Opinion
H049795
09-06-2023
JAMES LI, Plaintiff and Appellant, v. WEIPING XIA, et al., Defendants and Respondents
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. 18CV334462
Bromberg, J.
For nearly two decades, from 1999 to 2018, plaintiff and appellant James Li assisted defendants and respondents Weiping Xia and Han's Technologies, Inc. (HTI), first in selling wastewater equipment to China and then in developing water and wastewater treatment plants. The plants were built through Western Water Company (WWC), which in 2018 was sold for over $100 million. When Li did not receive any proceeds from the sale, he sued Xia and HTI, claiming that in 2017 Xia promised him a share in the proceeds. Li also claimed that from 2011 to 2018 Xia represented that HTI owned WWC, and Li later added claims that a decade or so earlier Xia had promised him shares in HTI and WWC.
At trial, the jury rejected Li's claims. In special verdicts, it found no 2017 promise that Li would receive proceeds from the sale of WWC, and it found that, when Xia made promises about the ownership of WWC in 2011, he intended to perform them. Even more pertinently, the jury accepted defendants' statute of limitations defense against Li's claims of earlier misrepresentations: while finding that Xia made intentional misrepresentations about Li's HTI and WWC shares in 2004, 2008, and 2009, the jury determined that by 2015 Li either knew or should have known about the misrepresentations.
On appeal, Li contends that the jury accepted defendants' statute of limitations defense due to erroneous evidentiary rulings and improper closing arguments. We conclude that the trial court did not abuse its discretion in admitting and excluding the evidence at issue, and in closing argument defense counsel properly urged the jury to draw adverse inferences based on evidence that Li concealed and destroyed documents. Accordingly, we affirm the judgment.
I. Factual and Procedural Background
A. The Companies
James Li and Weiping Xia are former friends and business colleagues. Both were born and educated in China, and they graduated from the same university, but did not become friends until meeting in the Bay Area in 1995. In 1997, Xia formed HTI, and though Li had a financial services and retirement planning business, he began helping Xia with HTI two years later. Eventually, Li became closely involved in HTI's finances but by 2001 it had become involved in "Build, Operate, Transfer" (BOT) projects in which it would design water and wastewater treatment plants, arrange for their construction, operate them for a period, and sell the plants to the cities and local governments in the areas where they operated. Between 2004 and 2011, HTI built 13 water or wastewater treatment plants in China.
HTI conducted the BOT projects through two foreign corporations. One was WWC, which was registered and incorporated in Samoa (the independent state formerly known as Western Samoa, not the American territory). The other was Western Water Group (WWG), which was owned by WWC and incorporated in China. While Li testified that WWG owned the BOT projects, the projects were financed by loans from Chinese and other foreign banks as well as investments from private individuals.
In August 2017, Goldwind Science and Technology Company (Goldwind), a Chinese company, purchased WWC. Goldwind paid 714 million Chinese renminbi, or approximately $108 million. The final payment was made in February 2018. While Li did not receive anything from this sale, in February 2018 Goldwind transferred $170,000 to him, which he understood to be in recognition of his contributions to the BOT projects.
B. The Norcross Litigation
In 2001 or 2002, HTI brought on two executives with experience in the wastewater industry and with BOT projects: Jerry Moseley, who became the Chairman of the Board, and Ken Norcross, who became chief technology officer. Rather than receiving a regular salary, Norcross was issued shares, which he understood would be earned through "sweat equity." Eventually, however, a dispute arose over Norcross's shares, and he sued HTI.
The catalyst appears to have been a 2011 change in WWC's ownership structure. Although HTI initially held all of WWC's stock, in 2011 Xia decided to transfer HTI's shares in WWC to Alpheus Management Limited (Alpheus), a Hong Kong company controlled by Xia and his family. When Norcross questioned the transfer, Xia responded that "nothing is going to be changed" and that the transfer was merely designed to avoid tax problems in the United States as well as facilitate a then-contemplated IPO. Norcross was not mollified, and the exchanges between Norcross and Xia grew increasingly acrimonious, with Xia telling Norcross (in an email string copied to Li) that he had not "complied with the requirement as a shareholder" and "all stocks were issued on the condition of your cash investment," which Norcross was the only one not to pay.
In 2013, Norcross sued Xia and HTI, and the parties settled two years later. In early 2015 Xia, who was then in China, asked Li to pick up a box of Norcross litigation documents from HTI's attorneys. Li did so and put the box in his basement. On Xia's return from China, Li asked him to pick up the box, but Xia declined, saying that the documents were" 'only for this legal case.'" As a consequence, the box's contents remained in Li's basement until he sued in 2018 and, indeed, through trial.
C. The Proceedings Below
1. Li's Claims
In September 2018, about seven months after Goldwind finalized the purchase of WWC, Li sued Xia and HTI. The complaint alleges that in 2017 Xia promised Li that Li and other HTI shareholders would share in the proceeds from WWC's sale. However, when the sale was finalized, no proceeds were distributed to HTI shareholders and Xia informed Li that Alpheus did not recognize him as a WWC shareholder. Nonetheless, Li alleged, Xia wired Li $170,000 in light of his nearly two decades of service.
Based on these allegations, Li's complaint asserted 13 causes of action. Among other things, he alleged a fraud claim based on Xia's alleged 2017 promise that Li and other HTI shareholders would share in the proceeds from the WWC sale. Li also alleged fraud and negligent misrepresentation based on Xia's statements between 2011 and 2018 that HTI remained the owner of WWC despite Alpheus' nominal ownership of WWC's shares as well as concealment that Li was no longer a WWC shareholder. In addition, Li asserted claims for conversion, constructive trust and unjust enrichment based on Xia's failure to distribute proceeds from WWC's sale, as well as Labor Code violations based on HTI's failure to compensate Li for the work he performed for HTI.
