Opinion
C096837
06-25-2024
CHAMP SYSTEMS, INC., Plaintiff and Appellant, v. STEWART FINES, Defendant and Appellant.
NOT TO BE PUBLISHED
Super. Ct. No. 34-2016-00189229-CU-IP-GDS
EARL, P. J.While Stewart Fines was employed by Champ Systems, Inc. (CSI), he used his knowledge of CSI's confidential customer list to solicit the business of CSI customers for his own new business. CSI sued Fines for, inter alia, breach of a nondisclosure and confidentiality agreement, as well as misappropriation of a trade secret. Following a bench trial, the trial court found in favor of CSI on the trade secret misappropriation claim and awarded damages accordingly but found some of CSI's other claims displaced by California's Uniform Trade Secrets Act. On appeal, CSI challenges the trial court's rulings. We affirm.
BACKGROUND
CSI is a corporation that offers, among other services, information technology (IT) services to companies that prefer to outsource the management of their IT network. In November 2007, CSI hired Fines as a technical services consultant. When Fines began his employment, he signed a nondisclosure and confidentiality agreement. In signing this agreement, Fines promised to refrain from using trade secrets "in any way . . . except as required in the course of being associated with CSI." Fines also promised not to compete with CSI by "offering goods or services to CSI clients that is not billed through CSI." Finally, Fines promised that for a period of one year following the termination of his employment by CSI, he would not "call on, solicit, take away . . . any of the clients of CSI on whom the Employee has called or with whom the Employee has become acquainted during the Employee's association with CSI, either for the Employee or for any other person, firm, or corporation."
Fines was employed by CSI for over five years. During this time, he was assigned to eight accounts. Fines ended his employment with CSI on February 28, 2013.
In February 2013, while still working for CSI, Fines approached CSI customer Medical Vision Technology (MVT) with a marketing document for his own company, which Fines was in the process of forming. On February 12, 2013, MVT discontinued its service contract with CSI, effective the end of the month. Fines later represented to CSI that MVT informed him that it would be using an IT service from an affiliated hospital. Fines thereafter admitted that he intentionally deceived CSI with that statement. In reality, MVT moved directly from CSI to Fines' new business, My IT Bud. On February 18, 2013, Fines submitted an invoice from My IT Bud to MVT for IT services.
Fines admitted that he had identified some additional customers of CSI with whom he had a good relationship and whose business he hoped to obtain, and had a plan to solicit them. He unsuccessfully solicited one of these additional customers, Viking Construction Company, in late February, while he was still employed by CSI. After his employment with CSI ended, he successfully solicited four additional CSI customers: Municipal Maintenance Equipment (MME), SGLC, Inc., Gateway Pacific Contractors (Gateway), and Corfee Stone and Associates (Corfee). The five former CSI customers were out of the eight customers Fines assisted while employed by CSI.
CSI filed a second amended complaint against Fines alleging: (1) misappropriation of trade secrets in violation of California's Uniform Trade Secrets Act (CUTSA) (Civ. Code, § 3426 et seq.); (2) breach of duty of loyalty; (3) breach of contract; (4) intentional interference with contractual relationship; and (5) intentional interference with prospective economic advantage. As a sixth cause of action, CSI requested injunctive relief.
On March 18, 2022, following a bench trial and posttrial briefing, the court filed a tentative decision. CSI filed its "Statement of Controverted Issues (Objections) to Tentative Decision; Request for Statement of Decision, Proposals for Inclusion in the Statement of Decision, and Offer to Prepare Statement of Decision" on April 4, 2022. On May 13, 2022, the court filed its proposed statement of decision. In response, CSI filed a more-than-100-page "Objection to Statement of Decision," listing numerous disagreements. On June 28, 2022, the court finalized its statement of decision. In the final statement, the court addressed CSI's many objections, explaining CSI "improperly seek[s] to reargue the merits of the court's decision or request written findings of fact or conclusions of law." Thus, the court adopted its tentative ruling as its final statement of decision in this case.
The court ruled in favor of CSI on almost all claims. It found that CSI's customer list qualified as a trade secret and that Fines misappropriated the trade secret by using his knowledge of CSI's customer list to direct marketing efforts for his new business in a manner that Fines could not have done without using the trade secret information.Further, by soliciting business from CSI's customers while he was still employed with CSI, Fines breached his duty of loyalty to CSI. In referencing the third cause of action for breach of contract in its statement of decision, the trial court noted that "the confidentiality agreement prohibits recruiting CSI clients within one year from termination. To the extent Fines used confidential information for the purpose of engaging in a lawful business, the enforceability of this agreement ceased at the conclusion of employment. (Bus. &Prof. Code, § 16600.)" The court found that "CSI cannot prevail on this claim as the agreement was unenforceable." The trial court rejected CSI's fourth and fifth causes of action, finding that both the intentional interference with contractual relationship and intentional interference with prospective economic advantage claims were preempted by CUTSA. The court reasoned that those causes of action were based on Fines' use of CSI's customer list and confidential information to encourage CSI's customers to use his IT company instead of CSI, which are the same facts that gave rise to CSI's claim for misappropriation of trade secrets.
The parties do not dispute these rulings. (See Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1523-1524 [holding that customer lists can constitute a trade secret, and the unlawful use of trade secrets to solicit those customers constitutes misappropriation of a trade secret].)
We discuss the trial court's award of damages below.
CSI filed a notice of appeal. Fines filed a notice of cross-appeal.
Fines did not file an opening brief in his cross-appeal.
DISCUSSION
I
Breach of Contract
In its third cause of action, CSI alleged that Fines breached the confidentiality agreement he signed when hired by CSI by competing with CSI while he was still employed by the company. On appeal, CSI argues both that the court erred by failing to rule on this cause of action and that given the court's ruling in its favor as to the breach of loyalty claim, the court also implicitly found that Fines breached the confidentiality agreement while employed by CSI. CSI challenges the sufficiency of the trial court's statement of decision, arguing that the court's failure to specifically rule on the breach of contract claim-even when CSI brought this omission to the court's attention-violated the mandate of Code of Civil Procedure section 632 to provide a legal and factual basis for each principal controverted issue. Fines responds that the statement of decision was sufficient and argues that the trial court properly found that the entire confidentiality agreement was void because it restricted his ability to engage in trade.
