The Twelve Tribes of Israel v. Barnum CA2/4
B299838
| Cal. Ct. App. | Mar 17, 2022Background
- In 1997 Wilhelm Grafrath (title holder) bought a house used as the Twelve Tribes of Israel, U.S.A.’s (the Tribe) headquarters; Katrina Barnum quitclaimed any interest. The Tribe paid mortgages and occupied the property.
- Grafrath was convicted and deported in 2006; he executed powers of attorney authorizing Barnum to act for him in Los Angeles.
- In 2014 Barnum quietly listed and entered escrow to sell the property; the Tribe sued to halt the sale claiming equitable interests and contributions to mortgage payments.
- While the litigation was pending, Barnum told Tribe board members she would remit the net sale proceeds to the Tribe in exchange for dismissal; the Tribe dismissed without prejudice; escrow closed and Barnum received the funds but did not pay the Tribe.
- The Tribe sued Barnum; after bench trial the court found promissory fraud and breach of an oral settlement agreement, awarded $375,000 in compensatory damages and $180,000 punitive damages, and imposed a constructive trust on assets into which Barnum diverted proceeds.
- On appeal the court held the promissory-fraud claim barred by the litigation privilege (reversing that part and the punitive award), but affirmed the breach‑of‑oral‑settlement/contract judgment and related relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the litigation privilege bars promissory‑fraud claims based on statements made during settlement negotiations | Tribe: Barnum’s promises induced dismissal and were tortious false promises not protected by privilege | Barnum: Promises were made during litigation/settlement negotiations and are absolutely privileged | Court: Privilege applies; promissory‑fraud claim barred (reversed) |
| Whether the statute of frauds bars enforcement of the oral settlement promising proceeds from a property sale | Tribe: Agreement was to pay cash proceeds, not to transfer real property, so statute of frauds does not apply | Barnum: The agreement concerned sale/transfer of real property and thus must be in writing | Court: Statute of frauds does not bar the oral agreement; enforceable as promise to pay proceeds; judgment on contract affirmed |
| Whether Barnum was immune from personal liability because she acted as agent for titleholder (Grafrath) | Tribe: Barnum made personal promises and diverted funds; liable individually | Barnum: She acted solely as agent/attorney-in-fact for Grafrath; agent cannot be bound personally for principal’s contracts | Court: Substantial evidence supports personal liability (found she acted for personal benefit); agency defense rejected |
| Whether Grafrath was an indispensable party and the action should have been dismissed for nonjoinder | Tribe: Relief could be awarded against Barnum alone (proceeds were in her control) | Barnum: As record titleholder and principal, Grafrath was necessary for complete relief | Court: Trial court did not abuse discretion; Grafrath not indispensable; action could proceed against Barnum |
Key Cases Cited
- Silberg v. Anderson, 50 Cal.3d 205 (litigation privilege is an absolute bar to tort liability for communications made in connection with judicial proceedings)
- Rusheen v. Cohen, 37 Cal.4th 1048 (privilege extends to communications made to achieve objects of litigation, even outside courtroom)
- Rosenthal v. Irell & Manella, 135 Cal.App.3d 121 (statements urging settlement are privileged and bar tort claims premised on them)
- Navarro v. IHOP Properties, Inc., 134 Cal.App.4th 834 (promissory‑fraud claim based on settlement statements barred by litigation privilege)
- Navellier v. Sletten, 106 Cal.App.4th 763 (privilege may bar tort claims where harm arises from communicative act in litigation context)
- Lazar v. Superior Court, 12 Cal.4th 631 (elements and treatment of promissory fraud as subspecies of fraud)
- Sunset‑Sternau Food Co. v. Bonzi, 60 Cal.2d 834 (statute of frauds applied narrowly where agreement is not strictly a sale of real property)
- Monarco v. Lo Greco, 35 Cal.2d 621 (estoppel doctrine can prevent statute of frauds defense to avoid unjust enrichment)