Opinion
G051888
01-12-2018
KRIS ESZLINGER et al., Plaintiffs, Cross-defendants, and Appellants, v. UNITED STUDIOS OF SELF DEFENSE, INC., et al., Defendants, Cross-complainants, and Appellants.
Law Offices of Thomas E. Francis, Thomas E. Francis, for Plaintiffs, Cross-defendants and Appellants. Kushner Carlson, Michael B. Kushner and Jonathan D. Kent for Defendants, Cross-complainants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2010-00404621) OPINION Appeal from a judgment of the Superior Court of Orange County, David R. Chaffee, Judge. Affirmed. Law Offices of Thomas E. Francis, Thomas E. Francis, for Plaintiffs, Cross-defendants and Appellants. Kushner Carlson, Michael B. Kushner and Jonathan D. Kent for Defendants, Cross-complainants and Appellants.
Appellants and cross-defendants Kris Eszlinger, William Clark, Paul Taylor, and Z-Ultimate Self Defense Studios, LLC (Z-Ultimate) appeal from a judgment in favor of respondents and cross-complainants United Studios of Self Defense, Inc. (USSD), Bushido Martial Arts Supplies, Inc. (Bushido), Advantage Billing Co., Inc. (ABC) and Charles Mattera, awarding respondents $929,007.56 in compensatory damages jointly and severally against appellants and $125,000 in punitive damages separately against both Eszlinger and Clark. Appellants' challenge rests mostly on their argument the evidence is insufficient to sustain the award of damages on any of the legal theories advanced at trial. We reject those arguments.
Because the net judgment was in favor of respondents in their capacity as cross-complainants, and because plaintiffs and cross-appellants have abandoned their cross-appeal, for purposes of clarity we will eschew our usual practice of referring to the parties by their capacity in the trial court, and instead refer to Eszlinger, Clark, Taylor, and Z-Ultimate collectively as appellants, and USSD, Bushido, ABC and Mattera collectively as respondents.
This case has a long, procedurally complicated history, including a two-phase jury trial, a court trial, an arbitration, multiple posttrial motions, several noticed appeals, and a prior opinion dismissing as premature appellants' appeal from a nonfinal judgment. Appellants now appeal from a prejudgment order as well as a nonfinal judgment entered before the court ruled on appellants' motions for judgment notwithstanding the verdict (JNOV), for new trial and for remittitur. Respondents follow suit by cross-appealing from the same prejudgment order and nonfinal judgment even though the court subsequently entered a final judgment from which an appeal correctly lies.
As will be seen, we save the appeal by construing it as from the final judgment.
Occasionally we encounter an appeal presenting procedural challenges that threaten to swallow the merits whole. This is one of those. Appellate courts have no independent knowledge of cases brought before them for review. Here we face an arduous combination of poorly articulated appellate arguments and a muddy and incomplete appellate record. Appellants failed to demonstrate error, and respondents abandoned their cross-appeal by failing to brief a single point of error, apparently under the mistaken belief the court never entered final judgment. Accordingly, we affirm the judgment.
It required enormous effort to straighten out the mess given we are not as intimately familiar with the case as is counsel.
PROCEDURAL HISTORY AND FACTS
Pretrial Proceedings
The recitation below is mostly from our unpublished opinion in Eszlinger v. United Studios of Self Defense, Inc. (April 17, 2014, G048174) (Eszlinger I).
"The underlying litigation involves a dispute involving the business operations of various martial arts studios practicing a martial arts style which utilizes the kempo form of martial arts as developed by the Shaolin temple in China. [Respondent] Charles Mattera is the chief executive officer of [respondent] United Studios of Self Defense, Inc. (USSD), which operates studios under the USSD name, principally by selling licenses and franchises.
"[Appellants], by Mattera's description, were 'long-time members of the USSD family' and 'had grown up with USSD, from novice karate students, to instructors, to studio managers, and ultimately to senior level USSD executives . . . .'
"In September 2004, [appellants] contracted with Mattera to purchase his interests in various limited liability companies that held licenses for various USSD studios. The relationship soured, and the purchase agreements were not consummated. At some point, [appellants] began offering mixed martial arts [kempo] operations under the 'Z-Ultimate' name.
"In September 2010, [appellants] sued [respondents] for breach of contract, slander, and declaratory relief. [Appellants] alleged they tendered the final payments to complete the purchase, but Mattera refused to complete the transfer of his ownership. [Appellants] sought declaratory relief whether USSD had exclusive rights to use of Shaolin Kempo techniques and combinations and whether they could sever their relationships with USSD and operate their karate studios under the 'Z-Ultimate' logo.
