Opinion
F071785
10-03-2017
CENTRAL VALLEY YOUNG MEN'S CHRISTIAN ASSOCIATION, INC., Plaintiff, Cross-defendant and Respondent, v. THE SEQUOIA LAKE CONFERENCE OF YOUNG MEN'S CHRISTIAN ASSOCIATIONS, Defendant, Cross-complainant and Appellant.
Sagaser, Watkins & Wieland, Howard A. Sagaser, William M. Woolman and Christopher M. Rusca for Defendants, Cross-complainants and Appellants. Whelan Law Group, Walter W. Whelan and Lucas C. Whelan; Dowling Aaron, Stephanie Hamilton Borchers and Trevor P. Goossen for Plaintiff, Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 10CECG00746)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Mark W. Snauffer, Judge. Sagaser, Watkins & Wieland, Howard A. Sagaser, William M. Woolman and Christopher M. Rusca for Defendants, Cross-complainants and Appellants. Whelan Law Group, Walter W. Whelan and Lucas C. Whelan; Dowling Aaron, Stephanie Hamilton Borchers and Trevor P. Goossen for Plaintiff, Cross-defendant and Respondent.
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Plaintiff, Central Valley Young Men's Christian Association, Inc. (now known as Central Valley Christian Camping, Incorporated; herein Central Valley) was a member of defendant, Sequoia Lake Conference of Young Men's Christian Associations (now known as Sequoia Lake Conference, a California nonprofit corporation; herein SLC). Central Valley operated camps on real property owned by SLC. SLC removed Central Valley as a member after Central Valley failed to pay its annual conference fees for two years and lost its charter with the national Young Men's Christian Association (YMCA) organization. Central Valley sued SLC to establish that it held an equitable interest in the real property, for reinstatement of its membership in SLC, for an injunction preventing SLC from interfering with its use of the camps it traditionally operated on SLC's property, and for damages for unjust enrichment. SLC cross-complained for payment of the unpaid conference fees and three other debts.
The jury found in SLC's favor on two of the four debts alleged in the cross-complaint. It found Central Valley was not entitled to damages for unjust enrichment. Central Valley was, however, wrongfully excluded from membership in SLC and, as a member of a joint venture with SLC and others, was entitled to use of the camp property. The trial court had concluded prior to trial that Central Valley did not hold an equitable possessory interest in SLC's property, but it entered an injunction, based on the jury's findings regarding the joint venture, restraining SLC from interfering with Central Valley's right to possess and operate two of the camps on SLC's property.
SLC challenges the sufficiency of the evidence to support the judgment against it. We find substantial evidence supports the judgment, but certain language in the judgment requires clarification. We therefore remand for modification of the judgment in accordance with this opinion.
FACTUAL AND PROCEDURAL BACKGROUND
SLC was formed in 1922. It was made up of four constituent members: YMCA of the City of Fresno, YMCA of the County of Fresno, Kings County YMCA and Tulare County YMCA. Its expressed purpose was "the improvement of the spiritual, moral, social and physical condition of boys and men, and to furnish them special facilities for physical recreation and pleasure and for education and religious development, and, for that purpose to own and possess such real estate, buildings, improvements and personal property as may be necessary or proper for such purposes." Shortly after its formation, SLC entered into an agreement with the Hume family and purchased from it approximately 640 acres of land in the Sierra Nevada Mountains, consisting of Sequoia Lake and the surrounding land. SLC later acquired adjacent parcels, bringing its acreage to 800. Five campgrounds were built on the property over 60 years ago. Camp Gaines and Camp Sequoia were built by YMCA of the County of Fresno and YMCA of the City of Fresno, respectively. Title to the real property is held by SLC.
In the 1960's, YMCA of the City of Fresno and YMCA of the County of Fresno merged and formed Central Valley. Thereafter, there were three members of SLC; each member appointed four representatives to the SLC board of trustees, for a total of 12 trustees.
SLC's main function was to maintain the common areas of the Sequoia Lake property, including the lake, forest, dam, roads, and water and septic systems. The members of SLC operated the camping programs and maintained their individual camps. The members paid the common area expenses by paying conference fees to SLC.
Historically, representatives of the three members met annually and approved the prior year's activities of the SLC board and empowered it to operate on behalf of the members for another year. They determined how the camps would be operated and the amount of conference fees each member would pay in connection with its operation of a camp or camps. The conference fees to be paid were calculated by preparing a budget for SLC, based on the total of the common area expenses and other expenses it was anticipated SLC would incur in the coming year, then dividing the total by five. The operator of each camp was responsible for paying one-fifth of the total amount as conference fees. SLC relied on the conference fees to pay its operating expenses.
Traditionally, Central Valley operated Camp Gaines and Camp Sequoia. Tulare County YMCA operated Camp Tulequoia, until Tulare County YMCA closed and turned Camp Tulequoia over to Visalia YMCA, which later became Golden State YMCA. Kings County YMCA operated Camp Redwood; when Kings County YMCA experienced financial difficulties, it contracted with Central Valley to have Central Valley operate Camp Redwood on its behalf. The fifth camp, Camp Millwood, was rented by the Boy Scouts for years, and they built the buildings there; when the Boy Scouts vacated the camp, SLC purchased the buildings. Thereafter, Camp Millwood was sometimes operated by SLC, and sometimes by one or more of the members. When SLC operated Camp Millwood, the net profit was used to pay SLC's expenses, and the conference fees to be paid by the members were reduced accordingly. Some years the revenue from SLC's operation of Camp Millwood was enough that the members were not charged any conference fees.
