Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Santa Clara County Super. Ct. No. CV808925
ELIA, Acting P.J.In this appeal, appellant Mali Kuo challenges a judgment entered after an order granting nonsuit on her cross-complaint against defendant Edmund Sun. Kuo contends that she was deprived of a fair trial after her attorney withdrew for ethical reasons and she was forced to represent herself after a minimal continuance. She further argues that nonsuit was unwarranted on her claims of misrepresentation and breach of fiduciary duty. We find no error and will therefore affirm the judgment.
Background
In 1992 respondent Sun, an engineer, founded Digital Video Systems, Inc. (DVS) to develop and market digital video compression hardware and software. Sun served as chief executive officer (CEO) until mid-1998, when Edward Miller took over the position and Sun became chief technology officer.
In the spring of 1998 Miller, who was then acting as chief financial officer, advised the board of directors that the company would need an investment of $5 million to remain viable. After visiting a company DVS was considering acquiring, Miller increased his estimate of DVS's cash needs by more than $1 million. In June 1998, seeing that DVS would run out of cash before the end of the summer, Miller entered into a contract with Ambient Capital Group, Inc. The contract, later ratified by the board, provided that Ambient would serve as "exclusive financial advisors and private placement agent" to DVS for eight months. Ambient was to find and negotiate with potential investors, and it would receive a minimum "success fee" of $150,000 or 7 percent of the principal raised, as well as 8 percent of the stock issued.
Meanwhile, Kuo considered investing in DVS during the spring and summer of 1998. She had learned about the company from Sun's wife, Jane Sun (from whom he was separated), the previous New Year's Eve. Kuo discussed the opportunity with Sun and with Miller and eventually brought in her business associate, Douglas Watson, to participate in negotiations. After meeting with Miller, Sun, and DVS's chief financial officer and examining the company's financial statements, Watson determined that DVS needed about $2 million.
In October 1998 Kuo agreed to invest in DVS through Oregon Power Lending Institution (OPLI). Watson had established OPLI to help individual investors obtain the receivables from the sale of a golf course so they could then invest that money in DVS. OPLI was initially involved in a project to generate and supply electricity from a floating power plant called a power barge. That project was not successful, however, in spite of the efforts of OPLI's president, Oran Chang.
Chang understood that DVS needed $2-3 million in order to make its payroll. Relying on the advice of Kuo and Watson, Chang approved the investment, and OPLI entered into an "investment agreement" with DVS on October 15, 1998. The private placement memorandum, a copy of which OPLI received at the time of the investment, displayed "Ambient Capital Group" on each page. Chang, however, was not aware of that document, as he was depending on other people to handle the legal work. He also followed Kuo's instructions when, on November 4, 1998, he sold real property located in Sunnyvale, which he had bought for $1,750,000, to the Edmund Y. Sun Family Trust for $1,500,000 even though, according to Kuo, the property was worth $1,860,000. At trial Kuo took the position that Sun, acting as a real estate broker in the sale, had demanded a $400,000 commission, which she arranged to be conveyed by means of the reduced purchase price.
Beginning with the October 15, 1998 investment agreement, OPLI invested a total of about $6.5 million in DVS. As part of the transaction, OPLI received two seats on the board of directors and shares of stock. Watson joined the board on November 5, 1998, along with Michael Chen, who, like Watson, had been nominated by Kuo to represent OPLI. A long transitional period followed, however, during which a three-member executive committee of the board, including Chen and Watson, took over the day-to-day operations of DVS and performed the duties of a CEO. In February 1999 Kuo was appointed CEO and remained in that role until 2002. During the fiscal year ending March 31, 2000, DVS reduced its losses and began to make some profit. Between 2002 and 2004 Watson served as CEO.
Soon after the OPLI investment Ambient learned of the transaction and demanded its commission. The three-member executive committee of DVS, including Watson, announced that it would handle negotiations with Ambient over this bill. In April 1999 Ambient brought suit to recover its fees and commission, naming DVS, OPLI, Agold (another corporation allegedly controlled by Kuo), and Kuo. On June 19, 2000 the board of directors gave Watson full authority to negotiate and settle the lawsuit. Watson did so on June 28, 2000. Chang signed the settlement agreement on behalf of OPLI.
