Filed 7/18/24 3H Investments v. Duncan CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE

3H INVESTMENTS, LLC, et al.,

 Plaintiffs and Respondents,

v.

KATHLEEN DUNCAN, as Trustee, etc.,

 Defendant and Appellant.

 G062641

 (Super. Ct. No. 30-2019-01106394)

 O P I N I O N

Appeal from a postjudgment order of the Superior Court of Orange County, 

John C. Gastelum, Judge. Affirmed in part, reversed in part and remanded with 

instructions.

Thomas Vogele & Associates, Thomas A. Vogele and Brendan M. Loper 

for Defendant and Appellant.

Law Office of Grant K. Peto and Grant K. Peto for Plaintiffs and 

Respondents.
2

INTRODUCTION

Kathleen Duncan has appealed a postjudgment order denying her motion 

for contribution from Airport Storage, LLC, a company that she managed for several 

years. After an arbitration, Melissa Priest, Richard Priest, and 3H Investments, LLC (3H)

(collectively respondents) obtained a judgment for withheld distributions, costs, and 

attorney fees. Duncan asserts she and Airport Storage were joint judgment debtors and

Airport Storage therefore is liable to her for contribution on a pro rata basis after she paid 

the entire judgment.

Duncan’s motion in the trial court requested indemnity, contribution from 

Airport Storage as a joint tortfeasor, and contribution from Airport Storage as a 

“judgment debtor[] jointly liable on a money judgment.” (Code Civ. Proc., § 882.)1 On 

appeal, however, she has abandoned the first two grounds. She now seeks contribution 

from Airport Storage solely on the ground that it is jointly liable with her on a money 

judgment.

The trial court ruled on her request for indemnity and for contribution from 

Airport Storage as a joint tortfeasor, denying them both. As Duncan does not dispute this 

aspect of the order on appeal, we affirm it. The trial court, however, did not rule on the 

request for contribution from Airport Storage as a jointly liable judgment debtor. We

therefore return the matter to the trial court to make a ruling on this issue in the first 

instance.

FACTS

In 2006, Duncan, Chris Hoskins, Melissa Priest, and Richard Priest took 

title to a self-storage center in Chico by the name of Apple Mini Storage. They formed 

Airport Storage in 2008, with Duncan holding the majority interest in the limited liability 

1

All further statutory references are to the Code of Civil Procedure.
3

company. They signed but did not record a quitclaim deed transferring their interests in 

the property to Airport Storage. 

In 2008, Hoskins replaced Airport Storage’s management company, 

Bayview Investments, with Reliable Property Management, a company he owned with a 

business partner, Brian Hauser. Hauser proceeded to embezzle $70,000 from the 

company. Duncan took over management in 2010. In 2011, Hoskins assigned his 

interest in Airport Storage to 3H. 

In 2016, Duncan sued Hoskins based on allegations that do not directly 

involve Airport Storage. In 2019, respondents sued Duncan and Airport Storage. 

Pursuant to an arbitration provision in the company’s operating agreement, the matter 

was sent to arbitration. A hearing in arbitration was held from September 20 to 

September 23, 2021. After the hearing, the parties filed postarbitration briefs, in which 

they made their requests to the arbitrator as to the provisions of the award. 

According to the arbitrator, “[m]any facts and disputed assertions regarding 

the management of the business were presented at the arbitration hearing.” Among these 

were disagreements about characterizations of roof repairs as expenses rather than capital 

improvements and about members’ access to company financial records. The arbitrator 

mentioned other disputes, but held that the award “will be limited in length as that is all 

that is necessary for proper resolution.” 

