Opinion
G058559
09-15-2021
TODD GRECO et. al., Plaintiffs and Respondents, v. RANDY CECOLA et. al., Defendants and Appellants.
Sage Law Partners and Darrel C. Menthe for Defendants and Appellants. The Boesch Law Group, Philip W. Boesch, Jr. and Annie Ksadzhikyan for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
Appeal from a judgment and postjudgment order of the Superior Court of Orange County No. 30-2016-00840785, Theodore R. Howard, Judge. Affirmed.
Sage Law Partners and Darrel C. Menthe for Defendants and Appellants.
The Boesch Law Group, Philip W. Boesch, Jr. and Annie Ksadzhikyan for Plaintiffs and Respondents.
OPINION
GOETHALS, J.
Todd Greco is the owner of Greco Surfboards, LLC (collectively Greco). In 2015, Greco agreed to sell all the assets of Greco Surfboards (i.e., the surfboard business) to Greco Acquisition, LLC (Acquisition), a company formed by Randy Cecola and Trovare Capital Group, LLC for the purpose of taking ownership of the surfboard business. Acquisition agreed to pay for the business with two promissory notes, secured by the purchased assets. The parties also agreed Acquisition would pay a contingent additional sum based on anticipated increased profits generated by the surfboard business over the three year period following the sale.
When Acquisition failed to pay the first promissory note by the extended due date, Greco filed suit and obtained writs of attachment for the assets. Randy and Acquisition then filed a cross-complaint. Following a jury trial, Greco obtained a money judgment against Randy, Trovare and Acquisition, based on claims including breach of contract and fraudulent promise. Greco also obtained a money judgment against Randy's son, Alex, and Gold Coast Surfboards, LLC, based on a claim they intentionally interfered with the contract between Greco and Acquisition.
Because both Randy Cecola and his son, Alex Cecola, are parties to this appeal, we refer to each of them individually by his first name for the sake of clarity.
Randy, Alex, Trovare, Acquisition and Gold Coast (collectively, the Cecolas) appeal, contending (1) the trial court prejudicially erred by allowing the jury to hear evidence of Randy's prior conviction for felony tax fraud, (2) the fraud judgment against Randy and Trovare was not supported by sufficient evidence, and (3) the court erred by denying the Cecolas' motion for judgment notwithstanding the verdict and motion for a new trial.
We find no merit in any of the contentions and affirm the judgment and postjudgment order. When the Cecolas moved in limine to exclude evidence of Randy's criminal conviction, the court denied the motion only tentatively-making clear that the issue would be addressed again during trial. However, the Cecolas failed to object during trial, thereby forfeiting whatever objection they might have made. In similar fashion, the Cecolas forfeited any objection to the introduction of evidence related to a judgment entered against Randy in a different civil case. They affirmatively stipulated to the introduction of attachment orders issued by the court in an earlier phase of this case, and thus cannot be heard to complain of that on appeal. With respect to all the challenged evidentiary rulings, the Cecolas fail to demonstrate the court erred, or that its rulings were prejudicial.
Randy's and Trovare's challenge to the fraud judgment is unpersuasive because they failed to sustain their burden in arguing a lack of substantial evidence, and because the theory of fraud liability they seek to undermine is not the one relied on at trial. Alex and Gold Coast's attack on the judgment against them for intentional interference with contract fails for similar reasons. Their summary of the evidence bearing on the claim is conclusory at best and relies largely on evidence favorable to their defense. Their argument also misconstrues the nature of the liability established against their codefendants and how it relates to the interference liability established against them.
FACTS
When Greco became interested in selling his surfboard business, he was introduced to Randy by an intermediary who was in the business of valuing companies and facilitating mergers and acquisitions. After reviewing some financial information about the surfboard business, Randy emailed Greco an “Expression of Interest” letter on August 31, 2015. On behalf of Trovare, Randy expressed an interest in purchasing the surfboard business for a base price of $3 million, with $1 million paid at closing and a $2 million promissory note payable in five years. He also suggested an additional contingent payment of up to $1 million, based on the revenue of the business over the three years following purchase.
