Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. CGC-01-323369
Margulies, J.
Gary Poon sued his brother, Gordon, to invalidate a series of monetary gifts their mother had made to Gordon before her death in 2000. A jury found that a November 1999 gift of $1.74 million was the result of Gordon’s undue influence. Following the jury trial, the trial court issued a statement of decision invalidating two earlier gifts to Gordon totaling $2.65 million made by his mother from an account held in the name of a family-owned corporation. The court ruled that Gordon breached his fiduciary duty to the corporation and its shareholders and directors by orchestrating these transfers without shareholder or director approval, and by concealing the transactions from Gary.
Gordon appeals from the ensuing judgment, contending that the trial court committed reversible error by, among other things: (1) failing to hold as a matter of law that the November 1999 transfer could not have been the product of undue influence because the funds came out of an account in which Gordon and his mother were joint tenants, (2) allowing the jury to continue deliberating and return a verdict on the 1999 transaction before responding to a critical question the jury had posed to the court, and (3) treating the $2.65 million transferred to Gordon as a corporate asset even though the family corporation existed in name only.
On the grounds stated below, we modify the judgment to provide that the compensatory damages award to Gary of $662,500 plus prejudgment interest shall instead go to the family corporation. As so modified, we affirm the judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
Gordon and Gary are the only children of Patrick and Vivien Poon. Gordon was born in 1956 and Gary in 1959. Due to political unrest in their native Hong Kong, the parents sent the boys in 1968 to live with their Aunt Ella (Vivien’s half-sister) in New York. Aunt Ella and her husband raised the boys as if they were their own children, although Vivien and Patrick maintained frequent contact with them, including yearly visits in Hong Kong or New York. Patrick was an attorney in Hong Kong and had his own Hong Kong law firm where he practiced for 25 years until retiring in 1985. Vivien worked at her husband’s law firm after marrying him in 1949.
Patrick and Vivien relocated from Hong Kong to Singapore in the early 1990’s. At that time, Gordon was working as an architect and living in San Francisco with his wife, Annie, in a residence on 38th Avenue that Patrick and Vivien had purchased in 1988 or 1989. Gary was a lawyer and lived near Washington, D.C. with his wife and two daughters.
In May 1993, Patrick suffered a stroke and both sons flew to Singapore to be with their parents. Gary took a three-month leave of absence from his job and remained in Singapore to help with Patrick’s rehabilitation and provide emotional support to Vivien. Gordon stayed in Singapore for a month and returned later for a second month. In October 1993, Patrick was flown to San Francisco where he lived until his death in 2001.
During the eight years Patrick lived in San Francisco, he required a demanding regimen of personal care for his daily needs and received intensive in-home physical therapy. Until 1998, Patrick lived with Gordon and Annie in the 38th Avenue house. Although they were assisted by paid helpers and a visiting physical therapist, Gordon and Annie were extensively involved in all aspects of Patrick’s care, at considerable personal sacrifice. Gordon testified that at Vivien’s request, Annie gave up a job in her own family’s business so that she could attend to Patrick. In the first half of 1998, Gordon moved Patrick into a condominium that Gordon had purchased on Cleary Court in San Francisco so that he could be closer to On Lok, a facility offering extensive senior services that was located on Bush Street. Patrick continued to require 24-hour in-home care, and Gordon or Annie visited him on almost a daily basis.
Vivien stayed with Patrick in the United States for approximately two months in 1993, supervising his care. She then returned to Singapore. Between 1993 and 1999, Vivien traveled extensively, living for months at a time in Singapore, Vancouver, Canada, Hong Kong, and the United States. She would spend a few months every year in San Francisco, staying with Patrick and Gordon, including a few months during 1998, when she stayed with Patrick at Cleary Court. Gary visited with Vivien in San Francisco in November 1994 and November 1998. Vivien also visited Gary and her sister Ella in Washington, D.C. in 1996.
The parties presented sharply conflicting evidence on the following issues, among others: (1) the extent of Vivien’s proficiency in reading and understanding English-language documents; (2) whether Vivien was making independent decisions about her finances at all times after Patrick’s stroke or came to depend on Gordon’s advice and direction; (3) whether Gordon tried to disrupt his parents’ relationship with Gary by feeding Vivien false information about Gary and keeping the parents’ whereabouts hidden from Gary at critical times; (4) whether Gary maintained a strong bond with Vivien throughout her life or had alienated her affection by, among other things, not putting his parents’ names on the invitations to his wedding in 1985, not making a greater effort to care for Patrick or maintain contact with her, neglecting Aunt Ella, misappropriating monies from Ella’s joint account with Vivien, and getting Ella to leave her entire estate to him.
