Opinion
G058235 C/w G058434 C/w G058457
10-30-2020
BILL BHASKAR et al., Plaintiffs and Appellants, v. FARMERS & MERCHANTS BANK, Defendant and Appellant.
Law Offices of Foroozandeh, Majid Foroozandeh; and Elizabeth Nigro & Associates, and Elizabeth Nigro, for Plaintiffs and Appellants. Law Offices of Michael Leight, Michael Leight, and John Gloger, for Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2013-00682081) OPINION Appeal from a judgment and postjudgment orders of the Superior Court of Orange County, David A. Hoffer and David Chaffee, Judges. Reversed in part and remanded. Motions for sanctions. Denied. Motion to augment. Granted. Law Offices of Foroozandeh, Majid Foroozandeh; and Elizabeth Nigro & Associates, and Elizabeth Nigro, for Plaintiffs and Appellants. Law Offices of Michael Leight, Michael Leight, and John Gloger, for Defendant and Appellant.
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Bill Bhaskar, M.D., is the president and sole officer of his medical corporation, Bill Bhaskar, M.D., Inc. (collectively "Bhaskar"). In late 2000, Abdul Walji, Bhaskar's friend and the manager of his retirement plan, approached Bhaskar and suggested starting a new retirement plan for the medical corporation with the contributions deposited at Farmers & Merchants Bank ("F&M"). Bhaskar agreed, and over the next few years, Bhaskar wrote checks payable to F&M, totaling over $ 1 million. Walji hand delivered the checks to an F&M branch, and deposited the checks into an account named the "Stone-Lamm" trust account. The Stone-Lamm account listed Walji as the sole person authorized to withdraw funds, and never referenced Bhaskar. In May 2013, Bhaskar discovered Walji had pleaded guilty to criminal charges of pension fraud, and learned the Stone-Lamm account had been nearly depleted.
Bhaskar sued F&M, alleging, among other claims, that F&M was negligent in depositing the checks into the Stone-Lamm account. After the trial court sustained F&M's demurrer to Bhaskar's entire complaint, this court partially reversed. We concluded the complaint stated a cause of action for common law negligence, but otherwise affirmed the order sustaining the demurrer without leave to amend. (Bhaskar v. Farmers & Merchants Bank (Aug. 7, 2017, G053047) [nonpub opn.].)
Following remand, over F&M's objection, the trial court permitted Bhaskar to amend the complaint to allege a new claim under Penal Code section 496, subdivisions (a) and (c). Penal Code section 496, subdivision (a), prohibits a person from knowingly receiving stolen property, and Penal Code section 496, subdivision (c), authorizes a civil action for a violation of Penal Code section 496, subdivision (a). The court, however, sustained F&M's demurrer to this claim.
Trial proceeded on the remaining negligence claim. Before closing arguments, F&M moved for a judgment of nonsuit against Bhaskar, as an individual, arguing he was not the appropriate plaintiff to bring the negligence claim. The trial court granted the motion because all the checks that are the subject matter of the claim were corporate checks.
The jury rendered a special verdict finding F&M negligent and its negligence a substantial factor in causing Bhaskar's damages. It also found Bhaskar negligent and Walji at fault. The jury determined F&M was 40 percent responsible for the harm, Walji was 40 percent responsible, and Bhaskar 20 percent responsible. Under the judgment, F&M was liable for 80 percent of the total damages.
Following entry of the judgment on the jury's special verdict, both parties filed motions for judgment notwithstanding the verdict (JNOV) and for a new trial. The trial court denied both JNOV motions, and denied Bhaskar's new trial motion without prejudice. It granted F&M's new trial motion on the grounds of insufficiency of the evidence and excessive damages.
F&M appealed from the judgment and from the order denying its JNOV motion. Bhaskar appealed from (1) the order sustaining the demurrer to the Penal Code section 496 claim, (2) the order granting judgment of nonsuit against Bhaskar, (3) the order granting F&M a new trial, (4) the order denying Bhaskar's new trial motion, and (5) the order denying Bhaskar's JNOV motion.
In its consolidated combined reply brief and respondent's opening brief, Bhaskar withdrew its challenge to the court's order granting F&M's nonsuit motion.
As discussed below, we conclude the trial court properly sustained the demurrer to the Penal Code section 496 claim because the complaint fails to state a cause of action. We also conclude F&M is not entitled to judgment in its favor. However, no basis exists to overturn the trial court's decision to grant F&M's new trial motion. In light of our affirmance of the new trial order, Bhaskar's remaining claims are moot. Accordingly, the matter is remanded for a new trial on the negligence claim.