Thereafter, Randy conducted due diligence on the surfboard business, reviewing its financial documents and revenue. Meanwhile, Greco did some online investigation about Randy, and came across information linking him to a 30 year old insider trading scandal involving financier Ivan Boesky. Randy's role in the scandal resulted in his guilty plea to two felony counts of filing a false tax return.
Greco asked Randy about his involvement in the scandal; Randy characterized it as “a big misunderstanding.” Greco testified that what Randy disclosed at the time was “nothing to the extent of what we now know.” Greco told Randy he believed “everybody has second chances, and so I understood.”
By contrast, Randy claimed he answered all of Greco's questions completely because “I always offer for anybody involved in that conversation to answer any questions at that time or anytime in the future.”
Greco also did an online search of Trovare, including a review of its Web site that portrayed Trovare as an established capital group with a large and diverse portfolio of business assets. Greco came away flattered that a company of Trovare's stature was interested in acquiring his surfboard business.
On September 10, 2015, Randy submitted a formal purchase proposal on behalf of Trovare. The proposal differed from the expression of interest in that the base price was raised to $3.075 million, but the initial $1 million payment was to be delayed until January 2016. The parties tentatively agreed to the proposal.
Greco did not have an attorney, so Randy proposed that his attorney act for both sides in drafting the agreement and they could split his fee. Greco agreed, but thereafter did not have any significant communications with the attorney.
The final purchase agreement, dated September 30, 2015, reflected Greco was selling the surfboard business to Acquisition, a new company would then be formed for the purpose of purchasing the assets.
The sale included not only inventory and other hard assets, but the business's name, good will, accounts receivables, and its interests in contracts, including the lease for its premises.
The purchase price was to be paid in accordance with the terms of two interest-bearing promissory notes-the first for $1 million, payable in January 2016, and the second for $2.075 million, payable in installments over a period of years. The promissory notes were secured by the purchased assets.
Before the agreement was finalized, Randy promised both Greco and his wife “on the name of the Lord, I will pay you.” According to Greco, Randy “told us he would personally make sure that we were paid.”
According to Randy, the plan was for Acquisition to obtain financing to pay off the initial note. As a result, Randy prepared a 40 to 60 page detailed financial analysis designed for potential lenders.
As soon as the sale closed, Acquisition began running the surfboard business, and Randy, his wife Sophia, and their son Alex all began working for the company. Greco and his wife were on-site to provide full-time training for a period of approximately a month before the sale closed, and then another month, in a trouble shooting role. Both Sophia and Alex were initially paid salaries of $3,250 every two weeks (roughly $6,500 per month) by Acquisition.
When Acquisition was unable to obtain the anticipated loan by January 2016, Randy asked Greco for an extension of the due date on the first promissory note until March so he could continue efforts to find an alternative funding source. Greco agreed.
However, it soon became apparent that Acquisition would not be able to obtain the financing by the extended date, and rather than work out some other payment option, Acquisition offered to “return the business” and walk away from the deal. Greco refused, and filed his initial complaint on March 15, 2016, seeking to recover the assets of the surfboard business and obtain an award of damages.
On March 18, 2016, three days after Greco filed the complaint, Alex registered the Internet domain name “goldcoastsurfboards.com” and Gold Coast LLC was formed in April 2016. Gold Coast operated out of the same premises as Acquisition's surfboard business, and Alex worked for both companies at the same time The revenue from Acquisition's surfboard business declined beginning in about March 2016, roughly coinciding with the filing of Greco's lawsuit and the formation of Gold Coast.
In April 2016, the court issued a writ of possession, a right to attach order, and a writ of attachment based on Greco's security interest in the assets of the surfboard business.
