Opinion
D038066.
7-16-2003
JAMES B. PANTHER, Plaintiff and Appellant, v. WILLIAM K. PARK et al., Defendants and Respondents. FINANCIAL ASSET MANAGEMENT FOUNDATION, Cross-complainant and Appellant, v. JAMES B. PANTHER et al., Cross-defendants and Respondents.
Plaintiff James B. Panther appeals various portions of the judgment entered on his first amended complaint against defendants Financial Asset Management Foundation (FAMF), William K. Park, Ken Tremblett and Grain Developments, LLC (Grain) for wrongful foreclosure and breach of the implied covenant of good faith and fair dealing (implied covenant). First, Panther contends the court erred in granting summary adjudication favoring Park, Tremblett and Grain on Panthers cause of action for wrongful foreclosure. Panther also contends the court erred in awarding attorney fees to Park, Tremblett and Grain. Further, Panther seeks additional recovery against FAMF on the portion of the judgment on the jurys special verdict favoring Panther on his claims for wrongful foreclosure and breach of the implied covenant. Specifically, Panther claims judicial error with respect to (1) the judgments lack of an award of prejudgment interest against FAMF; (2) the date from which postjudgment interest was awarded against FAMF; (3) and the asserted omission from the judgment of the amount of damages the jury found Panther suffered as a result of FAMFs breach of the implied covenant. We modify the judgment to include an award to Panther of prejudgment interest in the amount of $ 321,351 and then affirm, as modified, the portions of the judgment favoring Panther on his first amended complaint.
Cross-complainant FAMF appeals the portion of the judgment on the jurys special verdict favoring cross-defendant Panther on FAMFs second amended cross-complaints causes of action for intentional misrepresentation and negligent misrepresentation. FAMF contends the court reversibly erred in granting Panthers motion in limine to exclude evidence assertedly relevant to the primary issues of FAMFs second amended cross-complaint. We affirm the portion of the judgment favoring Panther on FAMFs second amended cross-complaint.
This litigation arises out of two separate business transactions involving the parties. Panthers appeal concerns a real estate development financing transaction that formed the basis of Panthers first amended complaint. FAMFs appeal relates to a financing transaction for the servicing of poorly performing credit card portfolios that formed the basis of FAMFs second amended cross-complaint. The trial of the actions was bifurcated.
I
PANTHERS APPEAL
A
Introduction
At issue in Panthers appeal are issues involving the financing of a contemplated development of Carlsbad real property (the Property) owned initially by Panther and Russell Grosse (Grosse).
For purposes of determining the propriety of the summary adjudication favoring Park, Tremblett and Grain on Panthers cause of action for wrongful foreclosure, we state the facts undisputed by the parties and other facts in the light most favorable to Panther.
Wanting to develop their Property, Panther/Grosse obtained funds from business trust FAMF in return for a promissory note favoring FAMF secured by the Property (the FAMF note). Eventually, Panther and FAMFs trustees agreed to a joint venture and created CanAm Developments, LLC (CanAm) to receive the Property. Panther and Grosse each received a 25 percent membership interest in CanAm. The remaining 50 percent ownership interest in CanAm was held by Grain, an entity created by FAMFs trustees to become a member of CanAm. As part of that transaction, Grain executed a promissory note to FAMF (the Grain note) secured by the membership interests in CanAm held by Grain and Panther/Grosse.
We may refer to the agreement of Panther/Grosse securing the Grain note as the Security Agreement.
Later, Park and Tremblett assumed management of FAMF and Grain. When Grain did not make interest payments to FAMF under the Grain note, FAMF noticed a default on the note. After FAMF gave Panther notice of its intent to sell his CanAm membership interest, Park and Tremblett began foreclosure proceedings on that interest. This lawsuit ensued.
According to Panther, FAMF used "the form of a Commercial Code foreclosure."
Panthers first amended complaint, the pleading at issue on Panthers appeal, sought to state 12 causes of action against defendants FAMF, Park, Tremblett and Grain. In essence, Panther alleged the defendants conspired to eliminate Panther as a member of CanAm by wrongfully foreclosing on the encumbrance against Panthers 25 percent ownership interest in CanAm and appropriate that ownership interest to defendants benefit. Panther also alleged defendants breached the implied covenant in CanAms operating agreement, the Grain note, and the Security Agreement.
Panthers first amended complaint also named Grosse, Russell W. Grosse Development and CanAm as defendants. However, those defendants are not parties on this appeal.
The superior court granted summary adjudication favoring Park, Tremblett and Grain on Panthers claim for wrongful foreclosure. Later, the jury returned a special verdict against FAMF on Panthers claims for wrongful foreclosure and breach of the implied covenant. FAMF has not appealed the portion of the judgment favoring Panther on those claims, but Panther has, seeking (1) additional recovery from FAMF, (2) entry of judgment against Park, (3) a new trial against Tremblett and Grain, and (4) reversal of the attorney fees awards to Park, Tremblett and Grain.
B
Summary Adjudication Favoring Park, Tremblett and Grain
In granting summary adjudication favoring defendants Park, Tremblett and Grain (the moving defendants) on Panthers cause of action for damages for wrongful foreclosure, the superior court concluded that only secured parties could be liable for wrongful foreclosure under Commercial Code former section 9507, and it was undisputed that FAMF had been the only creditor secured by Panthers interest in CanAm. Panther contends the court erred in concluding he could not also sue other persons allegedly responsible for the wrongful foreclosure, to wit, the moving defendants. Hence, asserting Park was the person directing all of FAMFs actions in conducting the wrongful foreclosure, Panther seeks reversal of the portion of the judgment favoring Park and entry of an amended judgment favoring Panther against Park. Further, asserting the court erroneously precluded him from pursuing a verdict against Tremblett and Grain, Panther seeks reversal of the portion of the judgment favoring those defendants and remand for a new trial. However, as we shall explain, on this record Panther has not demonstrated any reversible error with respect to the summary adjudication favoring the moving defendants on Panthers claim for wrongful foreclosure.
All further statutory references are to the Commercial Code unless otherwise specified.
Former section 9507 provided in relevant part: "(1) If it is established that the secured party is not proceeding in accordance with the provisions of this chapter disposition may be ordered or restrained on appropriate terms and conditions. If the disposition has occurred the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of this chapter." (Italics added.)
Preliminarily, we note that in seeking reversal of the order granting summary adjudication favoring the moving defendants, Panther relies on the allegations of his first amended complaint and the evidence ultimately presented at trial bearing on the conduct of those defendants without citing or discussing any evidence submitted with respect to the defense summary adjudication motion. In determining the propriety of an order granting summary adjudication, we may only review the evidentiary matters that were presented to the superior court with respect to the summary adjudication motion. "It is well settled that `in reviewing a summary judgment, the appellate court must consider only those facts before the trial court, disregarding any new allegations on appeal. [Citation.] Thus, possible theories that were not fully developed or factually presented to the trial court cannot create a "triable issue" on appeal. (Sacks v. FSR Brokerage, Inc. (1992) 7 Cal.App.4th 950, 962; accord, Havstad v. Fidelity National Title Ins. Co. (1997) 58 Cal.App.4th 654, 661; Uriarte v. United States Pipe & Foundry Co. (1996) 51 Cal.App.4th 780, 790-791; Maxwell v. Colburn (1980) 105 Cal. App. 3d 180, 185, 163 Cal. Rptr. 912 ["summary judgment must be reviewed on the basis of the papers filed at the time the court considers the motion"]; Wiler v. Firestone Tire & Rubber Co. (1979) 95 Cal. App. 3d 621, 627, 157 Cal. Rptr. 248 ["trial courts decision must be reviewed on the basis of the papers filed at the time the court considered the motion, not in the light of documents filed subsequent to the trial courts resolution of the issue"]; Jacobs v. Retail Clerks Union, Local 1222 (1975) 49 Cal. App. 3d 959, 966 [where we observed that "the validity of a summary judgment is to be determined solely by the sufficiency of the affidavits which were before the court when the motion was heard, and this court will consider only the facts before the trial court at the time it ruled on the motion"].) "Under this well-established rule, we need not address" Panthers appellate contentions challenging the ruling granting summary adjudication. (Havstad, at p. 661.)