The core of the claims against Duncan was the alleged breach of her 

fiduciary duty to other members as company manager. The arbitrator found that

respondents’ witnesses were “more credible over all” and that Melissa Priest and Richard 

Priest “were particularly believable in their concerns about Duncan’s self-interested 

conduct hurting their modest retirement investment.” He also found respondents’ expert 

“particularly credible” in pointing out breaches of Duncan’s fiduciary duty. Duncan

ignored Hoskins’ assignment of his interest in Airport Storage to 3H, damaging him by 

continuing to issue distribution checks and K-1 forms to him personally. Her actions 
4

during efforts to sell Airport Storage’s real property favored her unrelated personal 

interests. She withheld company records from respondents. The arbitrator concluded 

that Duncan had “breached her fiduciary duties of loyalty, care, and good faith.”

The arbitrator ruled that Airport Storage had to be dissolved, and he 

appointed respondents to wind it up. He awarded $176,280 in withheld distributions to 

3H and costs to respondents. He also stated respondents “have not sufficiently

established their other claims.” For her part, Duncan asked to be allowed to buy out the 

other parties if Airport Storage was to be dissolved. The arbitrator ruled that she could 

return to the arbitrator to ask for this relief if the matter could not be resolved otherwise. 

After the arbitration award was issued in November 2021, a further hearing 

took place on January 26, 2022, concerning additional motions briefed during the 

previous December. The arbitrator agreed to rule on the following issues: an alleged 

miscalculation of damages, costs, attorney fees, prejudgment interest, and a “request 

Duncan return [Airport Storage] funds used to defend the action[.]” The parties agreed to 

a baseball arbitration as to attorney fees.

The arbitrator issued his “Order on Concluding Matters” on March 28, 

2022. The order confirmed the amount of withheld distributions ($176,280), denied 

prejudgment interest, calculated costs ($11,240), and awarded attorney fees of $211,600. 

Concerning respondents’ request that Duncan be ordered to return Airport Storage funds 

used to defend the action, the arbitrator stated, “[respondents] seek a ruling that ‘Duncan

is not entitled to indemnity for her active negligence and breaches of fiduciary duties to 

[respondents].’ [Citation.] This raises difficult issues. It was appropriately raised by 

[respondents] in their Post-Arbitration Opening Brief, and accordingly fully considered 

by the Arbitrator in issuing the Arbitration Award. The Arbitrator sought equity in ruling 

on the various requests for damages, particularly as related to fiduciary issues. The 

amount at issue in Section 3.1 was awarded and other amounts were not. The fiduciary in 

this case faced difficult challenges, such as the embezzlement by Hausner, the business 
5

partner of Hoskins. True, at times, her performance was improper in these difficult 

circumstances. But the Arbitrator considered all the difficult circumstances in making 

the Award and [respondents’] burden of proof, and it is inappropriate now to change that 

Award. [¶] The Arbitrator DENIES [respondents] the relief sought denying indemnity to 

Duncan.”

In April 2022, respondents made yet another motion before the arbitrator, 

one “‘to Rule on Issues Presented But Not Yet Determined[.]’” The arbitrator identified 

one issue as being “who is to pay the costs and [attorney] fees.” The arbitrator noted, 

“[g]oing back to when the Arbitration Award was made, the Arbitrator looked to 

[respondents] to make argument on the allocation they now seek, but could not find any 

allocation argument sufficiently supported.” The arbitrator observed that respondents 

“prevailed in their arbitration against . . . Duncan (perhaps in more than one capacity) and 

Airport Storage . . . . But [respondents] have not shown how the burden of payment 

should be allocated among [Duncan and Airport Storage].” He suggested that, “[i]f the 

parties cannot work out an allocation,” the disputed amount could be placed in escrow for 

formal briefing or determined through another baseball arbitration. 

