California Court of Appeal Nov 10, 2022 No. E074972Unpublished
Filed 11/10/22 Debonne v. Debonne CA4/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
BERNARD JACQUES DEBONNE, Individually and as Trustee, etc. et al., E074972 Plaintiffs and Respondents, (Super. Ct. No. PSC1601655) v. OPINION YANN DEBONNE,
Defendant and Appellant.
APPEAL from the Superior Court of Riverside County. Kira L. Klatchko, Judge.
Affirmed.
Law Offices of Michael S. Overing, Michael S. Overing and Edward C. Wilde;
Bochnewich Law Offices, Peter Bochnewich and Jacquetta Bardacos, for Defendant and
Appellant.
Roemer & Harnik, Brian S. Harnik, Mary E. Gilstrap, Helene Dreyer Koch and
Andrew G. Montez, for Plaintiffs and Respondents.
1
I.
INTRODUCTION
On behalf of himself and his companies, Bernard Debonne sued his son, Yann
Debonne, for claims stemming from Yann’s alleged elder abuse of Bernard. The trial 1 court awarded Bernard , Debonne Asset Management, LLC (DAM), and Debonne
Property Management, Inc. (DPM) about $3.75 million in damages and about $402,600
in attorney’s fees.
Yann argues (1) the trial court lacked subject-matter jurisdiction over DAM; (2)
Bernard’s claims are barred by the statute of limitations; (3) the trial court erroneously
excluded various documents as privileged; (4) the trial court erroneously denied Yann’s
motion for a new trial; (5) the trial court awarded excessive damages; and (6) the trial
court improperly calculated Respondents’ attorney’s fees award. We find no error and
affirm.
II. 2 FACTUAL AND PROCEDURAL BACKGROUND
Bernard ran a successful farming company from 1965 until 2007, when he decided
1 We refer to Bernard and Yann by their first name because of their shared last name. We mean no disrespect. 2 We have had considerable difficulty determining the relevant facts and trial court proceedings because Yann failed to “[p]rovide a summary of the significant facts limited to matters in the record” and did not clearly discuss this case’s factual and procedural background in his opening brief. (Cal. Rules of Court, rule 8.204(a)(2)(C).) And as discussed in more detail below, Yann’s opening brief is deficient in other respects. Our recitation of the relevant background is therefore truncated.
2
to convert the company into DPM. Bernard was DPM’s only shareholder, and the
company focused on managing his real estate holdings.
In September 2008, when Bernard was in his 80s, he began to suffer from severe
mental illness. Bernard became depressed and suicidal and was hospitalized for nearly a
month. In October 2008, Bernard’s attorney executed a power of attorney, which
appointed Yann as Bernard’s attorney-in-fact, personally and as the trustee of Bernard’s
trust.
In April 2010, DAM was formed under Delaware law. DAM was formed as a
holding company for Bernard’s businesses. Yann and Bernard were its only members.
Bernard continued to suffer from serious, but sometimes intermittent mental health
issues through 2013. Although Bernard’s mental health issues improved significantly
toward the end of 2012, it was not until August 2013 that Bernard could fully care for
himself again.
In February 2013, Bernard revoked Yann’s power of attorney, and removed him as
a manager of DAM in August 2013. Around the spring or summer of 2013, Bernard
began to investigate the state of his business affairs. Bernard found that his companies’
records had been poorly managed and that there were a number of missing documents.
After receiving bank records that had gone missing at some point in the first half of 2014,
Bernard began to suspect Yann had improperly managed his financial affairs in recent
years. For about a year, Bernard tried to obtain all of the records necessary to assess the
state of his businesses. He eventually concluded that about $1 million of his assets had
3
gone missing. Bernard demanded Yann explain various transactions he had made in the
past few years and also demanded that Yann return some of Bernard’s property and
funds.
In April 2016, Bernard, DPM, and DAM (collectively, Respondents) sued Yann
for breach of fiduciary duty, conversion, financial elder abuse, fraud, violation of Penal 3 Code section 496, constructive trust, and for an accounting. After a lengthy bench trial,
the trial court issued a thorough written order ruling largely in Respondents’ favor. The
trial court awarded Respondents about $3.74 million and about $400,000 in attorney’s
fees and costs. The trial court later denied Yann’s motion for a new trial, and Yann
timely appealed.
