Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County Super. Ct. No. BC292587., Michael L. Stern, Judge.
Law Offices of Roger C. Hsu and Vincent Chan for Defendant and Appellant.
Robert D. Feighner for Plaintiff and Respondent.
ASHMANN-GERST, J.
Appellant Philip Chiang (Philip) appeals the amended judgment entered in favor of respondent Am-Mark Label, Inc. (Am-Mark) on the following grounds: (1) There was insufficient evidence to establish constructive fraud based on breach of the fiduciary duty of disclosure owed by Philip’s brother, Solon Chiang (Solon), to his employer, Am-Mark; (2) the undisputed testimony established that Am-Mark knew that Solon was purchasing Am-Mark labels at a discount through three companies owned by Solon; (3) even if Solon breached his fiduciary duty, Philip cannot be held liable for conspiracy to breach a duty he did not owe; (4) if Philip is legally culpable, then the compensatory damages award of $689,915.92 is excessive because it is based on improper purchases of labels by all three of Solon’s companies, and Philip was only involved with one of those companies, and that company was responsible for only $10,930.30 in damages; and (5) the punitive damages award of $25,000 is not supported by substantial evidence of fraud that meets the clear and convincing standard of proof. According to Philip, we should direct entry of judgment in his favor.
We find no error and affirm.
FACTS
The first amended complaint
Am-Mark sued Philip, Solon, Jimmy Yip (Yip), National Label, Inc. (National Label), Woventex Company (Woventex), and Here & There International (Here & There) on a variety of theories. According to Am-Mark: Solon was one of its sales agents, and his job was to solicit the sale of labels to new and existing Am-Mark customers. Solon took Am-Mark’s business opportunities by selling Am-Mark labels to National Label, Woventex and Here & There at steep discounts. These were companies that Solon either secretly owned or secretly controlled. Solon and Philip were the general partners of Woventex. Philip conspired with Solon, Yip, National Label, Woventex, and Here & There to induce Solon to breach his employment contract with Am-Mark. Further, Philip converted Am-Mark’s labels, intentionally and negligently interfered with Am-Mark’s prospective economic advantage, and misappropriated Am-Mark’s trade secrets.
At trial, Am-Mark referred to “HNT” and Here & There as two separate entities. In its respondent’s brief, Am-Mark contends that there was a company called “HTI,” which was succeeded by Here & There. For purposes of this opinion, we will treat all these entities as Here & There even though, at some point, they may have been different.
The bench trial
Mel Liu
Mel Liu (Liu), Am-Mark’s general manager, controller and head of sales, testified about the damages caused by Philip, Solon, Woventex, Here & There and National Label. According to Liu: From 1993 to 2003, the average price per thousand labels sold by D.E. Enterprises (DE), Am-Mark’s in house sales department, was $21.28, which included sales to Here & There, Woventex and National Label. Excluding sales to those three entities, the average price per thousand was $21.97. From 1995 to 1998, DE sold 10,182,028 labels to Here & There for $161,553.99, at an average of $15.87 per thousand. From 1997 to 1999, DE sold 5,357,989 labels to Woventex for $106,796.46, at an average of $19.93 per thousand. From 1999 to 2003, DE sold 57,178,772 labels to National Label for $639,687.31, for an average of $11.19 per thousand. In sum, DE sold 72,718,789 labels to Here & There, Woventex and National Label for $908,037.76, an overall average of $12.49 per thousand. The differential between $21.97 and $12.49 is $9.49. To calculate the damages to Am-Mark due to improper sales to Here & There, Woventex and National Label, Liu multiplied the price differential ($9.49) by the number of labels that those three entities sold (72,718,789), which equals $689,915.92.
According to David Mei (Mei), an Am-Mark employee from 1993 to 1997: “[DE] was started because Sandra Ching [(Ching)], along with her father and . . . younger sister, [wanted] to set up a sales department for . . . sales. That’s why it was started.”
Liu joined Am-Mark in November 2002. Liu was asked: “To your knowledge, prior to [Solon] leaving the company in December 2002, were you ever informed by anyone at [Am-Mark] that [Solon] had an ownership interest in [Here & There].” Liu replied: “No.” He responded identically with respect to similar questions about Woventex and National label. According to Liu, DE’s sales to Anataeus Fashions, BCTC, Body Waves, Inc. and H. Pacifica dropped when Here & There began selling labels to them.
Philip contends that Liu “did not even work at Am-Mark until after this case had been filed, long after [Solon] had left.” We note that the complaint was filed on March 21, 2003, and at trial Liu was asked about his knowledge at Am-Mark starting in November 2002.
