Frankston v. Glenn

Filed 3/19/07 Frankston v. Glenn CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Alexander H. Williams, III, Judge. Affirmed.

Gambrell & Stolz and Joshua Tropper for Plaintiff and Appellant.

Law Office of Henry N. Jannol and Paul H. Levine; Greines, Martin, Stein & Richland, Irving H. Greines and Marc J. Poster for Defendants and Respondents.

introduction

Plaintiff Michael J. Frankston appeals from a judgment in favor of defendants Patrick K. Glenn, Neal Kaufman, Cipora Kurtzman, Harry Kurtzman, and Arthur Schwartz. The judgment was entered by the trial court after the Court of Appeal (Division Seven of the Second Appellate District) filed an unpublished opinion reversing a money judgment in favor of Frankston. In the current appeal, we review the trial courts order denying Frankstons motion for a new trial, in which Frankston contended that newly discovered evidence existed which was not considered in the prior appeal and warranted a new trial. We conclude that Frankstons motion for a new trial, and indeed this appeal, are merely efforts to revisit the issues already determined in the prior appeal. The law of the case doctrine forecloses Frankston from obtaining such reconsideration. Accordingly, we affirm the judgment entered by the trial court.

factual and procedural background

A. Factual Background Underlying Frankstons Lawsuit

The following factual background is taken from the unpublished opinion (Sept. 22, 2003, B145777) filed in the prior appeal.[1]

Frankston and the defendants each owned about 100,000 shares of restricted stock in Innovative Information Systems (IIS). In early 1987, Kurtzman told Frankston and the other defendants about Anchor Growth (Anchor), a shell company, and its planned merger with IISs parent company. The defendants and Frankston agreed to form a partnership to invest in the pre-merger stock of Anchor, to sell it when its value increased after Anchors merger with IISs parent company, and to lend the profits from the resale of the stock to the new company formed by the merger (which they would control). The new company would repay the partnership when the new company had the means to do so. Before the merger, Anchor had approximately 800,000 freely-traded, unrestricted shares. Frankston purchased 45,000 freely traded shares of Anchor stock, and the other defendants purchased over 655,000 shares (collectively, the partnership stock). The partners agreed to divide equally the profits resulting from the partnership.

In 1987, Auras merger with IISs parent was completed and the new company, Aura Systems, Inc. (Aura), was formed. All of the pre-merger IIS and Anchor stock became Aura stock. Frankston and the defendants began selling their partnership stock and lending much of the profits to Aura.

In 1988, Aura arranged a private placement of four million new shares to a group of investors. The placement was designed to raise money for the company in order to repay loans and generate operating capital. Frankston understood through the private placement that Aura would issue 240,000 shares of new restricted Aura stock, and repay a large portion of the partnership loans. Each partner would receive 40,000 shares of the new restricted Aura stock (the Partnership Debt Shares).

By the fall of 1988, Frankston became dissatisfied with the defendants and the manner in which they were running Aura; he considered them dishonest. At the end of October 1988, Frankston made his last visit to Auras Los Angeles headquarters.

In November 1988, Kurtzman gave Frankston a document purporting to account for and summarize the various non-partnership and partnership transactions. According to that document, approximately 19,000 shares of partnership stock remained unsold as of November 1, 1988, of which Frankston held 15,000 shares (which he had already begun selling off), and the other 4,000 shares were held by defendant Schwartz. The document also showed the partners were to each receive 40,000 Partnership Debt Shares, and were also to receive a cash distribution of approximately $27,000 each. At that time, Frankston also received a check for approximately $28,990 as partial repayment for other loans he made to Aura.

In December 1988, Frankston continued to sell his remaining shares of partnership stock, but he did not loan the proceeds from the sale to Aura, nor divide the proceeds with the defendants. Frankston retained the monies from the sale while he waited for a final accounting; he intended to keep the monies as an offset against the amounts owed him by the partnership. At that time, Frankston was expecting to receive his portion of the Partnership Debt Shares and thus disclosed his ownership of the shares on his SEC schedule 13-D filing.

In January 1989, Frankston resigned from Auras board and washed his hands of the business side of the company. In February 1989, Aura sent to shareholders various documents filed with the SEC, including the companys 10Q; Auras 10K was sent by mid-1989. Those documents informed shareholders that Aura had completed the private placement, had paid off its outstanding debts, including loans from officers and directors of the corporation, and had over $2 million in capital. Auras SEC S-1 form, filed in April 1989, indicated the defendants had each received 48,000 shares of Aura restricted stock from the private placement. The document was publicly filed, but was not sent to Frankston as a shareholder. In late 1989, Aura issued news releases announcing the completion of the private placement. Frankston, however, had received no stock.

Frankston filed the instant action in late June 1994. In essence, he alleged that defendants had taken his Partnership Debt Shares and had failed to pay him his cash share of the partnership distributions. He asserted causes of action for conversion, fraud, and breach of fiduciary duty, and requested a partnership accounting.

B. Procedural Events Leading to the Prior Appeal

In 1995, defendants filed a motion for summary judgment, or in the alternative summary adjudication, arguing that all of Frankstons claims were barred by the relevant three and four year statutes of limitations. Defendants argued Frankston was on inquiry notice of all of his claims by mid-1989. They argued the accounting claim was untimely because the partnership dissolved no later than 1989.

