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GERARD v. McMAKEN, E049281. (2011)

Court: Court of Appeals of California Number: incaco20110405034 Visitors: 7
Filed: Apr. 05, 2011
Latest Update: Apr. 05, 2011
Summary: NOT TO BE PUBLISHED IN OFFICIAL REPORTS OPINION McKINSTER, Acting P. J. Plaintiff and appellant James Gerard filed the instant action against defendant and respondent Joan C. McMaken (personally and as trustee of the Dennis Cooney Living Trust) for resulting trust, breach of fiduciary duty, and constructive fraud. The action arises out of the disputed ownership of a parcel of property that was eventually taken in eminent domain; plaintiff claims that his interest entitles him to a share of th
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NOT TO BE PUBLISHED IN OFFICIAL REPORTS

OPINION

McKINSTER, Acting P. J.

Plaintiff and appellant James Gerard filed the instant action against defendant and respondent Joan C. McMaken (personally and as trustee of the Dennis Cooney Living Trust) for resulting trust, breach of fiduciary duty, and constructive fraud. The action arises out of the disputed ownership of a parcel of property that was eventually taken in eminent domain; plaintiff claims that his interest entitles him to a share of the proceeds of the eminent domain sale. In fact, in addition to the instant civil action, two other proceedings allegedly involve the same dispute over the same property: the eminent domain action, and a separate action in the probate court. Plaintiff voluntarily dismissed the instant civil action without prejudice; the other two actions were still pending. After dismissal, the trial court awarded costs to defendant. Plaintiff appeals the award of costs, asserting first that the trial court erred in awarding costs at all, because defendant assertedly was not the "prevailing party," and second that the trial court abused its discretion in failing to apportion the deposition costs among all three actions. We affirm.

FACTS AND PROCEDURAL HISTORY

In 1987, Dennis Cooney entered into a sale agreement to acquire the subject property. Cooney had an option agreement with Richard J. Meyer to purchase a 25-percent ownership interest in the property for 25 percent of the then-current value of $81,000; the option was valid through the end of 1987. After entering into the option agreement with Meyer, Cooney executed an agreement with Richard Donald Gerard (plaintiff's brother, hereinafter referred to as Rick Gerard) to sell a 50-percent interest to Rick Gerard for $40,500. For convenience, title was to be held in Cooney's name alone.

In February 1990, a felony complaint and warrant were issued against Rick Gerard for bookmaking, unlawful gambling, and drug possession. Rick Gerard pleaded guilty to one count of bookmaking in exchange for a grant of probation. At a hearing on Rick Gerard's certified plea, held in July 1990, the court dismissed the matter on the People's motion, upon report of Rick Gerard's death in Palm Springs.

The probate of Rick Gerard's estate listed only cash assets and an interest in a vending machine business. These assets were requested to be distributed to two other relatives (not plaintiff).

In 2005, plaintiff filed the instant action for partition and imposition of a constructive trust against defendant McMaken, both individually and as trustee of the Dennis Cooney Living Trust. The complaint noted that the living trust became irrevocable on Cooney's death in 2002. The complaint alleged that Rick Gerard assigned "all his right, title and interest" in the 1987 contract with Cooney, to plaintiff. In the year before his death, Rick Gerard had "systematically assigned all of his assets to his brother . . . by quit claim deed as to real property in his name, and delivery of other assets in kind to [plaintiff]." The complaint alleged that the 1987 contract between Cooney and Rick Gerard "created a partnership . . . regarding the ownership, investment and future sale of [the subject property]." Rick Gerard "assigned his full 50% to [plaintiff] who now is the owner of 50% of the profits from the sale of the Subject Property." The original complaint contained causes of action for partition of the property, which had been held in the name of Cooney only, and for imposition of a constructive trust and quiet title.

Defendant demurred on the ground of statute of limitations and lack of standing. Plaintiff alleged a partnership between Rick Gerard and Cooney, but that partnership would have been dissolved on Rick Gerard's death in 1990. Plaintiff would have had to file an action for an accounting within four years after Rick Gerard's death. Thus, the complaint was too late. Alternatively, plaintiff would have been required to bring an action on the agreement within one year after Cooney's death. Again, the complaint was too late.

In April 2006, plaintiff filed a first amended complaint, changing the causes of action. In the first amended complaint, plaintiff asserted causes of action for breach of trustee fiduciary duties, fraudulent conveyance, constructive fraud, conversion, breach of contract, anticipatory breach of contract, and declaratory relief.1 This time, plaintiff alleged in more detail how the transfer from his brother occurred: "In or about 1989, Rick Gerard had a meeting with [plaintiff]. At that meeting Rick Gerard discussed certain legal problems he was having2 and announced he did not want to own in his name any significant valuable assets. He advised Plaintiff that he was going to immediately unconditionally gift those assets to plaintiff. He then transferred all his significant assets, including all rights, and interests in the profits of the Subject Property and all right arising out of the Subject Contract to Plaintiff. He communicated clearly and unequivocally that as of that moment he was divesting himself permanently of all rights thereto. He delivered a copy of the Subject Contract to his brother, turned over the keys to a safe deposit box where the original was located and instructed plaintiff to empty the safe deposit box and take permanent possession of all its contents." By the wording of plaintiff's allegation ("discussed," "announced," "communicated clearly," "advised," "instructed"), it is clear that the transfer occurred by oral declaration (with delivery of documents and safe deposit box keys).

