DELLOCA v. THE BANK OF NEW YORK TRUST COMPANY

Filed 1/29/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

Story continued from Part I

Here, the order granting a new trial did not dispose of the litigation. It was not based on a finding that BNY had an absolute defense or that plaintiffs never could produce evidence of damages on the theory they asserted. The court ruled only that the evidence plaintiffs had produced on that theory was too speculative to permit recovery. The court also may have believed the jury was persuaded by evidence it should not have considered, noting it had sustained objections to questions to plaintiffs expert witness that might have provided a basis for the jurys award. By granting the motion for new trial, the court gave plaintiffs the opportunity to try again, presumably recognizing they might be able to produce evidence to support their theory.

Plaintiffs also argue reversal is required even if the trial courts ruling is reviewed under an abuse of discretion standard. They assert that although the court characterized the ground for its order as excessive damages, it actually granted a new trial because it found insufficient evidence to support plaintiffs theory of causation. Section 657 recites an order granting a new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict . . . or upon the ground of excessive or inadequate damages, unless such ground is stated in the order granting the motion. In plaintiffs opinion, the courts failure to state the true ground for its rulinginsufficiency of evidence to prove causationmeans this court cannot affirm the order. We disagree. The courts explanation of its ruling: It is too speculative for the trier of fact to conclude that no one would have invested in Trust IV if they had known that Trusts I and II were having financial difficulties, provided adequate notice to the parties and to this court that the trial court found the evidence did not support plaintiffs theory of damages. It is not fatal that the court did not characterize its ruling as either a finding of excessive damages or as a finding of lack of causation of the damages sought by plaintiffs. In any event, the court concluded there was evidence BNYs breach of the indenture contract caused injury to plaintiffs, and thus that BNYs breach actually caused damages, to the extent plaintiffs were able to prove them. Second, any time a new trial is granted for excessive damages, the court in effect is finding the evidence to have been insufficient to support the jurys award. In other words, an order granting a new trial on the grounds of excessiveness of damages automatically covers that aspect of the sufficiency of the evidence. Neither section 657 nor reason requires a court granting a new trial on the grounds of excessive damages to add that it finds the award to be excessive because the evidence is insufficient to support the award. (And see Kent v. Los Angeles Ry. Corp. (1938) 29 Cal.App.2d 435, 436-437 [recognizing that an order granting a new trial for excessive damages   implies that the motion was granted upon a consideration of the insufficiency of the evidence to support the verdict  ].)

Plaintiffs cite Shawmut Bank, N.A. v. Kress Associates (9th Cir. 1994) 33 F.3d 1477 (Shawmut), a case with some factual similarities to the present case, but also with differences that illustrate the flaws in plaintiffs position. The plaintiffs in Shawmut were bondholders who had purchased industrial development bonds issued to finance a real estate development project. The project collapsed, in part because one of the principals of the developer had diverted most of the bond proceeds to other companies he controlled. The plaintiffs brought suit against various entities, including First Interstate Bank of California (FICAL), the indenture trustee. (Id. at pp. 1481-1484.) As relevant, the indenture contract provided FICAL would release funds pursuant to requisitions for disbursement that specified in reasonable detail the purpose for which the funds could be used. FICAL breached the indenture agreement by releasing funds in response to requisitions that did not have adequate detail. (Id. at p. 1493.) The plaintiffs sought damages based on the funds lost when the developer used them for an improper purpose.

