Hackbart v. Uppal
Filed 8/8/13 Hackbart v. Uppal CA4/1
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
DAVID HACKBART et al.,
Plaintiffs and Appellants,
v.
SATINDER M. UPPAL et al.,
Defendants and Appellants;
BHAVNA R. UPPAL,
Defendant and Respondent.
D059657
(Super. Ct.
No. GIN057896)
APPEALS
from a judgment of the Superior Court of
County, Thomas P. Nugent and Earl H. Maas III, Judges. Affirmed in part, reversed in part.
English
& Gloven, Donald A. English, Jeffrey E. Flynn; Boudreau Williams, Jon R.
Williams, for Plaintiffs and Appellants, David Hackbart and Kihack Management,
LLC.
Catanese
& Wells, Thomas Randolph Catanese, Douglas R. Hume; Gerald N. Shelley, for
Defendant and Appellant, Satinder M. Uppal and Defendant and Respondent, Bhavna
R. Uppal.
Catanzarite
Law Corporation, Kenneth J. Catanzarite and Nicole M. Catanzarite-Woodward, for
Defendant and Appellant, Suresh K. Soni.
Defendants
and appellants Satinder M. Uppal and Suresh K. Soni appeal from a judgment
entered after a bifurcated jury and bench trial on fraud and related equitable
claims of plaintiffs and respondents David Hackbart and Kihack Management LLC
(collectively Hackbart) arising out of Hackbart's purchase of a gasoline
station and related businesses from defendants.
The trial court entered a judgment awarding Hackbart $1,400,000 in fraud
damages and $700,000 in punitive damages against Uppal, and $232,000 against
Soni in the amount it found Soni had been unjustly enriched. It awarded $1,400,000 in breach of contract
and fraud damages against suspended corporation MTPA Ventures Limited, Inc.
(MTPA), against which it had previously entered a default judgment. The court declined to hold any of the
individual defendants liable for the acts of MTPA as alter egos.
Uppal
contends: (1) there is no evidence to
support the jury's finding that Hackbart justifiably relied on any statement or
concealment of fact; and (2) the court erred by permitting the jury to
calculate fraud damages in a manner
contrary to the Civil Code
name="_ftnref1" title="">[1]
section 3343 out-of-pocket measure. Soni
joins these arguments from Uppal's appellant's brief. Uppal separately contends the jury's punitive
damage award is unsupported by a finding of actual damage, excessive and
contrary to law. Soni separately
contends the trial court erred by finding he was unjustly enriched because
Hackbart had no legal basis on which to premise a claim for unjust enrichment,
and even if there were such a basis, Hackbart failed to proffer evidence of the
businesses' value at the date of sale.
Hackbart cross-appeals, contending the
restitutionary award against Soni was improperly limited to the net cash
proceeds Soni received, and should be increased to $560,000, which reflects
Soni's proportionate share of the gross out-of-pocket damages awarded to
Hackbart. Hackbart further contends the
trial court erred by denying alter ego liability against Soni.
We conclude
that to the extent the trial court erred by submitting the wrong measure of
fraud damages to the jury or the jury calculated fraud damages in a manner
contrary to section 3343, the error was invited by Uppal's submission of the
fraud damages jury instruction. We
reverse the restitution award against Soni as unsupported by an independent
basis for liability, as well as the punitive damages award against Uppal as
without support by meaningful evidence of his ability to pay. We reject the remaining contentions and
otherwise affirm the judgment.
FACTUAL AND
PROCEDURAL BACKGROUND
In 2001,
Uppal, a certified public accountant (CPA) with undergraduate and master's
degrees from University of Southern California in business administration and
business taxation, purchased out of bankruptcy a Chevron gasoline station and
related businesses located at 350 Encinitas Boulevard. The purchase price was $1.1 million. Uppal signed the purchase agreement and
promissory note, as well as the security agreement and a sublease. During the previous 13 years, he had invested
in 12 to 15 automotive-related franchises and desired to get out of that
business. At some point, he and Soni
agreed to be financial partners in the transaction, and they formed and
incorporated MTPA in September 2001, shortly before the purchase. Uppal and his wife Bhavna Uppal owned a 60
percent interest in MTPA, and Soni owned a 40 percent interest. Despite MTPA's creation, Uppal never
attempted to assign to MTPA any assets or rights to the business he had
individually acquired, assertedly because the bankruptcy court would not permit
it. Soni accepted that all of the assets
were in Uppal's name.
name="_ftnref2" title="">[2]
MTPA never
held any formal shareholder or board of director meetings. MTPA did, however, obtain a seller's permit
from the state Board of Equalization in order to collect sales tax, and Uppal
was responsible for doing the monthly reporting of sales and use taxes
due. From January 2004 to August 2004,
Uppal understated transactions at the Chevron station subject to gasoline sales
taxes so he could save money, even though he knew doing so was dishonest.
At some
point in 2004, Uppal shared with Soni a monthly "break-even" analysis
of the station's profits and losses from 2003 that showed losses for 11 of the
12 months of that year, a net loss of over $91,000.
it made sense to put more money into the business given that analysis. Soni told Uppal that his numbers did not make
sense to him, and he asked him to come up with a "clean set of
numbers"; that they would discuss the sale "once we clean the
books." The men decided they would
sell the business and started marketing it by the spring of 2004.
In October
2004, Hackbart, a car wash owner with a college degree in accounting, called
Uppal in response to an advertisement about the Chevron station. Uppal informed Hackbart of the nature of the
business including the volume of gas pumped per month and the profit per
gallon, and the revenues from both the car wash and convenience store. Uppal told him the average income from
January 2004 to August 2004 was $33,000 to $34,000. A few days later, Hackbart made an e-mail
offer to Uppal of $1.8 million for the business, contingent on an inspection of
its books and records. Uppal countered
with a higher offer that would permit Hackbart to inspect the books and records
within the next three days. They finally
settled on a purchase price of $1.875 million for the Chevron gas station, car
wash, convenience store, automobile repair center and the rights to a sandwich
franchise.
In late
October 2004, Uppal, Hackbart and other potential investors with Hackbart met
at a nearby restaurant and Hackbart was shown profit and loss statements as
well as "Excel" spreadsheets for eight months ending in 2004, showing
a net operating income of about $33,000 to $34,000 per month. Uppal also showed Hackbart tax statements from
2003 showing ordinary income of $46,632.
