Opinion
C082256
09-28-2017
LEONARD K. TYSON, Plaintiff and Appellant, v. PATRICK JOSEPH WESTERHOUSE, Defendant and Respondent.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. SCV0036203)
Plaintiff and appellant Leonard K. Tyson sued his former brother-in-law, defendant and respondent Patrick Joseph Westerhouse, alleging Westerhouse knowingly assisted his sister and Tyson's ex-wife Mary Ann to conceal and invest property in which Tyson purportedly had a community interest. Tyson appeals from summary judgment entered in favor of Westerhouse, claiming the trial court improperly excluded material evidence and that triable issues of material fact exist whether Westerhouse aided and abetted Mary Ann in breaching her fiduciary duty towards Tyson. We shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Tyson filed suit against Westerhouse alleging causes of action for "conspiracy to defraud," unjust enrichment, and constructive trust. In brief, he alleged a mutual friend of Tyson and Mary Ann had gifted them $10,000 in 1984, and that Mary Ann had concealed that gift from him in breach of her fiduciary duty, that she gave it to Westerhouse to conceal and invest, that Westerhouse had "aided and abetted [Mary Ann] in her concealment of these assets by knowingly assisting her in hiding them from [Tyson], by holding and investing them under his or some other name or account," that Tyson had been damaged as a result, and that Westerhouse had been unjustly enriched. Tyson alleged that because Westerhouse gained the assets by fraudulent concealment, he held them in constructive trust for Tyson.
Westerhouse moved for summary judgment on various grounds. Among these was that Tyson could not prove that Westerhouse knew of any wrongful conduct. Among the facts Westerhouse presented in support of his motion were that he made no material misrepresentations or omissions of fact to Tyson, that he made no agreement with Mary Ann to accomplish any unlawful purpose, that he did not receive any check belonging to Tyson at any time, and that Mary Ann represented to him that the check he received from her in 1998 "was a gift to her, as her sole and separate property." Tyson disputed these facts. The evidence he relied upon in support of his dispute was that Mary Ann told him in 2013 that in 1984 she had hidden from him a gift of $10,000 she received from a friend; that she told him the gift was intended for her only; that she told him she had given the money to Westerhouse "to hold and invest [for] her;" that she told him she wanted the money in case of a divorce; that he found a letter purportedly from the friend conveying the gift that was addressed to "friends" rather than just Mary Ann; that in 2001 Tyson and Mary Ann signed an agreement declaring that all their property, regardless of how it was acquired, was community property; and that Westerhouse had received a copy of that agreement and told Tyson "he had read and understood it." He also presented copies of the letter and the agreement. The trial court excluded some of this evidence on hearsay and authentication grounds.
Ultimately, the trial court granted summary judgment in Westerhouse's favor. As to the cause of action for conspiracy to defraud, it found Tyson had failed to submit evidence to support two necessary elements of the cause of action: formation of a conspiracy and damages. It stated, in pertinent part, Tyson "fail[ed] to submit evidence which would support the formation and operation of a conspiracy between Mary Ann and [Westerhouse]. At most, there is evidence that [Westerhouse] agreed that he would not disclose the existence of the funds to [Tyson]. There is no evidence that [Westerhouse] was advised that the funds were gifted to both Mary Ann and [Tyson], and there is no evidence that [Westerhouse] understood at the time that he received the funds from Mary Ann that [Tyson] had any right to that money. [Westerhouse] himself had no duty to disclose the existence of the separate account he had established for Mary Ann's benefit to [Tyson]. Nor would receipt of a copy of the Community Property Agreement [dated 2001 in which Tyson and Mary Ann agreed all their property was community property] create such a duty." The trial court further found that Tyson had not submitted evidence that he was damaged by any alleged conspiracy in that he had the opportunity to and did unsuccessfully seek recovery of the funds as community property in his dissolution action with Mary Ann.
The trial court noted that though Tyson had advanced the claim that Mary Ann had wrongfully concealed these community property funds from him, he eventually withdrew that claim in the dissolution action "because there was not sufficient evidence to prove the existence of a community property gift."
With respect to the cause of action for unjust enrichment, the trial court found that Westerhouse had presented evidence that he had paid the entire proceeds of the check he received to Mary Ann, and that Tyson had not presented any contrary evidence. Thus, Tyson could not establish the necessary element that Westerhouse had "obtained a benefit which he could not justly retain from [Tyson]." Similarly, with respect to the cause of action for constructive trust, Tyson presented no evidence to create a triable issue of material fact regarding whether Westerhouse held any funds to which Tyson was entitled. Thus, he could not establish a necessary element for that cause of action.
