Masino v. Yap
Filed 6/26/12 Masino v. Yap
CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FOURTH APPELLATE
DISTRICT
DIVISION THREE
SANDRA B. MASINO,
Plaintiff and
Appellant,
v.
CALVIN C. S. YAP et al.,
Defendants and
Respondents.
G045441
(Super. Ct.
No. 30-2009-00319800)
O P I N I O
N
Appeal from a judgment of the Superior
Court of
County, David R. Chaffee, Judge. Affirmed.
Motion for sanctions denied.
Mark
B. Plummer for Plaintiff and Appellant.
Oswald
& Yap and Niall Sweetnam for Defendants and Respondents.
* * *
Sandra
B. Masino appeals from the trial court’s judgment denying her breach of
contract claim following a bench trial.
Entering a defense judgment in favor of Calvin C. S. Yap and his law
firm, Oswald & Yap, (collectively, O&Y or the defendants), the trial
court excused them from paying the remainder they owed on the purchase of
Masino’s business facilitating penny stock sales after she agreed to settle a
Securities and Exchange Commission (SEC) fraud prosecution concerning the
business. Masino does not dispute the
trial court’s finding she defrauded O&Y by failing to reveal the SEC’s
investigation at the time she sold them her business, “144 Opinions, Inc.”
(hereafter 144 Opinions).
Instead,
she quarrels with the outcome of a potential remedy the trial court fashioned
on her behalf before the final
judgment. Specifically, the business
assets Masino transferred to the defendants included the business’s purported
goodwill, certain Internet domain names, and Masino’s consulting services to
aid the defendants in running the business.
The taint of the SEC fraud charges, which Masino settled by agreeing not
to operate in the industry for five years, severely compromised or eliminated
any goodwill in 144 Opinions or value in Masino’s consulting services to run
the business, but the trial court nevertheless proposed to allow her — although
it had rejected her complaint to enforce
the contract — to rescind the sale and regain the Internet domain names,
provided she returned the first $62,500 installment the defendants had paid her
for the business. The trial court
expressly determined she was not
entitled to the second and final $62,500 installment owed by the defendants and
that the defendants had not breached the contract by failing to pay her that
sum.
The
court warned Masino that if her refund payment “is not made within the time I
specify, then the domain names would . . . remain” defendants’
property. But while Masino offered in
writing to refund defendants their $62,500 subject
to certain conditions, she ultimately failed to make the payment. She contends the trial court erred in
concluding she failed to timely make the required payment, and the remedy she
demands on appeal is that the judgment be reversed and remanded with
instructions that defendants pay her
the remaining $62,500 to fulfill the contract.
Alternatively, she argues she is entitled to a $7,000 profit she asserts
she could have gained by reselling the domain names, if only defendants had
returned them when she claimed she was ready to refund their money. We find no error in the trial court’s
conclusion Masino failed to pay defendants their $62,500 as ordered, and we
therefore affirm the judgment. As we
explain below, we deny defendants’ motion to impose sanctions on Masino for
filing a frivolous appeal.
I
FACTUAL
AND PROCEDURAL BACKGROUND
Because
the parties have included on appeal very little of the trial record, we glean
the origins of their dispute from their briefs.
According to the defendants, Masino, a stock broker and sole owner of
144 Opinions, failed to disclose that the true nature of her business consisted
of “selling fraudulent SEC rule 144 ‘opinion letters,’” which “enabled clients
to dump otherwise restricted and worthless penny stocks at a considerable profit.” “Inevitably, the [SEC] prosecuted,” but
Masino did not disclose the pending enforcement proceeding as O&Y
contemplated buying her business, nor did she disclose that the SEC, in
initiating its investigation, had notified her, “‘This action concerns a legal
opinion mill, which fraudulently facilitated the sale of securities in
violation of Federal securities laws.’”
According to the defendants, “Desperate to unload her worthless and
fraudulent mill, Masino swindled yet another party,” O&Y, “dup[ing] O&Y
into buying her . . . mill for $125,000 in October 2008.” Masino did not disclose that she and her
business “were about to be barred from the industry by the SEC for fraud.”
