Gomez v. Baio
Filed 5/29/13 Gomez v. Baio CA2/1
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
ONE
CLYDE
GOMEZ,
Plaintiff and Appellant,
v.
BRUNO BAIO et al.,
Defendants and Respondents.
No. B243785
(Super. Ct.
No. BC460628)
APPEAL from
an order of the Superior Court
of
County. Amy D. Hogue, Judge. Affirmed.
Herbert
Abrams for Plaintiff and Appellant.
Matthew
Soule for Defendants and Respondents.
___________________________________
Plaintiff Clyde Gomez and principal
defendant Bruno Baio entered into an agreement wherein Baio sold half of his
catering corporation to Gomez for $115,000.
Gomez later sued, ultimately contending Baio misappropriated the
$115,000 Gomez paid by placing it into his private account rather than the corporation’s
capital account. Gomez grounded his
claim on the theory that the $115,000 constituted startup capital for a new
corporation, not payment to Baio for half of an existing corporation. After a bench trial, the trial court rejected
Gomez’s theory, concluding the $115,000 constituted payment for half of an
existing corporation owned by Baio.
Judgment was entered for Baio accordingly. On appeal, Gomez contends the court’s ruling
was unsupported by substantial evidence and constituted an abuse of
discretion. We affirm.
BACKGROUND
Because the parties waived court
reporting below, we take the facts from undisputed allegations in the
complaint, exhibits admitted at trial, and the trial court’s statement of
decision.
Baio is a successful restaurateur
who operates groups of restaurants under the names “Crème De La Crepe
Franchising, Inc.†and “Crème De La Crepe of Westwood, Inc.†In early 2010, Baio formed CDLC Catering,
Inc., a venture that would provide catering services for restaurants in the
Crème De La Crepe groups. Baio found and
leased a location from which to operate CDLC, obtained all necessary equipment,
took steps to incorporate the company and was its sole owner. The trial court found Baio did all of this
“before he ever met Gomez.â€
On July 1, 2010, Baio and Gomez executed a one-page agreement
that provided in full the following:
“Effective July 01, 2010,
Clyde Gomez owns 50% of CDLC Catering Inc.
Clyde Gomez bought 500 shares out of 1000 shares of CDLC Catering Inc.,
for $115,000. [¶] The purchase of 500 shares or 50% of CDLC
Catering Inc. by Clyde Gomez, includes equipment, furniture and fixtures,
inventory, all clienteles, Beer & Wine License and all items and matters
related to the business. [¶] Remaining 50% share equivalent to 500 shares
is owned by Bruno Baio, resident of San Pedro, CA. [¶]
Therefore, Bruno Baio and Clyde Gomez are now owners of CDLC Catering
Inc.†The agreement was signed by “Bruno
Baio.â€
Gomez paid the $115,000 in checks
made out to Baio personally, after which Gomez became a signatory on CDLC’s
bank account with access to CDLC’s bank statements. CDLC also “issued†Gomez a share certificate
that was dated June 29, 2010. The certificate stated the corporation had
authorized 1,000 shares of common stock with a par value of $0.10 each and
certified that Gomez was “the registered holder of 500 shares†of the
corporation.
Baio worked diligently to build
CDLC’s business, using employees from his other restaurants to prepare
marketing materials and infusing his or his other companies’ money into CDLC to
cover rent and expenses. Gomez took no
part in the operation or management of CDLC, expecting it to succeed due to
Baio’s reputation and track record with restaurants. By the time of trial in July 2012, the business
was two months behind on its rent and had operated at a loss the prior year.
Sometime in 2011, after months of
operation, Gomez noticed there was little money in CDLC’s bank account and
filed the instant lawsuit against Baio and others, alleging defendants
defrauded him of the $115,000 he had paid.
In the first amended complaint, Gomez alleged causes of action for
fraud, negligent misrepresentation, conversion, breach of fiduciary duty,
conspiracy, money paid, and money had and received. He alleged defendants represented that if he
“invested the sum of $115,000.00, [he] would receive 50% of the stock of CDLC
Catering, Inc. which would be a separate catering company and which would be
operated in conjunction with [Baio’s] group of retail and franchised restaurants
. . . and would become the entity providing catering services for all such
restaurants.†Defendants falsely
represented that Baio would operate CDLC in conjunction with his restaurant
groups and use the corporation to provide catering services for all the
restaurants in the groups. In reality,
Gomez alleged, Baio operated a massive “Ponzi Scheme,†“commingling and
converting funds using entities which were not properly organized, permitted or
licensed by the State of California.
