Duus v. Snow

• Docket Number: A159800
• Decision Date: 29 October 2021
• Parties: JASON DUUS et al., Plaintiffs and Appellants, v. SUSAN G. SNOW, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

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JASON DUUS et al., Plaintiffs and Appellants, v. SUSAN G. SNOW, Defendant and Appellant.

A159800

California Court of Appeals, First District, Fifth Division

October 29, 2021

NOT TO BE PUBLISHED

Sonoma County Super. Ct. No. SCV258892

SIMONS, J.

The trial court entered judgment finding defendant, appellant and cross-respondent Susan G. Snow ("appellant") liable to plaintiffs, respondents, and cross-appellants Jason Duus, Renee Duus, and Cohasset Beach Recovery, LLC ("respondents")^[1] on causes of action for contribution and for unjust enrichment under a quasi-contract theory. We affirm the trial court's award to the Duuses on the quasi-contract claim, but we reverse the award to Cohasset.

BACKGROUND

Appellant and Paul Schaefer owned undeveloped coastal property known as Cohasset Beach in Westport, Washington (the "Property"). Schaefer asked respondent Jason Duus who was a builder, to partner with them to develop the Property for residential use. In early 2006, the Duuses formed Westport Homes, Inc. ("Westport Homes") with appellant and Schaefer; the Duuses' shares in Westport Homes were owned through an entity called Coast Drive Investments, LLC ("Coast Drive Investments"). Appellant and Schaefer sold the Property to Westport Homes.

In March 2010, Westport Homes entered into two loans with Timberland Bank in the amounts of $1, 050, 000 and $4, 110 361.32. The loans were secured by a deed of trust on the Property and personal guaranties executed by the Duuses appellant, Coast Drive Investments, and Schaefer (the "Guarantors").

By 2013, the Duuses believed the Cohasset Beach project was no longer financially viable and Coast Drive Investments sold its shares in Westport Homes to appellant for $1. Appellant also obtained Schaefer's shares and, as of August 2013, she owned 100% of Westport Homes.

In November 2013, according to appellant's testimony, the Cohasset Beach project's prospects worsened because the Federal Emergency Management Agency (FEMA) proposed to designate that the Property was in a flood zone, which "really ruined the value of the project."^[2] Appellant also learned that Timberland Bank declined to modify certain challenging loan conditions. By late 2013, Westport Homes had stopped making payments on the loans.

In April 2014, Timberland Bank filed a complaint in Washington against Westport Homes and the Guarantors (the "Washington Action"); in December the Washington court entered judgment against those parties (the "Timberland Judgment"). The original judgment amount was $5, 725, 190.56, with interest accruing at 18% annually.

In September 2015, Timberland Bank, Coast Drive Investments, the Duuses, and Cohasset entered into a settlement agreement (the "Settlement"). Cohasset is an entity 100% owned by the Duuses, formed for the purpose of satisfying and taking assignment of the judgment. Pursuant to the Settlement, Cohasset paid $4 million to Timberland Bank and the Timberland Judgment was assigned to Cohasset. The balance owing on the judgment at the time was $6, 637, 138.60, plus attorney's fees.

In February 2016, appellant filed a motion for relief from the Timberland Judgment in the Washington Action. She argued it was improper for Cohasset to seek to enforce the judgment against her because the Settlement constituted satisfaction of the judgment by the Duuses as co-obligors. In March 2016, Cohasset filed a "Partial Satisfaction of Judgment" in the Washington Action. The Partial Satisfaction of Judgment stated the Timberland Judgment was "satisfied" as to "Judgment Debtors" appellant, Schaefer, the Duuses, and Coast Drive Investments. It also stated that the judgment remained in effect as to Westport Homes and that "[t]his partial satisfaction shall have no force or effect on any obligations of contribution among and between the Satisfied Debtors."

In June 2016, the Duuses filed the present action alleging causes of action for contribution and avoidance of certain allegedly fraudulent transfers of assets by appellant. In December 2017, the Duuses filed an amended complaint (the "Complaint") adding Cohasset as a plaintiff and adding a claim for unjust enrichment under a quasi-contract theory.

In June 2018, Cohasset bought the Property for $1.3 million at a sheriff's sale. There were other developers there, but none of them bid on the Property.