We conclude the trial court's statement of decision was sufficient to constitute a denial on the breach of contract claim, which we further determine was error. However, we determine that no prejudice arose from this error and that the award of damages is not impacted by our decision.
A. Additional Background
The confidentiality agreement signed by Fines stated, in relevant part: "While associated with CSI, the Employee shall not, directly or indirectly, either as an employee, employer, consultant . . . or in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of CSI. [¶] Competition would be defined as offering goods or services to CSI clients that is not billed through CSI." The agreement also stated: "For a period of one (1) year immediately following the termination of the Employee's association with CSI, the Employee shall not directly or indirectly make known to any person, firm or corporation the names or addresses of any of the clients of CSI or . . . attempt to call on, solicit, or take away any of the clients of CSI on whom the Employee has called or with whom the Employee has become acquainted during the Employee's association with CSI ...." Fines signed this agreement on November 29, 2007.
In its second cause of action, CSI alleged, in part, that Fines breached his duty of loyalty by competing for the business of CSI's customers while Fines was still employed at CSI. In its third cause of action, CSI alleged that Fines breached his contract when he violated his confidentiality agreement and engaged in competition with CSI by offering his own goods or services to CSI's customers while still employed by CSI.
The evidence at trial demonstrated that while still working at CSI, Fines approached one of CSI's customers and attempted, albeit unsuccessfully, to solicit its business. Fines also submitted a marketing document designed to entice a different customer, MVT, to hire Fines' personal IT business, My IT Bud. After MVT terminated its service contract with CSI, Fines sent MVT an invoice from My IT Bud, dated February 18, 2013, payable by February 28, 2013, apparently for services to begin in March 2013. A printout of payments made by MVT to My IT Bud shows the first payment was made March 7, 2013, for the same amount as requested in the February 18th invoice.
Noting that an employee owes" 'a duty of loyalty' toward his or her employer at least during the term of employment (Fowler v. Varian Associates, Inc. (1987) 196 Cal.App.3d 34, 41)," the court found "Fines solicited CSI's customers while still employed by CSI, thereby breaching the duty of loyalty." The court further held Fines "did not breach this duty after his employment ended."
The court then addressed the breach of contract claim. It noted that the confidentiality agreement prohibited recruiting CSI customers within one year from termination. The court then ruled: "To the extent Fines used confidential information for the purpose of engaging in a lawful business, the enforceability of this agreement ceased at the conclusion of employment (Bus. &Prof. Code, § 16600.) Here, Fines used the information to further his own business. Thus, CSI cannot prevail on this claim as the agreement was unenforceable." Thus, the trial court denied this claim, determining that the confidentiality agreement was unenforceable under Business &Professions Code section 16600.
B. Analysis
In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. (Cuiellette v. City of Los Angeles (2011) 194 Cal.App.4th 757, 765.) We apply a substantial evidence standard of review to the trial court's findings of fact. (Niko v. Foreman (2006) 144 Cal.App.4th 344, 364.) Under this deferential standard of review, findings of fact (express or implied) are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)
While not a model of clarity, the statement of decision was sufficient to resolve the controverted issues at trial, including the breach of contract claim.
Under Code of Civil Procedure section 632, upon a party's request after a court trial, the court must issue a statement of decision "explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial." (Code Civ. Proc., § 632.) "And under [Code of Civil Procedure] section 634, if the statement of decision does not resolve a controverted issue or is ambiguous, and the omission or ambiguity was brought to the attention of the trial court, 'it shall not be inferred on appeal . . . that the trial court decided in favor of the prevailing party as to those facts or on that issue.'" (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981; see also In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133-1134.) CSI claims that the trial court's statement of decision reflects either a failure to rule on the breach of contract claim or an implicit ruling in CSI's favor. We disagree and conclude the trial court denied the claim.
Here, the court's statement of decision regarding the breach of contract claim recognized the confidentiality agreement prohibited employees from recruiting CSI clients within one year postemployment. The court then distinguished between Fines' conduct during employment and postemployment. Regarding Fines' conduct postemployment, the trial court concluded the enforceability of the confidentiality agreement had ended. The court then went on to conclude that because Fines used confidential information to further his own business, the agreement was equally unenforceable as applied to conduct during employment. We conclude the trial court, referencing Business and Professions Code section 16600, found the entire confidentiality agreement invalid.
Business and Professions Code section 16600 provides that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." (Bus. &Prof. Code, § 16600.) Our Supreme Court has strictly interpreted this statute in the context of noncompetition agreements following the termination of employment (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1159), and has held that "[Business and Professions Code] section 16600 prohibits employee noncompetition agreements unless the agreement falls within a statutory exception," none of which are applicable here. (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 942.)
To the extent the trial court relied on Business and Professions Code section 16600 to determine that the confidentiality agreement was unenforceable as to Fines' conduct during the time he was employed by CSI, we conclude the trial court erred. "Business and Professions Code section 16600 has consistently been interpreted as invalidating any employment agreement that unreasonably interferes with an employee's ability to compete with an employer after his or her employment ends. (See Muggill v. Reuben H. Donnelley Corp. (1965) 62 Cal.2d 239, 242.) However, the statute does not affect limitations on an employee's conduct or duties while employed." (Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 509 (Angelica).) "While California law does permit an employee to seek other employment and even to make some 'preparations to compete' before resigning [citation], California law does not authorize an employee to transfer his loyalty to a competitor. During the term of employment, an employer is entitled to its employees' 'undivided loyalty.' [Citation.]" (Fowler v. Varian Associates, Inc., supra, 196 Cal.App.3d at p. 41.)
We conclude, however, that reversal is not required because it is not reasonably probable the outcome (i.e., damages) would have been more favorable to CSI absent the error. (See People v. Watson (1956) 46 Cal.2d 818, 836; Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 801 [Watson standard applies to civil trial errors occurring under California law].) CSI does not argue that, had the court ruled in its favor on the breach of contract claim, it would have received a more favorable judgment regarding damages.
Indeed, CSI's alternative argument was that the court implicitly ruled in favor of CSI on the breach of contract claim.
Notwithstanding the trial court's error in its legal conclusion, the factual findings underpinning Fines' liability remain undisturbed and are supported by substantial evidence. There is no dispute about whether Fines misappropriated the client list and used it to compete with CSI during and after his employment. Fines is liable to CSI as a result of his malfeasance. Although damages are discussed in greater detail below, we see no basis, nor does CSI provide us with any, for the award of additional or different damages as a result of the trial court's erroneous legal conclusion.
