Opinion
F072818
06-19-2018
GUADALUPE GOMEZ GARCIA, et al., Plaintiffs and Respondents, v. S & J FARMS, LLC, et al. Defendants and Appellants.
Law Offices of Indra Lahiri, Indra Lahiri for Defendants and Appellants. Connors & Associates, G. Patrick Connors III for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. S-1500-CV272037)
OPINION
APPEAL from a judgment of the Superior Court of Kern County. J. Eric Bradshaw, Judge. Law Offices of Indra Lahiri, Indra Lahiri for Defendants and Appellants. Connors & Associates, G. Patrick Connors III for Plaintiffs and Respondents.
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S & J Farms, LLC (S & J), and its members, Jagroop S. Deol (Deol) and Jagmohan S. Sandhu (Sandhu) (collectively appellants), appeal from the judgment entered after the jury returned a special verdict finding in favor of Guadalupe Gomez Garcia (Guadalupe), her father Eduardo Z. Garcia (Eduardo), and Garcia Family Farms, Inc. (GFF) (collectively respondents) on their claims for malicious prosecution, abuse of process, and intentional infliction of emotional distress. Appellants contend there is insufficient evidence to support the jury's finding of liability for malicious prosecution, they established the defenses of advice of counsel and unclean hands as a matter of law, and the emotional distress and punitive damage awards were excessive. Finding no merit to appellants' contentions, we affirm the judgment.
Because some of the parties share a surname, we refer to those individuals by their first names. No disrespect is intended.
FACTUAL AND PROCEDURAL BACKGROUND
In accordance with the well-settled principles of appellate review, "[w]e recite the facts, resolving, as we must, all conflicts in the evidence and all legitimate and reasonable inferences that may arise therefrom in favor of the jury's findings and the verdict." (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1137-1138.)
Deol and Sandhu, who were brothers-in-law, formed S & J in 2004, with Deol as its managing member. That same year, S & J bought a 250-acre grape ranch named Sandrini Ranch (the ranch) for $1 million.
The 2005 Agreement
In 2005, Deol asked Eduardo if he would be willing to work the ranch. The two had known each other since the early 1980's, when they worked together providing labor for Deol's uncle's grape ranch, but Eduardo had not seen Deol since the 1990's. Deol and Eduardo entered into an oral agreement, in which Deol would pay the expenses of farming the ranch and S & J would receive the proceeds from the sale of the grapes. The labor would be provided by Garcia Farming, a farm labor contracting business owned by Eduardo's daughter, Guadalupe, as a sole proprietorship.
The oral agreement changed, however, when Deol fell behind on paying the bills. Eduardo began paying the expenses of the ranch, with the understanding he would be paid from the sales proceeds. Eventually, Eduardo had to put the bills in GFF's name, since vendors refused to sell to Deol. The 2005 harvest was "bad," as the prices for wine and table grapes were low.
At the end of the 2005 season, Eduardo met with Deol and provided him with an accounting, which Guadalupe, who worked as a bookkeeper for GFF in 2005, and Mack Cordova, who was in charge of marketing at GFF, helped prepare. The accounting consisted of hard-copy invoices for expenses and documents that showed the grape sales. The documents were put into a folder, which Eduardo gave to Deol. The documents showed a loss and that Deol owed Eduardo around $70,000 for bills GFF paid. Deol took the paperwork with him after the meeting.
The March 2006 Letter
In March 2006, Guadalupe was alone in her office when Deol came in and asked her to prepare a promissory note. Deol said he needed it in order to get a loan, as he needed to show some kind of income because the ranch had a loss the year before. Deol assured her it would not be used against her, which she thought meant he would not try to collect on it. Since Deol told her he had spoken to her father and Deol was her father's business acquaintance, she decided to write the letter. Deol told her to use Garcia Farming letterhead and told her what to type.
The letter is addressed to S & J, and states: "To Whom It May Concern: [¶] For the year 2005 Garcia Farming owes money to S & J Farms LLC as [sic] known as Sandrine [sic] Ranch. The amount that is owed to S & J Farms LLC is $569,250.30. This amount is from table grapes from the 2005 harvest. Payment will be issued to S & G [sic] Farms as soon as Garcia Farming comes up with year[-]end grape figures." The note is signed by Guadalupe as "Owner of Garcia Farming."
After Deol left, Guadalupe called her father, who was upset at what she wrote and yelled at her. Guadalupe told him Deol said he did not intend to use the letter against her or her family. Eduardo, who did not authorize Guadalupe to write the letter, spoke with Deol, who said he would not use the letter and he would tear it up.
