Opinion
A158010
03-30-2021
MONTGOMERY SANSOME, LP, Plaintiff, Cross-defendant, and Respondent, v. EVELYN PETERS, Defendant, Cross-complainant, and Appellant; LEONARD A. NORDEMAN, Cross-defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Mateo County Super. Ct. No. 17-CIV-00494)
This case concerns a dispute between a construction company and an elderly homeowner regarding payments for repair work after a fire damaged her home in Daly City, California. A jury found Evelyn Peters (Peters), the homeowner, liable for breach of contract and common counts in the amount of $59,027. The jury found Montgomery Sansome, LP (MS), the construction company, liable for negligence in the amount of $16,000. Leonard Nordeman is the general partner of MS. The jury found against Peters on her claims against Nordeman for negligence, fraud, and financial elder abuse.
Peters appeals. She argues the trial court erred by dismissing her claim for violation of the unfair competition law, Business and Professions Code section 17200 et seq. (the UCL claim), and that MS's contracts were unenforceable because they violate section 7159 of the Business and Professions Code. In addition, Peters argues the trial court erred or abused its discretion by admitting evidence of her insurance coverage, by excluding evidence of Nordeman's 2004 felony conviction, and by sanctioning Peters's attorney when ruling on a pretrial discovery dispute.
Undesignated statutory references are to the Business and Professions Code.
We conclude Peters was not prejudiced by the dismissal of her UCL claim and her contracts with MS are enforceable. We also conclude the trial court's evidentiary rulings were not an abuse of discretion and the sanctions order did not violate due process. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
I. The Fire and the Engagement of MS
On May 8, 2015, Peters's home suffered substantial damage when a fire from the adjacent building spread to her home. At the time of trial, Peters was 87 years old, and she lived in the house since 1965. Her husband passed away in 1987. Peters worked as a nurse, and she had two sons, Ervin and Calvin.
When her house caught fire, Peters was not home. She was out with her son, Ervin. For the first month after the fire, Peters's homeowner's insurance provider, CSAA Insurance Exchange (CSAA), paid for hotel rooms for Peters and her sons. After that, CSAA rented a house for Peters while her home was being repaired. Ervin passed away while Peters was out of her home.
CSAA proposed "tearing the house down and starting new," but Peters "just wanted the house back like it was." CSAA engaged Advanced Restoration (AR) to begin the work. On or about May 22, 2015, Peters, or her son Calvin, signed a "Limited Work Authorization" with AR. Less than a week later, Peters terminated the contract because AR caused damage while removing items from her house.
Nordeman is a licensed building contractor. He runs MS, which is a company that has its "own crew of plumbers, electricians, carpenters, painters, [and] drywall people." Sometimes the company has "as few as 5 or 6 projects, and sometimes . . . as many as 25." About 50 percent of MS's work is "for fire restoration" and the other 50 percent is remodeling and new construction.
Nordeman learned about the damage to Peters's home from Catastrophe Assistance Team (CAT), a company that "provides leads to [MS] for fire losses." CAT contacted Peters and recommended Nordeman. At Nordeman's first meeting with Peters and her sons, Peters told Nordeman she wanted her house "back like it was. Nothing more." Nordeman claimed he could do so.
II. The Estimates, the Home Improvement Agreements, and the Change Orders
CSAA inspected the damaged property on or about May 13, 2015, and its initial estimate for the repair work was $20,959.73. Nordeman testified that "everybody knew this was not enough." In July 2015, MS met with the insurance adjuster onsite, and CSAA prepared a revised estimate, stating the repairs would cost $60,218.17.
Based on this amount, on or about August 20, 2015, Peters and MS entered into a "Home Improvement Agreement." It stated MS "will complete the work proposed . . . for the amount of $60,218.17 (plus any additional carrier-approved supplements)." The document indicated the work would begin in August 2015 and be completed by the end of February 2016. As part of the recission waiver, Peters wrote: "I need to get back in my house right away."
In a letter from MS to Peters, MS indicated the insurance adjuster approved an increased cost for architectural work and agreed to MS obtaining subcontractor bids. The letter indicated there were issues not addressed in the estimate that "may add to the amount currently approved," and MS was required to submit architectural diagrams to the city "for their approval in order that we may begin the repairs." The purpose of the letter was to inform Peters "that the work can't be done for $60,218.70, but I'm going to proceed on an agreed process with the insurance adjuster to establish the correct values."
