Contursi v. Carabini

Filed 6/28/06 Contursi v. Carabini CA4/3

Received for posting 7/28/06

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeals from a judgment of the Superior Court of Orange County, John M. Watson, Judge. Affirmed in part and reversed and remanded in part.

Good, Wildman, Hegness & Walley, Gary A. Dapelo; Snell & Wilmer, Richard A. Derevan and Marc L. Turman for Plaintiff, Cross-defendants and Appellants.

Rutan & Tucker, Milford W. Dahl, Jr., Mark J. Payne and April L. Waiter for Defendants, Cross-complainants and Appellants.

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This appeal arises out of the dissolution of defendant and cross-complainant Monex Rare Coins, LLC (Monex). Plaintiff and cross-defendant Steven L. Contursi and defendant and cross-complainant Michael A. Carabini (defendant; collectively with Monex, defendants) were principals in Monex. The operating agreement contained two provisions dealing with withdrawal and dissolution. Interpretation and application of those two articles are the principal issues before us.

Plaintiff contends that upon his withdrawal from Monex, he had the right to have his interest valued and the opportunity to purchase all of the inventory. Defendants counter that once plaintiff withdrew, Monex automatically dissolved, negating any duty to value plaintiff's interest or sell him the coins. In a judgment ordering an accounting, the court agreed with defendants' interpretation of the contract.

Plaintiff maintains the court erred in construing the agreement, based on both the language of the agreement and the extrinsic evidence admitted at trial, and that defendants are judicially estopped from taking a contrary position. He also argues that defendants breached their fiduciary duty by failing to value his interest and by actions taken during dissolution of Monex. We agree that defendant breached the agreement by failing to value plaintiff's interest in Monex and allow him the opportunity to purchase the rare coin inventory; we reverse on that ground for the court to determine damages to plaintiff resulting from such breach. We also reverse and remand for the court to determine the amount defendant is required to reimburse Monex for attorney fees and costs it expended on his behalf in defending the lawsuit against the claim of such breach.

Defendants cross-appealed, claiming the court erred in calculating an item of damages awarded against plaintiff. Substantial evidence supports the finding. Finally, both parties contest several items in the final accounting and judgment thereon. To the extent there were additional attorney fees and costs spent by Monex on defendant's behalf related to his breach, the judgment is reversed and remanded for the court to determine those amounts defendant must repay to Monex. In all other respects the appeal from the accounting and judgment thereon is affirmed.

FACTS AND PROCEDURAL HISTORY

In 1997 plaintiff, defendant, and Stephen Deeds formed Monex to wholesale rare coins. Plaintiff, a numismatist, had substantial experience in the rare coin industry. For several years he had operated his own rare coin wholesale business in Laguna Beach that generated annual sales of $10 to $12 million. Deeds had over 30 years' experience in the rare coin industry.

Defendant had no experience in the rare coin business. His father owned Monex Deposit Company, the largest precious metal retailer in the country, with transactions totaling over $1 billion per year. Because â€