In May 2000, while preparing for a writ of attachment in the Ambient litigation, Watson watched a videotape of Miller's deposition. In that deposition Miller testified that Sun had instructed him not to disclose the Ambient agreement to OPLI "because it might spook the investors." In December 2001 Watson suggested to Kuo that she watch the video.
On June 24, 2002, DVS filed a complaint against Kuo and others for breach of fiduciary duty in her positions as CEO and chair of the board, by (1) granting herself compensation and benefits without DVS board approval and (2) employing and granting unreasonable employment benefits to close friends and family members without board authorization or approval. In November 2003 Chang assigned to Kuo not only all of his interest in DVS but also his right to sue anyone associated with DVS, including Kuo herself. He executed a similar assignment on behalf of OPLI. Kuo answered the DVS complaint and filed a cross-complaint against DVS and Sun, alleging 10 causes of action related to misrepresentation and unpaid compensation. The trial court deemed those pleadings to have been filed on January 29, 2004.
The court severed the first six claims in Kuo's second amended cross-complaint from the litigation, and the last four, along with the DVS lawsuit against her, were tried together in early 2005. Pursuant to the jury's verdict on February 1, 2005, DVS recovered nothing on its complaint, and Kuo obtained defense costs along with more than $2 million in damages on her cross-complaint, resulting in a judgment of about $3.4 million. In an ensuing settlement, Kuo released the company in exchange for DVS stock, which she registered to the OPLI investors.
Kuo amended the remaining portion of her cross-complaint two more times, finally asserting 11 causes of action, including fraud and deceit, securities fraud, negligent misrepresentation, and breach of fiduciary duty through misrepresentation and concealment. Jury trial on her fourth amended cross-complaint against Sun began on March 7, 2007. On March 9, 12, 13, and 14, her attorney, William Keegan, presented testimony by Watson, Miller, one of the assignor-investors, and two expert witnesses. Keegan conducted part of the direct examination of Chang before the court recessed on March 14. By this time the court viewed the proceedings as "well along and moving towards the completion of the plaintiff's case-in-chief."
The next morning, however, Keegan informed the court that "circumstances had arisen which made it mandatory" for him to terminate his employment by Kuo under California Rules of Professional Conduct, rule 3-700 (B)(2). Keegan drew the court's attention to chapter 5 of the Rules of Professional Conduct, but he could not more precisely identify the rule of concern without revealing his client's confidential communications. Asked whether she opposed her attorney's request to withdraw, Kuo said she did not. Defense counsel, on the other hand, anticipating a request for a continuance, was concerned about prejudice to Sun. Keegan did request a continuance on Kuo's behalf, which defense counsel opposed if it extended beyond 1:30 that day.
This rule, governing mandatory withdrawal of an attorney, states: "A member representing a client before a tribunal shall withdraw from employment with the permission of the tribunal, if required by its rules, and a member representing a client in other matters shall withdraw from employment, if: . . . [¶] (2) The member knows or should know that continued employment will result in violation of these rules or of the State Bar Act."
The court noted that Kuo's attorney had diligently investigated his dilemma and had brought his motion to withdraw as early as he could have under the circumstances. The court further recognized, however, the "competing interests" of the jurors, who had been "promised absolutely" that the case would be over no later than Monday, March 26. Kuo acknowledged that the jury had been fully impaneled and "well on the way through the case," and that this was a very costly process. She expressed her understanding that she would have to represent herself without further delay unless good cause supported a continuance.
