IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
December 21, 2010
SAL J. CARDINALLI, PLAINTIFF AND APPELLANT,
JOHN T. CARDINALLI, JR. ET AL., DEFENDANTS AND RESPONDENTS.
(Monterey County Super. Ct. No. M71906)
The opinion of the court was delivered by: Duffy, J.
Cardinalli v. Cardinalli
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
This appeal arises from disputes relating to a family-owned taxicab business, Monterey Checker Transportation, Inc. (Checker). Plaintiff Sal Cardinalli, his father, John Cardinalli, Sr., and his brothers, John Cardinalli, Jr., and Stephen Cardinalli, each owned a 25 percent share in Checker.*fn1 In October 2004, plaintiff filed this action, asserting, among other things, that beginning in 2002, defendants had eliminated his $3,000 monthly salary and his $1,000 share of the rent from certain corporate realty and had transferred other corporate assets to themselves, breaching their fiduciary duties as majority shareholders to him, a minority shareholder. Plaintiff requested relief including actual and punitive damages, partition of real property, and an accounting. Plaintiff named as defendants his brothers, their wives, Checker and New Hope, Inc., a corporation formed to acquire Checker, but not his father.
After a jury heard testimony for 11 days, plaintiff, who had originally requested a jury trial, moved to discharge the jury on the basis that all of the causes of action were equitable in nature. After the court took the motion under submission, the jury returned special verdicts in plaintiff's favor. Ultimately, the court determined that all the issues were equitable and that the verdicts were, at most, advisory. After hearing additional evidence at a court trial, the court found in favor of plaintiff on an amended claim for involuntary dissolution of the corporation and in favor of defendants on all remaining causes of action.
Plaintiff's principal argument on appeal, as we understand it, is that the jury's verdicts are binding, either because he was entitled to a jury trial on his breach of fiduciary duty claim or because defendants were estopped to obtain findings by the court. Plaintiff also assigns as errors the court's denial of his motion to prohibit Checker and New Hope from paying the fees of defendants' counsel and an evidentiary ruling made during trial regarding his notice to produce documents. We will affirm the judgment.
The contentions on appeal do not require a review of the evidence produced at trial, but they do require an understanding of the procedural history of the case. We will provide an overview of this history, before focusing on those aspects particularly relevant to plaintiff's contentions.
Plaintiff's unverified second amended complaint, filed in August 2005, alleged the following. Plaintiff, defendants, and their father each co-owned taxicab operators Checker and New Hope, Inc. In the course of bankruptcy proceedings beginning in 1992, shares were issued showing plaintiff to be a 75 percent owner of Checker, with Stephen holding the remaining 25 percent. In 1997, as Checker successfully emerged from bankruptcy, defendants retained attorney Daniel Schrader to redistribute the shares equally to the original four owners, but the redistribution did not occur. After plaintiff became ill in 2001, defendants: excluded plaintiff from the management of Checker; eliminated his $3,000 monthly salary and his $1,000 share of the rent from corporate property in Seaside on Olympia Avenue; acquired two other properties in Seaside; changed banks, bank accounts, and signatories; padded the payroll with family members; threatened to cut off his health insurance; and promised to buy him out of Checker for $600,000. Plaintiff asserted causes of action for declaratory relief, accounting, fraud, partition of real property, breach of fiduciary obligations owned by majority shareholders to minority shareholders, unjust enrichment, and breach of oral contract. Plaintiff alleged that the corporations were alter egos of individual defendants.
At some unspecified time in the early stages of the litigation, plaintiff filed a motion to recuse Daniel Schrader and his law firm, Fischer, Norris & Schrader, from representing his brothers. This motion was withdrawn, at least according to later assertions by plaintiff's counsel, Hugo Gerstl, in connection with his later motion to restrain Checker and New Hope, Inc., from paying Schrader.*fn2
The claims in plaintiff's unverified complaint were narrowed and clarified over the course of the litigation, without, as far as we can see, the filing of a third amended complaint or an amendment to the second amended complaint. By February 2006, plaintiff claimed only a 25 percent interest in Checker, not 75 percent.*fn3 By May 2006, he had dismissed his causes of action for breach of oral contract and fraud based on the claim that defendants had promised to buy him out of Checker for $600,000.*fn4 In his opening statement to the jury in August 2006, plaintiff's counsel dismissed the wives of his brothers as defendants.
When the jury trial began, with the second amended complaint as the operative pleading, the remaining causes of action stated against individual defendants were declaratory relief, accounting, partition of real property, breach of fiduciary obligations, and unjust enrichment
II. The Jury Trial
Plaintiff initially demanded a jury trial on all causes of action. Defendants also requested a jury trial. A jury was selected on August 15, 2006. Plaintiff presented evidence for eight days before resting on August 28, 2006. After three more days of evidence, defendants rested their case on August 31, 2006. On September 1, 2006, the parties and the court discussed jury instructions in chambers.
