Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC362244. Elizabeth A. Grimes, Judge.
Park & Lim, S. Young Lim; Norris & Galanter, Douglas F. Galanter and Donald G. Norris for Plaintiff and Appellant.
Miller Barondess, Louis R. Miller, Brian A. Procel, and Amnon Z. Siegel for Defendants and Respondents.
ASHMANN-GERST J.
Plaintiff and appellant Ocean Fresh Trading, Inc. (OFT) appeals from a judgment against it and in favor of defendants and respondents East West Bank (EWB) and one of EWB’s loan officers, Markus Kamarga (Kamarga). OFT offers two arguments on appeal. First, it claims that the trial court committed reversible error by granting respondents’ oral motion in limine to exclude four witnesses from testifying at trial: Joey Fan and Tommy Leung (the Bank Witnesses); and Tommy Rincon and Young Kim (the Customer Witnesses). Second, OFT asserts that insufficient evidence supports the jury’s finding of unclean hands.
We find no error and, accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Factual Background
Formation of OFT; OFT’s Line of Credit at EWB
Viewed in accordance with the usual rule of appellate review (People v. Rodriguez (1999) 20 Cal.4th 1, 11), the evidence established the following: In 2001, Judy Wu (Judy), Yuen Dang (Yuen), and Jimmie Dang (Dang) (collectively the siblings) formed OFT for the purpose of importing frozen seafood and then selling it to wholesalers and seafood distributors. In February 2003, OFT entered into a business loan agreement (BLA) with EWB. Under the terms of the BLA, EWB extended a business line of credit to OFT. According to Yuen, the line of credit was essential to OFT’s business.
Throughout the appellate record, Ms. Wu is occasionally referred to as Ms. Woo. For convenience, we refer to the parties by their first names. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 475, fn. 1.)
In applying as a guarantor for OFT’s original $2 million line of credit, Judy concealed the fact that she had previously been a president of another seafood importing company that had gone bankrupt. She stated that she hid this information to help OFT get the line of credit.
Kamarga, Dang’s long-time business associate friend, was OFT’s loan officer at EWB and handled matters relating to the line of credit.
Family Disputes at OFT
Problems began among the siblings in 2006. They fought with each other and were unable to agree on the management and direction of OFT. In fact, they each used OFT to launch competing seafood businesses, all of which maintained bank accounts at EWB: Yuen operated Ocean Breeze; Judy and Yuen formed Crystal Foods (without informing Dang); and Dang began operating Seafresh. In mid-July or August 2006, Dang applied for and obtained a line of credit at EWB for Seafresh.
Dang testified that the siblings formed Sea Lion Seafood in 2003 “to do [a] wholesale operation.” Despite the siblings’ initial ambitions, Sea Lion Seafood lay dormant for many years. In July 2006, Dang decided to essentially restart Sea Lion Seafood to compete with OFT. Sea Lion Seafood’s name was later changed to Seafresh. For purposes of this appeal, we refer to Dang’s competing company as Seafresh.
OFT’s Payment of Judy’s Personal Expenses; OFT’s Concealment of Judy’s Income; OFT’s Failure to Make Accurate Disclosures to EWB
The siblings did not respect the distinction between OFT’s expenses and their own, and frequently used OFT as a “personal account.” For example, OFT made various payments to Judy’s personal attorney in connection with her divorce, in part to help her conceal income from her estranged husband. In June 2004, OFT issued a check to Judy’s divorce attorney for $77,000. This payment was inaccurately represented as a seafood purchase on OFT’s general ledger. Similarly, in 2005, instead of paying $20,000 directly to Judy, OFT issued a check to her divorce attorney and falsely wrote off the payment as a corporate legal expense. On another occasion, Judy asked that certain of her salary and profit participation payments be made by checks issued to her daughter. At least seven checks for Judy’s distributions were issued to her daughter in 2005, and none was disclosed on her financial statements and schedules in her divorce proceeding. Another time, Judy asked that she be paid in cash, and she was paid $20,000 “off the books.” Judy even asked Dang to characterize a $50,000 payment from OFT as a loan so that she would not have to report the monies as income on her tax return.
No one at OFT informed EWB of these transactions.
In the summer of 2006, Dang and Yuen decided to withdraw approximately $1.1 million from OFT, to catch up with monies that Judy had previously withdrawn from the company.
