Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a judgment of the Superior Court of Orange County, Super. Ct. No. 03CC01067, Eleanor M. Palk, Temporary Judge (pursuant to Cal. Const., art. VI, § 21), and Clay M. Smith, Judge.
John L. Dodd & Associates and John L. Dodd, and Richard V. McMillan for Plaintiffs and Appellants.
Leffert Jay & Polglaze, Jonathan D. Jay, and Nicholas S. Kuhlmann, pro hac vice; Murray & Sabban and Paul S. Murray for Defendants and Respondents.
OPINION
ARONSON, ACTING P. J.
Jerry Shulman and Lifestyles Resorts, Inc., (collectively, Shulman) appeal from a jury verdict awarding $495 to Robert L. McGinley and L.S.O. Limited (collectively, McGinley) on their fraud claim against Shulman and $200,000 in punitive damages, which the trial court reduced to $4,950. Shulman contends the trial court erred in sustaining a demurrer or, in the alternative, granting nonsuit on Shulman’s breach of confidence claim. Shulman also challenges the sufficiency of the evidence to support the jury’s fraud finding and punitive damages award, asserts the trial court erred in denying his request to elicit testimony from McGinley’s trial counsel, and argues McGinley was not entitled to expert witness fees as part of his cost bill because his pretrial settlement offer was invalid (Code Civ. Proc., § 998; all further undesignated statutory references are to this code). As we explain below, none of these contentions has merit and we therefore affirm the judgment.
I
FACTUAL AND PROCEDURAL BACKGROUND
LSO Limited (LSO) caters to the adult “swinging” community by selling group travel packages to LSO members who travel to adults-only resorts primarily in Mexico and Jamaica, such as the “Hedonism” hotels. The tour “takes over” the resort with about 600 couples four or five times a year, earning LSO commission fees on the room bookings. LSO also hosts at least two conventions annually, selling booth space to vendors aiming products and services at the “Lifestyles” community. Over the years since its inception in the early 1970’s, LSO has developed a member mailing list of 25,000 to 30,000 couples.
Beginning in the 1980’s, McGinley became interested in acquiring a resort for LSO to pitch directly to its members, presumably increasing profits by cutting out the hotel “middleman.” McGinley never considered selling time shares in such a venture. McGinley located a promising property in Jamaica in 1999 or 2000. Shulman, who had licensed LSO’s Lifestyles trademark for a clothing line and conducted other business with LSO, learned of McGinley’s interest and discouraged him. He advised McGinley in a December 2000 letter, “Regarding the hotel acquisition, Jamaica sounds great but be aware of [the] challenges of managing a boutique property. The cost of management is the same for 76 rooms as for 200 rooms. The cost in time and money to oversee a property that far from home is draining. In speaking with Ted this morning, Las Vegas should remain as [the] highest and primary priority. We need to further discuss raising of capital.” According to McGinley, Shulman presented himself as “somewhat of an expert in [the] acquisition of hotels” because he had “previous ownership of hotels.” Shulman testified at trial that his family had owned hotels and he worked in “the hotel business” after they sold those hotels.
In December 2001, Shulman arranged a meeting with McGinley and other LSO personnel to discuss McGinley’s continued interest in acquiring a resort property. Shulman brought Ted Wiersema and Dawson Davenport with him to the meeting and introduced them as part of his team. Based on the business card Wiersema presented, McGinley believed he was a vice-president of Outrigger Hotels. Wiersema explained at trial that he had retired but still “did some work” for Outrigger Lodging Services, the property management division of Outrigger Hotels. Davenport had been involved in commercial real estate since 1982, and his company, Coldwell Banker Commercial American Spectrum (Coldwell Banker), had a franchise from Cendant Corporation (Cendant). Shulman himself worked for Cendant, which owned hotel chains, and teamed with Davenport at Coldwell Banker on its “‘hospitality team’” as a specialist “who knew how to evaluate hotels.”