FICAL claimed plaintiffs engaged in speculation by asserting their loss was caused by its breach of the indenture agreement. Its theory was that had it refused to disburse the funds because of the lack of detail in the requisitions, the developer simply would have supplied the necessary details. FICAL pointed out it was entitled to rely on the face of the documents, reasoning that once the developer supplied the details, it would have released the funds and the bondholders still would have suffered injury. (Shawmut, supra, 33 F.3d at p. 1496.) The trial court agreed, and finding the plaintiffs had failed to come forward with any evidence that would establish their losses were proximately caused by FICALs breach, granted summary judgment to FICAL. (Id. at p. 1494.) The appellate court reversed. It recognized plaintiffs theory of causation was speculative as it depended on what the developer would or would not have done had the indenture trustee refused to disburse the funds. But FICALs theorythat the developer simply would have supplied the missing detailsalso depended on what the developer would or would not have done, and therefore was similarly speculative. The court held that summary judgment was improper as [c]hoosing between speculations is ordinarily a question for the trier of fact, who must determine the balance of probabilities. [Citation.] (Id. at p. 1496.)

There are several reasons why Shawmut, supra, 33 F.3d 1477 does not support plaintiffs argument here. First, while the trial court in Shawmut believed the plaintiffs could not prove FICALs breach was a cause of their loss, the trial court here reasoned that the evidence did support a finding that BNYs breach resulted in loss to plaintiffs; it just found plaintiffs theory of damages to be speculative based on the evidence properly admitted at trial. The trial court here essentially recognized plaintiffs might be entitled to damages on the same theory of loss claimed by the Shawmut plaintiffs: the funds lost when the indenture trustee improperly released them. Second, Shawmut was an appeal from a grant of summary judgment that had disposed of the litigation. It follows that reversal was required if there was some possibility the plaintiffs could prove their theory. Here, again, the order granting a new trial did not dispose of the litigation, and the trial courts ruling must be upheld if its decision finds support in the record.[1]

But there is an additional, important, reason for distinguishing Shawmut. The plaintiffs there sought damages based on the sums that had been improperly released to the developer. In reversing the summary judgment, the appellate court reasoned it was quite simple, as an initial matter, to determine whether or not the breach was a cause of the plaintiffs lossbecause of the breach, the money was given to the developer who used it for his own purposes. (Shawmut, supra, 33 F.3d at pp. 1496-1497.) It followed it was the indenture trustee that was engaging in speculation by imagining what would have happened in the absence of breach, asserting that if the indenture trustee had refused to disburse the funds without adequately detailed requisitions, the developer simply would have amended the requisitions. (Id. at p. 1496.) Here, it is plaintiffs who are imagining what would have happened in the absence of breach (i.e., that the investment scheme would have collapsed so that no additional funds would have been invested and less money would have been lost on existing investments), and, as the court in Shawmut recognized, the party that imagines what might have happened in the absence of breach is the party that engages in speculation. (Ibid.)

Plaintiffs seize on an additional point made by the trial court in conditionally granting a new trial. The court noted, Plaintiffs expert testified that the DFS Trusts failed because of the failure of the business model, i.e., the DFS Trusts failed because they were unable to collect the receivables in a timely enough fashion to meet interest obligations.  Plaintiffs complain that the courts reference to this testimony reflected a misunderstanding of the law, asserting that the court found their loss to be speculative because it wrongly assumed they were required to show BNYs breach was the only cause of their loss, when they needed to show only that it was more than a remote or trivial factor that contributed to the harm.[2] The flaw in this line of reasoning is that it confuses the cause of the trusts failure with plaintiffs theory BNYs breach caused their loss by delaying the date of default. Plaintiffs complain the court erroneously concluded the evidence BNY caused the default was speculative, when the courts ruling actually was based on the speculative nature of the evidence BNYs breach delayed the default, and the speculative nature of plaintiffs claims about what they, or a reasonable investor, would have done had there been no breach.

Having rejected plaintiffs claim that the order granting a new trial was in reality a partial JNOV, and finding support for the order in the record, we will not address plaintiffs many arguments that the evidence supports the jurys verdict or that the trial court should have weighed the evidence differently. The trial court, which heard the evidence, and was in a position to assess the credibility of plaintiffs witnesses, was entitled to conclude the jurys award was based on speculation; i.e., that but for the breach, Trusts I and II would not have obtained the funds to pay interest to the investors; that when interest was not paid, Trusts I and II would have gone into default; that once those trusts went into default potential investors would have become aware of the flaws in the entire business plan and would not have invested additional money in Trust IV and would have withdrawn the funds they had invested, and that they would, instead, have chosen to invest their money in some other venture where their funds would have been preserved.