Guadalupe, who was 23 years old at the time, did not realize she was committing fraud by writing the letter. When she typed the letter, Garcia Farming did not owe S & J any money. Instead, Deol owed Garcia Farming money. Guadalupe thought she might get paid if Deol got a bank loan, but she never intended to defraud a bank.
The June 2006 Contract
On June 22, 2006, GFF and S & J entered into a written contact for the 2006 season. The contract, which is in the form of a letter, is written on GFF letterhead and addressed to Deol at S & J. The contract states that S & J was entering into an agreement with Eduardo, as CEO/President of GFF "for the sole purpose of 'selling and marketing' your crops off the Sandrini Ranch." The contract further states that the crop consists of three grape varieties, and "[t]his contract is estimated to consist of over 250,000 boxes for the harvest season of 2006." S & J was to produce a saleable crop that could pass the "standards mandate[d] by the U.S.D.A.," while GFF would pay S & J "$3.00 per box for 'Pick and Picking' weekly, payable the following Wednesday, of the prior week[']s picking." The total crop was "estimated not guaranteed by [S & J], just what is ever in the field that is pickable." Harvesting was projected to occur between the last week of July and the first week of August 2006, with the major crop to be Thompson seedless grapes "estimated between 200-225,000 boxes in 2006." S & J agreed to reimburse GFF $94,492 for all related expenses paid to date. The contract is signed by Eduardo and Deol.
Guadalupe typed the contract - Eduardo, Deol, and Cordova were all present. Guadalupe did not have any input in coming up with the wording of the contract or the numbers in it, although she provided the amount due of $94,492. According to Eduardo, Deol came up with the 250,000 box estimate, as well as the other numbers. Eduardo said he did not want to sign the contract because he believed the property could produce, at most, 105,000 boxes, but Deol said to sign it, as "whatever the farm has, it has."
Later, Cordova typed a document in Deol's presence entitled "Income and Expense Analysis For S & J Farms, LLC, 2006," which was dated June 26, 2006. The analysis is on GFF letterhead and is addressed to Deol at S & J. The analysis contains a prediction of the value of S & J's crop. Income is listed as $4,237,500, based on a total estimated number of boxes of 250,000 and an average projected value per box of $16.95. Total expenses are listed as $1.75 million, based on an estimated expense of $7 per box times 250,000 boxes. The difference between income and expenses is $3.75 million. Although there is a signature line for Eduardo, he did not sign it.
Cordova told Eduardo that Deol asked Cordova to write the analysis for him, and Cordova provided the prices based on the value of Thompson grapes in the Coachella Valley. Cordova told Deol that Eduardo would not sign the analysis. Cordova knew it did not have any worth, whether or not it was signed, because a price cannot be guaranteed in advance.
At the end of the 2006 season, Eduardo met with Deol to review the numbers. Eduardo provided Deol with a folder that contained an accounting similar to the one prepared for the 2005 season. The accounting showed the ranch had lost money, and S & J owed GFF $1.28 million. At trial, Eduardo testified he did not recall paying S & J the $3 per box stated in the 2006 contract. While he admitted it was an obligation under the contract, he could not pay it because he needed the money to pay the laborers.
The Prior Litigation
Sarwan Johal, the real estate broker who found the ranch for Deol, referred Deol to attorney Joseph Uremovic, because Deol had been complaining for two years that his crop yield was low and not paying for itself. When Johal, Deol, and Sandhu met with Uremovic, they brought him the March 2006 letter, and the June 2006 contract and analysis. Deol told Uremovic the March 2006 letter was a valid, enforceable promissory note, and the June 2006 contract and analysis constituted a promise to him of a 250,000 box yield.
Deol authorized Uremovic to send Guadalupe a demand letter. The March 19, 2007 letter stated that S & J retained Uremovic to collect the $569,250.30 Guadalupe acknowledged owing in her March 2006 letter. In addition, Uremovic demanded that she and GFF provide an accounting of all S & J transactions in the 2005 and 2006 seasons. When Guadalupe received the letter, she learned for the first time that S & J was going to treat the note as legitimate and try to collect on it. Eduardo hired an attorney to handle the demand letter.