O&Y
learned of the SEC’s investigation in November 2008, weeks after reaching
the purchase agreement with Masino.
According to the defendants, “[a]fter stalling for several months,”
Masino eventually “admitted the SEC charges,” whereupon “O&Y immediately
terminated Masino’s independent consultancy agreement, and refused to pay her
$62,500 (the second installment of the $125,000 purchase price).” When Masino sued O&Y for breach of
contract for refusing to pay the $62,500 balance, O&Y raised in their
defense “fraud by Masino, failure of consideration, and illegality of
contract.”
Masino’s
account of the lawsuit does not differ significantly from defendants’, except
that she minimizes her role in any fraud.
On appeal, she describes her former business as one serving “owners of
restricted [stocks] who wanted the restrictions removed so they could sell the
stock,” and therefore would contact “one of the websites or ‘800 numbers’
operated by the corporation to obtain the ‘legal opinion letter’ required by
[SEC] regulation 144.” Masino gathered
the stockholder’s information and passed it on to “one of two lawyers, Albert
J. Rasch, Jr. and Kathleen R. Novinger, who would review the information
and sign the required opinion letter,” which Masino then delivered to the
client and received payment.
Masino
concedes the SEC began investigating her company in 2008 “as a result of an
opinion . . . provided to a business, which in retrospect, was ill
advised.” She took the position the
lawyers were responsible because she “only provided administrative services”
and in any event, according to Masino, her lawyer advised her “it would look
better” if her “‘book of business’ was being operated by a law firm by the time
that the SEC got around to evaluating the allegations against her.” Consequently, in early October 2008, she
met with O&Y who soon offered her $125,000 “for all of the assets and
goodwill” of her company, “along with a separate 1 year consulting contract to
assimilate the business, with $62,500.00 payable upon acceptance and the
remaining $62,500.00 due in one year.”
Masino accepted on November 3, 2008, began her consulting position
with O&Y, and they paid her the initial $62,500 as agreed. Masino notes “[t]here was no written contract
although there was a list of assets.”
The asset list included two telephone numbers, an e-mail address,
and 18 Internet domain names (e.g., 144opinions.com,
Rule144opinionletters.com, etc.). The
asset list also expressly included “all goodwill” and any “customers generated
by the above Assets, including all customer contact information and service and
payment histories.”
According
to Masino, when the SEC notified her attorney on November 19, 2008, of “a
proposed settlement/judgment,” she promptly informed O&Y, who “advised
[her] to reject [it] and to hire another attorney” because her lawyer simultaneously
represented the subcontracted attorneys she blamed, Rasch and Novinger, a
conflict of interest. Masino hired a new
attorney recommended by O&Y and, while the SEC investigation continued, she
remained in her consulting position at O&Y, “training their employees and
assimilating [her] ‘book of business’ into [defendants’] operations.” In late June 2009, Masino’s new lawyer
informed her that, after reconsideration, “the SEC’[s] proposed
settlement/judgment was virtually the same.”
When Masino notified O&Y, they “promptly ‘rescinded the oral asset
purchase agreement’ and terminated the balance of the consulting contract,”
“refused to return any of the assets,” and “continued to operate [her] ‘book of
business,’” but “refused to pay the balance of the contract price
. . . .” Masino therefore
“sued to enforce the contract.”
It
appears O&Y believed their initial $62,500 installment constituted payment
for 144 Opinion’s phone numbers, domain names, and any customer contact
information and business generated by those resources. It also appears that O&Y concluded, given
the taint of SEC fraud findings and Masino’s failure to disclose the SEC
investigation, no business goodwill existed in her company or continued
association with her, and her consulting services were therefore
worthless. The trial court may have
adopted this view as the reason it excused O&Y from making any further
payment on the contract, but the record is not clear. (See, however, Denham v. Superior Court (1970) 2 Cal.3d 557, 564 (
record in light most favorable to judgment and indulge all reasonable
presumptions to support it].)
