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ZTE ELECTRONICS CORP INC v. AMOROSO PROPERTIES

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Court of Appeal, Second District, California.

ZTE ELECTRONICS CORP., INC., Plaintiff and Appellant, v. AMOROSO PROPERTIES, et al., Defendants and Respondents.

B215598

Decided: July 20, 2010

Law Offices of Shun C. Chen and Shun C. Chen for Plaintiff and Appellant. Law Office of Freeman, Freeman & Smiley and Joseph Mudd for Defendants and Respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

I. INTRODUCTION

Plaintiff, ZTE Electronics Corp., Inc., sought to recover from third parties-defendants, Amoroso Properties and James Amoroso-on an unsatisfied default judgment against Audio Wood Products, Inc. Plaintiff proceeded in part on a claim for conspiracy to effect fraudulent conveyances in violation of the Uniform Fraudulent Transfer Act. (Civ.Code, §§ 3439 et seq.)   Plaintiff also asserted a creditor's suit against defendant Amoroso Properties under Code of Civil Procedure section 708.210.   The trial court found in defendants' favor.   Plaintiff appeals from the judgment.   We affirm.

II. BACKGROUND

Amoroso Properties was a partnership, now dissolved.   The general partners were Jack Amoroso, Sr. and his two sons, Jack Edward Amoroso, Jr. and defendant James Amoroso.   Jack Sr. is deceased.1  Amoroso Properties owned and operated the Glenmore Hotel on Catalina Island.   From 1998 to 2003, Jack Jr. managed the hotel.   Jack Jr. also owned an 80 percent interest in Audio Wood Products, Inc., the judgment debtor.   Another brother, Michael Amoroso, owned a 20 percent interest in Audio Wood Products, Inc. Jack Jr. was the president and chief executive officer of Audio Wood Products, Inc. Hence, Jack Jr. managed both the hotel and Audio Wood Products, Inc. Audio Wood Products, Inc. is no longer in business.   By early 1998, the Amoroso Properties partnership had been dissolved by court order and Jack Jr. was required to sell the hotel.   Jack Jr. caused Audio Wood Products, Inc., then a profitable concern, to lend Amoroso Properties and the hotel $63,000.   There was a 20-year history of Audio Wood Products, Inc. loaning money to Amoroso Properties;  the loans were always paid back.   The loan from Audio Wood Products, Inc. was to be used to prepare the hotel for sale.   By December 31, 1999, the loaned amount had increased to a total of $263,000, and by February 29, 2000, to $297,000.   By December 31, 2001, Amoroso Properties had reduced its debt to Audio Wood Products, Inc. to $60,000.   Jack Jr. testified the loans were evidenced by promissory notes that carried interest;  however, no such notes were in evidence at trial.

Plaintiff sold goods to Audio Wood Products, Inc. Audio Wood Products, Inc. first purchased products from plaintiff beginning in 2000.   The terms of the arrangement between Audio Wood Products, Inc. and plaintiff were cash on delivery.   However, Audio Wood Products, Inc. became financially unstable in 2001 after its primary customer, Mitsubishi, abruptly stopped making purchases.   Without the cash flow from Mitsubishi, Audio Wood Products, Inc. was unable to pay its bills.   Beginning in March or April 2001, plaintiff began experiencing problems collecting payment from Audio Wood Products, Inc. Eventually, in May or June 2001, plaintiff ceased shipping products to Audio Wood Products, Inc. When Audio Wood Products, Inc. ceased business operations, it was in debt to plaintiff as well as others.   As part of its attempt to repay its creditors, Audio Wood Products, Inc. sought repayment of the loan balance from Amoroso Properties.   Counsel for the two parties negotiated a discounted debt in settlement.   Amoroso Properties paid the discounted amount to Audio Wood Products, Inc. On January 31, 2002, Audio Wood Products, Inc. executed a general assignment for the benefit of creditors and turned its financial records over to San Diego Wholesale Credit Association.

On September 18, 2002, Jack Jr. personally filed for relief under Chapter 7 of the United States Bankruptcy Code. In an adversary proceeding in the United States Bankruptcy Court for the Central District of California, plaintiff sought unsuccessfully to hold Jack Jr. personally liable for the debt of Audio Wood Products, Inc. (In re John Edward Amoroso, Jr.;   ZTE Electronics, Inc. v. John Edward Amoroso, Jr. (Bankr.2004) case No. SA 02-16819 RA).)   The decision in Jack Jr.'s favor was affirmed by the Ninth Circuit Court of Appeals.  (In re John Edward Amoroso, Jr.;  ZTE Electronics, Inc. v. John Edward Amoroso, Jr. (Bankr.9th Cir.2007) case No. CC-04-01207-PaBK.)

