Durbin v. Parinello, Inc.

Filed 4/7/06 Durbin v. Parinello, Inc. CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEALS from a judgment and orders of the Superior Court of San Diego County, Kevin A. Enright, Judge. Reversed and remanded.

I.

INTRODUCTION

Parinello, Inc. appeals from a judgment entered in favor of plaintiff Diane Durbin on Durbin's causes of action for wrongful termination, breach of contract, and breach of the implied covenant of good faith and fair dealing, and from postjudgment orders awarding Durbin attorney fees, denying its motion for a new trial, and denying its motion for judgment on the pleadings.

Durbin filed suit against Anthony Parinello and Parinello, Inc., alleging that Anthony Parinello unlawfully terminated her employment in order to avoid having to pay Durbin past-due commissions and/or in retaliation for her requests that he pay her those commissions.

After a week-long trial, the jury twice returned inconsistent special verdicts in which it determined that Parinello had not discharged Durbin, but awarded Durbin past and future economic damages and found that Parinello's conduct was a substantial factor in causing Durbin's harm. After sending the jury back to deliberate a third time, the trial court provided the jury with an amended special verdict form. The jury subsequently returned a verdict in Durbin's favor on three of her causes of action, finding this time that Parinello had discharged Durbin. The jury awarded Durbin $120,479.40 in economic damages─the same amount it had awarded in its first two verdicts─and an additional $100,000 in punitive damages. The trial court entered judgment against Anthony Parinello and Parinello, Inc. in these amounts.^[1]

Parinello, Inc. contends that the trial court erred in refusing to accept the jury's first two verdicts and ordering further deliberations. It also contends that the trial court improperly led the jury to find in Durbin's favor. In addition, Parinello, Inc. suggests that the trial court erred in allowing the jury to hear evidence regarding a consensual sexual relationship between Durbin and Parinello, and that the trial court erred in awarding Durbin a portion of her attorney fees. Finally, Parinello, Inc. contends that the punitive damages award should be set aside or that a new trial should be held as to punitive damages because the jury heard evidence regarding the net worth of both defendants before it awarded the $100,000 in punitive damages, but the judgment stands only as to defendant Parinello, Inc.

We conclude that the trial court should have declared a mistrial after the jury returned its second ambiguous verdict. Because of the problematic verdict forms, imprecise jury instructions, and the resulting confusion on the part of the jury, we cannot be confident that the verdict the jury ultimately returned reflects its actual findings. We therefore reverse and remand the case for retrial. Since we are reversing and remanding the matter for retrial, we need not consider Parinello, Inc.'s alternative arguments pertaining to the award of attorney fees and the punitive damages award. However, because the issue regarding the admissibility of evidence of the sexual relationship between Durbin and Parinello is likely to recur, we address Parinello, Inc.'s contention that this evidence should have been excluded and conclude that the trial court did not abuse its discretion by allowing Durbin to present evidence of a sexual relationship between her and Parinello.

II.

FACTUAL AND PROCEDURAL BACKGROUND

A. Factual history

Anthony Parinello founded Parinello, Inc. (the Corporation) to market a sales program he had developed entitled "Selling to VITO"^[2] and to secure paid speaking engagements for Parinello. Parinello hired Durbin in February 1994 to be his office manager and a customer services representative.

In October 1995, Parinello and Durbin began a romantic relationship. During this time Durbin began to take on more responsibility at work. She eventually became the director of marketing and chief operations officer of the Corporation. Sometime in 1997, Parinello began training Durbin to take over as head of the Corporation's sales department. Durbin earned commissions of 5 percent on sales of the "Selling to VITO" program, which were paid at the end of the year.^[3] In 1997, Durbin earned commissions in the amount of $14,335.67 and received an additional bonus of $23,000. In 1998, Parinello paid Durbin $20,000 in commissions. In May 2000, Parinello wrote a note to Durbin telling her, "You've done an outstanding job during 1999 selling inbound seminar opportunities." He paid her a 5 percent commission on more than $490,000 in sales Durbin made that year.

The parties dispute when their romantic relationship ended. Durbin contends that the consensual sexual relationship ended in December 2000. Parinello contends that the sexual relationship ended in or around mid‑1998.

Durbin received her last two commission checks, each in the amount of $10,000, in March and June 2001. Durbin asserted that at the end of 2001, Parinello still owed her an additional $9,521.34 in commissions she earned in 2000. Durbin said she asked Parinello to pay her the remaining commissions and that he failed to do so. In March 2002, Durbin again requested that Parinello pay her the commissions he owed her, but he never paid her any further commissions.

In or around March 2002, Parinello reduced Durbin's base salary by approximately 27 percent, stopped paying any portion of Durbin's health, dental, and life insurance premiums, and required her to reimburse the company for the cellular telephone she used for business. Parinello testified that in the months after September 11, 2001, the Corporation experienced a substantial reduction in business, particularly in paid speaking engagements; Parinello said that in the first half of 2002, he decided that the Corporation would no longer operate an office and that its few employees would work from home.^[4]

In June 2002, Durbin left a voicemail message for Parinello requesting that he pay her the commissions he owed her. Some time after she left the voicemail message, Durbin attempted to talk with Parinello in person about the outstanding commissions and the reductions in her salary and benefits. After Durbin inquired about the financial status of the company, Parinello stood up and said, "I'm not doing this anymore." He paused, and then said, "You're just like Nancy."^[5]

The Corporation closed its business office on August 31, 2002. The parties dispute what happened between the time Parinello told Durbin he would not "do[] this anymore" and the time the office closed. Durbin testified that she understood Parinello's statement "'I'm not doing this anymore'" to mean that Parinello was terminating her employment. She testified that Parinello told her he was "going to outsource," and that she could "stay a part of the company" by becoming an independent contractor, or she could go to work for someone else. According to Durbin, Parinello specified that her employment with the Corporation was to end effective August 31, 2002, the date on which the office was going to close.

