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Kinley Law Practice Wins at Court of Appeal


Kinley Law Practice has won the rare reversal from the California Court of Appeals on behalf of its clients, Double Rock Baptist Church.

The Court of Appeal for the Second District agreed with Mr. Kinley's argument that a Church resolution by the Board did not constitute a contract. The contract did not meet basic, law school learned, requirements for a contract such as assent or consideration.

Double Rock Baptist Church is a dynamic and successful church in the the south land.

Here is the full decision:

Filed 11/7/17

COURT OF APPEAL – SECOND DIST.

SECOND APPELLATE DISTRICT DIVISION TWO

CYNTHIA HOLMES,

Plaintiff and Respondent, v.

DOUBLE ROCK BAPTIST CHURCH OF COMPTON,

Defendant and Appellant.

ELECTRONICALLY

Nov 07, 2017

JOSEPH A. LANE, Clerk

Deputy Clerk

J Hatter (Los Angeles County

B277503

Super. Ct. No. TC026065)

APPEAL from a judgment of the Superior Court of

Los Angeles County. John Shepard Wiley, Jr., Judge. Affirmed in part, reversed in part and remanded.

Kinley Law Practice and Matthew L. Kinley for Defendant and Appellant.

Law Offices of Barbara A. Jackson and Barbara A. Jackson for Plaintiff and Respondent.

_________________________

Cynthia Holmes (Respondent) prevailed on her claim against Double Rock Baptist Church of Compton (Double Rock) for breaching an alleged 1996 contract to pay her $500,000 upon the death of Dr. Joseph L. Holmes. In addition, Respondent prevailed on her claim against Double Rock for breaching a 2006 settlement agreement to pay Dr. Holmes $108,000 by monthly installments of $500 until the amount was paid in full. Double Rock has now appealed the judgment. It challenges the finding of liability on the alleged 1996 contract, claiming there was insufficient evidence of contract formation and consideration. As a matter of law, Double Rock is correct. The portion of the judgment pertaining to the alleged 1996 contract is reversed. In all other respects, the judgment is affirmed.

FACTS

1996 Action of Double Rock’s Executive Board

On April 21, 1996, the Executive Board of Double Rock (Executive Board) signed and notarized the minutes (1996 Plan) of a meeting, which stated: “The [Executive Board] called to order a meeting that was presided by the Chairman of the Deacon Board, Herbert Lawrence. The order of business was the drafting of a financial compensation plan for our Founder and Pastor [Dr. Holmes]/or his beneficiaries ([Respondent] and/or Michael J. Holmes [(Michael)]) in the event of his death, incapacitation physically/mentally and/or retirement. [¶] A motion was made by Curtis Burries and second[ed] by Edward Dendy that in the event of the death of our Pastor [Dr. Holmes], [Double Rock] will pay to his beneficiaries ([Respondent] and/or Michael) a cash amount of five hundred thousand dollars ($500,000.00) to be paid within thirty (30) days and no more than ninety (90) days. [¶] In the event of incapacitation

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physically/mentally and/or retirement, [Double Rock] shall give to [Dr. Holmes] a cash amount of five hundred thousand dollars ($500,000.00) to be paid within thirty (30) days and no more than ninety (90) days[,] and a monthly pension of five thousand dollars ($5,000.00). [¶] [Double Rock] will also continue to pay health care (Medical/Dental, etc.) benefits. Life insurance with New York Life will continue to be paid by [Double Rock] until maturity. [¶] The motion was approved and passed by the Executive Board.”

The signatories to the 1996 Plan were Herbert Lawrence (Lawrence), “Chairman of the Deacon Board”; Edward Dendy, “Chairman of the Double Rock Trustee Board” (Board of Trustees); Julie Ellis, “Financial Secretary”; Curtis Burries (Burries), “Treasurer”; Willie Haynes (Haynes), “Chairman of the Building Fund”; Virginia Reed (Reed), “Member at Large”; and Charlie Josenburger, “Member at Large.”