In August 2015, Nordeman met Peters at her temporary residence to sign the agreement. Peters expected the repair work to be completed by February, and she was anxious to go home. However, she also testified she told Nordeman that $60,000 was insufficient to repair the damage. Nordeman indicated she should sign the agreement anyway. Regarding this amount, Nordeman explained that it "at least . . . gets us somewhere down the road, plus any additional carrier-approved supplements because we know this is not going to be enough."
Nordeman did not tell Peters he could complete the repairs for $60,000, nor did Peters testify that he did. Instead, Peters had confidence Nordeman could obtain more money from CSAA.
Around September 2015, CSAA requested a bid or estimate from Britannia Construction Inc. (Britannia), "a reconstruction contractor that works with insurance companies." Britannia provided two estimates. On September 21, 2015, Britannia determined the cost of the repairs would be $103,551.40. Nordeman testified Britannia was "more thorough than the [prior] adjusters," but this bid was "still short of the mark." On October 28, 2015, Britannia revised its estimate, indicating the repairs would cost $160,248.65.
Nordeman did not show the Britannia bid to Peters. In October 2015, MS prepared its own estimate indicating repairing the fire damage would cost $171,040.45.
CSAA agreed to pay the amount estimated by Britannia. Nordeman accepted this estimate because he did not "want to fight anymore." According to Nordeman, "it was a nonstop battle with the insurance company to convince them of the value of the work. We were on the phone to them, lots of letters exchanged, lots of telephone calls, then calling Britannia to verify the values. [¶] It was just one thing or another, and we couldn't seem to make them happy. And ultimately on October 29, they finally agreed to pay [$]160,000 based on the estimates."
According to Nordeman, seeking more money from CSAA would have caused additional delays. MS's project manager testified she kept in touch with Peters to keep "her updated on the delays with the insurance company and where we were at and fielding questions from her about the insurance company. Sometimes I had to call them to ask them to call her because she wasn't able to get in contact with them."
On October 29, 2015, MS and Peters executed a "Change Order" whereby MS agreed to perform the repairs "for the newly approved amount of $160,248.65 (* plus additional funds approved by the carrier)." The change order referred to progress payments. Nordeman explained that "CSAA was going to fund the whole project, but the progress payments . . . [were] made by the bank." As further explained, "[t]he money is paid by the insurance company to the owner and the lender, and then the lender makes the field inspections for releasing the money." The lender was the company with the mortgage on Peters's home.
On or around the same date, MS and Peters signed another "Home Improvement Agreement" in "the amount of $160,248.65 (plus any additional carrier-approved supplements)." At this time, MS was "still trying to get the insurance carrier to pay the value of some of the items." This contract indicated the work would start in November 2015 and be completed by May 2016. As part of the rescission waiver, Peters wrote, "I would like to get back in my home."
Nordeman made a number of changes to the project as proposed in the Britannia bid. For example, he decided not to replace the entire roof of Peters's house. There were other repairs in the Britannia estimate that MS did not perform. Nordeman did not inform Peters or CSAA about the changes. According to Nordeman, there were "a lot of changes. But we gave her more than we took back."
By the end of 2015, MS had received about $80,000 in progress payments. Although it is not clear whether repair work occurred in the interim, the Daly City Building Division issued a permit for the work in June 2016.
In September 2016, MS and Peters signed a second change order. It stated, "CSAA has approved our estimate for the framing and foundation work required by code in the amount of $57,340.45, in addition to the previous total. . . . This brings our total to $217,524.57, plus or minus any amounts approved by the carrier." The Daly City Building Division inspected the framing and shear wall work in July and September 2016. Peters signed this change order after the work was completed.
In October 2016, MS and Peters signed a third and final change order. It stated, "To address the sub-standard conditions on the east side of the foundation, we have had an opportunity to discuss this with the Building Department and they have approved heavy duty excavation on the east side in order to expose . . . the foundation and the framing that was burned. [¶] This is a substantially less costly method of repair than replacement of the foundation and after substantial efforts, we were able to get the Building Department to accept this method of repair and approve this design. [¶] We have submitted a supplement to the carrier for this work in the amount of $11,455.30."