As
noted, the parties have furnished a meager trial record. Besides the notice of entry of the judgment
and her notice of appeal, Masino designated only two documents in the clerk’s
transcript for the record on appeal: her
March 25, 2011, “Election to Rescind” the parties’ contract, and the trial
court’s subsequent entry of judgment on May 4, 2011. The judgment provides that, “evidence, both
oral and documentary, having been presented by both parties, and the cause
having been argued and submitted for decision,” Masino shall “take nothing by
her complaint from Defendants . . . .” The court awarded defendants their trial costs
and dismissed Masino’s breach of contract action with prejudice.
There
is nothing in the record on appeal to reflect what evidence was introduced at
trial, except the trial court’s oral ruling on March 7, 2011, in which the
court summarized the trial and the court’s conclusions and findings of
fact. We infer the trial ended on
March 7, 2011, because the parties eventually augmented the record to
include what appear to be their closing arguments on that date. Masino does not dispute, but rather expressly
“accepts the Court’s factual findings after trial,” which we summarize from the
March 7 hearing as follows.
The
trial court observed that the “initial factual issue to be determined is when
did Oswald & Yap learn of the S.E.C. investigation.” The court found “the revelation of the S.E.C.
investigation did not take place until, as Mr. Yap testified, he received
a telephone call from a newspaper reporter sometime in mid-November,”
2008. The court noted this finding would
“implicate on every single further aspect of this case.” Having heard Masino’s testimony, the court
observed she “is a very good salesperson” and concluded that when defendants
learned in November of the fraud investigation, “she sold to Mr. Yap and
Oswald & Yap the concept that she wasn’t the bad guy in this deal and with
proper representation this could all be turned around, and that the only
persons who were subject to S.E.C. sanction were the two lawyers who had been
writing the opinions. [¶] Ultimately not only did that not prove to be
true, but in fact it appears that Ms. Masino conceded the point and
acceded to the S.E.C. judgment without contest.
I think that has to implicate on this case as well.”
Specifically,
the court concluded that defendants “were taken in to some degree with the
concept of, hey, they . . . like Ms. Masino, she appeared to
be[:] A, sympathetic; B, sincere; C,
somebody who had previously made things happen with this company. And they thought that at the end of the day,
as Mr. Yap testified, no one without a . . . determination of
guilt or culpability should . . . have that held against them, and so
they continued to work with her to perform their part of the bargain.”
But
the court concluded that once the SEC reached its fraud judgment, “it is with
good reason that Oswald & Yap would say to Ms. Masino, wait, this
stops you from working here; wait, this actually can implicate . . .
the ability of this enterprise to actually conduct business.” The court observed that the SEC’s “final
judgment . . . bars Ms. Masino personally for five years from
participating in [the] offering of penny stock,” including “trading, or
inducing or attempting to induce, I emphasize those words, . . . the
purchase or sale of any penny stock” and “is of such a broad nature as to be so
broad that the participation [in] the issuance of 144 opinions would also be
barred.” The court found the SEC fraud
determination was “horribly damaging” to O&Y’s attempt to run a legitimate
rule 144 opinion “enterprise, such that people would not want to or be willing
to do business” with them.
The
court reiterated it found “specifically that the S.E.C. investigation was not
disclosed timely and truly was not disclosed with the degree of particularity
and sufficiency that would be required in order to adequately apprise the buyer
of a foundational fact for the purchase or sale of the enterprise.” The court held: “I don’t actually think that Oswald & Yap
would have entered into this agreement at all had they known of the nature of
the S.E.C. investigation and the subject of the S.E.C. investigation.” The court then ruled “that leaves us with
this: no damages to plaintiff on one
hand.”
The
court, however, held out a lifeline for Masino
to rescind the contract and regain her domain name assets. Specifically, the court continued: “On the other hand at this point Oswald &
Yap has a number of domain names that it acquired with a down payment of
$62,500 and a one-year consultancy contract.”
The court found Masino’s consulting consideration “terminated” by the
SEC fraud judgment. “But as to the
domain names,” the court offered, “it
seems to me that an election needs to be made and within a very short
period of time; that is, to rescind the contract. This would be at the plaintiff’s election, to
rescind the contract and upon the payment
of $62,500 from Ms. Masino to Oswald & Yap, Oswald & Yap would
transfer the domain names back to Ms. Masino.”