On September 5, 2006, plaintiff filed a motion to discharge the jury and defendants filed opposition. The court took the motion under submission. The jury was instructed to determine whether the defendants, as the majority shareholders, had breached a fiduciary duty to plaintiff, a minority shareholder, and if they did, what were plaintiff's damages, and whether plaintiff was entitled to punitive damages. After deliberating for about 90 minutes on September 7, 2006, the jury returned special verdicts finding that each individual defendant had breached a fiduciary duty to plaintiff, with resulting damages of $92,046 for loss of income, $13,223 for loss of rent, and $150,000 for loss of profits, and each defendant had acted in a manner justifying punitive damages.
III. The Court Trial
On September 20, 2006, the trial court, Monterey County Superior Court Judge Michael Fields, decided, as explained more fully below, that all issues were for the court to decide, so the jury's function was advisory.
A receiver, Dr. Rolf Trautsch, was appointed on November 7, 2006, to operate Checker pending a court trial. He prepared a report in January 2007.*fn5
Dr. Trautsch was a witness at the ensuing court trial conducted on four days in March 2007. The trial was based on his testimony, on offers of proof, and on the evidence already produced. On March 27, 2007, the final day of trial, the court granted plaintiff's motion to amend his complaint to request involuntary dissolution of Checker.*fn6 In arguing the case to the trial court on that date, Mr. Gerstl stated, "In the instant case, Your Honor, there are now six causes of actions, declaratory relief on unjust enrichment, accounting, partition, breach of fiduciary duty, alter ego, which is a sub speci of the declaratory relief action and an allegation for the involuntary dissolution of the corporation."
The court's oral ruling from the bench on that date was incorporated into a statement of decision. The court found that, apart from establishing 25 percent ownership of Checker and the Olympia Avenue property in Seaside and a right to involuntary dissolution, the plaintiff had failed to prove the following claims: there was "breach of fiduciary duty" by defendants; "plaintiff has been in any way misplaced by the company with respect to profits, earnings or wages;" he was part owner of any corporate realty in Seaside other than the Olympia Avenue property; there was lost rent or unjust enrichment of defendants; and there was any basis to pierce the corporate veil. The court also found that the Olympia Avenue property could not be partitioned because all record title holders were not joined in this lawsuit and that plaintiff was not entitled to attorney fees as damages or pursuant to a contract. The court found that "[c]orporations are entitled to hire attorneys and pay them" and that it was "an appropriate business decision to terminate plaintiff's employment" in 2002 and "a reasonable and appropriate business decision" to terminate plaintiff's monthly salary of $1,000 in November 2004 after he filed this lawsuit. The court made no reference in its ruling to the jury's verdicts.
After trial, plaintiff filed a motion for a new trial, which was denied on August 8, 2007, after a hearing by Judge Robert O'Farrell, as Judge Fields had retired. A judgment after trial was filed on August 27, 2007, and plaintiff filed a notice of appeal.
I. Claims on Appeal
As we understand him, plaintiff asserts on appeal that the jury's special verdicts are binding, either because he was entitled to a jury trial on his breach of fiduciary duty claim or because the parties, by requesting and conducting a jury trial, by contract or estoppel committed the trial court to defer to the jury's verdicts.
Plaintiff also claims that the trial court erred by allowing individual defendants to be represented by corporate counsel and by allowing the corporation to pay the charges of defendants' attorney. Finally, the court erred in failing to order defendants to produce documents pursuant to plaintiff's notice to produce and in restricting cross-examination about this notice.
II. Standards of Review
Under the California constitution, the right to a jury trial in a civil case is coextensive with that right as it existed in 1850 under English common law. (C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 8; Interactive Multimedia Artists, Inc. v. Superior Court (1998) 62 Cal.App.4th 1546, 1552 (Interactive Multimedia).) "It is the right to trial by jury as it existed at common law which is preserved; and what that right is, is a purely historical question, a fact which is to be ascertained like any other social, political or legal fact." (People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283, 287.) Determining the law of a foreign nation is a question of law (Evid. Code, § 310, subd. (b)) to be resolved by the rules applicable to permissive judicial notice. (Evid. Code, §§ 452, subd. (f), 459.) On appeal we review de novo whether a party was constitutionally entitled to a jury trial. (Caira v. Offner (2005) 126 Cal.App.4th 12, 23.)
As to plaintiff's claims about the payment and disqualification of opposing counsel, "[g]enerally, a trial court's decision on a disqualification motion is reviewed for abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the reviewing court should not substitute its judgment for the trial court's express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial court's factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial court's discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial court's determination as a question of law." (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144.) The same standard applies to a motion to restrict the source of opposing counsel's payment.
As to the rulings limiting evidence and cross-examination, we review the exclusion of evidence under Evidence Code section 352 for a prejudicial abuse of discretion. (Cf. Geffcken v. D'Andrea (2006) 137 Cal.App.4th 1298, 1307.)