The court granted Keegan's motion to withdraw. It then asked whether the parties agreed to a continuance until 1:30 p.m. Kuo requested a postponement of four calendar days, until the following Monday morning, March 19. Keegan spoke in support of Kuo's request, suggesting that this minimal delay would be all that was necessary to give her time to prepare and thus diminish the prejudice to her. Defense counsel, however, opposed the proposed continuance as prejudicial to Sun and unfair to the jurors. The court asked for and obtained an assurance from Kuo that if it continued the trial until Monday, then Kuo would be ready to proceed so that the promise to the jury could be kept. It indicated that it would likely "be somewhat more active in assisting and asking questions just so people have a right to be heard."
Kuo stipulated that the time limitations for the trial would not change; indeed, she anticipated an earlier completion by representing herself. The court granted Kuo's request for a continuance over defense counsel's objection.
The parties and their counsel returned to court that afternoon, outside the presence of the jury, to discuss how to proceed efficiently. With Keegan no longer formally representing her but nonetheless assisting her in this conference, Kuo narrowed the issues so that only the first, third, and fourth causes of action remained. Kuo's handwritten stipulation, which she produced with the assistance of Keegan, expressly stated that the parties had agreed that she would proceed on only intentional misrepresentation, negligent misrepresentation, and breach of fiduciary duty or constructive fraud. Each of those causes of action would be based on three alleged facts: a misrepresentation regarding DVS's true financial needs; the concealment of advice made by Miller to the board regarding the company's financial needs; and Sun's concealment of the involvement of Ambient. Proof of Sun's fiduciary status was to be based solely on the "existence of a broker relationship" in the sale of the Sunnyvale property by Chang (at Kuo's direction) to Sun's family at a significant discount. Finally, the parties clarified that all claims would be limited to those that OPLI had assigned to Kuo and that "existed in OPLI's favor as of the time of the claimed fraud (Oct. 15, 1998)." Thus, Kuo's objective was to prove that (1) Sun had falsely represented to OPLI that "only $2 million would be needed to put DVS back on its feet," while concealing contrary advice by Miller as well as the fact that the company was in danger of being de-listed from the NASDAQ; (2) Sun had concealed from OPLI the involvement of Ambient in DVS when he solicited investment in DVS; and (3) Sun had breached his fiduciary duty to OPLI by demanding and obtaining a $400,000 commission in the sale of the Sunnyvale property.
The court subsequently took judicial notice of the deed, which indicated that the property was sold to "Sun and Sun L.L.C.," which defense counsel represented to be Jane Sun's company.
Trial resumed on March 19, 2007, as planned, with Kuo completing her case with abundant assistance from the court. Kuo finished presenting Chang's testimony, conducted her own examination with questions pre-screened by the court, and examined Sun. She then rested her case that afternoon.
The next day Kuo moved for a mistrial on the ground that her attorney's withdrawal had caused prejudice to her, as her English was limited, she was unfamiliar with the relevant documents, and she had not spoken with the witnesses. The court denied her motion. It then conducted an Evidence Code section 402 hearing regarding Kuo's prospective expert witness in real estate appraisal, whose testimony was being offered to establish the value of the Sunnyvale property.
The court declined to rule specifically on the admissibility of this witness's testimony. Instead, it proceeded to address a defense motion for a directed verdict, which it accurately re-labeled a motion for nonsuit. After receiving extensive written and oral argument from defense counsel and written argument prepared for Kuo by Keegan, the court allowed Kuo to reopen her case by presenting additional documents in support of her case. The court then heard Kuo's oral opposition to the motion. The court determined, however, that an order of nonsuit was justified on multiple grounds, and it accordingly granted the motion.
Kuo appeals from the ensuing judgment for Sun. She challenges the asserted restrictions on her ability to present evidence, the denial of her motion for a mistrial, and the order granting the motion for nonsuit.
Discussion
1. Issues arising from Kuo's Self-Representation
Kuo first argues that the withdrawal of her attorney created a "fundamentally unfair" proceeding that is reversible per se because she was unable to handle the duties on her own and she was pressured by the court to keep the trial on track. In addition, Kuo contends, "acting without counsel, but naively in consultation with defense counsel," she stipulated to a narrowing of her claims, thereby foreclosing her opportunity to seek all the damages she was entitled to recover. Finally, she argues, the limited continuance granted by the court was inadequate to allow her to prepare her case or find new counsel.