Parinello testified that some time in 2002, he made the decision to close the Corporation's office and to have his employees work from home. Parinello said that Durbin began telling him she was interested in starting her own company to represent Parinello's products and book his speeches, and also to represent other speakers. According to Parinello, he encouraged Durbin to "go out on her own."

It is undisputed that on August 6, 2002, Parinello and Durbin signed an agreement (Service Agreement) setting forth the services Parinello would pay Durbin to provide as an independent contractor. The Service Agreement became effective August 31, 2002.

Not long after they began to work together pursuant to the Service Agreement, Durbin and Parinello became increasingly dissatisfied with each other's performance under the agreement. Durbin testified that Parinello "became very uncommunicative" with her, and that he sought to "change things that were agreed on." Parinello testified that Durbin was entering into client contracts that specified that clients were to pay her, not Parinello, and that she failed to pay him for his services from the money she received from clients. Parinello ultimately sought to terminate the Service Agreement on January 8, 2003. He told Durbin to cease all sales activity under the agreement, and he stopped sending Durbin referrals that they had agreed would be transferred to her pursuant to the terms of the Service Agreement.

B. Procedural history

On May 30, 2003, Durbin filed suit against Parinello and the Corporation for (1) wrongful discharge in violation of public policy, (2) breach of express promise not to terminate except for cause, (3) breach of implied-in-fact promise not to terminate except for cause, (4) breach of the implied covenant of good faith and fair dealing, (5) breach of contract, (6) breach of fiduciary duty, (7) intentional infliction of emotional distress, and (8) negligent infliction of emotional distress. The complaint requested "common counts" for the reasonable value of services rendered, specific performance on an alleged contract granting Durbin 20 percent equity in the Corporation, declaratory relief, an accounting, compensatory and punitive damages, interest, attorney fees, and the costs of suit.

After a week of testimony, the trial concluded on June 15, 2004. The special verdict form was organized into six sections: A. Wrongful discharge in violation of public policy; B. Breach of Employment Contract--Unspecified Term; C. Employment--Breach of the Implied Covenant of Good Faith and Fair Dealing; D. Infliction of Emotional Distress; E. Fiduciary Duty; and F. Damages.^[6] Under each section heading, the jury was asked to answer a series of numbered questions pertaining to the elements of each cause of action. Question 1 on the verdict form asked, "Was Diane Durbin discharged?" The verdict form instructed the jury to answer Question 2 if the answer to Question 1 was "yes," but to skip all of the remaining questions under sections A (wrongful discharge), B (breach of contract), and C (breach of implied covenant of good faith), and to answer Question 11, the first question under section D (infliction of emotional distress), if the answer to Question 1 was "no."

Questions 11, 12, 13, and 14, all under section D, related to Durbin's claim of intentional and/or negligent infliction of emotional distress. Questions 15 and 16, under section E, asked the jury to determine whether Parinello had given Durbin 20 percent equity in the Corporation and whether he had breached his fiduciary duty with regard to that equity. An instruction contained in the verdict form following Question 15, but before Question 16, stated, "If your answer to question 15 is yes, then answer question 16. If you answered no, skip question 16 and answer question 17." Immediately following Question 16 at the bottom of page 4 of the verdict form was another instruction to the jury that stated, "If your answer to any or all of the following questions is yes: 2, 3, 7, 10, 14 and/or 16, answer question 17. If you answered no to each of those questions, stop here, answer no further questions, and have the presiding juror sign and date this form."

Section F, which began on page 5 of the form, included Questions 17, 18, 19, and 20. Question 17 asked, "Was Anthony Parinello's conduct a substantial factor in causing Diane Durbin's harm?" The jury was instructed that if it answered "yes" to Question 17, it was to answer Question 18, which asked, "What are Diane Durbin's economic damages?" After an instruction to answer Question 19 only if it had answered "yes" to any of the questions establishing tort liability (i.e., Questions 2, 3, 14 and/or 16), the jury was asked to come up with dollar amounts for Durbin's noneconomic damages. Question 20 asked whether Parinello had "engage[d] in the conduct with malice or oppression."

1. First verdict

The jury returned with a verdict on June 17, 2004. On the completed verdict form, the jury indicated that Durbin had not been discharged (Question 1), Parinello's conduct had not been outrageous (Question 11), Parinello's conduct was not negligent (Question 13), and Durbin had not been granted 20 percent equity in the Corporation (Question 15).

The jury also determined that Parinello's conduct was a substantial factor in causing Durbin's harm (Question 17), and awarded her damages in the amount of $53,029.40 for past economic losses, and $59,950.00 for future economic losses (Question 18). The jury further concluded that Parinello had acted with malice or oppression (Question 20).

