Vos v. Sandwood Enterprises CA4/1 (2015) · DecisionDepot
Vos v. Sandwood Enterprises CA4/1
California Court of Appeal Apr 21, 2015 No. D066687Unpublished
Filed 4/21/15 Vos v. Sandwood Enterprises CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
WAYNE MARTIN VOS et al., D066687
Plaintiffs and Appellants,
v. (Super. Ct. No. RIC1204766)
SANDWOOD ENTERPRISES, INC.,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Riverside County, Paulette
Durand Barkley, Judge. Affirmed.
Jerome D. Stark for Plaintiffs and Appellants.
Law Offices of William B. Hanley and William B. Hanley for Defendant and
Respondent.
Appellants Wayne Martin Vos and Susan Vos1 appeal from a judgment
dismissing their action against respondent Sandwood Enterprises, Inc. (Sandwood) after
the trial court sustained Sandwood's demurrer to the complaint without leave to amend on
1 We refer to the parties at times by their first names to avoid confusion.
the ground that appellants' causes of action for equitable subrogation; imposition of
constructive trust, injunctive relief and damages were barred by the doctrine of res
judicata.
Appellants contend the trial court erred by finding res judicata applied, and
although the decision of division three of this district in a nonpublished opinion
(Sandwood Enterprises, Inc. v. Vos (June 27, 2011, G042239, G042426) (Sandwood I))
addressed ownership rights to real property located in Perris, California (the Perris
property), it did not address the matters appellants sought to adjudicate in the present
action (Sandwood II). We affirm.
FACTUAL AND PROCEDURAL BACKGROUND2
In 2007, Vos Industries, Wayne Martin Vos (Marty) and Susan Vos sued
Sandwood, alleging causes of action for conversion, constructive fraud, unjust
enrichment, accounting, preliminary and permanent injunction, appointment of receiver,
and constructive trust. Sandwood and Wayne K. Vos (Wayne) cross-complained.
Following a bench trial, the court found appellants were the sole owners of the Perris
property, which was not a corporate opportunity of Sandwood's.
Sandwood I
We rely on Sandwood I for a summary of the issues presented and the parties'
relationship to each other. The Court of Appeal pointed out it was inferring all factual
2 We deny Sandwood's request for judicial notice of certain court filings because some of those documents were not considered by the trial court, others are duplicative of documents in the appellate record, and none are necessary for our resolution of this appeal. 2
findings necessary to support the judgment because appellants had not requested a
statement of decision in the trial court: "This case essentially boils down to this: father
[Wayne] accuses son [Marty] of stealing from [Sandwood] through a related company
[Vos Industries, which is owned by Marty and Susan] and father fires him; son accuses
father and siblings of stealing from his independent company after his father fires him."
Sandwood I stated these facts regarding the parties' business dealings: "In July
2006, Vos Industries purchased rock crushing equipment, some of it financed by
Sandwood, and began rock crushing in Corona, California. Sandwood and Vos
Industries essentially operated as one company. [¶] Sandwood's lease for its Orange
property was about to expire and its lease payment was likely to increase substantially.
In January 2007, Marty purchased [the Perris property], in case Sandwood had to move.
Marty eventually negotiated a new lease for Sandwood's existing location in Orange.".
The Sandwood I court stated: "Marty admitted he did not speak with Wayne about
the Perris property, although he did speak with Wayne generally about purchasing the
property. . . . [¶] Marty testified he purchased the Perris property with his and Susan's
personal funds. However, Marty conceded he transferred approximately $1.7 million
from Sandwood to Vos Industries between 2003 to 2007."
On September 10, 2007, Wayne terminated Marty. Sandwood had $309 in the
bank. The same day, Wayne appointed his daughter, Traci Lyn Stewart (Traci), treasurer
and secretary of Sandwood. Wayne, Rick (Wayne's stepson), and Traci were directors.
The evidence relating to different ways Marty transferred thousands of dollars
from Sandwood to Vos Industries was set forth in Sandwood I: "Marty and Susan spend
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very little time responding to Sandwood, Rick, Traci, and Jason's claim the purchase of
the Perris property was a corporate opportunity. They assert the [trial] court's findings
were 'specific,' the money was 'traced,' and ownership was established. They provide no
citations to the record to support their claims. [¶] Vos Industries issued a check for
$10,000 to open escrow to purchase the Perris property to crush rocks, Sandwood's and
Vos Industries' concern, in October 2006. Around the same time Marty transferred
$128,000 from Sandwood to Vos Industries. And after Susan and he wrote a check for
$10,000 to Vos Industries, Marty wrote himself three separate checks for $10,000 each,
and Marty admitted at trial Sandwood paid his salary, not Vos Industries."
