Fullerton Med. Grp., Inc.v.Sideman & Bancroft, LLP

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREEApr 21, 2017
A140845 (Cal. Ct. App. Apr. 21, 2017)

A140845

04-21-2017

FULLERTON MEDICAL GROUP, INC., Plaintiff and Appellant, v. SIDEMAN & BANCROFT, LLP et al., Defendants and Respondents.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (City & County of San Francisco Super. Ct. No. CGC 04 428693)

This is the third appeal in this case we have considered from plaintiff Fullerton Medical Group (Fullerton) arising out of its legal malpractice case against defendants Sideman & Bancroft LLP and one of its partners, Robert L. Leberman (collectively, "Sideman"). Fullerton had retained Sideman to provide legal advice regarding an antitrust claim against several health care providers: Brown & Toland Medical Group, Brown & Toland Physician Services Organization, California Pacific Medical Center, California Pacific Medical Services organization, and Sutter Health System (collectively, "business competitors" or "competitors"). It claims Sideman lost documents Fullerton entrusted to Sideman that were critical in proving its competitors violated antitrust laws. Following a jury trial, the trial court entered judgment in favor of Sideman.

On appeal, Fullerton claims the trial court erred in several of its jury instructions and in excluding evidence of an allegedly comparable antitrust scheme undertaken by its business competitors. We conclude Fullerton has failed to meet its burden of showing error on appeal and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In the early 1990s, Dr. John Fullerton claimed to have developed a new method for providing health care to patients in subacute care settings, such as skilled nursing facilities. By employing specially-trained, on-site doctors who directed patient care in subacute facilities with the support of an interdisciplinary team of caregivers, the method provided a higher level of care to patients and shortened costly hospital stays. The business competitors' alleged usurpation of this method and their alleged conspiracy to destroy Fullerton's business prompted Fullerton to bring an antitrust suit against them for which it retained Sideman to prosecute. The facts concerning the underlying antitrust case and the instant malpractice suit against Sideman are more fully set forth in our previously filed opinion in Fullerton Medical Group v. Sideman & Bancroft (Feb 18, 2010, 428693) [nonpub. opn.], in which we reversed the trial court's grant of summary adjudication in favor of Sideman. We adopt and incorporate the facts in that unpublished opinion by reference and pick up where we left off in order to address the pertinent issues in this third appeal.

In 2013, Fullerton's case against Sideman proceeded to a jury trial. Sideman moved in limine to exclude evidence relating to another antitrust matter, St. Luke's Hospital v. California Pacific Medical Center, San Francisco County Superior Court, Case No. 300518 ("St. Luke's Litigation"). Fullerton argued evidence from St. Luke's was relevant because it would show its competitors engaged in a similar pattern of anticompetitive conduct in a similar geographic area during the same time frame. The court "provisionally granted" Sideman's in limine motion pending a "further specific offer of proof." No specific offer of proof appears to have been made.

During the course of an approximately seven-week trial, more than thirty witnesses testified. After the close of evidence, the court granted Sideman's motion for nonsuit on Fullerton's claims for conversion, fraud, constructive fraud, and negligent misrepresentation but permitted the legal malpractice and breach of fiduciary duty claims to go to the jury.

In this appeal, Fullerton is not challenging the nonsuit on the conversion, fraud, constructive fraud and negligent misrepresentation claims. --------

The trial court explained to the jury that resolving the question of whether Sideman was negligent and breached its fiduciary duty to Fullerton would require the jury to determine the appropriate result in the underlying antitrust case against Fullerton's business competitors. Accordingly, the trial court instructed the jury on Fullerton's underlying antitrust case as well as its malpractice case.

