Corlin v. Bry CA2/3 ( 2023 )

Filed 12/27/23 Corlin v. Bry CA2/3
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
ADAM CORLIN, B315560
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. SC123103)
v.
ORDER MODIFYING OPINION
RICHMAN BRY, AND DENYING REQUEST FOR
PUBLICATION AND PETITION FOR
Defendant and Respondent. REHEARING
[NO CHANGE IN JUDGMENT]
BY THE COURT:
Appellant’s petition for rehearing, filed December 14, 2023,
is hereby denied. The December 15, 2023 request for publication
of opinion filed by counsel for Appellant, Janice R. Mazur, is
hereby denied.
It is further ordered that the opinion filed herein on
November 29, 2023, is modified as follows:
On page 4 of the opinion, in the paragraph that begins, “In
2012, through his certified public accountant, Cooper signed and
filed the LLC’s federal 2011 tax return,” the words “signed and”
are deleted. The word “federal” is deleted and replaced with
“California.”
There is no change in judgment.
____________________________________________________________
EDMON, P. J. LAVIN, J. EGERTON, J.
2
Filed 11/29/23 Corlin v. Bry CA2/3 (unmodified opinion)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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
SECOND APPELLATE DISTRICT
DIVISION THREE
ADAM CORLIN, B315560
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. SC123103)
v.
RICHMAN BRY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Craig D. Karlan, Judge. Affirmed.
Humphrey+Grant, James T. Grant, J. Scott Humphrey;
Mazur & Mazur and Janice R. Mazur for Plaintiff and Appellant.
Law Offices of Jonathan P. Chodos and Jonathan P. Chodos
for Defendant and Respondent.
‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗
INTRODUCTION
In 2011, plaintiff Adam Corlin and his friend Glenn Cooper
agreed on a real estate venture to purchase and sell for profit a
residential property (the property) on Berkeley Street in Santa
Monica. Cooper financed the venture and plaintiff managed the
construction, for which he received $120,000; they agreed to
share in the profit from the sale. Berkeley View, LLC (the LLC),
created by Cooper, held title to the property. However, the
purchase and renovation of the property was so costly that by the
time the property was ready for a buyer, Cooper owed more than
it was worth. Before the property was sold, Cooper passed away.
Cooper’s widow then transferred the LLC to defendant Richman
Bry, the lender whose loans funded the venture. In exchange,
Bry forgave Cooper’s debts.
Plaintiff brought the present lawsuit for intentional
interference with contractual relations against Bry, Cooper’s
widow, and the LLC’s non-member manager. Plaintiff also
alleged a cause of action to dissolve the LLC. Only the claims
against Bry and the LLC are at issue on appeal. The operative
pleading alleged Bry knew plaintiff had a 50 percent membership
interest in the LLC, unlawfully took over the LLC, interfered
with the sale of the property to a third-party buyer, and then
encumbered and occupied the property. Following the first phase
of a bifurcated bench trial, the trial court tentatively found
plaintiff was a member of the LLC. Later, in issuing its
statement of decision, the court held plaintiff was not a member
of the LLC and entered judgment for Bry.
On appeal, plaintiff argues the court lacked authority to
change its tentative ruling. Plaintiff also asserts that as a matter
of law, he was a member of the LLC or, alternatively, was in a
2
partnership with the LLC. We affirm because the trial court
acted within its inherent authority to reconsider its interim
ruling, both the record and the law support the court’s finding
that plaintiff was not a member of the LLC, and plaintiff failed to
advance the partnership theory below.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Real Estate Venture
In 2011, plaintiff and Cooper orally agreed to purchase,
renovate, and sell the property. This was their third house-
flipping project.1 As with their previous projects, plaintiff, a
contractor, handled the design and renovation, and Cooper
financed the project. For his work, plaintiff received a
construction supervision fee of $120,000.2
In May 2011, through attorney Alan Carnegie, Cooper
created the LLC to hold title to the property. Carnegie
communicated with both Cooper and plaintiff in connection with
preparing and filing documents with the Secretary of State,
which listed Cooper as the LLC’s managing member. The
documents did not identify how many members were in the LLC.
In June 2011, the LLC purchased the property for
$1,553,546. Cooper declared in an affidavit submitted to the title
company that the LLC “was just formed and there is no
1 For their first project, they formed an LLC. They
conducted their second project as a partnership.