II
CUTSA
We next discuss whether, and to what extent, CUTSA displaces CSI's nonstatutory claims. For its part, CSI contends none of them are impacted by CUTSA, specifically the following: breach of contract (third cause of action); breach of duty of loyalty (second cause of action); intentional interference with contractual relationship (fourth cause of action); and intentional interference with prospective economic advantage (fifth cause of action). In response, Fines asserts that these arguments fail because CSI has "failed to provide any legal or factual basis to show that its claim for trade secret violations related to the identified client list could be brought under any non-contract theory." We conclude the trial court did not err in concluding the fourth and fifth causes of action are displaced by CUTSA.
A. Relevant Law
Prior to the enactment of CUTSA in 1984 (Civ. Code, § 3426 et seq.), California followed the broad approach of the Restatement of Torts in defining a trade secret. Through CUTSA, the Legislature codified and expanded the common law definition of" '[t]rade secret,'" which consists of three elements: (a) information, (b) which is valuable because unknown to others, and (c) which the owner has attempted to keep secret. (Civ. Code, § 3426.1, subd. (d); ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 18; cf. Ungar Electric Tools, Inc. v. Sid Ungar Co., Inc. (1961) 192 Cal.App.2d 398, 403 [quoting common law definition of trade secret from Rest., Torts, § 757, com. b, p. 5], disapproved of on other grounds in Nichols v. Hast (1965) 62 Cal.2d 598, 601.)
Under CUTSA, misappropriation of a trade secret "consists of only two elements: (1) existence of a trade secret, and (2) improper acquisition, use, or disclosure of that trade secret. (Civ. Code, § 3426.1, subd. (b).)" (Applied Medical Distribution Corp. v. Jarrells (2024) 100 Cal.App.5th 556, 569-570.) CUTSA identifies damages as a remedy that is available once misappropriation has been established. (Applied Medical, at p. 570, citing Civ. Code, § 3426.3, subd. (a).) A complainant under the act may seek injunctive relief. (§ 3426.2.) He or she may also recover damages for the actual loss caused by the misappropriation and for any unjust enrichment that is not considered in computing damages for actual loss. (Civ. Code, § 3426.3, subd. (a).) In addition, if the misappropriation was willful and malicious, the complainant may recover exemplary damages and attorney fees. (Civ. Code, §§ 3426.3, subd. (c), 3426.4.)
CUTSA" 'occupies the field'" of common law claims based on the misappropriation of a trade secret and supersedes or displaces common law remedies for trade secret misappropriation. (K.C. Multimedia, Inc. v. Bank of America Technology &Operations, Inc. (2009) 171 Cal.App.4th 939, 954 (K.C. Multimedia).) However, the act does not displace "contractual remedies, whether or not based upon misappropriation of a trade secret." (Civ. Code, § 3426.7, subd. (b)(1).) Thus, we conclude CSI's breach of contract claim is not displaced or superseded by CUTSA. (Civ. Code, § 3426.7, subd. (b)(1); Angelica, supra, 220 Cal.App.4th at p. 506 ["[C]UTSA by its terms does not displace a contract claim, even if it is based on the misappropriation of a trade secret"].) Nothing in the record suggests the trial court made findings to the contrary.
The terms "displace," "supersede," and "preempt" are sometimes used interchangeably within the context of CUTSA. The doctrine of preemption concerns situations where a federal law supersedes a state law-not when a state statute supersedes state common law. (See Angelica, supra, 220 Cal.App.4th at p. 498, fn. 1, citing Zengen, Inc. v. Comerica Bank (2007) 41 Cal.4th 239, 247, fn. 5 [adopting the term "displace" because this is the term the California Supreme Court employs to describe when a state statute supersedes common law].)
Nor does CUTSA displace "other civil remedies that are not based upon misappropriation of a trade secret." (Civ. Code, § 3426.7, subd. (b)(2).) Rather, the act's language" 'implicitly preempts alternative civil remedies based on trade secret misappropriation.'" (K.C. Multimedia, supra, 171 Cal.App.4th at p. 954.) A claim cannot simply depend on a different theory of liability to survive CUTSA's displacement effect. (See K.C. Multimedia, at pp. 957-959 &fn. 7 [distinguishing rule set forth in Powell Products, Inc. v. Marks (D.Colo. 1996) 948 F.Supp. 1469, 1474 (allowing a claim based on trade secret misappropriation to survive if the claim "requires an [element] which is not an element of a misappropriation claim")].) The claim must be based on more than" 'the same nucleus of facts as the misappropriation of trade secrets claim for relief.'" (K.C. Multimedia, at p. 958, quoting Digital Envoy, Inc. v. Google, Inc. (N.D.Cal. 2005) 370 F.Supp.2d 1025, 1035.)
Accordingly, the test for determining whether a cause of action is displaced by CUTSA is based on the facts as pleaded, or as in this case, proven, and not on the plaintiff's designation or theory of the cause of action. (K.C. Multimedia, supra, 171 Cal.App.4th at pp. 958-959.) In other words, displacement generally applies where there is no material distinction between the wrongdoing underlying the CUTSA claim and the non-CUTSA claim. (See K.C. Multimedia, at p. 960; Mattel, Inc. v. MGA Entertainment, Inc. (C.D.Cal. 2010) 782 F.Supp.2d 911, 986.)
B. Analysis
A "determination of whether a claim is based on trade secret misappropriation is largely factual." (K.C. Multimedia, supra, 171 Cal.App.4th at p. 954.) CUTSA displacement is interpreted broadly (K.C. Multimedia, at p. 957), and the court focuses on" 'the actual gravamen of [the] complaint'" (id. at p. 959).
" 'Construction of a complaint presents a legal question for our independent review.' (Balboa Ins. Co. v. Trans Global Equities [(1990] 218 Cal.App.3d [1327,] 1343; see also, e.g., McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) In undertaking our review, 'we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context, and ignoring erroneous or confusing labels if the complaint pleads facts which would entitle the plaintiff to relief.' (McBride v. Boughton (2004) 123 Cal.App.4th 379, 385.)" (K.C. Multimedia, supra, 171 Cal.App.4th at p. 959.)
