Miller v. Bechtel Corp.

• Decision Date: 19 May 1983
• Docket Number: S.F. 24429
• Citation: 33 Cal.3d 868,191 Cal.Rptr. 619,663 P.2d 177
• Court: California Supreme Court
• Parties: , 663 P.2d 177 Florrie H. MILLER, Plaintiff and Appellant, v. BECHTEL CORPORATION et al., Defendants and Respondents.

Page 619

191 Cal.Rptr. 619

33 Cal.3d 868, 663 P.2d 177

Florrie H. MILLER, Plaintiff and Appellant, v. BECHTEL CORPORATION et al., Defendants and Respondents.

S.F. 24429.

Supreme Court of California In Bank.

May 19, 1983.

Rehearing Denied June 23, 1983.

Donald Nemir, San Francisco, for plaintiff and appellant.

Pillsbury, Madison & Sutro, Noble K. Gregory, Anthony P. Brown, Frank E. Sieglitz, Michael H. Salinsky, George K. Hartwick, Paul J. Sanner, Michael R. Sheehan, Patricia K. Gilmore, Bronson, Bronson & McKinnon, Richard C. Dinkelspiel, Dinkelspiel, Donovan & Reder, San Francisco, for defendants and respondents.

MOSK, Justice.

In this action, plaintiff Florrie Miller, the former wife of defendant H. Eric Miller (Miller), seeks damages and an order setting aside a portion of a property settlement agreement and the decree of dissolution which approved the agreement, on the ground, inter alia, that Miller and other defendants misrepresented the value of certain stock owned by the community, and that they were guilty of other acts of misconduct which led to her consent to the agreement.

The Millers were married in 1940. They separated in 1969. Following negotiations through their respective attorneys, the parties executed a marital settlement agreement on September 14, 1971. On December 17 of that year the superior court ordered an interlocutory decree of dissolution which approved the agreement, as amended on October 29, 1971. The final judgment of dissolution was entered on July 25, 1972.

Miller had been employed by Bechtel Corporation since 1956. Beginning in 1967, he purchased stock in Bechtel and two related corporations (hereinafter collectively referred to as Bechtel) pursuant to a stockholders' agreement which provided that the shares could not be sold, assigned, or transferred, without giving Bechtel the right to purchase them at a price stated in the agreement. The stated price could be increased with the concurrence of the holders of two-thirds of Bechtel's stock. This restriction applied specifically to transfers effected by marital property settlement contracts.

At the time the Millers signed the marital settlement agreement in September 1971, the value assigned in the stockholders' agreement to the Bechtel stock purchased by Miller over the years was $294,000. Following discussions among Ross E. Hamlin, plaintiff's attorney, Paul R. Haerle, Miller's attorney, and Willis S. Slusser, an officer of Bechtel, regarding the terms of the stockholders' agreement and the rights which Bechtel would exercise under it, plaintiff consented in the marital settlement agreement to relinquish her interest in the stock to Miller in exchange for $147,000, i.e., one-half of the $294,000 value set in the stockholders' agreement. The parties acknowledged in the marital settlement agreement that the securities were subject to an option by Bechtel to purchase them at the price set forth in the stockholders' agreement.

In January 1978, plaintiff filed a complaint containing nine causes of action. The first and ninth counts alleged that Miller, Hamlin, Haerle, Slusser, Bechtel and others ¹ were guilty of intentional and negligent misrepresentations. The gravamen of these counts is that the market value of the stock was higher than the $294,000 attributed to it by defendants, and that if defendants had not made the misrepresentation, plaintiff would not have relinquished her interest for $147,000 but would have sought a share of the proceeds of the stock when Miller sold it.

According to the first count, defendants deliberately misrepresented the "aggregate value" of the Bechtel stock at $294,000, although they knew that it was worth more than $1 million in 1971, in order to induce plaintiff to relinquish her interest for less than its true worth. It was alleged that Miller sold the shares for over $2 million in 1977, and that plaintiff had no knowledge of the "true value" until February 1977. The ninth cause of action, which sounded in negligent misrepresentation, averred that defendants had no reasonable grounds for believing that the $294,000 value was correct, that this figure had no relationship to such factors as the assets and profits of Bechtel, and that defendants had no information regarding the true value of the stock when they told plaintiff that it was worth $294,000. ² Plaintiff prayed for compensatory and punitive damages, as well as an order to set aside the portion of the marital settlement agreement and the dissolution decree which divided the community property. Defendants in their answers denied that they were guilty of misrepresentation and alleged that the action was barred by the statute of limitations and the doctrine of res judicata.

