Filed 10/1/19 Mann v. Said CA1/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION TWO

VRINDERPAUL S. MANN,

Plaintiff and Respondent,

v.

HORIA SAID,

Defendant and Appellant.

A152978

(Alameda County

Super. Ct. No. HG16802566)

Appellant Horia Said appeals after a jury found in favor of respondent Vrinderpaul S. Mann in his action against appellant, her son Jawad Said, and Neighborhood Restoration Fund LLC (Neighborhood Restoration) on, inter alia, claims against appellant for voidable transfer and constructive voidable transfer. On appeal, appellant contends (1) the jury’s special verdict finding appellant liable under the theory of alter ego was fatally defective and the related instructions misstated the law of alter ego; (2) the causes of action for voidable transfer and constructive voidable transfer suffered from the same defects in the special verdict and jury instructions; and (3) because the special verdicts as to the voidable transfer and constructive voidable transfer causes of action must be vacated, the punitive damages award against appellant must also be vacated. We shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

As a preliminary matter, in her opening brief, appellant has violated the rule requiring that an appellant’s opening brief must “[p]rovide a summary of the significant facts” relevant to the issues raised on appeal. (Cal. Rules of Court, rule 8.204(a)(2)(C).) By selectively setting forth only those facts that favor her position, and relying on this evidence to argue that she was blameless of all claims regarding which the jury found against her, she has forfeited any appellate arguments that rely on the evidence presented at trial or that challenge any factual findings made by the jury. (See, e.g., Hjelm v. Prometheus Real Estate Group, Inc. (2016) 3 Cal.App.5th 1155, 1166 [“such ‘factual presentation is but an attempt to reargue on appeal those factual issues decided adversely to [appellant] at the trial level, contrary to established precepts of appellate review’ ”].)

On February 3, 2016, respondent, individually and doing business as Cream Real Estate Investments (Cream), filed a complaint against appellant’s son Jawad Said and Neighborhood Restoration, alleging causes of action for breach of oral contract, breach of the covenant of good faith and fair dealing, fraud and deceit, breach of fiduciary duty, constructive fraud, constructive trust, unjust enrichment, conversion, and accounting. According to the complaint, Jawad Said was the managing member of Neighborhood Restoration. Respondent entered into a joint venture with Jawad Said and Neighborhood Restoration “to purchase, renovate, and sell for profit, residential real property in the San Francisco Bay Area,” with half of any profits from the sale of a property to be paid to respondent and the other half to be paid collectively to Jawad Said and Neighborhood Restoration. This arrangement was followed for the first 10 residential properties the parties acquired, renovated, and sold.

The complaint further stated that on August 27, 2013, the parties purchased a final property, a single family home on Gates Street in San Francisco. On May 30, 2014, Jawad Said and appellant, who was also a member of Neighborhood Restoration, signed and notarized a grant deed acknowledging that the Gates property was held by respondent and Neighborhood Restoration as joint tenants. Respondent invested a total of $248,908.00 in the Gates property, for which he should have been reimbursed. The property was sold on October 30, 2015, for $1,835,000.00, with a profit of $277,458.00, half of which was owed to him under the terms of the joint venture. Jawad Said and Neighborhood Restoration failed to pay respondent any of the funds owed to him for the acquisition, renovation, and sale of the Gates property, in the total amount of $387,637.00.

On May 3, 2016, the trial court granted respondent’s application for a writ of attachment for “[a]ny and all property” of Neighborhood Restoration to secure the $387,637 respondent alleged was owed to him.

On November 1, 2016, Jawad Said filed a cross-complaint against respondent and respondent’s brother Herman Mann, which included causes of action for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, concealment, intentional and negligent misrepresentation, constructive trust, intentional and negligent infliction of emotional distress, and declaratory relief. According to the cross-complaint, Jawad Said had entered into an agreement with Herman Mann, not respondent, to purchase, renovate, and sell property in the San Francisco Bay Area. Herman Mann failed to perform his part of the agreement, which diminished his right to share any of the profits. By the time the Gates property was sold in October 2015, Herman Mann, who had run into financial difficulties and had made threats against Jawad Said, no longer had an interest in the property and any distribution due to him had been paid.

The complaint further stated that Herman Mann, “through threats and coercion,” forced Jawad Said to sign a grant deed on the Gates property to include respondent as a joint tenant. In addition, Herman Mann had told Jawad Said at the outset of their partnership that he was the owner of Cream, requested that his share of the profits be deposited into a Cream bank account, and never said that Cream was in fact owned by respondent.