Uppal did not show Hackbart the 2003 break-even analysis showing $91,000
in losses. Uppal explained to Hackbart
how the net operating income had continued to grow from the time Uppal had
taken the business out of bankruptcy.
That day, Uppal permitted Hackbart to take the profit and loss statement
and spreadsheets, and though Hackbart was still interested in going forward, he
sought more documentation. Later, in
response to Hackbart's e-mail request, Uppal additionally provided, among other
documents, an August 2004 invoice showing gas purchases. Hackbart continued to ask Uppal for
additional documents including financial statements he had been shown but was
not permitted to take as well as bank statements; Uppal told him they were in
numerous boxes with his CPA due to a recent move. In another telephone call, Hackbart asked
Uppal to break down the sales components of each part of the business in
detail, and Uppal did so over the phone while Hackbart took detailed notes
concerning the net revenues for an eight-month period ending August 31,
2004. Hackbart did not see anything
surprising in Uppal's numbers, and based on all of Uppal's statements, he
became convinced they were the actual numbers for the business. The next day, while Hackbart and Uppal
negotiated the purchase price and terms, Hackbart again asked for documents to
back up the numbers, but Uppal reiterated that they were not available. Uppal urged Hackbart to waive the contingency
provision on reviewing books and records, and Hackbart did so.
In November
2004, Hackbart signed a purchase and asset sale agreement (the purchase
agreement) with MTPA. He agreed to pay
$1,875,000 for the gas station, car wash, convenience store, related office
space, and the rights to the sandwich franchise in the form of $1,075,000 in
cash and Hackbart's assumption of an existing $800,000 promissory note against
the business. In the purchase agreement,
Hackbart acknowledged he had "reviewed the books and records prepared by
Seller of Chevron in Encinitas," was "satisfied with those records
and hereby removes the contingency in paragraph 3 of the purchase and sales
agreement . . . ." When Hackbart
received the escrow instructions, however, he took the time to alter or strike
out several paragraphs in them. First,
because he had not received all of the books and records that he had requested
and had primarily relied on Uppal's representations as to the business's
financial statements and revenues, he struck out and initialed a sentence
stating he had not relied upon seller representations but had conducted his own
investigation. He also struck out a
paragraph entitled "Purchase Agreement Governs," which indicated in
part that the parties had agreed the escrow instructions "supersede and
void" any prior agreements.
Hackbart felt that Uppal had in fact made representations to him.
In May
2005, Hackbart signed final escrow instructions containing a statement that the
parties agreed "all warranties and representations of the parties shall
survive the closing of this escrow."
The statement was important to Hackbart because his understanding of the
businesses' numbers came from Uppal and he did not have the back-up documents
he had asked for. During the entire
transaction, Uppal did not tell Hackbart about the underreporting of sales tax
or that Uppal had underestimated the businesses' expenses, was behind on lease
payments, had to borrow on personal credit cards to fund business expenses, or
that the business required loans to meet expenses. Soni never told Hackbart that he suspected
the books were inaccurate or otherwise tried to share any information
concerning what he knew about the business.
Escrow closed on or about May 3, 2005.
After
Hackbart took over the businesses, he observed he was losing money; expenses
were much higher than expected. When he
figured the profits and losses for the first 10 to 11 months of operation, he
calculated a net loss of almost $24,000.
In order to run the businesses, Hackbart had to slash expenses, and had
his wife work there five or six days a week without pay. In the first few months, he paid sales taxes
from his personal funds. Hackbart
eventually retained Brian Bergmark, a forensic accountant and CPA who had
previously valued gas stations for various estate and litigation matters, to
conduct an analysis of the businesses' financial performance.
In December
2006, Hackbart sued MTPA, Uppal, Bhavna, and Soni for rescission and
restitution, fraud, breach of contract, "unjust enrichment," an
accounting and imposition of a constructive trust. He later filed a first amended complaint,
which defendants answered, generally denying the allegations and asserting
various affirmative defenses.
The case
proceeded to a bifurcated jury trial on Hackbart's claims for intentional and
negligent misrepresentation as well as fraud by concealment. MTPA had not appeared and, before trial, the
trial court entered its default, striking its answer and operative
cross-complaint. The trial court and
Hackbart's counsel characterized the proceeding as to MTPA as a "prove-up
on damages." Hackbart dismissed
without prejudice his first cause of action.
At trial,
Hackbart's expert, Bergmark, opined that Hackbart had suffered economic damages
in connection with his purchase of the businesses. He derived these damages by calculating an
"indicated value" using an adjusted earnings (earnings before
interest) analysis, and applying the multiple that Hackbart was willing to pay
(based on the $1,875,000 purchase price relative to the earnings reported by
Uppal), under two different scenarios.
In reaching his conclusions, Bergmark annualized Uppal's underreported
sales tax, explaining he considered these numbers because if business earnings
were overstated, a person would overpay for what he or she received. According to Bergmark, accounting for Uppal's
underpaid sales tax, Hackbart overpaid $961,880 for the businesses;
additionally factoring in concerns that Uppal had understated other expenses
such as payroll, Hackbart overpaid by $1,408,571.
Hackbart's counsel had earlier disclaimed any right to
expenses or other consequential damages, including lost profits, occurring
after the sale.
title="">[6]
Uppal
presented his own expert, Ann Wilson, who criticized Bergmark's valuation
approaches, including his calculation of net operating income. Using Bergmark's numbers as to Uppal's
underpaid sales tax, Wilson obtained an adjusted net operating income figure of
$243,090 and applied various multiples to conclude that as of May 2, 2005, the
businesses were worth between $1,580,085 and $2,187,810. Wilson also looked at a valuation based on
the businesses' income stream, reaching a valuation of $2,131,972. According to Wilson, the best evidence of
fair market value (the price a willing buyer and seller would pay in an open
market) was what actual price was paid, and Bergmark's numbers did not pass a
"reality check" given Uppal had purchased the shuttered businesses
for $1.1 million in 2001 with bankruptcy court approval.
Following
the presentation of evidence, Bhanva and Soni successfully moved for a nonsuit
on Hackbart's fraud causes of action.