Plaintiff brought an action against Audio Wood Products, Inc. to recover the unpaid cost of products delivered.   Plaintiff obtained an October 31, 2003 default judgment against Audio Wood Products, Inc. for more than $200,000.   No part of that judgment has been paid.

Plaintiff filed the present action on April 20, 2004.   The operative pleading is a second amended complaint.   Plaintiff alleged it had an unsatisfied judgment against Audio Wood Products, Inc. In its first cause of action, plaintiff alleged the defendants had conspired to and engaged in fraudulent conveyances with the intent to hinder, delay or defraud it.   The conspiracy allegation was set forth as a separate, second cause of action.   It is well settled, however, that civil conspiracy is not an independent tort;  there is no separate cause of action for civil conspiracy.  (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511;  Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 44;  Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, 631, superseded by statute on other grounds as stated in (1991) 54 Cal.3d 723, 733, & fn. 6;  Mox Incorporated v. Woods (1927) 202 Cal. 675, 677;  Herron v. Hughes (1864) 25 Cal. 555, 560;  Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 574;  Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 82.)   In its third cause of action, plaintiff asserted a creditor's claim to recover money in defendants' possession or control that belonged or was owed to Audio Wood Products, Inc. (Code Civ. Proc., § 708.210.)

The case was tried by the court without a jury.   The trial court found in defendants' favor.   On appeal, plaintiff contends:  the judgment is reversible per se because the trial court refused to issue a statement of decision;  the trial committed evidentiary errors;  the trial court erred in applying collateral estoppel;  the trial court employed a wholly erroneous standard with respect to the third cause of action;  and there was substantial evidence of fraudulent conveyance.

III. DISCUSSION

A. Statement of Decision

Plaintiff argues the judgment is reversible per se because the trial court “refused” to issue a statement of decision.  (See Carpenter v. Pacific Mut. Life Ins. Co. (1937) 10 Cal.2d 307, 326 [failure to issue timely requested statement of decision is reversible error];  In re Estate of Pendell (1932) 216 Cal. 384, 386;  Gruendl v. Oewel Partnership, Inc. (1997) 55 Cal.App.4th 654, 659-660.)  Code of Civil Procedure section 632 states in part:  “In superior courts, upon the trial of a question of fact by the court, written findings of fact and conclusions of law shall not be required.   The court shall issue a statement of decision․  [¶] The statement of decision shall be in writing, unless the parties appearing at trial agree otherwise;  however, when the trial is concluded within one calendar day or in less than 8 hours over more than one day, the statement of decision may be made orally on the record in the presence of the parties.”   We conclude plaintiff forfeited its argument;  and even if not forfeited, plaintiff has not shown that the trial consumed more than eight hours over more than one day.

In the trial court, on December 22, 2008, plaintiff filed a written request for a statement of decision.   Also on December 22, at the outset of the trial, the trial court commented:  “I notice one of you requested a statement of decision.   What I like to do is just announce it, and the court reporter can write it down, but we'll cross that bridge when we get there․”  The trial commenced on December 22, 2008, at 1:30 p.m. Two witnesses testified that afternoon.   Evidence continued to be taken the following day, December 23.   Two witnesses testified during the morning session.   Following a noon recess, one additional witness testified.   The attorneys briefly presented argument with respect to trial exhibits.   Final arguments commenced on December 31, 2008, from 9:45 a.m. to 11:45 a.m. and continued on January 30, 2009, from 1:40 p.m. to 2:21 p.m.

The trial court orally announced its decision on the record.   The following colloquy ensued:  “[Defense counsel, Joseph Mudd]:  Do you want me to draft a formal judgment in accordance with-[¶] The Court:  Well, yeah, I don't want extensive findings and conclusions of law or anything like that.   I think my oral comments constitute that.  [¶] [Plaintiff's counsel, Shun Chen]:  I think we would ask for a statement of decision.  [¶] The Court:  I think the statement of decision I have made orally at this proceeding and in previous proceedings.  [¶] I don't see-under the statute, I have the right to make it orally on the record, which I have done today and previously;  and I don't see the need to do a written statement of decision.  [¶] Okay? [¶] Mr. Chen:  All right.”