A fair reading of CSI's operative complaint compels the conclusion that the causes of action for interference with contractual relationship and interference with prospective economic advantage both hinge upon the factual allegation that Fines misappropriated CSI's trade secrets in order to solicit and divert CSI's customers to Fines' own competing business. The facts proven at trial were consistent with those allegations and further support the conclusion that these noncontract claims are displaced by CUTSA.
1. Intentional interference with contractual relationship
With respect to the fourth cause of action, CSI alleged that Fines knew of the existing contracts (or service agreements) between CSI and its customers (and knew of at least some of the contracts' terms) when Fines intentionally solicited those customers for his own business, inducing them to terminate their contracts with CSI, causing CSI damage. The parties do not dispute that the evidence at trial established Fines' commission of the tort, as alleged. (See Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148 [listing the elements for tortious interference with contract].) The trial court found that CSI's claim for intentional interference with contractual relationship was based on Fines' use of "CSI's customer list and confidential information to encourage CSI's customers to utilize the services of [Fines'] new business in lieu of CSI." As these were the same nucleus of facts giving rise to CSI's claim for misappropriation of trade secrets, the court found these claims preempted by CUTSA.
CSI argues that the court erred in finding the claim was displaced by CUTSA because its claim for intentional interference with contractual relationship, as applied to MVT, was based on Fines' breach of the noncompete provision of the confidentiality agreement and also has a basis independent of the misappropriation. CSI does not provide any legal authority for its apparent argument that merely because this claim shares facts with the breach of contract claim, the related tort is not displaced by CUTSA. We conclude this common law claim-which shares a nucleus of facts with the misappropriation claim-does not survive displacement by CUTSA merely because there is a factual link to Fines' employment contract.
CSI also argues that its claim with respect to customers MME and SGLC, Inc., was based on Fines' breach of CSI's postemployment nonsolicitation provision. However, CSI did not allege a breach of contract as it relates to the postemployment nonsolicitation provision, nor did CSI include these allegations in its breach of contract claim or its claim for intentional interference with contractual relationship. Indeed, CSI fails to cite to any portion of the record demonstrating this breach of contract theory was litigated at trial and, as previously noted, CSI failed to separately challenge the validity of the postemployment nonsolicitation provision on appeal. As such, the claim as applied to MME and SGLC, Inc., is forfeited. (See Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564 [the failure to raise at trial any issue or infirmity that might subject the ensuing judgment to attack on appeal forfeits the issue]; see also Nelson v. American Airlines, Inc. (1968) 263 Cal.App.2d 742, 748 [" 'The rule is well settled that the theory upon which a case is tried must be adhered to on appeal' "].)
2. Intentional interference with prospective economic advantage
The court likewise found that CSI's claim for intentional interference with prospective economic advantage was based on the same facts giving rise to CSI's claim for misappropriation of trade secrets and thus was preempted by CUTSA. We agree.
"The tort of intentional or negligent interference with prospective economic advantage imposes liability for improper methods of disrupting or diverting the business relationship of another which fall outside the boundaries of fair competition." (Settimo Associates v. Environ Systems, Inc. (1993) 14 Cal.App.4th 842, 845.) As alleged in this fifth cause of action, CSI claimed that Fines intentionally disrupted relationships between CSI and five customers by soliciting their business, "which constituted a misappropriation . . . of CSI's trade secret customer information . . . and which constituted a breach of CSI's one year anti-solicitation clause." As with the fourth cause of action, the parties do not dispute the evidence established Fines committed this tort when he disrupted the relationships between CSI and five of its customers by intentionally and unlawfully soliciting CSI's customers for his own business. (See Reeves v. Hanlon, supra, 33 Cal.4th at p. 1152 [listing the elements of intentional interference with prospective economic advantage].)
On appeal, CSI asserts that with respect to MVT, this claim is based on the noncompete provision and does not depend on the status of the information as a trade secret. We have already rejected the argument that simply because it is factually linked to a contract-related claim, the tort is not displaced by CUTSA. Moreover, the evidence established that Fines interfered with CSI's prospective economic advantage by misappropriating the trade secret client list to recruit customers for himself. Because this shares the same nucleus of facts as the misappropriation of trade secret claim, it is displaced by CUTSA.
CSI also contends that this claim with respect to the four other customers is based on Fines' breach of the postemployment nonsolicitation provision and thus is not displaced by CUTSA. As with the fourth cause of action, CSI again fails to cite to any portion of the record demonstrating this theory was litigated at trial, and as previously noted, CSI failed to challenge the validity of the postemployment noncompete provision on appeal. As such, this claim with respect to four clients not including MVT is forfeited.
3. K.C. Media provides more guidance than Angelica
CSI's reliance on Angelica, supra, 220 Cal.App.4th 495 in arguing neither of the two above-referenced torts are displaced by CUTSA is not persuasive. In Angelica, a linens and laundry service accused its former vice president of violating his fiduciary duties. (See Angelica, at pp. 499-500.) During the course of his employment, the former vice president had signed an agreement promising "he would not, during his employment, 'become interested, directly or indirectly, as a partner, officer, director, stockholder, advisor, employee, independent contractor or in any other form or capacity, in any other business similar to Company's business.'" (Id. at p. 500.) According to the laundry service, the vice president worked with two board members of one of its clients to develop a business plan for a competing laundry business, in violation of the terms of his noncompetition agreement. (Id. at p. 501.) Around the same time, the vice president also approached a local bank to help the competing venture obtain financing. (Ibid.) The vice president also altered the laundry service's contracts with its largest customers to allow those customers to terminate the laundry service's services early for no penalty. (Id. at pp. 501-502.) The trial court granted the defendants' motion for summary adjudication on all of the laundry service's non-CUTSA claims, finding that all of laundry service's non-CUTSA claims were based on the defendants' alleged misappropriation of trade secrets and were therefore displaced by CUTSA. Subsequently, a jury returned a verdict in favor of the defendants on the laundry service's trade secrets cause of action. (Angelica, at p. 503.) On appeal, the appellate court concluded the contract claim was not "based on any misappropriation of a trade secret but on [the vice president's] entirely independent violation of the noncompetition agreement." (Id. at p. 508.) Angelica is thus distinguishable because there was no evidence of trade secret misappropriation and the non-CUTSA claims relied upon the vice president's conduct in undermining his employer's business while building his own competing business-independent of any trade secret. Not so in this case.