III. The Jury's Verdicts
The heart of plaintiff's appeal is that the jury's special verdicts were somehow binding on defendants and the trial court. In order to understand this set of contentions, we must first review in greater detail the procedural history of the jury's verdicts.
A. The Motion to Discharge the Jury and the Court's Ruling
As indicated, both sides demanded a jury, selected a jury, and presented eleven days of evidence in August 2006. During unrecorded discussions in chambers, the court indicated that at least some causes of action were equitable and to be decided by the court. During unrecorded discussions of jury instructions in chambers on Friday, September 1, 2006, there was further discussion of which issues were for the jury and which for the court.
On Tuesday, September 5, 2006, plaintiff's counsel, Mr. Gerstl, filed a written motion to discharge the jury and defendants filed opposition. (These documents do not appear in the record on appeal, though references to them do.) After rebuttal testimony was taken, the motion was argued in the jury's absence.
Mr. Gerstl argued as follows. He had twice requested a bench trial, at the mandatory settlement conference and at the outset of trial, while defendants had insisted on a jury. At the jury instruction conference, he was shocked to learn that the court intended to decide the valuation of the corporation and the Olympia Avenue realty, as well as the ownership of other Seaside realty. The court's comments led Mr. Gerstl to research the right to a jury trial, and he was "shocked to find out that there was no right to a jury trial in this case to begin with. Because in the case of a claim for breach of fiduciary obligations by a dominant shareholder or director to the minority, there is no right to a jury trial." That research led to his motion.
The court pointed out that when the court had first mentioned that some issues were equitable ones for the court, Mr. Gerstl's response was that all issues should go to the jury. Mr. Gerstl agreed and added that the court had identified one cause of action, the breach of fiduciary obligations, as for the jury.
The argument on plaintiff's motion to discharge the jury continued the following day of trial, September 7, 2006. Defendants argued that plaintiff had waived any objection to having a jury trial.
The court noted that Mr Gerstl had originally argued that all issues were for the jury and he observed, "So now we've done somewhat of a 180. 180-degree movement from objecting that the jury wasn't hearing enough issues to now objecting that the jury is hearing any issues; is that correct?" Mr. Gerstl agreed, and added that his motion to discharge the jury was intended to preserve the right to punitive damages.
The court took the issue under submission, stating: "Well, I don't know. Whether the jury is a determining factor or merely an advisory jury, which is permitted in equitable cases, will have to resolve after the fact." The court pointed out that both counsel, who had lived with the case for two years, should have determined long before trial "if the case is to be presented to a judge or a jury." The court concluded, "In any event, we'll take up the issue of the status of the jury at the conclusion of the case."
As noted, the jury rendered special verdicts finding in favor of plaintiff, after which the parties stipulated that the court could make the punitive damages determination and the jury could be excused.
At the next hearing, on September 20, 2006, the court decided that the jury verdicts were only advisory as "there really were no legal issues for the jury to decide in this case." Defendants' counsel agreed. Mr. Gerstl said, "In a way, yes; in a way, no, your Honor." "[T]his was one where we now find ourselves on opposite sides of where we were at the time the court sent the matter to the jury. In other words, we were relatively unhappy that the jury was sent out." The court concluded that "all issues are for the court to hear and there was nothing for the jury to have done except what turns out to be an advisory panel." Plaintiff acknowledged having no authority saying otherwise.
The court refined its position during the court trial. On March 26, 2007, the court entertained argument as to whether there was an evidentiary basis to award punitive damages. Mr. Gerstl argued that there was, pointing to the jury's verdict. The court responded that the court would not base any decision on what the jury found. Through the neglect of both counsel, the jury selection was invalid and there was no "advisory jury, because the jury was not empanelled to be an advisory jury. These are only issues of law for the Court to decide." Mr. Gerstl proceeded to argue other grounds before the court concluded that plaintiff had failed to prove malice, fraud or oppression by the defendants toward the plaintiff or any basis for awarding punitive damages.
B. The Right to a Jury Trial
The constitutional right to a jury trial in a civil case in California exists when the "gist" of the action is legal, but not when it is equitable. (C & K Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d at p. 9; Interactive Multimedia, supra, 62 Cal.App.4th at p. 1555.) "In order to determine whether an action for declaratory relief is equitable or legal, we must look behind the declaratory relief label to the gist of the action." (Strauss v. Summerhays (1984) 157 Cal.App.3d 806, 812; cf. Caira v. Offner, supra, 126 Cal.App.4th 12, 24-26.)
Interactive Multimedia, supra, 62 Cal.App.4th 1546 reasoned that the fiduciary relationship owed by controlling shareholders to minority shareholders is a relationship of trust that is controlled by equitable restrictions and concluded that a minority shareholder's claim of a breach of such an relationship is an equitable claim without a right to a jury trial. (Id. at pp. 1555-1556; see Nelson v. Anderson (1999) 72 Cal.App.4th 111, 122.) Plaintiff seeks to distinguish Interactive Media factually in that the breach of fiduciary duty claim there was based in part on an alleged reduction in the value of the minority shareholder's shares due to a merger. Our reading of that opinion reveals that the merger circumstance was irrelevant to the court's holding. He provides no reason for us to disagree with the court's holding.