We reject plaintiff's reversible error argument for two reasons.   First, plaintiff acquiesced in the trial court's statement that no written statement of decision was required.   Plaintiff's counsel did not disagree with the trial court's conclusion that under Code of Civil Procedure section 632 an oral statement of decision was permitted.   Plaintiff has forfeited the argument.   (Whittington v. McKinney (1991) 234 Cal.App.3d 123, 129-130;  see Martinez v. County of Tulare (1987) 190 Cal.App.3d 1430, 1434-1435;  University of San Francisco Faculty Assn. v. University of San Francisco (1983) 142 Cal.App.3d 942, 946.)   Second, the statute expressly provides that an oral statement of decision on the record in the presence of the parties suffices when the trial is concluded in less than eight hours over more than one day.  (Code Civ. Proc., § 632.)   The Court of Appeal has held:  “[T]he time of trial means the time that the court is in session, in open court, and also includes ordinary morning and afternoon recesses when the parties remain at the courthouse.   It does not include time spent by the judge off the bench without the parties present-lunch, for example-except for such routine recesses as occur during the day.”  (In re Marriage of Gray (2002) 103 Cal.App.4th 974, 980;  see Wegner et al., Cal. Practice Guide:  Civil Trials and Evidence (The Rutter Group 2009) ¶¶ 16:131, 16:134, pp. 16-29 to 16-30 (rev.# 1, 2007).)   The present record does not establish that the trial lasted more than eight hours over more than one day.   And plaintiff has not demonstrated that the trial lasted more than eight hours over more that one day.   Therefore, even if plaintiff had not forfeited the argument, we would not find reversible error in the trial court's failure to issue a written statement of decision.  (Olen Commercial Realty Corp. v. County of Orange (2005) 126 Cal.App.4th 1441, 1452;  see In re Marriage of Gray, supra, 103 Cal.App.4th at pp. 977-980.)

B. Evidentiary Issues

1. Standard of review

Plaintiff asserts the trial court committed evidentiary error.   We review the trial court's evidentiary rulings for an abuse of discretion.  (People v. Alvarez (1996) 14 Cal.4th 155, 201;  Poniktera v. Seiler (2010) 181 Cal.App.4th 121, 142.)   As the Supreme Court has held, “The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason.”  (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479;  accord, Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4th 694, 722;  In re Stephanie M. (1994) 7 Cal.4th 295, 318-319.)   And even if the trial court abused its discretion, the error is not reversible absent a showing it is reasonably probable a more favorable result would have been reached absent the error.  (Poniktera v. Seiler, supra, 181 Cal.App.4th at p. 142;  Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1431-1432.)

2. Exhibit No. 3

Plaintiff contends the trial court erred in admitting exhibit No. 3. Exhibit No. 3 was a printout of a “Quick Books” accounting record.   It showed the cash flow between Amoroso Properties and Audio Wood Products, Inc. from January 1, 1998, through March 11, 2004.   It was based on information provided by management and posted by an accountant.   Plaintiff argues exhibit No. 3 was inadmissible because it did not qualify as a business record.   Plaintiff further asserts exhibit No. 3 was inadmissible under the secondary evidence rule, Evidence Code sections 1520 and 1521.   We conclude:  plaintiff forfeited any business records argument by failing to assert it in the trial court;  exhibit No. 3 was not inadmissible secondary evidence;  and even if the trial court abused its discretion, plaintiff has not demonstrated prejudice.

Plaintiff did not raise any hearsay objection or argue the inapplicability of the business records rule in the trial court.   Plaintiff at no time argued to the trial court that Exhibit No. 3 was not a business record.   As a result, the present argument-that Exhibit No. 3 did not qualify as a business record-was forfeited.  (People v. Demetrulias (2006) 39 Cal.4th 1, 21-22;  People v. Partida (2005) 37 Cal.4th 428, 433-435.)

Plaintiff argues exhibit No. 3 was inadmissible under the secondary evidence rule.   The secondary evidence rule governs proof of the content of a writing by otherwise admissible secondary evidence.  (Evid.Code, § 1521, subd. (a).)  Secondary evidence is evidence of the contents of a writing other than the writing itself. (§§ 1520, 1521.)   Exhibit No. 3 was not offered to prove the content of any particular writing.   It was introduced as some evidence the transfers of funds from Audio Wood Products, Inc. to Amoroso Properties were interest-bearing loans that were repaid.   The admission of exhibit No. 3 was not foreclosed by the secondary evidence rule.  (Crail v. Blakely (1973) 8 Cal.3d 744, 754-755 [testimony as to value of estate not offered to prove content of any particular writing];  Ponce v. Marr (1956) 47 Cal.2d 159, 162 [defendant testified loan had been repaid];  Marriner v. Dennison (1889) 78 Cal. 202, 213 [testimony went not to contents of writing but whether one was made or not];  Bank of Costa Mesa v. Losack (1977) 74 Cal.App.3d 287, 291-292 [best evidence rule did not preclude bank president's testimony concerning account activity];  Vickter v. Pan Pac. Sales Corp. (1952) 108 Cal.App.2d 601, 603 [best evidence rule did not preclude testimony as to sums paid for merchandise];  8 Wharton's Criminal Evidence (15th ed.2001) § 126.6, pp. 442-443;  2 Witkin, Cal. Evidence (4th ed.   2000) Documentary Evidence, § 30, p. 155;  see People v. Sweeney (1960) 55 Cal.2d 27, 38 [oral testimony as to content of recorded conversation not precluded];  People v. Johnson (1974) 39 Cal.App.3d 749, 763 [witness may testify as to what he has seen or heard regardless whether matter is reduced to a writing or incorporated in a sound recording].)