Nothing in Solon’s personnel file indicated that he owned Here & There, Woventex or National Label.
Philip
Philip testified that he was a partner of Woventex, but only because his wife was interested in “doing business.” His wife asked him to sign a fictitious business statement for Woventex, so he did. Woventex’s business address was Philip’s home address, but he did not know why. He also stated that he did not know what sort of business Woventex did, and that he never worked there. Philip identified Woventex check No. 0741. He agreed that it bore his signature, and it was made out to cash. Subsequently, he identified a $6,903 check he wrote to National Label, a $3,486 check he wrote to National Label, a $1,000 check he made out to cash (and his endorsement on that check), a $1,291.80 check he wrote to DE, a $1,159 check he wrote to DE, and a $782 check he wrote to DE. According to Philip, he signed all of the checks on one day, and at the time the payees were blank. When asked if he had any idea why he was signing all of those checks, he stated: “I don’t know.”
Philip testified that he did not remember why he received an $850 check from Woventex in April 2002. He identified a 1999 check for $2,000 made out to him from Woventex. He was asked what the check was for, and he explained that it was for his individual tax. Philip acknowledged receiving a $2,793 check from Woventex in 1998. Again, he said the check was for taxes. When questioned why Woventex was paying his taxes, he stated: “Because I have some documentation filed with my personal income tax, and with those information [sic], I will pay more tax. Tax. All I know is this.” Am-Mark’s attorney queried: “And for what reason were you receiving cash in [Woventex]? Because you were not employed by [Woventex].” Philip replied: “I don’t know.”
Philip denied knowing where Solon worked. It was Philip’s position at trial that his wife introduced customers to Solon, but Philip did not know what kind of product was involved.
Every time Philip was asked about when he met Yip, what Yip’s business was in the past and the present, and whether Yip got involved in the clothing label business with Solon, Philip stated “I don’t remember” or “I don’t know.” He said: “We don’t talk business.” The only thing that Philip knew was that his sister was married to Yip.
In Philip’s view, he was a partner in Woventex, but he did not own it. Only his brother, Solon, owned Woventex. After he was asked to explain what he meant when he said he was a partner, Philip stated that “[p]artner mean to me—it’s like party.” He added: “Or a like ball game. Ball players. Partner. . . . It’s like that. Like we play billiards.”
Gloria Woo
Gloria Woo (Woo), Am-Mark’s director of human resources, began working at Am-Mark in 1994. She testified that she did not know that while Solon was working for Am-Mark and DE as a sales person that he was simultaneously selling products for other entities.
Woo and Solon attended an October 29, 2002, meeting with Jim Hsu (Hsu) and Chris Ku (Ku) to discuss an unpaid balance by L.A. Maxwell, an Am-Mark customer. According to Woo, Solon admitted that he told L.A. Maxwell to order labels from National Label. And, at no time did Solon admit that he owned National Label, or that Yip owned National Label.
Solon
Solon testified that he was given an employee corrective action report after the October 29, 2002, meeting with Woo, Hsu and Ku. Solon resigned from Am-Mark and DE soon after.
Woo testified that Solon left DE on November 4, 2002.
According to Solon, he told Ching of his intent to start Woventex. He stated that he believed that people at DE knew that Woventex was his company because it was discussed at security meetings. But on cross-examination, the following colloquy took place:
“[Am-Mark’s counsel]: Did you ever tell anyone at Am-Mark or [DE] that you were part owner of [Woventex]? [¶] [Solon]: Yes. [¶] . . . [¶] [Am-Mark’s counsel]: I’d like to read from the deposition of [Solon] at page 128, line 16 through 18. [¶] . . . [¶] [Am-Mark’s counsel]: (Reading): [¶] ‘Question: Did you ever tell anyone at Am-Mark or [DE] that you were part owner of [Woventex]?’ [¶] ‘Answer: No.’”
Mei
Mei handled purchase orders at Am-Mark. He testified that those orders included purchase orders from Woventex. He further testified that Solon and Woventex were the same entity. Asked how he knew this, Mei explained: “Because . . . when there was a problem . . ., either from [DE] orders or Woventex orders, . . . [Solon] always had the answer for it.” Problems, like design problems, occurred daily. When Mei met with his boss, Ching, Mei reported issues involving Woventex and Solon “together.” Mei said that “just about every supervisor at Am-Mark knew” that Solon owned Woventex. Ching told Mei to call Solon to deal with Woventex “issues.”