III.
DISCUSSION
A. Subject-Matter Jurisdiction
“California’s superior courts are courts of general jurisdiction, which means they
are generally empowered to resolve the legal disputes that are brought to them” unless
they have been expressly stripped of jurisdiction to hear the case. (Quigley v. Garden
Valley Fire Protection District (2019) 7 Cal.5th 798, 808.) Yann claims DAM’s
cancelling its registration with the California Secretary of State in 2016 means that DAM
could not file or maintain this action against him under Corporations Code section
3 Respondents alleged the same claims against Yann with the exception that only Bernard alleged a financial elder abuse claim.
provides in full: “A foreign limited liability company transacting intrastate business in
this state shall not maintain an action or proceeding in this state unless it has a certificate
of registration to transact intrastate business in this state.” With some exceptions not
applicable here, section 11708.07(a) precludes a foreign corporation conducting business
in California from lawfully prosecuting a lawsuit in the California courts if the
corporation is not registered to do business in California. (See Conseco Marketing, LLC
v. IFA & Ins. Services, Inc. (2013) 221 Cal.App.4th 831, 840.)
But Yann does not cite, and we cannot find, any authority that supports his
argument that section 11708.07(a) strips California courts of subject-matter jurisdiction
over a foreign corporation’s lawsuit if that corporation is unregistered in California.
Yann is correct that a foreign corporation conducting business in California that has not
registered with the California Secretary of State “may not . . . maintain an action [in
California courts] commenced prior to” registering. (United Medical Management, Ltd.
v. Gatto (1996) 49 Cal.App.4th 1732, 1739; see also Color-Vue, Inc. v. Abrams (1996) 44
Cal.App.4th 1599, 1603-1604 (Color-Vue) [“Suspension of corporate powers results in a
lack of capacity to sue, not a lack of standing to sue.”].)
4 We grant Yann’s May 17, 2021 request for judicial notice of documents filed with the California Secretary of State concerning this issue.
5
But this does not mean that a California trial court lacks subject-matter jurisdiction
over an unregistered foreign corporation’s lawsuit. Instead, the corporation only lacks
the capacity to prosecute the case. The case should therefore be stayed—not dismissed
for lack of subject-matter jurisdiction—to allow the corporation to register. (United
Medical Management, Ltd. v. Gatto, supra, 49 Cal.App.4th at p. 1739.) Until the
corporation registers with the California Secretary of State, it lacks the capacity to
prosecute a lawsuit in the California courts, even though it still may “commence an action
in [California] state court.” (Ibid.)
A corollary of this rule is that a defendant challenging a foreign corporation’s
capacity to sue must do so at “at the earliest opportunity,” either in its answer or in a
demurrer. (Color-Vue, supra, 44 Cal.App.4th at p. 1604.) If the defendant does not do
so, it forfeits any challenge to the foreign corporation’s capacity to prosecute the case.
(Ibid.)
Yann did not raise any issues about DAM’s capacity in the trial court. By failing
to do so until the first time on appeal, Yann forfeited his argument that DAM could not
prosecute this action at the time of trial under section 11708.07(a) because it was not
registered with the California Secretary of State. (Color-Vue, supra, 44 Cal.App.4th at p. 5 1604.) We therefore decline to address the issue.
5 Yann also argues Bernard perjured himself at trial by testifying that DAM was still in existence at the time of the July 2019 trial in an effort to secure the trial court’s subject-matter jurisdiction. Because the trial court had subject-matter jurisdiction irrespective of Bernard’s testimony, we need not address this argument.
6
B. Statute of Limitations
Yann contends Bernard’s claims, filed in April 2016, were barred by the three- 6 year statute of limitations (Code Civ. Proc., § 338, subd. (d)). The trial court found
otherwise for four independent reasons: (1) Bernard was not on notice of his claims
against Yann until August 2013 because his mental health issues prevented him from
discovering Yann’s wrongdoing before then; (2) Yann’s “status as a fiduciary tolled the
running of the statute [of limitations]”; (3) the statute of limitations should be tolled
under Code of Civil Procedure section 352, subdivision (a) (section 352(a)); and (4)
“alternatively,” the statute of limitations should be equitably tolled.