With the parties' agreement, the court thereafter instructed the jury on
fraud damages as follows: "If you
decide that the [plaintiffs] have proved their fraud claims—and that's what
they are—against the defendant, you must also decide how much money would
reasonably compensate the plaintiffs for the harm. This is called damages. [¶]
The amount of damages must include an award for each item of harm that
was caused by defendant's wrongful conduct, even if the particular harm could
not have been anticipated. [¶] Plaintiffs do not have to prove the exact
amount of damages that will provide reasonable compensation for the harm. However, you must not speculate or guess in
awarding damages. [¶] The following are the specific items of
damages claimed by the plaintiffs:
[¶] One, overpayment for the
business—or businesses; [¶] and prejudgment interest."
The jury
returned special verdicts in Hackbart's favor against Uppal, awarding Hackbart
$1,400,000 in fraud damages, and, after considering additional evidence as to
Uppal's finances, $700,000 in punitive damages.
The trial
court then conducted a bench trial on Hackbart's claims for damages against
MTPA, as well as his request for a finding of alter ego liability and remaining
equitable cause of action against Uppal, Bhavna and Soni styled "unjust
enrichment." It issued a proposed
statement of decision, to which Hackbart and Soni objected and/or sought
clarification. In its final statement of
decision, the court (1) entered a default judgment against MTPA in the amount
of $1,400,000; (2) found the evidence did not support a conclusion that recognition
of the corporate form would work an injustice to Hackbart; and (3) found both
Uppal and Soni were unjustly enriched: Uppal in the amount of the $155,000
bonus he had received at the close of the sale, and Soni in the amount of the
$232,000 distribution he received at the close of sale. The court found the award against Uppal
duplicative of the jury's fraud damage award, and required Hackbart to make an
election before entry of judgment. It
declined to impose liability on Bhavna, finding no evidence she participated in
the business management or had awareness of its operations, but was merely a
MTPA shareholder who relied upon her husband Uppal's conduct and
direction. On the other hand, the court
found Soni, a sophisticated businessman, was aware the business was being sold
for more than it was worth and knew Hackbart was shown books and records that
he considered to be unreliable, warranting a conclusion that it was unjust for
Soni to realize the $232,000 return on his investment in MTPA.
On March 2,
2011, the court entered judgment in Hackbart's favor awarding $1,400,000 fraud
and breach of contract damages against MTPA; $1,400,000 in fraud damages and
$700,000 in punitive damages against Uppal; and $232,000 in unjust enrichment
damages against Soni.
Uppal moved
for judgment notwithstanding the verdict (JNOV) and for a new trial. He argued a new trial was warranted in part
due to an error of law in that Hackbart had failed to establish a proper
measure of damages, and also for excessive damages resulting from Hackbart's
failure to present evidence of the businesses' actual value on the date of
sale. He argued JNOV was proper for the
latter failure of proof, as well as insufficient evidence of Hackbart's reasonable
reliance. On April 15, 2011, the trial
court denied both motions, as well as Soni's requests to join them. Thereafter, Uppal and Soni separately
appealed from the March 2, 2011 judgment; Uppal identifying that portion of the
judgment following the jury trial, and Soni identifying that portion of the
judgment following the bench trial.
Hackbart appeals the March 2, 2011 judgment both as to the jury and
DISCUSSION
I. Uppal's
and Soni's Contentions
A.
Jury's Findings of Justifiable Reliance on Uppal's Fraud
Uppal and
Soni contend that based on the trial evidence, the jury could not reasonably
have concluded that Hackbart acted with justifiable reliance on anything Uppal
did or did not say concerning the Chevron station. They characterize Hackbart as a
"sophisticated buyer" with experience in the car wash industry, and
point out, among other facts, Hackbart was never satisfied with the financial
documents he had sought from Uppal and could not conduct an independent
analysis to confirm the businesses' financials, but went ahead in any event
with the purchase. Uppal and Soni argue
that under the circumstances, the trial court should have granted Uppal's JNOV
motion on this ground.
We asked
the parties to brief Uppal and Soni's failure to identify the trial court's
April 18, 2011 amended minute order denying JNOV in their notices of
appeal. Having considered the
supplemental briefing, we conclude neither preserved an appeal from that separately
appealable order. (§ 904.1; In
re Baycol Cases I & II (2011) 51 Cal.4th 751, 761, fn. 8 [if order is
appealable, an appeal must be taken or the right to appellate review is
forfeited]; see Maughan v. Google Technology, Inc. (2006) 143 Cal.App.4th 1242, 1247; Sole
Energy Co. v. Petrominerals
Corp. (2005) 128 Cal.App.4th 212, 239 [notice of appeal must identify the
particular order being appealed].)
However,
their contention on appeal as to the element of justifiable reliance is in
substance a sufficiency of the evidence challenge, and because the jury
resolved disputed facts in reaching its finding, on Uppal's and Soni's appeals
from the March 2, 2011 judgment, we may review the record for substantial
evidence. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624,
632; Donovan v. Poway Unified School
Dist. (2008) 167 Cal.App.4th 567, 581-582.)
A challenge to the sufficiency of the evidence to support a judgment may
be made for the first time on appeal.
(See, e.g., Tahoe National Bank v.
Phillips (1971) 4 Cal.3d 11, 21, fn. 17.)
" 'When a finding of fact is attacked on the ground that there is
not any substantial evidence to sustain it, the power of an appellate court begins
and ends with the determination as to whether there is any substantial
evidence contradicted or uncontradicted which will support the finding of
fact.' [Citations] [¶]
'It is well established that a reviewing court starts with the
presumption that the record contains evidence to sustain every finding of
fact.' " (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875,
881.) The statement relied upon by Uppal
and Soni in Sweatman v. Department of
Veterans Affairs (2001) 25 Cal.4th 62, 68—that a party moving for JNOV
"may appeal from the judgment or from the order denying the motion for
[JNOV], or both"—recognizes that a sufficiency of the evidence challenge
may be asserted by either means.
1. Reasonable
Reliance Element of Fraud
In
establishing fraud, including fraud by omission, Hackbart was required to prove
actual, justifiable, reliance Uppal's on misrepresentations or omissions. Importantly,
" ' "[i]t is not . . . necessary that [a
plaintiff's] reliance upon the truth of the fraudulent misrepresentation be the
sole or even the predominant
his conduct. . . . It is enough that the representation has
played a substantial part, and so has been a substantial factor, in influencing
his decision." ' [Citations.] Regarding concealment claims, the plaintiff
may establish this element by showing that 'had the omitted information been
disclosed, [he or she] would have been aware of it and behaved
differently.' " (
CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 864 (
Uppal and Soni do not challenge the evidence supporting the element of
actual reliance, and Hackbart's testimony alone constitutes substantial
evidence he in fact relied on the financial information provided by Uppal, as
well as Soni's failure to disclose his suspicions about the soundness of the
businesses' financial operations. (
169 Cal.App.4th 1197, 1208 [testimony of a single credible witness, even if a
party, can be substantial evidence to support a judgment].)
