Opinion
G051180
08-07-2017
CLARE STEELE et al., Plaintiffs and Appellants, v. SILVER OAK REAL ESTATE OF ORANGE COUNTY et al., Defendants and Respondents.
Burkelegal and Gregory Burke for Plaintiffs and Appellants. Cummins & White, Larry M. Arnold, Kevin J. Price and Melody S. Mosley for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2013-00649673) OPINION Appeal from a judgment of the Superior Court of Orange County, Sheila B. Fell, Judge. Affirmed. Burkelegal and Gregory Burke for Plaintiffs and Appellants. Cummins & White, Larry M. Arnold, Kevin J. Price and Melody S. Mosley for Defendants and Respondents.
* * *
Plaintiffs Clare and Jack Steele sold the business assets of their pastry shop and café to a buyer on the condition the buyer enter a new commercial lease in place of theirs. The buyer did obtain a new lease but promptly defaulted on it after her fiancé stole her money. Because the Steeles had signed personal guarantees of the new lease, they remained liable for the rent until the date their original lease would have expired. Although a new tenant was eventually found, the base rent was about $1,000 per month less than under the buyer's lease — a differential for which the Steeles were responsible under the terms of their guarantees. The Steeles sued the broker who had arranged the sale, defendants Silver Oak Real Estate of Orange County, a California corporation, doing business as Prudential California Realty and Sean Edelstein, its agent, for breach of fiduciary duty, fraud, negligence, plus contribution and equitable indemnity. A jury rendered a verdict in defendants' favor.
For clarity, we refer to the plaintiffs individually by their first names, and collectively as the Steeles.
On appeal, the Steeles contend the judgment should be reversed because the verdict form was fatally inconsistent and because defense counsel committed prejudicial misconduct during opening and closing statements, as well as during their cross-examination. They also assert the court erred in (1) denying their motion in limine to exclude evidence of the buyer's bank statements, tax returns, and a credit report; (2) granting defendants' motion to correct the name used in the complaint and answer, Prudential California Realty, a California corporation doing business as Prudential Business Sales, to its proper name, Silver Oak Real Estate of Orange County (Silver Oak-OC), a California corporation, doing business as Prudential California Realty (Prudential); (3) allowing defendants to amend a response to a request for admission; and (4) denying their motion for judgment notwithstanding the verdict (JNOV) and for new trial. We reject these contentions and affirm the judgment.
FACTS
In 2002, the Steeles, doing business as Passionate Pastry & Café, entered into a five-year lease (later extended an additional five years) for retail space at 1500 Adams Avenue Costa Mesa, California (1500 Adams), executing it as individuals. The Steeles incorporated Passionate Pastry several months later but never added nor assigned the lease to the corporation.
The Steeles decided they wanted a larger space and contacted Edelstein, telling him they had found a new space and wanted to move quickly so they would not have to pay two rents. In November 2008, Clare and Edelstein signed an exclusive authorization to sell the business, minus some equipment and the business name. The agreement states it is between Prudential and "Passionate Pastry and Café, Inc." The "Inc." appears to have been mistakenly added, as the Steeles fictitious business name does not include it and it is not the name of the corporation.
At the time, Edelstein had a real estate license and was acting under the broker's license of Silver Oak, which does business as Prudential. Prudential's Web site indicates it "operates in Orange, Riverside, and San Bernardino Counties through three commonly known corporations . . . licensed by the California Department of Real Estate and are Silver Oak[-OC], Silver Oak Real Estate of Riverside County . . . and Silver Oak Real Estate of San Bernardino County . . . . All of these firms proudly do business as Prudential . . . ." As an agent for Silver Oak, Edelstein primarily arranged the sale of business assets and helped people find potential candidates to assume their lease obligations.
On November 17, 2008, Susan Derrick of The Gourmet Child, LLC (Gourmet) made an offer of $20,000. Derrick acknowledged she provided Edelstein with her credit report, company profile, and a financial report. The landlord's property manager, Linda Kenski, "reviewed certain documents that led [her] to believe there was quite a bit of money in the bank for" Derrick. She believed her review included Derrick's bank statements, her financial statement, and possibly tax returns, but she no longer had those documents. Kenski considered Derrick to be creditworthy.
Edelstein testified he provided the Steeles with Derrick's financial statements, bank statements, credit reports, resume and business plan, but later amended his response to say he was not sure if he obtained copies of her bank statements. He also provided the documents to Kenski. Based on the information from Derrick, Edelstein believed her to be "creditworthy to take over [the] lease."
Edelstein informed Derrick by e-mail he would be representing both the buyer and seller and advised the Steeles orally of that when he brought Derrick to the property to introduce her and show her the business. The dual notification was also contained in several documents sent to Clare, including the bulk sale escrow instructions on which Clare initialed the page indicating the broker represented both parties and the jointly initialed and signed business purchase agreement and joint escrow instructions.
The Steeles accepted Derrick's offer and the parties opened escrow. The close of escrow was contingent upon Derrick obtaining a new lease agreement. She did, and escrow closed on January 27, 2009. The landlord required both Derrick and Clare to sign personal guarantees of the lease because Gourmet was a startup business. The Steeles understood they were guaranteeing lease payments for the three and one-half years left on their lease, i.e., until May 31, 2012.
