Opinion
G062359
04-30-2024
LARRY TANG, Plaintiff and Appellant, v. BRIAN HOROWITZ, Defendant and Respondent.
Law Offices of Thomas S. Carter and Thomas S. Carter for Plaintiff and Appellant. Goe Forsythe &Hodges and Marc C. Forsythe for Defendant and Respondent.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 30-2021-01232845 Nathan T. Vu, Judge. Affirmed.
Law Offices of Thomas S. Carter and Thomas S. Carter for Plaintiff and Appellant.
Goe Forsythe &Hodges and Marc C. Forsythe for Defendant and Respondent.
OPINION
MOTOIKE, J.
Plaintiff Larry Tang appeals from a summary judgment in favor of defendant Brian Horowitz in a contract dispute. Tang argues the trial court abused its discretion by: (1) overruling Tang's objections to Horowitz's declaration for lack of personal knowledge; (2) overruling Tang's hearsay objections to nearly all of Horowitz's exhibits; (3) admitting almost all of Horowitz's exhibits and considering them in violation of Code of Civil Procedure section 437c, subdivision (c) (all undesignated statutory references are to this code); and (4) considering Horowitz's declaration despite excluding Horowitz's exhibits. Tang also contends Horowitz did not carry his initial burden of production to show the nonexistence of any triable issue of material fact at summary judgment, because Horowitz's separate statement of undisputed material facts, in support of his motion for summary judgment, drew from his declaration and excluded exhibits.
We affirm. We hold the trial court did not abuse its discretion by overruling Tang's personal knowledge and hearsay objections. As for the exhibits Tang challenges the trial court improperly considered in violation of section 437c, subdivision (c), we find the trial court actually excluded these exhibits on a different ground and no party challenges the exclusion of these exhibits on appeal. The trial court appropriately considered Horowitz's declaration notwithstanding these excluded exhibits and acted in accordance with section 437c, subdivision (c). Additionally, we hold Tang forfeited his argument Horowitz failed to meet his initial burden of production.
FACTUAL AND PROCEDURAL BACKGROUND
I. FIRST AMENDED COMPLAINT
In May 2022, Tang filed a first amended complaint (FAC) against Horowitz. Tang alleged five causes of action: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) declaratory relief; (4) fraud; and (5) breach of fiduciary duty.
Tang alleged he, Horowitz, and another individual executed an Agreement to Assign Patents on November 22, 2017. Under the Agreement to Assign Patents, Horowitz agreed to assign certain patents to Sporting Edge Designs, LLC (SED), where Tang was a managing member and Horowitz was a member. In exchange for the patents, Tang agreed to purchase stocks in Creative Outdoor Distributors USA, Inc. (COD), a business where Horowitz served as an officer and acted as its agent. Tang alleged he performed under the Agreement to Assign Patents and bought the COD stocks, but Horowitz refused to assign the patents to SED.
II. SUMMARY JUDGMENT PROCEEDINGS
A. Horowitz's Motion for Summary Judgment and Declaration
In September 2022, Horowitz moved for summary judgment or alternatively, summary adjudication of issues. Horowitz argued he and Tang entered into an agreement with Templar Business Credit LLC (Templar) in January 2018, terminating and abandoning the parties' obligations under the Agreement to Assign Patents. He asserted this January 2018 agreement assigned the patents from Templar, which had the rights to the patents at that time, to Tang and, under an October 2018 agreement between Tang and SouthStar Financial, Tang then assigned the patents to SouthStar Financial. Horowitz contended, because of these subsequent agreements, Tang could not establish the elements of his causes of action.
In support of his motion, Horowitz submitted his declaration and exhibits. In his declaration, Horowitz stated he was "fully familiar with the facts and circumstances herein." He averred he was the chief executive officer of COD. In October 2016, COD received a loan from Templar (2016 Templar Loan Agreement). According to Horowitz, under the 2016 Templar Loan Agreement, "I was required to assign patents to Templar as collateral on the loan." Horowitz said a United States Patent and Trademark Office notice of recordation showed the patents were assigned to Templar. Soon after, "COD defaulted on the loan."
Horowitz averred Tang agreed to help COD with the loan. Horowitz and Tang signed two agreements: (1) Agreement to Assign Patents dated November 22, 2017, and (2) Agreement to Transfer Stock dated November 29, 2017. Horowitz explained, under the Agreement to Assign Patents, "I was required to assign my patents . . . to non-party SED." Under the Agreement to Transfer Stock, Tang agreed to pay the loan on COD's behalf, in exchange for an equity share of COD.
