Opinion
NOT TO BE PUBLISHED
Super. Ct. No. PC20030587.
CANTIL-SAKAUYE, J.
Plaintiffs Derek Vanacore and William Palmer entered into a contract with defendant Jerry P. Huckaby for the purchase of a 45 percent sharehold interest in a corporation owned by Huckaby called the Hines Gilbert Gold Mines Company (Hines Gilbert). When Huckaby refused to proceed in accordance with the contract, plaintiffs filed this lawsuit against Huckaby, alleging, ultimately, 12 causes of action, including claims for reissuance of stock under California Corporations Code section 419, breach of fiduciary duty, breach of contract, conversion, fraud, and specific performance. After a court trial, the trial court determined Huckaby had breached his contract with plaintiffs, had breached his fiduciary duties, and had committed fraud in the inducement of the contract. The trial court ordered Huckaby to issue the agreed number of shares of stock in Hines Gilbert to plaintiffs, ordered specific performance of the contract by directing Huckaby to transfer property and/or mineral rights to Hines Gilbert in conformance with the contract and confirming the order for stock issuance, awarded plaintiffs $354,088 in damages for Huckaby’s breach of contract and breach of fiduciary duties, and awarded plaintiffs $150,000 in damages, including punitive damages, as additional damages for Huckaby’s fraudulent representations. The trial court ordered Huckaby not to transfer or otherwise divest himself of ownership and title to the property at issue except as ordered by the court.
On appeal, Huckaby claims (1) the trial judge’s failure to recuse himself when he was in a position of conflict of interest requires reversal, (2) the trial court erred in granting plaintiffs’ motion to compel the issuance of stock, (3) the trial court’s award of damages represents an impermissible double recovery, (4) plaintiffs are precluded from obtaining fraud damages, (5) insufficient evidence supports the finding of fraud, (6) the punitive damages award is improper, and (7) the trial court lacked jurisdiction to set aside its March 2006 judgment and file a new judgment on May 1, 2006. We reject Huckaby’s first and last claims. We agree with his third, fifth and sixth claims and given such conclusions, we do not need to resolve his second and fourth claims. We reject plaintiffs’ claim that the damages portion of the judgment can be affirmed on the basis of conversion. We shall reverse the entire damages portion of the judgment, but otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Huckaby’s grandfather and father were gold miners in the Sierra foothills. Huckaby and his sister, Sharon Bracco, eventually inherited the family’s property interests in various mining claims and mineral rights (the Huckaby properties), as well as the shares of the Hines Gilbert Corporation, the family corporation.
After the deaths of his grandparents and father, Huckaby went to Placer and El Dorado Counties to look up all recorded deeds that might be part of the Huckaby properties. Huckaby subsequently met Jerry Franco at a party, confided in him and asked his help. Huckaby brought a big box of unorganized documentation to Franco. According to Franco, Huckaby agreed to pay Franco 10 percent in exchange for Franco’s help in determining what he had. Franco went through the box of materials and prepared a booklet of deeds. Franco then called the Teichert construction company and made an appointment with them. He also introduced Huckaby to plaintiff Vanacore, owner of an asset recovery company.
Huckaby, Franco and Vanacore met in late spring or early summer of 2002. Huckaby brought a box of documents he thought were relevant, but at the end of the meeting, there was no conclusion as to what Huckaby really owned. Vanacore agreed to take a preliminary look at the paperwork.
A few weeks later Huckaby and Franco met with the head geologist for Teichert, a man named Ron Stickel, and showed him a list of the Huckaby properties. Stickel said the list was amazing, that Huckaby might be a wealthy man, and he agreed to look up all of the properties for Huckaby. Stickel later provided a report on the listed properties to Huckaby. According to Huckaby, he entered into a handshake agreement with Stickel that Teichert would have the right to make a first offer on any properties Huckaby decided to sell.
In the summer of 2002, Huckaby and Franco had another meeting with Vanacore. Huckaby told Vanacore about his ownership of the Hines Gilbert Corporation and the properties owned by Hines Gilbert. Huckaby showed Vanacore the binder or report from Teichert, but did not disclose his “handshake deal.” Vanacore thought the corporation might be used as a vehicle to get a venture going. Vanacore said he knew an attorney (plaintiff Palmer) who was experienced in mineral rights who might be interested in the project.
Vanacore approached Palmer about the business opportunity in November 2002. Vanacore then spoke with Franco and indicated he and Palmer were interested. If they could get 45 percent of the stock of the Hines Gilbert Corporation, they would provide their services at no cost. It was to be a contingency arrangement. Huckaby agreed to those terms.
Vanacore began taking steps to revive the Hines Gilbert Corporation, which was a suspended corporation owing back taxes and penalties. Vanacore negotiated and paid $654.11 to the Franchise Tax Board as settlement of the back taxes and penalties. Vanacore applied for a certificate of reviver for the corporation.
The reviver could not be completed until corporate tax returns, requiring a signature of a corporate officer, were filed. Huckaby was supposed to sign the returns, but never did. The tax returns were eventually filed by plaintiffs during trial and a certificate of reviver issued.
Huckaby and Franco met with Vanacore and Palmer in late December 2002. According to Palmer, Huckaby represented his properties were worth “millions and billions of dollars.” Palmer was very skeptical of the claim. However, he was willing to set aside his normal hourly fee and work on the transaction for a percentage of the corporation. The parties discussed the outlines of the transaction between them and Palmer prepared and circulated several drafts of a written memorandum of understanding (MOU) setting out the terms of their agreement. Huckaby never told Vanacore and Palmer that Teichert had a right of first refusal.