Derrick's new lease was to start on February 1, 2009. But before she could open Gourmet, her fiancé stole her money. She obtained a restraining order and contacted the district attorney's office, but was forced to file bankruptcy.
The Steeles asked Edelstein if he could help them re-let the property. Edelstein told them leasing vacant space was not his area of expertise and he could not represent them. But he wanted to help the Steeles and said he would reach out to those who had previously shown an interest in the property and forward any leads to them. Edelstein did not sign an agency agreement with the Steeles, was not acting on the Steeles behalf, and specifically told them he was not their agent. In his effort to help the Steeles, Edelstein asked Kenski if she could put up a sign indicating the property was available for lease.
In March, Kenski told Edelstein the Steeles intended to hire a broker to find a tenant. Around that time, real estate agent Linda McFarland (formerly Ahart) started assisting the Steeles to look for a tenant and believed she was their exclusive agent. With the premises still vacant in May, Kenski offered Edelstein a lease commission if he could provide even the name and phone number of a potential tenant, but he did not agree to do so at that time.
On July 9, 2009, "Passionate Pastry, Inc.," sued Edelstein and Prudential for breach of fiduciary duty and negligence. Nevertheless, Edelstein continued sending Clare leads to follow up on, which he would not have done if he represented her, as he would have kept them for himself. Passionate Pastry, Inc., dismissed this complaint in January 2010 without prejudice.
A few weeks after Edelstein was served with this first lawsuit, Sajjad Premjee asked Edelstein to represent him and his wife in leasing the vacant space. Edelstein agreed. He presented an offer to the landlord from Premjee on behalf of Bollywood Fresh, Inc. An agreement was reached and on October 12, 2009, the parties signed the Bollywood lease, which names Edelstein as the exclusive broker for the lessee.
Although the signed lease names Allied Gourmet Cuisine, Inc., as the lessee, the lease was known during the trial as the Bollywood lease.
Edelstein forwarded a copy of Premjee's offer to Clare, and her attorney because he felt bad for the Steeles and wanted to let them know what was going on. He did not discuss the fact the Bollywood lease payment would be $1,000 less than the amount the Steeles guaranteed, since he was not representing them and they had their own attorney.
In June 2012, the Steeles' personal guaranty expired and the landlord sued them for the difference in rent between Gourmet's obligation and the amount paid by Bollywood. The court entered a stipulated judgment.
The following May, the Steeles sued Edelstein and Prudential for breach of fiduciary duty, fraud, negligence, and implied equitable indemnity stemming from two events, namely the sale of the assets and the re-letting of the premises. Following a jury trial, but before deliberations, the Steeles dismissed their cause of action for negligence. Thereafter, the jury returned a verdict in defendants' favor. The trial court denied the Steeles' motions for JNOV and for new trial.
Passionate Pastry, Inc., was added as a plaintiff on the eve of trial but was dismissed from this appeal in June 2015.
DISCUSSION
The Verdict
The Steeles contend the verdict form is fatally defective, requiring reversal. But they have waived this claim by agreeing to its final form, following discussion and revision by counsel. The contention also fails on its merits, which we shall address. But first, we note that the description of the verdict form as a "special verdict" is, at least, unusual. The verdict form was a hybrid, set up as a series of special findings of fact on the issue whether Edelstein and Prudential were agents of the plaintiffs, with each finding then followed by a general verdict form intended to reflect the jury's determination as to all other issues and causes of action. "A general verdict is that by which [the jury] pronounce[s] generally upon all or any of the issues, either in favor of the plaintiff or defendant." (Code Civ. Proc., § 624.) "[A] special verdict is that by which the jury find[s] the facts only, leaving the judgment to the Court. The special verdict must present the conclusions of fact as established by the evidence, and not the evidence to prove them; and those conclusions of fact must be so presented as that nothing shall remain to the Court but to draw from them conclusions of law." (Ibid.) Here, the jury was asked to make specific conclusions of fact as to agency, but to render a general verdict as to all other issues of fact.
In the final version of the verdict form, the jury was asked to answer the following questions (paraphrased): 1. Were Prudential and Edelstein acting as the agents for the Steeles during the sale of the business assets to Gourmet Child and lease agreement? The jury answered no and proceeded to the second question as directed by the verdict form without answering the general verdict questions which followed.
2. Were Prudential and Edelstein acting as the agents for Passionate Pastry during the sale of the business assets to Gourmet Child and lease agreement? The jury answered yes, and answered the following general verdict question by finding in favor of Prudential and Edelstein and against the Steeles.
3. What were the total amount of damages suffered by the Steeles from the sale of the business assets to Gourmet Child and the lease agreement. The jury answered zero.
4. Were Prudential and Edelstein acting as the agents for the Steeles regarding the transaction for the lease between Bollywood and 1500 Adams. The jury answered no and proceeded to the fifth question as directed by the verdict form without answering the general verdict questions which followed.
