Barbaccia v. GBR Magic Sands MHP, LLC

• Decision Date: 16 December 2022
• Docket Number: B322596
• Parties: LOUIS P. BARBACCIA, SR., as Trustee, etc. et al., Plaintiffs and Respondents v. GBR MAGIC SANDS MHP, LLC, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

LOUIS P. BARBACCIA, SR., as Trustee, etc. et al., Plaintiffs and Respondents
v.
GBR MAGIC SANDS MHP, LLC, Defendant and Appellant.

B322596

California Court of Appeals, Second District, Seventh Division

December 16, 2022

NOT TO BE PUBLISHED

Order Filed Date 1/11/23

APPEAL from a judgment of the Superior Court of Santa Clara County, No. 17CV313947 Thang N. Barrett, Judge.

Morgan Franich Fredkin Siamas &Kays, William Siamas, David A. Kays and Mark B. Fredkin for Defendant and Appellant.

Hopkins &Carley, David W. Lively, Allonn E. Levy and Ryan Cunningham; Gates Eisenhart Dawson, Marc A. Eisenhart and James L. Dawson for Plaintiffs and Respondents.

ORDER MODIFYING OPINION AND DENYING PETITIONS FOR REHEARING

THE COURT:

The opinion filed December 16, 2022, and not certified for publication, is modified as follows:

1. On page 46, second paragraph, line 1, the word "has" is changed to "may have," and on line 2, the word "uncontradicted" is deleted, so that the sentences read:

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GBR may have a point, but not one that warrants reversal. GBR presented evidence the 2007 lease agreements and related documents describe the property encumbered by the leases as including Parcel Eight.

2. On page 46, lines 10-11, delete the sentence: Therefore, "all of" lot 26, as described in the leases, includes Parcel Eight.

3. On pages 46-47, footnotes 21 and 22 are deleted.

The petitions for rehearing are denied.

This order does not change the appellate judgment.

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SEGAL, J.

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INTRODUCTION

Since 2007 brothers Louis P. Barbaccia, Sr. (Lou) and Cyril Barbaccia (Cy) (now deceased), their two sisters, and their respective successors, have been litigating in Santa Clara County Superior Court over the rights to a 20-acre property in San Jose. Lou, Cy, and their parents originally obtained the property in the 1960s, with Lou and Cy collectively holding an undivided one-half interest in the property and the parents holding the other undivided one-half interest. In 1963 the parents agreed to lease their interest to Lou and Cy under a 98-year lease. The brothers subsequently built a mobilehome park on the property.

By 2010, after a series of transactions and lawsuits, Josephine Pecoraro (Cy and Lou's sister), Catherine Pecoraro (Cy and Lou's niece; the daughter of their deceased sister, Rita), Lou, and Loubar LLC-an entity created by Lou-collectively held, in various shares, the one-half interest originally owned by Cy and Lou's parents. GBR Magic Sands MHP, LLC-an entity created by Cy to operate the mobilehome park-held the right to lease that one-half interest under the 1963 lease. Loubar separately owned the collective one-half interest originally owned by the brothers, which GBR also held the right to lease under two separate agreements.

In 2010 Josephine and Catherine (backed by Lou) filed an action in Santa Clara County Superior Court to cancel the 1963 lease and to quiet title to the one-half undivided interest originally owned by Cy and Lou's parents. (Pecoraro v. GBR Magic Sands MHP, LLC (Super. Ct. Santa Clara County, 2013, No. 1-10-CV-186621) (the Pecoraro action).) Josephine and Catherine prevailed. The trial court in that action ruled Cy

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obtained the 1963 lease from his parents by "undue influence," and in 2013 the court entered a judgment canceling the lease, quieting title in favor of Josephine, Catherine, and Lou, and ordering GBR to relinquish possession of the one-half interest in the property originally owned by Cy and Lou's parents and previously encumbered by the 1963 lease. In October 2016 the Sixth District Court of Appeal affirmed that judgment. (See Pecoraro v. Barbaccia (Oct. 18, 2016, H040008, H040222) [nonpub. opn.].)

GBR, however, did not relinquish possession of the property. It continued to operate the mobilehome park and lease mobilehome lots on the property to tenants. In 2018 Loubar, Lou, Catherine, and Vivian Martorana (the Loubar plaintiffs)^[1]filed this action against GBR seeking mesne profits from GBR's continued possession of the Loubar plaintiffs' undivided one-half interest in the property.^[2] GBR, in turn, filed a cross-complaint

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seeking declaratory relief to allow it to occupy the entire property and continue operating the park. Following a nonjury trial, the trial court ruled in favor of the Loubar plaintiffs and awarded them over $5 million in damages.

