Caira v. Offner

• Decision Date: 28 January 2005
• Docket Number: No. D042481.,D042481.
• Citation: 24 Cal.Rptr.3d 233,126 Cal.App.4th 12
• Parties: Sylvia Offner CAIRA, Plaintiff and Respondent, v. Laurens OFFNER, Defendant and Appellant. Laurens Offner, Cross-complainant, Cross-defendant and Appellant, v. Alexandra Ponce de Leon, Individually and as Independent Administrator, etc., et al., Cross-defendants, Cross-complainants and Respondents; Robin Offner, Cross-defendant and Respondent. Alexandra Ponce de Leon, Individually and as Executor, etc., et al., Plaintiffs and Respondents, v. Laurens Offner, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

24 Cal.Rptr.3d 233

126 Cal.App.4th 12

Sylvia Offner CAIRA, Plaintiff and Respondent, v. Laurens OFFNER, Defendant and Appellant.

Laurens Offner, Cross-complainant, Cross-defendant and Appellant, v. Alexandra Ponce de Leon, Individually and as Independent Administrator, etc., et al., Cross-defendants, Cross-complainants and Respondents;

Robin Offner, Cross-defendant and Respondent.

Alexandra Ponce de Leon, Individually and as Executor, etc., et al., Plaintiffs and Respondents, v. Laurens Offner, Defendant and Appellant.

No. D042481.

Court of Appeal, Fourth District, Division 1.

January 28, 2005.

English & Gloven, Donald A. English, Mark M. Gloven and William J. Garrison; Law Offices of Mary A. Lehman and Mary A. Lehman for Defendant and Appellant and for Cross-complainant, Cross-defendant and Appellant.

Vantage Law Group, Michael H. Riney, San Diego; and Richard H. Benes, San Diego, for Plaintiff and Respondent Sylvia Offner Caira.

Vantage Law Group and Michael H. Riney, San Diego; and Richard H. Benes, San Diego, for Cross-defendants, Cross-complainants and Respondents and for Plaintiffs and Respondents Alexandra Ponce de Leon et al.

Vantage Law Group and Michael H. Riney, San Diego; and Richard H. Benes, San Diego, for Cross-defendant and Respondent.

AARON, J.

I. INTRODUCTION

Laurens Offner (Laurens) appeals a judgment entered against him in three consolidated actions involving disputes between him and his three siblings, Robin Offner (Robin), Alexandra Offner Ponce De Leon (Alexandra), and Sylvia Offner Caira (Sylvia) (collectively Siblings), and the estate of his father, Dr. Franklin F. Offner (the Estate).¹ The actions involved disputes over the ownership of a family company, Platypus Wear, Inc., and its subsidiary, P.W. Industries (Platypus),² and Laurens's alleged conversion of Platypus's corporate assets for his personal use.

The trial court impaneled a jury in the consolidated actions. The jury rendered a special verdict finding that: (1) Laurens owned certain shares of Platypus's common stock in dispute; (2) Sylvia owned 5,500 shares of Platypus's preferred stock, and (3) Laurens had converted $588,535 worth of Platypus's corporate assets for his personal use. The jury also found that Laurens had acted with malice, fraud, or oppression, and awarded punitive damages in the amount of $150,000.

The trial court determined that all of the actions were equitable claims and that the jury's verdict was therefore merely advisory. The trial court entered a judgment consistent with the jury's special verdict, with one exception. Contrary to the jury's verdict, the trial court found that the shares of Platypus's common stock in dispute were owned by the Estate, not by Laurens.

On appeal, Laurens contends the trial court erred in: (1) denying him the right to a jury trial on the issue of the ownership of Platypus's common stock; (2) excluding from evidence, pursuant to Evidence Code section 1152, an e-mail sent by Robin to Sylvia, Alexandra and Laurens during settlement negotiations, in which Robin mentioned the possibility of repurchasing the 5,500 shares of Platypus's preferred stock from a third party; and (3) entering an award of $150,000 in punitive damages when the jury did not have sufficient evidence of Laurens's financial condition. We affirm the judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background

1. The founding of Platypus

In the early 1980s, Laurens and a friend, Scott Cermansky, founded Platypus as a beachwear clothing company. In 1984, Laurens and Cermansky incorporated Platypus. Initially, Laurens owned 62.5 percent of Platypus and Cermansky owned 37.5 percent. About a year later, the Siblings purchased Cermansky's share of Platypus, with Robin, Alexandra, and Sylvia each owning 12.5 percent of the company.

2. The 1986 Agreement

In 1986, Laurens entered into an agreement (1986 Agreement) with his father, Dr. Franklin Offner (Dr. Offner), which provided in relevant part:

"I, the undersigned Laurens Offner, as security for:

"(1) Loans made and/or to be made to him personally for the benefit of Platypus ... by Franklin Offner;

"(2) Loans made to Platypus ... directly by Franklin Offner; and

"(3) Loans made by others to Platypus ..., and guaranteed by Franklin Offner, "do hereby transfer to Franklin Offner 49% of the stock I presently hold in Platypus....

