owned by Baer—IBT International, Inc. (“IBTâ€) and
Southern California Sunbelt Developers, Inc. (“SCSDâ€)
loans they made to the corporations that had not been repaid. Although the Grammer Limited Partnerships’
complaint alleged Baer was an alter ego of his corporations, no evidence
concerning the alter ego relationship was presented at trial and in its
statement of decision, the court found the Grammer Limited Partnerships had
affirmatively abandoned the alter ego claim. The trial court subsequently
granted the Grammer Limited Partnerships’ motion for new trial and amended its
statement of decision to delete the abandonment finding. The Grammer Limited Partnerships filed a
motion to dismiss Baer’s appeal, contending the order is not separately
appealable. We reject their contentions
and deny the motion to dismiss. Baer
contends the order must be reversed because the time for ruling on a new trial
motion had expired. We agree and reverse
the order.
FACTS AND PROCEDURE
This is the second of
three appeals that followed the final judgment in this litigation. In our concurrently filed opinion in
2013, G045584) [nonpub. opn.] (Banyan 1),
we affirm the final judgment against IBT and SCSD awarding the Grammer Limited
Partnerships about $1.1 million on certain contract claims, but which was
against the Grammer Limited Partnerships and four other plaintiffs (the
non-Grammer plaintiffs)
name="_ftnref2" title="">[2]
in favor of Baer, IBT, and SCSD on all other claims.
We adopt and incorporate
by reference the facts and analysis from our opinion in Banyan 1, supra,
G045584. To recap, attorney David A.
Tedder and non‑attorney Baer formed a business arrangement (ultimately
found by the court to be a partnership) in 1986 to market and mass-produce
estate plans through Tedder’s law firm, split the law firm profits, and use
them to invest in real estate in which the two men were to be partners. Tedder eventually began providing asset
protection services for some very wealthy clients, which entailed his creating
a myriad of limited partnerships for each client, of which Tedder was general
partner, through which client funds would be moved and invested. When the law firm failed to produce profits,
Tedder began arranging for loans from the limited partnerships, including the
Grammer Limited Partnerships, for real estate acquisition. Three pieces of real estate were acquired and
title held by the two corporations owned by Baer—IBT and SCSD. When Tedder and Baer’s partnership fell
apart, Tedder sued Defendants on behalf of his client limited partnerships to
recover on the loans.
The original complaint
filed in 1996 alleged the Grammer Limited Partnerships made loans to Defendants
based on oral agreements, pursuant to
which Baer agreed the proceeds from the real estate investments would be used first
to pay off the loans. An attachment to
the complaint identified seven loans made by the Grammer Limited
Partnerships to IBT totaling $1,210,500, and one loan to SCSD for $70,000. It alleged Baer, individually and on behalf
of IBT and SCSD had repudiated the loan agreements, was using the cash flow
from the properties for his own benefit, and was not repaying the loans as
agreed. The original complaint contained
causes of action against Defendants for money lent, seeking to recover all
amounts loaned; for fraud and deceit and for unjust enrichment, alleging Baer
was improperly diverting cash flow and equity in the properties (through new
loans and encumbrances) for his own use; and for judicial foreclosure, seeking
imposition of an equitable lien on the properties. The first amended complaint and subsequent
complaints contained the same basic allegations as the original complaint about
loans from the Grammer Limited Partnerships to Defendants for real estate acquisition,
adding the oral loan agreements were later memorialized by written promissory
notes. The amended complaints added
alter ego allegations, i.e., that each corporate defendant (IBT and SCSD)
were “sham†corporations acting as alter egos of the individual defendant
(Baer). The amended complaints also
added a breach of fiduciary duty cause of action.
The action was tried in
four phases over seven years before different judges. The phase 2 trial took place in the summer of
2004 before Judge C. Robert Jameson. The
trial status order stated the second phase would cover the claims of the
Grammer Limited Partnerships “except alter ego and punitive damages.†Later phases would consider the claims of the
non-Grammer plaintiffs, issues relating to the relationship of Tedder and Baer
and dissolving their joint venture, any remaining claims and cross-claims of
the parties, followed by alter ego claims, punitive damages claims, and
any remaining matters.