According to McGinley, Shulman proposed his team would “acquire a hotel that [LSO] could brand with the Lifestyles name.” Shulman would license the Lifestyles name from LSO. As McGinley put it, “[I]t was up to them to obtain the resort. It would have been up to us following that to market the rooms to our members.” According to McGinley, Shulman would be entitled to sell timeshares to LSO’s members, and would have access to LSO’s membership list to do so, but that would follow acquisition of the property. McGinley did not recall the “specific words” in Shulman’s proposal, but testified, “I do recall the impression that Outrigger was going to obtain a hotel, and it was our impression that Coldwell Banker was the source of funds.” McGinley acknowledged that, as for the details of Shulman’s funding plan, “they never actually laid it out,” but “[t]he impression we were given was that they had investors.”
McGinley arranged for Shulman to have a free booth at LSO’s April 2002 convention in Miami. The booth would ordinarily rent for $495. According to McGinley, the purpose of the booth was for Shulman to gauge interest in a Lifestyles-branded resort, including potential timeshare interests in such a resort. But he never expected Shulman to solicit or sell timeshares at that convention. Shulman met Robert Scharff, a longtime LSO member and acquaintance of McGinley’s, at the Miami booth. After Scharff expressed interest in the concept, Shulman sent him an e-mail stating, “Per our discussions in Miami, we are now accepting investment money for Lifestyles Resorts, Inc. You desire[] to invest $30,000 to $40,000 for 3,000 to 4,000 shares of the Class A Preferred stock. This has been approved as Friends and Family.”
Without McGinley’s knowledge, Shulman had formed a corporation named Lifestyles Resorts, Inc. (LSR). Shulman later filed a state trademark application for the phrase “Lifestyles Resorts” with the California Secretary of State. Shulman’s e-mail directed Scharff to LSR’s website to review a private placement memorandum (PPM) authorizing the sale of the stock. Scharff downloaded and signed the PPM subscription agreement, and sent a $40,000 check to Shulman.
Shulman and his team continued to meet with McGinley concerning the Lifestyles resort project. According to McGinley, “[a]t virtually all of our meetings,” Shulman’s agendas included “a list of hotels” and statements implying “we’re very close to closing on them or very close to doing the deal, those kind of words.” In June 2002, McGinley provided Shulman with an office at LSO’s headquarters in Anaheim. The office would have rented for approximately $560 during the time Shulman was there. McGinley also provided Shulman with booth space worth $1190 at LSO’s Reno convention at the end of July 2002, where they had their falling out.
Scharff complained to Shulman and McGinley at the Reno convention that he had never received stock certificates or other acknowledgement of his $40,000 investment. According to Scharff, McGinley was very upset to learn of the transaction. When McGinley learned from his staff that Shulman was attempting to sell stock to other LSO members at the Reno convention, he concluded it was time to part ways with him. He delivered a letter to Shulman in August 2002 evicting him from LSO’s offices and directing him to refrain from using LSO’s “Lifestyles” trademark or representing that LSR was “in any way affiliated with LSO . . . .”
Shulman and LSR sued McGinley and LSO in May 2003 for breach of confidence, breach of contract, unfair competition, and trademark infringement. McGinley and LSO counterclaimed for, among other causes of action, fraud and trademark infringement. Pretrial, McGinley and LSO offered to settle the breach of confidence and contract claims for $50,000. Shulman and LSR declined. After the court granted McGinley’s nonsuit motion on the breach of confidence claim, the jury rejected Shulman and LSR’s breach of contract and unfair competition claims, and awarded McGinley and LSO $495 for fraud. In a bench trial, the trial court enjoined Shulman and LSR from using the “Lifestyles” name. The jury had awarded $200,000 in punitive damages on the fraud claim, which the trial court reduced to $4,950. The court also awarded McGinley and LSO $67,000 in costs for their expert witnesses. Shulman and LSR now appeal.
II
DISCUSSION
A. Breach of Confidence Claim
Shulman contends the trial court erred by sustaining McGinley’s demurrer to Shulman’s breach of confidence claim or, in the alternative, that the trial court erred by granting McGinley’s nonsuit on the claim. We observe at the outset that it makes little sense to allege demurrer error if the claim made it through trial to the nonsuit stage. McGinley explains that during the hearing on his demurrer, the trial court “folded” Shulman’s breach of confidence claim “into his Breach of Contract claim.” The trial court did so after commenting, “I still don’t see where you have anything other than a breach of contract. They didn’t do what they said they were going to do.” Shulman’s counsel responded, “Okay. Let’s call it a breach of contract and let’s just go forward, then. That is fine with me. I can live with that.” The court confirmed, “Call it a breach of written contract. Will that work?” And Shulman’s counsel agreed: “Absolutely works for me.”