To
establish his reliance was justifiable, Hackbart must show the
" 'circumstances were such to make it reasonable for [him] to accept [Uppal's] statements without an
independent inquiry or investigation.'
[Citation.] The reasonableness of
the plaintiff's reliance is judged by reference to the plaintiff's knowledge
and experience. [Citation.]
' "Except in the rare case where the undisputed facts
leave no room for a reasonable difference of opinion, the question of whether a
plaintiff's reliance is reasonable is a question of fact." ' " (OCM,
supra, 157 Cal.App.4th at pp.
864-865; see Alliance Mortgage Co. v.
Rothwell (1995) 10 Cal.4th 1226, 1239; Wilhelm v. Pray, Price, Williams
& Russell (1986) 186
Cal.App.3d 1324, 1332.) "Generally,
'[a] plaintiff will be denied recovery only if his conduct is manifestly
unreasonable in the light of his own intelligence or information. It must appear that he put faith in
representations that were "preposterous" or "shown by facts within
his observation to be so patently and obviously false that he must have closed
his eyes to avoid discovery of the truth."
[Citation.] Even in case of a
mere negligent misrepresentation, a plaintiff is not barred unless his conduct,
in the light of his own information and intelligence, is preposterous and
irrational.' " (OCM, at p. 865;
1039, 1067.)
2. Analysis
We conclude
the record contains substantial evidence to support the jury's finding that
Hackbart reasonably relied on Uppal's misrepresentations and omissions. Contrary to Uppal's characterization of
Hackbart as a sophisticated buyer, the evidence was that Hackbart, who had
never been licensed as a CPA nor completed a master's degree in taxation,
worked for approximately two years as an accountant, became a resort manager,
installed cable television, worked as an administrator, and became an
investment counselor with Bank of America.
He purchased one business, a car wash, in 1998, with a partner. As Uppal acknowledges, Hackbart had never
before purchased a business involving a gas station. The evidence does not support Uppal's
characterization of Hackbart as a sophisticated purchaser of businesses.
The
evidence shows Uppal, himself a CPA who had bought and sold multiple automotive
oil change franchises, misrepresented to Hackbart the state of the station's
financials, and concealed not only the 2003 break-even analysis reflecting
significant losses, but also his underpayment of sales taxes. The jury found Uppal's misrepresentations
were intentional. And, Hackbart made
reasonable efforts to ascertain material financial information. During face-to-face meetings, Uppal showed
Hackbart various profit and loss statements and spreadsheets with financial
information, and Hackbart later pursued and carefully compiled net revenue
numbers from information that Uppal broke down to him over the telephone. When Hackbart asked for more detailed back-up
documentation, Uppal responded with a plausible excuse, telling Hackbart the
papers were out of his reach due to his CPA's recent move. Hackbart ultimately accepted Uppal's
assurances that the numbers he provided were correct.
Uppal and
Soni suggest that Hackbart's reliance was unjustified because Uppal was a
stranger, and Hackbart should have conducted background checks, independently
verified Uppal's profit and loss numbers, contacted a gas supplier, or hired
consultants to assist him in evaluating the information provided by Uppal. However, "the law is clear that ' "
'[n]o rogue should enjoy his ill-gotten plunder for the simple reason that his
victim is by chance a fool.' " '
[Citation.] ' " 'Negligence
on the part of the plaintiff in failing to discover the falsity of a statement
is no defense when the misrepresentation was intentional rather than
negligent.' [Citation.] 'Nor is a plaintiff held to the standard of
precaution or of minimum knowledge of a hypothetical, reasonable man.' " '
" (Beckwith v. Dahl, supra,
205 Cal.App.4th at p. 1067; see also Boeken
v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1666-1667;
Cal.App.2d 942, 964-965.) And, any
suspicions Hackbart may have had when Uppal denied his requests for additional
information were "repeatedly deflected by plausible assertions of
fact." (Hartong v. Partake, Inc., at pp. 965-966.) "If the defendant makes a plausible
explanation of fact, the plaintiff is not required to further
investigate." (Id. at p. 966.)
The
circumstances here are akin to those in Hartong
v. Partake, Inc., supra, 266
Cal.App.2d 942, in which plaintiffs without franchising experience sought help
from defendants who held themselves out as expert consultants to potential
franchisees and who used "confidence-inspiring" materials to induce
trust. (Id. at pp. 949, 965.) The
plaintiffs invested after being knowingly given false information by a supposed
agent concerning minimum net income based on past sales records, the nature and
level of support they would receive, and information concerning the franchisor
(id. at pp. 953-954, 957), but the
performance was not as promised and the plaintiffs discovered that they had no
actual business relationship with the franchisor, contrary to representations
made to them. (Id. at pp. 953-954, 956.) The defendant argued the plaintiffs'
reliance was unreasonable because they were negligent in failing to ascertain
the extent of the agent's true authority, and had made some independent
investigation of the facts. (
the plaintiffs had no prior experience with franchising or distributorships,
the defendant held itself out as an expert consultant and provided materials
that backed its statements, and plaintiff's suspicions were allayed by
defendant's plausible assertions as to the franchisor's relationships. (Id. at pp. 965-966.) Under
these circumstances, the court concluded there was no bar to the plaintiffs'
recovery by the fact some of them may have relied to some extent on independent
advice or checked the company's Better Business Bureau rating. (Id.
at p. 966.)
As in
some investigation before the close of escrow does not preclude a finding of
justifiable reliance. An independent
investigation does not preclude reliance on representations where the falsity
of statements is not apparent from an inspection, or the person making the
representations has superior knowledge, or the party relying thereon is not
competent to judge the facts without expert assistance. (Bagdasarian v. Gragnon, supra, 31 Cal.2d at p. 748;
Hackbart regarding the backup financial numbers, Hackbart was not required to
conduct an independent investigation.
