Filed 9/16/16? Hanna v. Erganian CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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
FIFTH APPELLATE DISTRICT
| RIMON HANNA, etc.
Plaintiff and Appellant, v. RICHARD ERGANIAN et al., Defendants and Respondents. |
F068116 (Super. Ct. No. 08CECG02258) OPINION |
APPEAL from a judgment of the Superior Court of Fresno County.? Mark W. Snauffer, Judge.
Counsel:
Rimon Hanna, in pro. per., for Plaintiff and Appellant.
Rummonds, Thornton, Lapcevic, Douglas V. Thornton; Thornton Law Group and Robert W. Branch for Defendants and Respondents.
-ooOoo-
??????????? Plaintiff Rimon Hanna leased the vacant restaurant premises located at 5123 N. Blackstone Avenue in Fresno (the restaurant property or premises) from its owners, Richard Erganian, Miche Erganian and Edward Erganian (collectively defendants), for the purpose of starting a new restaurant at that location.? Plaintiff assigned all of his rights and interests under the lease to a corporate entity formed by him known as Rimon Culinary Enterprises, Inc. (RCE).? The restaurant opened in 2004, but ultimately failed.? Plaintiff commenced the present action against defendants for alleged breach of contract, misrepresentation, intentional interference with economic advantage and other causes of action.? On a motion for summary adjudication, the trial court adjudicated several causes of action in defendants? favor, including on the ground that plaintiff lacked standing to sue as a result of the assignment to RCE.? The remaining causes of action were disposed of by the trial court following a trial, and a judgment for defendants was entered.? Plaintiff now appeals from the judgment.? Because plaintiff has failed to demonstrate any reversible error, we affirm the judgment of the trial court.
FACTS AND PROCEDURAL HISTORY
Plaintiff filed his original complaint for damages on July 2, 2008.? The complaint alleged that in 2003, plaintiff saw an advertisement soliciting tenants for the restaurant property owned by defendants.? Allegedly, the advertisement mentioned that a former restaurant at the same site, known as the Peppermill, ?had a history of $5 million gross? revenues each year.? The advertisement also purportedly represented that the restaurant property was ?fully equipped ? for [a] new lease to the right operator with at least $100,000 working capital.?? In or around November 2003, plaintiff contacted defendant Richard Erganian for purposes of leasing the restaurant property.? Allegedly, at that time Richard Erganian orally represented that the restaurant property would only require a $100,000 investment and would produce revenues of approximately $5 million annually.? Plaintiff entered into a lease agreement (and an addendum) with defendants on December?11, 2003, allowing the property to be operated by plaintiff as a ?[f]amily restaurant and lounge.?
According to the complaint, ?[u]pon taking possession of the Restaurant, and contrary to the representations made by the Defendants, Plaintiff was forced to make nearly One Million Dollars ($1,000,000.00) in repairs and alterations to the Restaurant.?? Additionally, defendants engaged in certain conduct to harass or interfere with plaintiff?s operation of the restaurant.? Although the new restaurant opened for business in 2004, it was ultimately unsuccessful and the premises had to be surrendered back to defendants in 2007.
Plaintiff believed he had been wronged by defendants and alleged several theories of liability in the original complaint.? The causes of action in the complaint included breach of contract, breach of covenant of good faith and fair dealing, fraud, breach of covenant of quiet enjoyment, negligent misrepresentation, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, and unfair business practices in violation of Business and Professions Code section 17200.? The complaint was brought by plaintiff individually and did not attempt to plead a derivative action on behalf of RCE.
Following a demurrer, plaintiff filed a first amended complaint adding further specificity to the allegations.? Plaintiff?s first amended complaint included an allegation that defendant Richard Erganian had orally ?promised Plaintiff that he would provide him with a Peppermill accounting? showing that the Peppermill made $5 million in revenues per year.? Attached to the first amended complaint was a ?Second Addendum, Assignment and Extension of Lease? (Second Addendum to Lease).? The Second Addendum to Lease specified that plaintiff assigned to RCE all of his right, title and interest in the lease and that plaintiff agreed to individually guarantee the payment of all lease obligations.? The Second Addendum to Lease was executed on November?11, 2004.
Plaintiff filed a second amended complaint on April 6, 2011. ?In this pleading, plaintiff first sought to allege that the action was being brought as a derivative action on behalf of RCE.? The second amended complaint reiterated that in 2004, plaintiff and his wife ?assigned all right, title and interest in which Plaintiff owned and operated in Plaintiff?s Restaurant to the corporation, [RCE].?? According to the second amended complaint, even though RCE had acquired all such rights, plaintiff ?did not make any effort to secure action from the board of directors of [RCE] in prosecuting this action since any such effort would have been futile?.??? Plaintiff claimed that any such effort to secure action from the board of directors would have been futile because he was the sole shareholder of RCE as well as the sole member of the board of directors.