In the 1970's, the three members thought they could achieve economies of scale and run the camps more efficiently by operating them all together, instead of as five independent camps. They decided to have SLC take over operation of the camps and the camping programs. SLC operated all the camps for about six years, but had difficulty with fundraising. Because SLC was not a YMCA organization, it was not assigned its own geographic territory in which to carry on fundraising activities. Instead, it was essentially competing with its members for the same donors. After SLC ran up a debt of approximately $100,000, the members agreed to resume individual control of the camps. They added a surcharge to their camping fees and collectively raised enough funds to pay off SLC's debt.
In 2006, Central Valley was experiencing financial difficulties. Although its camping operations were profitable, it was losing money on its downtown Fresno operation and its child care facilities. By December 9, 2008, Central Valley acknowledged it owed SLC $94,526 in unpaid conference fees.
On July 17, 2008, a representative of YMCA of the USA, the national YMCA organization, conducted a mediation attended by representatives of SLC and Central Valley. There was testimony that the parties entered into a final written contract after the mediation, which would have required that Central Valley enter into a license agreement to rent the camps from SLC, that Central Valley make certain payments to SLC by September 30, 2008, and that, if payment was not made by that date, Central Valley would be prohibited from use of the Sequoia Lakes facility until payment was made. No signed final document was placed in evidence, however; there was testimony that the Central Valley representatives signed only a first draft of the document, after which SLC indicated changes needed to be made.
Because of disagreements about who was entitled to decide how the camps were to be operated, in 2007, SLC and its members started to draft a written document that would govern the parties' relationship and the terms of operation of the camps. The document that resulted, known as a license agreement, essentially would have created a landlord-tenant relationship between SLC and each member. Central Valley opposed any agreement that converted the parties' relationship into a landlord-tenant relationship.
On or about October 31, 2008, Golden State YMCA and Kings County YMCA signed license agreements with SLC. At that time, the same individual, Tim Foster, was CEO of SLC, Golden State YMCA, and Kings County YMCA. When Central Valley did not pay its debt to SLC by September 30, 2008, under the purported mediated agreement, SLC decided not to offer a license agreement to Central Valley and refused to allow Central Valley to operate Camp Gaines and Camp Sequoia in the 2009 camping season. Central Valley turned over operation of the two camps to SLC as of January 1, 2009, leaving its personal property on the premises for use in the operation of the camps; its representatives understood SLC would operate the camps and use any surplus revenue to pay down Central Valley's debt. Central Valley's representatives believed that, when the debt was paid, Central Valley would once again operate the two camps.
On June 11, 2009, the national YMCA organization revoked Central Valley's charter, and Central Valley was no longer a YMCA; it could no longer represent that it was a YMCA or use the YMCA name. Central Valley's status as a nonprofit corporation was not changed by this decertification, although it changed its name to Central Valley Christian Camping, Incorporated.
After learning of the decertification, Foster, the CEO of SLC, Kings County YMCA and Golden State YMCA, asserted to the SLC board of trustees that, "[w]hile the legal entity [Central Valley] has not yet fully dissolved, it has ceased to be functioning and is no longer a YMCA"; he proposed that SLC amend its bylaws to remove Central Valley as a listed member, and to reflect that Kings County YMCA and Golden State YMCA were the only members of SLC. At the July 11, 2009, meeting of the SLC board, after consulting SLC's legal counsel, Foster represented to the board that a member could be removed only by a unanimous decision of all the members, but the proposal he was making was not a decision to remove a member. Rather, it was a reaction to the decertification, to remove from the bylaws a reference to a YMCA that no longer existed. The board of SLC voted to amend the bylaws, effectively excluding Central Valley from membership. Foster acknowledged at trial that the bylaws and articles of incorporation of SLC did not provide a procedure for expelling a member. He interpreted the bylaws and articles of incorporation to require that members of SLC be YMCAs, and concluded that, if a member was no longer a YMCA, it could no longer be a member of SLC.
Central Valley sued SLC on various causes of action and litigated three claims at trial: (1) a claim that SLC violated Corporations Code section 5341 by expelling it from membership in SLC in bad faith and in an unreasonable manner; (2) a claim that SLC was unjustly enriched by seizing Central Valley's personal property and by excluding Central Valley from participation in the joint venture in which it was involved as a founding member of SLC; and (3) a request for an injunction restraining SLC from excluding Central Valley from membership on the SLC board and from preventing Central Valley from exercising its possessory rights over the Sequoia Lake property. SLC cross-complained against Central Valley, seeking payment of the delinquent conference fees and three other alleged debts.
All further statutory references are to the Corporations Code unless otherwise indicated.
The jury found SLC violated section 5341 by expelling Central Valley from membership in SLC in a manner that was not in good faith and reasonable. It found the relationship between SLC and Central Valley in operating the camps at Sequoia Lake was not a landlord-tenant relationship, but a joint venture; part of the joint venture agreement gave Central Valley the right to possess and operate Camp Gaines and Camp Sequoia. The jury found SLC was unjustly enriched by retaining Central Valley's personal property without compensation, but awarded no damages to Central Valley on that claim. It found SLC was not unjustly enriched by operating Camp Gaines and Camp Sequoia after it took over operation of those camps. On SLC's cross-complaint, the jury found Central Valley owed SLC $94,526 in unpaid conference fees and $8,254 on a debt for propane. It found for Central Valley on the other alleged debts. In the second phase of trial, the trial court ruled in favor of Central Valley on its injunction request.