Furthermore, Defendants never properly registered for a franchise for
any of the Defendant Corporations who are illegally representing to the public
that†one of the corporate defendants was a “legal franchisor.†Further, Gomez alleged Baio breached his
fiduciary duties by failing “to properly organize, register, obtain permits or
complete the formation of CDLC Catering Inc. as required by California Law†and
“became indebted to [Gomez] in the sum of $115,000.00.†He sought damages in the amount of $115,000,
damages according to proof, and punitive damages. Gomez did not seek rescission of the July
2010 agreement or allege a cause of action for breach of contract.
In July 2011, after the lawsuit was
filed, Baio filed a “Notice of Issuance of Shares†with the California
Department of Corporations, giving notice that CDLC had “issued†or proposed to
issue 500 shares of voting common stock to Baio and 500 to Gomez. The value of the securities was stated to be
$115,000 “in money†and $115,000 “in consideration other than money.â€
At trial, Gomez presented no
evidence that any defendant made any false representation as alleged in the
complaint or that Gomez relied upon any misrepresentation to his
detriment. Gomez conceded that he
received and still owned half of the stock in CDLC and that Baio operated CDLC
as a separate catering company as promised.
The court found no evidence suggesting any dishonest conduct or lack of
diligence by Baio. On the contrary, the
evidence showed Baio had worked diligently to build CDLC’s business. Gomez also presented no evidence of the
decreased value of CDLC or any other measure of damages other than testimony
that CDLC was two months behind in its rent.
Gomez contended for the first time
at trial that Baio misrepresented to him that his $115,000 payment would be
invested in the corporation, rather than retained by Baio. The trial court found no evidence supported
this allegation. On the contrary, the
court found Gomez had admitted he merely assumed that the $115,000 would go to
CDLC’s operations account, but his conduct was inconsistent with even this
claim, as the checks by which he paid the $115,000 were made out to Baio
personally, not to the corporation, and Gomez took no action when the cancelled
checks and CDLC’s bank account balance put him on notice that Baio had taken
personal possession of the funds rather than giving them to CDLC.
The trial court interpreted the
July 1, 2010 agreement as memorializing Baio’s sale of half of his existing
shares in CDLC to Gomez, as the agreement referred to the transaction as a
“purchase†and referenced “500 shares out of 1000 shares,†suggesting the
shares predated the transaction. The
court also found it significant that Gomez contracted with Baio personally, not
with CDLC, and Baio had personally invested a substantial amount of time in the
business and engaged an accountant to prepare incorporation documents before
entering into discussions with Gomez.
Baio “found the location, signed the lease, and obtained all of the
necessary equipment to operate a ‘special events’ catering business†“before he
ever met Gomez. He was therefore in a
position to sell a portion of his ownership interest to Gomez.†Furthermore, Gomez argued that the notice of
issuance filed in July 2011 compelled the trial court to find that CDLC had
the $115,000, not that Baio transferred
500 shares to Gomez. He argued this
showed the parties intended in July 2010 that CDLC, not Baio, receive the
$115,000. The court was unpersuaded. Finding the 2011 notice of issuance to be
only minimally probative as to the parties’ intent in 2010, it wrote: “First, the content of this document is
inadmissible hearsay. Even if it were
admissible as an admission against interest (based on Baio’s testimony that he
instructed his assistant to fill it out as she did), its evidentiary value as
parol evidence is slight because the document is a pre-printed form and it was
prepared long after the agreement was signed.
Since Baio did not originate the word ‘issuance’ to identify the
transaction, it does little to reveal his intentions. Baio’s assistant’s election, long after the
fact, to use an issuance form rather than a form specifying a transfer of
shares does little to clarify the parties’ intentions when they signed [the
July 1, 2010 agreement].â€
The court found Gomez’s claims for conversion and money
had and received failed because under the July 2010 agreement, Baio was
entitled to the $115,000 at issue. It
found Gomez failed to identify any fiduciary duty that Baio owed him and failed
to prove the breach alleged in the complaint, i.e., “that CDLC failed ‘to
properly organize, register, obtain permits or complete the formation of CDLC
Catering Inc.’ as required by law.†On
the contrary, Baio produced numerous documents indicating CDLC was properly
organized, registered, and permitted.
Finally, the court found that even if Gomez had proven any of his
claims, he failed to prove he suffered any damages, as he continued to own half
of CDLC, which continued to operate as a caterer.
Judgment was entered for
defendants, from which Gomez appeals.
DISCUSSION
In the first paragraph of his
abandons his claims for fraud and negligent representation, leaving only claims
for conversion, conspiracy and breach of fiduciary duty, and the common counts
of money paid and money had and received.
But of those five outstanding claims, Gomez ignores his causes of action
for conspiracy and money paid, and we therefore deem them to be waived.
v. Wells (1999) 72 Cal.App.4th 512, 522 [the court may treat as waived any
contention not supported by legal argument and citation to authority].)