Defendants responded to the second amended complaint by filing a motion for summary judgment and/or summary adjudication on the ground that plaintiff could not prove compliance with Corporations Code section 800 (the requirements for derivative actions) and, as a result, plaintiff lacked standing to pursue any of the causes of action set forth in the second amended complaint.? The trial court treated the motion as one for judgment on the pleadings, and granted the motion ?on the ground that the claims [pled] belong to the corporation, [RCE], and that plaintiff ? lacks standing to maintain them and has not properly alleged futility pursuant to Corporations Code s[e]ction 800[, subdivision?](b)(2)?.??? Plaintiff was given 20?days? leave to amend.
On March 9, 2012, plaintiff filed his third amended complaint in an effort to overcome the defects of the second amended complaint regarding lack of compliance with Corporations Code section 800.? The third amended complaint alleged facts in direct conflict with what had been set forth in the second amended complaint on that issue.? Specifically, the third amended complaint alleged that plaintiff did make a demand to RCE?s board of directors prior to the filing of the lawsuit in this case, but RCE refused to pursue the corporation?s claims against defendants.? Defendants demurred and moved to strike, challenging the entire third amended complaint on the ground that the new allegations seeking to allege a basis for a derivative action were manifestly a ?sham.?? In its written ruling on those motions, the trial court agreed that the attempt to plead a derivative action on behalf of RCE was a sham, but concluded that there were also allegations that could be construed as plaintiff?s attempt to assert claims of his own.? Because of the existence of individual claims, which were not segregated from the corporate claims, the demurrer and motion to strike regarding the entire third amended complaint were overruled.
On August 10, 2012, defendants filed a motion for summary judgment and/or summary adjudication.? The motion challenged each of the causes of action in the third amended complaint on several grounds, including lack of standing to pursue claims belonging to the corporation, RCE.? The trial court granted summary adjudication of each of the contractual causes of action (i.e., breach of contract, breach of implied covenant of good faith and fair dealing and breach of implied covenant of quiet enjoyment) based on lack of standing, among other things.? The trial court also dismissed the causes of action for unfair competition and unjust enrichment for failure to state a cause of action.
The case proceeded to trial on the four causes of action in the third amended complaint that remained after the above motion for summary judgment and/or summary adjudication.? The four remaining causes of action were: ?(1) fraud, (2) negligent misrepresentation, (3) intentional interference with economic advantage, and (4)?negligent interference with economic advantage.? RCE, although named as a nominal defendant in the third amended complaint, was not a party to the trial proceedings because it never appeared and because the trial court had previously ruled that plaintiff?s effort to allege a derivative action was a sham.? Moreover, the trial court, on an unopposed motion in limine, ruled that the case was not being tried as a derivative action.
At the close of plaintiff?s presentation of evidence, the trial court granted defendants? motion for judgment on the causes of action for intentional and negligent interference with economic advantage, finding that plaintiff failed to provide any credible evidence of an actual interference by defendants personal to plaintiff.? Thus, after the close of plaintiff?s case, the sole remaining causes of action before the trial court were fraud and negligent misrepresentation.
Following the completion of the trial, the parties filed written closing briefs.? On July 29, 2013, the trial court issued its tentative statement of decision.? No objections were filed to the tentative statement of decision and, thus, the tentative statement of decision became the trial court?s final decision (the statement of decision).? In its statement of decision, the trial court found that the fraud and negligent misrepresentation causes of action failed for a number of reasons, including statute of limitations, lack of standing and failure to prove any actionable misrepresentation.
On September 4, 2013, a judgment after trial was entered by the trial court.? Plaintiff?s timely notice of appeal followed.
DISCUSSION
Preliminarily, we point out plaintiff?s burden as the appellant.? A judgment or order of a trial court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.? (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.)? Because a trial court?s judgment or order is presumed to be correct, reversible error must be affirmatively shown.? (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)? Thus, an appellant must affirmatively show prejudicial error based on adequate legal argument and citation to the record.? (Yield Dymanics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 556?557.)? These requirements apply equally to an appellant who is acting without an attorney.? (McComber v. Wells (1999) 72 Cal.App.4th 512, 523.)
Plaintiff?s appeal concerns rulings made by the trial court in two phases of the proceedings below.? First, plaintiff contends the trial court reversibly erred in granting summary adjudication of the three contractual causes of action and the unfair business practices cause of action.? Second, plaintiff contends the trial court reversibly erred in deciding, after hearing the evidence at trial, that plaintiff?s other causes of action failed.? We shall begin our discussion with the issues relating to the summary adjudication motion.