Distilled to its essence, Kuo's position appears to be a complaint that she should never have been allowed to represent herself and to "stipulate away her case." She acknowledges, however, that by acting as her own attorney she was entitled to the same, but no greater, consideration than other litigants and attorneys, and that she must be held to the same procedural rules. (Barton v. New United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1210; Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 638-639.)
The record discloses no error, "structural" or otherwise. There can be no question that Kuo agreed to her attorney's withdrawal, even as she understood that the trial, which was well underway, would proceed without excessive delay. By this time trial had been, in the court's words, "well along and moving towards the completion of the plaintiff's case-in-chief." Several witnesses, including Miller and Watson, had already been examined at length. While expressing its concern over undue consumption of time, the court nevertheless allowed Kuo, over defense counsel's objection, the only continuance she requested, from Thursday morning to Monday. Indeed, her attorney affirmed that any prejudice to Kuo would be "greatly diminished if she has a couple of days to prepare, and that only requires a half a day continuance of the trial."
As for stipulating away her case, Kuo fails to mention that her attorney had already worked "furiously to narrow issues, streamline evidence, and present a compact and cogent story to the jury." Keegan had emphasized during in limine proceedings that his and Kuo's intention was "to narrow the claims and jettison some of the causes of action, not increase their number." After he withdrew, Keegan helped Kuo prepare the stipulation, which Kuo wrote out in her own hand. She expressed no reservations about it even when questioned by the court.
What followed thereafter went beyond the equal treatment Kuo now says she should have received as a pro per litigant; indeed, the court went to great lengths to assist her throughout the remaining day of testimony. With Kuo's continuing approval, the court helped her prepare questions to ask witnesses, thereby facilitating her examination and obviating intrusive but meritorious objections from the defense. The court also helped her articulate her questions of witnesses as they testified, and it engaged her in lengthy discussion in order to understand her position on issues as they arose. The court's treatment of Kuo was both patient and respectful, even as it recognized its promise to the jurors to conclude the trial "absolutely" by Monday, March 26.
Kuo's shortcomings as her own attorney do not in themselves justify reversal. She complains that (1) the court pre-screened the questions she asked Chang and herself on the stand in light of the anticipated defense objections; (2) she did not understand what facts were important to elicit to prove the elements of her claims; (3) she did not have the opportunity or ability to question Sun effectively; and (4) she was unable to address Sun's substantive points in opposing the motion for nonsuit. Kuo does not identify any cognizable legal error, however; the tenor of her argument on appeal suggests that the court should not have allowed her to represent herself. However, she willingly accepted the court's help in framing her questions of witnesses to forestall objection and elicit relevant testimony. Other than a longer continuance, which she did not request, Kuo does not suggest any failure of duty by the trial court in its conduct of the trial. On the contrary, the court appears to have made a conscientious effort to ensure that the trial proceed fairly and efficiently.
Kuo's challenge to the denial of her motion for a mistrial likewise fails, as it was based on the same complaint regarding her inability to represent herself adequately. The entire written argument, prepared for her by her former counsel, was as follows: "The Court has allowed a half-day continuance for Mali Kuo to get up to speed following the withdrawal of her attorney in the middle of a jury trial. This is an unrealistic expectation. Mali Kuo is not an attorney herself; she has limited English abilities; she is not familiar with the documents or how they have been organized; she has not spoken with the witnesses; and she has not been able to find replacement counsel in the one interim business day available to her. [¶] Consequently, continuing the trial in these circumstances not only prejudices and disadvantages Mali Kuo, practically speaking it amounts to a directed verdict against her, not based on the facts and the evidence, but based instead on her lack of any legal skills." As we have just concluded, Kuo obtained exactly the continuance she requested and thereafter received substantial assistance and support from the court. Furthermore, as she expressly acknowledged, Keegan assisted Kuo in presenting written arguments in opposition to the motion for directed verdict and in support of her motion for mistrial. Nevertheless, as explained below, Kuo's causes of action were destined for nonsuit based on facts that could not have been avoided even with substitute counsel. The record thus discloses no abuse of discretion, no deprivation of due process, and no miscarriage of justice resulting from Kuo's representation of herself for the remaining two days of the trial.