The parties have not included [appellants'] complaints in the record on appeal. Our review of the superior court file reveals the fourth amended complaint to be operative, but it was ordered sealed when filed. We have not reviewed it and have no way of knowing what causes of action are alleged.
"USSD, Mattera and several affiliated corporations collectively cross-complained against [appellants] for allegedly entering into an 'unlawful and secret plan to destroy Mattera and USSD by illegally rebranding the USSD studios as Z-Ultimate studios.
The third amended cross-complaint is the operative cross-complaint. Respondents alleged the following causes of action: (1) breach of fiduciary duty; (2) constructive fraud; (3) theft of trade secret and confidential information; (4) conspiracy to misappropriate trade secrets and confidential information; (5) violation of Penal Code section 502; (6) trademark infringement; (7) trademark dilution; (8) civil conspiracy; (9) tortious interference with contract; (10) breach of written contract; (11) unfair business practices; (12) accounting; and (13) permanent injunction.
"In November 2010, [appellants] moved to compel arbitration of their breach of contract claims against Mattera, and to stay trial of their tort claims and of the tort causes of action in the cross-complaint. [Appellants] relied upon arbitration clauses in their purchase and sale agreements for the limited liability companies with Mattera.
"[Respondents] opposed the stay on the ground that the 'vast majority' of their cross-complaints had nothing to do with the agreements." (Eszlinger I, supra, G048174.)
Arbitration and Trial
"In March 2011, the trial court (Judge Jamoa Moberly) granted [appellants'] motion to compel arbitration as to the contractual causes of action, but denied [appellants'] request to stay the remainder of the litigation pending completion of the arbitration proceedings.
"As a result, the case proceeded on two parallel tracks, a jury/judge trial on the tort claims and cross-claims, and an arbitration on the [appellants'] breach of contract actions.
"[Appellants] recovered $1 in nominal damages on their tort claims against [respondents], with the jury awarding [respondents] $6.5 million in compensatory damages and $1.2 million in punitive damages on their cross-complaints.
"Judge Chaffee, sitting without a jury, denied [respondents] any equitable or injunctive relief on their efforts to bar [appellants] from using the Shaolin [K]empo system of training instruction at their Z-Ultimate branded martial arts studios. Instead, the court found '[t]he method and style of karate called Shaolin Kempo karate is not a trade secret, could not be a trade secret, and that something that is so publicly displayed in tournaments, in classes, in lectures and on the Internet repeatedly cannot in and of itself be a trade secret.'
"The arbitrator, retired judge James L. Smith of JAMS, awarded $470,991 to [appellants] on their breach of contract claims.
"On November 29, 2012, Judge Chaffee signed a judgment on the jury verdict, but reserved jurisdiction to determine the validity of the arbitration award. On December 12, 2012, [respondents] served and filed a document entitled 'Notice of Entry of Judgment.'" (Eszlinger I, supra, G048174.)
Posttrial Proceedings and Notices of Appeal in Eszlinger I
"[Appellants] filed posttrial motions for new trial and for [JNOV]. They also filed a petition to confirm the arbitration award, which [respondents] opposed as untimely and not correctly rendered.
"By stipulation, Judge Chaffee held a hearing on the posttrial motions on February 1, 2013, and issued his rulings on February 11, 2013. Judge Chaffee ordered a new trial on [respondents'] claim for civil conspiracy, and a [JNOV] on the causes of action for breach of fiduciary duty and constructive fraud. Judge Chaffee granted a conditional new trial on excessive damages, subject to a remittitur of compensatory damages from $6.5 million to $1.4 million, and punitive damages from the original $1.2 million award to an aggregate of $275,000 against three individual [appellants].
Respondents filed a notice of appeal from the November 29, 2012 judgment, but later abandoned this appeal.
"[Respondents] filed a notice of acceptance of the remittitur of the conditional new trial order, and moved ex parte to enter a proposed amended judgment reflecting acceptance of the remittitur. [Appellants] filed their own proposed amended judgment, rejecting the remittitur.
"On March 1, 2013, [appellants] filed a notice of appeal from the November 29, 2012 judgment, as modified by the February 11, 2013 posttrial rulings.
