Cable v. O'Neill CA4/1

Filed 7/7/22 Cable v. O’Neill CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
DENISE CABLE et al., D078601
Plaintiffs and Respondents,
v. (Super. Ct. No. 37-2019-
00018657-CU-BC-CTL)
MICHAEL THOMAS O’NEILL,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of San Diego County,
Joel R. Wohlfeil, Judge. Affirmed.
Arendsen Cane & Molnar, Christian S. Molnar; Atabek & Associates
and Jon A. Atabek for Defendant and Appellant.
Dean Gazzo Roistacher, Lee H. Roistacher, Samuel C. Gazzo and
Joseph M. Radochonski for Plaintiffs and Respondents.
Denise and James Cable sued Michael Thomas O’Neill for breach of
contract and a common count of money had and received after O’Neill failed
to repay a loan as required by two written agreements. O’Neill contended
that the loan represented an investment in a business venture and that the
Cables owe him money for litigation expenses that he incurred in pursuing
that deal. The trial court granted summary judgment for the Cables,
concluding that the undisputed evidence showed that O’Neill was obligated to
repay the loan under the terms of a fully integrated written loan agreement
and a subsequent written agreement to extend the repayment terms, neither
of which referred to an investment agreement. O’Neill appeals the judgment
contending that the trial court ignored triable issues of fact and misapplied
the parol evidence rule. We conclude that O’Neill has forfeited his claims of
error by failing to provide cogent arguments supported by citations to the
record and authority. Even if he had not forfeited his claims, the court
properly granted summary judgment because the undisputed evidence
established that O’Neill breached written agreements to repay a loan. We
therefore affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
A. Background
Denise Cable met O’Neill in approximately 2014 when he was a student
in a scuba diving instructor class that she taught for Ocean Enterprises. At
the time, Ocean Enterprise conducted three different types of business:
a scuba gear retail store, which included service, rental, and instructional
departments; military sales; and a travel division that took clients on scuba
diving trips. Denise and O’Neill became work associates at Ocean
Enterprises and friends. O’Neill also became friends with Denise’s husband,
James.
In the summer of 2015, O’Neill expressed interest in purchasing the
retail scuba gear rental portion of Ocean Enterprises. O’Neill loaned the
owner of Ocean Enterprises, Werner Kurn, money to pay off some business
debts while they discussed the potential sale.
2
The Cables considered investing in O’Neill’s purchase of the business.
They attended a meeting with O’Neill and Kurn’s financial advisor to look at
the financial information for Ocean Enterprises as part of the financial due
diligence process to determine a fair purchase price. After reviewing
financial documents provided by Kurn, James Cable expressed serious
concerns about the cash flow of Ocean Enterprises.
By the end of 2015, O’Neill had loaned Kurn a total of $300,000.
Negotiations continued and in February 2016, Kurn asked O’Neill for an
additional loan of $100,000.
B. February 2016 Loan Agreement
O’Neill asked the Cables for a loan of $100,000 in February 2016 to
enable O’Neill to pursue the business opportunity with Kurn. Although
O’Neill intended to provide the money to Kurn, he assured the Cables that
the loan would be for only a few months and that O’Neill would pay it back
quickly with interest. Denise wrote a check to O’Neill in the amount of
$100,000 on February 16, 2016.
According to O’Neill, Denise told him that James required a promissory
note, but that the note would be a “fiction, partly to not disclose her status as