After silently reading the verdict form, the court said,

"Okay. Let me--and just so counsel is aware, Mr. Jacobs [the foreperson], looking at the verdict form, I have a question just of you, not of any one [sic] else right now, but just as to you the foreperson. What I am seeing with regard to this is answers [sic] that may be inconsistent. And I want to make sure that I am understanding the situation. And just answer 'yes' or 'no' for me right now in terms of the answer--in terms of the question that I am going to ask you. [¶] Did the jury, as a whole, find a basis of liability? In other words, find against the defendant on any of the causes of action?"

The foreperson replied that the jury had found against the defendant on at least one of the causes of action.

The court then indicated that it would like to discuss the issue with counsel, outside the presence of the jury. During the discussion with counsel, the court stated, "I have never been confronted with this. But my suggestion would be to tell them flat out that your answers to the first 16 questions, those that you have answered[,] would indicate that it's a defense verdict, finding of no liability. Therefore, there is no reason to answer question 17 through 20, or any of those questions. On the other hand, if you found against the defendant and for the plaintiff on any one of these theories, then the answers to 17 through 20 might apply." In response, counsel for the defendants, Michael Cressey, argued that the verdict was not in fact inconsistent, but rather, that it was a defense verdict because the jury had made no findings of liability in its answers to the questions in sections A through E of the special verdict form. Counsel for Durbin, Phillip Burkhardt, contended that the verdict form and the foreperson's answer to the court's question established that the first verdict was in fact inconsistent.

After much discussion and a suggestion by Attorney Cressey that the court poll the jury, the court said, "The only thing about polling, and I would just say this, I look at this verdict form and I think it's inconsistent. [¶] I have my own duty. And in light of an inconsistent verdict, I think I have a duty to send them back to correct the error. [¶] Now I don't need to instruct them on what the error is or it's not because I recognize there is a disagreement as to what the error is. But I think that it's inconsistent, and I will tell them I think it's inconsistent and go back in the jury room."

When the jury came back into the courtroom, the trial court informed them that their verdict was inconsistent. The court explained that sections A through E of the verdict form represented different theories of liability, but that section F, the damages section, did not represent a theory of liability.^[7] After another sidebar conference with counsel, and at the behest of Attorney Cressey, the court further instructed the jury that section F was "something that the jury fills out only if there was a finding on any or all of the theories of liability which are contained within sections A through E of the verdict form." The court then asked the jury to continue its deliberations.

2. Second verdict

After the jury resumed its deliberations, counsel for Parinello indicated to the court that the verdict form may have inadvertently instructed the jury to answer Question 17, the question regarding damage amounts, whether or not it had found liability. Defense counsel requested that the verdict form be revised.

Before the court could decide how to handle this issue, the jury returned with a second verdict, having used the same special verdict form it had completed in rendering its first verdict. In its second verdict, the jury answered in the affirmative the questions regarding whether Parinello's conduct had been outrageous and intentional, but indicated that Parinello had not been negligent and that Durbin had not suffered severe emotional distress. The jury did not change the damage award, nor did it change its finding that Parinello's conduct was a substantial factor in causing Durbin's harm or its finding of malice or oppression. The jury again found that Durbin had not been discharged.^[8]

Noting that the second verdict was inconsistent, the court discussed the issue with counsel, outside the presence of the jury. Attorney Burkhardt moved for a mistrial, but Attorney Cressey suggested that the special verdict form be amended to clarify under what circumstances damages were to be awarded, stating, "We have a completely fixable problem here." The court said, "If anyone has a better idea, tell me. So what I am going to do is I am going to read to them out loud, I am going to add 15 to [the instruction as to when to answer question 17], and I am going to point out that I am adding 15 to it. And I will refer to it as a preface to 17, so consider this as part of the question 17." The court denied the motion for mistrial without prejudice to either party renewing the motion.

3. Third verdict

Before the trial court sent the jury to deliberate for a third time, the court informed the jury that it was going to give them an additional instruction, relating to the directions on the special verdict form following the answer to Question 16. The court then orally instructed the jury to consider these directions as a preface to Question 17, and told them that the verdict form would read, "If your answer to any or all of the following questions is yes, 2, 3, 7, 10, 14, 15 and/or 16, answer question 17. If you answered 'no' to each of those questions, stop here, answer no further questions and have the presiding juror sign and date this form." The court told the jury to "consider that [direction] again as part of question 17."

The jury returned to deliberate with the same special verdict form, but with an additional page inserted that set forth the revised version of Question 17. The new version of Question 17 included the language that had previously appeared at the bottom of page 4 of the special verdict form, immediately following Question 16, rather than on the same page as Question 17.^[9]

After further deliberations, the jury sent a note to the court (jury note D). The note read in part, "The implication of the new instruction is that [Diane Durbin] can only be awarded damages, if & only if she was discharged--that is not our reading of the special verdict." After discussing the note with counsel, the court decided to give the jury an amended special verdict form. The trial court instructed the jury that the court was going to provide the jury with an amended special verdict to replace the special verdict form that the jury foreperson had already signed and dated. The court indicated that the jury could continue to use the original special verdict form as a reference until they received an amended special verdict form. The court told the jury that it was making a number of changes to the original form in an attempt to prevent the jury from rendering another inconsistent verdict.^[10] Plaintiff's counsel renewed his request for a mistrial, which the court denied.