On January 15, 2003, the parties met again and signed a binding MOU. The MOU stated it was intended to be a binding agreement to purchase and transfer a minority interest in the shares of the Hines Gilbert Corporation, specifically 450,000 shares of common stock representing 45 percent of the stock of the corporation to be shared equally (22.5 percent each) between Vanacore and Palmer. The MOU stated Vanacore and Palmer had provided services to Huckaby and would pay a purchase price of $100. In consideration for the purchase price, Huckaby would transfer the Huckaby properties to the Hines Gilbert Corporation. The agreement acknowledged Vanacore and Palmer had already provided valuable consideration under the terms of the MOU by resuscitating the Hines Gilbert Corporation and that they agreed to continue to provide services to the corporation, as mutually agreed, including, among other things, providing legal research and investigative services, marshalling the known and unknown assets, and maximizing its value to the benefit of the Hines Gilbert shareholders.
Palmer testified the $100 figure was chosen based on the realization that the Huckaby properties might not be worth anything.
According to Huckaby, he understood the MOU to require him to transfer to the Hines Gilbert Corporation only the Huckaby properties that he did not sell to Teichert. However, it is undisputed Huckaby never actually sold any properties to Teichert or anyone else.
The MOU set out a due diligence period as one of the contingencies of the agreement. Specifically, the MOU stated, “The Minority Shareholders shall be given a period of sixty (60) days after execution of, this Agreement and not sooner than March 19, 2003, in order to conduct their due diligence (the ‘Due Diligence Period’). During the Due Diligence Period, the Minority Shareholders shall investigate the businesses, which include the Assets, to their full and complete satisfaction and shall either affirm or disaffirm their obligation to purchase the Majority Shareholder’s Stock within the Due Diligence Period.” Vanacore and Palmer understood the due diligence period to be a protection for them, allowing them to back out of the deal if they discovered problems, such as contamination, on the Huckaby properties.
Palmer drafted and, in February 2003, Huckaby’s sister signed documents assigning all of her interest in the Hines Gilbert Corporation and the Huckaby properties to Huckaby in exchange for Huckaby’s transfer to her of his interest in a property known as the Lake Chiquita property. Bracco later sold the Lake Chiquita property for around $1,200.
Vanacore continued to work to investigate the scope of the properties owned by Huckaby. Vanacore hired several title companies to conduct preliminary searches on the Huckaby properties. When the results appeared to be conflicting, Vanacore went directly to several county recorders’ offices to pull the hard copies of the Huckaby records. Vanacore talked to the Bureau of Land Management (BLM) about the Huckaby properties. He learned that some of the mining claims had been lost for nonpayment of fees, but could potentially be reclaimed. He learned some of the properties listed someone else as having a claim and operating on them. Vanacore was told that litigation might be available to return the Huckaby property taken in condemnation for the Auburn Dam, although Palmer considered such litigation a “long-shot.” Vanacore got conflicting information from the BLM and the counties on whether the Huckaby properties could be mined. Based on the information Vanacore obtained and Palmer’s assessment of Huckaby, his family and the amount Bracco obtained for essentially what was her half interest in the Huckaby properties, Palmer thought Huckaby’s claims were worthless.
Nevertheless, Palmer contacted several Teichert employees. He contacted Norman Lagomarsino, a retired engineer with Teichert, who set up a business lunch for Palmer with the senior vice president and chief financial officer of Teichert to get an idea of Teichert’s mind-set. Lagomarsino also set up a meeting between Palmer and Niam Roberts of Teichert. Roberts was able to review some of the maps of the Huckaby properties and give Palmer some insight into the necessary permitting processes for mining aggregate.
Palmer asked Mark McLoughlin, who also formerly worked at Teichert, to help him evaluate the Huckaby properties. McLoughlin reviewed the available documents and reports and did an inventory of the sites from such documentation. He determined five to 10 sites might be “viable,” by which he meant they may be worth purchasing for mining. However, the properties would not be worth anything as a mining operation without the required permits and such permits would usually take eight to 10 years to acquire.
Vanacore requested and obtained from Huckaby an extension of the due diligence period because of the difficulties encountered in investigating the Huckaby properties. Near the end of March, however, Huckaby told Franco the due diligence period had expired and Vanacore and Palmer were out of contract. Although Vanacore and Palmer were thereafter in almost daily contact with Franco, they were unsuccessful in contacting Huckaby, who refused to talk to anybody. A couple of months later, Huckaby wanted to get the deal going again. The parties were able to arrange a site visit to the Huckaby properties in late May 2003. The subject of Palmer and Vanacore being out of contract never came up during the site visit. The parties spent all day visiting several properties.
The results of the visits were mixed. The parties saw houses either located on some of Huckaby’s properties or very close to it. However, they also saw a Teichert aggregate plant and other property being mined in the area of Huckaby’s property.
Palmer next heard from Huckaby when Huckaby telephoned him requesting representation in possible criminal proceedings resulting from law enforcement’s seizure of marijuana plants Huckaby was growing based on medical prescriptions. Palmer declined.