In his opening brief, Yann focuses mostly on the trial court’s third and fourth
reasons for finding Bernard’s claims were not time-barred. Although it is unclear
whether Yann challenges the trial court’s first reason for finding Respondents’ claims
timely, Yann does mention the court’s second reason in his opening brief. By failing to
do so, Yann failed to meet his burden of showing that the trial court erred in finding that 7 Bernard’s claims were not time-barred. (Kurinij v. Hanna & Morton (1997) 55
6 It is unclear from Yann’s opening brief whether he argued in the trial court that the statute of limitations barred DAM and DPM’s claims as well as Bernard’s claims. The trial court discussed only whether Bernard’s claims were time-barred, and Yann does not argue that DAM and DPM’s claims are time-barred in his opening brief. We therefore discuss only whether the trial court properly found that Bernard’s claims were timely filed. 7 We decline to address Yann’s arguments on the issue raised for the first time in his reply brief. (Chicago Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 427-428.)
7
Cal.App.4th 853, 865 [judgment is presumed correct and the appellant has the burden of
failure to brief issue on appeal waives it].) We affirm the trial court’s finding that
Bernard’s claims were timely filed on that that basis alone.
In any event, the trial court properly found that the statute of limitations should be
tolled for Bernard’s claims under section 352(a). That statute provides in relevant part
that “[i]f a person entitled to bring an action . . . is at the time the cause of action accrued
either under the age of majority or lacking the legal capacity to make decisions, the time
of the disability is not part of the time limited for the commencement of the action.”
(Italics added.) Thus, under section 352(a), if Bernard lacked “the legal capacity to make
decisions” when his claims against Yann accrued, then the three-year statute of 8 limitations did not begin unless and until he regained “the legal capacity to make
decisions.” (See In re Mirapex Products Liability Litig. (8th Cir. 2019) 912 F.3d 1129,
1132; Hsu v. Mt. Zion Hospital (1968) 259 Cal.App.2d 562, 571.)
We independently review the trial court’s interpretation of a statute. (Smith v.
Superior Court (2006) 39 Cal.4th 77, 82-83.) When, as here, the facts are disputed, we
review for substantial evidence the trial court’s finding that a plaintiff lacks legal capacity
under section 352(a) and thus the statute of limitations should be tolled. (See Winograd
8 We agree with the parties and the trial court that Respondents’ claims relevant to this appeal are subject to a three-year statute of limitations. (Hatch v. Collins (1990) 225 Cal.App.3d 1104, 1110.)
8
v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632; Jolly v. Eli Lilly & Co.
(1988) 44 Cal.3d 1103, 1112.) Under that standard of review, “[i]f the trial court’s
resolution of the factual issue is supported by substantial evidence, it must be affirmed.”
(Winograd v. American Broadcasting Co., supra, at p. 632.) Substantial evidence is
“evidence of ‘ponderable legal significance, . . . reasonable in nature, credible, and of
When reviewing the trial court’s judgment for substantial evidence, we “consider all of
the evidence in the light most favorable to the prevailing party, giving it the benefit of
every reasonable inference, and resolving conflicts in support of the [findings].
[Citations.]” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) We may not
reweigh the evidence and are bound by the trial court’s credibility determinations.
(Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1384.)
Yann claims the trial court erred because, as the court acknowledged, Respondents
did not argue Bernard was completely incapacitated. But the trial court correctly
observed that the standard for tolling the statute of limitations under section 352(a) is not
whether the plaintiff suffers from “total legal ‘incapacity.’” (Italics added.) A person
lacks the “legal capacity to make decisions” under section 352(a) when he or she is
“incapable of caring for his [or her] property or transacting business or understanding the
nature or effects of his [or her] acts.” (Pearl v. Pearl (1918) 177 Cal. 303, 307; Hsu v.
9
9 Mt. Zion Hospital, supra, 259 Cal.App.2d at pp. 574-575.) The trial court rightly 10 recognized and applied this standard. We therefore disagree with Yann that the trial
court applied the wrong standard under section 352(a) or otherwise misinterpreted the
statute.
Yann argues the trial court erred in tolling the statute of limitations because the
court did not find that Bernard lacked legal capacity. Yann is mistaken. The trial court
found that Bernard “was not truly capable of caring for his property or transacting
business, or understanding the nature of his actions after his hospitalization in 2008,” and
remained “unable to live alone” and “unable to care for himself in even the most basic
sense” until August 2013, “when he returned to his right mind.” The trial court thus
found that Bernard was “entitled to tolling under . . . section 352.” These findings show
the trial court found Bernard lacked legal capacity within the meaning of section 352(a).