1. The Two Speedgain Transactions
In December 1988, Patrick caused articles of incorporation to be filed in Liberia for a company known as Speedgain Limited (Speedgain). Speedgain was initially capitalized with a $4 million deposit into an account in its name at the Banque Nationale de Paris (BNP) in Paris. Gary testified that Patrick told him Speedgain was formed as a vehicle for passing family assets on to Gordon and Gary equally when he and Vivien passed away. According to Gary, Patrick wanted the corporate process to be used so that family members, acting as shareholders and directors, would have to approve any transactions of assets out of the corporation. Gary introduced a letter signed by him and addressed to the Speedgain board of directors, dated August 28, 1989, in which he purported to accept appointment as a Speedgain director. A draft of the acceptance letter in Patrick’s handwriting was also admitted in evidence. A January 1993 asset list prepared by Patrick listed Vivien, Patrick, Gordon, and Gary as Speedgain’s directors and shareholders. Gary testified that Patrick also sought and obtained his approval as a director for the appointment of Patrick as president and Vivien as treasurer of Speedgain.
In 1992, Patrick obtained tax advice suggesting that withdrawals from the corporation to either Gordon or Gary might be subject to United States taxes. As a result, there were family discussions about moving some of the assets in the corporation into a family trust. A trust, called the “Vivien Fong Poon and Family Trust” (Trust) was formed in September 1992, and, after a telephonic meeting in which Patrick, Gordon, and Gary discussed and agreed to the transaction, $3 million was transferred from the Speedgain account to the Trust in 1992. In January 1997, Vivien dissolved the Trust and transferred $2.48 million of the Trust’s corpus back into Speedgain’s BNP account in Paris.
In April 1998, Gordon prepared a letter to BNP for Vivien’s signature requesting that it transfer $360,000 from Speedgain’s account to Vivien’s account at the Hong Kong and Shanghai Banking Corporation (HSBC) in Singapore. The signed letter was faxed to BNP from Gordon’s fax machine. One month later, on May 6, 1998, Vivien requested HSBC to transfer $350,000 from the same Singapore account to Gordon’s personal account at Wells Fargo Bank in San Francisco. Gordon did not inform Gary of these transactions at any time until litigation between the brothers began after Vivien’s death.
On December 23, 1998, Gordon faxed to BNP two letters prepared by him and dated November 22, 1998 requesting on Vivien’s behalf that BNP close two Speedgain accounts and transfer the proceeds to Vivien’s personal account in Singapore. The two Speedgain accounts had $2,373,156.51 and $85,745.31 in them at the time they were closed. Gordon did not inform Gary about these transfers. In January 1999, pursuant to an authorization letter addressed to HSBC that had been typed by Gordon and mailed and/or faxed to Vivien for her signature, $2.3 million was transferred from Vivien’s Singapore account to Gordon’s Wells Fargo account in San Francisco. Gordon did not inform Gary about this transfer either.
2. The November 1999 Transaction
In March 1999, Vivien was struck by a motorcycle while in Singapore, and was seriously injured. The hospital requested that one of the sons come to Singapore to help make healthcare decisions for Vivien. Gary had a business trip to Miami with his family planned so Gordon went to Singapore and stayed there for two months. Gary came to Singapore three or four weeks after the accident and stayed for approximately a week. Vivien eventually improved enough that she was able to return to San Francisco with Gordon. The doctors in Singapore recommended that she go into a care facility where her medical condition could be monitored after the long plane flight to San Francisco. She was placed in Central Gardens Convalescent Hospital and stayed there for two or three weeks. After that, she briefly moved into the Cleary Court apartment with Patrick. She returned to Central Gardens in July 1999, and then in October 1999 moved to Eden Villa, a senior assisted living facility in San Francisco.
Gary testified that Gordon transported Vivien to San Francisco after her accident without informing him. Gary learned of the move from a family friend in late July or early August. After repeated inquiries to Gordon that went unanswered, Gordon learned from his father’s live-in helper in September 1999 that Gordon had placed her at Central Gardens in San Francisco. Gary saw her there in September 1999. He testified that she was not mentally present and would speak about deceased relatives, such as her parents and her sister Ella, as if they were still alive. After Gary reminded Vivien that Ella had passed away, Vivien would again inquire about her a few minutes later.
Gordon did not inform Gary when Vivien was moved from Central Gardens to Eden Villa. After learning that she had been discharged from Central Gardens, Gary contacted Gordon without success to find out where she had gone. Finally, one of the nurses at Central Gardens told him that she had been transferred to Eden Villa.
On November 30, 1999, Gary was coming to San Francisco to visit Vivien. Gordon knew that Gary was planning to see her that morning. According to Gordon, Vivien became impatient waiting for Gary. She insisted on leaving the facility with Gordon to go on a trip they had previously discussed taking to Lake Tahoe to do some gambling. Michael Sim, who was the administrator of Eden Villa at the time, testified that Vivien left the facility “suddenly” on November 30, without following the normal procedure when a resident was going to leave for more than a day, which was to give sufficient advance notice that the resident could take his or her medication list and medications with them. Sim recalled the incident as an “unusual event.”
When Gary arrived at Eden Villa he was surprised to learn that Vivien had left. Gordon left a piece of paper with his father’s helper containing a San Francisco phone number where Vivien could supposedly be reached but the number turned out to be the phone number of Central Gardens. Gordon testified at trial that he had written that number at an earlier date so that the helper could contact Vivien when she was living in Central Gardens. He was impeached on this point with deposition testimony given in 2001, in which he had identified the same writing as the telephone number he had left for Gary to reach Vivien on November 30, 1999.
