Zte Elec.S Corp. Inc v. Properties

ZTE ELECTRONICS CORP., INC., Plaintiff and Appellant,

v.AMOROSO PROPERTIES, et al., Defendants and Respondents.

No. B215598

No. BC313921

Court Of Appeal Of The State Of California

Second Appellate District

Division Five

Filed July 20, 2010

Law Offices of Shun C. Chen and Shun C. Chen for Plaintiff and Appellant.

Law Office of Freeman, Freeman & Smiley and Joseph Mudd for Defendants and Respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

APPEAL from a judgment of the Superior Court of Los Angeles County, Rex Heeseman, Judge. Affirmed.

I. INTRODUCTION

TURNER, J.

Plaintiff, ZTE Electronics Corp., Inc., sought to recover from third parties― defendants, Amoroso Properties and James Amoroso―on an unsatisfied default judgment against Audio Wood Products, Inc. Plaintiff proceeded in part on a claim for conspiracy to effect fraudulent conveyances in violation of the Uniform Fraudulent Transfer Act. (Civ. Code, §§ 3439 et seq.) Plaintiff also asserted a creditor's suit against defendant Amoroso Properties under Code of Civil Procedure section 708.210. The trial court found in defendants' favor. Plaintiff appeals from the judgment. We affirm.

II. BACKGROUND

Amoroso Properties was a partnership, now dissolved. The general partners were Jack Amoroso, Sr. and his two sons, Jack Edward Amoroso, Jr. and defendant James Amoroso. Jack Sr. is deceased.¹ Amoroso Properties owned and operated the Glenmore Hotel on Catalina Island. From 1998 to 2003, Jack Jr. managed the hotel. Jack Jr. also owned an 80 percent interest in Audio Wood Products, Inc., the judgment debtor. Another brother, Michael Amoroso, owned a 20 percent interest in Audio Wood Products, Inc. Jack Jr. was the president and chief executive officer of Audio Wood Products, Inc. Hence, Jack Jr. managed both the hotel and Audio Wood Products, Inc. Audio Wood Products, Inc. is no longer in business. By early 1998, the Amoroso Properties partnership had been dissolved by court order and Jack Jr. was required to sell the hotel. Jack Jr. caused Audio Wood Products, Inc., then a profitable concern, to lend Amoroso Properties and the hotel $63,000. There was a 20-year history of Audio Wood Products, Inc. loaning money to Amoroso Properties; the loans were always paid back. The loan from Audio Wood Products, Inc. was to be used to prepare the hotel for sale. By December 31, 1999, the loaned amount had increased to a total of $263,000, and by February 29, 2000, to $297,000. By December 31, 2001, Amoroso Properties had reduced its debt to Audio Wood Products, Inc. to $60,000. Jack Jr. testified the loans were evidenced by promissory notes that carried interest; however, no such notes were in evidence at trial.

Plaintiff sold goods to Audio Wood Products, Inc. Audio Wood Products, Inc. first purchased products from plaintiff beginning in 2000. The terms of the arrangement between Audio Wood Products, Inc. and plaintiff were cash on delivery. However, Audio Wood Products, Inc. became financially unstable in 2001 after its primary customer, Mitsubishi, abruptly stopped making purchases. Without the cash flow from Mitsubishi, Audio Wood Products, Inc. was unable to pay its bills. Beginning in March or April 2001, plaintiff began experiencing problems collecting payment from Audio Wood Products, Inc. Eventually, in May or June 2001, plaintiff ceased shipping products to Audio Wood Products, Inc. When Audio Wood Products, Inc. ceased business operations, it was in debt to plaintiff as well as others. As part of its attempt to repay its creditors, Audio Wood Products, Inc. sought repayment of the loan balance from Amoroso Properties. Counsel for the two parties negotiated a discounted debt in settlement. Amoroso Properties paid the discounted amount to Audio Wood Products, Inc. On January 31, 2002, Audio Wood Products, Inc. executed a general assignment for the benefit of creditors and turned its financial records over to San Diego Wholesale Credit Association.

On September 18, 2002, Jack Jr. personally filed for relief under Chapter 7 of the United States Bankruptcy Code. In an adversary proceeding in the United States Bankruptcy Court for the Central District of California, plaintiff sought unsuccessfully to hold Jack Jr. personally liable for the debt of Audio Wood Products, Inc. (In re John Edward Amoroso, Jr.; ZTE Electronics, Inc. v. John Edward Amoroso, Jr. (Bankr. 2004) case No. SA 02-16819 RA).) The decision in Jack Jr.'s favor was affirmed by the Ninth Circuit Court of Appeals. (In re John Edward Amoroso, Jr.; ZTE Electronics, Inc. v. John Edward Amoroso, Jr. (Bankr. 9th Cir. 2007) case No. CC-04-01207-PaBK.)