Following service of the writ of possession, Randy doubled the salary Acquisition was paying Alex to $6,500 every two weeks-or roughly $170,000 per year.
Randy testified that despite the pending lawsuit, the Cecolas continued to try to make a go of the Acquisition surfboard business, in part because he was concerned he would be blamed for any damage to the business. Randy claimed they continued to operate the business even after representatives of the sheriff's office came to the premises on two separate occasions to repossess assets pursuant to Greco's writ of attachment. The Cecolas finally abandoned efforts to run the business after the third visit from a sheriff's representative in October 2016, because by that point, “there was no business to operate.”
Greco's operative fifth amended complaint alleges causes of action including breach of contract and claim and delivery against Acquisition, fraud in the inducement against Randy and Trovare, and intentional interference with contract against Alex and Gold Coast.
The fraud cause of action alleged the initial letter of intent for purchase of the surfboard business reflected that Trovare would be the purchaser of the assets, that Randy and Trovare had represented Trovare would be the buyer of the assets, and that Greco would not have agreed to sell the business to a shell company in the absence of assurances by Randy and Trovare that they would guarantee the purchase price was paid. It also alleges that at the end of September 2015, shortly before the sale to Acquisition closed, Greco told Randy that before he completed the transaction, he needed Randy to make a covenant with him in the Lord's name to pay the purchase price, and that Randy made that covenant. It was those alleged promises that Greco relied upon in entering into the agreement with Acquisition, and which Randy and Trovare allegedly never intended to fulfill.
The cause of action for intentional interference with contract was based on allegations that Alex and Gold Coast began operating a competing surfboard business out of the same facility as Acquisition's surfboard business, and they diverted customers and sales from Acquisition.
Before trial commenced, both sides moved in limine for orders limiting the evidence to be introduced at trial. The court repeatedly stated its pretrial rulings were not final, explaining “[t]hese are all tentative rulings at this point, so we'll deal with it in the flow of evidence.”
Among the Cecolas' in limine motions was one seeking exclusion of any evidence regarding Randy's 30 year old felony conviction. They argued the evidence was not relevant to any issue in the case and should be excluded under Evidence Code section 352 on the basis it was substantially more prejudicial than probative. Greco opposed the motion, pointing out that it was broad and vague, and it was not directed to any specific piece of evidence.
The court denied the motion, noting that the conviction was expressly made admissible under Evidence Code section 788, and it was not inclined to exclude the evidence. However, the court said again that its ruling was “tentative.”
The Cecolas also sought an order precluding Greco from introducing evidence of other litigation Randy had been involved in, including an Illinois case which resulted in a $500,000 default judgment against Randy, based on his failure to satisfy a loan guarantee. The court indicated it believed that case might be germane to the issues raised in this case and denied the motion on that basis.
The matter thereafter proceeded to a jury trial, and the jury rendered a verdict in favor of Greco and against the Cecolas. Specifically, the jury found in favor of Greco on the breach of contract claim, awarding damages of $3,076,290 against Acquisition. It found in favor of Greco Surfboards on the claim of false promise and awarded the same amount of damages against Randy and Trovare. It also found in favor of Greco Surfboards, and against Randy and Trovare on the claim for fraud in the inducement of the contract, again awarding the same damages, plus $250,000 in lost profits. And it found in favor of Greco Surfboards and against Alex and Gold Coast on the claim for intentional interference with contract, awarding $660,000 with a reference to “13 months loss profits.”
13 months is the period of time the Cecolas operated Acquisition.
After the jury rendered its verdict, Greco elected not to proceed with a punitive damages phase of the trial.