OFT Shuts Down
As a result of Dang and Yuen’s $1.1 million withdrawal, OFT became in default on its loan covenant in the ratio of equity. Thus, on September 12, 2006, Dang sent an e-mail to Judy and Yuen, advising them that OFT was in violation of the BLA with EWB, that OFT’s line of credit needed to be reduced, that OFT’s seafood purchases would therefore be halted, and that OFT’s loan balance with EWB must be paid off. In a subsequent e-mail dated September 14, 2006, Dang reiterated to Judy and Yuen that EWB “MUST be paid off” and only after that would the siblings and their respective companies (Ocean Breeze, Crystal Foods, and Seafresh) receive monies and/or credit. He also confirmed that OFT was closing its operations, writing: “We should all put aside any personal feelings towards one another and work together to wind down peacefully, safe, and systematic[ally].”
On October 18, 2006, over Dang’s objection, Judy and Yuen convened a meeting of OFT’s directors. At that meeting, Dang was removed as president of OFT, and Yuen was elected its president. Yuen and Judy then voted to cease OFT’s operations, effective October 31, 2006. Because OFT owed money to EWB and Dang did not believe that EWB would be paid off between the time of that board meeting and October 31, 2006, Dang dissented to the decision to cease operations.
Judy and Yuen even informed its employees and notified third parties that OFT was shutting down.
At first, OFT, through Dang, was attempting to “work[] out” the loan covenant issue with EWB, through Kamarga. But, once OFT decided to cease its operations and close down by October 31, 2006, it would have been “moot” or “a waste of time” to do so.
EWB Calls a Default
As of November 2006, OFT was in violation of at least five different loan covenants, and OFT owed EWB approximately $620,000 in outstanding loans.
On December 11, 2006, EWB sent OFT a letter outlining all of the reasons that EWB was calling OFT’s loan.
OFT Rescinds Its Decision to Cease Operations
Meanwhile, on November 10, 2006, without notifying Dang, the OFT board of directors held a special meeting and decided to continue its business operations.
Procedural Background
Pleadings
On November 21, 2006, OFT initiated this litigation against respondents, among others. According to its third amended complaint, in 2005 and 2006, Dang diverted OFT’s customer lists and supplier information, along with large sums of money, to Seafresh. OFT claimed that Dang was using Seafresh to compete with OFT, “with the intention to ultimately steal [OFT’s] customers and suppliers.” The pleading further alleged that Kamarga and EWB “knowingly participated in” Dang’s theft from OFT. In particular, Kamarga helped Dang with Seafresh’s loan application, and EWB extended Seafresh a line of credit.
In November 2006, Kamarga recommended that EWB approve a $2 million line of credit for Seafresh. At the same time, EWB “began the process of fabricating reasons to call the [OFT] line of credit into default.” After Seafresh’s line of credit was approved, EWB froze OFT’s line of credit on the grounds that (1) Dang had told EWB that OFT would no longer draw against it; (2) OFT had violated two financial covenants; and (3) Dang had revoked his personal guarantee. EWB subsequently called OFT’s line of credit into default.
According to OFT, EWB improperly called a default to aid Seafresh and cause the collapse of OFT.
Kamarga answered in December 2007, and EWB filed its answer on or about February 1, 2008. In addition to a general denial, respondents each alleged unclean hands as an affirmative defense.
Pretrial Discovery
On February 13, 2007, EWB served form interrogatories on OFT. Form interrogatory No. 12.1 asked OFT to “[s]tate the name, ADDRESS, and telephone number of each individual: [¶] (a) who witnessed the INCIDENT or the events occurring immediately before or after the INCIDENT; [¶] (b) who made any statement at the scene of the INCIDENT; [¶] (c) who heard any statements made about the INCIDENT by any individual at the scene; and [¶] (d) who YOU OR ANYONE ACTING ON YOUR BEHALF claim has knowledge of the INCIDENT (except for expert witnesses covered by Code of Civil Procedure section 2034).” “Incident” was earlier defined as “the allegations as stated in [OFT’s] First-Amended Complaint and Cross-Complainant [EWB’s] Cross-Complaint.”