- Standard of Review?Motions for Summary Adjudication
We review the trial court?s order granting summary adjudication de novo.? (Certain Underwriters at Lloyd?s of London v. Superior Court (2001) 24 Cal.4th 945, 972 (Certain Underwriters).)? Summary adjudication is appropriate when the papers submitted show there is no triable issue of material fact and the moving party is entitled to adjudication as a matter of law.? (Code Civ. Proc., ??437c, subds.?(c), (f); Certain Underwriters, supra, at p.?972.)? The purpose of the law of summary judgment or summary adjudication is ?to provide courts with a mechanism to cut through the parties? pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.?? (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)
A defendant moving for summary adjudication has the initial burden of showing a cause of action is without merit.? A defendant meets that burden by showing that one or more elements of the cause of action cannot be established, or that there is a complete defense thereto. ?(Code Civ. Proc., ??437c, subd.?(p)(2).)? If the defendant makes such a prima facie showing, the burden then shifts to the plaintiff to produce evidence demonstrating the existence of a triable issue of material fact.? (Ibid.; Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 849.)? If the plaintiff is unable to do so, the defendant is entitled to summary adjudication as a matter of law and the motion will be granted. ?(Kincaid v. Kincaid (2011) 197 Cal.App.4th 75, 82.)
On appeal, our task is to independently determine whether a triable issue of material fact exists and whether the moving party is entitled to summary judgment or adjudication as a matter of law.? (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1601.)? ?We independently review the parties? papers supporting and opposing the motion, using the same method of analysis as the trial court.? Essentially, we assume the role of the trial court and apply the same rules and?standards.?? (Kline v. Turner (2001) 87 Cal.App.4th 1369, 1373.)? In so doing, we liberally construe the opposing party?s evidence, strictly construe the moving party?s evidence, and resolve all doubts in favor of the opposing party.? (Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64; Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768.)
- Motion for Summary Adjudication Properly Granted
- Causes of Action Based on Contract
We first consider plaintiff?s challenge to the trial court?s grant of summary adjudication of the contractual causes of action. ?Defendants? motion for summary adjudication of the first, second and fourth causes of action of the third amended complaint (i.e., for breach of contract, breach of implied covenant of good faith and fair dealing and breach of covenant of quiet enjoyment) was made on the ground that plaintiff lacked standing to assert contractual claims belonging to the corporation, RCE.? The trial court granted the motion concerning these contract-based claims, explaining as follows: ??Plaintiff?s own evidence shows indisputably that plaintiff was originally a party to the lease but that he assigned all right[,] title and interest in his restaurant and, indeed, in the lease and other contracts sued upon, to RCE.? As such, only RCE and not plaintiff, was a party to the contracts sued upon.?? Because the basis for recovery under the contractual claims was that plaintiff was personally a party to the contracts, which was no longer the case after the assignment, the motion for summary adjudication of the first, second and fourth causes of action was granted.? According to the trial court, the claims belonged to RCE, and plaintiff lacked standing to assert them.? Plaintiff contends the trial court erred in granting the motion as to the above contractual causes of action.? As explained more fully below, we disagree with plaintiff?s contention.
In support of their motion for summary adjudication, defendants? separate statement set forth as undisputed material facts that in December 2003, plaintiff executed the lease to operate a restaurant at the subject property, and that subsequently, on November 11, 2004, plaintiff assigned all of his right, title and interest under said lease to RCE.? The assignment of rights under the lease to RCE was the pivotal fact in defendants? lack of standing argument.? Additionally, defendants? separate statement noted that in June 2007, in response to defendants? unlawful detainer action against RCE, RCE entered into a stipulation for entry of a judgment in favor of defendants for the possession of the subject property and forfeiture of the lease.? Thus, after the assignment of the lease, the assignee RCE appeared in legal proceedings as the lessee, not plaintiff.
Additionally, defendants? separate statement recounted plaintiff?s failure to allege the necessary requirements for a derivative action under Corporations Code section 800, subdivision (b)(2).[1]? Defendants? synopsis of plaintiff?s pleading failure included that when plaintiff filed his original complaint in 2008, he did so in his own name and without allegations of a derivative action pursuant to Corporations Code section 800.? It was not until the filing of the second amended complaint in 2011 that plaintiff joined RCE as a nominal defendant and first attempted to allege a futility exception to the demand requirement of Corporations Code section 800, subdivision (b)(2).[2]? Among other deficiencies, the second amended complaint failed to allege (as required by Corp. Code, ??800, subd. (b)(2)) that either the corporation or the board was informed in writing of the ultimate facts of each cause of action against each defendant or that a true copy of the complaint that plaintiff proposed to file (in 2008) was delivered to the corporation or the board.? After the allegations were found insufficient by the trial court to satisfy the requirements for a derivative action, plaintiff filed a third amended complaint, alleging (rather than futility) that he actually made a demand to the board of directions.? As noted above, the trial court found these new allegations to be a sham.