Other authority has established that there is no right to a jury trial in a shareholder's derivative suit or for involuntary dissolution of a corporation (Rankin v. Frebank Co. (1975) 47 Cal.App.3d 75, 91-92) and there is no right to a jury trial on an issue of stock ownership (Caira v. Offner, supra, 126 Cal.App.4th at pp. 28-29). Plaintiff baldly asserts that "Rankin v. Frebank is distinguishable," while also conceding that the involuntary dissolution cause of action is equitable.
On appeal, plaintiff now argues, contrary to his motion to discharge the jury, that he was entitled to a jury trial on his claim that dominant shareholders had breached their fiduciary duties.
Were we to find that the trial court erred in determining that the jury's verdicts were, at most, advisory, we might conclude that plaintiff could not raise this issue on appeal as he had invited this error by making a motion to discharge the jury. (Estate Of Novotny (1928) 94 Cal.App. 782, 790-791 [party who objected to jury determining an issue will not be heard to complain that court determined the issue]) Defendants do not exactly argue invited error, although they cite authority that discusses the doctrine. (E.g., Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685-1686.) Defendants contend that plaintiff "is judicially estopped from arguing against the authority he cited to the court" and he "waived any objections he had to the matter being tried to the court." (Capitalization omitted.) In response, plaintiff asserts that he "abandoned his motion to discharge the jury" once it returned its verdicts. However, there is no need to discuss invited error further, as we are confident that there was no error by the trial court.
Plaintiff invokes federal law arising under the Seventh Amendment to argue that "a Plaintiff is entitled to a jury trial in connection with a dominant shareholder's breach of fiduciary duties." This claim has been rejected before by courts recognizing that the Seventh Amendment is inapplicable to civil actions in state courts. (Rankin v. Frebank, supra, 47 Cal.App.3d at pp. 91-92; Interactive Multimedia, supra, 62 Cal.App.4th at p. 1550, fn. 3.)
Plaintiff also discusses at length a decision by this court, Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582. In that case, the president of one corporation sued officers and directors of another corporation with which his corporation merged for deceiving him about the transferability of the stock he would acquire during the merger, alleging fraud, breach of fiduciary duty, and a violation of section 11 of the federal Securities Act of 1933. (Id. at pp. 1587, 1590.) Plaintiff relies on our discussion of whether the trial court had unduly limited the scope of an expert's testimony about the standards, customs, and practices in the securities industry. (Id. at p. 1599.) We upheld the trial court's ruling, describing the elements of a cause of action for breach of fiduciary duty and explaining: "Whether a fiduciary duty exists is generally a question of law. [Citation.] Whether the defendant breached that duty towards the plaintiff is a question of fact. [Citation.] Thus, insofar as the excluded testimony would have described the fiduciary relationship, it was properly excluded as pertaining to a question of law. The judge would explain that in the jury instructions." (Ibid.)
While Amtower v. Photon Dynamics, Inc. did discuss submitting a breach of fiduciary duty claim to a jury, that opinion contained no argument or analysis of whether there was a constitutional right to a jury trial or whether a majority shareholder's breach of fiduciary duty to a minority shareholder gave rise to a legal or equitable cause of action. Our opinions should not be considered authority for propositions they do not consider. (Grant v. Comp USA, Inc. (2003) 109 Cal.App.4th 637, 647.)
On appeal, plaintiff asserts that the "gist" of his action was not really breach of fiduciary duties. In his opening brief, he claims the action was really an amalgamation of "numerous legal causes of action": an accounting; "intentional interference with economic expectancy; intentional infliction of mental and emotional distress; money had and received; and fraudulent misrepresentation concerning the financial posture of the company." His reply brief identifies elements of still more causes of action as the gist, namely constructive fraud, wrongful termination, and defamation.
These transparent attempts to recharacterize plaintiff's operative second amended complaint must fail. As summarized by Mr. Gerstl in argument concluding the court trial, "there are now six causes of action, declaratory relief or unjust enrichment, accounting, partition, breach of fiduciary duty, alter ego, which is a sub speci of the declaratory relief action and an allegation for the involuntary dissolution of the corporation." As to plaintiff's attempt to change his theories, "no reason appears why we should not apply the established rules that a party to an action may not, for the first time on appeal, change the theory of the cause of action." (Estate of Westerman (1968) 68 Cal.2d 267, 279.)