Shulman argues, in essence, that the trial court coerced him into abandoning the breach of confidence claim, but the foregoing exchange does not bear out his assertion. The record does not suggest it was futile for Shulman to resist the trial court’s approach. Rather, Shulman simply failed then, as now, to articulate any reasoned objection. Shulman asserts generally that he suffered prejudice in presenting evidence on his claim because his breach of confidence theory “necessarily would have different elements than a contract,” but he fails to specify any meaningful distinction here. The core of a breach of confidence claim is the defendant’s agreement to safeguard the privacy of the plaintiff’s information. (See Tele-Count Engineers, Inc. v. Pacific Tel. & Tel. Co. (1985) 168 Cal.App.3d 455, 463 (Tele-Count).) Accordingly, it is akin to a breach of contract claim. In any event, despite vague insinuations, Shulman identifies no evidence he “was prevented from presenting to the jury.” At most, Shulman suggests merely he would be “entitled to expanded remedies under a tort theory.” But remedies only become relevant if Shulman presented evidence sufficient to avoid McGinley’s nonsuit. He did not.
“A defendant is entitled to a nonsuit if the trial court determines that, as a matter of law, the evidence presented by the plaintiff is insufficient to permit a jury to find in his favor.” (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291; § 581c.) An initial defect in Shulman’s claim is that he never identified the information McGinley agreed to keep confidential. Shulman pinpoints in his complaint his claim that McGinley and his operatives “secretly determined they would misappropriate the Plaintiffs’ business/action plan,” but Shulman never introduced that plan at trial, though he claimed it ran to more than 2,000 pages.
Purporting to abstract the plan from snippets of Shulman’s testimony, appellate counsel asserts “[t]he point of the business plan was to locate underperforming hotels and either purchase them at reduced prices or lease them at favorable rates because of the widespread problems in the travel industry after September 11, 2001, and market the rooms — both for sale and for rent — exclusively to persons in the ‘lifestyle community’ for the entire year.” This plan fails as a basis for a viable breach of confidence claim for two reasons: McGinley’s foreknowledge and lack of damages.
First, Shulman did not disclose the notion of acquiring resort properties for the Lifestyles community to McGinley. While the parties dispute whether the idea or information the plaintiff imparts in confidence must be “novel” (compare Tele-Count, supra, 168 Cal.App.3d at p. 463, with Gunther-Wahl Productions, Inc. v. Mattel, Inc. (2002) 104 Cal.App.4th 27, 41 (Gunther-Wahl)), it is at least necessary that the defendant learn of the idea or information from the plaintiff’s disclosure. (Gunther-Wahl, supra, 104 Cal.App.4th at pp. 41-42 [defendant bound in confidence regarding material unknown to him “‘but for the disclosure’”].) Here, it was undisputed McGinley long had an interest in acquiring a resort property; indeed, he broached the idea to Shulman, who dissuaded him from purchasing the Jamaica hotel.
Second, Shulman presented no evidence of damages. Shulman argues “McGinley only had taken over a resort for a week or so at [a] time previously; he had not acquired an entire resort for the use of the ‘lifestyles community’ exclusively year-round, nor had he previously sold membership interests in properties.” This is no more than a restatement of McGinley’s interest in acquiring a resort but, even assuming the idea somehow originated with Shulman, the evidence was undisputed McGinley never acquired any resort, “underperforming” or not, and never sold a single timeshare or other type of membership interest in any property. According to Shulman’s witness, Roberta Valdez, a former LSO employee, McGinley “asked me if I was able to locate any hotels that we could operate and manage ourselves as Lifestyles Resorts.” But she admitted she found none. The witness also admitted, “As far as I know he hasn’t sold any time shares” and that McGinley was “not in the time-share business . . . .” Given the absence of any disclosure resulting in damages, the trial court properly granted McGinley’s nonsuit motion.