5. What were the total damages sustained by all plaintiffs from all transactions? The jury answered zero.
The Steeles contend the verdict form was inconsistent because it: (1) did not separately address each of their causes for breach of fiduciary duty, fraud, contribution and indemnity, and negligence, which they had been "forced" to dismiss; (2) omitted the possibility of finding concealment or misrepresentation; and (3) made it impossible "for the jury to find indemnity and apportionment on the failure to perform the due diligence." According to the Steeles, the omission of all of their causes of action in the verdict form made it "confusing and inconsistent with the claims in the complaint" such that "the jury was unable to make a proper determination on the claims." (Italics added.) These contentions are not a matter of inconsistent findings where we would need to reconcile any conflicts; rather they amount to a claim that the jury failed to make a determination on the essential elements of their various cause of action.
But a review of the record reveals that the Steeles not only waived the asserted error by agreeing to the verdict in its final form, they invited the asserted error by submitting their own verdict form using essentially the same format, i.e., a series of special findings followed by a series of general verdicts. The Steele's proposed verdict form separated their claims into two transactions; (1) the transaction resulting in the sale of assets to Derrick; and (2) the re-lease of the property after Derrick's default. As to each transaction, the jury would first be asked whether Edelstein and Prudential acted as the Steeles' agent. And if the answer was no, the jury would be told not to proceed to any of the separate causes of action. This proposal differed from the final verdict form in two respects. First, in the Steeles' proposal, the initial question for each transaction asked whether the agency was with "Clare Steele and Jack Steele [or] Passionate Pastry, Inc." The final verdict form split the agency questions into separate questions — one for the Steeles and another for Passionate Pastry. Second, if agency was found under the Steeles' proposal, the jury would be asked to render a general verdict for each cause of action. The final verdict form asked the jury for a general verdict, encompassing all causes of action. But these are differences without significance. The jury's responses in the final verdict reflect that had the jury been given the Steeles' proposed form, it would have responded that Edelstein and Prudential acted as the agent of either the Steeles or Passionate Pastry in the first transaction, but not in the second transaction. And by rendering a general verdict in favor of defendants in the first transaction with Derrick, the jury impliedly found in favor of defendants on each of the Steeles' causes of action. (Codekas v. Dyna-Life Co. (1975) 48 Cal.App.3d 20, 25 ["Where a case is tried on alternate theories of liability, and the court properly instructs on the theories [tendered to the jury] and [the non-prevailing party] fails to request special verdicts, the general verdict implies findings in favor of the prevailing party on all issues submitted to the jury"].)
Thus, both parties requested a verdict form which required a finding of agency as a prerequisite of any liability, and if agency was found, a general verdict was requested. The doctrines of waiver and invited error both doom the Steeles' argument that the verdict form was defective.
The Steeles also challenge some of the specific questions in the verdict form. They assert the jury was misled by the inclusion of question number four, which asks whether defendants were acting as their agent "[w]ith regard to the transaction for the lease between Bollywood and 1500 Adams," because they "never alleged they were a party to [that] lease transaction . . . or that [Edelstein] represented them in that transaction." This claim is contrary to their argument in their motion for judgment notwithstanding the verdict that defendants were the Steeles' agent and owed "a duty to fully disclose . . . that they would still be liable under the personal guarantee for the difference in the lease rate between the Bollywood lease and the lease signed by . . . Derrick." It is also contrary to the verdict form they proposed which contained the same question. They also waived any claim of error in this regard by failing to object on this ground and agreeing to include the question in the verdict form. The Steeles further failed to show they were prejudiced by the question. "[T]he judgment must be affirmed unless appellant can show a [verdict form] error that was so prejudicial a miscarriage of justice occurred." (Austin B. v. Escondido Union School Dist. (2007) 149 Cal.App.4th 860, 872.)
Lastly, we address the Steeles' argument the verdict form inconsistently allowed the jury to find, in answer to question number two, Prudential and Edelstein "were acting as the agent for Passionate Pastry" (italics added), yet also find "in favor of defendants Prudential . . . and . . . Edelstein and against Plaintiffs Clare Steele and Jack Steele," instead of Passionate Pastry. (Italics added.) As with question number four, however, the Steeles stipulated to the verdict form, including the words used in it, thereby waiving any issue as to how the answers were phrased. Additionally the Steeles failed to demonstrate any prejudice given that the jury indicated its intent to find in defendants' favor regardless of whether it was against the Steeles or Passionate Pastry. The lack of prejudice is confirmed by the fact the jury found "the total damages sustained by all [p]laintiffs" to be zero in answer to question number three. By finding none of the plaintiffs sustained any damages, it necessarily follows the jury found against all of the plaintiffs, notwithstanding the actual response. The verdict form was not fatally defective.
Asserted Misconduct by Defense Counsel
The Steeles assert the judgment should be reversed because of defense counsel's asserted misconduct in (1) making material misrepresentations in their opening statement by referencing bank statements and documents they knew did not exist; (2) attacking their credibility with false statements during cross-examination; and (3) attempting to discredit their attorney and misstating the evidence.
1. Opening Statement
The asserted misconduct during opening statement consists primarily of the following comments by defense counsel: "The evidence will show he got bank statements he provided to the parties. He got a credit check on . . . Derrick that showed the credit score of over 700 that he provided to the parties. And he did all of those things so that the Steeles and the landlord could agree upon the creditworthiness of the new tenant and decide whether they want to go through with the transaction."