Neither Horowitz nor COD notified Templar of the Agreement to Assign Patents. Horowitz recounted, "Unbeknownst to COD and due to COD's default, Templar had already commenced to proceed against its collateral (the patents)." He stated, "Templar required COD and its principals (including [Tang], me and others) to execute the Loan Purchase and Sale Agreement dated January 9, 2018." Horowitz explained the Loan Purchase and Sale Agreement had assigned the patents from Templar to Tang and therefore Horowitz was not required to assign the patents to Tang.
Horowitz said, "[T]he parties clearly and indisputably terminated the [Agreement to Assign Patents] by entering into the January 9, 2018 Loan [Purchase and Sale] Agreement. The subject matter of the [Agreement to Assign Patents] and the January 9, 2018 Loan [Purchase and Sale] Agreement [citation] are exactly the same[-] curing the default on the [2016] Templar Loan Agreement and assigning [Horowitz's] patents that were previously collateral for the [2016] Templar Loan Agreement."
Horowitz stated that, on October 23, 2018, Tang and SouthStar Financial signed the Assignment, Assumption and Sale Agreement. In that agreement, Tang "assigned all rights and entitlements in the Templar debt," which Tang "previously purchased pursuant to the January 9, 2018 Loan [Purchase and Sale] Agreement, to SouthStar Financial."
Horowitz averred that, on the same day, COD and SouthStar Financial executed the Omnibus Agreement, which "reiterated [Tang's] assignment of all rights and entitlements in the Templar debt (pursuant to the [2016] Templar Loan Agreement) to SouthStar Financial." Horowitz stated the Omnibus Agreement detailed "the entirety of the transaction and how the parties changed course with respect to the debt purchase and the assignments of rights, which is the exact same subject matter of the [Agreement to Assign Patents]. [Tang] himself signed all of these documents and, as a result, cannot now claim that the specifics recited therein are somehow not accurate."
Horowitz stated Tang, through these multiple contracts following the Agreement to Assign Patents, "terminated, abandoned and voluntarily assigned" any right to the patents to SouthStar Financial.
Horowitz attached the following exhibits to his declaration: (1) Tang's FAC (exhibit A); (2) Horowitz's answer to the FAC (exhibit B); (3) the 2016 Templar Loan Agreement (exhibit C); (4) the U.S. Patent and Trademark Office Notice dated February 7, 2017 (exhibit D); (5) the Agreement to Assign Patents dated November 22, 2017 (exhibit E); (4) the Agreement to Transfer Stock dated November 29, 2017 (exhibit F); (5) the Loan Purchase and Sale Agreement dated January 9, 2018 (exhibit G); (6) the Assignment, Assumption and Sale Agreement dated October 23, 2018 (exhibit H); (7) the Omnibus Agreement dated October 23, 2018 (exhibit I); and (8) a request for dismissal in a lawsuit between Templar and COD (exhibit J).
B. Tang's Opposition and Evidentiary Objections
In January 2023, Tang opposed Horowitz's motion for summary judgment without submitting any evidence in support. Tang argued, among other things, Horowitz failed to meet his initial burden of production because the motion for summary judgment rested solely on an inadmissible document, Horowitz's declaration.
Tang concurrently filed evidentiary objections to Horowitz's declaration. Of relevance here, Tang objected to Horowitz's declaration in its entirety, as well as nearly every paragraph in the declaration, based on lack of personal knowledge. He also objected to numerous paragraphs and to each exhibit, except Horowitz's answer to the FAC, on the ground of hearsay. Finally, he objected to all the exhibits attached to the declaration except Horowitz's answer to the FAC for lack of authentication.
C. Trial Court's Evidentiary Rulings and Granting of Summary Judgment
In February 2023, the trial court issued an order and judgment. It overruled Tang's personal knowledge objections, explaining:
"[Horowitz's] [d]eclaration properly lays the foundation for the statements and exhibits therein. [Horowitz's] [d]eclaration reveals that [Horowitz] had personal knowledge of the agreements, transactions, and documents contained in the declaration because [Horowitz] was either a direct party or acted as agent on behalf of a party to each of the agreements and transactions.
"[Tang] argues that [Horowitz's] [d]eclaration is deficient because [Horowitz] does not assert in the first paragraph that the declaration is based on personal knowledge. However, [Tang] provides no authority for the proposition that personal knowledge must be explicitly asserted in the first paragraph of a declaration."