In response, Frankston argued that he did not discover defendants misconduct until September 1992, when he saw internal Aura documents, produced by Aura in other litigation, showing that each defendant had been issued a certificate for 40,000 shares of Aura stock plus another certificate for 8,000 shares. Frankston also filed a cross-motion for summary adjudication as to his entitlement to a partnership accounting.

The trial court denied defendants motion for summary judgment/summary adjudication, but granted Frankstons motion for summary adjudication regarding his right to a partnership accounting.

Frankstons tort claims for conversion, fraud and breach of fiduciary duty went to a jury trial. In a special verdict, the jury concluded defendants had converted partnership monies owed to Frankston and the Partnership Debt Shares, committed fraud, and breached their fiduciary duties to him. With respect to the statute of limitations, the jury adopted Frankstons view that he did not have constructive notice of his claims with respect to the Partnership Debt Shares until September 1992, and did not have constructive notice of his claims for partnership cash distributions until June 1993. The jury awarded Frankston compensatory and punitive damages. The trial court also memorialized its decision on the accounting. Judgment was entered against defendants for about $1.3 million.

Defendants filed a motion for judgment notwithstanding the verdict and a motion for a new trial. In their motion for judgment notwithstanding the verdict, defendants argued again, among other things, that all of Frankstons claims, including for an accounting, were barred by the relevant statutes of limitations.[2] The trial court denied the motions.

C. The Decision in the Prior Appeal

Defendants appealed from the judgment and statement of decision re accounting . . . in favor of plaintiff and against defendants, entered August 1, 2000, and from the order denying defendants motion for new trial and motion for judgment notwithstanding the verdict, entered October 5, 2000. In their opening brief on appeal, defendants argued that Frankstons entire action was barred as a matter of law by the relevant statutes of limitations. Although defendants simply argued that the entire judgment should be reversed on that basis, among others, and did not specifically challenge the grant of summary adjudication in favor of Frankston on the accounting claim, they did designate all of the relevant summary judgment and summary adjudication documents to be included in the record on appeal.

The Court of Appeal stated in its opinion that appeal had been taken from: (1) the judgment upon the jurys verdict in favor of Michael Frankston on his conversion, fraud and breach of fiduciary duty claims; (2) the courts order granting Frankstons motion for summary adjudication on Frankstons partnership accounting claim; and (3) the post-judgment order awarding Frankston attorneys fees. [Defendants] argue, among other things, they were entitled to judgment because Frankstons causes of action are all barred by the three or four year statute of limitations governing his claims.

The court agreed with defendants contention that Frankstons entire action was barred by the statute of limitations and, accordingly, reversed the judgment. For discussion, we divide the courts decision into two sections: the reversal of the jurys verdicts on Frankstons tort claims, and the reversal of the trial courts grant of summary adjudication on the accounting claim.

1. The Reversal of the Jurys Verdict on Frankstons Tort Claims

As to Frankstons tort claims (fraud, conversion, and breach of fiduciary duty), the Court of Appeal framed the relevant issue as follows: The evidence presented at trial demonstrated [defendants] failed to give Frankston his Partnership Debt Shares and cash distribution, and in fact, divided those assets amongst themselves in the fall of 1988. Thus, here, the inquiry turns on the issue of when Frankston discovered or should have discovered [defendants] misconduct. [] Frankston filed his action in June of 1994. Accordingly, at trial Frankston needed to show he was not negligent in failing to discover [defendants] conduct and had no actual or presump[tive] knowledge prior to June of 1991 on the fraud and conversion claims and prior to June of 1990 with respect to the breach of fiduciary duty claim.

The court noted that in reaching its verdicts, the jury adopted the view, expressed by Frankston in his testimony, that he did not have notice of his claims with respect to the Partnership Debt Shares until September 1992 when he reviewed internal Aura documents he received in connection with other litigation, and did not have notice of his claims for partnership cash distributions until June 1993. The court concluded, however, that substantial evidence did not support the jurys findings. According to the court, the jury rejected uncontroverted evidence susceptible to only one legitimate inference showing Frankston had constructive notice of his claims not later [than] the spring of 1989.

The court summarized the relevant evidence, and reasoned as follows: At trial Frankston testified he knew he would receive his Partnership Debt Shares in connection with the private placement. In late 1988, Frankston was expecting his shares because he was told that the private placement would happen soon. He even disclosed he owned them in his SEC 13D filing. The private placement occurred in late 1988. Auras quarterly report filed with the SEC and sent to shareholders in February 1989, disclosed the private placement had occurred and Aura was solvent. Auras annual report sent to shareholders in mid-1989 also disclosed the private placement and further noted Aura had repaid nearly all of its debts and possessed significant operating funds. Nonetheless, neither Frankstons Private Placement Shares or any partnership cash distribution were paid to him.

Frankston testified he did not read Auras 10K and 10Q documents because he was not interested in them and based on his prior experiences with Aura he expected them to be untrustworthy.