On December 7, 2016, respondent, individually and doing business as Cream, and his brother Herman Mann filed a cross-complaint against Jawad Said, appellant, appellant’s daughter Khatera Said, and Neighborhood Restoration, which included causes of action including to annul and set aside fraudulent (i.e., voidable) transfer, conversion, fraud and deceit, declaratory relief, account stated, constructive trust, and accounting. According to the cross-complaint, which incorporated by reference the allegations of the original complaint filed by respondent on February 3, Jawad Said was the managing member of Neighborhood Restoration and appellant was also a member, that the two members had used the assets of Neighborhood Restoration for their own personal use and had diverted the income of the company to themselves, and that the company was now insolvent.

The cross-complaint further stated that after obtaining writs of attachment against Jawad Said and Neighborhood Restoration, respondent had been unsuccessful in his efforts to identify and attach their assets due to “the closure of accounts, withdrawals and/or transfer of funds, and lack of cooperation in fully responding to discovery requests seeking an accounting of the Proceeds.” The complaint alleged that the cross-defendants had engaged in activities intended to hide assets and thwart any possible recovery by respondent and Herman Mann, including protecting other assets by executing and recording a fraudulent deed of trust for a Fremont property in favor of Khatera Said “to protect any equity in [the] property, which is owned by her mother,” appellant.

At the conclusion of trial, the jury returned verdicts in all of the related actions, as follows. First, as to respondent’s claims against Jawad Said and Neighborhood Restoration alleged in his original complaint, the jury found respondent was entitled to judgment in the amount of $387,637.00 on his breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, constructive trust, unjust enrichment, and conversion causes of action.

Second, as to the claims of respondent in the cross-complaint against Jawad Said, appellant, appellant’s daughter Khatera Said, and Neighborhood Restoration, the jury found that respondent was entitled to judgment on his voidable transfer and constructive voidable transfer causes of action.

Third, the jury found that Neighborhood Restoration was the alter ego of its members Jawad Said and appellant, and that both individuals were liable for the indebtedness of Neighborhood Restoration to respondent.

Fourth, as to Jawad Said’s claims against respondent and Herman Mann alleged in his cross-complaint, the jury found against him on all causes of action.

Finally, the jury found that respondent was entitled to punitive damages and, following the presentation of additional evidence, the jury awarded him punitive damages against Jawad Said in the amount of $150,000 and against appellant in the amount of $37,500.

The trial court’s judgment on jury verdict, entered on October 10, 2017, reflects these verdicts.

Also on October 10, 2017, appellant filed her notice of appeal.

Notice of entry of judgment was entered on October 16, 2017.

DISCUSSION

I. Alter Ego Special Verdict Form and Instruction

Appellant contends the special verdict regarding alter ego liability was defective and the related instructions were erroneous, requiring reversal of the judgment.

“ ‘The alter ego doctrine prevents individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds.’ [Citation.] As an equitable doctrine, its ‘essence . . . is that justice be done.’ [Citation.] Before the alter ego doctrine will be invoked in California, two conditions generally must be met.

‘First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.’ [Citation.] While courts have developed a list of factors that may be analyzed in making these determinations, ‘[t]here is no litmus test to determine when the corporate veil will be pierced; rather the result will depend on the circumstances of each particular case.’ [Citation.]” (Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 221 (Curci), citing Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300–301 & Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538 (Sonora).)

A. Alter Ego Special Verdict

The part of the special verdict form on alter ego liability stated: “Do you find that Neighborhood Restoration Fund LLC is the alter ego of its members Jawad Said and Horia Said and that Jawad Said and Horia Said are personally liable for the indebtedness of [Neighborhood Restoration], if any, to Vrinderpaul Mann?” The jury answered yes to the question posed.

Appellant contends this verdict was defective because it did not (1) require the jury to find any facts related to the two-part test for proving alter ego or (2) differentiate appellant’s alter ego liability from that of Jawad Said. (See Code Civ. Proc., § 624 [“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 presented so that nothing shall remain to the Court but to draw from them conclusions of law”]; accord, Saxena v. Goffney (2008) 159 Cal.App.4th 316, 325; Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 959 (Myers).)

Respondent points out that the trial court noted that it was the parties who had “hammered . . . out” the special verdict form and appellant’s counsel explicitly acknowledged his approval of the wording of the special verdict form generally upon questioning by the trial court. In particular, appellant’s counsel declined to object to the alter ego verdict language when the court gave him the opportunity to do so.