"Counsel is granted wide latitude to discuss the merits of the case, both as to the law and facts, and is entitled to argue his or her case vigorously and to argue all reasonable inferences from the evidence." (Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, 305.) Applying a de novo standard of review (Lafrenz v. Stoddard (1942) 50 Cal.App.2d 1, 9 (Lafrenz)), we must determine whether the improper remarks in the opening statement were prejudicial, that is, a serious and prejudicial misstatement of the evidence, resulting in a miscarriage of justice. (Love v. Wolf (1964) 226 Cal.App.2d 378, 392-394.) "It is only where the statements are inflammatory in character and calculated to blind the jury to the succeeding lack of proof that they will be found ordinarily to be prejudicial." (Lafrenz, at p. 9.)
Here, defense counsel's statements did not misrepresent the evidence to be presented. Edelstein testified he provided the Steeles and Kenski with a package containing documents given to him by Derrick, including a business plan, financial information, credit report, and bank deposits. He further testified he supplied the information to allow them to determine Derrick's "creditworthiness or financial ability."
The fact there was a pending motion in limine to exclude the evidence does not alter our view on the matter. The motion had not been ruled upon at the time of opening statements, and we conclude below the trial court did not abuse its discretion in ultimately denying it. As to the Steeles' complaint that defense counsel referred to the evidence as conclusive or undisputed, it was defense counsel's job to state what he believed the evidence would show.
The Steeles maintain the bank statements were never produced during discovery. "The landlord testified she did not have any bank statements, nor did she review any such statements," and the argument contradicted Edelstein's deposition testimony he did not know whether he received any bank statements. But all of those arguments go merely to Edelstein's credibility, not whether his attorney made prejudicial misstatements of the evidence.
Further, Kenski specifically testified she had in fact reviewed Derrick's bank statements at one time, contrary to the Steeles' claim, as well as "certain documents that led me to believe there was quite a bit of money in the bank for" Derrick, although she did not produce the statements at her deposition. The Steeles' assertion that Kenski testified "she did not request the information," presumably referring to Derrick's bank statements, reflect on her credibility and not whether defense counsel made prejudicially improper remarks during oral argument. In fact, Kenski testified that regardless of whether there were any e-mails between her and Edelstein forwarding "this information," she "would have" asked Edelstein to provide tax returns and other financial information from Derrick. Kenski believed she had asked "for a credit application, bank statements and tax returns," but did not recall. Derrick also testified she provided Edelstein with a credit report, company profile, and financial report.
The Steeles also challenge several other representations made in defense counsel's opening statement, i.e., that they were "experienced business people" who knew what they were "doing in the sale of their business"; "[t]he landlord, as is common . . . in these transactions, required personal guarantees on the lease"; "Edelstein gets sued by Mr. Burke on behalf of Passionate Pastry"; "In both transactions, Mr. Edelstein advises the Steeles that they should seek legal counsel; they should seek tax advice. . . . Everybody knew who was acting for who"; "Edelstein was retained by the landlord to find a tenant. He was also working on behalf of the tenant. The dual agency disclosures were made in the that transaction." We do not view any of these statements as so "inflammatory in character and calculated to blind the jury to the succeeding lack of proof that they will be found ordinarily to be prejudicial." (Lafrenz, supra, 50 Cal.App.2d at p. 9.)
Moreover, the trial court instructed the jury to decide the case solely on the evidence and what the attorneys say and argue, including during opening and closing statements, do not constitute evidence. "Absent some contrary indication in the record, we presume the jury follows its instructions [citations] 'and that its verdict reflects the legal limitations those instructions imposed' [citations]." (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 803-804 (Cassim).) The Steeles have pointed to no indication the jury did not follow the court's instructions. Therefore, the presumption applies.
In any event, as Lafrenz stated, "It is hard to see how prejudice resulted. Any trial lawyer or judge at all experienced with juries knows that the making of positive claims that the evidence will show certain things followed by failure of proof on the subject is a two-edged sword apt to be more harmful to the one wielding it than to his opponent. Juries are frequently adversely impressed when proof falls short of promise, and the astute trial lawyer in his argument to the jury very often points out with telling effect the failure of his adversary to support by evidence the things which he forecast in his opening statement would be established. [¶] It is only where the statements are inflammatory in character and calculated to blind the jury to the succeeding lack of proof that they will be found ordinarily to be prejudicial. The statements complained of [in Lafrenz] were not of that character." (Lafrenz, supra, 50 Cal.App.2d at p. 9.) Neither were those here.
2. Cross-examination
The Steeles contend defense counsel wrongly attacked them during cross-examination. They rely on Balistreri v. Turner (1964) 227 Cal.App.2d 236 (Balistreri), for the following proposition: "'"While a wide latitude should be given in cross-examinations, counsel, in putting questions to the witness, should not be allowed to assume facts not in evidence and state as positive assertions facts which if true, would be detrimental to the opposing party's case and of such a nature as to inflame and prejudice the minds of the jurors. . . . The inherent vice of the matter lies in the attempt to bring before the jury, in a roundabout way, facts which could not be proved and which from all appearances may have been entirely false."'" (Id. at p. 244.) Defense counsel's alleged conduct does not violate this standard.