Later in the day the jury sent the court another note (jury note E). In this note, the jury asked, "If [Diane Durbin] signed the Service Agreement under false pretenses or undue influence, does it have the same force or implication as if she did it free and unencumbered; i.e., is it legally binding?" While conferring with counsel, the Court suggested that it would respond to the jury's question by saying, "The phrases, 'false pretenses,' . . . and 'undue influence' have not been defined by the Court and the Court is not now in a position to define those terms. [¶] With regard to your question 'Is it legally binding . . . .,' that question is not relevant to the issues before you. In other words, whether or not the Service Agreement is legally binding is not a question for you to decide." Counsel argued for different variations of the proposed response, and the court seemed to believe that it had adjusted the last sentence in response to counsels' suggestions. However, the transcript indicates that the court did not make any change to the last sentence. The final oral and/or written response that was given to the jury does not appear in the record on appeal.

After receiving this instruction, the jury returned to deliberate again. Approximately four hours later, the jury returned with a third verdict. This verdict differed from the second verdict in a number of ways. The jury changed its answers regarding the infliction of emotional distress theory of liability, responding "no" to Question 11, which asked whether Parinello's conduct had been outrageous. The jury left its response to Question 12 blank, in accordance with the instructions after Question 11.^[11] In addition, the jury changed the answers to Questions 1, 2, and 3 (wrongful discharge questions), 4, 5, and 7 (breach of employment contract questions), and 9 and 10 (breach of implied covenant of good faith questions) from "no" to "yes."

In the third verdict, the jury awarded Durbin the same amounts for past economic damages ($53,029.40) and future economic damages ($59,950.00) that it had awarded in both its first and second verdicts. The jury changed its response to question 19, awarding Durbin $7,500.00 in past noneconomic damages. The jury again concluded that Parinello had acted with malice or oppression.

The jury awarded Durbin an additional $100,000.00 in the punitive damages phase of the trial.

4. Post-trial motions

On September 10, 2004, the court entered a judgment on special verdict against both Parinello and the Corporation in the amount of $220,479.40. Defendants filed a motion for new trial and a motion for judgment notwithstanding the verdict, both of which Durbin opposed. The court denied the motion for a new trial and denied the motion for judgment notwithstanding the verdict as to Parinello, Inc., but granted the motion for judgment notwithstanding the verdict as to Parinello, the individual defendant.^[12]

On November 10, 2004, Durbin moved for an award of reasonable attorney fees. The Corporation and Parinello opposed the motion. After requesting supplemental briefing from the parties regarding apportionment of the requested $111,200 in attorney fees, the court awarded Durbin attorney fees in the amount of $66,721.20 on January 21, 2005.

On December 13, 2004, the Corporation filed a notice of appeal from the judgment on special verdict, the order denying its motion for a new trial, and the order denying its motion for judgment notwithstanding the verdict.

On February 8, 2005, the Corporation filed a notice of appeal from the order granting Durbin's request for attorney fees.

III.

DISCUSSION

A. The first verdict was ambiguous and inconsistent

The Corporation contends that the trial court erred in ordering further deliberations after the jury returned its first verdict, arguing that the first verdict was not in fact inconsistent. The Corporation also asserts that the court impermissibly relied on the jury foreperson's statement that the jury had found against the defendants^[13] as to liability, in disregarding the jury's first two verdicts.

"A court's instruction to the jury that a verdict is inconsistent and [that] they are to deliberate further is reviewed for an abuse of discretion. [Citation.]" (Mendoza v. Club Car, Inc. (2000) 81 Cal.App.4th 287, 301 (Mendoza).) Code of Civil Procedure section 619 provides: "When the verdict is announced, if it is informal or insufficient, in not covering the issue submitted, it may be corrected by the jury under the advice of the Court, or the jury may be again sent out." "When a jury renders an informal or insufficient verdict not covering the issue submitted, the trial court may direct the jury to deliberate further, to correct any ambiguity. [Citations.]" (Mizel v. City of Santa Monica (2001) 93 Cal.App.4th 1059, 1070-1071; Mendoza, supra, 81 Cal.App.4th at p. 302.)

"The terms 'informal' and 'insufficient' have been broadly defined in cases interpreting [Code of Civil Procedure] section 619." (Mendoza, supra, 81 Cal.App.4th at p. 302.) "'Informal' is defined as 'defective in form; not in the usual form or manner; contrary to custom or prescribed rule.' 'Insufficient' is defined as 'inadequate for some need, purpose or use.'" (Crowe v. Sacks (1955) 44 Cal.2d 590, 596.) A number of courts have concluded that Code of Civil Procedure section 619 applies to inconsistent or ambiguous verdicts. (See, e.g. Mendoza, supra, 81 Cal.App.4th at p. 302; Johnson v. Marquis (1949) 93 Cal.App.2d 341, 355; Sparks v. Berntsen (1942) 19 Cal.2d 308, 310-313.)