To make that finding, the trial court found relied mostly on the testimony of
Bernard’s long-term caretaker, Maria Reza, and two of Bernard’s treating physicians, Dr.
Roxana Farinpour and Dr. Anthony Bassinelli, all of whom described Bernard between
2008 and the summer of 2013 as “as a virtual zombie who was illogical, irrational,
9 “In 2014, the California Legislature amended § 352(a) to replace the term ‘insane’ with the phrase ‘lacking the legal capacity to make decisions.’ 2014 Cal.Stat. ch. 144, § 4. Courts continue to rely on pre-2014 case law in interpreting the amended statute.” (In re Mirapex Products Liability Litig., supra, 912 F.3d at p. 1132, fn. 2.) 10 Even if Respondents did not argue Bernard lacked legal capacity under section 352(a), as Yann contends, we may affirm on any basis presented by the record, even if not advanced by a party below. (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 98.)
10
chronically suicidal, and unable to care for himself and his basic human needs.” Drs.
Farinpour and Bassinelli also testified that Bernard’s serious mental health issues
“impaired his judgment, reasoning ability, and memory.” Based on their testimony and
Reza’s testimony, the trial court found that Bernard was “so preoccupied with killing
himself” from 2008 until at least August 2013 “that he was unable to care for himself in
even the most basic sense” and, in turn, that he lacked the “legal capacity to make
decisions” under section 352(a) during that time. Substantial evidence thus supports the
trial court’s finding that tolling the statute of limitations was appropriate under section
352(a). (In re Marriage of Fregoso & Hernandez (2016) 5 Cal.App.5th 698, 703 [“The
testimony of one witness, even that of a party, may constitute substantial evidence.”];
Winograd v. American Broadcasting Co., supra, 68 Cal.App.4th at p. 632.)
Moreover, Yann provides no reasoned argument why the trial court erroneously
relied on the testimony of Reza, Dr. Farinpour, or Dr. Bassinelli in reaching that
conclusion. In his opening brief, Yann does not mention Reza and only briefly mentions
Drs. Farinpour and Bassanelli. As for Dr. Farinpour, Yann discusses her testimony only
once in passing in a footnote. He argues the trial court incorrectly found that Drs.
Fainpour and Bassanelli testified that a treatment Bernard received “could cause memory
loss.” But the testimony Yann then quotes to undermine that finding states that the
therapy has been “consistently shown to compromise new learning and memory.” As for
Dr. Bassanelli, Yann mentions only two of his notes from June 2010.
11
In short, Yann did not comply with his obligation to properly discuss the
testimony of Reza, Dr. Farinpour, or Dr. Bassanelli that the trial court relied on to toll the
statute of limitations. (See Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246 [“[A]n
attack on the evidence without a fair statement of the evidence is entitled to no
consideration when it is apparent that a substantial amount of evidence was received on
behalf of the respondent.”].) For that reason alone, Yann forfeited his argument that the
trial court erroneously found that Bernard lacked legal capacity under section 352(a) and
thus the statute of limitations should be tolled. (See Rayii v. Gatica (2013) 218
Cal.App.4th 1402, 1408 [“An appellant . . . who cites and discusses only evidence in her
favor fails to demonstrate any error and waives the contention that the evidence is
insufficient to support the judgment.”]; see also Doe v. Roman Catholic Archbishop of
bears the burden of proving every fact of defense].) Among other things, Yann had to
prove the amount of the offset he sought. which required Yann to prove the value of the
property he allegedly bought for DPM. (See ibid.; see also People ex rel. Dept. of Public
Works v. Giumarra Vineyards Corp. (1966) 245 Cal.App.2d 309, 322; Nielsen v.
Farrington (1990) 223 Cal.App.3d 1582, 1587, fn. 5 [noting party seeking offset for real
estate transaction had to prove value of property].)
In his opening brief, Yann does not clearly identify all of the relevant items, does
not state how much the at-issue items are individually or collectively worth, and does not
properly cite evidence in the record to support his argument. We therefore cannot discern
the amount of the offset, if any, Yann was entitled to receive. As a result, Yann fails to
show the trial court abused its discretion in denying his request for an offset.