The arbitrator then noted respondents “also argue that the Arbitrator failed 

to determine other issues. Not so. For many reasons, including those described in 

[Duncan and Airport Storage’s] [o]pposition, the Arbitrator carefully considered and 

determined all issues properly presented to him. As one example, the issue of 

indemnification continues to be raised, but the Arbitrator has addressed and ruled upon 

that issue numerous times.” He also stated respondents “look to provisions concerning 

costs in the paragraph 12.10 of the [o]perating [a]greement, but those costs must be 

reasonable. The Arbitrator finds that it was not sufficiently shown that some requested 

costs were reasonably incurred in this matter that could have been much simpler and less 

expensive. Also, Paragraph 12.5 of the [Airport Storage] [o]perating [a]greement states 

that ‘costs of the arbitration . . . shall be borne equally by the parties to the arbitration.’ 
6

The relationship of this clause with other clauses and the law has not been sufficiently 

reviewed. Again, the Arbitrator considered all matters presented to him, weighed a 

variety of competing concerns, including burdens of proof, reasonableness, and equities 

where appropriate, and decided all issues presented, including those [respondents] now 

argue may not have been determined.” The arbitrator declined to grant the relief sought 

by the motion. 

Respondents filed two ex parte applications to confirm the award. The trial 

court held a hearing on May 31, 2022, regarding the wording of the judgment. Duncan 

opposed the entry of the proposed judgment in part on the ground that it did not include 

indemnification for her. 

On August 25, 2022, the court entered judgment based on the arbitrator’s 

award. The judgment (1) ordered the dissolution of Airport Storage, (2) appointed

respondents to wind up the company, (3) awarded $176,280 to 3H, plus interest from the 

date of the judgment, and (4) awarded costs to respondents as prevailing parties, 

arbitration costs of $11,240, and attorney fees of $211,600. The judgment did not include 

a provision regarding indemnification. The trial court noted in its minute order granting 

the petition to confirm the award that, “[w]hile [respondents’] motion to deny 

indemnification was denied by the arbitrator, the arbitrator did not change the [a]ward.” 

On October 5, 2022, Duncan moved in the trial court for indemnity or 

contribution. Her counsel asserted that she had paid the entire judgment, including the 

costs and attorney fees, in the amount of $399,120, out of her personal share of the 

proceeds from the sale of Airport Storage’s property. She asked for either indemnity or

contribution from Airport Storage. The statutory basis for contribution was either 

sections 875 and 878 or section 882. 
7

On March 14, 2023, the trial court denied both contribution under section 

8782and indemnity. As to contribution, the trial court stated contribution is discretionary 

under section 878. The trial court found important that the arbitrator’s findings of 

wrongdoing focused on Duncan alone, and the arbitrator mentioned Airport Storage only 

to rule that it had to be wound up and to appoint respondents to oversee this process. The 

trial court also noted the arbitrator awarded $176,280 to 3H in wrongfully withheld 

distributions, but did not explain who was to pay this amount, did not state Duncan and 

Airport Storage were jointly and severally liable, and did not say Airport Storage is a 

tortfeasor. The trial court highlighted that “[t]he Arbitrator invited the parties to submit 

additional briefing on the subject of allocation but, for some reason, it appears that such 

briefing did not take place.” 

As to indemnity, the trial court declined to allow it. “[T]he Arbitrator had 

numerous opportunities to grant indemnity but only stated that it would not deny 

indemnity. Thus, the Arbitrator neither granted nor denied indemnity and the Court will 

not disrupt the Award on this issue.” 

Duncan has appealed from this order. 

DISCUSSION

Although Duncan asked the trial court for both indemnity and contribution, 

on appeal she has narrowed the issues to whether she is entitled to contribution from 

Airport Storage under section 882, which provides in pertinent part: “If two or more 

judgment debtors are jointly liable on a money judgment: [¶] (a) A judgment debtor who 

has satisfied more than his or her due proportion of the judgment, whether voluntarily or 

2

Section 878 provides: “Judgment for contribution may be entered by one tortfeasor judgment 

debtor against other tortfeasor judgment debtors by motion upon notice. Notice of such motion shall be given to all 

parties in the action, including the plaintiff or plaintiffs, at least 10 days before the hearing thereon. Such notice 

shall be accompanied by an affidavit setting forth any information which the moving party may have as to the assets

of defendants available for satisfaction of the judgment or claim for contribution.”
8

through enforcement procedures, may compel contribution from another judgment debtor 

who has satisfied less than his or her due proportion of the judgment.” 