The judgment set out the amounts awarded to SLC on its cross-complaint, plus interest. It declared Central Valley to be a full member of SLC, equal to Golden State YMCA, and set out provisions requiring that Central Valley appoint the same number of trustees to the board of SLC as Golden State YMCA. It declared that the personal property situated at Camp Gaines and Camp Sequoia was property of the joint venture, that could be used by Central Valley in the operation of those camps. The judgment enjoined SLC from interfering with Central Valley's right to possess and operate Camp Gaines and Camp Sequoia, which derived from the joint venture among SLC, Central Valley, and Golden State YMCA; it ordered SLC to transfer management of those camps to Central Valley, with specific provisions for Central Valley to pay the sums found due to SLC out of the surplus from operating the camps. SLC appeals from the judgment.
Golden State YMCA and Kings County YMCA merged in 2010 to form Golden State YMCA. At the time of trial, Golden State YMCA purported to be the only member of SLC.
DISCUSSION
I. Appellant's Opening Brief
" 'The rule is well established that a reviewing court must presume that the record contains evidence to support every finding of fact.' " ( In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) "A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence on that point, favorable and unfavorable, and show how and why it is insufficient." (Roemer v. Pappas (1988) 203 Cal.App.3d 201, 208.) " 'Unless this is done, the error assigned is deemed to be waived.' " (Fink, at p. 887.)
Central Valley asserts SLC's opening brief fails to set out the facts favorable to the judgment and requests that we deem the challenge to the sufficiency of the evidence to be waived. Although the opening brief is markedly short on facts supporting the judgment, it is not entirely devoid of them. We decline to deem the issues raised by SLC's appeal to be waived, and will address them on the merits.
II. Expulsion from SLC
The jury found SLC expelled Central Valley as a member when it amended its bylaws on July 11, 2009, to remove Central Valley from the listing of its members. It also found SLC did not act in good faith and in a fair and reasonable manner in expelling Central Valley as a member.
SLC is a California nonprofit public benefit corporation. It is governed by the Nonprofit Public Benefit Corporation Law (§ 5110, et seq.). Section 5341 of that law provides, in pertinent part:
"(a) No member may be expelled or suspended, and no membership or membership rights may be terminated or suspended, except according to procedures satisfying the requirements of this section. An expulsion, termination or suspension not in accord with this section shall be void and without effect.
"(b) Any expulsion, suspension or termination must be done in good faith and in a fair and reasonable manner. Any procedure which conforms to the requirements of subdivision (c) is fair and reasonable, but a court may also find other procedures to be fair and reasonable when the full circumstances of the suspension, termination, or expulsion are considered.
"(c) A procedure is fair and reasonable when:
"(1) The provisions of the procedure have been set forth in the articles or bylaws, or copies of such provisions are sent annually to all the members as required by the articles or bylaws;
"(2) It provides the giving of 15 days prior notice of the expulsion, suspension or termination and the reasons therefor; and
"(3) It provides an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension or termination by a person or body authorized to decide that the proposed expulsion, termination or suspension not take place." (§ 5341, subds. (a)-(c).)
Subdivision (c) of section 5341 "provides a 'safe harbor' that allows the corporation to act with assurance that procedural regularity is being maintained." (Coms. Based on Legis. Com. Summary, Deering's Ann. Corp. Code (2009 ed.) foll. § 5341, p. 121.) Neither the articles of incorporation nor the bylaws of SLC, in effect in July 2009, provided any means by which a member could be expelled from membership. Thus, SLC did not comply with the safe harbor provision.
A procedure may be fair and reasonable without conforming to the safe harbor provision, "when the full circumstances of the suspension, termination, or expulsion are considered." (§ 5341, subd. (b).) The safe harbor provision suggests that a fair and reasonable procedure would include notice to the member who is facing expulsion, and an opportunity for the member to be heard by the decision makers before the expulsion decision has been made.
SLC asserted Central Valley was on notice that the expulsion of Central Valley from membership would be considered at the July 11, 2009, meeting, because the status of its membership in the event of its decertification as a YMCA was discussed at the prior SLC board meeting, on May 19, 2009. Three of the SLC board members appointed by Central Valley were present at that meeting. The same three attended the July 11, 2009, meeting at which the board voted to amend the bylaws to exclude Central Valley as a member of SLC. There was no evidence, however, that SLC gave advance notice to Central Valley, through its CEO or the president of its board, that SLC would consider expelling Central Valley from its membership in SLC at the July 11, 2009, meeting. There was no evidence representatives of Central Valley were afforded an opportunity to appear at the meeting and oppose expulsion before the decision was made.
SLC also did not comply with its own procedures for amending its bylaws. The SLC bylaws authorized amendment of the bylaws "by the vote of a majority of the members of the Board of Trustees," but required that "[f]ive days' notice in writing shall be given to all members of the Board of Trustees in advance of any meeting at which a proposal to amend or repeal any portion of these By-Laws is to be considered or acted upon." Because the matter was presented as a bylaw amendment, notice was given to the SLC board members by way of an agenda for the July 11, 2009, meeting. The agenda, however, did not explain that the proposed bylaw amendment would effectively terminate Central Valley's membership in SLC. It merely listed as an item requiring action: "By-Laws Revision—Central Valley YMCA Membership."
Although the bylaws required notice to "all members of the Board of Trustees" when a proposal to amend the bylaws was to be considered or acted upon, SLC did not give notice of the July 11, 2009, meeting or the proposal to amend the bylaws to exclude Central Valley to the newest member of the board appointed by Central Valley, David Coleman. In June 2009, the president of Central Valley appointed Coleman to represent Central Valley on the SLC board, after the previous board member stepped down. There was testimony the SLC board did not give Coleman notice of the July 2009 meeting because they believed Coleman did not become a member of the board until his appointment was approved by the SLC board, which did not occur until the July 11, 2009, meeting. The bylaws provided for election of a successor trustee after a trustee's term expired. Midterm vacancies, however, were filled by appointment of the member represented by the vacant board position. The bylaws did not require that a midterm appointment be approved by the SLC board.