In our view a reasonably prudent Aura shareholder would have read the companys annual and quarterly reports. Frankston is charged with the knowledge of facts which would have been discovered had he read them. (See Turner v. Lundquist (1967) 377 F.2d 44, 47-48 [investor charged with notice of information contained in companys annual statement and financial statements for the purposes of the statute of limitation].) Moreover, the information contained in the reports about the private placement would have caused a reasonably prudent person to make additional inquiries and investigation about the Partnership Debt Shares and any other payments Aura made on the loans owed the partnership.

Thus, Frankstons failure to obtain actual notice of [defendants] conduct earlier than 1992 and Frankstons delay in filing suit until 1994 is attributable to Frankstons own negligence, that is, to his failure to review information in company SEC documents readily available to him. (See Bernson v. Browning-Ferris Industries of California, Inc. (1994) 7 Cal.4th 926, 936 [a plaintiff may not disregard reasonably available avenues of inquiry which, if vigorously pursued, might yield the desired information].)

Had Frankston read these documents, he would have discovered by mid-1989 Aura was claiming the private placement had already occurred[,] the very event he expected would trigger the issuance of his Partnership Debt Shares. Given that Frankston was expecting but had not yet received his Partnership Debt Shares in early 1989, his discovery from the company reports that the private placement had occurred in late 1988 would have raised suspicions that something was amiss. Reasonable inquiries following such discovery would have unearthed information, such as the publicly filed Aura S-1 document in which [defendants] disclosed they had each received 48,000 shares from the private placement and thus, in essence had divided Frankstons partnership shares amongst themselves.

The party seeking to invoke the delayed discovery rules must show that he or she acted with diligence in protecting his or her rights, i.e., she has not made herself willfully ignorant. Frankston simply could not make such a showing.

Finally, that [defendants] owed Frankston a fiduciary obligation does not change the result. The fiduciary relationship allowed Frankston to assume [defendants] were acting on his behalf until he had knowledge to the contrary. A review of Auras annual and quarterly reports and the subsequent inquiries such review would generate would have apprised Frankston [defendants] were not acting in his best interest.

In light of the entire record no reasonable trier of fact could have concluded otherwise. To do so would be to isolate and credit only evidence relevant to actual knowledge (in June 1992) while arbitrarily rejecting unrefuted evidence showing constructive notice (by mid-1989).

Consequently, this is that rare case where the jurys verdict is not supported by sufficient evidence. The evidence presented at trial leads to but one legitimate and reasonable conclusion, Frankston had constructive notice of his Tort Actions in the spring of 1989 and thus his June 1994 complaint is untimely. Consequently, the trial court erred in denying [defendants] motion for a judgment not withstanding the verdict on the Tort Actions. (Fn. omitted.)

2. Reversal of Summary Adjudication on the Accounting Claim

In the prior appeal, Frankston contended that defendants could not raise a statue-of-limitations challenge to the accounting claim because they did not appeal from the order granting summary adjudication in favor of Frankston. The Court of Appeal concluded, however, that the issue was properly raised, because an order granting summary adjudication is properly reviewed after entry of a final judgment.

In reversing the grant of summary adjudication, the court reviewed the portion of the record on appeal pertaining to the motion for summary judgment filed by defendants in 1995, and the cross-motion for summary adjudication filed by Frankston. The court concluded that the trial court should have granted defendants motion for summary judgment, because Frankstons accounting claim was time-barred as a matter of law.

The court summarized the governing law as follows: Under the former Corporation[s] Code section 15043, the right to an accounting accrues to a partner against his or her other partners at the date of dissolution of the partnership absent an agreement to the contrary. Former Corporations Code section 15029 defined dissolution as the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from winding up of the business. Pursuant to former Corporations Code section 15031, a partnership is dissolved by various means including the termination of the particular undertaking of the partnership agreement. In other words, a partnership ends, a cause of action for a partnership accounting accrues and the statute of limitations begins to run when the business of the partnership is substantially complete or where the purpose of the partnership is accomplished. (See Wrightson v. Dougherty (1936) 5 Cal.2d 257, 261; San Francisco Iron and Metal Company v. American Milling & Industrial Company (1931) 115 Cal.App. 238, 248.) Moreover, an abandonment or dissolution of a partnership . . . may take place by conduct inconsistent with its continuance, in spite of the fact that liquidation is not complete, or that some appearances of partnership continue. (Middleton v. F.P. Newport (1936) 6 Cal.2d 57, 62.) (Fns. omitted.)

The court concluded that the uncontroverted evidence presented below in connection with the motion for summary judgment and motion for summary adjudication leads to but one logical conclusion, that is, Frankstons partnership with [defendants] dissolved no later than spring 1989 when the business of the partnership was substantially complete and its purpose accomplished. [] [Defendants] and Frankston formed a partnership to invest in the stock of Anchor. The purpose of the partnership was to buy the pre-merger Anchor stock, to [resell] it after the merger when its value increased and to lend the profits from the resale of the stock to Aura with the understanding Aura would repay the partnership when Aura had the means. All of the transactions and events relating to the partnerships business occurred between 1987 and early 1989.

Frankston and [defendants] began purchasing pre-merger Anchor freely traded stock in 1987. Also in 1987 Aura was created from the merger of Anchor and IISs parent company. In 1988, Frankston and [defendants] sold almost all of the partnership stock and lent the proceeds to Aura. In late 1988, Aura completed the private placement and began to repay partnership and other debts.