In the phase 2 trial,
Judge Jameson determined the Grammer Limited Partnerships were entitled to a
judgment against IBT on four unpaid promissory notes signed by Baer on IBT’s
behalf totaling $1 million (less credit for certain amounts IBT had already
paid on those debts), and against SCSD on one unpaid promissory note signed by
Baer on SCSD’s behalf for $70,000.
(Baer’s motion for judgment on the breach of contract cause of action
was subsequently granted.) After the
phase 2 trial, but before the statement of decision was entered, Judge Jameson
retired. He returned on assignment for
the following hearings/events scheduled for March 9, 2005, “statement of
decision; [p]roposal of plaintiff to revise Court’s
ruling . . . until completion and disposition of all causes
and matters heard pursuant to this assignment.â€
He was again assigned to sit on April 6, 2005, “and until completion and
disposition of all causes and matters heard pursuant to this assignment.â€
Judge Thierry Colaw
presided over the final two phases of the trial, including phase 4 in the
summer of 2010. In their statement of
issues for the 2010 phase 4 trial before Judge Colaw, which was to be the final
phase of trial, the Grammer Limited Partnerships stated their contract claims
had been resolved in phase 2 and there were “[n]o remaining issues for trial: This claim was fully tried in prior
phases. Plaintiffs prevailed on some
loan claims, Defendants prevailed on others.â€
The only remaining issues were as to their remaining tenth cause of
action for breach of fiduciary duty against Baer. The statement made no mention of alter ego
issues remaining to be tried.
The trial court’s phase
4 tentative ruling was issued on October 18, 2010, stating phase 4 was the
“final†phase of trial. It ruled in
Baer’s favor, declared Baer the prevailing party, and directed Baer’s attorneys
to prepare the formal statement of decision.
Although the court’s tentative ruling made no specific mention of the
alter ego allegations, the proposed statement of decision stated that
because the Grammer Limited Partnerships introduced no evidence during trial on
any other causes of action of claims, including alter ego, they had
“affirmatively abandoned†any remaining claims.
Over the Grammer Limited Partnerships’ timely objections, the trial
court signed and entered the proposed statement of decision.
On March 29, 2011, the
Grammer Limited Partnerships filed a motion for new trial under Code of Civil
Procedure section 657 on the alter ego issue asking the court to
strike the finding in its statement of decision they had affirmatively abandoned
their alter ego claim and allow alter ego be litigated. In their motion, the Grammer Limited
Partnerships’ attorney, Dennis Hartmann, asserted it had always been his
understanding that claims for attorney fees and alter ego claims relating
to the phase 2 breach of contract claims on which the Grammer Limited
Partnerships prevailed would be decided postjudgment by retired Judge
Jameson. He understood Judge Jameson’s
postretirement assignment to sit on post phase 2 trial matters, which was to
last “until completion and disposition of all causes and matters heard pursuant
to [these] assignment[s,]†encompassed these matters. Hartmann declared he had recently learned
Judge Jameson now had a conflict that prevented him from hearing the
postjudgment motions.
The trial court entered
final judgment on May 31, 2011, awarding the Grammer Limited Partnerships
approximately $1.1 million in damages, plus pre- and postjudgment interest,
against IBT and SCSD on their breach of contract and common counts causes of
action in accordance with Judge Jameson’s August 30, 2005, statement of
decision. The court entered judgment in
Defendants’ favor on all remaining causes of action as to the Grammer Limited
Partnerships and on all causes of action as to the non‑Grammer
plaintiffs.
On July 19, 2011, the
trial court ruled on the Grammer Limited Partnerships’ new trial motion. It granted the motion “as to [the Grammer
Limited Partnerships’] request to strike from the statement of decision the finding
that [they] had abandoned their alter ego remedy against Baer. [¶] A
review of the complicated procedural posture of this case, particularly the
status of Judge Jameson begin given, post-retirement, the power to resolve
issues in [phase 2] of these proceedings mandate†granting the Grammer Limited
Partnerships’ new trial motion as to the alter ego issue only. “The evidence was insufficient to show waiver
of further proceedings on this issue, and this [alter ego] matter,
procedurally, was still an issue for Judge Jameson to decide since he still had
sole jurisdiction to decide such an issue in the [phase 2] portion of the
trial.â€
On August 3, 2011, the
Grammer Limited Partnerships (and the
non-Grammer
plaintiffs) filed their notice of appeal from the final judgment. (Banyan
1, supra, G045584.) On August 24,
2011, Defendants filed a notice of appeal from the final judgment, but they
later dismissed their cross-appeal.
