Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Los Angeles County Super. Ct. No. BC 242306, William Highberger, Judge. Affirmed in part; reversed in part.
Pastor, Schiff & Summers, Michael J. Schiff; Benedon & Serlin, Gerald M. Serlin and Douglas G. Benedon for Defendants and Appellants.
Hornberger & Brewer, Michael A. Brewer, Nicholas W. Hornberger and Mathias D. MacIejewski for Plaintiffs and Respondents.
FLIER, J.
This is an appeal from a judgment after a jury unanimously found appellants Steve Teitelbaum and L.A. Coin Company, LLC (L.A. Coin Company) liable for breach of contract and fraud. In a bifurcated trial, the jury awarded Indra and Mary Jhaveri, doing business as Kant-Sar International, compensatory damages in the amount of $1,219,864. The jury awarded respondent punitive damages of an additional $1,016,554 against L.A. Coin Company and $2,033,108 against Teitelbaum. Appellants contend the jury’s compensatory award is excessive, the punitive damages award must be reversed due to insufficient evidence of appellants’ financial condition and the trial court incorrectly calculated prejudgment interest.
For purposes of discussion, we will refer to Indra Jhaveri individually, and the plaintiffs collectively, as “respondent.”
The jury awarded breach of contract damages of $1,016,554 and fraud damages of $1,219,864. The court entered a compensatory award in the judgment only for the greater sum.
We reverse the judgment insofar as it awards prejudgment interest of 10 percent instead of 7 percent per annum on the tort portion of the compensatory award, modify the judgment to adjust the prejudgment interest and affirm the judgment as so modified.
FACTS
Respondent is a wholesale jewelry merchant with many years of experience in the industry. Respondent was born in India where his family has been in the jewelry business for many generations. He resides with his family in Arizona, but bought, sold or traded with dealers all over the United States as well as overseas.
Appellant Teitelbaum has been the owner, general manager and member of L.A. Coin Company in its various forms since 1977. L.A. Coin Company is a coin dealer that has also dealt in jewelry since the early 1980s. In May 2000, appellant L.A. Coin Company was formed with appellant Teitelbaum, Brian Dubois, and Paul Wojdak as members and equal partners.
Teitelbaum has since become the sole owner of L.A. Coin Company.
In or about 1999, to facilitate a change to a more family-oriented lifestyle, respondent became interested in selling his entire inventory of diamonds and diamond jewelry. Respondent was aware he would not be able to command as high a price in selling the entire inventory as a lot than if he were to sell the diamonds individually. In November 1999, respondent visited L.A. Coin Company and showed his inventory to Teitelbaum, Dubois and Wojdak. Respondent saw that L.A. Coin Company had several showcases of white diamond rings, fancy colored diamond jewelry and other jewelry, including rings, earrings, necklaces and watches. Coins and bank notes were also on display. Dubois and Teitelbaum made a careful inspection of the diamond lot and made respondent a cash offer of $750,000 for his entire inventory. Respondent rejected the offer as too low.
Over the next two months, Teitelbaum and Dubois reconfirmed their interest in purchasing respondent’s inventory. In order to renew negotiations, Teitelbaum and Dubois presented themselves as “solid players in the industry.” As part of this characterization, they told respondent that Teitelbaum was an established financier to a Beverly Hills jeweler and owner of 1,000 apartment units in Las Vegas.
In early January 2000, respondent met again with Teitelbaum, Dubois and Wojdak at L.A. Coin Company to negotiate a sale. Respondent’s inventory consisted of a total of 3,700 carats, comprising a variety of certified and uncertified white diamonds, colored diamonds, black diamonds and small diamonds called “melees.” After inspecting the diamonds for several hours, Dubois and Teitelbaum reached an agreement with respondent to buy the entire lot for $1.1 million, to be paid over the course of seven months.
Earlier in the day, respondent had rejected an offer from another prospective purchaser of $1.2 million with a one-year payment plan.