Due to poor weather conditions in Lake Tahoe, Gordon took Vivien to Monterey instead of Lake Tahoe. On their way out of town, he stopped to have Vivien’s signature notarized on two documents. One document was a letter to a Canadian bank requesting that it immediately close Vivien’s accounts at the bank and wire the funds to Gordon’s personal bank account. The second was a one-page note acknowledging that this transfer—totaling $1.74 million—was a gift to Gordon. Gordon testified that he may have typed both documents on November 29, but he could not be sure of the date. According to Gordon, Vivien had told him sometime before November 29 that she wanted to transfer the money in these accounts to him.
3. Deaths of Vivien and Patrick
On December 27, 1999, Vivien was taken to the hospital for emergency surgery. Gordon did not inform Gary of the hospitalization until five days later, by faxing him a handwritten note on January 1, 2000. Gary flew out to San Francisco on January 1 or January 2, and stayed for approximately three weeks. After Gary had returned home, Gordon had Vivien sign a document in her hospital room quitclaiming her one-third interest in the 38th Avenue house to Patrick. Vivien was still in the intensive care unit at that time, recovering from her surgery. Gordon, who also held a one-third interest that he had obtained from Vivien and Patrick immediately after Patrick’s stroke in 1993, quitclaimed his own interest to Patrick at the same time. On the same day these transactions were completed, the property was sold to a third party under Patrick’s name. The proceeds of the sale went first to an offshore account in Patrick’s name and were then transferred into Gordon’s account in San Francisco as a tax-free gift from Patrick.
Vivien died on March 22, 2000. Patrick died on December 27, 2001.
B. Procedural History
In his first amended complaint filed on February 19, 2002, Gary asserted 10 causes of action against Gordon, including: (1) causes of action for undue influence and fraud asserted as an intestate heir of Vivien’s estate; (2) breach of fiduciary duty and fraud claims asserted directly as a shareholder and director of Speedgain; and (3) breach of fiduciary duty and fraud asserted derivatively as a shareholder of Speedgain. Gordon asserted a counterclaim against Gary in connection with Gary’s receipt of $1 million in 1995 from a joint account maintained by Vivien and her sister, Ella.
By the time the case went to the jury, the only contested transfers were Gordon’s receipt of $350,000 in May 1998 and $2.3 million in January 1999 out of the Speedgain accounts, and his receipt of $1.74 million in November 1999 out of the Canadian accounts. Four of the ten causes of action had either been dismissed by the court or settled by the parties. The court only instructed the jury on the cause of action for undue influence, giving the jury a special verdict form asking whether the May 1998, January 1999, and November 1999 transfers were the result of Gordon’s undue influence over Vivien.
The court took the remaining causes of action—those based on the theory that the May 1998 and January 1999 transactions breached duties owed to Gary as a Speedgain director and shareholder, as well as duties owed to the corporation—away from the jury. After the jury began its deliberations, the court memorialized an off-the-record discussion held the previous day regarding the jury instructions. Although the recorded colloquy leaves some ambiguity, it appears that the court reserved these causes of action for court trial on the following basis: (1) Gary’s standing to assert claims belonging to the corporation was in dispute; (2) Gary was asking, in effect, for declaratory relief on the standing issue as well as substantive relief on all of the underlying claims arising from Speedgain’s asserted corporate status; and (3) both requests were for the court rather than the jury to decide. Neither Gordon nor Gary interposed any objection to a court trial on these issues.
In its ensuing statement of decision, the trial court explained that it reserved for court trial “a request for declaratory relief involving Gary’s standing to bring a derivative relief action on behalf of Speedgain . . . .”
On January 28, 2005, the jury returned a verdict finding that the May 1998 and January 1999 transfers were not the result of undue influence, but the November 1999 transfer of $1.74 million was the result of such influence. Following the jury’s verdict, the parties submitted posttrial briefs on the bifurcated issues. On July 25, 2005, the court issued a tentative statement of decision in favor of Gary on the reserved issues. The court’s final statement of decision followed on August 31, 2005. The trial court determined that: (1) Speedgain was a valid corporation until its annulment by the Liberian Ministry of Foreign Affairs in June 2001; (2) Gordon and Gary were directors and shareholders of Speedgain; (3) as a director and shareholder of Speedgain, Gary had standing to bring suit; (4) the $2.65 million of withdrawals and transfers in issue were accomplished without notice to or approval by Gary; (5) Gary is entitled to compensatory damages equal to one-fourth of the total amount appropriated; and (6) Gary was not entitled to punitive damages because Gordon’s conduct was neither fraudulent nor deceitful.
The trial court found that Gary had standing to bring the claims pertaining to Speedgain “both on an individual and derivative basis.”
Following the entry of judgment, and the denial of his motions challenging the judgment and seeking a new trial, Gordon timely appealed.
II. DISCUSSION
A. Speedgain Transactions
Gordon contends that the court’s rulings regarding the Speedgain transactions were plainly erroneous because (1) the money that Vivien placed in the Speedgain account that she later took out to give to Gordon belonged to her and was never Speedgain’s property, and (2) Speedgain was never treated as a valid corporation but instead served as only a bank account for Vivien and Patrick’s use.