Foster testified initially that the bylaws authorized expulsion of a member by a unanimous vote of the SLC members. After reviewing the bylaws and articles of incorporation, however, he admitted neither document contained provisions for expulsion of a member. The minutes of the July 11, 2009, meeting reflect that Foster advised the SLC board members present that the proposal to amend the SLC bylaws was "not a decision for the SLC to remove a member. Only a unanimous decision of the member YMCA's can remove a member YMCA. The revision makes the records reflect the names of the membership still in existence." Foster testified he was not sure where he obtained the information that a unanimous vote of the members was required for expulsion, but it could have come from consultation with SLC's attorney.
The same meeting minutes also reflect that Daniel Eberly, who was at that time president of the SLC board of trustees and a member of the Central Valley board, "stated that normally action is not taken on By-law changes until the board meeting following the proposal." Nonetheless, the board voted on the bylaw amendment that had the effect of expelling Central Valley from its membership at that meeting, the same meeting at which the amendment was proposed.
At the next meeting of the SLC board, on September 8, 2009, Foster advised that Golden State YMCA and Kings County YMCA would consolidate on January 1, 2010, and Kings County YMCA would become a branch of Golden State YMCA. He proposed that Golden State YMCA enter into license agreements with SLC for operation of Camps Tulequoia, Millwood, Gaines, and Sequoia. He also proposed that Kings County YMCA renew its license for operation of Camp Redwood and, upon consolidation, the license agreement would be "absorbed" by Golden State YMCA. The proposals passed; Coleman's was the lone dissenting vote on entering into a license agreement for Camp Gaines and Camp Sequoia.
There was testimony the consolidation of Golden State YMCA and Kings County YMCA had been planned since early in 2009. Like Foster, the members of the SLC board who were elected or appointed to represent Central Valley, with the exception of Coleman, favored consolidating all YMCA operations in the four counties. Foster testified he knew he could do a better job of running a consolidated YMCA than Central Valley.
Substantial evidence supports the jury's finding that the expulsion of Central Valley from membership in SLC was not done in good faith or in a fair and reasonable manner. SLC did not notify Central Valley, through its board, president, or CEO, that SLC was proposing to terminate its membership in SLC at the July 11, 2009, board meeting. It characterized its action as a bylaw amendment that took only approval of a majority of the SLC board, rather than as an expulsion of a member, which was believed to require a unanimous vote of the three SLC members. SLC did not afford Central Valley an opportunity to appear and argue against the proposal prior to the decision being made. There was sufficient evidence from which the jury could have found the SLC board did not expel Central Valley for the reason asserted—because it was no longer a chartered YMCA—but because Foster and the SLC trustees wished to consolidate all the members of SLC into one organization, which would operate all of the camps under Foster's direction, and because the SLC trustees perceived Central Valley to be an impediment to that plan.
SLC contends its articles of incorporation and bylaws required its members to be YMCAs. Central Valley had been decertified by the national YMCA organization prior to SLC's vote to amend the bylaws, so it was no longer a YMCA at the time the SLC board voted to amend the bylaws to exclude Central Valley as a listed member. SLC contends the dispute between SLC and Central Valley regarding whether SLC's bylaws required its members to be chartered YMCAs was an internal dispute about interpretation of the bylaws, and the trial court was required to abstain from deciding that internal dispute. It invokes the abstention doctrine discussed in California Dental Assn. v. American Dental Assn. (1979) 23 Cal.3d 346 (California Dental) and Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 642-643 (Oakland Raiders).
In California Dental, a dispute arose between a private voluntary organization and its parent organization over expulsion of one of the former's members. (California Dental, supra, 23 Cal.3d at pp. 349-350.) The court noted that " 'the rights and duties of the members as between themselves and in their relation to [a private voluntary] association, in all matters affecting its internal government and the management of its affairs, are measured by the terms of [its] constitution and by-laws.' [Citation.] In many disputes in which such rights and duties are at issue, however, the courts may decline to exercise jurisdiction. Their determination not to intervene reflects their judgment that the resulting burdens on the judiciary outweigh the interests of the parties at stake. One concern in such cases is that judicial attempts to construe ritual or obscure rules and laws of private organizations may lead the courts into what Professor Chafee called the 'dismal swamp.' [Citation.] Another is with preserving the autonomy of such organizations." (Id. at p. 353.) "The courts will nevertheless accept jurisdiction over private voluntary organizations when the aggrieved party can demonstrate ' "an abuse of discretion, and a clear, unreasonable and arbitrary invasion of [its] private rights . . . ." ' " (Id. at p. 354.)
This has been termed the "abstention doctrine." (Oakland Raiders, supra, 131 Cal.App.4th at pp. 642-643.) Under this doctrine, the " 'reluctance to intervene in internecine controversies, the resolution of which requires that an association's constitution, bylaws, or rules be construed, is premised on the principle that the judiciary should generally accede to any interpretation by an independent voluntary organization of its own rules which is not unreasonable or arbitrary.' " (Id. at p. 645.)
SLC contends the issue raised by its amendment of the bylaws to exclude Central Valley from its list of members requires interpretation of its bylaws. It contends the parties dispute whether a member was required to be a YMCA and whether Central Valley lost its eligibility for membership upon losing its charter as a YMCA. This, it asserts, is an internal dispute which the courts should abstain from adjudicating.