2 In December 2011 and March 2012 emails to plaintiff,
Cooper indicated the construction supervision fee was an advance
as against plaintiff’s share of the profits, not additional
compensation.
3
Operating Agreement and . . . I am the only Member and
Managing Member . . . .” For the purchase, Cooper contributed
his own funds and borrowed $1.4 million from Bry, secured by a
deed of trust on the property recorded in favor of Bry. The
property was the LLC’s sole asset. Cooper also borrowed
additional funds from Bry for the renovation.
In the summer of 2011, Cooper sought to refinance the
property with City National Bank. In applying for the loan, he
provided the bank with a copy of the LLC’s operating agreement,
which listed Cooper as the 100 percent member and his brother-
in-law, Richard Geisman, as the non-member manager. In
September 2011, Cooper turned down the City National Bank
loan and opted to stay with Bry’s funding.
In 2012, through his certified public accountant, Cooper
signed and filed the LLC’s federal 2011 tax return, indicating
Cooper was the LLC’s sole member. Cooper checked the box
stating “This LLC is not in a partnership with any other entity.”
In April 2012, the property was listed for sale and
marketed.3 In late November 2012, a buyer offered $3,695,000
for the property, but cancelled the offer in December 2012.
On January 3, 2013, Cooper passed away. On January 18,
2013, a second potential purchaser submitted a $3.4 million offer
to purchase the property. This offer was not accepted. Plaintiff
believed this buyer would eventually offer $3.5 million.
On January 31, 2013, Bry purchased the LLC from
Cooper’s widow. In exchange, Bry forgave Cooper’s debts.
During negotiations for the sale, Cooper’s lawyer, Todd Grayson,
3 However, the house was incomplete and there was no
certificate for occupancy even by January 2013.
4
gave Bry the LLC’s operating agreement, dated May 15, 2011.
On several pages, Cooper appeared to have signed in his capacity
as president of his corporation, G.H. Cooper Properties, Inc.
However, the document identified Cooper (not G.H. Cooper
Properties, Inc.) as the sole member of the LLC. Geisman also
signed the agreement as non-member manager of the LLC.
By the time of Bry’s purchase, the real estate venture had
cost at least $3,746,000, including interest from the loans.
II. Plaintiff’s Lawsuit
In 2014, plaintiff filed a complaint against Cooper’s widow
and unnamed Doe defendants. In his first amended complaint,
plaintiff added allegations against Bry and Geisman (the non-
member manager of the LLC), and sought involuntary dissolution
and winding up of the LLC. After successive demurrers, plaintiff
filed the fourth amended complaint (4AC), the operative pleading
at trial.
The 4AC alleged contractual interference and sought to
dissolve the LLC. Plaintiff alleged that in mid-June 2011, he and
Cooper signed an operating agreement for the LLC, which stated
he and Cooper each owned 50 percent of the LLC. Plaintiff did
not retain a copy of the executed operating agreement, but
Cooper maintained the original in Cooper’s office. Plaintiff found
an unsigned copy of the operating agreement in a box in his
garage in May 2014, while preparing for this litigation. (For ease
of discussion, we refer to this operating agreement as the “garage
agreement,” as the parties did below.) Per the garage agreement,
in consideration for his “sweat equity” supervising renovations at
the property, plaintiff was to receive both a construction
supervision fee equal to 10 percent of the total cost of
construction (up to $150,000) and 50 percent of the net profit
5
generated by the lease and/or sale of the property. Plaintiff
asserted that Bry interfered with plaintiff’s rights under the
garage agreement by preventing the sale of the property to the
buyer who had offered $3.4 million and by purchasing the
property for himself.
The court would later explain that the inconsistencies
between the five iterations of plaintiff’s complaints led the court
to doubt plaintiff’s credibility in asserting the existence of the
garage agreement. Without explanation, plaintiff inflated his
construction supervision fee from $125,000 in the original
complaint to $150,000 in the 4AC. The original complaint alleged
plaintiff “believed” the LLC was governed by a signed operating
agreement. Yet, the 4AC asserted that plaintiff signed the
garage agreement in Cooper’s office and that he periodically saw
the agreement in a tan folder in Cooper’s filing cabinet.