The statement of decision
In the factual background in the statement of decision, the trial court averred that while Solon was working for DE, he had the authority to grant discounts up to 35 percent off list price without approval from Am-Mark. Beginning in 1994, Solon and his brother Philip set up secret entities to purchase Am-Mark labels at steep discounts and sell them to Am-Mark’s customers, or newly solicited customers. Further, Solon was paid commissions for those Am-Mark sales. Solon and his brother-in-law Yip set up Here & There and National Label. Solon and Philip set up Woventex by filing a fictitious business name statement on December 16, 1996. There was no evidence that Am-Mark knew of these activities.
The trial court found the defendants’ testimony “that they had no knowledge about the nature or operations of these entities was not convincing.” Further, Am-Mark “presented documentary evidence demonstrating participation by [Solon, Philip and Yip] in [Woventex, National Label and Here & There]. This includes checks to DE substantiating purchases by National Label for purchase and invoices for significant sales by DE to [Here & There], Woventex and National Label for a number of years between 1995 and 2002.”
In the statement of decision’s legal discussion, the trial court found that Solon breached his contractual and fiduciary duties to Am-Mark, and that he misappropriated its trade secrets. Though Am-Mark did not prove a conspiracy to induce breach of contract or conversion against Philip or the other defendants, it did prove that they committed fraud and intentionally and negligently interfered with Am-Mark’s prospective economic advantage. With respect to fraud, the trial court stated that Am-Mark established active concealment and nondisclosure by clear and convincing evidence.
The amended judgment
The trial court’s amended judgment awarded Am-Mark $689,915.92 in compensatory damages and $25,000 in punitive damages against each of the defendants, including Philip, jointly and severally.
This timely appeal followed.
STANDARD OF REVIEW
When reviewing a trier of fact’s factual findings, “‘“the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,” to support the findings below. [Citation.] We view the evidence most favorably to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor. [Citation.] Substantial evidence is evidence of ponderable legal significance, reasonable, credible and of solid value. [Citation.]’” (Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 366.)
DISCUSSION
Philip seeks reversal of the judgment based on the following assignments of error: (1) the trial court erred when it ignored direct evidence from two Am-Mark employees that it knew about Solon’s outside sales; (2) there is insufficient evidence to establish that Philip’s dealings with Woventex support liability against him for Solon’s alleged wrong-doings; (3) Philip cannot be held joint and severally liable for damages that have no relationship to his alleged wrong-doing; and (4) there is insufficient evidence to support the award of punitive damages.
We turn to these issues in the context of fraud, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, damages and punitive damages.
1. Fraud.
Philip avers that he cannot be held liable for fraud because there was insufficient evidence that he and Solon concealed Solon’s relationship with Woventex from Am-Mark and DE. We do not concur.
a. The law.
In general, to prove a fraud based on concealment, a plaintiff must demonstrate: (1) the defendant concealed or suppressed a material fact, (2) the defendant had a duty to disclose the fact to the plaintiff, (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained damage. (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 131 (Linear).) Linear is consistent with Civil Code section 1710, subdivision (3), which provides that deceit includes “[t]he suppression of a fact, by one who is bound to disclose it.”
b. Waiver.
Philip contends that the judgment is not supported by substantial evidence. His statement of facts, however, is devoid of reference to the Woventex checks he signed and the money he received from Woventex. Also, Philip did not summarize the testimony of either Liu or Woo, nor did he advert to the reading of the portion of Solon’s deposition wherein he conceded that he never told anybody at Am-Mark that he was a part owner of Woventex. Compounding this omission, Philip did not advert to any of this evidence in the discussion portion of his opening brief.
When an appellant challenges a trial court’s factual findings, he is “‘required to set forth in [his] brief all the material evidence on the point and not merely [his] own evidence.’ [Citations.] An appellant’s failure to state all of the evidence fairly in [his] brief waives the alleged error. [Citation.]” (County of Solano v. Vallejo Redevelopment Agency (1999) 75 Cal.App.4th 1262, 1274.) Given Philip’s failure to fairly present the facts, this rule of forfeiture is applicable. Our analysis could end here. We continue on with our analysis, but the endeavor is academic.
c. Evidence of concealment.
Woo testified that she did not know that Solon owned Woventex. But she was merely the director of human resources. There was no direct evidence of what anyone else at Am-Mark knew during Solon’s tenure. Woo did not, for example, testify as to what Ching knew. Philip complains that Ching and Hsu did not testify, and that the trial judge ignored testimony from Mei and Solon that the principals at Am-Mark and DE knew that Solon owned Woventex.