"[C]ourts are given wide latitude in deciding whether a verdict is ambiguous or inconsistent so as to come within section 619. [Citation.]" (Mendoza, supra, 81 Cal.App.4th at p. 302.) "'"[I]f the trial judge has any doubts on the subject, he may send the jury out, under proper instructions, to correct the informal or insufficient verdict." [Citations.]'" (Ibid.) "Where the discrepancy is identified before the jury is discharged, the court retains control of the jury and may . . . use its power to correct the verdict before it becomes final. [Citation.]" (Id. at p. 303.) In fact, the court has an affirmative duty to attempt to remedy such a situation. (Ibid.; see also Mizel, supra, 93 Cal.App.4th at p. 1072 ["If the jury renders an inconsistent or ambiguous verdict, it is prudent, economical, and judicious to provide that jury with an opportunity to correct those inconsistencies before it is discharged."].) This is because "[i]n a trial, the court, the parties and the jury have invested time and energy towards the goal of providing the parties with a fair trial and a result based upon the jury's accurate understanding of the law." (Mizel, supra, 93 Cal.App.4th at p. 1072.)

The Corporation contends that the first and second verdicts were not inconsistent because the jury answered the question regarding whether Durbin had been discharged in its favor, and thus, the findings of causation and the assessment of damages were irrelevant.

In other cases in which juries have answered special verdict questions in a manner that would indicate no finding of liability, but at the same time apportioned fault and/or awarded damages to the plaintiff, courts have determined that the verdicts were inconsistent. For instance, Mizel, supra, 93 Cal.App.4th at page 1071, involved a plaintiff who slipped and fell on a unidirectional access ramp in front of a beach-front hotel. The plaintiff sued both the City of Santa Monica and the hotel. In special verdicts, the jury found true many of the elements necessary to establish premises liability against the defendants, including that the unidirectional ramp constituted a dangerous condition. At the same time, the jury concluded that the dangerous condition had not created a foreseeable risk of Mizel's injury. (Id. at pp. 1068-1069.) Thus, the jury's ultimate finding on the issue of liability was in favor of the defendants. However, in response to a question asking the jury to apportion fault among the parties, the jury determined that the hotel was 30 percent liable, the City of Santa Monica was 65 percent liable, and Mizel was 5 percent liable for the damages. (Id. at p. 1065.) A finding in favor of the defendant on the issue of liability should have resulted in an apportionment of zero fault, but the jury apparently did not understand that it had found the defendants not liable. The jury also determined that Mizel had suffered economic damages of $856,712 and noneconomic damages of $3 million. (Ibid.)

The trial court in Mizel explained what it perceived as the inconsistency in the verdict, stating,

"'[I]f you look at the way in which you answered the last question, you broke down your various percentages of allocation, and you assigned an allocation of fault to the City of Santa Monica, which is inconsistent with your answer to question number 5. Because in question number 5 you found by vote of nine to three, that the dangerous condition created--did not create a reasonable [sic] foreseeable risk of the kind of injury which arose in this action . . . . [¶] So this is my request. I want you to do two things: [¶] First, . . . I want the jury to go back to the jury room and discuss this issue further. If the jury cannot discuss the matter further without asking a question of the court, explain to me what it is that you told me I did wrong, then frame the question and send the question to me through the bailiff. . . . [¶] If, on the other hand, as you go through the jury verdict form you feel that privately amongst yourselves, you can arrive at an adjustment to it which reflects your true . . . analysis and vote, then adjust the verdict form, change the numbers to make whatever changes you think have to be made in order to bring it into alignment with whatever your thinking is, and then return the verdict to the bailiff.'" (Mizel, supra, 93 Cal.App.4th at pp. 1069-1070.)

After further deliberations, the jury returned with a verdict in which it found that the ramp had created a reasonably foreseeable risk, and then responded to two additional questions it had previously left unanswered, finding that the dangerous condition was created by a negligent act or omission on the part of the defendant's employee and that the defendant had notice of the dangerous condition in sufficient time to have taken corrective measures. (Mizel, supra, 93 Cal.App.4th at p. 1070.) The appellate court agreed with the trial court's conclusion that the jury had originally returned ambiguous and inconsistent verdicts, stating, "[S]ome responses indicated the curb was a dangerous condition that caused Mizel's injuries amounting to almost $4 million, but the response to question No. 5 was that the dangerous curb had not created a reasonably foreseeable risk of the kind of injury suffered by Mizel." (Id. at p. 1071.)

Similarly, in Mendoza, supra, 81 Cal.App.4th at p. 302, the appellate court upheld the trial court's decision to order the jury to deliberate further after concluding that it had rendered an inconsistent verdict. The plaintiff was injured while trying to retrieve a golf cart that had begun to roll down a hill, as a result of a faulty parking break. (Id. at pp. 293-294.) Mendoza sued the golf cart's manufacturer for strict products liability, negligence and breach of warranty.^[14] Only the claim for strict products liability proceeded to trial. (Id. at p. 294.) The jury returned a special verdict in which it determined that there was a design defect that existed when the golf cart left the manufacturer's possession and that the defect was the cause of Mendoza's harm. However, the jury also concluded that Mendoza's injury was not caused by a use of the product that was reasonably foreseeable. (Id. at pp. 298-299.) Nevertheless, the jury proceeded to assign 40 percent of the fault for Mendoza's injury to the manufacturer, 44 percent of the fault to the golf course, and 16 percent of the fault to Mendoza. (Id. at p. 299.)