Even assuming the abstention doctrine, which California Dental and Oakland Raiders applied in the context of a private voluntary association, applies to nonprofit public benefit corporations, it does not require abstention in this case. The trial court and jury here were not asked to interpret SLC's bylaws or determine whether SLC's expulsion decision was correct on substantive grounds. The jury decided only whether SLC complied with the statutory requirements imposed by section 5341. Section 5341 mandates that any expulsion of a member of a nonprofit public benefit corporation must be done in good faith and in a fair and reasonable manner. The section "governs only the procedures for expulsion, suspension or termination and not the substantive grounds therefor." (§ 5341, subd. (f).) Thus, it does not intrude on a corporation's internal dispute over interpretation of any provisions of its governing documents that set out the substantive grounds for expulsion from membership. The court was not required to abstain from determining whether SLC complied with its statutory procedural obligations under section 5341.
SLC has not demonstrated any error in the jury's findings regarding expulsion, or in the provisions of the judgment requiring reinstatement of Central Valley's membership, which were based on those findings.
III. Injunction
In its special verdict, the jury found that the elements of a joint venture agreement among SLC, Central Valley, and the other member YMCAs existed, and part of their agreement was that Central Valley had the right to possess and operate Camp Gaines and Camp Sequoia. Based on the jury's factual findings, on additional evidence presented in the second phase of trial before the court, and on the oral arguments of counsel, the trial court entered judgment. The judgment determined Central Valley was improperly expelled from SLC by the bylaw amendment, and declared Central Valley to be a full member of SLC, equal to Golden State YMCA. It enjoined SLC from interfering with Central Valley's "right . . . to possess and operate Camp Gaines and Camp Sequoia, which right derives from the parties' joint venture," and from preventing Central Valley and its campers from using the common areas of the Sequoia Lake property as SLC members and their invitees were traditionally permitted to do.
SLC challenges the injunction on two grounds: (1) the findings supporting the conclusion that there was a joint venture among SLC, Central Valley, and the other members of SLC are not supported by substantial evidence and (2) Central Valley could not have a right to possess any of the camps at Sequoia Lake without a writing transferring an interest in the real property from SLC to Central Valley, which the parties stipulated did not exist.
A. Substantial evidence of a joint venture
"An appealed judgment is presumed correct, and the appellant must affirmatively demonstrate error." (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408.) "When findings of fact are challenged on appeal, we are bound by the substantial evidence rule, which requires us to review the entire record to determine whether substantial evidence supports the appealed judgment." (Donovan v. Poway Unified School Dist. (2008) 167 Cal.App.4th 567, 581, italics added.) It is the appellant's burden to produce an adequate record demonstrating trial court error. (Baranchik v. Fizulich (2017) 10 Cal.App.5th 1210, 1226.) A record is inadequate if the appellant does not present portions of the trial court proceedings that may provide grounds upon which the decision of the trial court could be affirmed. (Osgood v. Landon (2005) 127 Cal.App.4th 425, 435.)
The judgment indicates Central Valley's request for injunctive relief was addressed at the second phase of the trial, where the trial court acted as trier of fact. It indicates the trial court received evidence in the form of declarations submitted by Central Valley's witnesses, in addition to the evidence presented during the first phase of the trial. The declarations submitted at the second phase of the trial are not included in the record on appeal. Thus, we have not been provided with, and therefore cannot review, all of the evidence that was before the court when it made its decision to grant injunctive relief as part of the judgment.
In its briefs, SLC repeatedly asserts there was "no evidence" to support various findings or decisions made in the trial court. In addition to failing to present all the evidence submitted at the second phase of trial, it set out the purported facts, focusing on the version of the facts presented by SLC in the trial court, rather than presenting the evidence supporting the judgment and showing how it is insufficient to support the findings and the decision of the trial court. Accordingly, SLC has failed to establish the insufficiency of the evidence to support the judgment. In any event, the evidence presented at the first phase of the trial was sufficient to support the factual findings of the jury and the grant of injunctive relief by the trial court.
B. Elements of a joint venture
A joint venture is "an association of two or more persons who combine their property, skill or knowledge to carry out a single business enterprise for profit." (Holtz v. United Plumbing & Heating Co. (1957) 49 Cal.2d 501, 506.) A nonprofit public benefit corporation is authorized to participate with others in a joint venture. (§ 5140, subd. (j).) "[I]n order to create a joint venture there must be an agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control" (Holtz, at pp. 506-507), that is, the right of joint participation in the management and control of the business (Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586 (Kaljian)).
1. Agreement to a joint business undertaking
SLC asserts there was no evidence of an oral or written agreement to a joint venture between SLC and Central Valley. To create a joint venture, however, there need not be any formal written agreement or express oral agreement between the parties defining their respective rights and duties; a joint venture "may be assumed as a reasonable deduction from the acts and declarations of the parties." (Rickless v. Temple (1970) 4 Cal.App.3d 869, 893.) In other words, the agreement "may be implied from the conduct of the parties." (Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 285 (Boyd).) " 'The law requires little formality in the creation of a joint venture and the agreement is not invalid because it may be indefinite with respect to its details.' " (Ibid.) SLC's briefs fail to address the conduct of the parties that supports a finding that they had an agreement to jointly conduct camping operations on the Sequoia Lake property. Therefore, SLC failed to carry its burden of showing that there is no substantial evidence to support the jury's finding that SLC, Central Valley, and the other members of SLC "orally or impliedly agree[d] to combine their property, skill, or knowledge with the intent to carry out a single nonprofit business undertaking at Sequoia Lake."
