Filed 2/28/20 Wilde Built Tactical, LLC v. Wilde CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

WILDE BUILT TACTICAL, LLC et al.,

Plaintiffs, Cross-defendants and Appellants,

v.

JOHN WILDE et al.,

Defendants, Cross-complainants and Respondents.

D074942

(Super. Ct. No. 37-2016-00011372-

CU-BT-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Kevin A. Enright, Judge. Affirmed.

Law Offices of Matthew D. Rifat, Matthew D. Rifat, Berstein Law and John Dimuzio Jr, for Plaintiffs, Cross-defendants and Appellants.

Webb Law Group and Lenden F. Webb, for Defendants, Cross-complainants and Respondents.

INTRODUCTION

Appellants Wilde Built Tactical, LLC, Jack Pearson, and Bryan Howes (collectively referred to as WBT) appeal from a final judgment following trial on their complaint and a cross-complaint filed by their former business partner, John Wilde (Wilde), his wife Anna Wilde, and Wilde’s new company, Wilde Built Tactical Nylon Fabrications, LLC. At trial, both legal and equitable claims were simultaneously presented to the jury. The trial court then adopted the jury’s verdicts as to the equitable claims and entered judgment accordingly, resulting in a net award of approximately $130,000 to Anna Wilde on her cross-complaint. Due to the parties’ decision to submit general verdict forms to the jury and the failure to request a statement of decision from the trial court, the precise basis for the finding of WBT’s liability and the calculation of damages was unclear.

Seizing on this ambiguity, WBT filed post-judgment motions attempting to persuade the court that the jury’s verdicts on the equitable claims were improper and asserting the court had failed to exercise its own independent judgment when it adopted those verdicts. The trial court disagreed and denied the motions, noting that the parties agreed to the trial procedures despite the court’s repeated efforts to highlight the potential for confusion and that it adopted the jury’s verdict based on its independent review of the evidence. This appeal followed.

WBT contends the trial court erred in submitting general verdict forms to the jury on the equitable causes of action and that the court neglected its duty to make its own independent findings of fact and conclusions of law on the equitable claims. It contends that if the court had properly exercised its independent judgment, WBT would have secured a more favorable judgment. We disagree. The perceived errors at trial were largely caused by WBT’s own actions such that WBT cannot now raise these claims on appeal. We conclude that WBT fails to establish any error by the trial court and, therefore, affirm the judgment.

BACKGROUND

A

In 2010, John Wilde started a small business, Wilde Built Tactical, out of his home. Wilde sewed nylon “tactical” gear for people using firearms, including law enforcement officers, such as vests and magazine pouches. Wilde originally operated the business as a sole proprietorship, but in late 2011 converted the business to a limited liability company with Wilde holding 75 percent ownership and his business partner, Jack Pearson, holding the remaining 25 percent. When Pearson joined, the company expanded into selling firearm accessories. Later, Pearson decided to obtain a license to also sell firearms under the Wilde Built Tactical name. Shortly thereafter, Bryan Howes also became involved in the business.

Wilde, a state law enforcement officer, was prohibited from being involved in the sale of firearms. Despite his efforts to keep the firearms business distinct from the nylon gear production, Wilde was told by his employer that he must relinquish his ownership interest in Wilde Built Tactical. Wilde testified he did so in April 2013 by transferring his shares in the company to his wife, Anna Wilde. He also testified that at the same time as this change in ownership, Howes acquired an eight percent interest in the company, with Anna Wilde and Pearson then holding 46 percent each. Wilde concurrently split off his own company, Wilde Built Tactical Nylon (WBT Nylon), under which Wilde continued to sew nylon gear using the same “Wilde Built Tactical” name.

Following this change in ownership and creation of a new business using the same branding, tensions began to mount between the parties. Contrary to Wilde’s understanding of the respective shares in the business, Howes believed he owned a one-third equal share in Wilde Built Tactical rather than only eight percent. Additionally, given the similarity in the names between Wilde Built Tactical and Wilde Built Tactical Nylon, the parties disputed who could use the “Wilde Built Tactical” name and disagreed on other related branding issues. Wilde was also concerned when he discovered Pearson and Howes were writing checks to themselves from the Wilde Built Tactical accounts while his wife was not receiving any compensation or other disbursements. This lawsuit followed.

B

In its complaint, WBT alleged causes of action against Wilde, Anna Wilde, and WBT Nylon, for breach of fiduciary duty, conversion, civil conspiracy, federal trademark infringement, violations of Business and Professions Code sections 17200 and 17500, and fraud and conspiracy. In response, Wilde, Anna, and WBT Nylon filed a cross-complaint, alleging causes of action for accounting, contribution, indemnification, and declaratory relief.

