Wells v. Dailey

Filed 10/3/06 Wells v. Dailey CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County.

Ralph Dau, Judge. Reversed in part and affirmed in part.

W. G. Wells, in pro. per., for Plaintiffs and Appellants.

Law Office of David E. Bower, David E. Bower for Defendant and Appellant.

___________________________________________________

A lawyer has repeatedly sued his former employee for alleged conversions of property. In the present litigation, the trial court awarded the lawyer money on a stock conversion claim that was not alleged in the complaint, over the relevancy objections of the former employee. We reverse the award for the stock conversion. The trial court should not have admitted or considered testimony relating to stock conversion because it is not the subject of this litigation. Otherwise, we affirm the judgment.

FACTS

The parties to this appeal are long-time business associates. W.G. Wells is an attorney and businessman. Barbara Dailey worked as a secretary and assistant in Wells’s office for 33 years. Since she left Wells’s employ, Dailey has been repeatedly targeted by Wells in a series of unmeritorious lawsuits. We take judicial notice of some of Wells’s unsuccessful attempts to claim ownership of Dailey’s property.^[1]

In February 2003, Wells instituted a new round of litigation against Dailey by filing the present lawsuit, in which he seeks to recover from her $50,125.55 in cash; a china cabinet; and a Luger replica handgun.^[2] Wells alleges that Dailey appropriated the $50,125 of his money to her own use, depositing the funds into an account at City National Bank (CNB).

Trial was by the court. Dailey testified that she began working for Wells in 1963 or 1964, and ended her employ there in February 1997. Wells conducted a legal practice and a property management business from his office. In connection with the property management business, Dailey helped collect and deposit rents, and prepared leases.

In 1976, Dailey opened a checking account at CNB. Wells’s name was also on the signature card, but Dailey was the primary account holder. In 2002, Dailey transferred $50,000 from the CNB checking account into a money market account in her name alone. She testified that “It was my account, I took it so [Wells] wouldn’t.” Dailey was unable to document her salary deposits into the CNB account because the records were at Wells’s office.

Wells elicited testimony from Dailey regarding her possession of securities in a company called PPG. Wells claimed that the securities belonged to him. Ostensibly, the testimony was elicited to prove that Dailey had a practice of transferring property belonging to Wells to herself, thereby indicating an intent to take the $50,000 in the CNB account in the same manner. Dailey’s counsel objected twice to the relevance of the questions regarding the PPG stock, noting that Wells was seemingly engaging in discovery during trial, rather than trying the issues framed in the complaint. The objections were overruled.

Wells testified regarding his claim that Dailey misappropriated funds from his business that were in the CNB checking account. Wells claimed that the misappropriated money was rent derived from a commercial property in Stanton owned by his mother and maintained by Dailey. When Dailey questioned the authenticity of a ledger card purporting to show deposits of rent from the Stanton property into the CNB account, the trial court directed Wells to bring the original document to court. When Wells produced the original document, it indicated that the deposits from the Stanton property went into Union Bank, not into CNB. Dailey testified that the rent deposits were not made into CNB.

The trial court did not award Wells the $50,125 that he sought for the allegedly misappropriated CNB money. However, it awarded Wells $28,998, plus a like amount of interest, for the PPG stock that Wells claimed was misappropriated. Wells’s motion for a new trial was denied. Dailey also requested a new trial, arguing that Wells, in his complaint, “does not allege anything with regard to the PPG stock . . . .” As a result, “no discovery could be done on this issue” and Dailey was taken by surprise at trial when Wells claimed ownership of the stock.

Wells appeals from the judgment. Dailey cross-appeals from the judgment.

DISCUSSION

Wells’s Appeal

1. Sufficiency Of The Evidence

a. CNB Account

The trial court declined to award Wells the $50,125.55 he sought for Dailey’s purported misappropriation of funds from the CNB checking account. The decision is supported by substantial evidence, and the court correctly refused to enter judgment for Wells on this claim.

First, Wells failed to establish the source of the money in the CNB account. He claimed the money came from his mother’s rental property in Stanton; however, the evidence he produced at trial indicated that the rents from the Stanton property were deposited into Union Bank, not into CNB. Thus, there is no showing of a connection between the Stanton property rents and the CNB account on which Dailey was the primary account holder.

Second, Wells failed to establish that he has standing to sue for the alleged misappropriation from CNB. Wells testified at trial that his mother owned the Stanton property that supposedly produced the money in the CNB account. He claimed at trial to be the trustee of his now-deceased mother’s trust. However, he refused to produce any documentation in discovery or at trial showing that (a) the Stanton property is held in trust, and (b) he is the trustee. The trial court justifiably concluded that Wells failed to prove he has any right to the CNB account, whether as an heir or as a trustee.

b. Demand For An Accounting

“An accounting cause of action is equitable in nature, and may be sought ‘where . . . the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable.’” (Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 14.) A demand for an accounting “’will not lie where it appears from the complaint that none is necessary or that there is an adequate remedy at law.’” (Ibid.)

Wells’s complaint identifies only one instance in which he claims that Dailey misappropriated money from an account belonging to him. As we have seen, even that single claim fails. Because the accounting claim is derivative, it must also fail. (Duggal v. G.E. Capital Communications Services, Inc. (2000) 81 Cal.App.4th 81, 95.) In any event, Wells seeks to force Dailey to account for all the money she received over the course of her 33 years of employment. The trial court wisely rejected Wells’s attempt to go on a fishing expedition through Dailey’s personal affairs. We agree with the court’s refusal to order an accounting.

