Coachella Valley Water Dist. v. McMaken CA4/2 ( 2014 )

Filed 1/16/14 Coachella Valley Water Dist. V. McMaken CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
COACHELLA VALLEY WATER
DISTRICT,
E053851
Plaintiff and Respondent,
(Super.Ct.No. CIVSS816045)
v.
OPINION
JOAN McMAKEN as Trustee, etc.,
Defendant and Respondent;
JAMES GERARD et al.,
Defendants and Appellants;
NICHOLAS GERARD et al.,
Defendants in Intervention and
Respondents.
APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge.
Affirmed.
Mahaffey & Associates and Douglas L. Mahaffey for Defendants and Appellants.
1
Farmer & Ridley, Richard D. Cleary; Oliver, Sandifer & Murphy, Duff Murphy,
and Jennifer L. Pancake for Defendant and Respondent.
Dabney B. Finch; Lieberg, Oberhansley, Strohmeyer & Garn and William H.
Strohmeyer for Defendants in Intervention and Respondents.
I
INTRODUCTION
In this eminent domain action, appellants and defendants James Gerard and
Patricia Gerard (referred to collectively as James Gerard) appeal summary judgment
entered against them and in favor of defendants and respondents, Joan C. McMaken,
individually and as successor trustee of the Dennis Cooney Living Trust (referred to as
McMaken) and Nicholas and Ricardo Gerard (collectively referred to as the Gerard sons).
The trial court granted McMaken’s motion for summary adjudication, deeming it a
motion for summary judgment because it disposed of James Gerard’s entire claim to the
condemnation proceeds.1 The trial court concluded it was undisputed James Gerard had
no enforceable interest in the undeveloped real property that is the subject of the instant
eminent domain action (Property), because his property interest is barred by the statute of
frauds. Therefore he is not entitled to any compensation for the taking of the Property by
Coachella Valley Water District (Coachella).
James Gerard contends his interest in the Property is not barred by the statute of
frauds because it is based on an oral assignment of a partnership or joint venture interest
1We therefore refer to McMaken’s motion in this opinion as a summary
judgment motion and treat it as such, as did the trial court.
2
to share in the profits from the sale of the Property, and such an interest is personal
property, which is not subject to the statute of frauds. James Gerard argues that the issues
of whether there was a joint venture or partnership interest and whether there was an
enforceable verbal assignment of a personal property interest in the Property, rather than
a real property interest, are triable issues of fact.
McMaken and the Gerard sons argue James Gerard’s appeal is moot because he
did not appeal the interlocutory judgment apportioning the condemnation proceeds. We
disagree. James Gerard’s appeal is not moot because the stipulated apportionment
judgment was entered after the trial court granted summary judgment against James
Gerard. On the merits of James Gerard’s appeal, we conclude it is undisputed that James
Gerard was orally assigned a 50 percent ownership interest in the Property and, since the
assignment was not in writing and concerned a real property interest, the assignment is
unenforceable under the statute of frauds. We therefore affirm summary judgment
against James Gerard because his claim to the Property and condemnation proceeds is
barred by the statute of frauds as a matter of law. We need not address James Gerard’s
other contentions since summary judgment was proper based on the statute of frauds.
II
FACTS
Dennis Cooney acquired title to the Property located in La Quinta, with the
3
assistance of Richard Meyer. On March 30, 1987, Richard Gerard2 entered into a
written, signed agreement with Cooney, entitled “Sale Agreement” (referred to in this
opinion as the “Sale Agreement”). The Sale Agreement states that Cooney and Richard
agreed that: “Cooney hereby sells to GERARD 50% ownership interest” in the Property
for $40,500, with title to the Property to remain in Cooney’s name.
According to Meyer’s testimony, Cooney did not have the funds to purchase the
Property. The purchase price was approximately $81,000. Richard provided $81,000 in
funds for the down payment to purchase the Property and the installment payment on the
remaining note. Title to the Property was to remain in Cooney’s name because Richard
participated in illegal bookmaking activities.
In June 1989, Richard told his brother, James, he was transferring all of his assets
to James, including his interest in the Property under the Sale Agreement. Richard gave
James a copy of the Sale Agreement and the keys to his safe deposit box, where the Sale
Agreement and other assets were located. At the time, Richard believed criminal charges
against him were imminent. James testified that Richard told him that he wanted his
assets transferred to James because “[h]e didn’t want to have any assets that could be
attached to him”; “so they don’t become part of any legal proceedings against him should
he [become] involved in some sort of legal case because of his bookie activity.”
After disposing of his assets, Richard was charged in February 1990, with
bookmaking crimes, allegedly committed between April 4, 1989, and June 14, 1989. In
2 We refer to Richard Gerard and James Gerard in their individual capacity by
their first names, since they share common last names.
4
July 1990, Richard pled guilty to one count of felony bookmaking, based on accepting
bets on professional sports games in May 1989, which was a month before Richard told
James he was transferring his interest in the Property to James. Richard died
unexpectedly in July 1990.