The trial court also overruled Tang's hearsay objections. It wrote: "The statements and exhibits in question do not constitute hearsay, as they are not offered for the truth of the matter asserted but rather, as statements of independent legal significance." In support, the trial court cited Jazayeri v. Mao (2009) 174 Cal.App.4th 301, 316-317 (Jazayeri) for the proposition that "'documents containing operative facts, such as the words forming an agreement, are not hearsay.'"
The trial court sustained Tang's evidentiary objection as to Horowitz's failure to authenticate his exhibits as "'true and correct copies of the originals,'" and it excluded exhibits A and C-J from evidence. It explained: "[W]hen [Horowitz's] [d]eclaration is read as a whole, it[]is clear that [Horowitz] is asserting that the exhibits are true and correct copies of the originals. Further, if there were any question about the authenticity of the exhibits, [Tang] could easily have presented evidence about this as [Tang] or an entity controlled by [Tang] was a party to each of the agreements, or [Tang] has substantial involvement in each of the transactions evidenced in the exhibit.
Nonetheless, it is true that the exhibits have not been authenticated, such that the Court will sustain [Tang's] evidentiary objection . . . made on that basis. However, even if all the exhibits to [Horowitz's] [d]eclaration are excluded, [Horowitz] has still met his initial burden. [Horowitz's] [d]eclaration contains sufficient facts to show that there is no dispute of material fact that the Agreement to Assign Patents dated [November 22, 2017] has been terminated, and that the rights and obligations under [that agreement] are no longer valid."
Despite the exclusion of nearly every exhibit, the trial court granted Horowitz's motion for summary judgment. As to Tang's first, second, third, and fifth causes of action, the trial court explained:
"The [FAC's first, second, third, and fifth] causes of action are all based on the same essential allegation: that [Horowitz] breached the [Agreement to Assign Patents] by failing to execute documents to effectuate the transfer of certain patents. [Citation.]
"[Horowitz's] [d]eclaration, even if the Court does not consider the attached exhibits, shows that the [Agreement to Assign Patents] and the rights and obligations under the [Agreement to Assign Patents] had been terminated. [Citation.] [Horowitz's] [d]eclaration also asserts that the patents were transferred to [Tang] and, in October 2018, [Tang] assigned to [SouthStar] Financial all rights and entitlements in the [2016 Templar Loan Agreement], including any right to assignment of patents. [Citation.] Thus, [Horowitz] was under no obligation to transfer the patents in question and did not violate any agreements or fiduciary duties by failing to do so.
"The burden then shifts to [Tang] to present specific facts that show the existence of a triable, material issue. [Tang] has not presented any such facts or filed a declaration at all, even though the assertions made by [Horowitz] all relate to agreements and transactions in which [Tang] was intimately involved. Thus, the undisputed facts show that [Tang] cannot establish his claims for breach of contract (First Cause of Action of the FAC), breach of the implied covenant of good faith and fair dealing (Second Cause of Action of the FAC), declaratory relief (Third Cause of Action of the FAC), or breach of fiduciary duty (Fifth Cause of Action of the FAC)."
As to Tang's fourth cause of action, the trial court stated Tang was unable to show the elements of promissory fraud: "The Fourth Cause of Action of the FAC alleges that Defendant Horowitz falsely promised that he would assign all of his interest in any patent held by him or any company owned or controlled by him. [Citation.] [¶] . . . The elements of a cause of action for promissory fraud are: (i) the defendant made a false promise; (ii) with intent not to perform; (iii) intent to induce reliance; (iv) justifiable reliance by the plaintiff; and (v) resulting damages. [Citations.] [¶] Here, the undisputed facts show that [Tang] cannot establish justifiable reliance, as [Tang] later agreed to restructure the transactions, the patents were assigned to [Tang], and [Tang] ultimately assigned to SouthStar Financial any right to the patents."
Tang timely appealed from the trial court's judgment.
DISCUSSION
I. SUMMARY JUDGMENT PRINCIPLES AND STANDARD OF REVIEW
"'[F]rom commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.'" (LAOSD Asbestos Cases (2023) 87 Cal.App.5th 939, 945.) A moving defendant "'bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact.'" (Ibid.) The defendant must present evidence showing "one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action." (§ 437c, subd. (p)(2).) The defendant's "motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken." (§ 437c, subd. (b)(1).)
