Court Opinion

ID: 8209676
Source: CourtListenerOpinion
Date Created: 2022-09-27 20:01:56.501826+00
Date Added: 2024-06-11T16:41:43.653108
License: Public Domain

Filed 9/27/22 The Palm Grove v. Pirozzi CA2/6
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

 THE PALM GROVE, LLC, et al.,                                   2d Civil No. B313186
                                                             (Super. Ct. No. 20CV02870)
      Plaintiffs and Respondents,                              (Santa Barbara County)

 v.

 ADAM PIROZZI et al.,

      Defendants and Appellants.

       This case is the second round of litigation between former
business partners Adam Pirozzi and Dennis Hoey.1 The first
round resulted in a settlement in which Pirozzi agreed to buy
Hoey’s interest in certain business assets, including a ten-acre
golf course and onsite clubhouse. A second round of litigation

        Appellants are Pirozzi and two of his co-defendants:
         1

Quicklink Asset Services, LLC and Five Deep Entertainment,
Inc. A third co-defendant, Central Holding Group LLC, is not a
party to this appeal. Respondents are Hoey and his two co-
plaintiffs: The Palm Grove, LLC and Vantage Group
Investments, LLC.
began when the buyout failed. The court found Pirozzi breached
the prior settlement agreement and ordered the assets sold to a
third party on the open market. Pirozzi appeals several
components of the judgment, including the court’s decision to
allocate the first $4.7 million in sales proceeds to Hoey.
       We affirm the judgment in full.
         FACTUAL AND PROCEDURAL BACKGROUND
       Hoey and Pirozzi formed a partnership to purchase Santa
Barbara’s Hidden Oaks Golf Course in 2015. Hoey provided most
of the capital for the acquisition and took title to the course and
onsite clubhouse. Pirozzi received a 25-year lease to operate and
manage the facility. They agreed Pirozzi would make monthly
lease payments to Hoey equaling 50 percent of fixed costs
(including mortgage/debt financing, insurance, and taxes) plus 50
percent of all revenues generated.
       Pirozzi fell behind on his lease payments. Hoey filed
companion actions to dissolve the partnership and to evict
Pirozzi.2 They reached a compromise before trial: Pirozzi would
have 60 days to purchase Hidden Oaks for $4.4 million. This
figure would reimburse Hoey for capital contributions, past due
rent, and other expenses. They signed a settlement agreement
and memorandum of understanding (settlement) to this effect.
Hoey would receive the first $4.4 million in proceeds then split
any profits with Pirozzi. They agreed to sell the property on the
open market if Pirozzi was “unable” or “unwilling” to close the
buyout after a 60-day escrow period.

      2 Santa Barbara Superior Court case nos. 19CV03509
(action to dissolve partnership, etc.) and 19CV03511 (unlawful
detainer). We grant Pirozzi’s August 25 2022 request for judicial
notice of the dismissals and registers of action in these cases.

                                 2
       The buyout failed when escrow expired without closing.
Hoey filed this declaratory relief action when Pirozzi refused to
place Hidden Oaks on the market. He sought a judgment
declaring Pirozzi in breach of the settlement and ordering the
property sold as they had agreed. He also requested the court
dissolve their partnership and terminate Pirozzi’s 25-year lease.
Pirozzi cross-complained for breach of contract and sought both
specific performance and damages.3
       The court conducted a four-day bench trial. The parties
gave conflicting accounts about why the buyout failed. Pirozzi
blamed Hoey for wrongly insisting he pay certain property taxes
and insurance premiums. Hoey said this was a pretext to hide
Pirozzi’s inability to obtain financing. Edward St. George, a
former business partner of Pirozzi, testified how Pirozzi falsely
represented himself as an owner of Hidden Oaks in 2018. They
formed a jointly owned LLC capitalized by Pirozzi’s purported
equity interest in the facility and St. George’s interest in a 10-
unit rental property of equal market value. They agreed to
evenly split their combined revenues. However, St. George
received no revenue from Hidden Oaks and later discovered
Pirozzi only leased the facility from Hoey. St. George also
learned Pirozzi had used their LLC as the purchasing entity in
the failed buyout so it would appear he owned the assets needed
to fund the deal.
       The court found Pirozzi breached the settlement by failing
“to timely fund and close” the buyout, among other reasons. It
terminated the partnership agreement as well as Pirozzi’s 25-
year lease. The court ordered Hoey to retain a broker to sell