Instead, we find K.C. Multimedia, supra, 171 Cal.App.4th 939 is analogous. There, the plaintiff company alleged that a former employee owed it" 'a duty of confidence as to confidential information accessed during the course and scope of his employment, both under the common law and the Employment Agreement he entered into with plaintiff,'" but that the respondents induced the employee to breach that duty by disclosing trade secrets to the respondents. (Id. at p. 960.) The court found, and the appellate court agreed, that as reflected in the pleading itself, the conduct at the heart of this claim was the asserted disclosure of trade secrets by the former employee to the respondents. Because the claim for breach of confidence was" 'based on the same nucleus of facts'" as the trade secret misappropriation claim, the claim was displaced by CUTSA. (K.C. Multimedia, at p. 960.) Similarly, the plaintiff's cause of action for tortious interference with contract rested on the same legal and factual basis as its trade secret misappropriation claim where the plaintiff alleged that the respondents induced the former employee's breach or disruption of the plaintiff's contractual relationship by encouraging him to misappropriate trade secrets then luring him to become the respondents' employee. (Id. at pp. 960-961.) As before, the gravamen of the wrongful conduct asserted was the misappropriation of trade secrets. (Id. at p. 961.) As pled, the plaintiffs could only prevail on their claim for contractual interference if they proved that trade secrets were in fact misappropriated. (Id. at pp. 960-961.) The trial court ruled, and the appellate court affirmed, that the interference with contract claim was preempted by CUTSA. (K.C. Multimedia, at pp. 960-961.)
Here, too, the gravamen of Fines' wrongful conduct, as alleged and proven at trial, was his misappropriation of the customer list. Under the circumstances of this case, CSI could only prevail on the tort claims that Fines interfered with CSI's existing contracts, and interfered with CSI's prospective economic advantage by proving that Fines misappropriated the trade secret customer list to solicit their business for himself. As pled and proven, causes of action four and five are displaced by CUTSA.
III
Damages
In awarding damages, the court found it was not persuaded by CSI's theory of lost net profits and instead found the appropriate measure for relief was to calculate the unjust enrichment to Fines as a result of the misappropriation. The court found "the time necessary for Fines to independently identify CSI's customers and to solicit those customers from CSI would be shortened," reasoning there existed permissible ways for Fines to grow his client list. Specifically, the court stated that although Fines could not use his memory of the customer information obtained through his employment by CSI, he could use his general skills and knowledge to independently identify potential customers. Also, to the extent CSI's customers were willing and able to share information they had regarding CSI's pricing and other customers, Fines could have used that information. The court found that "the best evidence of how long it would have taken Fines to independently develop CSI's clients as Fines' own customers is the parties' own understanding and intent," demonstrated by the confidentiality agreement prohibiting a former employee from soliciting customers for one year following termination of employment. The court ultimately found that "Fines was unjustly enriched in an amount equal to the profits earned from dealings with CSI's former clients during that first year following the formation of Fines' new business." The court calculated this to be a total of $122,683.20, plus any costs to CSI recoverable as the prevailing party. The court denied CSI's requests for exemplary damages, finding that Fines was motivated by a desire to operate his own business, not to damage CSI, that Fines' misappropriation was not malicious or despicable, and that, thus, exemplary damages were inappropriate. The court further found that because Fines could have developed his own client list within a year of his termination, no legitimate purpose would be served by issuing an injunction at that point in time and denied that request.
CSI's primary argument before us is that the court should have awarded CSI its lost net profits or all of Fines' net profits he received from the five former CSI customers instead of limiting the damages to one year of Fines' profits. CSI contends the evidence does not support the trial court's conclusions that CSI's customers would have inevitably transferred their accounts to Fines, had he simply announced his departure from CSI to form his own company or relied upon his general knowledge and skill of marketing. CSI also argues that the court erred in failing to order Fines to disgorge all the net profits he earned from MVT, arguing that damages for a breach of loyalty require the party in breach to forgo any and all profits from the breach. Finally, CSI argues the trial court erred in failing to award exemplary damages.
Whether a party is entitled to a particular measure of damages is a question of law subject to de novo review. (Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 691; Santa Clarita Water Co. v. Lyons (1984) 161 Cal.App.3d 450, 458.) We review the trial court's damages award for substantial evidence. (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 42-43.)
A. Lost Net Profits
In the statement of decision, the trial court awarded damages under a theory of unjust enrichment because it was "not persuaded that but for Fines' solicitation and use of trade secrets the customers at issue would have continued to do business with [CSI]," and that it did "not find persuasive the damages claims offered by CSI and finds no basis to measure royalties." CSI argues that these conclusory findings failed to sufficiently address the issue of lost profits and therefore failed to comply with Code of Civil Procedure section 632 and, thus, the court's ruling is not entitled to any deference.
In its objection to the statement of decision, CSI contended that the issue of whether it was entitled to lost profits as damages was not resolved in the statement of decision, yet cited to no legal or factual error, or ambiguity in the decision. Rather, the objection was based on the fact that CUTSA allows for the award of actual damages, which CSI argued should be calculated as lost profits. This objection is merely a disagreement with the credibility determination made by the trial court in choosing the calculation method for awarding damages and is insufficient to constitute the type of specific objection required under Code of Civil Procedure section 634 to pinpoint alleged deficiencies in the statement of decision; it offers no meaningful legal guidance to the court as to how to correct any particular defect. (See Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 498 [general objections that the statement of decision does not provide an explanation for its decision and fails to accurately identify the matters that were proved at trial are insufficient to comply with Code Civ. Proc., § 634].) Accordingly, we infer that the trial court impliedly made every factual finding necessary to support its decision and presume the judgment as to damages is correct. (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 48.)
CSI contends the appropriate theory for recovery of damages is lost net profits because the evidence (especially that pertaining to MVT) demonstrated without contradiction that CSI would have continued to earn profits from CSI's customers. We disagree that the evidence provided was uniformly favorable to CSI.
"Lost anticipated profits cannot be recovered if it is uncertain whether any profit would have been derived at all from the proposed undertaking." (S. C. Anderson, Inc. v. Bank of America (1994) 24 Cal.App.4th 529, 536; see also Continental Car-Na-Var Corp. v. Moseley (1944) 24 Cal.2d 104, 113 [lost profits based on a future contract cannot be recovered when the contract is uncertain or speculative]; Citri-Lite Co. v. Cott Beverages, Inc. (E.D.Cal. 2010) 721 F.Supp.2d 912, 937-938 [the plaintiff could not recover lost profits based on renewal of contract when there was no evidence contract would be renewed].)