Defendants moved for a nonsuit on the fraud claims, arguing that they were barred by the statute of limitations, but the trial court denied the motion based on Li's denial that he saw documents showing that he did not own shares in HTI before 2017.
2. HTI's Cross-Claims
In December 2018, HTI filed a cross-complaint against Li alleging eight claims. Four claims concerned the $170,000 transferred to Li in 2018. Alleging that the money was owed HTI for after-sale services, that Li had no right to it, and that Li had promised to transfer it to HTI, HTI claimed conversion, money had and received, false promise, and unjust enrichment. HTI also asserted claims for trade libel, intentional interference with prospective economic relations, unfair competition, and declaratory relief based on a letter that Li sent to Goldwind's CEO Gang Wu that denigrated HTI.
3. The Trial
At some point before trial, which is unclear from the limited record supplied by him, Li added fraud claims predating the complaint by a decade or so. According to these additional claims, Xia represented that Li owned 10,000 HTI shares in 2004, that Li owned 9.6 percent of HTI's shares in 2008, and that he owned 4.1 percent of WWC's shares in 2009. At trial, Li voluntarily dismissed his claims for concealment fraud, negligent misrepresentation, conversion, negligence, and common count.
On February 1, 2021, the case went to trial, and after approximately 12 days of testimony and three days of deliberation the jury returned special verdicts. The jury rejected all of the claims and cross-claims presented to it, and in light of the jury's verdicts, the trial court denied Li's equitable claims for constructive trust, unjust enrichment, and unfair competition (but failed to address HTI's unjust enrichment crossclaim).
The jury rejected the claim at the core of Li's original complaint: the alleged 2017 promise that Li would receive a distribution from WWC's sale. The jury also rejected Li's claim that Xia promised his shares in WWC would increase to 10 percent by 2015. While the jury found that Xia had promised that his sister would hold WWC's shares under Alpheus's name for the benefit of HTI shareholders, including Li, it determined that Xia intended to perform that promise.
The jury also found knowing misrepresentations by Xia in 2004, 2008, and 2009 about Li's shares. However, the jury accepted defendants' statute of limitations defense, finding that by 2015 Li knew or with reasonable diligence should have known about Xia's misrepresentations. The jury found as well that Li did not suffer any lost wages after 2015 and that Li either knew or should have known about his fiduciary duty claims by that point.
Finally, the jury rejected HTI's cross-claims. With respect to HTI's cross-claims for conversion, false promises, and money had and received, the jury found that the $170,000 payment sent to Li was not intended for HTI, that Li did not promise to transfer the payment to HTI, and HTI had no right to it. In addition, with respect to HTI's crossclaims for trade libel and intentional interference, the jury found that the statements that Li had made to Wu were true and that Goldwind did not have the requisite economic relationship with HTI.
4. Post-Trial Proceedings
After trial, Li and HTI filed motions for judgment notwithstanding the verdict and for new trial. The trial court denied Li's motion but granted HTI's motion in part.
After observing that there had been "ample basis for the Court to grant a directed verdict for Defendant based on the statute of limitations with regard to all of the intentional misrepresentation claims," the trial court found substantial evidence supporting the jury's findings that, by 2015, Li knew or should have known about the misrepresentations made to him in 2004, 2008, and 2009. The trial court also ruled that evidence concerning the Norcross litigation, which had been the subject of an Evidence Code section 402 hearing during the trial, was properly excluded in light of the risk of confusion and undue delay that admission of the evidence would have created and other evidence showing that by 2015 Li knew or should have known of Xia's 2004, 2008, and 2009 misrepresentations.
The trial court granted a new trial on HTI's trade libel and tortious interference claims based on Li's concealment of evidence. During discovery Li failed to produce the letter to Goldwind's chairman Wu underlying HTI's trade libel and tortious interference claims. However, at trial Li revealed that he had a copy of the letter on his computer, and several days later he produced the letter in the original Mandarin with an English translation. The trial court found that there was no credible reason for Li's failure to produce the letter earlier and that this failure prejudiced HTI's ability to conduct discovery and mitigate damages. Accordingly, the court ordered a new trial on HTI's cross-claims for trade libel and tortious interference.
Li subsequently moved for summary judgment on HTI's trade libel and tortious interference cross-claims, as well as the related equitable cross-claim for unfair competition. Rather than respond, HTI dismissed without prejudice these three crossclaims, as well as its cross-claim for declaratory relief.
On February 2, 2022, the trial court entered an amended judgment. The amended judgment noted that Li had voluntarily dismissed five claims and entered judgment in favor of defendants on Li's eight remaining claims. The trial court also entered judgment in favor of Li on HTI's cross-claims for conversion, false promise, and money had and received, and it noted that HTI voluntarily dismissed its cross-claims for trade libel and intentional interference, but the trial court did not mention the unfair competition and declaratory relief cross-claims. Finally, the court found that HTI and Xia were the prevailing parties and entered a judgment for $58,127.25 in costs in their favor.
On February 8, 2022, Li filed a timely notice of appeal.
II. Discussion
On appeal, Li does not challenge the jury's rejection of his claim that in 2017 Xia promised him a share of the proceeds from WWC's sale. Nor does he appeal the rejection of his claims that in 2011 Xia falsely promised that his sister would hold WWC's shares under Alpheus' name for the benefit of HTI shareholders. Instead, Li focuses on his claims that years earlier-in 2004, 2008, and 2009-Xia made fraudulent promises concerning Li's shares in HTI and WWC. Although the jury found that these promises were made, defendants succeeded in showing that, by the time that Li's fraud claims were brought on September 6, 2018-nine years or more after the promises were made-the claims were barred by the applicable three-year statute of limitations. (Code Civ. Proc., § 383, subd. (d).) In particular, the jury found that Li either knew or should have known the facts constituting the fraud-and therefore the statute of limitations began to run-on or before September 6, 2015.