III.

Plaintiffs Motion for Partial JNOV

Plaintiffs moved for partial JNOV, asking the court to reverse the jurys finding BNY had complied with Trust I and IIs indenture contracts. The court denied plaintiffs motion, finding a partial JNOV would be available only if it could be coupled with the remainder of the unaltered verdict to become a final judgment. (Citing Beavers v. Allstate Ins. Co. (1990) 225 Cal.App.3d 310, 330 (Beavers).) Plaintiffs contend that, contrary to the trial courts understanding of the law, the court had the power to grant plaintiffs motion for partial JNOV.

Partial JNOV

It is settled that the trial court has the power, in appropriate circumstances, to grant partial JNOV. In Beavers, supra, 225 Cal.App.3d 310, after the jury entered a verdict awarding compensatory and punitive damages to the plaintiffs, the trial court granted JNOV as to punitive damages and some of the causes of action, and granted a new trial as to all remaining issues. (Id. at p. 314.) The Court of Appeal agreed the trial court had the power to grant partial JNOV as to some but not all issues or causes of action, reasoning in part that such a conclusion is consistent with law equating a trial courts power to grant JNOV with its power to grant a motion for a nonsuit or a directed verdict. (Id. at pp. 327-329.) The court recognized a procedural difficulty exists where the trial court grants a partial JNOV and a partial new trial and an appeal is taken from the new trial order. The JNOV essentially asks the trial court to vacate the judgment entered on the verdict and enter a new judgment despite the verdict, but a partial new trial order vacates and holds in abeyance the entire judgment. (Id. at p. 330.)The court found these difficulties could be resolved by making the entire judgment, including the portion affected by the partial JNOV, subject to appellate review. (Id. at pp. 329-330.)

The present situation is not quite the same as that in Beavers, supra, 225 Cal.App.3d 310because the partial JNOV in that case, entered in favor of the defendant, completely disposed of several of the plaintiffs causes of action, which then could be reviewed by the appellate court. Here, had the court granted plaintiffs motion, it would have ruled only that plaintiffs had established BNY failed to comply with Trust I and Trust IIs indenture contracts. That ruling would not have disposed of any cause of action because several issues remained as to liability,[3] and the ruling, of course, could not and did not determine what damages, if any, resulted from the failure to comply. It follows that if the trial court had granted plaintiffs motion, there would have been no final judgment, and therefore nothing from which an appeal might be taken. By asking this court to reverse the trial courts ruling, plaintiffs are in effect asking this court to determine it has no jurisdiction to entertain the appeal. (See Walton v. Magno (1994) 25 Cal.App.4th 1237, 1240.)

In any event, plaintiffs position simply is that the verdict was not supported by the evidence (or, as plaintiffs phrase it, whether there is no substantial evidence to support the jurys verdict BNY did not breach the Indentures for Trusts I and II.)   The scope of appellate review of a trial courts denial of a motion for judgment notwithstanding the verdict is to determine whether there is any substantial evidence, contradicted or uncontradicted, supporting the jurys conclusion and where so found, to uphold the trial courts denial of the motion.  [Citation.] (Shapiro v. Prudential Property & Casualty Co. (1997) 52 Cal.App.4th 722, 730.)