Finally, Bhaskar filed a motion for sanctions against F&M, arguing F&M's appeal was frivolous and that F&M's appellate briefing violated several rules of court. F&M filed a motion for sanctions against Bhaskar, arguing Bhaskar's motion for sanctions was frivolous. We deny both motions.
I
FACTUAL AND PROCEDURAL BACKGROUND
We grant Bhaskar's motion to augment the record.
A. Complaint
Bhaskar's complaint against F&M stated multiple causes of action, including a cause of action for common law negligence. Following amendments, the complaint alleged that from December 2000 to December 2011, Bhaskar made out checks totaling over $1 million payable to F&M. Walji hand delivered the checks to an F&M branch, where F&M wrongfully deposited the checks into a third party account (the Stone-Lamm Trust account) in the name of Abdul Walji. Bhaskar did not discover any wrongdoing until May 2013, when he could not locate Walji, learned Walji had been indicted for misappropriating pension funds, and attempted to meet with an F&M's branch manager, who "refused to discuss the status of his funds, claiming he was not their customer." A later investigation determined only $145,715 remained in the Stone-Lamm Trust account.
Bhaskar alleged F&M owed a duty of care that "was activated when dishonest and unfaithful Abdul Walji, according to F&M, instructed F&M to divert each check, not insignificant in amounts, and drawn payable to the order of F&M, and presented to the payee by a third party (Walji), who sought to negotiate the checks for his own benefit, by way of deposit into his personal accounts. Those instructions suggest a possible fraud and misappropriation sufficiently suspicious to alert F&M that [Bhaskar's] funds were being unlawfully diverted so that F&M should have and could have made reasonable inquiries . . . [of Bhaskar] and in doing so, F&M could have discovered the fraudulent conduct and prevented its success." B. Prior Appeal
F&M demurred to the entire complaint. In demurring to the negligence claim, F&M argued the complaint failed to state a cause of action for common law negligence, and the claim was time-barred. The trial court sustained the demurrer without leave to amend, and Bhaskar appealed.
In an unpublished opinion, we affirmed the trial court's order sustaining F&M's demurrer, except for the common law negligence cause of action. We concluded the allegations stated a negligence claim under the holding of Sun 'n Sand, Inc. v. United California Bank (1978) 21 Cal.3d 671 (Sun 'n Sand). (Bhaskar v. Farmers & Merchants Bank (Aug. 7, 2017, G053047) [nonpub opn.].)
As we explained, in Sun 'n Sand, the Supreme Court concluded that "an attempt by a third party to divert the proceeds of a check drawn payable to the order of a bank to the benefit of one other than the drawer or drawee suggests a possible misappropriation." (Sun 'n Sand, supra, 21 Cal.3d at p. 694.) The high court further concluded that the plaintiff's "allegations define circumstances sufficiently suspicious that [the bank] should have been alerted to the risk that [the] employee was perpetrating a fraud. By making reasonable inquiries, [the bank] could have discovered the fraudulent scheme and prevented its success." (Id. at pp. 694-695.) However, the court in Sun 'n Sand also cautioned that "[t]he duty is narrowly circumscribed: it is activated only when checks, not insignificant in amount, are drawn payable to the order of a bank and are presented to the payee bank by a third party seeking to negotiate the checks for his own benefit." (Id. at p. 695.)
We rejected F&M's argument that Sun 'n Sand did not apply because in Sun 'n Sand, the employee altered the amounts on the checks and deposited them into a personal account, whereas here Walji did not alter the checks and the checks were deposited into a "trust" account. We concluded the different facts were not material and did not alter the bank's duty to make reasonable inquiry. We also concluded the claim was not time-barred because Bhaskar alleged he did not discover any wrongdoing until May 2013. (Bhaskar v. Farmers & Merchants Bank (Aug. 7, 2017, G053047) [nonpub opn.].) C. Demurrer to Penal Code Section 496 Claim
After the matter was remanded, the trial court permitted Bhaskar to amend the complaint several times. On May 2, 2018, Bhaskar filed a Seventh Amended Complaint, alleging a new cause of action under Penal Code section 496, subdivisions (a) and (c). Penal Code section 496, subdivision (a), prohibits a person from "receiv[ing] any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained," or "withholding any property from the owner, knowing the property to be stolen or obtained." Penal Code section 496, subdivision (c), authorizes "[a]ny person who has been injured by a violation of subdivision (a)," to "bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney's fees."