Li argues that the jury's findings concerning the statute of limitations were a direct result of several erroneous evidentiary rulings by the trial court and alleged misconduct by defense counsel during closing argument. Because trial courts enjoy" 'broad authority' over the admission and exclusion of evidence," rulings concerning the admission and exclusion of evidence are reviewed for abuse of discretion (McCoy v. Pacific Maritime Assn. (2013) 216 Cal.App.4th 283, 295-296 (McCoy)), and they generally "will not be disturbed except on a showing that the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a [ ] miscarriage of justice." (People v. Rodriguez (1999) 20 Cal.4th 1, 9-10.) Trial courts also have broad discretion to determine whether to grant a new trial for attorney misconduct, and their exercise of that discretion"' "will not be disturbed unless a manifest and unmistakable abuse of discretion clearly appears." '" (Jackson v. Park (2021) 66 Cal.App.5th 1196, 1213.)
However, before considering whether Li has satisfied these requirements, we must satisfy our independent obligation to confirm jurisdiction over this appeal. (See, e.g., California Redevelopment Assn. v. Matasantos (2011) 53 Cal.4th 231, 252.)
A. Appellate Jurisdiction
Under the "one final judgment rule," which is codified in Code of Civil Procedure section 904.1, subdivision (a)(1), a judgment is final and appealable" 'where no issue is left for future consideration except the fact of compliance or noncompliance with the terms of the first decree.'" (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 698 (Griset).) Although Li purports to appeal from a final judgment, the judgment entered by the trial court does not satisfy the one final judgment rule because it fails to dispose of HTI's cross-claims for unjust enrichment, unfair competition, and declaratory relief. HTI, however, voluntarily dismissed its unfair competition, and declaratory relief cross-claims, and the unjust enrichment cross-claim is precluded by the findings in the jury's special verdict on other cross-claims. As a consequence, the judgment's failure to resolve these cross-claims appears to be inadvertent, and we exercise our authority to amend the judgment to dismiss them and make the judgment final and appealable. (Sullivan v. Delta Airlines, Inc. (1997) 15 Cal.4th 288, 308 (Sullivan).)
It was not apparent that there was a final judgment from the parties' initial filings in this court. The civil case information statement submitted by Li after noticing his appeal failed to answer the question whether the "judgment appealed from disposed of all causes of action, including all cross-actions between the parties." Li also failed to include HTI's cross-complaint in the appellant's appendix, which made it unclear whether the trial court's judgment disposed of all of HTI's cross-claims. We therefore directed Li to provide the cross-complaint and any additional documents that would aid the court in considering jurisdiction. After Li responded, it remained unclear whether the unjust enrichment cross-claim had been resolved, and we requested further briefing on the issue. Defendants did not respond, and Li did not argue that the trial court disposed of that cross-claim. Instead, he argued that there is no cause of action for unjust enrichment and that, to the extent HTI was seeking restitution, the jury's findings on HTI's other cross-claims precluded their cross-claim for unjust enrichment.
We decline to consider Li's argument that there is no cause of action for unjust enrichment because doing so would require us to address the merits of an issue not resolved by the trial court. It is well-settled, however, that the Court of Appeal has authority to amend a trial court's judgment to correct inadvertent omissions and make the judgment reflect the court's apparent intention to fully dispose of all claims between the parties. As the Supreme Court has long recognized, "[w]hen 'the trial court's failure to dispose of all causes of action results from inadvertence or mistake rather than an intention to retain the remaining causes of action for trial,' the appellate court has discretion to 'preserve the appeal by amending the judgment to reflect the manifest intent of the trial court.'" (Sullivan, supra, 15 Cal.4th at p. 308; see also Griset, supra, 25 Cal.4th at p. 700; Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 920-921; Tehnet v. Boswell (1976) 18 Cal.3d 150, 154.)
We conclude that the failure of the trial court's amended judgment to dispose of HTI's cross-claims for unjust enrichment, unfair competition, and declaratory relief was due to inadvertence. The amended judgment noted that HTI's cross-claims for trade libel and intentional interference were voluntarily dismissed, which we interpret as a disposition of those claims. The unfair competition and declaratory relief cross-claims were voluntarily dismissed in the same request as the trade libel and intentional interference cross-claims. We therefore conclude that amended judgment's failure to mention them was inadvertent.
We also conclude that the amended judgment's failure to mention the unjust enrichment claim was inadvertent. In its cross-complaint, HTI asserted four claims based on Li's retention of Alpheus's payment of $170,000: conversion, money had and received, false promise, and unjust enrichment. In the unjust enrichment claim, HTI alleged that Li had no right to the $170,000 payment and "was supposed to immediately transfer it to" HTI but "did not." Although the unjust enrichment claim was not presented to the jury (because it is an equitable claim), the jury considered the other three cross-claims concerning the $170,000 payment and in its special verdicts rejected HTI's contention that Li was supposed to transfer the payment to HTI. In particular, the jury found that HTI did not have a right to the $170,000, that Li did not promise to transfer the $170,000 payment to HTI, and that he did not receive $170,000 that was intended for HTI. In light of these findings, HTI's unjust enrichment claim cannot succeed. As the trial court entered judgment on Li's equitable claims in light of the jury's special verdicts, the trial court's failure to do the same with HTI's equitable cross-claim for unjust enrichment appears to be inadvertent.
Our conclusion is bolstered by HTI's acknowledgement at oral argument that it had intended to voluntarily dismiss all remaining causes of action in its cross-complaint, including the unjust enrichment cross-claim.
