ZTE Electronics v. Amoroso Properties

Filed 10/5/06 ZTE Electronics v. Amoroso Properties CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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

APPEAL from a judgment of the Superior Court of Los Angeles County, Irving S. Feffer, Judge. Reversed.

Law Offices of Shun C. Chen and Shun C. Chen for Plaintiff and Appellant.

Mudd, Marks & Associates and Kenneth G. Marks; and Joseph E. Mudd for Defendants and Respondents.

I. INTRODUCTION

Plaintiff, ZTE Electronics Corp., Inc., appeals from an August 22, 2005 Code of Civil Procedure^[1] section 437c judgment in favor of defendants Amoroso Properties, Glenmore Plaza Hotel, James Amoroso (James), and Jack Amoroso, Sr. (Jack).^[2] Defendants’ motion was based on collateral estoppel. We conclude defendants failed to establish plaintiff’s causes of action were entirely without merit because there was a complete defense to them. Accordingly, we reverse the judgment.

II. BACKGROUND

A. The Second Amended Complaint

The second amended complaint is the operative pleading. Plaintiff alleges as follows. On October 31, 2003, plaintiff obtained a $203,457.57 judgment against Audio Wood Products, Inc. (Audio Wood). Audio Wood is no longer in business. John Edward Amoroso, Jr. (John) owned Audio Wood. John has declared bankruptcy. John is not a party to this appeal. John’s brother James and their father, Jack, were the general or managing partners of Amoroso Properties, a general partnership. Amoroso Properties owned the Glenmore Plaza Hotel (the hotel). Between 1997 and 2004, Audio Wood transferred money to Amoroso Properties, the hotel, James, and Jack, with actual intent to

defraud plaintiff. Specifically, there were fraudulent transfers from: Audio Wood to the hotel, which as noted was owned by Amoroso Properties; Audio Wood to James; and Audio Wood to Jack. Further, Amoroso Properties and the hotel subsequently conveyed some of the money received from Audio Wood to James and Jack. Plaintiff asserted claims to set aside the fraudulent conveyances (first cause of action) and for conspiracy to defraud (second cause of action). In the third cause of action, plaintiff sought, pursuant to section 708.210, to recover from Amoroso Properties and the hotel $250 they allegedly owed to Audio Wood. Section 708.210 states, “If a third person has possession or control of property in which the judgment debtor has an interest or is indebted to the judgment debtor, the judgment creditor may bring an action against the third person to have the interest or debt applied to the satisfaction of the money judgment.”

B. Proceedings in the Bankruptcy Courts

In September 2002, John filed for relief under Chapter 7 of the Bankruptcy Code. (11 U.S.C. § 701 et seq.) In December 2002, plaintiff commenced an adversary proceeding seeking a determination John was personally liable for the Audio Wood debt. Plaintiff further sought a determination the debt was nondischargeable in bankruptcy. The bankruptcy court ruled against plaintiff on both assertions. The bankruptcy court found the hotel had repaid the loan from Audio Wood, albeit in a negotiated discounted amount. Plaintiff appealed. The Ninth Circuit bankruptcy panel affirmed.

C. The Summary Adjudication Motion

Defendants’ motion was identified as one for summary adjudication as opposed to summary judgment. Defendants sought summary adjudication as to all three of plaintiff’s causes of action on collateral estoppel grounds. Defendants also requested summary adjudication of their third affirmative defense, which stated: “[T]he issues of fact herein alleged have already been adjudicated in the United States Bankruptcy Court . . . and . . . plaintiff is barred from re-litigating these facts by the doctrine of Collateral Estoppel.” In their separate statement, defendants set forth the following undisputed facts: plaintiff alleged the loans from Audio Wood to Amoroso Properties (“aka” the hotel) were without consideration; plaintiff further alleged partnership distributions Amoroso Properties made to James and Jack were sums that were previously transferred from Audio Wood to the hotel; and the identical factual issues concerning the loans from Audio Wood to Amoroso Properties (“aka” the hotel) were adjudicated in the bankruptcy court. At the hearing in the trial court, when asked whether granting the summary adjudication motion would dispose of plaintiff’s causes of action, defense counsel replied: “Well, let’s put it this way, Your Honor. It completely disposes [of] the causes of action as it pertains to the loans which were made from Audio Wood to Amoroso Properties.” The trial court granted the motion and entered a judgment in plaintiff’s favor.