The amended complaint alleged that when Walji deposited the various checks at the bank, he "attached his Stone-Lam Trust deposit ticket to the checks, in order to steal the checks." Later, the complaint reiterated that the checks were "stolen by the banks customer, Abdul Walji, inside the bank." (Italics added.) It alleged F&M violated Penal Code section 496's prohibition against receiving stolen property when it accepted the checks for deposit into the Stone-Lamm account. The complaint also alleged that on July 2, 2013, F&M received notice Walji pleaded guilty to criminal charges for pension fraud, and on September 26, 2013, Bhaskar asked F&M to return the money in the Stone-Lamm account, but F&M refused to return the property. Thus, according to Bhaskar, F&M also wrongfully withheld Bhaskar's money in violation of Penal Code section 496, subdivision (a).
F&M demurred to the new claim, and the trial court sustained the demurrer without leave to amend. The court determined the complaint did not allege the checks were forged or stolen, or that F&M had actual knowledge Bhaskar's money was stolen when Walji deposited the checks. The court also determined the claim was time-barred, under the three-year limitations period set forth in Code of Civil Procedure section 338, subdivision (a), and the relation-back doctrine did not save the claim. D. Trial
At trial, Bhaskar testified he is the president of the medical corporation and its sole officer. He first met Walji in 1987, and Walji began managing his retirement plan. In late 2000, Walji approached him to start a new retirement plan for the corporation. The new plan would be called Welfare Plan or Multi-Employer Retirement Voluntary Trust Account or something similar. The contributions would be deposited with F&M, and Bhaskar understood F&M would be in charge of holding and managing the money.
Walji represented that the new plan would allow for unlimited contributions, which was an attractive feature to Bhaskar. Bhaskar agreed to participate, and on June 11, 2001, Bhaskar signed a document adopting the new plan. The document Bhaskar signed specifically provided that Walji was the sole "trustee" for the plan.
On direct examination, Bhaskar was shown various checks he had written payable to F&M, and claimed he did not intend the checks to be deposited into the Stone-Lamm account. If someone had called him to inquire about depositing the checks into the Stone-Lamm account, he would have responded "absolutely not."
On cross-examination, Bhaskar acknowledged he understood that any bank account would have a name and someone authorized to withdraw money from the account. He conceded he never told Walji he wanted his name on the account for the new plan or a specific name for the account. He also admitted he never told Walji he wanted "signature power to withdraw funds from the new account."
Bhaskar testified he intended to hand the checks to Walji to take the checks to F&M, and "it has to be deposited into some account." He reiterated he did not tell Walji into which account to deposit the check. Asked whether Walji had "swindled" or "robbed" him, Bhaskar responded, "No." Bhaskar also testified he still considered Walji to be a friend.
Bhaskar testified he expected F&M, rather than Walji, would invest his money. Later, he clarified he did not expect the contributions would be invested. Indeed, he expressly told Walji it would be fine if the money did not earn any interest. Rather than investing the contributions, he was more interested in the tax deferral benefits.
Bhaskar also testified Walji suggested using F&M because it was a safe and reputable company. Although Bhaskar had never been in an F&M Bank and did not research F&M, he agreed to Walji's suggestion. Asked to explain why he did not personally deposit the checks at an F&M branch, but instead delegated the task to Walji, Bhaskar stated he was busy with his practice and Walji had volunteered.
The deposit agreement between Walji and F&M showed the account was named "Stone-Lamm Trust," and Walji, the sole signor authorized to withdraw from the account, was a "trustee." E. Nonsuit, Jury's Special Verdict and Post-judgment Motions
Before closing arguments, F&M moved for a judgment of nonsuit against Bhaskar as an individual, arguing he had admitted "the checks which are the subject of this case are all checks written by or endorsed by his medical corporation." The trial court granted F&M's nonsuit motion against Bhaskar as an individual. It determined the negligence claim was based on F&M's purported negligence in depositing the checks of a noncustomer, made payable to the bank, into the account of someone other than the noncustomer. The court, however, noted that all the deposited checks were corporate checks, explaining, "It was a check to the corporation that was signed over to F&M or a check directly written from the corporation." Thus, the appropriate plaintiff was the corporation, not the individual.