Accordingly, we conclude that the amended judgment's failure to dispose of HTI's cross-claims for unjust enrichment, unfair competition, and declaratory relief was inadvertent, and we exercise our discretion to amend the judgment to dismiss without prejudice the unfair competition and declaratory relief cross-claims and to render judgment for Li and against HTI on the unjust enrichment cross-claim. As so amended, the judgment disposes of all of Li's claims against defendants and all of HTI's crossclaims against Li. Consequently, the judgment satisfies the one final judgment rule, and we have jurisdiction over this appeal under Code of Civil Procedure section 904.1, subdivision (a)(1).
B. Admission of the HTI Stock Ledger (Exhibit 520)
Li challenges the admission of exhibit 520, a spreadsheet or ledger concerning HTI shareholders. The ledger lists Li as a prospective shareholder and indicates that the shares available to him decreased from 12,000 in 2002, to 10,000 in 2004 and 6,000 in 2006, and that he never actually purchased any shares. Li asserts that the trial court invented a new hearsay exception to admit the ledger based on the court's statement that the ledger was "created by this witness [Xia] and used by him." Earlier, however, in response to Li's objection that the ledger was not a business record, defendants proffered evidence that the ledger was an electronic record prepared by Xia personally that he updated over time to keep track of HTI's stock. Accordingly, we understand the trial court's observation that Xia created and used the ledger to be a shorthand rationale for applying the business records exception.
Li also argues that the business records exception was not satisfied. However, "[t]he trial court is vested with broad discretion to determine whether a party has laid a proper foundation for admission of records under [the business records exception], and the court's exercise of that discretion' "will not be disturbed on appeal absent a showing of abuse." '" (People v. McVey (2018) 24 Cal.App.5th 405, 414.) Li has not shown such abuse.
1. The Trial Court's Application of the Business Records Exception
Hearsay-that is, "an out-of-court statement offered for the truth of its content" (People v. Sanchez (2016) 63 Cal.4th 665, 674)-is not admissible unless it falls within an exception. (Evid. Code, § 1200, subd. (b).) One exception is for business records. (Evid. Code, § 1271.) This exception has four requirements: "(a) The writing was made in the regular course of a business; [¶] (b) The writing was made at or near the time of the act, condition, or event; [¶] (c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and [¶] (d) The sources of information and method and time of preparation were such as to indicate its trustworthiness." (Ibid.) The trial court had before it evidence satisfying each of these requirements.
First, Xia testified that the ledger was a "record of our shareholders," which he created in 2002, personally updated, and kept with HTI's records. In addition, Xia later testified that the ledger or a "then current version" of the document was made available to Li and other officers at their shareholder meetings. This testimony satisfied the requirement that the stock ledger was made in the "regular course of [ ] business." (Evid. Code, § 1271, subd. (a).)
Second, Xia testified that he updated the ledger "over time." The trial court could reasonably infer from this evidence that the ledger was updated as shares were issued or revoked, and therefore the ledger's entries were "made at or near the time of the act, condition, or event" recorded. (Evid. Code, § 1271, subd. (b).)
Third, Xia-a founder and senior vice president of HTI-testified that he updated the ledger "personally," which satisfied the requirement that the custodian or other qualified witness identify the document and describe its mode of preparation. (Evid. Code, § 1270, subd. (c).)
Fourth, because Xia was a founder and director of HTI, he was in a position to obtain accurate information concerning HTI's shares to put into the ledger. In addition, because he regularly shared the ledger with interested parties such as Li, any inaccuracies in the ledger were subject to challenge or correction, which gives the ledger a significant degree of trustworthiness. Moreover, other evidence corroborated the information in the ledger. For example, the ledger contains the same share numbers and prices for 2002 as the 2002 HTI resolution issuing new certificates; the same number of shares for Li in 2004 as a certificate dated June 2, 2004; and the same number of shares in 2006 as a 2006 shareholder agreement. As a consequence, there are sufficient indications of trustworthiness to satisfy the business record exception's fourth requirement (Evid. Code, § 1270, subd. (d)) and therefore to apply the exception.
2. Li's Objections
Although Li disputes whether the ledger was created in the regular course of business, he does not explain why Xia's testimony that he regularly updated and shared the document is insufficient to satisfy that requirement. Instead, Li asserts that the ledger was created for litigation because it lists shares as of August 18, 2018, and therefore was created after Xia became aware that Li would sue him. As noted above, however, Xia testified that the ledger was first created in 2002, long before this suit was filed. And while the trial court had earlier told Li that he could cross-examine Xia about modifications made to the document before it was produced, Li failed to do so. As a consequence, there was no evidence before the trial court that the ledger was created for litigation, and the court did not abuse its discretion in crediting Xia's testimony that the ledger was made in the regular course of business.
Li also asserts that the ledger is not trustworthy because it was updated after Xia became aware that Li intended to sue and because an email to HTI's accountant contained different information concerning Li's shares in 2008, which is not shown on the ledger. However, as shown above, the information in the ledger is corroborated by other documents. Moreover, the document referenced by Li is a chart attached to an email stating that HTI's board had not approved the chart. Even more important, the business records exception does not require trial courts to determine whether documents are accurate, only whether the "sources of information" and "method and time of preparation" of the document "indicate its trustworthiness." (Evid. Code, § 1271, subd. (d), italics added.)