Appellant responds that she was not required to object in the trial court in light of the express wording section 647, which provides, inter alia: “All of the following are deemed excepted to: the verdict of the jury . . . .” Appellant is incorrect. Section 647 states that it is a challenge to the jury’s verdict, not defects in a verdict form used at trial, that may be challenged on appeal without any objection having been made in the trial court. With respect to a challenge to the defects in the verdict form, “ ‘[a]n objection to a defective verdict must be made before the jury is discharged. . . . [D]efects apparent when the verdict was read, and that could have been corrected, are waived [forfeited] by counsel’s failure to timely object . . . unless the verdict itself is inconsistent.’ [Citations.]” (Keener v. Jeld-Wen, Inc. (2009) 46 Cal.4th 247, 265 (Keener); accord, Taylor v. Nabors Drilling USA, LP (2014) 222 Cal.App.4th 1228, 1242 (Taylor).)

Here, appellant does not argue that the verdict was inconsistent or that the alleged defect in the special verdict was not apparent. Rather, her contention is that the special verdict form was incomplete because it did not include all of the factual findings the jury was required to make regarding the alter ego claim. In the circumstances of this case, we conclude appellant’s failure to object to the lack of specificity in the special verdict form until now forfeits the issue on appeal. (See Keener, supra, 46 Cal.4th at p. 267 [incomplete polling of a juror “was indeed ‘apparent at the time the verdict was rendered and could have been corrected’ ”]; Taylor, supra, 222 Cal.App.4th at pp. 1242–1243 [“Because appellant did not object and had expressly approved the erroneous verdict form, it forfeited its claim that the special verdict is defective because the jury did not answer questions five and six”]; compare Fuller-Austin Insulation Co. v. Highlands Ins. Co. (2006) 135 Cal.App.4th 958, 1005 (Fuller-Austin) [finding no forfeiture where trial court had refused plaintiff’s request to include a question on reasonableness in special verdict]; Myers, supra, 13 Cal.App.4th at p. 962 [finding no waiver where defendant had “attempted repeatedly” to bring special verdict’s failure to elicit findings on fraud cause of action to attention of plaintiff’s trial counsel and the trial court].)

B. Alter Ego Instruction

The jury instruction on alter ego liability provided: “An LLC [limited liability company] designation protects members of the LLC from personal liability for the obligations of the LLC. However, those protections do not apply if the members of the LLC engage in certain conduct that makes the members the ‘alter ego’ of the LLC. This is called alter ego liability.

“To determine whether alter ego liability exists in this case to make Horia Said and Jawad Said personally liable for the obligations of Neighborhood Restoration Fund LLC, you should consider the following list of factors . . . .” The instruction then listed eight factors relevant to the jury’s determination. The instruction then continued: “Some—but not all—of the factors may be present when an alter ego finding is made.

“If you find that one or more of these factors apply to [Neighborhood Restoration], you may find that [Neighborhood Restoration] is the alter ego of its members Jawad Said and Horia Said and that Jawad Said and Horia Said are personally liable for the indebtedness of the [Neighborhood Restoration], if any, to Vrinderpaul Mann.”

Appellant contends this jury instruction (1) misstated the law of alter ego by omitting the balancing of the equities requirement, which removed a necessary factual element from the jury’s consideration, and (2) like the special verdict form, was improperly written in the conjunctive as to both Jawad Said and appellant, without requiring the jury to separately consider the question of alter ego as to each of them.

Respondent argues that, as with the alter ego verdict form, appellant has forfeited this claim and/or invited the error by approving the instruction in the trial court. Appellant responds that under section 647, the trial court’s giving of an instruction is “deemed excepted to.” The law, however, is not that simple. “When a trial court gives a jury instruction which is correct as far as it goes but which is too general or is incomplete for the state of the evidence, a failure to request an additional or a qualifying instruction will waive a party’s right to later complain on appeal about the instruction which was given. [Citation.] However, when a trial court gives a jury instruction which is prejudicially erroneous as given, i.e., which is an incorrect statement of the law, the party harmed by that instruction need not have objected to the instruction or proposed a correct instruction of his own in order to preserve the right to complain of the erroneous instruction on appeal. [Citation.]” (Suman v. BMW of North America, Inc. (1994) 23 Cal.App.4th 1, 9 (Suman), citing Mock v. Michigan Millers Mutual Insurance Co. (1992) 4 Cal.App.4th 306, 334.)

Here, even giving appellant the benefit of the doubt and assuming the instruction was not merely incomplete, but in fact misstated the law of alter ego by failing to include the second element of the alter ego doctrine—the necessity of an inequitable result—appellant has failed to establish that she was prejudiced thereby.