III. Peters Returns Home and the Final Payment Dispute
Peters moved back into the house in January 2017. According to Peters, the house was not safe; she testified part of the floor in the living room had no foundation, the toilet flooded, and the kitchen sink leaked. These problems upset Peters. She claimed that if Nordeman had initially told her how long the repairs would take and their cost, she would not have signed an agreement with him.
CSAA financed the repair work. Peters did not contribute money. According to MS's project manager, delays were caused by CSAA and the Daly City Building Division. The project manager interacted with a number of different adjusters from CSAA.
In a letter to Peters, in January 2017, Nordeman indicated there was a balance due on the contract. The letter stated, "We have been informed by the bank, Reverse Mortgage Funding, that you have instructed them not to speak with us regarding you[r] project, and you have refused to allow them to schedule a final inspection on your property, which is required by them, in order for them to release the remaining funds they have in their possession." Soon after, Peters relented. In a follow up letter, Nordeman stated he was happy Peters was moving home and agreed "to contact the bank" to "allow them to perform their final inspection."
However, in its inspection, the bank found the repairs were incomplete. An email from MS to the bank in February 2017 stated there were three problems: "The front steps were not repaired," "The floor is 'uneven[,]' " and "[t]here is a weak spot needing reinforcement in the sub floor of the living room." MS responded that "the front steps were not included in our scope of work, and the insurance has not included anything for them," and that the uneven state of the floor was "a pre-existing condition that, again, was not a part of our work." According to MS, "[t]he weak spot in the living room is a part of our work, and we have asked Mrs. Peters on at least 7 occasions to allow us in to repair this. Yesterday, we arrived with a carpenter and tools . . . , but she . . . turned us away."
At trial, Peters acknowledged her mortgage company was holding money from CSAA.
Citing a trial court order, Peters claims her lender, and the Department of Housing and Urban Development (HUD), are holding $89,997.88 in funds. In their brief, MS and Nordeman state, "An additional $89,026.87 was funded by CSAA, but was being held by Peters' mortgagee, Reverse Mortgage, and [HUD]."
IV. The Lawsuit, the Jury Trial, and the Verdicts
On February 2, 2017, MS filed a complaint against Peters asserting five causes of action including for breach of contract and unjust enrichment. MS alleged it received a number of progress or retention payments, including on "September 4, 2015 in the amount of $29,194.81; December 7, 2015 in the amount of $50,897.25; November 7, 2016 in the amount of $22,038.16, and . . . [on] November 28, 2016 in the amount of $51,064.1." These amounts total $153,194.32. MS alleged Peters prevented "the final retention payment of insurance funds" in the amount of $89,026.87.
On August 16, 2017, Peters cross-complained against MS and Nordeman for breach of contract, fraud, negligence, financial elder abuse, and unfair business practices. The cross-complaint alleged that Nordeman "coax[ed], convince[d], and induce[d]" Peters "to rescind her agreement with [AR] and enter into a construction agreement with" MS. Among other things, Peters alleged Nordeman misrepresented his "ability to perform the necessary construction repairs . . . [for the] amount of $60,218.17," and that the repairs would be completed on or before February 28, 2016. Peters alleged numerous construction defects and delays, and that MS performed work unrelated to the fire damage.
A jury trial began in September 2018. The jury returned its verdicts in October 2018.
The jury returned a verdict in favor of MS on its claims against Peters for breach of contract and common counts, and the jury awarded the company $59,027 in damages. The jury returned a verdict in favor of Peters on her claim against MS for negligence, and the jury awarded Peters $5,200 in economic damages and $10,800 in noneconomic damages. However, on Peters's claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and financial elder abuse, the jury returned verdicts in favor of MS and Nordeman and against Peters. The jury's verdict was also against Peters on her claim against Nordeman for negligence.
The judgment was filed on June 4, 2019. Peters appeals.
DISCUSSION
On appeal, Peters makes five arguments, which we address in turn.
I. Peters Was Not Prejudiced by Dismissal of Her UCL Claim
Peters's first argument is that the trial court erred by dismissing her UCL claim "based on a failure to show harm to competition." We agree the UCL claim should not have been dismissed for this reason, but Peters fails to establish prejudice. (F.P. v. Monier (2017) 3 Cal.5th 1099, 1107 [no "reversal for errors in civil cases absent prejudice"].)