Respondent drew up an invoice indicating the transaction date, sale price of $1.1 million for the 3,700-carat lot of diamonds and payment terms. Scheduled payments were to be made by checks ranging from $7,500 to $150,000 over the course of seven months. Teitelbaum signed the invoice and provided respondent with a series of 10 postdated checks, which were to be cashed throughout the next several months. Both Teitelbaum and Dubois made personal guarantees to respondent that the checks would be honored.
The year of the transaction was mistakenly shown as 1999, but there is no dispute the transaction occurred in 2000.
The deal fell apart almost immediately. Within two weeks, Teitelbaum began to pawn the $1.1 million of diamonds to a Beverly Hills pawnbroker for quick cash, netting L.A. Coin Company a $292,000 loan check in return for the merchandise. Appellants did not notify respondent they had pawned the diamonds, nor did respondent agree they could be pawned.
By the end of January 2000, respondent had received credits and payments from appellants totaling $190,000, roughly consistent with the payment schedule. Starting in late January 2000, however, checks provided respondent began to be dishonored. At first, Teitelbaum provided wire transfers as replacements for those checks.
In the summer of 2000, Teitelbaum told respondent he had received a substantial settlement from a lawsuit. As proof of the settlement, Teitelbaum bought and paid for additional diamonds worth $74,710 with two checks, both of which cleared the bank. He told respondent he would pay for everything plus interest once he received money from another settlement. After regaining respondent’s confidence with the checks, Teitelbaum and Dubois induced respondent to part with more jewelry, including certified diamonds, pearls and a Rolex watch, of a total value of $200,449.
Despite Teitelbaum’s and Dubois’ assurances of payment, respondent was given only more checks with nonsufficient funds or on which Teitelbaum placed stop payment orders.
In September 2000, through his personal relationship with the pawnbroker, respondent learned for the first time that the diamonds had been pawned. At or about that time, the pawnbroker foreclosed upon all of the diamonds for appellants’ failure to make required loan payments.
The transactions and items left unpaid totaled $1,016,554.
Appellants’ continued practice of placing stop payments on the checks, providing checks with insufficient funds and providing checks on accounts that could not be found also caused great strain on respondent’s business and personal finances. Respondent was forced to sell other assets, twice refinance his home and abandon needed home improvements; he lost credibility among his peers, and his business lost significant value.
PROCEDURAL HISTORY
Respondent filed the present action against Teitelbaum, L.A. Coin Company, Dubois and others. The complaint included causes of action for breach of contract and fraud. L.A. Coin Company responded with a cross-complaint against respondent alleging breach of contract and fraud.
At trial, the court bifurcated the punitive damages issue from the issues of liability and compensatory damages. After the first phase of trial, the jury found that Teitelbaum, L.A. Coin Company and Dubois were liable to respondent for breach of contract and fraud and that respondent was not liable on L.A. Coin Company’s cross-complaint. The jury found respondent’s damages on the breach of contract claim to be $1,016,554 and on the fraud claim to be $1,219,864. The jury further determined Teitelbaum, L.A. Coin Company and Dubois had acted with malice, oppression and fraud.
Following the second phase of the bifurcated trial, the jury awarded punitive damages of $2,033,108 against Teitelbaum, $1,016,554 against L.A. Coin Company and $1,016,554 against Dubois.
The court entered a judgment for compensatory damages in the larger amount of $1,219,864 and for punitive damages consistent with the verdict. The court denied appellants’ motions for new trial and to vacate the judgment.
Dubois appealed from the judgment, and appellants Teitelbaum and L.A. Coin Company timely cross-appealed. We dismissed Dubois’ appeal after he failed to file an opening brief, and the judgment against him is final.
DISCUSSION
1. Compensatory Damages
Appellants contend the jury’s compensatory damages award of $1,219,864 for fraud cannot stand because it is not supported by the evidence.
Neither party attempts to explain how the jury might have arrived at the figure of $1,219,864.
Appellants argue the parties stipulated at trial that exhibit 122 established L.A. Coin Company’s outstanding balance was $1,019,554 and that such figure is the maximum amount the jury could award as compensatory damages. Appellants give too much significance to respondent’s stipulation.