Before trial, the record discloses no attempt to bifurcate the trial into separate phases. By the time of trial, the parties had still not prepared jury instructions and verdict forms. In apparent concern over the structure of the trial, the court repeatedly requested that the parties submit the jury instructions and “special verdict form or forms.”

By the third day of trial, the court confronted the parties with its concerns previously expressed off the record regarding the nature of the claims and structure of the trial. The court noted the parties were proposing special jury instructions regarding equitable claims for which there was no right to a jury trial and, accordingly, there were no standard jury instructions. The court reminded the parties that equitable claims are “not normally for the jury, but I have the feeling that both of you want that to go to jury and treat it as an adviser.”

Later that same day, the court reiterated that “as I’ve said in our phone call [last week] and also this morning, I understand that both of you have prepared this trial as if the jury is going to decide everything, including [section 17200], including the accounting, including all the equitable defenses and requests for affirmative relief. [¶] If that’s what you want to do, I don’t want to, at this late stage, recognizing that these instructions need to be set by tomorrow night . . . I don’t want to [] undo everything that you expect, but the way we’ll do that is, we’ll treat it as jury advisory only; meaning, it’s advisory to the court, and I may or may not agree. And I want everyone to understand that.” The parties expressly confirmed this plan and stipulated to proceeding with the entire case going to the jury for an advisory verdict on the equitable claims. The court then inquired again about the preparation of special verdict forms, but the parties told the court they still had not prepared them.

At the close of evidence, the court excused the jurors to allow the court and parties to continue work on the jury instructions and “special verdict forms.” During additional argument regarding the instructions, the court again requested the parties to confirm that they both wanted all causes of action to be presented to the jury “and those that there is no right to a jury trial on will be considered advisory opinions.” Again, both parties confirmed that plan.

The next day, the parties submitted their respective proposed verdict forms, but despite prior discussions of special verdict forms, both parties submitted general verdict forms. Neither party objected to any aspect of the verdict forms beyond a minor correction raised by Wilde’s counsel. When asked if they wanted to make any statements on the record based on discussions that occurred off the record, neither party made any objection or statement.

Following deliberations, the jury returned a verdict in favor of defendants on all of WBT’s claims except for violation of Business and Professions Code section 17500. The jury awarded compensatory damages of $1,734 from Wilde individually. On the cross-complaint, the jury found in favor of the Wildes and WBT Nylon on the claims for accounting and indemnity and awarded $130,000 in damages to Anna Wilde individually against the cross-defendants jointly and severally.

Neither party raised any issues or sought clarification before the court discharged the jury. The court asked defense counsel to prepare a judgment and no party raised any objection or made any comment. Defense counsel prepared a proposed judgment based on the jury’s verdict, to which WBT submitted objections, largely on the basis that the “advisory verdict demonstrates a severe misunderstanding of the principles of equity” and that the evidence did not support the verdict.

Following an unreported hearing, the court indicated in a minute order that it adopted the advisory verdict of the jury and asked the parties to modify the proposed judgment. The minute order from the hearing states that “upon inquiry of the Court there are no objections to the modified judgment.” The court then signed and entered the judgment.

Wilde Built Tactical moved to vacate the judgment and for a new trial. In the motion to vacate the judgment, it argued that the court’s implied legal conclusions were incorrect and the evidence did not support any finding in favor of the Wildes and WBT Nylon. The motion for new trial was based on similar arguments.

At the hearing on the post-trial motions, the court reiterated that “the Court was the one that raised [the] issue” of whether the equitable causes of action would go to the jury and stated that “it’s a little bit like a Johnny-come-lately to say, you know, Judge, … thinking about this now, we don’t like the jury verdict. We want you to decide. And impliedly do formal findings of fact and conclusions of law, which is not a state court requirement.” The court noted that the parties did not request a statement of decision and expressed that it was “a little mystified . . . why this wasn’t thought about a long time ago.”

The court also responded to WBT’s assertion the court entered judgment solely on the jury’s verdict rather than based on its own independent conclusions. The court explained it “heard all the evidence. The Court carefully considered that evidence. The Court listened carefully to the witnesses as they testified. I find that the testimony of Mrs. Wilde to be credible. I find that the credibility of John Wilde was very good. And based on that, and listening to all the evidence and the documentation, the Court has considered the jury verdict with regard to these causes of action, and the Court, as I have said before, adopts the jury verdict, because I find that in the Court exercising its own discretion, and listening to the evidence that was presented, and based on the credibility of the witnesses particularly, the Court finds that that jury verdict is correct. And the Court therefore, in . . . making its own weighing of the evidence and assessing the credibility of the witnesses on its own, finds that the jury verdict is appropriate and therefore adopts it.” Accordingly, the court denied the motion to vacate the judgment and motion for new trial.