The Steeles argue defense counsel falsely accused Clare of suing Edelstein for fraud while blindly relying on his representations, when in fact they sued him for breach of fiduciary duty. It is unclear from the pages cited whether the cross-examination relates to the first action brought by Passionate Pastry, Inc., which was later dismissed, or to the present case. The complaint in this case brought by the Steeles individually names Edelstein in its cause of action for fraud and Clare admitted she was suing for fraud. The complaint brought by Passionate Pastry, Inc., does not allege fraud. Later, defense counsel acknowledged he misspoke in stating Passionate Pastry, Inc.'s complaint accused Edelstein of fraud; rather, it alleged breach of fiduciary duty. Thus, the court granted a motion to strike the questions about fraud with respect to the action by Passionate Pastry. Defense counsel's on-the-record acknowledgement he misspoke indicates his questioning was not intended to inflame the juror's minds, and in any event, the Steeles have not explained how it was detrimental to their case. (Balistreri, supra, 227 Cal.App.2d at p. 244.)
Second, the Steeles argue defense counsel committed misconduct in asking Jack if he filed an answer to the action brought by the landlord against them for breach of guarantee after Derrick defaulted. Jack did not understand the question, responding, "I paid it. I'm paying 1500 a month," referring to the payments they were making on the stipulated $100,000 judgment on the landlord's action against the Steeles. The Steeles' attorney objected and asked for a sidebar, which was granted but not reported. Thereafter, defense counsel asked if the Steeles had paid their attorney $75,000 in legal fees and whether any discovery was done in that case.
Following the sidebar, the only objection made by the Steeles' attorney was that defense counsel was testifying as to the amount of discovery or the existence of a trial. The court summarily stated, "He's cross-examining," and allowed defense counsel to continue.
No other objection was made and the Steeles' attorney never requested a curative admonition. "'Generally, to preserve for appeal an instance of misconduct of counsel in the presence of the jury, an objection must have been lodged at trial.' [Citation.] In addition to objecting, a litigant faced with opposing counsel's misconduct must also 'move for a mistrial or seek a curative admonition' [citation] unless the misconduct is so persistent that an admonition would be inadequate to cure the resulting prejudice [citation]." (Cassim, supra, 33 Cal.4th at pp. 794-795.)
The Steeles offer no argument that any conduct was so persistent that an admonition would have been inadequate to cure the prejudice, if any, arising from the questioning. As such, they forfeited their arguments with respect to Jack. (Cassim, supra, 33 Cal.4th at pp. 794-795.) They also forfeited their claim defense counsel made "unsupported attacks at the top of his lungs" by failing to support it with citations to the record. Moreover, as defendants note, the record suggests the contrary.
For that matter, the Steeles fail to explain how asking if Jack answered the breach of guarantee complaint prejudiced them in the minds of the jury. (Balistreri, supra, 227 Cal.App.2d at p. 244.)
3. Closing Statement
The Steeles next focus on defense counsel's closing argument, citing a barrage of asserted misrepresentations. But they failed to object to any of these statements, forfeiting the issue. (Cassim, supra, 33 Cal.4th at p. 794.)
Alleged Trial Court Errors
1. Denial of Motion in Limine to Exclude Evidence of Financial Documents
The Steeles argue the court committed reversible error in denying their motion in limine to exclude from trial evidence of Derrick's bank statements, tax returns, and credit report, claiming defendants intentionally concealed them. We disagree.
We review the trial court's ruling on a motion in limine to exclude evidence for abuse of discretion. (Piedra v. Dugan (2004) 123 Cal.App.4th 1483, 1493.) A trial court does not abuse its discretion unless it acts in an arbitrary, capricious or patently absurd manner. (San Lorenzo Valley Community Advocates for Responsible Education v. San Lorenzo Valley Unified School Dist. (2006) 139 Cal.App.4th 1356, 1419.) As the appellants, the Steeles had the burden to demonstrate not only did the trial court abuse its discretion in denying their motion in limine, but also that its error was prejudicial. (Christ v. Schwartz (2016) 2 Cal.App.5th 440, 446-447.) A trial court does not abuse its discretion unless it acts in an arbitrary, capricious or patently absurd manner. (San Lorenzo Valley Community Advocates for Responsible Education, at p. 1419.)
The motion in limine sought to exclude the documents because defendants initially produced only a single-page document that Derrick created, listing her assets and liabilities. But when he was deposed one month before the discovery cut-off date, Edelstein testified Derrick had provided him with both her credit report and her bank statement and he believed those documents were in the file he had given his attorney. Defense counsel represented that Edelstein had just located a copy of the credit report, which would be produced once it was Bates-stamped, along with any bank statements if they were in the file. The credit report and a nondisclosure agreement were provided to the Steeles on April 14, 2014, but no bank records were found or produced. Rather, on May 19, after the discovery cut-off date, defendants served corrections to Edelstein's deposition transcript, changing his testimony from "I have bank statements" to "I'm not sure if I obtained copies of bank statements from . . . Derrick on this transaction." The Steeles contended defendants intentionally withheld documents, which constituted discovery abuse and required the discovery sanction of exclusion.