Subsequently, on August 4, Huckaby called Palmer to request a meeting to finalize the parties’ business arrangements. The parties met on August 12, 2003, at a restaurant. Palmer presented for signature a number of business documents he had prepared. The meeting turned acrimonious, but in the end the parties signed, among other things, an addendum to the MOU. The addendum stated, in part, that Huckaby acknowledged Vanacore and Palmer had performed and that Huckaby had “received consideration in the form of valuable services and payments such that the terms of the binding MOU were met by [Palmer and Vanacore], such that MOU Paragraphs B.5 [the due diligence period] and B.7 [regarding access to information for investigation] no longer apply and the MOU is fully binding on [Huckaby].” According to Palmer, the addendum’s purpose was to make it clear that the parties were going through with their deal.
Huckaby failed to show up at Vanacore’s office the next day to sign the last of the documents prepared by Palmer and when he did finally come to the office, Huckaby expressed his desire to cut Franco out of his percentage of the deal. Vanacore told Huckaby to work it out with Franco.
On September 12, 2003, Huckaby wrote a letter rescinding the documents he signed on August 12. Palmer rejected Huckaby’s efforts to renegotiate the shareholder position of the parties. This litigation followed.
DISCUSSION
We treat the issues in a somewhat different order than presented by Huckaby.
I.
Judicial Disqualification
Acting as plaintiffs’ attorney, Palmer filed a “motion to compel specific performance” pursuant to Corporations Code section 419. When Palmer appeared at the initially scheduled hearing date, the trial judge (Judge James Wagoner) recognized Palmer. Judge Wagoner stated, “Well, I will disclose for the record that Mr. Palmer and I worked for many years at Bolling, Walter and Gothwrup [sic]. That will not affect my ability to handle this case. I didn’t see your name on the calendar until just now.” There was no appearance for Huckaby at that hearing, which was then continued for over a month.
Pointing to the judge’s comment, Huckaby now claims on appeal the trial judge was a “long-time professional crony” of Palmer, who was disqualified from this case under Code of Civil Procedure section 170.1, subdivision (a)(6)(A)(iii) (section 170.1(a)(6)(A)(iii)). Without providing any specific examples by citation to the record, Huckaby claims the judge’s “evident bias in favor of the plaintiff appears at every step of this proceeding, and has so infected it that reversal is required.” We disagree.
Section 170.1(a)(6)(A)(iii) provides that a judge is disqualified if “A person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial.” The standard for disqualification under this subdivision “‘“[i]s fundamentally an objective one.” If a reasonable member of the public at large, aware of all the facts, would fairly entertain doubts concerning the judge’s impartiality, disqualification is mandated. The existence of actual bias is not required.’ [Citations.]” (People v. Panah (2005) 35 Cal.4th 395, 446.) Neither the judge’s personal view of his own impartiality nor the litigants’ necessarily partisan views of bias provide the applicable frame of reference. (Leland Stanford Junior Univ. v. Superior Court (1985) 173 Cal.App.3d 403, 408.) Rather the question is how the judge’s participation in a given case “‘looks to the average person on the street.’ [Citations.]” (United Farm Workers of America v. Superior Court (1985) 170 Cal.App.3d 97, 104.)
The grounds for disqualification must be raised at the earliest practicable opportunity after the disqualifying facts are discovered. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 655-656, overruled on another ground in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68; Urias v. Harris Farms, Inc. (1991) 234 Cal.App.3d 415, 424-425.) The burden is on the party seeking judicial disqualification to establish the facts showing such disqualification existed. (Urias v. Harris Farms, Inc., supra, at p. 424.)
In this case, although neither party mentions it on appeal, the record reflects the trial judge not only disclosed his prior work relationship with Palmer at the pretrial hearing, but also disclosed it again during trial, during the testimony of Vanacore. Neither Huckaby nor his counsel followed up on the second disclosure to obtain any further details. No objection to the judge continuing to conduct the court trial was made. Huckaby never submitted a statement of disqualification pursuant to Code of Civil Procedure section 170.3, subdivision (c)(1). Huckaby raises the issue for the first time on appeal. By failing to raise the issue at the earliest practicable opportunity, Huckaby has forfeited his right to object to the trial judge’s qualification. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 838; see In re S.B. (2004) 32 Cal.4th 1287, 1293, fn. 2 [stating that the correct legal term for loss of right based on failure to assert it in a timely fashion is forfeiture, not waiver].)
However, even if we were to reach the merits of the issue, we would reject Huckaby’s claim of judicial disqualification. The average person on the street aware of the single fact that Judge Wagoner and Palmer were once both associate attorneys together at a law firm, that is, they were once coworkers/coemployees, would not reasonably or fairly entertain doubts about the judge’s impartiality. (People v. Panah, supra, 35 Cal.4th at p. 446; United Farm Workers of America v. Superior Court, supra, 170 Cal.App.3d at p. 104.) After all, coworkers may like or dislike each other; respect each other’s abilities or not. Simply being prior coworkers or coemployees does not suggest Judge Wagoner was biased in favor of Palmer.
II.
The Trial Court Had Jurisdiction To Set Aside Its March 2006 Judgment And Enter A New Judgment
The trial court filed a “ruling” on this case on February 14, 2006. In its ruling, the trial court found Huckaby had breached the MOU contract and his fiduciary duties to plaintiffs as minority shareholders. The trial court awarded damages to plaintiffs in the amount of $354,088 for such breaches. The trial court also found Huckaby had committed fraud in the inducement of the contract by making false representations to plaintiffs that “he would convey the property, his failure to mention the purported ‘gentlemen’s agreement with Teichert,’ and his assertion that the property was worth ‘millions and billions.’” The trial court found Huckaby’s fraud supported the award of damages as well as punitive damages. The court found the amount of $150,000 to be the appropriate amount of additional damages. Finally, the trial court found the equitable remedy of specific performance was appropriate and ordered Huckaby to transfer the Huckaby property to the Hines Gilbert Corporation and confirmed its previous order regarding the issuance of stock to plaintiffs.