In ascertaining the gist of an action, "consideration must be given to the nature of the rights involved and the remedies invoked as disclosed by the pleadings." (Tibbitts v. Fife (1958) 162 Cal.App.2d 568, 572; cf. Southern Pac. Transporation Co. v. Superior Court (1976) 58 Cal.App.3d 433, 436; Fowler v. Ross (1983) 142 Cal.App.3d 472, 478.) Despite plaintiff's varying positions about the nature of the lawsuit he filed in 2004, the trial court was entitled to rely on his second amended complaint, as further amended by deletions. The gist of the case presented for trial was equitable, namely a minority shareholder's claim of breach by majority shareholders of fiduciary duties and a request for involuntary dissolution, and plaintiff had no constitutional right to a jury trial.
C. The Relevance of Findings by an Advisory Jury
Plaintiff's articulation of the issues on appeal urges that, by one theory or another, the jury's special verdicts were either binding or at least owed deference.
It has been long established that, while there is no constitutional right to a jury trial on equitable claims, a court may impanel an advisory jury to resolve one or more controverted factual issues. But any verdict by an advisory jury "is not conclusive upon the questions submitted, but merely advisory in its character; and the judge may, when satisfied that truth and justice require it, set aside the verdict and order a new trial, or may qualify or alter any of its special findings, or disregard it, in whole or in part, and find the facts for himself. Or he may approve them in whole or in part, and if approved, they become, by adoption, the findings of the court." (Sweetser v. Dobbins (1884) 65 Cal. 529, 530-531; cf. Schooler v. Williamson (1923) 192 Cal. 472, 478-479; Estate of Cazaurang (1946) 75 Cal.App.2d 217, 225, and cases there cited.)
Some cases present both equitable and legal issues. In such cases, "It is beyond dispute that where both legal and equitable issues are present, a jury may be empanelled to try the legal issues, and may also at the court's discretion be asked for advisory verdicts as to facts which may apply to the equitable issues, and that the 'equity first' rule is the court should resolve the equitable issues first [citation], and that the court's resolution of the equitable issues may resolve the legal issues. [Citation.] [¶] It is equally beyond dispute that while a jury may be used for advisory verdicts as to questions of fact, 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.]" (A-C Co. v. Security Pacific Nat. Bank (1985) 173 Cal.App.3d 462, 473-474; cf. Caira v. Offner, supra, 126 Cal.App.4th at p. 22, fn. 4.)
On the other hand, when a jury determines legal issues before the trial of equitable issues, the "jury's determination of legal issues may curtail or foreclose equitable issues." (Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 157.) In that case, involving a dispute between a landlord and a tenant over the tenant's parking rights under a lease, the trial judge erred by disregarding the jury's factual determinations on legal issues. (Id. at pp. 159-161.) Plaintiff quotes at length from Hoopes v. Dolan in his reply brief, without establishing that the jury in this case determined any legal issues.
Plaintiff recognizes that trial courts are generally entitled to reject the findings of advisory juries on equitable issues. In view of the long-established nature of this principle, it is not surprising that plaintiff is unable to provide pertinent authority for overturning it. He asserts that the law does not require idle acts (Civ. Code, § 3532) and it is idle for a trial court to obtain a special verdict in order to disregard it. He argues that "the trial court should either have given deference to the jury verdict or, at the very least, acknowledged that it existed." (Capitalization omitted.) Plaintiff quotes Whiting v. Squeglia (1924) 70 Cal.App. 108, but that opinion only determined that a party was not prejudiced by having equitable issues submitted to a jury when the trial court ultimately made its own findings on those issues. (Id. at pp. 114-115.) As an intermediate appellate court, we must follow higher authority establishing the non-binding nature of the special verdicts of advisory juries. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)
Plaintiff also argues that, "since the trial court held that the jury was 'only' advisory, it became, in effect, the thirteenth (or only) juror. Thus, it should be guided by rules concerning judgment notwithstanding the verdict." (Capitalization omitted.) On such a motion in the trial of a legal issue, the trial court is required to accept the evidence supporting the verdict. Again, plaintiff cites no authority requiring the trial court to defer to the special verdict of an advisory jury on an equitable issue. On equitable claims, "the findings of the jury were purely advisory. [Citations.] The court was therefore empowered to reject the general and special findings of the jury and adopt contrary findings of its own which are warranted by the evidence, pursuant to which a judgment was properly rendered." (Woolsey v. Woolsey (1932) 121 Cal.App. 576, 581.)
Plaintiff argues in the alternative that, if he was not entitled to a jury trial as a matter of right, the parties are estopped by conduct and implicit contract from objecting to the jury verdict. He asserts, "whether or not the parties were entitled to a jury, the parties each 'contracted for' a jury trial. The parties should be estopped from now claiming they did not contract for a jury trial." (Capitalization omitted.) "The parties waived their right to object to trial by jury. Alternatively, there is a paradigmatic estoppel in this case." (Capitalization omitted.) Plaintiff cites general principles of estoppel, but no authority finding a party estopped "to object to a binding jury verdict."