Outside the jury’s presence, the parties stipulated only that exhibit 122 was “an accurate reflection of the things that they purport to reflect.” Respondent’s counsel explained to the court the parties were in agreement that exhibit 122 represented “a list of the amounts or things that we have given” and of “what we got back in return” for the merchandise given to appellants. Counsel informed the court that “[t]hey [appellants] are agreeing that those [items] are true and authentic. I don’t have to go through each invoice coming in. I don’t have to go through each check going out.” Defense counsel agreed with that statement, with the proviso that there was a $3,000 credit not reflected in exhibit 122.
When trial resumed before the jury, the trial court told the jury: “I mentioned that when there were stipulations I was going to ring the bell loudly. I’m ringing the bell and there is an agreement between the attorneys.” Respondent’s counsel then offered the stipulation that exhibit 122 “is an accurate accounting, except for one matter that [appellants] are going to bring up later on.” (Italics added.) Appellants’ counsel accepted the stipulation, with the clarification that “there is a credit that we’ll discuss with witnesses that is not reflected here.” Exhibit 122 showed that L.A. Coin Company’s outstanding balance to respondent was $1,019,554. Respondent later testified there was a $3,000 credit not reflected on exhibit 122 that brought the amount owing to $1,016,554.
Pursuant to the parties’ stipulation, exhibit 122 was then admitted and received, without further authentication, as evidence of appellants’ outstanding indebtedness. There was no stipulation or agreement that respondent’s damages were limited solely to the amount shown by the exhibit. “A stipulation is conclusive with respect to the matters covered by it, unless the court, for good cause shown, later permits its abandonment or withdrawal.” (Harris v. Spinali Auto Sales, Inc. (1966) 240 Cal.App.2d 447, 452.) The “matters covered by” the stipulation in this case included no limitation of respondent’s claimed damages.
Indeed, during closing argument, respondent’s counsel referred to exhibit 122 merely as the “accounting,” observing, “we did the accounting, [and] they [appellants] didn’t do an accounting.” Respondent’s counsel explained to the jury that exhibit 122 “[b]asically shows everything that happened over time, shows the checks and credits that went through, and that’s it, $1,016,554.” The jury was free to consider exhibit 122 as evidence of respondent’s damages (see Evid. Code, § 140 [“Evidence” includes “writings . . . presented to the senses that are offered to prove the existence or nonexistence of a fact”]), but the exhibit in itself did not foreclose the jury from calculating damages upon all the evidence presented.
As respondent correctly argues, the amount of damage sustained by a party need not be proven with the same degree of certainty as the fact of damage but may be left to reasonable approximation or inference by the finder of fact. (See 6 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 1551, p. 1024; Johnson v. Cayman Development Co. (1980) 108 Cal.App.3d 977, 983.) The trial court properly instructed the jury that “[p]laintiff must prove the amount of his or her damages. However, plaintiff does not have to prove the exact amount of damages that will provide reasonable compensation for the harm.”
On appeal, the inquiry is whether the determination of damages is supported by substantial evidence, and the appellant has the burden of demonstrating error in that regard. (City of Salinas v. Souza & McCue Construction Co. (1967) 66 Cal.2d 217, 225, overruled on another point in Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3 1, 14.) Appellants fail to meet that burden.
Although exhibit 122 showed that respondent was owed at least $1,016,554, there was additional evidence before the jury that respondent’s damages were in excess of $1,016,554. Under the fraud measure of damages, exhibit 122 showed the difference between the contract price and what respondent received. The contract price was $1,377,659, which included additional diamonds and jewelry Teitelbaum and Dubois induced respondent to sell. L.A. Coin Company paid or received credit in the amount of $358,105, which left the sum of $1,019,554 that respondent did not receive. Respondent testified there was an additional credit of $3,000, making the outstanding balance $1,016,554. The jury heard testimony that had appellants not induced respondent into selling his entire lot of diamonds, he could have sold it for $1.4 million, wholesale. The jury also reasonably could have inferred from the evidence that respondent incurred damages in addition to nonpayment caused by fraudulent checks that appellants wrote against accounts they knew to contain insufficient funds, as well as accounts that did not exist, and checks on which appellants stopped payment.