The trial court did not rule on this issue. The minute order ruling on 

Duncan’s motion is confined to her requests for indemnity and for contribution under 

section 878

3

as a joint tortfeasor. Among the undecided issues, therefore, are whether 

Duncan and Airport Storage are both judgment debtors, “jointly liable on a money 

judgment,”

4

given the arbitrator’s reasoning, conclusions, and award, and, if Duncan is 

entitled to contribution, what her “due proportion” of that contribution would be. She 

asserts she is entitled to half of the $399,120 judgment; respondents assert, among other 

things, if the court determines pro rata contribution is appropriate, then she would be 

entitled to at most one third of the $176,280 awarded for withheld distributions. The 

court may decide that an equitable contribution is some other amount, if Duncan is 

entitled to contribution.5(See Pacific Freight Lines v. Pioneer Express Co. (1940) 39 

Cal.App.2d 609, 613 (Pacific Freight Lines) [“The doctrine [of contribution] . . . is 

founded on principles of equity and natural justice . . . .”].) 

3

Sections 875 et seq., which includes section 878, refer to contribution among joint tortfeasors. 

Everyone agrees that Duncan and Airport Storage are not joint tortfeasors, as do we. The only tortfeasor, according 

to the arbitrator, was Duncan, who breached her fiduciary duties of “loyalty, care and good faith.”

4

Respondents argue on this appeal the judgment is not joint and several. But respondents also have 

asserted to this court in a separate appeal from this same matter that the arbitration award was joint and several. 

Specifically, respondents asserted in another appeal that the arbitrator, in denying one of respondents’ motions, “left 

the [a]ward as originally written – against Duncan and Airport Storage, jointly and severally.” However, we do not 

address these other statements further here as we leave to the trial court to decide in the first instance whether 

Duncan is entitled to contribution under section 882.

5

Duncan asserts equity has no role in determining the “due proportion” because section 882 does 

not expressly state that equity can be considered. We disagree. The Law Revision Commission Comment from 

1982 for this section notes “[t]his section does not determine the proportionate shares of the obligation on a 

judgment; the joint judgment debtor’s share depends on the circumstances of the case[,]” and it cites, among other 

things, Pacific Freight Lines. Given the unique circumstances of this arbitration, the trial court is not limited to 

determining contribution on a pro rata basis. Duncan’s citation to Young v. Rosenthal (1989) 212 Cal.App.3d 96

(Young) does not convince us otherwise. Young stated, “where there is no apportionment of joint liability made by 

the judgment or order itself, or dictated by the terms of some underlying instrument, such as a partnership agreement 

[citation], then the ‘due proportion’ of the liability of the several judgment debtors shall be calculated on a pro rata 

basis.” (Id. at pp. 129-130.) Young does not appear to have expressly addressed the issue of whether a court may 

consider equity. (Ibid.) 
9

DISPOSITION

The matter is remanded to the trial court to consider and rule on whether 

Kathleen Duncan is entitled to contribution under section 882, subdivision (a), and if so, 

what her “due proportion” of the contribution is. The order is otherwise affirmed. The 

parties are to bear their own costs on appeal.6

BEDSWORTH, ACTING P. J.

WE CONCUR:

MOTOIKE, J.

GOODING, J.

6 We decline to address in the first instance respondents’ request for attorney fees on appeal. While 

we conclude for this appeal the parties are to bear their own costs on appeal, that ruling does not preclude 

respondents from seeking in the trial court their attorney fees on appeal. (See Stratton v. Beck (2018) 30 

Cal.App.5th 901, 904, 909-914; Cal. Rules of Court, rule 8.278(d)(2) [“[u]nless the court orders otherwise, an award 

of costs neither includes attorney’s fees on appeal nor precludes a party from seeking them under rule 3.1702”].)