III. The Bench Trial
Prior to trial, plaintiff dismissed with prejudice his claims
against Cooper’s widow and Geisman. Bry was the only
defendant involved in the bench trial and subsequent
proceedings.
Plaintiff and Bry stipulated to a bifurcated trial. In the
first phase, the court would decide what kind of contractual
relationship existed between plaintiff and Cooper regarding the
development of the property. If successful in proving his
membership in the LLC, plaintiff could elect to proceed with a
bench trial on his dissolution claim, or with a jury or bench trial
to determine Bry’s liability on the contractual interference claim.
In November 2018, the trial court heard two days of
testimony and admitted evidence in the first phase bench trial.
Central to the dispute were three operating agreements: (1) the
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garage agreement, (2) the signed operating agreement Cooper
furnished City National Bank (the CNB agreement) when he
sought to refinance, and (3) the signed operating agreement Bry
received from Grayson when in negotiations to purchase the LLC
(the Grayson agreement).
a. Plaintiff’s Case
The Garage Agreement. Plaintiff testified that on May
26, 2011, he and Cooper executed the garage agreement, which
created the LLC to hold title to the property. The garage
agreement identified plaintiff and Cooper as 50 percent members
of the LLC. Plaintiff asserted Cooper stored the signed
agreement in Cooper’s garage office, but Cooper’s associates
destroyed it after his death. Plaintiff testified he found an
unsigned copy of the garage agreement in storage prior to filing
his complaint.
Carnegie, the lawyer who prepared and filed the LLC’s
articles of incorporation, testified he was under the impression
that Cooper and plaintiff were both members of the LLC, but he
did not see the operating agreement. Plaintiff had told Carnegie
he wanted a two-member LLC. The articles filed with the
Secretary of State did not specify the number of members but
solely identified Cooper as the managing member.
The real estate agent Cooper used to purchase the property
and the senior vice president of the real estate division at City
National Bank both testified they believed plaintiff and Cooper
were partners.
The CNB Agreement. Plaintiff testified that after the
garage agreement was executed, Cooper had contemplated
making it a single member LLC in order to refinance the property
with City National Bank. Cooper created and signed the CNB
7
agreement, which showed the LLC had only one member, and
provided it to the bank. Plaintiff argued that conversion to a
single member LLC was never realized because Cooper declined
the City National Bank loan, opting to maintain Bry’s funding.
Plaintiff also presented evidence that around the time Cooper
sought a loan from City National Bank, Cooper had drafted
another agreement to create a partnership between the LLC and
plaintiff. Plaintiff asserted this partnership agreement was not
finalized because the single-member LLC was never formed
under the CNB agreement.
The Grayson Agreement. Plaintiff contended the final
operating agreement—the Grayson agreement—was fraudulent.
The material difference between the Grayson agreement and the
CNB agreement was that the Grayson agreement indicated the
LLC’s sole member was Cooper’s corporation, not Cooper.
Plaintiff’s theory was that Grayson (Cooper’s attorney) altered
the single-member CNB agreement to create the forged Grayson
agreement, which Grayson presented to Bry in negotiating the
sale of the LLC for Cooper’s widow. In that vein, plaintiff elicited
testimony from a handwriting expert who stated Cooper may not
have been the one who wrote two of the three signatures in the
Grayson agreement.
Plaintiff also examined Geisman and Grayson, both of
whom were instrumental in preparing documents to transfer the
LLC to Bry. Neither Geisman nor Grayson was forthcoming in
their testimony, testifying they did not recall significant events.
The court opined they lacked credibility and appeared to have
forged the Grayson agreement to protect Cooper’s widow.
8
b. Bry’s Case
Bry testified that when he was in negotiations to purchase
the LLC, Cooper’s attorney, Grayson, represented that plaintiff
had no membership interest. When plaintiff told Bry he was a 50
percent member, Bry asked for documentation of plaintiff’s
interest in the LLC, which plaintiff could not provide. Grayson
subsequently gave Bry the May 15, 2011 operating agreement,
which showed that either Cooper or Cooper’s corporation, G.H.
Cooper Properties, Inc., was the LLC’s sole member. Bry
believed he purchased the LLC clear and free of plaintiff’s
interest based on (1) the LLC’s tax return showing it was entirely
owned by Cooper, (2) repeated statements from the Cooper family
that it was the 100 percent owner of the LLC, and (3) the
operating agreement, which stated Cooper was the sole owner.