A. Governing Law
"[A] cause of action under the UCL . . . is to be tried by the court rather than by a jury." (Nationwide Biweekly Admin., Inc. v. Superior Court (2020) 9 Cal.5th 279, 305.) "A UCL action is equitable in nature; damages cannot be recovered." (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.) Relief for violation of the UCL is generally limited to injunctive relief and restitution. (Ibid.) Indeed, injunctive relief is " ' "the primary form of relief available under the UCL," while restitution is merely "ancillary." ' " (In re Tobacco Cases II (2015) 240 Cal.App.4th 779, 801-802.)
"[R]estitution is the only monetary remedy authorized in a private action brought under the unfair competition law. [Citation.] . . . The word 'restitution' means the return of money or other property obtained through an improper means to the person from whom the property was taken. [Citations.] 'The object of restitution is to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.' " (Clark v. Superior Court (2010) 50 Cal.4th 605, 614.)
B. No Prejudicial Error
Here, before trial, the court granted a motion in limine to bifurcate and resolve the UCL claim outside the presence of the jury. The court dismissed the claim because there was no allegation of "antitrust injury to competition." According to the court, the UCL is "designed to protect business competition," and Peters failed to allege or show "the requisite injury to competition itself."
In dismissing the claim, the trial court relied on Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, in which our high court held that "[w]hen a plaintiff who claims to have suffered injury from a direct competitor's 'unfair' act or practice invokes section 17200, the word 'unfair' in that section means conduct that threatens an incipient violation of an antitrust law . . . or otherwise significantly threatens or harms competition." (Id. at p. 187.) But, in a footnote, our high court explained that this test is limited to actions "by a competitor alleging anticompetitive practices," and it does not apply "to actions by consumers." (Ibid., fn. 12.)
Indeed, in Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 209-210, our high court stated " 'section 17200 is not confined to anticompetitive business practice but is equally directed toward " 'the right of the public to protection from fraud and deceit.' ". . . . The Legislature apparently intended to permit courts to enjoin ongoing wrongful business conduct in whatever context such activity might occur.' " The UCL is broad in scope, and, as a result, the trial court's focus on "injury to competition" was too narrow.
Nevertheless, Peters was not prejudiced by the dismissal of her UCL claim. She points to no evidence of ongoing misconduct, and, on appeal, she does not argue entitlement to injunctive relief. After a jury trial, Peters was awarded compensatory damages for MS's negligence, but " '[c]ompensatory damages are not recoverable as restitution.' " (Zhang v. Superior Court (2013) 57 Cal.4th 364, 371.) Moreover, in her complaint, Peters did not allege entitlement to restitution.
Peters did allege entitlement to forms of damages that are not recoverable under the UCL, including punitive damages. (Zhang v. Superior Court, supra, 57 Cal.4th at p. 376.)
In a footnote in her reply brief, Peters claims she "suffered out-of-pocket loss of money . . . but that record was not developed" because the UCL claim was dismissed before trial. We could decline to consider this argument made for the first time in the reply brief. But even if we consider it, Peters loses. Below, in her offer of proof, Peters claimed she spent money "getting her toilet replaced, and her blinds, and purchasing things that Mr. Nordeman was supposed to repair but didn't." But Peters points to no evidence she paid money to respondents, and, indeed, she testified she did not give them anything. Accordingly, the trial court could not have awarded restitution. (Clark v. Superior Court, supra, 50 Cal.4th at p. 614.) Peters fails to show prejudice resulting from the dismissal of her UCL claim.
II. The Contracts Are Enforceable
Next, Peters contends the trial court erred in denying her motion for nonsuit because MS's contracts are illegal and unenforceable under section 7159. We are not persuaded.
A. Governing Law and Standard of Review
Section 7159 applies to home improvement contracts if "the aggregate contract price" exceeds $500. (§ 7159, subd. (b).) Among other requirements, the contract must have a "heading: 'Contract Price,' followed by the amount of the contract in dollars and cents." (§ 7159, subd. (d)(5).) Change orders must be "in writing and signed by the parties prior to the commencement of any work covered by a change order." (§ 7159, subd. (c)(5).) In addition, the contract must include "a description of the project and a description of the significant materials to be used and equipment to be installed." (§ 7159, subd. (d)(7).)
