Pifer v. Pifer

• Decision Date: 08 November 2018
• Docket Number: D072582
• Court: California Court of Appeals Court of Appeals
• Parties: KEVIN PIFER et al., Plaintiffs and Appellants, v. STACY KATE PIFER et al., Defendants and Respondents.

KEVIN PIFER et al., Plaintiffs and Appellants, v. STACY KATE PIFER et al., Defendants and Respondents.

D072582

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

November 8, 2018

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2015-00030172-CU-MC-CTL)

APPEAL from judgments of the Superior Court of San Diego County, Richard E.L. Strauss, Judge. Affirmed.

Higgs Fletcher & Mack and Mark K. Stender for Plaintiffs and Appellants.

Hahn Loeser & Parks, Michael J. Gleason and Kyle T. Overs for Defendants and Respondents.

These two appeals by two limited partners, plaintiffs and appellants Kevin Pifer and Steven Pifer ("Appellants"), arise out of rulings on their amended cross-complaint, which challenged the administration of a restated family limited partnership, Pifer Property Holdings LP (the "partnership"). Demurrers brought by defendant and respondent Stacy Kate Pifer ("Kate") and her affiliated entity, defendant and respondent Pifer LLC, were sustained without leave to amend. A judgment on the pleadings brought by defendant and respondent Phoebe Moffatt (Moffatt) was granted without leave to amend. On appeal, Appellants argue the court erred as a matter of law in finding their 13 derivative and/or direct causes of action are defective, and in an exercise of discretion, it should have granted them leave to amend. (Schuster v. Gardner (2005) 127 Cal.App.4th 305, 312 (Schuster) [direct action, where right of action and recovery belongs to partner/shareholder, is distinct from derivative action, that is to be brought by partnership/corporation]; Wallner v. Parry Professional Bldg., Ltd. (1994) 22 Cal.App.4th 1446, 1449 (Wallner) [limited partner's derivative action is to enforce a claim that the partnership possesses against others, such as the general partners, but that the partnership refuses to enforce].)

We find the trial court's analyses of the apparent defects in these derivative and direct claims were well grounded in the record, which includes judicially noticeable procedural background from an underlying main action and a complaint in intervention. Appellants fail to show that they made or can make any sufficient showing of entitlement to further amend their cross-complaint. We affirm the judgments of dismissal.

IINTRODUCTION; MAIN ACTION FILED

Because the appellate issues are somewhat complex, this introduction outlines the factual and procedural context in which this operative pleading (the amended cross-complaint) arose. The business of the partnership is mainly to own and operate several commercial real properties that are utilized primarily in the domestic trucking industry.Appellants' father John Pifer ("John") formed the partnership in 1998 and originally served as the president of its corporate general partner, Pifer Property, Inc. (PPI) (not a party to the cross-complaint). Later, Kate took over the presidency of PPI from her husband John, when he became disabled. For a short time, Kate's and John's adopted daughter Moffatt acted as PPI's president.

Disagreements arose over partnership administration, and in the underlying complaint (the main action) that gave rise to this cross-action, Appellants sued PPI, alleging that its operation of the partnership, through Kate and Moffatt, had disadvantaged their interests in it. Specifically, Appellants alleged Kate was using PPI to divert certain partnership assets and was taking excessive compensation, and they sought an accounting and damages for breaches of fiduciary duty and contract.¹

Kate subsequently filed a complaint in intervention, claiming some alleged partnership assets belonged to her. (Code Civ. Proc., § 387 [intervention]; all further statutory references are to this code unless noted.) Appellants then filed their cross-complaint that is the subject of this appeal, naming as cross-defendants Moffatt, Kate, and Kate's affiliated entity Pifer LLC. In the amended cross-complaint, Appellants also named the partnership as a nominal cross-defendant, and attempted to clarify that some of their 13 causes of actions were derivative ones, brought on behalf of the partnership.

IIADDITIONAL BACKGROUND

A. Partnership Business

Section 2.4 of the restated partnership agreement recites that its purposes include consolidating John's real estate holdings. Such consolidation was intended to minimize asset management expenses to facilitate John's gift giving. Thus, the primary purpose in creating the partnership is stated as permitting the transfer of interests in it to John's children, "to ease them into the ownership of the Partnership Property and to systematically involve them in the management of Partnership Property and thereby, provide for effective transition in the management of the Partnership Property." The agreement characterizes John as an "Affiliate of the General Partner," his company PPI.