Deol authorized Uremovic to file suit against respondents on S & J's behalf. The July 2007 complaint alleged claims for breach of contract, accounting, and fraud as to the 2005 and 2006 grape crops, and account stated as to the 2005 grape crop. The complaint also alleged a negligence claim as to both grape crops. S & J sought to recover $4.95 million in general damages. In addition, S & J sought an accounting, punitive damages, prejudgment interest, and costs of suit. According to Deol, the breach of contract claim for the 2005 season was based entirely on the March 2006 letter, and S & J sought to recover $3.75 million for the 2006 season based on Eduardo's promise in the June 2006 analysis.
GFF filed a cross-complaint against S & J and Deol, alleging causes of action for breach of the 2005 oral contract and breach of the 2006 written contract.
In October 2008, Guadalupe was dismissed from the action and a motion for nonsuit was granted as to S & J's two fraud causes of action. The following month, the jury returned a special verdict in which it found: (1) respondents did not breach the terms of a contract between themselves and S & J in 2005 or 2006; (2) S & J breached the terms of an agreement with GFF in 2005, but the breach was not a legal cause of damage; and (3) S & J breached the terms of an agreement with GFF in 2006, which legally caused damages totaling $29,370.37. The trial court ordered that S & J take nothing by way of its complaint and entered judgment in favor of GFF and against S & J on the related cross-complaint.
The Malicious Prosecution Action
In October 2010, respondents filed the instant action against appellants. In their first amended complaint, respondents alleged causes of action for malicious prosecution, abuse of process, and intentional infliction of emotional distress.
Respondents also named Uremovic as a defendant. He was dismissed from the action and judgment entered in his favor after the trial court sustained his demurrer to the complaint based on the statute of limitations.
A negligent infliction of emotional distress claim also was alleged, but that claim was not submitted to the jury.
Following an eight-day trial, the jury returned a special verdict in which it found in favor of respondents on all of their claims. The jury was asked to make specific factual findings which were relevant to whether there was probable cause. The jury found as follows: (1) appellants' claims in the underlying action for the 2005 season were based on the alleged March 5, 2006 promissory note, which appellants knew or should have known was not a valid or enforceable promissory note; (2) appellants' claims in the underlying lawsuit for the 2006 season were based on the June 22, 2006 agreement, and June 26, 2006 document, both of which appellants knew or should have known were not enforceable guarantees by respondents as to the number of boxes to be harvested for the 2006 season; and (3) appellants knew or should have known the claims in the underlying lawsuit for the 2005 and 2006 seasons were not based on any enforceable agreement with Guadalupe.
The jury found appellants liable for malicious prosecution, assuming the trial court found there were no reasonable grounds for bringing or continuing the underlying lawsuit, and awarded $205,298 in attorney fees and costs to respondents, $100,000 to Guadalupe for her emotional distress, $5,000 to Guadalupe for lost revenue, and $410,000 to Eduardo for his emotional distress. The jury found appellants liable to Guadalupe and Eduardo for abuse of process and intentional infliction of emotional distress, and awarded them each $10,000 for emotional distress on both claims. Finally, the jury found respondents engaged in the above conduct with malice, oppression or fraud.
Outside the jury's presence, the trial court found the underlying lawsuit was filed without probable cause and there was a favorable termination in respondents' favor. Based on the trial court's and jury's findings, appellants were liable for malicious prosecution.
The matter proceeded immediately to the punitive damages phase. Before the jury returned, respondents' attorney stated that each appellant had been served with a subpoena that requested the following: (1) any and all documents showing their current financial condition and/or net worth, including statements of current assets and liabilities, and statements of profit and loss; (2) 2013 and 2014 tax returns, including schedules, credit applications, W-2s, and 1099s; (3) accounts receivable, general ledgers, and bank statements for the last 12 months; (4) documents indicating the value of currently owned real or personal property; and (5) documents concerning the distribution or the status of the proceeds from the 2008 sale of Sandrini Ranch. In response to those subpoenas, respondents' attorney said that appellants produced three documents - Sandhu's August 31, 2015 bank statement, which showed a closing balance of $7,575; a 2015 property assessment for property in Canada, in the name of Jagmohan and Karmjit Sandhu, with a taxable value of $591,000; and Deol's September 18, 2015 Bank of the Sierra statement which showed an ending balance of $5,694.