B. Fraud and Punitive Damages
Shulman challenges the sufficiency of the evidence to support the jury’s fraud finding. “‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter:); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
According to Shulman, the dearth of evidence required the trial court to grant his nonsuit motion. We disagree. The substantial evidence standard is a daunting one for an appellant. “‘“If the circumstances reasonably justify the trier of fact’s findings, the opinion of the reviewing court that the circumstances might also reasonably be reconciled with a contrary finding does not warrant a reversal of the judgment. [Citation.]”’” (People v. Kraft (2000) 23 Cal.4th 978, 1054.) It is not enough that reasonable minds may disagree; when two or more inferences can be reasonably deduced from the evidence, the appellate court may not substitute its judgment for the trier of fact’s. (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571.) In sum, the reviewing court has “‘“no power to judge of the effect or value of the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to resolve conflicts in the evidence or in the reasonable inferences that may be drawn therefrom.” [Citation.]’ [Citation.]” (People v. Orange County Charitable Services (1999) 73 Cal.App.4th 1054, 1071-1072, original italics.)
Shulman complains there was “no substantial evidence of any specific misrepresentation.” He focuses on McGinley’s admissions he did not recall Shulman’s “specific words” concerning how Shulman would acquire hotels and that Shulman “never actually laid . . . out” his funding source in their initial meeting. No specific words are necessary to constitute fraud. “‘The gist of the action is fraudulently producing a false impression upon the mind of the other party; and, if this result is accomplished, it is unimportant whether the means of accomplishing it are words or acts of the defendant . . . .’” (Sime v. Malouf (1949) 95 Cal.App.2d 82, 100.)
The jury could reasonably conclude Shulman falsely represented he was on the verge of obtaining a hotel, and had lined up the funding to do so. Shulman dissuaded McGinley from pursuing the Jamaican hotel he was interested in, and instead suggested a Las Vegas resort and other hotel properties. Shulman dismissed the small Jamaican resort as a “boutique” purchase, and never suggested McGinley or LSO should obtain the larger properties Shulman recommended. If that were the case, there would be no reason to license the Lifestyles name to Shulman to brand the hotel. His proposal to McGinley to license the Lifestyles name for such a property implicitly suggested he had the backing to attain one.
Shulman deepened that impression in his December 2001 meeting with McGinley by presenting Wiersema and Davenport as part of his team. Both hailed from prominent companies in the hotel and real estate business, Outrigger and Cendant/Coldwell Banker, respectively. Both made a point to present their business cards verifying those affiliations, and the jury could reasonably infer Shulman secured their presence to imply he was well-connected and capable of landing a resort for McGinley to brand. Indeed, Davenport pointed out in a letter to McGinley immediately after the meeting, “With our national exposure as it relates to Hospitality assets and the availability thereof and the management infrastructure we either have in place or can assemble[,] the combination is very powerful.” As McGinley explained, while Shulman “never actually laid . . . out” his funding source in the December meeting, it was no accident “[t]he impression we were given was that they had investors.”
The jury could reasonably conclude Shulman created a false impression of having funding or investors at the ready. Shulman claimed in a May 7, 2002, e-mail to McGinley that Western Security Bank “has agreed to lend us $7.8 of the $9.0 million necessary to bu[y] the existing note” on the Palm Springs Marquis Hotel, but subpoened records from the bank showed no loan agreement or even a credit application. Davenport opened LSR’s checking account at the bank and presumably, as LSR’s corporate secretary, would have known of such a large loan, but could not recall “approval of any loan from a Western Security Bank.” The jury could reasonably infer this testimony and the absence of loan records discredited Shulman’s claim.
Similarly, Shulman represented on the agenda for his June 14, 2002, meeting with McGinley and others that an investor had committed $12.5 million to acquire the Palm Springs Marquis Hotel in a trustee sale. But that investor, who Shulman identified as William Fleischman, testified he met Shulman and learned of the Marquis Hotel for the first time in September of the following year, when he declined to invest in it. Shulman also stated on the June 14th agenda that, “pending approval from the eight owners” of the Pompano Beach Ocean Resort, the requisite “[f]unds” were “ready to take possession.” The purchase price was $8 million; Shulman never disclosed to McGinley his source for such a sum, but suggested at trial he would simply have written a check from a “personal account[]” to lease the property. According to Shulman, he “had access to $8 million, yes.” He confirmed, however, that he neither leased nor bought the property. He identified no reason for not proceeding with the acquisition. The jury, as sole arbiter of credibility, was entitled to conclude Shulman misled McGinley about being “ready” to “take possession” of the resort.