WBT appeals from the judgment and orders denying their post-judgment motions.

DISCUSSION

On appeal, WBT contends “the trial court’s use of a general verdict forms was error” the court failed to ” ‘make its own independent findings and to adopt or reject the findings of the jury as it deems proper.’ ” Neither contention has merit.

The parties agree this action involves both legal and equitable claims. “While the judge determines equitable causes of action, the judge may (in rare instances) empanel an advisory jury to make preliminary factual findings. [Citations.] The factual findings are purely advisory because, on equitable causes of action, the judge is the proper factfinder. [Citation.] ‘[W]hile a jury may be used for advisory verdicts as to questions of fact [in equitable actions], it is the duty of the trial court to make its own independent findings and to adopt or reject the findings of the jury as it deems proper.’ [Citation.]” (Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 156.)

Here, the parties either did not understand this distinction before trial or failed to adequately prepare for a trial involving both legal and equitable claims. The record on appeal demonstrates the trial court—unequivocally and repeatedly—attempted to assist the parties in placing this case on the right track. Despite these efforts, WBT took actions leading to the very issues it raises on appeal. It repeatedly stipulated to the use of an advisory jury at a single-phase trial. The court repeatedly asked the parties to submit special verdict forms. However, both parties then submitted general verdict forms and did not enter any objections or otherwise seek clarification from the court regarding those forms.

Now, on appeal, WBT faults the trial court for using those general verdict forms. This claim, however, is not cognizable on appeal due to WBT’s actions at trial. A party cannot complain of error on appeal when its own conduct induces the commission of the alleged error. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403.) Similarly, a party forfeits the claim that a verdict form did not provide the requisite specificity when it fails to object to a proposed verdict form by requesting an alternative form with more specificity. (See, e.g., Greer v. Buzgheia (2006) 141 Cal.App.4th 1150, 1158.) Although the record is not clear as to whether WBT actively invited the alleged error or merely failed to object, we need not consider this claim on appeal.

Regardless, we see no error by the trial court. WBT asserts the trial court categorically erred by using general verdict forms without citation to any case authority or statute establishing such a bright-line rule. Instead, WBT directly undermines its own argument by citing multiple cases in which advisory juries rendered a general verdict on equitable claims, but none of those cases held that doing so was in error. (See Holland v. Kelly (1917) 177 Cal. 43, 45-46; McKeever v. Locke-Paddon Co. (1920) 49 Cal.App. 350 (McKeever).) We see no reason to find the court erred in this regard, especially considering the court’s efforts to secure special verdict forms and the parties’ failure to prepare such forms.

Beyond challenging the verdict forms, the heart of WBT’s assertions on appeal is that the jury’s general verdict, when combined with the absence of any written findings or conclusions by the trial court, suggest a possibility that the court made no such findings but rather entered judgment based only on the jury’s verdicts. This assertion, however, ignores a critical rule governing appellate review. “[I]t is a fundamental principle of appellate procedure that a trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment.” (Jameson v. Desta (2018) 5 Cal.5th 594, 608-609.)

Thus, WBT cannot ask this court to presume, without any supporting evidence supporting that presumption, that the trial court erred by entering the jury’s verdicts without conducting its own independent decision-making on the equitable claims. Instead, we presume the trial court properly exercised its authority and performed its duties. The burden is on WBT to demonstrate otherwise.

WBT does not satisfy this burden. Rather, the record reflects the trial court properly exercised its duty to render its own independent judgment on the equitable claims. A minute order from an unreported hearing regarding the proposed judgment reveals that the trial court expressly adopted the advisory verdicts of the jury based on its own independent judgment. At the subsequent hearing on WBT’s post-judgment motions, the trial court again unequivocally stated that it found the jury’s verdicts to be correct based on its own review of the evidence. As expressed by the court, it found “that in this case, that the verdict rendered by the jury should be adopted. And therefore the Court does adopt it based on the Court’s own weighing of the credibility of the evidence — the credibility of the witnesses and weighing of the evidence. I think the jury’s verdict was correct, and that’s why I have adopted it.”