The trial court’s course of action cannot be condemned as a matter of practice blind to its function as the arbiter of credibility. (Ortzman v. Van Der Waal (1952) 114 Cal.App.2d 167, 170–171.) “‘[A] judgment may be supported by inference, but the inference must be a reasonable conclusion from the evidence and cannot be based upon suspicion, imagination, speculation, surmise, conjecture or guesswork. [Citation.] Thus, an inference cannot stand if it is unreasonable when viewed in light of the whole record. [Citation.] And although an appellate court will normally defer to the trier of fact’s drawing of inferences, it has been said: “To these well settled rules there is a common sense limited exception which is aimed at preventing the trier of the facts from running away with the case. This limited exception is that the trier of the facts may not indulge in the inference when that inference is rebutted by clear, positive and uncontradicted evidence of such a nature that it is not subject to doubt in the minds of reasonable men. The trier of the facts may not believe impossibilities.” [Citations.]’ [Citation.]” (McRae v. Department of Corrections and Rehabilitation (2006) 142 Cal.App.4th 377, 389–390.) The Evidence Code put it another, more succinct way: “An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established in the action.” (Evid. Code, § 600, subd. (b).)
Taking the record in its current repose, we conclude that the trial court’s resolution of the concealment issue was anything but arbitrary. Presumably, if Am-Mark and DE principals knew about Solon and Woventex, then Woo, who was a director, would have known. Also, it is likely that his activities would have been noted in his personnel file, and that the new manager, Liu, would have been told about Solon when Liu joined Am-Mark in November 2002. Though Solon testified that Am-Mark’s principals knew he owned Woventex because he told Ching he intended to start Woventex, and because it was discussed at security meetings, he was impeached when he said that he told people at Am-Mark that he was a part owner of Woventex. In his deposition, he stated that he did not tell anyone. That impeachment evidence suggested that he never informed his employer of his activities. And it begs credulity to suggest that Am-Mark and DE would accept Solon’s divided loyalties, especially when the effect was to deprive them of profits and the opportunity to grow and cultivate new clients. Further, Philip filed the fictitious business statement for Woventex, a business entity that concealed Solon’s actions. Thus, the logical and reasonable inferences from the facts suggested that Solon actively concealed his self-dealing, and that Philip helped. We note that “[i]n analyzing the testimony to determine whether there is sufficient evidence to support a particular finding, an ‘appellate court must accept as established all facts and all inferences favorable to respondent which find substantial support in the evidence.’ [Citation.]” (Oldenburg v. Sears, Roebuck & Co. (1957) 152 Cal.App.2d 733, 742.) Thus, we must uphold the trial court’s reasonable finding.
Last, Philip tries to nullify the concealment finding by adverting to the law of the “negative pregnant,” which is an aspect of our jurisprudence that is more esoteric than most. What is a negative pregnant?
Because Mr. Witkin has traversed this ground with respect to pleadings, we take shelter in his words as a springboard for our understanding. A negative pregnant in an answer to a complaint is “a denial that is ‘pregnant with an implied admission.’” (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 995, pp. 451–452.) Mr. Witkin gave the following example: “Thus, in Janeway & Carpender v. Long Beach Paper & Paint Co. (1922) 190 [Cal.] 150, 153 . . ., the allegation that defendant ‘made, executed and delivered its contract for goods to the plaintiff’ was denied in the same words. The court said: ‘Defendant may have “executed and delivered” them, or it may have “made and executed” them, and the denial would be true, and yet the defendant would be liable. By connecting the words together with the conjunction “and” it has limited its denial to a simple statement that it did not do all three of the things, leaving an admission that it did any two of them. It amounts to an admission that it executed the contract, which is all that is necessary to make it liable thereon.’ [Citations.]” (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 998, p. 454.)
Negative pregnant analysis has been applied to findings of fact. If a trial court issues a finding that “it is untrue that the defendant defamed and defrauded the plaintiff,” there is a possibility that the defendant committed defamation but not fraud, or that the defendant committed fraud but not defamation. In some early cases, a negative pregnant in a material finding of fact rendered the finding insufficient. (Johndrow v. Thomas (1947) 31 Cal.2d 202, 208 (Johndrow).) Following the rule of liberal construction of findings to support a judgment, however, Johndrow held that “the appropriate rule should be that the sufficiency of findings turns upon the particular case and that there is no absolute rule regarding negatives pregnant, which at best is nothing more than a rule of construction.” (Id. at p. 209.)