Appellants came to believe that Kate was progressively increasing the control she had over John's finances and business affairs, as he became older and disabled. Kate had been married to him for about 30 years and is not the mother of Appellants. They contend that her actions as president of the corporate general partner PPI (from 2013-2015) have served to frustrate the purposes of the partnership. For a number of years before she succeeded to the presidency, she had acted as the chief operating officer of the partnership. In 2015, she and John achieved an adult adoption of Moffatt, a 47-year-old lawyer from Arizona, and Moffatt briefly served as president of PPI.

In September 2015, Appellants filed the main action against PPI, objecting to certain transactions by the partnership, including its sale of a real estate asset, the "Tulsa Property," to a PPI affiliate. Appellants claimed that PPI had "reversed" the partnership's"earlier, long-standing position that the Mountain Valley Property ["Mountain Valley" in Arizona] belongs to the Partnership and allow[ed] that property to be conveyed to the principals of PPI," i.e., Kate. The main action also claimed that PPI had wrongfully retroactively charged the partnership rent and overhead for past years, and had "siphoned" revenues from the partnership to itself or its principals, "thereby reducing the distributions payable to the limited partners." Without suing the partnership, John, or Kate, Appellants' original complaint requested a judicial partnership accounting and alleged that PPI had breached its fiduciary duties to them. (Corp. Code, § 15900 et seq., the Uniform Limited Partnership Act of 2008; transitional section, Corp. Code, § 15912.06.)

The operative cross-complaint's allegations arose from Kate's filing of her complaint in intervention in the main action, in November 2015 (amended in Feb. 2016). Among other things, she alleged that she was a third-party beneficiary of the partnership agreement, and that she qualified as an "Affiliate" of PPI under its terms.² She contended that she should have received the benefit of Appellants' work in carrying out their obligations as limited partners, "to become more involved in the management in the partnership property," but they had refused to do so despite requests from John and Kate. She alleged that these breaches of duties by the limited partners caused her damages, and that she was entitled to reimbursement of monies paid to them. She sought declarationsthat various properties and assets, which Appellants claimed were partnership property, belonged instead to John and to her, as community or her individual property. These included rents, income and the Mountain Valley land.

B. Filing of Cross-Complaint; Amendment

In response to the complaint in intervention, Appellants filed their original cross-complaint in March 2016, alleging 13 causes of action and seeking damages for Kate's breaches of fiduciary duty, misappropriations, intentional interference with contractual relations and/or prospective economic advantage. They alleged that PPI, through Kate, had utilized Pifer LLC as a conduit to receive money that properly belonged to the partnership. Moffatt, as an officer of PPI, was sued for PPI's torts committed during her tenure.

Appellants' cross-complaint alleges individual and/or partnership entitlement to monetary recovery and equitable relief, largely based on Kate's alleged breaches of fiduciary duty through self-dealing in partnership property and drawing of excessive compensation. As direct causes of action, Appellants claim Kate committed related business interference torts (i.e., interference with prospective economic advantage and interference with contractual relations).

As against Kate, Pifer LLC, and Moffatt, Appellants plead a derivative claim for assumpsit (money had and received), accounting and other relief. (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 (McBride) [assumpsit or common count theory seeks to remedy monetary indebtedness, e.g., alleged restitution entitlement].) As against Kate and Moffatt, Appellants seek to impose liability for conspiracy and Moffatt's allegedaiding and abetting of Kate's tortious conduct. As against all cross-defendants, including the partnership itself, restitution, damages, injunctive, accounting, receivership and other relief are sought.

After Kate and Pifer LLC brought an initial motion for judgment on the pleadings, the court indicated during the hearing that the cross-complaint did not adequately plead derivative allegations on behalf of the partnership, and granted Appellants leave to amend. (Corp. Code, § 15910.01 [limited partner direct actions allowed for injury other than to partnership]; Corp. Code, § 15910.05 [any proceeds of derivative action belong to limited...