Dr. Holmes’s Retirement

Dr. Holmes retired in 1998. Double Rock did not pay him $500,000. However, it began paying him $3,500 per month, and it paid $521 a month for his medical insurance as well as over $80 a month for his life insurance. He received donations during annual “Founders Day” celebrations. One year the donation was $5,000, and another year it went “up to $7,200.”

Dr. Holmes and Respondent moved to Texas in 1998. He returned to California in 2000, and Respondent returned in 2001.

2006 Settlement Agreement

On February 15, 2006, the Executive Board and Dr. Holmes signed the 2006 settlement agreement, which stated: “The [Executive Board] agrees to pay [Dr. Holmes] $108,000, reported by [Dr. Holmes] to be the amount that he allowed to be withheld

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from monthly retirement allotment of $5,000. [¶] It is further agreed that the $108,000 is to be paid in monthly installments of $500, effective February 26, 2006, and shall be paid on the 4th Sunday of each month thereafter until $108,000 is paid in full. [¶] It is also agreed that this shall be the final request that the Executive Board will consider from Dr. Holmes for any additional compensation, including any increase in his monthly retirement allotment. [¶] This Agreement has no bearing/effect on the retirement Agreement dated April 21, 1996.”

Cessation of Payments

Double Rock stopped making payments to Dr. Holmes in April 2010. It also stopped making payments on his life insurance policy.

The Complaint

Dr. Holmes and Respondent sued Double Rock and various others for, inter alia, breach of written contract and common counts. The complaint alleged: On April 14, 1996, Dr. Holmes entered into a written agreement evidenced by the document signed by the Executive Board on that date. On February 15, 2006, Dr. Holmes entered into a settlement agreement with the Board of Trustees.1 Double Rock breached these contracts by stopping all payments.

We note that the first amended complaint (FAC) refers to the Board of Trustees instead of the Executive Board. This is worthy of note because it raises the question of who—as a matter of Double Rock corporate governance—had the authority to enter into binding contracts. As far as we can determine, Respondent never established whether the Executive Board, the Board of Trustees, or both had authority.

Dr. Holmes’s Death

Dr. Holmes died on November 23, 2012. Double Rock did not pay Respondent a $500,000 death benefit.

The FAC; Denial of Summary Judgment

The FAC reflected the death of Dr. Holmes and Respondent’s appointment as special administrator for his estate. It alleged the breach of the “retirement contract” and the settlement agreement based on, inter alia, Double Rock’s failure to pay Respondent $500,000 after Dr. Holmes’s death, and Double’s Rock’s cessation of $500 monthly payments to Dr. Holmes.

The stated causes of action were breach of written contract, common counts, fraud, intentional interference with prospective economic advantage, negligent interference with business relationships, and negligence.

Double Rock moved for summary judgment and/or adjudication regarding Respondent’s various claims. The trial court granted summary adjudication as to the torts and denied it as to breach of contract and common counts. It denied summary judgment.

Testimony Regarding the 1996 Plan

Burries and Reed testified that on April 21, 1996, Haynes presented a proposal to the Executive Board regarding

Dr. Holmes’s retirement. Reed testified that it was never acted on. Rather, it was a “plan of action.” She also testified that “[t]his was brought to the [Executive Board] for us to review it, critique it, and it was to come back again.” It never came back.

The breach of contract cause of action contained the following new allegation: “The written contract between [Dr. Holmes] and [the Executive Board] was approved by the [Board of Trustees] on April 21, 1996.”

Asked why the Executive Board members signed it, she stated, “This was signed according to the notary. We signed because we were present[.]” Haynes testified that the purpose of the April 21, 1996, meeting was “to set up an agreement for Dr. Holmes for retirement and death benefits and a . . . monthly salary.” According to Haynes, it was the final retirement agreement for Dr. Holmes. Lawrence testified that the 1996 Plan was the last document on the issue of Dr. Holmes’s retirement plan.

Dr. Holmes had no involvement in its creation. When asked what Dr. Holmes needed to do to get his retirement, Lawrence stated, “He’d been pastor for 40 years, and he was at an age where he was trying to make up his mind to retire, and [Double Rock] was trying to draw up a plan to compensate him for all the years that he had served—given leadership.”