OFT responded on May 29, 2007, identifying Judy, Yuen, Shao Wei, Wayne Dang, Susan Dang, and Thomas A. Cowan III, Van Bandwith, Reed Tiao, Bennett Chui, Agatha Fung, Paul Yee, “and all the Defendants named in this action. Discovery is continuing.” At the time, the named defendants were Dang, Sea Lion Seafood, Seafresh Trading, EWB, Kamarga, Yaranti Kamarga, Sanjeewa Jayawardana, and Miling Chua.
On October 4, 2007, Kamarga served form interrogatories on OFT, including form interrogatory No. 12.1. In his interrogatories, the term “incident” was defined as “the circumstances and events surrounding the alleged accident, injury, or other occurrence or breach of contract giving rise to this action or proceeding.” Subject to a host of objections, OFT responded as follows: “See [OFT’s] Responses to Jimmie Dang and [EWB’s] Form Interrogatories.”
On December 19, 2007, EWB served supplemental interrogatories on OFT, asking it to provide “any later acquired information bearing on all answers previously made by [OFT] in response to all interrogatories (including all Form Interrogatories and Special Interrogatories) previously propounded to [OFT].” The following day, Kamarga served OFT with nearly identical supplemental interrogatories. OFT responded to both sets of supplemental interrogatories with a narrative regarding its claims in this action. While 14 witnesses were identified by name, the Bank Witnesses and the Customer Witnesses were not mentioned in either response.
OFT’s Pretrial Witness List
Less than two weeks before the original trial date, on February 6, 2008, OFT served a witness list that included more than 100 witnesses. The Bank Witnesses and the Customer Witnesses were included on OFT’s witness list.
Final Status Conference (February 11, 2008)
The parties appeared in court for the final status conference on February 11, 2008. At that time, the trial court reminded counsel that the case was scheduled for a five-day trial. When counsel for OFT attempted to explain why that time estimate was too short, the trial court interrupted, stating: “It’s way too late for you to tell me that. Right now is the time to tell me how you’re going to do it in five days.”
Kamarga’s counsel then pointed out that OFT had served a witness list with “106 witnesses on it.” The trial court replied: “They’re not all going to be able to testify.”
Later, the trial court advised counsel: “I’m not going to tell the jury room to send a panel up here on Tuesday until I see your final papers which persuade me that you actually have a workable plan to try this case in the five days I’ve allotted.” Counsel then raised the question of how jury selection would weigh into the five-day allotment. The trial court reiterated that the trial would last only “[f]ive days. If you want to spend two or three days picking a jury, be my guest. It’s not going to extend the period of time I’m going to make my department available to you for your trial. I don’t know why you’re still here. I don’t know why you haven’t settled your differences.”
The final status was continued to February 14, 2008.
Continued Final Status Conference (February 14, 2008)
The parties met with the trial court for a continued final status conference on February 14, 2008. After the trial court commented that OFT had presented “an awful long list of witnesses,” Kamarga’s counsel stated: “I believe there are several issues that are still outstanding with respect to the witnesses that were raised at the previous hearing, one of which being at least four or five of the witnesses [OFT] intends to call were not disclosed in its written discovery.” Kamarga identified them as OFT’s “banking witnesses and... customers.”
Later in the final status conference, respondents clarified that they were objecting to four individuals, namely the Bank Witnesses and the Customer Witnesses.
OFT’s counsel replied: “There are two bank officers that we intend on calling. We have produced business cards of both of those banking experts in the demand for production of documents. They were fully aware of those banking officers. [OFT] attempted to get a new line of credit. We gave [respondents] copies of business cards. They’re aware of it.
“In regard to the customers we plan on calling, that customer signed a declaration under penalty of perjury in the opposition to the right to attach order and we have mentioned that person several times in Judy Woo’s deposition and it has always been an issue in regards to the declaration. They’re fully aware of that person also.
“Those are the only three people that I’m aware of. We took out all the other names on the list because of the shortened time period that we have. Those are the three we plan on calling. They’ve been fully identified and they had access to talk to them.”
Kamarga’s attorney responded: “The issue is whether those witnesses have been fully identified. We did propound several rounds of discovery. There have been several sets of supplemental responses. None of those witnesses were identified.
“[OFT] wants to rely on the fact [that] business cards were produced among several thousand pages of documents. We don’t know who those people are. We didn’t know they intended to call them even if we did know who they were.” After pointing out numerous deficiencies in OFT’s discovery responses, counsel continued: “I don’t think [OFT] can dispute at this point none of these people were disclosed in any of the written discovery in this case. I don’t think that it’s sufficient that they threw some business cards into their production and now they want to call these people at trial.”
