Chabad of California, Inc. v. Arnall

















Filed 1/25/13 Chabad of
California, Inc. v. Arnall CA2/4











NOT TO BE PUBLISHED
IN THE 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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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



SECOND APPELLATE DISTRICT



DIVISION FOUR










>

CHABAD OF CALIFORNIA, INC., Plaintiff and Appellant, v. DAWN ARNALL, as Special Administrator etc., Defendant and Respondent.

B234059 (Los Angeles County Super. Ct. No. BC423042)

APPEAL
from a judgment of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Los Angeles
County, Mary Ann Murphy, Judge. Affirmed.

Bingham
McCutchen, Marshall B. Grossman, Seth M. Gerber; Greines, Martin, Stein &
Richland, Robin Meadow, Barbara W. Ravitz, and Cynthia E. Tobisman for
Plaintiff and Appellant.

Reed
Smith, Margaret M. Grignon, and Brandon W. Corbridge for Defendant and
Respondent.

>

In this
litigation, plaintiff Chabad of California, Inc., seeks to enforce the
purported oral pledge of a deceased donor, the late Roland Arnall. Mr. Arnall’s widow, defendant Dawn Arnall,
denies any knowledge of the purported $18 million pledge, which Chabad
failed to acknowledge in writing or record in its books prior to
Mr. Arnall’s death.

Chabad
filed the present action for promissory
estoppel against Mrs. Arnall as special administrator and trustee of Mr.
Arnall’s estate and trust. During the
bench trial, Chabad’s president, Rabbi Boruch Shlomo Cunin, testified as the
sole percipient witness to Mr. Arnall’s alleged oral pledge of $18 million
for the construction of a new facility.
Rabbi Cunin testified that Mr. Arnall’s three $180,000 donations to
Chabad were installments against the $18 million pledge, although they
were not recorded as such by Chabad until after his death.

In
its 69-page statement of decision, the trial court found that Chabad had failed
to prove the existence of Mr. Arnall’s oral promise to pay “$18 million or
any amount other than what he actually paid during his lifetime, to fund the
development or construction of the Project.”
In light of Chabad’s failure to prove the existence of a promise, which
is an essential element of promissory estoppel, the trial court entered
judgment for Mrs. Arnall.

In
this appeal from the judgment, Chabad argues the trial court erred in refusing
to draw any inferences from Mrs. Arnall’s alleged withholding of evidence,
namely, the Excel spreadsheets on which Mr. Arnall’s charitable contributions
were recorded by his personal assistant, Lisa Gravelle. Chabad contends that notwithstanding the
trial court’s doubts concerning Rabbi Cunin’s credibility, the evidence when viewed
in conjunction with Mrs. Arnall’s alleged withholding of the spreadsheets
supports the reasonable inference that “Mr. Arnall did, in fact, make the
$18 million pledge to Chabad and indeed made payments on it.”

We
conclude Chabad’s reliance upon the withholding of the spreadsheets is misplaced. When Chabad first learned of the spreadsheets
during Ms. Gravelle’s testimony at trial (Ms. Gravelle’s deposition was not
taken before trial), Chabad did not demand their production, seek a
continuance, or request a finding that the spreadsheets were wrongfully
withheld. Because the spreadsheets were
never produced at trial, they are not part of the record on appeal and we may
not speculate as to their contents.
Assuming the failure to produce the spreadsheets reflects poorly on Mrs.
Arnall’s credibility, casting doubt on her testimony will not rehabilitate
Chabad’s witnesses or satisfy its evidentiary burden of proving the existence
of an oral pledge. With regard to
Chabad’s burden of proof, not even the elimination of all the defense evidence
would cure its failure to prove the existence of an oral pledge. Based on the record properly before us, we
conclude the evidence does not reasonably support Chabad’s contentions and thus
we affirm.



>BACKGROUND

>

The narrow focus of this
appeal does not warrant a full recitation of the evidence. We therefore will focus only on the matters
relevant to this appeal.

Chabad
contends that Mr. Arnallhref="#_ftn1"
name="_ftnref1" title="">^[1] orally pledged $18 million for the
construction of a community center and made three $180,000 installments against
that pledge before his death. However,
the testimony of Rabbi Cunin, the sole percipient witness to the oral pledge,
was not fully credited by the trial court.
At the conclusion of trial, the court issued a proposed statement of
decision which stated that Chabad had failed to prove the existence of Mr.
Arnall’s promise to pay “$18 million or any amount other than what he
actually paid during his lifetime.” In
opposition to the proposed statement of decision, Chabad argued, as it does on
appeal, that it was entitled to prevail, as a matter of law, based on Mrs.
Arnall’s suppression of the Excel spreadsheets.