DISCUSSION
1. Evidentiary Issues
The Cecolas first argue the court erred in several of its evidentiary rulings. “We review for an abuse of discretion a trial court's admission of evidence.” (People v. Booker (2011) 51 Cal.4th 141, 170.) The standard is a high one and justifies a reversal only if the ruling was both beyond the bounds of reason and resulted in a manifest miscarriage of justice. “‘Under the abuse of discretion standard, “a trial court's ruling will not be disturbed, and reversal of the judgment is not required, unless the trial court exercised its discretion in an arbitrary, capricious, or patently absurd manner that resulted in a manifest miscarriage of justice.”'” (People v. Lewis (2009) 46 Cal.4th 1255, 1286.) An appellant arguing the court abused its discretion must explain the factual context in which the ruling was made because “all discretionary authority is contextual.” (People v. Superior Court (Alvarez) (1997) 14 Cal.4th 968, 978.)
Finally, as stated in Jameson v. Desta (2018) 5 Cal.5th 594, 608 609, “[I]t is a fundamental principle of appellate procedure that a trial court [order or] judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment.”
a. Felony Conviction
The Cecolas assert the trial court erred by allowing the jury to hear evidence that Randy had been convicted of a felony 30 years earlier. However, the Cecolas objected to the introduction of the evidence only in their motion in limine, and thereafter failed to repeat the objection during trial. They have consequently forfeited the issue.
As explained in People v. Jennings (1988) 46 Cal.3d 963, 975, fn. 3 (Jennings), “[g]enerally when an in limine ruling that evidence is admissible has been made, the party seeking exclusion must object at such time as the evidence is actually offered to preserve the issue for appeal. [Citations.] The reason for this rule is that until the evidence is actually offered, and the court is aware of its relevance in context, its probative value, and its potential for prejudice, matters related to the state of the evidence at the time an objection is made, the court cannot intelligently rule on admissibility.” (Italics omitted.)
In Jennings, the Supreme Court noted the parties had stipulated that the trial court's in limine ruling was “binding at trial” and on that basis agreed to review the ruling. (Jennings, supra, 46 Cal.3d. at pp. 975-976.) There was no such stipulation in this case; to the contrary, the court repeatedly reminded the parties that its in limine rulings were tentative and any evidentiary objections would be revisited “in the flow of evidence.” Thus, the onus remained on the Cecolas to state any objections to specific questions during trial. The Cecolas' failure to do so forfeited the objection.
In any event, as the trial court noted in its tentative denial of the motion in limine, the evidence of Randy's felony conviction was expressly made admissible by Evidence Code section 788, which states that “[f]or the purpose of attacking the credibility of a witness, it may be shown by the examination of the witness or by the record of the judgment that he has been convicted of a felony....” (See Piscitelli v. Salesian Society (2008) 166 Cal.App.4th 1, 6-7 [“Such evidence is a general attack on a witness's character for honesty”].)
The rule stated in Evidence Code section 788 is subject to specified exceptions, none of which is relevant here. In People v. Castro (1985) 38 Cal.3d 301, 314, our Supreme Court ruled in a criminal case that due process limits the use of felonies for impeachment purposes to felonies involving moral turpitude.
The admission of such evidence is still subject to Evidence Code section 352, which allows the court to exclude evidence if its probative value is substantially outweighed by its prejudicial effect. (Robbins v. Wong (1994) 27 Cal.App.4th 261, 274.) In applying that standard, “prejudicial” is not measured by whether the evidence is damaging to an opponent's case. All evidence offered by a party at trial is intended to damage the opposing party's case, in one way or another or it would not be relevant. Instead, “prejudicial” means the evidence “evok[es] an emotional response that has very little to do with the issue on which the evidence is offered.” (Rufo v. Simpson (2001) 86 Cal.App.4th 573, 597.) Here, the evidence of Randy's felony conviction is statutorily admissible for the specific purpose of attacking credibility as a witness.
Even if the evidence is potentially prejudicial, it need not be excluded unless the danger of prejudicial impact substantially outweighs its probative value. (Evid. Code, § 352.) In other words, it is excludable when “it ‘poses an intolerable “risk to the fairness of the proceedings or the reliability of the outcome.”'” (Rufo v. Simpson, supra, 86 Cal.App.4th at p. 597.)