In September 2001, Cooney, who was dying of cancer, transferred his interest in
the Property to his living trust, entitled “Dennis Cooney Living Trust” (the trust). No
mention is made in the trust of James’s interest in the Property. The trust, however,
directed the payment of $100,000 to be made to James when the Property was sold, and
for the balance of the sale proceeds to be paid pursuant to the “preexisting agreement”
(the Sale Agreement). After Cooney died in April 2002, his sister, McMaken, became
successor trustee of the trust, sole beneficiary, and owner of Cooney’s interest in the
Property. In July 2007, McMaken, as trustee, paid James $100,000 from Cooney’s trust,
even though the Property had not yet been sold.
In November 2007, Coachella filed the instant eminent domain action to take the
Property for a water recharge facility. McMaken and James Gerard were named as
defendant claimants to the Property. James Gerard and McMaken filed answers to the
complaint. Upon becoming aware of the eminent domain action, Richard’s sons
intervened in the action and filed an answer to the complaint. In October 2009, the trial
court entered an interlocutory judgment awarding Coachella the Property and approving
the sale of the Property for approximately $8 million. The condemnation proceeds were
deposited with the California State Treasury, leaving the sole issue of apportionment of
the proceeds.
5
In November 2010, McMaken filed a motion for summary adjudication of James
Gerard’s answer to the eminent domain action. McMaken argued in her motion that
James Gerard had no interest in the condemnation proceeds because his claim was barred
by the statute of frauds, the statute of limitations, and the doctrine of unclean hands.
James Gerard opposed McMaken’s motion, arguing it was procedurally defective,
McMaken did not have standing to challenge his interest in the Property, and the statute
of frauds did not apply because James Gerard was claiming a personal property interest in
the Property, not a real property interest.
On January 27, 2011, the trial court heard and granted McMaken’s motion for
summary adjudication, deeming it a motion for summary judgment because it disposed of
James Gerard’s entire claim to the condemnation proceeds. The court granted summary
judgment against James Gerard on the ground his interest in the Property was barred by
the statute of frauds and therefore James Gerard did not have any interest in the
condemnation proceeds.
After granting McMaken’s motion as to James Gerard’s claim, the trial court
heard and denied a second motion brought by McMaken against the Gerard sons’ claim
to the condemnation proceeds. The court found that under the Sale Agreement, Cooney
transferred a 50 percent ownership interest in the Property to Richard, held in a resulting
trust, and that interest in the Property transferred intestate to the Gerard sons upon
Richard’s death.
James Gerard filed a motion for reconsideration of the ruling granting summary
judgment against him, which the trial court denied.
6
On March 7, 2011, McMaken and the Gerard sons stipulated to apportionment of
the proceeds, and the stipulation was entered as judgment on March 8, 2011
(apportionment judgment). On April 28, 2011, the trial court executed and filed
judgment on McMaken’s summary judgment motion granted against James Gerard.
III
APPEAL IS NOT MOOT
McMaken and the Gerard sons contend this appeal is moot because James Gerard
did not appeal the March 8, 2011 apportionment judgment, which determined the amount
of the condemnation proceeds to be paid to each defendant claimant.
A. Procedural Background Relating to Whether Appeal Is Moot
When Coachella filed its eminent domain action, it deposited the estimated
condemnation proceeds with the State Treasurer’s Office. In 2008, Coachella took
possession of the Property pursuant to an order for prejudgment possession. In October
2009, the trial court entered an interlocutory judgment in the action, authorizing
Coachella to acquire the Property by eminent domain. The parties, including Coachella,
McMaken and James Gerard, agreed that the fair market value of the Property was $8.1
million, and this amount was the total just compensation, award, and damages to be paid
for the taking of the Property.
The October 2009 interlocutory judgment further stated that McMaken and James
Gerard had not resolved their differences regarding their respective rights to
compensation awarded for the Property. Therefore the issue of apportionment of the
condemnation award between McMaken and Gerard, and a determination of their
7
respective rights to the Property and compensation awards remained to be decided by the
trial court. Upon deposit of the required amount of condemnation proceeds, the trial
court entered a final order of condemnation for the Property, condemned in fee simple for
the public use, and Coachella took fee simple title to the Property, with all defendants’
interests and title in the Property terminating. The trial court retained jurisdiction for
purposes of determining the interests of McMaken and James Gerard in the Property and
to apportionment of the condemnation award.
Several months later, the Gerard sons intervened in the action.
The trial court heard and granted McMaken’s summary judgment motion against
James Gerard on January 27, 2011. The court noted that the motion was actually a
motion for summary judgment because, as is commonly the case with eminent domain
actions, the taking of the Property and setting of just compensation had already concluded
and the only remaining issues were those of the parties’ rights to distribution. The court
concluded that since James Gerard did not have any interest in the Property or
condemnation proceeds, judgment should be entered against him and his claim dismissed.
The other defendants’ claims to the condemnation proceeds proceeded to trial and
were settled on March 7, 2011. The Gerard sons and McMaken stipulated in court to the
division of the condemnation proceeds and, on March 8, 2011, the trial court entered a
stipulated judgment of apportionment, incorporating the terms of the settlement
agreement. James Gerard did not appeal the March 8, 2011 apportionment judgment.