After the jury returned, respondents' attorney called both Deol and Sandhu as witnesses. Deol testified S & J Farms sold Sandrini Ranch in April 2008 for $1.75 million and the net proceeds to the seller was $455,000. Deol denied selling the property because he was concerned a judgment might be entered against him on the cross-complaint in the underlying case. Deol claimed his only checking account was the Bank of Sierra account with a balance of $5,694. He also claimed he did not have any savings accounts, CDs, or investments, and he did not own any real property. His wife owned the house he lived in and he did not know what the house was worth or the mortgage balance. Deol said he did not own a car and he drove his son's car. Deol denied having any personal or real property in his name, or that he was part of any companies that owned real property. Deol did not work and his only income was $1,020 from disability.
Sandhu testified the property assessment notice was for his residence, which valued the property at $591,000 for tax purposes, which he believed was close to what he could sell the property for. He believed there was $300,000 in equity in the property. Sandhu claimed the $7,575 ending balance in the August 31, 2015 bank statement was a typical ending balance for him. Sandhu worked and earned around $40,000 per year in Canadian dollars. Sandhu denied owning any other real estate and said he had not been involved in any other companies since S & J Farms. S & J Farms no longer existed as a company, although it had a bank account, but Sandhu did not know if there was any money in the account. To Sandhu's knowledge, S & J Farms had not done any business since 2008. Sandhu owned a 2010 Toyota pickup which was worth about $12,000. He denied owning any gold or silver, stocks, bonds, or other investments. He believed he and wife's net worth was about $350,000.
Respondents' attorney asked the jury to award $740,000 in punitive damages, which was a one-to-one ratio of general to punitive damages, as appellants had withheld information on their assets and ability to pay. Appellants' attorney argued appellants did not have the ability to pay much more than the damages already awarded, and left it to the jury's discretion to determine how much more they could pay. The jury found that appellants were liable to respondents for $600,000 in punitive damages. A $1,340,298 judgment in favor of respondents against appellants, jointly and severally, was entered on October 1, 2015.
Appellants subsequently filed motions for a new trial and judgment notwithstanding the verdict. The trial court denied both motions.
DISCUSSION
Forfeiture
Appellants contend there is insufficient evidence to support liability for malicious prosecution, that they proved the advice of counsel and unclean hands defenses as a matter of law, and the emotional distress and punitive damages awarded were excessive. They acknowledge the standard of review on these issues is substantial evidence. Respondents assert appellants' substantial evidence claims are forfeited, as they failed to set forth all of the relevant evidence on these issues. We agree.
Appellate review begins with the presumption the judgment of the trial court is correct. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; Fleishman v. Superior Court (2002) 102 Cal.App.4th 350, 357.) It is the burden of the appellants to show reversible error by an adequate record. (Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) Meeting this burden requires citations to the record to direct the court to pertinent evidence or other matters in the record that demonstrate reversible error. (Guthrey v. State of California (1998) 63 Cal.App.4th 1108, 1115; Culbertson v. R.D. Werner Co., Inc. (1987) 190 Cal.App.3d 704, 710.) Specifically, an appellant's opening brief must "[p]rovide a summary of the significant facts limited to matters in the record" (Cal. Rules of Court, rule 8.204(a)(2)(C)) with a citation to the volume and page number of the record where those facts appear (rule 8.204(a)(1)(C)).
References to rules are to the California Rules of Court.
"[I]t is counsel's duty to point out portions of the record that support the position taken on appeal." (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768 (Del Real).) It is not the Court of Appeal's proper function to search the record on behalf of appellants or to serve as "backup appellate counsel." (Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545-546.)
Similarly, we start with a " ' "presumption that the record contains evidence to sustain every finding of fact." ' " (People v. Dougherty (1982) 138 Cal.App.3d 278, 282.) Any challenge to the factual findings requires the appellants to demonstrate there is no substantial evidence to support those findings. (Ibid.) This demonstration requires the appellants to " ' "state fully, with transcript references, the evidence which is claimed to be insufficient to support the findings." ' " (Ibid.) The appellants must " ' "set forth in their brief all of the material evidence on the point and not merely their own evidence." ' " (Ibid., italics omitted; see Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.)
These rules of appellate procedure are designed to facilitate the efficient administration of justice - allowing the court to focus on the important job of resolving disputed legal issues and correcting errors - and are not complicated or burdensome. Failure to follow these rules is an adequate ground to find an appellant has forfeited his or her arguments on appeal. (Del Real, supra, 95 Cal.App.4th at p. 768 ["violation of the rules of court may result in the striking of the offending document, the waiver of the arguments made therein, the imposition of fines and/or the dismissal of the appeal"]; Gunn v. Mariners Church, Inc. (2008) 167 Cal.App.4th 206, 217-218 [argument on appeal deemed forfeited by failure to present factual analysis and legal authority on each point raised]; People ex rel. Dept. of Alcoholic Beverage Control v. Miller Brewing Co. (2002) 104 Cal.App.4th 1189, 1200 [same].)