Plaintiffs contend the jury reached the wrong verdict because BNYs conduct unquestionably violated section 1.2 of the indenture agreements, requiring the trusts to furnish an officers certificate and an opinion of counsel [u]pon any application or request by the Trust to the Trustee [i.e., BNY] to take any action under any provision of this Indenture. Plaintiffs point out, correctly, BNY released funds to Trusts I and II to correct deposit errors and make fee payments even though the trusts had not supported their requests for the release of funds with officers certificates or opinions of counsel. BNY counters by pointing out section 1.2 of the indenture agreements expressly applies to requests by a trust under any provision of [the] Indenture, but no provision of the indenture addresses the correction of deposit errors. BNY points out, further, that it introduced evidence the lack of an express provision covering deposit errors did not preclude it from correcting deposit errors. BNYs position is that neither section 1.2 nor reason required it to obtain officers certificates and opinions of counsel before releasing funds for acts such as correcting deposit errors or paying fees. As one expert witness testified, [t]here has to be some reasonableness. BNY also points out section 1.2 applies to requests by a trust, but the requests at issue were made not by the trusts or by their trustees. They were made by the trusts administrators. BNY argues that to the extent such requests are contemplated by the indenture agreements, they are covered by provisions in article 12, which in BNYs view allowed it to act without first receiving an officers certificate and an opinion of counsel.

The argument assumes a request from the trust administrator is not necessarily a request from the trust itselfan assumption plaintiffs hotly contest. There is, however, evidence supporting BNYs position. The indenture agreements do not use the term administrator and trust interchangeably. Section 1.2 by its terms applies to the requests of a trust or trustee. Article 12, however, refers in part to actions taken by the administrator. Section 12.4 addresses funds to be distributed to healthcare providers from the trusts distribution accounts upon the instructions of the administrator. Section 12.5 addresses funds in the trusts cash management accounts, directing BNY to retain certain funds in those accounts until the administrator directs BNY to transfer those funds elsewhere, setting forth the documentation the administrator is to furnish in connection with those directions. BNYs expert testified that requests from the administrator, such as requests to correct deposit errors or for fees, complied with these sections and therefore were authorized by the indenture agreements even though the requests were not accompanied by officers certificates and the opinions of counsel. It also stands to reason the parties did not intend that ministerial tasks, which might include such things as the correction of deposit errors or payment or repayment of fees, could take place only if there was a supporting officers certificate and opinion of counsel. In any event, the evidence does not mandate the conclusion the indenture agreements required certificates and opinions for all tasks, however minor or ministerial in nature.

Plaintiffs rely in part on the courts finding, in denying BNYs motion for summary judgment, [t]he language of 1.2 is plain and unambiguous.

That the court found section 1.2 to be unambiguous when it denied the motion for summary judgment did not preclude it from taking a different view in light of other evidence or arguments developed at trial. In addition, a finding that section 1.2, standing alone, appears to be unambiguous does not establish it applies in all cases to all transactions irrespective of any other provision of the indenture agreements. Section 1.2 is only one section of an extremely complicated and detailed agreement and, having read the agreement, we cannot conclusively say section 1.2 applies to every conceivable action that a trust, a trustee, or an administrator might ask the indenture trustee to take. We find, therefore, BNY was entitled to argue, and the jury to find,[4] that section 1.2 applied only to certain formal discretionary actions set out in the indenture agreements, but not to lesser ministerial tasks not specifically addressed in the agreements. It follows that even if the trial court should have considered the merits of plaintiffs motion for partial JNOV, it would have been required to deny the motion.

Conclusion

We conclude that none of plaintiffs arguments require reversal of either the order denying partial JNOV to plaintiffs, or of the order granting a new trial to BNY.

The Cross-Appeal

I.

BNYs Motion for JNOV

BNY contends the court erred by denying its motion for JNOV, making several arguments plaintiffs theory of damages did not justify an award of damages on their cause of action for breach of contract.

BNY contends plaintiffs were not entitled to recover losses suffered by noteholders who invested funds after BNY purportedly breached Trust IVs indenture agreement, arguing that at the time of the breach it had no contractual duty to potential investors. Similarly, BNY contends plaintiffs are not entitled to recover losses suffered by Trust I and Trust II investors allegedly arising from BNYs breach of Trust IVs indenture agreement. We do not address these contentions. The parties can litigate them if they so choose, upon retrial.