To support his conversion claim
Gomez contends on appeal that Baio kept for himself the $115,000 given to
purchase half of CDLC, rather than pay the money into CDLC’s operations
account. The claim fails at the outset
because by admitting the $115,000 belongs to CDLC Gomez necessarily admits that
any claim for conversion would also belong to CDLC (Oakdale Village Group v. Fong (1996) 43 Cal.App.4th 539, 543-544
[the first element of a conversion action is “the plaintiff’s ownership or
right to possession of the property at the time of the conversion . . .â€]), and
he does not purport to bring this action on CDLC’s behalf (Jones v. Re-Mine Oil Co. (1941) 47 Cal.App.2d 832, 842-843 [a claim
for misappropriation of money owned by a corporation belongs to the corporation
and must be brought on the corporation’s behalf]).
Gomez similarly argues the cause of
action for money had and received “is an appropriate claim in this case,†but
as with conversion, the cause of action would belong to CDLC, not Gomez. At any rate, the issue on appeal is not
whether such a claim is appropriate but whether Gomez proved it at trial. On this issue Gomez is silent.
Finally, with respect to his claim
for breach of fiduciary duty, Gomez alleged in the complaint that Baio failed
to form or incorporate CDLC or operate it as a catering business, a claim the
trial court found lacked merit.
Apparently abandoning the claim on appeal, Gomez now offers the
following one-sentence argument pertaining to Baio’s alleged breach of
fiduciary duty: “Here, Defendant, Bruno
Baio’s failure to place the $115,000.000 in the corporate account as mandated
by [the July 2011 notice of listing] constitutes a breach of his fiduciary duty
to Plaintiff and the corporation.†Gomez
made no such claim below, either in the complaint or at trial, and on appeal
offers no further discussion or citation to the record or any authority. We therefore deem the claim to be
waived. (People v. Gray (2005) 37 Cal.4th 168, 198; People v. Catlin (2001) 26 Cal.4th 81, 133; People v. Barnett (1998) 17 Cal.4th 1044, 1182;
793.)
Because Gomez has expressly waived
his claims for fraud and misrepresentation
and impliedly waived his claims for conspiracy, money paid, and breach of
fiduciary duty, and because his remaining claims, for conversion and money had
and received, belong exclusively to CDLC, his appeal entirely fails.
In his reply brief Gomez argues the
trial court misinterpreted the July 2010 agreement as permitting Baio to keep
the $115,00 Gomez paid, rather than giving it to CDLC. Even if true, the point would be
immaterial. Because Gomez has expressly
and impliedly waived all claims for
fraud and breach of fiduciary duty, any remaining claim that CDLC was owed the
$115,000 would belong exclusively to CDLC, not Gomez.
At any rate, the trial court’s interpretation
of the July 2010 agreement was reasonable.
The agreement stated the $115,000 was for the “purchase†of 500 shares
of CDLC. It is entirely reasonable to
interpret this as effecting the sale of half of a corporation by the
corporation’s sole owner.
Gomez argues the July 2011 notice
of issuance compels the conclusion that the July 2010 agreement contemplated
payment to the corporation for issuance of 500 of its shares. We disagree.
True, the notice of issuance stated CDLC shares were “issued†to Gomez
and Baio in exchange for $115,000 “in money†and $115,000 “in consideration
other than money,†which supports Gomez’s theory that the $115,000 he paid was
intended to go to the corporation. But
other evidence supports the trial court’s conclusion that the money was
intended for Baio. First, the July 2010
agreement itself did not mention “issuance†of any shares—it mentioned only
“purchase†of shares. Second, as the
trial court noted, the notice of issuance was only minimally probative of the
parties’ intent when they entered into the purchase agreement one year
earlier. Third, Gomez did not contract
with CDLC or pay it, he contracted with Baio and wrote checks payable to him
personally. Fourth, even when Gomez was
put on notice that the corporation did not possess the $115,000 he had paid, he
did nothing for months. And finally and
most importantly, Gomez never alleged in the complaint that CDLC was entitled
to possession of the $115,000. On the
contrary, he alleged he was entitled
to it. Although the trial court
reasonably could have concluded in light of the July 2011 issuance of notice
that the July 2010 agreement contemplated payment of $115,000 to CDLC rather
than Baio, it’s contrary interpretation was also reasonable.
DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED.
CHANEY,
J.
We concur:
ROTHSCHILD, Acting P. J.
JOHNSON, J.
name="_ftn1" title=""> [1] Of course, it is well established that
“[c]onspiracy is not a cause of action, but a legal doctrine that imposes
liability on persons who, although not actually committing a tort themselves,
share with the immediate tortfeasors a common plan or design in its
perpetration.†(Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7
Cal.4th 503, 510-511.)