The jury returned a special verdict, finding F&M negligent and its negligence was a substantial factor in causing harm to Bhaskar. It also found the corporation negligent and Walji at fault. The jury determined F&M was 40 percent responsible, Walji 40 percent responsible, and Bhaskar 20 percent responsible. It determined total damages were $ 1,177,500. The jury also determined that none of Walji's conduct for which he was at fault happened after F&M's negligent conduct, and as instructed, it did not answer whether F&M reasonably could have foreseen Walji would take advantage of F&M's conduct to deplete the account.
Following entry of judgment, Bhaskar filed a JNOV motion, arguing insufficient evidence supported the jury's finding the medical corporation was 20 percent negligent. The trial court denied the JNOV motion, concluding that at all times, Bhaskar acted for his medical corporation.
F&M filed a JNOV motion, arguing that Walji, not F&M, was the proximate cause of Bhaskar's damages. F&M also argued it was entitled to judgment based on the statute of limitations and Bhaskar's failure to mitigate damages because Walji acted as Bhaskar's agent when he deposited the checks. Thus, according to F&M, Bhaskar had knowledge the checks were being deposited into the Stone-Lamm account when the deposits occurred, precluding delayed accrual of the claims, and the same knowledge allowed Bhaskar to mitigate all damages. The trial court denied the JNOV motion. As to the claims based on Walji's purported agency, the court noted the jury did not find Walji was Bhaskar's agent and it found substantial evidence supported a determination that Walji was not acting within the scope of any agency to commit fraud on Bhaskar. As to the claim that Walji, not F&M, was the proximate cause, the court concluded the special verdict never resolved whether Walji's misconduct was a superseding cause, and thus, a JNOV could not be granted on that basis.
The trial court denied Bhaskar's new trial motion on prejudgment interest without prejudice to the filing of a motion for prejudgment interest.
The trial court granted F&M's motion for a new trial on two grounds: (1) insufficiency of the evidence and (2) excessive damages. On the latter, the court noted the judgment assigned damages from Walji's wrongful conduct to F&M, although the jury never determined whether Walji was acting as Bhaskar's agent. Without a determination of the agency issue, the court concluded it could not determine F&M's share of the damages.
As to insufficiency of the evidence, the trial court concluded "the jury found, in contravention of the evidence, that Walji's wrongful conduct occurred before the bank's negligence." The court rejected Bhaskar's argument the jury could have found Walji's wrongful conduct occurred when he received the checks for deposit because "in taking the checks to the bank and depositing them, Walji was following plaintiff's express instructions. . . . Moreover, the money was deposited into a trust account. Had the money been held in trust for the plaintiff, the plaintiff would have suffered no harm at all."
II
DISCUSSION
A. The Trial Court Properly Sustained the Demurrer to the Penal Code Section 496 Claim
The trial court sustained F&M's demurrer to Bhaskar's cause of action under Penal Code section 496 because (1) the complaint failed to allege facts showing the checks were stolen, (2) failed to allege facts showing F&M had actual knowledge of the stolen nature of the checks when Walji deposited them, and (3) the claim was time-barred. As noted, Penal Code section 496, subdivision (a), prohibits a person from "receiv[ing] any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained," or "withholding any property from the owner, knowing the property to be stolen or obtained." On appeal, however, Bhaskar only assigns error to the court's order as it relates to the prohibition against receipt of stolen property. Accordingly, he forfeits any claim the trial court erred in sustaining the demurrer to Penal Code section 496 claim arising from F&M's alleged wrongful withholding of stolen property.
If not forfeited, we conclude the claim is time-barred and the relation-back doctrine does not save the claim. The wrongful withholding claim accrued in September 2013, when F&M refused to return the money in the Stone-Lamm account to Bhaskar despite being on notice in July 2013 that Walji had pleaded guilty to pension fraud. Bhaskar does not challenge the trial court's determination that the applicable limitations period is three years. Thus, assuming without deciding that the applicable limitations period is three years, the claim had to be asserted by September 2016, but Bhaskar first asserted it on May 2, 2018.
The relation-back doctrine would not save the withholding claim because it is based on new facts unrelated to the negligence claim, specifically the date the Bank received notice of Walji's guilty plea and the date it refused to return the money despite Bhaskar's demand. (See Barrington v. A. H. Robins Co. (1985) 39 Cal.3d 146, 154 ["when a complaint is amended to allege a new cause of action based on different operative facts, the new cause of action is different in nature from any cause of action contained in the earlier complaint, and hence does not relate back"].)