Here, a representative from MME testified that it was having problems with CSI and CSI's failure to resolve an IT issue created "a big hardship." In addition, CSI refused to accommodate MME's preferences to have work done in the evening rather than during business hours when it disrupted productivity at MME. A representative for SGLC, Inc., testified that she had begun looking for another service provider before choosing to hire Fines. She explained her boss was not happy with the technicians and the pricing structure from CSI. A representative from Corfee testified that she really liked CSI, but the technician assigned to Corfee would not explain things and so she did not understand what was going on with her computer and was frustrated. She used Fines and other people for IT services instead of CSI. Finally, a representative from MVT testified that, while he couldn't remember the details of switching from CSI to Fines for IT services, "we would have had to have a business reason to make a change. It had to be financially driven or service driven." We conclude the evidence did not uniformly establish that the five former customers would have continued their service agreements with CSI but for Fines' recruitment efforts. Accordingly, the evidence does not establish CSI was entitled to lost profits as a matter of law.
Instead, substantial evidence supports the trial court's conclusion that Fines was unjustly enriched by his misappropriation of CSI's trade secret. (See Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., supra, 226 Cal.App.4th at p. 43 [reviewing damages awarded for misappropriation of trade secrets for substantial evidence].) Unjust enrichment is a realized profit or other calculable benefit as a result of the misappropriation of a trade secret. (Ajaxo Inc. v. E*Trade Financial Corp. (2010) 187 Cal.App.4th 1295, 1313 (Ajaxo II).) The evidence established that Fines used his knowledge and memory of CSI's otherwise secret customer information to solicit the business of several of CSI's customers, successfully diverting five customers from CSI. Fines then earned income as a calculable benefit as a result of this misappropriation. The trial court awarded the amount calculated for one year following the termination of Fines, based on Fines' income from the five former CSI customers he recruited away from CSI.
B. Limiting Damages to One Year of Fines' Income
CSI raises several challenges to the trial court's determination that the unjust enrichment award should be limited to one year of Fines' income he generated from the five former CSI customers. CSI argues that the trial court erred by interpreting the nonsolicitation provision as an expression of intent to limit damages for a trade secret misappropriation and by finding that there were other ways Fines could have built his business with CSI's customers. We disagree that the trial court abused its discretion.
In the nonsolicitation provision of the confidentiality agreement, the parties agreed that for one year following the termination of employment by CSI, Fines would not solicit any of CSI's customers. Although the trial court ultimately found the confidentiality agreement unenforceable, for purposes of calculating damages, the court found the terms of that agreement represented an understanding that after one year, Fines could independently develop CSI's clients as his own. Accordingly, the court limited the time period in which Fines was unjustly enriched to that one-year postemployment period.
CSI argues the trial court had no authority to interpret this clause of the confidentiality agreement and the court abused its discretion when it did so. Because the trial court was called upon to interpret part of the confidentiality agreement, it had the authority to examine the contract as a whole in order to determine the intentions of the parties. (See Civ. Code, § 1641 ["[t]he whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other"].)
Contrary to CSI's claims, the trial court did not interpret the provision as a contractual limitation on damages. Rather, the court interpreted the plain terms of the agreement as setting forth the parties' understanding that Fines was prohibited from soliciting CSI's customers for one year after ending his employment with CSI. This reveals the parties' understanding that the trade secret was to be protected for one year postemployment. Phrased differently, CSI expressed both its desire to have its customer list protected from use by former employees for one year postemployment and its understanding that the customer list might be used after the one-year postemployment term. By recruiting CSI's customers during and immediately after his employment with CSI, Fines was unjustly enriched by his misappropriation of CSI's trade secret. Because this occurred during the year that CSI expected its trade secret to be protected, it was not an abuse of discretion to award damages for Fines' unjust enrichment during the year the parties had intended the customer list to be protected.
CSI also argues that the court erred in noting that Fines could have merely announced his departure from CSI and the formation of a new company and obtained the business of CSI's former customers because the "announcement" exception to trade secret misappropriation is not valid under CUTSA. We disagree. The California Supreme Court has reiterated that "the [C]UTSA does not forbid an individual from announcing a change of employment, even to clients on a protected trade secret client list." (Reeves v. Hanlon, supra, 33 Cal.4th at p. 1156.)
CSI waived this argument by taking the opposite position at trial, arguing that Fines had the right to announce the formation of his company but that his actions went beyond mere announcement. (See In re Marriage of Broderick (1989) 209 Cal.App.3d 489, 501 [an appellant waives his or her right to attack error by expressly or implicitly agreeing or acquiescing at trial to the procedure objected to on appeal].)
Nor do we find any merit in CSI's arguments challenging the trial court's consideration of Fines' relationship with CSI's customers or his general knowledge and skill in marketing as possible ways to build his own business with CSI's customers. We note these facts are subsidiary-evidentiary facts supporting the ultimate issue-and need not be listed in the statement of decision in detail: "[S]pecial findings are not required on every subsidiary matter on which evidence is received at trial, even though the subsidiary matter is relevant to the ultimate issues of fact. [Citation.] For example, where damages are the product of many interwoven elements, the trial court is not required to make separate findings on each element." (Kuffel v. Seaside Oil Co. (1977) 69 Cal.App.3d 555, 565-566.) Thus, contrary to CSI's claims, any lack of specificity in the statement of decision regarding Fines' ability and skill to build his own client list did not violate Code of Civil Procedure section 632 on the ultimate issue of damages.
Moreover, we have already concluded that the trial court did not err in considering the one-year limitation on nonsolicitation of CSI customers for purposes of establishing the time period in which Fines was unjustly enriched. This calculation is appropriate independent of these subsidiary facts. Whatever the nature of Fines' relationships with the customers or Fines' ability vis-a-vis marketing, the evidence demonstrated that Fines misappropriated the trade secret customer list to divert CSI customers to himself and was unjustly enriched by doing so. Because the parties had already established the intent to protect the trade secret customer list for one year postemployment, that set the appropriate time period for calculating damages. Upon review, we cannot say the court's award of damages for unjust enrichment was arbitrary, unreasonable, or unsupported by the record.