(See Linden Partners v. Wilshire Linden Associates (1998) 62
Cal.App.4th 508, 529.) Nor was Hackbart
required to hire professionals to confirm the truth of Uppal's alleged
representations, given Uppal's superior knowledge about the businesses'
financial condition. (See Furla v.
Jon Douglas Co. (1998) 65 Cal.App.4th 1069, 1079 [buyer not required to
hire a professional to discover falsity of seller's representations concerning
area of real property]; Hartong, at p. 966; Curran v. Heslop
(1953) 115 Cal.App.2d 476, 481-482 [reasonable reliance supported by the
evidence even where buyer conducted physical inspection of house, where
inspection did not reveal apparent building code violations].)
In sum,
Hackbart made a reasonable effort to ascertain the financial information
concerning the Chevron station and related businesses, received plausible
assertions as to why Uppal could not provide backup financial information in
the face of his requests, and he accepted at face value the balance sheets and
spreadsheets given to him by Uppal, who had superior knowledge of the facts. This is not a case in which Hackbart
"put faith in representations that were 'preposterous' or 'shown by facts
within his observation to be so patently and obviously false that he must have
closed his eyes to avoid discovery of the truth.' " (OCM,
supra, 157 Cal.App.4th at pp.
864-865; see also Cortez v. Weymouth (1965) 235 Cal.App.2d 140, 151-152.) His conduct, in the light of his own
information and intelligence was not "preposterous and irrational."
(Hartong v. Partake, Inc., supra, 266 Cal.App.2d at p.
965). Substantial evidence
supports the jury's finding that Hackbart justifiably relied on Uppal's
misrepresentations and omissions.
B.
Measure of Damages
Uppal and
Soni contend the trial court prejudicially abused its discretion by (1)
allowing the jury to award damages contrary to the exclusive out-of-pocket
measure of damages set forth in section 3343 for fraud "involving the
'purchase, sale or exchange of property'. . . ." and (2) preventing Uppal
from fully presenting his own expert testimony on the businesses' actual value.
evidence of the actual value of the gas station and car wash on the date of
purchase and that Hackbart's expert Bergmark admitted as much when he testified
that he based his damages calculation on Hackbart's desired "multiple of
earnings." Uppal argues the failure
of proof requires that judgment be entered in his favor on his JNOV
motion. Soni argues the failure of proof
on damages means there is no evidence to support the trial court's finding that
Hackbart paid more for the businesses than what they were worth, and that he
(Soni) was unjustly enriched.
Hackbart
responds that the parties used the correct measure of damages at trial as
evidenced in part by the jury instructions; that Uppal and Soni's challenge is
merely to his expert's methodology in
calculating value, which is an issue of credibility that cannot be relitigated
in an appellate court. Hackbart asserts
Bergmark's testimony showed the extent Hackbart overpaid for the businesses,
satisfying section 3343, and it was countered by that of Uppal's expert,
Wilson, who disagreed with Bergmark's conclusions and opined that a
market-based approach was a more proper evaluation to determine the businesses'
actual value. He points out it was the
jury's task to weigh and evaluate the various expert approaches on how to best
calculate the actual value of the gas station and car wash (the value of what
he received) so that it could be compared with what Hackbart actually paid.
1. Out-of-Pocket
Measure of Damages
One who is
defrauded in the purchase or sale of property is entitled to recover the
difference between the actual value
of that with which the defrauded party parted and the actual
value of that received.
(§ 3343;
Mortgage Co. v. Rothwell, supra,
10 Cal.4th at p. 1240; Bagdasarian v. Gragnon, supra, 31 Cal.2d 744, 762; Fragale v. Faulkner (2003) 110 Cal.App.4th 229, 236.) The term value ordinarily means market
value. (Bagdasarian, at p. 753; Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663,
675; Glendale Fed. Sav. & Loan Assn.
v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 141.) "The definition of market value and the
principles governing its ascertainment are the same as those applicable to the
valuation of property in eminent domain proceedings [citation] and in ad
valorem taxation of property." (
Market
value " 'is normally determined by the price at which [property] could be
resold in an open market or by private sale if its quality or other
characteristics which affect its value were known.' " (Bagdasarian v. Gragnon, supra,
31 Cal.2d at p. 753, quoting Rest.,
Torts, § 549, com. c; see also In re
Marriage of Hewitson (1983) 142 Cal.App.3d 874, 882 (Hewitson) [fair market value is " 'the price at which the
property would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell' and both having reasonable
knowledge of relevant facts"].)
Damages are to be calculated as of the date of the transaction. (Salahutdin
v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 568;
228 Cal.App.2d 21, 31.) Hackbart had the
burden to prove facts entitling him to damages in accordance with that
measure. (Nece v. Bennett (1963) 212 Cal.App.2d 494, 497.)
The
out-of-pocket measure is contrasted with the benefit-of-the-bargain rule, which
is " 'concerned with satisfying the expectancy interest of the defrauded
plaintiff by putting him in the position he would have enjoyed if the false
representation relied upon had been true; it awards the difference in value
between what the plaintiff actually received and what he was fraudulently led
to believe he would receive.' " (
Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 1710, p. 1238.) In the case of a party defrauded in the
purchase or sale of property, section 3343 specifically excludes
benefit-of-the-bargain damages by prohibiting the defrauded person from
recovering "any amount measured by the difference between the value of
property as represented and the actual value thereof." (§ 3343, subd. (b)(1);
2. Invited
Error
Under the
doctrine of invited error, if a party's conduct induces the commission of an
error, the party is estopped from claiming on appeal that the judgment should
be reversed because of that error. (
383, 403; Mary M. v. City of Los Angeles (1991)
54 Cal.3d 202, 212.) "As a leading
treatise puts it, an appellant 'cannot complain of error [it] personally
"invited." In other words, one
whose conduct induces or invites the commission of error by the trial court is estopped
from asserting it as a ground for reversal on appeal.' " (Transport
Ins. Co. v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1000.) The invited error doctrine applies with
particular force in the area of jury instructions; a party that requests, or
acquiesces in, a particular jury instruction cannot appeal the giving of that
instruction or the sufficiency of evidence of matters contrary to the
instruction. (Ibid.; Nevis v. Pacific Gas
& Elec. Co. (1954) 43 Cal.2d 626, 627-630 [defendant invited error in
requesting jury instruction that a utilities company was permitted to maintain
power lines a distance of 22 feet above the ground and failing to request an instruction
that an 18-foot minimum clearance was permitted in the subject accident area,
which estopped defendant from arguing the evidence was insufficient to support
a finding on negligence in respect to violating a 22-foot rule, or that the
violation of that rule did not contribute to the plaintiff's injuries].)