2. Denial Of Wells’s Motion For A New Trial

The trial court properly denied Wells’s motion for a new trial. In his motion, Wells merely reiterated his right to recover the $50,000 from the CNB account. As the court found, there was no proof presented that Wells was a trustee or heir with any standing to assert a right to the money. Wells also argued that he was entitled to an accounting because Dailey was his fiduciary. Dailey, as Wells’s secretary and assistant, was not a fiduciary, and there is no basis for allowing Wells to invade Dailey’s privacy in the manner he proposes. Finally, Wells attempted to append two new claims against Dailey in his motion for a new trial. His claims are untimely. The court correctly denied Wells’s motion for a new trial.

Dailey’s Cross-Appeal

1. The PPG Stock

The trial court awarded Wells $28,998, plus interest, for Dailey’s alleged conversion of PPG stock belonging to Wells. On appeal, Dailey challenges this award because recovery for the PPG stock was not placed at issue in Wells’s complaint, and there is no evidence to support this claim in any event. Dailey’s argument is well taken.

Wells’s complaint mentions nothing about the PPG stock. In a pretrial motion, Wells declared that this action involved Dailey’s alleged conversion of $50,000 from his bank account. There is no mention of PPG stock in his motion. Critically, when Wells attempted to secure discovery regarding the PPG stock, the trial court rejecting his efforts, ruling that “[t]here are no allegations in the complaint concerning the companies identified in the questions or ‘bonds.’” Dailey objected twice during trial to the relevancy of testimony regarding the PPG stock, but her objections were overruled.

Dailey was completely taken by surprise when the trial court, without any warning, awarded Wells a large sum of money for the PPG stock. Had the purported conversion of the PPG stock been alleged in the complaint, Dailey could have demurred or moved for summary judgment on the grounds that the claim is barred by the statute of limitations. Dailey was deprived of an opportunity to assert this issue below when the trial court unexpectedly gave credence to Wells’s testimony and suddenly treated the complaint as if the PPG stock claim was alleged therein, without a motion to amend the complaint to assert such a claim. Due process demands that some warning be given before the trial court awards judgment on an issue that is not framed in the complaint, which the court had previously ruled to be irrelevant. The trial court abused its discretion by overruling Dailey’s objections at trial to the relevancy of testimony regarding the PPG stock. This testimony should not have been admitted as it had nothing to do with the allegations in the complaint. No award can be based on the improperly admitted testimony.

Apart from the due process concerns we have just noted, there are several other reasons why this judgment cannot stand. First, Wells testified that he discovered the alleged stock conversion in 1995. The statutory period for conversion claims is three years. (Code Civ. Proc., § 338; Fabricon Products v. United Cal. Bank (1968) 264 Cal.App.2d 113, 117.) As a matter of law, Wells’s claim is barred by the statute of limitations because he did not file suit until 2003. Second, Wells’s claims of ownership are not supported by the evidence. Wells did not produce any documentation showing his acquisition of PPG stock. Wells admitted at trial that he owns no property in his own name, and he could not identify the rightful owner of the PPG shares. Thus, Wells lacks standing to assert a claim to the PPG stock: only the named owner of the stock can assert such a claim.

2. Injunctive Relief

Wells makes claim to property held jointly by himself and Dailey, which is presently in the possession of the California State Controller’s Office as unclaimed property. The unclaimed property consists of $1,100 in bond interest; $300 in stock dividends; and a $239.47 checking account. The trial court ordered Dailey to sign affirmations regarding this property. Dailey contends that there is no evidence that this property actually belongs to Wells. During her testimony, Dailey conceded that she was not making a claim to property in Wells’s name that is in possession of the state controller. Having made the concession, Dailey cannot now claim that Wells failed to prove his right to the property.

DISPOSITION

The portion of the judgment awarding W.G. Wells $56,646.27 plus costs of suit of $3,476.70 is reversed. In all other respects, the judgment is affirmed. The parties are to bear their own costs on appeal. Wells’s request for sanctions is denied.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

BOREN, P.J.

We concur:

ASHMANN-GERST, J. CHAVEZ, J.

Publication Courtesy of California lawyer directory.

Analysis and review provided by Escondido Property line Lawyers.

^[1] Wells, through an assignee, unsuccessfully asserted ownership of commercial real property in Corona belonging to Dailey, despite Wells’s sworn testimony that Dailey was the 100 percent owner of the property. (Golden Gate, Inc. v. Dailey (Mar. 12, 2001, E026810) [nonpub. opn].) Wells renewed his efforts to wrest the Corona property from Dailey by suing her on a constructive trust theory, only to be rebuffed by our colleagues in Division Five, who applied the doctrine of res judicata against Wells. (Golden Gate, Inc. v. Siegel (Apr. 15, 2002, B146897) [nonpub. opn.].) Through his wife, Wells again made claims on Dailey’s property, losing in four consolidated appeals before our colleagues in Division Four. (Wells v. Dailey (Dec. 15, 2003, B157801, B159406, B161857, B162775) [nonpub. opn.].)

^[2] In September 2004, Wells filed yet another lawsuit against Dailey seeking the same $50,125.55. (Case No. BC290672.)