2. Prejudgment Interest on Punitive Damages Award
The trial court doubled Bernard’s damages award for his breach of fiduciary duty
claim (see Prob. Code, § 4231.5, subd. (c)). Yann claims that because the doubling was a
form of punitive damages, the trial court could not award prejudgment interest on that
amount, but erroneously did so.
15
Yann is mistaken. Respondents hired Sabby Jonathan to calculate prejudgment
interest damages. Mr. Jonathan testified at length as to how he calculated interest and
reached his conclusions. The court relied on Mr. Jonathan’s credible testimony to
calculate the prejudgment interest award. Mr. Jonathan did not calculate prejudgment
interest based on the trial court’s doubling Bernard’s award for the breach of fiduciary
claim. Thus, as the trial court explained, it “did not award prejudgment interest on the
doubled damages.” Yann fails to acknowledge the basis for the trial court’s prejudgment
interest award and entirely ignores Mr. Jonathan’s testimony. As a result, Yann fails to
show the trial court erroneously awarded prejudgment interest on Bernard’s doubled
award.
3. Post-Judgment Interest on Prejudgment Interest
Yann contends the trial court improperly awarded “post judgment interest on
prejudgment interest.” Again, Yann is mistaken.
Yann objected Respondents’ proposed judgment on the ground that it would have
improperly awarded Respondents post-judgment interest on interest. The trial court
explained that it would not award such interest and would not refer to any post-judgment
interest in the final judgment. The final judgment therefore does not award any post-
judgment interest.
4. Double-Counted Interest
Yann mistakenly argues that the trial court awarded “interest on interest.” The
court did not do so.
16
Yann objected to Respondents’ proposed judgment on the ground that the trial
court improperly found in its written ruling that Respondents were entitled to interest on
an award of interest under Delaware law. The relevant sentence in that ruling stated,
Including interest, “DAM and the Trust are owed $1,080,044.58 in damages plus
$557,092.96 in prejudgment interest thereon.” (Italics added.) In response, the trial court
ruled that the amounts in the proposed judgment were correct, but noted that “including
interest” language in its written ruling was a “typographic error” and therefore corrected
its ruling by deleting the language. As a result, the trial court did not award Respondents
improper “interest on interest” in its final judgment.
5. Attorney’s Fees
Yann argues the trial court improperly awarded Respondents attorney’s fees.
Yann’s one-paragraph argument on the issue asks us to independently review
Respondents’ motion for attorney’s fees and determine whether the trial court’s fee award
was proper. We decline the invitation. (Placer County Local Agency Formation
Commission v. Nevada County Local Agency Formation Commission (2006) 135
Cal.App.4th 793, 815 [“We need not address this unsupported and undeveloped
argument, and it is improper simply to incorporate by reference papers filed in the trial
court.”].)
17
IV.
DISPOSITION
The judgment is affirmed. Respondents may recover their costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
CODRINGTON J.
We concur:
RAMIREZ P. J.
McKINSTER J.
18
AI Brief
AI-generated · verify before citing
Holding. The court affirmed a judgment awarding damages and attorney's fees for elder abuse and breach of fiduciary duty, holding that the trial court properly exercised jurisdiction, correctly applied tolling provisions for the statute of limitations, and did not abuse its discretion in its evidentiary or damages rulings. The appellant forfeited several claims by failing to adequately brief them or provide a sufficient record for review.
Issues
Did the trial court lack subject-matter jurisdiction over a foreign limited liability company that was not registered to transact business in California?
Did the trial court err in finding that the statute of limitations was tolled due to the plaintiff's lack of legal capacity to make decisions?
Did the trial court abuse its discretion in its evidentiary rulings regarding privileged documents and the denial of a motion for a new trial?
Did the trial court err in its calculation of damages, including the denial of an offset and the assessment of interest?
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“The case should therefore be stayed—not dismissed for lack of subject-matter jurisdiction—to allow the corporation to register.”
“A person lacks the “legal capacity to make decisions” under section 352(a) when he or she is “incapable of caring for his [or her] property or transacting business or understanding the nature or effects of his [or her] acts.””
“Yann did not comply with his obligation to properly discuss the testimony of Reza, Dr. Farinpour, or Dr. Bassanelli that the trial court relied on to toll the statute of limitations.”