The manufacturer requested that the court instruct the jury "to put in 0 percent for [the manufacturer] in question No. 10 based upon its 'no' answer to question No. 7 [regarding liability]." (Mendoza, supra, 81 Cal.App.4th at p. 299.) Instead, the court instructed the jury regarding the inconsistency, saying,

"[I]n the view of the court, your answers to question number seven and 10 present an inconsistency. . . . You will notice in question number seven your answer was no. That was reflected with 12 no votes. By answering no to question number seven, that eliminated liability for Club Car. So when you get to question number 10 then, Club Car should not be included in the breakdown of the percentages. So what I am going to ask you to do is reflect on seven and 10 and make any appropriate changes. [¶] Does the foreperson understand what I am talking about?" (Ibid.)

The foreperson responded, "I understand. Our interpretation of the question was different. Yes." (Id. at p. 300, italics omitted.) The court then told the jury that it was not asking the jury to change one question in favor of the other, but that it was the jury's responsibility to decide how to answer the questions. (Ibid.) Eleven minutes after returning to deliberate, the jury returned with a new verdict in which it changed the answer to the question regarding liability from "no" to "yes." (Ibid.)

The trial court's conclusion that the jury's first verdict in the Mendoza case was inconsistent was upheld on appeal. (Mendoza, supra, 81 Cal.App.4th at p. 303.) According to the appellate court, "The findings in [the defendant's] favor on the reasonably foreseeable use element presented in question No. 7 cannot be reconciled with a finding in question No. 10 that allocated a percentage of fault to [defendant] for Mendoza's injuries. If the jury had understood the meaning of question No. 7, and that a 'no' vote would relieve [defendant] of liability, they would not have proceeded on to assess liability against it." (Ibid.)

Here, the jury appeared to believe that it had found liability on the part of the defendants, despite the fact that it had indicated otherwise on the special verdict form in its first verdict. The jury answered all of the questions pertaining to liability in the negative, yet went on to assess damages against defendants and to declare that Parinello's conduct had caused Durbin's damages. It was not possible for the trial court to determine exactly what the jury intended, based on the verdict form. The foreperson's response to the trial court's inquiry indicated that the jury had not understood the special verdict form and that it had completed the form in a manner that was inconsistent with its intentions. This is not surprising, because the form was misleading and ambiguous in many respects.^[15]

The Corporation contends that the trial court should not have relied on the foreperson's answer to the court's question regarding whether the jury had found any basis for liability against defendants. However, the foreperson's statement was merely further evidence corroborating what the court already believed to be true, i.e., that the verdict was inconsistent and did not reflect the consensus of the jury. In Mendoza, the appellate court relied on a statement by the jury foreperson to establish that the trial court had correctly concluded that the jury had misunderstood the import of the question precluding liability. (Mendoza, supra, 81 Cal.App.4th at p. 304.) Similarly, here the jury foreperson's response to the trial court's inquiry merely supported the court's conclusion that the first verdict was inconsistent.^[16]

B. The trial court should not have sent the jury back to deliberate further after it returned a second inconsistent verdict.

In this case, unlike in Mendoza and Mizel, the court sent the jury to deliberate a third time after the jury returned a second inconsistent verdict. The second verdict suffered from the same ambiguities as the first, most likely because the trial court's new instruction did little to clear up the problems with the special verdict form. In the second verdict, the jury again ultimately answered the questions pertaining to liability in the negative, but nevertheless indicated that Parinello had caused Durbin's injuries and awarded Durbin damages.

According to the Corporation, the jury changed some "no" answers in the first verdict to "yes" in the second verdict, which suggests that the jury was trying to come up with a verdict that would appease the court. The Corporation asserts that the trial court should have instructed the jury "on the problem with the verdict form syntax error" rather than "simply sen[d] the jury back . . . ."^[17] Indeed, the additional instructions the court provided before sending the jury to deliberate further after it returned its first verdict did little to clarify what was wrong with the first verdict. The court generally described the verdict form and pointed out that sections A through E were "theories of liability" and that section F, the damages section, was not a theory of liability. Pursuant to Attorney Cressey's suggestion, the court clarified that the jury was to fill out section F, the damages section, only if the jury made findings in favor of the plaintiff on any or all of the theories of liability contained in sections A through E of the form. However, a jury of laypersons may not have understood what finding for the plaintiff on a "theory of liability" entailed. Ultimately, the court sent the jury to resume its deliberations with virtually the same instructions that had resulted in the inconsistent verdict.

In its second verdict, the jury apparently attempted to correct the inconsistency in its original verdict by changing some of its answers. Although it did find in Durbin's favor on some of the questions regarding liability, the jury's answers still precluded a finding of liability on any of the theories in the verdict form. Nevertheless, the trial court sent the jury to deliberate yet again, with the same verdict form it had already filled out twice, rather than with more carefully considered instructions or a corrected verdict form.^[18] The problem with proceeding in this manner is that the jury was clearly already confused; sending them back to deliberate further did little if anything to help clarify the situation for them. Although the trial court did not direct the jury to find in favor of the plaintiff, sending the jury back a third time may have communicated to the jurors that there was a correct way to answer the questions on the verdict form, and that they would have to continue deliberating until they got it "right." Under these circumstances, one cannot have confidence in the verdict the jury ultimately returned.