In view of the foregoing showing by defendants, we hold that defendants as moving parties met their burden of establishing that the contact-based causes of action were without merit on the ground that plaintiff lacked standing.? The concept of standing derives from the principle that ?[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.? ?(Code Civ. Proc., ??367; see City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 59.) ?The person possessing the right to sue under the substantive law is the real party in interest.? (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, ??121, p.?187; Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 427.) ?Such person has an actual and substantial interest in the subject matter of the action, and stands to be benefited or injured by a judgment in the action. ?(Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 55 (Fladeboe).)? Here, defendants clearly established, based on plaintiff?s assignment of his rights under the lease, that RCE possessed all of the rights and interests in said lease, which would necessarily include any right to damages for breach or similar remedies. ?(See, e.g., National R. Co. v. Metropolitan T. Co. (1941) 17 Cal.2d 827, 832?833 [unqualified assignment of a contract or chose in action vests in the assignee all rights and remedies incidental thereto]; Johnson v. County of Fresno (2003) 111 Cal.App.4th 1087, 1096 [where a claim or contract is assigned, the assignee is the owner thereof and has the right to sue on it, but the assignor lacks standing to sue on the claim or contract].)? It follows that standing to pursue contractual remedies arising under the lease belonged to RCE, not plaintiff.? Because RCE was the real party in interest for purposes of the contractual causes of action, those causes of action had to be prosecuted by or in the name of RCE.
Plaintiff did not have standing to assert RCE?s corporate causes of action, except potentially in a derivative action. ?(Fladeboe, supra, 150 Cal.App.4th at p. 55; Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 106?107.)? However, because plaintiff was unable to plead a derivative action in this case, and since it has been shown that he lacked standing to pursue the causes of action individually, defendants plainly met their burden of showing entitlement to summary adjudication as a matter of law on the ground of lack of standing.
In his appeal, plaintiff does not argue there was a triable issue of material fact.? Instead, plaintiff argues that the statutory requirements for maintaining a derivative action made little sense in this case and should not have been applied to him.? Specifically, plaintiff argues that because he was the sole shareholder of RCE at the relevant time period, and/or because he was acting as its only director, the requirements of Corporations Code section 800 should not have been enforced.? We disagree with that proposition.
The corporate form, and its separate existence from the shareholders, will not be ignored by the courts merely because it serves the purposes of the person controlling the corporation to do so.? (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993?994.)? ?Parties who determine to avail themselves of the right to do business by means of the establishment of a corporate entity must assume the burdens thereof as well as the privileges.? ?(Alladin Oil Corp. v. Perluss (1964) 230 Cal.App.2d 603, 614.)? ?An individual who has obtained the benefits of corporate limited liability will not be permitted to repudiate corporate existence just because the corporation has become an inconvenience.?? (Opp v. St. Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71, 76.)? An exception exists ?in narrowly defined circumstances? where the doctrine of alter ego applies, but those circumstances are not present here.[3] ?(See Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.) ??[A]lter ego is used to prevent a corporation from using its statutory separate corporate form as a shield from liability only where to recognize its corporate status would defeat the rights and equities of third parties; it is not a doctrine that allows the persons who actually control the corporation to disregard the corporate form.?? (Communist Party v. 522 Valencia, Inc., supra, at p.?994; accord, Capon v. Monopoly Game LLC (2011) 193 Cal.App.4th 344, 357.)? Here, plaintiff sought to avail himself of the benefits of incorporation when he assigned the lease rights to RCE, and he has offered no basis for disregarding the corporate form or for failing to comply with the requirements of Corporations Code section 800.