In late 1988, only 19,000 shares of partnership stock were still held by the partners. Of that, Frankston held 15,000 shares, which he sold between late 1988 and early 1989. At no time did Frankston offer to loan the proceeds from that stock sale to Aura, nor did he seek to divide the proceeds with [defendants]. According to Frankston he retained the monies from the sale while he waited for a final accounting; he intended to retain the monies as an offset against the amounts owed him by the partnership. Frankstons conduct with respect to the 15,000 shares is inconsistent with the continuance of the partnership, and instead is consistent with the view the partnership had completed its undertaking and all that remained was the winding up of partnership affairs.

There was simply no evidence the partnership conducted any business (i.e., bought any additional shares or lent any funds to Aura) after early 1989. The fact the partnership still owned 4,000 partnership shares in early 1989 does not, standing alone, prolong the life of the partnership. These assets notwithstanding, by the spring of 1989 the partnerships purpose was accomplished as there was no evidence Aura needed or sought any new loans from the partnership at that point.

In view of the foregoing, we cannot agree with the lower courts finding the partnership existed until Frankston filed this lawsuit in June of 1994. Instead, we conclude the uncontroverted evidence demonstrates the partnership dissolved no later than spring of 1989 and the four-year statute of limitations for the accounting claim ran no later than the spring of 1993. Consequently, the trial court erred in granting summary adjudication on Frankstons accounting claim and erred in failing to grant [defendants] judgment on the claim.

3. The Disposition of the Prior Appeal

The Court of Appeals disposition in the prior appeal stated as follows: The judgment is reversed and remanded with directions to the trial court to (1) grant [defendants] motion for judgment notwithstanding the verdict; (2) deny respondents motion for summary adjudication on the accounting claim and grant [defendants] motion for summary adjudication on the accounting claim; and (3) to enter an order denying respondents post-judgment motion for fees and costs.

Frankston filed a petition for rehearing in the Court of Appeal. He sought rehearing pursuant to Government Code section 68081 on the grounds that he was deprived of the opportunity to brief or address the propriety of the 1995 summary judgment and summary adjudication rulings, which he contended were not challenged by defendants on appeal.

Frankstons petition for rehearing was denied.

Frankston then filed a petition for review in the Supreme Court. It was also denied.

D. Trial Court Proceedings After Remand, Leading to the Present Appeal

In accordance with the Court of Appeals decision, the trial court entered judgment against Frankston and in favor of the defendants on March 30, 2004.

Thereafter, Frankston filed in the trial court a motion for new trial. As to the accounting claim, Frankston contended new evidence, which he could not have produced at the time of the hearing on the motion for summary judgment in October 1995, undermined the Court of Appeals decision. Frankston asserted the new evidence, introduced at trial, showed that there was a triable issue of fact as to when the business of the partnership was substantially completed, and that many of defendants uncontroverted facts were knowingly false. Frankston also leveled various other attacks on the appellate decision: (1) there had been irregularity in the proceedings of the trial court, in the form of the denial of Frankstons discovery motion to compel answers to interrogatories in 1995, which ruling would have been highly prejudicial if defendants summary judgment motion had been granted at that time; (2) the evidence was insufficient to summarily adjudicate the accounting claim in defendants favor on the basis that the partnerships purpose had been accomplished by the spring of 1989; (3) the Court of Appeal made an error of law in declaring the partnership purpose completed; (4) the Court of Appeals decision was unlawful because the order denying defendants motion for summary judgment was nether appealable nor appealed, the propriety of that order had not been proposed or briefed by any party, and the Court of Appeal failed to give the parties an opportunity to submit supplemental briefs on the issue (Gov. Code,  68081).

As to the tort claims (conversion, fraud, and breach of fiduciary duty) which had been tried to the jury, Frankston argued that the Court of Appeals conclusion that he had constructive notice of his tort claim in 1989 was not supported by the evidence and was contrary to law. In addition, Frankston argued that a prior Court of Appeal decision entered in a related case, Frankston v. Interwest Transfer Co. (Feb. 15, 2000, B128082 [nonpub. opn.]) had established the law of the case to be that the same facts relied on by defendants to establish inquiry notice were not sufficient to put Frankston on inquiry notice that defendants might have defrauded him.

The trial court denied the motion for new trial, citing the age of the case (which involves events of 1989 and earlier, was filed in 1994, and was tried in 1999), as well as deference to the Court of Appeal. The trial court stated that it did not have the authority to grant the motion, and even if it did, I dont find that the predicates are laid. I dont see the new evidence upon which it would hinge.

