Wickline v. Schweder CA4/1
D080074
| Cal. Ct. App. | Sep 21, 2023Background
- Wickline and Schweder agreed in 2014 to pursue ownership of wellness resorts; they closed on Glen Ivy Hot Springs in January 2016 using a layered ownership structure in which GOCO Hospitality Global Opportunity Limited (GOCO BVI), a British Virgin Islands (BVI) company owned by Schweder, was the parent of the California operating entities.
- Parties had email evidence reflecting an agreement that Wickline would receive 42.5% of GOCO BVI, but Wickline never became a recorded shareholder; reorganization left Schweder with a larger share and others small interests.
- A jury returned a special verdict finding Wickline and Schweder formed a partnership, but made no finding about its nature or whether it continued; the jury rejected Wickline’s legal claims for breach of fiduciary duty and fraudulent inducement.
- The trial court issued a statement of decision and declaratory judgment identifying the partnership as manifesting in GOCO BVI, finding each had a 42.5% interest, and ruling the partnership “terminated on June 16, 2016.”
- Wickline appealed only the portion declaring the partnership terminated and the trial court’s award of costs to respondents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the partnership "terminated" on June 16, 2016 | Wickline: Termination requires RUPA dissolution followed by winding up; neither occurred, so termination is legally erroneous | Respondents: Even if RUPA doesn’t apply, BVI law governs GOCO BVI; alternatively, Wickline’s election to sue for damages amounted to submitting to repudiation and ended the partnership | Court: Vacated termination finding and remanded. If trial court meant termination under RUPA or by Wickline’s suit, both would be legal error; the judgment is fatally unclear and must be clarified on remand. |
| Choice of law for partnership-termination question | Wickline: Partnership centered on California resort; RUPA (California law) governs relations and termination | Respondents: Partnership interests were manifested in GOCO BVI (a BVI company), so BVI corporate law controls dissolution/termination | Court: Applied California law. The partnership relationship is distinct from GOCO BVI; because the partnership’s principal activities and office were in California, RUPA governs. |
| Whether appellate relief is inappropriate because Wickline cannot benefit from a ruling that partnership continues | Wickline: Declaratory relief is a standalone legally correct statement of rights; he is entitled to vacatur of an erroneous declaration regardless of downstream remedies | Respondents: Any reversal would be futile because Wickline could not practically obtain relief even if the partnership were declared ongoing | Court: Rejected futility argument; declaratory judgments are legal declarations of rights and remand/vacatur is appropriate to obtain a legally correct declaration. |
| Award of costs to respondents | Wickline: Vacatur of declaratory judgment may affect prevailing-party calculation; costs award should be reconsidered on remand | Respondents: They were prevailing parties and entitled to costs | Court: Vacated the costs award and remanded for reconsideration after the trial court revisits declaratory relief. |
Key Cases Cited
- Gherman v. Colburn, 72 Cal.App.3d 544 (Cal. Ct. App.) (explains that a plaintiff may plead inconsistent remedies and that an election to abandon equitable remedies can moot dissolution/accounting claims under the facts of that case)
- Heller Ehrman LLP v. Davis Wright Tremaine LLP, 4 Cal.5th 467 (Cal. 2018) (discusses adoption and common reference to the Revised Uniform Partnership Act in California law)
- Corrales v. Corrales, 198 Cal.App.4th 221 (Cal. Ct. App.) (describes aspects of dissolution for two-person partnerships under RUPA)
- Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (Cal. Ct. App.) (explains declaratory relief serves to declare legal rights and duties as a preventive-justice remedy)
- Marina Pacifica Homeowners Assn. v. Southern California Financial Corp., 20 Cal.App.5th 191 (Cal. Ct. App.) (addresses prevailing-party determination where parties recover nonmonetary declaratory relief)