Further, since Panthers appellate contentions are not supported by citation to anything in the evidentiary record of the summary adjudication motion, we may disregard his claims of errors with respect to the motion. (Cal. Rules of Court, rule 14(a)(1)(C) [brief must "support any reference to a matter in the record by a citation to the record"]; Guthrey v. State of California (1998) 63 Cal.App.4th 1108, 1115-1116 [reviewing court is generally " not required to make an independent, unassisted study of the record in search of error"; counsel has duty to refer reviewing court to portion of record supporting appellants appellate contentions]; Bernard v. Hartford Fire Ins. Co. (1991) 226 Cal. App. 3d 1203, 1205, 277 Cal. Rptr. 401 [party has duty to support arguments in briefs "by appropriate reference to the record, which includes providing exact page citations"; "problem is especially acute" where appeal is taken from summary judgment]; Fox v. Erickson (1950) 99 Cal. App. 2d 740, 742, 222 P.2d 452 [appellate court "will not act as counsel for either party" or assume task of "initiating and prosecuting a search" of record for "purpose of discovering errors not pointed out" in briefs; counsel has duty to refer reviewing court to portion of record to which appellant objects and to show resulting prejudice].)
All further rule references are to the California Rules of Court unless otherwise specified.
However, in any event, review of the record on the moving defendants summary adjudication motion indicates those defendants were not secured parties for purposes of former section 9507. The record contained undisputed evidence that Park and Tremblett were never members of CanAm; at no time did Park or Tremblett ever own Panthers members interest in CanAm; and Park and Tremblett were never parties to the CanAm operating agreement, the Grain note, or the Security Agreement. Further, the record showed that Grain was not a party to the Security Agreement. In sum, the moving defendants were not the parties secured under the Security Agreement or the parties who foreclosed on Panthers ownership interest in CanAm. Instead, upon Grains default on its obligation to FAMF under the Grain note, it was FAMF that exercised its right under the Security Agreement executed by Panther favoring FAMF and then foreclosed on Panthers ownership interest in CanAm. Panther has not demonstrated anything to the contrary.
Nevertheless, characterizing the wrongful foreclosure of his ownership interest in CanAm as conversion, Panther contends the court erred in holding as a matter of law that damages for his resulting harm could be recovered only against secured party FAMF even though the moving defendants participated in the conversion. More specifically, Panther contends his damage claims against those unsecured parties for wrongful foreclosure of his interest in CanAm were not precluded by former section 9507 since that statute did not expressly state it contained the exclusive remedy for conversion. ( §§ 1103, 1106 [Com. Code remedies are not exclusive]; Rojo v. Kliger (1990) 52 Cal.3d 65, 79, 276 Cal. Rptr. 130, 801 P.2d 373 ["Where a statutory remedy is provided for a preexisting common law right, the newer remedy is generally considered to be cumulative, and the older remedy may be pursued at the plaintiffs election"]; Gray v. Sutherland (1954) 124 Cal. App. 2d 280, 290, 268 P.2d 754.) Panther further contends the moving defendants were liable for their own conversion torts (Civ. Code, § 1714, subd. (a)); Park and Tremblett were liable for the conversion torts they committed and/or aided and abetted as Grains corporate officers; and Park, who as FAMFs trustee assertedly made the decision to foreclose, was liable as a matter of law for his own tort even though FAMF might also be liable (Prob. Code, §§ 18001, 18002). Additionally, Panther contends that as FAMFs alleged coconspirators, the moving defendants were liable for FAMFs acts in converting Panthers property for FAMFs gain as well as their own. Panther thus concludes his cause of action entitled "wrongful foreclosure" encompassed a common law conversion claim not limited to a statutory claim under former section 9507.
However, even if we deemed that remedies for conversion other than under former section 9507 were not statutorily precluded, we would reject Panthers characterization of his cause of action for wrongful foreclosure as tantamount to a claim for conversion. Panthers first amended complaint did not use the word "conversion" or otherwise purport to plead the elements of a cause of action for conversion. Further, potential damages on a cause of action for wrongful foreclosure may differ from those for conversion. (Neumeyer v. Union Bank (1974) 43 Cal. App. 3d 873, 878-879, 118 Cal. Rptr. 116.) Moreover, in sustaining without leave to amend defendants demurrers to various purported causes of action in Panthers first amended complaint about two months before the moving defendants sought summary adjudication, the superior court had stated Panthers "sole remedy for wrongful foreclosure is damages, pursuant to Commercial Code section 9507(1)." Panther has not shown that he ever sought to leave to plead a cause of action for conversion.
In particular, the court sustained the moving defendants demurrer to Panthers first amended complaints purported second cause of action to set aside the wrongful foreclosure and sale of Panthers interest in CanAm; Panthers purported third cause of action for declaratory relief about the parties rights under the Security Agreement; Panthers purported fourth cause of action for declaratory relief about the parties rights under CanAms operating agreement; Panthers purported fifth cause of action styled as an individual and derivative action by Panther as a member of CanAm for declaratory relief about whether the FAMF note was usurious; and Panthers purported twelfth cause of action for unjust enrichment/constructive trust with respect to Panthers interest in CanAm.
Finally, in any event, on this record Panther cannot show prejudice from judicial error, if any, with respect to the summary adjudication favoring the moving defendants on Panthers wrongful foreclosure claim. Although granting summary adjudication favoring the moving defendants on Panthers wrongful foreclosure claim, the court at the same time denied those defendants motions for summary adjudication on Panthers seventh cause of action for fraud (false promise and concealment) about agreements assertedly restructuring CanAm as part of depriving Panther of his interest in CanAm by manufacturing a default on the Grain note and a foreclosure on that interest; Panthers eighth cause of action for breach of fiduciary duty assertedly owed to Panther as a comember of CanAm; and Panthers ninth cause of action for constructive fraud in taking advantage of Panther by misleading him to his detriment. In denying those motions, the court noted the existence of evidence raising triable issues of material fact bearing on the existence of agreements to restructure CanAm; Panthers reliance on those agreements; defendants intent with respect to those agreements; the existence of a conspiracy by defendants to deprive Panther of his membership interest in CanAm; and the existence of a fiduciary duty attendant to Parks/Trembletts positions and Grains status as a comember of CanAm with Panther.
In sum, the record indicates the court effectively permitted Panther to proceed to trial against the moving defendants on his theories that they tortiously foreclosed his ownership interest in CanAm and conspired to deprive him of such interest. Later, Panthers claims against those defendants for breach of fiduciary duty and constructive fraud were, in fact, litigated to the jury. By special verdict the jury found Grain did not breach fiduciary duties it owed to Panther or constructively defraud Panther. Further, although finding Park and Tremblett breached fiduciary duties they owed to Panther and constructively defrauded Panther, the jury also found Panther did not suffer any loss or damages as a result of those defendants breach of fiduciary duties or constructive fraud. Hence, on this record Panther cannot show a reasonable likelihood that a result more favorable to Panther on his wrongful foreclosure claim against the moving defendants would have ultimately resulted absent the courts assertedly erroneous grant of summary adjudication favoring those defendants on such claim.
Accordingly, since Panther has not demonstrated the existence of any reversible judicial error with respect to the summary adjudication favoring the moving defendants on Panthers wrongful foreclosure claim, the portion of the ultimate judgment favoring those defendants must be upheld.
C
Amount of Judgment Against FAMF
The jury found by special verdict that FAMFs foreclosure of Panthers membership interest in CanAm was wrongful on the theory of waiver (two jurors) and the theory that the Grain note had already been paid in full (10 jurors); and as a result of the wrongful foreclosure, Panther suffered loss or damage in the amount of $ 2,464,142. The jury also found FAMF breached the implied covenant and, as a result of that breach, Panther suffered loss or damage in the amount of $ 372,551. On February 23, 2001, the court entered judgment favoring Panther against FAMF for $ 2,464,142 plus 10 percent annual interest from February 22, 2001. Panther contends the court erred in its treatment and calculation of the judgment and interest.
Additionally, the jury found FAMF breached fiduciary duties it owed to Panther and constructively defrauded Panther but without any resulting loss or damages to Panther.