Plaintiff brought an action against Audio Wood Products, Inc. to recover the unpaid cost of products delivered. Plaintiff obtained an October 31, 2003 default judgment against Audio Wood Products, Inc. for more than $200,000. No part of that judgment has been paid.

Plaintiff filed the present action on April 20, 2004. The operative pleading is a second amended complaint. Plaintiff alleged it had an unsatisfied judgment against Audio Wood Products, Inc. In its first cause of action, plaintiff alleged the defendants had conspired to and engaged in fraudulent conveyances with the intent to hinder, delay or defraud it. The conspiracy allegation was set forth as a separate, second cause of action. It is well settled, however, that civil conspiracy is not an independent tort; there is no separate cause of action for civil conspiracy. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511; Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 44; Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, 631, superseded by statute on other grounds as stated in (1991) 54 Cal.3d 723, 733, & fn. 6; Mox Incorporated v. Woods (1927) 202 Cal. 675, 677; Herron v. Hughes (1864) 25 Cal. 555, 560; RichardB. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 574; Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 82.) In its third cause of action, plaintiff asserted a creditor's claim to recover money in defendants' possession or control that belonged or was owed to Audio Wood Products, Inc. (Code Civ. Proc., § 708.210.)

The case was tried by the court without a jury. The trial court found in defendants' favor. On appeal, plaintiff contends: the judgment is reversible per se because the trial court refused to issue a statement of decision; the trial committed evidentiary errors; the trial court erred in applying collateral estoppel; the trial court employed a wholly erroneous standard with respect to the third cause of action; and there was substantial evidence of fraudulent conveyance.

III. DISCUSSION

A. Statement of Decision

Plaintiff argues the judgment is reversible per se because the trial court "refused" to issue a statement of decision. (See Carpenter v. Pacific Mut. Life Ins. Co. (1937) 10 Cal.2d 307, 326 [failure to issue timely requested statement of decision is reversible error]; In re Estate of Pendell (1932) 216 Cal. 384, 386; Gruendl v. Oewel Partnership, Inc. (1997) 55 Cal.App.4th 654, 659-660.) Code of Civil Procedure section 632 states in part: "In superior courts, upon the trial of a question of fact by the court, written findings of fact and conclusions of law shall not be required. The court shall issue a statement of decision.... [¶] The statement of decision shall be in writing, unless the parties appearing at trial agree otherwise; however, when the trial is concluded within one calendar day or in less than 8 hours over more than one day, the statement of decision may be made orally on the record in the presence of the parties." We conclude plaintiff forfeited its argument; and even if not forfeited, plaintiff has not shown that the trial consumed more than eight hours over more than one day.

In the trial court, on December 22, 2008, plaintiff filed a written request for a statement of decision. Also on December 22, at the outset of the trial, the trial court commented: "I notice one of you requested a statement of decision. What I like to do is just announce it, and the court reporter can write it down, but we'll cross that bridge when we get there...." The trial commenced on December 22, 2008, at 1:30 p.m. Two witnesses testified that afternoon. Evidence continued to be taken the following day, December 23. Two witnesses testified during the morning session. Following a noon recess, one additional witness testified. The attorneys briefly presented argument with respect to trial exhibits. Final arguments commenced on December 31, 2008, from 9:45 a.m. to 11:45 a.m. and continued on January 30, 2009, from 1:40 p.m. to 2:21 p.m.

The trial court orally announced its decision on the record. The following colloquy ensued: "[Defense counsel, Joseph Mudd]: Do you want me to draft a formaljudgment in accordance with--[¶] The Court: Well, yeah, I don't want extensive findings and conclusions of law or anything like that. I think my oral comments constitute that. [¶] [Plaintiffs counsel, Shun Chen]: I think we would ask for a statement of decision. [¶] The Court: I think the statement of decision I have made orally at this proceeding and in previous proceedings. [¶] I don't see―under the statute, I have the right to make it orally on the record, which I have done today and previously; and I don't see the need to do a written statement of decision. [¶] Okay? [¶] Mr. Chen: All right."

We reject plaintiff's reversible error argument for two reasons. First, plaintiff acquiesced in the trial court's statement that no written statement of decision was required. Plaintiffs counsel did not disagree with the trial court's conclusion that under Code of Civil Procedure section 632 an oral statement of decision was permitted. Plaintiff has forfeited the argument. (Whittington v. McKinney (1991) 234 Cal.App.3d 123, 129-130; see Martinez v. County of Tulare (1987) 190 Cal.App.3d 1430, 1434-1435; University of San Francisco Faculty Assn. v. University of San Francisco ...