DISCUSSION
On appeal, Tyson contends the trial court erred in awarding summary judgment to Westerhouse. However, Tyson does not separately challenge on appeal the trial court's award of judgment as a matter of law to Westerhouse on Tyson's causes of action for unjust enrichment and constructive trust. Accordingly, he has forfeited any claims he has in that regard. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1177-1178.) Therefore, we address only whether the trial court properly awarded judgment as a matter of law to Westerhouse on Tyson's first cause of action, entitled "conspiracy to defraud."
With respect to that cause of action, Tyson first contends the trial court improperly excluded evidence of Mary Ann's out-of-court statements to Tyson and a letter he claimed conveyed the challenged gift to both himself and Mary Ann in 1984. Specifically, Tyson declared he found a letter with Mary Ann's belongings in their house, and he described the letter as being "dated August 29, 1984 ([his and Mary Ann's] 3rd anniversary), from [their friend] naming both of us [(Tyson and Mary Ann)] as her 'most cherished friends,' and referencing a check enclosed." The August 29 letter, addressed "Dear friends," reads, in pertinent part: "Had the good fortune to sell the last of my ranch land and am hoping a few of my most-cherished friends will celebrate with me—hence the check enclosed." Tyson also declared that in 2013 Mary Ann "told [him] and verbally re-affirmed to [him] over the next couple of months, that in 1984 she had hidden from [him] a gift of $10,000 received from a friend . . . , so that she could use that money in the future for divorce purposes. She also claimed that the gift . . . was intended for her only." He further averred that "Mary Ann told [him] that she had given the money to [Westerhouse] in 1984, to hold and invest [for] her." He also declared that Mary Ann " 'stated that she wanted to have the monies in the event of a divorce because she "wasn't going to take care of an invalid [(Tyson)] for the rest of her life." ' "
We need not decide whether the trial court erred in excluding this evidence, because even if the evidence were admitted, it would only possibly show that the gift was not separate property when made and that Mary Ann knew it. Tyson does not assert or present any evidence that Westerhouse was privy to or otherwise knew about either the letter or Mary Ann's statements to Tyson. Therefore, the existence of the letter and the fact of Mary Ann's statements do not establish a triable issue of material fact with respect to the cause of action directed at Westerhouse. Thus, even if we were to decide the trial court erred in excluding the evidence, Tyson has not made the requisite showing of prejudice to warrant reversal. (In re Automobile Antitrust Cases I & II (2016) 1 Cal.App.5th 127, 141 ["erroneous exclusion of evidence by the trial court is not grounds for reversal unless we also determine that the error was prejudicial"].)
As such, we now turn to Tyson's contention that the trial court erred in entering judgment in Westerhouse's favor with respect to Tyson's conspiracy to defraud cause of action because there was a triable issue of material fact whether Westerhouse engaged in wrongful conduct when he concealed funds following his receipt of a 2001 agreement between Tyson and Mary Ann that designated all their assets as community property. Tyson labeled his cause of action as one for conspiring to defraud him. This is also how he framed the cause of action in the trial court. On appeal, however, Tyson argues the cause of action should be construed as one for aiding and abetting a breach of fiduciary duty, and we agree that as alleged the first cause of action in the complaint properly sounds in aiding and abetting a breach of fiduciary duty. (Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1283 [in reviewing whether summary judgment was properly awarded, "[w]e ignore erroneous or confusing labels in the pleading and look to its gravamen to determine what cause of action is stated"].) Nevertheless, regardless whether we construe the complaint as alleging a cause of action sounding in civil conspiracy or one sounding in aiding and abetting a tort, we conclude Westerhouse is entitled to judgment as a matter of law on the record before us.
Tyson alleges Mary Ann owed him a duty to disclose the existence of the gift and that Westerhouse "aided and abetted" her by "knowingly assisting her in hiding" the gift from Tyson.
We review de novo a trial court's decision to grant a summary judgment motion. (Cerna v. City of Oakland (2008) 161 Cal.App.4th 1340, 1346.) We may affirm the trial court's ruling on any ground set forth in the motion for summary judgment, regardless of the grounds relied on by the trial court. (American Meat Institute v. Leeman (2009) 180 Cal.App.4th 728, 747-748.)