Bry elicited testimony from Cooper’s accountant, who in
September 2012, filed the LLC’s 2011 tax returns. Those tax
returns stated that Cooper was the sole member of the LLC, and
that the LLC was “not in a partnership with any other entity.”
c. Tentative Decision
On May 29, 2019, the court heard closing arguments and
issued a tentative decision, finding by a preponderance of the
evidence that plaintiff was a 50 percent member of the LLC. The
court did not specify which version of the operating agreement
controlled.
IV. Stay for Valuation Proceeding
After the court issued its tentative decision, Bry served and
filed a notice of election to buy out plaintiff’s 50 percent interest
in the LLC pursuant to the Corporations Code. Plaintiff objected,
moved to strike Bry’s notice of election, and filed a notice of
election to pursue his fourth cause of action to dissolve the LLC.
9
The court denied plaintiff’s motion to strike Bry’s notice of
election and stayed the second phase of the trial pending a
separate valuation proceeding pursuant to Corporations Code
section 17707.03, subdivision (c)(2).4
After much dispute between the parties, the trial court
established January 31, 2013 as the date of valuation. In mid-
March 2021, the court conducted an appraisal hearing after
reviewing valuations from the court-appointed neutral appraiser
and the parties’ appraisers. The court adopted the findings of the
neutral appraiser and the appraiser nominated by Bry that the
value of plaintiff’s membership interest in the LLC as of January
31, 2013, was either less than zero, or at best, one dollar. Those
appraisers found the purchase and renovation costs for the
property were at least $197,836 more than its fair market value
as of the valuation date. The court found plaintiff’s interest did
not have positive value and ordered Bry to prepare a judgment
and final decree.
V. Statement of Decision
Plaintiff requested that the trial court issue a statement of
decision addressing the basis for its decision that plaintiff was a
member of the LLC. After reviewing the evidence, the court
4 All subsequent statutory references are to the Corporations
Code.
Section 17707.03 permits a court to order the dissolution of
a limited liability company at the request of a member. Pursuant
to subdivision (c)(2) of that section, if a member elects to
purchase the other member’s ownership interest, the court is
required to stay the dissolution proceedings for a determination
of the fair market value of the membership interests.
10
concluded there was insufficient evidence to find that plaintiff
was a member of the LLC. In April 2021, the court notified the
parties of its decision to reverse course. Bry then submitted a
proposed statement of decision and plaintiff filed his objections to
it.
The court prepared its own 28-page statement of decision,
thoroughly discussing the history of the case and its finding that
plaintiff was not a member of the LLC. The court found that
plaintiff had an oral agreement with Cooper to split the proceeds
of the sale, that the money given to plaintiff at the inception of
the project was an advance on these sale proceeds, and that
Cooper subsequently created the LLC to hold title to the
property. Plaintiff was neither a member of the LLC nor in a
partnership with the LLC. Plaintiff therefore failed to prove his
claims for intentional interference with contractual relations or
dissolution of the LLC, because both were premised on plaintiff
being a member of the LLC under the garage agreement.
The court meticulously explained its findings. Because the
court’s statement of decision is the focus of plaintiff’s arguments
on appeal, we quote the court’s decision at length:
[T]he Court herein finds [plaintiff] has failed to
meet his burden of proof that he is a member of
Berkeley View, LLC. Nor was there any credible
evidence that [plaintiff] entered into a partnership or
joint venture with the LLC. The pleadings and the
evidence clearly show that [plaintiff] and Cooper
entered into the Project based on an oral agreement
between [plaintiff] and Cooper, and that “[t]he joint
venture legal structure did not matter to [plaintiff]
because he trusted Cooper, [and] had received
numerous writings from Cooper acknowledging the
50/50 split of proceeds from the exploitation of the
11
developed project.” . . . A “50/50 split of proceeds from
the exploitation of the developed project” is precisely
what the evidence shows and nothing further.