a silent investor to Kurn and partly to appease her then-separated
husband.”1 O’Neill maintains that the $100,000 represented a 25 percent
equity investment by Denise that the Cables agreed O’Neill could repay when
Kurn paid O’Neill, and that Denise would be responsible for 25 percent of any
expenses incurred in attempting to recover funds from Kurn.2
1 The Cables separated in December 2015.
2 The court sustained the Cables’s objections to statements in O’Neill’s
initial declaration that they agreed that the funds would serve as an equity
investment of $100,000 in Ocean Enterprises, that Denise Cable would act as
3
O’Neill drafted and executed a two-page “loan agreement” dated
February 17, 2016, which he e-mailed to Denise. In the e-mail attaching the
agreement, O’Neill stated, “we all know this money is going to [Kurn] but this
loan and any other subsequent are to me and me alone. For this particular
loan to make you more secure of repayment I am selling my cape house as
soon as the snow melts and I get home to spruce it up. I am selling the home
in any case whether this deal with Werner goes through or not so I will be
sure to keep up the payment schedule and have the principal ready for you
should you decide not to engage in our scuba venture.” He also said, “[i]f we
do go forward” he would secure a life insurance policy and list Denise as a
beneficiary to “more than cover her investment amount.”
a silent partner with a 25 percent equity interest in the business, that she
would be responsible for 25 percent of any expenses incurred to acquire the
business, and that if the acquisition did not go through, “[the Cables] would
be repaid when Kurn repaid [O’Neill], basically accepting that as collateral.”
However, the Cables did not object to nearly identical passages in
O’Neill’s second declaration, which he submitted in support of his further
opposition to the motion for summary judgment after conducting discovery.
They did not object to a statement that the Cables agreed they would be
repaid when Kurn repaid O’Neill or that Denise Cable “would be responsible
for 25 [percent] of any expenses in recovering the funding back from Kurn.”
The court overruled the Cables’s objections to two sentences in O’Neill’s
second declaration stating that the Cables “provided the initial $100,000 as
Denise Cable’s investment in Ocean Enterprises as a 25 [percent] silent
partner who would be responsible for 25 [percent] of any expenses incurred
by the partnership in the acquisition or operation of the acquired business”
and that the “$100,000.00 represented Denise Cable’s 25[ percent] equity
interest in the business as a silent partner.” We decline the Cables’s request
to find that the trial court abused its discretion in making these later rulings.
(Duarte v. Pacific Specialty Ins. Co. (2017) 13 Cal.App.5th 45, 52 [in
considering a trial court’s evidentiary rulings we “ ‘will only interfere with
the lower court’s judgment if [the objecting party] can show that under the
evidence offered, “ ‘no judge could reasonably have made the order that he
did’ ” ’ ”].)
4
The terms of the loan agreement required O’Neill to repay $100,000
with interest at a rate of 10 percent per annum. He agreed to repay the loan
“in consecutive monthly installments of interest only . . . commencing the
month following the execution of this Agreement and continuing until July 1,
2016. With the balance then owing under this Agreement being paid at that
time.”
The agreement stated, “This Agreement may only be modified by a
written instrument executed by both the Borrower and the Lender.” It also
stated, “This Agreement constitutes the entire agreement between the
parties and there are no further items or provisions, either oral or otherwise.”
O’Neill deposited the check on February 17, 2016. He made three
interest-only payments between March and May 2016.
C. Ocean Enterprises Deal Falls Through
By the end of May 2016, O’Neill learned that Kurn had provided
misleading information about the value of Ocean Enterprises and its
profitability. The deal to purchase part of Ocean Enterprises’ business fell
through. O’Neill eventually sued Kurn in June 2018 for failing to repay the
loans that Kurn obtained from O’Neill.
D. Interest-Only Payments
O’Neill did not repay his loan from the Cables by July 1, 2016. He
made interest-only payments between July 2016 and January 2018. In
February 2018, the Cables and O’Neill discussed a plan to repay the loan.
E. February 2018 Agreement to Extend Debt Repayment
O’Neill prepared and executed a second written agreement on February
12, 2018, titled “Debt Repayment Extension Agreement” memorializing the
parties’ agreement to extend the debt repayment period under additional
terms. O’Neill agreed that he owed the Cables “the sum of $100,000.00, said
5
sum being presently due and payable.” In consideration for the Cables’s
“forbearance,” O’Neill agreed to make monthly principal payments of $5,000
plus interest until paid in full, with a full maturity date of October 10, 2019.
