Opinion
B298922
06-23-2020
BELLA LANE, as Trustee, etc., Plaintiff and Appellant, v. EMILY MURA-SMITH et al., Defendants and Respondents.
Brown Rudnick, Joel S. Miliband, Shoshana B. Kaiser, and Samuel A. Moniz for Plaintiff and Appellant. Richard M. Rosenthal for Defendant and Respondent Emily Mura-Smith. No appearances for Defendants and Respondents Lisa Long, Widows Kitchen, LLC, Flats Management Group, LLC, and Turtle Dove Productions, Inc.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a). Los Angeles County Super. Ct. No. BC710839 APPEAL from a judgment of the Superior Court of Los Angeles County, Barbara A. Meiers, Judge. Affirmed. Brown Rudnick, Joel S. Miliband, Shoshana B. Kaiser, and Samuel A. Moniz for Plaintiff and Appellant. Richard M. Rosenthal for Defendant and Respondent Emily Mura-Smith. No appearances for Defendants and Respondents Lisa Long, Widows Kitchen, LLC, Flats Management Group, LLC, and Turtle Dove Productions, Inc.
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INTRODUCTION
Bella Lane, as trustee of the Michelle M. Lane Living Trust (Trust), appeals from a judgment entered in favor of Lisa Long, Emily Mura-Smith, Widows Kitchen, LLC (Widows Kitchen), Flats Management, LLC (Flats Management), and Turtle Dove Productions, Inc. (Turtle Dove Productions). On appeal, Lane argues the court erred in denying her requests for entry of a default judgment on the first cause of action for breach of contract, third cause of action for fraud, and fourth cause of action for breach of fiduciary duty asserted in her complaint. Because Lane has not provided an adequate record to review her claims on appeal, we affirm the judgment.
The court entered judgment in Lane's favor on the second cause of action for breach of contract.
BACKGROUND
Lane, as trustee of the Trust, sued defendants for claims arising out of the Trust's $250,000 investment in Widows Kitchen to develop a new restaurant in Beverly Hills. The first cause of action is for breach of contract against Widows Kitchen, alleging the company breached the investment agreement when it failed to make required annual payments of $75,000 to the Trust in October 2016 and October 2017. The second cause of action asserts Long breached a personal guaranty she executed in favor of the Trust when she failed to pay the Trust $150,000—i.e., the amount of Widows Kitchen's outstanding payments under the investment agreement. In the third cause of action, Lane alleged Long, Flats Management, and Widows Kitchen fraudulently induced the Trust to invest in the company by misrepresenting how the company's shares would be distributed among investors and by undervaluing the salaries of the company's managers. The fourth cause of action alleged all defendants breached their fiduciary duties owed to the Trust by failing to allow Lane to inspect Widows Kitchen's books and records, by mismanaging the company's assets and financial records, and by failing to make distributions to the company's members. As to the third and fourth causes of action, Lane also alleged defendants acted willfully, wrongfully, and with malice. Finally, the complaint's fifth cause of action against Widows Kitchen sought an accounting.
In the first and second causes of action for breach of contract, Lane sought compensatory damages "in an amount subject to proof, but no less than $150,000 plus interest at the legal rate." In the third cause of action for fraud, Lane sought compensatory damages "in an amount subject to proof, but no less than $250,000 plus interest at the legal rate from October 23, 2015." As to the fourth cause of action for breach of fiduciary duty, Lane claimed she suffered "no less than" $250,000 in damages. Lane also requested punitive damages in the third and fourth causes of action. Lane requested an accounting in the fifth cause of action. In addition, Lane requested costs and attorneys' fees "in an amount not less than $50,000."
In August 2018, defendants answered the complaint. In September 2018, defendants filed an amended answer.
In November 2018, Lane served Long, Mura-Smith, and Widows Kitchen with requests for admissions (RFAs). Long, Mura-Smith, and Widows Kitchen did not respond to the RFAs. Lane moved for orders deeming admitted the facts raised in the RFAs and $690 in monetary sanctions against each defendant.