1. Ownership of Funds in Speedgain’s Account
Gordon argues that the mere fact that Vivien transferred “her own money” into a Speedgain account did not make that money Speedgain’s. According to Gordon, unless Gary could establish that Vivien intended the money as a gift, a loan, or an equity contribution to Speedgain, the money continued to belong to her even though she had placed it into an account in Speedgain’s name. Since no evidence was presented as to Vivien’s intent in January 1997, when she dissolved the Trust and transferred $2.48 million of the Trust’s corpus back into Speedgain’s account, Gordon maintains that the money she put in the account should have been treated as her money, which she was free to withdraw from the Speedgain account without the approval of its board.
Gordon cites no authority for the proposition that money transferred into a corporate account by a corporate insider remains that person’s property unless a different intent is shown. The case law is to the contrary. In Exchange Nat. Bank of Spokane v. Meikle (9th Cir. 1932) 61 F.2d 176, the sole shareholder of four related corporations treated an account maintained by one of the corporations as his own personal bank account, transferring money into it that he received from his various business activities, and using it—without any form of corporate authorization—to make payments for both personal expenses and expenses related to his other businesses. (Id. at pp. 177–178.) Despite the owner’s uncontradicted testimony that he at all times regarded the money he placed in the corporate account as his own money, the court noted that “the question of title to those funds is one of law and not of personal opinion,” and found that “[a]fter the Milwaukee Company received money from Mr. Herrick or from any of his companies, the title thereto was in the corporation and not in Herrick personally.” (Id. at p. 180.) Similarly, in Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, the Court of Appeal held that the assumed facts that a corporation had been funded by the Communist Party, and used since its inception to advance the Party’s interests, did not transform the corporation’s property into an asset of the Party that it could reclaim after getting into a dispute with the corporation’s directors. (Id. at pp. 987, 992–993; see also, Nelson v. Anderson (1999) 72 Cal.App.4th 111, 126 [shareholders do not own the property of a corporation].)
In this case, assuming Speedgain was entitled to treatment as a valid corporation, the $2.48 million Vivien transferred to Speedgain in 1997 became a corporate asset absent some special agreement authorized by Speedgain’s board that she could use the corporation’s bank account as her own.
2. Speedgain’s Corporate Status
Even if the trial court correctly determined that funds put into the Speedgain account nominally became Speedgain’s property, Gordon maintains that the trial court should have disregarded Speedgain’s corporate form. He argues that the trial court initially went astray by “concluding . . . as a matter of law [that] Gordon could not challenge the corporate status of Speedgain.”
The trial court’s statement of decision addressed this issue as follows: “The corporate form will be disregarded only in narrowly defined circumstances and only when required by the ends of justice. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.) In rejecting the use of the alter ego doctrine by corporate insiders, California appellate courts have estopped a person who has acted as director, officer, or agent of an association purporting to be a corporation from denying the corporate existence both as against the alleged corporation itself and its members and stockholders. (Wynn v. Treasure Co. (1956) 146 Cal.App.2d 69, 77; [Communist Party v. 522 Valencia, Inc., supra, 35 Cal.App.4th at pp. 993–994]; Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc. (1993) 19 Cal.App.4th 615, 628.) [¶] Thus, the evidence clearly established that Speedgain was duly incorporated as a valid corporation and was regarded as such by the Poon family. Gordon, as director, is estopped from denying the existence of Speedgain.”
Gordon argues that the estoppel rule is inapplicable here because he did not establish Speedgain, and did not in any way benefit from its purported corporate status. He relies instead on In re Marriage of Imperato (1975) 45 Cal.App.3d 432 (Marriage of Imperato), which recognized an exception to the rule that “an incorporator should be precluded from ignoring his own deliberately chosen corporate form” when the transactions in issue are between stockholders and the rights of third parties would not be adversely affected by disregarding the corporate form. (Id. at pp. 439–440.)
At the outset, we disagree with the premise of Gordon’s argument that the trial court held “as a matter of law” that he was estopped to deny the existence of Speedgain. It did not. The court first found, based on the evidence, that the Poon family, including Gordon, treated Speedgain as a valid corporation and, on that basis, found that Gordon was estopped to deny its existence. The portion of the trial court’s statement of decision quoted above on the estoppel issue was preceded by six paragraphs discussing the evidence as to whether Speedgain was a valid corporation. The trial court’s analysis of the evidence on that point may be summarized as follows: (1) the certification and filing of Speedgain’s articles of incorporation is conclusive evidence of its formation and existence under Liberian and California corporate law; (2) Gary’s testimony established that the corporation was formed so that the “ ‘corporate process,’ ” including shareholder/director approvals, would be required to transfer money out of the corporation and to avoid taxation of income earned at the corporate level; (3) the January 1993 asset list confirmed Gary’s testimony about the corporation; and (4) although the Poons ignored many corporate record-keeping formalities with respect to Speedgain, Gary’s approval was required on at least two occasions—the appointments of Patrick as president and Vivien as treasurer of the corporation and the transfer out of Speedgain of $3 million to establish the Trust.