"Unless said 49% of the stock is disposed of earlier by Franklin Offner as a part of the restructuring or sale of the company, he agrees to return to Laurens Offner said stock when said loans, with accrued interest, have been repaid to Franklin Offner, and he has been released by lender or lenders from all guarantees under (3) above."

3. The 1989 Agreement

In 1989, Laurens determined that it was necessary to reorganize Platypus. As part of the reorganization plan, Platypus entered into an agreement (the 1989 Agreement) in which Dr. Offner agreed to receive 29,000 shares of preferred stock in Platypus in exchange for $2,900,000 Platypus owed Dr. Offner.

4. The post-1989 period

In mid-1994, Dr. Offner was diagnosed with Alzheimer's disease. In December 1994, Dr. Offner executed various family planning documents. He created a trust (the Trust) and executed a power of attorney in favor of his wife, Janine Offner (Janine). In July 1996, Dr. Offner's doctor determined that Dr. Offner was no longer competent to manage his own affairs.

By 1997, the Siblings began to actively participate as shareholders of Platypus. In October 1997, a dispute arose with regard to 5,500 shares of preferred stock. Laurens claimed he owned the shares because Dr. Offner had transferred the shares to him in September 1995. The Siblings claimed that Dr. Offner was not competent to make such a transfer at that time. The Platypus board of directors resolved the issue by reissuing the 5,500 shares to the Trust. In December 1997, the Trust sold 5,500 of the 29,000 shares of Dr. Offner's preferred stock to Paula Sandberg, a friend of Alexandra.

Dr. Offner died in May 1999, and Janine died in November 2000. Alexandra was named executor of the Estate. The Siblings learned the extent of Dr. Offner's investment in Platypus only after their parents' deaths. The Siblings also became concerned that Laurens may have been converting Platypus's corporate assets for his personal use. From June through October 2001, the Siblings and Laurens exchanged numerous e-mails in an attempt to resolve various disputes regarding Platypus. In April 2002, Sandberg transferred the 5,500 shares of preferred shares to Sylvia.

B. Procedural summary

1. The three actions

This appeal stems from three consolidated actions: Buckley v. Platypus Wear, Inc. (Super. Ct. San Diego County, 2003, No. GIC 785142) (the Buckley Action), Platypus Wear, Inc. v. Offner (Super. Ct. San Diego County, 2003, No. GIC 790273) (the Platypus Action), and Ponce De Leon v. Platypus Wear, Inc. (Super. Ct. San Diego County, 2003, No. GIC 797739) (the Corporations Code Action).

a. The Buckley action

In the Buckley Action, Robert Buckley, acting as trustee of the Trust, brought a breach of contract claim and an action to recover collateral against Laurens and Platypus, in an attempt to collect on a 1994 note. The trial court granted summary judgment on those claims and they are not at issue in this appeal. In addition, Sylvia brought shareholder derivative claims and claims for an accounting, and a constructive trust against Laurens on behalf of Platypus, based on allegations that Laurens had converted Platypus's corporate funds for his personal use.

b. The Platypus action

The Platypus Action involved three complaints. Platypus filed a declaratory relief action in which it claimed that there was a dispute between the Siblings and Laurens regarding the ownership of 30,625 shares of its common stock and 5,500 shares of its preferred stock. Platypus sought a judicial determination of the ownership of the stock in dispute.

Alexandra and Sylvia filed a cross-complaint. The cross-complaint was styled as a request for declaratory relief, seeking a judicial determination of the ownership of the common and preferred stock referred to in Platypus's complaint. With regard to the common stock, Alexandra and Sylvia alleged that the 1986 Agreement transferred the common stock to Dr. Offner, that the transfer had not been reversed, and that the shares thus remained the property of the Estate. Alexandra and Sylvia alleged that Laurens claimed the 1986 Agreement had never been formalized, and that any obligation to transfer stock had been discharged by the restructuring of Platypus in 1989, when Dr. Offner was given preferred shares.

With regard to the 5,500 shares of preferred stock, Alexandra and Sylvia alleged that in 1997, the Trust sold 5,500 preferred shares to Sandberg and that in 2002, Sandberg sold the shares to Sylvia. Alexandra and Sylvia alleged that Laurens claimed the 5,500 shares had been previously transferred by Dr. Offner to Platypus and that therefore the shares had not been available for transfer to Sandberg.

Laurens brought a cross-complaint in which he alleged that the Estate had breached the 1986 Agreement by "claiming ownership to certain of Laurens' Platypus common stock." He requested monetary damages for this breach. Laurens also brought similar claims and requests for damages with respect to the 1989 Agreement and the 5,500 shares of preferred stock.

Laurens further alleged in his cross-complaint that there was a dispute between the Estate and Laurens regarding whether the 1986 Agreement entitled Dr. Offner to ownership of any of Platypus's common stock and, if so, whether any such entitlement had been extinguished by the 1989 Agreement. In addition, Laurens claimed that either he or Platypus, and not Sylvia owned the disputed shares of the preferred stock. Laurens requested declaratory relief as to the ownership of the disputed shares of common and preferred stock.

c. The ...