On February 28, 2019, the court issued a minute order granting Lane's motions to deem admitted the facts raised in the RFAs and awarding Lane $6,210 in sanctions against those three defendants, jointly and severally. The caption on the court's minute order states the hearing was held to address not only Lane's motions to deem the RFAs admitted, but also an "Order to Show Cause Re: Striking the Answers of all Defendants" and Lane's motions to compel some of the defendants' responses to interrogatories and requests for production. The February 28, 2019 minute order also states that "[p]ursuant to Plaintiff['s] motions and the court order of January 4, 2019, the Answers of all Defendants now on file are ordered stricken, Defendants having failed to appear to oppose as to noticed 'dismissal matters' (as well as with regard to the above-noted discovery matters). Plaintiffs are to submit a judgment prove up package ... in the same manner as if all Defendants had been defaulting parties from the outset."
The appellate record does not contain a transcript from the February 28, 2019 hearing or several of the documents referenced in the court's minute order issued after that hearing, such as the January 4, 2019 order, the order to show cause, or Lane's motions to compel responses to interrogatories and requests for production. Nor does the record contain any request by Lane to strike defendants' answers or any defaults that may have been entered against defendants.
On May 6, 2019, Mura-Smith moved to vacate the default against her, claiming it had been entered as the result of "mistake, inadvertence, surprise, and/or excusable neglect." Mura-Smith explained that after she was served with the summons and complaint, Long assured her that Long's attorneys would represent Mura-Smith in the underlying lawsuit, but Mura-Smith did not recall signing a retainer agreement. Around October 2018, Long had asked Mura-Smith to sign a substitution of attorney form. But after Mura-Smith signed that form, she never received any documents related to this case, and she did not discover that a default had been entered against her until April 2019.
On May 15, 2019, Lane requested entry of a default judgment against Long, Mura-Smith, Widows Kitchen, Flats Management, and Turtle Dove Productions. As to Widows Kitchen, Lane sought a judgment for $301,890.82, including $225,000 in damages, nearly $24,000 in interest, and $50,000 in attorneys' fees. As to Long, Lane filed three separate requests for entry of a default judgment. Lane asked the court to enter judgment against Long for up to $346,403.16, including $250,000 in damages, nearly $62,000 in interest, and $50,000 in attorneys' fees. As to Mura-Smith and Turtle Dove Productions, Lane requested entry of judgment against each defendant for $302,985.35, inclusive of attorneys' fees, and as to Flats Management, Lane sought a judgment for $364,403.16, inclusive of attorneys' fees.
Although Lane did not request entry of a default judgment against Kyle Schutte, nothing in the record indicates he was ever dismissed from the lawsuit.
For each request, Lane used the mandatory CIV-100 form (Cal. Rules of Court, rule 3.1800(a)), and she selected the box in the caption section of each form requesting a "COURT JUDGMENT." Lane also checked the box in Section 1(d) of each form stating that she was "request[ing] a court judgment under Code of Civil Procedure sections 585(b), 585(c), 989, etc., against [the named] defendant." On each CIV-100 form used by Lane, Section 1(d) advises that "[t]estimony [is] required" for entry of a court judgment.
In support of her default judgment requests, Lane filed a "summary of claims and [supporting evidence]." (Capitalization removed.) Lane also filed a request for judicial notice of documents from a prior lawsuit in which she obtained a writ of mandate compelling defendants to produce copies of, among other things, Widows Kitchen's financial and personnel records. And Lane filed sworn declarations executed by: (1) herself; (2) two of her attorneys; (3) Schutte; (4) Julissa M. Quirk, an accountant retained by Lane "to inspect and copy the books and records of Widows Kitchen"; and (5) J. Michael Issa, a financial advisor retained by Lane as a "damages expert" to "render an opinion on the fair market value of [the Trust's] investment in Widows Kitchen." In support of her declaration, Quirk attached two exhibits: a copy of a page from what is purported to be Widows Kitchen's "2015 General Ledger," and a copy of a page from what is purported to be Widows Kitchen's "Investor List."
Mura-Smith filed an opposition and objections to Lane's request for entry of default judgment.
On May 29, 2019, the court heard Lane's default judgment requests. Two days later, the court issued a minute order granting in part and denying in part Lane's requests. The court granted Lane's request against Long on the second cause of action for breach of contract in the amount of $275,000, "representing [the Trust's] 'investment money' plus interest at 10% from the date of the closure of the restaurant ... based only upon defendant Long's guaranty." The court denied Lane's other requests.