"On March 21, 2013, Judge Chaffee ruled on [appellants'] petition to [confirm arbitration award]. Judge Chaffee granted the [petition] to confirm the arbitration award, but ordered that it be corrected to run against Mattera alone and not against the other [respondents]. Judge Chaffee determined that 'the USSD entities were not proper parties to the arbitration because the contracts at issue were only between Mattera and [the limited liability companies], and [Judge Moberly's] order compelling arbitration was not directed to the USSD entities.'
"Judge Chaffee did not sign the minute order, and did not address the outstanding dispute between [appellants] and [respondents] regarding acceptance or rejection of the remittitur.
"On March 27, 2013, [respondents] filed a notice of cross-appeal from the adverse portions of the February 11, 2013 posttrial order conditionally grant[ing] a new trial and a judgment notwithstanding the verdict, as well as the March 21, 2013 minute order confirming the arbitration award." (Eszlinger I, supra, G048174.)
USSD's Motion to Dismiss Eszlinger I
Respondents filed a motion to dismiss appellants' appeal in Eszlinger I on the ground the November 29, 2012 judgment on the jury verdict was not an appealable final judgment. On April 17, 2014, we issued an opinion dismissing the appeal as premature, because the court had yet to enter a final appealable judgment. We remanded to the trial court for entry of a final judgment and consideration of any remaining posttrial issues.
With regard to offset, we wrote, "How to apply the offset remains an open question. The original arbitration award issued against [respondents] as a group. In confirming the arbitration award in the March 21, 2013 minute order, Judge Chaffee ordered that it be corrected to run against Mattera alone. But Mattera is not named as a prevailing party in the multi-million award on the cross-complaint that is the subject of the November 29, 2012 judgment. (Only USSD and Bushido . . . are beneficiaries of the jury award.) How then is the arbitration award against Mattera to be used as an offset to a judgment in favor of USSD and Bushido? Plainly, such questions remained to be answered in a final judgment." (Eszlinger I, supra, G048174.)
Post-Eszlinger I Proceedings in the Trial Court
After litigating respondents' asserted right to prejudgment interest, on March 3, 2015, the court entered a new judgment. The judgment addressed the jury's award of $1 in nominal damages to appellants; the arbitrator's award of $470,991.44 to appellants, corrected as against Mattera only; and the jury's award of $6.5 million in compensatory damages and $1.2 million in punitive damages to respondents. The court entered judgment in favor of respondents against appellants jointly and severally in the sum of $6,029,007.56 for compensatory damages; and in favor of USSD for punitive damages against the following individuals: Eszlinger for $500,000; Clark for $500,000; Hans Prosch for $100,000; and Taylor for $50,000. Additionally the court entered judgment in favor of respondent Bushido against Taylor for $50,000 in punitive damages. The court determined USSD and Bushido were entitled to costs and reserved jurisdiction to determine attorneys' fees payable to respondents as prevailing parties. The court ordered respondents take nothing against appellants on the ninth, tenth, eleventh, twelfth, and thirteenth causes of action in the cross-complaint.
Prosch was one of the original respondents, but after further proceedings was not named in the final judgment.
On March 17, 2015, appellants filed motions for JNOV, for new trial, and for remittitur. The court ruled on appellants' motions on May 4, 2015. The court granted the motion for new trial as to compensatory damages pursuant to Code of Civil Procedure section 657 "subject to condition that the motion is denied if respondents consent to a reduction of compensatory damages to $1.4 million, which is the amount determined by the Court to be fair and reasonable based on the evidence." The court also granted the motion for new trial as to punitive damages subject to the condition it would deny the motion if respondents agreed to a reduction as follows: Eszlinger $125,000; Clark $125,000; Prosch $25,000. The court found there was no evidence "fully establishing" the net worth of each appellant, other than evidence showing Taylor was insolvent.
On appellants' motion for JNOV, the court granted the motion of all appellants except Taylor on the breach of fiduciary duty and constructive fraud causes of action. The court also granted the motion as to all appellants on the misappropriation of trade secrets and conspiracy causes of action. However, the court denied the motion as to the violation of Penal Code section 502 and trademark infringement causes of action. As to compensatory and punitive damages, the court re-addressed the issue in the context of the motion for JNOV and granted the motion on these issues (except as to Taylor on compensatory damages, which the court denied). Finally, the court rejected appellants' assertion that respondents' counsel engaged in misconduct.
All further statutory references are to the Penal Code unless otherwise stated.
On the same day the court ruled, May 4, 2015, appellants filed their notice of appeal from a "judgment after jury trial" stating they appealed from orders entered March 4, 2015 and May 4, 2015.