1
Panthers Entitlement to Prejudgment Interest
Before the jury deliberated, the court instructed the jurors: "The damages for wrongful foreclosure is the value, at the time of the foreclosure, of the property taken in the foreclosure, plus interest at 10 percent per year up to the date of your decision." (See Civ. Code, § 3336; Kane v. County of San Diego (1969) 2 Cal. App. 3d 550, 553, 83 Cal. Rptr. 19 (Kane).) As noted, the courts ultimate judgment against FAMF awarded Panther $ 2,464,142 plus postjudgment interest. Characterizing an award of prejudgment interest as a "mandatory" element of damages under Civil Code section 3336, Panther contends the court erred in not also awarding him $ 321,351 prejudgment interest for the period from the date of the wrongful foreclosure (Aug. 24, 1999) until the date of the jurys decision (Dec. 19, 2000). On this record we conclude the court should have included prejudgment interest in its ultimate judgment.
Civil Code section 3336 provides in relevant part: "The detriment caused by the wrongful conversion of personal property is presumed to be: [P] First — The value of the property at the time of the conversion, with the interest from that time . . . ."
"The section states a presumption for determining the plaintiffs detriment to be compensated." (Kane, supra, 2 Cal. App. 3d at p. 553.)
By special verdict, the jury found Panther suffered the amount of $ 2,464,142 of loss or damage resulting from FAMFs wrongful foreclosure. During polling of the jurors on their special verdict, the presiding juror stated: "Your Honor, add to the verdict on item number 3, the amount awarded, we have not computated [sic] the interest, because we didnt know what final date the court would be using. So may we add that to the verdict, this amount does not reflect the interest, the interest to be added according to instructions." The court stated: "All right. Ill note that. Okay. Now lets go back to our polling." In response to the polling, 11 jurors stated it was their verdict that Panther suffered loss or damage in the amount of $ 2,464,142. After additional polling, the court proceeded to have the verdicts recorded and discharged the jury.
Following discharge of the jury, the court discussed with counsel the issue whether prejudgment interest should be added to the judgment. Noting that the number on the verdict "did not include interest," the court concluded: "The issue is whether you have 9 jurors that feel that interest should have been included. They came up with a number. They had an instruction in front of them. I cant tell. I dont know. I dont have evidence that 9 would have agreed. So the interest will be denied."
Panther contends that since the jury failed to include any prejudgment interest in its damages finding on his wrongful foreclosure claim, the court should have added to the judgment the sum of $ 321,351 as prejudgment interest. Panther faults the court for declining to do so despite having earlier instructed the jury that such interest was an element of damages and despite having heard from the presiding juror that the jury was effectively relying on the court to calculate the amount of such interest.
As noted, during the hearing that ensued upon the jurys return of its special verdict, the presiding juror told the court that the amount awarded in the special verdict did not include interest and that such interest should be added to the verdict. However, the record contains no suggestion that any other juror expressed disagreement with the presiding jurors statement. The silence of the other jurors amounted to acquiescence in the presiding jurors statement. Further, when in responding to the presiding jurors statement the court stated "All right. Ill note that. Okay. Now lets go back to our polling," the other jurors would reasonably interpret the courts response as indicating the prejudgment interest would be added to the verdict. Hence, on this record the judgment favoring Panther on his first amended complaint must be amended to include an award to Panther of prejudgment interest in the amount of $ 321,351.
2
Date When Postjudgment Interest Began Accruing
On December 19, 2000, after the first phase of the bifurcated trial, the jury returned its special verdict favoring Panther on his first amended complaints claims against FAMF for wrongful foreclosure and breach of the implied covenant.
On February 22, 2001, after the second phase of the bifurcated trial, the jury returned its special verdict favoring Panther on FAMFs second amended cross-complaint. Since FAMF did not prevail on its second amended cross-complaint, the verdict in the second phase of trial did not reduce the amount of damages the jury had set forth in its verdict in the first phase.
On February 23, 2001, in entering judgment on Panthers first amended complaint and FAMFs second amended cross-complaint, the court awarded Panther $ 2,464,142 plus 10 percent annual interest from February 22, 2001.
Panther contends the court should have awarded him postjudgment interest from December 19, 2000, the date of the verdict setting forth the damages on his first amended complaint in the first phase of the bifurcated trial, instead of from February 22, 2001, the date of verdict in the trials second phase. Panther thus seeks "correction" of the judgment to provide for postverdict interest from December 19, 2000.
In support of his contention that postjudgment interest began accruing on the date of the jurys verdict in the first phase of trial, Panther relies on rule 875 (["The clerk shall include in the judgment any interest awarded by the court and the interest accrued since the entry of the verdict"]). On the other hand, asserting interest began accruing only upon the date the court entered the ultimate judgment, FAMF contends Panther was not entitled to the interest he sought for the portion of the postverdict period preceding entry of the judgment. In support of his contention, FAMF relies on Code of Civil Procedure sections 685.010, subdivision (a) and 685.020 as well as Jones v. World Life Research Institute (1976) 60 Cal. App. 3d 836, 848, 131 Cal. Rptr. 674 (Jones).
"Interest accrues at the rate of 10 percent per annum on the principal amount of a money judgment remaining unsatisfied." (Code Civ. Proc., § 685.010, subd. (a).)
"Interest commences to accrue on a money judgment on the date of entry of the judgment." (Code Civ. Proc., § 685.020, subd. (a).)
"There can be no interest on a judgment prior to its rendition and entry." (Jones, supra, 60 Cal. App. 3d at p. 848.)
In Ehret v. Congoleum Corp. (2001) 87 Cal.App.4th 202, in noting the existence of a "technical variation in the language" of Code of Civil Procedure section 685.020 and rule 875, the appellate court stated: "The former calls for postjudgment interest from the entry of the judgment, while the latter calls for interest from the entry of the verdict. The language of rule 875 follows the language of former [Code of Civil Procedure] section 1033, which called for interest from the date the verdict was rendered." (Ehret, at p. 208, fn. 2.) However, the appellate court in Ehret did not decide whether the statute or the rule controlled since the "difference in the two provisions" was "immaterial" given the fact that the verdict there was reached on one day and judgment on the verdict was entered the following day. (Ibid .)
Here, we conclude Code of Civil Procedure 685.020 prevails over rule 875. (Cal. Const., art. 6, § 6 [rules adopted by the Judicial Council "shall not be inconsistent with statute"].) Accordingly, the court properly declined to award Panther postjudgment interest during the period following entry of the verdict in the first phase of trial and preceding the ultimate entry of judgment.
Panthers reliance on Espinoza v. Rossini (1967) 257 Cal. App. 2d 567, 65 Cal. Rptr. 110 is unavailing as that case did not involve the issue whether interest was recoverable in the period between the jurys rendering its verdict and entry of judgment on that verdict.
3
Panthers Asserted Entitlement to $ 372,551 Increase in Judgment Amount
After the first phase of the bifurcated trial, the jury returned its special verdict finding Panther suffered $ 2,464,142 damage resulting from FAMFs wrongful foreclosure and $ 372,551 damage resulting from FAMFs breach of the implied covenant. Ultimately, the court entered judgment favoring Panther against FAMF for $ 2,464,142.
Panther contends the court erred in assertedly not including in its ultimate judgment the $ 372,551 in damages found by the jury to have resulted from FAMFs breach of the implied covenant. More particularly, Panther contends that in assertedly not including such amount in the judgment, the court erred by effectively acting counter to its earlier response to the jurys inquiry about damages. However, on this record Panther has not demonstrated any reversible judicial error involving the courts decision not to add to the judgment the amount of $ 372,551.
Before the jury deliberated in the first phase of the bifurcated trial, the court instructed the jurors that the measure of damages for wrongfully foreclosing on property was the propertys value plus interest from the date of the wrongful foreclosure until the date of the jurys decision. The court also instructed the jury that the measure of damages for breach of the implied covenant was the amount that would compensate the injured party for losses naturally arising from the breach or reasonably contemplated/foreseen by the parties at the time of contracting as the probable result of the breach, including lost profits.
During deliberations, the jury sent the court a note stating:
"The jury request an answer to this question:
"re: Breach of Implied Covenant
"Amt. of loss or damage . . . .
"Question:
"1. Must we assume the amt., based on the whole project being completed
Terraces, Apartments, Estates and Commercial
"or:
"2. Can we determine which part of the project will be completed.