In his reply brief, Li makes several additional arguments. Because these arguments were not raised in the opening brief, they have been forfeited. (See, e.g., California Building Industry Assn. v. State Water Resources Control Bd. (2018) 4 Cal.5th 1032, 1050 (California Building).) The arguments are also unavailing. For example, Li asserts that the ledger was not maintained in the regular course of business because "Defendant constantly played with people's shares without their full consent." This assertion, however, concerns actions underlying the information recorded in the ledger, not the information itself, and Li offers no reason why a business record cannot record information from unusual events. Li also denies that the ledger was made at or near the time shares were issued or canceled because it was dated August 18, 2018. Xia, however, testified that he would "update" the ledger, which suggests that he revised the ledger when shares were issued, redeemed, or canceled, and it can be reasonably inferred that the reference to August 18, 2018, indicates when it was last updated, not when all information was recorded. Finally, Li asserts that there was no evidence concerning the ledger's mode of preparation. Li, however, made no such objection in the trial court, and in any event the trial court reasonably could have inferred from Xia's testimony about updating the ledger that Xia personally modified it when new information became available.
Thus, Li has failed to show that the trial court abused its discretion in admitting the stock ledger under the business records exception to the hearsay rule.
C. Exclusion of Evidence
In addition to challenging admission of the stock ledger, Li challenges the exclusion of evidence concerning the Norcross litigation, the box of documents from that litigation that Li kept in his basement, and Xia's academic credentials. Li once again fails to show the trial court abused its discretion, and in any event, he was not prejudiced by admission of this evidence.
1. The In Limine Order
In 2013, Ken Norcross, HTI's former chief technology officer, filed a lawsuit against HTI, which was settled in 2015. Before trial, the trial court issued an in limine order limiting testimony from Norcross, whom Li had called as a witness, and in particular barring testimony about what Norcross's claims were or the settlement he obtained. Li contends that, despite the order, the jury learned that Norcross sued Xia in 2012 or 2013 over his shares in HTI and the in limine order unfairly prevented him from explaining why he did not sue Xia at that time. This argument is without merit.
Seizing on a statement by the trial court that it would not permit "what is called 'me too' evidence," Li contends that the trial court applied a sweeping "automatic bar" that erroneously prevented him from using evidence about the Norcross litigation to prove intent and motive. In fact, in referring to "me too" evidence, the trial court was merely observing that evidence of the Norcross litigation had limited probative value because this suit is not a class action, and Norcross is not a party to it.
In addition, while Li now contends that evidence of the Norcross litigation was admissible to show his mental state and, in particular, why the Norcross litigation did not lead him to file suit in 2013 when Norcross did, Li fails to point to any evidence that he informed the trial court of this purpose at trial. Instead, he points to a declaration submitted after trial with his motion for a new trial. Li cannot show an abuse of discretion based on an argument that "could have been but was not presented to the [trial] court." (In re Carrie W. (2003) 110 Cal.App.4th 746, 755 (Carrie W.).)
Nor did the trial court abuse its discretion in ruling that evidence of the Norcross litigation was inadmissible under Evidence Code section 352. That section authorizes trial courts to exclude evidence "if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of . . . confusing the issues ...." (Evid. Code, § 352.) Here, Li's reasons for not joining Norcross's suit against Xia had little, if any, probative value. Although there was an email referencing the "[t]heft" of Norcross's shares, a brief mention (by Li) of a dispute between Norcross and Xia, there was no evidence concerning the nature or basis for Norcross's suit, much less evidence that Li could have filed a similar suit. As a consequence, there was little or no risk that the jury would assume that Li should have sued simply because Norcross did so.
The limited probative value of the evidence in question was substantially outweighed by the risks of confusion and undue consumption of time. As the trial court recognized, it would have taken substantial testimony to explain the basis for the Norcross litigation, and its potential connection with this case, and why this connection did not prompt Li to file suit. Moreover, there was a substantial risk that the jury would be confused by evidence that there is a connection, but the connection is unimportant. The trial court did not abuse its discretion in finding that the risk of undue delay and confusion substantially outweighed the probative value of Li's proposed testimony about the Norcross litigation.
Finally, even if that testimony should have been admitted, Li was not prejudiced by its exclusion. A judgment may be overturned only for error which "substantially affects the rights of a party" (Code Civ. Proc., § 906), and a party seeking to overturn a judgment based on trial error must show a reasonable probability that, absent the error, the jury would have reached a different verdict. (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 872.) Li has not done this. Because Li did not sue until September 2018, and the limitations period for fraud claims is three years (Code Civ. Proc., § 338, subd. (d)), Li's claims based on the misrepresentations made in 2004, 2008, and 2009 could only escape the statute of limitations if they were not discovered until September 2015. There is, however, overwhelming evidence that Li either knew or should have known about the claims long before that.
Li was in a position to discover how many shares he had in HTI and WWC. For more than a decade, he was deeply involved in the finances of both HTI and WWC, traveling frequently to China to help secure loans; he testified that he was the unofficial "CFO," the "finance guy," and the "chief funding officer"; and he was described as WWC's chief financial analyst on at least one BOT project. Even more important, Li was a director of both HTI and WWC and attended the board meetings of both companies. Indeed, he remained on the WWC board even after HTI's shares were transferred to Alpheus in 2011. As a consequence, he was copied on internal correspondence concerning shareholders and present at meetings where information concerning shareholders were made available.
In particular, Li had access to HTI's stock ledger, which was regularly made available at HTI shareholder meetings that Li attended. According to the ledger, in 2006 the number of shares available to Li decreased to 6,000 out of the 200,000 total shares (three percent of the total), which was less than both 10,000 shares and 9.6 percent. The ledger also listed Li's shares as only "prospective" and indicated that he had not bought any shares, thereby indicating that he did not own any HTI stock.
