Portico Management Group, LLC v. Harrison

202 Cal. App. 4th 464, 136 Cal. Rptr. 3d 151, 2011 Cal. App. LEXIS 1642
CourtCalifornia Court of Appeal
DecidedDecember 28, 2011
DocketNo. C062060
StatusPublished
Cited by24 cases

This text of 202 Cal. App. 4th 464 (Portico Management Group, LLC v. Harrison) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Portico Management Group, LLC v. Harrison, 202 Cal. App. 4th 464, 136 Cal. Rptr. 3d 151, 2011 Cal. App. LEXIS 1642 (Cal. Ct. App. 2011).

Opinion

Opinion

DUARTE, J.

Plaintiff Portico Management Group, LLC (Portico), entered into a contract to purchase an apartment building owned by the trustees of the Harrison Children’s Trust (HCT) and Harrison Family Enterprise II (HFE II), a limited partnership. When the sale was not completed, Portico sued the [467]*467sellers for specific performance and damages. The matter went to arbitration, resulting in an arbitration award of over $1.6 million in Portico’s favor. Although in its lawsuit Portico properly named as defendants Alan Harrison and Wei-Jen Harrison as trustees of the HCT, and HFE II, the arbitration award was not against the trustees, but only against the HCT and HFE n.

In 2007, a judgment confirming the arbitration award against the trust and the limited partnership was entered; the trial court declined to accept a proposed judgment against the trustees.

Portico did not seek to correct or modify either the arbitration award or the judgment to indicate the arbitration award and judgment were properly against the trustees; nor did Portico appeal from the judgment against the trust. Instead, years of protracted litigation ensued. Portico sought to enforce the judgment by levying on funds generated by the apartment building and to add as judgment debtors the successor trustees of the HCT, and Wei-Jen Harrison as trustee of the Wei-Jen Harrison Revocable Trust (WHRT), to which HFE II had transferred its share of the apartment building. In response, the successor trustees of the HCT asserted a third party claim on the levied funds.

The trial court originally ruled in favor of Portico, but later changed its mind and accepted the argument that the HCT, as a trust, was not an entity and did not hold title to any property; thus the judgment against it was unenforceable. The court also rejected the argument that Wei-Jen Harrison could be added to the judgment on an alter ego theory. The court awarded the successor trustees postarbitration attorney fees as prevailing parties under the attorney fee provision of the purchase contract.

Portico appeals. It maintains, as it has throughout the litigation, that it is proper to enter judgment against a trust and such a judgment is enforceable against the assets of the trust. Portico contends that in granting various motions, the court, without jurisdiction, was permitting a collateral attack on the final 2007 judgment. It further contends the court’s judgments and orders addressing adding judgment debtors and the validity of the third party claim must be reversed due to these errors. It argues the trial court erred in denying its motion to add Wei-Jen Harrison, as trustee of the WHRT, to the judgment on an alter ego theory. Finally, Portico claims the attorney fee award to the successor trustees must be reversed.

We find merit solely in Portico’s contention of error regarding adding Wei-Jen Harrison to the judgment. In ruling on the motion, the trial court apparently misconstrued the motion and therefore erred. Accordingly, we shall remand for further proceedings on that motion. In all other respects, we shall affirm.

[468]*468BACKGROUND

I

The Parties and the Purchase Contract

Alan Harrison and Wei-Jen Harrison were married in 1975; in 1987, they created the HCT for the benefit of their daughters, Kim and Lynn.1 Alan and Wei-Jen were the general trustees of the HCT. The couple invested in several apartment complexes over the years, one of which was the 102-unit apartment complex in Carmichael known as the Continental. In 1999, Alan and Wei-Jen divorced; pursuant to a partial marital settlement agreement, the Continental was placed in the HCT. The HCT owned 87.5 percent of the Continental. The remaining 12.5 percent was owned by Wei-Jen’s relatives. After the separation, Wei-Jen purchased their interest.

In 2001 or 2002, Wei-Jen organized the limited partnership HFE II, which held the 12.5 percent interest in the Continental. She planned to sell the Continental and manage the properties through HFE II. Wei-Jen, as “Trustee Asset Manager” of HCT and as general partner of HFE II, entered into a purchase agreement to sell the Continental to Portico. Alan refused to sign the deed and closing documents.

II

The Arbitration Award and Judgment

In 2003, Portico brought suit for specific performance, breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and negligent misrepresentation based on the failure to complete the sale of the Continental. The complaint named as defendants Alan and Wei-Jen, individually and as general trustees of the HCT, two special trustees of the HCT, HFE II, and Wei-Jen as general partner of HFE II. The complaint also sought to compel mediation and arbitration pursuant to paragraph 21 of the purchase agreement.

Portico’s motion to compel arbitration was granted.

The arbitration hearing was held October 23 through October 27, 2006. In 2007, the arbitrator issued a final award. The arbitrator found for Portico on the breach of contract claim, as Alan’s failure to sign the closing documents [469]*469to permit the sale caused the sellers to breach the contract with Portico. The arbitrator found, however, that Portico had failed to carry its burden to show fraud and misrepresentation. Noting that the action was brought against Alan and Wei-Jen personally and as trustees and against Wei-Jen as general partner of HFE II, the arbitrator found “that the General Trustees are not personally liable for their acts as trustees of an irrevocable Trust. At all times, Plaintiff knew it was dealing with a trust and a partnership. Thus, the award in this case is against [HCT] and HFE II in proportion to their ownership interest in the Continental (87.5% and 12.5%).” Portico had elected the remedy of damages rather than specific performance. The arbitrator awarded Portico damages, attorney fees, and costs totaling $1,621,435.80.

Portico petitioned to confirm the arbitration award. Portico proposed a judgment that was against HFE II and Alan and Wei-Jen as general trustees of the HCT. After Alan and Wei-Jen objected to this form of judgment, the trial court directed Portico to revise the proposed judgment. In August 2007, judgment was entered against the HCT and HFE II—without reference to trustees.

Ill

The Levy and Third Party Claim of Ownership

To enforce the judgment, Portico caused a writ of execution on the judgment to be issued. Pursuant to this writ, a notice of levy was served on FPI Management, Inc. (FPI). Portico sought to levy on all personal property of the HCT and HFE H, including rents from the Continental and all monies in the Continental Apartments operating account at Wells Fargo Bank.

FPI turned over $189,000 to the levying officer. This sum represented 87.5 percent of the monies in the Continental account that were dispersible under HUD requirements. FPI noted the owner of 12.5 percent of the Continental was not named in the levy.2

Meanwhile, Kim and Lynn, Alan and Wei-Jen’s adult daughters and beneficiaries of the HCT, had petitioned the court for appointment as cotrustees of the HCT. In March of 2007, after the arbitration but before the award issued, Kim and Lynn were approved and appointed interim successor cotrustees of the HCT.

[470]

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Cite This Page — Counsel Stack

Bluebook (online)
202 Cal. App. 4th 464, 136 Cal. Rptr. 3d 151, 2011 Cal. App. LEXIS 1642, Counsel Stack Legal Research, https://law.counselstack.com/opinion/portico-management-group-llc-v-harrison-calctapp-2011.