C. Duty of Loyalty
CSI argues that the trial court erred in failing to award lost net profits because damages for a breach of loyalty are governed by the Restatement of Agency. According to CSI, the proper remedy was the complete disgorgement to CSI of all of Fines' profits from MVT during the entire time MVT was Fines' customer; from 2013 to 2018. As the trial court awarded CSI profits Fines obtained from MVT for one year, CSI's claim merely constitutes a disagreement with the trial court's ruling that it was only entitled to a year of Fines' profits from MVT. We have already examined the court's decision to limit damages to one-year postemployment profits earned by Fines and found no error. CSI's argument here fails to persuade us differently.
D. Breach of Contract
CSI argues that lost profits should have been awarded for Fines' in-term breach of contract claim because CUTSA does not displace contractual remedies. (See Civ. Code, § 3426.7, subd. (b); Angelica, supra, 220 Cal.App.4th at p. 505.)
CSI offers no legal argument as to the proper approach to calculating damages for the breach of contract claim either independently or in light of the award for unjust enrichment. It cites to one case, GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 873, for the general proposition that where damages are certain but the amount is difficult to calculate, the court need only provide a rational basis of computation of damages. At the same time, CSI does not claim that unjust enrichment was not a rational basis of computation. CSI's failure to present reasoned argument and legal authorities in support of its contention that it is entitled to damages on its breach of contract claim forfeited our consideration of it in this appeal. (People v. Sorden (2021) 65 Cal.App.5th 582, 603.)
CSI has not persuaded us that the trial court abused its discretion in awarding damages. (See GHK Associates v. Mayer Group, Inc., supra, 224 Cal.App.3d at p. 874 ["The selection of which measure of damages to apply is within the sound discretion of the trier of fact"].)
E. Punitive Damages
In its decision, the trial court explained its findings related to general punitive damages under Civil Code section 3294: "[T]he evidence indicates Fines' behavior was motivated by a desire to operate his own successful business, not to damage CSI. Fines' behavior is not so vile or contemptible to satisfy the definition of despicable. Thus, no exemplary damages are appropriate." Similarly, the court denied exemplary damages under Civil Code section 3426.3 of CUTSA, stating that "[f]or the reasons already discussed above, the Court finds Fines' misappropriation was not malicious and that exemplary damages are therefore inappropriate."
CSI argues the court's reasoning for its no-malice finding-Fines' motivation for personal success in business-was unsupported by the evidence and creates an unprecedented and impermissible exception for situations in which punitive damages would otherwise be warranted. We disagree.
"In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings. [Citations.]" (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.) "Generally, punitive damages awards are reviewed under the substantial evidence standard of review 'in which all presumptions favor the trial court's findings and we view the record in the light most favorable to the judgment.'" (Behr v. Redmond (2011) 193 Cal.App.4th 517, 535, citing Kelly v. Haag (2006) 145 Cal.App.4th 910, 916; see also Johnson v. Monsanto Co. (2020) 52 Cal.App.5th 434, 455.) However, "where the trier of fact has determined that the party with the burden of proof did not carry its burden and that party appeals," "we ask 'whether the appellant's evidence was (1) "uncontradicted and unimpeached" and (2) "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding." '" (Ajaxo, Inc. v. E*Trade Financial Corp. (2020) 48 Cal.App.5th 129, 163-164 (Ajaxo III).) Thus, because it was CSI's burden to prove malice, and the trial court determined CSI did not, we review the record to determine whether the evidence presented was so compelling so as to "leave no room for a judicial determination that it was insufficient to support a finding." (Ibid.) We find no such evidence exists here.
Civil Code section 3294 permits a punitive damage award for any "breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice . . . for the sake of example and by way of punishing the defendant." (Civ. Code, § 3294, subd. (a).) Under this section," '[m]alice'" is defined as "conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others." (Civ. Code, § 3294, subd. (c)(1).) Thus, this section could apply to the breach of loyalty claim. (See e.g., Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 166-168 [discussing punitive damages in a corporate tort case].)
However, a" 'breach of a fiduciary duty alone without malice, fraud or oppression does not permit an award of punitive damages. [Citation.] . . . Punitive damages are appropriate if the defendant's acts are reprehensible, fraudulent or in blatant violation of law or policy.... Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff's rights, a level which decent citizens should not have to tolerate.'" (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287; see also Davis v. Hearst (1911) 160 Cal. 143, 162 [malice required under Civ. Code, § 3294 is malice in fact, meaning, "the motive and willingness to vex, harass, annoy, or injure"].) Contrary to CSI's claim, it is not sufficient that Fines' actions were intentional and inflicted injury.
CUTSA allows exemplary damage awards where a "willful and malicious misappropriation exists." (Civ. Code, § 3426.3, subd. (c).) This statute, unlike for general punitive damages pursuant to Civil Code section 3294, does not expressly require clear and convincing evidence. However, appellate courts interpreting this statute have determined that an award under this statute still requires the plaintiff to meet a high burden of proof. For example, in Ajaxo, the court found substantial evidence supported the jury's finding of willful and malicious conduct by clear and convincing evidence, using the definition of malice pertaining to Civil Code section 3294, subdivision (c)(1). (See Ajaxo Inc. v. E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 66-67 (Ajaxo I).) Another court has explained: "Unlike Civil Code section 3294, which authorizes punitive damages on clear and convincing evidence of oppression, fraud, or malice in the disjunctive, Civil Code section 3426.3, subdivision (c) authorizes exemplary damages on evidence of willful and malicious misappropriation in the conjunctive. Thus, applying the definitions approved by the Ajaxo court, to obtain exemplary damages a plaintiff must prove by clear and convincing evidence that the defendant's acquisition, use, or disclosure of the plaintiff's trade secret was accomplished by an act implying a purpose or willingness to commit the act and by conduct intended to cause injury or conduct that is despicable and carried on with a willful and conscious disregard of the rights or safety of others." (Applied Medical Distribution Corp. v. Jarrells, supra, 100 Cal.App.5th at p. 594.)
We agree with CSI that Fines' misappropriation of CSI's trade secret was "intentional" or willful, since the court found Fines liable. To find a defendant liable for trade secret misappropriation, the court must find they had knowledge of or acquired the secret through confidential or improper means, which "includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage," which are themselves willful acts. (Civ. Code, § 3426.1, subd. (a).)