Moreover, Corporations Code section 800 specifies the conditions required by the Legislature for derivative actions, and we are not at liberty to change or ignore the requirements expressed therein.? Among other things, the requirements in Corporations Code section 800 strike a careful balance between a corporation?s right to decide whether to pursue a claim or cause of action on its own, and the ability of a shareholder in limited circumstances to pursue judicial action in the corporation?s behalf where the conditions for a derivative action are satisfied.? As our Supreme Court explained:? ?It is fundamental that a corporation is a legal entity that is distinct from its shareholders. ?[Citation.]? The authority to manage the business and affairs of a corporation is vested in its board of directors, not in its shareholders.? [Citations.]? This includes the authority to commence, defend, and control actions on behalf of the corporation. ?[Citations.]? [?]? Because a corporation exists as a separate legal entity, the shareholders have no direct cause of action or right of recovery against those who have harmed it.? The shareholders may, however, bring a derivative suit to enforce the corporation?s rights and redress its injuries when the board of directors fails or refuses to do so.? ?(Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1108.)? ?A stockholder?s representative suit has been called a ?derivative action? for the reason that the wrong to be redressed is one against the corporation, and normally the corporation would bring the suit.? Where, however, the corporation fails or refuses to act after proper demand, the stockholder?s ultimate interest in the corporation is sufficient to justify the bringing of a ?propulsive? action, designed to set in motion the judicial machinery for the redress of the wrong to the corporation.?? (Klopstock v. Superior Court (1941) 17 Cal.2d 13, 16.)
As was summarized in Nelson v. Anderson (1999) 72 Cal.App.4th 111 at page?127, ?the law demands certain prerequisites to bringing a derivative action which have not been alleged or proven in this case, such as alleging ?in the complaint with particularity[, the] plaintiff?s efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and ? further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file.? ?(See Corp. Code, ??800, subd. (b)(2).) ??No action may be instituted or maintained? unless there has been compliance with the statute. (Ibid.)? [?]? Failure to comply with the requirements of the statute deprives a litigant of standing.? [Citation.]?
No exceptions to the above requirements for derivative actions are indicated in the statute for sole shareholders and/or where there is a single director.? To the contrary, the statute clearly states, ?[n]o action may be instituted or maintained? as a derivative action ?unless? the conditions set forth in Corporations Code section 800 are satisfied.? (Corp. Code, ??800, subd. (b).)? Therefore, a failure to comply results in a lack of standing.? (See, e.g., Fladeboe, supra, 150 Cal.App.4th at pp.?49, 55 [president and sole shareholder of corporation did not have standing to assert corporate claims, except in a derivative action]; Vinci v. Waste Management, Inc. (1995) 36 Cal.App.4th 1811, 1815 [remedy for corporate claim lies with the corporation, not the shareholder, ?even if the injured shareholder is the sole shareholder?].)
Further, plaintiff?s suggestion that it was futile to comply with the requirement that he seek to have the corporation take action is entirely unpersuasive.? Plaintiff?s assertion that he was the sole shareholder or was acting as the only board member does not reflect that compliance with Corporations Code section 800 would be impracticable or futile.[4]? If anything, those circumstances should have made it far easier for plaintiff to either secure action on the part of RCE to pursue the corporate causes of action itself and/or for plaintiff to formally confirm that RCE will not do so.? Rather than showing futility, the alleged facts simply confirm that plaintiff failed to do what was required by corporate law to maintain this action.
Finally, we reject plaintiff?s apparent argument that Code of Civil Procedure section?473 and/or the policy favoring trial on the merits should now relieve him of the outcome below.? If there were grounds for asserting that the allegations found by the trial court to be a sham represented an honest mistake for which relief under Code of Civil Procedure section?473 was conceivably available, plaintiff had the opportunity to present that motion to the trial court below.? He failed to do so, and likewise failed to raise any such arguments in connection with his opposition to the summary adjudication motion.? Matters that are not adequately raised in the trial court are not considered on appeal and we treat them as forfeited. ?(Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3.)[5]
We conclude the trial court correctly granted summary adjudication of the contractual causes of action (the first, second and fourth causes of action of the third amended complaint) on the ground that plaintiff lacked standing to assert claims that belonged to RCE.
- Cause of Action Under Business and Professions Code Section 17200
In regard to the eighth cause of action for unfair business practices under Business and Professions Code section 17200, defendants moved for summary adjudication on the ground that plaintiff had failed to allege an injury for which restitution or disgorgement of money wrongfully acquired was recoverable by him, but had merely sought the recovery of monetary damages.? Agreeing with defendants, the trial court treated the motion for summary adjudication of the eighth cause of action as a motion for judgment on the pleadings, and granted the same without leave to amend.? The trial court reasoned that plaintiff had alleged only damages in his pleading, which could not be recovered under Business and Professions Code section 17200.