The Cecolas have failed to demonstrate either error or prejudice under that standard. The evidence was admissible for the specific purpose of undermining Randy's credibility-which in a case such as this, where the two sides were each accusing the other of fraud, was crucial. Contrary to the Cecolas' suggestion, Greco did not harp on the issue at trial, mentioning it only briefly during opening statement and questioning Randy about it once. It was not even mentioned in Greco's brief closing argument. Finally, the jury was instructed to consider Randy's felony conviction solely for the purpose of assessing his credibility. We presume it followed that instruction. (Cassim v. Allstate Insurance Co. (2004) 33 Cal.4th 780, 803-804 [“[a]bsent some contrary indication in the record, we presume the jury follows its instructions”].)
Greco also asked the attorney who prepared the parties' agreement whether he had been aware of Randy's felony conviction. The Cecolas argue the question should have been precluded on the basis that the attorney's knowledge of the issue is irrelevant. That may be true, strictly speaking, but the Cecolas did not object on that basis in the trial court. They objected only on grounds of attorney-client privilege. They do not reassert that objection on appeal.
The jury was instructed: “You have heard that a witness in this trial has been convicted of a felony. You were told about the conviction only to help you decide whether you should believe the witness. You must not consider it for any other purpose.”
During oral argument, appellants' counsel for the first time suggested that admitting this evidence violated their right to due process. For all the foregoing reasons, we are not persuaded.
b. Civil Judgment Against Randy
The Cecolas also contend Greco “improperly introduced evidence that there was a civil judgment against Randy... for breach of contract in another case.” The framing of that issue is revealing. The Cecolas are not contending the trial court made an erroneous ruling when the evidence was introduced because they failed to object to it at that time. They consequently forfeited whatever objection they might have made.
Greco did reference the unsatisfied Illinois judgment against Randy in closing-again without objection-but not to support the point that Randy was a serial business cheat. Instead, it was referenced as support for the assertion that the jury should treat any potential finding of liability against Greco on the cross-complaint as an offset against the Cecolas' liability on the complaint because unlike Randy, Greco would feel constrained to pay any monetary judgment entered against him. The Cecolas have failed to demonstrate any error on this point.
c. Attachment Evidence
The Cecolas complain it was improper for the jury to be informed about the pretrial attachment orders issued by the court. However, as Greco points out, the Cecolas actually stipulated that the court order authorizing the attachment would be admitted into evidence. Later in the trial, the Cecolas stated they had no objection to the admission of a different attachment order issued in August 2016.
The Cecolas acknowledge that point, but explain they wanted the attachment evidence admitted at trial for the sole purpose of bolstering their contention that it was the levying of the attachment order, rather than anything Alex did with Gold Coast, that interfered with Acquisition's business.
Their complaint is that the court allowed Greco to “repeatedly refer[] to attachment proceedings against [them]” for the purpose of “mak[ing] sure the jury heard that the Court had ruled in favor of them before.” They argue Greco placed too much emphasis on the writ during trial, and that constant references to the fact the court had issued the writ prejudiced the jury against them. Once again, the issue is forfeited because the Cecolas failed to object to the allegedly improper references at the time they were made. Objections to evidence cannot be asserted for the first time on appeal.
Finally, the Cecolas complain that “the general denial in [their] Answer was discussed/questioned to Sophia Cecola over objection of relevance.” They do not explain how or why allowing a party to ask a witness questions about a general denial would be error in every case, without regard to circumstances, nor do they point to any circumstances in this case that would make it so. “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 contention as waived.” (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830.)
2. Sufficiency of the Evidence to Support Fraud Liability
The Cecolas challenge the sufficiency of the evidence to support the jury's imposition of fraud liability against Randy and Trovare. An appellant claiming the record contains insufficient evidence to support the court's ruling undertakes a heavy burden.