Gary admitted at trial that, to his knowledge, Speedgain did not adopt bylaws, maintain a minute book or stock ledger, issue share certificates, prepare financial statements, hold elections for directors, adopt board resolutions, or have paid employees.
Thus, the assertion in the statement of decision that Gordon was estopped to deny Speedgain’s corporate form was not a legal premise or assumption underlying the court’s analysis, but a conclusion derived from the court’s review of the evidentiary record concerning the Poon family’s treatment of Speedgain. Nothing in Marriage of Imperato precludes a finding, based on a family’s history of dealings with a closely-held family-owned corporation, that a family member/shareholder is estopped from denying its existence. In fact, as the appellate court emphatically recognized in Marriage of Imperato, the exception to the estoppel rule for disputes between shareholders only applies when the shareholders have failed to treat the corporation as a separate entity. (Marriage of Imperato, supra, 45 Cal.App.3d at p. 440 [cases recognizing the exception “illustrate the right of the courts to disregard the corporate entity at the urging of a stockholder providing the facts support the alter ego theory”].)
A trial court’s determination as to whether to disregard the corporate form will not be disturbed on appeal as long as it is supported by substantial evidence. (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1248; Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 837.) Gordon’s argument regarding Speedgain boils down to a claim that the court’s ruling refusing to disregard its corporate status is unsupported by substantial evidence. We reject that claim. The filing of the articles of incorporation provides “conclusive evidence of the formation of the corporation and prima facie evidence of its corporate existence” during the relevant time period. (See Corp. Code, § 209.) Gary’s testimony and the 1993 asset list furnish substantial evidence as to the purposes for which Speedgain was formed, and the identities and ownership interests of its shareholders and directors. Gary’s testimony concerning the telephonic conference that preceded the corporation’s 1992 transfer to Vivien of $3 million establishes that corporate formalities were followed in connection with a major event that was central to Speedgain’s purpose, as testified to by Gary—to serve as a vehicle for Vivien and Patrick to set aside assets to pass equally to their sons. Gordon also admitted that he wrote at least one check in March 1998 for the payment of Speedgain’s “annual dues” to the Liberian company designated in Speedgain’s articles of incorporation as its registered agent. Taken together, the foregoing evidence is sufficient to establish that Speedgain was a validly-formed corporation, that it continued to exist throughout the relevant time period, and that the Poon family treated it as such. Substantial evidence thus supports the trial court’s determination that Speedgain’s corporate form should not be disregarded.
The trial court found that California law, the law of the forum state, was applicable since neither party articulated any interest Liberia would have in applying its law in the event of a conflict. Gordon has raised no objection to that ruling on this appeal and has relied exclusively on California corporations law in his briefs.
At trial, Gordon denied that he was ever a shareholder or director of Speedgain. This testimony was contradicted by the 1993 asset list as well as by Gordon’s own 2002 deposition testimony, which was read into the record, in which he admitted that Patrick had told him he was a director and “ ‘possibly [a] shareholder’ ” of Speedgain, along with Patrick, Vivien, and Gary. We note that stock ownership does not require issuance of a stock certificate. (Crane Valley Land Co. v. Bank of America (1960) 182 Cal.App.2d 166, 173; Majors v. Girdner (1916) 31 Cal.App. 47, 51.)
Gordon denied that the $450 annual fee he paid in 1998 was for maintaining the corporation in good standing, but his testimony on this point indicated that he was not really sure what it was paid for. He could only say that he paid it at Patrick’s request and that it was “paid to keep the name . . . registered or something. I don’t know.” An April 2001 letter from Speedgain’s registered agent in Liberia shows that the annual registration fee to keep the corporation in good standing in Liberia was $450.
In two footnotes, Gordon argues that Gary could not have been a valid shareholder of Speedgain because he assertedly admitted at trial that he had not paid any consideration for his shares. (See Corp. Code, § 409, subd. (a).) However, in the testimony Gordon cites, Gary admits only that he did not pay money consideration for the shares. In any event, Gary could have obtained the shares from his parents as inter vivos gifts rather than directly from Speedgain. (See Jean v. Jean (1929) 207 Cal. 115.)
B. Award of Damages to Gary
The trial court awarded Gary, as damages payable by Gordon, one-quarter of the $2.65 million transferred out of Speedgain to Gordon, or $662,500. According to Gordon, the judgment should at a minimum be modified to eliminate the award to Gary individually and to increase the award to Speedgain by the $662,500 awarded to Gary. Gordon challenges the individual award on the following grounds: (1) Gary’s direct cause of action was, in reality, a derivative claim; (2) Gordon had the right to a jury trial on any claim for damages by Gary; (3) an award of damages to Gary is inconsistent with the court’s ruling that the funds transferred belonged to Speedgain; and (4) there was no substantial evidence of any breach of fiduciary duty.
At oral argument, Gary conceded that the judgment should properly be modified to eliminate the individual award to him and, instead, to provide that the entire amount of the challenged Speedgain transactions, totaling $2.65 million, be awarded to Speedgain. This concession is appropriate and we will so modify the judgment.