(Italics added.)
The
court continued: “If the
specify, then the domain names would basically remain in the possession and
control and ownership of Oswald & Yap.
And so what I plan to do is set a payment
deadline, or an election — actually it would be a payment deadline, you figure out your election as you wish
. . . .” (Italics added.) The court set the deadline a month away, on
April 6, 2008, and rejected Masino’s attorney’s request for an extension
based on his travel schedule, observing, “You’re not the one
[a.m.] in this department” (italics added), and ordered O&Y’s attorney to
prepare the judgment, “although obviously there’s a certain condition” to its
final terms, i.e., whether Masino timely made her payment.
On
March 25, 2008, Masino sent to O&Y, and filed with the court, a
document she entitled, “Election to Rescind Subject to Verification of Ability
to Return Assets.” (Capitalization
changed to initial caps only.) She did
not include in her letter to O&Y any payment, nor did she file payment with
the trial court. Nevertheless, she
stated in her “Election” that she “hereby tenders payment of $62,500 to Oswald
& Yap[.]” She identified her tender
as “in exchange for the 21 items identified on the attached list,” and she
limited her offer “subject to the condition precedent that [O&Y]
and completely return each of the 21 items on the attached list, free of
encumbrances, and with all the rights and title pertaining thereto.” (Italics
added.) The attached list identified the
21 items as the 18 domain names, two phone numbers, and one e-mail address
Masino transferred to O&Y as partial consideration for their contract.
Having
received no payment or notice of actual payment, O&Y did not appear at the
courthouse on April 6. O&Y’s
attorney later explained he understood the April 6 date as a deadline for
payment, and when Masino did not make any payment by that date, there was no
reason to appear. Masino does not
include in the record on appeal the minute order or a record transcript, if
any, arising from the April 6 hearing.
The court apparently scheduled another hearing on April 8, and both
parties appeared on that date. In the
meantime, O&Y filed a document, which is also absent from the record on
appeal, objecting to any rescission or retransfer of the domain names at
Masino’s sole election.
O&Y
argued at the April 8 hearing that Masino’s option for rescission had
terminated because she did not make her required payment as ordered by the
court. Counsel observed, “[I]t was my
understanding that the 30 days was 30 days in which to essentially
consummate the rescission, not 30 days in which to at leisure contemplate
whether a better deal could be gotten from various other parties, in the
meantime damag[ing] further the reputation of Oswald & Yap.” Counsel explained he brought a witness, who
“can be heard if Your Honor wishes,” to testify that “Ms. Masino is currently
touting some of the assets around,” in other words, offering to sell domain
names like 144letters.com to potential buyers and harming O&Y by suggesting
“that we no longer own them.” Counsel
also complained Masino was spreading a falsehood that “[w]e’re no longer
. . . in the business of writing 144 opinion letters” and that, while
O&Y considered cease and desist letters, “[t]hat’s only going to exacerbate
the situation.” O&Y requested that
any “right to elect [rescission] be mutual,” but argued “in practical terms
it’s moot because the date of April the 6th has come and gone.”
Counsel
for Masino argued her “tender” on March 25th sufficed to meet the court’s
payment deadline. He asserted, without
an offer of proof, that O&Y was “only . . . capable of returning”
to Masino six out of the 21 assets and
that was why Masino had made only a conditional tender and not an actual
payment. According to counsel, “We had
checked on several of these and concluded that they didn’t even own them, which
is why we tendered it[.]” Thus, as
counsel phrased it, “the problem was, well, while Ms. Masino did properly
elect and tender the money, . . . over two-thirds of the assets can’t
even be returned, which was a problem we were anticipating, which is why we
officially filed the tender with the court, to put everyone on notice that we
were offering the money but, of course, subject to the assets being returned.”
When
the court asked Masino’s attorney, “What does ‘tender’ mean to you,” counsel
replied, “‘Tender’ means we’re offering the money if they can return the
assets.” When the court asked, “Did you
deliver up a cashier’s check or certified check for $62,500” to O&Y or to
the clerk of the court, counsel acknowledged Masino had not done so.
