Jayco Acceptance v. Strong

Filed 1/16/08 Jayco Acceptance v. Strong CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County, Abraham A. Khan, Judge. Affirmed.

David Burkenroad for Defendant and Appellant.

Schroeder & Associates, John Schroeder and Robert A. Von Esch IV for Plaintiff and Respondent.

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Jayco Acceptance Corporation (Jayco) recovered a compensatory damages of $25,252 and a punitive damages award of $25,000 against appellant Donald Strong in a bench trial, predicated on the dilapidated and dangerous state of commercial property quitclaimed by Strong to Jayco. We affirm.

PROCEDURAL HISTORY

Jayco filed its action against Strong on August 18, 2005. In the second amended complaint^[1]Jayco alleged that in September 2004 Strong had quitclaimed to Jayco a commercial building of approximately 5,900 square feet in Pomona, California (hereafter the Pomona property); the building was suitable for light manufacturing. After the quitclaim deed was recorded, Jayco learned of the existence of an underground fuel tank on the property.

In the first cause of action, Jayco alleged that it would not have accepted the property had it known of the underground tank since it significantly affected the value of the property and exposed Jayco to liability under various government regulations. Jayco paid $20,530 to have the tank removed. This cause of action alleged that Strong had fraudulently concealed the existence of the underground tank from Jayco.

The second cause of action for negligence alleged that Strong had a duty to disclose the existence of the tank but failed to do so.

The third cause of action for breach of contract alleged that Strong had left the property in a state of disrepair and that Jayco paid $21,409.45 to have the property cleaned up.

Following a one-day bench trial on June 20, 2006, the trial court found for Jayco on the fraud and contract causes of action, and reserved decision on the negligence count. The court announced by way of a minute order of June 23, 2006, that it awarded Jayco $25,252 in compensatory damages and $25,000 in punitive damages. On July 24, 2006, the court found for Strong on the negligence count, in that it was inconsistent with the first and third causes of action.^[2]

Jayco served a notice of judgment on August 16, 2006, even though no judgment had as yet been entered, in which it gave notice of the favorable rulings on the fraud and contract causes of action. Strong filed a notice of appeal from the judgment on August 22, 2006. On September 19, 2006, the court entered judgment for Jayco for $25,252 in compensatory damages and $25,000 in punitive damages.

The notice of appeal in this case was filed after the announcement of the courts intended decision and before entry of judgment. We are authorized by rule 8.104(e)(2) of the California Rules of Court to deem this premature notice of appeal to have been filed after entry of judgment.

DISCUSSION

1. The Present Action Is Not Barred by Res Judicata or Anti-deficiency Principles

Strongs contentions on appeal are based on a default judgment entered against him in another action brought by Jayco; Strong contends that this previous judgment bars the present action both in terms of res judicata and anti-deficiency principles.

We do not agree with Strong that the previous judgment bars the present action. We conclude that the previous judgment resolved a different cause of action than the causes of action on which judgment was entered in the present case.^[3] In order to explain why we think that the previous judgment bears no relationship to the causes of action asserted in the instant action, it is necessary to set forth the cause of action led to the previous judgment, and the circumstances under which the previous judgment was entered.

We begin with the fact that the documents required to establish the factual predicates for Strongs contentions in this appeal were, at least in part, the subject of a motion to augment the record, which we denied on May 1, 2007, when Strong was also in default in filing his opening brief.^[4] (This was the third time that he was in default in proceeding with his appeal. Prior to the motion to augment, Strongs appeal had been twice dismissed as in default and twice reinstated.) Our order denying the motion to augment explained that Strong had failed to give reasons why it should be granted and also failed to explain why the motion to augment had not been filed promptly. While we later vacated the (third) dismissal of Strongs appeal, we never vacated our order denying the motion for leave to augment the record.

Strongs opening brief contains multiple references to the documents that were the subject of his unsuccessful motion to augment the record. Strong cannot cavalierly disregard our previous order denying his motion to augment the record. Accordingly, we find that Strongs factual assertions about the previous judgment are not supported by the record and we disregard those assertions for this reason. (Kendall v. Barker (1988) 197 Cal.App.3d 619, 625.)

We take judicial notice of a complaint^[5]filed by Jayco against Strong on May 18, 1999, in case No. KC030622. That complaint alleges that on June 26, 1998, Strong executed a promissory note in the amount of $284,500, which he promised to repay in monthly installments of $2,496.69; that commencing in February 1999 Strong failed to pay the monthly installments and that, as a consequence, Strong had breached the terms of the contract under which he had received $284,500 from Jayco. The complaint also alleged a cause of action seeking the foreclosure of a deed of trust covering the Pomona property.

Strong testified in the trial of the case before us that this complaint led to the entry of a default judgment against him in the amount of approximately $299,000, that Jayco attempted to collect on this judgment, but that he, Strong, never paid anything on this judgment, with the exception of $17,000 that Jayco managed to collect from a bank account. Finally, in the year 2004 Strong and Jayco agreed that Jayco would enter a satisfaction of judgment in case No. KC030622 if Strong would quitclaim the Pomona property to Jayco.

Jayco represents in its principal brief that it never foreclosed on the Pomona property, a representation with which Strong agrees, and which we have no reason to doubt.^[6] Thus, the default judgment in case No. KC030622 was a money judgment on the cause of action for breach of contract.

It is evident that the promissory note executed in June 1998, which went into default in 1999, and ultimately led to a default judgment, has absolutely no factual or legal relationship to the transfer of the Pomona property in 2004. This becomes even more obvious when one considers the causes of action that arose from the transfer of the Pomona property in 2004. These causes of action were that the fact of an underground fuel tank was fraudulently concealed from Jayco and that the property was in disrepair when it was transferred. Neither claim has the remotest connection to the promissory note executed by Strong in 1998.