The evidence indicated SLC's purpose, as set out in its original articles of incorporation, was "to furnish . . . special facilities for physical recreation and pleasure and for education and religious development" of boys and men. SLC provided the real property for those recreational facilities, and maintained the common areas of the Sequoia Lake property. With the exception of a six-year period in the 1970's when the members turned over operation of the camps to SLC, the members of SLC maintained the real property and facilities within their respective camps, provided personal property for the use of campers, operated and managed the camping programs, and paid SLC's expenses of maintaining the common areas. There was evidence at least some of the buildings at Camp Gaines and Camp Sequoia were built by or at the behest of Central Valley or its predecessors.
The jury found the relationship between the parties was not that of landlord and tenant. Substantial evidence supports that finding. Until this dispute arose between the parties in or after 2006, there was never any written lease, rental, or license agreement between the parties. The SLC members were referred to as "member-owners," rather than "renters." What the members paid to SLC annually was termed "conference fees," not "rent." Conference fees were not paid for the use of the real property, as SLC asserts in its brief (without citation to the record) , but to cover the costs of maintenance of the common areas of the Sequoia Lake property, for the benefit of all the camps. The evidence indicated the members of SLC, or their representatives on the SLC board, met annually to determine what common area maintenance and improvements should be performed by SLC in the coming year. A budget for that work was prepared and the total cost was divided five ways; each camp was charged one-fifth of the total common area expenses as conference fees. In years when SLC operated Camp Millwood and the revenue received from it was sufficient to cover SLC's maintenance expenses, the members paid no conference fees.
Moreover, when SLC took over the operation of Camp Gaines and Camp Sequoia from Central Valley in 2009, it did not simply evict a tenant and take back possession of the real property. It took over Central Valley's camping operations, its "book of business," taking advantage of the camping reservations already received by Central Valley and retaining the personal property necessary to continue smooth operation of the camps (beds and other furnishings, boats and other recreational equipment).
Thus, there was sufficient evidence to support the jury's findings that SLC, Central Valley and the other members of SLC impliedly agreed to jointly own a business enterprise operating camps on the Sequoia Lake property.
2. Understanding as to sharing of profits and losses
SLC contends there was no sharing of profits and losses between the parties because each member of SLC ran its camp or camps independently, and each retained its own profits. The term " 'profits' " in an agreement to divide profits, "means 'the excess of receipts over expenditures.' " (Howard v. D. W. Hobson Co. (1918) 38 Cal.App. 445, 451.)
SLC cites Ramirez v. Long Beach Unified School Dist. (2002) 105 Cal.App.4th 182 (Ramirez) for the proposition that a nonprofit enterprise cannot constitute a joint venture. In Ramirez, the defendant school district informed the plaintiff's decedent, a high school student, of a nonprofit summer camp he could attend. (Id. at p. 185.) The camp provided a program for low-income, at risk youths. The district identified and recruited eligible students, including the decedent, for the program. It assured the plaintiff the camp program was safe. (Id. at p. 186.) The decedent attended the camp and drowned while swimming in the lake. (Id. at p. 187.) The plaintiff sued the district for wrongful death. (Ibid.) The trial court sustained the district's demurrer to the complaint without leave to amend, and the appellate court affirmed. (Id. at p. 185.)
The plaintiff contended the district was liable as a joint venturer with the camp. (Ramirez, supra, 105 Cal.App.4th at p. 193.) After defining a joint venture as "an undertaking by two or more persons, or entities, jointly to carry out a single business enterprise for profit," the court concluded: "The facts before us do not involve a for profit enterprise. There was no joint venture." (Ibid.) The court recognized that, even if there was no for-profit enterprise, there was authority for finding a joint enterprise or joint adventure if there was an undertaking for the mutual benefit or pleasure of the parties. (Ibid.) The court rejected that theory, however, because there were no facts demonstrating the district had any right to control the camp, its employees, or its counselors. (Id. at pp. 193-194.)
SLC contends there cannot be a for-profit enterprise here because SLC is a nonprofit corporation. It is the joint enterprise that must be operated for profit, however, not its members. The jury did not find that SLC was the joint venture; it found the joint venture was a joint enterprise in which SLC, Central Valley, and Golden State YMCA were the participants. The Nonprofit Corporation Law (§ 5000 et seq.) does not preclude a nonprofit corporation from generating a profit. Subject to some limitations, a nonprofit public benefit corporation "shall have all of the powers of a natural person," including the power to "[c]arry on a business at a profit and apply any profit that results from the business activity to any activity in which it may lawfully engage." (§ 5140, subd. (l).) It may not, however, distribute any "gains, profits or dividends" to any of its members. (§§ 5049, 5410.) A nonprofit public benefit corporation expressly has the power to "[p]articipate with others in any . . . joint venture." (§ 5140, subd. (j).)
SLC argues there was no sharing of profits and losses because each of the SLC members operated its camp or camps separately and retained its own profits. "While in a technical joint venture there is usually a sharing of profits and losses in the prosecution of the common enterprise [citation], the mode of participating in the fruits of the undertaking may be left to the agreement of the parties." (Universal Sales Corp. v. California Press Mfg. Co. (1942) 20 Cal.2d 751, 764.) That agreement may be implied from the conduct of the parties, and "[t]he acts and conduct of the parties engaged in the accomplishment of the apparent purposes may speak above the expressed declarations of the parties to the contrary." (Id. at pp. 764-765.) " 'The law requires little formality in the creation of a joint venture and the agreement is not invalid because it may be indefinite with respect to its details.' " (Boyd, supra, 247 Cal.App.2d at p. 285.)