The record discloses the trial court was well aware of the fact that the contract measure of damages also yielded a balance outstanding of $1,016,554, and for that reason the court made clear it would enter only a single award as compensatory damages.
The jury was instructed the purpose of contract damages was to put the plaintiff “in as good a position as he, she or it would have been” if the defendant had performed as promised, but it could award as damages for fraud only “[t]he difference between the contract price of the property at the time of sale and the amount that plaintiff received.” In so instructing the jury, the trial court erred. (See 6 Witkin, Summary of Cal. Law, supra, Torts, § 1714, pp. 1245-1246 [1971 amendment to Civ. Code, § 3343 allows defrauded person to recover “any additional damage” arising from the transaction, including “ ‘[a]mounts actually and reasonably expended in reliance upon the fraud’ ” and “ ‘[a]n amount which would compensate the defrauded party for loss of use and enjoyment of the property to the extent that any such loss was proximately caused by the fraud’ ”; nothing in statute denies fraud plaintiff “ ‘any legal or equitable remedies to which such person may be entitled’ ”].) However, appellants do not raise such error as an issue and, in any case, the error was not prejudicial to appellants since it overly restricted recoverable damages and the court subsequently instructed the jury it should “review the evidence produced at trial as to the amount of damages claimed and proven by the plaintiffs . . . .”
With the consent of counsel, the court instructed the jury that “[i]f you award damages for both contract and for fraud, only the larger of the two numbers will be included in the judgment on your verdict. If the number is the same, then only one such amount will be included in the judgment on your verdict.” After the verdict, appellants implicitly acknowledged that the jury could properly select one amount for contract damages and a greater, different amount for fraud damages. Specifically, in objecting to the proposed judgment, appellants argued only that the “larger amount,” i.e., $1,219,864, should “jointly and severally” be awarded as economic damages. They did not claim the larger amount was unsupported by the evidence or barred by stipulation and thus did not give the trial court an opportunity to address that contention prior to entry of judgment. The trial court properly entered judgment in the larger sum as requested by appellants.
Appellants asserted that “[t]he amount awarded for fraud and breach of contract should be one figure ($1,219,864.00),” “[j]udgment should be [entered for the] contract and fraud causes of action for the larger amount,” and “[t]he [j]udgment should reflect an award of $1,219,864.00 jointly and severally against all . . . defendants, plus punitive damages . . . .”
2. Punitive Damages
Appellants contend the punitive damages must be reversed and retried because there was no “meaningful” evidence of their financial condition and, in any case, the amounts awarded are not in proportion to their net worth. (Adams v. Murakami (1991) 54 Cal.3d 105, 109-111.)
A reviewing court will reverse as excessive “ ‘only those judgments which the entire record, when viewed most favorably to the judgment, indicates were rendered as the result of passion and prejudice. . . .’ ” (Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 927.) An award of punitive damages may be reversed only if the award appears excessive as a matter of law or is so grossly disproportionate to the defendant’s ability to pay as to raise a presumption that it was the result of passion or prejudice. (Id. at p. 928.)
Our Supreme Court has expressly declined to adopt net worth as the standard for determining a defendant’s ability to pay in every case, noting: “Various measures of a defendant’s ability to pay a punitive damages award have been suggested. Defendant in this case contends the best measure of his ability to pay is his net worth. . . . We decline . . . to prescribe any rigid standard for measuring a defendant’s ability to pay.” (Adams v. Murakami, supra, 54 Cal.3d at p. 116, fn. 7.) Moreover, “[n]et worth is too easily subject to manipulation to be the sole standard for measuring a defendant’s ability to pay.” (Zaxis Wireless Communications, Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, 582; see also Rufo v. Simpson (2001) 86 Cal.App.4th 573, 624-625 [“net worth . . . is not the only measure for determining whether punitive damages are excessive in relation to” a defendant’s financial condition].)