The Sandwood I court ruled the Perris property was a corporate opportunity for
Sandwood: "Obviously, rock crushing is reasonably incident to Sandwood's present
business and is one in which it has the capacity to engage. When Marty purchased the
Perris property, he did so for Sandwood. Additionally, the documentary evidence and
Marty's testimony support the conclusion Marty used Sandwood's money to open escrow
on the property, and although not relevant to this issue he collected rent from Vos
Industries on the property. There was evidence Marty and Susan obtained a second
mortgage on their house to purchase the Perris property, but this does not compel the
conclusion the purchase of the Perris property was not a corporate opportunity for
Sandwood for the reasons above. Based on the record before, [sic] we conclude the
purchase of the Perris property was a Sandwood corporate opportunity. Thus, the [trial]
court should have imposed a constructive trust on the Perris property for the benefit of
Sandwood."
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Sandwood II
In May 2012, appellants filed the operative first amended verified complaint
alleging causes of action for equitable subrogation; imposition of constructive trust,
injunctive relief and damages against Sandwood. They alleged: "In 2007, the lease for
[Sandwood] was scheduled to terminate. [Wayne] found the Perris property and thought
that it would be a good location to relocate [Sandwood] in the event the lease for the
property in city of Orange could not be renewed. The court [in Sandwood I] found that
the deposit of ten thousand dollars ($10,000) came from [Sandwood]; however, the
balance of the purchase price was financed by plaintiffs' borrowing money against their
personal residence . . . . Title in the Perris Property was taken by [appellants], trustees of
the Vos Family Trust . . . . [¶] On or about November 30, 2006, [appellants], in their
individual capacities, entered into a fixed rate home equity loan ("Citibank Loan") in the
amount of three hundred sixty[-]four thousand dollars ($364,000), secured by a deed of
trust on the Stone Haven Property. . . . [¶] On or about October 27, 2006 [sic], the
$364,000.00 in loan proceeds from the Citibank Loan was used for the purchase of the
Perris property." (Some capitalization omitted.)
Sandwood demurred to the complaint on grounds appellants sought to relitigate
the Perris property's ownership, which Sandwood I had resolved in Sandwood's favor.
The trial court sustained the demurrer, finding res judicata barred appellants' claims.
DISCUSSION
Appellants contend res judicata is not applicable because although the court in
Sandwood I imposed a constructive trust on the Perris property, no court adjudicated the
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issue of whether appellants, in their individual capacities, are entitled to reimbursement
for purchasing the Perris property with their personal funds. Specifically, appellants
contend: "[With the filing of Sandwood I], which is entirely silent on the issue of
whether or not [Sandwood] takes title to the Perris property free and clear of any liens or
encumbrances, including appellants' $364,000.00 loan, appellants' claims and issues
regarding unjust enrichment and reimbursement for the purchase money for the Perris
property sprang into being and became viable, giving rise to the instant action." (Some
capitalization omitted.)
I. Standard of Review
Our review standard on this demurrer is settled. We review the allegations of the
complaint de novo to determine if it alleges facts sufficient to state a claim for relief
under any legal theory. (Committee for Green Foothills v. Santa Clara County Bd. of
Supervisors (2010) 48 Cal.4th 32, 42; Apple Inc. v. Superior Court (2013) 56 Cal.4th
128, 156.) " 'In doing so, we treat the demurrer as admitting all material facts properly
pleaded. " 'Further, we give the complaint a reasonable interpretation, reading it as a
whole and its parts in their context.' " ' " (Apple Inc., at p. 156.) "We may also consider
matters that have been judicially noticed." (Committee for Green Foothills, at p. 42.)
"If we conclude the complaint fails on any grounds stated in the demurrer, we
must then consider whether there is a ' "reasonable possibility" ' the complaint's defect(s)
can be cured by an amendment. [Citation.] If it is apparent the complaint's defects can
be cured, the trial court has abused its discretion and we will reverse the judgment.
[Citation.] Alternatively, if it is apparent the complaint's defects cannot be cured, no
6
abuse of discretion has occurred and we will affirm the judgment. [Citation.] The
burden of proving the reasonable possibility of such a curative amendment falls ' "
'squarely on the plaintiff[s].' " ' " (Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216
Cal.App.4th 497, 506-507.)