Shulman’s appellate counsel asserts McGinley’s record references on appeal do not support “to whom” such representations were made, but the accusation is baseless. McGinley’s references include his testimony that “[a]t virtually all of our meetings,” Shulman’s agendas included “a list of hotels” and statements implying “we’re very close to closing on them or very close to doing the deal, those kind of words.”
Shulman asserts no evidence supports the jury’s reliance or damages conclusions. According to Shulman, McGinley could not show justifiable reliance because he was represented by counsel. But the presence of a lawyer does not confer immunity to lie. Reliance is “justifiable” when “‘circumstances were such to make it reasonable for plaintiff to accept defendant’s statements without an independent inquiry or investigation.’” (Philipson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.) The issue is generally a question of fact for the jury’s determination, unless reason points to only one conclusion. (Guido v. Koopman (1991) 1 Cal.App.4th 837, 843.)
McGinley testified Shulman’s role was to “acquire a hotel that we could brand with a Lifestyles name.” Because acquiring the hotel was Shulman’s responsibility, the jury could reasonably conclude McGinley had no obligation to investigate Shulman’s stated funding resources for doing so. There would be no reason to partner with Shulman if McGinley had to do Shulman’s job by overseeing funding or other aspects of acquisition.
Moreover, the reasonableness of the plaintiff’s reliance necessarily depends on the stakes. Here, McGinley in effect extended Shulman credit of $495 for the cost of the Miami booth, $560 for about one and one-half months’ rent in LSO’s office, and $1190 for the cost of the Reno booth. The jury could reasonably conclude these low reliance costs counseled against spending much higher sums to police the truth of Shulman’s funding representations.
Though the stakes were low, McGinley was entitled to damages to compensate for his reliance on Shulman’s untruths. Shulman suggests that because McGinley was not a disinterested lessor of booth space, but rather worked together with Shulman to roll out the concept of a Lifestyles-branded resort at the conventions, McGinley suffered no damages. The contention is puzzling. Shulman cites McGinley’s testimony: “It was our booth. It was our money. It was our trademark attached to the word resorts.” Although McGinley had long been interested in presenting a Lifestyles resort to his client base, the jury could reasonably conclude he would not have dedicated booth space to the concept when he did, absent Shulman’s fraudulent representations of an imminent acquisition. The evidence showed LSO’s conventions were oversubscribed for vendors desiring booth space and, consequently, Shulman’s substantial evidence challenge is without merit.
Shulman argues the punitive damages award of $4,950 must be reversed for lack of evidence of his or LSR’s net worth. Net worth, however, is not the standard, since that figure is easily manipulated. (Lara v. Cadag (1993) 13 Cal.App.4th 1061, 1064-1065 & fn. 3.) In Adams v. Murakami (1991) 54 Cal.3d 105 (Adams), the Supreme Court held “meaningful” evidence of a defendant’s financial condition is necessary to sustain an award of punitive damages and the burden rests on the plaintiff to introduce such evidence. (Id. at pp. 108-109.) Absent the evidence, there is no way to determine whether an award is disproportionate to the defendant’s ability to pay, and therefore excessive. (Id. at p. 109.)
Adams was a personal injury case in which no “financial evidence of any kind” was introduced at trial. (Adams, supra, 54 Cal.3d at p. 116, fn. 7.) That is not the case here, where Shulman claimed to be a self-made millionaire, and bank records showed he deposited a $125,000 check from a personal account into LSR’s account at Western Security Bank in 2002. Shulman, as noted, also claimed he had funds in “personal accounts” available to cover leasing the $8 million Pompano Beach resort.