8
On March 15, 2011, the State of California issued a check to the Gerard sons and
their attorney for their stipulated portion of the condemnation proceeds ($2.225 million),
in accordance with the apportionment judgment.
On April 28, 2011, the trial court entered and filed judgment on McMaken’s
motion for summary judgment against James Gerard. In the judgment, the court ordered
and decreed that James Gerard had no interest in the Property and was not entitled to any
portion of the eminent domain award for Coachella’s taking of the Property. James
Gerard filed a notice of appeal of the April 28, 2011 judgment.
B. Discussion
McMaken and the Gerard sons (respondents) argue James Gerard’s appeal is moot
because James Gerard did not appeal the March 8, 2011 apportionment judgment, which
determined the distribution of the condemnation proceeds and brought the eminent
domain action to a final conclusion. Respondents assert that, because the apportionment
judgment is final and the condemnation proceeds have been distributed, there would be
no effective relief if this court decided the instant appeal in James Gerard’s favor.
Generally, an appeal is moot if there is no longer a justiciable controversy.
“California courts will decide only justiciable controversies. [Citations.] The concept of
justiciability is a tenet of common law jurisprudence and embodies ‘[t]he principle that
courts will not entertain an action which is not founded on an actual controversy . . . .’
[Citations.] Justiciability thus ‘involves the intertwined criteria of ripeness and standing.
A controversy is “ripe” when it has reached, but has not passed, the point that the facts
have sufficiently congealed to permit an intelligent and useful decision to be made.’
9
[Citation.] But ‘ripeness is not a static state’ [citation], and a case that presents a true
controversy at its inception becomes moot ‘“if before decision it has, through act of the
parties or other cause, occurring after the commencement of the action, lost that essential
character.”’” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal. App. 4th
1559, 1573 (Wilson ); see also Lockaway Storage v. County of Alameda (2013) 216
Cal. App. 4th 161, 174 (Lockaway).)
Here, there remains the justiciable issue of whether James Gerard has any interest
in the Property and, if so, what portion of the condemnation proceeds James Gerard is
entitled to receive. Although the proceeds have been distributed to respondents, this does
not preclude James Gerard from seeking reimbursement for the portion of proceeds that
should have been distributed to him in the event this court reverses summary judgment.
On the other hand, the effect of dismissing James Gerard’s appeal as moot would result in
finality of the determination that James Gerard has no interest in the condemnation
proceeds and preclude James Gerard from recovering his share of the proceeds. Even
though the proceeds have been apportioned and distributed, the essential character of the
controversy in the instant case has not been lost as to James Gerard’s claim to the
proceeds.
“The pivotal question in determining if a case is moot is therefore whether the
court can grant the plaintiff any effectual relief. [Citations.] If events have made such
relief impracticable, the controversy has become ‘overripe’ and is therefore moot.”
(Wilson, supra, 191 Cal.App.4th at p. 1574; Lockaway, supra, 216 Cal.App.4th pp. 174-
175.) By the same token, an appeal is moot if “‘the occurrence of events renders it
10
impossible for the appellate court to grant appellant any effective relief.’” (Santa Monica
Baykeeper v. City of Malibu (2011) 193 Cal. App. 4th 1538, 1547; Lockaway, at p. 175.)
(1) Effective Relief
Respondents argue entry of the apportionment judgment and distribution of the
condemnation proceeds precludes any effective relief. We disagree. There remains the
possibility of effectual relief upon remanding the matter to the trial court for
determination of whether James Gerard has an interest in the Property and his share of
the proceeds. Although the court entered a final, stipulated judgment determining the
division of the condemnation proceeds, the court did not address James Gerard’s claim to
the proceeds because he was excluded as a potential claimant through summary
judgment.
Respondents assert that the trial court no longer has jurisdiction over the matter
because the trial court entered a final apportionment judgment, resulting in distribution of
the condemnation proceeds. But if James Gerard prevails on his appeal, the trial court
will still have jurisdiction to decide the justiciable issue of whether James Gerard has any
interest in the Property and condemnation proceeds, and if so, the portion of the proceeds
is he is entitled to receive. Although the proceeds are no longer deposited with the state
treasurer’s office, James Gerard could recover his share through judgment enforcement
proceedings.
Respondents further argue James Gerard was required to appeal, not only the April
28, 2011 summary judgment, but also the March 8, 2011 apportionment judgment. But
James Gerard was not a real party in interest when the apportionment judgment was
11
entered because summary judgment had been granted against him in January 2011.
James Gerard therefore was not required to appeal the March 8, 2011 apportionment
judgment, nor could he, because summary judgment terminates the action between the
parties. In turn, James Gerard also did not have standing to appeal the March 8, 2011
stipulated apportionment judgment. A person who was a party but ceased to be a party as
a result of dismissal from the action ordinarily has no appellate standing. (Bates v. John
Deere Co. (1983) 148 Cal. App. 3d 40, 53 [would-be appellant initially became a party by
complaint-in-intervention but its complaint was thereafter dismissed at its request]. In
the instant case, James Gerard was no longer a party for purposes of standing to appeal
the March 8, 2011 apportionment judgment because summary judgment had previously
been granted against him.