The analytical stage thus set, our task is to examine express findings of fact that contain a negative pregnant. But the stage is devoid of players. Philip’s appellate briefs do not advert to any findings in either the statement of decision or in the reporter’s transcript that contain a negative pregnant. We easily conclude that this argument lacks support or merit.
d. Breach of Solon’s fiduciary duty to disclose.
From Philip’s perspective, the lynchpin of this appeal is whether he can be held liable for Solon’s breach of fiduciary duty as a conspirator. We disagree. Philip’s liability, as we shall discuss, is tethered to his participation in a different species of fraud: active concealment. Even though Philip cannot be held liable for conspiring to breach Solon’s fiduciary duty, Philip can be held liable for conspiring to conceal material facts from Am-Mark. Nonetheless, we elucidate the conspiracy issue as it relates to breach of fiduciary duty in order to distinguish it from the conspiracy issue as it relates to active concealment.
(1) The law.
Even if a defendant was not the perpetrator of a tort, the defendant can be held liable if he or she was a conspirator. “‘The elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act or acts done in furtherance of the common design. . . . In such an action the major significance of the conspiracy lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity. [Citations.]’ [Citations.]” (Doctors’ Co. v. Superior Court (1989) 49 Cal.3d 39, 44 (Doctors’).)
As is often true, there is an exception. “By its nature, tort liability arising from conspiracy presupposes that the coconspirator is legally capable of committing the tort, i.e., that he or she owes a duty to plaintiff recognized by law and is potentially subject to liability for breach of that duty.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511 (Applied).) For example, a defendant is not subject to conspiracy liability for constructive fraud based on a breach of a fiduciary duty of disclosure that was owed to the plaintiff only by a codefendant. (Doctors’, supra, 49 Cal.3d at p. 48, citing and summarizing Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 516–517 with approval.)
(2) Philip cannot be held liable for Solon’s breach of fiduciary duty.
The parties dispute whether Philip can be held liable for Solon’s breach of fiduciary duty of disclosure. Rightfully, Philip cites Doctors’ as the controlling law. Applying Doctors’, Philip cannot be held liable as a coconspirator for Solon’s constructive fraud because, as Doctors’ stated, “[a] cause of action for civil conspiracy may not arise . . . if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party who did have that duty.” (Doctors’, supra, 49 Cal.3d at p. 44.)
To defeat our Supreme Court’s holdings in Doctors’ and Applied, Am-Mark cites Certified Grocers of California, Ltd. v. San Gabriel Valley Bank (1983) 150 Cal.App.3d 281 (Certified Grocers), which stated: “[A] person not himself a fiduciary may be liable for breach of a fiduciary duty as a result of colluding with a disloyal fiduciary.” (Id. at p. 289.) The problem with Am-Mark’s reliance on Certified Grocers is twofold. First, it is axiomatic that we cannot ignore Doctors’ and Applied; they are binding precedents. Second, in our view, Certified Grocers is distinguishable, and it did not accurately state the law. It involved a conspiracy to convert money from a payroll account and it cited Gray v. Sutherland (1954) 124 Cal.App.2d 280, 290 (Gray) for the proposition that a person can be held liable for breach of fiduciary duty even if that person did not owe a fiduciary duty. Gray does not support that broad proposition. The coconspirators in Gray both owed the plaintiff a fiduciary duty and breached that duty. Further, as in Certified Grocers, the wrong involved the conversion of a sum certain of money. Gray did state that the defendant could be liable for breach of fiduciary duty by colluding with a disloyal fiduciary without being a fiduciary himself. But this was a narrow statement tailored to the court’s citation to Restatement of Restitution, section 138. That section stated: “(1) A fiduciary who has acquired a benefit by a breach of his duty as fiduciary is under a duty of restitution to the beneficiary. [¶] (2) A third person who has colluded with a fiduciary in committing a breach of duty, and who obtained a benefit therefrom, is under a duty of restitution to the beneficiary.” (Rest., Restitution, § 138.) The case at bar does not involve restitution.
e. Active concealment.
The trial court ruled that Philip could be held liable for active concealment. In our view, this was correct.
A defendant in a fraud action has a duty to disclose to the plaintiff if: (1) the defendant has a fiduciary relationship with the plaintiff; (2) the defendant had exclusive knowledge of material facts that are not known to the plaintiff; (3) the defendant actively concealed a material fact from the plaintiff; or (4) the defendant made partial representations and suppressed material facts. (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336 (LiMandri).)