Defendants moved for summary judgment. For purpose of the motions, the parties stipulated that there was a triable issue of fact as to whether the value of Miller's stock on September 14, 1971, the date the marital settlement agreement was signed, was greater than the price attributed to it in the stockholders' agreement.

Defendants' affidavits in support of the motions declared that Haerle, Miller's attorney, represented to Hamlin, plaintiff's attorney, during the discussions which led to the agreement, that the Bechtel stock was worth $294,000 according to the stockholders' agreement. Slusser told Hamlin that if Miller attempted to transfer the stock to plaintiff in trust or otherwise, Bechtel would exercise its right under the stockholders' agreement to purchase the shares, in accordance with the provisions of that agreement.

Defendants' declarations further established that, following the signing of the agreement, but before the final judgment of dissolution was entered, plaintiff sought the advice of a family friend who was a stockbroker regarding the terms of the agreement. The broker examined it in detail and recommended various changes, including a suggestion that the proceeds of the Bechtel stock be placed in a previously created trust for the Miller children upon redemption, and that Miller hold only a life estate in the proceeds. Plaintiff transmitted the report to Hamlin and asked that he review it.

Shortly thereafter, she consulted another attorney, who reviewed the agreement with Hamlin to clarify certain provisions. Hamlin thereafter withdrew from representation of plaintiff. Later in 1972, plaintiff's attorney wrote Miller's counsel a number of times regarding implementation and interpretation of various provisions of the agreement. In October, he requested a copy of the shareholders' agreement and information "as to the basis of valuation of the Bechtel shares." Plaintiff then sought the advice of a third attorney who, in February 1973, reiterated the request made in the October letter, and threatened to file suit to obtain the information if it was not disclosed voluntarily. Such an action was not filed and, so far as the record shows, the information was not provided and the request was not renewed.

In plaintiff's declaration in opposition to the motions for summary judgment, she stated that she could not ascertain the "true value" of the Bechtel stock until Miller redeemed it in 1977 because Bechtel was a "closed" corporation which "jealously guarded" its financial records.

The trial court granted the motions as to all defendants except Hamlin, plaintiff's attorney, and the law firm of which he was a member. Plaintiff appeals from the ensuing judgment. ³

In a lengthy memorandum opinion, the trial court explained the reasons for its decision as follows: First, the representation of Bechtel, Slusser, the Thelen firm, Haerle, Plageman and Miller, that the Bechtel stock was worth $294,000 "pursuant to the shareholders' agreement" was accurate, and these defendants were not guilty of concealing the value of the stock; second, the decree of dissolution approving the property settlement agreement was res judicata, and the value of the shares for the purpose of the dissolution proceeding was conclusively determined by the final judgment in that proceeding.

Finally, the court concluded that plaintiff was barred by the statute of limitations from proceeding with the action. Section 337, subdivision 3, of the Code of Civil Procedure provides for a four-year period of limitations for actions for rescission of written contracts, and section 338, subdivision 4, sets forth a three-year limitation period for tort actions based on fraud or mistake. Both statutes provide that a cause of action for fraud or mistake does not accrue until the facts constituting the fraud or mistake are discovered by the aggrieved party. The trial court determined that plaintiff's first and ninth causes of action were barred even if the four-year limitation period of section 337, subdivision 3, were applied, because she had "constructive notice or presumed knowledge sufficient to put her on inquiry in 1971 and 1972 as to the value of the stock."

We agree with the trial court's determination that plaintiff is barred from pursuing her action against these defendants by the statute of limitations. Our determination is made in the light of the well-established rules relating to the consideration of motions for summary judgment. The purpose of such a motion is to determine if there are any triable issues of material fact, or whether the moving party is entitled to judgment as a matter of law. The affidavits in support of and in opposition to the motion must be made on personal knowledge and must set forth admissible evidence as to which the affiant is competent to testify. (Code Civ.Proc., § 437c.) The affidavits of the moving party are strictly construed, while those of the party opposing the motion are liberally construed, and doubts as to the propriety of granting the motion must be resolved in favor of the party opposing the motion. (Stationers Corp. v. Dun & Bradstreet, Inc. (1965) 62 Cal.2d 412, 417, 42 Cal.Rptr. 449, 398 P.2d 785.)

The declarations...