Frankston filed a notice of appeal from the judgment entered by the trial court on March 30, 2004, and from the May 24, 2004, order denying his motion for a new trial.[3]

discussion

A. Law of the Case

Resolution of the current appeal is governed by the doctrine of law of the case. Under the law of the case doctrine, when an appellate court states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout [the cases] subsequent progress, both in the lower court and upon subsequent appeal. . . . (Kowis v. Howard (1992) 3 Cal.4th 888, 893.) Absent an applicable exception, the doctrine requir[es] both trial and appellate courts to follow the rules laid down upon a former appeal whether such rules are right or wrong. (Estate of Baird (1924) 193 Cal. 225, 234.) As its name suggests, the doctrine applies only to an appellate courts decision on a question of law; it does not apply to questions of fact. (Id. at pp. 234-239.) Nevertheless, it is . . . relevant here because an appellate courts determination that the evidence is insufficient to justify a finding or a judgment is necessarily a decision upon a question of law. (Id. at p. 238.) Such a determination establishe[s] as the law of the case that all the evidence adduced at the previous trial was insufficient as a matter of law to establish the finding or judgment. (Id. at p. 234; see also People v. Shuey (1975) 13 Cal.3d 835, 842 [doctrine applies to finding of evidences legal sufficiency].) (People v. Barragan (2004) 32 Cal.4th 236, 246, italics added.)

Of course, the law of the case doctrine has exceptions. Thus, during subsequent proceedings in the same case, an appellate courts binding legal determination controls the outcome only if the evidence on retrial or rehearing of an issue is substantially the same as that upon which the appellate ruling was based. [Citations.] (People v. Mattson (1990) 50 Cal.3d 826, 850 (Mattson).) Where, on remand, there is a substantial difference in the evidence to which the [announced] principle of law is applied, . . . the [doctrine] may not be invoked. (Hoffman v. Southern Pac. Co. (1932) 215 Cal. 454, 457.) Even where the appellate court reverses based on the sufficiency of the evidence, the rule of the law of the case may not be extended to be an estoppel when new material facts, or evidence, or explanation of previous evidence appears in the subsequent trial. [Citations.] (Weaver v. Shell Company (1939) 34 Cal.App.2d 713, 717.) (People v. Barragan, supra, 32 Cal.4th at p. 246; see also Erlin v. National Union Fire Ins. Co. (1936) 7 Cal.2d 547, 549.) Similarly, the doctrine does not apply to points of law that might have been, but were not determined on the prior appeal. (9 Witkin [Cal. Procedure (3d ed. 1985) Appeal],  752 at pp. 719-720; Tally v. Ganahl (1907) 151 Cal. 418, 421.) (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 302.)

Applying these principles in the instant case, it is clear that Frankstons current appeal is barred by law of the case.

B. Frankstons Tort Claims

As to Frankstons claims for conversion, fraud, and breach of fiduciary duty, the disposition in the prior appeal stated: The judgment is reversed and remanded with directions to the trial court to . . . grant [defendants] motion for judgment notwithstanding the verdict. The meaning of this disposition is clear: the trial court was required on remand to grant defendants motion for judgment notwithstanding the verdict as to those causes of action, and no retrial was permitted.[4] If the appellate court determines the trial court erred in denying judgment NOV, it must order entry of the judgment NOV it deems should have been granted. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2006), 11:68, p. 11-21 (rev. #1, 2006), italics omitted; see also Code Civ. Proc.,  629; Ferrell v. County of San Diego (2001) 90 Cal.App.4th 537, 544; Bank of America Natl Trust & Sav. Assn v. Super. Ct. (Kruse) (1990) 220 Cal.App.3d 613, 624-626; Williamson v. Prida (1999) 75 Cal.App.4th 1417, 1427.) Further, the appellate court is statutorily required to give directions to the trial court for entry of the judgment NOV on remandi.e., no retrial may be held. (Id. at 14:147.1, p. 14-47, some italics omitted; see Code Civ. Proc.,  629 [the appellate court shall, when it appears that the motion for judgment notwithstanding the verdict should have been granted, order judgment to be so entered on appeal from the judgment or from the order denying the motion for judgment notwithstanding the verdict].)

These principles are illustrated by Snoffer v. City of Los Angeles (1936) 14 Cal.App.2d 650. There, the jury rendered a verdict in favor of plaintiff. Defendant appealed, and the appellate court reversed the judgment and further directed the trial court to enter judgment for the defendant. After issuance of the remittitur, the trial court entered judgment for the defendant as directed. Plaintiff thereafter brought a motion for new trial, which the trial court granted. The defendant then appealed from the order granting a new trial.

The Court of Appeal concluded that the law of the case doctrine precluded a retrial. [A]side from respondents attack upon the decision of this court in this case upon the previous appeal, we are of the opinion that the decision in that case, based as it was upon a question of law, becomes, by reason of our decision, the law of this particular case, and was and is thereafter, in all subsequent stages of the case, binding not only upon the trial court but upon this court when again brought before us. When a cause is remanded, as in this case, not for retrial, but to give effect to the decision on appeal, the trial court can take no further proceedings except such as are necessary to give effect to the judgment of the appellate court. (Soule v. Dawes [(1859)] 14 Cal. 247.) When a cause is remanded with directions to enter a particular judgment, it is the duty of the trial court to enter judgment in conformity with the order of the appellate court, and that order is decisive of the character of the judgment to which the appellant is entitled. The lower court cannot reopen the case on the facts, allow the filing of amended or supplemental pleadings, nor retry the case, and if it should do so, the judgment rendered thereon would be void. [] A decision on appeal, upon becoming final, establishes the law of the case, and where, as in this case, there were no changes in the pleadings or findings, and no retrial of the case, on a second appeal such decision is conclusive, and that is so even though the appellate court should have reached a different conclusion on the former appeal. (Gordon v. Green [(1924)] 66 Cal.App. 303, 306.) (Snoffer v. City of Los Angeles, supra, 14 Cal.App.2d at p. 653.)