It appears notice of entry of the March 3, 2015 judgment was filed and served on March 4, 2015.
On May 14, 2015, respondents filed an acceptance of the remittitur and requested entry of a proposed amended judgment, which respondents attached to their request. Unlike the previous round of posttrial briefing, this time appellants did not file their own proposed amended judgment or anything indicating rejection of the remittitur.
On June 2, 2015, respondents cross-appealed from the March 3, 2015 judgment and the May 4, 2015 order on posttrial motions.
The court signed and entered the amended judgment proposed by respondents on June 15, 2015. The amended judgment provides in relevant part: (1) USSD and Bushido take judgment against Taylor for breach of fiduciary duty and constructive fraud; (2) USSD takes judgment against Taylor for violation of section 502; (3) USSD takes judgment against Eszlinger and Z-Ultimate for trademark infringement; (4) all respondents take judgment against Eszlinger and Clark for conspiracy to commit trademark infringement and against Taylor for conspiracy to violate section 502; (5) Taylor, Eszlinger, Clark, and Z-Ultimate are jointly and severally liable for compensatory damages in the sum of $929,007.56; (6) USSD takes judgment against Eszlinger for $125,000 in punitive damages; and (7) USSD takes judgment against Clark for $125,000 in punitive damages.
On September 22, 2017, we notified the parties of our intent to augment the record on appeal to include the March 3, 2015 judgment and the June 15, 2015 amended judgment. We invited opposition within 10 days and received none. Therefore, we augment the record to include the March 3, 2015 judgment and the June 15, 2015 amended judgment filed in Orange County Superior Court Case No. 30-2010-00404621.
The amended judgment amount of $929,007.56 was calculated by offsetting against the remitted $1.4 million compensatory award the amount of $470,992.44, which is the combined total of the $470,991.44 arbitration award plus the jury's $1 verdict against Mattera. Neither the court nor the parties addressed our query in Eszlinger I as to how the arbitration award against Mattera could be used to offset a judgment in favor of USSD and Bushido. The court ordered respondents to take nothing as against several of the original cross-defendants including Prosch. The amended judgment as to Prosch conflicts with the court's order granting appellants a new trial as to Prosch subject to the condition it would deny new trial if respondents agreed to a reduction to $25,000 in punitive damages.
The balance of the procedural history, facts, and court's findings will be discussed below as relevant to the parties' specific contentions.
DISCUSSION
We Treat the Appeal as from the Amended Judgment
Neither appellants nor respondents appealed from the June 15, 2015 amended judgment. On May 4, 2015, appellants filed their notice of appeal from a "judgment after jury trial" specifying they appealed from orders entered March 4, 2015 and May 4, 2015. Nothing happened on March 4, 2015 except service of notice of entry of the March 3, 2015 judgment, which was superseded by the June 15, 2015 amended judgment. The May 4, 2015 order granting in part and denying in part appellants' motion for JNOV and motion for new trial itself is not fully appealable. An order denying a motion for JNOV is an appealable order (Code of Civ. Proc., § 904.1, subd. (a)(4)), but an order granting a JNOV motion is not a final judgment and is not itself an appealable order. (Mason v. Mercury Cas. Co. (1976) 64 Cal.App.3d 471, 473, fn. 2; Jordan v. Talbot (1961) 55 Cal.2d 597, 602.) Rather, appeal lies from the judgment entered pursuant to the court's order granting the JNOV motion. (Code of Civ. Proc., § 904.1, subd. (a)(1).) To preserve an appeal, a timely notice of appeal from the order granting JNOV may be treated as a notice of appeal from the judgment entered pursuant thereto. (See Cal. Rules of Court, rule 8.104(d)(1).)
All further rule references are to the California Rules of Court.
Respondents equally miss the mark. On June 2, 2015, respondents cross-appealed from the stale March 3, 2015 judgment and the May 4, 2015 order on posttrial motions. Although the order granting a new trial is appealable (Code Civ. Proc., § 904.1, subd. (a)(4)), if a trial court grants a new trial and a JNOV, the new trial order is effective only if we reverse the JNOV and affirm the new trial order. (Code of Civ. Proc., § 629, subd. (d).)
On June 19, 2015, we entered an order adopting a proposed briefing schedule stipulated to by the parties. Appellants were to file an opening brief, and respondents were to file a combined respondents' and cross-appellants' opening brief within 60 days thereafter. Appellants were then to file a combined reply and cross-respondents' brief within 60 days. Finally, respondents were to file a cross-reply brief within 30 days.
