Waud v. Dawson-Dixon

1

ERNEST P. WAUD III et al., Plaintiffs and Respondents v. MARILYN J. DAWSON-DIXON, Defendant and Appellant,

G063304

California Court of Appeals, Fourth District, Third Division

June 5, 2024

NOT TO BE PUBLISHED

Appeal from a judgment of the Superior Court of Riverside County No. CVPS2100614 Godofredo Magno, Judge.

Point Law Group and Troy M. Mueller for Defendant and Appellant.

Sauer & Wagner, Robert S. Chapman and Gregory P. Barchie for Plaintiffs and Respondents.

OPINION

GOODING, J.

Respondents Ernest P. Waud III and Chase Steer are neighbors and friends who share an interest in show horses. In 2019, Steer approached appellant Marilyn J Dawson-Dixon about purchasing a horse she owned named Peninsula Vertigo (Vertigo). Dawson-Dixon declined to sell the horse but agreed to lease it to Steer for one year. The deal was struck, and Waud paid the lease amount. Over the next few months, Dawson-Dixon offered Waud and Steer investment opportunities in two show horses, Buckle Up and Classic Lad (Classic), in which she claimed to hold investment interests, and another show horse, Quibelle, in which she told Waud she would buy an interest. Waud agreed to purchase an investment interest in each of the three horses.

Acting as Waud's agent and fiduciary, Dawson-Dixon paid $250,000 to purchase Buckle Up and then sold Waud a 50 percent interest in the horse for $350,000, plus a commission of $26,250. She later sold Waud her remaining 50 percent interest in Buckle Up for $400,000. Acting as Waud's agent and fiduciary, Dawson-Dixon purchased Classic for $66,000 and then sold Waud a 75 percent interest in the horse for $180,000. The transaction with Quibelle was a little different. Waud told Dawson-Dixon he did not want to purchase a 100 percent interest in Quibelle. So, acting as Waud's agent and fiduciary, Dawson-Dixon purchased all rights to Quibelle for $126,900 (which Waud paid), but told Waud he had acquired only 55 percent of Quibelle for that sum and she had acquired the remaining 45 percent.

The parties agreed Dawson-Dixon was responsible for providing care and training to all four horses and Steer and Waud were responsible for paying the expenses of the care and training. Over the next few years, Waud paid Dawson-Dixon more than $600,000 in care and training costs.

The parties ultimately had a falling out. Steer and Waud sued Dawson-Dixon, who in turn filed a cross-complaint against them. A jury found for Steer and Waud on all their claims but awarded damages only to Waud, who had made all the payments to Dawson-Dixon. The jury awarded Waud $900,000 in damages. The jury found against Dawson-Dixon on all her claims.

Dawson-Dixon appeals the judgment on several grounds. We conclude the trial court erred by refusing to permit Dawson-Dixon's horse valuation expert, who had COVID-19 and could not attend trial in person, to testify remotely. We therefore reverse for a limited trial on damages. We find no merit in the remainder of Dawson-Dixon's grounds for appeal, including her assertion that the damages awarded to Waud are not supported by substantial evidence.

FACTUAL HISTORY

In 2018, Steer contacted Dawson-Dixon to inquire about purchasing her horse, Vertigo. Dawson-Dixon did not want to sell Vertigo but agreed to lease the horse to Steer for one year for $120,000. Pursuant to the terms of the lease agreement, Vertigo would remain in Dawson-Dixon's care for training during the period of the lease, and Steer would reimburse Dawson-Dixon for the costs of the care and training. The lease was later renewed for another year on the same terms. Waud, a close friend and supporter of Steer's interest in show horses, paid all the lease fees and expenses for Vertigo.

Shortly after Steer leased Vertigo, Dawson-Dixon told him of a possible investment opportunity in Buckle Up. Dawson-Dixon told Steer she owned 50 percent of Buckle Up and a co-investor owned the other 50 percent. Steer relayed the information to Waud and, after speaking directly with Dawson-Dixon, Waud decided to purchase the 50 percent interest in Buckle Up that Dawson-Dixon said was owned by her co-investor. Dawson-Dixon told Waud the 50 percent interest would cost $350,000. In fact, Dawson-Dixon's representation that she owned 50 percent of Buckle Up was false; Dawson-Dixon owned only a 30 percent interest in Buckle Up. The other 70 percent was owned by Anne Marie Patmore.

Dawson-Dixon told Patmore someone wanted to purchase a 100 percent interest in Buckle Up for $250,000 and assured Patmore the $250,000 offer was a "very fair" price. Patmore agreed to sell her 70 percent share in Buckle Up for 70 percent of the $250,000 purchase price-i.e., $175,000.