Appellants have completely failed to follow these basic rules. While the eight-day trial resulted in a four volume reporter's transcript of over a thousand pages, appellants' statement of facts is only two pages long. Only the documentary evidence is discussed in the statement of facts, with a total of five citations to the clerk's transcript; the trial testimony is not discussed and there are no citations to the reporter's transcript. Although more facts are cited in the argument section, appellants do nothing more than selectively recite the evidence that supported their arguments at trial that they had probable cause to bring the underlying action, they did not harbor malice toward respondents, they relied on advice of counsel, Guadalupe's claims were barred under the unclean hands doctrine, there was no evidence to support an award of emotional distress damages, and the punitive damages was excessive because there was insufficient evidence of their financial worth. Appellants, however, fail to mention the evidence favorable to respondents that supports the jury's findings.
Appellants' defense of their tactic - that they complied with their duty by citing Eduardo's testimony - is wholly inadequate, as the testimony they cite pertains solely to the malicious prosecution claim and, in any event, does not provide the complete evidentiary basis for the jury's factual findings and the trial court's ruling that appellants lacked probable cause to bring the underlying action. An appellant may not completely ignore the respondent's evidence and argument on the very findings appellant challenges as insufficient on appeal. To the extent the appellant feels the evidence adduced was, as a matter of law, insufficient to support the finding, the proper approach is to recite the evidence in the statement of facts and then explain in the argument section why the evidence is insufficient. Appellants' failure to do so here results in a forfeiture of their substantial evidence challenges.
While we find appellants' substantial evidence claims forfeited, we alternatively conclude there is no merit to them. (See, e.g., Doe v. Roman Catholic Archbishop of Cashel & Emly (2009) 177 Cal.App.4th 209, 218-219 [deciding substantial evidence issue in the alternative after deeming the issue waived because appellant failed to set forth all the relevant evidence].)
Malicious Prosecution
The elements of malicious prosecution are: favorable termination, probable cause, and malice. Specifically, the malicious prosecution plaintiff must establish that: (1) the defendant's earlier lawsuit reached a final conclusion, terminating in the plaintiff's favor; (2) the defendant pursued the lawsuit without probable cause; and (3) the defendant acted with malice in doing so. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1539.) "Continuing an already filed lawsuit . . . may also be the basis for a malicious prosecution claim." (Ibid.) "A claim for malicious prosecution need not be addressed to an entire lawsuit; it may . . . be based upon only some of the causes of action alleged in the underlying lawsuit." (Silas v. Arden (2012) 213 Cal.App.4th 75, 89-90 (Silas); Bertero v. National General Corp. (1974) 13 Cal.3d 43, 57 (Bertero).)
Appellants appear to be challenging only the malice element. They argue that because Eduardo testified at trial that GFF had an obligation under the June 2006 contract to pay S & J $3 per box for picking, Eduardo admitted he breached the contract and they cannot be liable for malicious prosecution in suing on this breach. They assert that "all the evidence" shows they pursued the underlying action in order to recover the $3 per box under the 2006 contract and to obtain an accounting for the 2005 and 2006 seasons.
To the extent appellants are claiming the trial court erred in finding they lacked probable cause to bring the underlying action since Eduardo admitted he did not pay S & J $3 per box, the claim fails. This is because appellants fail to challenge the other claims on which the trial court based its lack of probable cause finding, namely that respondents owed appellants money based on the March 2006 letter, as well as the 250,000 box estimates in the June 2006 contract and analysis. (Silas, supra, 213 Cal.App.4th at pp. 89-90.)
"The malice element of the malicious prosecution tort goes to the defendant's subjective intent in initiating the prior action. [Citation.] For purposes of a malicious prosecution claim, malice 'is not limited to actual hostility or ill will toward the plaintiff. Rather, malice is present when proceedings are instituted primarily for an improper purpose.' [Citation.] 'Suits with the hallmark of an improper purpose' include, but are not necessarily limited to, 'those in which: " '. . . (1) the person initiating them does not believe that his claim may be held valid; (2) the proceedings are begun primarily because of hostility or ill will; (3) the proceedings are initiated solely for the purpose of depriving the person against whom they are initiated of a beneficial use of his property; (4) the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim.' " ' [Citation.] [¶] Evidence tending to show that the defendants did not subjectively believe that the action was tenable is relevant to whether an action was instituted or maintained with malice." (Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1407.)