On September 16, 2011,
Baer filed a separate notice of appeal from the trial court’s July 19, 2011,
order granting the Grammer Limited Partnerships’ new trial motion, which is the
appeal before us. The Grammer Limited
Partnerships filed a motion in this court to dismiss the appeal on the grounds
the order is not separately appealable.
We ordered the motion to dismiss
decided in conjunction with the appeal.
DISCUSSION
Motion to Dismiss
The Grammer Limited
Partnerships contend the appeal should be dismissed because the order is not
appealable. A new trial order, including
an order for a partial new trial, is an appealable order. (Code Civ. Proc., § 904.1, subd. (a)(4);
Beavers v. Allstate Ins. Co. (1990)
225 Cal.App.3d 310, 330.) Although the
Grammer Limited Partnerships moved for new trial under Code of Civil Procedure
section 657, and the trial court granted the new trial motion as to the
alter ego issue, the Grammer Limited Partnerships argue the order was in
reality one simply modifying the statement of decision to delete the
abandonment finding so they could file a postjudgment motion under Code of
Civil Procedure section 187 to add Baer as a judgment debtor. Therefore, they argue the order is in effect
one denying new trial and granting alternative relief under Code of Civil
Procedure section 662
name="_ftnref4" title="">[4]
and such an order is not separately appealable.
(See Concerned Citizens Coalition
of Stockton v. City of Stockton (2005) 128 Cal.App.4th 70, 77-78
[where true nature of order was denying new trial and granting alternative
relief under Code of Civil Procedure section 662, order not directly
appealable].)
As we explain in
on the faulty premise that being fully aware of its alter ego claim
against Baer, and having alleged those claims in its complaint and identifying
it as a trial issue in the pretrial scheduling order, it nonetheless had the
“option†of not presenting those claims for trial and pursuing them via a
postjudgment motion to amend the judgment under Code of Civil Procedure section 187.
Code of Civil Procedure section 187
provides the trial court an equitable procedure to add a nonparty
when the judgment creditor has been unsuccessful in its efforts at collecting
on the judgment against the named judgment debtor. (See e.g., Leek v. Cooper (2011) 194 Cal.App.4th 399, 419 [“[u]nder some
circumstances a judgment against a corporation may be amended to add a
debtor†(italics added)].) Here, whether
named defendant Baer was an alter ego of named defendants IBT and SCSD was
front and center in the Grammer Limited Partnerships’ pleadings and was an
issue that should have been proven at trial.
(See Jines v. Abarbanel (1978)
77 Cal.App.3d 702, 717 [improper to amend judgment where plaintiff was
aware alleged alter ego’s existence before trial].) Accordingly, the trial court’s original
finding Baer did not present evidence at trial to prove alter ego and thus
abandoned that claim was appropriate and any relief was properly to be
addressed via a new trial motion. The
trial court’s order is properly viewed as one granting a new trial because it
envisions “a re-examination of an issue of fact in the same court after a trial
and decision by a jury, court or referee†(Code Civ. Proc., § 656), and as
such the postjudgment order is appealable (Code Civ. Proc., § 904.1, subd.
(a)(4)). Accordingly, we deny the
Grammer Limited Partnerships’ motion to dismiss and turn to the merits of Baer’s
appeal.
New Trial Order
Baer contends the order
granting the Grammer Limited Partnerships a new trial on the alter ego
issue is void because the court lost jurisdiction to rule on the motion. We agree.
“The power of a trial
court to rule on a motion for a new trial expires 60 days after (1) the
clerk mails the notice of entry of judgment, or (2) a party serves written
notice of entry of judgment on the party moving for a new trial, whichever is
earlier, or if no such notice is given, then 60 days after filing of the first
notice of intent to move for a new trial.
([Code Civ. Proc.,] § 660.)
If the motion for a new trial is not ruled upon within the 60-day time
period, then ‘the effect shall be a denial of the motion without further order
of the court.’ ([Code Civ. Proc.,] §
660.) The 60-day time limit provided in
[Code of Civil Procedure] section 660 is jurisdictional. Consequently, an order granting a motion for
a new trial beyond the relevant 60-day time period is void for lack of
jurisdiction. (Fischer v. First Internat. Bank (2003) 109 Cal.App.4th 1433,
1450-1451.)†(Dakota
Payphone, LLC v. Alcarez (2011) 192 Cal.App.4th 493, 500 (
(2011) 196 Cal.App.4th 1, 14.)