II. Res Judicata Bars the Present Action
The California Supreme Court explains: " 'Res judicata' describes the preclusive
effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents
relitigation of the same cause of action in a second suit between the same parties or
parties in privity with them. Collateral estoppel, or issue preclusion, 'precludes
relitigation of issues argued and decided in prior proceedings.' [Citation.] Under the
doctrine of res judicata, if a plaintiff prevails in an action, the cause is merged into the
judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant
serves as a bar to further litigation of the same cause of action." (Mycogen Corp. v.
Further, the parties are not required to have actually litigated an issue in the prior lawsuit
for it to be precluded, as res judicata also bars issues that could have been litigated, as
long as the later-raised issues constitute the same cause of action involved in the prior
proceeding. (Federation of Hillside and Canyon Associations v. City of Los Angeles
(2004) 126 Cal.App.4th 1180, 1202; Weikel v. TCW Realty Fund II Holding Co. (1997)
55 Cal.App.4th 1234, 1245.)
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Here, we conclude res judicata applies because the parties in both actions are the
same and the same primary right raised in Sandwood II—who owns the Perris Property—
was adjudicated on the merits in Sandwood I.3
The Sandwood I court's determination that appellants' purchase of the Perris
property was a corporate opportunity properly belonging to Sandwood was grounded in
equity. It quoted case law stating the basis of the doctrine of corporate opportunity must
3 Specifically, in Sandwood's appellate reply brief in Sandwood I, it argued in favor of a constructive trust by setting forth evidence tending to support its claim that Marty borrowed money from Sandwood or Vos Industries to fund the Perris property's purchase: "For the down payment for the purchase of the Perris property, Vos Industries writes a $10,000 check to First American Title. Then Marty Vos, two months later, writes a personal check to Vos Industries to allegedly repay the $10,000. But three days later Marty Vos takes the $10,000 back from Vos Industries for himself. . . . [¶] On October 22, 2006[,] a $10,000 check is written to First American Title as deposit for Perris property from Vos Industries . . . . Then on December 12, 2006, Marty Vos deposits his personal check of $10,000 in Vos Industries account . . . . Then on December 13, 2006, three days later, Marty Vos writes a $50,000 check from Sandwood to Vos Industries . . . . Then Marty Vos writes a check from Vos Industries to himself for $10,000 . . . . Essentially, Marty Vos launders money through the two companies so he can claim he owns the Perris property." (Some capitalization omitted.) The Court of Appeal in Sandwood I relied on some of the same evidence in imposing a constructive trust: "Marty testified he purchased the Perris property with his and Susan's personal funds. However, Marty conceded he transferred approximately $1.7 million from Sandwood to Vos Industries between 2003 and 2007. . . . [¶] There are two checks dated October 5, 2006, from Sandwood to Vos Industries for $11,000 and $12,000. There is a check dated October 11, 2006, from Sandwood to Vos Industries for $10,000. On October 27, 2006, Marty wrote a check from [Vos Industries] to First American Title in the amount of $10,000 for the purchase of the Perris property. Four days later, Marty wrote a check from Sandwood to Vos Industries for $20,000, and two weeks later he wrote another check from Sandwood to Vos Industries for $25,000. There is a check dated December 6, 2006, from Marty and Susan to Vos Industries for $10,000. Less than one week later, Marty wrote a check from Sandwood to Vos Industries for $50,000. Finally, Marty wrote a check from Sandwood to Vos Industries for $10,000 on January 31, 2007. Marty wrote himself checks from [Vos Industries] in the amount of $10,000 on June 15, 2007, July 13, 2007, and November 19, 2007." 9
be found in the unfairness on the particular facts of a fiduciary taking advantage of an
opportunity when the interests of the corporation justly call for protection. (New v. New
(1957) 148 Cal.App.2d 372, 384-385.) Further, Sandwood I imposed the equitable
remedy of a constructive trust on the Perris property. " 'A constructive trust is a remedial
device primarily created to prevent unjust enrichment; equity compels the restoration to
another of property to which the holder thereof is not justly entitled.' " (Kraus v. Willow
Park Public Golf Course (1977) 73 Cal.App.3d 354, 373.) " 'The essence of the
constructive trust theory is to prevent unjust enrichment and to prevent a person from
taking advantage of his own wrongdoing.' " (Martin v. Kehl (1983) 145 Cal.App.3d 228,
237.)