The statute was amended in 2018 (Stats. 2018, ch. 406, § 3), and again in 2020 (Stats. 2020, ch. 158, § 2). We refer to the version in effect from July 1, 2012 to December 31, 2018.
While the purpose of section 7159 is to protect unsophisticated consumers, home improvement contracts that do not comply with these statutory requirements are voidable, not void. (Asdourian v. Araj (1985) 38 Cal.3d 276, 292-293.) In Asdourian, our high court enforced contracts that did not comply with the statute because the property owners were experienced real estate investors, and if they were allowed to benefit from the work without compensating the contractor, they would be unjustly enriched. (Id. at pp. 290, 292-293.) Similarly, in Hinerfeld-Ward, Inc. v. Lipian (2010) 188 Cal.App.4th 86, 91, the Court of Appeal enforced an oral contract for renovation work because the property owners were " 'not the typical homeowner,' " the project was a complex, high-end remodel that evolved over a number of years, the architect was the homeowners' "advocate on the project," and the homeowners would be unjustly enriched if the contractor was denied recovery. (Id. at pp. 91-95.) The court emphasized that the "sophistication of the parties in construction matters is only one of several factors considered by the Asdourian court and its progeny." (Id. at p. 94.)
Superseded by statute on other grounds as stated in Kashani v. Tsann Kuen China Enterprise Co. (2004) 118 Cal.App.4th 531, 541.
" '[C]ourts grant motions for nonsuit only under very limited circumstances.' [Citation.] 'A defendant is entitled to a nonsuit if the trial court determines that, as a matter of law, the evidence presented by plaintiff is insufficient to permit a jury to find in his favor.' " (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208.) When "motions for nonsuit raise issues of law [citation], we review the rulings on those motions de novo, employing the same standard which governs the trial court." (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1541-1542.)
B. No Error in the Denial of the Motion for Nonsuit
Here, after both sides rested, Peters—reraising an issue considered earlier—made an oral motion for nonsuit based on the failure of the contracts to comply with section 7159. The trial court denied the motion, stating there was evidence of "participation by CSAA," which obtained an estimate from Britannia, and there was "an elevation of the claim to more senior, more experienced claims people to watch over this. And I think it's a reasonable inference that there wouldn't have been monies released if there had not been a look at the work by CSAA. [¶] And there's other evidence that the holder of the mortgage . . . had its own inspections. [¶] . . . I don't see that it's a case where we have an unsophisticated homeowner, who is at the mercy of an overbearing contractor, without some third-party assistance in furthering what was in her interests." Based on this ruling, the trial court entered a written order denying the motion for nonsuit.
Assuming without deciding that we review this ruling de novo, and also assuming that the contracts with Peters were not in strict compliance with the requirements of section 7159, we conclude the contracts are enforceable.
The policy of section 7159 is to protect unsophisticated consumers, but Peters was not paying for the repairs; instead CSAA was doing so. MS was required to show CSAA "the actual value of the job by getting . . . contractors to provide estimates," and MS had to present the estimates "to the insurance company . . . [to] get approval for the work that needed to be done." In September 2015, CSAA obtained its own bid or estimate from Britannia, and, after five months of discussions, CSAA approved repair costs based on the Britannia estimate.
Thereafter, the Daly City Building Division required additional work, and these additional costs were approved by CSAA around September 2016. CSAA sent approved funds to Peters's bank, and an inspection was required before the release of a final payment. When the final payment was not made, this litigation ensued, and a jury determined MS is entitled to $59,027 out of the funds approved by CSAA and apparently being held by Peters's lender or HUD. Based on these circumstances, which involve sophisticated entities determining the scope of the repair work, and how much would be paid, and when, enforcing MS's contracts with Peters does not violate the policy of section 7159. (Asdourian v. Araj, supra, 38 Cal.3d at p. 294.)
III. The Evidence of Insurance Payments Was Admissible
Peters's third argument is that the trial court erred "by allowing evidence and argument regarding . . . insurance coverage, leaving the jury to understand that [Peters] suffered no financial harm, and that an award to her would be a windfall." We disagree.