Further, a printout of data stored in a computer that accurately reflects the stored data is not secondary evidence of some other writing;  it is an original writing.  (Evid.Code, § 255.)   And when computer data is admissible as a business record, the secondary evidence rule does not foreclose its admission.  (People v. Hernandez (1997) 55 Cal.App.4th 225, 239-240;  see People v. Ayers (2005) 125 Cal.App.4th 988, 994.)   Here, the trial court had before it evidence the information in the accounting system was provided by management and recorded by the accountant.   The accountant did not independently verify the information.   The trial court concluded the information reflected in exhibit No. 3 was corroborated in part by other evidence and was entitled to some weight.   We find no abuse of discretion.

Even if the trial court abused its discretion by admitting exhibit No. 3 into evidence, plaintiff does not argue, let alone demonstrate, it is reasonably probable the result would have been more favorable to it in the absence of that evidence.  (Cal. Const., art.   VI, § 13;  People v. Watson (1956) 46 Cal.2d 818, 836.)   Plaintiff asserts in conclusory fashion only that the trial court “heavily relied” on the exhibit and it would be grossly unfair for exhibit No. 3 to be admitted in lieu of cancelled checks.   This does not amount to a sufficient showing of prejudice to permit reversal of the judgment.

2. Repayment Evidence

Plaintiff asserts without citation to any legal authority in support that only a cancelled check can be used to prove repayment of a loan.   Pursuant to well established authority, this court need not consider an argument that is not supported by citations to pertinent legal authority.  (E.g., Associated Builders & Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 366, fn. 2;  Estate of Randall (1924) 194 Cal. 725, 728-729;  Hess Collection Winery v. California Agr. Labor Relations Bd. (2006) 140 Cal.App.4th 1584, 1607, fn. 6;  Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785;  San Mateo County Coastal Landowners' Assn. v. County of San Mateo (1995) 38 Cal.App.4th 523, 559;  Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545-546;  Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.)   In any event, oral testimony that a loan was made or repaid is admissible notwithstanding that a writing might also disclose that fact.   (Ponce v. Marr, supra, 47 Cal.2d at p. 162;  see Lacy v. Bennett (1962) 207 Cal.App.2d 796, 798-799 [plaintiff and defendant testified concerning existence of loans];  Shea v. Paul (1962) 208 Cal.App.2d 207, 210 [witness testified to loan and repayment but was unable to produce any cancelled check];  Vickter v. Pan Pac. Sales Corp., supra, 108 Cal.App.2d at p. 603 [trial court properly overruled objection to testimony about sums paid for merchandise on grounds account books were best evidence as to those facts;  witness testified to facts within his knowledge and not as to contents of account books];  2 Witkin, Cal. Evidence (4th ed.   2000) Documentary Evidence, § 40, p. 165.)   And it was for the trier of fact to decide what inferences to draw from the absence of cancelled checks in light of all the evidence.  (See Board of Education v. Jack M. (1977) 19 Cal.3d 691, 697 [trial court's province to weigh the evidence and draw reasonable inferences];  Crail v. Blakely, supra, 8 Cal.3d at p. 755;  Estate of Teel (1944) 25 Cal.2d 520, 526-527 [same];  Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429 [same].)

C. Collateral Estoppel

Plaintiff raises several arguments with respect to the collateral estoppel effect of a factual finding in the United States Bankruptcy Court for the Central District of California to the effect that Amoroso Properties repaid the loan from Audio Wood Products, Inc. in full.   We need not address those contentions because to the extent that the trial court relied on collateral estoppel, it did so only as an alternative basis for its decision.   The trial court found, and we agree as discussed below, that there was substantial evidence in the record of repayment.   Therefore, even if we were to conclude collateral estoppel did not apply, the judgment would be affirmed.  (Palmero v. Stockton Theatres, Inc. (1948) 32 Cal.2d 53, 65-66;  Natter v. Palm Desert Rent Review Com. (1987) 190 Cal.App.3d 994, 1001.)