The
court inquired whether Masino “ha[d] a sale of these assets if she recovers
them,” and Masino herself answered that in “talking” to various parties she
obtained a $69,500 offer for “[t]he group of 21 intact,” which amounted to
$62,500 “plus an additional $7,000 for my troubles.” She complained that O&Y “didn’t have control”
over “[m]ost” of the domain name assets “when they offered me the first
rescission in June of 2009. These
expired in May. There’s a ton of them
that expired in May 2009.” Masino
further complained that when she was soliciting offers for the domain names
pending their return by O&Y, a potential buyer or buyers balked because
some of the domain names were already “up and running” on the Internet under
new domain name registrants and, therefore, they already “must have been let
go” by O&Y. Masino did not address
the fact that, if the registration had been “let go” in May 2009 as she
suggested, it occurred during her consulting role about integrating these
assets into O&Y’s operations, which was not revoked until June 2009. Nor did she discuss whether any of the domain
names may have been “let go” merely subject to lease agreements, a right of
redemption, or other provisional term, or whether other means existed to regain
lost domain names, so that O&Y could restore them to Masino if so ordered by
the court.
At
this juncture, the trial court offered to attempt to “fashion a resolution of
this matter” with the parties in chambers, but the effort was
unsuccessful. Returning to the
courtroom, the court noted “the solution that I proposed was unacceptable for
reasons that I need not detail on the record, therefore, basically the court is
in the position of having to decide at long last how judgment ought to be
rendered.”
The
court concluded Masino’s “tender” did not suffice to meet the terms of its March
7 payment order. The court explained its
ruling as follows: “A, the court did not
indicate anything conditional; B, while there is some representation of the
unavailability of some of the listed assets, that representation [being] made
by the plaintiff’s side, I have no evidence of that from which to make such a
determination; and, C, in the court’s view the $62,500 needed to be tendered,
not simply a statement saying, I’ll pay conditional upon proof of
something.” Consequently, “under the
circumstances, the court grants judgment to the defense and against the
plaintiff, and I think that leaves the assets in the hands of Oswald & Yap,
and [O&Y] will prepare” the judgment to that effect.
Counsel
for Masino objected that “on the date the court had set,” April 6, he and
Masino “did appear in court, and Ms. Masino did bring with her a check for the
full $62,500. And it is my understanding
from the court’s original order that she could pay on that day. And the only reason that she didn’t pay on
that day was because the other party did not show up. So that was an actual tender of the money on
the date set by the court and [Masino] still has the check.”
The
court responded, “Mr. Plummer, you were here on that day; Ms. Masino
was here on that day. I confess I was
somewhat frustrated by the absence of Mr. Sweetnam, but I understand now
from his explanation why he was not here.” The court continued: “At no time did you deliver that check to the
clerk, that I’m aware of, and at no time did I see any attempt to deliver that
check to the court and/or to represent that [the] check was being sent down to
Oswald & Yap on that date. [¶] And so I actually find this to be part of
something of a pattern of gamesmanship that unfortunately doesn’t do the job
for this purpose. So the judgment will
be as I indicated to the defense in this case.”
Counsel
for Masino again objected that “[t]he reason it wasn’t deposited on that date
was because you trailed the hearing to this date and we’re right here.” The court answered, “Nowhere in that
proceeding or [on] that date did I order that the expiration date be
extended. If you had asked for that, I
probably would have considered it, but not having asked for it, [and] not
having ordered it, I don’t find any extension.”
The court concluded the hearing, subsequently entered the judgment in
favor of O&Y, and Masino now appeals.
II
DISCUSSION
A.
as Ordered by the Court
Masino
argues that her notice of election to rescind the contract satisfied the trial
court’s requirement that she refund the defendants their $62,500 to qualify for
rescission. Specifically, she asserts
her written offer “hereby tender[ing]
payment of $62,500.00 to [O&Y] in exchange for the 21 items identified on
the attached list” sufficed even though she never actually made the payment to
O&Y or to the court on behalf of O&Y.