We conclude Bhaskar failed to state a cause of action under Penal Code section 496 because the complaint failed to allege the checks were stolen before being deposited. According to Bhaskar, F&M violated Penal Code section 496 when it accepted the checks for deposit into the Stone-Lamm account. Penal Code section 496, subdivision (a), prohibits "receiv[ing] any property that has been stolen." (Italics added.) The present perfect tense indicates the theft of the property occurred in the past, before the receipt of the property. (See, e.g., People v. Land (1994) 30 Cal.App.4th 220, 223 ["to sustain a conviction for receiving stolen property, the prosecution must prove (1) the property was stolen; (2) the defendant knew the property was stolen; and, (3) the defendant had possession of the stolen property," italics added). However, the complaint alleges that Walji stole the checks "inside the bank," by depositing the checks into the Stone-Lamm Trust account. Thus, Walji stole the checks after F&M took possession of them for deposit into the Stone-Lammm account. The allegations thus fail to state a cause of action under Penal Code section 496. Accordingly, we affirm trial court's order sustaining F&M's demurrer. B. The Trial Court Properly Granted Judgment of Nonsuit Against Bhaskar as an Individual
The trial court granted F&M's motion for judgment of nonsuit against Bhaskar as an individual on the negligence claim, concluding Bhaskar was not a proper plaintiff because undisputed evidence showed all the checks were corporate checks. As noted, Bhaskar no longer challenges the trial court's order. Thus, the only remaining plaintiff is the medical corporation. C. F&M Is Not Entitled to Judgment in Its Favor
F&M moved for a JNOV on the grounds that: (1) Walji, not F&M, was the proximate cause of Bhaskar's damages; (2) the claims were time-barred under the applicable statute of limitations; and (3) Bhaskar failed to mitigate damages. "'A motion for judgment notwithstanding the verdict may be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support. [Citation.] [¶] . . . As in the trial court, the standard of review [on appeal] is whether any substantial evidence—contradicted or uncontradicted—supports the jury's conclusion.' [Citation.]" (Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 770.)
F&M argues the trial court should have granted its JNOV motion because the evidence established that in depositing the checks into the Stone-Lamm account, Walji was acting on Bhaskar's instructions and acting as Bhaskar's agent. Bhaskar is thus imputed to have knowledge the checks were deposited into the Stone-Lamm account, and therefore should have mitigated his damages or lodged a timely complaint. Additionally, because F&M complied with Bhaskar's instructions to deposit the checks into the Stone-Lamm account, F&M reasons it was not the proximate cause of Bhaskar's harm. Rather, the harm to Bhaskar occurred after the checks were deposited, when Walji withdrew the money in the account for his personal use.
F&M's argument fails to account for evidence supporting a contrary conclusion. Bhaskar testified he did not want Walji to deposit the checks into the Stone-Lamm account. Rather, he expected Walji to deposit the money into an account controlled and managed by F&M, not Walji. Bhaskar further testified that if F&M had contacted him, he would have informed F&M he did not want the checks deposited into the Stone-Lamm account. In light of this testimony which the jury was entitled to credit, substantial evidence supported the jury's conclusion that F&M's conduct was the proximate cause of Bhaskar's damages.
F&M also contends it is entitled to JNOV based on the statute of limitations and Bhaskar's failure to mitigate damages. According to F&M, Bhaskar knew F&M had negligently deposited the checks into the Stone-Lamm account. The jury found, however, that before October 27, 2010, Bhaskar did not know of facts that would have caused a reasonable person to suspect it had suffered harm caused by someone's wrongful conduct. F&M contends Bhaskar had knowledge of F&M's negligent conduct because Walji was Bhaskar's agent, and the knowledge of an agent generally is imputed to the principal. However, "[t]he scope of the imputation of knowledge is directly related to the scope of the duty arising from the agency agreement." (Triple A Management Co., v. Frisone (1999) 69 Cal.App.4th 520, 535.) Bhaskar testified he intended that F&M, not Walji, would manage and control the contributions in the retirement plan. Thus, even if Walji was Bhaskar's agent in creating and forming the plan, substantial evidence does not establish Walji was acting within the scope of that agency when Walji deposited the checks into the Stone-Lamm account.