Once the defendant carries its burden, the burden shifts to the plaintiff. (§ 437c, subd. (p)(2).) The plaintiff has a burden of production to make a prima facie showing. (LAOSD Asbestos Cases, supra, 87 Cal.App.5th at p. 945.) The plaintiff "must produce substantial responsive evidence sufficient to establish a triable issue of material fact on the merits of the defendant's showing." (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) "The plaintiff . . . shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto." (§ 437c, subd. (p)(2).) "If the plaintiff is unable to meet [its] burden of proof regarding an essential element of [its] case, all other facts are rendered immaterial." (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 780781.)
"The moving party's evidence is strictly construed, while the opponent's is liberally construed. [Citation.] All reasonable inferences must be drawn in favor of the opposing party and 'summary judgment cannot be granted when the facts are susceptible of more than one reasonable inference ....'" (Blaylock v. DMP 250 Newport Center, LLC (2023) 92 Cal.App.5th 863, 870.)
We review the trial court's granting of summary judgment de novo. (California Medical Assn. v. Aetna Health of California Inc. (2023) 14 Cal.5th 1075, 1087.) But "[t]here is a split of authority on [the standard of review of] evidentiary objections made in connection with a motion for summary judgment." (Martin v. Board of Trustees of the California State University (2023) 97 Cal.App.5th 149, 161.) Most appellate courts have applied the abuse of discretion standard, while some have used the de novo standard. (LAOSD Asbestos Cases, supra, 87 Cal.App.5th at p. 946 &fn. 3 [citing abuse of discretion cases].) "We will follow the weight of authority and apply the abuse of discretion standard." (Schmidt v. Citibank, N.A. (2018) 28 Cal.App.5th 1109, 1118.)
II.
THE TRIAL COUR DID NOT ERR IN RULING ON TANG'S EVIDENTIARY OBJECTIONS
"The 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. In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence ...." (§ 437c, subd. (c).)
"Supporting and opposing affidavits or declarations shall be made by a person on personal knowledge, shall set forth admissible evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavits or declarations." (§ 437c, subd. (d).) "'The affidavits must cite evidentiary facts, not legal conclusions or "ultimate" facts.'" (Brown v. Ransweiler (2009) 171 Cal.App.4th 516, 529.) "'Matters which would be excluded under the rules of evidence if proffered by a witness in a trial as hearsay, conclusions or impermissible opinions, must be disregarded in supporting affidavits.'" (LAOSD Asbestos Cases, supra, 87 Cal.App.5th at p. 946.)
A. Personal Knowledge
Tang contends the trial court abused its discretion when it overruled his objections to Horowitz's declaration for lack of personal knowledge. He argues Horowitz failed to "specifically attest" the statements "in his declaration were based on his personal knowledge" in violation of section 437c, subdivision (d). We disagree.
Section 437c, subdivision (d), merely provides, "[D]eclarations shall be made by a person on personal knowledge." (§ 437c, subd. (d).) It does not require a declarant to explicitly state a declaration is based on personal knowledge, nor does Tang cite any legal authority requiring a declarant to do so. Declarations may be sufficient, even when they contain "no statement that '"the facts set forth are personally known to the declarant and . . . he has firsthand knowledge of the same."'" (Osmond v. EWAP, Inc. (1984) 153 Cal.App.3d 842, 851.)
As the trial court properly found, Horowitz's declaration shows Horowitz had personal knowledge of the facts in this matter. In his declaration, Horowitz stated he was chief executive officer of COD. Horowitz was either a party or an agent on behalf of a party to the relevant agreements and transactions. (See Taylor v. Financial Casualty &Surety, Inc. (2021) 67 Cal.App.5th 966, 983 [an officer and director's status "gave him sufficient personal knowledge to establish a foundation for his assertions"].) Notwithstanding the absence of a statement that Horowitz had personal knowledge of the facts, the facts set forth in his declaration were sufficient to establish personal knowledge. Thus, the trial court did not abuse its discretion by overruling Tang's personal knowledge objections.
B. Hearsay
1. Horowitz's Declaration
"Evidence of an out-of-court statement offered to prove the truth of the matter stated is hearsay. (Evid. Code, § 1200, subd. (a).)" (Faigin v. Signature Group Holdings, Inc. (2012) 211 Cal.App.4th 726, 749.) "Utterances, written or oral, which are not merely statements or assertions offered as evidence of the truth of what is stated, but acts in themselves constituting legal results in issue in the case . . . do not come under the hearsay rule." (Bank of America National Trust &Savings Assn. v. Taliaferro (1956) 144 Cal.App.2d 578, 581-582.) "'Operative facts draw their significance from having been said or written regardless of whether they are true, and such facts lie outside the hearsay rule.'" (J&A Mash &Barrel, LLC v Superior Court (2022) 74 Cal.App.5th 1, 18-19.) "[D]ocuments containing operative facts, such as the words forming an agreement, are not hearsay." (Jazayeri, supra, 174 Cal.App.4th at p. 316.)