Lane has not provided us a copy of the reporter's transcript, or a suitable substitute, from the May 29, 2019 hearing.
The court explained that it reached its decision "after an in court discussion of the perceived deficiencies in the moving papers." The court also stated that its "conclusion in part reflects the fact that in connection with [the Trust's] investment, plaintiff signed a document which set forth in every way possible, including by means of a paragraph that said that this was the entire integrated agreement between the parties, that whatever [Lane] may have been told or led to expect, essentially no promises were being made and that essentially every expectation she might have ... might not be realized." The court went on, "Similarly, the document [Lane] was given which her counsel referred to as a prospectus was also very clear in its explanation that everything stated therein was but a hope, a plan, and a projection, not anything to be relied upon."
On June 19, 2019, the court entered judgment in favor of Lane and against Long for $275,000 on the second cause of action for breach of contract. The court entered judgment in defendants' favor on the first, third, fourth, and fifth causes of action.
Lane appeals.
DISCUSSION
Lane argues the court erred when it entered judgment in defendants' favor on the first, third, and fourth causes of action of the complaint. We are unable to evaluate Lane's claims on appeal because she has not provided us an adequate appellate record.
The most fundamental rule of appellate review is that the judgment or order challenged on appeal is presumed correct and all presumptions are indulged in favor of upholding the judgment. (Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 799.) The appellant, therefore, must affirmatively demonstrate error. (Smiley v. Citibank (1995) 11 Cal.4th 138, 147; Robbins v. Los Angeles Unified School Dist. (1992) 3 Cal.App.4th 313, 318.) To satisfy this burden, the appellant must, among other things, supply an adequate appellate record. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295 (Maria P.).) Failure to comply with this requirement may result in a waiver or forfeiture of the appellant's claims on appeal. (See id. at pp. 1295-1296.)
"In numerous situations, appellate courts have refused to reach the merits of an appellant's claims because no reporter's transcript of a pertinent proceeding or a suitable substitute was provided. ([Maria P., supra,] 43 Cal.3d [at pp.] 1295-1296 [attorney fee motion hearing]; Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575 (lead opn. of Grodin, J.) [new trial motion hearing]; In re Kathy P. (1979) 25 Cal.3d 91, 102 [hearing to determine whether counsel was waived and the minor consented to informal adjudication]; Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440, 447 [trial transcript when attorney fees sought]; Estate of Fain (1999) 75 Cal.App.4th 973, 992 [surcharge hearing]; Hodges v. Mark (1996) 49 Cal.App.4th 651, 657 [nonsuit motion where trial transcript not provided]; Null v. City of Los Angeles (1988) 206 Cal.App.3d 1528, 1532 [reporter's transcript fails to reflect content of special instructions]; Buckhart v. San Francisco Residential Rent etc., Bd. (1988) 197 Cal.App.3d 1032, 1036 [hearing on Code Civ. Proc., § 1094.5 petition]; Sui v. Landi (1985) 163 Cal.App.3d 383, 385-386 [motion to dissolve preliminary injunction hearing]; Rossiter v. Benoit (1979) 88 Cal.App.3d 706, 713-714 [demurrer hearing]; Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70, 71-73 [transcript of argument to the jury]; Ehman v. Moore (1963) 221 Cal.App.2d 460, 462 [failure to secure reporter's transcript or settled statement].)" (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 186-187.) In the absence of a transcript or a suitable substitute, any ruling concerning an evidentiary matter is presumed to be correct. (Nielsen v. Gibson (2009) 178 Cal.App.4th 318, 324.)
As we noted in the background of the case, we are missing numerous materials from the trial court proceedings. Specifically, Lane has not provided us copies of the reporter's transcripts, or suitable substitutes, from the February 28 and May 29, 2019 hearings. Lane also omitted from the appellate record any of the documents referenced in the court's February 28, 2019 minute order, such as the January 4, 2019 order, the order to show cause, Lane's motions to compel discovery responses by some of the defendants, and any request by Lane to strike defendants' answers.