C. The November 1999 Transfer
Gordon contends that the jury’s verdict concerning the November 1999 transfer must be reversed for four reasons: (1) as a matter of law, the transfer to him of $1.74 million in November 1999 could not have been the result of undue influence because he was already a joint tenant of the Canadian accounts at the time of the transfer and, therefore, was a co-owner of the funds; (2) under his right of survivorship, the money in those funds would have reverted to him even if the challenged transfer was rescinded as the product of undue influence; (3) the jury was inadequately instructed; and (4) no substantial evidence supports the jury’s verdict.
1. Joint Tenancy Issues
In our view, Gordon waived his argument that the nature of his rights in the Canadian accounts precluded a finding of undue influence by failing to timely raise or argue that theory in the trial court. The issue was not raised in any pretrial motion, or in Gordon’s opening statement or closing argument to the jury. Neither the jury instructions nor the special verdict form touched on the issue of joint ownership of the Canadian accounts, yet these omissions drew no objection from Gordon. It appears that the claim first arose more than eight months after the jury trial had ended, in connection with posttrial proceedings held in October 2005 on the form of judgment to be entered. Gordon renewed the claim in his motion for judgment notwithstanding the verdict, filed two months after that.
Nor did Gordon develop a factual record at trial adequate to establish his asserted rights in the accounts. He testified that his mother added his name to the accounts in 1997 and that it was his understanding that he could have taken all of the money out of the account and that he had a right of survivorship, but he offered no competent evidence at trial as to what his rights were under Vivien’s account agreement with the bank. As evidence of Vivien’s intent in adding his name to the accounts, Gordon also cites an exhibit offered by Gary at trial in which Vivien purportedly acknowledged in writing that she had added Gordon’s name to the accounts “as joint tenant” and understood that he would have a right of survivorship. This did not close the evidentiary gap at trial. First, the document does not identify the accounts referred to in it. Second, Gordon admitted that he typed up the document for his mother to sign, and it is at least questionable whether Vivien had a sufficient command of English to understand what she was signing. Third, even if the document provided evidence of Vivien’s intent, it does not establish the terms upon which the bank accepted the accounts or how Gordon’s rights in the accounts would be construed under Canadian law. Finally, the document at most evidences an intent that Gordon was to have a right of survivorship upon Vivien’s death. It does not establish that he had the right to convert all of the funds in the account to his personal use during Vivien’s lifetime. (See Lee v. Yang (2003) 111 Cal.App.4th 481, 490, 493 [ownership of and the right to withdraw funds from a joint tenancy account may be restricted by oral agreement between the parties].)
With exceptions not relevant here, a defendant appealing from an adverse jury verdict cannot raise a new theory of defense on appeal that was not raised at trial. (Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1065–1066; Bardis v. Oates (2004) 119 Cal.App.4th 1, 13–14, fn. 6; Curcio v. Svanevik (1984) 155 Cal.App.3d 955, 960.) Gordon maintains that he did not waive his joint tenancy theory because his position “essentially is that, because he could not have exerted undue evidence as a matter of law [due to the joint tenancy], the evidence is insufficient to support the jury’s verdict that he did.” He argues that his posttrial motion for judgment notwithstanding the verdict properly attacked the verdict on this ground, and that no objection is necessary to preserve the issue of the sufficiency of the evidence on appeal in any event. We are not convinced. Even under Gordon’s theory, the evidence of undue influence would have been sufficient to support the verdict but for the asserted fact that the funds in issue were held in a joint account with a right of survivorship. Since Gordon did not in fact provide competent evidence of that asserted fact at trial, there was no insufficiency in Gary’s showing of undue evidence.
Further, we are not convinced that Gordon’s joint account theory would have negated Gary’s showing of undue influence even if Gordon had timely raised the theory and provided competent evidence to support it during the trial. By causing Vivien to transfer the funds in the Canadian accounts to his personal account, Gordon gained the right to exercise exclusive control over the money, prevented Vivien from deciding on any different disposition of it in the future, and destroyed Vivien’s survivorship rights. Gordon cites no case law suggesting that a transfer of assets from a joint tenancy account to the individual account of a joint tenant cannot as a matter of law support a cause of action for undue influence or similar wrong. At least one jurisdiction has specifically rejected that proposition. (See Simon v. Wilson (1997) 291 Ill.App.3d 495, 502–504 [reversing dismissal of action by wife’s heirs against husband made on the grounds that husband’s transfer of assets held by husband and wife as joint tenants into his personal trust had no effect since he would have succeeded to her interest in the assets].)
Gordon makes the related claim that even assuming the November 1999 transfer had to be rescinded due to undue influence, it was error for the court to direct that the funds go to Vivien’s intestate estate. Instead, the funds should have been restored to the same accounts from which they were drawn, namely, the accounts in which Gordon asserts he was a joint tenant with a right of survivorship. Since Gordon was the joint survivor on both accounts, he is arguing in substance that the judgment should have ordered him to return the funds to himself. He insists that his failure to raise this point at trial was not a waiver of it because it is an objection to the form of judgment entered on the verdict, not an objection to an error that occurred in the course of the trial or in the jury’s verdict.