Respondents argue that under Code of Civil Procedure section 1250.220,
subdivision (d),3 the apportionment judgment is binding and conclusive on James Gerard.
Section 1250.220, subdivision (d) states: “A judgment rendered in a proceeding under
this title is binding and conclusive upon all persons named as defendants as provided in
this section and properly served.” Here, however, the judgment was entered after James
Gerard was no longer a party to the apportionment proceedings because the trial court
granted summary judgment against him. As a consequence, the apportionment judgment
was not binding or conclusive on James Gerard.
3Unless otherwise noted, all statutory references are to the Code of Civil
Procedure.
12
Respondents’ reliance on Mendocino County v. Peters (1905) 2 Cal. App. 34, for
the proposition James Gerard’s appeal is moot, is misplaced as well. In that case, the
defendant claimant in a condemnation proceeding appealed a condemnation order and an
order granting the plaintiff possession of the condemned Property. The Peters court
affirmed the condemnation order but dismissed the appeal to the order granting
possession of the Property, as moot, because the first order passed title and the right of
possession to the plaintiff. In the instant case, there is no dispute or challenge to the
condemnation judgment or to the orders and interlocutory judgments passing title, right
of possession, and determination of the amount of just compensation to be paid by the
plaintiff. Unlike in Peters, here, the sole remaining issue is apportionment of the
condemnation proceeds. The apportionment judgment did not address James Gerard’s
claim, since summary judgment had been granted against him. Therefore, if the matter
were remanded to the trial court, determination of whether James Gerard has an interest
in the condemnation proceeds could be adjudicated. Apportionment was determined only
as to respondents.
Respondents’ reliance on First Federal Bank of California v. Fegen (2005) 131
Cal. App. 4th 798, is misplaced. The case involved a judgment which resulted in the sale
of defendant Fegen’s real property before the appeal was decided. This rendered Fegen’s
appeal moot because the property sale was absolute and could not be set aside for any
reason under section 701.680, subdivision (a). The instant appeal does not concern the
erroneous, irreversible sale of real property. Rather, it concerns the apportionment and
distribution of condemnation proceeds which are not unique, one-of-a-kind property and
13
therefore can be redistributed, taking into consideration James Gerard’s additional claim,
which was excluded and thus not taken into account when the apportionment judgment
was entered. Although the appropriation judgment is final as between McMaken and the
Gerard sons, it is not final and binding on James Gerard because there was never a final
determination as to his interest in the Property and share of the condemnation proceeds.
If successful on appeal, James Gerard would be entitled to adjudication of his claim and
the previous apportionment judgment would not preclude such determination or relief as
to the conflicting interests of James Gerard and the Gerard sons in the Property and
condemnation proceeds.
(2) In Rem Jurisdiction
Respondents argue that once the condemnation proceeds were distributed, the trial
court lost jurisdiction over the case because the eminent domain action is an in rem
proceeding, in which jurisdiction is founded on the res or property. Once the res is gone,
the trial court no longer has in rem jurisdiction of the matter. This proposition has no
merit, as rejected in Republic National Bank of Miami v. U.S. (1992) 506 U.S. 80, 84-86.
As the court in Republic National Bank explained with regard to in rem forfeiture
proceedings: “Certainly, it long has been understood that a valid seizure of the res is a
prerequisite to the initiation of an in rem civil forfeiture proceeding. [Citations.]” (Id. at
p. 84.) The court in Republic National Bank further noted, however, that retention of the
res throughout the proceedings is not necessary to maintain jurisdiction over an in rem
forfeiture action. Jurisdiction, once vested, is not divested, although in some cases there
14
might be an exception to the rule where the release of the property would render the
proceedings moot. (Ibid.)
The res in the instant eminent domain action is the Property, not the condemnation
proceeds. The sale of the Property and distribution of the proceeds did not terminate
jurisdiction over the remaining issue of determination of James Gerard’s interest in the
condemnation proceeds. If this court were to remand this matter to the trial court, the
trial court would still have jurisdiction to determine whether James Gerard has an interest
in the Property.
The interlocutory order apportioning the proceeds between McMaken and the
Gerard sons was not conclusive and final as to James Gerard because summary judgment
had been granted against him and he was no longer a real party in interest to the
apportionment proceedings at the time of entry of the apportionment judgment. The trial
court therefore retained subject matter jurisdiction over James Gerard’s claim, even
though the proceeds were prematurely distributed before James Gerard’s claim to the
proceeds was resolved. This appeal is not moot because, if summary judgment against
James Gerard is reversed, James Gerard can obtain effective relief in the form of a trial
court adjudication of his interest in the Property and condemnation proceeds. A
judgment in James Gerard’s favor, declaring James Gerard to have title to the
condemnation proceeds superior to the Gerard sons’ intestate interest, could thereafter be
enforced through judgment enforcement proceedings.