The Trial Court’s November 6, 2015, Tentative Views Regarding Formation and Enforceability of a 1996 Contract

At one point during trial, the trial court said that Double Rock indicated that it would move for a nonsuit. The trial court stated that it wanted to give a “tentative view now” and said, “I think the plaintiff has established liability against Double Rock

. . . on the basis of two contracts. I think they are contracts. This is the 1996 contract and then the 2006 settlement agreement.”

In the trial court’s view, “[t]here was mutual assent. [Double Rock] consented.” Next, the trial court stated, “Then

[Dr. Holmes] consented by not resigning after he’s got this package, but continuing in his work. The way I interpret this mutual consent, I believe, is the proposal in writing from one side and then consistent accepting conduct on the other. Common for a contract. It’s just as if somebody mows my front lawn, and I go

out and look at that and say, ‘That’s a good job. You do that every week, I’ll pay you [a] [hundred] bucks.’ And the mower says nothing, but comes back the next week and mows. If I then say, ‘Well, the mower just made a gift to me because she never said, “I accept your proposal,’” that would be nonsense. That would be contrary to Hornbook contract law. So in essence

[Dr. Holmes] kept mowing the lawn. So there is mutual consent unquestionably. Another way to think of the same thing is this is a proposal by the board to retain an aging employee. And there was plenty of consideration.”

According to the trial court, the provision requiring a payment of $500,000 upon Dr. Holmes’ death was only applicable while he remained in office. Thus, the trial court said that provision was “not applicable.”

The trial court interpreted the contract as requiring Double Rock to pay Dr. Holmes $500,000 when he retired, plus $5,000 a month. When defense counsel raised the statute of limitations, the trial court said, “I don’t think it applies. . . . And the reason is because we have had an ongoing controversy about whether there was actually going to be payment, and it wasn’t until much, much later that the board drew the line in the sand and said, ‘You’re cut off.’”

The Trial Court’s January 28, 2016, Modification of its Tentative Views

At a subsequent hearing, the trial court accepted defense counsel’s argument that the claim for a $500,000 retirement benefit was barred by the statute of limitations. However, the trial court reversed its earlier tentative view that Dr. Holmes had to be in office for the death benefit to be triggered. It said the death benefit was due within 90 days of Dr. Holmes’s death.

Judgment

The trial court entered judgment in favor of Respondent on both contract claims in the amount of $863,833.33 plus interest.

This timely appeal followed.

DISCUSSION

The parties dispute the formation of a contract in 1996, the existence of consideration, and—assuming the existence of a contract—whether the trial court properly interpreted its terms. As we discuss below, there was insufficient evidence of contract formation and consideration.

I. Preliminary Comment.

None of Respondent’s scattershot arguments are cogent or legally sound. We have tried to decipher and address some of them. As for any other arguments buried within Respondent’s brief, they are not sufficiently developed or cognizable to warrant our consideration. Significantly, Respondent has made no attempt to defend the trial court’s rationale for its findings of contract formation and consideration. Instead, Respondent seems to take the position that Double Rock waived its appeal, that the cases that it cites are “false,” and that there was a contract because the parties relied on the 1996 Plan.

II. No Waiver of Appeal.

Respondent contends that there was a statement of decision, that Double Rock failed to file any objections, and it “waived [its] right to appeal the Statement of Decision that addressed the issues that it is now appealing.” Also, she contends that when the trial court denied Double Rock’s motion for summary adjudication regarding breach of contract and common counts, the trial court inferentially made a determination that the 1996 Plan constituted a valid contract,

and Double Rock waived its appeal by not appealing that denial order. These arguments are frivolous, and we conclude that Double Rock did not waive its appeal.

A. Statement of Decision.

Double Rock requested a statement of decision, and both parties agree that there was one. Nonetheless, the appellate record does not contain a copy of the trial court’s file stamped statement of decision, or of a minute order from the trial court containing the statement of decision. Rather, Respondent submitted an appendix containing what purportedly and ostensibly is a cut-and-paste of the trial court’s statement of decision. It was produced by a company called File&ServeExpress. The document does not purport to be a trial court document. In essence, Respondent is trying to incorporate the actual statement of decision by reference. But California Rules of Court, rule 8.124(b)(3)(D) prohibits the incorporation of documents by reference except for the record on appeal in another case. The bottom line is that we cannot accept the statement of decision in Respondent’s appendix because it is not a trial court document, and it was not properly included in the record.