Here, the Grammer
Limited Partnerships filed their new trial motion on March 29, 2011, but the
court did not rule on the motion until July 19—112 days after the motion was
filed. Accordingly, the trial court lost
jurisdiction to rule on the new trial motion.
The Grammer Limited
Partnerships argue Baer waived his right to object to the trial court’s
jurisdiction to rule on the Code of Civil Procedure section 657 new trial
motion because he did not alert the court to the jurisdictional issue. But it was not Baer’s responsibility to make
sure the motion was ruled on in a timely manner. (See Dakota
Payphone, supra, 192 Cal.App.4th at p. 500 [“‘It is the duty of the
[moving] party to be present and see that his motion for a new trial is set for
hearing within the statutory [time] period’â€].)
And the claim ignores the record.
At a hearing on May 20, 2011, Baer’s counsel specifically alerted the
trial court the 60-day period for ruling on the Grammer Limited Partnerships’
new trial motion was about to expire.
The Grammer Limited Partnerships’ counsel advised the court the 60-day
period did not start until judgment was entered. The trial court agreed the 60 days did not
start until either judgment was entered or notice of entry of judgment was
given. But in Green v. Laibco, LLC (2011) 192 Cal.App.4th 441, on procedurally
similar facts (i.e., motion for new trial was filed after verdict rendered but
before judgment was entered), the court concluded that based on “the unanimity
of the appellate authorities†when no judgment has been entered, the 60-day
period begins to run from the date of filing of the notice of intention to move
for new trial. (Id. at pp. 447-448.)
Baer was not responsible for the Grammer Limited Partnerships’
misunderstanding of the law. A new trial
order rendered more than 60 days after the motion was filed is void. (Dakota
Payphone, supra, 192 Cal.App.4th at p. 500.)
Grammer Limited Partnerships also argue we should construe their new trial
motion as a motion to set aside a judgment under Code of Civil Procedure
section 663 so as to avoid jurisdictional bar and render the order
effective. Code of Civil Procedure
section 663 allows the trial court, in the case of a court trial, upon
noticed motion to set aside and vacate the judgment and enter a different
judgment when there was an “[i]ncorrect or erroneous legal basis for the
decision, not consistent with or not supported by the facts; and in such case
when the judgment is set aside, the statement of decision shall be amended and
corrected.†(See Payne v. Rader (2008) 167 Cal.App.4th 1569, 1574 [“‘“A
motion to vacate under [Code of Civil Procedure] section 663 is a remedy to be
used when a trial court draws incorrect
conclusions of law or renders an erroneous judgment on the basis of
Procedure section 663a imposes the same 60-day requirement for ruling on
the motion imposed upon new trial motions (Code Civ. Proc., § 663a, subd.
(b)), the version of the statute in effect when the Grammer Limited Partnerships’
motion was ruled upon imposed no time limit.
In the alternative, the Grammer Limited Partnerships argue we should
construe the motion as one brought under Code of Civil Procedure
section 473, subdivision (d), to set aside any void judgment or
order. Generally, absent a showing of
“‘extremely good cause,’†an appellate court will construe a motion as it is
labeled. (20th Century Ins. Co. v. Superior Court (2001) 90 Cal.App.4th 1247,
1261 (20th Century));
76 Cal.App.4th 176, 181-184; Passavanti
v. Williams (1990) 225 Cal.App.3d 1602, 1610.) Although there can be exceptional cases in
which appellate courts have disregarded the label assigned to the motion by the
moving party and looked instead to the substance of the relief sought and
obtained from trial court (20th Century,
supra, 90 Cal.App.4th at p. 1261), the Grammer Limited Partnerships have
not demonstrated this to be such a case.
DISPOSITION
The motion to dismiss
the appeal is denied. The postjudgment
order is reversed. In
the interests of justice, each side shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
O’LEARY,
P. J.
WE CONCUR:
RYLAARSDAM, J.
BEDSWORTH, J.
hereafter sometimes referred to collectively as Defendants.
Partnerships and the non-Grammer plaintiffs are hereafter sometimes referred to
collectively as Plaintiffs.
