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Sal J. Cardinalli v. John T. Cardinalli

December 21, 2010


(Monterey County Super. Ct. No. M71906)

The opinion of the court was delivered by: Duffy, J.

Cardinalli v. Cardinalli



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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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.

I. Pleadings

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, ยง 310, subd. (b)) to be resolved by the rules applicable to permissive ...

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