Shulman argues the fact he had, in his words, “access to” these sums is consistent with borrowing those amounts instead of possessing them personally. Such borrowing capacity, however, signals a financial ability to pay $4,950. Shulman asserts the evidence says nothing about his financial condition at the time of the award (Washington v. Farlice (1991) 1 Cal.App.4th 766, 777), but “[t]he fundamental underlying principle is that punitive damages must not be so large they destroy the defendant.” (Rufo v. Simpson (2001) 86 Cal.App.4th 573, 625.) In light of the evidence of Shulman’s recent wealth and demonstrated earning capacity to attain that wealth (id. at pp. 621-622), we cannot conclude an award of less than $5,000 would “financially annihilate” him. (Adams, supra, 54 Cal.3d at p. 113.) On the evidence presented, the award was not excessive in relation to Shulman’s ability to pay. Adequate evidence supports the award.
C. Attorney Testimony
Shulman contends the trial court erred by barring him from calling McGinley’s trial attorney, Paul Murray, as a witness. The court did not err. “‘The practice of forcing trial counsel to testify as a witness . . . has long been discouraged . . . and recognized as disrupting the adversarial nature of our judicial system . . . .” (Spectra-Physics, Inc. v. Superior Court (1988) 198 Cal.App.3d 1487, 1494 (Spectra-Physics).) Consequently, “California applies a three-prong test in considering the propriety of attorney depositions. First, does the proponent have other practicable means to obtain the information? Second, is the information crucial to the preparation of the case? Third, is the information subject to a privilege? [Citations.] [¶] Each of these prongs poses an independent hurdle to deposing an adversary’s counsel . . . . [¶] Without question, the proponent has the burden of proof to establish the predicate circumstances for the first two prongs.” (Carehouse Convalescent Hospital v. Superior Court (2006) 143 Cal.App.4th 1558, 1563.) Shulman’s offer of proof failed to meet either criterion.
The proponent’s offer of proof must make “[t]he substance, purpose, and relevance of the excluded evidence . . . known to the court . . . .” (Evid. Code, § 354.) “An offer of proof must be specific. It must set forth the actual evidence to be produced and not merely the facts or issues to be addressed and argued.” (People v. Schmies (1996) 44 Cal.App.4th 38, 53.)
The evidence Shulman specified in his offer of proof was inadequate to show Murray’s testimony was necessary or relevant. Shulman made his offer after the trial court observed initially, “I see absolutely no reason for him to be on the witness stand,” commenting, “[T]here is nothing to suggest . . . information to be solicited from him is material or can’t be supplied by somebody else.” Shulman focused his offer on McGinley’s trial strategy of “now coming in and complaining, ‘Oh, the P.P.M. is illegal.’”
The record is not particularly clear, but it appears McGinley sought to show Shulman practiced a pattern of fraud that extended to actual and potential timeshare purchasers at LSO conventions, offering LSO members shares in an invalid corporation and with improper advertising that violated securities rules for private placements.
Shulman specified “the testimony is going to be [Murray] was present in the meeting where the P.P.M. was actually given to [McGinley and others], and [Murray], in fact, himself, was given a copy of the P.P.M.” According to Shulman, Murray “was, in fact, a party who was in the negotiations. He was supposed to be a member of the board of directors at Mr. McGinley’s request.” Thus, Murray “was actually sitting in the meetings where these things were discussed,” and Shulman therefore sought to elicit Murray’s testimony on, “mainly, the P.P.M. And, as to whether or not his client sought legal advice on the P.P.M.” (Italics added.) Shulman asserted, “I believe that is relevant and I don’t really care what the advice was.” When the trial court commented, “Well, . . . if he has said, ‘Yes,’ you can’t have Mr. Murray testifying as to what the advice was that he gave,” Shulman responded, “No, Ma’am. But, I can certainly have Mr. Murray testify as to whether or not he collaborated with attorney Barry on that document and made suggestions and changes to it.”
Murray responded: “I went back and looked at my calendar . . . . [¶] I did attend two meetings at the be[h]est of my client to listen and provide him with information after the meetings. [¶] It’s all attorney-client privilege. I was asked to be there on behalf of my client to listen, and I did, and as far as all of this participation and negotiations with anybody, didn’t happen. [¶] As far as collaborating with another attorney on the P.P.M., it didn’t happen because, you know what? I wouldn’t know how to write a P.P.M. to save me. . . . I am not a securit[ie]s specialist.”