Appellants' opening brief violates rule 8.204(a)(2)(B) in failing to state the judgment appealed from is final, or explain why the orders appealed from are appealable. The rule requiring that appellant's opening brief contain a statement of appealability serves multiple purposes. First, it requires an appellant to make the preliminary and fundamental determination that the order appealed from is, in fact, an appealable order or judgment, and second, it demonstrates both to other parties and to the Court of Appeal, before work on the merits of a case is begun, why the order is appealable. (Lester v. Lennane (2000) 84 Cal.App.4th 536, 556.) Appellants also fail to include a register of actions in their appendix as required by rules 8.124(a)(2) and 8.122(b)(1)(F). Had they complied, they likely would have realized the amended judgment had been entered and may have better focused their arguments on appeal.
Respondents' brief, labeled "Respondents' Opening Brief" is just that — a respondent's brief. It contains no argument addressing respondents' purported cross-appeal, perhaps because respondents are under the mistaken impression the amended judgment was never signed and entered by the court. Not so. Accordingly, appellants' reply brief was limited to just that — a reply.
A simple review of the superior court file would have revealed this fact.
We are left with several arguments advanced by appellants that we interpret as an attack on the amended judgment even though they are advanced in the context of the court's JNOV ruling. We treat appellants' notice of appeal filed May 4, 2015 as from the amended judgment entered June 15, 2015. (Rule 8.104(d)(1).) Respondents have chosen not to pursue their cross-appeal, so we treat it as abandoned.
The Amended Judgment is Presumed Correct
The most fundamental rule of appellate review is that an appealed judgment or order is presumed to be correct. "'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 (Foreman).) "All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown." (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) Because appealed judgments and orders are presumed correct, the appellant has the burden of overcoming this presumption by affirmatively showing error on an adequate record. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141.) This rule "'is not only a general principle of appellate practice but an ingredient of the constitutional doctrine of reversible error.'" (Denham, at p. 564.)
Against this basic appellate backdrop, we now consider appellants' arguments. They contend they were not fiduciaries and there was insufficient evidence of damages for breach of fiduciary duty, trademark infringement, violation of section 502, and conspiracy. They also attack the expert opinion of Dr. Alan Goedde. Finally, they challenge the court's punitive damages award.
Appellants' Challenge Regarding Breach of Fiduciary Duty is Meritless
Appellants' argument heading entitled, "Judge Chaffee's [sic] Ruled The Masters Did Not Have A Fiduciary Relationship With USSD" is a correct factual statement (not a legal argument) as to appellants other than Taylor, because the court granted JNOV as to these appellants on this cause of action. We are at a loss to understand why appellants argue "there is no evidence . . . Eszlinger, Clark, Prosch, Ley and Clegg knowingly undertook to act on behalf of USSD and USSD's benefit." This is what the lower court found. Appellants need not argue a point they won below. Appellants are entitled to challenge only those trial court errors injurious to themselves, not injurious to other parties or favorable to themselves. (See Marich v. MGM/US Telecommunications, Inc. (2003) 113 Cal.App.4th 415, 431.)
Appellants' arguments on appeal bear a striking resemblance to the arguments they advanced in their motion for JNOV. The problem, of course, is appellants mostly won that motion. Appellants made little effort to conform their arguments on appeal to the court's JNOV ruling.
The only adverse ruling regarding breach of fiduciary duty was the court's denial of JNOV as to Taylor. In their opening brief, appellants advance no separate argument that the court erred as to Taylor. Appellants also fail to challenge in their opening brief Taylor's liability for constructive fraud. Both the fiduciary duty and constructive fraud arguments as to Taylor were raised for the first time in the reply brief. They are thereby waived. We will not address arguments raised for the first time in the reply brief. (Provost v. Regents of University of California (2011) 201 Cal.App.4th 1289, 1296 (Provost).)
We also note appellants never argued constructive fraud in their motions for JNOV or for new trial. Appellants argued USSD did not have a fiduciary relationship necessary to predicate a claim of constructive fraud in their motion for remittitur.