However, even if Fines' conduct was willful, that alone is not enough to constitute malice. If it were, punitive damages would be awarded in nearly every trade secret misappropriation case. Rather, to determine whether a defendant's actions in a trade secret misappropriation case warrant a punitive damages award, courts must give full effect to the conjunctive statutory language in Civil Code section 3426.3-"willful and malicious misappropriation." (Civil Code, § 3426.3, subd. (c), italics added.) Thus, we move to the second requirement in the statute-a malice determination.
In defining malice, CSI relies heavily on In re Ormsby, which they contend supplies factors for determining malicious injury in trade secret misappropriation cases. (Ormsby v. First Am. Title Co. (9th Cir. 2010) 591 F.3d 1199 (In re Ormsby).) However, the issues in that case are unlike those here. While In re Ormsby did involve trade secret misappropriation, it was in the context of a bankruptcy proceeding in which Ormsby sought to discharge the debt he owed for trade secret misappropriation liability. (Id. at p. 1203.) The relevant bankruptcy statute (11 U.S.C. § 523), prevents discharge of debts caused by malicious conduct, so the court had to interpret "malicious" in the context of the federal bankruptcy statute, attempting to determine whether the trade secret misappropriation was malicious. (In re Ormsby, at pp. 1206-1207.) Thus, the court's interpretation and definition of malice in In re Ormsby does not control in the context of this Civil Code section 3426.3 trade secret misappropriation case.
Instead, to find malice under Civil Code section 3426.3, Applied Medical Distribution Corp. v. Jarrells, supra, 100 Cal.App.5th 556 is instructive. That court found the statute requires the court to find evidence that in misappropriating a trade secret, the defendant engaged in conduct "intended to cause injury or . . . that is despicable and carried on with a willful and conscious disregard of the rights or safety of others." (Id. at p. 594.) This is the same definition of malice in Civil Code section 3294, subdivision (c). Thus, insofar as CSI contends it was improper for the court to deny punitive damages under both statutes based on the same definition of malice, we disagree.
CSI faces a very high, even insurmountable burden. Not only is this a finding of failure to meet the burden of proof, requiring compelling evidence in CSI's favor to warrant reversal (Ajaxo III, supra, 48 Cal.App.5th at pp. 163-164), but the relevant punitive damages statute holds plaintiffs to a high burden of proof, requiring "clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice." (Civ. Code, § 3294, subd. (a).) Thus, we review the record to determine whether there is evidence"' "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding" '" of clear and convincing evidence of malice. (Ajaxo III, at pp. 163-164.)
CSI references evidence in the record that it contends shows Fines intentionally lied to and deceived CSI, requiring a finding of malice. For example, CSI indicates that Fines e-mailed a former CSI employee who had left to start his own company. In these emails, the former employee asked Fines if he was planning on taking some of CSI's customers off its hands, and Fines responded affirmatively. CSI also suggests that Fines' choice to omit the fact that he had MVT as a client, in a 2014 deposition for a different case, shows further evidence of malice. CSI further alleges that evidence indicating Fines created his first invoice for MVT while still working for CSI shows malice, as well.
Fines argues this court cannot consider these facts because they were not explicitly included in the statement of decision; we disagree. The court's finding in the statement of decision was based explicitly on "the evidence" submitted in the case. Thus, we can consider all the evidence upon which the court based this finding when determining whether such finding was reasonable.
However, even including this evidence, a trier of fact could reasonably conclude CSI did not show by clear and convincing evidence that Fines' conduct was malicious. Malice is a very high burden to meet, especially in breach of duty cases (see e.g., Cruz v. HomeBase, supra, 83 Cal.App.4th at p. 168 [reversing a punitive damages award where "[t]here was no evidence that [the corporate defendant's] officers, directors, or managing agents had actual knowledge that [employees] had acted maliciously .... Evidence that reports routinely submitted to the officers might have provided the occasion for further investigation, possibly leading to discovery of employee misconduct, is not enough"]; Southern California Disinfecting Co. v. Lomkin (1960) 183 Cal.App.2d 431, 448-449 [finding malice and awarding punitive damages in trade secret misappropriation case where the defendant was part of a conspiracy with a competing company to willfully and knowingly steal and destroy the plaintiff's physical customer list, so they could not use it]; Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1174-1176 [despite evidence that PG&E was liable for fires due to failure to maintain power lines, the court found there was no "clear and convincing evidence from which a reasonable jury could find that PG&E consciously disregarded the risk of wildfire or willfully ignored fire safety standards"].)
Here, there is no explicit evidence of intent to deliberately harm or disregard the rights of CSI so as to render the trial court's decision otherwise unreasonable. In fact, there is evidence upon which the court could have reasonably concluded the opposite. For example, in the same e-mails that CSI argues show clear and convincing evidence of malice, Fines also stated that he deceived CSI about accepting a job offer when he left the company "so there would be no bad blood or burned bridges." Additionally, when asked if he knew that acquiring CSI's former customers would cause the company harm, Fines explained that he did know, but "that wasn't going through my mind." Thus, it was reasonable for the trial court to conclude that the evidence at trial showed Fines did not act with malice, and thus that the evidence did not amount to clear and convincing evidence of malice.
Insofar as CSI argues the court erred by considering Fines' motivation in determining whether he acted with malice, we also disagree. Intent and motive go hand in hand, and, according to a long line of California case law, both are relevant to a malice determination. "[Civil Code] section 3294 views evil motive as the central, essential factor in the malice which justifies an exemplary award. That factor calls upon the [fact finder] to assess the defendant's actual state of mind; it is not satisfied by characterizing his conduct as unreasonable, negligent, grossly negligent or reckless." (G. D. Searle &Co. v. Superior Court (1975) 49 Cal.App.3d 22, 31; see also Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-895 [" 'Something more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation or outrage, such as spite or "malice," or a fraudulent or evil motive on the part of the defendant' "]; Ebaugh v. Rabkin (1972) 22 Cal.App.3d 891, 895 ["malice in fact is malice of evil motive"].)
Overall, we find that the evidence in the record is not so compelling as to require a trier of fact to find Fines' conduct malicious. (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.)
DISPOSITION
The judgment is affirmed. The parties are to bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
We concur: DUARTE, J., KRAUSE, J.