An appellate court “‘must presume that the record contains evidence to support every finding of fact....'” (In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) “It is the appellant's burden, not the court's, to identify and establish deficiencies in the evidence. [Citation.] This burden is a ‘daunting' one. [Citation.] ‘A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence on that point, favorable and unfavorable, and show how and why it is insufficient.”' (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409.) Stated another way, “with all substantial evidence challenges, an appellant... must lay out the evidence favorable to the other side and show why it is lacking. Failure to do so is fatal. A reviewing court will not independently review the record to make up for appellant's failure to carry his burden.” (Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261, 1266.) Randy and Trovare have not satisfied that burden.
In any event, Randy and Trovare's argument is legally flawed. They argue the fraud finding against them was erroneous because they were improperly treated as alter egos of Acquisition, which was neither proved nor found to be true by the jury; they also suggest such a finding is incongruous with the fact Acquisition itself was not held liable for the fraud. Those arguments misconstrue the verdict.
Randy and Trovare were not held liable based on a theory that Acquisition had entered into the contract with Greco without intending to perform it, and that they were alter egos of Acquisition. Rather, they were held liable as nonparties to the contract, for fraudulently inducing Greco to enter into it-i.e., they falsely assured Greco that he would be paid the purchase price for the surfboard business no matter what happened with Acquisition, and that they had the resources to back up that assurance.
They concede as much in their opening brief, noting that Greco's “argument, which the jury apparently believed, was that Randy promised to personally guarantee the corporate payment. And that Trovare in some fashion did as well.” They note the key to Greco's claim was his assertion that Randy “look[ed] him in the eye, sh[ook] hands, and promised to pay ‘on the name of the Lord;'” they also acknowledge that “Trovare's website [sic] may have made the company seem more impressive than it was.” Randy and Trovare do not challenge the sufficiency of the evidence to support either of those facts.
Randy and Trovare contend the fraud judgment must be reversed because an oral personal guarantee is not enforceable due to the statute of frauds. (See, Ailing v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1436.) That may be true as an abstract proposition, but the assertion does not establish error in this case for two reasons. First, the statute of frauds is an affirmative defense that must be relied upon below, or it is waived. (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 551 [“The statute of frauds is treated as a rule of evidence which, if not properly raised, may be forfeited”].) Randy and Trovare do not claim to have properly raised or relied on the statute of frauds as the basis for any objection at trial, rendering the point moot.
Second, Greco did not attempt to “enforce” the guarantee in a contract cause of action; instead, Greco relied upon it as the basis of a false promise claim. Randy and Trovare admit that “[a]n action for false promise inducing reliance may depend on an oral statement, but that requires proof of elements of fraud, including fraudulent intent and justifiable reliance.” In this case, the jury was instructed that in order to establish the claim of false promise, Greco was required to prove not only that Randy and Trovare had made a false promise, but also that (1) they did not intend to perform the promise when they made it, (2) they intended Greco to rely on it; and (3) that Greco reasonably relied on it. ‘“We of course presume ‘that jurors understand and follow the court's instructions.'” (People v. Wilson (2008) 44 Cal.4th 758, 803.) Because Randy and Trovare make no contention that the evidence was insufficient to support those presumed findings, they have waived any such assertion.
Randy and Trovare's final contention is that the fraud judgment against them must be reversed because the trial court improperly limited Randy's ability to testify about the fact he and Trovare intended the purchase price for the surfboard business would be paid out of the profits of the business-which would have negated the contention that they never intended it would be paid. We are not persuaded.
The evidence Randy and Trovare rely on is a colloquy which they describe as an effort to prove Randy's claim that Greco lied to him in September 2015 about the anticipated profits of the surfboard business. After Greco's attorney objected on the basis that Greco's profit forecast was necessarily an opinion, the court informed the jury of its “unease” because “we're dealing with the cross-complaint now.” When the court then sought confirmation of that point from Randy's counsel, he responded that while the question did relate to defense of the complaint, the “majority” purpose of the question is the cross complaint.