Our request
for supplemental briefing sought input from the parties as to whether Uppal and
Soni had invited error on the measure of damages, including by failing to
object to the trial court's fraud damages jury instruction or Bergmark's
opinion testimony. Both Uppal and Soni
concede they jointly proposed the damages instruction, asserting it
"subsumed the requirements of Civil Code Section 3343" when it stated
damages as "overpayment for the businesses." According to Uppal and Soni, they did not
invite error by requesting the instruction because the reasonable and only
construction of those terms means inclusion of the actual value (or fair market
value) of the business on the date of sale.
As for Bergmark's testimony, Uppal and Soni maintain they had no reason
to object and they have not challenged its admission on appeal, because it was
opinion as to valuation, a necessary element of the section 3343 measure of
damages.
" '
" 'In a civil case, each of the parties must propose complete and
comprehensive instructions in accordance with his theory of the litigation; if
the parties do not do so, the court has no duty to instruct on its own motion.' [Citations.]" [Citation.]
Neither a trial court nor a reviewing court in a civil action is
obligated to seek out theories plaintiff might have advanced, or to articulate
for him that which he has left unspoken.' " (Metcalf v. County of San Joaquin (2008) 42 Cal.4th 1121,
1130-1131.) And, with regard to the
measure of damages, "It is well established that where a case is tried,
without objection on the part of the defendant, on the theory that a certain
rule for the measure of damages is correct, the defendant cannot urge for the
first time on appeal that the case was tried on an erroneous theory as to
damages. [Citations.] Accordingly, the theory on which the case is
tried, that under the issues framed certain damages are recoverable, will be
adhered to by the appellate court on appeal." (Evans v. Faught (1965) 231 Cal.App.2d
698, 713-714.)
We conclude
that under these principles, invited error bars Uppal's and Soni's contention
that the trial court erred when it "allowed the jury to find damages . . .
contrary to the express provisions of Civil Code section 3343" or
"fail[ed] to apply" the proper measure of damages. (Emphasis and some capitalization
omitted.) The record does not contain
any motions in limine as to Bergmark's
testimony and the parties do not point to any argument on Uppal or Soni's
behalf to the court that it was somehow permitting the jury to award a legally
incorrect measure of damage. Rather, the
trial court instructed the jury in accordance with the parties' agreed-upon
jury instruction, which unspecifically told the jury that Hackbart was entitled
to damages in the form of his overpayment
for the businesses. Each party presented
experts who used different theories and methods to explain why Hackbart paid,
or did not pay, more than what the businesses were worth. Even if this instruction "subsumed"
the notion that the businesses' worth is to be determined by fair market value,
as Uppal and Soni maintain, it was so general, lacking clarity, and incomplete
that Uppal and Soni by offering it acceded to the jury's calculation of damages
by any method the experts proposed to establish the amount of Hackbart's
overpayment. We cannot say the requested
instruction was an incorrect statement of the law, but it was certainly vague
and incomplete. Thus, Uppal and Soni
should have sought additional or clarifying instructions in order to preserve a
claim that the court erred by submitting an erroneous measure of damages to the
jury or permitting the jury to reach an erroneous measure. (See, e.g., Metcalf v. County of San
Joaquin, supra, 42
Cal.4th at pp. 1130-1131.)
We
acknowledge Uppal moved for a new trial on grounds of excessive damages, as
well as on grounds the verdict was "against law" or the result of an
error in law. But principles of invited
error nevertheless apply where a trial court, as here, has denied a motion for
new trial. (Hand Electronics, Inc. v. Snowline Joint Unified School Dist. (1994)
21 Cal.App.4th 862, 870-871 [distinguishing application of invited error
principles in connection with an order granting
a new trial from an order denying a
new trial; " ' ". . . the rules applicable to . . . invited error or
to estoppel[] have no application when an appellate court is considering the propriety
of an order granting a new trial.
such error would be considered waived by failure to object" ' "
(italics added)]; Neal v. Montgomery
Elevator Co. (1992) 7 Cal.App.4th 1194, 1198; see McCarty v. Department of Transportation (2008) 164 Cal.App.4th 955,
984; contra, Roberson v. J.C. Penney Co. (1955)
136 Cal.App.2d 1, 4-5 [on appeal from an order granting a new trial, invited
error by offering of jury instructions will not restrict appellate court from
considering the issue].) And, to prevail
on a motion for new trial on grounds of error in law, Uppal was required to
have excepted to the error in the
measure of damages. (Code Civ. Proc.,
§ 657(7).) Nor is Uppal's claim
saved by the fact he moved for a new trial attacking the damages as a result of
passion or prejudice, because in his motion, he "did not in so doing
contend that the measure of damages upon which the jury was instructed was
improper." (See
Cal.App.3d 90, 108, [appellate court rejected appellant's claim that the jury
used the wrong measure in awarding damages even when appellant had moved for a
new trial on grounds of damages being the result of passion or prejudice; the
respondent and trial court relied in part on appellant's acquiescence in the
use of the measure of damages, appellant did not object to the respondent's
evidence regarding damages (cost of repair) and in fact offered its own
evidence on this cost item, and in the absence of any objection by appellant to
use of cost of repair as the proper measure, it would be unfair to allow the
appellant to raise the issue].)
Based on
these principles and the invited error doctrine, we conclude the trial court
was not required to override the parties' choice of jury instructions and
suggest a different measure of damages to the jury. Nor will we disturb the jury's compensatory
fraud damages verdict, which was reached after a weighing of both parties'
expert testimony and necessarily based on the measure of damages proposed by
the parties.
II. Uppal's
Challenge to Punitive Damages Award
Uppal
advances a two-pronged argument against the jury's $700,000 punitive damages
award. First, he maintains that because
Hackbart failed to establish actual compensatory damages, he cannot be held
responsible for punitive damages.
Because we have not disturbed the jury's compensatory damages verdict,
that contention fails. Uppal further
contends the $700,000 award is contrary to law as it has no rational
relationship to his financial condition, namely the fact he is insolvent and
there was no proof he had any net worth.