In a later declaration, findings and order, the trial court asserted its “ruling” was not a statement of decision nor a tentative decision triggering the time to request a statement of decision under Code of Civil Procedure section 632. We disagree. Since the “ruling” contains the trial court’s determination of the issues tried in the case, the ruling was at least the trial court’s tentative decision. However, in light of the issues raised on appeal and our resolution of them, we find it unnecessary to consider the nature and timeliness of Huckaby’s objections to the ruling as a statement of decision.
On March 13, 2006, the trial court signed a “Judgment of Specific Performance” that awarded no damages to plaintiffs, but ordered Huckaby to issue 225,000 shares of Hines Gilbert stock to Palmer, to issue 225,000 shares of Hines Gilbert stock to Vanacore, and to transfer the property and mineral rights he owned at the time the contract was entered to the Hines Gilbert Corporation. The judgment does not indicate who prepared the judgment, but counsel for Huckaby served notice of entry of the judgment on March 23, 2006. Plaintiffs filed a motion for new trial or modification of the judgment, which Huckaby opposed.
On May 1, 2006, the trial court filed a “Declaration, Findings, and Order” (capitalization changed), in which the court made “its solemn declaration and findings . . . that the judgment signed on March 13, 2006 does not conform to the true judgment rendered by this court as evidenced by the court’s Ruling in this matter.” The trial court specifically found its entry of the March order was “a clerical error” in that the court had briefly reviewed the judgment and signed it not realizing that the judgment did not comport with the court’s February ruling. The trial court set aside the March 13 judgment and entered nunc pro tunc a new judgment consistent with its ruling. The trial court determined plaintiffs’ motion for new trial or modification of the judgment was moot in light of its action on the judgment.
On appeal, Huckaby claims the trial court was without jurisdiction to set aside the March 13 judgment it originally signed because plaintiffs’ motion for new trial or modification of judgment was not timely served and because the trial court’s entry of judgment did not qualify as a clerical error.
It is true “[o]nce judgment has been entered, . . . the court . . . loses its unrestricted power to change the judgment” and “may correct judicial error only through certain limited procedures such as motions for new trial and motions to vacate the judgment. [Citations.]” (Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1606.) This limitation, however, does not prevent the court from vacating a judgment to correct a clerical error. “Independently of statute a trial court has power to correct mistakes and to annul orders and judgments inadvertently or improvidently made.” (Bastajian v. Brown (1941) 19 Cal.2d 209, 214.) The question here is whether the trial court’s entry of the March 13 judgment was a clerical error.
“A clerical error in a judgment is an inadvertent one made by the court which cannot reasonably be attributed to the exercise of judicial consideration or discretion. [Citation.] ‘The test is simply whether the challenged judgment was made or entered inadvertently (clerical error) or advertently (judicial error).’ [Citation.]” (Bowden v. Green (1982) 128 Cal.App.3d 65, 71.) “The court’s inherent power to correct clerical errors includes errors made in the entry of the judgment or due to inadvertence of the court. ‘The term “clerical error” covers all errors, mistakes, or omissions which are not the result of the exercise of the judicial function. If an error, mistake, or omission is the result of inadvertence, but for which a different judgment would have been rendered, the error is clerical and the judgment may be corrected . . . .’ [Citation.] The signing of a judgment, which does not express the actual judicial intention of the court, is clerical rather than judicial error. [Citations.]” (Conservatorship of Tobias (1989) 208 Cal.App.3d 1031, 1035.)
Whether an error was clerical in nature is a matter for the trial court to determine (Bastajian v. Brown, supra, 19 Cal.2d at p. 215), and “great weight” is placed on the statement of the trial judge as to his or her intention in making the order. (Gill v. Epstein (1965) 62 Cal.2d 611, 615; Bowden v. Green, supra, 128 Cal.App.3d at pp. 71-72.) In this case, the trial court specifically found it signed the original March 13 judgment in clerical error. The March 13 original judgment was the result of inadvertence in that the court had failed to realize, when briefly reviewing the proffered judgment, it did not comport with the court’s February ruling.
Based on the trial court’s declaration and findings, we conclude the judgment was properly set aside by the trial court in the exercise of its authority to correct clerical error.
III.
Plaintiffs’ Motion To Compel The Issuance Of Stock Pursuant To Corporations Code Section 419
Huckaby contends the trial court erred in granting plaintiffs’ pretrial motion to compel the issuance of stock pursuant to Corporations Code section 419 (section 419). Huckaby claims both the motion was procedurally improper, since it did not comply with the requirements for a motion for summary judgment, and that it was unsupported by the evidence. Plaintiffs respond by claiming Huckaby has failed to support his claim by an adequate record on appeal, invited his own error by failing to appear at the two hearings on the motion, improperly raises a new inconsistent theory on appeal, and in any event, the shares were properly issued under subdivision (c) of section 419.