In this case, Teitelbaum provided a one-sheet, handwritten description of his assets in which he purported to own only minimal personal belongings, a wristwatch, a piano and bank assets totaling $13,200. He claimed to have a net worth of negative $3 million. He testified the assets of L.A. Coin Company were “zero.” According to Teitelbaum, after the events underlying the lawsuit, L.A. Coin Company ceased doing business. He testified its business was taken over by B.D. Management, a company wholly owned by his wife. Although L.A. Coin Company at one point had an average monthly revenue of $500,000, Teitelbaum claimed he had transferred that business, along with its trade name, for no consideration and without documentation, to B.D. Management. B.D. Management basically filed a new d.b.a. and simply took over L.A. Coin Company’s trade name.
The jury determined Teitelbaum’s evidence regarding his and L.A. Coin Company’s lack of financial resources was not credible.
The record indicates evidence that L.A. Coin Company was a highly successful business with substantial assets at the time of trial and that Teitelbaum and his wife lived an opulent lifestyle that included lavish expenditures, luxury automobiles, mansions in gated communities and other substantial financial assets.
Respondent provided evidence from which the jury could conclude Teitelbaum continued to own L.A. Coin Company and that the company continued in successful operation. The inventory acquired from respondent had a value in the retail market of approximately $3.5 to $4 million. Bank statements for L.A. Coin Company showed, and Teitelbaum confirmed under oath, that average monthly revenues during 2000 were approximately $500,000 per month. Thus, the annualized revenue for the year 2000 was approximately $6 million per year. At the time of trial in 2004, the business still remained in the same location, being managed by Teitelbaum and operated out of the same office as it had been since 1977. As noted below, the business was leasing luxury automobiles for Teitelbaum and his family, under leases that Teitelbaum had listed as personal liabilities on his balance sheet. The jury could have concluded from this evidence that Teitelbaum continued to enjoy the same benefits and profits from L.A. Coin Company at the time of trial. Moreover, L.A. Coin Company had valuable assets including real property -- the land and the building -- at its Ventura Boulevard location in Studio City, California. Teitelbaum testified he had owned the real property from 1980 to 1999 but claimed to have sold the property for $350,000. He was impeached by his own deposition testimony admitting he had not received expected payment. The jury could have concluded Teitelbaum remained the property’s beneficial owner and that the property retained some modicum of value, even if there was no evidence of the liabilities, if any, against the property.
The evidence before the jury also substantially contradicted Teitelbaum’s claim of penury. Teitelbaum testified his wife was the owner of, and paid the mortgage on, the Teitelbaums’ multi-million dollar Palm Springs and Parkway Calabasas homes. He claimed to be legally separated and living in a home on Holbertson Court in Simi Valley. However, there was evidence from which the jury could conclude that Teitelbaum was actually living in the five bedroom Parkway Calabasas home with his wife and children. The jury was shown a photograph of the residence with one of the family’s luxury vehicles parked outside. Although Teitelbaum testified he and his wife had filed for divorce, he admitted they had taken no substantive action on the dissolution petition beyond the filing. He claimed he was giving his wife “everything” in their divorce yet could provide no values or documentation for the assets he was handing over. The jury reasonably could conclude the separation was in name only and Teitelbaum still controlled the family’s assets.
Teitelbaum professed to be a mere employee of B.D. Management, receiving compensation of only $6,000 per month, yet he and his family drove a number of luxury vehicles leased for them by the business, namely: a 2000 Range Rover, driven by his 16-year-old daughter; a 2002 or 2003 Ford Mustang, driven by his 20-year-old son; a Lincoln Blackwood SUV, driven by his other son; another Range Rover, driven by his wife; and a brand new 2004 Ferrari sports car driven by himself. Teitelbaum claimed B.D. Management paid all the automobile expenses but listed the company leases as personal liabilities on his balance sheet. The jury reasonably could have believed the listed liabilities were indicia of ownership of the business and that the business clearly had the financial wherewithal to obtain the line of credit necessary to procure the leasing of such expensive vehicles.
There was further evidence from which the jury could infer Teitelbaum had additional assets and financial resources. He testified he had owned a home on Bolivar Road in Woodland Hills but sold the property the year before to codefendant Dubois’s wife for $800,000. Respondent testified that Teitelbaum said he owned 1,000 apartment units in Las Vegas and had secured for respondent a complimentary suite in the Bellagio Hotel valued at $1,000 per night. Teitelbaum also claimed to have an interest in litigation, including a $70 million claim against “Graystone” and another lawsuit in San Diego.