Uppal summarizes his testimony at the punitive damages phase as
indicating (1) he had no regular employment but acted as a consultant for
various businesses; (2) he earned between $60,000 and $96,000 in 2010; (3) he
did not own a business; (4) he owned a vehicle worth $10,000 and a home with no
equity; (5) his 2009 tax return showed an adjusted gross income of $112,805.00;
and (6) he had no real estate other than his heavily-encumbered home, no stocks
or bonds, and no cash savings. He asks
us to strike the punitive damages award.
Hackbart
responds that Uppal's summary of the evidence is incomplete; that the record
shows the jury relied on other financial condition information from expert
Bergmark and also evidence of Uppal's access to loans from his mother and other
family members, Uppal's ability to practice as a CPA, the existence of $100,000
cash in an escrow account, Uppal's $93,000 average yearly earning capacity, the
$1,075,000 in cash Uppal received from the sale of the Chevron station, and
Uppal's 2009
title="">[10]
tax return, which reflected $266,800 in earnings.
A.
This court
set out a comprehensive overview of punitive damages law in
910, 914-915: "An award of punitive
damages hinges on three factors: the reprehensibility of the defendant's
conduct; the reasonableness of the relationship between the award and the plaintiff's
harm; and, in view of the defendant's financial condition, the amount necessary
to punish him or her and discourage future wrongful conduct." (Id. at
pp. 914-915.) Under those standards, it
was Hackbart's burden to present actual and meaningful evidence
time of trial, net worth was not the only permissible evidence of ability to
pay, and the evidence must be such that would permit the " 'jury and a
reviewing court to determine whether the amount of the award is appropriate and,
in particular, whether it is excessive in light of the central goal of
deterrence.' " (
" ' "historically honored standard of reversing as
excessive only those judgments which the entire record . . . indicates were
rendered as a result of passion and prejudice." ' " (Id.
at p. 916.) We review independently
Uppal's challenge to the amount of the punitive damages award. (Simon
v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1172;
169 Cal.App.4th 1197, 1222.)
B.
Here,
Hackbart called Uppal to testify concerning his financial condition, and also
presented Bergmark to testify about Uppal's ability to pay certain sums of
money, given his income and ability to earn.
The evidence showed Uppal's self-employment consulting income was
generally in the range of $60,000 to $72,000 per year, however, his
self-employment income reported to the IRS for 2009 was $266,800 (with $14,585
in expenses against income). Uppal also
received $12,000 per year in rental income and obtained loans from his mother
and other family members to pay other debts.
Without objection, Bergmark testified that Uppal's yearly earnings given
his education, age and experience, and accounting for government and other
benefits, were $93,632. Taking into
account his life expectancy (Uppal was 50 years old at the time), the present
value of Uppal's projected earnings was over $1.1 million. And, according to Bergmark, if Uppal
continued to earn at the level his 2009 tax return indicated, he would be able
to pay $3,152,261 in present value dollars.
Bergmark did not look at Uppal's adjusted gross income, which was
$112,805, because Uppal had closed the businesses from which he reported net
operating losses. Bergmark admitted on
cross-examination that he did not account for Uppal's expenses other than
business expenses relating to his marketing or Uppal's cost of living. Nor did Bergmark take into account Uppal's
income tax obligations to the state or federal government; he explained he only
performed an earning capacity analysis.
On this
record, we vacate the $700,000 punitive damages award in view of the absence of
meaningful evidence of Uppal's actual wealth or ability to pay such a damages
award. In Kenly v. Ukegawa (1993)
16 Cal.App.4th 49, this court
expressly rejected the plaintiff's argument that the punitive damages award in
that case could be based solely on the defendant's alleged profit: "An award based solely on the alleged
'profit' gained by the defendant, in the absence of evidence of net worth,
raises the potential of its crippling or destroying the defendant, focusing as
it does solely on the assets side of the balance sheet without examining the
liabilities side of the balance sheet. Without evidence of the entire financial
picture, an award based on 'profit' could leave a defendant devoid of assets
with which to pay his other liabilities."
(Id. at p. 57.) We made it clear that our holding did not
preclude such a showing in all cases, however, as long as there was some
evidence to demonstrate that the defendant would not be crippled by the
award. (Id. at
p. 57, fn. 7.) In Kelly
v. Haag, we held a
$75,000 punitive damages award lacked evidentiary support where the plaintiff
only produced evidence of the defendant's statements about certain properties
and assets without evidence that he still owned them at the time of trial, and
produced no evidence of the defendant's liabilities, requiring the trial court
to speculate as to any liabilities. (Kelly
v. Haag, supra, 145
Cal.App.4th at
p. 917.)
The
evidence here fails for the same reasons we expressed in the above cases. As stated, Hackbart bore the burden of
proving Uppal's financial condition or ability to pay for purposes of the award
(Adams v. Murakami (1991)
54 Cal.3d 105, 119; Baxter v. Peterson (2007) 150 Cal.App.4th 673, 680; Kelly
v. Haag, supra, 145
Cal.App.4th at
p. 916), which was required to be based on "some
evidence of the defendant's actual wealth.
Normally, evidence of liabilities should accompany evidence of assets,
and evidence of expenses should accompany evidence of income." (Baxter v. Peterson, at
p. 680.)
While the
jury had before it evidence of Uppal's income, his earning capacity and the
present value of his lifetime earnings, it had no meaningful evidence of
Uppal's liabilities. Absent such
evidence, the jury was unable to "assure that the award punishes but
[would] not cripple or bankrupt [him]."
(Kenly v. Ukegawa,
supra, 16 Cal.App.4th at p. 57; see also Baxter v. Peterson, supra, 150 Cal.App.4th at p.
681 [though record showed the defendant owned substantial assets, it was silent
with regard to her liabilities, and thus insufficient for a reviewing court to
evaluate her ability to pay $75,000 in punitive damages].) Bergmark's testimony was limited to the
present value of Uppal's earning capacity.
Hackbart
suggests Uppal failed to produce adequate and timely financial condition
evidence for the jury's evaluation.
However, the record indicates Uppal provided Hackbart's counsel with
documents for the purpose of showing his financial condition for the punitive
damages phase, and Hackbart does not demonstrate he was prevented from
obtaining evidence of Uppal's net worth or that he lacked any meaningful
resource to obtain evidence of Uppal's financial condition or net worth. There is no indication Uppal failed to comply
with court orders for such information, or that any void in financial condition
information was attributable solely to Uppal.