He further agreed that if he failed to make any payments “punctually on the
agreed upon extended terms,” the Cables would have “full rights to proceed
for the collection of the entire balance then remaining.”
O’Neill made loan repayments between March and November 2018. He
stopped making payments after November 8, 2018.
F. Litigation
The Cables sued O’Neill in April 2019 for breach of contract, money had
and received, and unjust enrichment. They alleged that O’Neill had breached
the agreement to extend the debt payment by failing to make payments since
November 2018. They later amended their complaint to remove the unjust
enrichment cause of action.
The Cables moved for summary judgment based on O’Neill’s written
discovery in which he admitted that the Cables loaned him $100,000, that he
agreed to repay the $100,000 with interest, that after making some interest-
only payments he entered into an agreement in 2018 to extend the debt
repayments, and that he stopped making payments after November 8, 2018.
O’Neill opposed the motion, contending that he needed additional time
to conduct discovery regarding triable issues of fact and his affirmative
defenses of frustration of purpose, failure to mitigate damages, and equitable
estoppel. He did not dispute that there was a written contract, but he
contended that defenses to breach of contract existed. Although he agreed
that “performance on the contract, namely making loan payments, remains
possible,” he claimed that the “reason and entire basis” for the contract
“namely utilizing the money to acquire Mr. Kurn’s business, Ocean
6
Enterprises, was frustrated by the supervening circumstance of non-
acquisition due to Mr. Kurn’s fraud and unanticipated breach of contract to
repay O’Neill.” He claimed that Kurn had “thwarted” his attempt to return
the Cables’s money. O’Neill contended that the Cables had not responded to
his phone calls about his lawsuit against Kurn and that they had failed to
pay their share of fees and costs to recover money from Kurn.
O’Neill asserted the defense of equitable estoppel, claiming that Denise
Cable had orally agreed to be a silent partner in the business venture and
that she would pay a 25 percent share of expenses related to that business
venture. O’Neill claimed that Denise intended for him to rely on this
agreement when he entered into the initial loan agreement but that she
intended to renege on the agreement if the venture failed. He contended that
he would not have entered into the agreement if he had known that she did
not intend to bear 25 percent of the expenses related to the Kurn transaction.
At O’Neill’s request, the court continued the summary judgment
hearing to allow O’Neill to conduct discovery regarding facts essential to
oppose the motion.
O’Neill submitted a further opposition asserting the same arguments.
As he had previously, he agreed that “it is undisputed that . . . there was a
written contract.” However, he contended that the Cables had omitted facts
surrounding the initial agreement, namely, oral agreements that Denise
Cable would be a 25 percent silent investor in the business venture. O’Neill
contended that triable issues of material fact existed regarding “(1) whether
the agreement between [the Cables] and O’Neill was characterized as a loan
or an investment, (2) the amount of payments made by O’Neill to [the
Cables], and (3) the amount due and owing under the Promissory Note in
light of Denise Cable’s responsibility for partnership losses pursuant to her
7
25 [percent] equity interest and liability.” He contended that his duty to
perform under the contract was discharged by offset, frustration of purpose,
failure to mitigate, and equitable estoppel.
O’Neill did not dispute that he failed to repay the initial loan by July 1,
2016. Nor did he dispute that he entered into an agreement to extend the
debt repayment schedule in 2018, with additional terms. He did not dispute
that he had made only 12 of the payments of principal and interest required
by the debt extension agreement.
In reply, the Cables pointed out that O’Neill admitted in discovery
responses that the Cables loaned him $100,000 on February 16, 2016, which
he did not repay by July 16, 2016, and that his opposition was essentially
silent about the subsequent agreement to extend the debt payment. They
argued that there was no genuine dispute about the amounts that O’Neill
had repaid.