(Italics added.) She relies on an
evidentiary rule (Code Civ. Proc., § 2074) establishing that an offer of
payment rejected by the obligee qualifies as a valid tender.
Code
of Civil Procedure section 2074 provides:
“An offer in writing to pay a particular sum of money, or to deliver a
written instrument or specific personal property is, if not accepted,
equivalent to the actual production and tender of the money, instrument, or
property.” This and related code
provisions operate as “rules of evidence affecting the question of costs and
the right to bring actions in cases where a tender is necessary before
commencing the action.” (
137 Cal. 376, 383.) These rules do
not prevent a party to whom, for example, $10 is offered to pay a $20,000 claim
from insisting on the full terms of the obligation. (Ibid.)
Similarly
here, Masino’s obligation consisted of full payment of $62,500 by a date
certain and, therefore, an offer of
payment is no substitute for actual payment when that is what the court
ordered. Despite its later use of the
word “tender,” the trial court did not order Masino to tender an offer to O&Y,
but rather to actually pay them $62,500 and do so by April 6. Moreover, it was not Masino’s prerogative to
impose conditions on O&Y before she
fulfilled the court’s order. “A tender
is an offer of performance made with the intent to extinguish the obligation. [Citation.]
When properly made, it has the effect of putting the other party in
default if he refuses to accept it.
[Citations.]
. . . . [¶] However, a tender to be valid must be of full
performance [citation], and it must be unconditional.” (Still
v. Plaza Marina Commercial Corp. (1971) 21 Cal.App.3d 378, 385.)
Here,
Masino attempted to impose a verification condition on O&Y before she would
make her payment. But a failure to
names would not have placed O&Y in default, since the court had not
required verification before Masino’s payment or O&Y’s return of the
assets. Therefore, O&Y was not
required to accept Masino’s unilaterally-imposed verification
precondition. If Masino timely had made her payment as ordered, either to O&Y
or to the court, and O&Y proved unable to return the assets,
from the court for its default in
meeting the court’s order. But Masino
introduced no evidence of O&Y’s inability to return the assets and, in any
event, she short circuited the proceedings by superimposing her own conditions
on the court’s order. (See
273 Cal.App.2d 774, 782 [“an unwarranted condition annexed to an offer to
pay is in effect a refusal to pay”].)
In
effect, Masino’s conditional offer amounted to insistence on delaying
payment. Thus, while her “tender”
verbalized a willingness to pay, “a mere indication of a willingness to perform
in the future is not the equivalent of a valid, subsisting tender.” (Waller
v. Brooks (1968) 267 Cal.App.2d 389, 394-395.) In sum, the court required Masino’s prepaid
refund before she could obtain the return of the domain names, and we cannot
say the trial court erred in concluding her tender did not qualify as
payment. The court required payment and
she did not pay. She did not pay
O&Y, nor did she pay the funds to the court clerk, nor interplead the funds
with the court, nor pay them to a third party to hold in trust for
O&Y. Because Masino did not make her
payment by the time and date the trial court specified in its payment deadline,
there is no basis to reverse the judgment.
Masino’s
reliance on authority that depositing monies with the court does not constitute
a valid tender is unavailing. (See
Proctor Co. (1919) 40 Cal.App. 524.)
First, the tendering party’s sua sponte attempt in that case to pay into
court an amount arising under a different
obligation than the contract at issue, and to have the payment constitute
an offset, has no relation to the facts here.
Second, and more fundamentally, the trial court here did not authorize a
tender or offer of payment to satisfy Masino’s refund obligation, but instead
required payment. As discussed, the
record is undisputed Masino failed to make that payment and she therefore fails
her burden to demonstrate reversal is required.
(Denham, supra, 2 Cal.3d at p. 564.)
Similarly,
while Masino argues the court “trailed” the April 6 hearing to April 8 as a
continuation of the April 6 hearing, and therefore effectively extended her
timeframe for payment to the later date, she has not included in the record on
appeal the court’s April 6 minute order or the record transcript on that date,
if any, to support that inference. We
must presume the judgment is correct (Denham,
supra, 2 Cal.3d at p. 564),
and “‘[a] necessary corollary to this rule is that if the record is inadequate
for meaningful review [on a particular point], the appellant defaults and the
decision of the trial court should be affirmed.’” (Gee v.