In ruling on the nonsuit motion, the trial court noted that 90 percent of the evidence related to the statute of limitations issue had been produced by plaintiff while Keegan was representing her.
2. Nonsuit
Sun's nonsuit motion, originally framed as a premature motion for directed verdict, encompassed two points: (1) The facts presented by Kuo did not meet the elements of either misrepresentation or breach of fiduciary duty; and (2) Whether or not a fiduciary duty existed, the three-year statute of limitations for fraud barred Kuo's claims of both misrepresentation and breach of fiduciary duty. Misrepresentation was defeated, Sun argued, because there was no evidence of reasonable reliance on any pre-investment statements, given OPLI's access to information on the amount of necessary investment and the Ambient contract. Breach of fiduciary duty failed because there was no evidence of a fiduciary duty of Sun toward OPLI. Finally, Sun argued that the undisputed evidence established that OPLI had had actual notice of the Ambient liability and that OPLI was aware early on that more than $2 million would be needed to put DVS back on its feet.
In orally arguing the motion, Sun's counsel added lack of damages as another ground for nonsuit. According to the defense, any suggestion that OPLI could have sold DVS stock for any particular amount was "speculative as a matter of law." The court regarded this as a newly asserted ground but not prejudicial, as it had been addressed by Kuo's counsel in responding to a motion in limine.
We also note Sun's cursory assertion of lack of damages in his trial brief.
The court invited Kuo to submit additional evidence that would improve her case. Kuo submitted two documents: a September 30, 1999 Asset Purchase and Option Agreement between DVS (as seller) and OPLI (as buyer); the other, a letter from Chang to an accountant to confirm an additional investment in DVS by OPLI. Kuo explained at length the history of her relationship with Sun, including the trust she had placed in him, the disappointments she had encountered in the course of that relationship, and the loss to OPLI investors.
The trial court found merit in the motion on all grounds asserted. It particularly found it "impossible to get away from" the statute of limitations issue. It was undisputed that it was OPLI's knowledge that determined this issue. In the court's view, "it's beyond any doubt in the Court's mind that the statute of limitations bars the claims." The court further emphasized, however, that "each of the other grounds asserted is a good and valid ground, individually and collectively, and separately sufficient to grant a motion for nonsuit." In its written order the court specifically added that there was "no substantial evidence of justifiable reliance on the alleged misrepresentations and concealment" and no evidence of damages beyond speculation.
The trial court's ruling was correct on at least one of the grounds asserted. Civil Code section 338 limits any cause of action based on fraud to three years from the date the plaintiff discovered, or reasonably should have discovered, the facts constituting the fraud—in other words, the point at which the plaintiff "suspected or should have suspected that an injury was caused by wrongdoing." (Kline v. Turner (2001) 87 Cal.App.4th 1369, 1374.) Negligent misrepresentation carries a limitations period of two years. (§ 339; see Ventura County Nat. Bank v. Macker (1996) 49 Cal.App.4th 1528, 1531.) The parties, however, litigated the case based on a three-year limitations period. Kuo concedes on appeal that the three-year statute applies to a breach of fiduciary duty based on fraud. (See City of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889 [where gravamen of breach of fiduciary duty claim is fraud, section 338, subdivision (d) applies].)
All further statutory references are to the Civil Code unless otherwise specified.
Kuo's initial cross-complaint was deemed filed on January 29, 2004, through an order granting her relief from default. She therefore had to show that OPLI did not discover—or could not have discovered with reasonable diligence—the true financial needs of DVS and the role of Ambient until January 29, 2001. "[P]laintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation." (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808; see also Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397-398 [discovery rule postpones accrual of cause of action until plaintiff discovers, or has reason to discover, a factual basis for the cause of action].) The statute of limitations thus began to run when OPLI had "reason to at least suspect" that some wrongdoing had injured it. (Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 807.)