The Cables argued that any breach of a separate oral agreement that
Denise would reimburse 25 percent of O’Neill’s expenses related to the Kurn
litigation was immaterial to the Cables’s breach of contract action because
this issue was outside of the pleadings and was barred by the statute of
limitations and the statute of frauds. They argued that a frustration of
purpose defense was not properly pled as an affirmative defense and, in any
event, O’Neill admitted that performance of the contract remains possible
and reaffirmed his loan obligation with the agreement to extend the debt
repayment after the business deal fell through. The Cables argued that
mitigation of damages does not apply to a claim for breach of contract, where
damages are fixed by the agreement. Finally, they argued that the claim for
equitable estoppel was unintelligible and that any attempt to modify the
8
initial agreement or the agreement to extend the debt payments is barred by
the parol evidence rule.
G. Ruling on Summary Judgment Motion
After considering the evidence and arguments of counsel, the trial court
took the matter under submission. The court subsequently issued a ruling
confirming its tentative ruling and granting summary judgment. The court
concluded that the undisputed evidence showed that O’Neill entered into an
agreement to repay a $100,000 loan under specified terms. The court noted
that the short agreement made no reference to any other investment
agreement. The agreement stated that it could be modified only by a
subsequent written agreement between the parties and it included an
integration clause. The court concluded that no provision of the agreement
entitled O’Neill to an offset for legal fees and costs related to the Kurn
litigation and that the outstanding amount owed was essentially undisputed.
The court rejected the defense of equitable estoppel, observing that
O’Neill could not have relied on a separate oral agreement because the loan
agreement was fully integrated and could be amended only by written
agreement. The court commented that any separate agreement with Denise
Cable about litigation expenses related to the Kurn deal would not release
O’Neill from his obligation to repay the loan under the terms of the
agreement.
The court rejected the defense of failure to mitigate damages as
inapplicable to a breach of contract action where damages are fixed by the
note. It also rejected the defense of offset as inapplicable because O’Neill did
not have a judgment against the Cables.
Finally, the court noted that O’Neill had not pled the affirmative
defense of frustration of purpose. The court further commented that, in any
9
event, the agreement to repay the loan was not conditioned on the successful
purchase of the Ocean Enterprises venture and the Cables had not
contractually agreed to assume the risk of any failed venture.
The court entered judgment in favor of the Cables and awarded
damages in the amount of $69,085.30. The court noted that the judgment
may be augmented with recoverable costs as allowed by law and attorney fees
pursuant to contract, upon proper motion.3
DISCUSSION
A. General Principles Governing Review of Summary Judgment
Summary judgment is properly granted if the record demonstrates that
there is no triable issue of material fact such that the moving party is
entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)
In reviewing an appeal from a summary judgment, “ ‘we examine the
facts presented to the trial court and determine their effect as a matter of
law.’ [Citation.] We review the entire record, ‘considering all the evidence
set forth in the moving and opposition papers except that to which objections
have been made and sustained.’ [Citation.] Evidence presented in opposition
to summary judgment is liberally construed, with any doubts about the
evidence resolved in favor of the party opposing the motion.” (Regents of
University of California v. Superior Court (2018) 4 Cal.5th 607, 618.) We also
independently interpret written instruments where the interpretation does
not turn on the credibility of extrinsic evidence. (Parsons v. Bristol
Development Co. (1965) 62 Cal.2d 861, 865.)
3 The court’s order denying the Cables’s request for attorney fees is the
subject of a separate appeal decided concurrently with this opinion. (Cable
et al. v O’Neill (July 7, 2022, D079096) [nonpub. opn.].)
10
However, “our review is governed by a fundamental principle of
appellate procedure, namely, that ‘ “[a] judgment or order of the lower court
is presumed correct,” ’ and thus, ‘ “error must be affirmatively shown.” ’
[Citation.] Under this principle, [the appellant] bear[s] the burden of
establishing error on appeal, even though [the respondent] had the burden of
proving its right to summary judgment before the trial court. [Citation.] For
this reason, our review is limited to contentions adequately raised in the
[appellant’s] briefs.” (Paslay v. State Farm General Ins. Co. (2016) 248
Cal.App.4th 639, 644–645; Arnold v. Dignity Health (2020) 53 Cal.App.5th
412, 423.)