OFT’s counsel then argued: The “two bank officers are not being called for aiding and abetting or anything to do with aiding and abetting. They’re being called as an attempt by [OFT] in an attempt to get a line of credit to continue their business and inability to get a line of credit because of [EWB’s] improper default and the pending litigation that’s gone forward which caused downfall and eventually shutting down of the business of [OFT].”
Moreover, he explained to the trial court that it needed the Bank Witnesses’ testimony to rebut respondents’ affirmative defense of failure to mitigate damages. “[Respondents are] going to argue that there’s a failure to mitigate damages, [OFT] didn’t take steps to mitigate damages. These loan officers are being called to [support] the allegation that we made every effort to obtain a new line of credit in an attempt to continue the business but because of [EWB’s] improper calling of the loan and improper sending [of] letters out to all of our customers and improperly freezing our inventory and because of this lawsuit, no other banks would give us a line of credit.”
The trial court then asked OFT why it did not identify these individuals in discovery. OFT’s attorney answered: “We did identify them in discovery. They asked for the business card. We gave them the business card. And that was produced to them and that was not done in 6,000 pieces of paper. It was done specifically with regard to demand. Give me a specific question and a specific answer to preclude it.”
When the trial court asked Kamarga’s counsel why he was not moving to exclude all witnesses, he explained that most of OFT’s other witnesses were identified in OFT’s written discovery responses; these individuals were not.
Subsequently, another attorney for OFT informed the trial court that the issue of these potential witnesses came up at Judy’s deposition. “I believe at the deposition of Judy Woo, she was asked who she spoke with to try to get a line of credit and there was some colloquy which I believe was in effect. She answered. Counsel liked the answer she gave because, I think, the perception was that the answer she gave was sort of a flippant or off-the-cuff answer that did not give a detailed universe of people. [¶]...
“After that, we had several considerations and I said specifically we will provide you with the names and business cards of the people that we talked about and shortly thereafter and I don’t know where in the discovery it was produced. Whether it was-it was certainly produced in response to a request for production of documents and I did not know that this particular issue was going to come up this morning but we will provide the court with the document production that references these documents.
“If it was recorded on the transcript of the deposition, I’ll provide the court with that as well.”
Dang and Seafresh’s attorney then chimed in: “I was the one who took Ms. Woo’s deposition. I asked her specifically I want to know every person and every bank you went to to replace this line of credit so she already testified. It’s the single most indispensable thing in this type of importing business.
“She couldn’t give me a single name. She couldn’t say she filled out any loan applications. She thought she maybe went to Cathay Bank, maybe not. Maybe Wells Fargo, maybe not. The reason I didn’t pursue the line of questioning after several attempts for her to tell me anybody, she indicated she couldn’t.
“It wasn’t that I was happy with the answer exclusively although it was because the witness told me she couldn’t give me any information and I was never provided nor told okay, here’s who she meant.”
EWB’s counsel then stated that she was provided with a one-page document that had copies of the Bank Witnesses’ business cards.
Kamarga’s counsel resumed his comments: “I think we may be going off topic here. I think the rules in the [Code of Civil Procedure] are fairly straightforward particularly for a plaintiff. Disclose your evidence and your witnesses in the interrogatories or you don’t get to introduce them at trial. I don’t think [OFT] can now come in and say we sent them a piece of paper or we disclosed it at a deposition.
“We went to all this trouble to propound all of these interrogatories and check off all these boxes and meet and confer on these issues over months and months of discovery and instead we receive boilerplate objections and circuitous responses. What [OFT] is attempting to do is eviscerate written discovery. None of this is really necessary. We can give it in the manner we feel is appropriate. And I don’t know that the rules or the case law supports that.”
OFT’s counsel then argued that it was inappropriate for respondents to bring up this issue “in the absence of an actual motion.” “The question is did we disclose who our witnesses were and the circumstances under which we disclosed them and whether or not they were prejudiced. That is the issue.”
As for OFT’s suggestion that it was unaware of this problem, EWB’s counsel stated that the issue had been briefed in a motion in limine to exclude any and all statements on this particular issue. And, Kamarga’s attorney reminded the parties and the trial court that the issue had been raised at the last hearing and, in addition, he sent OFT’s counsel an e-mail indicating that he was planning to raise the issue at that final status conference.