Appellants' Attack on the Sufficiency of Evidence to Support the Award of Compensatory Damages Must Fail Unless the Evidence on all Theories of Liability is Insufficient
As respondents aptly note, the jury returned a general verdict on compensatory damages. Because respondents claimed damages on multiple theories, appellants must surmount an extraordinarily high hurdle to demonstrate insufficiency of the evidence on damages. "[W]here several counts are tried, a general verdict will be sustained if any one count is supported by substantial evidence and is unaffected by error, despite possible insufficiency of evidence as to the remaining counts." (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1157.) As we shall explain, appellants have failed to clear this hurdle. As to some theories of liability, appellants have waived their argument by inadequate briefing. On other theories, appellants have failed to recite all of the evidence bearing on the issue, as they must in making a challenge to the sufficiency of the evidence.
The verdict form asked the jury to make a finding of liability on each of the causes of action submitted to it, and then set forth a single question on compensatory damages, which was asked and answered as follows: "As to the Cause(s) of action, if any, for which we, the jury in the above-entitled case, find in favor of Cross-Complainants and against Cross-Defendants, we find damages in the amount of: [¶] $6,500,000.00. [¶] These damages represent the total damages to be awarded to Cross-Complainants for each and all of the findings on liability as to the causes of action listed above."
Appellants Failed to Demonstrate Error in the Award of Compensatory Damages for Breach of Taylor's Fiduciary Duty
In the less than one page in their opening brief allotted to damages for breach of fiduciary duty, appellants fail to make any meaningful legal argument. Although appellants cite three cases on the so-called economic loss rule generally (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 Cal.App.2d 675; Aas v. Superior Court (2000) 24 Cal.4th 627; Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979), they fail to explain how the economic loss rule applies to the facts of this case, or whether the court failed to apply the economic loss rule if it does apply, how the outcome may have been adverse to appellants, where the error lies, or what appellants would like us to do about it.
"Issues do not have a life of their own: if they are not raised or supported by argument or citation to authority, we consider the issues waived." (Jones v. Superior Court (1994) 26 Cal.App.4th 92, 99; see In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 ["We are not bound to develop appellants' argument for them. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contentions as waived."].) On this meager showing, appellants have failed to demonstrate error.
Appellants Failed to Demonstrate Error in the Award of Damages for Trademark Infringement
Appellants spend one page in their opening brief arguing about damages for trademark infringement. Appellants include not a single citation to the record. (See rule 8.204(a)(1)(C) [each brief must support reference to matter in record by citation to volume and page number].) "A party on appeal has the duty to support the arguments in the briefs by appropriate reference to the record, which includes providing exact page citations. We have no duty to search the record for evidence and may disregard any factual contention not supported by proper citations to the record." (Air Couriers Internat. v. Employment Development Dept. (2007) 150 Cal.App.4th 923, 928; Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1149 [we will not scour record on our own in search of supporting evidence, and where parties fail to cite evidence they cannot complain when we find their arguments unpersuasive].) Further, we note the reporter's transcript from trial consists of 3,033 pages and the appendices prepared by the parties comprise another 1,743 pages. "The duty to adhere to appellate procedural rules grows with the complexity of the record." (Western Aggregates, Inc. v. County of Yuba (2002) 101 Cal.App.4th 278, 290 (Western Aggregates).) "'[A]ppellate counsel should be vigilant in providing us with effective assistance in ferreting out all of the operative facts that affect the resolution of issues tendered in an appeal.'" (Id. at p. 291.)
Appellants also failed to set forth the material evidence (or any evidence) adduced at trial regarding trademark infringement damages. If, as appellants here contend, "'some particular issue of fact is not [supported by substantial evidence], they are required to set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error is deemed to be waived.'" (Foreman, supra, 3 Cal.3d at p. 881.) The trademark infringement damages argument is waived.
In their reply brief appellants argue for the first time that USSD failed to provide evidence of infringement. We will not consider arguments made for the first time in the reply brief. (Provost, supra, 201 Cal.App.4th at p. 1296.)
Appellants Failed to Demonstrate Error in the Award of Damages for Taylor's Violation of Section 502
Only Taylor was found liable for violating section 502. In the one page in their opening brief devoted to the issue, appellants declare a "lost password to gain access to a website is not cognizable under [section] 502," but they fail to cite legal authority to support such a conclusion. Nor do appellants explain the facts and circumstances surrounding the lost password.
Section 502 provides in relevant part, "In addition to any other civil remedy available, the owner or lessee of the computer, computer system, computer network, computer program, or data who suffers damage or loss by reason of a violation of any of the provisions of subdivision (c) may bring a civil action against the violator for compensatory damages and injunctive relief or other equitable relief. Compensatory damages shall include any expenditure reasonably and necessarily incurred by the owner or lessee to verify that a computer system, computer network, computer program, or data was or was not altered, damaged, or deleted by the access." (Id., subd. (e)(1).) Subdivison (c) or section 502 specifies 12 different acts involving wrongful access to or use of a computer, computer system or computer network.