In defendants' opposition to the motion in limine, they argued they produced approximately 600 pages of documents. Also, the Steeles had omitted statements in Edelstein's deposition showing he did not intentionally withhold any documents. The record bears this out. Edelstein testified Derrick had provided him a credit report, which Edelstein assumed, but was not sure, was contained in the file he provided to his attorneys in this case. His attorney represented Edelstein's daughter had "just located the credit report" and it would be produced after it was Bates-stamped. The credit report was provided to the Steeles' attorney about one-month and one-half later on April 14, 2014, which was approximately two weeks before the discovery cut-off date of May 2, 2014. Edelstein also testified he had reviewed bank statements from Derrick and believed those were produced as well. The fact he was unable to locate them and had to change his deposition testimony to indicate he did not know if he obtained copies of the bank statements does not indicate an intentional withholding of documents. To that end, defendants noted Kenski had testified in her deposition she reviewed bank statements from Derrick but no longer had copies.
The trial court heard the motion in limine before trial but did not immediately issue a ruling. During trial, the Steeles renewed the motion after defendants mentioned the bank statements during opening statements. The Steeles argued that because no bank statements were ever produced during discovery, any reference to them should be precluded. Defendants stated, "We don't have any bank statements. We believe there were bank statements. . . . Kenski . . . will testify that she, in fact, received bank statements, but she no longer has them either." The trial court denied the motion, stating it would "let both sides put on what they need to" and the other side could cross-examine him.
On appeal, the Steeles contend the trial court's ruling denied them "the opportunity to verify the information" contained in the "bank statements and tax records that [defendants] never produced and intentionally withheld," yet "[t]hroughout the trial, defendants, their] attorney, and expert witness testified about the review of" those documents. But based on Edelstein's deposition testimony and corrections to his transcript, the court could have reasonably determined Edelstein did not intentionally withhold anything but that he did not keep a copy of the bank statements after reviewing them. That this may have happened is supported by Kenski's deposition testimony that she also reviewed the bank statements but did not know if she obtained copies of them. The court may have also considered the 600 pages of documents already produced by defendants. In light of the above, the court's ruling was far from arbitrary, capricious or patently absurd.
2. Granting of Request to Correct the Corporate Defendant's Name
The Steeles assert the court erred in granting Edelstein's motion to amend the name "Prudential" to "Silver Oak-OC." According to the Steeles, this "last minute change [less than two weeks before trial] was highly prejudicial because it confused the jury and the Steeles never had an opportunity to conduct discovery on this new entity." These contentions fail.
Code of Civil Procedure section 473, subdivision (a)(1) allows the trial court to, "in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by . . . correcting a mistake in the name of a party . . . ." "This section has always been liberally construed." (J. C. Peacock, Inc. v. Hasko (1961) 196 Cal.App.2d 363, 366.) We review the court's order for abuse of discretion. (Ford v. Loaney (1959) 169 Cal.App.2d 503, 508.) No abuse of discretion occurred.
First, to the extent it was error, the "last minute change" was invited by the Steeles. Contrary to their claim defendants delayed for over eight months before seeking the amendment, defendants originally requested the Steeles to stipulate to the name change in October 2013, three months after they filed their answer. The Steeles did not respond and as defense counsel declared, "the issue fell through the cracks for the next few month, likely as the parties prepared for mediation scheduled for December . . . ." Then, with trial scheduled to begin on June 2, 2014, defendants attempted to correct the name by filing a notice of errata to their answer, but the Steeles objected and requested the court strike the notice of errata.
Thereafter, trial was continued, and on June 20, 2014, defendants applied ex parte for an order to have the name Silver Oak-OC replace the name Prudential wherever it appeared in the discovery and pleadings. Defendants explained that Prudential is the name Silver Oaks-OC does business as but that the proper name should be the latter. According to defendants, the Steeles erroneously sued the fictitious business name of Silver Oaks-OC in naming Prudential and defendants inadvertently adopted the fictitious business name upon answering the complaint. Following additional briefing, the court granted the application on July 25, 2014. During the trial, the Steeles renewed their objection, stating they "were prejudiced by the fact that we won't be able to do any discovery on" Silver Oak-OC. The court rejected the claim, stating the Steeles had been given the opportunity to continue the trial and to do discovery and had known of the issue for several weeks before trial commenced.
Given these facts, it was the Steeles' own conduct that delayed the name change until shortly before trial. As a result, they are estopped from asserting any error in the lateness of the change as a ground for reversal. (In re Marriage of Ilas (1993) 12 Cal.App.4th 1630, 1640 ["'where a party by his conduct induces the commission of an error, under the doctrine of invited error he is estopped from asserting the alleged error as grounds for reversal'"].)