Thus, this case is distinguishable from those cited by WBT in which the trial court unequivocally did not reach its own conclusion on equitable claims. For example, in A-C Company v. Security Pacific National Bank (1985) 173 Cal.App.3d 462, the trial court told the parties that it was assuming the jury “was the appropriate trier of fact, they have ruled on the credibility of the witnesses” and stated that the court did not “wish to opine as to whether my judgment would have been the same in terms of credibility.” (Id. at pp. 471-472; see also Saks v. Charity Mission Baptist Church (2001) 90 Cal.App.4th 1116, 1147 [court admitted that the “jury . . . made this decision in that case” and the court would not “substitute my opinion” on equitable claims].)

In an attempt to overcome the trial court’s express statements that it was exercising its own judgment, WBT cites several older cases that it believes support the contention that the trial court was required to make a more detailed statement regarding its own findings and conclusions. WBT relies on McKeever, supra, 49 Cal.App. 350, in which the court held that “[t]he calling of the jury in an advisory capacity made it a trial by the court, and necessitated a written decision by the court (Code Civ. Proc., sec. 632), as well as findings of fact and conclusions of law.” (Id. at p. 351.) McKeever, in turn, is cited by another case relied upon by WBT, Petroleum Midway Co. v. Zahn (1944) 62 Cal.App.2d 645, which held that the trial court erred in a bench trial “by entering a judgment without the filing of prerequisite findings.” (Id. at p. 652.)

WBT quotes another case, Holland v. Kelly, supra, 177 Cal. 43, which held that a party has no obligation to ask the court to make express findings because “findings must be made in an equity case, whether it be tried with the aid of a jury or not, and whether either party specifically demands findings or is silent upon the subject.” (Id. at p. 45.)

These decisions, however, relied on statutes that have since been amended or repealed. Specifically, the court in McKeever relied upon section 632 of the Code of Civil Procedure to hold that the trial court was required to file a written decision, but the current section 632 is markedly different than the statute applied in the cases cited by WBT. “In 1968, a radical change was made in former [Code of Civil Procedure section] 632, abolishing the mandatory requirement, and substituting alternatives of (a) findings on request or (b) a written judgment.” (7 Witkin, California Procedure (5th ed. 2008) Trial, § 389, p. 457.) Thereafter, in 1981, section 632 was amended again to abolish findings as a necessary part of a bench trial. (R.E. Folcka Construction, Inc. v. Medallion Home Loan Co. (1987) 191 Cal.App.3d 50, 54.) “The effect of the 1981 legislation was to abolish the requirement for findings of fact and conclusions of law and to substitute a less formal procedure requiring the court to issue a statement of decision, when duly requested, explaining the factual and legal basis for its decision as to each of the principal controverted issues at the trial.” (McCurter v. Older (1985) 173 Cal.App.3d 582, 591, disapproved on other grounds in Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1137.)

Under the current version of Code of Civil Procedures section 632, a trial court has no independent duty to make express findings or explain its decision underlying the judgment. Instead, a party must make a timely request for a statement of decision. If no party requests a statement of decision, the judge must (1) prepare a proposed judgment, or direct a party to do so; (2) allow for the filing of objections to the proposed judgment, and; (3) sign and file the judgment after considering the objections. (Cal. Rules of Court, rule 3.1590.) In other words, no written findings or statement of decision is required unless requested by a party.

There is no indication in the record or in the appellate briefs that WBT ever requested a statement of decision from the trial court. Additionally, WBT never addresses the current state of the law on appeal. To the extent it relies on decisions premised on a since-amended statute, WBT’s contentions have no merit. Applying current law, the trial court followed the proper procedure when it requested defense counsel prepare a proposed judgment, permitted WBT to file objections to the proposed judgment, and, after a hearing, signed and entered the judgment. Nothing more was required of the trial court.

WBT’s failure to request a statement of decision not only undermines its central argument on appeal, it severely limits its ability to seek a reversal of the trial court’s order. To prove that the trial court failed to make the necessary factual findings on the equitable claims, “[t]he appellant must secure a statement of decision under Code of Civil Procedure section 632 and, pursuant to Code of Civil Procedure section 634, bring any ambiguities and omissions in the statement of decision to the trial court’s attention.” (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58.) When a party fails to request a statement of decision, an appellate court will infer the trial court made the necessary findings to support the judgment. (In re Marriage of Dancy (2000) 82 Cal.App.4th 1142, 1159, superseded by statute on other grounds as recognized in Marriage of Fellows (2006) 39 Cal.4th 179, 185, fn. 6.)