In Iskenderian v. Iskenderian (2006) 144 Cal.App.4th 1162 (Iskenderian), members of a family litigated a dispute about ownership of the trademark used in their business. (Id. at p. 1165.) Vartkes and Markrid Iskenderian and their son and daughter-in-law opened a restaurant called Zankou Chicken in Hollywood. The business was informally operated as a father-son partnership. The partnership was dissolved when the son wished to open additional restaurants at other locations. The parents continued to operate the Hollywood restaurant and retained the profits from it, while the son opened four others under the Zankou Chicken name and retained the profits from those restaurants. (Id. at pp. 1165-1166.) After Vartkes died, Markrid continued to operate the Hollywood restaurant. She conveyed the business, including the trademark, Zankou Chicken, to a living trust, which provided that the rights to the trademark would be distributed to and divided equally among her son and her two daughters on her death. (Id. at pp. 1166-1167.) After the son killed his mother, one sister, and himself, a dispute arose among his widow, the surviving sister, and the deceased sister's sons regarding ownership of the trademark. (Id. at p. 1167.) The widow claimed her husband had owned the trademark since the dissolution of the father-son partnership. The trial court found ownership of the trademark remained with the " 'unified and cooperative family enterprise,' " and Markrid's interest should pass as provided in the trust. (Id. at pp. 1167-1168.)
The widow contended no joint enterprise existed because there was no sharing of profits and losses. The court rejected the argument. "We know of no rule requiring a joint enterprise to share profits and losses equally among each participant in the enterprise. A joint enterprise exists when there is ' "an agreement between the parties under which they have a community of interest, that is, a joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control." . . .' [Citation.] The family plainly had 'an understanding as to the sharing of profits and losses,' namely that the parents would take the profits from [the restaurant] in Hollywood, and [the son] would take the profits from the other stores he opened. Substantial evidence supported the trial court's implicit conclusion that all parties had a joint interest in and joint control of the Zankou Chicken enterprise as a whole, as well as an understanding as to profits and losses." (Iskenderian, supra, 144 Cal.App.4th at pp. 1168-1169.)
Similarly, substantial evidence supported a finding that SLC and its members impliedly agreed to share the profits of the joint enterprise. The agreement generally permitted the SLC members to retain the profits from the camp or camps they operated. The profits generated when SLC directly operated Camp Millwood were used to pay the expenses of maintaining the common areas of the Sequoia Lake property, reducing or eliminating the conference fees otherwise paid by the members to cover those expenses. When SLC directly operated all of the camps during the 1970's and incurred substantial losses as a result, the SLC members joined together to make good those losses. When Kings County YMCA faced financial difficulties in operating its camp, it arranged for Central Valley to operate the camp on its behalf, and some of the revenue from that operation went to Kings County YMCA. Thus, the evidence supported an understanding that each member would retain the profits from operation of its own camp; but the participants would cooperate with each other to resolve problems within the enterprise when any participant encountered financial difficulties or business losses.
Based on the evidence the parties had an implied understanding to share the profits and losses of the joint enterprise, we conclude substantial evidence supports the jury's finding that the parties agreed to share the profits and losses of their enterprise.
3. Right of joint control
" 'An essential element of a partnership or joint venture is the right of joint participation in the management and control of the business.' " (Kaljian, supra, 36 Cal.App.4th at p. 586.) Joint control of the venture may be delegated. (Orosco v. Sun-Diamond Corp. (1997) 51 Cal.App.4th 1659, 1666.)
The business of the joint venture was offering camping opportunities on the Sequoia Lake property. The jury found the joint venture participants were SLC and its members. The SLC board of trustees was made up of trustees elected or appointed by the members of SLC. Each member elected or appointed the same number of trustees. There was evidence the members of SLC met annually to approve the business of the SLC board and empower it to operate on behalf of the members for another year.
Although SLC owned the Sequoia Lake real property, the members operated the camps that used the property for recreational purposes. The members operated the programs that brought campers into the camps. They bore the costs of maintaining their individual camps and shared the costs of maintaining the common areas of the Sequoia Lake property through their conference fees. Each year, SLC and the members jointly determined how the camps would be operated and what common area maintenance was required; they prepared a budget for SLC and divided the costs by five, because there were five camps, even though some camps required more services than others. It was the members who met and agreed to allow SLC to operate all of the camps for a time during the 1970's. The members also covered the losses SLC sustained as a result of running the camps during the 1970's.
Substantial evidence supports the jury's finding that SLC and its members shared joint control of the business enterprise, either directly or by delegating control.
C. Possession of the camps
The jury verdict included a finding that part of the parties' joint venture agreement was that Central Valley had a right to possess and operate Camp Gaines and Camp Sequoia. In accordance with that finding, the judgment enjoined SLC from "interfering with the right of [Central Valley] to possess and operate Camp Gaines and Camp Sequoia, which right derives from the parties' joint venture, which joint venture continues to exist between [Central Valley], SLC and Golden State YMCA." The judgment provided for the immediate transfer of the management of those camps to Central Valley.
SLC contends these provisions of the judgment effectively conveyed to Central Valley a permanent easement to use the camp property "in any manner [Central Valley] sees fit despite SLC's bylaws," and regardless of whether Central Valley pays its annual conference fees. It characterizes Central Valley's claimed right to possession of the camps as a transfer of an interest in real property, which, under the statute of frauds, must be in writing to be valid. (Civ. Code, § 1624, subd. (a)(3).) Because the parties stipulated that SLC holds legal title to the Sequoia Lakes real property and that there is no writing transferring an interest in the real property to Central Valley , SLC contends the portion of the judgment granting possession of Camp Gaines and Camp Sequoia to Central Valley is not supported by substantial evidence.
The statute of frauds provides that certain 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." (Civ. Code, § 1624, subd. (a).) The contracts that must be memorialized in writing include: "An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein." (Civ. Code, § 1624, subd. (a)(3).)