He quotes at length from this court's discussion in City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 486-488. The issue in that case was whether an insurer was estopped from insisting on a policy provision requiring an insured to act within a specified time. It had nothing to do with the kind of estoppel asserted here.
Long ago the California Supreme Court rejected an argument that a party, by submitting to a general jury verdict in an equitable action, was estopped by its conduct to obtain findings by the trial court. "It is true that appellant made no specific objection to the form of the verdict, but it does not follow that thereby he assented to the theory that the cause on trial was a 'law case.' Even conceding that by his conduct he waived the absence of special interrogatories, there is nothing to indicate in any way that he consented to have judgment entered without findings by the court. Unless waived, 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." (Holland v. Kelly (1917) 177 Cal. 43, 45*fn7 ; cf. Hodge v. Superior Court (2006) 145 Cal.App.4th 278, 282, fn. 3 [the right to a jury trial on a claim arising under the Unfair Competition Law is a question of law to which judicial estoppel does not apply].)
We conclude that plaintiff has identified no legal basis to avoid the long-established principle that the trial court in this equitable action was not required to adopt or defer to the special verdicts of an advisory jury.
IV. Payment of Opposing Counsel
Plaintiff asserts in his opening brief that "the trial court erred in allowing respondents' attorney to represent the corporation and two of its shareholders when they were in conflict with the other shareholder." (Capitalization omitted.) This suggests that plaintiff is challenging a ruling denying a motion to recuse defendants' counsel, Mr. Schrader. While there is evidence in the record that plaintiff filed such a motion, the record on appeal does not contain either this motion or any ruling by the court on such a motion. An appellant who claims error has the burden of producing a record on appeal adequate to substantiate that claim. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141; Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 557.) "The reviewing court will presume that the record in an appeal includes all matters material to deciding the issues raised." (Cal. Rules of Court, Rule 8.163.) Plaintiff has failed to provide a record adequate to substantiate any error in the court's early ruling, if there was such a ruling.
Plaintiff next argues, "Since respondents' counsel violated his professional duties he should not be allowed to collect fees from the corporation." (Capitalization omitted.) The record does contain a motion by plaintiff to prohibit Checker and New Hope from paying Schrader, opposition by defendants, and a ruling by the trial court denying the motion.
Plaintiff's argument in his opening brief that Schrader should not be paid by Checker consists almost entirely of three and one-half pages of quotations and paraphrases of case law applying rules restricting corporate counsel.
The following rules apply. Corporations, of course, can retain attorneys. The attorney's first duty is to the corporation, not to individual officers, directors, or shareholders. (Meehan v. Hopps (1956) 144 Cal.App.2d 284, 293.) A minority shareholder is not regarded as a client of the corporate counsel unless the shareholder has retained or reposed trust and confidence in the attorney. (Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 707, 710-711.) Corporate counsel "may also represent any of its directors, officers, employees, members, shareholders, or other constituents" subject to rule 3-310*fn8 of the Rules of Professional Conduct. (Rules Prof. Conduct, rule 3-600(E); Metro-Goldwyn-Mayer, Inc. v. Tracinda Corp., supra, 36 Cal.App.4th at p. 1841.)
Rules of Professional Conduct, rule 3-310 identifies two ethical duties that "are entwined in any attorney-client relationship. First is the attorney's duty of confidentiality, which fosters full and open communication between client and counsel, based on the client's understanding that the attorney is statutorily obligated (Bus. & Prof. Code, § 6068, subd. (e)) to maintain the client's confidences. [Citation.] The second is the attorney's duty of undivided loyalty to the client." (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846.) "An attorney who seeks to simultaneously represent clients with directly adverse interests in the same litigation will be automatically disqualified." (Ibid.) Otherwise, simultaneous and successive representation may be authorized by informed written consent. (Rules Prof. Conduct, rule 3-310.)
As to why Schrader should not be paid by Checker, plaintiff asserts that "[a]n attorney may not recover for services rendered if those services are rendered in contradiction to the requirements of professional responsibility." He cites A.I. Credit Corp., Inc. v. Aguilar & Sebastinelli (2003) 113 Cal.App.4th 1072, 1076, which quotes this statement from Goldstein v. Lees (1975) 46 Cal.App.3d 614, 618 (Goldstein).
The issue in Goldstein, supra, 46 Cal.App.3d 614, was "whether a former counsel to a corporation can properly represent a minority shareholder and director of the same corporation in a proxy contest in circumstances where counsel holds corporate secrets that are material to the proxy fight." (Id. at p. 618.) The court noted: "As the Committee on Professional Ethics and Grievances of the American Bar Association stated in Opinion 86: 'In acting as the corporation's legal adviser he must refrain from taking part in any controversies or factional differences which may exist among shareholders as to its control. When his opinion is sought by those entitled to it, or when it becomes his duty to voice it, he must be in a position to give it without bias or prejudice and to have it recognized as being so given. Unless he is in that position his usefulness to his client is impaired.' This duty to act without bias or prejudice does not dissolve merely because the attorney has been discharged." (Id. at p. 622.) The appellate court concluded that the attorney's duty to preserve the corporation's confidences precluded him from accepting adverse employment and from being compensated for such employment. (Id. at pp. 618-623.)