As noted before, the appropriate term for the loss of the right to raise an issue on appeal due to the failure to object in the trial court is actually “forfeiture.” (In re S.B., supra, 32 Cal.4th 1287, 1293, fn. 2.) “Invited error” is properly used to describe a form of estoppel when a party, by his or her affirmative conduct, induces the trial court to commit error. (See Redevelopment Agency v. City of Berkeley (1978) 80 Cal.App.3d 158, 166.) A failure to object is not “invited error.”
We need not resolve these issues as the trial court also directed the issuance of the shares to plaintiffs as part of its judgment granting specific performance of the contract and Huckaby does not challenge that portion of the judgment. Nevertheless, we feel compelled to make a few comments regarding plaintiffs’ motion to compel, which the trial court confirmed on plaintiffs’ subsequent motion in limine.
Section 419 authorizes a corporation to issue a new share certificate to replace any certificate alleged to have been “lost, stolen or destroyed[.]” (§ 419, subd. (a).) If the corporation refuses to issue a new certificate in such circumstances, section 419 authorizes the owner of the lost, stolen or destroyed certificate to “bring an action in the superior court . . . for an order requiring the corporation to issue a new certificate in place of the one lost, stolen or destroyed.” (§ 419, subd. (b), italics added.) “An action is an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.” (Code Civ. Proc., § 22.) Plaintiffs brought an action by filing a complaint alleging a cause of action under section 419. (Code Civ. Proc., § 350.) However, plaintiffs then sought to resolve the factual issues raised in the cause of action alleged under section 419 by a motion to compel the issuance of the shares. We are unaware of any such motion and find no authority in section 419 for such procedure.
In moving to compel the issuance of shares under section 419 by reference to extrinsic evidence, plaintiffs’ motion was akin to what used to be known as a “speaking motion.” A “speaking motion” is one supported by facts outside the pleadings, usually set forth in a declaration or affidavit. (Vesely v. Sager (1971) 5 Cal.3d 153, 167, fn. 4, statutorily overruled on another ground as stated in In re Jennings (2004) 34 Cal.4th 254, 269.) Such nonstatutory motions have long since been superseded by the procedures for summary judgment/summary adjudication set forth in Code of Civil Procedure section 437c. (Vesely v. Sager, supra, at pp. 167-168; Pianka v. State of California (1956) 46 Cal.2d 208, 211, statutorily overruled on another ground as stated in Levy v. Superior Court (1995) 10 Cal.4th 578, 585.) Because summary judgment/summary adjudication is a drastic remedy, the moving party is held to strict compliance with the procedural prerequisites. (Department of General Services v. Superior Court (1978) 85 Cal.App.3d 273, 284.) Plaintiffs’ motion to compel did not comply with the procedures governing summary adjudication of a cause of action. (See Code Civ. Proc., § 437c, subd. (f).)
It is axiomatic that a trial court’s function in ruling on a summary judgment/summary adjudication motion is not to decide the merits of the issues, but to determine whether such issues of fact exist. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107, superseded by statute on other grounds as stated in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854, fn. 19.)
In a further unorthodox move, plaintiffs subsequently filed a number of motions in limine seeking to exclude all evidence on particular causes of action or issues, including a motion in limine “to prevent the introduction of evidence or any legal argument that Plaintiffs are not the rightful owners of shares of stock in the Hines Gilbert . . . Corporation . . . as previously determined by [the trial court’s ruling on the motion to compel.]” The trial court granted the motion and reaffirmed its prior order on the motion to compel.
“A motion in limine is made to exclude evidence before the evidence is offered at trial, on grounds which would be sufficient to object to the evidence.” (3 Witkin, Cal. Evidence (4th ed. 2000) Presentation at Trial, § 368, p. 455.) That is, motions in limine seek to keep particular items of evidence from the jury. (Clemens v. American Warranty Corp. (1987) 193 Cal.App.3d 444, 451.) While not expressly authorized by statute, it is a motion within a trial court’s inherent power to entertain and grant. (Peat v. Superior Court (1988) 200 Cal.App.3d 272, 288; 3 Witkin, Cal. Evidence, supra, § 368, p. 455.) A motion in limine is not normally made to preclude all evidence, although such an irregular motion in limine might be considered in effect as a substitute for a general demurrer or motion for judgment on the pleadings. (Clemens v. American Warranty Corp., supra, at pp. 451-452.) However, a motion in limine is never an appropriate substitute for a motion for summary judgment or summary adjudication, which must be brought pursuant to Code of Civil Procedure section 437c. (See Vesely v. Sager, supra, 5 Cal.3d at pp. 167-168.)
Nevertheless, because Huckaby does not challenge the portion of the judgment awarding specific performance of the contract, including the issuance of the agreed amount of stock in the Hines Gilbert Corporation to plaintiffs, we need not further discuss the issues relating to the trial court’s grant of plaintiffs’ peculiar motions. There was no prejudice.
IV.
The Trial Court Improperly Awarded $354,088 Of Damages In Addition To Specific Performance For Huckaby’s Breach of Contract And Breach Of Fiduciary Duties
The trial court found the MOU was a valid and enforceable contract that Huckaby breached. In addition to ordering specific performance of the contract as a remedy for such breach, the trial court awarded damages in the amount of $354,088 calculated on the time and effort spent by Palmer and Vanacore to accomplish the requirements of the contract. The trial court further found Huckaby’s conduct as majority shareholder of the Hines Gilbert Corporation violated the fiduciary duties owed to the plaintiffs as minority shareholders and that such breach of fiduciary duties was also an appropriate basis for the same damage award. Huckaby does not challenge the trial court’s findings of breach of contract or breach of fiduciary duties on appeal. Huckaby contends, however, the trial court improperly awarded a double recovery for plaintiffs by ordering damages on the various theories and specific performance. We agree.