B. O’Neill’s Deficient Brief Forfeits His Claims on Appeal
O’Neill’s opening brief is deficient in a number of respects. The legal
argument section includes a single heading stating that the trial court
“ignored multiple triable issues of fact and misapplied the parol evidence
rule . . . as well as the fraud exceptions to the parol[ ] evidence rule.”
(Bolding & capitalization omitted.) After quoting the court’s minute order at
length, O’Neill states that the court did not discuss his affirmative defense
that his consent and signature on “the fictional [p]romissory [n]ote and later,
related, forbearance agreement” was obtained by fraud “rendering his
consent and the agreements voidable at his election.” However, he provides
no citation to the record to support a claim that his consent to either
agreement was obtained by fraud. An appellant must cite to the record to
direct the reviewing court to the pertinent evidence or other matters in the
record that demonstrate reversible error. (Cal. Rules of Court, rule
8.204(a)(1)(C).) “ ‘Issues do not have a life of their own: if they are not raised
or supported by [substantive] argument or citation to authority, we consider
11
the issues waived.’ ” (Holden v. City of San Diego (2019) 43 Cal.App.5th 404,
418 (Holden).)
O’Neill also fails to demonstrate that he properly raised the argument
that consent was obtained by fraud in the trial court. To the contrary, the
record shows that he did not address this affirmative defense in either of his
opposition briefs to the summary judgment motion. O’Neill’s counsel first
raised the issue during oral arguments at the hearing on the motion.
The trial court was not required to consider this issue because it was
not fully developed or factually presented in O’Neill’s trial court briefs in a
manner that would permit the Cables to provide a meaningful response. (See
American Continental Ins. Co. v. C & Z Timber Co. (1987) 195 Cal.App.3d
1271, 1281 [“possible theories that were not fully developed or factually
presented to the trial court cannot create a ‘triable issue’ ” for summary
judgment].) As a general rule of motion practice, courts ordinarily do not
consider new issues and evidence presented in reply papers because it
deprives the opposing party of an opportunity to counter the argument. (Jay
v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537–1538.) For the same reason,
as a matter of fairness, courts may decline to consider issues raised for the
first time at oral argument. (California Redevelopment Assn. v. Motosantos
(2013) 212 Cal.App.4th 1457, 1500.) Because O’Neill did not adequately raise
this issue in the trial court, he is precluded from raising the issue on appeal.
(Holden, supra, 43 Cal.App.5th at p. 419.)
O’Neill also recites the court’s evidentiary rulings and observes that the
rulings do not refer to the parol evidence rule, but “respectfully suggests, that
it is clear that the [c]ourt improperly is using [the parol evidence rule] to
exclude all of the triable issues of fact raised by [O’Neill], and thereby
impermissibly granting summary judgment in spite of them.”
12
O’Neill describes, over several pages, general legal principles related to
the parol evidence rule and exceptions to this rule based on fraud. He does
not, however, analyze how these principles apply, if at all, to the facts of this
case with proper citations to the record. Instead, he makes a broad
conclusory statement that the court’s order granting summary judgment “had
the practical effect of ignoring and impermissibly barring any and all
evidence despite the authority cited above, and thereby prevented [O’Neill]
from proffering his copious evidence proffered in his oppositions to the motion
for summary judgment, which would have clearly established or at least
raised triable issues of fact necessitating a denial of the motion, and provided
[O’Neill] with his right to have those triable issues of fact tried before a jury.”