Gordon’s argument glosses over the fact that it would have been self-evidently pointless to have a jury trial on the issue of whether Gordon obtained $1.74 million from Vivien due to undue influence in November 1999 if he was entitled to keep the money regardless of the jury’s verdict. Whether considered under the doctrines of waiver, estoppel, invited error, or theory of trial, Gordon could not allow the case to proceed on the premise—which he ostensibly shared—that the funds would go to Vivien’s estate if the jury found against him—and then turn around and attack that premise after the verdict came in.
“The purpose of the waiver doctrine is to bring errors to the attention of the trial court so they may be corrected or avoided. [Citation.] The rule that contentions not raised in the trial court will not be considered on appeal is founded on considerations of fairness to the court and opposing party, and on the practical need for an orderly and efficient administration of the law. [Citations.]” (People v. Gibson (1994) 27 Cal.App.4th 1466, 1468.) Under the related doctrine of judicial estoppel, a party who has taken a particular position in litigation may be estopped from taking an inconsistent position to the detriment of the other party. (See California Coastal Com. v. Tahmassebi (1998) 69 Cal.App.4th 255, 258–260, and cases cited therein, for a discussion of these overlapping doctrines.) “Where the parties try the case on the assumption that a cause of action is stated, that certain issues are raised by the pleadings, that a particular issue is controlling, or that other steps affecting the course of the trial are correct, neither party can change this theory for purposes of review on appeal. ” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 399, pp. 451–452.)
In 2001, Gordon sought to dismiss or stay Gary’s undue influence case on the ground that the claims belonged to and could only be asserted by Vivien’s estate. In 2004, he filed a motion in limine to strike all of Gary’s claims on behalf of Vivien’s estate, arguing explicitly that if Gary were successful in his challenge to any of the transfers in issue, the money would become assets of Vivien’s intestate estate. Just before the jury trial began in January 2005, Gordon renewed his motion in limine to strike all of Gary’s undue influence claims. In reference to those claims, Gordon’s counsel told the court: “[W]hat [Gary] is seeking does not and would not go directly to him. It would go to his mother, his mother [is] deceased, it would go through her estate. . . . [¶] And our concern is the fact that if the [estate] administrator, who is not a party to this, were to decide to come in after, because it’s his claim, we could be subject to a duplicate liability or second trial.” As a result of that concern, the parties and the estate administrator entered into a “Stipulation to be Bound by Outcome of Trial,” which stated in part that “any and all right of recovery of assets or property properly belonging to the Estate of Vivien Poon shall immediately pass and be delivered to [the administrator of Vivien Poon’s estate].”
Although Gordon now tries to parse the words he used in his submissions and statements to the court, the clear import of them when made was that any funds found to have been transferred to Gordon as a result of undue influence would become assets of Vivien’s estate. Gary never disputed that position, and the court accepted it in resolving Gordon’s in limine motion by requesting that the estate administrator agree to be bound by the jury’s verdict. The phrase, “properly belonging to the Estate of Vivien Poon” in the ensuing stipulation was understood by all concerned to encompass any and all assets that the jury found Gordon had obtained from her by improper means. All of Gary’s undue influence claims were tried to a verdict on that premise. Gordon could not thereafter change his position with respect to the 1999 transfer after the jury found against him on that claim.
In any event, Gordon’s current position is unpersuasive on the merits. When he obtained the assets in November 1999, Gordon had only a contingent right of survivorship to them, a right that became fixed only if Vivien predeceased him without having withdrawn the assets or changed the terms of the accounts. (See Tenhet v. Boswell (1976) 18 Cal.3d 150, 155–156.) If Vivien had learned of Gordon’s wrongdoing and regained control over these assets during her lifetime, she would have most likely eliminated Gordon’s right of survivorship. He should not be permitted to reap a benefit from his wrongful conduct merely because he succeeded in keeping it hidden until after Vivien’s death. Thus, Gordon’s survivorship argument would not have prevailed even if it had been timely raised in the trial court.
2. Failure to Answer Jury Question
During its deliberations, the jury sent the following question to the court: “If we conclude that Vivien was no longer sane and competent at a relevant time, is there a free will to be subjugated?” Working with counsel, the court drafted an additional instruction to make it clear to the jury that the court had already determined that Vivien was sane and competent as a matter of law. However, before the new instruction could be finalized and read to the jury, the jury announced that it had reached a verdict. This was approximately an hour and a half after the question was first communicated to the court. The court asked counsel for both parties if they wanted the answer sent in to the jury before a verdict was recorded. Both sides indicated that they were not interested in having the answer sent to the jury before its verdict was recorded.
The instruction would have read: “The Court finds that there is insufficient evidence as a matter of law to overcome the presumption that Vivien was sane and competent at the time she made each specific gift; therefore, you cannot find otherwise. However, her mental condition is a factor that you may consider in determining whether her free will was destroyed as to each specific gift at the time it was made.”
Gordon now argues that it was reversible error not to answer the jury’s question even though neither side objected to allowing the verdict to be recorded. Gordon also complains that the court should have halted jury deliberations pending the formulation of an answer.