Plaintiff also added allegations that, before Rick Gerard's death, Cooney made a writing in 1989 confirming the contract between them. The 1989 document stated that the property was owned by Cooney and Rick Gerard, and that upon sale, the first $80,000 should be paid to Rick Gerard, and any additional proceeds would be "`divided as per the original Agreement.'" When Cooney was diagnosed with terminal cancer, he created a revocable trust and placed the property in trust. One provision of Cooney's trust provided that, on sale of the property, $100,000 was to be distributed to plaintiff. Plaintiff asserted that this trust provision was "consistent with [the 1989] document confirming that Plaintiff[']s transferor had apparently paid in addition to the original $40,500 . . . a separate sum of $40,000."

Plaintiff also alleged that, after Rick Gerard's death, Cooney made oral statements purportedly recognizing plaintiff as the transferee of the contract with Rick Gerard, and promising to honor the terms of the contract.

After Cooney's death, defendant McMaken never contacted plaintiff, did not provide plaintiff any accountings, and through letters of counsel informed plaintiff that she did not intend to include plaintiff in any share of the proceeds from the sale of the property. Therefore, plaintiff alleged the asserted causes of action, for breach of trustee fiduciary duties, fraudulent conveyance, constructive fraud, conversion, breach of contract, anticipatory breach of contract, and declaratory relief.

In September 2006, plaintiff filed a second amended complaint, alleging two causes of action: breach of trustee fiduciary duties, and constructive fraud.3

In December 2007, plaintiff filed a third amended complaint.

In the meantime, two other developments took place. First, in October 2007, plaintiff filed a petition in Riverside County under Probate Code section 850 to determine ownership of the disputed property, nominally owned by the Cooney trust.4 Second, in November 2007, the Coachella Valley Water District filed an action in eminent domain, to take the subject property for a water recharge facility. The water district ultimately took the property, paying over $8 million.

Plaintiff's third amended complaint in the instant civil action repeated essentially the same operative allegations as the first and second amended complaints, but alleged causes of action for breach of trustee fiduciary duties, constructive fraud, and constructive trust or equitable relief.

In November 2008, defendant filed a motion for summary judgment on the third amended complaint. The matter was heard in February 2009. The court's tentative ruling was to grant the motion for summary judgment in favor of defendant. The court's tentative view was that plaintiff's claim of an ownership interest in the real property was barred by the statute of frauds; the transfer of real property from plaintiff's brother would require a writing. Plaintiff also admitted that he had received the $100,000 as provided in the Cooney trust instrument, so plaintiff had no remaining claim against the trust. After the hearing, the court took the matter under submission.

Plaintiff responded by immediately filing a request for dismissal of the entire action, without prejudice. Defendant moved to vacate the dismissal on the ground that the request for dismissal was untimely. The trial court denied defendant's motion, accepted the request for dismissal, and deemed the action dismissed.

Defendant filed a memorandum of costs as the prevailing party after dismissal; she requested $11,337.03 in costs, including $8,256.83 for depositions of plaintiff, plaintiff's wife Patricia Gerard, and Richard Meyer.

Plaintiff objected on the ground that defendant was not a prevailing party, because the gravamen of the dismissed civil suit was the same as the two other pending actions: the eminent domain action, and plaintiff's probate action against the Dennis Cooney Living Trust. The disputed rights to the property or its proceeds had not been determined on the merits.

Alternatively, plaintiff sought to tax part of the claimed costs: defendant's claim for mediation expenses should be disallowed under Code of Civil Procedure section 1032, subdivision (b),5 as mediation did not constitute an "`action or proceeding.'" In addition, plaintiff urged that the deposition costs were duplicative of costs in the other pending actions, and that the deposition fees should thus be apportioned among all three actions. Defendant's counsel averred that the deposition costs were incurred solely in the instant civil action (indeed, some depositions had taken place before plaintiff filed his probate action).

The trial court disallowed the mediation costs, but otherwise awarded costs to defendant of $9,212.03, including the deposition costs. These costs were included in the judgment of dismissal.

Plaintiff now appeals, again urging alternatively that defendant was not entitled to costs because there was no prevailing party, or that the court abused its discretion in failing to apportion the deposition costs among all three actions.