A review of the transcript of trial reflects the damages award was based on Palmer’s testimony regarding the hourly charges he and Vanacore would normally have received for reviving the Hines Gilbert Corporation, investigating the Huckaby properties, and drafting the various legal documents, including Bracco’s assignment of her rights to Huckaby, the various drafts of the MOU, the final MOU, the addendum, a draft stock purchase agreement, power of attorney, corporate resolutions and the start of a business plan, plus their out-of-pocket costs.
“In its ‘conventional form,’ the doctrine of election of remedies ‘is stated as follows: Where a person has two concurrent remedies to obtain relief on the same state of facts, and these remedies are inconsistent, he must choose or elect between them; and if he has clearly elected to proceed on one, he is bound by this election and cannot thereafter pursue the other. “Election of remedies has been defined to be the right to choose or the act of choosing between different actions or remedies where plaintiff has suffered one species of wrong from the act complained of. Broadly speaking, an election of remedies is the choice by a plaintiff to an action of one of two or more coexisting remedial rights, where several such rights arise out of the same facts, but the term has been generally limited to a choice by a party between inconsistent remedial rights, the assertion of one being necessarily repugnant to or a repudiation of the other.” [Citation.]’ [Citation.]” (Denevi v. LGCC (2004) 121 Cal.App.4th 1211, 1218.)
A breach of contract gives the aggrieved party such an election of remedies. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 853, p. 940.) The injured party “must elect to affirm the contract or to terminate it.” (3 Witkin, Cal. Procedure (4th ed. 1996) Actions, § 176, p. 246.) “Pursuant to that election of rights he may obtain appropriate remedies, such as specific performance based on affirmance, or damages or restitution based on termination.” (Ibid.) But not both. (Alder v. Drudis (1947) 30 Cal.2d 372, 383 [damages and restitution are inconsistent alternative remedies]; Buckmaster v. Bertram (1921) 186 Cal. 673, 678 [damages and specific performance are inconsistent alternative remedies].)
“A party should be entitled to change alternative remedies until satisfaction of judgment, or application of res judicata or estoppel, vindicates one of the inconsistent rights. [Citation.] The election of remedies doctrine states that accepting an actual benefit from an alternative theory that renders continued pursuit of the alternative unfair constitutes an election. [Citation.]” (Southern Christian Leadership Conference v. Al Malaikah Auditorium Co. (1991) 230 Cal.App.3d 207, 223.) Plaintiffs made such an election here.
Plaintiffs’ election of remedies is clearly evidenced by (1) their filing of the motion to compel issuance of stock and obtaining of a pretrial order directing Huckaby to issue to them share certificates in the Hines Gilbert Corporation, (2) their filing and obtaining the grant of a motion in limine restricting Huckaby’s ability to challenge at trial plaintiffs’ ownership of such stock, and (3) their filing of an amended complaint on the last day of trial to expressly include a request for specific performance of the MOU contract. The trial court granted specific performance confirming its prior order requiring Huckaby to issue plaintiffs the agreed amount of stock and ordering Huckaby to transfer the Huckaby properties to the Hines Gilbert Corporation for the benefit of its shareholders. Clearly, plaintiffs affirmed the contract and obtained the benefits to which they were entitled under the contract. They cannot also obtain damages, particularly where those damages represent the time and effort plaintiffs agreed to contribute without charge under the contract. In light of Huckaby’s breach, plaintiffs are entitled to be made whole, but they are not entitled to be made better off.
“Under general contract principles, when one party breaches a contract the other party ordinarily is entitled to damages sufficient to make that party ‘whole,’ that is, enough to place the nonbreaching party in the same position as if the breach had not occurred. [Citations.]” (Postal Instant Press, Inc. v. Sealy (1996) 43 Cal.App.4th 1704, 1708-1709.) Here damages and specific performance go beyond making plaintiffs whole.
Plaintiffs contend, however, the award of damages is appropriate based on the finding of breach of fiduciary duties. In the particular circumstances of this case, however, the damages award is an impermissible double recovery as a matter of law.
“A breach of fiduciary duty involves ‘the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.’ [Citation.]” (Daly v. Yessne (2005) 131 Cal.App.4th 52, 64.)
Here, a fiduciary relationship exists only by virtue of the MOU contract through which plaintiffs obtained shares in the Hines Gilbert Corporation in exchange for their services at no cost. Plaintiffs’ position that Huckaby breached his fiduciary duty, thus, rests on their affirmation of the contract which provided them their shareholder status.
Plaintiffs claim Huckaby breached his fiduciary duty to them when “(1) [Huckaby] attempted to improperly terminate his statutory obligations to [plaintiffs], ignored their requests and instructions, and pretended that the injured shareholders in this case did not exist and attempted to leave them in ‘corporate limbo’; (2) lied to the minority shareholders regarding the true status [of] the corporate assets in order to obtain thousands of dollars of funds and services from [plaintiffs]; and (3) refused to transfer the Huckaby Properties into Hines Gilbert, while attempting to sell the same assets to third parties for [Huckaby’s] sole personal benefit.”
