Espiritu v. Garrison

• Decision Date: 08 February 2022
• Docket Number: E075721
• Parties: MARY JANE ESPIRITU et al., Plaintiffs and Appellants, v. MARK GARRISON, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

MARY JANE ESPIRITU et al., Plaintiffs and Appellants,
v.
MARK GARRISON, Defendant and Respondent.

E075721

California Court of Appeals, Fourth District, Second Division

February 8, 2022

NOT TO BE PUBLISHED

APPEAL from the Superior Court of Riverside County. No. MCC1900986 Raquel A. Marquez, Judge. Affirmed.

Law Offices of William J. Tucker and William J. Tucker for Plaintiffs and Appellants.

Casselman Law Group and David B. Casselman; Esner, Change & Boyer and Stuart B. Esner for Defendant and Respondent.

OPINION

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FIELDS J.

I. INTRODUCTION

In 2015, defendant and respondent Mark Garrison (defendant) and plaintiffs and appellants Mary Jane Espiritu and Roberto Gerometta (collectively, plaintiffs) formed a business for the purpose of marketing and selling vegan foods. They named the business" 'Pivotal Foods, LLC'" (Pivotal) and agreed that plaintiffs would be responsible for the culinary aspects of Pivotal, while defendant would be responsible for the financial and business operations. As the business grew, plaintiffs made three capital contributions to Pivotal totaling $250, 000. Defendant also made three capital contributions totaling that same amount, but he made his contributions at different times.

The parties disagreed about numerous issues regarding management of the business and began negotiations to end their business relationship in 2019. During the course of these negotiations, plaintiffs purportedly learned for the first time that defendant did not make his capital contributions to Pivotal at the same time that plaintiffs made their contributions. Plaintiffs alleged this failure constituted grounds for rescission of their contractual agreements with defendant; damages for fraud, negligent misrepresentation, or fraudulent concealment; equitable relief under the doctrine of money had and received; and an accounting.

On August 6, 2020, the trial court granted summary adjudication in favor of defendant on every cause of action stated in the complaint, and judgment in favor of defendant was entered on August 18. Plaintiffs appeal, arguing the trial court erred in granting summary adjudication on each cause of action, except the cause of action for accounting. We find no error warranting reversal and affirm the judgment.

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II. FACTS AND PROCEDURAL HISTORY

A. Complaint

On August 26, 2019, plaintiffs filed a civil complaint against defendant. According to the complaint, plaintiffs and defendant agreed to form a business to market and sell vegan foods in 2015. They initially made an oral agreement to form the business; later, they formalized their business relationship in a written operating agreement (Operating Agreement) in January 2016 and a second written agreement, the Founders Agreement, in January 2019.

As relevant on appeal, ^[1] plaintiffs' first six causes of action were styled as causes of action for "rescission for intentional misrepresentation," "rescission for negligent misrepresentation," "rescission for unilateral mistake of fact," "damages for intentional misrepresentation," "damages for negligent misrepresentation," and "damages for suppression and concealment of fact." However, each of these purported causes of action was based upon the same set of operative facts. Specifically, plaintiffs alleged that defendant represented he would" 'match'" any capital contribution that plaintiffs made to Pivotal; plaintiffs relied on this representation to make three capital contributions totaling $250, 000;^[2] and defendant's representation was false or untrue.

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Plaintiffs alleged that defendant's representations were false because, with respect to two of their capital contributions, defendant delayed for months before making his corresponding capital contribution. Plaintiffs also alleged that, with respect to their third capital contribution, defendant never made a corresponding contribution. As a result, plaintiffs sought to rescind their oral and written agreements with defendant or, alternatively, obtain tort damages.

Finally, plaintiffs asserted a cause of action for "money had and received," seeking equitable relief in the form of return of their capital contributions to Pivotal and a cause of action for an accounting of the money plaintiffs contributed to the business.^[3]

B. Defendant's Motion for Summary Adjudication

Defendant filed a motion for summary adjudication of all claims asserted by plaintiffs in the complaint. In a declaration in support of the motion, defendant attested that prior to the formation of Pivotal, there was never an agreement regarding the amount of any specific capital contributions. After the formation of Pivotal, the parties reached an agreement providing that plaintiffs (collectively) and defendant each would contribute $125, 000 to Pivotal, but they never discussed the timing for these contributions. Defendant stated the parties' discussions were memorialized in e-mail correspondence in February 2017, and he attached those messages. Defendant further confirmed that the parties later agreed that plaintiffs would contribute a total of $250, 000, and defendant

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would contribute a total of $250, 000 to Pivotal. However, the parties again did not discuss when these contributions would be made.