In her reply brief, appellant states that “jury instructions that misstate the law are deemed prejudicial per se.” Appellant is incorrect. “[T]here is no rule of automatic reversal or ‘inherent’ prejudice applicable to any category of civil instructional error, whether of commission or omission. A judgment may not be reversed for instructional error in a civil case ‘unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice.’ (Cal. Const., art. VI, § 13.)” (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 580 (Soule).)

Prejudice is established if it seems probable that the error prejudicially affected the verdict, a determination that “depends heavily on the particular nature of the error, including its natural and probable effect on a party’s ability to place his full case before the jury.” (Soule, supra, 8 Cal.4th at p. 580.) “[W]hen deciding whether an error of instructional omission was prejudicial, the court must also evaluate (1) the state of the evidence, (2) the effect of other instructions, (3) the effect of counsel’s arguments, and (4) any indications by the jury itself that it was misled.” (Id. at pp. 580–581, fn. omitted.)

Here, to the extent appellant does not insist that the error is prejudicial per se, she alludes to the prejudice factors to be evaluated set forth in Soule by stating only that (1) the erroneous instruction was not only provided to the jury in writing, but the court read the instruction aloud, and (2) respondent’s counsel “repeatedly incorrectly stated in his closing arguments that the unity of interest factors alone were sufficient to find Appellant liable for alter ego.” First, that the court both read the alter ego instruction to the jury and gave it a written copy of the instruction—which is what trial courts generally do before the jury begins to deliberate—is not the equivalent of “[r]ereading or emphasizing the language of an incorrect instruction,” which “enhances the likelihood of prejudice.” (Shell Oil Co. v. Winterthur Swiss Insurance Co. (1993) 12 Cal.App.4th 715, 772.) Second, our review of counsel’s closing arguments does not confirm appellant’s assertion that respondent’s counsel “repeatedly” told the jury “that the unity of interest factors alone were sufficient” for it to find appellant liable pursuant to the alter ego doctrine. Rather, counsel for both parties spoke generally about alter ego liability as allowing a party to pierce the corporate veil if certain factors, listed in the instruction given, were satisfied.

Appellant does not otherwise address any of the factors set forth in Soule, including the state of the evidence, which, as previously discussed, she also failed to set forth fully in the statement of facts in her opening brief. (See Cal. Rules of Court, rule 8.204(a)(2)(C).) Appellant has therefore forfeited any possible argument that the evidence failed to support a factual finding of “ ‘an inequitable result if the acts in question are treated as those of [Neighborhood Restoration] alone.’ ” (See Curci, supra, 14 Cal.App.5th at p. 221.)

In addition, other instructions and special verdict findings concerning the voidable transfer and constructive voidable transfer causes of action plainly demonstrate that the failure to instruct the jury on the requirement that there be an inequitable result before it could find alter ego liability was necessarily harmless in the context of this case. (See Soule, supra, 8 Cal.4th at pp. 580–581.)

First, the court instructed the jury on voidable transfer with CACI No. 4200, which stated that for respondent to establish his claim that appellant transferred property to Khatera Said “in order to avoid paying an obligation owed by Jawad Said and [Neighborhood Restoration] to” respondent, he had to prove that he had a right to the payment, that appellant transferred the property to Khatera Said “with the intent to hinder, delay, or defraud one or more of [appellant’s] creditors,” that respondent “was harmed,” and that appellant’s “conduct was a substantial factor in causing [respondent] harm.” The instruction concluded that to establish the claim, respondent “need only show that [appellant] intended to remove or conceal assets to make it more difficult for [her] creditors to collect payment.” The jury found for respondent on the voidable transfer cause of action, making the specific factual findings described in the CACI No. 4200 instruction.

Second, the court instructed the jury on constructive voidable transfer with CACI No. 4202, which stated that, to establish the claim that he was harmed because appellant transferred property to Khatera Said and, as a result, she was unable to pay him money he was owed, respondent had to prove that he had a right to payment from appellant in the amount of $387,637.00, that appellant transferred property to Khatera Said, that appellant “did not receive a reasonably equivalent value in exchange for the transfer,” that appellant “believed or reasonably should have believed that she would incur debts beyond her ability to pay as they became due,” that he was harmed, and that appellant’s conduct was a substantial factor in causing his harm. The jury found for respondent on his constructive voidable transfer cause of action, making the specific factual findings set forth in the CACI No. 4202 instruction.