O’Neill does not explain what evidence was purportedly excluded. He
does not analyze whether the court abused its discretion in its evidentiary
rulings, and he does not demonstrate prejudice. Instead, he apparently
expects this court to comb through the record or match up the evidence
discussed in the factual history section of his brief to the legal principles
listed and then analyze whether there is any support for his contention that
the court should have considered parole evidence based on fraudulent
inducement. We decline to do so. “[A]n appellant must supply the reviewing
court with some cogent argument supported by legal analysis and citation to
the record. Rather than scour the record unguided, we may decide that the
appellant has forfeited a point urged on appeal when it is not supported by
accurate citations to the record.” (WFG National Title Ins. Co. v. Wells Fargo
Bank, N.A. (2020) 51 Cal.App.5th 881, 894; Cahill v. San Diego Gas &
Electric Co. (2011) 194 Cal.App.4th 939, 956 [“ ‘We are not bound to develop
appellants’ arguments for them’ ”]; Palm Springs Villas II Homeowners Assn.,
Inc. v. Parth (2016) 248 Cal.App.4th 268, 287, citing Del Real v. City of
13
Riverside (2002) 95 Cal.App.4th 761, 768 [it is not the reviewing court’s
responsibility to search the appellate record for facts or to conduct legal
research in search of authority to support the contentions on appeal].)
C. Summary Judgment Was Properly Granted
Even if we were to overlook O’Neill’s forfeiture based on his deficient
brief, the record demonstrates that the trial court properly granted summary
judgment because undisputed evidence establishes that the Cables are
entitled to judgment based on breach of contract. The elements of a breach of
contract action are “(1) the existence of the contract, (2) plaintiff's
performance or excuse for nonperformance, (3) defendant’s breach, and (4)
the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman
(2011) 51 Cal.4th 811, 821.)4
O’Neill does not dispute the existence of a written contract. Further,
O’Neill has admitted in both discovery and in his pleadings that the Cables
loaned him $100,000, that he agreed to repay the loan, that he entered into a
second agreement to extend the debt payment, and that he has not made any
payments on the loan after November 8, 2018. (Western Bagel Co., Inc. v.
Superior Court (2021) 66 Cal.App.5th 649, 655, fn. 2 [a reviewing court may
use statements and arguments in the parties’ filings as “ ‘ “reliable
indications of a party’s position” ’ ” and “ ‘ “admissions against the party” ’ ”].)
O’Neill’s claim that a dispute exists about whether the money was a
“loan” or instead, an “investment” is belied by the language of the agreement
4 The Cables’s second cause of action is a common count for money had
and received, which is an alternative and simplified form of pleading
indebtedness. The trial court did not reach this alternative cause of action
because the court determined that the Cables were entitled to summary
judgment based on the breach of contract cause of action. We need not
address the alternative theory because we conclude that summary judgment
was properly granted based on the breach of contract cause of action.
14
that O’Neill himself prepared. “The interpretation of a contract is a judicial
function. [Citation.] In engaging in this function, the trial court ‘give[s]
effect to the mutual intention of the parties as it existed’ at the time the
contract was executed. (Civ. Code, § 1636.) Ordinarily, the objective intent of
the contracting parties is a legal question determined solely by reference to
the contract’s terms. (Civ. Code, § 1639 [‘[w]hen a contract is reduced to
writing, the intention of the parties is to be ascertained from the writing
alone, if possible . . .’]; Civ. Code, § 1638 [the ‘language of a contract is to
govern its interpretation . . .’].)” (Wolf v. Walt Disney Pictures & Television
(2008) 162 Cal.App.4th 1107, 1125–1126.) Extrinsic evidence cannot be used
to vary or contradict the unambiguous terms of a written, integrated contract
but may be admissible to aid in the interpretation of an ambiguous term.
(Ibid; Civ. Code, § 1856, subd. (a) [“Terms set forth in a writing intended by
the parties as a final expression of their agreement with respect to the terms
included therein may not be contradicted by evidence of a prior agreement or
of a contemporaneous oral agreement”].) Even if there is uncertainty, “the
language of a contract should be interpreted most strongly against the party
who caused the uncertainty to exist.” (Civ. Code, § 1654; Victoria v. Superior
Court (1985) 40 Cal.3d 734, 739 [“ambiguities in standard form contracts are
to be construed against the drafter”].)