15
IV
SUMMARY JUDGMENT
James Gerard contends the trial court erred in granting McMaken’s motion for
summary adjudication against him.
A. Summary Judgment Standard of Review
“[T]he party moving for summary judgment bears the burden of persuasion that
there is no triable issue of material fact and that he is entitled to judgment as a matter of
law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal. 4th 826, 850, fn. omitted.) “Once
the [movant] has met that burden, the burden shifts to the [other party] to show that a
triable issue of one or more material facts exists as to that cause of action . . . .” (§ 437c,
subd. (p)(2); Aguilar, at p. 850.) The party opposing summary judgment “may not rely
upon the mere allegations or denials of its pleadings,” but rather “shall set forth the
specific facts showing that a triable issue of material fact exists . . . .” (§ 437c, subd.
(p)(2).) A triable issue of material fact exists where “the evidence would allow a
reasonable trier of fact to find the underlying fact in favor of the party opposing the
motion in accordance with the applicable standard of proof.” (Aguilar, at p. 850.) We
affirm summary judgment where it is shown that no triable issue of material fact exists
and the moving party is entitled to judgment as a matter of law. (§ 437c, subd. (c).)
Where summary judgment has been granted, we review the trial court’s ruling de novo.
(Aguilar, at p. 860.)
16
B. The Right to Recover Condemnation Proceeds
The takings clause of the Fifth Amendment guarantees the right to not have
property taken without just compensation. (National City Business Assn. v. City of
National City (1983) 146 Cal. App. 3d 1060, 1065.) “‘The state’s power to take property
by eminent domain is conditioned on its obligation to pay “just compensation” to the
owner.’” (City and County of San Francisco v. Coyne (2008) 168 Cal. App. 4th 1515,
1521.) Only an “owner of property acquired by eminent domain is entitled to
compensation.” (§ 1263.010, subd. (a).) This includes anyone who has a legal or
equitable interest in the property described in the eminent domain complaint.
(§ 1250.230, subd. (a).)
McMaken’s motion for summary judgment was between defendants asserting
conflicting claims to the Property condemnation proceeds. In effect, the claimants were
asserting cross-claims against each other as to their share of the condemnation proceeds
but, under section 1260.220, “defendants with conflicting interests in condemned
property [may] litigate their adverse claims in the condemnation award without the
necessity of filing a cross-complaint.” (County of San Diego v. Miller (1980) 102
Cal. App. 3d 424, 432.) The trial court was required to resolve the conflicting interests in
the Property and apportion the proceeds among the claimants in accordance with their
respective rights and interests in the Property. (§ 1260.220.) As the moving party,
McMaken had the burden of establishing that James Gerard had no valid ownership
interest in the Property. Upon McMaken meeting that burden, the burden shifted to
17
James Gerard to produce evidence that he had a legal or equitable interest in the Property,
thereby raising a triable issue of fact as to his right to condemnation proceeds.
C. The Statute of Frauds
The trial court granted McMaken’s summary judgment motion against James
Gerard on the ground he did not have any interest in the Property based on the statute of
frauds. Under the statute of frauds, an agreement for transfer of an interest in real
property is invalid unless it “or some note or memorandum thereof, [is] in writing and
subscribed by the party to be charged.” (Civ. Code, § 1624, subd. (a).)
James Gerard argues that McMaken cannot rely on the statute of frauds in her
summary judgment motion because she did not assert it as an affirmative defense in her
answer to the eminent domain complaint. McMaken was not required to file an answer to
codefendants’ answers or cross-complain against codefendants. This is because eminent
domain actions are unique proceedings in which “[t]he plaintiff may require that the
amount of compensation be first determined as between plaintiff and all defendants
claiming an interest in the property. Thereafter, in the same proceeding, the trier of fact
shall determine the respective rights of the defendants in and to the amount of
compensation awarded and shall apportion the award accordingly.” (§ 1260.220, subd.
(b).)
The purpose for requiring a defendant in a condemnation action to set forth his
interest in the condemned property by way of answer is to enable the condemner to
acquire clear title to property needed for public purposes as expediently as possible.
(Redevelopment Agency v. Penzner (1970) 8 Cal. App. 3d 417, 423.) Eminent domain
18
actions are special proceedings, in which the rules of pleading (§§ 1250.320 and
1260.220) are streamlined “by making it possible for defendants having conflicting
interests in property condemned by a public agency to litigate their adverse claims to the
condemnation award without the necessity of filing cross-complaints.” (Penzner, at p.
423.) As defendants in the eminent domain action, both McMaken and James Gerard
filed answers to the complaint stating the extent of their interests in the Property. Under
section 1250.320, subdivision (a), this was all that was required to be pled by those
claiming an interest in the property. McMaken was not required to allege affirmative
defenses against codefendants’ claims in her answer to the eminent domain complaint.
(Penzner, at p. 423.)
Even though McMaken did not include in her answer the statute of frauds as an
affirmative defense, it was clear from the nature of the eminent domain action and the
respondents’ answers to the complaint that they were claiming an interest in the
condemnation proceeds and opposing any conflicting interests. Furthermore, James
Gerard was on notice of the statute of frauds defense to his claim because the Gerard sons
alleged it in their answer and McMaken raised it in her motion for summary judgment.
