Nesbitt v. Emmanuel
Filed 2/7/12 Nesbitt v. Emmanuel CA2/4
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opinion has not been certified for publication or ordered published for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
ROSINA
NESBITT, Individually and as Trustee, etc.,
Plaintiff and Respondent,
v.
WARNER
EMMANUEL,
Defendant and Appellant.
B224521
(Los Angeles County
Super. Ct. No. BC401027)
APPEAL from a
judgment of the Superior Court of
County, Richard Fruin, Judge.
Affirmed in part; reversed in part.
Raymond I. Moniak for Defendant and
Appellant.
Law Offices of Hugh Duff Robertson
and Vivian M. Lum for Plaintiff and Respondent.
__________________________________
INTRODUCTION
Appellant Warner Emmanuel appeals
from a money judgment in favor of
respondent Rosina Nesbitt, individually and as trustee for the Rosina Nesbitt
Trust. He contends (1) there was
insufficient evidence of his finances to support the award of punitive damages;
and (2) the Rosina Nesbitt Trust should not have been awarded attorney fees. We conclude the punitive damages award must
be stricken on the basis of insufficient evidence, but we will sustain the
award of attorney fees.
On November
2, 2005,
Nesbitt, individually and on behalf of the Rosina Nesbitt Trust, sold her
condominium to appellant for $1,200,000.
Appellant financed the purchase by making a $120,000 down payment,
obtaining a $680,000 bank loan, and persuading respondents to carry back a loan
of $400,000. The $400,000 loan was
evidenced by a written promissory note dated October 21,
2005, and
made payable to the Rosina Nesbitt Trust.
It was secured by a deed of trust encumbering the condominium. The note provided that appellant would pay
$52,000 in interest over two years, and the principal balance of $400,000 on
November 3, 2007.
At the time of
the transaction, Nesbitt was in her late 70’s and did not understand real
estate transactions. In contrast,
appellant had been a licensed real estate agent from 1976 to the early 1990’s. At the time of trial, he was acting as a
trustee of a trust and managing various parcels of real property. His salary was approximately $16,800 per
month. He still owned the condominium
that formerly belonged to Nesbitt.
Within the past three years, he had purchased another condominium and a
cabin in California, and a large parcel of land in Utah.
He also had sold one of his condominiums in Maui, and had purchased another
condominium in a better area in Maui. He had at least one
tenant for his Maui
properties.
On March
28, 2006,
appellant, along with a notary public, visited Nesbitt. He obtained from her a deed of reconveyance
which released the deed of trust securing his payment of the $400,000
promissory note. Appellant had the
signed documents recorded with the county recorder’s office April
3, 2006. Appellant thereafter encumbered the
condominium with a new loan in the amount of $800,000, and received $101,465 in
cash as a result of the refinance. He
also obtained a $150,000 line of credit secured by the property.
Under the
terms of the October 21, 2005 promissory note, appellant was
required to repay the $400,000 loan by November 3, 2007.
When Nesbitt had not received a payment from appellant by that date, she
complained to her friend, Silvana Licciardi, a licensed real estate agent and
the successor trustee for the Rosina Nesbitt Trust. Licciardi investigated and learned that
Nesbitt had reconveyed her security interest in the condominium. Nesbitt was unaware she had signed a deed of
reconveyance and did not understand the legal effect of signing such a
document.
On November
13, 2007,
Licciardi contacted appellant, who was residing in Hawaii.
Appellant told her his lender had “made him do it†-- which Licciardi
understood as referring to having Nesbitt sign the reconveyance documents. He also stated he would come to California before Christmas and would then pay
off the sum due Nesbitt on the promissory note.
Despite these representations, appellant made no further payments to
respondent.
Nesbitt was
very upset about appellant’s actions.
Her lawyers wrote a demand letter to appellant on August
11, 2008,
but received no response. On October
31, 2008,
she filed a verified complaint against appellant for breach of contract and
elder abuse.
After a three-day bench trial, the
court issued its written decision in favor of respondent. The court found appellant liable on the October
21, 2005
promissory note, and awarded the Rosina Nesbitt Trust damages and “legal fees,
as provided in the note itself.†It also
found appellant had committed an “egregious violation of the Elder Abuse Act,â€
Welfare and Institutions Code section 15610.30 et seq. In addition, the court found by clear and
convincing evidence that appellant’s conduct was fraudulent, oppressive and
malicious, and that Nesbitt was entitled to punitive damages.
On March 16, 2010, in a judgment
after trial by court, it was ordered, adjudged and decreed that “[t]he Rosina
Nesbitt Trust and Rosina Nesbitt, individually, shall recover, jointly and
severally, from Emmanuel compensatory damages in the sum of $428,000, plus
pre-judgment interest at 10% from and after November 3, 2007 until paid, plus
attorney’s fees as provided in Welfare and Institutions Code §
15667.5(a).†Nesbitt also was awarded
punitive damages in the sum of $1,000,000.