Again, in reaching this conclusion, the Court
finds that the unsigned Garage Agreement . . . does
not reflect the terms of the agreement between
[plaintiff] and Cooper and is therefore not the LLC
Operating Agreement. It does not make sense that
[plaintiff] would get paid up to $150,000 for
supervising construction (his contractor’s license was
suspended) and receive 50 percent of the equity in the
Project, as per his testimony and the Garage
Agreement. Again, [emails from Cooper to plaintiff]
directly contradict the Garage Agreement and
[plaintiff]’s testimony to that effect. [¶] . . . [¶]
In addition, the Court finds it significant that
there is no mention of the signed LLC Operating
Agreement or . . . the unsigned Garage Agreement[] in
either the original [complaint] or the First Amended
Complaint, even though Plaintiff testified he located
the Garage Agreement sometime in May 2014 when
preparing for this litigation. To the contrary, in his
[original c]omplaint, filed four months later, on
September 10, 2014, at paragraph 30, [plaintiff] states
“it is at this time [June 28, 2011] that [plaintiff]
believes he and [Cooper] executed an operating
agreement for Berkeley View, LLC.” The Court is
troubled by the failure of Plaintiff to specifically
identify the Garage Agreement in his [original
c]omplaint as the Operating Agreement he and Cooper
signed, especially given his claim that he had, by that
time, already located it in his garage.
12
Equally problematic is the juxtaposition of the
above statement, i.e., [plaintiff] ‘believes he and
[Cooper] executed an operating agreement for
Berkeley View, LLC,’ with [plaintiff]’s position in the
[4AC], that in mid-June 2011, he “signed the Berkeley
Operating Agreement in [Cooper’s] office and gave the
original back to [Cooper],” and in the [third amended
complaint] that he saw the LLC Operating Agreement
in Cooper’s office on January 5, 2013, two days after
Cooper [died].
Simply put, it is difficult to reconcile these
inconsistent allegations. Nor is it clear how greater
clarity arrived after multiple demurrers had been
sustained.
The Court finds [plaintiff]’s allegation in the
[second amended complaint] to be far more likely true
than any of the others, i.e., that “[t]he joint venture
legal structure did not matter to [plaintiff] because he
trusted Cooper, had received numerous writings from
Cooper acknowledging the 50/50 split of proceeds from
the exploitation of the developed project . . . .”
In addition, . . . the operating agreement
presented to City National Bank as the operating
agreement for the LLC, presents yet another hurdle
[plaintiff] failed to surmount. According to [plaintiff],
even though Cooper submitted this ‘alternative’
operating agreement to [City National Bank], it did
not go into effect because Cooper ultimately chose not
to accept the City National Bank offer.
The Court does not condone picking and
choosing agreements as it suits the parties. Nor does
the Court believe in legal fictions. When the City
13
National Bank proposal was submitted with Plaintiff’s
knowledge, to the extent there was a Garage
Agreement, it was vitiated.
As such, and for all the above reasons, the Court
finds that the Garage Agreement did not control the
relationship between Cooper and [plaintiff] at the time
of Cooper’s death or any other time. . . .
Pursuant to this analysis, the Court
acknowledges that one possibility is the [CNB]
agreement was in force and effect at the time of
Cooper’s passing. If this were the case, [plaintiff]’s
claims necessarily fail because he is not a member of
the LLC under that agreement.
Far more likely, though, is there was solely an
oral agreement between Cooper and [plaintiff];
wherein the two friends agreed to a “50/50 split of [the]
proceeds from the exploitation of the developed
project.” Unfortunately, this, too, is problematic for
several reasons. First, in the bench trial, counsel for
[plaintiff] expressly represented to the Court that he
was not relying on any type of oral agreement or
partnership agreement but was instead relying on the
Garage Agreement. . . .
Second, and regardless of any representation by
counsel that no claim based on an oral agreement was
being advanced, if Plaintiff’s only retreat is to a claim
based on an oral agreement between him and the
deceased, then such a claim is barred either by Code of
Civil Procedure section 366.2 or [plaintiff]’s failure to
bring any such claim under the applicable provisions
of the Probate Code, let alone such a claim in this
action.
14
This case proceeded to trial with [plaintiff]
(1) alleging in the pleadings, (2) representing to the
Court at the inception of trial; and (3) arguing at the
conclusion of the first phase of the trial that he was a
50 [percent] member of Berkeley View, LLC, based on
the Garage Agreement, an argument which the Court
herein rejects. There is no allegation in any of the five
iterations of the complaint, nor was any credible
evidence presented, that [plaintiff] entered into an
oral partnership agreement with the LLC, or that one
was proposed. Thus, the only plausible agreement
relating to the Project, based on the evidence
presented at trial, is that an oral agreement was
reached between [plaintiff] and Cooper, one which
[plaintiff] chose not to pursue in litigation.