LiMandri demonstrates that a duty to disclose does not always depend upon a preexisting fiduciary duty. Thus, even if Philip did not owe Am-Mark a fiduciary duty, he could have acquired a duty to disclose if he perpetrated, or conspired to perpetrate, the last three types of fraud LiMandri listed.
Active concealment occurs when a defendant prevents the discovery of material facts. (5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 798, p. 1155.) Solon actively prevented the discovery of his self-dealing by owning Woventex so that Woventex instead of him would be the ostensible buyer of discounted Am-Mark labels. Philip participated in the active concealment by filing a fictitious business name statement for Woventex, and by writing checks on Woventex’s behalf, all of which concealed that Solon was a principal. The exception in Doctors’ and Applied is not implicated because Philip was legally able to commit the tort of active concealment of material facts from Am-Mark.
2. Intentional and negligent interference with prospective economic advantage.
Philip contends that Am-Mark’s claims for intentional and negligent interference with prospective economic advantage must fail because there is no evidence of a legal wrong separate from the interference. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392–393.) But this argument is premised on the contention that Philip cannot be held liable for Solon’s fraud. Because the premise is faulty, as we have shown, this argument is unavailing.
3. Damages.
According to Philip, he cannot be held liable for wrongful conduct related to Here & There and National Label because he had no connection to them.
Philip contends that, at most, he can be held liable for $10,930.30, which represents the money Am-Mark lost by selling labels to Woventex for an average price per thousand of $19.93.
We disagree.
No direct evidence ties Philip to Here & There. However, the reasonable inference from the evidence is that Solon successively used Here & There, Woventex and National Label to hide his scheme. In other words, the purchase of labels by those companies was a continuing conspiracy. When a conspirator joins a continuing conspiracy, he is liable for all the damages caused by the conspiracy, not just the damages that occurred after he joined. (DeVries v. Brumback (1960) 53 Cal.2d 643, 650 (DeVries) [“In tort ‘the major significance of the conspiracy lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity’”].) By joining a continuing conspiracy to commit active concealment, Philip rendered himself liable for all its damages, including the damages caused by Here & There.
Philip is liable for National Label’s sales, and not just based on the general rule of liability set forth in DeVries. He is liable because there is evidence of his active participation and profit from those sales. Philip wrote checks to National Label, and he received money from Woventex in April 2002, which was during the time National Label purchased labels from DE from 1999 to 2003. The inference is that he assisted National Label in furtherance of the conspiracy, and he continued to profit even after Woventex’s last purchase.
Last, it is worth highlighting that Woventex, which was established through a fictitious business name filing by Philip, helped the conspirator’s avoid scrutiny of the improper sales. Stated more colloquially, label purchases by different entities helped the conspirators work a shell game with their improper activity. Philip played an active role in actualizing that shell game.
4. Punitive damages.
To affirm a punitive damages award based on a trial court’s finding of fraud under Civil Code section 3294, an appellate court must find that fraud was established by substantial evidence that meets the clear and convincing standard of proof. (Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 605–606.) Under this standard, the evidence must be so clear as to leave no substantial doubt; it must be sufficiently strong to command the unhesitating assent of every reasonable mind. (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 332.)
Once again, we conclude that Philip waived his argument by not presenting the adverse facts for our consideration.
In any event, the standard was met. There is no substantial doubt that Am-Mark was unaware of Solon’s self-dealing. Every reasonable mind would agree that if a company such as Am-Mark knew that one of its employees was draining its profits and business opportunities, it would take immediate, corrective action. Am-Mark never did so; undoubtedly, it was in the dark. Further, the evidence establishes that Philip was instrumental in the concealment of Solon’s activities. Philip filed the fictitious business name statement for Woventex, and he signed Woventex’s checks, which kept Solon’s involvement a secret.
Philip complains that even if the undisputed testimony of Solon and Mei is rejected, it only leaves a negative inference regarding Am-Mark’s lack of knowledge about Solon’s activities. According to Philip, this negative inference does not meet either the preponderance of the evidence standard, or the higher standard. That may be true, but as we have pointed out, the award of punitive damages is supported by other inferences, which ends our inquiry. And it bears reiterating that Solon was impeached by his own deposition testimony. Thus, it is unavailing for Philip to suggest that Solon’s testimony was undisputed.
DISPOSITION
The judgment is affirmed.
Am-Mark shall recover its costs on appeal.
We concur: BOREN, P. J. DOI TODD, J.