"3. Do we then subtract amt., if any, awarded under any other award section.
"4. Does each monetary damage stand alone or is it cumulative."
In response, the court answered no to question No. 1; yes to question No. 2; and no to question No. 3. In answering question No. 4, the court stated: "The damages awarded under each cause of action stand-alone and are not cumulative."
Eventually, the jury returned a special verdict finding Panther suffered $ 2,464,142 in damages resulting from FAMFs wrongful foreclosure and $ 372,551 in damages resulting from FAMFs breach of the implied covenant. After the jury was discharged, counsel and the court discussed whether those two amounts should be added together for inclusion in the eventual judgment. Panthers counsel asserted it was clear that the two numbers were not for the same items of damage. However, noting that the jury had been advised the numbers were not cumulative, the court stated: "Everybody agreed we would advise them that theyre not cumulative." Panthers counsel argued that "the fact theyre not cumulative doesnt mean if they award different numbers that you cant add them up if it appears that they are not for the same thing." The court concluded that "everyone agreed wed advise the jury it wasnt cumulative. That was a question they asked. That was a factor they considered. So Im not going to add the two together."
Citing Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1158-1159, 847 P.2d 574 (Tavaglione), Panther contends that in entering judgment, the trial court should not have ignored the amount of damage the jury found Panther had suffered as the result of FAMFs breach of the implied covenant. In Tavaglione, the Supreme Court observed that "where separate items of compensable damage are shown by distinct and independent evidence, the plaintiff is entitled to recover the entire amount of his damages, whether that amount is expressed by the jury in a single verdict or multiple verdicts referring to different claims or legal theories." (Id. at p. 1159.) The Supreme Court also observed that "regardless of the nature or number of legal theories advanced by the plaintiff, he is not entitled to more than a single recovery for each distinct item of compensable damage supported by the evidence. [Citation.] Double or duplicative recovery for the same items of damage amounts to overcompensation and is therefore prohibited." (Id. at pp. 1158-1159.) In declining to add $ 372,551 to the judgment amount, the court effectively concluded that such addition would constitute impermissible duplicate recovery by Panther. (Ibid.) However, on this record Panther has not shown that any error involving the courts decision not to make such addition to the judgment was reversible.
The heading of the jurys inquiry to the court during deliberations referred to the amount of loss or damage with respect to Panthers claim for breach of the implied covenant. However, apparently based upon the use of ambiguous terms in the inquirys question No. 3 and question No. 4, to wit, "any other award section," "each money damage," "stand alone" and "cumulative," the court essentially interpreted the inquiry as referring to all causes of action Panther had pursued against FAMF at trial. Hence, the court responded, also ambiguously, that the "damages awarded under each cause of action stand-alone and are not cumulative." To the extent Panther contends the courts response was erroneous, Panther should have sought clarification from the court before its response was read to the jury. However, Panther has not presented a record indicating he objected to the courts response to the jury. Similarly, after the jury returned its special verdict and before the jurors were discharged, Panther did not seek clarification from the trial court about any asserted uncertainty with respect to the verdicts effect on damages.
Moreover, in any event, although asserting that the damages found by the jurors on his two causes of action (wrongful foreclosure and breach of the implied covenant) did not overlap and that the jurys $ 372,551 damage finding on his claim for breach of the implied covenant reflected only his lost profits, Panther has not demonstrated entitlement to a $ 372,551 addition to the judgments amount. Specifically, Panther has failed to identify anything in the record indicating that specific "distinct and independent evidence" established "separate items of compensable damage" with respect to each of his two causes of action. (Tavaglione, supra, 4 Cal.4th at p. 1159.) Instead, Panther simply makes the speculative contention that when considered in the light of the instructions to the jurors, the special verdict indicated that the jury intended that the two damage amounts in the verdict be added together. Hence, Panther has not shown that the trial court reversibly erred in effectively concluding that adding $ 372,551 to the judgment amount would give Panther impermissible double recovery "for the same items of damage amounts." (Ibid.)
Panther also speculates that in responding to the jurys inquiry during deliberations, all the court "was instructing the jury was that they were to calculate the damages for each cause of action separately" and "not take into account the damages for one cause of action in calculating the amount awarded on another cause of action." Manifestly, the court disagreed with Panthers characterization of the courts intent.
D
Attorney Fees Awarded by Trial Court
As discussed, the superior court properly granted summary adjudication favoring Park, Tremblett and Grain on Panthers first amended complaints cause of action for wrongful foreclosure. The claims alleged against defendants Park, Tremblett and Grain in Panthers first amended complaint also included Panthers purported third cause of action for declaratory relief about the parties rights under the Security Agreement and Panthers purported fourth cause of action for declaratory relief about the parties rights under CanAms operating agreement. The superior court sustained without leave to amend defendants demurrers to those purported causes of action.
Also included in Panthers first amended complaints claims against defendants Park, Tremblett and Grain were Panthers sixth cause of action for breach of the CanAm operating agreement and Panthers tenth cause of action for breach of the implied covenant in the Security Agreement and the CanAm operating agreement. The superior court granted defendants motion for summary adjudication on those claims. In doing so, the court stated it was "undisputed" that defendants were "not parties to the agreements [referenced] by these causes of action" and "non-parties cannot be subject to liability for breach of contract or breach of the implied covenant premised on a conspiracy theory."
Further, Panthers first amended complaint alleged the Security Agreement and the CanAm operating agreement provided for recovery of attorney fees incurred in an action arising from those agreements. Moreover, the prayer of Panthers first amended complaint sought attorney fees and costs "according to proof." Thus, in light of Panthers contract-related claims allegations of entitlement to attorney fees, defendants Park, Tremblett and Grain brought and won posttrial motions for attorney fees as the prevailing parties on Panthers contract-related claims. Panther seeks reversal of those attorney fees awards.
1
Fee Award to Park and Tremblett
The superior court awarded defendants Park and Tremblett $ 76,475 attorney fees and costs as the prevailing parties on (1) their successful demurrer to Panthers purported third cause of action for declaratory relief about the parties rights under the Security Agreement; and (2) their successful summary adjudication motion on Panthers tenth cause of action for breach of the implied covenant in the Security Agreement. The court stated that although Park and Tremblett "were not signatories to the agreement, Panther sued them individually and alleged they `controlled FAMF." The court also stated that if Panther had "prevailed against Park and Tremblett" on those two claims, Panther "would have been entitled to recover contractual attorneys fees and costs against them." Accordingly, the court concluded Park and Tremblett were entitled to reasonable fees incurred with respect to Panthers claims for declaratory relief and breach of the implied covenant involving the Security Agreement. (Civ. Code, § 1717; Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128-129, 158 Cal. Rptr. 1, 599 P.2d 83 (Reynolds).)
The Security Agreement provided in relevant part: "The prevailing party in any legal action to enforce or interpret the terms of this Agreement shall be entitled to all costs incurred in connection therewith, including reasonable attorneys fees."
Panther does not challenge the reasonableness of the specific amount of attorney fees awarded to Park and Tremblett. Instead, Panther contends Park and Tremblett were not entitled to any attorney fees at all. Specifically, Panther asserts that (1) Park and Tremblett were not parties to the Security Agreement or to any other contract that would allow them to recover attorney fees; (2) Park and Tremblett were not sued on any contract as if they were parties to it; and (3) Panther would not have been entitled to attorney fees if he had prevailed against Park and Tremblett on his causes of action for declaratory relief and breach of the implied covenant based upon the Security Agreement. However, on this record the court properly concluded Park and Tremblett were entitled to attorney fees as the prevailing parties on those claims.
Panthers first amended complaints purported third cause of action for declaratory relief about the parties rights under the Security Agreement expressly stated it was directed against FAMF, Park and Tremblett. More specifically, that purported cause of action expressly alleged the existence of an actual controversy "between Panther and the [FAMF] defendants regarding their respective rights" under the Security Agreement. Similarly, Panthers tenth cause of action for breach of the implied covenant expressly stated it was against FAMF, Park and Tremblett. That cause of action also alleged "defendants, and each of them, breached" the implied covenant in the Security Agreement. Further, Panthers first amended complaint expressly alleged that the Security Agreement provided "for the recovery of attorneys fees incurred in an action arising from" that agreement. Finally, Panthers pleading prayed for attorney fees and costs "according to proof."