Documentary and testimonial evidence demonstrated at least inquiry notice of DVS's financial needs. The company's annual report for the year ending March 31, 1999, referred to the October 15, 1998 investment agreement with OPLI, which permitted OPLI "to invest a minimum of $6.0 million to a potential maximum of $12.25 million in the Company's common shares." According to that document, OPLI had already provided $6.5 million by March 31, 1999. In addition Chang, president of OPLI, was aware of a November 12, 1998 press release which stated that OPLI was entitled to invest up to $10 million. Chang admitted that OPLI was contemplating an investment of "much more than $2 million." More to the point, DVS's precarious financial situation was revealed in an independent audit report by Ernst & Young, LLP, on July 9, 1998. The report described the company as having "recurring operating losses. This condition raises substantial doubt about the Company's ability to continue as a going concern."
It was undisputed that both Chang, president of OPLI, and Watson, who investigated DVS and negotiated on OPLI's behalf, had been given access to all the documents containing the relevant financial information before the investment. Thus, they had an opportunity to learn for themselves that a contribution of $2 million would be inadequate. Watson nevertheless examined DVS's financial statements and determined for himself that $2 million was sufficient for DVS to retain its viability.
The evidence at trial also established that among the documents given to Watson and Chen was the Ambient contract, before OPLI's investment in DVS. Miller also discussed the arrangement between Ambient and DVS with Watson before the investment and conveyed the information that Ambient was to receive compensation for the relationship. The role of Ambient was also discussed at the December 1998 board meeting. Although, as Kuo points out, Watson and Chen were members of the DVS board by this time, Watson testified that he was looking out for the interests of OPLI as well as those of the other investors.
Chang (who unquestionably had allegiance to OPLI, not DVS) admitted that he was aware in 1999 that the amount of money DVS needed was greater than he had been led to believe. He conceded that in 1999 he learned that some of the information he had received before the investment was "kind of not true," including how much money DVS needed. He had "just a suspicion" that he had been "cheated," but no "direct evidence" of that. Chang was also aware of the Ambient lawsuit in April 1999 and clearly "knew that something was amiss." He did not make any inquiries because it was "tough to deal with DVS," even in the years Kuo was CEO. He wished that she had disclosed the Ambient agreement to him and believed that he would have had a claim against her.
These facts compel the conclusion reached by the trial court, that OPLI was on notice of any misrepresentation well before January 29, 2001. For similar reasons we agree with the lower court that there was insufficient evidence of justifiable reliance to sustain the misrepresentation causes of action. Before the October 1998 investment Watson and Chang had all the information necessary to alert them to DVS's true financial situation as well as Ambient's involvement with the company. Watson's testimony that he did not have enough time to review the documents given him does not amount to justifiable reliance on a misrepresentation regarding DVS's investment needs and the status of contracts with other entities.
Kuo's resort to tolling of the statute of limitations is unavailing here; even if this argument, first raised on appeal, were timely, it depends on irrelevant facts—namely, Sun's absences from the country and presumed evasion of service of the cross-complaint. Likewise, the equitable estoppel argument depends on Sun's alleged concealment of the Ambient liability from Kuo herself rather than from OPLI.
The fourth cause of action for breach of fiduciary duty was premised on the alleged role of Sun as a broker in the sale of the Sunnyvale property from OPLI to Sun and Sun, LLC. In moving for nonsuit Sun argued that there was no brokerage agreement with OPLI, nor had OPLI paid any commission to Sun for that purchase. Sun acknowledged Kuo's assertion that she personally had paid Sun a commission through the reduced price of the property, but there was no evidence that any OPLI agent or representative was even aware of such a condition of the transaction. Sun further argued that any transaction was illegal, because (a) Sun was not a licensed securities broker, (b) any secret agreement for OPLI to give money to someone on the board would have been illegal, and (c) any secret agreement to pay a commission through a reduction in the purchase price would constitute tax fraud and a breach of Sun's obligations to DVS to report personal gain. Kuo's collusion in such an arrangement would also constitute unclean hands, according to Sun, because she would have been perpetrating fraud on the corporation as well as conspiracy to avoid paying taxes. Finally, Sun maintained that "Sun and Sun, LLC," the recipient of the deed, was Jane Sun's company and had nothing to do with Sun, from whom she was no longer married.