In short, there was substantial evidence for the jury to find that Teitelbaum held substantial personal assets and real property and that his business in the past had earned, and it continued to earn, revenues of approximately $500,000 per month or an annualized yearly income of approximately $6 million. In light of such evidence, punitive damages of $1,016,554 and $2,033,108, or a total of three times the compensatory damages, were not excessive or disproportionate to appellants’ financial condition or ability to generate more wealth in the future. (See Rufo v. Simpson, supra, 86 Cal.App.4th at p. 625.)
Even if this evidence of appellants’ financial condition were not meaningful, the requirement that the plaintiff produce evidence of the defendant’s financial condition may be waived by a failure to comply with the trial court’s discovery order to produce financial records or to challenge that order on appeal. (Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 608-609 (Issod).)
In the present case, during discovery, respondent requested over 60 categories of documents under appellants’ exclusive control that would have provided additional evidence of financial condition. Appellants did not object to the request for production, yet they failed to produce all the requested documents. The documents requested included balance sheets, financial ledgers, cancelled checks, invoices and fiscal status reports that would have provided respondent with substantial information concerning appellants’ financial condition. Teitelbaum admitted he made little or no effort to produce that information during discovery.
At trial, following the jury’s determination of liability, the trial court ordered appellants to provide financial information to respondent, either by producing documents or by a court-ordered deposition, to ensure the record contained sufficient evidence regarding their financial condition. Appellants produced only a one-page handwritten document that respondent showed was factually untrue and that the jury found not credible in light of all the evidence.
Appellants assert that respondent was statutorily precluded from obtaining pretrial discovery related to appellants’ financial condition because they failed to seek a court order directing such discovery under Civil Code section 3295, subdivision (c). However, pretrial discovery is only one method of obtaining the necessary financial information. The affidavit-and-hearing procedure under the statute is “patently superfluous” once there has been a determination of liability by the trier of fact based on an actual weighing of the credibility of witnesses. (Issod, supra, 78 Cal.App.4th at p. 609.) Following the liability determination, so long as sufficient time is allowed, the court may appropriately order the defendant to collect his or her financial records for presentation on the issue of the amount of punitive damages to be awarded. (Ibid.)
Civil Code section 3295, subdivision (c) allows the trial court “at any time” to enter an order permitting the discovery of a defendant’s financial condition, if the plaintiff has established that there is a substantial probability that the plaintiff will prevail on his or her claim on which an award of punitive damages can be based. Subdivision (c) further provides that such an order may be made “[u]pon motion by the plaintiff supported by appropriate affidavits and after a hearing, if the court deems a hearing to be necessary.” (Civ. Code, § 3295, subd. (c).)
As one court explained, “Under Civil Code section 3295, subdivision (c), a plaintiff seeking punitive damages may move for a pretrial discovery order pertaining to the defendant’s financial condition. Further, even without such an order the plaintiff may subpoena documents or witnesses to be available at trial to establish the defendant’s financial condition. [Citation.]” (Kelly v. Haag (2006) 145 Cal.App.4th 910, 919 (Kelly).)
Here, appellants do not contend that they had insufficient time to collect their financial information. They contend only that they technically did not violate the court’s order since they provided some information, however incredible. A failure to make a full, good faith disclosure regarding financial condition despite a proper order to do so may constitute a waiver of any right to complain of insufficiency of the evidence to support a punitive damage award. (See Issod, supra, 78 Cal.App.4th at pp. 608-609.)
In that respect, the cases appellants rely on are not helpful to their position. In Baxter v. Peterson (2007) 150 Cal.App.4th 673 (Baxter), our colleagues in Division Five reversed the jury’s award of punitive damages because, even though plaintiff showed defendant owned substantial assets, plaintiff failed to show whether defendant’s real properties were subject to liabilities. (Id. at p. 681.) Importantly, the panel quoted Kelly v. Haag, supra, 145 Cal.App.4th 910, in noting that plaintiff “had ‘a full and fair opportunity to present his case for punitive damages, and he does not contend otherwise.’ ” (Baxter, supra, at p. 681; see also Kelly, supra, at p. 919.) In Kelly, the trial court invited the plaintiff “ ‘to come back tomorrow’ ” in order to obtain the defendant’s testimony on net worth, but the plaintiff refused the opportunity. (Kelly, supra, at p. 920.)