Murray need not have responded. Shulman’s offer of proof was inadequate on its face because the testimony Shulman sought from Murray was neither necessary nor relevant to the proffered reason, i.e., to rebut the illegality of the P.P.M. Whether McGinley sought Murray’s advice on the P.P.M. and whether Murray participated in drafting it had no bearing on the P.P.M.’s legal validity — that was a legal question and an issue for which McGinley hired an expert witness to provide expert testimony. Shulman did not seek to offer Murray as a securities expert; indeed, it would have been manifestly improper for him to do so, even if Murray were competent on the topic. (See Spectra-Physics, supra, 198 Cal.App.3d at p. 1494 [“‘Discovery was hardly intended to enable a learned profession to perform its functions . . . on wits borrowed from the adversary’”].)
Shulman suggests on appeal that the purpose of eliciting Murray’s testimony was to rebut “McGinley’s tenuous claim he did not understand Shulman intended to seek . . . investors at Lifestyles events, which was the premise of the fraud claim.” In other words, since the nature of a private placement memorandum is to authorize the sale of stock to investors, McGinley could not credibly claim ignorance of Shulman’s intentions if McGinley knew of the P.P.M., particularly if Murray reviewed the P.P.M. and explained it provided for stock sales and other details. We have already seen, however, that McGinley’s fraud claim was broader than this, incorporating Shulman’s repeated false claims of impending hotel acquisitions, which alone support the judgment.
In any event, there are two problems with Shulman’s tack on appeal. First, it bears no resemblance to the offer of proof. It would be wrong to say the trial court erred and unfair to the opposing party to reverse an otherwise proper evidentiary ruling on the basis of an argument neither had the opportunity to consider or rebut. (People v. Morrison (2004) 34 Cal.4th 698, 711 [actual offer of proof is a “‘condition precedent’” to challenging exclusion of proffered testimony]; see People v. Partida (2005) 37 Cal.4th 428, 435 [“A party cannot argue the court erred in failing to conduct an analysis it was not asked to conduct”].)
Second, on the merits, McGinley admitted receiving the P.P.M., attached to a proposed marketing agreement, at a May 2002 meeting with Shulman. Consequently, Shulman was free to argue to the jury McGinley was aware of Shulman’s intentions as purportedly expressed in the P.P.M. (Shulman never produced it). Shulman insists his argument to the jury would have carried more weight if he could have shown Murray discussed the P.P.M. with McGinley. But even assuming the attorney-client privilege were no bar to this argument, it fails because McGinley refused to sign the marketing agreement. Accordingly, there would be no reason for the jury to conclude McGinley was on notice Shulman would proceed with a proposal McGinley rejected. There is no basis for reversal.
D. Expert Witness Fees
Shulman argues McGinley and LSO were not entitled to expert witness fees because their section 998 offer was invalid. Section 998, subdivision (c)(1), provides for expert witness fees in the trial court’s discretion when a plaintiff rejects the defendant’s prelitigation offer of settlement and fails to obtain a more favorable judgment. The manifest purpose of section 998 is to “encourage settlement by providing a strong financial disincentive to a party . . . who fails to achieve a better result than that party could have achieved by accepting his or her opponent’s settlement offer.” (Bank of San Pedro v. Superior Court (1992) 3 Cal.4th 797, 804.)
Shulman contends the offer was invalid because it purported to settle only two of the four claims in the complaint. In the offer, McGinley and LSO agreed “to allow judgment to be taken against them regarding [the] claims for Breach of Confidence (Count I) and Breach of Oral Agreement (Count II) in the amount of $50,000,” but the offer expressly “d[id] not include the Unfair Competition claim (Count III) or the Trade Name, Service Mark Infringement claim (Count IV).” According to Shulman, “Because the offer did not dispose of all causes of action, it was not an offer for ‘judgment,’ only a partial settlement offer.”