Li's testimony confirmed that he was aware that he did not own the 10,000 shares in HTI that Xia promised him in 2004 or the 9.6 percent of its stock promised in 2008. As Li acknowledged on the stand, in a 2009 email discussing his involvement in HTI, he thanked Xi for "increas[ing] [my] share from 3 percent to 4.1 percent." Of course, 4.1 percent is less than half of 9.6 percent, and because HTI issued only 200,000 shares, amounts to only 8,200 shares. Although Li asserted at oral argument that his email referenced his shares in WWC rather than HTI, the distinction is immaterial because Li testified that at the time the email was sent, he believed that he had the same percentage interest in both companies. Thus, the jury had evidence that by 2009, nine years before filing suit, Li knew or should have known that Xia's 2004 representations that he owned 10,000 HTI shares and 2008 representation that he had 9.6 percent of HTI's shares were false. Indeed, Li testified that in June 2009, he had concerns regarding his shares and thought it was not a good option for him to continue with HTI for so long without pay and for so few shares.
Li also confirmed that by 2011 he knew that Xia's 2009 representation that he owned 4.1 percent of WWC was false. In emails sent in July 2011, Xia informed Li and others that all of HTI's shares in WWC would be transferred to Alpheus. Moreover, Li signed a July 20, 2011, stock certificate recognizing Alpheus as the sole shareholder in WWC. Accordingly, even though Xia supposedly assured him that the transfers to Alpheus was only nominal, Li admitted that he was "really concern[ed]" that the HTI shareholders such as him could lose everything. Thus, the jury had evidence that Li either knew or suspected at least seven years before filing suit in 2018 that Xia's representations about his stock in WWC were false.
Nor is it hard to imagine why Li did not sue immediately upon learning about Xia's misrepresentations. While the plants in China owned by WWG and, through WWG, by WWC, had great value, they were illiquid, and they could not be turned into cash without an IPO or a sale. There was an attempted IPO in 2011, but it fell through. As a consequence, until the sale of WWC to Goldwind in 2017, it was unlikely that Li could recover any significant damages from Xia or HTI. Moreover, unlike Norcross, Li had a longstanding personal relationship with Xia. As a consequence, Li had good reason to wait until such a sale in the hopes that he could prevail on Xia to share in some of the proceeds of the sale of WWC. In rejecting HTI's claim to the $170,000 Li received after the sale, the jury implicitly found that Li received some compensation. While Li may find that amount unsatisfactory, after waiting to bring suit for at least seven years after learning of Xia's misrepresentations, Li can no longer assert fraud claims based on those misrepresentations.
In light of this extensive evidence that the statute of limitations bars fraud claims based on Xia's 2004, 2008, and 2009 misrepresentations, there is little, if any, possibility that Li's explanation why his case differs from Norcross's would have affected the jury's finding that Li knew or should have known of those misrepresentations by September 2015 and therefore no prejudice from the exclusion of that evidence.
2. Testimony Concerning Li's December 2013 Email (Exhibit 600C)
Li also challenges the exclusion of his testimony concerning a December 6, 2013, email that was admitted as part of defense exhibit 600C. In this email, which concerns WWC, Li said that "at least for now, legally speaking, I don't have any shares, just like Ken." This appears to be a reference to the fact that all of HTI's shares in WWC were transferred to Alpheus in 2011. After Li explained that this was his way of asking Xia for a stock certificate, his counsel asked, "Were you worrying about how he was going to treat you like how he treated Ken?" Defendants objected, and the trial court precluded Li from answering based on the in limine order concerning the Norcross litigation. Li contends that this ruling prevented him from telling the jury about Xia's assurance that he did not need to worry because, unlike Norcross, he had paid for his shares. Li has not shown any abuse of discretion.
Evidence of Xia's statement that Norcross was the only one who had not paid for his shares would have been relevant because, as noted above, the HTI ledger indicated that Li had no shares because he had not paid for the shares made available to him, an issue on which there was conflicting evidence. The trial court, however, had no reason to anticipate that Li would testify about this admission because Li never informed the court that he would do so. Instead, in response to Xia's objection and the court's ruling, Li's counsel simply withdrew the question. As a consequence, the trial court reasonably assumed that Li would respond to the question about Norcross's treatment by discussing Norcross's claims in violation of the court's in limine ruling precluding such testimony.
A party may forfeit a claimed error by any action which, although falling short of an express waiver, demonstrates "acquiescence" in the error. (Sperber v. Robinson (1994) 26 Cal.App.4th 736, 742-743.) "An appellate court will ordinarily not consider procedural defects or erroneous rulings, in connection with relief sought or defenses asserted, where an objection could have been but was not presented to the trial court by some appropriate method ...." (Carrie W., supra, 110 Cal.App.4th at p. 755.) As Li failed to inform the trial court that he wished to testify concerning Xia's assurance, we hold that Li has forfeited any objection based on the assurance.
Just as important, this ruling did not prejudice Li. The trial court did not preclude Li's counsel from asking Li directly about Xia's supposed assurance, which Li's counsel chose not to do, or presenting evidence of his purported payments, which Li did but without any supporting documentation. In addition, as discussed above, the jury had overwhelming evidence that by 2011 Li knew or should have known that Xia's 2004, 2008, and 2009 representations were false. Li has not explained how Xia's subsequent assurance that Li had paid for his shares would have vitiated this knowledge and stopped the statute of limitations from running. Nor has Li argued that the assurance tolled the statute of limitations. As a consequence, Li has not shown that the trial court's ruling prejudiced him.
3. The October 7, 2011 Email (Exhibit 215B)
Li also challenges the exclusion of an email dated October 7, 2011, which was pre-marked as exhibit 215B (Exhibit 215B), in which Xia informed Norcross that Norcross was "the only one [to] have never paid." Li argues that this email would have rebutted Xia's testimony that Li's shares were revoked for nonpayment. We need not consider whether the trial court abused its discretion in excluding the email because Li has failed to provide a record adequately showing why the email was excluded.