BNY also complains plaintiffs theory of causation and damages fails as a matter of law. To the extent the argument is that the trial court essentially concluded plaintiffs failed to produce evidence to support their theory, it is the mirror image of plaintiffs claim the trial courts grant of a new trial was in effect a grant of a JNOV to BNY. As discussed previously, the trial court, which heard the evidence and was in a position to evaluate the credibility and value of the witnesses testimony, did not rule that plaintiffs would be unable to prove damages on any theory, and it did not even rule there was no evidence to support the damages actually awarded by the jury. It ruled only that, in its opinion and on its view of the evidence, the jurys ultimate award was based on speculation. In other words, the court made no finding plaintiffs must lose or even that they must lose on their theory of causation and damages; it found only that the evidence did not justify the jurys verdict. Under such circumstances, the court appropriately and correctly granted BNYs motion for a new trial, and equally appropriately and correctly denied BNYs motion for JNOV.

BNY, citing federal cases such as AUSA Life Ins. Co. v. Ernst & Young (S.D.N.Y. 2000) 119 F.Supp.2d 394 (AUSA), construing the Securities Exchange Act of 1934, section 10b, contends plaintiffs theory of damages failed as a matter of law. The cited cases recognize that in an action under Securities Exchange Act of 1934, section 10b, a plaintiff can recover investment losses only by showing both that the misrepresentation in question caused the plaintiff to act (i.e., transaction causationhere the plaintiffs decision to invest, or their failure to cash out early) and the misrepresentation itself was a cause of the loss of the plaintiffs investment (i.e., loss causationhere the loss of money resulting from the collapse of the trusts.) (See id. at pp. 397-398; and also McGonigle v. Combs (9th Cir. 1992) 968 F.2d 810, 820.) In addition, a plaintiff is entitled only to those damages the plaintiff can prove were the reasonably foreseeable results of the defendants acts or omissions. (AUSA, supra, at p. 397.) In AUSA, for example, the court found an auditors wrong in allowing inaccurate annual reports to go out may have caused investors to loan money to a corporation, but the auditor was not legally responsible for the loss of that money when the corporation defaulted on the notes. The court reasoned the auditor could not possibly have foreseen that after the loans were made, the corporation would acquire a company that was losing money at a staggering rate, or that other market factors would intervene to destroy the corporations business. (Id. at p. 402-403.)

The trial court here never determined loss causation because it found the evidence did not support the jurys determination of transaction causation. BNY essentially asserts plaintiffs never will be able to show loss causation because they cannot show BNYs acts or omissions directly led to the demise of the trusts or, at least, that BNY had any reason to foresee its acts or omissions would lead to the demise of the trusts. According to BNY, the trusts failed because they were mismanaged and, at most, BNY could have foreseen only that plaintiffs might lose the sums BNY allowed the trusts to invest in contravention of the indenture agreements.

We are not wholly unsympathetic to this argument, but this is not a case under the Securities Exchange Act of 1934, section 10b, and in the context of this appeal, we are unwilling to decide whether, in a state contract action, a plaintiff seeking damages based on lost investments must show not only that the defendants derelictions were a cause of the decision to invest, but also were a cause of the loss of the investments. In addition, assuming for purposes of argument BNY breached a contractual duty owed to plaintiffs by allowing the trusts to make improper use of plaintiffs funds, we cannot say as a matter of law either that it was unforeseeable that the funds would be lost or that it was unforeseeable the improper use would contribute to the collapse of the trusts. In addition, in connection with transactional causation, we cannot say as a matter of law no one could have foreseen that an investor would look to and rely on a false indication of prosperity in deciding whether to invest in a trust or in deciding not to withdraw the investment. Indeed, the court in AUSA recognized it is foreseeable a perception of a companys prosperity will cause persons to invest in that company. (AUSA, supra, 119 F.Supp.2d at p. 402.) Finally, as we noted earlier, because the trial court granted a new trial, it is of little matter the courts own calculation of damages may have been speculative. In sum, we find no reversible error in the trial courts decision to deny BNYs motion for JNOV, but to grant it a conditional new trial, and we decline to limit the theories of causation or damages plaintiffs may employ upon retrial.