The relevance of Goldstein does not immediately appear. Schrader has not undertaken to represent a minority shareholder seeking to gain control of Checker and plaintiff has cited no evidence that Schrader's employment by defendants has created any conflict of interest with his role as corporate counsel. Plaintiff does not explain what conflict of interest he perceives in Schrader representing defendants, the majority shareholders in the corporation Schrader also represents. Assuming there was a conceivable conflict, Checker could have consented to Schrader's representation of defendants. Unlike the plaintiff in Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1004-1005 (Pringle), plaintiff does not assert the lack of a valid consent.
If plaintiff is insinuating that the conflict consists in Schrader representing the majority shareholders against a minority shareholder, plaintiff has failed to establish that he, as a minority shareholder, was ever a client of Schrader or reposed any trust and confidence in him.
Moreover, there is no case establishing "that a violation of a rule of professional conduct automatically precludes an attorney from obtaining fees. Rules 3-310 and 3-600 do not so provide." (Pringle, supra, 73 Cal.App.4th at pp. 1005-1006.) "Further, the Supreme Court case addressing the issue, and upon which all others are based (Clark v. Millsap (1926) 197 Cal. 765), seems to suggest there must be a serious violation of the attorney's responsibilities before an attorney who violates an ethical rule is required to forfeit his fees." (Pringle, supra, at p. 1006.)
As we cannot tell what purported conflict plaintiff perceives, we cannot evaluate whether there was any serious conflict of interest. (Pringle, supra, 73 Cal.App.4th at pp. 1006-1007.) Plaintiff has identified no abuse of discretion in the court denying his motion to preclude Checker from paying Schrader. As this court stated in Sullivan v. Dorsa (2005) 128 Cal.App.4th 947, plaintiff fails "to show that any violation of the rules governing representation of adverse interests was serious enough to compel a forfeiture of fees. Insofar as these questions were entrusted either to the trial court's discretion or its factfinding powers, we cannot substitute our judgment for the trial court's except on a clear showing that those powers were abused." (Id. at pp. 965-966.)
In light of this conclusion, we need not consider defendants' contentions that plaintiff's motion should have been denied based on his unreasonable delay and that he should have appealed sooner from the denial of his motion.
V. The Production of Documents
Plaintiff has framed one of the issues on appeal as whether the trial court erred in refusing to order defendants to produce documents requested by plaintiff. Plaintiff's opening brief focuses on the court's reasoning on August 18 and 21, 2006, but we consider that reasoning in its larger procedural context.
A. The Notice to Produce Documents
On June 2, 2006, plaintiff served a "notice to appear at trial and to produce documents ([Code Civ. Proc.,] § 1987[, subd.] (c))."*fn9 (Capitalization omitted.) This notice asked defendants and their wives and the custodians of records "and/or Person(s) Most Knowledgeable" of Checker and New Hope, Inc., to appear and produce 37 kinds of documents at trial.*fn10 This was followed by a notice of motion to compel production of these documents at trial, supported by two declarations by Hugo Gerstl, and a supplemental notice to produce documents dated June 21, 2006. Defendants objected to and opposed these notices and this motion.*fn11 The record on appeal contains no ruling or transcript of hearings on this motion or their objections. However, according to a declaration filed by Gerstl in support of a new trial motion, on June 20, 2006, the judge hearing the motion took it under submission and on June 27, 2006, deferred it for a ruling by the trial judge.
On August 18, 2006, during the trial before the jury, plaintiff sought to cross-examine defendant John Jr. about the June 2 notice to produce documents (offered as Exhibit 14). John Jr. acknowledged that he had not brought financial statements or tax returns to trial, stating that he had produced every financial record that he could find in discovery to plaintiff's expert, Clark Savage. Through cross-examination of John Jr., plaintiff established that, on August 30, 2005, plaintiff had served a first demand to identify and produce documents. and that John Jr. had responded to it in writing. The court sustained objections to whether plaintiff came to court seeking production of those documents. The court sustained a relevance objection to what the June 2006 notice to produce documents said about tax returns. When plaintiff asked if John Jr. had brought any of documents listed in the notice to produce for purposes of trial, the court stated: "Don't answer the question. We'll go to a different area. This is all discovery. This is all post-filing. We're not going . . . into that. I've indicated before we're not." The court sustained a relevance objection when Exhibit 14 was offered into evidence.