OFT’s counsel then argued that respondents could not have been surprised by these four potential witnesses because they filed a motion in limine to exclude their testimony. Thus, respondents’ claim that OFT never disclosed the Bank Witnesses and the Customer Witnesses as potential live witnesses was not credible.
EWB’s counsel retorted: “It is not fair and it’s not a reasonable use of the discovery process to require a responding party who gets a page to decipher this may be a witness, this may not be a witness particularly when I asked the person most knowledgeable [to] tell me who you met with and she can’t give any names, not a single one.”
Later, in response to OFT’s comment that this issue could be resolved in connection with the trial court’s rulings on the motions in limine and that the question was whether respondents knew who the witnesses were, the trial court stated: “Under the discovery rules you should be precluded from calling people notwithstanding the e-mails sent before the second day of Ms. Woo’s deposition and I’m inclined to think they should be excluded. I’ll work up the motions in limine. That’s my thinking at this point.”
OFT’s counsel asked for more time to revisit this issue and present additional evidence. The trial court responded: “We can spend five days in motions in limine. Then the case will be over which is to say I’ll dismiss your complaint with prejudice or we can spend 30 minutes on the motions in limine which is the most that ever makes any sense and then move on to jury selection.
“But you get to spend your time however you want. If you want to spend two and a half days on motions in limine, I’ll be delighted to engage in this discussion with you for two and a half days.”
In response to OFT’s request to “file something” to address “a misrepresentation being made as to the manner in which this has happened,” the trial court stated: “I don’t think so. I don’t think they deny she sent this e-mail. What they say is that’s not adequate. That’s not good faith compliance with the rules of discovery particularly not in the face of these interrogatories which ask you to identify witnesses and you give objections and circuitous responses.”
OFT then indicated that it wanted the opportunity to review its discovery responses. The trial court replied: “None of this matters to me. If you want to identify a specific interrogatory answer that says we’re going to call Joey Fan, Tommy Leung, Tomas Rincon, and Yong Kim, do so but otherwise I don’t care about this resuscitation of discovery history.”
Next, OFT pointed out that respondents had not demonstrated that they were prejudiced. The trial court rejected that argument as well. “No, that’s not the way it works. You collect lots of names perhaps in discovery. What they need to know is who do you contemplate calling to testify. That’s how they make their determinations whose depositions they take. You don’t throw names on a list and say we gave you their business cards even though we never identified in answer to your questions who are your witnesses.”
OFT indicated that it intended to “file something that addresses this issue.” The final status conference was continued to February 28, 2008.
OFT’s Opposition to Kamarga’s Motion to Exclude the Bank Witnesses and Customer Witnesses
On February 27, 2008, OFT filed a written opposition to Kamarga’s oral motion to exclude witnesses. OFT argued that respondents “sought information relating to identities [of] OFT’s customers and the bankers it contacted to obtain a line of credit by way of requests for production of documents, not written interrogatories. Accordingly, OFT’s identification of these witnesses by production of relevant documents was fully [compliant] with the discovery requests propounded by EWB and Kamarga.” OFT also asserted that Kamarga’s motion was brought in bad faith as none of Kamarga’s interrogatories specifically requested the identities of the Bank Witnesses and the Customer Witnesses. Finally, OFT claimed that Kamarga could not show that he would be prejudiced by these witnesses’ testimonies. However, OFT would be prejudiced by the exclusion of the Bank Witnesses because their testimony was relevant to OFT’s efforts to mitigate its damages.
Continued Final Status Conference (April 10, 2008)
At the continued final status conference on April 10, 2008, counsel for OFT reminded the trial court of Kamarga’s oral motion to exclude the Bank Witnesses and the Customer Witnesses. After OFT’s counsel summarized OFT’s arguments set forth in its written opposition, the trial court stated: “I’m not going to revisit that ruling and that argument.” When OFT’s counsel asked to make a record, the trial court responded: “That’s not what you’re here for. That’s not [what] my court reporter is here for and that’s not what I’m here for.”
Following a recess, Kamarga’s counsel clarified that the trial court excluded the Bank Witnesses and the Customer Witnesses.