      3 Pirozzi dismissed the cross-complaint before trial. It is
not at issue on appeal.

                                 3
Hidden Oaks and authorized Hoey “to evaluate all offers on the
Parcels, determine the buyer and the final sales price, and
execute all documents to effectuate the sale” to a third party.
Hoey would then receive the first $4,723,859 from the sale and
split any excess proceeds with Pirozzi. The court reserved
jurisdiction to modify the figure when escrow closed.4 Pirozzi
appealed the decision.
                            DISCUSSION
                  A. Pirozzi’s Right to a Jury Trial
       Pirozzi describes Hoey’s complaint for declaratory relief as
a disguised breach of contract claim. He contends the trial court
deprived him of a jury trial. (See, e.g., Entin v. Superior Court
(2012) 208 Cal.App.4th 770, 782-783 [party may not use
declaratory relief to circumvent the other party’s right to a jury
trial on breach of contract claim].) The right to a jury is a
question of law we resolve de novo. (Id. at p. 776.)
       The thrust of Hoey’s declaratory relief action was specific
performance of the settlement agreement. His complaint sought
an order placing Hidden Oaks on the market. This required the
court to resolve factual disputes about why the parties did not
complete the buyout. The court did not award Hoey damages
when it found in his favor; rather, it prioritized the allocation of
sale proceeds in the event a third-party purchased the property

      4 Hidden Oaks subsequently sold to a third party. The
court’s distribution of proceeds from the sale is the subject of a
second appeal filed by Pirozzi. (The Palm Grove, LLC v. Pirozzi
(B320449, app. pending).) We denied Pirozzi’s motion to
consolidate the appeals and the companion motion to augment
the record in our orders dated June 17, 2022. We also deny
Hoey’s July 14, 2022 motion to dismiss the appeal as it relates to
the sale and partnership dissolution. We instead affirm the trial
court’s judgment on these issues, as discussed below.

                                  4
from him. Pirozzi had no right to a jury trial in this equitable
proceeding. (See Nwosu v. Uba (2004) 122 Cal.App.4th 1229,
1240 [“A claim for specific performance is an equitable one”].)
                   B. Distribution of Sale Proceeds
       Pirozzi contends the $4,723,859 in damages awarded to
Hoey exceeded the remedies provided in the settlement
agreement. We disagree for two reasons. First, as discussed
above, we do not characterize the court’s allocating of sales
proceeds as awarding Hoey damages. He receives the money only
if a third party buys Hidden Oaks and, further, receives the full
amount only if the sale price meets or exceeds this figure.
Second, the settlement agreement contemplated that “[t]otal debt
and operating expenditures [were] subject to change based upon
actual expenses paid by [Hoey] up to and including the date to
close escrow.” The approximate $300,000 difference between the
buyout price ($4,422.232) and Hoey’s priority allocation
($4,723,859) consisted of expenses incurred during the period
between the settlement’s signing in August of 2020 and the
court’s final statement of decision in June of 2021. To the extent
Pirozzi challenges the validity or character of the expenses, we
affirm the statement of decision’s figures as supported by Hoey’s
testimony and related exhibits.5 (See Doe v. Regents of University
of California (2016) 5 Cal.App.5th 1055, 1074 [“the testimony of a
single witness, even that of a party, is sufficient to provide
substantial evidence to support a finding of fact”].)

      This included, among other exhibits, Hoey’s accounting of
      5

Hidden Oaks’ final purchase price.