These instructions on the voidable transfer cause of action, together with the jury’s factual findings regarding appellant’s conduct, establish that the jury was required to find—and did find—that appellant concealed money by making the property transfer to her daughter to avoid paying respondent money he was owed, and that this caused harm to respondent. These findings are equally applicable to the inequitable result factor for alter ego liability. (See Curci, supra, 14 Cal.App.5th at p. 221; see also Sonora, supra, 83 Cal.App.4th at p. 539 [alter ego doctrine “affords protection where some conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form”]; compare Fuller-Austin, supra, 135 Cal.App.4th at p. 1004 [finding prejudice where other instructions did not cure error but, instead, reinforced it].)

Accordingly, assuming the court misstated the law of alter ego in the instruction given to the jury, we conclude there is “little chance the jury was actually misled” and there is, therefore, “no reasonable probability that the error in [misstating the instruction on the alter ego doctrine] affected the jury’s verdict. Accordingly, we conclude, the error was harmless.” (Soule, supra, 8 Cal.4th at pp. 582–583.)

II. Special Verdicts and Instruction on the Remaining Causes of Action

Appellant next contends that the special verdict forms and a jury instruction for the remaining causes of action for voidable transfer and constructive voidable transfer suffer from the same defects as the alter ego claim.

A. Special Verdict Form on Voidable Transfer

and Constructive Voidable Transfer

In an abbreviated and somewhat hodgepodge argument in her opening brief, appellant asserts that the special verdict form is defective because (1) under Civil Code section 3439.05, the constructive voidable transfer cause of action applies only to present creditors and relief under this section “would be unavailable to [respondent] as a form of relief because his claim did not arise before the transfer took place”; (2) the special verdict form did not contain the required factual finding for constructive voidable transfer that appellant was insolvent; (3) the special verdict form was “defective on its face” because it asked, as to the voidable transfer cause of action, whether appellant had a right to payment from appellant, Jawad Said, “and/or” Neighborhood Restoration, which did not require the jury to specifically find that respondent had a right to payment from appellant; and (4) respondent’s counsel “misstates the law of the jury by using the writ of attachment as evidence of underlying fault, which likely misled the jury and affected the verdict.”

For the same reasons discussed with respect to the alter ego special verdict form (see pt. I.A., ante), we find that appellant’s failure to object to the special verdict form in the trial court forfeits these claims on appeal. (See Keener, supra, 46 Cal.4th at p. 267; Taylor, supra, 222 Cal.App.4th at pp. 1242–1243.)

B. Instruction on Voidable Transfer Cause of Action

Appellant contends the instruction on voidable transfer included the same error earlier described in the special verdict form, asking the jury to find whether appellant had a right to payment from appellant, Jawad Said, “and/or” Neighborhood Restoration, which did not require the jury to specifically find that respondent had a right to payment from appellant. First, to the extent appellant believed this portion of the instruction was incomplete or confusing, she should have objected at trial, to give the court an opportunity to remedy the allegedly problematic wording. (See Suman, supra, 23 Cal.App.4th at p. 9.)

Moreover, to the extent any error in the wording of the voidable transfer instruction could have been misleading, the instruction and special verdict on constructive voidable transfer shows that the jury necessarily found that respondent had a right to payment from appellant. (See Soule, supra, 8 Cal.4th at p. 580.) The first element set forth in the instruction, which had to be proven before the jury could find against appellant on constructive voidable transfer, stated that respondent “has a right to payment from [appellant] for $387,637.00.” In the portion of the special verdict on this cause of action, the jury found that appellant had a right to such payment specifically from appellant. Hence, any error in including the “and/or” language in the otherwise identical voidable transfer instruction was plainly harmless. (See id. at pp. 580–581; compare Fuller-Austin, supra, 135 Cal.App.4th at p. 1004.)

III. Punitive Damages

Appellant’s final contention is that “because the punitive damages award flow[s] from the fraudulent transfer special verdict, and both fraudulent transfer special verdicts are defective as stated above, the punitive damages award cannot stand on its own, and must therefore be vacated along with the fraudulent transfer special verdicts.” (See Myers, supra, 13 Cal.App.4th at p. 961 [“without an actual verdict by the jury on a fraud (or other tort) cause of action, the instructions and evidence cannot support the punitive damage award”].)

Here, we have rejected all of appellant’s claims regarding the voidable transfer and constructive voidable transfer special verdicts and, therefore, those verdicts remain in place. Hence, the jury’s award of punitive damages was proper. (Compare Myers, supra, 13 Cal.App.4th at pp. 960–961 [award of punitive damages could not be sustained where a finding of fraud “was never expressly or impliedly made by the jury in its special verdict which found only that [defendant] had breached its contract with [plaintiff]”].)

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondent, Vrinderpaul S. Mann.

 

_________________________

Kline, P.J.

We concur:

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Stewart, J.

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Miller, J.

Mann v. Said (A152978)