Panthers first amended complaint also alleged that Park and Tremblett "control" FAMF.
Civil Code section 1717, subdivision (a) provides in relevant part: "In any action on a contract, where the contract specifically provides that attorneys fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorneys fees in addition to other costs." In Reynolds, supra, 25 Cal.3d 124, the Supreme Court interpreted Civil Code section 1717 to "provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorneys fees should he prevail in enforcing the contractual obligation against the defendant." (Reynolds , at p. 128.) Further, the Supreme Court cited with approval the appellate courts opinion in Babcock v. Omansky (1973) 31 Cal. App. 3d 625, 107 Cal. Rptr. 512 (Babcock): "Concluding that the nonsigning defendant was entitled to attorneys fees, the court reasoned the language of [Civil Code] section 1717 was sufficiently broad to include persons who had not signed the contract but were sued on the note and found not to be parties to it." (Reynolds, at p. 129.)
Thus, contrary to Panthers contentions, the mere fact that Park and Tremblett were not signatories to the Security Agreement did not preclude their recovery of attorney fees as the prevailing parties on Panthers claims for declaratory relief and breach of contract based on the Security Agreement. (Reynolds, supra, 25 Cal.3d at pp. 128-129; Babcock, supra, 31 Cal. App. 3d at pp. 633-634.) Further, the record belies Panthers contention that Park and Tremblett were precluded from recovering attorney fees since they were assertedly not sued on the Security Agreement as if they were parties to that contract. As discussed, Panthers claims for declaratory relief and breach of contract based upon the Security Agreement were expressly directed against Park/Tremblett and contained express charging allegations against those defendants. Moreover, in light of the fact that Panther chose to allege claims based on the Security Agreement against defendants Park and Tremblett individually while also alleging entitlement to attorney fees under such agreement, Panthers contention that his allegation involving those defendants "control" of FAMF would not have entitled him to attorney fees upon prevailing against defendants is speculation if not also spurious.
In sum, since Panther sued defendants Park and Tremblett on two contract-related claims based upon the Security Agreement and they prevailed, those prevailing defendants were entitled to recover attorney fees to the same extent Panther could have recovered fees if he had prevailed, even though they were not signatories to the Security Agreement. (Reynolds, supra, 25 Cal.3d at pp. 128-129; Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1423 (Hedging).) Accordingly, the attorney fees award favoring Park and Tremblett will not be disturbed.
"`Under Civil Code 1717, the prevailing party is entitled to attorneys fees even when it wins on the grounds that the contract is inapplicable, invalid, unenforceable or nonexistent, so long as the party pursuing the lawsuit would have been entitled to attorneys fees had it prevailed." (Hedging, supra, 41 Cal.App.4th at p. 1423.)
2
Fee Award to Grain
The superior court awarded Grain $ 38,752 attorney fees and costs as the prevailing party on (1) its successful demurrer to Panthers purported fourth cause of action for declaratory relief about the parties rights under the CanAm operating agreement; (2) its successful summary adjudication motion on Panthers sixth cause of action for breach of the CanAm operating agreement; and (3) the nonsuit granted during phase one of trial on Panthers tenth cause of action for breach of the implied covenant in the CanAm operating agreement.
The CanAm operating agreement provided in relevant part: "In the event suit is brought to enforce or interpret any part of this Operating Agreement, the prevailing party shall be entitled to recover as an element of his costs of suit, and not as damages, reasonable attorneys fees to be fixed by the court. The `prevailing party shall be the party entitled to recover its costs of suit, whether or not the suit proceeds to final judgment. A party not entitled to recover costs shall not recover attorneys fees. No sum for attorneys fees shall be counted in calculating the amount of a judgment for the purposes of determining whether a party is entitled to recover its costs or attorneys fees."
Panther does not challenge the reasonableness of the specific amount of attorney fees awarded to Grain. Instead, Panther contends Grain was not the prevailing party and thus not entitled to recover any attorney fees. However, the record belies Panthers contention. Indeed, the record indicates that Grain prevailed on every contract-based claim as well as every other claim pursued against Grain by Panther, to wit, (1) wrongful foreclosure (defense summary adjudication); (2) setting aside foreclosure (demurrer sustained); (3) declaratory relief about the Security Agreement (demurrer sustained); (4) declaratory relief about the CanAm operating agreement (demurrer sustained); (5) declaratory relief about whether the FAMF note was usurious (demurrer sustained); (6) breach of the CanAm operating agreement (defense summary adjudication); (7) fraud about alleged agreements restructuring CanAm (defense jury finding); (8) breach of fiduciary duty allegedly owed to Panther as CanAm comember (defense jury finding); (9) constructive fraud (defense jury finding); (10) breach of the implied covenant in the CanAm operating agreement (defense summary adjudication); (11) Panthers right as surety on the Grain note to recover from Grain as the notes principal obligor (claim apparently abandoned); and (12) unjust enrichment/constructive trust with respect to Panthers interest in CanAm (demurrer sustained).
Nevertheless, asserting Grain was FAMFs alter ego and "united in interest" with FAMF throughout this litigation, Panther contends Grain should not be deemed to be the prevailing party in light of the judgment favoring Panther against FAMF on his jury-tried claims for wrongful foreclosure and breach of the implied covenant. (Smith v. Circle P Ranch Co. (1978) 87 Cal. App. 3d 267, 272, 150 Cal. Rptr. 828 (Smith).) More particularly, characterizing the "crux" of Grains case at trial as the theory that FAMFs foreclosure on Panthers interest in CanAm was not wrongful since the Grain note had assertedly not been paid in full before the foreclosure, Panther contends the jury found otherwise and awarded substantial damages against FAMF in rejecting such theory. In essence, attributing FAMFs wrongful conduct to its purported alter ego Grain, Panther contends Grain should be deemed to have failed at trial since FAMF failed. However, on this record the superior court acted within its discretion in concluding Grain was the prevailing party entitled to attorney fees. (Smith , at p. 272.)
"In those instances in which several defendants are united in interest and/or join in making the same defenses in the same answer, the allowance or disallowance of an award to prevailing defendants lies within the sound discretion of the trial court." (Smith, supra, 87 Cal. App. 3d at p. 272.)
In opposing Grains motion for attorney fees, Panther argued that FAMFs loss at trial precluded a finding that its alter ego Grain was a prevailing party entitled to an attorney fees award. However, as effectively acknowledged by Panther, the trial court did not accept Panthers argument. Asserting judicial error, Panther contends the record contained evidence clearly showing that Grain was FAMFs alter ego. Specifically, Panther cites evidence indicating that Grain never had any money; Grain never had a bank account; Grain never prepared financial statements; Grain never filed a tax return; Grain never had any management meetings; Grain was not capitalized; Grains capital contributions to CanAm were made by FAMF through wire transfers directly from FAMF to CanAm; Grain and FAMF had the same management; and Grain assigned to FAMF all of Grains rights to receive moneys from CanAm. However, in effect, Panther improperly seeks reweighing on appeal of conflicting evidence presented to the trial court.
Further, in any event, review of the record refutes Panthers argument that, for purposes of recovering attorney fees, Grain should be deemed a losing party in this litigation because its interests were assertedly united with FAMFs. As discussed, Grain prevailed on every contract-related claim Panther litigated against Grain. Moreover, Panthers argument is meritless to the extent based on Panthers contention that the purportedly united interests of Grain and FAMF rendered Panther unable to recover as a surety from the Grain notes principal obligor Grain. As Panther acknowledges, any right to recover as a surety would have depended upon a finding that the foreclosure on his interest in CanAm was proper, a finding Panther successfully resisted in this litigation. Additionally, as noted, in his first amended complaints eleventh cause of action, Panther alleged entitlement as the surety on the Grain note to recover damages from the notes principal obligor Grain. Thus, Panther had the opportunity to litigate his surety cause of action but apparently abandoned that claim.