GBR makes several arguments on appeal, which generally involve some version of the argument that the judgment in the Pecoraro action quieting title to the Loubar plaintiffs' one-half interest had no practical effect on GBR's right to possess the property. As we explain, those arguments lack merit, and GBR is liable for damages caused by continuing to possess or occupy the property to the exclusion of the Loubar plaintiffs after the date the Pecoraro judgment became enforceable. GBR may not relitigate whether it has any rights in the Loubar plaintiffs' one-half interest.

GBR, however, is partially correct on one of its arguments: Claim preclusion bars the Loubar plaintiffs from recovering damages from GBR's possession of the property before the judgment in the Pecoraro action became enforceable, which as we explain was not until the Sixth District Court of Appeal issued its remittitur on January 12, 2017. If the Loubar plaintiffs wanted to seek damages for GBR's possession of the property before that date, they had to seek those damages in the Pecoraro action. Thus, by awarding the Loubar plaintiffs damages for GBR's possession of the property as far back as August 2012, the trial court erred.

GBR is also correct on an argument that affects part of the property at issue in this appeal: Substantial evidence did not support the trial court's ruling in favor of the Loubar plaintiffs on their third cause of action, in which the Loubar plaintiffs sought damages for GBR's alleged possession of a vacant lot on land the

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parties refer to as Parcel Eight. The Loubar plaintiffs did not prove GBR occupied or excluded the Loubar plaintiffs from Parcel Eight during the relevant time period.

Therefore, we reverse the judgment and direct the trial court to conduct a new trial on damages, limited to damages incurred after January 12, 2017. After the new trial, the court is directed to enter a new judgment that, among other things, finds in favor of GBR on the Loubar plaintiffs' third cause of action and in favor of the Loubar plaintiffs on GBR's cross-complaint.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Property

Philip and Josephine Greco Barbaccia had four children: Cy, Lou, Josephine, and Rita. In December 1960 the parents purchased a 20-acre orchard in San Jose (the Property) and transferred an undivided one-fourth interest in the Property to each of Cy and Lou. Cy and Lou formed a business partnership, which held their collective one-half interest (the partnership's one-half interest). The parents kept the remaining one-half interest. Over the next few years, Cy and Lou bought 36 additional acres adjacent to the Property. In 1963 the parents leased their one-half interest in the Property to the brothers for 98 years.

The Property contains three parcels: Parcel One, Parcel Three,^[3] and Parcel Eight. Cy and Lou developed the Magic Sands

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Mobile Home Park on Parcel One, Parcel Three, and the adjacent 36 acres. For many years they leased Parcel Eight to Standard Oil Company, and then to Standard Oil's successor, Chevron USA, for a gas station.

After both parents died, Cy, Lou, Josephine, and Rita's two children, Anthony and Catherine Pecoraro, inherited the parents' interest in the Property: Cy, Lou, and Josephine each inherited an undivided one-eighth interest in the Property (one-fourth of the parents' one-half interest), and Catherine and Anthony each inherited an undivided one-sixteenth interest in the Property (one-eighth of the parents' one-half interest.)^[4] Anthony sold his interest to Cy, giving Cy an undivided three-sixteenth interest. The collective one-half interest in the Property that Cy, Lou, Josephine, and Catherine obtained from the parents remained encumbered by the 1963 lease. Cy and Lou's company, Barbaccia Properties L.P., held the partnership's one-half interest, which was not encumbered by the 1963 lease.

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B. Loubar Obtains Cy's Interest in the Property, Plus the Partnership's One-half Interest, Pursuant to a Partition

Cy and Lou's partnership came to an end. In 2006 Cy and new business partners purchased the partnership's one-half interest from Barbaccia Properties. Cy then orchestrated a series of transfers and leases between various entities with which he was affiliated. An entity called MHP Roll-Up ultimately obtained the partnership's one-half interest, and in 2007 GBR obtained the right to lease the partnership's one-half interest under two lease agreements. These 2007 leases, which were essentially between entities affiliated with Cy and gave GBR the right to lease a one-half interest in the Property, figure significantly in the subsequent litigation among the family members. The 2007 leases, combined with GBR's right to lease the other one-half interest in the Property under the 1963 lease, gave GBR the right to operate the mobilehome park on the entire property.

But that would change, in two steps.

Step one: Lou, Josephine, and Catherine filed an action to partition the Property, and the parties stipulated to a procedure to sell the Property. Lou, Josephine, and Catherine, collectively, submitted a successful bid, and in November 2010 the court entered an order confirming the sale. After the sale the interests of Lou, Josephine, and Catherine remained unchanged, while Loubar obtained all of Cy's interest in the Property, plus the partnership's one-half interest. At that point, the ownership interests in the Property were as follows: Loubar owned the partnership's undivided one-half interest and Loubar, Lou...