Trial, Special Verdict, Judgment, and Appeal
Trial commenced on April 14, 2008. Ultimately, the jury returned a verdict in favor of respondents. Regarding OFT’s breach of contract cause of action against EWB, the jury found that OFT “defeat[ed] the purpose of the contract between [OFT] and [EWB] by failing to do all, or substantially all, of the significant things that the contract required it to do” and that OFT was not “excused from having to do all, or substantially all, of the significant things that the contract required it to do.”
As for OFT’s interference with prospective economic advantage cause of action, the jury found that OFT “and its customers [had] an economic relationship that probably would have resulted in an economic advantage to” OFT, that EWB knew of the relationship between OFT and its customers, but that EWB did not intend to disrupt OFT’s relationship with its customers.
With respect to OFT’s claim for deceit, the jury found that EWB did not intentionally fail to disclose an important fact to OFT, but that Kamarga did. The jury also determined that Kamarga did not “[disclose] some facts to [OFT] but intentionally [failed] to disclose other fact(s) making [his] disclosure deceptive.” But, the jury found that he did “intentionally [fail] to disclose an important fact that was known only to [him]... and that [OFT] could not have discovered.” Likewise, the jury concluded that Kamarga “actively [concealed] an important fact from [OFT] or [prevented OFT] from discovering that fact.” While (1) OFT did not know of the fact at the time Kamarga concealed it, (2) Kamarga intended to deceive OFT, and (3) OFT reasonably relied on Kamarga’s deception, the jury found that OFT was not harmed by the concealment.
The jury then considered respondents’ affirmative defense of unclean hands. The jury found that OFT “engage[d] in misconduct directly relating to the allegations against” EWB, but not against Kamarga. The jury then found that OFT’s “conduct [was] such that it would be unjust to grant [OFT] relief from” EWB.
Finally, the jury answered questions relating to respondents’ affirmative defense of mitigation of damages. It found that OFT did not “take reasonable steps to avoid its claimed damages,” even though it could have.
Judgment was entered, and this timely appeal ensued.
DISCUSSION
I. Motion in Limine
A. Standard of review.
As the parties agree, the grant or denial of a motion in limine is within the trial court’s sound discretion, and the exercise of that discretion will not be reversed on appeal absent a clear showing of abuse. (People v. Mincey (1992) 2 Cal.4th 408, 439.)
B. The trial court did not abuse its discretion in granting respondents’ motion in limine.
OFT argues that the trial court abused its discretion in excluding the Bank Witnesses and the Customer Witnesses. Assuming without deciding that OFT’s offer of proof was adequate, we cannot agree with OFT’s arguments.
First, OFT argues that respondents’ oral motion was improper. In so asserting, it relies heavily upon the Superior Court of Los Angeles County, Local Rules, rule 8.92(a), which provides, in relevant part: “Motions made for the purpose of precluding the mention or display of inadmissible and prejudicial matter in the presence of the jury shall be accompanied by a declaration” that identifies the specific prejudicial matter and contains a statement of prejudice. Because respondents did not supply a written declaration to the trial court, OFT contends that respondents’ motion in limine should never have been considered.
The law is otherwise. Motions in limine may be presented orally or in writing. (See, e.g., Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659, 669; 3 Witkin, Cal. Evidence (4th ed. 2000) Presentation at Trial, § 369, p. 457.) Regardless of the form, as OFT points out, a motion in limine must be supported by an adequate foundation. (Kelly v. New West Federal Savings, supra, at p. 671, fn. 3.) Respondents satisfied that burden here. After all, there is no dispute that OFT did not provide respondents with the identities of the Bank Witnesses and Customer Witnesses until it served its witness list.
Regardless, the Superior Court of Los Angeles County, Local Rules, rule 8.0 specifically allows a trial court to exercise its discretion in connection with enforcement of the local rules. “In the discretion of the trial judge, upon application in a particular case these rules herein may be applied differently or not at all.” (Super. Ct. L.A. County, Local Rules, rule 8.0.) OFT has not demonstrated on appeal how the trial court abused its discretion in deciding to consider this one oral motion in limine.
OFT claims that because respondents did not file a written motion, it “had no real opportunity to address the matter.” But, OFT did file a written opposition. And, as outlined above, counsel argued the motion and discussed the issue at length with the trial court.