ANALYSIS

I. Defendant Was the Prevailing Party

Plaintiff contends that defendant cannot be the "prevailing party," because the same issues involved in the civil action are or were pending in the eminent domain and probate actions,6 such that no determination on the merits of plaintiff's claims (to an interest in the property or the proceeds of the sale) has yet been made.

The claim is without merit. The section 1032, subdivision (a)(4) definition of "prevailing party" includes "a defendant in whose favor a dismissal is entered," and "a defendant where neither plaintiff nor defendant obtains any relief." Unquestionably, here, a dismissal has been entered in defendant's favor, and therefore she "is entitled as a matter of right to recover costs" in the action. (§ 1032, subd. (b).) Even when a plaintiff voluntarily dismisses an action before trial, the defendant is one in whose favor a dismissal has been entered, and therefore qualifies as a prevailing party entitled to recover costs as a matter of right. (Carver v. Chevron U.S.A., Inc. (2002) 97 Cal.App.4th 132, 150 [voluntary dismissal with prejudice]; see also International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 221 [voluntary dismissal without prejudice].)

II. Defendant Is Entitled to Recover the Deposition Costs

Plaintiff next contends that, even if defendant is entitled to recover costs as the prevailing party, the trial court abused its discretion in failing to apportion the deposition costs among the three pending actions on the same issues. The issues in the instant civil case, the probate case, and the eminent domain case were overlapping, and each presented the identical claim, i.e., that plaintiff was entitled to an interest in the property or the proceeds of its sale, as a result of the transactions between Cooney and Rick Gerard, and the assignment of Rick Gerard's rights to plaintiff.7 Because the same deposition testimony would be used in all three actions, the deposition costs would be duplicative; if plaintiff prevailed in one of the other actions, he would recover the same costs from defendants that they are now claiming from him. Because of the possibility of inconsistent outcomes, the trial court should have taxed the deposition costs, or at least have apportioned the deposition costs among the three actions.

Plaintiff is mistaken. As defendant's counsel averred in the opposition to plaintiff's motion to tax costs, the depositions here were noticed in the instant civil action, not in any other action. Indeed, some of the depositions were taken before either of the other two suits were filed. The costs were incurred in the civil action only, and would not be recoverable in either the probate or the eminent domain actions, even if the sworn deposition testimony might be used in all three.

Plaintiff is further mistaken about supposed inconsistent results. In the event he was a prevailing party in one of the other actions, he would be entitled to recover his costs from defendant, not to recover her costs (i.e., depositions that defendant, not plaintiff, had paid for).

Finally, plaintiff is mistaken in thinking that apportionment among the different actions was warranted, or even permissible. Pursuant to section 1032, subdivision (a)(4), the court has discretion, in a case where there are multiple parties, to apportion costs appropriately between the prevailing party and the other parties, both those with whom costs were incurred jointly, and those against whom the prevailing party actually prevailed.

Thus, plaintiff's reliance on Fennessy v. DeLeuw-Cather Corp. (1990) 218 Cal.App.3d 1192, concerning apportionment, is inappropriate. Fennessy held that, "where a prevailing party incurs costs jointly with one or more parties who remain in the litigation, during the pendency of the litigation that party may recover only costs actually incurred by a party or in its behalf in prosecuting or defending the case." (Id. at p. 1196.)

However, section 1032, subdivision (a)(4) says nothing about apportionment among multiple cases. Likewise, plaintiff has presented no authority permitting apportionment of a portion of costs, wholly incurred in one case, to other lawsuits.

DISPOSITION

Defendant was the prevailing party in the litigation and was entitled as a matter of right to recover her costs. Those costs properly included costs for the depositions, which were noticed and taken in the underlying civil suit; those costs were incurred in this suit and in no other, regardless of whether the deposition testimony might be used in other litigation. There is no authority for apportioning the costs to some other lawsuit. The judgment, including the order for costs, is affirmed. Defendant and respondent is awarded her costs on appeal.

We concur:

RICHLI, J.

KING, J.

FootNotes


1. The first amended complaint also added Richard Meyer, the optionee, as a defendant.
2. Presumably, the bookmaking, gambling and drug charges, which were soon to be filed.
3. The second amended complaint no longer named Richard Meyer as a defendant.
4. In March 2007, plaintiff had filed another action in Orange County to enforce the trust.
5. All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
6. Defendant has asked this court to take judicial notice that plaintiff voluntarily dismissed the probate action in September 2009. Inasmuch as both parties made similar statements in briefing, we grant the motion.
7. Plaintiff, realizing that his original theory of his brother's oral assignment of real property rights to him may run afoul of the statute of frauds, has attempted to recast the matter as a joint venture or partnership agreement. He also attempted the same shift in theory within the eminent domain proceeding, when he apparently moved to amend his answer. Defendant opposed plaintiff's motion to amend in the eminent domain proceeding, arguing that plaintiff was bound by the judicial admissions contained, e.g., in his pleadings here, where he asserted a real property ownership interest.
Source:  Leagle

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