The loan agreement states that the $100,000 that the Cables provided
to O’Neill was a “loan” that he promised to repay with interest. The
agreement includes an integration clause stating that the agreement
“constitutes the entire agreement between parties and there are no further
items or provisions, either oral or otherwise,” and further states that the
agreement “may only be modified by a written instrument executed by both
the Borrower and the Lender,” There is no ambiguity in this agreement that
15
would require looking to extrinsic evidence to understand the intention of the
parties.
In addition, it is worth noting that in the e-mail attaching the loan
agreement, O’Neill stated that although the money was going to Kurn, “this
loan and any other subsequent are to me and me alone” (Italics added.) The
e-mail suggests that the Cables had not yet committed to going forward with
an investment. O’Neill said that he was selling a home “so I will be sure to
keep up the payment schedule and have the principal ready for you should
you decide not to engage in our scuba venture.” (Italics added.) O’Neill refers
in his briefing on appeal to a portion of this e-mail that uses the word
“investment,” but he omits the context. The word appears in a separate
paragraph that begins by stating, “Also, if we do go forward know that I am
in the process of securing a 2 million dollar life insurance policy.” It then
states, “If we do go forward and something should happen to me Denise is
going to be listed as a beneficiary on my policy which I will be sure to have it
more than cover her investment amount.” (Italics added.) The context of the
e-mail indicates that the $100,000 was a loan, and that O’Neill was
considering arrangements to protect a potential future investment. As the
trial court appropriately determined, there is no evidence of an investment
agreement and any oral agreement for Denise to pay 25 percent of expenses
in connection with the potential business venture would not release O’Neill
from his obligation to repay the loan under the terms of the original loan
agreement and the extension agreement, both of which he drafted.
Even if we were to accept O’Neill’s claim that Denise misled him to
believe that the original loan agreement was a “fiction” required by James
and/or to obscure from Kurn the fact that Denise had agreed to be a “silent
investor,” a contract obtained by fraud is voidable, not void. A party who
16
believes that he has been fraudulently induced to enter a contract must
rescind. (Village Northridge Homeowners Assn. v. State Farm Fire Casualty
Co. (2010) 50 Cal.4th 913, 921.)
O’Neill did not rescind the contract. Rather, he affirmed the loan by
making payments required by the terms of the loan agreement and by
preparing and executing the extension agreement in 2018, after the deal with
Kurn had fallen through.
O’Neill acknowledged in the 2018 agreement that he “presently owes
the creditors the sum of $100,000.00, said sum being presently due and
payable,” and in consideration of their “forbearance” he agreed “to pay said
debt on the extended terms” under certain conditions. This agreement
ratified and waived any claim of fraud related to the first agreement.
(Oakland Raiders v. Oakland-Alameda County Coliseum, Inc. (2006)
144 Cal.App.4th 1175, 1192–1193 [“ ‘ “where a party, with full knowledge of
all the material facts, does an act which indicates his intention to stand to
the contract, and waive all right of action for fraud, he cannot maintain an
action for the original wrong practiced upon him. Where the affirmance of the
contract is equivalent to a ratification, all right of action is gone. . . . [Thus]
where a party, with full knowledge, declines to repudiate a transaction
known to him to be fraudulent, and fully and expressly ratifies it, he can
neither rescind nor maintain an action for damages” ’ ”]; Schied v. Bodinson
Mfg. Co. (1947) 79 Cal.App.2d 134, 142–143 [if the party purportedly
defrauded “enters, after discovery of the fraud, into new arrangements or
engagements concerning the subject-matter of the contract to which the fraud
applies, he is deemed to have waived any claim for damages on account of the
fraud” (italics omitted)].)
17
For all of these reasons, summary judgment in favor of the Cables is
appropriate.
DISPOSITION
The judgment is affirmed. Respondents are entitled to recover costs on
appeal.
AARON, J.
WE CONCUR:
HUFFMAN, Acting P. J.
O’ROURKE, J.
18