Defendant declared that he never represented that any capital contribution to Pivotal would be made at the same time as plaintiffs, never entered into any agreement providing for the timing of any capital contribution, and never even discussed the issue of simultaneous investment with plaintiffs. Defendant further attached the Operating Agreement entered into by the parties and the current bylaws for Pivotal, neither of which provided for simultaneous capital contributions by the parties.

Finally, defendant declared that when the parties were first forming Pivotal, he personally paid for various expenses necessary to establish the business; plaintiffs were notified of these expenses at the time they were paid; and, to the extent any of these expenses were not reimbursed, defendant treated them as part of his agreed contributions. Defendant attached e-mail correspondence to plaintiffs in which he notified plaintiffs of these expenses to Pivotal. He also attached written correspondence from vendors and contractors, invoices, receipts, and service agreements, indicating that a sum of $10, 288 had been incurred by Pivotal, as well as his personal credit card and bank statements, indicating he had personally paid for these expenses.

Following the payment of these initial expenses, defendant deposited an additional $40, 000 in June 2017. According to defendant, his unreimbursed expenses and this initial deposit were intended to correspond with plaintiffs' initial capital contribution of $50, 000. Defendant also deposited $75, 000 into Pivotal's bank account in May 2018, which he intended to correspond with a September 2017 deposit of $75, 000 made by

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plaintiffs. Defendant attached e-mail correspondence indicating he had provided plaintiffs with a bank statement showing the timing of his contribution on the same day it was made. Finally, defendant made a deposit of $125, 000 into Pivotal's bank account on August 19, 2019, which corresponded with a $125, 000 deposit made in May 2018 by plaintiffs. According to defendant, the deposits were never simultaneous because they were intended to correspond with Pivotal's need for operating capital.

Defendant also submitted excerpts from the transcript of plaintiffs' deposition testimony in which both plaintiffs admitted there were never express representations about making simultaneous capital contributions; there was no written agreement providing for simultaneous capital contributions; and the parties never had a discussion about making simultaneous contributions. Gerometta even admitted that, as long as defendant made his contributions available when Pivotal needed the money, such would comply with his understanding of the parties' agreement. Gerometta also admitted he was not aware of any time in which Pivotal was left without sufficient funds to pay any expenses as a result of the timing of defendant's contributions.

C. Plaintiffs' Evidence in Opposition

In opposition, plaintiffs each submitted declarations that merely reaffirmed the allegations of the complaint, but they asserted those facts under oath. However, at no point in their declarations did they contradict defendant's representation or their prior deposition testimony that the parties had never discussed or agreed upon the timing of any capital contributions.

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D. Trial Court's Ruling, Order, and Judgment

On July 30, 2020, the trial court held a hearing on the motion in which both parties presented oral argument. During the hearing, plaintiffs' counsel was specifically asked by the trial court to identify the evidence showing harm to Pivotal flowing from defendant's purported failure to make simultaneous capital contributions. However, plaintiffs did not identify any such evidence and instead argued that the lack of harm to Pivotal was irrelevant. At the conclusion of the hearing, the trial court took the matter under submission.

On August 6, 2020, the trial court entered an order granting summary adjudication as to all causes of action, and judgment in favor of defendant was entered on August 18. Plaintiffs appeal from the judgment.

III. DISCUSSION

On appeal, plaintiffs argue the trial court erred in granting summary adjudication on each cause of action, except the cause of action for an accounting. As we explain post, we find no error warranting reversal, and we affirm the judgment.

A. General Legal Principles and Standard of Review

" 'A summary adjudication motion is subject to the same rules and procedures as a summary judgment motion.'" (Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1157; see Code Civ. Proc., § 437c, subd. (f)(2) [A motion for summary...