The October 7, 2011, email was part of an email string in a document, exhibit 215 (Exhibit 215), that Li sought to introduce on February 10, 2021. Defendants, however, objected that the email string was incomplete, and Li agreed to withdraw the document and introduce instead a portion of the email string not containing the October 7, 2011, email at issue as exhibit 215A. Eight days later, Li informed the court that he might use Exhibit 215B, which contains the October 7, 2011, email at issue. There is, however, no indication in the trial transcripts that Li in fact sought to introduce Exhibit 215B.
Li admits this: In his opening brief, he asserts, "Strangely, the records of the trial court's exclusion of [Exhibits 215 and 215B]-on the basis of the [in] limine order regarding [the] Norcross litigation-are missing from the trial transcripts." Nonetheless, citing a declaration submitted in support of his motion for a new trial, Li contends that the trial court excluded Exhibit 215B off the record. This declaration, however, does not indicate when or why the trial court denied admission of Exhibit 215B, though his new trial motion asserts that the exclusion was "based on the in-limine order regarding the Norcross litigation."
Even if we were to credit this evidence, this record would not provide an adequate basis for challenging the exclusion of the October 7, 2011, email. As noted above, trial courts have broad authority over the admission or exclusion of evidence. (McCoy, supra, 216 Cal.App.4th at pp. 295-296.) As a consequence, "the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment," and"' "[a] necessary corollary to this rule is that if the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed." '" (Jameson v. Desta (2018) 5 Cal.5th 594, 608-609 (Jameson).) The evidence presented by Li that the trial court denied admission of Exhibit 215B and that this denial was based on the in limine order do not provide a record adequate to determine whether the trial court abused its discretion in denying admission of Exhibit 215B. For this reason alone, Li's challenge to the exclusion of the Exhibit 215B must be rejected.
In addition, here again, Li has failed to show prejudice. Like Xia's supposed assurance, the December 7, 2011, email provides indirect evidence that Li paid for HTI shares but does not vitiate the evidence that by 2011 Li knew or should have known that Xia's earlier representations concerning his shares in HTI and WWC were false. As a consequence, even if the December 7, 2011, email had been admitted and credited by the jury, there is little probability that it would have affected the jury's finding concerning the running of the statute of limitations.
In his reply brief, Li argues that the exclusion of Exhibit 215B violates the rule of completeness. Because this argument was not raised either in the trial court or in Li's opening brief, it has been forfeited. (California Building, supra, 4 Cal.5th at p. 1050.)
4. The Norcross Litigation Documents
Li also contends that the trial court's in limine order prevented him from explaining why he did not review the box of documents from the Norcross litigation that Xia left in his basement. In fact, however, the Norcross litigation documents were the subject of a separate order issued after a hearing under Evidence Code section 402. Li does not challenge that order, and in any event, we find no abuse of discretion in it.
In the Evidence Code section 402 hearing, Li proffered evidence that in January 2015 he picked up a large box of documents from HTI's counsel concerning the Norcross litigation, which settled two months later. Xia had asked Li to pick up the documents because Xia was in China at the time. When Xia returned, Xia declined to retrieve the documents from Li, saying "[d]on't worry" because" '[t]hese documents [were] only created for this legal case. Never mind.'" Li wanted to present testimony concerning Xia's statement to challenge the genuineness of documents in the box, including four pages of shareholder agreements, and to show that they were forged and "fake."
Xia objected that this testimony should be excluded due to its prejudicial effect, and the trial court largely agreed. It concluded that while Xia's alleged statement had little probative value concerning the authenticity of the shareholder agreements in light of testimony that Li already had elicited from the individual who signed the agreements and the absence of any forensic testimony, an assertion that the documents were forged would elicit extensive cross-examination concerning the documents in the box and how Li obtained them, which would consume an undue amount of time. Accordingly, the trial court precluded Li from testifying that documents in the box were "created" for the litigation.
We see no abuse of discretion in this ruling, and in any event, Li has forfeited any challenge to the ruling by failing to address it. (See, e.g., People v. JTH Tax, Inc. (2013) 212 Cal.App.4th 1219, 1237; Sutter Health Uninsured Pricing Cases (2009) 171 Cal.App.4th 495, 513.)
Li also challenges testimony relating to the Norcross litigation documents elicited by Xia. Many of these challenges concern testimony to which he did not object and thus have not been preserved for appeal. (People v. Gamble (1970) 8 Cal.App.3d 142, 149; Evid. Code, § 353 [a judgment shall not be reversed for the erroneous admission of evidence unless an objection was timely made].) Li also complains that at several points the in limine order precluded him from mentioning the Norcross litigation by name. But, as we concluded above, the trial court did not abuse its discretion in issuing the in limine order. Finally, Li complains that Xia was permitted to testify that he believed that the ledger was in the box of Norcross litigation documents that Li received. Li argues this was an impossibility since he picked up the box in 2015 and the ledger was "fabricated" in 2018. This argument is without merit, since it ignores the fact that Xia was asked about a previous version of the ledger "without the 2018 information," a "then current version of" the ledger. Moreover, while Li objected to this testimony, he did not object to Xia's testimony that the ledger was also made available at shareholder meetings attended by Li, and therefore he was not prejudiced by the testimony that Xia believed a copy of the ledger was in the box.
5. Xia's Degree from Old Dominion University
Li asserts that the trial court erred when it excluded evidence that Xia lied under oath during his deposition when he testified that he had a Ph.D. from Old Dominion University when, in fact, he had obtained only a master's degree from Old Dominion University. The evidence Li sought to introduce to impeach Xia's testimony included his allegedly forged Ph.D. diploma and the testimony of the custodian of records for Old Dominion University. He argues that the trial court erred when it excluded this evidence under the collateral impeachment rule, which has been rejected by Evidence Code section 780. (Although Li also tried to present this same evidence at trial to show that Xia had the capacity to forge documents, on appeal he has expressly declined to challenge the exclusion of that evidence on that theory.) The trial court, however, did not rely on the collateral impeachment rule in excluding Li's evidence concerning Xia's degree from Old Dominion. Instead, the court excluded the evidence under Evidence Code section 352. We find no abuse of discretion in that determination.