In Kaljian, the owner of real property and a partnership consisting of a real estate broker and a builder planned to jointly construct a residential development on the owner's land, and entered into various oral agreements to that end. (Kaljian, supra, 36 Cal.App.4th at pp. 576-581.) The project was unsuccessful, the land was not developed, and the owner sold part of the land to a third party. (Id. at pp. 579-581.) The partnership sued the owner for breach of contract and fraud; the owner cross-complained. (Id. at p. 581.) The trial court concluded that, if the relationship between the parties was a joint venture, the statute of frauds would not apply; it did not give jury instructions on the statute of frauds and its writing requirement. (Id. at pp. 582-583.) The special verdict form did not ask the jury to find whether there was a joint venture; the jury found only that there was a contract between the parties. (Id. at p. 583.)
In determining whether the jury should have been instructed on the statute of frauds, this court reviewed cases "generally holding that agreements among partners or joint venturers regarding real property are not within the statute of frauds." (Kaljian, supra, 36 Cal.App.4th at p. 583.) This included cases in which the parties agreed to share profits from the sale or rental of real property, cases in which an oral agreement created a partnership in an existing business that already owned real property, and cases in which the owner of real property orally agreed to contribute it to a joint venture, which would operate or sell it. (Id. at p. 584.) We observed that "none of the cited cases dealt with an agreement which contemplated a transfer of real property from one joint venturer to another. The distinction appears critical." (Id. at p. 584.) We concluded the statute of frauds applies "to an agreement by which one joint venturer or partner is to transfer an interest in real property to another member for consideration." (Id. at p. 586.) "[T]he trial court's reliance on the cited cases was justified only if the jury found or the evidence indisputably established a joint venture and if there was no substantial evidence of an agreement under which [the real property owner] was to sell property to [the other alleged joint venturer]." (Ibid.) Because there was evidence from which the jury could have concluded the contract or joint venture provided for a sale of land from one joint venturer to another, we concluded jury instructions on the statute of frauds should have been given. (Id. at pp. 588-589.)
Central Valley's first amended complaint contained causes of action against SLC for slander of title and breach of third party beneficiary rights. In those causes of action Central Valley asserted it held an equitable possessory interest in the Sequoia Lake real property by virtue of being a third party beneficiary of the Hume agreement. The trial court disposed of those causes of action prior to trial. It apparently determined by motion for summary adjudication that Central Valley held no possessory property interest in the Sequoia Lake real property.
Central Valley's joint venture claim was not based on any oral transfer of title to the Sequoia Lake real property, or some part of it, from SLC to Central Valley. Rather, the evidence indicated SLC retained title to the real property, but contributed the use of the property to the joint venture so the joint venture could operate the camps on the property. Central Valley claimed it was improperly ousted from SLC and was denied its traditional use of Camp Gaines and Camp Sequoia as a participant in the decades old joint venture. Thus, there was no alleged oral or implied agreement by which one joint venturer transferred an interest in real property to another joint venturer for consideration. There was no agreement that was required by the statute of frauds to be in writing.
The judgment, however, enjoined SLC from interfering with Central Valley's "right . . . to possess and operate Camp Gaines and Camp Sequoia." It ordered that Central Valley "will be entitled to the surplus (profit) derived from the operation of Camp Gaines and Camp Sequoia for the 2015 camping season and going forward thereafter," although it required Central Valley to satisfy the money judgment in SLC's favor out of those proceeds. The language suggests the judgment was conferring on Central Valley a perpetual possessory interest in the two camps. The jury found, and the judgment reflected, that the right to possess and operate the camps arose from the joint venture, rather than from any transfer of a possessory interest in the property from SLC to Central Valley. Accordingly, Central Valley's right to operate the camps was governed by the joint venture agreement.
The evidence favorable to the judgment indicated that, historically, the members of the joint venture met annually to determine how the camps were to be operated in the coming year. At one point, they agreed to turn over operation of all the camps to SLC. Thus, a collective decision of the joint venturers determined who would operate the camps in any given year. The judgment should give Central Valley only the rights the members of the joint venture historically held; it should grant Central Valley no more right to occupy and use Camp Gaines and Camp Sequoia than it had before the dispute litigated in this action arose. Central Valley's right to operate Camp Gaines and Camp Sequoia in the future is therefore subject, as it was in the past, to the provisions of the governing instruments (such as the articles of incorporation and bylaws of SLC) and the annual agreement of the joint venturers.
Because the language of the judgment suggests Central Valley holds a possessory property interest in the Sequoia Lake real property, it is overbroad and inaccurate. When the trial court determines issues prior to trial by summary adjudication, the final judgment must award judgment as established by the summary adjudication. (Code Civ. Proc., § 437c, subd. (k).) To the extent the trial court adjudicated prior to trial that Central Valley lacked any possessory interest in the Sequoia Lake real property, that determination was required to be included in the final judgment. We therefore remand to the trial court to modify the judgment. The judgment should include matters adjudicated by motion prior to trial. It should clarify the scope of Central Valley's rights to use the Sequoia Lakes real property and to operate camps at Sequoia Lakes, which are defined by the joint venture agreement established by the conduct of the parties. The parties should have the opportunity in the first instance to propose language that they can agree upon and that will not lead to confusion and further litigation.
DISPOSITION
The matter is remanded to the trial court to modify the judgment to clarify that Central Valley does not hold a possessory property interest in the Sequoia Lake real property and to clarify the scope of the injunction enjoining SLC from interfering with Central Valley's right to operate camps at Sequoia Lake, in accordance with this opinion. The judgment is otherwise affirmed. The parties shall bear their own costs on appeal.
/s/_________
HILL, P.J. WE CONCUR: /s/_________
LEVY, J. /s/_________
DETJEN, J.