Specifically, Panther has contended: By reason of his pledge of his CanAm membership interest as security for the Grain note, Panther was a surety for Grains obligation as the principal obligor on that note; as a surety, Panther had the absolute right to recover from Grain any money Panther paid toward Grains note obligation (Civ. Code, § 2847); hence, if FAMF had properly taken Panthers CanAm membership interest through foreclosure in order to pay a delinquency on the Grain note, Grain would have been required to pay Panther the value of his interest that was used in the foreclosure to pay the delinquency; on the other hand, Grain would not have owed Panther anything if, as ultimately proved by Panther, the full payoff of the Grain note before foreclosure had rendered the foreclosure wrongful; however, although Grains best interests would have dictated that Grain join Panther in asserting that the Grain note had been paid off and the foreclosure was wrongful, Grain never made such assertion in this litigation as it was inconsistent with FAMFs position that the foreclosure was proper; instead, in answering Panthers first amended complaint and in responding to Panthers interrogatories, Grain affirmatively asserted foreclosure was proper on the ground that the Grain note had not been paid off before the foreclosure. Panther has also contended that if Park as Grains president had asserted the note had been paid off before FAMF foreclosed, Park would have effectively admitted in his other role as FAMFs trustee that FAMFs foreclosure was wrongful.
Similarly, Panther has contended that in discovery Grain asserted Grosses secured interest in CanAm was worthless although Grains best interests with respect to proving Grain did not owe Panther would have dictated that Grain assert that Grosses secured interest transferred to FAMF before the foreclosure had sufficient value to pay off the note.
Also belied by the record is Panthers contention that Grain should be denied attorney fees on the ground Grain assertedly lost on what Panther characterizes as the "main issue" in this case. Specifically, characterizing the cases main issue as whether the Grain note had been fully paid off before the foreclosure on Panthers interest in CanAm, Panther contends neither FAMF nor Grain prevailed on that issue when the jury specially found the preforeclosure full payoff of the Grain note rendered the foreclosure wrongful. However, although the jury ultimately found for Panther against FAMF on Panthers first cause of action for wrongful foreclosure, the superior court had earlier granted Grains motion for summary adjudication on that claim in a ruling we have upheld above. Hence, contrary to Panthers contention, although FAMF lost on the issue of wrongful foreclosure, Grain won.
Finally, as was proper, the trial court awarded Grain attorney fees only on Panthers contract-related claims against Grain. Manifestly, Grain was the prevailing party on (1) Panthers purported fourth cause of action for declaratory relief about the parties rights under the CanAm operating agreement, a claim to which Grains demurrer was sustained; (2) Panthers sixth cause of action for breach of the CanAm operating agreement, a claim on which Grain obtained summary adjudication; and (3) Panthers tenth cause of action for breach of the implied covenant in the CanAm operating agreement, a claim on which nonsuit was granted favoring Grain during the first phase of trial.
In sum, on this record the trial court reasonably rejected Panthers contention that Grain was assertedly the losing party in this litigation since Grains interests were purportedly united with FAMFs. Accordingly, since Panther has not shown the court abused its discretion with respect to the attorney fees award to Grain, we do not disturb that award.
II
FAMFS APPEAL
A
Introduction
Litigated in the second phase of the bifurcated trial was FAMFs second amended cross-complaint alleging causes of action against Panther for intentional misrepresentation and negligent misrepresentation (FAMFs fraud claims). After trial, the jury returned a special verdict finding that Panther did not make any representation of past or existing material fact to FAMF that was false when the representation was made. Based on the special verdict, the court entered judgment favoring Panther on FAMFs second amended cross-complaint. In appealing the portion of the judgment entered on that verdict, FAMF contends the court reversibly erred in excluding evidence of the matters specified in the "third" and "fourth" items set forth in Panthers fifteenth in limine motion (Panthers in limine motion).
As we shall explain, on this record FAMF has not demonstrated that the trial court abused its discretion in granting Panthers in limine motion. Further, in any event, since FAMF has not provided a record containing all of the evidence presented at trial, FAMF cannot show the existence of reversible prejudice resulting from any judicial error involving the ruling granting Panthers in limine motion.
B
Factual and Procedural Background
FAMFs appeal concerns the parties financial transactions involving the business of servicing credit card portfolios that gave rise to FAMFs fraud claims against Panther. Since FAMF has not provided a record containing all the evidence presented at trial, we summarize the allegations of FAMFs fraud claims against Panther contained in FAMFs second amended cross-complaint.
FAMF and Financial Asset Recovery I Limited Partnership ("FAR I") were entities established by Paul Groat and Robert Pain. In 1995, FAR I acquired credit card portfolios in default at distressed prices but did not service those portfolios. Meanwhile, Triage Information Services, LLC ("TIS") was established by Panther to manage and service nonperforming credit cards. TIS was owned and controlled by Panther.
FAR I and TIS formed a limited partnership called Triage 2000 LP ("Triage 2000"), with limited partner FAR I contributing its portfolios to Triage 2000 and general partner TIS contributing its purported management experience. Ostensibly to provide working capital to pay the costs of servicing and managing the portfolios contributed by FAR I, Triage 2000 entered into a loan agreement with commercial lender Cargill Financial Services Corporation (Cargill). With Panther acting on its behalf, Triage 2000 borrowed more than $ 2.3 million from Cargill under the loan agreement. TIS also caused the FAR I portfolio to be pledged to Cargill as security. Additionally, to further Triage 2000s business, FAR I lent TIS some $ 3.5 million.
However, after Triage 2000 received the FAR I portfolio and TIS received the funds lent by FAR I, Panther did not use those funds for Triage 2000s operations. Instead, Panther caused Triage 2000s funds to be commingled and transferred to other Panther-controlled entities, including Service One International Corporation (Service One). Further, Panther collateralized the entire FAR I portfolio and improperly borrowed funds from Cargill that further encumbered the Triage 2000 portfolio. Moreover, Panthers business entities did not provide the promised servicing of the portfolio. Meanwhile, unbeknownst to Groat and Pain, Cargill was accusing Panther of fraud, claiming Panther was "a professional cheat" and threatening to levy on the FAR I portfolio. Cargill also discovered that Panther had orchestrated cross-collateralization of non-Triage 2000 accounts with the FAR I portfolio then held by Triage 2000.
Under an agreement dated February 1996, FAR I and TIS dissolved Triage 2000 (the Triage 2000 Dissolution Agreement). Under that agreement, FAR I was to regain title to all Triage 2000 assets subject only to Cargills secured $ 2.3 million loan; FAR I was to discharge its $ 3.5 million loan made to TIS; and Service One was to service the entire portfolio, then to be owned by FAR I, without a marketing charge until establishment of a minimum balance of $ 10 million in performing credit cards.
However, although FAR I could not actually reacquire the secured FAR I portfolio unless Cargills claim to such collateral was satisfied, Panthers misdeeds caused FAR I to lack the cash to repay Cargill and disencumber the portfolio. Further, as a result of Service Ones failure to provide services to FAR I so as to generate the cash flow necessary to repay Cargill, FAR I defaulted.
Knowing that Groat and Pain needed funds to pay off Cargill, Panther induced FAMF to provide the funds to do so by representing to FAMFs principals (Groat and Pain) that Service One would continue to service the portfolio as already promised and that FAMF would receive first priority over all cash flow produced by the servicing. Panther also misrepresented FAR I portfolios level of performance and projected that reaching $ 10 million in performing accounts would "not be a problem." In essence, Panthers words meant that FAMF would be repaid shortly, with profit, for providing the $ 2.3 million to extricate FAR I, Panther and TIS from Cargills threats to execute on the collateral.
Groat and Pain thus proceeded to obtain from FAMF the funds needed to pay off Cargill. Specifically, FAMF paid $ 2.3 million to FAR I to repay Cargill and obtain release of the collateral that was to be serviced by Service One. Under a September 1996 agreement, release of the collateral was achieved. However, Panther never intended to honor his commitment that Service One would employ its best efforts to service the loan portfolio. Instead, Panther had already begun negotiations in April 1996 to sell Service One to a third party without disclosing to the buyer the commitment by Panther/Service One to service the portfolio for free. In October 1996 those negotiations were formalized in an agreement for Panther essentially to sell Service One to the third party. Ultimately, Service Ones new owners declined to provide free servicing of the FAR I portfolio. Hence, FAMF did not regain the sums it should have received by virtue of its participating interest in FAR Is Triage 2000 Dissolution Agreement with TIS.