                                5
                  C. Pirozzi’s Capital Expenditures
         and Interest Earned on Partnership Contributions
       Pirozzi contends the court erred when it declined to
reimburse him for two items: (1) capital expenditures he made
while operating Hidden Oaks; and (2) interest he earned on a
$290,000 promissory note he contributed to the partnership.6
These items were the subject of conflicting testimony at trial.
Hoey stated Pirozzi did not verify his capital expenditures
properly. The promissory note interest, Hoey explained, was an
operating cost of the partnership and thus not subject to
reimbursement. This testimony provided substantial evidence
for the court’s rulings on these issues. We again conclude no
abuse of discretion occurred.
      D. Termination of Lease and Dissolution of Partnership
       Pirozzi argues the trial court exceeded its authority by
terminating his Hidden Oaks lease and dissolving the parties’
partnership. This is not so. The settlement agreement provided
for the property to be “sold to a third party without any further
required acceptance or signature” by Pirozzi if he breached the
agreement’s terms. Dismantling the lease and partnership
served this purpose by ensuring Pirozzi could not obstruct a
third-party sale. (Bisno v. Sax (1959) 175 Cal.App.2d 714, 729
[“Equity having taken jurisdiction over a cause does complete
justice, even to the extent of exceeding the specific prayers of the
complaint when necessary”].)
               E. Denial of Trial Continuance Request
       Pirozzi contends the trial court deprived him of due process
when it denied his ex parte request to continue trial because of a

        6   The parties refer to this as the “Five Deep Entertainment”
note.

                                    6
purported conflict of interest between Pirozzi and co-defendant
Central Holding Group LLC. The conflict, he claims, prompted
his counsel to forego cross-examining St. George during Hoey’s
case-in-chief. This allowed St. George’s adverse testimony about
his dealing with Pirozzi to go unchallenged.
        “The decision to grant or deny a continuance is committed
to the sound discretion of the trial court.” (Forthmann v. Boyer
(2002) 97 Cal.App.4th 977, 984.) “A reviewing court may not
disturb the exercise of discretion by a trial court in the absence of
a clear abuse thereof appearing in the record.” (Ibid.) No abuse
occurred here. Pirozzi sought the continuance only six days
before trial. His moving papers failed to specify the nature of the
conflict and counsel’s comments at the ex parte hearing added
little else to show good cause. (Cal. Rules of Court, rule 3.1332(c)
[“The court may grant a continuance only on an affirmative
showing of good cause requiring the continuance”].) Pirozzi
attested in his motion for new trial that counsel “did not let me
explain or rebut Mr. St. George’s allegations.” However, he
stopped short of explaining how doing so would have altered the
court’s decision. (Qaadir v. Figueroa (2021) 67 Cal.App.5th 790,
814 [appellant must demonstrate prejudice from the trial court’s
denial of a request to continue trial].)
                F. Code of Civil Procedure Section 664.6
        The settlement provided for the trial court to retain
jurisdiction to enforce its terms pursuant to Code of Civil
Procedure section 664.6. Hoey elected to seek declaratory relief
and specific performance rather than move for judgment in the
unlawful detainer and dissolution cases under section 664.6.7

      7 Section 664.6, subdivision (a) provides: “If parties to
pending litigation stipulate, in a writing signed by the parties
outside of the presence of the court or orally before the court, for

                                  7
This was an appropriate means to enforce the settlement. (See
Nicholson v. Barab (1991) 233 Cal.App.3d 1671, 1681 [parties to
settlement agreement may enforce it “by motion for summary
judgment, by a separate suit in equity or by amendment of the
pleadings to raise the settlement as an affirmative defense”].)
This appeal requires no further analysis of section 664.6.8
                           CONCLUSION
       Judgment is affirmed. Respondents shall recover their
costs on appeal.
       NOT TO BE PUBLISHED.

                                     PERREN, J.*

We concur:

      GILBERT, P. J.                 YEGAN, J.

settlement of the case, or part thereof, the court, upon motion,
may enter judgment pursuant to the terms of the settlement.”

      8  This court requested supplemental briefing at oral
argument addressing whether section 664.6 applies to this case
and, if so, whether the stature entitled Pirozzi to a jury trial. We
received and considered the parties’ supplemental briefs.

      * Retired Associate Justice of the Court of Appeal, Second
Appellate District, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                 8
                   Thomas P. Anderle, Judge
            Superior Court County of Santa Barbara
                ______________________________

      Kirker Wright Law Group, Vanessa Kirker Wright, for
Plaintiff and Respondent Dennis Hoey.
      Slaughter Reagan & Cole, James B. Cole and Gabriele M.
Lashley; Berg Law Group, Eric Berg, for Plaintiffs and
Respondents, the Palm Grove, LLC and Vantage Group
Investments, LLC.
      Ozbirn Law, Jasper Ozbirn, for Defendants and Appellants.

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