II.

Costs

BNY contends the court erred by awarding costs to plaintiffs. Section 1032 provides that the prevailing party is entitled as a matter of right to recover costs in any action or proceeding. ( 1032, subd. (b).) Prevailing party is defined as including the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. ( 1032, subd. (a)(4).) Here, while the courts order granting a conditional new trial proposed to award $3,051,552.70 to plaintiffs, plaintiffs have not accepted that condition, and, at this point, they have no monetary recovery from defendant and therefore no right to costs.[5] Our opinion is not altered by the courts order that BNY was to return $132,433 to Trust IV, representing funds improperly used to defend BNY in this action. The order, while conferring a monetary benefit on Trust IV, conferred no benefit directly on plaintiffs.

Not content to argue that plaintiffs are not prevailing parties, BNY argues that it must be deemed the prevailing party and is entitled to its costs. The argument is premature. BNY has not obtained dismissal, and, until the matter is retried, it cannot be determined whether plaintiffs will or will not obtain a net monetary recovery. BNY points out it obtained a defense verdict as to the claimed breaches of Trust Is and Trust IIs indenture agreements, but a party that receives a net monetary recovery is entitled to its costs even if the party did not prevail on all causes of action asserted. (Michell v. Olick (1996) 49 Cal.App.4th 1194, 1198-1199.)

III.

BNYs Right to Offset

As part of a protective cross-appeal, BNY contends the trial court erred in ruling it was not entitled to an offset for the value of the settlements plaintiffs reached with the other defendants.

Section 887 provides, as relevant: Where a release . . . is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: [] (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release. . . . [] (b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties. Three interests are at work in section 877.  First . . . is the maximization of recovery to the injured party for the amount of his injury to the extent fault of others contributed to it. . . . Second is encouragement of settlement of the injured partys claim. . . . Third is the equitable apportionment of liability among the tortfeasors. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 304.) It follows that the statute must be interpreted to allow the plaintiff full recovery to the extent that others are responsible for his injuries. (Ibid.) However, an additional purpose of the statute is to prevent double recovery for the same wrong. (Lafayette v. County of Los Angeles (1984) 162 Cal.App.3d 547, 554.)

Plaintiffs claim against BNY, whether stated as a contract claim or a tort claim, was in essence a claim of negligence in the performance of contractual duties that allowed the other defendants to obtain and lose plaintiffs investments. Thus, plaintiffs theory of liability sought to recover from BNY the value of their lost investments, exactly the same loss plaintiffs sought to recover from the other defendants. Allowing BNY an offset for sums paid to settle plaintiffs claims against the other defendants would, therefore, further the interests behind section 877. Plaintiffs, however, contend section 877 does not apply because, although they at first proceeded against BNY in both tort and contract, they later dismissed their tort claims. They argue that because BNY technically was not a tortfeasor, section 877 simply does not apply, meaning, in effect, plaintiffs might obtain a double recovery. Neither party has cited a case directly on point, but the cases they do cite establish that the statute should be broadly construed to effect its underlying purposes. (E.g., Bobrow/Thomas & Associates v. Superior Court (1996) 50 Cal.App.4th 1654, 1662, fn. 2 [The joint tortfeasor concept has taken on a new meaning under current principles of comparative fault, apportionment of damages and releases that no longer discharge all joint tortfeasors]; Considine Co. v. Shadle, Hunt & Hagar (1986) 187 Cal.App.3d 760, 767 [the term joint tortfeasors as used in section 877.6 (which works in concert with section 877) is not limited to those who act in concert to cause an injury]; Lafayette v. County of Los Angeles, supra, 162 Cal.App.3d at pp. 555-556 [it is not necessary a settling defendant be in fact liable for the same tort as the nonsettling defendant; it is enough that the settling defendant was claimed to be liable for the same tort].)