“[‘I]t would be unfair to ground a ruling on the inadequacy of the pleadings if the
pleadings, read in the light of the facts adduced in the summary judgment proceeding,
give notice to the plaintiffs of a potentially meritorious defense.” (FPI Development, Inc.
v. Nakashima (1991) 231 Cal. App. 3d 367, 384-385; Thornton v. Victor Meat Co. (1968)
260 Cal. App. 2d 452, 461.)
19
As to the merits of McMaken’s summary judgment motion, McMaken met her
burden of producing evidence that James Gerard’s claim was barred by the statute of
frauds, and James Gerard failed to refute the statute of frauds bar.
(1) Cooney’s Sale of a 50 Percent Ownership Interest in the Property to Richard
It is undisputed James Gerard’s interest in the Property is founded on Richard’s
purchase of a 50 percent interest in the Property from Cooney in 1987. A copy of a grant
deed dated March 3, 1987, and recorded on April 1, 1987, shows that title to the Property
was transferred to Cooney. A written agreement, entitled, “SALE AGREEMENT,” dated
March 30, 1987, states that it was agreed between Cooney and Richard that: “1) Cooney
hereby sells to GERARD 50% ownership interest in the parcels [the Property] for the
sum of $40,500. [¶] 2) Said sale is subject to the Option Agreement between Cooney
and Meyer dated March 1, 1987. [¶] 3) As a matter of convenience, title to the
properties shall remain in Dennis Cooney’s name. [¶] 3A) Cooney agrees that should he
become married, he will obtain a quit claim deed from his spouse. [¶] The decision for
disposition of the property shall rest solely with Dennis Cooney.” The Sale Agreement
was signed by both Richard and Cooney.
Cooney’s transfer to Richard of a 50 percent ownership interest in the Property is
further reflected in a written agreement signed by Cooney and his wife, Kathryn Cooney,
on December 1, 1989, stating that the Property, “which is owned by Richard Gerard and
Dennis Cooney, should it be sold, the initial $80,000.00 goes to Richard Gerard. The
remainder over and above the initial $80,000.00 is to be divided as per the original
Agreement. In case of the death of Dennis Cooney, Kathryn Wayman Cooney will see
20
that this transaction takes place.” It was agreed Richard would be paid the initial $80,000
because this the approximate amount he paid to fund the purchase of the Property.
(2) Alleged Oral Transfer of Property to James
James Gerard argues that his 50 percent interest in the Property is not barred by
the statute of frauds because his interest is founded solely on Richard’s assignment to
James of his partnership interest in receiving profits from the sale of the Property. James
Gerard acknowledges that “[i]t is undisputed that the Gerards[’] claim that they are
assignees of Rick Gerard’s interest arising from the Sale Agreement between Cooney and
Rick Gerard.” James Gerard argues that the Sale Agreement “formed a joint venture or
resulting trust to share in the profits, not a conveyance of real property interest. As such
the Statute of Frauds does not prohibit a verbal assignment from Rick to James of Rick’s
share.” James Gerard has failed to cite any evidence supporting this contention.
As explained in Kaljian v. Menezes (1995) 36 Cal. App. 4th 573, a joint venture or
partnership agreement to share the profits from a transaction involving real estate is not
required to be in writing. (Id. at p. 585.) However, an agreement to transfer a real
property interest from one joint venturer to another contravenes the statute of frauds if not
in writing. (Id. at pp. 586-587.) Regardless of whether Cooney and Richard formed a
joint venture or partnership, it is undisputed the statute of frauds bars James Gerard’s
interest in the condemnation proceeds because his claim is founded on an oral agreement
transfer to James, of Richard’s 50 percent ownership interest in the Property under the
Sale Agreement. The Sale Agreement is not a partnership or joint venture agreement
merely to share the profits from the sale of the Property. Richard’s right to profits from
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the sale of the Property was founded on his purchase under the Sale Agreement of a 50
percent ownership interest in the Property. It is undisputed that, even if the Sale
Agreement created a joint venture or partnership, the agreement provided for the sale of a
50 percent ownership interest in real property to Richard, and therefore the statute of
frauds applied to Richard’s subsequent oral agreement in 1989 to transfer that interest in
the Property under the Sale Agreement to James.
(3) James Gerard’s Efforts to Claim Richard’s Interest in the Property
After Richard’s death in July 1990, James Gerard initiated various litigation,
claiming a 50 percent ownership interest in the Property under the Sale Agreement. In
October 2005, James Gerard filed a complaint for partition and imposition of a
constructive trust against McMaken. James Gerard also filed a notice of lis pendens
giving notice that he had filed an action asserting a real property claim to the Property.