Contrary to appellants' assertion, "all the evidence" did not show they pursued the underlying action merely to recover the $3 per box or to obtain the accountings. Instead, there is abundant evidence appellants prosecuted the underlying action despite being aware there was no basis for their claims. The evidence showed that Deol convinced Guadalupe to prepare and sign the March 2006 letter by falsely telling her that he had spoken to Eduardo about it and assuring her that the letter would not be used against her or her family. Despite all of this, and knowing that Garcia Farming and Guadalupe did not owe him the money, he and Sandhu used the letter as the basis for the claim that he and S & J were owed the amount listed in the letter for the 2005 season. Moreover, Deol and Sandhu knew the estimated harvest of 250,000 boxes in the June 2006 contract and analysis was just that - an estimate and not a guarantee - yet they claimed the amount was an enforceable guarantee that would have resulted in a net profit of $3.75 million, which Deol admitted S & J sought to recover for the 2006 season, and used the documents as a basis for their claims that respondents breached the 2006 contract. Finally, Eduardo had provided respondents with accountings that showed the ranch had lost money in both 2005 and 2006. Based on this evidence, the jury reasonably could find that appellants brought the underlying action for an improper purpose, namely to recover money they knew they were not entitled to based on documents created at their direction, and therefore acted with malice. (Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 452 [". . . a plaintiff acts with malice when he asserts a claim with knowledge of its falsity, because one who seeks to establish such a claim 'can only be motivated by an improper purpose.' "].)
Advice of Counsel and Unclean Hands Defenses
Appellants contend the jury should have found in their favor on their advice of counsel defense and that the evidence compelled a finding in their favor on their unclean hands defense. Although appellants assert the standard of review on their defenses is substantial evidence, where, as here, the trier of fact has concluded the party with the burden of proof did not carry that burden, and the appeal by that party turns on a failure of proof at trial, the question for the reviewing court is whether the evidence compels a finding in the appellant's favor as a matter of law. (In re I.W. (2009) 180 Cal.App.4th 1517, 1528 (I.W.); Dreyer's Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838.) "Specifically, the question becomes 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.' " (I.W., supra, 180 Cal.App.4th at p. 1528.)
We begin with the advice of counsel defense. Appellants assert the uncontradicted testimony of Deol and Sandhu showed they relied on Uremovic's advice in pursuing the underlying action and the sole purpose of the lawsuit was to recover money they felt they were owed.
" 'Good faith reliance on the advice of counsel, after truthful disclosure of all the relevant facts, is a complete defense to a malicious prosecution claim.' " (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 876-877.) Appellants had the burden of proving the defense. (Id. at p. 877.) The jury was instructed on the defense and clearly rejected it when it found appellants liable for malicious prosecution.
While appellants argue the evidence compels a finding in their favor, they ignore the evidence unfavorable to them which supports the jury's rejection of the defense. Specifically, they fail to discuss the evidence that shows they did not fully and honestly disclose the relevant facts to Uremovic, as they did not tell him the March 2006 letter was not valid or enforceable, or that the number of boxes listed to be harvested in the June 2006 contract and analysis was not an enforceable guarantee. In fact, Deol admitted at trial that he told Uremovic the March 2006 letter was a valid and enforceable promissory note, and the June 2006 contract and analysis constituted a promise to him of a 250,000 box yield. The jury was not required to find in appellants' favor merely because Deol and Sandhu testified they relied on Uremovic's advice. Instead, the jury was free to examine all of the evidence and determine, as it did, that appellants failed to prove all of the elements of the advice of counsel defense. As the evidence was conflicting, appellants are not entitled to a contrary finding as a matter of law.
As for the unclean hands defense, appellants contend they established the defense based on Guadalupe's uncontroverted testimony which showed that if the March 2006 letter was fraudulent, she was fully aware of its fraudulent nature, and she actually prepared and signed it with the hope of benefitting from it.
"The defense of unclean hands arises from the maxim, ' " 'He who comes into Equity must come with clean hands.' " ' [Citation.] The doctrine demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim. [Citations.] The defense is available in legal as well as equitable actions. [Citations.] Whether the doctrine of unclean hands applies is a question of fact." (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978.)