In our view, for purposes of section 877, BNY was sued as a tortfeasor, even if plaintiffs ultimately proceeded only on their contract claims. Plaintiffs settlement with the other defendants occurred before they dismissed their tort claims against BNY. Moreover, and more importantly, plaintiffs theory against BNY throughout the proceedings was in effect a theory of negligence, and under that theory plaintiffs were attempting to recover the same loss from BNY that they had sought to recover from the other defendants.[6] Nonetheless, the parties may have arguments or authorities they did not submit to us, and the state of the law may evolve by the time this case is retried. We therefore decline to resolve the point here.

If after retrial damages are awarded to plaintiffs, then the trial court will have to determine, based on plaintiffs theory of recovery, whether those damages amount to double recovery from BNY and the settling defendants, if BNY and the settling defendants were joint tortfeasors, and/or if BNY was a co-obligor with rights of contribution from the settling defendants. If so, then BNY would be entitled to an offset for the value of those settlements.

Finally, we take no position here as to whether any offset should or should not include any amount of the settlement attributable to loss resulting from the collapse of Trusts I and II. While it is true the jury found BNY did not breach the indenture agreements for either Trust I or Trust II, plaintiffs theory has been BNYs breach of Trust IVs indenture agreement caused them to lose a portion of their investments in Trusts I and II because but for that breach they would have withdrawn their funds before they were entirely lost. While it seems that to the extent plaintiffs seek to recover that loss BNY should be entitled to an offset, we think the question is one better litigated upon retrial after the type and extent of plaintiffs recovery, if any, is determined.

Conclusion

As there was sufficient evidence supporting the jurys determination BNY breached Trust IVs indenture agreement and plaintiffs suffered resulting damages, the court properly denied BNYs motion for JNOV. The court erred in awarding costs to plaintiffs.

Disposition

The order granting BNY a new trial is affirmed. The orders denying plaintiffs partial judgment notwithstanding the verdict, and denying BNY judgment notwithstanding the verdict, are affirmed. The order awarding statutory costs to plaintiffs is reversed. BNY is awarded appellate costs incurred in responding to the appeal. Plaintiffs are awarded appellate costs incurred in responding to BNYs argument that the trial court erred in denying its motion for judgment notwithstanding the verdict.

_________________________

STEIN, J.

We concur:

_________________________

MARCHIANO, P. J.

_________________________

SWAGER, J.

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[1] Other cases cited by plaintiffs are distinguishable for similar reasons. In Better Foods Mkts. v. Amer. Dist. Teleg. Co. (1953) 40 Cal.2d 179, the plaintiff brought suit against a defendant burglar alarm company for losses sustained in a burglary, alleging the defendant had failed properly to transmit burglar alarm signals to their own guards and to the police. (Id. at p. 182.) After the jury was unable to agree and was dismissed, the trial court entered judgment for the defendant, reasoning that a motion for directed verdict should have been, but was not, granted. (Ibid.) The judgment, of course, disposed of the litigation. The Supreme Court therefore viewed the evidence in the light most favorable to the plaintiff, finding a directed verdict should not have been granted because some evidence supported the plaintiffs theory of causation. (Id. at pp. 182-183.) The court also pointed out the difficulty of ascertaining what portion of any loss suffered should be attributed to the defendants failure to perform (id. at p. 186)a point that favors BNYs position here. In Helm v. K.O.G. Alarm Co.(1992) 4 Cal.App.4th 194, the plaintiffs brought suit against an alarm company after their mobile home was burglarized and set on fire. (Id. at pp. 199-200.) Although the appellate court ultimately affirmed a judgment of nonsuit for lack of evidence supporting the plaintiffs theory of liability (id. at p. 204), it held the trial court erred when it found the plaintiffs were precluded as a matter of law from attempting to prove a causal nexus between the defendants conduct and the plaintiffs loss. (Id. at pp. 202-203.) The trial court here did not rule that plaintiffs were precluded as a matter of law from attempting to prove a causal nexus between BNYs conduct and their loss; it found only that plaintiffs had failed to prove the full extent of the loss they claimed.