We cannot entertain Kuo's argument on appeal that Sun's concealment of DVS's needs and the Ambient contract constituted substantial evidence of breach of fiduciary duty. The parties' stipulation at trial was that Sun's fiduciary status was limited to his role as broker in the Sunnyvale property transfer.
Kuo makes much of the legal status of Sun and Jane Sun. The defense had characterized their relationship as divorced; Kuo has offered for this court's judicial notice a 2003 judgment of legal separation between the Suns to support her argument that the Sunnyvale property was actually held by them as community property. The legal separation agreement states that the Suns had been separated since November 15, 1996. We have taken judicial notice of the 2003 judgment, but it has no bearing on the outcome of the cause of action for breach of fiduciary duty.
The trial court determined that there was no evidence that Sun had assumed a fiduciary position toward OPLI as a broker in the transaction and he therefore was not liable for breach of fiduciary duty. The court also agreed with Sun's argument that the claim was barred by illegality and unclean hands.
The court's grant of nonsuit on this cause of action was correct. Neither Miller, negotiating for DVS, nor Watson, negotiating for OPLI in the investment deal with DVS, was aware of a broker's commission paid to Sun for the transaction. Had Watson been aware of such a commission, he would have seen that it was properly disclosed in an "8K filing." Sun testified that he would never act as a broker because it would damage his reputation.
The only evidence of a broker relationship was Kuo's representation and Chang's testimony that she directed Chang to sell the property, which he had bought for $1,750,000, to the Sun family for $1.5 million, although it was worth $1.86 million. Kuo also testified that Sun had required payment of a commission. The court sustained Sun's objection to Kuo's additional statement that the price had been reduced as a form of commission to Sun. In the court's view, it was "the knowledge of Mr. Chang that we have to rely upon . . . on that issue since he and Dr. Sun were involved in that transaction." Kuo admitted that she had directed Chang to sell the property to Sun but that he did not know about any commission. Kuo explained to the court that she told Chang about the broker fee after the transaction, but not before title was transferred.
We agree with the trial court that the evidence presented at trial did not permit the inference that Sun had a fiduciary relationship with OPLI based on his status as a broker in the real estate transaction. Whether or not Kuo herself may have paid Sun a commission in some form, she was not asserting her own personal claims in this trial. Kuo contends that her knowledge of the commission is imputed to OPLI because she was acting "on behalf of, and as agent for, OPLI and the other investors." Kuo had maintained, however, that she was not an agent of OPLI, but only a "finder" who helped investors and DVS find each other. Ostensible agency, a theory she raises in her reply brief, has no relevance to her alleged payment if that payment was unknown to others. In any event, the evidence established that it was Chang personally, not OPLI, that owned and sold the property. Most of the contrary statements Kuo points to in her appellate briefs regarding her agency and negotiation of a reduced price as commission were not evidence, but rather argument or excluded testimony.
We thus conclude that the absence of evidence of a broker's fee vitiated the breach of fiduciary duty claim. In light of this conclusion we need not enter the parties' debate regarding the asserted illegality of the brokerage agreement, though we see merit in Sun's argument that Kuo's participation in the payment of the commission would constitute unclean hands. As the statute of limitations and lack of justifiable reliance barred the misrepresentation claims, there was no viable cause of action remaining for the jury's consideration. The trial court therefore correctly granted nonsuit with respect to each cause of action in the fourth amended complaint as amended by stipulation.
Disposition
The judgment is affirmed.
WE CONCUR: MIHARA, J., McADAMS, J.