Second, the Steeles have not demonstrated the name change confused the jury. The record reveals that before opening statements, the trial court instructed the jury, "A corporation, Silver Oak[-OC], a California Corporation, doing business as Prudential . . . , is a party in this lawsuit . . . entitled to the same fair and impartial treatment that you would give to an individual." The court's instruction explains "Prudential" is the name under which Silver Oaks-OC is doing business, but they are the same entity. Thereafter, the Steeles' attorney simply referred to the corporate defendant as "Prudential" both in opening and closing statements. As for defense counsel, he explained during his opening statement, "We're going to call it during this trial 'Prudential . . .' because the other one's just frankly too long for us to try to deal with." The verdict form also refers to the corporate defendant as "Prudential." (See fn. 4, ante.) The Steeles' failure to present any reasoned argument as to how the name change confused the jury waives the issue. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)
Finally, Silver Oaks-OC was not a "new entity," as claimed by the Steeles. Rather, it was the legal business name of the defendant corporation, operating under the fictitious business name of "Prudential." "Use of a fictitious business name does not create a separate legal entity. . . . '"[t]he designation [DBA] means 'doing business as' but is merely descriptive of the person or corporation who does business under some other name. Doing business under another name does not create an entity distinct from the person operating the business.' [Citation.] The business name is a fiction, and so too is any implication that the business is a legal entity separate from its owner.'" (Pinkerton's, Inc. v. Superior Court (1996) 49 Cal.App.4th 1342, 1348.) While the lawsuit may have been properly initiated against Prudential, once its "true name is discovered, the pleading or proceeding must be amended accordingly." (Code Civ. Proc., § 474, italics added.) "'"The ordinary meaning of . . . 'must' is of mandatory effect . . . ." (Compton College Federation of Teachers v. Compton Community College Dist. (1982) 132 Cal.App.3d 704, 711.)
We also reject the Steeles' assertion it "never had an opportunity to conduct discovery." In his declaration in support of the ex parte application to replace "Prudential" with "Silver Oak-OC," defense counsel attested the Steeles had never served any discovery on Prudential nor notice the deposition of anyone associated with it other than Edelstein. Additionally, although defendants offered the Steeles an opportunity to conduct further discovery on the role of Silver Oaks-OC, the Steeles declined.
3. Allowing Amendment of Responses to Request for Admissions (RFAs)
The Steeles next contend the trial court erred in granting defendants' motion to amend Edelstein's responses to RFA No. 13, which asked him to admit he was "acting as the agent for Allied Gourmet Cuisines, Inc., doing business as Bollywood Fresh in negotiating the lease terms with 1500 Adams Ave, LLP." Edelstein responded with objections and a denial he "was an agent for Allied Gourmet." During Edelstein's deposition, the Steeles' attorney asked if this response was a true statement. Defense counsel objected on the ground the answer was a legal conclusion. He instructed Edelstein not to answer and went off the record to confer with him. Once back on the record, defense counsel noted opposing counsel had "obviously pointed out an error in one of our responses to" the RFAs and therefore defendants would move to amend the response to be consistent with Edelstein's testimony. Defendants did so and the court granted the motion over the Steeles' objection, stating, "The proposed amended response will match Edelstein's deposition testimony; Plaintiffs are not prejudiced by the amending of Edelstein's [RFA] response to match his deposition testimony."
Code of Civil Procedure section 2033.300 provides in relevant part, "(a) A party may withdraw or amend an admission made in response to a request for admission only on leave of court granted after notice to all parties. [¶] (b) The court may permit withdrawal or amendment of an admission only if it determines that the admission was the result of mistake, inadvertence, or excusable neglect, and that the party who obtained the admission will not be substantially prejudiced in maintaining that party's action or defense on the merits." This statute "eliminates undeserved windfalls obtained through requests for admission and furthers the policy favoring the resolution of lawsuits on the merits." (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1418 (New Albertsons).) We review the court's ruling for abuse of discretion. (Id. at pp. 1418, 1421.)
"The trial court's discretion in ruling on a motion to withdraw or amend an admission is not unlimited, but must be exercised in conformity with the spirit of the law and in a manner that serves the interests of justice. Because the law strongly favors trial and disposition on the merits, any doubts in applying [Code of Civil Procedure] section 2033.300 must be resolved in favor of the party seeking relief. Accordingly, the court's discretion to deny a motion under the statute is limited to circumstances where it is clear that the mistake, inadvertence, or neglect was inexcusable, or where it is clear that the withdrawal or amendment would substantially prejudice the party who obtained the admission in maintaining that party's action or defense on the merits." (New Albertsons, supra, 168 Cal.App.4th at pp. 1420-1421.)
In his declaration filed in support of defendants' motion to amend, defense counsel stated he and Edelstein recognized there was an error in Edelstein's response to RFA No. 13 during Edelstein's deposition. Counsel attested the "error was due to miscommunications between Edelstein and me in preparing his RFA responses" and Edelstein was in fact Allied Gourmet's agent. In the moving papers, defendants explained "Edelstein's error was excusable as it was a result of a mistake, inadvertence and neglect." Also, the Steeles would not suffer any prejudice because "the response Edelstein seeks to amend . . . does not touch upon any material factors raised in [the] present action against [d]efendants. The instant action centers around the allegations that [d]efendants failed to do their due diligence regarding Derrick and also made false representations regarding the extinguishment of [the Steeles'] liability under a guaranty agreement."
