Opinion
NOT TO BE PUBLISHED
APPEAL from a postjudgment order of the Superior Court of San Diego County No. GIC 37-2007- 00073741, William R. Nevitt, Jr., Judge.
O'ROURKE, J.
Respondent Westside Athletic Club, dba Purefitness (Westside), sued personal fitness trainer Anthony Farmer, dba Anthony Farmer Training (AFT) and the gym where he worked, FIT Athletics (FIT). Westside alleged a cause of action for misappropriation of trade secrets against Farmer, AFT and Doe defendants in the operative first amended complaint. Farmer successfully moved for summary adjudication of that cause of action. The trial court denied Farmer's attorney fee motion under the California Uniform Trade Secrets Act (Civ. Code, § 3426.4).
All further statutory references are to the Civil Code. Section 3426.4 provides: "If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney's fees and costs to the prevailing party."
Farmer appeals the postjudgment attorney fee order, contending the trial court abused its discretion in finding that Westside did not act in bad faith in bringing or maintaining the misappropriation claim. He further contends the trial court applied an "overly restrictive standard" in reaching that conclusion. We affirm the order.
Westside contends it is likely no appellant has standing on appeal and therefore this case is not properly before us because although the opening brief caption lists FIT, James Cooper and Farmer as "appellants, " appellate counsel signed the brief as attorney for FIT, and Farmer's name was not included as a party on the brief's signature page. Farmer counters that the court's attorney fee order was against him, he filed the notice of appeal from the judgment, and his name was omitted from the signature page due to a clerical error, which was corrected in the reply brief. We conclude Farmer is a proper appellant.
We note that Farmer states in the opening brief that FIT has elected not to pursue a second attorney fee award based on contract.
FACTUAL AND PROCEDURAL BACKGROUND
Westside alleged in its operative complaint that it contracted with Farmer to provide personal training services to Westside's members; however, between 2004 and 2007, Farmer violated the contract by directly soliciting Westside's members, who paid Farmer "under the table." Westside also alleged that Farmer wrongfully obtained and used confidential information from Westside's membership database, including financial information, for his economic benefit and to harm Westside.
The trial court summarily adjudicated in Farmer's favor Westside's other causes of action for permanent injunction, interference with contract relations, interference with prospective economic relations, interference with business advantage, and unfair business practices. The trial court deemed Farmer's summary adjudication motion a motion for judgment on the pleadings and granted it without leave to amend as to the cause of action for declaratory relief and accounting, but denied it as to causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, conspiracy to commit fraud, damages due on promissory note, and conversion.
Approximately five weeks after Westside filed the complaint, Farmer's counsel demanded that Westside dismiss the misappropriation claim, writing in a letter to Westside: "Mr. Farmer did not have access to your member list at the time of the termination and never had the opportunity to access that list as you had him escorted from the [Purefitness] facility immediately after termination. It is obvious that this case arises from the fact that you find yourself at a competitive disadvantage because of the superior facilities and environment that [FIT] can offer the public. [¶] The trade secret statute provides for an award of attorney's fees and costs for the prosecution of this bad faith claim. We demand that all claims of misappropriation be dismissed immediately."
Farmer moved for summary adjudication of the misappropriation cause of action, arguing that no triable issues of fact existed to support that cause of action in that Westside could not prove the membership list existed, it had economic value and it was a trade secret; Westside made reasonable efforts to keep it secret; and Farmer acquired or used the membership list. The trial court granted summary adjudication, ruling that the membership list was not a trade secret and Westside had not raised a triable issue of material fact as to that issue.
Farmer moved to recover attorney fees under section 3426.4, arguing that under that statute, Westside's misappropriation claim was objectively specious because the membership list was not a trade secret, and Westside brought and maintained the claim in bad faith. In opposing the motion, Westside argued its claim was not objectively specious because it reasonably believed its membership list was a trade secret, which Farmer had stolen and used. It maintained its court filings were protected by the litigation privilege. Westside further argued it did not act in bad faith, as evidenced by the fact it prevailed on various causes of action in pretrial motions and at trial, and was awarded punitive damages.
The trial court denied the attorney fee motion, finding that to obtain relief, the movant must establish both prongs of section 3426.4: (1) objective speciousness of the claim and (2) subjective bad faith. The court ruled the litigation privilege did not apply. It ruled that Farmer met the first prong because Westside's customer list was not a trade secret, but Farmer had failed to establish that Westside commenced and maintained the misappropriation claim in bad faith.
The parties did not request a statement of decision from the trial court.
DISCUSSION
I.
The gravamen of Farmer's appeal is that Westside brought and maintained the claim in bad faith.
"[T]he parties did not request a statement of decision or findings of fact... [, ] all intendments favor the ruling below... [, ] and we must assume that the trial court made whatever findings are necessary to sustain the judgment." (Michael U. v. Jamie B. (1985) 39 Cal.3d 787, 792-793, superseded by statute on another ground, as noted in In re Zacharia D. (1993) 6 Cal.4th 435, 448.)
The doctrine of implied findings "requires the appellate court to infer the trial court made all factual findings necessary to support the judgment. [Citation.] The doctrine is a natural and logical corollary to three fundamental principles of appellate review: (1) a judgment is presumed correct; (2) all intendments and presumptions are indulged in favor of correctness; and (3) the appellant bears the burden of providing an adequate record affirmatively proving error." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58; accord, Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
We discussed "bad faith" as used in section 3426.4 in Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1262 (Gemini), pointing out that absent a legislative definition of "bad faith, " courts have developed a two-prong standard for evaluating bad faith: (1) objective speciousness of the claim, and (2) subjective bad faith in bringing or maintaining the action, that is, for an improper purpose. Section 3426.4 authorizes the trial court to award attorney fees as a deterrent to specious trade secret claims. (Gemini, at p. 1261.)