We understand plaintiffs’ first claim of Huckaby’s breach of fiduciary duty to be a reference to Huckaby’s refusal to issue stock certificates to them as required by the contract. The judgment, however, requires Huckaby to issue such certificates to plaintiffs and plaintiffs have shown no damages from the delay in issuance of their share certificates. Rather plaintiffs seek to uphold the trial court’s award of damages for plaintiffs’ time and effort to accomplish the contract. This they cannot do. Plaintiffs agreed to expend such time and effort in exchange for their shares, which they have now been awarded.
Plaintiffs’ second claim of breach of fiduciary duty is based on Huckaby’s misrepresentations regarding the Huckaby properties “in order to obtain” plaintiffs’ services. This is another way of arguing plaintiffs’ claim of fraud in the inducement of the contract. It is not an argument supporting damages for breach of fiduciary duty, which as we have explained, rests on affirmation of the contract, which was essentially an agreement to provide shares in exchange for plaintiffs’ services. Again, plaintiffs have been awarded the agreed shares.
Plaintiffs’ final claim of breach of fiduciary duty rests on Huckaby’s failure to transfer the Huckaby properties into the Hines Gilbert Corporation and his attempts to sell such properties to third parties. The judgment, however, requires Huckaby to transfer the Huckaby properties to the corporation for the benefit of all shareholders and plaintiffs have shown no damages from Huckaby’s mere attempts to sell the properties to third parties. It is undisputed Huckaby never actually sold any of the Huckaby properties and it is all available to be transferred to the corporation.
In as much as plaintiffs showed no damages from Huckaby’s failure to issue the stock or transfer the properties as agreed, no damage award is appropriate at all and without an underlying damage award, there can be no punitive damages as we discuss post in relation to Huckaby’s challenge to the trial court’s award of damages for fraud.
We conclude the trial court’s award of $354,088 of damages for plaintiffs’ time and effort constitutes an impermissible double recovery in light of plaintiffs’ election of affirmation of the contract and the remedy of specific performance. We shall reverse the damages award.
V.
The Trial Court’s Finding Of Fraud Is Not Supported By Substantial Evidence; Reversal Is Required Of The Damages Awarded For Fraud, Including Punitive Damages
Huckaby contends the trial court’s finding that he committed fraud is without substantial support in the trial evidence. We agree.
Plaintiffs claim Huckaby is precluded from challenging the sufficiency of the trial court’s “fraud fact-finding” because he did not timely seek or move for a more definite statement of the trial court’s ruling. Huckaby is not challenging the sufficiency of the trial court’s “fraud fact-finding.” He is challenging the sufficiency of the evidence to support the trial court’s findings. A substantial evidence argument is not forfeited by a failure to raise the issue in the trial court. (People v. Saunders (1993) 5 Cal.4th 580, 602.)
We are mindful that “‘[i]n reviewing the evidence on . . . appeal all conflicts must be resolved in favor of the [prevailing party], and all legitimate and reasonable inferences indulged in to uphold the [finding] if possible. It is an elementary, but often overlooked principle of law, that when a [finding] is attacked as being unsupported, the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the [finding]. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court.’” (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571, quoting Crawford v. Southern Pac. Co. (1935) 3 Cal.2d 427, 429; see Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) “[T]his does not mean we must blindly seize any evidence in support of the respondent in order to affirm the judgment.” (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) Substantial evidence “‘must be of ponderable legal significance. Obviously the word cannot be deemed synonymous with “any” evidence. It must be reasonable . . ., credible, and of solid value . . . .” (Id. at p. 1633, quoting Estate of Teed (1952) 112 Cal.App.2d 638, 644.) And while we indulge in all legitimate and reasonable inferences, “‘[r]easonable’ inferences do not include those which are contrary to uncontradicted evidence of such a nature that reasonable people would not doubt it. [Citation.]” (Kuhn v. Department of General Services, supra, at p. 1633, fn. 4.)
The elements of fraud are (1) a misrepresentation or concealment of a material fact; (2) scienter or knowledge of the falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Molko v. Holy Spirit Assn., supra, 46 Cal.3d at p. 1108.)
The trial court’s ruling explains the basis for the trial court’s finding of fraud in the inducement of the contract. Specifically, the trial court found Huckaby made three false representations to plaintiffs concerning the transaction. First, Huckaby falsely represented he would convey the Huckaby properties. Second, Huckaby failed to mention his handshake agreement with Teichert. Third, Huckaby falsely asserted the properties were worth “millions and billions of dollars.”
Contrary to plaintiffs’ bizarre claim in their brief, a finding of fraud cannot be found based on the trial court’s finding that Huckaby’s trial testimony was incredible. To prove fraud, plaintiffs had to prove Huckaby made a false representation or concealment of material fact which plaintiffs justifiably relied upon in this business transaction to their detriment, not that he subsequently “lied” in his testimony at trial.