The trial court?s understanding of the law was correct.? ?[R]estitution is the only monetary remedy authorized in a private action brought under [Business and Professions Code section 17200]. ?[Citation.]? ? ?[R]estitution? means the return of money or other property obtained through an improper means to the person from whom the property was taken.?? (Clark v. Superior Court (2010) 50 Cal.4th 605, 614.)? ?[D]amages are not available.?? (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266.)? The trial court?s evaluation of the pleading was also correct.? The eighth cause of action merely incorporated the accrued damage claims from the prior causes of action alleged in the third amended complaint.? In the present appeal, plaintiff?s opening brief made a vague reference to standing, but failed to discuss the eighth cause of action or to even address the trial court?s ruling.? Therefore, plaintiff has forfeited such matters on appeal and has obviously failed to demonstrate the existence of any error.? For these reasons, the trial court?s ruling on the eighth cause of action will not be disturbed.
III.????? Judgment After Trial on the Merits Was Proper
- Interference Torts
After the close of plaintiff?s presentation of evidence at trial, defendants moved for judgment on the sixth and seventh causes of action for intentional and negligent interference with economic advantage.? The trial court granted the motion, concluding that plaintiff failed to provide credible evidence of any actual interference by defendants personal to plaintiff.? The reason that the actual interference had to be personal to plaintiff was that the case was not being tried as a derivative action, but solely on plaintiff?s individual causes of action.
A motion for judgment under Code of Civil Procedure section 631.8, made after a party has completed his presentation of evidence in a court trial, is ???to enable a trial court which, after weighing the evidence at the close of the plaintiff?s case, is persuaded that the plaintiff has failed to sustain his burden of proof, to dispense with the need for the defendant to produce evidence. ?[Citations.]???? (Roth v. Parker (1997) 57 Cal.App.4th 542, 549.)? The motion may be granted as to some of the issues in the case, and need not dispose of all issues. ?(Code Civ. Proc., ??631.8, subd. (b).)? ?The substantial evidence standard of review applies to judgment given under Code of Civil Procedure section?631.8; the trial court?s grant of the motion will not be reversed if its findings are supported by substantial evidence.? [Citation.]? Because section 631.8 authorizes the trial court to weigh evidence and make findings, the court may refuse to believe witnesses and draw conclusions at odds with expert opinion.?? (Roth v. Parker, supra, at pp.?549?550.)
In the present appeal, plaintiff appears to challenge the trial court?s decision granting the Code of Civil Procedure section 631.8 motion by making a conclusory assertion that standing existed for him to pursue RCE?s claims for intentional and negligent interference with economic advantage.? However, as we discussed above in connection with our review of the summary adjudication motion, plaintiff failed to adequately allege a derivative action and, therefore, he lacked standing to assert RCE?s claims.? Moreover, the parties clearly understood and accepted that the case was not being tried as a derivative action.? Defendants? pretrial motion in limine sought to preclude plaintiff from offering any evidence that the third amended complaint was in the nature of a derivative action on behalf of RCE.? The ground for said motion in limine was that the trial court had already ?ruled that the pleading of compliance with Corporations Code Section 800 [was] a sham? and, based thereon, the trial court had ?granted summary adjudication on the first, second and fourth causes of action in the [third amended complaint].?? Plaintiff filed a nonopposition to the motion in limine.? The trial court granted the motion, ordering ?that the case was not being tried as a derivative action.?
Since the case was being tried on plaintiff?s individual claims only, plaintiff had to show interference that damaged plaintiff?s individual economic advantage, not RCE?s.[6]? The trial court found he did not do so and, therefore, granted the motion for judgment.? Plaintiff?s appeal does not argue that the trial court?s decision to grant the motion for judgment (regarding the causes of action for intentional and negligent interference with economic advantage) was not supported by substantial evidence.? Accordingly, that argument is forfeited and the trial court?s ruling may be affirmed without further discussion.? (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685 [an appellant?s failure to raise an issue in his or her opening brief is a waiver of that challenge].)
In any event, substantial evidence supported the trial court?s decision.? The evidence at trial confirmed that after plaintiff assigned all of his right, title and interest in the restaurant lease to RCE, the restaurant was operated by and through the corporate entity, RCE.? For example, the evidence showed that business licenses and permits were in the name of RCE, bills were paid by RCE, tax returns for the business were filed by RCE, and the stipulation surrendering possession of the premises and forfeiting the lease was entered by RCE.? Testimony at trial further showed that a financial contribution by plaintiff of $500,000 to the business was a capital contribution to RCE.? Additionally, expert testimony was introduced that financial contributions from a shareholder to its corporation would ordinarily be treated as a capital contribution or a loan to the company.? Consequently, even assuming that defendants may have engaged in conduct that interfered with the restaurant business, such conduct would have given rise to claims belonging to RCE, not to plaintiff personally or as an individual.