James Gerard alleged in his complaint for partition that he and his wife “are the assignees
of [Richard] who assigned all his right, title and interest to plaintiff James N. Gerard, a
married man, to that certain contract dated March 30, 1987 between Rick Gerardo [sic]
and Dennis Cooney.” James Gerard also alleged that, pursuant to the terms of the Sale
Agreement, Cooney sold to Richard a 50 percent ownership interest in the Property for
the sum of $40,500. Richard “also loaned to Dennis Cooney the other portion of the
purchase price totaling $40,000. Richard Gerard assigned his full 50% to James Gerard
who now is the owner of 50% of the profits from the sale of the Subject Property.”
James Gerard further alleged that James and his wife, “as assignees of Richard Gerard
own in Fee Title an undivided 50% interest in and to the Subject Property.”
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James Gerard later amended his partition complaint, omitting the allegation that he
had a 50 percent ownership interest in the Property, and replacing it with allegations that
James Gerard’s interest in the Property consisted solely of a partnership interest in the
profits from the sale of the Property. In February 2009, James Gerard dismissed his
complaint for partition after the trial court issued a tentative ruling granting McMaken’s
motion for summary judgment based in part on the statute of frauds barring James
Gerard’s claim to an interest in the Property. James Gerard’s amended complaints for
partition misconstrue the Sale Agreement as a partnership agreement. The terms of the
Sale Agreement do not create a partnership. The sale agreement simply states that
Richard purchased a 50 percent ownership interest in the Property.
Meanwhile, in October 2007, James Gerard also filed a verified petition for an
order to convey real property under Probate Code section 850, and request for equitable
relief (probation petition). James Gerard alleged the following facts. In 1990, Richard
assigned to James the Sale Agreement. Under the Sale Agreement, Cooney and Meyer
agreed to sell Richard a 50 percent ownership interest in the Property and profits derived
from the sale of the Property in excess of the $80,000 purchase price. Richard told James
he was “going to immediately unconditionally transfer certain assets to [James]. He then
transferred all his significant assets, including all rights, and interests in the profits of the
Subject Property and all rights arising out of the Subject Contract [Sale Agreement] to
[James]. 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 [James], turned over the keys to a safe deposit box where the original was
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located and instructed [James] to empty the safe deposit box and take permanent
possession of all its contents.” James Gerard alleged that from that point onward, James
exercised full ownership rights over the Sale Agreement, and the other assets transferred
to him, and that Cooney had written multiple documents confirming that he recognized
James’s ownership interest in the Property.
James Gerard filed an amended probate complaint, retreating from his previous
allegations that he had a 50 percent ownership interest in the Property and alleged he was
entitled to disbursement of his share of joint venture proceeds arising out the Sale
Agreement, which was allegedly a “joint venture agreement.” In September 2009, James
Gerard dismissed the probate action. James Gerard again attempts to construe the Sale
Agreement as something other than an agreement to sell Richard a 50 percent ownership
interest in the Property. The Sale Agreement is neither a partnership agreement nor a
joint venture agreement. “A joint venture has been broadly defined as an association of
two or more persons who combine their property, money, efforts, skill or knowledge to
carry out a single business enterprise with the objective of realizing a profit. [Citations.]
(Simmons v. Ware (2013) 213 Cal. App. 4th 1035, 1054.) The Sale Agreement does not
state that the parties to the agreement were creating a partnership or joint venture.
Cooney was merely transferring a 50 percent interest in the Property to Richard in
exchange for Richard’s payment of $40,500.
James Gerard acknowledged in his initial complaint for partition, his initial
probate petition, and his answer to the instant eminent domain action that the Sale
Agreement was simply a real property sale agreement, in which Cooney agreed to sell to
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Richard a 50 percent ownership interest in the Property. This real property interest was
the basis of James Gerard’s allegation in his answer to the eminent domain action that,
“[i]n compliance with Code of Civil Procedure § 1250.320, [James Gerard] states [James
and his wife] are claimants to a fifty percent interest in the real property.” James Gerard
is bound by his allegation in his answer that the basis of his claim to condemnation
proceeds is his 50 percent ownership interest in the real Property. James Gerard’s alleged
interest in the Property is invalid and unenforceable under the statute of frauds.
Furthermore, James testified that, based on the Sale Agreement, he believed Richard
orally transferred to James his 50 percent ownership interest in the Property, resulting in
James becoming an owner of a 50 percent interest in the Property. James acknowledged
that Richard never put in writing or signed a document confirming that Richard was
transferring his rights to the Property under the Sale Agreement.
McMaken met her burden of establishing that the Sale Agreement was not a
partnership or joint venture agreement to share the proceeds from the sale of the Property.
Rather, under the Sale Agreement, Cooney transferred a 50 percent ownership interest in
the Property to Richard, and that interest was what Richard orally assigned to James.
Since the assignment of Richard’s ownership interest in the Property was verbal, and not
in writing, it is unenforceable and barred by the statute of frauds as a matter of law.
(4) James Gerard’s Opposition to Summary Judgment
The burden shifted to James Gerard to produce evidence of specific facts showing
a triable issue refuting the statute of frauds bar. James Gerard failed to meet his burden.