“A proper statement of decision is thus essential to effective appellate review. ‘Without a statement of decision, the judgment is effectively insulated from review by the substantial evidence rule,’ as we would have no means of ascertaining the trial court’s reasoning or determining whether its findings on disputed factual issues support the judgment as a matter of law.” (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 982; quoting Gordon v. Wolfe (1986) 179 Cal.App.3d 162, 168.)

To the extent WBT attempts to raise a substantial evidence argument, it then abandons it by failing to cite any relevant legal authority or provide an adequate factual analysis. WBT’s simple assertion that “there was no evidence” to support the judgment is not sufficient to overcome the presumption of correctness. ” ‘A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence on that point, favorable and unfavorable, and show how and why it is insufficient.’ [Citations.] ‘[W]hen an appellant urges the insufficiency of the evidence to support the findings it is his duty to set forth a fair and adequate statement of the evidence which is claimed to be insufficient. He cannot shift this burden onto respondent, nor is a reviewing court required to undertake an independent examination of the record when appellant has shirked his responsibility in this respect.’ ” (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409.)

Rather than challenging the judgment by squarely addressing the evidence at trial, WBT simply asserts that “[t]he jury’s verdict leaves a mystery where its award of damages to Anna Wilde came from.” As already explained, this “mystery” is the result of the parties’ submission of general verdict forms and subsequent failure to request a statement of decision from the trial court. If WBT had requested a statement of decision, the trial court would have been required to explain the basis for its judgment adopting the jury’s verdict.

Regardless, we cannot conclude that the judgment is “plainly erroneous” as WBT asserts. The jury found in favor of Anna on her causes of action for an accounting and indemnity. On appeal, WBT asserts that there was “no evidence of any sum for which indemnity was owed” and “no evidence that an accounting was due and no evidence contradicting the testimony of [WBT]’s accountant that the business never made any distributions to its members.”

As alleged in the operative cross-complaint, the accounting cause of action was premised on the general allegation that as a member of WBT, Anna was entitled to her share of profits. The jury was instructed, without objection by WBT, that the members of the limited liability company owe a duty to account to the other members “any property, profit, or benefit derived by the member in the conduct . . . of a limited liability company.” The jury was further instructed that it could award damages, including a recovery of past profits, on the accounting cause of action.

As argued by Anna Wilde’s attorney in closing argument, she was seeking to recover past profits and a distribution equal to the purported expense reimbursement received by Howes, who was paid $1,745 a month. Evidence regarding WBT’s profits was submitted to the jury and trial court as trial exhibits. As defendants argued in opposition to the motion to vacate the judgment, these documents “contained all revenue and expenditures associated with [WBT]: more than sufficient evidence to support an award for a cause of action for an accounting.”

However, those exhibits have not been transmitted to this court as part of the record on appeal. When exhibits are not transmitted to this court, “we will not presume they would undermine the judgment.” (Western Aggregates, Inc. v. County of Yuba (2002) 101 Cal.App.4th 278, 291.)

The necessity of these exhibits to any appellate review of the sufficiency of the evidence is heightened when we are reviewing an equitable claim for accounting. An accounting is proper ” ‘where . . . the accounts are so complicated that an ordinary legal action demanding a fixed sum is impracticable.’ ” (Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 14.) “An action for an accounting, as instituted herein, is a proceeding in equity for the purpose of obtaining a judicial settlement of the accounts of the parties in which proceeding the court will adjudicate the amount due, administer full relief and render complete justice.” (Verdier v. Superior Court (1948) 88 Cal.App.2d 527, 530.) The accounting, itself a remedy, is the means of determining the amount of damages owed. (See, e.g., Van de Kamp v. Bank of America (1988) 204 Cal.App.3d 819, 865.) Without the complicated financial records submitted at trial, and a statement of decision detailing the specific findings and conclusions of the trial court, WBT cannot establish any basis for reversal of the judgment on the ground that it is not supported by substantial evidence.

Accordingly, applying the current laws regarding statements of decisions following bench trials, and in light of the principles governing appellate review, we hold WBT failed to meet its burden of demonstrating reversible error by the trial court in adopting the jury’s advisory verdict on the equitable causes of action. Although WBT generally questions the sufficiency of the evidence to support the judgment, it forfeits any claim in this regard by failing to properly address it on appeal and provide the necessary record for our review. Accordingly, finding no error, we must affirm the judgement.

DISPOSITION

The judgment is affirmed. Respondents shall recover their costs on appeal.

McCONNELL, P. J.

WE CONCUR:

BENKE, J.

IRION, J.