The trial court also held that plaintiff could not prove
damages based on the prior valuation proceeding showing that
plaintiff had no positive interest in the LLC. The court concluded
that because plaintiff failed to prove he had a membership
interest in the LLC and could not prove damages, plaintiff had no
viable cause of action for tortious interference with contractual
relations or for dissolution of the LLC.
On September 28, 2021, the court entered judgment in
favor of Bry. Plaintiff timely appealed.
DISCUSSION
“In reviewing a judgment based upon a statement of
decision following a bench trial, we review questions of law de
novo. [Citation.] We apply a substantial evidence standard of
review to the trial court’s findings of fact. [Citation.] Under this
deferential standard of review, findings of fact are liberally
construed to support the judgment and we consider the evidence
15
in the light most favorable to the prevailing party, drawing all
reasonable inferences in support of the findings.” (Thompson v.
Asimos (2016) 6 Cal.App.5th 970, 981.) As the reviewing court,
we do not reweigh evidence or assess witness credibility. (Ibid.)
The crux of this case is whether plaintiff had a membership
interest in the LLC. Without a membership interest, he lacked
standing to litigate claims for interfering with his rights under
the LLC’s operating agreement or for dissolution of the LLC.
(See Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148 [“To prevail
on a cause of action for intentional interference with contractual
relations, a plaintiff must plead and prove . . . the existence of a
valid contract between the plaintiff and a third party”];
§ 17707.03 [manager or member may bring action for judicial
dissolution of LLC].)
Plaintiff makes two arguments about the court’s
membership finding. First, plaintiff asserts the trial court lacked
authority to change its tentative decision that plaintiff was a
member. Second, plaintiff asserts that, as a matter of law, he
was a member of the LLC or in a partnership with the LLC. We
address each in turn.
I. The Trial Court Had Inherent Authority to
Reconsider Its Interim Ruling on Plaintiff’s Status as
a Member of the LLC
Plaintiff contends that “as a matter of law, procedural due
process and fundamental fairness, the court had no authority to
change its phase one bifurcated trial ruling that [plaintiff] is a
member of [the LLC] two-and-a-half years later, after [plaintiff]
made an election to dissolve [the LLC] based on the court’s
ruling.”
16
We disagree. It is well established that the trial court
possesses inherent authority to reconsider its own interim orders
prior to entry of final judgment. (Le Francois v. Goel (2005)
35 Cal.4th 1094, 1106–1108.) Further, California Rules of Court,
rule 3.1590(b) makes clear: “The tentative decision does not
constitute a judgment and is not binding on the court. If the
court subsequently modifies or changes its announced tentative
decision, the clerk must serve a copy of the modification or
change on all parties that appeared at the trial.”
“[W]here a matter is tried to the court as here, the trial
judge has broad discretion to reopen the matter prior to final
judgment, even over the objection of the litigants. ‘Within
reasonable limits, it is not only the right but the duty of a trial
judge to clearly bring out the facts so that the important
functions of his office may be fairly and justly performed.
[Citations.] For the same reason the trial judge is not to be
unduly and unreasonably hampered in his control or conduct of
the trial.’ [Citations.] . . . [T]he trial court may sometimes even
need to vacate a prior formal order on a matter and consider
additional new evidence in light of the applicable legal theory.”
(Coit Drapery Cleaners, Inc. v. Sequoia Ins. Co. (1993) 14
Cal.App.4th 1595, 1611 (Coit Drapery).)
The Supreme Court has explained that the trial court’s
authority to reconsider interim rulings “derives from the
judiciary’s fundamental, constitutionally mandated function to
resolve specific controversies between parties.” (Brown, Winfield
& Canzoneri, Inc. v. Superior Court (2010) 47 Cal.4th 1233, 1248
(Brown).) To preserve procedural fairness, when the trial court
chooses to reconsider an interim ruling, the court “must provide
the parties ‘notice that it may do so and a reasonable opportunity
17
to litigate the question.’ ” (Ibid.) “ ‘ “All that fairness requires is
that the new theory, which the judge decides is the correct one, be
disclosed to the opposing party so that he may have a full
opportunity to meet it.” ’ [Citations.] Such a procedure, while
admittedly very unusual, does not violate the litigants’ rights
when adequate notice is given, as here—and may, in fact, be
required in order to reach a just result.” (Coit Drapery, supra,
14 Cal.App.4th at pp. 1611–1612.)
Here, the court informed the parties of its intention to
modify its earlier tentative and gave the parties an opportunity
to respond. Plaintiff filed a 32-page brief, which challenged the
court’s newly changed findings, and submitted dozens of exhibits.