III. DISCUSSION

A. Defendants’ Summary Judgment Burden and the Standard of Review

Defendants sought summary adjudication as to plaintiff’s three causes of action on collateral estoppel grounds. Defendants also asserted they were entitled to prevail on the affirmative defense of collateral estoppel. Because defendants sought to dispose of the entire lawsuit, the motion was in effect one for summary judgment. Moreover, the trial court in fact entered summary judgment. Therefore, our review is governed by the standard applicable to a summary judgment motion.

The parties’ summary judgment burdens of production were described by the Supreme Court in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850-851, as follows: “[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion[^[3]] that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. . . . A defendant bears the burden of persuasion that ‘one or more elements of’ the ‘cause of action’ in question ‘cannot be established,’ or that ‘there is a complete defense’ thereto. (. . . § 437c, subd. (o)(2).)

. . . [T]he party moving for summary judgment bears an initial burden of production[^[4]] to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact. . . . A prima facie showing is one that is sufficient to support the position of the party in question. [Citation.]” (Fns. omitted.) Unless and until the moving party meets its burden, the opposing party has no obligation to show that a triable issue of material fact exists. (Boyle v. CertainTeed Corp. (2006) 137 Cal.App.4th 645, 654-655; Thatcher v. Lucky Stores, Inc. (2000) 79 Cal.App.4th 1081, 1084-1087; Anderson v. Metalclad Insulation Corp. (1999) 72 Cal.App.4th 284, 289-290; Villa v. McFerren (1995) 35 Cal.App.4th 733, 743-744; Huynh v. Ingersoll-Rand (1993) 16 Cal.App.4th 825, 830-831.) If a defendant does not meet its summary judgment burden, the motion must be denied. (Anderson v. Metalclad Insulation Corp., supra, 72 Cal.App.4th at pp. 289-290; Huynh v. Ingersoll-Rand, supra, 16 Cal.App.4th at pp. 830-831) We determine de novo whether there is no triable issue of material fact and the defendants were entitled to summary judgment. (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65, 67-68; Sharon P. v. Arman, Ltd. (1999) 21 Cal.4th 1181, 1188, disapproved on another point in Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 853, fn. 19.)

B. Defendants Did Not Meet Their Burden And The Judgment Must Be Reversed

Defendants sought to summarily adjudicate that plaintiff could not assert fraud as to the conveyances from Audio Wood to Amoroso Properties and the hotel. Further, defendants sought a determination that plaintiff could not assert fraud as to the subsequent retransfers of Audio Wood’s moneys from Amoroso Properties to James and Jack. Defendants reasoned plaintiff was barred from asserting its fraud based contentions because it had been conclusively determined in the bankruptcy proceedings that the hotel had repaid the loans. Defendants’ summary adjudication motion did not in any way address plaintiff’s allegations, in the first and second causes of action, of fraudulent conveyances directly from Audio Wood to James. Moreover, defendants’ summary adjudication motion did not address the purported fraudulent conveyances directly from Audio Wood to Jack. Defendants’ motion also did not in any way address plaintiff’s third cause of action alleging it was entitled to recover $250 from Amoroso Properties and the hotel pursuant to section 708.210. Defendants’ counsel admitted as much during the hearing in the trial court. As noted above, when asked whether granting the motion would dispose of plaintiff’s causes of action, defense counsel replied: “Well, let’s put it this way, Your Honor. It completely disposes [of] the causes of action as it pertains to the loans which were made from Audio Wood to Amoroso Properties.” Having failed to establish a complete defense to the entirety of any of plaintiff’s causes of action, defendants were not entitled to a judgment in their favor. (Anderson v. Metalclad Insulation Corp., supra, 72 Cal.App.4th at pp. 289-290; Huynh v. Ingersoll-Rand, supra, 16 Cal.App.4th at pp. 830-831) The judgment must be reversed.

IV. DISPOSITION

The August 22, 2005 judgment is reversed. Plaintiff, ZTE Electronics Corp., Inc., is to recover its costs on appeal jointly and severally from defendants, Amoroso Properties, Glenmore Plaza Hotel, James Amoroso, and Jack Amoroso, Sr.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

TURNER, P. J.

We concur:

ARMSTRONG, J.

KRIEGLER, J.

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^[1] All further statutory references are to the Code of Civil Procedure unless otherwise noted.

^[2] To avoid confusion and not out of any disrespect, we refer to members of the Amoroso family by their first names.

^[3] “A burden of persuasion . . . entails the ‘establish[ment]’ through . . . evidence of a ‘requisite degree of belief.’ ([Evid. Code,] § 115.)” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)

^[4] “A burden of production entails only the presentation of ‘evidence.’ (Evid. Code, § 110.)” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)