Under these facts, the mistake in Edelstein's response to RFA No. 13 was at least arguably excusable. The Steeles argue the "mounting misconduct severely prejudiced [their] right to a fair trial." But they have not demonstrated the mistake was clearly inexcusable, much less misconduct. Nor have the Steeles adequately explained how the correction affected their right to a fair trial. They apparently claim they relied on Edelstein's original admission he was not Allied Gourmet doing business as Bollywood's agent to support their allegation he had "agreed to act as their agent in finding a new tenant to re-let the space and relieve them of liability." We are not persuaded. In the words of the New Albertsons court in rejecting the plaintiff's claim of prejudice, "The [Steeles] vigorously pursued discovery . . . even after the admission and have failed to explain what additional discovery they would have pursued absent the admission. Moreover, the trial court has the discretion to allow additional discovery on the issue, continuing the trial if necessary, or impose other conditions on the granting of the motion [citation] so as to avoid any possible prejudice." (New Albertsons, supra, 168 Cal.App.4th at p. 1421.) The Steeles have not argued they requested additional discovery or a continuance of trial.
As the appellants, the Steeles had the burden "to show the trial court abused its discretion." (Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 957.) They failed to do so.
4. Denial of Motions for JNOV and for New Trial
As a final matter, the Steeles contend the court erred in denying their motions for JNOV and for new trial. They fail to persuade.
At the outset, we address defendants' claim the trial court could have denied the motion for JNOV simply because the Steeles failed to file and serve their points and authorities within 10 days after they filed their notice of the motion, as required by Code of Civil Procedure section 659a. But the 10-day deadline is not jurisdictional (Kabran v. Sharp Memorial Hospital (2017) 2 Cal.5th 330, 342) and courts may consider supporting documents filed after the deadline. (See Fredrics v. Paige (1994) 29 Cal.App.4th 1642, 1648 [counter declarations filed after 10-day period].) The court did not abuse its discretion in considering such documents and deciding the motion on its merits.
The trial court denied the motion for JNOV on the ground the Steeles failed to show either the existence of an actual agency relationship between them and Edelstein in connection with the Bollywood lease, or that an ostensible agency theory applies. The denial of the motion for new trial was based on different reasons. The Steeles contend both denials constituted error, and they purport to limit their argument on appeal to the court's findings with regard to the motion for JNOV that no actual agency or ostensible agency existed.
The court denied the motion for new trial on the ground the Steels "have not established that the [special] instruction submitted to the jury was improper - the parties stipulated to the instruction and submitted it jointly; [the Steeles] have not presented evidence that the reference to bank account statements by [d]efendant[s] in opening statement[s] or otherwise were improper." --------
But the Steeles then assert several arguments they did not make in the motion for JNOV or for new trial. The JNOV motion was limited to the issue of whether defendants were acting as the Steeles' agent or ostensible agent when he helped re-let the property to Bollywood after Derrick defaulted. The new trial motion argued the verdict form was inconsistent with the law, the court erred in allowing defense counsel to refer to bank statements in his opening statement, and defense counsel made the misrepresentations discussed above during his opening statement and cross-examination of the Steeles.
On appeal, however, the Steeles contend defense counsel misrepresented Passionate Pastry, Inc., was defendants' client as it was the party identified in the exclusive authorization to sell agreement, not the Steeles, and the evidence supported a finding Edelstein breached his fiduciary duty. These issues were not raised in either the JNOV or new trial motions and are forfeited. We will not consider points raised for the first time on appeal, and which the trial court did not have an opportunity to address. (Franz v. Board of Medical Quality Assurance (1982) 31 Cal.3d 124, 143; accord, Litt v. Eisenhower Medical Center (2015) 237 Cal.App.4th 1217, 1224.)
As to the issues of agency and ostensible agency raised in the JNOV motion, we review the court's decision under the substantial evidence standard. "A motion for [JNOV] may be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support." (Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68.) On appeal, "the standard of review is whether any substantial evidence — contradicted or uncontradicted — supports the jury's conclusion." (Ibid.)
"In California agency is either actual or ostensible. [Citation.] An agency is actual when the agent is really employed by the principal. [Citation.] An agency is ostensible when a principal causes a third person to believe another to be his agent, who is really not employed by him." (Van Den Eikhof v. Hocker (1978) 87 Cal.App.3d 900, 905.) "To establish ostensible authority in an agent, it must be shown the principal, intentionally or by want of ordinary care has caused or allowed a third person to believe the agent possesses such authority." (Preis v. American Indemnity Co. (1990) 220 Cal.App.3d 752, 761 (Preis).)
The issue here involves only the transaction involving Bollywood. The Steeles assert their expert testified "[t]he continuation of the agency [between them and Edelstein] during the Bollywood lease was an ostensible agency." According to them, there is no evidence Edelstein informed them he was not acting as their agent. But that is not the question. Rather, the determination of an ostensible agency depends on whether the Steeles intentionally or negligently caused or allowed a third person to believe Edelstein was their agent although they did not employ him. (Civ. Code, § 2300; Preis, supra, 220 Cal.App.3d at p. 761.) The Steeles failed to cite any evidence this occurred, making the ostensible agency theory inapplicable.
Lastly, the Steels argue the verdict form did not allow the jury to render a decision on fraud. We have already rejected this claim in our discussion above. No error appears in the trial court's denial of the JNOV and new trial motions.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
IKOLA, J. WE CONCUR: FYBEL, ACTING P. J. THOMPSON, J.