In the present case, respondent did take advantage of an opportunity to depose Teitelbaum and obtain financial information from appellants during the punitive damages phase but obtained only a cursory unsubstantiated balance sheet for Teitelbum specially prepared for trial. Teitelbaum’s testimony also was remarkable for its self contradictions. Unlike the plaintiffs in Baxter and Kelly, respondent was deprived of a full and fair opportunity to present his case for punitive damages.
Viewing the entire record, we cannot conclude the punitive damage awards were the result of passion or prejudice of the jury or excessive as a matter of law.
3. Prejudgment Interest
Respondent requested, and the trial court awarded, prejudgment interest calculated at the rate of 10 percent on the jury’s compensatory award of $1,219,864. Appellants contend the judgment must be vacated and the matter remanded because the prejudgment interest should have been calculated at the rate of 7 percent on the entire compensatory award. We agree the award of interest must be reversed in part.
Civil Code section 3287, subdivision (a) provides that “[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . .” Under this code section, prejudgment interest is available for actions sounding in tort, as well as actions based upon contract or a violation of statute. (Tripp v. Swoap (1976) 17 Cal.3d 671, 681-682, overruled on other grounds in Frink v. Prod (1982) 31 Cal.3d 166, 180.) However, absent a legislative act to the contrary, prejudgment interest on an obligation not based on contract is only awarded at the rate of 7 percent per annum. (Cal. Const., art. XV, § 1; Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1585; Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 434.) In this case, the jury awarded respondents fraud-based damages in the amount of $1,219,864, but the court awarded prejudgment interest upon that sum of 10 percent per annum. This was error as a matter of law. (Michelson, supra, at p. 1585; Christiansen v. Roddy (1986) 186 Cal.App.3d 780, 789.)
Respondent contends that under Civil Code section 3289, subdivision (b), “[i]f a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.” Respondent argues that, because the $1,219,864 award necessarily includes an award for breach of contract in the amount of $1,016,554, and the contract at the center of the dispute was entered into after January 1, 1986, the trial court had discretion to award prejudgment interest at the rate of 10 percent at least upon that much of the award. We agree.
“For more than a century it has been settled that one purpose of section 3287, and of prejudgment interest in general, is to provide just compensation to the injured party for loss of use of the award during the prejudgment period -- in other words, to make the plaintiff whole as of the date of the injury.” (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 663.) In oral argument, appellants conceded that the $1,219,864 judgment necessarily includes breach of contract damages in the amount of $1,016,554. Thus, there is no dispute that at least $1,016,554 of the judgment award is for breach of contract.
Because appellants had presumptive use of $1,016,554 prior to the judgment’s entry, allowing prejudgment interest of 10 percent upon that much of the compensatory award would further the legislative purpose of providing just compensation for the loss of use of such sums during the prejudgment period. On the other hand, denial of the contract rate of interest on that sum would provide insufficient recompense for lost interest and fail to make respondent whole. We hold, therefore, that respondent is entitled to prejudgment interest of 10 percent on $1,016,554 of the compensatory damages award for breach of contract and prejudgment interest of 7 percent on the balance based solely on the tort.
Accordingly, the judgment should be modified to reflect a prejudgment interest rate of 10 percent per annum upon $1,016,554 of the judgment, or $496,579.66, and 7 percent per annum on the $203,310 balance, or $99,315.54. (Pacific-Southern Mortgage Trust Co. v. Insurance Co. of North America (1985) 166 Cal.App.3d 703, 717.)
DISPOSITION
The judgment is modified by reducing prejudgment interest to $595,905.20 ($496,579.66 plus $99,315.54) and, as so modified, the judgment is affirmed. Respondent is to recover costs on appeal.
We concur: COOPER, P. J., RUBIN, J.