The court then reminded the jury that each side had claimed the other has engaged in fraud of varying types, and that “[t]ypically, in fraud cases, what has to occur is a misrepresentation of a present or past fact.” The court explained that although Greco's forecast of a future profit number could not qualify as a statement of present or past fact that might support a typical fraud claim, it could still be relied upon to support the cross complaint's allegation that Acquisition was fraudulently induced into purchasing the surfboard business. The court instructed the jury, “to the extent that anything that Mr. Greco said about the future was given with the intent to have Mr. Cecola do something, ” it may be relevant and admissible, and “[s]o for that purpose, I'm going to overrule [the] objection.” The court then instructed the jury that it could “only consider this testimony for that cause of action in the cross-complaint by... Acquisitions that there was fraud in the inducement.”
Randy and Trovare seem to believe the court's limiting instruction precluded the jury from considering Greco's optimistic profit forecast in connection with their defense to the complaint-i.e., for the purpose of disputing Greco's claim that they never intended that Acquisition would pay off the promissory notes. We disagree. In context, the court was concerned with the extent to which Greco's profit forecast was relevant and admissible to prove the allegations of fraud in the cross-complaint, which Randy's counsel had confirmed was his primary purpose in soliciting the testimony.
To the extent Randy and Trovare were concerned the jury might construe the court's instruction as also precluding it from considering the evidence for purposes of their defense to the complaint-which the court never expressly stated-it was incumbent upon them to seek a clarification on that point. In any event, the issue has little significance because it also relates to Randy and Trovare's incorrect assertion that their fraud liability arose from their false promise that Acquisition itself would pay off the promissory notes when they did not intend that would happen. That is not the case.
As we have already explained (and Randy and Trovare have conceded), Greco's fraud claim was based on the allegation that Randy and Trovare promised to ensure the purchase price was paid, and that they had the financial wherewithal to pay if Acquisition failed to obtain the necessary cash. The fact they may have believed Acquisition would generate sufficient profits to make the payments is irrelevant to that claim, as the alleged promise only became operative if Acquisition itself failed to pay.
3. Denial of Motion for Judgment Notwithstanding the Verdict
Alex and Gold Coast argue the court should have granted their motion for judgment notwithstanding the verdict because there was insufficient evidence to support the claim they interfered with performance of the contract between Greco and Acquisition. Like Randy and Trovare's attack on the fraud judgment, the claim is both factually and legally flawed.
Alex and Gold Coast have made no effort to summarize all the relevant evidence pertaining to the interference with contract claim, both favorable and unfavorable, and explain why it is insufficient to sustain the judgment. Rather than summarizing the evidence in the record as requested, they claim, “there was no substantial evidence that Alex... or Gold Coast actually caused any disruption” in Acquisition's performance of the contract. Their sole citation to the record is in support of the claim that “Gold Coast did not sell its first surfboard until November 2016.” Their substantial evidence argument fails on that basis alone.
Alex and Gold Coast argue that due to inherent inconsistencies among the various claims asserted by Greco at trial, Greco could not establish necessary elements of the cause of action against them, as a matter of law. Again, we must disagree.
“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.)
To state a claim for disruption of a contractual relation, the plaintiff need not show the defendant induced an actual or inevitable breach of the contract. It is sufficient to show the defendant's conduct made the plaintiff's performance, and inferentially enjoyment, under the contract more burdensome or costly. (Pacific Gas & Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d at p. 1129.) In this case, the jury was instructed that it had to find the conduct of Alex and Gold Coast either prevented performance or made performance more expensive or more difficult, and that their conduct was “a substantial factor” in causing harm to Greco Surfboards. Alex and Gold Coast nonetheless argue the judgment against them is fatally flawed because a finding of causation cannot be sustained where “a key feature of [Greco's] case below was admission and proof that none of Randy, Trovare, nor Greco Acquisition ever had the money to make the payments.”