James Gerard concedes his interest in the condemnation proceeds is founded on an oral
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agreement. It is undisputed that the oral agreement was to transfer Richard’s 50 percent
ownership interest in the Property. That oral agreement is unenforceable under the
statute of frauds as a matter of law. It is thus undisputed James Gerard has no valid,
enforceable interest in the condemnation proceeds.
Apparently recognizing the statute of frauds impediment, James Gerard bases his
right to condemnation proceeds on construing the Sale Agreement as a partnership
agreement to share the proceeds in the sale of the Property. But James Gerard has failed
to provide any evidence supporting this contention. None of the documents cited by
James Gerard establish that under the Sale Agreement Richard merely received a
partnership interest in the sale proceeds, as opposed to receiving an ownership interest in
the Property.
James Gerard relied on the following evidence in support of his contention the
statute of frauds did not apply because Richard orally assigned to James his partnership
interest in 50 percent of the profits from the sale of the Property, rather than a real
property interest in the Property: (1) Cooney’s notes prepared in connection with his
divorce, regarding potential sale proceeds disbursements related to the sale of the
Property. The spreadsheet notes state that $40,000 of the anticipated proceeds would be
paid to Richard, with an additional $20,000 paid to Richard’s “brother,” if found; (2) An
accounting statement by Meyer, dated August 1, 1999, of the anticipated profits from the
pending sale of the Property. The accounting statement indicates that James had an
interest in the Property proceeds based on the notation: “After tax Cash(excluding Rick’s
Bro).”; (3) Cooney’s handwritten instructions, dated September 19, 2001, stating that in
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his will he was leaving Richard’s brother, James, $100,000. Cooney stated that, if James
could not be found or had died, the money was not to go to any of Richard’s other heirs,
including his sons. The money would go to Cooney’s sister, McMaken.; (4) Cooney’s
handwritten note, regarding anticipated sale proceeds from the Property and disbursement
of the proceeds, which states “Rick Gerard’s brother gets $40,000”; (5) A letter dated
April 4, 2003, from McMaken to James, stating that Cooney died and had instructed in
his trust to pay James $100,000 as a gift, in remembrance of James’s brother, Richard,
who was a friend of Cooney.
None of these documents refutes the fact that James Gerard’s interest in the
Property is barred by the statute of frauds. These documents do not establish that Richard
transferred to James a partnership interest or joint venture interest in the Property sale
proceeds, as opposed to a 50 percent ownership interest in the Property under the Sale
Agreement. James Gerard’s reliance on Bates v. Babcock (1892) 95 Cal. 479, for the
proposition that Richard’s interest in the Property sale proceeds was transferable to James
in the absence of a written agreement, is misplaced because there is no evidence that the
Sale Agreement was merely a partnership agreement to share the proceeds from the sale
of the Property. It is undisputed the Sale Agreement transferred a 50 percent ownership
interest in the Property to Richard. This ownership interest would have entitled him to 50
percent of the profits from the sale of the Property, regardless of any partnership
agreement.
Since there was no written agreement transferring Richard’s ownership interest in
the Property to James, it is unrefuted that James Gerard’s claim to the Property is
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unenforceable and barred by the statute of frauds. Under Civil Code section 1624,
subdivision (a), “The following contracts are invalid, unless they, or some note or
memorandum thereof, are in writing and subscribed by the party to be charged or by the
party’s agent: [¶] . . . [¶] (3) An agreement for . . . the sale of real property, or of an
interest therein.”
In addition, section 1971 provides: “No estate or interest in real property . . . nor
any power over or concerning it, or in any manner relating thereto, can be created,
granted, assigned, surrendered, or declared, otherwise than by operation of law, or a
conveyance or other instrument in writing, subscribed by the party creating, granting,
assigning, surrendering, or declaring the same, . . .” Civil Code section 1091 further
provides: “An estate in real property, other than an estate at will or for a term not
exceeding one year, can be transferred only by operation of law, or by an instrument in
writing, subscribed by the party disposing of the same, or by his agent thereunto
authorized by writing.” Under these statutory provisions, Richard could not legally
transfer his real property interest in the Property to James, unless he did so by means of a
signed writing. It is undisputed there was no signed writing.
Regardless of whether Richard and Cooney formed a partnership or joint venture,
it is undisputed Richard had an ownership interest in the Property under the Sale
Agreement, and James Gerard’s claim to the condemnation proceeds is founded on
Richard’s oral representation that James was to receive that interest in the Property.
James Gerard cannot circumvent the statute of frauds by converting his original claim,
that he had an ownership interest in the real Property, to an equitable one based on a
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partnership interest in the proceeds from the sale of the Property under the Sale
Agreement. James testified that he did not believe Cooney and Richard were entering
into a partnership agreement when they executed the Sale Agreement. Since the transfer
of Richard’s ownership interest in the Property to James is unenforceable under the
statute of frauds, James Gerard has no right to any of the condemnation proceeds as a
matter of law. Therefore summary judgment was proper.
V
DISPOSITION
The judgment is affirmed. Respondents McMaken and the Gerard sons are
awarded their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON
J.
We concur:
HOLLENHORST
Acting P. J.
MILLER
J.
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