According to respondents, it was not the lost password that led to Taylor's liability, it was Taylor's act of wiping USSD's electronic financial and business records, an act Taylor admitted at trial. Appellants have not argued such an act is not actionable under section 502. Factually, appellants include a reference to "TEX 280, 281" which we assume refers to trial exhibits. Respondents also reference exhibits 280 and 281. However, the parties failed to supply us with the trial exhibits, so we cannot discern what help they might provide. A party cannot argue trial exhibits undermine the judgment when those exhibits are not transmitted to the appellate court. (Hiser v. Bell Helicopter Textron, Inc. (2003) 111 Cal.App.4th 640, 656-657 (Hiser).) Where exhibits are missing, we will not presume they would undermine the judgment. (See Western Aggregates, supra, 101 Cal.App.4th at p. 291.)
Rule 8.224 outlines the procedure for transmitting exhibits to our court for review.
Appellants also cite Mattera's testimony concerning the difficulty USSD had in reconstructing its Web site but we are unclear how this relates to appellants' argument Taylor's actions did not cause damages. It seems to support USSD's position. As pointed out by respondents, Goedde testified it cost USSD $87,000 to partially repair and reconstruct the electronic files Taylor destroyed.
In their reply brief, appellants rely on Mahru v. Superior Court (1987) 191 Cal.App.3d 545, apparently for the proposition a lost password is not cognizable under section 502. The criminal case is readily distinguishable. Mahru v. Superior Court dealt with a programmer-employee's alteration of two file names to prevent employees from running programs in the system. (Mahru, at p. 547.) It was not a case involving civil liability for damages under section 502, subdivision (e)(1), nor did it involve the deletion of files from the company's computer system.
Appellants have failed to meet their burden to establish there was insufficient evidence of damages for Taylor's violation of section 502.
Appellants Failed to Demonstrate Error in the Award of Damages Under a Conspiracy Theory Against Eszlinger and Clark for Trademark Infringement
Appellants spend less than one page in their opening brief attempting to convince us there was insufficient evidence to establish an underlying cause of action to support conspiracy. They cite the general rule concerning conspiracy surviving as a cause of action only when the complaint alleges the commission of an underlying civil wrong that causes damages. (Okun v. Superior Court (1981) 29 Cal.3d 442, 454.) Thus, the inquiry is whether there was sufficient evidence to establish trademark infringement.
The jury found Eszlinger and Z-Ultimate liable for trademark infringement but not liable for trademark dilution. We have already determined appellants failed to meet their burden to establish insufficient evidence of damages for trademark infringement. Hence, an underlying cause of action exists for imposing liability for conspiracy upon Eszlinger and Clark. Notably, Clark need not have committed the underlying tort himself. The civil conspiracy doctrine "provides a remedial measure for affixing liability to all persons who have 'agreed to a common design to commit a wrong.'" (Choate v. County of Orange (2000) 86 Cal.App.4th 312, 333; Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784 [as long as two or more persons agree to perform wrongful act, law places civil liability for resulting damages on all regardless whether they actually commit tort themselves].) Appellants present no argument to the effect that Clark did not conspire with Eszlinger to infringe the trademark.
Appellants Failed to Demonstrate the Expert Testimony Lacks Evidentiary Support
Appellants' final argument on compensatory damages attacks Goedde's expert opinion as lacking in evidentiary support. Appellants argue USSD did not authenticate its financial records. In their reply brief, appellants argue Goedde's expert opinion relies on hearsay, there was no authentication of financial records, and there was insufficient evidence of damages from records missing from Taylor's computer.
Although appellants fail to identify for us their trial objections, respondents informed us appellants objected at trial to Goedde's testimony on grounds it lacked foundation and called for hearsay. Even so, appellants have not demonstrated their objections were improperly overruled. Appellants argue Goedde based his opinions on "unauthenticated financial records and speculative projections of continued growth of studios and use of Bushido martial arts supplies and ABC billing services." But appellants have not pointed us to financial records they contend were unauthenticated or speculative or that constitute inadmissible hearsay. We cannot review documents we do not have. (See Hiser, supra, 111 Cal.App.4th at pp. 656-657; see also Western Aggregates, supra, 101 Cal.App.4th at pp. 290-291.)
