Garcia v. Hejmadi

• Decision Date: 20 October 1997
• Docket Number: No. A068031,A068031
• Citation: 68 Cal.Rptr.2d 228,58 Cal.App.4th 674
• Parties: , 97 Cal. Daily Op. Serv. 8102, 97 Daily Journal D.A.R. 13,083 Antonio M. GARCIA, Plaintiff and Respondent, v. Vivek HEJMADI et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

Page 228

68 Cal.Rptr.2d 228

58 Cal.App.4th 674, 97 Cal. Daily Op. Serv. 8102,

97 Daily Journal D.A.R. 13,083

Antonio M. GARCIA, Plaintiff and Respondent, v. Vivek HEJMADI et al., Defendants and Appellants.

No. A068031.

Court of Appeal, First District, Division 2, California.

Oct. 20, 1997.

As Modified on Denial of Rehearing Nov. 19, 1997.

Review Denied Feb. 18, 1998.

[58 Cal.App.4th 677] Peter R. Chernik, San Jose, for Defendants and Appellants.

Dennis L. Livingston, Livingston & Weiss, San Francisco, for Plaintiff and Respondent.

LAMBDEN, Associate Justice.

Antonio M. Garcia brought this action against Vivek Hejmadi and Dyna-Tel, Inc. (Dyna-Tel), a New Jersey corporation, for declaratory relief, dissolution, accounting and other relief regarding, at root, a dispute over Dyna-Tel's ownership. This appeal by Hejmadi follows a 10-day court trial which yielded judgment for Garcia and a lengthy statement of decision.

BACKGROUND

The case history is complex. We briefly recite it for context, resorting to the statement of decision. Garcia was a shareholder and officer of Chemical Industries of the Philippines (Chemphil) when in 1979 he entered a joint venture agreement for the Philippine manufacture and distribution of electric motors for export, principally to the United States. This led to the purchase of a plant from Marco Electric Motors (Marco) and the formation of Chemark Electric Motors (Chemark), a joint venture of Marco and another of Garcia's companies, Dynetics, Inc. (Dynetics). In late 1981 and early 1982, Garcia formed Dyna-Tel as a marketing-company outgrowth of that venture, selecting Hejmadi--a financial manager for another of his companies, Intel--as his representative to head the operation.

Paul Fine, a principal in Marco, undertook to form Dyna-Tel at Garcia's request and utilized the services of Henry Fein, an attorney from a New Jersey law firm. Fein had a certificate of incorporation filed on February 17, 1982. The designated directors were Fine, Garcia, Hejmadi and Murray Traub, with Garcia designated chairman of the board. An initial 1,000 shares were to be issued, 500 to Garcia and 500 to Traub, but Fein never completed the corporate organization or issued any stock. Garcia capitalized and secured financing and credit for Dyna-Tel. It was disputed at trial what financing, if any, Hejmadi contributed, and the court found he had contributed none.

Concern eventually arose that funds collected by Dyna-Tel were not being remitted to Chemark, and unsuccessful attempts to get an accounting from Hejmadi led to acrimony and Hejmadi claiming to be the actual owner of Dyna-Tel. A standoff resulted, with threats and inducements for Hejmadi to relinquish his position and reveal the funds, and Chemark decided in late1983 to capitalize and form New York marketing company Advance Motor Technology Corporation (Amtek) to take over Dyna-Tel's functions.

Pressure from creditors mounted, and in 1984 Chemark and Garcia filed suit in federal district court in San Francisco against Dyna-Tel and Hejmadi, for embezzlement and recovery of the missing funds. Meanwhile, Vicente Chuidian, a sometime business partner of Garcia's, assumed control of Amtek and began engaging Chemark and Garcia in other litigation, including a lawsuit in Chicago over $611,000 owed to Chemark (the Lakewood receivable). A settlement reached in the San Francisco lawsuit involved an assignment to Chemark of Dyna-Tel's claims to the Lakewood receivable.

The parties executed a "Release and Assignment" (release) and "Settlement Agreement and Release" (settlement agreement), both dated September 22, 1985, which ended the 1984 litigation and required certain performance obligations. By October, Garcia formed Chemark International, Ltd. (Chemark International) and stood ready to contribute $75,000 toward its capitalization. Hejmadi, however, did not contribute his own required $75,000 share.

In November 1986, Dyna-Tel brought suit against Lakewood (the Lakewood litigation), seeking payment of the same receivable previously at issue, and now also the subject of the release and settlement agreement. Hejmadi argued in that case that those documents were null and void. He prevailed, and a September 1988 judgment for Dyna-Tel was ultimately affirmed by the Seventh Circuit Court of Appeals in October 1991.