A. Governing Law and Standard of Review
"The collateral source rule states that 'if an injured party receives some compensation for his injuries from a source wholly independent of the tortfeasor, such payment should not be deducted from the damages which the plaintiff would otherwise collect from the tortfeasor.' " (Howell v. Hamilton Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 551.) "The collateral source rule has an evidentiary as well as a substantive aspect. Because a collateral payment may not be used to reduce recoverable damages, evidence of such a payment is inadmissible for that purpose." If relevant on another issue, the probative value of the collateral payment must be carefully weighed " 'against the inevitable prejudicial impact such evidence is likely to have on the jury's deliberations.' " (Id. at p. 552.)
"While trial judges ordinarily enjoy broad discretion with respect to the admission and exclusion of evidence . . . , a court's discretion is limited by the [applicable] legal principles." (Katiuzhinsky v. Perry (2007) 152 Cal.App.4th 1288, 1294.) Action that "transgresses the confines of the applicable principles of law" constitutes an abuse of discretion. (Ibid.)
B. No Abuse of Discretion
Peters moved in limine "to exclude evidence that CSAA . . . paid MS for work conducted on her home, or paid some of her living expenses while out of her home." In opposing the motion, MS argued the collateral source rule did not apply because the insurance payments were for the fire loss, not the alleged misconduct of MS and Nordeman.
The trial court denied the motion finding the insurance money was for "damage to the house . . . from the fire." According to the court, the payments were not collateral because the insurance carrier released money based on inspections. The trial court found excluding evidence of the payments would prejudice MS because it claimed Peters "wrongfully sidelined" released funds, and CSAA's involvement was relevant to the issue of whether MS's work was defective.
We agree with the trial court. " 'It has always been the rule that the existence of insurance may properly be referred to in a case if the evidence is otherwise admissible.' [Citation.] The trial court must then determine, pursuant to Evidence Code section 352, whether the probative value of the other evidence outweighs the prejudicial effect of the mention of insurance." (Blake v. E. Thompson Petroleum Repair Co. (1985) 170 Cal.App.3d 823, 831.)
Here, if Peters sued the neighbor that caused the fire, then evidence of the insurance payments would be inadmissible to reduce the damages Peters could seek from her neighbor. But Peters did not seek to recover from MS or Nordeman for "the same property damage" covered by the CSAA insurance payments. (Cf. Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 39.)
Instead, MS sued Peters alleging she interfered with or prevented "the final retention payment of insurance funds." Peters then cross-claimed against MS and Nordeman, alleging, among other things, that they performed defective work, overcharged, engaged in work unrelated to the fire, and "delay[ed] completion of the project to leverage extortion demands for additional money from CSAA . . . ."
Based on allegations of this kind, evidence of CSAA's involvement in assessing the fire damage and determining how much to approve and pay for the repair work was admissible and relevant. For example, if there was evidence CSAA caused delays in approving the repair work and releasing payments, this evidence was relevant to Peters's claim that MS and Nordeman misrepresented their ability to complete the project by February 2016. If there was evidence CSAA approved the final payment, but Peters refused to release it, this evidence was relevant to MS's quantum meruit claim. Indeed, some of the trial exhibits Peters sought to introduce themselves referred to CSAA insurance payments.
In other words, the parties were not seeking to introduce evidence of insurance payments for the purpose of reducing the damages Peters could recover for the alleged tortious conduct of Nordeman and MS. The evidence was relevant to deciding the parties' claims, and Peters fails to establish an abuse of discretion in the trial court's determination that the probative value of the evidence outweighed its prejudicial effect. (Arambula v. Wells (1999) 72 Cal.App.4th 1006, 1015 [collateral source rule does not preclude evidence of collateral payments if "there is a 'persuasive showing' that such evidence is of 'substantial probative value' for purposes other than reducing damages"]; Chanda v. Federal Home Loans Corp. (2013) 215 Cal.App.4th 746, 753 [abuse of discretion to exclude evidence broker obtained title insurance because evidence was relevant to question of liability, or whether broker breached fiduciary duty to lenders].)