It was understood by all parties that Acquisition had no assets when it was formed. The assumption underlying the agreement for sale of the surfboard business was that Acquisition would generate sufficient profits from the surfboard business to ensure payment of the sums due. Greco's interference claim focused on Acquisition's inability to earn the expected profits to generate the “contingent earn-out” that Greco anticipated receiving under the terms of the contract.
That “contingent” amount, ranging from $400,000 to $1 million, would have been owed if the surfboard business's annual compounded gross profit grew between 10 percent and 20 percent in the first three years, relative to the 12 month period prior to closing. Greco's theory was that Alex and Gold Coast's decision to operate a competing surfboard business out of the same facility that was purchased by Acquisition from Greco, using the same systems and contacts developed by Greco, made it more difficult for Acquisition to achieve the anticipated profits necessary to generate the contingent amounts. Alex and Gold Coast have not demonstrated the evidence was insufficient to support that theory of liability.
In a related argument, Alex and Gold Coast also contend the interference with contract-related judgment against them is fatally inconsistent with the fraud judgment entered against Randy and Trovare because the latter represents a finding that Randy and Trovare “never intended that Greco Acquisition would pay Greco Surfboards.” Alex and Gold Coast suggest that if Randy and Trovare never intended that Acquisition would pay the contract amount in the first place, there was nothing for them to interfere with.
But as we have already explained (and Randy and Trovare conceded), that is not the basis of the fraud judgment. The fraud judgment was based on Randy and Trovare's false promise to personally ensure Greco would be paid-to act, in effect, as Acquisition's guarantors. It was that promise which induced Greco to take the risk of selling the surfboard business to an entity which had no assets of its own. Greco never claimed that Randy and Trovare did not intend that Acquisition itself would attempt to perform the contract.
To the contrary, Greco argued in closing that the Cecolas initially intended that Acquisition would obtain SBA financing to pay the initial promissory note, and that it was only after Randy learned by February 2016 that the loan would not be forthcoming that the whole family “checked out” from trying to make a go of Acquisition and focused instead on establishing Gold Coast as a competitive business with the same workforce and same business plan. Consequently, Alex and Gold Coast's assertion of inconsistency is misplaced.
The last challenge to the causation element is the assertion that the testimony of Greco's economic expert, which correlated the timing of Gold Coast's formation with a drop off of Acquisition's revenue, was insufficient, in and of itself, to establish causation. But the expert's testimony did not exist in a vacuum, and it was not required to prove anything by itself. It is the totality of the evidence that is relevant in establishing its sufficiency, rather than any single piece. Again, the failure to summarize all of the evidence pertaining to this issue forfeits the point.
Alex and Gold Coast assert that they owed Greco no duty to refrain from competing with Acquisition-while conceding that Alex may have owed such a duty to Acquisition while it continued to employ him-and thus argue they cannot be held liable to Greco for doing so. The argument fails because it ignores the evidence that Alex and Gold Coast usurped Acquisition's own resources to compete, with knowledge that by doing so they were hobbling Acquisition's ability to conduct its business as contemplated by the parties to the contract.
Finally, Alex and Gold Coast point out that their misconduct might give rise to various alternative causes of action, such as unfair competition by Acquisition. They imply that the availability of those alternative causes of action demonstrates the one actually asserted-interference with contract-was not the appropriate choice. What they do not do is offer any authority to demonstrate that causes of action are exclusive of each other. We know of none.
Finding no merit in any of the claims asserted by Alex and Gold Coast, we find no error in the trial court's denial of their motion for judgment notwithstanding the verdict.
DISPOSITION
The judgment and postjudgment order are affirmed. Respondents are entitled to recover their costs on appeal.
WE CONCUR: O'LEARY, P. J., MOORE, J.