Before trial, the trial court granted a motion in limine "preclud[ing] all arguments and exclud[ing] all evidence that might be offered by [appellant] that the satisfaction of the [Timberland Judgment] was not made by the Duuses as co-obligors." Also before trial, the parties agreed to bifurcation of the issues in the case, with appellant's liability under the contribution and quasi-contract claims to be determined before the causes of action for avoidance of allegedly fraudulent transfers.

In October 2019, following trial, the trial court issued a written ruling on certain issues of fact. As relevant to the issues on appeal, the court found the value of the Property as of November 10, 2015 was $1 million. In December 2019, the trial court issued its ruling on appellant's liability under the Complaint. The court found in favor of the Duuses and Cohasset on both the contribution and quasi-contract/unjust enrichment causes of action, concluding that appellant owes respondents $1.5 million under either cause of action.

The trial court entered judgment in accordance with its ruling, and the present appeal and cross-appeal followed.^[3]

DISCUSSION

Appellant contends the trial court erred in finding in favor of respondents on their contribution and quasi-contract/unjust enrichment causes of action, and in determining the value of the Property. We conclude the trial court properly found in favor of the Duuses on the quasi-contract cause of action; we need not and do not address their contribution claim.^[4]The trial court did not err in determining the Property's value. We also reject respondents' cross-appeal.

I. The Trial Court Properly Entered Judgment in Favor of the Duuses on Their Quasi-Contract/Unjust Enrichment Claim

The parties refer to respondents' twelfth cause of action as one for unjust enrichment, but it is actually styled in the Complaint as an "Unjust Enrichment/Quasi-Contract" claim. This is proper, because "[u]njust enrichment is not a cause of action, . . . but rather '" 'a general principle, underlying various legal doctrines and remedies' ". . . . [Citation.] It is synonymous with restitution.'" (McBride v. Boughton (2004) 123 Cal.App.4th 379, 387 (McBride); see also Munoz v. MacMillan (2011) 195 Cal.App.4th 648, 661.) "It is based on the idea that 'one person should not be permitted unjustly to enrich himself at the expense of another, but should be required to make restitution of or for property or benefits received, retained, or appropriated, where it is just and equitable that such restitution be made, and where such action involves no violation or frustration of law or opposition to public policy, either directly or indirectly.'" (Cty. of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533, 542; see also Broadway Foreclosure Investments, LLC v. Tarlesson (2010) 184 Cal.App.4th 931, 938.)

" 'Quasi-contracts, unlike true contracts, are not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. They are obligations created by law for reasons of justice.' [Citation.] Quasi contractual recovery is based upon benefit accepted or derived for which the law implies an obligation to pay." (Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 794-795; accord McBride, supra, 123 Cal.App.4th at p. 388, fn. 6; 1 Witkin, Summary of Cal. Law [11th ed. 2017] Contracts, § 103, p. 148.) "A cause of action for quasi-contract invokes consideration of equitable principles, rather than of contract." (Welborne v. Ryman-Carroll Found. (2018) 22 Cal.App.5th 719, 725.)

In the present case, the trial court held respondents could recover under both the contribution and the quasi-contract/unjust enrichment causes of action. As to the latter action, the court found appellant "obtained the benefit of [respondents'] payment of a debt jointly owed. In fact, the [respondents'] efforts to satisfy the debt resulted in the debt being satisfied for almost $2 million less than the face of the debt and terminating the accrual of interest on the debt as to [appellant]. Due to [respondents'] efforts, [appellant] was relieved of the obligation to pay the debt when a satisfaction of judgment was filed as to her. As such, requiring [appellant] to pay restitution for the benefit conferred is equitable." We conclude the trial court properly required appellant to pay restitution to the Duuses for the benefit they conferred on her.

Appellant's primary argument against the Duuses' quasi-contract/unjust enrichment claim is that respondents have a statutory contribution claim that precludes equitable relief for the identical loss.^[5] Civil Code section 1432^[6] provides that "a party to a joint, or joint and several obligation, who satisfies more than [its] share of the claim against all, may require a proportionate contribution from all the parties joined with [it]." In support of her position, appellant relies on the broad proposition that a trial court's equity powers "must be exercised pursuant to the principle that equity follows the law. [Citation.] A court of equity cannot grant relief which the law denies." (Johnson v. Tago, Inc. (1986) 188 Cal.App.3d 507, 518 (Johnson).)

Appellant's argument fails because she has not demonstrated the Legislature, in enacting section 1432, intended to foreclose other equitable claims between co-obligors. The California Supreme Court's reasoning in Pac. Scene, Inc. v....