Citing Saxena v. Goffney (2008) 159 Cal.App.4th 316, OFT argues that exclusion of the Bank Witnesses and Customer Witnesses was an improper sanction. We disagree. “Precluding a witness from testifying at trial is proper where a party willfully and falsely withholds or conceals a witness’s name in response to an interrogatory. [Citation.] ‘Where the party served with an interrogatory asking the names of witnesses to an occurrence then known to him deprives his adversary of that information by a willfully false response, he subjects the adversary to unfair surprise at trial.’ [Citation.]” (Id. at p. 332, fn. omitted [citing Thoren v. Johnston & Washer (1972) 29 Cal.App.3d 270, 274].)
The evidence in the appellate record supports the trial court’s implied finding that that is exactly what occurred here. Respondents served interrogatories asking for the identities of witnesses. They later served supplemental interrogatories. OFT never provided respondents with the names of the Bank Witnesses or Customer Witnesses in its interrogatory responses. Instead, it waited until the eve of trial to identify these individuals in its 106-person witness list as potential trial witnesses. Thus, the trial court’s ruling was within its discretion.
Respondents admit that OFT did provide them with business cards of the four individuals. But, it did so in response to respondents’ request for production of documents. This distinction is critical. OFT failed to identify the Bank Witnesses and Customer Witnesses in its interrogatory responses and therefore never indicated to respondents that these four persons would be possible witnesses at trial.
On appeal, OFT opines that the trial court excluded these four witnesses “out of concern for the length of the trial or the number of witnesses, as her comments during the Final Status Conference suggest.” While OFT’s unease with the trial court’s remarks is legitimate, we still find no prejudicial abuse of discretion.
Even if the trial court had erred in excluding these witnesses, OFT has failed to demonstrate prejudice. (Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1431–1432; Saxena v. Goffney, supra, 159 Cal.App.4th at pp. 334–335.) OFT asserts that the Bank Witnesses were critical “to establish that OFT had not gone out of business, and that it had attempted to mitigate its losses by obtaining bank loans to replace EWB’s canceled credit line.” OFT’s argument is flawed. For one thing, Yuen and Judy testified on this point. OFT argues that it suffered prejudice by being forced to rely on testimony from Judy, who OFT admits was “not a credible witness.” But, aside from Yuen having testified, there were several other persons whom OFT could have called to testify regarding whether OFT had gone out of business and whether it attempted to mitigate its losses, including Sanjeewa Jayawardana (who consulted for OFT) and Miling Chua (a former OFT “financial person”).
In any event, in the face of the overwhelming evidence that OFT shut down its business operations in October 2006, it is not reasonably probable that a different result would have been reached had these witnesses not been excluded. (Saxena v. Goffney, supra, 159 Cal.App.4th at pp. 334–335.)
With respect to the Customer Witnesses, OFT claims that they would have testified that Dang used Seafresh to confuse them and lure them away from OFT. There is no dispute that Dang sold seafood to many of OFT’s customers. Thus, any testimony from the Customer Witnesses would have been cumulative and unnecessary.
Perhaps more importantly, OFT intended to call the Customer Witnesses to testify regarding Dang’s alleged wrongdoing, not respondents’ alleged misconduct. Thus, the verdict in favor of respondents would stand even if the Customer Witnesses had testified.
According to OFT’s reply brief, Dang settled with OFT and thus was dismissed from this appeal.
Accordingly, we find no grounds to reverse the trial court’s order.
II. Unclean Hands
A. Standard of review.
Ordinarily, we review the trial court’s decision as to whether or not to apply the unclean hands doctrine under the abuse of discretion standard. (Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 446–447; Lovett v. Carrasco (1998) 63 Cal.App.4th 48, 55.) In assessing an abuse of discretion claim on appeal, we may not substitute our judgment for that of the trial court; we may reverse for abuse of the trial court’s broad discretion only when it has acted arbitrarily and capriciously, exceeding the bounds of reason and resulting in a manifest miscarriage of justice. (Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1448–1449.)
That being said, as a general rule, application of the doctrine of unclean hands is primarily a question of fact. (Insurance Co. of North America v. Liberty Mutual Ins. Co. (1982) 128 Cal.App.3d 297, 306; Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978 (Kendall-Jackson).) Thus, as the parties agree, the trial court’s finding (or, in this case, the jury’s finding) of unclean hands must be supported by substantial evidence. (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 56.)