It follows that in the present case equity would not be served by requiring
Sandwood to repay appellants' loan used to purchase the Perris property, particularly in
light of Sandwood I's conclusions—binding on us as law of the case—that appellants had
borrowed up to $1.7 million from Sandwood and, in buying the Perris property,
appellants took advantage of a corporate opportunity belonging to Sandwood. (Accord,
Lucky United Properties Investments, Inc. v. Lee (2013) 213 Cal.App.4th 635, 654 [" '
"The decision of an appellate court, stating a rule of law necessary to the decision of the
case, conclusively establishes that rule and makes it determinative of the rights of the
same parties in any subsequent retrial or appeal in the same case." ' "].)
In any event, although we agree with appellants that the record does not explicitly
state whether Sandwood should reimburse appellants in the amount of $364,000 for the
loan used to purchase the Perris property, we conclude that silence is immaterial because
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appellants had an opportunity to litigate that specific issue in Sandwood I, and their
failure to do so bars this claim under the doctrine of res judicata. (Federation of Hillside
and Canyon Associations v. City of Los Angeles, supra, 126 Cal.App.4th at p. 1202.)
In seeking to escape the effects of res judicata, appellants claim Sandwood I
created a new situation by imposing the constructive trust. We have no quarrel with the
proposition that new facts or rights that arise after the filing of an initial pleading may not
serve as a basis for res judicata. "As a cause of action is framed by the facts in existence
when the underlying complaint is filed, res judicata 'is not a bar to claims that arise after
the initial complaint is filed.' [Citations.] For this reason, the doctrine may not apply
when 'there are changed conditions and new facts which were not in existence at the time
the action was filed upon which the prior judgment is based. [Citations.]' [Citation.]
This exception to the doctrine encompasses claims based on rights that arise after the
filing of the complaint in the first action, but before judgment is entered. [Citation.] . . .
'The general rule that a judgment is conclusive as to matters that could have been litigated
"does not apply to new rights acquired pending the action which might have been, but
which were not, required to be[,] litigated." ' " (Planning & Conservation League v.
Castaic Lake Water Agency (2009) 180 Cal.App.4th 210, 227-228; see also Allied Fire
Protection (2005) 127 Cal.App.4th 150, 155.)
Contrary to appellants' claim, however, it was not the Sandwood I decision that
gave rise to the issue of unjust enrichment or the need to resolve the question of whether
appellants were entitled to reimbursement for the cost of loan used to purchase the Perris
property. Rather, the constructive trust cause of action in Sandwood I arose out of a
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claim appellants unjustly enriched themselves at Sandwood's expense. In resolving that
issue, the appellate court did nothing more than restore appellants' rights by imposing a
constructive trust on the Perris property.
Appellants have not met their burden of showing they can amend their complaint
to avoid the effects of res judicata. In the trial court, their counsel requested leave to
amend: "The appellate court establish[ed] this constructive trust, so give us the right to
establish an equitable lien right against this trust that the appellate court established." But
the trial court responded that those issues could have been raised in Sandwood I. We
agree. In sum, the trial court did not err in sustaining the demurrer to these causes of
action without leave to amend. Appellants did not present any proposed amendments in
their opening brief in this court to cure these pleading defects.
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DISPOSITION
The judgment is affirmed. Respondent Sandwood Enterprises, Inc. is awarded
costs on appeal.
O'ROURKE, J.
WE CONCUR:
HUFFMAN, Acting P. J.
HALLER, J.
13
AI Brief
AI-generated · verify before citing
Holding. The court held that the doctrine of res judicata bars the plaintiffs' current action because the ownership of the Perris property and the associated claims of unjust enrichment were already adjudicated in a prior action between the same parties. The plaintiffs' failure to raise the issue of reimbursement for purchase funds in the prior litigation precludes them from relitigating the matter.
Issues
Does the doctrine of res judicata bar a subsequent action for equitable subrogation and constructive trust when the underlying ownership of the property was determined in a prior action?
Did the trial court err in sustaining a demurrer without leave to amend based on the application of res judicata?
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“Res judicata or claim preclusion operates to bar the maintenance of a later action if (1) the claim decided in the former action is identical to the claim presented in this action; (2) there was a final judgment on the merits; and (3) the parties in the current action were parties (or a privy to a party) to the prior adjudication.”
“the parties are not required to have actually litigated an issue in the prior lawsuit for it to be precluded, as res judicata also bars issues that could have been litigated”
“the trial court did not err in sustaining the demurrer to these causes of action without leave to amend.”