In the instant case, the appellate court concluded that the trial court erred in denying a motion for judgment notwithstanding the verdict as to Frankstons tort claims, finding the evidence insufficient to sustain the verdict. Thus, on remand the trial court was required to enter judgment as directed by the appellate court, and could not thereafter modify the judgment. Just as the trial court was bound by the decision in the prior appeal, so, too, are we obliged to follow it. We will not review the legal validity of the earlier decision. Frankstons motion for a new trial as to the tort causes of action was nothing more than an unauthorized attempt to challenge the legal validity of the Court of Appeals conclusions. The trial court properly rejected it, and we reject it as well.

C. Frankstons Accounting Claim

Concerning Frankstons accounting claim, the disposition in the prior appeal reversed the judgment, and directed the trial court to deny [Frankstons] motion for summary adjudication on the accounting claim and grant [defendants] motion for summary adjudication on the accounting claim.

The appellate court did not expressly order entry of judgment for defendants on the accounting claim. Despite this omission, it might be inferred that the court intended that there be no retrial on remand, because in its opinion the court concluded as a matter of law that Frankstons accounting claim was barred by the statute of limitations, and defendants were therefore entitled to entry of judgment in their favor. However, the appellate court was not explicit, and the instant case presents unique circumstances.[5]Therefore, we have examined the record to determine whether the evidence presented at trial constituted [n]ewly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the time of the summary adjudication motion. (Code Civ. Proc.,  657.) The existence of new evidence, neither available to nor considered by the Court of Appeal, would be the only situation in which a trial court could conceivably entertain a motion for new trial under the circumstances present here. It is anathema to the law of the case doctrine to suggest that the trial court could decide whether the Court of Appeals ruling was contrary to law or based on insufficient evidence. In examining the record, we conclude that the evidence was not newly discovered. The appellate court did, in fact, consider it.

The appellate record in the prior appeal included the reporters and clerks transcripts of the jury trial, and the Court of Appeal reviewed that record in deciding the issues relevant to the tort claims. Granted, in considering the statute of limitations issue with regard to the accounting claim, the Court of Appeal stated that its review was limited to the documents relating to the cross-motions for summary adjudication. However, the record before us demonstrates that in his petition for rehearing, Frankston brought to the Court of Appeals attention the very evidence that he now claims the Court of Appeal never considered.

In particular, Frankston argues on appeal that the evidence at trial demonstrated that in early 1989, the partnership still owned 166,382 shares of Aura stock, as opposed to 4,000 shares as the Court of Appeal stated in its opinion.[6] The crux of Frankstons argument is as follows: [W]ith the benefit of Defendants own undisputed statements to the SEC in 1988 [citation] that the officers, directors and affiliates of [Aura] had held 762,882 free-trading shares in February 1988 [citation], Frankstons forensic accounting expert was able to show that all the other persons posited by Defendants as possible owners of some of that 762,882 shares either were not officers, directors or affiliates, or did not own free-trading shares. [Citation.] [] As the trial court found, as trier of fact on the accounting [citation], if that 762,882 shares were held by the six partners, and it was undisputed that Frankston held only 45,000, then the remaining 717,882 were held by Defendants. Defendants had reported the sale of only 551,500 of those shares, leaving 166,382 still held by Defendants. The fact that Kurtzman had acknowledged only 4,000 of those 166,382 shares on his November 1988 draft accounting (Trial Exhibit 8) was just another part of Defendants efforts to conceal from Frankston the fact that Defendants had already taken a substantial partnership distribution without including him. The difference between 4,000 and 166,382 thus was proof not only that the purpose of the partnership had not been concluded, but also that Defendants wanted to ensure that Frankston believed it was continuing so that he would not ask too many questions. [] Given the prior panels legal conclusion that the partnership dissolved when the business of the partnership is substantially complete or where the purpose of the partnership is accomplished [citation], this new evidence is material to a determination of when the partnership dissolved. Denial of a new trial in the face of this new evidence was therefore a reversible abuse of discretion.[7](Fn. omitted.)

Frankston made the same argument in his petition for rehearing, i.e., that substantially more than 4,000 shares of stock, well over 100,000 shares, remained unaccounted for at the point in time when the Court of Appeal considered the partnerships purpose to have been accomplished. Specifically, he stated in his petition for rehearing that [defendants] admitted having bought at least 144,500 shares of stock that they had never accounted for in any way. He continued: [Defendants] did not dispute that they had purchased for the partnership an aggregate of more than 700,000 shares of common stock in a company then known as [Anchor]. [Citation.] . . . Yet [defendants] have accounted for only 551,500 shares of that stock, and have never accounted for any partnership stock bought by Appellant Zvi Kurtzman. [Citation.] [] . . . Yet the decision does not consider the obvious implications of [defendants] continuing possession of a substantial quantity of partnership stock, drawing instead speculative inferences contrary to the judgment. [] Regardless of any possible disagreement concerning the purpose or purposes of the partnership, the Superior Court was not just reasonable but correct in concluding that the business of the partnership had not been completed while there was still a substantial amount of unaccounted-for partnership stock and undistributed profits in [defendants] possession.