In the jury's absence on August 18, 2006, plaintiff objected to the court restricting him from asking questions about the notice to produce documents. Plaintiff's opening brief quotes three single-spaced pages of the colloquy among Mr. Gerstl, defense counsel, and the trial court. Plaintiff's position, essentially, was that he was not seeking discovery. He was utilizing a different statutory procedure for obtaining production of documents at trial. He was unable to specify who had which documents as the defendants had not told him during discovery. In any event, other judges, including Judge O'Farrell as recently as July 28, 2006, had already overruled defendants' objections and ordered them to produce the documents.*fn12 Plaintiff concluded his comments by acknowledging that he did not expect defendants to be producing "these documents" at trial. What he was objecting to was that "the plaintiff is made to look as though he cannot produce evidence to support his case," even though Judge O'Farrell has ordered the documents produced. The defense position was that they had already produced the requested documents and that the discovery of documents was an issue for the court, not the jury.
On August 18, 2006, while plaintiff argued, the trial court observed that the notice to produce did not meet the requirements of section 1987, subdivision (c), of specifically identifying the documents requested, as well as who had them in his or her control, that some of the requests were vague, and that it would be an undue consumption of time for Mr. Gerstl to question each witness about the 37 items on the list with subparts. Proceedings recessed on August 18 without a ruling on plaintiff's argument.
On August 21, 2006, in the jury's absence, the court denied plaintiff's motion for mistrial based on the court's refusal to receive into evidence Exhibit 14. The court explained that Judge O'Farrell had not ordered production of the documents, contrary to Mr. Gerstl's representation and, as Exhibit 14 did not comply with section 1987, it would not be received into evidence and questions about it would not be permitted.*fn13
B. The Validity of the Ruling
Plaintiff has captioned this argument in his opening brief as "the trial court's refusal to order respondents to produce the documents noticed to be produced constituted prejudicial error." However, our review of the transcripts of August 18 and 21, 2006, quoted by plaintiff reveals that plaintiff never expressly asked the trial judge to make such an order. We do not construe plaintiff's arguments on August 18, 2006, as including a request to order production of the documents. (Cf. Crisci v. Sorce (1957) 150 Cal.App.2d 96, 99.)
It is a basic principle of appellate review that a trial court cannot be criticized for failing to rule on a motion that no party made. "As a general rule an appellate court will consider only such points as were raised in the trial court, and this rule precludes a party from asserting, on appeal, claims to relief not asserted or asked for in the court below." (Hennefer v. Butcher (1986) 182 Cal.App.3d 492, 505; Cinnamon Square Shopping Center v. Meadowlark Enterprises (1994) 24 Cal.App.4th 1837, 1844 disapproved on another ground by Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 698; cf. Bullock v. City and County of San Francisco (1990) 221 Cal.App.3d 1072, 1093 ["It is fundamentally unfair to fault a trial court for a reason it never had an opportunity to consider"].)
Plaintiff argues in the alternative that the court should have allowed him to question defendants about his notice to produce documents. Plaintiff argues that, "[t]he prejudice to Appellant came at the end of the trial when the trial court ruled that Appellant had not met his burden of proof."
Plaintiff admitted to the trial judge that he did not expect that the defendants would produce additional documents at trial. He just wanted to produce evidence showing why it might appear that he could not prove his case.
While cross-examination of a party should be allowed in order to ascertain the truth, trial courts are authorized to exercise their discretion to confine cross-examination within reasonable limits (Reed v. Clark (1873) 47 Cal. 194, 201), such as "to protect the witness from undue harassment or embarrassment" (Evid. Code, § 765, subd. (a)), to prevent "undue consumption of time" (Evid. Code, § 352, subd. (a)) and to avoid creating "substantial danger of undue prejudice, of confusing the issues, or of misleading the jury" (id. subd. (b).)
In this case the trial court expressed a concern about the undue consumption of time if plaintiff's counsel intended to ask each of the defendants and their wives whether he or she had any documents of the 37 kinds listed in plaintiff's notice to produce documents, and, if so, why he or she was not producing them at trial. Plaintiff had already established that John Jr. had not brought any documents to trial in response to his notice to produce because the witness believed he had already produced all documents in discovery.
It is the appellant's burden to establish that the trial court abused its discretion in excluding evidence under Evidence Code section 352. (Geffcken v. D'Andrea, supra, 137 Cal.App.4th at p. 1307.) On appeal, we review the trial court's action, not its reasoning. If there was a good reason to exclude offered evidence, we will uphold the ruling regardless of the reasons given by the trial court. (Lemer v. Boise Cascade, Inc. (1980) 107 Cal.App.3d 1, 10; Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 328-329.) We believe the court acted well within its discretion in curtailing potentially repetitious, argumentative, and time-consuming questions about plaintiff's notice to produce documents at trial. (Santos v. Santos (1963) 222 Cal.App.2d 231, 233.)*fn14 We conclude that plaintiff has identified no abuse of discretion in the trial court's exclusion of Exhibit 14 or restriction of cross-examination about it.
The judgment is affirmed. Defendants are to recover costs on appeal.
WE CONCUR: Bamattre-Manoukian, Acting P.J. McAdams, J.