For these reasons, plaintiff?s appeal of the trial court?s decision to grant defendants? motion for judgment (on the causes of action for intentional and negligent interference with economic advantage) fails to demonstrate any reversible error.? To the contrary, the record shows the trial court?s decision was supported by substantial evidence.
- Fraud and Negligent Misrepresentation
In its posttrial statement of decision, the trial court found against plaintiff and in favor of defendants on the fraud and negligent misrepresentation causes of action (the third and fifth causes of action in the third amended complaint).? The trial court explained as follows:? ?It is the decision of this Court that (1) Plaintiff lacks standing to pursue the remaining causes of action of fraud and negligent misrepresentation; (2) Even if Plaintiff had standing to pursue the causes of action of fraud and negligent misrepresentation, the claims are barred by the statute of limitations; (3) Plaintiff abandoned [his] claim of negligent misrepresentation; (4) Plaintiff?s testimony concerning two modifications of the Lease demonstrate[s] a waiver of the claims of fraud and misrepresentation; [and] (5)?Plaintiff failed to establish by a preponderance of the evidence ? each element of the causes of action of fraud and negligent misrepresentation?.??
Although the trial court based its judgment on the fraud and negligent misrepresentation causes of action on the multiple grounds stated above, plaintiff?s appeal addresses only one of them?namely, the expiration of the statute of limitations.? Therefore, any challenges to the correctness of the trial court?s ruling on the other grounds are forfeited.? (Behr v. Redmond (2011) 193 Cal.App.4th 517, 538 [failure to brief an issue constitutes a waiver or abandonment of the issue on appeal]; Title G. & T. Co. v. Fraternal Finance Co. (1934) 220 Cal. 362, 363 [appellate courts only notice issues raised in appellant?s brief; ?all others are deemed to have been waived or abandoned?].)? Because the judgment remains intact on the independent grounds not addressed in plaintiff?s brief on appeal (including failure to prove the elements of fraud and negligent misrepresentation), it follows that plaintiff cannot establish any prejudicial error?even assuming for the sake of argument that the trial court erred on the statute of limitations issue.? Accordingly, the trial court?s judgment denying relief on the fraud and negligent misrepresentation causes of action must be affirmed.
Nonetheless, even considering the statute of limitations issue, plaintiff?s claim of error fails because substantial evidence supported the trial court?s conclusion that the statute of limitations had expired on these causes of action before the original complaint was filed.? In a nutshell, the trial court found, based on the pleadings and testimony at trial, that plaintiff had notice or knowledge of the falsity of the alleged representations (or suspicion of wrongdoing) by at least December 2004.? The statute of limitations is three years for fraud (Code Civ. Proc., ??338, subd. (d)) and two years for negligent misrepresentation (Ventura County Nat. Bank v. Macker (1996) 49 Cal.App.4th 1528, 1531.)? However, the complaint in this action was not filed until July 2, 2008, long after the statutory deadlines on both causes of action had expired.
A cause of action premised on fraud accrues upon discovery of the facts. ?(Code Civ. Proc., ??338, subd. (d).)? ?The courts interpret discovery in this context to mean not when the plaintiff became aware of the specific wrong alleged, but when the plaintiff suspected or should have suspected that an injury was caused by wrongdoing.? The statute of limitations begins to run when the plaintiff has information which would put a reasonable person on inquiry.?? (Kline v. Turner, supra, 87 Cal.App.4th at p.?1374.)? ?[A] cause of action for fraud or mistake accrues, and the limitations period commences to run, when the aggrieved party could have discovered the fraud or mistake through the exercise of reasonable diligence.?? (Sun?n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671, 701.)? Therefore, where a plaintiff claims delayed discovery, the plaintiff ??must affirmatively excuse his failure to discover the fraud within three years after it took place, by establishing facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry.? ?(Italics added.)? [Citations.]? ?(Id. at pp. 701?702; accord, Bedolla v. Logan & Frazer (1975) 52 Cal.App.3d 118, 129.)? The issue of whether a plaintiff has notice of circumstances sufficient to put a prudent person upon inquiry is one of fact.? (Helfer v. Hubert (1962) 208 Cal.App.2d 22, 26.)[7]? We review the finding on this issue by the trier of fact under the substantial evidence test.? (Sime v. Malouf (1949) 95 Cal.App.2d 82, 104; Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 439?441.)
As noted, the record supports the trial court?s conclusion that the statute of limitations expired on the causes of action for fraud and negligent misrepresentation.? According to the third amended complaint, the false representations were made to plaintiff in November 2003, just before the lease was entered in December 2003.? Plaintiff admitted at trial and in his pleadings that by December 2004, when he had a conversation with Edward Erganian, he had already spent more than $400,000 in improvements, which was clearly contrary to the alleged representation that the premises were in a turn-key condition and that an investment of only $100,000 would suffice.[8]? The trial court found that this fact alone was sufficient to put plaintiff on inquiry notice, as of December 2004, of the alleged fraud or wrongdoing for purposes of the statute of limitations.