Despite Frankstons argument in his rehearing petition that well over 100,000 shares remained unaccounted for, the Court of Appeal denied the petition. We presume that the Court of Appeal fully considered Frankstons contention (Evid. Code,  664),[8]and determined that the evidence did not alter the conclusions it had reached in its opinion. We further presume, given the entirety of the circumstances, that the Court of Appeal was well aware of the whole record, and only granted summary adjudication as to the accounting claim after concluding that the evidence presented at trial was not sufficient to overcome the prejudice to defendants resulting from the trial courts error in failing to grant summary adjudication in defendants favor in 1995. (See generally Waller v. TJD, Inc. (1993) 12 Cal.App.4th 830, 836.)

Thus, Frankstons argument in this appeal, that his motion for new trial was based on new evidence, is incorrect. Furthermore, it is not within our province to reexamine the Court of Appeals decision, including its decision to deny rehearing, to determine whether the decision was legally correct, just as it was not the trial

courts role to do so. The doctrine of the law of the case prohibits a final appellate court opinion from being undermined in such fashion.

The Supreme Court has stated: The [law of the case] doctrine is, we have recognized, harsh. (Clemente v. State of California (1985) 40 Cal.3d 202, 212.) Accordingly, we have declined to adhere to it where its application would result in an unjust decision, e.g., where there has been a manifest misapplication of existing principles resulting in substantial injustice, or where the controlling rules of law have been altered or clarified by a decision intervening between the first and second appellate determinations. The unjust decision exception does not apply when there is a mere disagreement with the prior appellate determination. ([People v.Stanley (1995) 10 Cal.4th 764] at p. 787.) (Morohoshi v. Pacific Home (2004) 34 Cal.4th 482, 491-492, italics added.) Frankston has not shown there was a manifest misapplication of existing principles resulting in substantial injustice. In truth, he merely disagrees with the prior appellate determination.

D. Frankstons Remaining Arguments

Frankston makes three additional arguments on appeal that require only brief discussion. The first is that if defendants 1995 motion for summary adjudication had been granted, he would have been prejudiced by two pre-trial discovery rulings that followed. The result of these rulings was to temporarily deny him access to the unredacted document reflecting the quantity of shares purchased by defendants and others, and the identity of the purchaser of each share. However, as Frankston acknowledges, the document was produced prior to trial. Indeed, the document is the historical report which he posits to be the new evidence that justified his bringing a motion for new trial after the prior appellate decision was filed. Frankston had full access to the information by the time of trial, it was introduced into evidence at trial, and the information was considered in the prior appeal. His claim of prejudice is unfounded.

The second issue is one that Frankston expressly raised in his petition for rehearing. His contention was, and is, that the Court of Appeals decision ignored the law of the case as stated in a previous appeal, Frankston v. Interwest Transfer Co. (Feb. 15, 2000, B128082 [nonpub. opn.]). In that case, Frankston sued a transfer agent for wrongfully transferring his shares of Aura stock to third persons. The court stated therein that yet another prior appellate decision (July 23, 1996, B098285 [nonpub. opn.]) established the law of the case by holding that the statutes of limitations on all of Frankstons claims against the transfer agent were tolled until he had actual notice of Interwests transfer of his stock. Thus, the previous appeals were in a related but distinct matter and involved a different defendant, a transfer agent. They did not establish law of the case applicable to the present lawsuit. In addition, Frankston raised this argument in his petition for rehearing, and the Court of Appeal rejected it. It is not a novel issue that we may consider anew.

Finally, Frankston argues that even if the partnership was dissolved in 1989, defendants still had a fiduciary obligation to account for partnership assets remaining in their hands (former Corp. Code,  15021(1), 15020), and therefore the trial court was obliged to take an accounting for the previously undisclosed stock. According to Frankston, [e]ven if the partnership was dissolved some time in 1989, as long as a final accounting has not been done the statute of limitation would not even have started running with regard to transactions not yet accounted for. Thus, a new trial should have been ordered because the new evidence showed post-dissolution transactions for which an accounting was still required. This argument is merely a renewal of the legal argument Frankston has been asserting all along in this matter as to the date of accrual of the statute of limitations for a cause of action for a partnership accounting. The issue has already been decided against him in the prior appeal: Under the former Corporation[s] Code section 15043, the right to an accounting accrues to a partner against his or her other partners at the date of dissolution of the partnership absent an agreement to the contrary. (Fn. omitted.) (See also Estate of Peebles (1972) 27 Cal.App.3d 163, 168 [the right to maintain a cause of action for a partnership accounting accrues immediately on dissolution, even though the amount of the partners interest may not be ascertainable at that time].)

In any event, the authorities cited by Frankston do not support the contention that a plaintiffs entitlement to an accounting of partnership assets is a continuing right as to post-dissolution transactions, even after the plaintiff has failed to timely file an action requesting an accounting. (See Estate of de LaVeaga (1958) 50 Cal.2d 480, 487; Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 445; Urzi v. Urzi (1956) 140 Cal.App.2d 589, 592.)

disposition

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

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

WILLHITE, J.

We concur:

EPSTEIN, P. J.