American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412,
1416 (Gee).) The trial court was emphatic it had not
granted Masino any extension of her payment deadline, and Masino presents no
basis to reverse that determination.
B. Masino
Presents No Record Evidence of Her Claim the Contract Was Inseverable
Masino
contends obliquely in two brief paragraphs that “partial rescission is not an
option” because “[t]he subject contract for the purchase of [her] ‘book of
business’ was not severable.” We infer
from this vague claim that Masino is arguing the terms of her contract with
O&Y prevented the trial court from leaving the domain name assets with
O&Y upon her failure to refund the initial $62,500 O&Y paid her. It appears Masino is suggesting the trial
court had to find a way to require Masino to make her refund payment or, in the
alternative, require O&Y to pay her $62,500 to fulfill the contract, even
though her failure to disclose the SEC investigation, which resulted in a fraud
judgment barring her from the industry, undercut any value in her consulting
services or the business goodwill for which O&Y bargained. Masino does not, however, include in the
record on appeal any testimony or
other evidence bearing on the terms of her contract with O&Y. It is therefore impossible to review her
contention concerning the severability or inseverability of portions of the
contract. (Denham, supra,
2 Cal.3d at p. 564; Gee,
In
a related point, Masino argues O&Y
waived rescission once it became aware of the SEC investigation and failed to
terminate the contract immediately.
Masino’s premise is faulty, however, because the trial court offered
contract by refunding O&Y its $62,500.
She did not avail herself of that opportunity, as discussed. Masino also asserts, without any supporting
evidence in the record, that O&Y sold
the domain names Masino claims, again without evidence, were unavailable for
return, and she suggests that “by choosing to sell off approximately 70% of the
assets that they had received after
November 28, 2008” (apparently the date O&Y became aware of the SEC
investigation), O&Y necessarily “waive[d] the right to rescind.” Because the trial court offered the
rescission option to Masino, not
O&Y, we infer her true target is to undo the trial court’s assertedly
invalid “partial rescission” of the contract, in which O&Y retained the
domain names but did not have to pay for other aspects of the bargain,
including business goodwill or Masino’s consulting services. This, however, constitutes no more than
rearguing her inseverability claim, and has no merit, as discussed.
C. Sanctions
We
conclude sanctions are unwarranted.
Sanctions rest in the court’s discretion when a litigant files an appeal
that is “frivolous . . . or . . . solely to cause
delay.” (Cal. Rules of Court,
rule 8.276(a)(1); Code of Civ. Proc., § 907.) An appeal is frivolous “when it is prosecuted
for an improper motive . . . or when it indisputably has no
merit.” (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 (
deter only the most egregious conduct.”
(Id. at p. 651.) Here, the record suggests the trial court may
have mistakenly believed a valid “tender” required an attempt to actually pay
the obligee the sum due, rather than a written offer to do so, as permitted
under Code of Civil Procedure section 2074. Thus, when the trial court mentioned the
tender procedure at the April 8 hearing, counsel may have discerned a
slim, but potentially viable opportunity to argue on appeal that its written
offer was sufficient to constitute an actual tender, contrary to the trial
court’s impression.
But
as discussed, the trial court’s terms for rescission imposed a
actually make a court-ordered payment and not merely a tender, and do so by a
certain time and date, which she failed to do.
Additionally, her tender was invalid because of the verification and
implicit delay conditions it purported to impose, as discussed. Nevertheless, “[c]ounsel and their clients
have a right to present issues that are arguably correct, even if it is
extremely unlikely that they will win on appeal” (Flaherty, supra,
31 Cal.3d at p. 650), and we therefore decline to impose sanctions.
III
DISPOSITION
The
judgment is affirmed. Respondents are
entitled to their costs on appeal.
ARONSON,
J.
WE CONCUR:
O’LEARY, P.
J.
FYBEL, J.
