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PER CURIAM.
This appeal is from a final judgment in an action on a contract to purchase an ongoing dry-cleaning business and its equipment for $500,000.
Cherry's cross-appeal and plaintiffs' opposition are before us. Defendants' appeal was dismissed for failure to prosecute. We reverse on Cherry's appeal and remand for amendment of the final judgment.
A few months after purchasing the business, plaintiffs sued defendants on the contract. They alleged defendants fraudulently misrepresented and conspired to misrepresent the value of its sales,
The jurors found that plaintiffs proved fraud, conspiracy to defraud, breach of the contract and the implied covenant and grounds to pierce the corporate veil. The jurors awarded plaintiffs $682,000 for compensatory and $301,000 for punitive damages.
Cherry was drawn into the dispute at the conclusion of the parties' post-trial, pre-judgment motions. The trial court denied defendants' motions for judgment notwithstanding the verdict and a new trial. On plaintiffs' motion for equitable relief on the contract of sale, the court rescinded, nullified and voided the contract and note and restored defendants as owners of the business and its equipment.
On its motion for equitable relief, plaintiffs also sought rescission or reformation of Cherry's lease. Although that relief implicated Cherry's as well as plaintiffs' and defendants' rights, plaintiffs did not join Cherry as a party or give Cherry notice of the motion.
As to Cherry, plaintiffs asked the court to substitute defendants for plaintiffs as the tenants and guarantors or reinstate defendants' prior lease with Cherry. In their supporting brief, plaintiffs submitted that $344,176.45 of their compensatory damages award was for their future obligations to Cherry under the lease and supported a remittitur in that amount.
The pertinent circumstances and terms of Cherry's lease with plaintiffs are as follows. Plaintiffs signed the lease with Cherry four days prior to signing the business contract, which was done on June 14, 2014. The lease was to commence on "the earlier of the Business Sale date or July 30, 2014."
As to use of the premises, the lease permits use "as a clothing dry cleaner store with a full on-site dry cleaning plant, and no other use whatsoever without the express written consent of the Landlord." Commencement of the lease is linked to sale of the business: "If the Business Sale does not close by July 30, 2014 the Lease shall become void." But, the lease does not address termination for any reason related to the sale or the success of the business. To the contrary, it states: "The sole relationship between the parties [Cherry and the individual plaintiffs] created by the agreement is that of Landlord and Tenant. Nothing contained in the lease shall be deemed, held, or construed as creating a joint venture or partnership between the parties."
None of the defendants were tenants on the lease. But Chin and both Tamburos gave Cherry personal guarantees of payment and "compliance with and performance of all terms and covenants of the lease."
On plaintiffs' post-trial motion seeking revision of the lease, the court reserved decision pending notice and giving Cherry an opportunity to be heard. To that end, the court authorized plaintiffs to file an order to show cause (OTSC) "related to the issue of whether the commercial lease should be rescinded and/or reformed in light of the jury's finding that defendants committed fraud and/or conspiracy to commit fraud related to the above-referenced sales contracts, and each of the parties remaining rights and obligations . . . under the commercial lease stemming therefrom."
The court signed the OTSC on October 2, 2015. It indicates that plaintiffs seek
The complaint referenced was not informative, because it does not name or state a claim involving Cherry. And, the trial court's findings and conclusions were stated on the record and the transcript was not provided to Cherry. The OTSC required plaintiffs to serve Cherry with nothing other than the complaint and the brief and the certifications they submitted to secure the OTSC.
The OTSC compels Cherry to appear on the return date and show cause why the court should not preliminarily enjoin and restrain enforcement of the lease; rescind "and/or" reform the lease; discharge plaintiffs' obligations "and/or" liabilities under the lease; and grant other relief the court deems equitable and just.
Cherry's attorney submitted a written response addressing preliminary restraints in light of
Cherry's attorney objected to the court considering the merits that day and referred to a certification from the manager of Cherry's shopping center, which included the drycleaners. According to the manager, he had information and believed that plaintiffs violated the lease by using chemicals prohibited by environmental laws and failing to provide proof of insurance and permit annual inspections. The attorney also pointed to the unfairness of leaving Cherry to collect rent from tenants and guarantors who were subject to a sizeable judgment for damages. The court assured the attorney those matters could be raised by motion for reconsideration.
Unpersuaded, the court included provisions in the final judgment that affected Cherry's rights under the lease, as well as the rights of the parties to the contract of sale litigated between them in the contract action. As a remedy for defendants' fraud, the court removed the Tamburos as tenants and guarantors, and rescinded the obligations and liabilities "that may
In short, plaintiffs were given a remedy that absolved them of any responsibility to Cherry in lieu of the damages the jury awarded in a proceeding that did not include Cherry.
Plaintiffs urge us to dismiss Cherry's appeal for non-compliance with the rules of appellate procedure. Their arguments do not require extensive discussion.
There is no basis for dismissal of Cherry's appeal as untimely filed. The final judgment was entered on November 9, 2015, and defendants filed a timely appeal on December 24, 2015, as required by
Plaintiffs also contend we should dismiss the appeal because Cherry did not file transcripts of all proceedings conducted in the trial court on the contract action. Setting aside plaintiffs' decision to forego a motion to compel and hold this objection for its brief on the merits, Cherry has provided the transcript needed to resolve this appeal, which is the only proceeding conducted on notice to Cherry.
For those reasons, we decline to dismiss the appeal for non-compliance with the
Turning to the merits, Cherry contends the court erred in reforming the lease to remove the Tamburos as tenants and guarantors, and rescind, void and nullify plaintiffs' obligations and liabilities under the lease. Cherry claims reversible error on several grounds. We conclude reversal is required because
As the Supreme Court recently explained:
Summary disposition is authorized in only two situations.
There were other problems. This was not a matter "likely" to "be completely disposed of in a summary manner."
Moreover, "[s]ummary disposition is permitted by agreement of the court and the parties, evinced by `a clear and unambiguous statement from the judge and the unequivocal consent of the parties to a final resolution. . . .'"
Simply put, the trial "court's summary disposition" in plaintiffs' favor denied non-party Cherry a fair opportunity to be heard on and defend against the relief requested.
There are several issues we have not addressed and are not remanding for reconsideration. Because plaintiffs have not filed a complaint against Cherry, or against defendants, pleading a claim for revision of the Cherry's lease, there is no pending matter to remand. We have not addressed the availability of reformation or rescission of the lease, because it was not necessary to resolve this appeal. We have not addressed Cherry's argument based on the entire controversy doctrine, because Cherry did not raise that issue in the trial court and it does not implicate the public interest or, at this point, the jurisdiction to adjudicate any matter in the trial court.
Reversed and remanded for amendment of the judgment in conformity with this opinion.