With respect to the alleged representation that defendants would provide to plaintiff the Peppermill accounting showing that the former restaurant had made $5?million in annual revenues, plaintiff obviously knew the Peppermill accounting had not been provided to him at the time he entered into the lease in December 2003, and he knew that it still had not been provided to him in December 2004, when he sought to renegotiate the lease (i.e., to reduce the rent) in his discussion with Edward Erganian.? Furthermore, plaintiff understood that the level of rent under the lease was structured based on the alleged representation by defendants of the amount of revenue ($5 million) that the Peppermill had previously generated, yet by the time of his 2004 meeting with Edward Erganian, plaintiff was convinced the level of rent was unfair, unaffordable and unrealistic, in part because the revenues and expenses of the restaurant were not as represented.? Plaintiff not only had notice thereof, but even used this information in seeking renegotiation at that time.? Finally, plaintiff admitted that in early 2004, he learned that defendants had misrepresented that the Peppermill was the prior tenant; in reality, there was an intervening tenant who had opened a French-Asian cuisine restaurant that had closed down within one year.
Based on the evidence summarized above, the trial court properly concluded that the causes of action for fraud and negligent misrepresentation had accrued no later than December 2004.? By that time, plaintiff knew or was put on inquiry notice that the circumstances relating to the lease were not as allegedly represented by defendants and that fraud or other wrongdoing may have occurred.? Accordingly, the trial court correctly ruled that the statute of limitations expired on those causes of action.[9]
As we have discussed in this opinion, plaintiff has failed to establish reversible error regarding any of the challenged rulings of the trial court.? In fact, our review demonstrates that the trial court correctly resolved the issues and disposed of plaintiff?s causes of action.
DISPOSITION
The judgment of the trial court is affirmed.? Costs on appeal are awarded to defendants.
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KANE, J.
WE CONCUR:
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GOMES, Acting P.J.
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DETJEN, J.
[1] ???????? Corporations Code, section 800, subdivision (b)(2), requires, as a condition for a shareholder to maintain an action in right of the corporation, as follows:? ?The plaintiff alleges in the complaint with particularity plaintiff?s efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file.?
[2] ???????? As noted previously herein, the second amended complaint stated that plaintiff ?did not make any effort? (i.e., made no demand) to secure action from the board of directors in prosecuting the action ?since any such effort would have been futile.?
[3] ???????? Plaintiff does not argue the alter ego doctrine, but in effect he is asking for a similar result?i.e., that we not treat the corporation as a separate entity from him for purposes of standing to file this action.? Here, however, there were no third party rights involved, nor does justice require that we disregard the corporate form.
[4] ???????? Futility ordinarily is premised on a showing that the directors could not fairly evaluate the claim in an independent or disinterested manner. ?(See Bader v. Anderson (2009) 179 Cal.App.4th 775, 790?792.)
[5] ???????? Additionally, there is authority for the proposition that relief under Code of Civil Procedure section 473 must be addressed to the trial court in the first instance. ?(Weaver v. Fickett (1925) 196 Cal. 401, 404; Eureka Casualty Co. v. Municipal Court (1934) 136 Cal.App. 261, 262.)? Even assuming for the sake of argument that, in an exceptional circumstance, such relief might be requested in the appellate court in the first instance, no such circumstance exists here.? Plaintiff simply failed to avail himself of the opportunity to make this motion below.
[6] ???????? An element of both types of interference torts (i.e., intentional and negligent) is actual interference with an economic relationship between the plaintiff and a third party having a reasonably probable economic benefit or advantage to the plaintiff. ?(See, e.g., Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153; North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)
[7] ???????? The issue may also be resolved as a matter of law in some cases. ??[W]hen knowledge had by or imputed to plaintiff is such as to compel the conclusion that a prudent man would have suspected the fraud, the court may determine as a matter of law that there had been ?discovery.? ?[Citations.]? ?(Helfer v. Hubert, supra, 208 Cal.App.2d at pp.?26?27.)
[8] ???????? In the third amended complaint, plaintiff estimated that by December 2004 he had spent ?nearly $500,000? making repairs to the restaurant.
[9] ???????? We also agree with the trial court?s conclusion that plaintiff abandoned his cause of action for negligent misrepresentation by his omission of that cause of action in his posttrial briefing and in his proposed statement of decision.