Appellant appealed from the judgment.
On appeal,
appellant contends (1) the trial court erred as a matter of law in awarding
punitive damages because there was insufficient evidence of appellant’s
financial condition; and (2) the court erred as a matter of law in awarding
attorney fees to the Rosina Nesbitt Trust.
We conclude there was insufficient evidence to support the award of
contractually entitled to an award of attorney fees. We address each issue in turn.
A. Punitive Damages
As
an initial matter, we note appellant did not move for a new trial based on the
allegedly excessive punitive damages pursuant to Code of Civil Procedure
section 657, subdivision 5. We asked for
supplemental briefing on whether appellant forfeited its challenge to the award
of punitive damages by failing to move for a new trial. After reviewing the
has been no forfeiture. We find
dispositive the footnote in Adams v.
Murakami (1991) 54 Cal.3d 105 (Adams) that an appellate court should
review whether an award of punitive damages is excessive despite “a defendant’s
oversight or trial tactics.†(
(1994) 25 Cal.App.4th 1269, 1282 [evidence of a defendant’s financial condition
“is a requirement imposed as a matter of public policy and hence not subject to
waiver by the failure of an inattentive defendant to object or otherwise call
attention to the inadequacy of plaintiff’s proofâ€].) We turn to the merits of the challenge to the
award of punitive damages.
“[T]he purpose of punitive damages is
not served by financially destroying a defendant. The purpose is to deter, not to
destroy.†(Adams, supra,
it is disproportionate to the defendant’s ability to pay.†(Ibid.
[citing cases finding award of punitive damages excessive where award exceeded
more than two-and-a-half-months of defendant’s annual net income, or more than
30 percent of defendant’s net worth].)
The plaintiff bears the burden of proof to show defendant’s ability to
pay. (Id. at p. 119.) Accordingly,
“[a] reviewing court cannot make a fully informed determination of whether an
award of punitive damages is excessive unless the record contains evidence of
the defendant’s financial condition.†(
damages for substantial evidence. (
910, 916 (Kelly).)
Here, the
record showed that appellant was employed as a trustee earning approximately
$16,800 per month, or $201,600 annually.
He also had at least one tenant, but there was no evidence as to the
amount of his rental income. Appellant
had been a licensed real estate agent, but there was no evidence regarding
whether he could operate a profitable real estate practice in the near
future. The record further showed that
appellant still owned the condominium that formerly belonged to Nesbitt, but
there was no evidence of how much equity remained in the property. In addition, the record showed appellant had
recently purchased several properties in California and Hawaii as well as a
parcel of land in Utah. However, there
was no evidence that appellant still owned the properties or whether any of
them was encumbered. Finally, there was
no evidence regarding appellant’s liabilities.
In short, there was insufficient evidence from which the court below --
or this court on appeal -- could determine whether appellant would be able to
pay the award of $1,000,000 in punitive damages. (See, e.g., Baxter v. Peterson (2007) 150 Cal.App.4th 673, 681 [“In sum,
although the record shows that [defendant] owns substantial assets, it is
silent with respect to her liabilities.
The record is thus insufficient for a reviewing court to evaluate
[defendant’s] ability to pay $75,000 in punitive damages.â€];
[defendant] still held the assets, or of the amounts of his liabilities, the
$75,000 award is unsupported by substantial evidence and excessive.â€].) Although appellant’s conduct was
unquestionably reprehensible and Nesbitt would otherwise be entitled to
punitive damages, the award of punitive damages must be stricken because there
was insufficient evidence of appellant’s financial condition. (Kelly,
supra, 145 Cal.App.4th at p. 919.)
B.
In the judgment, the trial court
awarded Nesbitt and the trust “jointly and
severally . . . attorney’s fees as provided in Welfare and
Institutions Code § 15667.5(a).â€
Appellant contends the trust was not entitled to attorney fees under
section 15667.5 because that provision applies only to an elder or dependent
adult, and not to an entity such as a trust.
However, as the trial court correctly stated in its written decision,
the trust was entitled to legal fees based upon the October 21, 2005 promissory
note. The note provided that “[i]f
action [is] instituted on this note, I/We promise to pay such sum as the Court
may fix as attorney’s fees.†Thus, even
if the trust was not statutorily entitled to attorney fees, the fee award was
proper under the terms of the promissory
note. (Hiott v. Superior Court (1993) 16 Cal.App.4th 712, 717 [order of
superior court may be sustained on any adequate ground that exists in the
record].) Accordingly, the trust was
entitled to the award of attorney fees.
DISPOSITION
The judgment is reversed
insofar as it awarded punitive damages.
In all other aspects, the judgment is affirmed. The parties are to bear their own costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
MANELLA,
J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.
Appellant
does not contest that Nesbitt was individually
entitled to attorney fees under the statute.