In her reply brief, Peters relies primarily on Kardly v. State Farm Mut. Auto. Ins. Co. (1989) 207 Cal.App.3d 479. In that case, the court explained that the collateral source rule "provides that if an injured person receives compensation for injuries from a source wholly independent of the tortfeasor, such compensation should not be deducted from the damages the victim otherwise obtains from the tortfeasor." (Id. at p. 485.) There is an exception to this rule when a joint tortfeasor is involved "because the source of recovery is not wholly independent." (Ibid.) In Kardly, following plaintiffs' recovery of damages for emotional distress against the driver of the vehicle that injured them, they sued their insurance company after it refused to pay certain claims, which caused them additional emotional distress. The court found the claims against the insurer "are so tenuously related" to the accident claims that State Farm could not be considered a joint tortfeasor. (Ibid.) Accordingly, the judgment against the driver did not preclude claims against the insurer. (Id. at p. 486.)
Kardly does not establish the trial court should have excluded evidence of the CSAA insurance payments. Indeed, Kardly did not consider any issue regarding the admissibility of evidence based on the collateral source rule. Here, admissibility of the CSAA payments did not depend on whether MS and Nordeman were joint or independent tortfeasors. Instead, it depended on whether the evidence was relevant to deciding the parties' claims and cross-claims, and whether its probative value outweighed its prejudicial effect. (Howell v. Hamilton Meats & Provisions, Inc., supra, 52 Cal.4th at p. 552.)
Having found no error in the trial court's admission of evidence of the CSAA insurance payments, we also find no error in its rejection of a proposed jury instruction on the collateral source rule. Peters argues the trial court should not have struck language from a proposed jury instruction regarding breach of contract damages. But "an award for breach of contract . . . is not subject to the collateral source rule." (Plut v. Fireman's Fund Ins. Co. (2000) 85 Cal.App.4th 98, 110.)
Finally, Peters complains about the trial court's response to a question from the jury, which essentially told the jury that if it decided to award MS less than the $89,000 paid by CSAA, then Peters could use the remaining funds to complete unfinished work or correct defects. But Peters did not object that this response violated the collateral source rule; instead, she expressed concern about whether HUD or another third party had a claim to the remaining funds. We decline to consider whether the response implicates or violates the collateral source rule. (Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 Cal.App.5th 982, 997 [" 'theories not raised in the trial court cannot be asserted for the first time on appeal' "].) More generally, Peters's concern about the prejudicial effect of evidence of the CSAA payments is belied by the fact the jury awarded her $16,000 for MS's negligence.
IV. The Exclusion of Evidence of a Prior Felony Conviction
Peters contends the trial court should not have excluded evidence of Nordeman's 2004 felony conviction. We are not persuaded.
A. Governing Law and Standard of Review
"For the purpose of attacking the credibility of a witness, it may be shown . . . that he has been convicted of a felony." (Evid. Code, § 788.) However, "when [Evidence Code] sections 788 and 352 are read together they clearly provide discretion to the trial judge to exclude evidence of prior felony convictions when their probative value on credibility is outweighed by the risk of undue prejudice." (People v. Beagle (1972) 6 Cal.3d 441, 453, abrogated on other grounds by People v. Diaz (2015) 60 Cal.4th 1176, 1190.) "[U]pon proper objection to the admission of a prior felony conviction for purposes of impeachment in a civil case, a trial court is bound to perform the weighing function prescribed by section 352." (Robbins v. Wong (1994) 27 Cal.App.4th 261, 274.) The court "should consider, among other factors, whether . . . [the prior conviction] reflects on the witness's honesty or veracity, [and] whether it is near or remote in time." (People v. Clark (2011) 52 Cal.4th 856, 931.)
The opposition to the motion to exclude the evidence primarily relied on the argument that the conviction was relevant to credibility. While Peters also cited Evidence Code section 1101, subdivision (b) below, she did not explain how the admissibility of the felony conviction was appropriate under that statute or whether a different analysis of the applicability of Evidence Code section 352 was required than under Evidence Code section 788. (Isaacs v. Huntington Memorial Hospital (1985) 38 Cal.3d 112, 132-133 [evidence of remote prior incidents may be excluded under Evidence Code section 352].) Her argument before us mirrors her argument below.