In addition to charging Waud $350,000 for a 50 percent interest in Buckle Up, Dawson-Dixon charged him a commission of $26,250 and $20,000 in expenses. Waud paid all three amounts.^[1] After completing the sale, Dawson-Dixon assumed responsibility for Buckle Up's care and training and billed Steer and Waud for the expenses she claimed to incur; Waud paid the bills.

Following the Buckle Up transaction, Dawson-Dixon approached Steer and Waud about investing in another horse, Classic. She said they could buy 75 percent of Classic for $180,000 and she would own the other 25 percent. Waud agreed to the purchase and Dawson-Dixon arranged to buy Classic. Despite her representation to Waud and Steer that the purchase price was $180,000, she bought 100 percent of Classic for only 60,000 euros-the equivalent of $66,000. On May 9, 2019, Waud transferred $182,549 to Dawson-Dixon for his purchase of a 75 percent ownership interest in Classic.

Dawson-Dixon then offered to sell her half of Buckle Up to Waud for $400,000. Waud accepted her offer. They agreed Waud would pay Dawson-Dixon $350,000 in cash and the remainder via a $50,000 credit by transferring a 25 percent interest in Classic to Dawson-Dixon. Including the $396,250 Waud paid for his initial 50 percent interest in Buckle Up, the $350,000 cash he paid for the remaining 50 percent, and the $50,000 credit he received for transferring a portion of his interest in Classic, Waud paid Dawson-Dixon a total of $796,250 to acquire a 100 percent interest in Buckle Up.

In the fall of 2019, Steer traveled with Dawson-Dixon to look at more horses for possible investment by Waud. Steer decided on a mare named Quibelle. Waud agreed to purchase an interest in Quibelle but told Dawson-Dixon he did not want a 100 percent interest. Dawson-Dixon proposed that Waud buy only a 55 percent interest for $126,900 and she would purchase the other 45 percent. Waud agreed and paid Dawson-Dixon the $126,900 along with a 15 percent commission ($19,487) on the transaction. As with the other horses, Quibelle remained under Dawson-Dixon's care following the purchase, with Waud paying Dawson-Dixon for all the expenses of the mare's care and training. In fact, Dawson-Dixon used Waud's $126,900 to purchase 100 percent of Quibelle, and though she contributed nothing to the purchase price, she continued to claim she owned a 45 percent interest in the horse. Ultimately, Quibelle was bred with Vertigo, and three embryos resulting from that breeding (Foals) were implanted in host mares. Thereafter, Quibelle died following an unsuccessful surgery.

On June 24, 2019, at Dawson-Dixon's request, Waud paid Dawson-Dixon $100,000 in expenses related to the care and upkeep of the horses. Dawson-Dixon did not provide any backup documentation for the requested expenses. Later in 2019, Dawson-Dixon asked Waud to pay her a management fee of $10,000 per month to care for and oversee the investment horses. Waud agreed, and in August 2019, Waud paid Dawson-Dixon $120,000 for a year's worth of management fees. Dawson-Dixon later informed Waud she considered the $120,000 in fees to be retroactive. Over the period of their dealings, Waud paid Dawson-Dixon more than $659,000 in management fees and expenses.

At some point, the parties quarreled for reasons unrelated to this appeal, and Waud and Steer filed a complaint against Dawson-Dixon for fraud, breach of fiduciary duty, and breach of contract arising out of the purchase and care of the horses. They also sought equitable relief: Waud and Steer sought partition of the ownership interests in Vertigo, Classic, and the Foals and an accounting of the expenses paid to Dawson-Dixon. Dawson-Dixon responded with a cross-complaint. She asserted two breach of contract claims-a first cause of action against Waud for failing to pay her $120,000 management fee for 2020 and her management fees and expenses for 2021 and 2022, and a second cause of action against both Waud and Steer, based on a claimed promise by Steer to pay her 2020 management fees if she came to California. She also asserted a fraud claim against Steer relating to his alleged attempt to obtain ownership of Vertigo. Dawson-Dixon also brought a claim for declaratory relief regarding her ownership interest in Vertigo under Canadian law.^[2]

The non-equitable claims of both parties proceeded to a jury trial, and the jury found against Dawson-Dixon on her claims. It found in favor of Waud on his claims against Dawson-Dixon for fraud, breach of fiduciary duty, and breach of contract and found Dawson-Dixon acted with malice, fraud, or oppression on the fraud and breach of fiduciary duty claims. The jury found against Dawson-Dixon on Steer's claim for breach of fiduciary duty, and also found Dawson-Dixon acted with malice, fraud, or oppression on that claim. It found in Dawson-Dixon's favor on only one claim: Steer's claim against her for breach of contract. The jury awarded $900,000 in damages to Waud and no damages to Steer.

Following a second phase of trial on punitive damages, the jury awarded no...