F&M also contends Bhaskar had actual knowledge of F&M's negligence because he received annual "Certificates of Participation," showing the amount of contributions into the retirement plan. F&M notes that 2002 certificate showed an amount significantly less than the total amount of the checks Bhaskar had written to the account at that point. The certificates, however, did not name the account where the contributions were being held. The negligence claim here is based on F&M's failure to make reasonable inquiries before depositing the checks into the Stone-Lamm account. The 2002 certificate did not alert, or even suggest to Bhaskar that F&M breached its duty to make a reasonable inquiry before depositing the checks into a third party account. In sum, substantial evidence supported the jury's conclusion Bhaskar did not have knowledge sufficient to place him on inquiry notice of F&M's negligence. F&M was not entitled to a partial or full JNOV based on Walji's purported agency.
Because substantial evidence supported the jury's special verdict, the trial court properly denied F&M's JNOV motion. For the same reasons, F&M's challenge to the judgment fails. Substantial evidence supported the jury's conclusions that F&M's negligence was a substantial factor in causing Bhaskar's harm and that Bhaskar did not discover facts that would have caused a reasonable person to suspect F&M's wrongdoing until October 2010.
To the extent F&M argues insufficient evidence supported the jury's conclusion F&M was negligent, we disagree. The facts established at trial were not materially different from the allegations in the complaint, which we previously found were sufficient to state a cause of action for negligence under the holding in Sun 'n Sand. Specifically, the trial evidence established that Walji sought to deposit numerous corporate checks, made payable to F&M and in large amounts, into an account not controlled either by F&M or by the medical corporation. Walji's conduct was sufficient to trigger a duty of inquiry on the part of F&M. The trial evidence also established that F&M never contacted Bhaskar before agreeing to deposit the money into the third party account. Substantial evidence supported the jury's conclusion F&M was negligent.
Finally, F&M argues the judgment must be reversed due to instructional error. Specifically, F&M contends the trial court improperly instructed the jury on the discovery rule and mitigation of damages. As to the former, F&M argues the trial court erred when it instructed the jury the discovery rule applied if Bhaskar "did not discover, and did not know of facts that would have caused a reasonable person to suspect," rather than instruct the jury the discovery rule applied if Bhaskar "could not have, in the exercise of reasonable diligence, . . . discovered the alleged misconduct." We find no error because the given instruction sufficiently states the requirement for application of the discovery rule. As to the latter, F&M argues that although a plaintiff has an active duty to mitigate damages, the given instruction on mitigation of damages incorrectly states Bhaskar had a passive "could have avoided" duty. We do not read the instruction in the manner F&M suggests. Moreover, F&M has not shown prejudice because as discussed above, Bhaskar lacked the requisite knowledge to mitigate damages. In sum, F&M has not shown the judgment on the jury's special verdict should be reversed. D. The Trial Court Did Not Err in Granting F&M's New Trial Motion
Bhaskar appeals from the new trial order. As an initial matter, we consider whether the trial court could grant F&M's new trial motion because, according to Bhaskar, the order granting the motion fell outside the time limits set forth in Code of Civil Procedure section 660. Bhaskar argues the new trial order was untimely by one day because the court docket has an entry stating that on October 8, 2019, "minutes [were] finalized for multiple events 10/07/2019." It is undisputed that on October 7, 2019, the trial court ruled on the new trial motion and ordered its ruling entered into the permanent minutes. On the undisputed facts, we conclude the new trial order was entered on October 7, 2019, and thus it is timely.
Turning to the merits, we note that as a general matter, orders granting a new trial are reviewed for abuse of discretion. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 859 (Aguilar); Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405, 412 (Lane).) However, "any determination underlying [the] order is scrutinized under the test appropriate to such determination." (Aguilar, supra, 25 Cal.4th at p. 859.)
Here, the trial court granted the new trial motion on the grounds of insufficiency of the evidence and excessive damages. Code of Civil Procedure section 657 provides: "[O]n appeal from an order granting a new trial upon the ground of the insufficiency of the evidence . . . or upon the ground of excessive or inadequate damages, . . . such order shall be reversed as to such ground only if there is no substantial basis in the record for any of such reasons." Accordingly, the trial court's new trial order "'must be sustained on appeal unless the opposing party demonstrates that no reasonable finder of fact could have found for the movant on [the trial court's] theory.'" (Lane, supra, 22 Cal.4th at p. 412, quoting Jones v. Citrus Motors Ontario, Inc. (1973) 8 Cal.3d 706, 710.) Moreover, "'the presumption of correctness normally accorded on appeal to the jury's verdict is replaced by a presumption in favor of the [new trial] order.' [¶] . . . Therefore the trial court's factual determinations, reflected in its decision to grant the new trial, are entitled to the same deference that an appellate court would ordinarily accord a jury's factual determinations." (Lane, supra, 22 Cal.4th at p. 412, internal citations omitted.) "In weighing and evaluating the evidence, the court is a trier-of-fact and is not bound by factual resolutions made by the jury. The court may grant a new trial even though there be sufficient evidence to sustain the jury's verdict on appeal, so long as the court determines the weight of the evidence is against the verdict." (Candido v. Huitt (1984) 151 Cal.App.3d 918, 923.)