The omission of these materials precludes us from evaluating whether the court properly denied Lane's default judgment requests. We note, for example, the court may have determined that it lacked the authority to enter a default judgment on the first, third, and fourth causes of action asserted in the complaint. Indeed, the court appears to have used an irregular procedure to strike defendants' answers and deem defendants "defaulting parties from the outset." Although a court may strike a defendant's answer and enter default as a terminating sanction (see Greenup v. Rodman (1986) 42 Cal.3d 822, 828 [recognizing that courts may, as a discovery sanction, strike an answer and enter the defendant's default]), we cannot, on this record, determine why the court struck defendants' answers or whether defendants were provided adequate notice that the court intended to strike their answers. The court's February 28, 2019 minute order states only that the court struck defendants' answers "[p]ursuant to Plaintiffs' motions and the court order of January 4, 2019 ... , Defendants having failed to appear to oppose as to noticed 'dismissal matters' (as well as with regard to the above-noted matters)." But none of the motions filed by Lane that are included in the record contain any request for such a sanction and, as noted above, the record is missing the January 4, 2019 order. For all we know, the court may have denied Lane's default judgment requests after determining it had improperly struck some of the defendants' answers and that entry of a default judgment on the first, third, and fourth causes of action would be improper. (See Yeung v. Soos (2004) 119 Cal.App.4th 576, 582 [court lacks authority to enter a default judgment where it had "no power to enter the default"].)
If the court struck defendants' answers and entered a default against them as a discovery sanction pursuant to a local rule, it was required to first provide them "prior notice" and an "opportunity to be heard." (See Code Civ. Proc., § 575.2 ["Local rules promulgated pursuant to Section 575.1 may provide that if any counsel, [or] a party represented by counsel ... fails to comply with any of the requirements thereof, the court on motion of a party or on its own motion may strike out all or any part of any pleading of that party ... or enter a judgment by default against that party," only if its first provides them "prior notice" and "an opportunity to be heard"]; see also Lee v. An (2008) 168 Cal.App.4th 558, 564-566.)
The court also could have denied Lane's default judgment requests after finding she failed to meet her burden to prove she was entitled to the damages requested in her complaint. While a plaintiff seeking a default judgment does not need to present any evidence establishing the defaulted defendant's liability with respect to a well-pleaded claim (Carlsen v. Koivumaki (2014) 227 Cal.App.4th 879, 898), she must prove her entitlement to damages with actual evidence where, as here, she has requested entry of a default judgment by the court under section 585, subdivision (b). (See Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 287.) The court has discretion to allow the plaintiff to use "affidavits, in lieu of personal testimony, as to all or any part of the evidence or proof required or permitted to be offered, received or heard." (Code Civ. Proc., § 585, subd. (d).) But "[j]udges generally require personal testimony when credibility is crucial ... [or] fraud or malice is alleged ... ." (Cal. Judges Benchbook: Civil Proceedings Before Trial (CJER 2019) § 16.43, p. 1567.)
Without the transcript from the hearing on Lane's default judgment requests, we cannot determine whether the court made evidentiary rulings that may have materially affected Lane's ability to prove her entitlement to damages as to the first, third, and fourth causes of action. For instance, the court may have found some of the witnesses who submitted sworn statements lacked credibility or personal knowledge of the facts to which they testified. (See Code Civ. Proc., § 585, subd. (d) ["The facts stated in the affidavit or affidavits shall be within the personal knowledge of the affiant and shall be set forth with particularity, and each affidavit shall show affirmatively that the affiant, if sworn as a witness, can testify competently thereto."].)
The court may also have found that some of the witnesses failed to authenticate the exhibits attached to their sworn statements, such as the copies of portions of Widows Kitchen's financial and investor records attached to the accountant's declaration. Or, because Lane was requesting a default judgment on a claim of fraud, the court may have required Lane to present live testimony because it found Lane's documentary evidence was insufficient to prove her entitlement to damages.
In short, because Lane has not provided an adequate appellate record for us to evaluate her claims on appeal, we must affirm the court's judgment. (See Estate of Fain, supra, 75 Cal.App.4th at p. 992 ["it is presumed that the unreported trial testimony would demonstrate the absence of error"].)
DISPOSITION
The judgment is affirmed. The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
LAVIN, Acting P. J. WE CONCUR:
EGERTON, J.
DHANIDINA, J.