The trial court ruled that "the probative value of that evidence is de minimis as it goes to the impeachment on a fact that is not material to the jury's determination of the issues in this case" and the court already had "allowed in significant evidence" concerning Xia's credibility. The court also concluded that a challenge to Xia's degree would create "the necessity of showing a videotape or reading a deposition from a representative of Old Dominion University." As a consequence, the trial court concluded that the limited probative value of the evidence would be substantially outweighed by the undue consumption of time, and it should be excluded under Evidence Code section 352.
While Li disputes whether the evidence in question should have been excluded under Evidence Code section 352, he fails to show that the trial court abused its discretion in concluding otherwise. Indeed, because Li has failed to include his in limine motion and the deposition of the records custodian from Old Dominion in the record, and the only record of the trial court's order is from a subsequent summary at trial, once again he has failed to present an adequate record for reviewing the trial court's ruling. (Jameson, supra, 5 Cal.5th at pp. 608-609 [failure to provide an adequate record on an issue requires that the issue be resolved against the appellant].)
D. Closing Argument
Li accuses defense counsel of misconduct in closing argument, including "intentional false representations to the jury regarding the alleged withholding or destruction of documents." These accusations are unfounded, and in any event, Li failed to properly raise them in the trial court.
1. Destruction of Documents
Li asserts that in closing defense counsel told the jury "a wild story of evidence destruction" without any basis. In fact, counsel's accusation of document destruction is based on Li's own testimony. During the 402 hearing concerning the box of Norcross litigation documents, the trial court asked Li where the documents in the box were, and Li responded that he only kept what "I think [is] going to be useful for my case" and threw out the rest. To confirm what Li had just said, the court asked, "[s]o you made a selection of which documents you thought would help your case, and you threw out the rest?" Li responded, "Yes." Later, on cross-examination, Li admitted that he had said that he threw away documents that were not helpful to his case. Although Li tried to backtrack a week later, testifying that he had found the documents he thought had been thrown away on a ping pong table in his basement, nothing required defense counsel, who acknowledged the subsequent statement, to accept this story at face value. As a consequence, Li's accusation that defense counsel made an "intentional false accusation" is baseless.
In addition, Li forfeited any objection to defense counsel's arguments concerning destruction of evidence and the inferences that the jury was instructed could be drawn from it. (See Judicial Council of California Civil Jury Instructions (CACI) No. 204 ["If you decide that a party [intentionally concealed or destroyed evidence], you may decide that the evidence would have been unfavorable to the party"].)" 'Generally, to preserve for appeal an instance of misconduct of counsel in the presence of the jury, an objection must have been lodged at trial.' [Citation.]" (Cassim v. Allstate (2004) 33 Cal.4th 780, 795 (Cassim).) Indeed, a litigant faced with an opposing counsel's misconduct generally "must also 'move for a mistrial or seek a curative admonition'" (id. at p. 794) because" '[o]ne of the primary purposes of admonition at the beginning of an improper course of argument is to avoid repetition of the remarks and thus obviate the necessity of a new trial.'" (Id. at p. 795.) By failing to object and request a curative instruction, Li forfeited any appeal based on defense counsel's arguments concerning his destruction of documents.
2. Concealment
Li also accuses defense counsel of making "intentional[ly] false representations to the jury regarding alleged withholding . . . of documents." Like Li's accusation concerning the document destruction, this accusation is both baseless and unpreserved.
HTI brought cross-claims against Li for trade libel and intentional interference with prospective advantage based on statements disparaging HTI and disrupting its business dealings with Goldwind, the company that purchased WWC and WWG. At trial, Li testified about a letter he had sent to Wu,Goldwind's chairman, in October 2018. Although he had failed to produce the letter during discovery, at trial Li revealed that he had a copy of the letter on his computer, and several days later he produced the original letter in Mandarin and an English translation of it. After the jury found in Li's favor on the trade libel and intentional interference claims, the trial court granted a new trial based on "the decision of [Li's] former counsel not to produce the letter and his decision to withhold knowledge of its existence." Li's accusation that defense counsel falsely accused him of withholding documents cannot be reconciled with this ruling or the record.
In addition, here again, Li failed to preserve any objection to defense counsel's closing argument. Although defense counsel argued that Li concealed his letter to Wu and the concealment was intentional, Li made no objection and did not request any curative instruction. Consequently, just as with the closing argument concerning document destruction, any objection to the closing argument concerning document concealment has been forfeited. (Cassim, supra, 33 Cal.4th at p. 795.) Because Li also failed to object to or seek curative instructions about defense counsel's suggestion that Li changed attorneys in order to facilitate the concealment of the letter to Wu, Li's objection to this argument likewise has been forfeited.
3. The Norcross Litigation Box
Li's final objection is that defense counsel misrepresented the size of the box of Norcross litigation documents that he received. Contrary to Li's assertion, defense counsel did not represent to the jury that the box contained 1,600 pages: instead, he said "I'll just hold one up" and appears to have held up a box. But there is no indication in the record of the size of the box, and even more important, Li made no objection and did not request any curative instruction. As a consequence, once again, Li has forfeited any claim of misconduct. (Cassim, supra, 33 Cal.4th at p. 795.)
III. Disposition
The judgment is amended to note that HTI's cross-claims for unfair competition and declaratory relief were voluntarily dismissed and also to enter judgment for Li and against HTI on HTI's cross-claim for unjust enrichment. As so amended, the judgment is affirmed. Respondents are awarded their costs on appeal.
WE CONCUR: Grover, Acting P.J. Danner, J.