When, during its deliberations between the second and third verdicts, the jury sent the court note D, it became clear that the jury had misunderstood the verdict form from the beginning. Note D stated:

"We would like further clarification. Per our instructions

"A1--'If no--go to Q 11'

"A11--'If answer is yes, answer 12'

"A12--'If answer is yes--go to 14'

"A14--'Whether yes or no, answer 15'

"A15--'If you answer no, skip 16 & answer 17' [an arrow is drawn to the word 'damages' written underneath '17']"

"New instructions do not affect any of the above[.] [¶] Please confirm the above instructions are correct. The implication of the new instruction is that [Diane Durbin] can only be awarded damages, if & only if she was discharged--that is not our reading of the special verdict."

The jury's statement clearly indicates that it had not previously understood the verdict form to require that it must find that Durbin had been discharged in order to find liability. Rather than respond directly to jury note D, after discussions with counsel the trial court decided to provide the jury with an amended special verdict form, in which a variety of errors that appeared in the original form were corrected.^[19] However, by this point in time, the problems with the verdict form had so infected the jury's deliberations that it was, in our view, impractical to attempt to cure the deficiencies.

The fact that the jury changed many of its answers when it rendered its third verdict suggests that this verdict may reflect the jury's "guesses" as to what answers would be acceptable, rather than accurately reflecting its actual findings. After the jury returned a second inconsistent verdict, the trial court should have concluded that a mistrial was in order.

This case demonstrates the necessity for the trial court and counsel to give full consideration to a special verdict form prior to submitting the form to the jury and asking it to make findings. If the attorneys and the court had thoroughly examined the special verdict form after the jury returned its first inconsistent verdict, they could have discovered the flaws that were instead found only after the jury had returned a second inconsistent verdict. Under these particular circumstances, we cannot be confident that the final verdict rendered by the jury represents its actual findings. We therefore reverse the judgment and remand the case for retrial.

C. The Corporation's alternative arguments

The Corporation raises three alternative arguments on appeal. The Corporation challenges (1) the court's award of punitive damages on the ground that the award was based on evidence of the net worth of both defendants, but Parinello was later dismissed from the case pursuant to a motion for judgment notwithstanding the verdict; (2) the court's postjudgment award of attorney fees on the basis that section 218.5 of the Labor Code, which allows for an award of attorney fees to the prevailing party in an action for "unpaid wages," does not provide statutory authority for an award of fees in cases like this one; and (3) the trial court's admission of evidence that Durbin and Parinello engaged in a consensual sexual relationship during the time Parinello employed Durbin, on the ground that this evidence was more prejudicial than probative.

The resolution of these issues is not necessary for a final determination of this appeal, since we are reversing and remanding for retrial. (See Code Civ. Proc., § 43; see also Giles v. Horn (2001) 100 Cal.App.4th [order for attorney fees falls with reversal of judgment on which it is based].) However, because a question regarding the admission of evidence of a sexual relationship between Durbin and Parinello is likely to recur on remand, we address this contention in order to provide guidance to the parties and the trial court in the event of a retrial. (See, e.g., People v. Neely (1993) 6 Cal.4th 877, 896; People v. Frierson (1979) 25 Cal.3d 142, 167; People v. Gainer (1977) 19 Cal.3d 835, 857; § 43.)

The Corporation contends that the trial court erred in allowing the jury to hear evidence that Durbin and Parinello engaged in a consensual sexual relationship during the time Parinello employed Durbin. Although it is not entirely clear, the Corporation appears to argue that evidence of the sexual relationship between Durbin and Parinello should not have been admitted because it was irrelevant and/or prejudicial to the defendant.

It is well established in California that "a trial court's ruling on the admissibility of evidence generally is reviewed for abuse of discretion." (People v. Griffin (2004) 33 Cal.4th 536, 587.) Under the Evidence Code, "all relevant evidence is admissible." (Evid. Code § 351.) Relevant evidence is defined as "evidence, including evidence relevant to the credibility of a witness or hearsay declarant, having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action." (Evid. Code, § 210.) However, a trial court has discretion to exclude evidence if it determines that the probative value of the evidence is substantially outweighed by the probability that admitting it will "necessitate undue consumption of time" or will create "substantial danger" of undue prejudice, confusion or misleading the jury. (Evid. Code, § 351.)

The trial court observed that the credibility of the witnesses was particularly important in this case. Parinello had previously denied having had a sexual relationship with Durbin in his verified responses to requests for admissions and in responses to interrogatories. Evidence to the contrary reflects on Parinello's credibility. Additionally, the trial court determined that evidence of the sexual relationship was relevant to the substantive issues in the case because "[i]f the sexual relationship is over, [Parinello] may not be as interested in paying commissions as he once was." It is not unreasonable to believe that the nature of the personal relationship between Durbin and Parinello may have impacted the nature of their business relationship. Therefore, the trial court did not abuse its discretion in determining that evidence of their sexual relationship was relevant.