D. Fraudulent Conveyance

The trial court found plaintiff had not established any fraudulent conveyance by a preponderance of the evidence.   Plaintiff does not contend there was no substantial evidence in support of the trial court's no fraudulent conveyance finding.   Rather, plaintiff argues it established a fraudulent conveyance, therefore it was error to find in defendants' favor.   Plaintiff paints the facts in the light most favorable to its case.   This argument ignores the established standards of review on appeal.   This court cannot retry the case.   (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1531;  James B. v. Superior Court (1995) 35 Cal.App.4th 1014, 1021.)   It is well established that, as the Court of Appeal held in Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, “[T]he power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court.   If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion.  (People v. Johnson [ (1980) ] 26 Cal.3d 557, 576-577;  Green Trees Enterprises, Inc. v. Palm Springs Alpine Estates, Inc. (1967) 66 Cal.2d 782, 784-785;  Grainger v. Antoyan (1957) 48 Cal.2d 805, 807;  Estate of Wilson (1980) 111 Cal.App.3d 242, 247;  Carroll v. Gava (1979) 98 Cal.App.3d 892, 896;  Fields v. Riley (1969) 1 Cal.App.3d 308, 314, 315.)”  (Accord, e.g., Donovan v. Poway Unified School Dist. (2008) 167 Cal.App.4th 567, 581-582;  Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633;  see Eisenberg et al., Cal. Practice Guide:  Civil Appeals and Writs (The Rutter Group 2009) ¶ 8:58, p. 8-25 (rev.# 1, 2008).)

E. Code of Civil Procedure Section 708.210

Code of Civil Procedure section 708.210 states, “If a third person has possession or control of property in which the judgment debtor has an interest or is indebted to the judgment debtor, the judgment creditor may bring an action against the third person to have the interest or debt applied to the satisfaction of the money judgment.”   Direct claims against third parties are permitted under the statute.  (See Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 945-947 [former section 720];  Bond v. Bulgheroni (1932) 215 Cal. 7, 10 [same].)   Plaintiff contends Amoroso Properties owed Audio Wood Products, Inc. a substantial amount of money.   Thus, plaintiff reasons under Code of Civil Procedure section 708.210, as a judgment creditor, it was entitled to those funds.   Plaintiff asserts the trial court erroneously relied on collateral estoppel and incorrectly refused to apply section 708.210 on the ground there was no decisional authority construing the statute.   We find no error.

The trial court found-independent of any collateral estoppel effect of the bankruptcy court's factual findings-that Amoroso Properties had repaid its debt to Audio Wood Products, Inc. Hence, Amoroso Properties did not owe Audio Wood Products, Inc. any money that plaintiff could collect under Code of Civil Procedure section 708.210.   Substantial evidence supported the trial court's factual finding.   There was evidence that as of December 31, 1999, Amoroso Properties owed Audio Wood Products, Inc. the highest total reached, $263,048.37, including accrued interest.   As of December 31, 2000, the debt had been reduced to $221,195.90.   One year later, December 31, 2001, it was down to $60,171.32.   After Mitsubishi stopped making purchases, Audio Wood Products, Inc. ceased to operate.   Audio Wood Products, Inc. attempted to pay off its creditors.   Michael testified that to that end, and in order to generate cash, the attorney for Audio Wood Products, Inc. negotiated with counsel for Amoroso Properties.   They agreed to discount Amoroso Properties's debt.   Amoroso Properties paid the discounted amount to Audio Wood Products, Inc. This was substantial evidence Amoroso Properties did not owe any money to Audio Wood Products, Inc. Hence, as the judgment creditor of Audio Wood Products, Inc., plaintiff could not collect any funds from Amoroso Properties under Code of Civil Procedure section 708.210.   We agree that a debtor may not escape liability under Code of Civil Procedure section 708.210 by entering into a collusive agreement with a third party for purposes of frustrating a creditor.   But here there was substantial evidence, Michael's statement, that such did not occur.

IV. DISPOSITION

The judgment is affirmed.   Defendants, Amoroso Properties and James Amoroso, are to recover their costs on appeal from plaintiff, ZTE Electronics Corp., Inc.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

KUMAR, J.*

FOOTNOTES

FN1. For purposes of clarity, we refer to members of the Amoroso family by their first names..  FN1. For purposes of clarity, we refer to members of the Amoroso family by their first names.

FOOTNOTE.  FN*.  Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

KRIEGLER, J.

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