Subjective bad faith may be inferred by evidence that appellants intended to cause unnecessary delay, filed the action to harass respondents, or harbored an improper motive. (Gemini, supra, 95 Cal.App.4th at p. 1263.) The timing of the action may raise an inference of bad faith. (Id., at pp. 1263–1264.) Similar inferences may be made when the plaintiff proceeds to trial after the action's fatal shortcomings are revealed by opposing counsel. (Id., at p. 1264.)
We noted in Gemini that "[a]n award of attorney fees for bad faith constitutes a sanction [citation], and the trial court has broad discretion in ruling on sanctions motions. [Citation.] 'Assuming some evidence exists in support of the factual findings, the trial court's exercise of discretion will not be disturbed unless it exceeds the bounds of reason. [Citation.] [¶] In reviewing the facts which led the trial court to impose sanctions, we must accept the version thereof which supports the trial court's determination, and must indulge in the inferences which favor its findings.' " (Id., at p. 1262.)
"On appeal from [an order addressed to the trial court's discretion], the appellant has an 'uphill battle' and must overcome both the 'sufficiency of evidence' rule and the 'abuse of discretion' rule. We need not repeat these well-settled rules. [Citation.] "As we shall explain, appellant does not appear to appreciate the trial court's fact-finding power and its discretionary power to award attorney fees and costs.... We do not retry cases on appeal and we do not substitute our discretion for that of the trial court." (FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275-1276.)
Farmer reiterates arguments rejected in the trial court: (1) even if Westside's misappropriation claim was initially brought in good faith, it was not maintained in good faith because Westside failed to identify the trade secrets with particularity, or produce the claimed trade secret, the membership list, despite requests for its production and a motion to compel its production. (2) Westside requested four continuances on the summary judgment motion; therefore, it should have known that its claim was completely lacking in merit. (3) Westside engaged in delay tactics that "served no purpose other than to prolong the case and multiply the burden and expense" to Farmer.
We interpret Farmer's contentions as constituting a request that we discard the permissive inferences the trial court drew from the evidence and substitute them with contrary mandatory presumptions. But we may not do so. Under Evidence Code section 600, subdivision (b), an inference "is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts." By contrast, a presumption is "an assumption of fact that the law requires to be made from another fact or group of facts." (Evid. Code, § 600, subd. (a).) (See People v. Bland (1995) 10 Cal.4th 991, 1003, fn. 5 [distinguishing between inferences and presumptions under the Evidence Code].) Further, the weighing of the evidence and the drawing of reasonable inferences therefrom is the function of the trial court, and the duty of an appellate court ends when it determines there is substantial support in the evidence for the reasonable inference which supports the trial court's findings. (Candido v. California Employment Stabilization Commission (1949) 95 Cal.App.2d 338, 340.)
The trial court was unpersuaded by Farmer's arguments. Thus, we infer in support of the order the fact that Westside sought four continuances in response to the summary judgment motion did not prove Westside was dilatory or brought the misappropriation claim to harass or burden Farmer. The trial court evaluated each separate request for a continuance, found each meritorious and therefore granted them.
Farmer contends the letter his attorney wrote urging Westside to dismiss the misappropriation claim was evidence Westside was on notice the claim was meritless. But Westside argued in the trial court that the letter was written early in the litigation and it did not identify dispositive deficiencies or "specific shortcomings of the case." (Gemini, supra, 95 Cal.App.4th at p. 1264.)Westside also argued in opposition to the demurrer, "To the extent Defendants contend they identified defects in the Plaintiff's misappropriation claim and demanded the dismissal thereof, that occurred approximately one month after Plaintiff filed the [first amended complaint]. [¶] Plaintiff and its counsel are not required to accept, at face value, the initial assessment of an opposing attorney." By its ruling, we may infer the trial court found Westside's argument more convincing.
The trial court's ruling is additionally supported by the declaration of a Westside attorney in opposition to the demurrer: "Following the filing of the [first amended complaint], the parties commenced written discovery. [Westside's] efforts to conduct necessary discovery were repeatedly thwarted, including all attempts to depose Farmer." The trial court could infer from this declaration that Westside's continuance requests were related to difficulties in obtaining discovery, and not from improper motives. Finally, noting that discovery was not complete, Westside sent a letter to Farmer proposing mediation of their dispute. From that letter, the trial court could infer Westside's willingness to avoid costly and prolonged litigation.
We conclude because evidence supports its implied factual findings, the trial court did not abuse its discretion in denying Farmer's request for attorney fees under section 3426.4 on grounds Westside did not bring or maintain the misappropriation claim in bad faith.
II.
Farmer contends the test for finding a violation of section 3426.4 set forth in Gemini, supra, 95 Cal.App.4th 1249, is "overly restrictive" and presents "difficulties associated with proving a plaintiff's subjective state of mind." He invites us to "adopt the principle that once the defendant establishes that the trade secret misappropriation claim is objectively specious and raises an inference of the plaintiff's subjective bad faith, the burden then shifts to the plaintiff to rebut the inference." Nothing in the trial court's ruling or Farmer's arguments convinces us the Gemini test is unworkable. We note that courts routinely evaluate bad faith in different contexts, thus they can also make that evaluation in a motion for attorney fees under section 3426.4. We therefore decline the invitation.
DISPOSITION
The order is affirmed. Respondent Westside Athletic Club is awarded costs on appeal.
WE CONCUR: HALLER, Acting P. J., McINTYRE, J.
A jury, by special verdict, ruled in Westside's favor regarding its causes of action for breach of contract, breach of covenant of good faith and fair dealing, breach of promissory note, and conversion, and awarded Westside $69,942 in damages and $1,000 in punitive damages.