B. Applicable law.
The venerable doctrine of unclean hands arises from the maxim that one who comes to court seeking equity must come with clean hands. (Blain v. Doctor’s Co. (1990) 222 Cal.App.3d 1048, 1059 (Blain).) It is an equitable doctrine that is invoked as a complete affirmative defense if the plaintiff has engaged in inequitable conduct in connection with the matter in controversy. (Dickson, Carlson & Campillo v. Pole, supra, 83 Cal.App.4th at p. 446.)
“The unclean hands doctrine protects judicial integrity and promotes justice. It protects judicial integrity because allowing a plaintiff with unclean hands to recover in an action creates doubts as to the justice provided by the judicial system. Thus, precluding recovery to the unclean plaintiff protects the court’s, rather than the opposing party’s, interests. [Citations.] The doctrine promotes justice by making a plaintiff answer for his own misconduct in the action. It prevents ‘a wrongdoer from enjoying the fruits of his transgression.’ [Citations.]
“Not every wrongful act constitutes unclean hands. But, the misconduct need not be a crime or an actionable tort. Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine. [Citations.]
“The misconduct that brings the unclean hands doctrine into play must relate directly to the cause at issue. Past improper conduct or prior misconduct that only indirectly affects the problem before the court does not suffice. The determination of the unclean hands defense cannot be distorted into a proceeding to try the general morals of the parties. [Citation.] Courts have expressed this relationship requirement in various ways. The misconduct ‘must relate directly to the transaction concerning which the complaint is made, i.e., it must pertain to the very subject matter involved and affect the equitable relations between the litigants.’ [Citation.] ‘[T]here must be a direct relationship between the misconduct and the claimed injuries... “‘so that it would be inequitable to grant [the requested] relief.”’ [Citation.] ‘The issue is not that the plaintiff’s hands are dirty, but rather “‘“that the manner of dirtying renders inequitable the assertion of such rights against the defendant.”’”’ [Citation.] The misconduct must ‘“‘prejudicially affect... the rights of the person against whom the relief is sought so that it would be inequitable to grant such relief.’”’ [Citation.]
“From these general principles, the Blain court gleaned a three-pronged test to determine the effect to be given to the plaintiff’s unclean hands conduct. Whether the particular misconduct is a bar to the alleged claim for relief depends on (1) analogous case law, (2) the nature of the misconduct, and (3) the relationship of the misconduct to the claimed injuries. [Citations.]” (Kendall-Jackson, supra, 76 Cal.App.4th at pp. 978–979.)
C. Ample evidence supports the jury’s finding of unclean hands.
Based upon the arguments raised in their appellate briefs, only two of the three factors identified in Kendall-Jackson are at issue, namely the nature of OFT’s alleged misconduct and the relationship of that misconduct to OFT’s claimed injuries. (Kendall-Jackson, supra, 76 Cal.App.4th at p. 979.) We conclude that OFT engaged in widespread misconduct and that misconduct relates to OFT’s injuries allegedly caused by respondents.
In their appellate brief, respondents argue that OFT waived any challenge to the jury’s finding of unclean hands because it failed to present all material evidence. We elect not to consider this procedural objection and proceed directly to the merits of OFT’s appeal.
As set forth above, in order for OFT to qualify for the line of credit, Judy concealed the fact that she had previously been president of another seafood company that declared bankruptcy. She repeatedly denied ownership of OFT in sworn documents submitted in her divorce proceeding, even though OFT represented to EWB that Judy always owned one-third of the company. OFT even paid for many of her personal expenses and improperly recorded those payments as business expenses.
Moreover, OFT created fraudulent corporate minutes concerning meetings that never occurred and reflected decisions that were never made; the siblings signed these minutes knowing that they were false. Judy and Yuen also held at least one meeting without inviting Dang, even though he was a director and shareholder entitled to notice.
The siblings even used OFT to launch and operate their own competing seafood companies.
In addition, in January 2006, OFT borrowed $100,000 from a family member in order to artificially inflate its minimum equity levels. OFT misrepresented the fact that the loan was equity in order to satisfy EWB’s minimum equity requirement. OFT never informed EWB that this cash infusion was a loan.
In light of OFT’s widespread fraud and misrepresentations to its lender, the jury’s finding of unclean hands is supported by substantial evidence.
DISPOSITION
The judgment is affirmed. Respondents are entitled to costs on appeal.
We concur: BOREN, P. J. CHAVEZ J.