A motion for summary judgment "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) These issues are framed by the allegations of the complaint. (Higgins-Williams v. Sutter Medical Foundation (2015) 237 Cal.App.4th 78, 80.) On a motion for summary judgment by a defendant, the moving party "has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto." (Code Civ. Proc., § 437c, subd. (p)(2); Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 274.) Thus, "[s]ummary judgment is properly granted to a defendant who shows that an element of the plaintiff's cause of action cannot be established, unless the plaintiff sets forth specific facts showing a triable issue of material fact as to that element." (Higgins-Williams, supra, 237 Cal.App.4th at pp. 80-81.)
To prove a cause of action for civil conspiracy, Tyson must show inter alia " ' "the formation and operation of the conspiracy and damage resulting to [himself] from an act or acts done in furtherance of the common design. . . ." ' " (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511.) To be liable as a coconspirator, the defendant must be "legally capable of committing the tort, i.e., . . . he or she owes a duty to plaintiff recognized by law and is potentially subject to liability for breach of that duty." (Ibid.) And, " '[a] nonfiduciary cannot conspire to breach a duty owed only by a fiduciary.' " (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1474 (American Master Lease).)
Here, it is undisputed that as Tyson's spouse, Mary Ann had a duty not to conceal community assets from him. (See Fam. Code, § 721, subd. (b)(1)-(3) [spouses owe each other "a duty of the highest good faith and fair dealing," may not "take any unfair advantage of the other," and, with respect to community property, must allow access to books kept regarding a transaction, must provide information on request of things affecting a transaction concerning community property, and must account to the other spouse for benefits or profits derived from transactions conducted without the consent of the other spouse that concern community property]; see In re Marriage of Walker (2006) 138 Cal.App.4th 1408, 1419-1420.) However, Westerhouse was not married to Tyson. Rather, the only basis for a duty to Tyson that Tyson has asserted is that Westerhouse was named as successor trustee to Tyson's and Mary Ann's living trust. While a trustee owes fiduciary duties to the beneficiaries of the trust (see, e.g., Prob. Code, § 16000 et seq.), Tyson has provided no authority, and we have found none, that imposes any fiduciary duties on a named successor trustee before that person has assumed the position of acting trustee. Therefore, Westerhouse has shown as a matter of law that he owed Tyson no independent duty to disclose the existence of the gift he invested and held on behalf of Mary Ann, and Tyson has presented no evidence creating a triable issue of material fact. Accordingly, if we construe the cause of action as one for civil conspiracy, Westerhouse is entitled to judgment as a matter of law.
In contrast to civil conspiracy, " ' "[l]iability may . . . be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." ' " (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144, italics added (Casey).) Tyson argues Westerhouse is liable based on the theory that he knew Mary Ann was breaching her fiduciary duty to Tyson by concealing the funds and he gave her substantial assistance. Tyson claims that he has established a triable issue of material fact with respect to what Westerhouse knew. We are not persuaded.
As one might expect, "[k]nowledge is the crucial element" in a claim for aiding and abetting a tort. (Casey, supra, 127 Cal.App.4th at p. 1145.) For, "liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted." (Ibid.) This requires a showing of " 'intentional participation with knowledge of the object to be attained' "; thus a defendant may be liable if he or she "had 'actual knowledge of all the facts relative to' the scheme and 'knowingly' assisted in its 'consummation . . . .' " (Id. at p. 1146, quoting Lomita Land & Water Co. v. Robinson (1908) 154 Cal. 36, 47-48.)
Here, Westerhouse presented evidence that he had "made no material misrepresentations or omissions of fact" to Tyson. Tyson purported to dispute this fact, stating that "Westerhouse knowingly and deliberately assisted and conspired with [Mary Ann] to conceal community property assets from [Tyson]." The evidence Tyson presented, however, does not support this statement. Instead, Tyson cites the portions of his declaration which recite that Mary Ann told Tyson in 2013 that she had hidden a gift from him in 1984, that she had given the money to Westerhouse "to hold and invest for her," that Tyson and Mary Ann had signed an agreement in 2001 making all property held by either community property, and that Westerhouse had received a copy of that agreement and acknowledged that he had read and understood it. Tyson also presents a copy of the 2001 community property agreement, which indeed states that all of Tyson's and Mary Ann's property is community property as of the signing of that agreement. Nevertheless, while this evidence may show Mary Ann intended to or knew she was concealing community property from Tyson, it does not show that Westerhouse knew or deliberately assisted or conspired with Mary Ann. Thus, this evidence does not present a triable issue of material fact because it does not demonstrate Westerhouse at any time knew he was concealing community property assets from Tyson.