There is no evidence in the record that Gordon asked the court to instruct the jury to suspend its deliberations. The record shows that the court invited both sides to request that the answer be sent in to the jury before its verdict was recorded, but neither side expressed interest in doing so. Gordon asserts that this did not constitute a forfeiture on his part of the issues he now raises because the court’s offer to send in the answer was conditioned on both sides agreeing to that procedure. Since a unilateral request by Gordon would assertedly have been futile, he claims that his failure to make the request cannot be deemed a forfeiture.
We are not persuaded. The court stated that it would send the answer in to the jury before accepting the verdict if both sides agreed. It did not specify what action it would take if the parties disagreed about following that procedure. The court never had to do so because both sides ostensibly agreed that the verdict should be recorded without delay. Had Gordon not acquiesced in that procedure, the court would have been forced to rule in favor of one side or the other, and Gordon would have made his record and preserved the issue for appellate review. But by neither proposing that jury deliberations be suspended nor requesting that the jury’s question be answered before its verdict was recorded, Gordon forfeited appellate review of his present objections. He cannot be allowed to speculate on the outcome of a potentially flawed decisionmaking process, and then having lost his bet, complain about the flaws.
3. Substantial Evidence
Gordon claims that the evidence was insufficient to show undue influence with respect to the November 1999 transaction because there was no evidence that Gordon brought any pressure to bear on the donative act or that Vivien would not have made the $1.74 million gift to Gordon but for Gordon’s alleged influence over her.
Undue influence is normally shown through the accumulation of circumstantial evidence. (David v. Hermann (2005) 129 Cal.App.4th 672, 684.) Here, the following circumstantial evidence supported the jury’s verdict: (1) Vivien was susceptible to undue influence because she was in an impaired mental state, which included short-term memory loss, dementia, and Alzheimer’s disease; (2) Gordon had isolated Vivien from Gary by not keeping Gary informed of where she was living, removing her from Eden Villa and taking her on an unannounced trip out of town on the morning Gary was due to arrive in San Francisco, and leaving the wrong telephone number for Gary to try and reach her; (3) Gordon prepared the November 1999 transfer documents himself and had Vivien sign them under highly unusual and suspicious circumstances—during a stop at a notary’s office while on the way out of town on a sudden, unannounced trip on the day Gary was traveling across country to see her; (4) after Patrick’s stroke, Vivien depended on Gordon for help and advice in managing her financial affairs, and it may reasonably be inferred that her dependence on Gordon increased after her accident in March 1999; (5) before Patrick’s stroke, Vivien and Patrick had treated Gordon and Gary equally in financial matters, consistent with the parents’ traditional Chinese values, but after the stroke, Gordon repeatedly sought to drive a wedge between Gary and their parents by feeding them false stories about Gary’s conduct; (6) in late 1998, Vivien expressed concern to a family friend that Gordon had stolen a substantial amount of money from her by transferring money out of one of her accounts, but Gordon reassured the friend and apparently persuaded Vivien— falsely it may be inferred—that the money was still hers even though Gordon had moved it to the United States; and (7) in January 2000, while Vivien was in the hospital intensive care unit and was suffering from short-term memory loss severe enough that she was unable to remember conversations that took place earlier in the day, and was too weak to complete her own signature, Gordon got her to quitclaim her interest in the 38th Avenue property so that he could sell the property in his father’s name and have the proceeds transferred tax-free to his personal account.
In our view, the foregoing evidence is sufficient to support the verdict. Cutting the donor off from other relatives can be indicative of whether undue influence was being exerted. (Estate of Gelonese (1974) 36 Cal.App.3d 854, 865–866.) The defendant’s active involvement in the preparation of the documents is another relevant factor. (Id. at p. 865.) The donor’s weakened mental and physical condition is also highly relevant. (Estate of Teel (1944) 25 Cal.2d 520, 527.) The unusual circumstances surrounding Vivien’s execution of the transfer documents are indicative of undue influence. (See Keithley v. Civil Service Bd. (1970) 11 Cal.App.3d 443, 451–452.) Vivien’s concern about Gordon in 1998, and the extreme lengths he went to in January 2000 to get her to sign over her interest in the 38th Avenue property lend further weight to the inference of undue influence.
There was also evidence from which the jury could reasonably conclude that Vivien would not have transferred $1.74 million to Gordon in November 1999 but for his undue influence. The jury was entitled to accept Gary’s testimony that he continued to have a strong bond with his mother throughout her life, and to disbelieve Gordon’s evidence that Gary and Vivien were estranged from one another. There was also evidence that Vivien and Patrick had treated Gordon and Gary equally in financial matters, at least until some time after Patrick’s stroke. While it was possible for the jury to infer from the evidence that Vivien’s feelings toward Gary cooled at some point, the evidence was in conflict on that issue and the jury could also reasonably conclude that the November 1999 transfer was different from what Vivien would have been expected to do but for Gordon’s influence over her.
Viewing the evidentiary record as a whole, substantial evidence supports the jury’s verdict.
III. DISPOSITION
The judgment is modified to provide that the $662,500 in compensatory damages and prejudgment interest thereon of $323,284.93 awarded to respondent shall instead be added to the monetary judgment in favor of Speedgain. As so modified, the judgment is affirmed. Respondent is awarded his costs on appeal.
We concur: Marchiano, P. J., Stein, J.