The court then addressed plaintiff’s arguments in its final
statement of decision. We conclude the court afforded plaintiff
due process. (See Brown, supra, 47 Cal.4th at p. 1248.)
In asserting the court lacked authority to change its
tentative statement of decision, plaintiff cites Arntz Contracting
Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464,
and Orange County Water Dist. v. Alcoa Global Fasteners, Inc.
(2017) 12 Cal.App.5th 252. Neither case addresses the trial
court’s power to change its prior tentative findings of fact or
conclusions of law, let alone holds that a trial court may not do
so. Rather, these cases address the impact of earlier findings
made in a bifurcated trial. (See Arntz, at p. 487, and Orange
County Water Dist., at p. 355, fn. 52.)
Plaintiff also argues that “the ruling became final in June
2019 when the court required [plaintiff] to elect between his two
pled claims.” First of all, plaintiff cites no authority to support
his legal conclusion that a tentative from a first phase of trial
becomes final because a party elects to proceed to the second
18
phase of trial on a particular cause of action. To the contrary,
California Rules of Court rule 3.1591(c) states, “A judge may
proceed with the trial of subsequent issues before the issuance of
a statement of decision on previously tried issues.”
Second, plaintiff mischaracterizes the record. Plaintiff was
not forced by the court to choose whether to pursue a particular
cause of action, nor did the court’s decision corner him into a
particular trial strategy. Regardless of which cause of action
plaintiff pursued, he necessarily needed to prove he was a
member of the LLC. Notably, it was only after Bry’s election to
buy out plaintiff’s membership interest that plaintiff sought to
proceed on his dissolution claim.
In sum, the trial court acted well within its inherent
authority to reconsider interim orders prior to entry of final
judgment. By noticing its intent to reverse its tentative and
giving plaintiff the opportunity to be heard prior to its final
ruling, the court ensured fairness and that plaintiff was afforded
due process.
II. The Trial Court Did Not Err in Finding Plaintiff Was
Not a Member of the LLC
In his opening brief, plaintiff “acknowledges that at the
Phase One trial, there was substantial evidence presented on
both sides” of the issue of whether plaintiff was a member of the
LLC. We agree. The evidence at trial included two signed
agreements identifying the LLC as a single-member company,
statements made by Cooper under penalty of perjury to the
Internal Revenue Service and title company that he was the sole
member, and plaintiff’s inconsistent pleadings that created doubt
about plaintiff’s credibility.
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Nonetheless, plaintiff asserts that as “as a matter of law”
he is a member of the LLC. In support, plaintiff urges that the
trial court found plaintiff “and Cooper ‘unquestionably’ agreed to
be 50-50 partners in the real estate venture.” Plaintiff concludes
that as partners, plaintiff and Cooper created the LLC to hold
title to the “partnership asset,” the property. Plaintiff argues
that once the LLC was created, plaintiff “as a matter of law had a
legal relationship with” the LLC.
We are unpersuaded, as plaintiff mischaracterizes the
record and the law. First, the trial court did not find plaintiff and
Cooper were in a partnership. While the court stated plaintiff
“has unquestionably proven he and Cooper had an agreement to
split the net ‘proceeds from the exploitation of the developed
project,’ ” the court did not find plaintiff and Cooper entered into
a partnership. Second, at trial, plaintiff “expressly represented to
the Court that he was not relying on any type of oral agreement
or partnership agreement but was instead relying on the Garage
Agreement.” Third, the court never found that plaintiff had a
role in creating the LLC. The court instead found that Cooper
made a single-member LLC, independent of plaintiff.