At oral argument, citing Oakland Raiders v. National Football League (2007) 41 Cal.4th 624 (Oakland Raiders), Bhaskar contends for the first time we should review the new trial order de novo. Bhaskar's reliance on Oakland Raiders, supra, is misplaced. There, the Supreme Court concluded "the absence of a statement of reasons calls for independent review of the trial court's order granting a motion for a new trial." (Id. at p. 640.) In contrast, here there was a statement of reasons.
Moreover, the statement of reasons is not deficient because it directs attention to the aspects of the record supporting the new trial order. Specifically, the trial court granted a new trial because it concluded Walji, not F&M, caused Bhaskar's harm and referenced Bhaskar's testimony. (See Romero v. Riggs (1994) 24 Cal.App.4th 117, 122 ["an order granting a new trial will not be disturbed if it adequately refers to evidence in the record to support the action taken"].) Bhaskar argues the specification of reasons is deficient because the trial court failed to refer to all the evidence, repeated F&M's arguments, and misinterpreted Bhaskar's testimony. However, to comply with the requirements for an adequate specification of reason in new trial motion, "'the trial judge is not necessarily required to cite page and line of the record, or discuss the testimony of particular witnesses,' nor need he undertake 'a discussion of the weight to be given, and the inferences to be drawn from each item of evidence supporting, or impeaching, the judgment.' [Citation.]" (Scala v. Jerry Witt & Sons, Inc. (1970) 3 Cal.3d 359, 370; see also Montoya v. Barragan (2013) 220 Cal.App.4th 1215, 1228 [rejecting appellant's argument "the trial court's specification of reasons is deficient because it does not refer to any evidence it believed was insufficient to support the jury's verdict, and fails to specify the portion of the record on which the decision was based"].) Moreover, the trial court may adopt reasons advanced in a party's brief. (Lane, supra, 22 Cal.4th at p. 415.) Finally, "mistakes in the trial court's statement [of reasons] do not undermine the trial court's conclusions," if other evidence sufficiently supports the court's reasons. (Montoya v. Barragan, supra, 220 Cal.App.4th at p. 1229.) Because there was an adequate statement of reasons, we review the new trial court order only to determine whether the court abused its discretion.
In its order granting a new trial, the trial court determined there was insufficient evidence establishing F&M's conduct was the proximate cause of Bhaskar's damages. The trial court found that in depositing the checks into the Stone-Lamm account, Walji was following Bhaskar's instructions. Substantial evidence supports this factual determination. Bhaskar testified he gave the checks to Walji to deposit in "some account" at F&M. He further testified he understood that all bank accounts have a name and a person authorized to withdraw from the account, and he never told Walji he wanted the F&M account to have a specific name or a specific person authorized to withdraw from the account. Thus, the deposit of the checks into the Stone-Lamm account comported with Bhaskar's express instructions.
In addition, the documentary evidence supported thetrial court's factual determination that Walji complied with Bhaskar's instructions when he deposited the checks into the Stone-Lamm account. The plan documents listed Walji as the sole "trustee" of the plan. Bhaskar signed the page listing Walji as the trustee. F&M was never mentioned. The deposit agreement between Walji and F&M showed the Stone-Lamm account was a "trust" account, and Walji was named as "trustee" and the sole signor authorized to withdraw from the account.
Bhaskar argues the trial court ignored the jury's special verdict and Bhaskar's testimony he did not intend Walji to deposit the checks into the Stone-Lamm account. However, "[i]n ruling upon a motion for a new trial, the court is not prohibited from reweighing the evidence or evaluating the credibility of witnesses. On the contrary, the trial court is vested with the authority to disbelieve witnesses and draw inferences from the evidence contrary to those drawn by the jury." (Eltolad Music, Inc. v. April Music, Inc. (1983) 139 Cal.App.3d 697, 705; accord, Barrese v. Murray (2011) 198 Cal.App.4th 494, 504 ["The cases make it clear that in ruling on the new trial motion the trial court and - and should - consider credibility independently of the jury's conclusions."].)