Shulman’s attempt to draw a distinction between a judgment and settlement has no merit here. “[A] section 998 offer, even if accepted and entered as a judgment, is still a settlement.” (People ex rel. Lockyer v. Fremont General Corp. (2001) 89 Cal.App.4th 1260, 1269.) Section 998, subdivision (f), expressly states: “Any judgment or award entered pursuant to this section shall be deemed to be a compromise settlement.” Section 998, subdivision (b), empowers the offeror to set the “terms and conditions” on which it is willing to settle, and it is axiomatic that “[a] settlement settles only so much of the dispute between the parties as they agree to settle . . . .” (2 California Affirmative Defenses (2d ed. 2008) Effective of Settlement, § 43:2.)
The “one final judgment” rule to which Shulman alludes applies to appeals (see Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1605), not to settlement offers under section 998. Shulman’s reliance on Valentino v. Elliot Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692 is also misplaced. Shulman discerns in Valentino the rule that a valid offer “must dispose of the entire case, and all the issues in the case, or else it improperly requires the trial court to allocate the offer between various causes of action.” But Valentino stands for the simple proposition that the offer must enable the court to determine whether the judgment is more or less favorable than the terms offered. In Valentino, however, the defendant’s $15,000 offer was conditioned on release of claims in addition to those being litigated. Accordingly, since the judgment decided nothing about the value of those claims, it was impossible to say plaintiff fared worse than if she had accepted the offer. In other words, the outstanding claims “introduced an imponderable which makes it impractible if not impossible to accurately and fairly evaluate the offer.” (Id. at p. 699.)
Here, in contrast, Shulman rejected the offer of $50,000 to settle two claims in the complaint, choosing instead to litigate all four, on which he recovered nothing. There is no uncertainty in determining Shulman’s litigiousness produced a worse result. The “stick” imposed by section 998, subdivision(c)(1), therefore applies.
Shulman also argues the offer was invalid because it did not apportion the $50,000 between him and LSR. He relies on cases disapproving unapportioned offers exposing both plaintiffs to a cost award even if only one does worse at trial than under the offer, as in Meissner v. Paulson (1989) 212 Cal.App.3d 785, 791. But that is no concern here, where the judgment awarded neither plaintiff a penny, whereas the offer promised each a joint interest in $50,000. (See 6 Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without Trial, § 89, p. 517 [“‘recent cases have declined to mechanically apply a rule that renders void’ a joint offer without first examining whether it can be determined that the party has in fact obtained a more [or less] favorable judgment”].) Moreover, given Shulman’s domination of LSR, the trial court could reasonably pierce any distinction between the two and conclude their “unity of interest” dispelled policy concerns that one coplaintiff might unilaterally expose the other to section 998 costs by unreasonably rejecting a joint settlement offer. (Weinberg v. Safeco Ins. Co. of America (2004) 114 Cal.App.4th 1075, 1087; accord, Peterson v. John Crane, Inc. (2007) 154 Cal.App.4th 498, 513; Vick v. DaCorsi (2003) 110 Cal.App.4th 206, 212.)
Shulman contends that even if McGinley and LSO’s offer was valid, the trial court erroneously rejected his challenge to the $67,582.00 figure claimed for expert witness fees. In his motion to tax costs, Shulman asserted that because “there is no detail provided in support of the request” on McGinley and LSO’s verified costs memorandum, “this motion must be granted.” To the contrary: “Initial verification will suffice to establish the reasonable necessity of the costs claimed. There is no requirement that copies of bills, invoices, statements, or any other such documents be attached to the memorandum. Only if the costs have been put in issue via a motion to tax costs must supporting documentation be submitted.” (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1267, citing predecessor to Cal. Rules of Court, rule 3.1700(a)(1).)
In response to Shulman’s motion to tax costs, McGinley and LSO provided invoices for their experts’ fees and justified the fee request with a detailed explanation of the experts’ services and why they were necessary. Shulman made no effort to respond to this showing in his reply or at the motion hearing. He did not attack the documentation or justification of the fees in any way. Consequently, the trial court reasonably concluded Shulman “failed adequately to challenge the claimed witness fees.”
III
DISPOSITION
The judgment is affirmed. Respondents are entitled to their costs on appeal.
WE CONCUR: FYBEL, J. IKOLA, J.