To the extent the Corporation contends that admitting this evidence was improper because the evidence was unduly prejudicial to the defendants, we reject this contention. The trial court is given great discretion in determining the admissibility of evidence. Here, the trial court considered the potential prejudice to the defendants and concluded that the probative value of evidence regarding the sexual relationship, which included evidence regarding the parties' testimony during their depositions, was not outweighed by any potential prejudice. Additionally, some of the prejudice from evidence of the sexual relationship would work to the detriment of both parties, since both Durbin and Parinello entered into the relationship while they were married to other people. The court explained its views on the evidentiary question as follows:

"I think the credibility of the plaintiff and the credibility of the defendant are going to be the key as to how this jury decides the case in large part. And so the--to preclude that [evidence] and to not give the jury the context of the relationship or everything regarding the relationship I think would be inappropriate for the court to rule. [¶] Now I do know that the technical objection is [regarding Evidence Code section] 352. But my feeling is the situation is--I think the probity [sic] is high because it does go to credibility of both plaintiff and defendant as to what actions were taken or not taken or what was said or what was not said. [¶] I think the context of the relationship and the intimacy involved is something that lends the probity [sic] of the personal relationship a high degree of--something that the jury will want to scrutinize. So I think the probity [sic] is high. [¶] The prejudicial aspect I don't think arises [sic] to an undue level. And in any event, I don't think that the probity [sic] is substantially outweighed by the danger of undue prejudice. [¶] The prejudice that there would be is that both parties were married at the time to other people, and--but I think that--and there is, from the defense point of view, the danger of the jury deciding this case based on the sexual relationship instead of on the employment relationship. [¶] But I think both sides are going to have a chance to do the direct and cross of their own client and the opposing party respectively, and I think that you can both clearly at the end of the day argue that the end of the case, more specifically argue why probity [sic] is high versus why the probity [sic] is low. And I think that under all those circumstances I don't think it's a situation where the prejudice arises [sic] to an undue level."

The trial court did not abuse its discretion in determining that the probative value of the evidence pertaining to a consensual sexual relationship between Parinello and Durbin outweighed any potential prejudice to defendants as a result of its admission.

IV.

DISPOSITION

The judgment of the trial court as to defendant Parinello, Inc. is reversed and the case is remanded for retrial, or other proceedings consistent with this opinion. The order awarding attorney fees is reversed. Parties to bear their own costs on appeal.

AARON, J.

WE CONCUR:

NARES, Acting P. J.

HALLER, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Apartment Manager Lawyers.

^[1] The trial court subsequently granted Anthony Parinello's motion for judgment notwithstanding the verdict, leaving only Parinello, Inc. with a judgment against it.

^[2] "VITO" stands for "Very Important Top Officer."

^[3] Parinello initially testified that he paid Durbin a 5 percent commission on sales only in the 60 days prior to the time her employment ended.

^[4] Durbin presented evidence that Parinello's income, as reported to the IRS, increased from $93,000 in 2001 to more than $128,000 in 2002.

^[5] Nancy is Parinello's ex-wife.

^[6] A copy of the first special verdict form is attached to this opinion as Exhibit A.

^[7] The question regarding causation, Question 17, was placed within the section entitled "Damages" on page 5 of the special verdict form.

^[8] See Exhibit A.

^[9] See Exhibit A, unnumbered page between pages 3 and 4.

^[10] A copy of the second verdict form is attached to this opinion as Exhibit B.

^[11] In its second verdict, the jury had answered "yes" to Questions 11 and 12.

^[12] The court granted Parinello's motion for judgment notwithstanding the verdict "without prejudice to Plaintiff to establish whether any judgment in Plaintiff's favor should be entered against Mr. Parinello individually."

^[13] In one of many instances in which those involved in the trial in this case failed to distinguish between the two named defendants, the court actually asked whether the jury had found against the defendant on any of the causes of action.

^[14] It appears the golf course was also named as a defendant, but the appellate court's decision does not provide details regarding the claims against it. (See Mendoza, supra, 81 Cal.App.4th at p. 298.)

^[15] For instance, the instruction after Question 15 erroneously directed the jury to skip Question 16 and to answer Question 17. Because the instruction that was intended to prevent the jury from answering Questions 17 (causation), 18 (economic damages), 19 (noneconomic damages), and 20 (malice) was placed below Question 16 at the bottom of the page, and not at the top of the next page just before Question 17, it is likely that the jury simply missed that instruction and, pursuant to the instruction after Question 15, went on to answer Question 17 and the other questions under the "Damages" section.

In addition, the limiting instructions associated with Questions 17-20 were ambiguous. For instance, the limiting instruction for Question 17 read: "If your answer to any or all of the following question is yes: 2, 3, 7, 10, 14, and/or 16, answer question 17. If you answered no to each of those questions, stop here, answer no further questions, and have the presiding juror sign and date this form." The jury left blank a number of the answers to the referenced questions because other instructions directed the jury to skip those questions as a result of its answers elsewhere on the form. The questions were therefore not answered with a "yes" or "no"─a circumstance not accounted for by the form's limiting instruction for Question 17. A literal reading of the instruction would require that the jury have answered those questions "no" in order to skip Question 17 and the questions following it, in the damages section.

^[16] This case is distinguishable from Mendoza and Mizel in that the juries in those cases answered a number of the questions pertaining to liability in the plaintiffs' favor, while here, in its first verdict, the jury found in Durbin's favor only on the question of causation, and not on any of the individual theories of liability. However, the verdict was ambiguous, since despite having found no liability, the jury found that Parinello had caused Durbin harm and awarded her damages. Under these circumstances, in view of the "wide latitude" the trial court is accorded to determine whether a verdi