[2] But see Mitchell v. Gonzales (1991) 54 Cal.3d 1041, 1049, cited by the court in Shawmut, supra, 33 F.3d at p. 1495:  There are two widely recognized tests for establishing cause in fact. The but for or sine qua non rule . . . asks whether the injury would not have occurred but for the defendants conduct. The other test, labeled legal cause . . ., asks whether the defendants conduct was a substantial factor in bringing about the injury. [Citation.] (Italics added.)

[3] That the ruling could not determine liability is shown by the questions posed to the jury on the special verdict form, which recognized that a breach of the indenture agreement might not render BNY liable for damages, and therefore posed a series of questions to be answered if the jury found BNY had done something the indenture contracts prohibited it from doing or had failed to do something the contracts required it to do. For example, as to Trust I, the verdict form asked:

1. Did defendant BNY Western either (a) do something the Indenture contract for Trust I prohibited it from doing or (b) fail to do something the Indenture contract for Trust I required it to do:

____Yes ____No

If your answer to question 1 is yes, then answer question 2. If you answered no, skip to the questions for Trust II, below.

2. As to the acts you found in responding yes to question 1, did plaintiffs know, or could they reasonably have known, prior to June 15, 1997, they had been harmed and that the harm was potentially caused by BNY Westerns breach of the Indenture contracts?

____ Yes ____No

If your answer to question 2 is yes, skip to questions for Trust II, below. If your answer to question 2 is no, then answer question 3.

3. Did any of the acts that you found in responding yes to question 1 involve an error of judgment by BNY Western?

____ Yes ____No

If your answer to question 3 is yes, then answer question 4. If you answered no, skip to question 7.

4. As to any of the acts that you found involved an error of judgment by BNY Western, was BNY Westerns error of judgment either (a) not in good faith or (b) made with negligence in determining the facts pertinent to such judgment?

____Yes ____No

If your answer to question 4 is yes, go to question 5. If you answered no, skip to question 6.

5. Were the plaintiffs harmed by the acts that you found in responding yes to question 4?

____ Yes ____ No

Go to question 6.

6. Did any of the acts that you found in responding yes to question 1 not involve an error of judgment by BNY Western?

____ Yes ____ No

If your answer to question 6 is yes, then answer question 7. If your answer to question 6 is no, skip to question 8.

7. As to any acts that you found that did not involve the exercise of judgment by BNY Western, were the plaintiffs harmed by such acts?

____ Yes ____ No

Go to question 8.

8. If you answered yes to either question 5 or question 7 then answer the following[;] if you answered no to both questions 5 and 7 then skip to the questions for Trust II, below:

What are plaintiffs damages?

$______

[4] Although interpretation of a contract is essentially a judicial function (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865), it is the jurys responsibility, as the trier of fact, to resolve any conflicts in the extrinsic evidence properly admitted to interpret the language of a contract. (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912-913.)

[5] The trial court apparently was of the opinion that the plaintiffs were entitled to a monetary recovery, reasoning they could accept the remittitur if the order was affirmed on appeal. As we noted earlier, by taking the appeal, plaintiffs effectively cut off any right they had to the award available by reason of the courts conditional order granting a new trial. (Swett v. Gray, supra, 141 Cal. at p. 70.)

[6] Section 877 no longer limits its application to tortfeasors claimed to be liable for the same tort, extending its reach to one or more other co-obligors mutually subject to contribution rights. Section 877.6 refers to joint tortfeasors or co-obligors on a contract debt. These provisions, while not expressly addressing the situation present here, further support the conclusion the Legislature intended section 877 to define the rights of all persons jointly responsible for the same wrong or the same loss.