SUZUKAWA, J.

Publication courtesy of California pro bono legal advice.

Analysis and review provided by La Mesa Property line attorney.

[1] As we have noted, the opinion in the prior appeal was filed by Division Seven of this appellate district. In the present appeal, defendants filed a motion to recuse Division Seven on the ground that the presiding justice of that division had represented Frankston in the early phases of this dispute, and Frankston had filed a legal malpractice lawsuit against him. The presiding justice did not participate in the prior appeal. Division Seven granted the recusal motion, and the present appeal was transferred to this division.

In his letter brief dated October 23, 2006, Frankston contends that the prior appellate decision was void and should be vacated on the basis that the presiding justices earlier representation of Frankston irretrievably tainted the entire proceedings. We disagree. There is no indication that the presiding justice was involved in consideration of the appeal at any time or in any way, and there is no legitimate basis on which to vacate the prior decision.

[2] Specifically, defendants argued: The Court will recall that the defendants moved for summary judgment before trial and for judgment during trial on the ground that the statute of limitations expired on all of the plaintiffs causes of action. The plaintiff argued that the statute of limitations did not begin to run because (1) the partnership was not dissolved until suit was filed; and, (2) the plaintiff was not on inquiry notice until 1992. Now, as a matter of law, the Court should reject these arguments with the evidence in hand.

[3] The trial court subsequently vacated its prior judgment of March 30, 2004, and entered a new judgment on July 15, 2004, which included a cost award to defendants, as well as an award of their costs on appeal.

Although an order denying a new trial is not directly appealable, we may review it after the final judgment as an order substantially affecting the rights of the parties. (Code Civ. Proc.,  906 [Upon an appeal pursuant to Section 904.1 or 904.2, the reviewing court may review the verdict or decision and any intermediate ruling, proceeding, order or decision which involves the merits or necessarily affects the judgment or order appealed from or which substantially affects the rights of a party, including, on any appeal from the judgment, any order on motion for a new trial. . . .].) (Ajaxo Inc. v. E*TRADE Group, Inc. (2005) 135 Cal.App.4th 21, 46, fn. 25.)

[4] Although the disposition states broadly that the motion for judgment notwithstanding the verdict was to be granted, and that motion actually encompassed Frankstons accounting claim as well, the Court of Appeals discussion of the motion for judgment notwithstanding the verdict was confined to Frankstons tort claims.

[5] It is generally stated that [a] motion for a new trial is appropriate following an order granting summary judgment. [Citations.] This is so, even though, strictly speaking, summary judgment . . . is a determination that there shall be no trial at all. (Green v. Del-Camp Investments, Inc. [(1961)] 193 Cal.App.2d [479] at p. 481.) (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 858 [plaintiffs new trial motion properly brought following trial courts order granting defendants motion for summary judgment].) The situation here, however, is unique, in that Frankstons motion for new trial followed an order by the appellate court, rather than a trial court, granting a motion for summary adjudication.

[6] The Court of Appeal stated: There was simply no evidence the partnership conducted any business (i.e., bought any additional shares or lent any funds to Aura) after early 1989. The fact the partnership still owned 4,000 partnership shares in early 1989 does not, standing alone, prolong the life of the partnership. These assets notwithstanding, by the spring of 1989 the partnerships purpose was accomplished as there was no evidence Aura needed or sought any new loans from the partnership at that point.

[7] Frankston also discusses several of defendants undisputed facts set forth in their motion for summary adjudication, and points to evidence introduced at the trial that contradicts those facts. The undisputed facts concern (1) the timing of the distribution of IIS shares; (2) whether the defendants were given 40,000 shares each as deferred compensation; (3) the timing of when Harry Kurtzman knew Frankston had offered options on his Aura shares to some of Auras employees; (4) the timing of a dispute between Harry Kurtzman and Frankston in relation to when Cipora Kurtzman directed Auras transfer agent to cancel the 40,000 shares issues to Frankston; and (5) the asserted fact that Frankston was not given 40,000 shares because he failed to abide by decisions of Auras board of directors and honor his financial commitments.

Frankston asserts that the evidence introduced at trial included material and convincing evidence and goes to the very heart of the issues not controlled by the first appeal that was not available to [Frankston] or in the record at summary judgment. He contends that the law of the case does not preclude consideration of this evidence because it was not considered on the first appeal.

We conclude that Frankston has failed to demonstrate that any of these factual disparities would have made a determinative difference in the Court of Appeals opinion had they been part of the record regarding the summary adjudication motion. None of these facts affect the Court of Appeals overriding conclusion that Frankstons partnership with defendants dissolved no later than spring 1989 when the business of the partnership was substantially complete and its purpose accomplished, where no new loans were made to Aura after 1989. The crucial point in Frankstons argument on appeal is the disparity in the evidence as to the number of shares that remained outstanding at the time the Court of Appeal deemed the partnership terminated.

[8] Evidence Code section 664 provides: It is presumed that official duty has been regularly performed. The presumption is one affecting the burden of proof (Fukuda v. City of Angels (1999) 20 Cal.4th 805, 820-821), and thus, Frankston must demonstrate that the Court of Appeal failed to consider the arguments he made in his petition for rehearing. He has not done so.