We consider this last representation first. It is true Palmer testified Huckaby told him and Vanacore when they met in late December 2002 that the Huckaby properties were worth millions and billions of dollars. However, the evidence shows that plaintiffs did not rely on Huckaby’s representation. Palmer testified, in the very same answer, that he was “far more skeptical” than Vanacore and “a lot more skeptical” than Huckaby about such claim of value. Palmer also testified he chose $100 as the figure for the purchase price to be paid Huckaby in the MOU he drafted based on the realization that the properties “might not be worth anything.” After the parties signed the MOU, Vanacore and Palmer conducted significant investigation of the properties during the extended due diligence period, which revealed at the very least that it might be quite difficult to realize profit from the sale of the properties. Palmer testified he thought Huckaby’s claims were “worthless” in light of the information they obtained. Nevertheless, Palmer and Vanacore continued to investigate the properties, apparently believing it was worth their gamble. Plaintiffs persisted in their efforts to proceed with the transaction even though Huckaby refused to return phone calls or otherwise respond to them for a couple of months and even after they had notice that Huckaby was potentially involved in a criminal investigation for drug activity. Plaintiffs went forward with the deal, preparing and signing the addendum to the MOU at the August 2003 meeting, making it clear, according to Palmer, that the parties were going through with their deal. This uncontradicted evidence establishes plaintiffs did not actually rely on Huckaby’s initial representation of value in entering into the MOU contract and in later affirming the contract after completion of their due diligence. Nor could they have reasonably relied on Huckaby’s representation in light of their own investigation, which clearly revealed the speculative nature of realizing profit from the Huckaby properties and the potential unreliability of Huckaby. Without actual, justifiable reliance on the representation, there was no fraud in the inducement.
Next we consider plaintiffs’ claim of fraud based on Huckaby’s failure to reveal his “handshake deal” with Teichert to the plaintiffs. Here the problem with the fraud finding is that the evidence indisputably shows there was no damage caused by Huckaby’s concealment of his purported agreement with Teichert. It is undisputed Huckaby never sold any of his properties to Teichert or any other third parties. The properties are all available to be transferred to the Hines Gilbert Corporation and the trial court has ordered such transfer as part of the remedy of specific performance. There is no evidence Teichert has submitted an offer to purchase any of the properties in reliance on any agreement with Huckaby. Any claim of damage from the possible future sale of some portion of the property to Teichert based on the handshake agreement is uncertain and pure conjecture.
Finally, we consider plaintiffs’ claim of fraud based on Huckaby’s false representation he would convey the Huckaby properties to the Hines Gilbert Corporation. Again, there is no evidence of resulting damages from such representation. The properties have not been sold or transferred, are available for transfer to the corporation, and Huckaby has been ordered to make such transfer.
We conclude there is no substantial evidence supporting the trial court’s finding of fraud in the inducement.
The trial court awarded $150,000 as additional damages for Huckaby’s fraud. Such figure includes some unspecified amount for punitive damages.
Punitive damages may only be awarded “[i]n an action for the breach of an obligation not arising from contract . . . .” (Civ. Code, § 3294, subd. (a).) “‘In the absence of an independent tort, punitive damages may not be awarded for breach of contract “even where the defendant’s conduct in breaching the contract was willful, fraudulent, or malicious.”’” (Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 61, quoting Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 516.) Because we shall reverse the judgment for fraud, we must also reverse the punitive damages award (whatever amount it may be within the trial court’s award of $150,000 of additional damages). (Cates, supra, 21 Cal.4th at p. 61.)
Based on these conclusions, we need not address Huckaby’s claims that the award for fraud is otherwise precluded and the punitive damages award is improper on other grounds. We shall reverse the award of additional damages for fraud, including punitive damages.
IV.
The Damages Portion Of The Judgment Cannot Be Affirmed Based On Conversion
The trial court, as the trier of fact in this case, found Huckaby breached the MOU contract, breached his fiduciary duties to plaintiffs as minority shareholders, and committed fraud in the inducement of the contract. The trial court did not find Huckaby had committed the tort of conversion. Plaintiffs, however, claim the damages portion of the judgment can be affirmed on the basis of conversion because the evidence establishes Huckaby’s conversion as a matter of law. Setting aside the question of the propriety of our substituting ourselves for the trier of fact, we disagree that a finding of conversion is compelled on the record.
Plaintiffs argue Huckaby’s “actions and failure to acknowledge [plaintiffs’] shareholders’ existance [sic] are deemed ‘conversion.’” Plaintiffs go on to explain that Huckaby’s attempt “to dishonor the stock he had already issued to the minority shareholders” was a conversion of “their ownership interests.” Huckaby’s “efforts to sell the only assets of the corporation to Teichert only heightened the illegal misconduct.”
Factually, this statement is completely at odds with both the evidence and plaintiffs’ motion to compel issuance of stock and request for specific performance requiring the issuance of stock. We construe the statement to be an argument that Huckaby’s failure to issue stock certificates amounted to conversion.
Again, this statement by plaintiffs is at odds with the evidence and plaintiffs’ claims. At trial, plaintiffs contended, and the evidence showed, Huckaby did not transfer his property to the Hines Gilbert Corporation as agreed. He tried to sell the property to Teichert. However, there was no evidence Huckaby tried to sell property that was already held by the Hines Gilbert Corporation, i.e., “assets of the corporation,” to Teichert. We construe plaintiffs’ statement to be an argument that Huckaby improperly tried to sell the property he had agreed to transfer to the corporation to Teichert.
A cause of action for conversion requires: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. (Oakdale Village Group v. Fong (1996) 43 Cal.App.4th 539, 543-544.)
Assuming the presence of the first two elements, plaintiffs failed to show evidence of any damages from Huckaby’s refusal to issue the stock certificates to plaintiffs or from his “handshake deal” with Teichert. Therefore, plaintiffs have not proven the tort of conversion.
DISPOSITION
The portion of the judgment awarding plaintiffs/respondents $504,088.00 in total damages is reversed. In all other respects, the judgment is affirmed. Costs on appeal are awarded to appellant. (Cal. Rules of Court, rule 8.278(a).)
We concur: BLEASE, Acting P.J., MORRISON, J.