With
regard to the spreadsheets, the trial court stated in its proposed statement of
decision: “Ms. Gravelle maintained an
Excel spreadsheet on the Ameriquest server that documented all of Mr. Arnall’s
charitable contributions. She testified
that none of the lawyers on the defense team asked her about such a
document. Mr. Steven Dorfman
[Mr. Arnall’s accountant] also had a copy of the Excel spreadsheet
documenting Mr. Arnall’s charitable contributions. Defendant did not produce the spreadsheet
documenting Mr. Arnall’s charitable contributions in discovery. Defendant did not produce the spreadsheet
documenting Mr. Arnall’s charitable contributions at trial.” (Internal record references omitted.) “The defense did not produce
. . . the Excel spread sheet that would have shed light on
disputed facts. Based on the testimony
of Mrs. Arnall, Lisa Gravelle and Adam Bass [Mr. Arnall’s nephew by marriage
who was senior vice president of Ameriquest Mortgage and a partner at the
Buchalter law firm], it does not appear that a diligent search and reasonable
inquiry was performed.”

In
objecting that the above language was unduly lenient as to Mrs. Arnall, Chabad
argued that the court had overlooked “the most salient portion of Ms.
Gravelle’s testimony. >She testified that among the entries she
made concerning each charitable payment was the ‘purpose’ of each such payment.
Isn’t this enough proof that these
three payments were on account of the pledge at issue in this case? Being such, this is proof of the existence of
the pledge itself.” (Internal record
references omitted.) Chabad urged “the
Court to find that the purpose of these three $180,000 payments is on the
suppressed Excel spreadsheets in the possession of Mrs. Arnall (through her
wholly owned Ameriquest and her accountant Mr. Dorfman) and the inference
is that the contemporaneously prepared spreadsheet shows the purpose to be
payments on account of the claimed pledge.
We request a finding one way or the other. More to the point, we ask the Court to find
that the last $180,000 check which Mr. Arnall asked Ms. Gravelle to pay to
Chabad was for the purpose of payment on what was then a firm $18 million
gift. We request a finding one way or
the other. We invite the Court to
ask: If the stated purpose of these
three payments on the spreadsheet, including the crucial last payment, showed a
purpose other than payment on the $18 million pledge or was even
inconclusive, is there . . . any question in the Court’s mind
that the spreadsheets would have been produced in discovery and at trial? Is there any doubt in the Court’s mind that
after Ms. Gravelle’s first day of testimony that the defense didn’t access the
Ameriquest servers and the files of Mr. Dorfman and review those spreadsheets
and would have produced them, even late, if they supported their case? Many people know what those spreadsheets show
the purpose of the payments to be. But
not Chabad. And not this Court from
which this evidence was intentionally withheld.
Is there no negative inference to be drawn from this? And isn’t it clear what it is — >the purpose of these payments recorded when
made states that the payments were made on the pledge sought to be enforced in
this case. Surely that inference
alone provides the requisite proof to require judgment in favor of Chabad. Yet there is no finding one way or the other
with respect to this contemptuous conduct and Chabad requests such a finding.” (Internal record references omitted.)

Mrs.
Arnall, on the other hand, expressed her agreement with the court’s proposed
statement of decision. She argued below
that even if her credibility had been damaged by her failure to produce the
spreadsheets, neither the rejection of her testimony nor the elimination of her
evidence would provide affirmative evidence of an oral promise to pay
$18 million. Mrs. Arnall
stated: “It is well settled that a
plaintiff cannot satisfy its evidentiary burden merely by casting doubt on the
credibility of the opposing party’s testimony.
‘The rejection of a witness’s testimony by the trier of fact has only
the effect of removing that testimony from the evidentiary mix. Without more, the disregard or disbelief of
the testimony of a witness is not affirmative evidence of a contrary
conclusion. In other words, the fact that the trier of fact
does not credit a witness’s testimony does not entitle it to adopt an opposite
version of the facts which otherwise lacks evidentiary support.’ (Beck
Development Co. v. Southern Pacific Transpiration Co. (1996) 44 Cal.App.4th
1160, 1205-1206 [citations omitted]; Bose
Corp. v. Consumers Union of U.S., Inc.
(1984) 466 U.S. 485, 512 [disbelief of defense witness’ testimony did not
constitute evidence of the opposite fact sufficient to satisfy plaintiff’s
burden of proving the opposite fact]; Moore
v. Chesapeake & O. Ry. Co. (1951) 340 U.S. 573, 576 [‘[D]isbelief of
the engineer’s testimony would not supply a want of proof. Nor would the possibility alone that the jury
might disbelieve the engineer’s version make the case submissible to [the
jury].’) Accordingly, ‘[d]isbelief of [a
witness’s] testimony does not constitute affirmative evidence of the contrary
proposition.’ (Viner v. Sweet (2004) 117 Cal.App.4th 1218, 1229; >Estate of Bould (1955) 135 Cal.App.2d
260, 265 [the determination that a witness testified falsely ‘does not reveal
the truth itself or warrant an inference that the truth is the direct converse
of the rejected testimony’].)”