Contrary to appellants' contention, the facts on this issue are not uncontroverted. Guadalupe testified that while she knew Garcia Farming did not owe Deol the money, she did not realize at the time that she might be committing fraud by writing the letter and she never intended to defraud a bank. Based on this testimony, appellants did not establish they were entitled to the defense as a matter of law. (See Stone v. Lobsien (1952) 112 Cal.App.2d 750, 757-758 (Stone) [while the unclean hands doctrine will bar a party from relief if there is a mere intent to defraud, the rule applies as a matter of law only where the evidence is susceptible of but one inference the transaction was entered into with the intent to defraud].)
Moreover, it does not appear that the defense was ever submitted to the jury. It is well-settled that "[t]he doctrine of unclean hands must be raised in the trial court to be available as a defense." (Marshall v. Marshall (1965) 232 Cal.App.2d 232, 253.) While appellants pled the defense in their answer, no jury instructions were given on the defense and the jury was not asked to render any findings related to the defense on the special verdict form. While appellants apparently raised the defense in their motion for a new trial, it was within the trial court's discretion to refuse to consider the issue at that late date. (Stone, supra, 112 Cal.App.2d at p. 758.)
Emotional Distress Damages
Damages for attorney fees, costs, emotional distress, mental suffering, and impairment to reputation are available in a successful malicious prosecution action. (Bertero, supra, 13 Cal.3d at p. 59.) Here, the jury awarded Eduardo $410,000 and Guadalupe $100,000 for their emotional distress on their malicious prosecution claim, and $10,000 each on their claim for intentional infliction of emotional distress.
When, as here, a jury awards damages for malicious prosecution, we "must uphold [the] award of damages whenever possible [citation][,] and all presumptions are in favor of the judgment [citations]." (Bertero, supra, 13 Cal.3d at p. 61.) To the extent appellants assert the award fails for want of sufficient evidence, we examine the record for substantial evidence to support it. (Davis v. Local Union No. 11, Internat. etc. of Elec. Workers (1971) 16 Cal.App.3d 686, 693.) On review for substantial evidence, our inquiry "begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the [jury's] determination ...." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, italics omitted.) To the extent appellants attack the award as excessive, notwithstanding the existence of substantial evidence to support it, we will reverse the award only if " ' "the recovery is so grossly disproportionate as to raise a presumption that it is the result of passion or prejudice ...." ' " (Bertero, supra, 13 Cal.3d at p. 64.)
Appellants contend the emotional distress damages were excessive because (1) Eduardo and Guadalupe did not have any medical treatment for, and did not offer expert medical testimony regarding, their emotional distress; (2) appellants' expert testified the underlying action was not a cause of emotional distress for either Eduardo or Guadalupe; and (3) Eduardo and Guadalupe had other stressors that caused them emotional distress.
We disagree that Eduardo and Guadalupe were required to present medical evidence showing their emotional distress, as damages for emotional distress may be shown through the plaintiff's testimony. (See Bertero, supra, 13 Cal.3d at pp. 64-65 & fn. 11 [in malicious prosecution, plaintiff's testimony was sufficient to support award for damages to reputation and "emotional well-being []"].) Appellants do not cite any authority to the contrary.
Here, Eduardo and Guadalupe both testified they suffered very significant emotional distress from the underlying action. Eduardo had to retain an attorney to defend the case and he paid all of the attorney's bills. The complaint sought to recover nearly $5 million, which caused Eduardo to worry "very much[,]" because not only did appellants owe him money, they were trying to recover a substantial sum of money from him. Eduardo could not sleep and the stress from the lawsuit affected his physical health - his blood pressure went up and he was still having trouble controlling it. He lost weight, he sometimes had diarrhea and nausea, and he had trouble controlling his diabetes. The attorney fees totaled over $200,000, which caused him financial problems, as he was still trying to pay the ranch's bills. He paid one contractor by giving him an 80-acre farm that he owned. In addition, he borrowed $1.2 million from a dairy farmer so he could pay the ranch's bills. To pay off the debt, he signed over one of his other ranches.
Guadalupe also testified that the underlying action caused her emotional distress. She was concerned about the financial impact of the lawsuit. She was pregnant at the time and having trouble sleeping. She was worried about her father, as he could not sleep and was troubled by what the lawsuit would do to them, since $5 million was a lot of money. She said that her father started going to the doctor for his high blood pressure and diabetes, and his personality changed. She was living with her parents at the time, and the problems from the lawsuit followed the family, who were very close, from work to home.