In sum, FAMFs fraud claims alleged that Panther misrepresented to the principals of FAMF and FAR I that Service One intended to service FAR Is credit card portfolios and that the predicted future performance of those portfolios was rosy; by making those representations, Panther induced FAMF to lend FAR I money to pay off Cargills $ 2.3 million lien encumbering the portfolios; and Panther made those representations to "appease" TISs former Triage 2000 partner FAR I (as well as its representatives Groat and Pain) and obtain FAR Is release of claims against Panther for commingling and absconding with the Cargill loan proceeds and FAR Is $ 3.5 million cash infusion into TIS.
As trial approached on FAMFs fraud claims, Panther brought his disputed motion in limine seeking to exclude various items of evidence challenged by Panther as irrelevant, unduly prejudicial, and constituting impermissible character evidence. (Evid. Code, §§ 352, 1101, subd. (a), 1104.) Only the third and fourth items set forth in Panthers in limine motion are at issue on this appeal. The third item sought to exclude evidence that "Cargills claim to the FAR I loan portfolio as collateral was improperly arranged by Panther" and that "Panther abused his position as general partner of Triage 2000 by `collateralizing FAR Is portfolio of non-performing credit card debts, subjecting the FAR I portfolio to unrelated expenses and a lien by Cargill." The fourth item sought to exclude evidence that "Cargill called Panther `a professional cheat in internal emails."
After hearing, the trial court granted Panthers motion in limine with respect to its third and fourth items. The issue on FAMFs appeal is whether the court reversibly erred in granting that motion.
C
Standard of Review
"`Although not expressly authorized by statute, [a motion in limine] is recognized in decisions as a proper request which the trial court has inherent power to entertain and grant." (Clemens v. American Warranty Corp. (1987) 193 Cal. App. 3d 444, 451, 238 Cal. Rptr. 339.) The motion "is made to exclude evidence before the evidence is offered at trial, on grounds that would be sufficient to object to or move to strike the evidence." (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 26 (Edwards).) "The scope of such motion is any kind of evidence which could be objected to at trial, either as irrelevant or subject to discretionary exclusion as unduly prejudicial." (Clemens, at p. 451.) Indeed, the "usual purpose of motions in limine is to preclude the presentation of evidence deemed inadmissible and prejudicial by the moving party." (People v. Morris (1991) 53 Cal.3d 152, 188, 279 Cal. Rptr. 720, 807 P.2d 949, disapproved on another point, People v. Stansbury (1995) 9 Cal.4th 824, 830, fn. 1, 889 P.2d 588.) "The advantage of such motions is to avoid the obviously futile attempt to "unring the bell" in the event a motion to strike is granted in the proceedings before the jury." (Ibid.; Edwards, at p. 26.) However, a "ruling on a pretrial motion in limine is necessarily tentative because subsequent evidentiary developments may change the context." (Rufo v. Simpson (2001) 86 Cal.App.4th 573, 608 (Rufo).)
"The law vests wide discretion in the trial court to decide the relevance of proffered evidence. [Citation.] The trial court is also vested with broad discretion in ruling on the admissibility of evidence. [Citation.] The weighing process under Evidence Code section 352 depends on the trial courts consideration of the unique facts and issues of each case, rather than on mechanically automatic rules; the courts ruling will be upset only if there is a clear showing of an abuse of discretion." (Smith v. Brown-Forman Distillers Corp. (1987) 196 Cal. App. 3d 503, 519-520, 241 Cal. Rptr. 916 (Smith ); accord, Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1431 (Tudor); People v. Adams (1980) 101 Cal. App. 3d 791, 799, 162 Cal. Rptr. 72.) Further, "relief is available only where the alleged abuse of discretion clearly constitutes a miscarriage of justice." (Olson v. American Bankers Ins. Co. (1994) 30 Cal.App.4th 816, 826.) "`"[A] `miscarriage of justice should be declared only when the court, `after an examination of the entire cause, including the evidence, is of the `opinion that it is reasonably probable that a result more favorable to the appealing party would have been reached in the absence of the error."" (Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1069, 232 Cal. Rptr. 528, 728 P.2d 1163 (Pool).) In sum, a "trial courts exercise of discretion in admitting or excluding evidence is reviewable for abuse [citation] and will not be disturbed except on a showing the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice." (People v. Rodriguez (1999) 20 Cal.4th 1, 9-10, 971 P.2d 618.)
Accordingly, to prevail on this appeal, FAMF must show that the ruling granting Panthers in limine motion constituted "an abuse of discretion on the part of the trial court which resulted in prejudice." (Rokeby-Johnson v. Aquatronics International, Inc. (1984) 159 Cal. App. 3d 1076, 1085, 206 Cal. Rptr. 232.) However, as we shall explain, on this record FAMF has not demonstrated either an abuse of discretion by the superior court or the existence of prejudice resulting from any judicial error involving the ruling granting Panthers in limine motion.
D
Discussion
FAMF contends that in granting Panthers motion in limine, the trial court abused its discretion by assertedly granting a "wholesale exclusion of the evidence" of Panthers "deceitful conduct and misrepresentations" constituting the "heart" and "essence" of FAMFs fraud claims. Further, asserting the challenged ruling "eviscerated" its case on those claims by precluding evidence of Panthers "dishonesty and false representations," FAMF contends such allegedly erroneous ruling is reversible per se as purportedly denying FAMF a fair trial by excluding evidence at the "core" of FAMFs case. (Kelly v. New West Federal Savings (1996) 49 Cal.App.4th 659, 677 (Kelly).) However, FAMF has failed to present a reporters transcript of the hearing on Panthers motion in limine or of the transcript of all the evidence at trial. FAMFs omission of the reporters transcript precludes FAMF "from raising any evidentiary issues on appeal." (Hodges v. Mark (1996) 49 Cal.App.4th 651, 657 (Hodges); Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575, 224 Cal. Rptr. 664, 715 P.2d 624 (Ballard) ["It is well settled . . . that a party challenging a judgment has the burden of showing reversible error by an adequate record"]; Tudor, supra, 65 Cal.App.4th at p. 1433 [appellant assumes "burden of showing reversible error by an adequate record"].) In any event, on this limited record FAMF has not shown the court abused its discretion in granting Panthers motion in limine. Moreover, on this record FAMF cannot demonstrate any prejudicial error involving the ruling granting motion.
Panther presented a reporters transcript of trial proceedings primarily bearing on his appeal of portions of the judgment based on the first phase of trial. In this appeal based on the second phase of trial, FAMF has not cited to anything in that evidentiary record submitted by Panther.
As acknowledged by FAMF in its trial brief, this case was about "Panthers responsibility for fraud in inducing FAMF to make the payment to Cargill." Specifically, as discussed, FAMFs fraud claims alleged that in inducing FAMF to lend FAR I the sums needed to repay the Cargill loan, Panther falsely represented that Service One would service the FAR I credit card portfolios. FAMF also alleged that Panther falsely indicated that FAMF would be repaid shortly by misrepresenting that the portfolios had a favorable level of performance that was projected to continue into the future and that the goal of reaching $ 10 million in performing accounts would be met without any problem. As also discussed, under the third item of Panthers motion in limine, the superior court excluded evidence that "Cargills claim to the FAR I loan portfolio as collateral was improperly arranged by Panther" and that "Panther abused his position as general partner of Triage 2000 by `collateralizing FAR Is portfolio of non-performing credit card debts, subjecting the FAR I portfolio to unrelated expenses and a lien by Cargill." Under the fourth item of Panthers motion in limine, the court excluded evidence that "Cargill called Panther `a professional cheat in internal emails."
1
No Showing of Abuse of Discretion
"`"The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court."" (Tudor, supra, 65 Cal.App.4th at p. 1431.)
Characterizing its points/authorities opposing Panthers motion in limine and its trial brief as offers of evidentiary proof, FAMF contends the trial court abused its discretion in excluding the evidentiary matters set forth in the third and fourth items of that motion. Specifically, in its opposition to Panthers motion in limine, FAMF asserted those evidentiary matters should not have been excluded because (1) Panthers purported "improprieties" in managing Triage 2000 set the "stage for the fraud," as Panther used the $ 2.3 million debt to Cargill as "an excuse" why FAR I could not "disengage" from Triage 2000, and thus explained why Panther and FAR I approached FAMF to pay Cargill; and (2) Panthers purportedly "improper cross-collateralization" of the Cargill loan was a factor leading to FAR Is decision to withdraw from Triage 2000 and to Panthers demand that it be done only through the payment of $ 2.3 million to Cargill. FAMF also contends the excluded matters did not constitute inadmissible character evidence.