Mrs.
Arnall further argued: “During this
lengthy trial, Chabad produced just one witness—Rabbi Cunin—who claims to have
heard Roland Arnall orally pledge $18 million, and failed to produce a
single document that confirmed any such pledge. This Court then issued a 69-page Proposed
Statement of Decision amply explaining why Chabad failed to meet its burden of
proof. Now, Chabad essentially renews
its closing argument and asks the Court to reverse itself based primarily on
Chabad’s claim that the defense lacked credibility. This argument is easily rejected because, by
law, Chabad cannot win through any lack of credibility by the defense but must
prove its case through affirmative evidence accepted by the Court.”

The
trial court then inquired of Chabad’s counsel, Marshall Grossman: “Let me ask you this. Why didn’t you ask me to suspend the trial
and order them to produce the Excel spreadsheet?” In response, Mr. Grossman explained that he
does not “choose to do discovery during the course of a trial. I don’t have the ability to test it, I don’t
have the full ability to cross-examine on it, I don’t have the ability to
contact a forensics person in the middle of the trial to do a forensic analysis
to determine the integrity of the computers and the servers. These were Ameriquest servicers [and
Mrs. Arnall] was still the chairman of Ameriquest during the trial. That’s why I thought it would have been
futile and, frankly, unnecessary to do so.
Overnight they had the opportunity of pulling those documents in from
Mr. Dorfman, from Ms. Gravelle, or from Mrs. Arnall. Or from Adam Bass, who was still then the
general counsel of Ameriquest.” The
defense “had the power, and I believe the duty, to explain why they didn’t
bring the Excel spreadsheets into Court.
It’s not my burden in the middle of a trial to engage in forensic
testimony, or I should say discovery, and go out and hire a qualified examiner
of computer data.”

After
accepting Mr. Grossman’s explanation, the trial court asked Mrs. Arnall’s
attorney, John Gordon, whether the defense was obligated “to produce the
document, to go out and ask [Ms. Gravelle].”
Mr. Gordon replied that, on the contrary, Chabad was required to “ask
for the spreadsheet no matter what. Then
you worry about do I need to have a forensic examiner start looking at the
computer; if the document doesn’t show any evidence helping me, then am I going
to . . . hire someone.
They didn’t even bother to ask for the spreadsheet to see if it helped
their case.” “If you believe your case
and you think that the document’s going to show a pledge of 18 million,
you ask for the document.”

Mr.
Gordon pointed to the lack of any finding that a suppression or concealment of
evidence had occurred. The trial court
had found only that it “[did] not appear” a diligent search and reasonable
inquiry had been made. According to the
proposed statement of decision: “The
defense did not produce . . . the Excel spread sheet that would
have shed light on disputed facts. Based
on the testimony of Mrs. Arnall, Lisa Gravelle and Adam Bass, it does not
appear that a diligent search and reasonable inquiry was performed.”

Mr.
Gordon rejected his opponent’s argument that a suppression or concealment of evidence had occurred in this case: “Chabad’s entire argument that there’s been
any suppression or concealment or misconduct is completely without foundation,
Your Honor. And, it’s clear, no matter
what we did do, even if you assume the worst, even if you disregard
. . . of what I just said, when he did find out about it he never
even bothered to ask. Which says a
lot. Chabad wants to continue to focus
on our spreadsheets and what our spreadsheets say. They continue to ignore, and fail to mention,
and do not explain, why there is not one, and I am saying literally one, there
is not one written reference contemporaneously made, ever, in all of Chabad’s
records, saying anything about any pledge.
Any 18 to 40 million, any 18 million pledge. Not one word anywhere.”

At
the conclusion of the hearing concerning the proposed statement of decision,
the trial court adhered to its proposed decision and reiterated that Chabad had
failed to prove the existence of an oral pledge: “I’m not acknowledging that [Chabad] put on a
prima facie case here.” “My statement of
decision is that [Chabad] never proved by a preponderance of evidence that
Roland Arnall promised 18 million.
Never.” “You had the burden of
proof. Your witnesses were contradicted
all over the place — all you have to do is read the proposed statement of
decision, contradicted themselves right and left — and you didn’t ask Mr.
Weisman a word about the corroboration.
That was a major problem in the burden of proof on your side.”href="#_ftn2" name="_ftnref2" title="">^[2]

The
trial court entered a final statement of decision and judgment in favor of Mrs.
Arnall. This timely appeal followed.