Guadalupe's husband, Tomas Gomez, testified that Guadalupe was "very stressed out" during the course of the underlying action. While Guadalupe was usually a "chatterbox," when she mentioned the lawsuit, her character changed and she became more quiet and serious. She told Tomas that she was tired and did not sleep well. After they moved in together following their church marriage in March 2008, he noticed she was not sleeping and she would sometimes wake up in the middle of the night crying. She also was worried about her father, mother, and the business.
Other evidence was presented that there were other sources of emotional distress in Eduardo's and Guadalupe's lives, such as the accidental death of Eduardo's nine-year-old son Orlando in the 1990's, the recent death of another son, and other lawsuits against GFF. The jury, however, reasonably could find that the underlying action was the source of their emotional distress during the course of the litigation based on the testimony of Eduardo, Guadalupe, and Tomas.
There was expert testimony from Dr. Jagdeep S. Garewal, a psychiatrist who performed a psychiatric diagnostic evaluation and mental status examination of Eduardo and Guadalupe, that (1) Guadalupe's reaction to the underlying action was a normal reaction to stress, and (2) Eduardo may have had depression during the underlying action, and there were other stressors in his life. The jury was not required to accept the testimony and was free to reject it as long as it did not act arbitrarily. (Conservatorship of McKeown (1994) 25 Cal.App.4th 502, 509 [a jury may reject an expert witness's testimony even where uncontradicted by other evidence as long as the jury's rejection is not arbitrary].) Given that Dr. Garewal's examinations lasted only 35 minutes and were performed eight years after the underlying action, the jury reasonably could conclude his testimony had no probative value. Moreover, Dr. Garewal admitted that it was hard to determine how much impact the underlying action had on Eduardo, as he suffered from general depression and a generalized anxiety disorder. There is nothing to suggest the jury's rejection of Dr. Garewal's opinion was arbitrary.
Since there is no fixed standard by which to compute the monetary value of emotional distress, we cannot say as a matter of law that the jury's award was excessive. (Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1067-1068 & fn. 17.)
Punitive Damages
Appellants contend there is insufficient evidence of their financial condition to justify an award of punitive damages in any amount. Whatever the merits of their argument, they are estopped from asserting it.
Generally, punitive damages are inappropriate unless sufficient proof of a defendant's financial condition is presented. But if a court orders production of evidence of a defendant's financial condition following the liability phase of the trial, and the defendant fails to comply with such order, the defendant loses the right to complain about the issue on appeal and an award of punitive damages is appropriate. (Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 609-610.) The same rule applies when a defendant has been served with a subpoena to produce evidence of his financial condition at trial and the defendant fails to produce the records. (Corenbaum v. Lampkin (2013) 215 Cal.App.4th 1308, 1322, 1336-1338.) "In light of [defendant's] failure to comply with the subpoena for records, we conclude that he is estopped from challenging the punitive damage awards based on lack of evidence of his financial condition or insufficiency of the evidence to establish his ability to pay the amount awarded." (Id. at p. 1338.)
Here, respondents served appellants with subpoenas seeking their financial records the day before the jury returned its verdict. In response to the subpoena, appellants produced only three documents - two bank statements and a property tax assessment. By failing to make a good faith effort to produce meaningful evidence of their financial conditions, appellants forfeited any objection to the lack of evidence of their financial conditions. Appellants complain on appeal that they were not given enough time to comply with the subpoena. There is nothing in the record, however, to indicate that they raised this objection below. Accordingly, they cannot raise it for the first time on appeal. (Damiani v. Albert (1957) 48 Cal.2d 15, 18 [points not urged in the trial court may not be raised for the first time on appeal].)
It appears that appellants' counsel was told the day before this what documents would be covered by the subpoenas. During a discussion outside the jury's presence, respondents' counsel advised appellants' counsel that because respondents were not allowed to subpoena personal financial information until a right to punitive damages was established, appellants needed to be prepared to immediately turn over their financial information should the jury find a right to punitive damages. Appellants' counsel asked what documents needed to be produced. Respondents' counsel began to list the documents, but the trial court stated the record did not need to be burdened with that and recessed for lunch.
Appellants are not entitled to escape punitive damages by the simple expedient of refusing to produce financial information needed to fix such an award and failing to object to the subpoena, as doing so would flout the equivalent of a court order and undermine the legal process. In view of appellants' failure to produce evidence of their respective financial conditions, they may not complain the amount of punitive damages is excessive.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
/s/_________
ELLISON, J. WE CONCUR: /s/_________
LEVY, Acting P.J. /s/_________
DETJEN, J.
Retired judge of the Fresno Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.