For purposes of our analysis, we will consider the evidence excluded by the trial court because even with that evidence Tyson did not make the requisite showing. --------
Similarly, Tyson professed to dispute Westerhouse's undisputed fact that Westerhouse and Mary Ann had not made any "agreement to accomplish any unlawful purpose." Tyson argued "Westerhouse and Mary Ann agreed to conceal assets and income from [Tyson,]" but the evidence he presents in support shows only that Mary Ann told Tyson she had hid a gift from him and that she had given the money to Westerhouse "to hold and invest for her." This evidence does not create a triable issue of material fact because it does not demonstrate that Westerhouse knew he was hiding money from Tyson.
Westerhouse also presented as an undisputed fact that "[i]n 1998, Westerhouse received from Mary Ann a check made payable to Westerhouse in the amount of $10,000 that Mary Ann represented was a gift to her, as her sole and separate property, from [a friend], who gave the money to Mary Ann to use in initiating marital dissolution proceedings against [Tyson]." (Italics added.) Westerhouse presented in support of this undisputed fact his declaration that "[a]t the time [Mary Ann] gave the check to [Westerhouse], Mary Ann said it was a gift to her from [a friend], for [him] to invest for Mary Ann's benefit." He further averred that Mary Ann told him the friend intended "that the proceeds be held separately and invested for Mary Ann's benefit, without [Tyson] having any knowledge of the gift's existence, and that the proceeds were only to be used to file divorce proceedings." Mary Ann too declared that she "told [Westerhouse] that [the] gift was [her] separate property" and that Tyson was not to know about it. Tyson ostensibly admitted in part and disputed in part this fact, but he provided no evidence to counter the undisputed fact.
Likewise, in response to two other undisputed facts—that Mary Ann told Westerhouse when she gave him the check that the proceeds were to be held "separately from [Tyson]" and that Westerhouse agreed at that time "to hold the proceeds and invest them on her behalf"—Tyson admitted that "Mary Ann asked Westerhouse to conceal this payment from [Tyson]," but he presented no evidence to support that statement, and he did not otherwise dispute those facts.
Finally, Westerhouse presented as undisputed facts that he did not "receive" any gifts "belonging in part" to Tyson. Tyson disputed those facts by presenting the community property agreement signed by Tyson and Mary Ann in 2001, and by presenting his declaration that a copy of that agreement was forwarded to Westerhouse in 2002, which Westerhouse acknowledged reading and understanding. The evidence presented shows Westerhouse accepted funds from Mary Ann some time prior to 2001, which she represented at that time were her separate property, and which she asked Westerhouse to hold and invest for her, and which she told Westerhouse not to reveal to Tyson. Thus, the fact is undisputed.
However, Tyson contends that he has created a triable issue of material fact as to whether, once Westerhouse received a copy of the community property agreement, he knowingly assisted Mary Ann in hiding community property assets from him. The evidence presented shows that in 2001 Tyson and Mary Ann agreed that all their property, no matter how taken or held, was community property, that Westerhouse was informed of this agreement in May 2002, and that Westerhouse continued to invest the funds Mary Ann had previously given him until he returned them to her in 2013. However, there is not any evidence that as of May 2002 Westerhouse knew Mary Ann still treated the funds as her separate property. Indeed, the evidence shows Westerhouse received the agreement in which Mary Ann agreed that all funds were community property. Therefore, though " '[w]e strictly construe the moving party's evidence and liberally construe the opposing party's evidence' " (Snatchko v. Westfield LLC (2010) 187 Cal.App.4th 469, 476), Tyson has not presented any evidence that as of May 2002, Westerhouse knew he was hiding community assets from Tyson. Absent that evidence, Tyson has not made the necessary showing that Westerhouse " ' "reach[ed] a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act." ' " (American Master Lease, supra, 225 Cal.App.4th at p. 1476.) Therefore, he has not created a triable issue of material fact. Accordingly, Westerhouse is entitled to judgment as a matter of law.
DISPOSITION
The judgment is affirmed. Respondent is entitled to his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
BUTZ, Acting P. J. We concur: MURRAY, J. RENNER, J.