(See Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 608-609 [defendant waived any
challenge to complain about the lack of evidence of net worth for purposes of
punitive damages because he did not comply with a court order to produce his
financial records]; Caira v. Offner (2005) 126 Cal.App.4th 12, 40-41
[trial court ordered defendant to produce a current financial statement; Court
of Appeal held any insufficiency in the record as to his financial condition
was attributable solely to defendant's failure to comply with a court order].) Because Hackbart had a full and fair
opportunity to present his case for punitive damages, we do not find any basis
to remand the matter for retrial. (See Kelly
v. Haag, supra, 145
Cal.App.4th at p. 920.)
III. Restitution
Award Against Soni
Soni
contends the trial court reversibly erred when it awarded Hackbart restitution
on a theory of unjust enrichment.
Pointing out he obtained a nonsuit on Hackbart's fraud causes of action,
he maintains Hackbart's claims of unjust enrichment/restitution are not
stand-alone causes of action but are merely duplicative of Hackbart's fraud
claims as evidenced by the allegations of Hackbart's operative complaint, and
thus there was no legal basis on which Hackbart could premise a theory of
maintain a claim for unjust enrichment, there is no basis for a restitution
award against him without evidence to support a finding that Hackbart suffered fraud
damages from the sale.
Hackbart
correctly concedes unjust enrichment is not an independent cause of
action. (See Levine v. Blue Shield of California (2010) 189 Cal.App.4th 1117,
1138
[" ' "[T]here is no cause of action in California
for unjust enrichment" ' "], quoting Durell v. Sharp Healthcare (2010)
183 Cal.App.4th 1350, 1370 (Durell),
and see Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th
779, 793 (Melchior).) He argues the evidence showed Uppal was
acting on Soni's behalf, and that the predicate liability finding is the jury
finding as to Uppal's fraudulent sale
of the business, which, along with First
Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, provides the basis
for the trial court's finding that Soni had been improperly benefitted and
unjustly enriched. And, according to
Hackbart, section 2224,
name="_ftnref11" title="">[11]
relating to constructive trusts, sets out general principles that permitted the
trial court to enter a restitutionary award against Soni in view of evidence
that Soni knew of the businesses' precarious financial condition, acted
"in close concert" with Uppal in the management and financing of the
busineses, and urged Uppal to " 'do the minimum necessary' to market and
sell them on his behalf, as quickly as possible."
Unjust enrichment is " ' "a general
principle, underlying various legal doctrines and remedies," ' rather than
a remedy itself." (
p. 793.) It "is
a common law obligation implied by law based on the equities of a particular
case and not on any contractual
obligation. [Citation.] Whether termed unjust enrichment,
quasi-contract, or quantum meruit, the equitable remedy of restitution when
unjust enrichment has occurred 'is an obligation
(not a true contract [citation]) created by the law without regard to the
intention of the parties, and is designed to restore the aggrieved party to his
or her former position by return of the thing or its equivalent in money.'
" (F.D.I.C. v. Dintino (2008) 167 Cal.App.4th 333, 346.) Unjust enrichment is synonymous with
restitution, and has been characterized as describing the result of a failure
to make restitution. (Durell, supra, 183 Cal.App.4th at p. 1370; McBride v. Boughton (2004) 123 Cal.App.4th 379, 387.)
Likewise,
restitution is itself not a cause of action, but a remedy. (Munoz
v . MacMillan (2011) 195 Cal.App.4th 648, 661; Nakash v. Sup. Ct. (1987) 196 Cal.App.3d 59, 70.) " 'There are several potential bases for
a cause of action seeking restitution.
For example, restitution may be awarded in lieu of
parties had an express contract, but it was procured by fraud or is
unenforceable or ineffective for some reason.
[Citations.] Alternatively,
restitution may be awarded where the defendant obtained a benefit from the
plaintiff by fraud, duress, conversion, or similar conduct. In such cases, the plaintiff may choose not
to sue in tort, but instead to seek restitution on a quasi-contract theory. . .
. [Citations.] In such cases, where appropriate, the law
will imply a contract (or rather, a quasi-contract), without regard to the parties'
intent, in order to avoid unjust enrichment.'
[¶] 'Under the law of restitution,
"[a]n individual is required to make restitution if he or she is unjustly
enriched at the expense of another.
[Citations.] A person is enriched
if the person receives a benefit at another's expense. [Citation.]" [Citation.]
However, "[t]he fact that one person benefits another is not, by
itself, sufficient to require restitution.
The person receiving the benefit is required to make restitution only if
the circumstances are such that, as between the two individuals, it is
it." ' " (Durell, supra, 183
Cal.App.4th at p. 1371, quoting McBride
v. Boughton, supra, 123
Cal.App.4th at pp. 388-389.)
name="_ftnref12" title="">[12]
Similarly,
a constructive trust is an equitable remedy,
not a substantive claim for relief. (
Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384,
398.) It " 'is an involuntary
equitable trust created by operation of law as a remedy to compel the transfer
of property from the person wrongfully holding it to the rightful owner. [Citations.]
The essence of the theory of constructive trust is to prevent unjust
enrichment and to prevent a person from taking advantage of his or her own
wrongdoing. [Citations.]' [Citations.]
Before a constructive trust can be imposed, the plaintiff must prove
that the defendant's acquisition of the property was wrongful."
(Ibid.) A
constructive trust may be imposed where the following three conditions are
satisfied: " '(1) the existence of
a res (property or some interest in property); (2) the right of a
complaining party to that res; and (3) some wrongful acquisition or
detention of the res by another party who is
| Description | Defendants and appellants Satinder M. Uppal and Suresh K. Soni appeal from a judgment entered after a bifurcated jury and bench trial on fraud and related equitable claims of plaintiffs and respondents David Hackbart and Kihack Management LLC (collectively Hackbart) arising out of Hackbart's purchase of a gasoline station and related businesses from defendants. The trial court entered a judgment awarding Hackbart $1,400,000 in fraud damages and $700,000 in punitive damages against Uppal, and $232,000 against Soni in the amount it found Soni had been unjustly enriched. It awarded $1,400,000 in breach of contract and fraud damages against suspended corporation MTPA Ventures Limited, Inc. (MTPA), against which it had previously entered a default judgment. The court declined to hold any of the individual defendants liable for the acts of MTPA as alter egos. |
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