B. No Abuse of Discretion
Here, MS and Nordeman moved in limine to exclude evidence of Nordeman's 2004 felony conviction, which occurred 14 years before the trial in this matter and was based on conduct dating back to 1990. The motion stated Nordeman pled guilty "in 2004 to a violation of Title 18 [United States Code] section 1014, which makes it illegal to overstate income for purposes of securing a federally insured loan." The trial court granted the motion.
In doing so, the trial court did not abuse its discretion. The trial court balanced the relevant factors, and it granted the motion because the conviction was remote. We uphold the ruling. (People v. Clark, supra, 52 Cal.4th at p. 932 ["Because . . . discretion to admit or exclude impeachment evidence . . . [is broad] . . . , a reviewing court ordinarily will uphold the . . . exercise of discretion."].)
V. The Monetary Sanction Did Not Violate Due Process
Peters's final argument is that a discovery sanction violated her attorney's due process rights. We disagree.
On August 1, 2018, counsel for Nordeman emailed counsel for Peters advising that she would be appearing ex parte the next day for an order to compel the completion of Peters's deposition "and for sanctions." The following day, Nordeman filed the ex parte application. On the same day, Peters filed an opposition and requested monetary sanctions against Nordeman and his counsel.
After the hearing, the trial court granted the application. It denied Nordeman's request for sanctions against Peters's counsel in the amount of $3,088,20, but it imposed a monetary sanction in the amount of $1,000.
It is not clear from the text of the order whether the monetary sanction was against Peters or her counsel and there is no record of what occurred at the hearing. However, on appeal, Peters contends the monetary sanction was against her attorney.
A. The Notice of Appeal
Preliminarily, we reject the argument that "the sanctions order is not reviewable" because Peters's attorney is not named as an appellant in the notice of appeal. "[A] reviewing court must construe a notice of appeal from a sanctions order to include an omitted attorney when it is reasonably clear that the attorney intended to join in the appeal, and the respondent was not misled or prejudiced by the omission." (K.J. v. Los Angeles Unified School Dist. (2020) 8 Cal.5th 875, 885.) Here, Peters is represented on appeal by her trial attorneys, and respondents identify no prejudice resulting from the omission. Accordingly, we construe the notice of appeal liberally as including Peters's attorney.
B. No Due Process Violation
Considered on the merits, there was no due process violation in the trial court's imposition of a monetary sanction against the attorney. The court may impose discovery sanctions, including monetary sanctions, "after notice to any affected party, person, or attorney, and after opportunity for hearing." (Code Civ. Proc., § 2023.030, subd. (a).) However, "a party who appears and contests a motion in the court below cannot object on appeal . . . that he had no notice of the motion or that the notice was insufficient or defective." (Alliance Bank v. Murray (1984) 161 Cal.App.3d 1, 8.) Ordinarily, such a party "is deemed to waive the defect or irregularity" in the notice. (Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 333, 342.) "[T]he party's appearance at the hearing and opposition on the merits showed that the notice 'served its purpose,' . . . and that any defect in the notice did not prejudice the party's preparation for the hearing and opportunity to be heard." (Id. at pp. 342-343.)
Here, Peters filed an opposition to the ex parte application and her counsel appeared at the hearing. There is no indication her counsel objected that the request for sanctions did not comply with the statutory notice requirements or violated her due process rights. Indeed, in her opposition to the application, Peters sought sanctions against Nordeman and his attorney. Therefore the court's order did not violate her counsel's due process rights.
In arguing otherwise, Peters's counsel relies on O'Brien v. Cseh (1983) 148 Cal.App.3d 957, Parker v. Wolters Kluwer United States, Inc. (2007) 149 Cal.App.4th 285, 296, and Sole Energy Co. v. Hodges (2005) 128 Cal.App.4th 199, 208. These cases are inapposite because, in each of them, the party who complained of lack of notice did not appear or defend against the motion or application. (O'Brien, at p. 960; Parker, at pp. 292, 296; Sole Energy, at pp. 205, 208.) Here, Peters's counsel did appear and defend, and, as a result, we uphold the trial court's order imposing a monetary sanction.
DISPOSITION
We affirm. Respondents are awarded costs on appeal. (Cal. Rules of Court, rule 8.278(a).)
/s/_________
Seligman, J. WE CONCUR: /s/_________
Simons, Acting P. J. /s/_________
Burns, J.
Judge of the Superior Court of Alameda County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------