Garcia brought this suit in November 1991, seeking dissolution and declaratory relief, among other things. By then, Dyna-Tel had not been engaged in active trade or business since 1984 and its only assets were funds, held in federal court, representing the net proceeds obtained through judgment in the Lakewood litigation. A key position asserted Trial before the Honorable Thomas J. Dandurand began August 1, 1994, and judgment for Garcia was filed on November 2, 1994, the court declaring Garcia sole owner of Dyna-Tel, directing all funds then held in the court registry ($545,823.90 plus interest) released to him and authorizing corporate dissolution. Defendants timely appeal following notice of entry of the ensuing judgment.

by Hejmadi in this action was that, at a March 1982 organizational meeting for Dyna-Tel, he and another Dyna-Tel director, Antonio Telesca, authorized the issuance of Dyna-Tel stock to himself.

APPEAL

Defendants in their opening brief claim reversible error in that: Garcia lacked shareholder standing and the necessary grounds to seek involuntary dissolution; he also lacked standing as a real party in interest; the settlement agreement barred this action; the statute of limitations also barred it; and there was a valid issuance of stock to Hejmadi in 1982. In a supplemental brief, defendants claim a pretrial grant of summary judgment in their favor was vacated without jurisdiction, thus nullifying the subsequent trial. We find the jurisdictional point dispositive.

Authority to vacate order granting summary judgment

On October 8, 1993, about 10 months before trial, defendants moved for summary judgment or summary adjudication of issues (Code Civ. Proc., § 437c; all unspecified section references are to that code). Garcia timely filed opposition on October 22, and the matter was assigned to the Honorable William J. Cahill. Judge Cahill issued a tentative ruling to grant the motion on November 4 but was unavailable the next morning when the matter was set to be argued. Garcia declined to stipulate to a commissioner presiding in Judge Cahill's stead, and the matter was assigned to the Honorable Barbara J.R. Jones for review and decision.

On November 12, reacting to Judge Cahill's tentative ruling, which had in part found no triable issue of fact as to the written release, Garcia filed a supplemental brief in opposition to summary judgment. In it, he provided further argument and cited, as creating triable issues, first, a paragraph of his own declaration previously filed with his original opposition and, second, a new declaration by himself further elaborating on the subject. Meanwhile, Judge Jones had on November 10 signed an order granting summary judgment and finding, as had Judge Cahill, no triable issue as to the settlement agreement and release. Her order was filed on November 16.

On November 29, Garcia filed a motion to reconsider and revoke the summary judgment order (§ 1008, subd. (a)) and/or set it aside as taken through mistake, inadvertence or excusable neglect (§ 473). He argued that his original opposition papers, through inadvertence and time pressure, had not correctly identified all evidence creating triable issues and that his supplemental brief correcting this shortcoming had not been filed in time for consideration, presumably also through inadvertence. This, he urged, constituted "different" facts or circumstances (§ 1008) and excusable neglect (§ 473) justifying relief. Defendants' opposition papers disputed both bases for relief.

Judge Jones heard the matter on December 15, 1993, and granted relief by an order filed January 5, 1994. Acknowledging the two grounds of relief sought, she ruled on only one: "The motion of plaintiff Garcia for relief under CCP § 473 is granted. The Court's order granting summary judgment filed November 16, 1993 is vacated, and the motion of [defendants] for summary judgment is denied. [p] A triable issue of material fact exists as to the terms of the [settlement agreement and release], whether the terms of the parties' agreement were performed by [defendants], and the effect of the [settlement agreement and release]."

Defendants seek reversal, relying on precedent from this division holding a court has jurisdiction to reconsider its orders only under section 1008 and cannot do so by resort to section 473. (Gilberd v. AC Transit (1995) 32 Cal.App.4th 1494, 38 Cal.Rptr.2d 626 (Gilberd ).) Garcia first contended in his brief that we may affirm because the court had grounds to grant relief on the alternate, correct ground. Defendants disagree and argue the court either did not reach, or impliedly A preliminary issue is this court's jurisdiction to review the challenged order, an issue we consider on our own motion. (Olson v. Cory (1983) 35 Cal.3d 390, 398, 197 Cal.Rptr. 843, 673 P.2d 720.) An order granting a motion to vacate under section 473 is itself appealable, and thus reviewable only by direct appeal, where the order it vacates was an appealable final judgment. (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 108, p. 127; Elsea v. Saberi (1992) 4 Cal.App.4th 625, 628, 5 Cal.Rptr.2d 742.) The vacated order here was an order granting summary judgment, which is not itself appealable. Appeal lies only from an ensuing judgment of dismissal. (Donohue v. State of California (1986) 178 Cal.App.3d 795, 800, 224 Cal.Rptr. 57.) Because no such judgment appears in the record, we assume there was none (ibid.) and find the order granting the motion to vacate reviewable on this appeal from a posttrial judgment. (George Ball Pacific, Inc. v. Coldwell Banker & Co. (1981) 117...