Fourth, plaintiff jumps to the conclusion that the property
is “partnership property.” We do not agree. Under section 16204,
subdivision (d), “[p]roperty acquired in the name of one or more of
the partners, without an indication in the instrument
transferring title to the property of the person’s capacity as a
partner or of the existence of a partnership and without use of
partnership assets, is presumed to be separate property, even if
used for partnership purposes.” Even if we were to assume the
existence of a partnership, there is no evidence the property was
a partnership asset. Nothing on the deed indicates the property
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is a partnership asset. Further, Cooper acquired the property in
the name of his single-member LLC, partly by spending his own
assets and partly by taking on a large amount of debt for which
he was solely liable.
For all of these reasons, we reject plaintiff’s argument that
he was a member of the LLC as a matter of law.
III. Plaintiff Cannot Now Pursue a Partnership Theory,
Which Was Not Alleged or Argued at Trial
To the extent plaintiff contends on appeal he was in a
partnership with the LLC, he did not plead a partnership with
the LLC in any complaint or pursue this theory at trial. The 4AC
solely alleged that plaintiff was a member of the LLC.
At trial, plaintiff told the court that he was not relying on
an oral agreement or a partnership agreement. The court asked
plaintiff’s counsel: “So you’re not going to be taking an
inconsistent position that there was a partnership?” Plaintiff’s
counsel responded: “You are correct. You are correct. So that
was the alternative track that didn’t happen.” Plaintiff relied
entirely on the garage agreement to prove his membership in the
LLC.
One of plaintiff’s PowerPoint slides presented during
closing arguments stated: “The two competing issues to be
decided in the First Phase Bench Trial are: (1) Were [plaintiff]
and Cooper the two individual members of [the] LLC when
Cooper died in January 2013, as plaintiff . . . contends? or (2) Was
[Cooper’s corporation, G.H. Cooper Properties, Inc.] the sole
member of [the] LLC with Geisman its ‘non-member manager’
when Cooper died in January 2013, as defendant Bry contends?
. . . Based on the preponderance of the evidence, the substantial
trial evidence shows that [plaintiff] and Cooper were each
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individual members of [the] LLC. Conversely, the evidence does
not show that [G.H. Cooper Properties, Inc.] was the sole member
of [the] LLC, and that Geisman was its non-member manager.”
As the trial court summarized in its statement of decision:
There is no allegation in any of the five
iterations of the complaint, nor was any credible
evidence presented, that [plaintiff] entered into an
oral partnership agreement with the LLC, or that one
was proposed. Thus, the only plausible agreement
relating to the Project, based on the evidence
presented at trial, is that an oral agreement was
reached between [plaintiff] and Cooper, one which
[plaintiff] chose not to pursue in litigation.
It is well settled that “ ‘the theory upon which a case is
tried must be adhered to on appeal. A party is not permitted to
change his position and adopt a new and different theory on
appeal. To permit him to do so would not only be unfair to the
trial court, but manifestly unjust to the opposing litigant.’ ”
(Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869,
874.) “Despite this general rule, courts have discretion to
consider a new theory on appeal if it involves a legal question
based on undisputed facts.” (Vasquez v. SOLO 1 Kustoms, Inc.
(2018) 27 Cal.App.5th 84, 96.)
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Plaintiff’s partnership argument challenges the judgment
on a theory not advanced below, and presents not just a question
of law, but a question of fact. Accordingly, we will not consider
this partnership theory on appeal.5
5 Plaintiff raises many other issues on appeal that presume
he has a membership interest in the LLC. We decline to address
these as plaintiff is not a member of the LLC and therefore lacks
standing to pursue them. (See Mendoza v. JPMorgan Chase
Bank, N.A. (2016) 6 Cal.App.5th 802, 809 [“Standing is a
threshold issue necessary to maintain a cause of action.”].) We
also decline to address whether plaintiff’s potential claim against
Cooper’s estate is barred by the statute of limitations because
this issue was not properly before the trial court (plaintiff had not
filed claims against Cooper’s estate) and is therefore not ripe for
our discussion. (See Vandermost v. Bowen (2012) 53 Cal.4th 421,
452 [“ ‘The ripeness requirement, a branch of the doctrine of
justiciability, prevents courts from issuing purely advisory
opinions.’ ”].)
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DISPOSITION
The judgment is affirmed. Defendant Richman Bry is
awarded his appellate costs.
NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS
EDMON, P. J.
We concur:
LAVIN, J.
EGERTON, J.
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