Strongs contentions on appeal are predicated on the groundless theory that the default judgment in action No. KC030622 was a judgment that affected title and ownership to the Pomona property and that this judgment forecloses Jaycos claims predicated on the underground fuel tank and the disrepair of the Pomona property. Any possibility, however, that the default judgment affected title to the Pomona property is excluded by the circumstance that Jayco did not proceed with the foreclosure claim in case No. KC030622. We do not mean to imply that there is any merit to the contention that if Jayco had foreclosed on the Pomona property, its claims based on the underground tank and the disrepair of the property would be barred; this is an entirely erroneous view that we find unnecessary to address.

Strongs argument that the satisfaction of judgment filed in civil action No. KC030622 precludes the causes of action asserted in the action now on appeal is specious. Civil action No. KC030622 went to judgment on the breach of contract claim; the condition of the Pomona property in 2004 has nothing in common with the breach of the 1998 contract. Nor, of course, does res judicata bar causes of action that have nothing to do with the cause of action asserted in civil action No. KC030622.

We conclude that Strongs contention that the judgment in civil action No. KC030622 bars this action is without merit.

2. Strongs Contentions, Advanced for the First Time in His Reply Brief, That There Is No Evidence To Support the Finding of Fraudulent Concealment and the Award of Punitive Damages Are Barred and Are in Any Event Without Merit

Obvious considerations of fairness in argument demand that the appellant present all of his points in the opening brief. To withhold a point until the closing brief would deprive the respondent of his opportunity to answer it or require the effort and delay of an additional brief by permission. Hence, the rule is that points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before. [Citations.] (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal,  616, pp. 647-648; accord, Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 761, fn. 4.)

In our experience, this rule is usually breached when the appellant introduces, frequently without a separate caption, a new argument in his or her reply brief, among several others properly covered in the reply brief; it is not uncommon that this rule is violated unintentionally and as a result of oversight. In the appeal before us, however, we state with concern that 16 of the 21 pages in Strongs reply brief address new arguments, boldly captioned and separately presented, that were not raised in Strongs opening brief. These are the arguments that we have listed in the caption to this part of our opinion.

We find the observation made in Eisenberg, Horvitz & Wiener, California Practice Guide: Civil Appeals and Writs (The Rutter Group 2006) paragraph 9:78.2, page 9-24, that such a maneuver is  gamesplaying  and inappropriate, particularly descriptive of Strongs reply brief.

Unfortunately, this reflects Strongs approach to the trial of this case. Admitting that he knew about the underground fuel tank, he testified variously that (1) the Pomona property was not selling because the buyers were afraid of the tank; (2) he never made a written disclosure of the tank to Jayco; (3) he did tell Jaycos counsel about the tank; and (4) he never told prospective buyers about the tank. Jaycos representative, with whom Strong dealt, denied ever having been told about the tank. The broker dealing with the Pomona property testified that Strong denied the existence of the tank and, when asked by a prospective buyer, also denied that there was an underground tank. Strong also admitted that he simply disregarded his obligation to pay on the 1998 promissory note, or the judgment that was entered on the note. He admitted to agreeing to clean up the Pomona property prior to the quitclaim deed, and also admitted that he did nothing of the sort. Strong also professed not to know how much he was paying his wife, who was his employee.

It is not as if Strong is without resources. He admitted to owning over six figures of equipment, accounts receivable in excess of $200,000, is a member of a country club, and lives in a house worth over $1 million.

Jaycos counsel asked for punitive damages for fraud (fraudulent concealment of the tank) in twice the amount of compensatory damages. The trial court exercised restraint and awarded punitive damages on a one-to-one ratio, which is an eminently sound decision.

For the reasons stated, we decline to address Strongs contentions about the insufficiency of the evidence as to punitive damages that are advanced for the first time in his reply brief. Were we to address them, we would find them to be without merit since the award of punitive damages is supported by substantial evidence.

3. We Decline To Sanction Strong and his Counsel for Prosecuting a Frivolous Appeal

We find that Jaycos contention that this appeal is frivolous has considerable weight and merit. Under the familiar test, it is a close question indeed whether a reasonable attorney would conclude that this appeal is totally and completely without merit. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649.)

As close as the question is in this case, our preference is to assure that litigants have their day in court. While the appeal as it has been presented is of vanishing merit, it is not out of the question thata more solid appeal, even if unsuccessful, would have been presented by a counsel more mindful of appellate rules and practices. We understand, of course, that we must address the actual appeal that has been prosecuted in this case, and not one that could have been prosecuted. Nonetheless, it is not out of the question that initially, following the trial, a reasonable lawyer would have concluded that an appeal would have some merit. For this reason, we decline to assess sanctions for prosecuting a frivolous appeal.

DISPOSITION

The judgment is affirmed. The respondent is to recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

FLIER, J.

We concur:

COOPER, P. J. RUBIN, J.

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^[1] All further references are to the second amended complaint.

^[2] It would have been more apt to conclude that recovery under the negligence count would have duplicated recovery under the fraud cause of action.

^[3] While we agree with Jayco that Strongs failure to raise these contentions in the trial court should bar these arguments on appeal, we prefer to address these contentions on their merits.

^[4] These documents were the complaint in civil action No. KC030622, a deed of trust dated June 26, 1998, a promissory note in the amount of $284,500 of the same date and a satisfaction of judgment in case No. KC030622 filed on September 29, 2004.

^[5] Judicial notice may be taken of the records of any court of this state. (Evid. Code,  452, subd. (d)(1).)

^[6] Obviously, the Pomona property would not have been quitclaimed in 2004 it if had been foreclosed in 2000.