In sum, there was substantial evidence F&M was negligent in failing to make reasonable inquiry before depositing the checks into the Stone-Lamm account. However, substantial evidence supported the trial court's determination F&M's negligence was not a substantial factor in causing harm to Bhaskar because depositing the checks into the Stone-Lamm account comported with Bhaskar's wishes.
Substantial evidence also supported the trial court's conclusion the harm to Bhaskar occurred when Walji breached his duties as a trustee and withdrew the money in the account for his personal use. However, F&M is not liable for Walji's withdrawals because it has no duty to police fiduciary accounts. As an appellate court has explained, the relationship between a bank and its depositor "does not involve any implied duty 'to supervise account activity' [citation] or 'to inquire into the purpose for which the funds are being used' [citation] and entails no contractual obligation to persons other than the account holder [citation]." (Chazen v. Centennial Bank (1998) 61 Cal.App.4th 532, 537, 541 [bank "has no duty to prevent commingling of assets in fiduciary accounts, to monitor fiduciary accounts for irregular transactions, to prevent improper disbursements from the accounts, or to conduct an investigation of possible misappropriation of funds."]) Thus, there was substantial evidence to support the trial court's determination that Walji, not F&M, was the proximate cause of Bhaskar's damages. Accordingly, we affirm the trial court's order granting a new trial on the ground of insufficiency of the evidence.
Because the new trial motion can be sustained on the ground of insufficiency of the evidence, we need not address whether the new trial order may also be sustained based on excessive damages. (See Code Civ. Proc., § 657 ["On appeal from an order granting a new trial the order shall be affirmed if it should have been granted upon any ground stated in the motion . . ."].) However, we must address whether the new trial will be on all issues, or on limited issues. The new trial order suggests the new trial will be limited to allow a jury to make findings on superseding cause and Walji's agency. These issues, however, are so intertwined with other issues related to the negligence claim that a full trial is warranted to avoid prejudice to either party. (See Leipert v. Honold (1952) 39 Cal.2d 462, 466 ["The purpose of limited retrials is to expedite the administration of justice by avoiding costly repetition. Such retrials should be granted, however, only if it is clear that no injustice will result."]; Liodas v. Sahadi (1977) 19 Cal.3d 278, 286 ["When a limited retrial might be prejudicial to either party, the failure to grant a new trial on all of the issues is an abuse of discretion."].) Accordingly, we remand the matter for a new trial on all issues relating to the medical corporation's negligence claim against F&M.
In light of our affirmance of the new trial order and remand for a full trial, Bhaskar's remaining claims are moot. E. Motions for Sanctions
Finally, we address the parties' motions for sanctions. Bhaskar argues F&M should be sanctioned because F&M's appeal is frivolous and it violated several rules of court, including filing an overly lengthy appellate brief and failing to provide an accurate summary of the record or factual citations. "[A]n appeal may be found frivolous and sanctions imposed when (1) the appeal was prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment; or (2) the appeal indisputably has no merit, i.e., when any reasonable attorney would agree that the appeal is totally and completely without merit." (Bach v. County of Butte (1989) 215 Cal.App.3d 294, 310.) We also may impose monetary sanctions for any unreasonable infraction of the rules governing appeals. (Pierotti v. Torian (2000) 81 Cal.App.4th 17, 29.) Because F&M did not violate the rules of court and F&M's appeal is not meritless, we deny Bhaskar's motion for sanctions.
F&M argues Bhaskar should be sanctioned for filing a frivolous motion for sanctions. (See Dana Commercial Credit Corp. v. Ferns & Ferns (2001) 90 Cal.App.4th 142, 147 ["[appellate] court has the inherent authority to impose sanctions for the filing of a frivolous motion on appeal, and will exercise its discretion to do so upon an appropriate showing"].) Although it is admittedly a close case, we will deny the motion for sanctions because we cannot say Bhaskar's motion indisputably has no merit.
III
DISPOSITION
The orders sustaining F&M's demurrer to the Penal Code section 496 claim, denying F&M's JNOV motion, and granting F&M's new trial motion are affirmed. The matter is remanded for a full trial in accordance with this opinion. The parties are to bear their own costs on appeal. The motions for sanctions are denied.
ARONSON, J. WE CONCUR: O'LEARY, P. J. FYBEL, J.