To the extent appellants argue insufficiency of the evidence of damages from records missing from Taylor's computer, the purely factual argument is barren of adequate citations to the record, a violation of rule 8.204(a)(1)(C). (See Western Aggregates, supra, 101 Cal.App.4th at pp. 290-291 [legal issues arise out of facts; party cannot ignore facts to raise academic legal argument].) Further, appellants fail to set forth material evidence adduced at trial on the point. (See Foreman, supra, 3 Cal.3d at p. 881.) We will not take it upon ourselves to fulfill appellants' responsibilities. Appellants have not met their burden on appeal.
Appellants' Punitive Damages Arguments Fail
Appellants incorrectly contend our review of the punitive damages award is de novo. But appellants do not make a constitutional challenge to the award of punitive damages, in which case our standard of review would be de novo. (See State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408, 418 [error to reinstate jury's $145 million punitive damages award which violated due process].) Instead, appellants argue there was no clear and convincing evidence of malice, oppression or fraud and insufficient evidence of their financial condition. In such a case, we "inquire whether the record contains 'substantial evidence to support a determination by clear and convincing evidence . . . .'" (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) "Under that standard, we review the evidence in the light most favorable to the [respondents], give them the benefit of every reasonable inference, and resolve all conflicts in their favor, with due attention to the heightened standard of proof." (Ibid.)
Appellants' Inadequate Briefing Has Waived Their Insufficiency of the Evidence Argument Regarding Malice, Oppression or Fraud
While the jury found Taylor, Eszlinger, Clark, Prosch, and Ley acted with malice, oppression or fraud, the court granted new trial and JNOV motions subject to a reduction in punitive damages to $125,000 against Eszlinger, $125,000 against Clark, and $25,000 against Prosch. In the end, however, the amended judgment includes an award of punitive damages only as to Eszlinger and Clark.
Frank Ley was an original cross-defendant. The amended judgment made no award against him.
Civil Code section 3294, subdivision (a) provides, "In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant."
"'Oppression' means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights." (Civ. Code, § 3294, subd. (c)(2).) "'Fraud' means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury." (Id., subd. (c)(3).) "Malice' means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others." (Id., subd. (c)(1).) The term "despicable" is not defined in the statute, but the Supreme Court has observed it is applicable to "circumstances that are 'base,' 'vile,' or 'contemptible.'" (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725.)
Given the amended judgment finds only Ezslinger and Clark liable for punitive damages, we would expect appellants' briefing to focus on evidence, or lack thereof, of malice, oppression, or fraud specifically related to these parties. Instead, appellants make the conclusory assertion that none of the evidence demonstrated despicable conduct, willful and conscious disregard for USSD's interests, the evil motive required for malice, or that appellants acted with the intention of causing harm to respondents. Appellants brief reference exhibits 77, 114, 138, 184, 280 and 281, but as we previously stated, appellants did not supply us with the exhibits. (See Hiser, supra, 111 Cal.App.4th at pp. 656-657; see also Western Aggregates, supra, 101 Cal.App.4th at pp. 290-291.) Most importantly, appellants failed to set forth in their brief all the material evidence on the point as required when challenging the sufficiency of the evidence. (See Foreman, supra, 3 Cal.3d at p. 881.) Appellants have waived their argument by failing to support it with adequate facts.
Appellants' Inadequate Briefing Has Waived Their Argument Regarding Insufficiency of the Evidence of Financial Condition
In reducing the punitive damages award against Eszlinger and Clark, the court found there was no evidence fully establishing the net worth of appellants. On appeal, appellants argue their "financial statements demonstrate that the [appellants] do not have the ability to pay the compensatory damages award let alone the punitive damages award." But appellants failed to provide us with their financial statements. (See Hiser, supra, 111 Cal.App.4th at pp. 656-657; see also Western Aggregates, supra, 101 Cal.App.4th at p. 291.) Indeed appellants failed to reference a single citation to the record anywhere in their opening or reply briefs concerning their net worth or ability to pay a punitive damages award. (See rule 8.204(a)(1)(C).) Notably, appellants' reply brief contains not a single fact (whether supported or unsupported by a citation to the record) concerning their net worth or ability to pay the punitive damages award. We again find the argument is waived.
DISPOSITION
The judgment is affirmed. USSD, Bushido, ABC and Mattera shall recover their costs on appeal.
IKOLA, J. WE CONCUR: O'LEARY, P. J. ARONSON, J.