Regardless, we will assume for the sake of argument that the trial court did issue a statement of decision. In suggesting that Double Rock waived its appeal by failing to object to the statement of decision, Respondent misapprehends the pertinent law. Under Code of Civil Procedure section 634,3 “‘a party must

“When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court . . . prior to entry of judgment . . . , it raise any objection to the statement [of decision] in order to avoid an implied finding on appeal in favor of the prevailing party.’ [Citation.]” (Tusher v. Gabrielsen (1998) 68 Cal.App.4th 131, 140.) In other words, if there is a deficient statement of decision and a corresponding objection, a reviewing court will not imply findings in favor of affirming the judgment. But if there is no objection, implied findings will be indulged. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133–1134.) Consequently, if Double Rock failed to object to any deficiencies in the purported statement of decision, the only consequence is that we would imply findings to affirm the judgment if those implied findings were otherwise supported by substantial evidence. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462 (SFFP).)

B. Denial of Summary Adjudication.

Respondent argues that Double Rock “had 60 days from the” order denying summary adjudication to appeal the ruling. She then argues that the trial court “clearly made a finding

. . . that [the 1996 [Plan] and 2006 settlement agreement] were

shall not be inferred on appeal . . . that the trial court decided in favor of the prevailing party as to those facts or on that issue.” (Code Civ. Proc., § 634.)

The SFFP court explained that the doctrine of implied findings “(1) directs the appellate court to presume that the trial court made all factual findings necessary to support the judgment so long as substantial evidence supports those findings and

(2) applies unless the omissions and ambiguities in the statement of decision are brought to the attention of the superior court in a timely manner. [Citations.]” (SFFP, supra, 121 Cal.App.4th at p. 462.)

contracts and that there was one beneficiary[,] . . . [Respondent].” Next, she avers, “[Double Rock] did not file a Writ or Notice of Appeal to [the] trial court’s . . . ruling that rendered a decision that there was a contract relationship between [Double Rock] and . . . [Dr. Holmes][,] and that [Respondent] was a beneficiary of the contract. [The 1996 Plan] was the only document that the parties relied on for over eleven years of payments to [Dr. Holmes]. The trial court heard . . . proof that the . . . parties relied on [the 1996 Plan and 2006 settlement agreement] as binding on each party. [Double Rock] failed to [appeal] the . . . ruling and therefore [has] waived any right [it] may have had [to challenge the trial court’s ruling]. [¶] The issue going to trial was the accounting of monies owed by [Double Rock] and whether [Double Rock] [was] entitled to any offsets. The issues of whether [the 1996 Plan and 2006 settlement agreement] [were] contracts are waived.”

Respondent “is under the misimpression that in an ‘original motion for summary judgment’ a party ‘asks for the court to grant relief and’ in ‘the opposition papers’ the opposing party ‘ask[s] for the opposite relief.’ However, this is not an accurate description of what a party seeks in opposing a motion for summary judgment. A party opposing a motion for summary judgment is not seeking affirmative relief; rather, he or she is simply seeking to prevent the other party from obtaining a judgment in his or her favor, which is the affirmative relief sought in the motion for summary judgment. In order to seek ‘the opposite relief,’ i.e., a judgment entered in one’s own favor, a party must make its own affirmative motion for summary judgment, and cannot simply rely on its opposition to the opposing party’s motion for summary judgment.” (Cuff v. Grossmont Union High School Dist. (2013) 221 Cal.App.4th 582,

596.) The trial court’s denial of Double Rock’s motion for summary adjudication meant nothing more than that there were triable issues as to breach of contract and common counts. (Code Civ. Proc., § 437c, subds. (c), (f)(2).)

III. No Contract Formation.

“‘Where the existence of a contract is at issue and the evidence is conflicting or admits of more than one inference, it is for the trier of fact to determine whether the contract actually existed