>DISCUSSION



Chabad’s
appeal is based on Evidence Code section 413, which provides: “In determining what inferences to draw from
the evidence or facts in the case against a party, the trier of fact may
consider, among other things, the party’s failure to explain or to deny by his
testimony such evidence or facts in the case against him, or his willful
suppression of evidence relating thereto, if such be the case.” The statute reflects the well-established
concept that “[w]hen a party is once found to be fabricating, or suppressing,
documents, the natural, indeed the inevitable, conclusion is that he has
something to conceal, and is conscious of guilt.” (Warner
Barnes & Co. v. Kokosai Kisen Kabushiki Kaisha (2d Cir. N.Y. 1939) 102
F.2d 450, 453.)

Chabad
argues that “[c]onsideration of all of these factors yields only one conclusion
here: Mrs. Arnall’s suppression of the
spreadsheet gives rise to an unavoidable inference that the spreadsheet
reflected the three $180,000 payments as installments on the pledge that Mr.
Arnall made to Chabad.”

We
find Chabad’s contention unpersuasive for several reasons. As Mrs. Arnall correctly points out in her
respondent’s brief, the trial court never found that she willfully suppressed
or concealed the spreadsheets. By its
terms, Evidence Code section 413 requires a finding of willful suppression or
concealment as a prerequisite to the adverse inference that is permitted, but
is not mandated, by the statute. That
requirement has not been met here. At
most, the trial court found “it [did] not appear that a diligent search and
reasonable inquiry [had been made].” The
lack of a diligent search and reasonable inquiry is not the equivalent of an
intentional withholding of evidence and there is no basis in this record to
conclude otherwise.

More importantly, even if the trial
court had made the requisite finding of intentional concealment, Chabad’s
contention that the court was then required to conclude Chabad had met its
burden of proof is flawed. The statute
provides that the trier of fact “may consider” a party’s willful suppression of
evidence. That language makes clear the
trial court was not required to consider such evidence, much less conclude that
the missing evidence necessarily supported Chabad’s claim that the promise had
been made.

In
addition, the controversy regarding the spreadsheets was addressed at the
hearing on Chabad’s objections to the proposed statement of decision. At that hearing, the trial court discussed
Chabad’s assertion that Mrs. Arnall’s failure to produce the spreadsheets
supported the reasonable, if not mandatory, inference that the spreadsheets
would have proven the existence of Mr. Arnall’s promise to donate $18 million
for a new facility. As it was entitled
to do, the trial court found the adverse inference was not warranted in this
case. The detailed 69-page statement of
decision lays to rest Chabad’s contention on appeal that the trial court
reached this decision without considering all of the evidence provided by both
parties.

The
critical issue at the heart of this dispute was the credibility of the
witnesses, many of whom were personally interested in the outcome of the
case. On issues of credibility, we of
course defer to the trier of fact. “The trier of the facts
is the exclusive judge of the credibility of the name="SR;2750">witnesses.
[Citation.]” (>Hicks v. Reis (1943) 21 Cal.2d 654,
659.) In assessing a witness’
credibility, the trier of fact may consider the manner in which the witness
testifies, the motive or interest of the witness in the outcome of the case,
and any contradictory evidence. (>Ibid.)
“Provided the trier of the facts does not act arbitrarily, he may reject
in toto the testimony of a witness,
even though the witness is uncontradicted.”
(Id. at pp. 659-660.) “[W]hen two or more inferences can reasonably be
deduced from the facts, the reviewing court is without power to substitute its
deductions for those of the jury or trial court.” (Juchert
v. California Water Service Co. (1940) 16 Cal.2d 500, 503.)

After finding that nearly
every witness in this case was lacking in credibility to one degree or another,
the trial court found that Chabad had failed to prove an essential element of
its case, namely, the existence of a promise to donate $18 million for the
new facility. In making this finding,
the trial court necessarily found that Rabbi Cunin’s testimony was not credible
on the fundamental question regarding the existence of an oral pledge. Because the adverse credibility determination
was based on substantial evidence that Chabad does not dispute on appeal, there
are no valid grounds to overturn the trial court’s findings.



>DISPOSITION



The
judgment is affirmed. Mrs. Arnall is
awarded her costs on appeal.



NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS







SUZUKAWA,
J.



We concur:







EPSTEIN,
P. J. MANELLA,
J.