However, in light of the allegations pleaded in FAMFs second amended cross-complaint, the superior court could reasonably conclude that the evidentiary matters specified in the third and fourth items of Panthers in limine motion were irrelevant, unduly prejudicial, and constituted impermissible character evidence. (Evid. Code, §§ 352, 1101, subd. (a), 1104.) At most, as involving disputed historical events preceding the purported misrepresentations alleged in FAMFs fraud claims, the excluded evidentiary matters were tangential to the issues raised by those claims and not "directly relevant to the primary issues of the litigation." (Kelly, supra, 49 Cal.App.4th at p. 674.) Further, to the extent those matters may have become relevant due to "subsequent evidentiary developments" that changed "the context," FAMF could have asked the court to revisit its "necessarily tentative" ruling on Panthers pretrial motion in limine. (Rufo, supra, 86 Cal.App.4th at p. 608.) However, nothing in the record indicates FAMF did so. In sum, on this record FAMF has not demonstrated the court abused its discretion in granting Panthers motion in limine. (Tudor, supra, 65 Cal.App.4th at pp. 1431, 1433.)
FAMFs trial brief and appellate briefs have also faulted the court for excluding evidence assertedly relevant to prove that "Panther misrepresented the reason why Cargill had ended its financing program for Panthers credit card collection business." In particular, FAMF has referred to evidence that (1) Cargill discovered that a TIS officer was the son of a convicted white collar criminal; and (2) Cargills audit team discovered a tape recorder in a plant in the room during an audit at Triage 2000. However, FAMFs second amended cross-complaints fraud claims did not plead that Panthers purported misrepresentation to FAMF about the circumstances of the end of his relationship with Cargill constituted actionable fraudulent misconduct. Further, FAMF has not otherwise shown the relevance to those pleaded fraud claims of the excluded evidence involving Cargills discoveries purportedly bearing on the reason for the end of the Panther-Cargill relationship. (Rufo, supra, 86 Cal.App.4th at p. 608.) In essence, those evidentiary matters were tangential to the issues framed by the pleadings and not "directly relevant to the primary issues of the litigation." (Kelly, supra, 49 Cal.App.4th at p. 674.) Moreover, FAMF has not provided a record demonstrating that those evidentiary matters were excluded under the third or fourth items of Panthers (fifteenth) motion in limine. Although the record contains the superior court clerks minutes indicating the court granted a portion of Panthers fifteenth motion in limine to exclude "any mention of the anonymous package, tape recorder or [the white collar criminals son]," FAMF has not provided a reporters transcript of the hearing on that motion. Hence, FAMF has not established any abuse of discretion with respect to exclusion of those evidentiary matters. (Ballard, supra, 41 Cal.3d at pp. 574-575; Tudor, supra, 65 Cal.App.4th at pp. 1431, 1433; Hodges, supra, 49 Cal.App.4th at p. 657.)
2
No Showing of Reversible Prejudice
Finally, in any event, on this record FAMF cannot demonstrate the existence of prejudice resulting from any judicial error in granting Panthers motion in limine so as to warrant reversal of the portion of the judgment favoring Panther on FAMFs second amended cross-complaint.
Even "where evidence is improperly excluded, the error is not reversible unless `"it is reasonably probable a result more favorable to the appellant would have been reached absent the error."" (Tudor, supra, 65 Cal.App.4th at pp. 1431-1432; cf. Pool, supra, 42 Cal.3d at p. 1069.) Further, by appealing, FAMF "assumed `the burden of showing reversible error by an adequate record." (Tudor, at p. 1433.) However, by not presenting a reporters transcript of all the evidence at trial, FAMF has failed to meet that burden. (Ballard, supra, 41 Cal.3d at pp. 574-575; Tudor, at p. 1433; Hodges, supra, 49 Cal.App.4th at p. 657.) Accordingly, since we are unable to review the evidence because of a lack of record, we cannot determine whether the courts asserted error in granting Panthers motion in limine was prejudicial.
Nonetheless, citing Kelly, supra, 49 Cal.App.4th 659, FAMF contends the trial court reversibly erred in excluding the evidentiary matters set forth in the third and fourth items of Panthers motion in limine. Further, asserting such exclusion of evidence violated its right to a fair hearing, FAMF contends the error was prejudicial per se. However, the record belies FAMFs contentions.
In Kelly, supra, 49 Cal.App.4th at page 677, the appellate court stated: "A judgment may not be reversed on appeal, . . . unless "after an examination of the entire cause, including the evidence," it appears the error caused a "miscarriage of justice." [Citation.] When the error is one of state law only, it generally does not warrant reversal unless there is a reasonable probability that in the absence of the error, a result more favorable to the appealing party would have been reached. [Citation.] [Citation.] However, where the error results in denial of a fair hearing, the error is reversible per se. Denying a party the right to testify or to offer evidence is reversible per se." In the matter before it, the appellate court in Kelly concluded that the effect of granting the disputed motions in limine "was to prevent plaintiffs from offering evidence to establish their case, meaning the error is reversible per se." (Ibid.; accord, Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1248.)
However, on this record FAMF has not demonstrated that the superior courts ruling excluding the evidentiary matters set forth in the third and fourth items of Panthers motion in limine denied FAMF a fair trial. As discussed, unlike the situation in Kelly, supra, 49 Cal.App.4th 659, the excluded evidence was not "directly relevant to the primary issues of the litigation." (Id. at p. 674.) Further, the ruling granting Panthers motion in limine did not deny FAMF the right to testify or prevent FAMF from offering evidence to establish its case. (Id. at p. 677.) In particular, unlike the situation in Kelly, nothing in this record suggests the trial court "effectively excluded any presentation of evidence on liability." (Id. at p. 668.) Stated otherwise, unlike the situation in Kelly, the court did not completely foreclose FAMF from "pursuing the only factual theory of liability supported by the evidence." (Tudor, supra, 65 Cal.App.4th at p. 1432.) On the contrary, the record indicates the court afforded FAMF ample opportunity to present its case on its fraud claims against Panther. For similar reasons, FAMFs characterization of the courts ruling as "tantamount to a nonsuit" is meritless. (Edwards, supra, 53 Cal.App.4th at p. 28.)
Indeed, the record contains no indication that the trial court granted Panthers motion in limine with respect to the evidentiary matters set forth in the motions second item ("Panther commingled the Triage 2000 funds and transferred funds upstream to his other controlled entities, TIS, Service One and The Credit Store, and otherwise failed to utilize those funds appropriately for operations of Triage 2000") or in the motions fifth item ("Panther misrepresented the performance of the credit card portfolios, and the obligation of Service One to service the portfolios, to obtain the release by FAR I in the [Triage] 2000 dissolution agreement, of claims against Panther for improperly commingling and absconding with the Cargill loan proceeds").
In sum, on this record FAMF has not shown that anything in the courts ruling granting Panthers motion in limine precluded FAMF from presenting evidence tending to prove its fraud claims based on the allegations Panther made misrepresentations that Service One would service FAR Is credit card portfolios having a profitable future and thus enable FAR I to repay the FAMF loan. Thus, FAMF has not demonstrated the court committed any prejudicial error in excluding the evidentiary matters set forth in the third and fourth items of Panthers motion in limine. Finally, since FAMF has not provided a record containing all the evidence presented to the jury, we must deem the ultimate judgment favoring Panther to be correct. (Ehrler v. Ehrler (1981) 126 Cal. App. 3d 147, 154-155, 178 Cal. Rptr. 642.)
III
DISPOSITION
The judgment is modified to award Panther $ 321,351 against Financial Asset Management Foundation for prejudgment interest. As modified, the judgment is affirmed.
Panther and Financial Asset Management Foundation shall bear their own costs on appeal. Park, Tremblett and Grain shall have costs from Panther.
WE CONCUR: BENKE, J., and McDONALD, J.