It is unclear in Tang's briefs whether he is challenging the trial court's overruling of Tang's hearsay objections to Horowitz's declaration. We therefore deem any such challenge forfeited. (Martine v. Heavenly Valley Limited Partnership (2018) 27 Cal.App.5th 715, 728 ["We are not required to examine undeveloped claims or to supply arguments for the litigants"].) Even if we were to consider such a challenge, we would conclude the trial court did not abuse its discretion in finding Horowitz's declaration contained statements of independent legal significance not offered for the truth of the matter asserted. In other words, his statements were operative facts, which are not hearsay.
Tang also argues, for the first time on appeal, Horowitz's declaration is replete with double hearsay. We decline to address this argument and treat it as forfeited because "'issues not raised in the trial court cannot be raised for the first time on appeal.'" (Johnson v. Greenelsh (2009) 47 Cal.4th 598, 603.)
2. Horowitz's Exhibits
Tang challenges the trial court's overruling of Tang's hearsay objections to Horowitz's exhibits A and C-J. But the trial court excluded these exhibits on a different ground-for failure to authenticate these exhibits-which no party challenges on appeal. "'"[W]e review the [evidentiary] ruling, not the court's reasoning and, if the ruling was correct on any ground, we affirm."'" (People v. Brooks (2017) 3 Cal.5th 1, 39.) "The rationale for this consideration is that there can be no prejudice from an error in logic or reasoning if the decision itself is correct." (Fierro v. Landry's Restaurant Inc. (2019) 32 Cal.App.5th 276, 286-287.) Here, Tang is not challenging the evidentiary ruling, but only the rationale for the ruling. We therefore need not consider Tang's hearsay challenge to these exhibits.
C. Section 437c, subdivision (c)
Tang next argues: "The entirety of [Horowitz's] case is built on Exhibits A through J, and when the trial court completely ignored the rules of evidence by allowing them in, the trial court committed reversible error and abused its discretion. This is nowhere more clearly seen than where the trial court sustained [Tang's] evidentiary objections to exhibits A, C, D, E, F, G, H, I, and J, and then concluded that even if all the exhibits to [Horowitz's] Declaration are excluded, [Horowitz] has still met his initial burden." (Italics omitted.) Tang asserts "[t]he trial court's findings run counter to" section 437c, subdivision (c). He contends the trial court should have disregarded Horowitz's declaration because the trial court excluded "the so-called operative documents."
Tang appears to be uncertain whether the trial court excluded exhibits A and C-J. To be clear, the trial court sustained Tang's authentication objection to these exhibits; it did not admit them into evidence. Despite the exclusion of the "operative documents," Horowitz recounted facts based on personal knowledge in his declaration, as discussed above. The trial court therefore did not abuse its discretion by considering Horowitz's declaration and acted in accordance with section 437c, subdivision (c): it considered "all of the evidence set forth in the papers," including the declaration, and disregarded the excluded exhibits.
In sum, we conclude the trial court did not err in ruling on Tang's evidentiary objections. Because no party challenges the trial court's exclusion of exhibits A and C-J for lack of authentication, we decline to consider Tang's challenge to the trial court's reasoning for excluding these exhibits. The trial court appropriately considered the evidence as required by section 437c, subdivision (c).
III. HOROWITZ MET HIS INITIAL BURDEN OF PRODUCTION
Tang argues Horowitz failed to meet his initial burden of production because Horowitz's separate statement of undisputed material facts, in support of the motion for summary judgment, derived from Horowitz's declaration and excluded exhibits. But Horowitz's separate statement of undisputed material facts is not in the record. Without it, we are unable to evaluate this argument and treat it as forfeited. (Jameson v. Desta (2018) 5 Cal.5th 594, 609 ["'Failure to provide an adequate record on an issue requires that the issue be resolved against [the appellant]'"].)
DISPOSITION
We affirm. Respondent is entitled to costs on appeal.
WE CONCUR: SANCHEZ, ACTING P. J., GOODING, J.