Fullerton objected to the trial court's antitrust instructions. Fullerton sought a "per se" instruction that could be given if its competitors' activities constituted a horizontal restraint on trade or a boycott. Under its proposed per se instruction, to establish per se illegal activity, Fullerton would have had to prove that its competitors had agreed to refuse to deal with Fullerton; Fullerton was harmed; and its competitors' conduct was a substantial factor in causing Fullerton's harm. Instead, the trial court gave the jury the "rule of reason" instruction. Under the rule of reason, the trial court instructed the jury to consider whether the competitors' activities had an anticompetitive or beneficial effect on competition and to consider a number of other factors, including the reasonableness of the restraint and whether the competitors' activities substantially harmed the competition in the relevant market.

Fullerton also objected to the trial court's malpractice instructions and the trial court's refusal to shift the burden of proof to require Sideman to disprove causation. Fullerton proposed an instruction that would have asked the jury to decide whether Sideman lost Fullerton's records, and if so, to determine whether those lost documents were "necessary to proving [Fullerton's] case in the underlying action." If the jury found Sideman lost such documents and such documents were necessary to prove the antitrust violation, the instruction stated that "Sideman & Bancroft have the burden of proving by a preponderance of the evidence in their legal malpractice case, that their loss of [Fullerton's] files and documents did not cause injury to [Fullerton] in the underlying case." The trial court refused this instruction, and instead instructed that the burden of proof on causation was with Fullerton. Thus, Fullerton was required to prove "that but for the negligence of [Sideman] it should have obtained a favorable judgment" against the antitrust defendants in the underlying action.

The trial court provided the jury written instructions as well as a special verdict form, listing twelve questions to be determined by the jury. Questions 1 through 7 related to Fullerton's underlying antitrust claim; question 8 asked the jury to determine the "dollar injury" to Fullerton, if any; and questions 9 through 12 related to its legal malpractice and breach of fiduciary duty claims against Sideman. The trial court instructed the jury to "consider each question separately" and to "answer the questions on the verdict form in the order they appear." At least 9 of the 12 jurors had to agree on an answer before the jury could move on to the next question. These directions appeared on page 49 of the written jury instructions.

During deliberations, the jury requested the following clarification: "If we have a 'NO' 9 out of 12 majority on a question in the 9-12 section, but are deadlocked on previous questions—does the question with the majority decide the verdict?" It further asked whether the trial court's answer to this question superseded the written jury instructions on page 49. The trial court responded, "If you have a 'no' (at least 9 out of 12) vote on question 9 or 10, you do not have to decide the preceding questions, or you may indicate that you are deadlocked on the preceding questions." The trial court also confirmed this response superseded the instructions on page 49.

The jury returned a verdict. The special verdict form the jury submitted responded to only question 10, which asked, "But for Sideman & Bancroft's and Mr. Leberman's breach of the standard of care and/or breach of fiduciary duty, would Fullerton Medical Group's case against [its competitors] have resulted in a favorable judgment?" The jury answered, "No." The jury did not answer any of the other questions on the special verdict form. The court entered judgment for Sideman. Following an unsuccessful motion for a new trial, Fullerton appeals.

DISCUSSION

A. The Trial Court Did Not Err When It Declined to Instruct the Jury That Sideman Had the Burden of Proof to Show a Lack of Causation

Fullerton first argues Sideman should have carried the burden of proof to show there was no causation on its malpractice claims and the trial court erred when it refused to so instruct the jury. Specifically, Fullerton contends that rather than having to prove it would have won its antiturst case against its business competitors had Sideman not lost its critical documents, it was Sideman's burden "to prove that the [antitrust] case could not have been won" even with the critical documents. (Emphasis in original.)

"Except as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting." (Evid. Code, § 500.) "In a litigation malpractice action, the plaintiff must establish that but for the alleged negligence of the defendant attorney, the plaintiff would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims. [Citation.] It serves the essential purpose of ensuring that damages awarded for the attorney's malpractice actually have been caused by the malpractice." (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241.)

" 'On rare occasions, the courts have altered the normal allocation of the burden of proof.' " (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1670 (Sargent Fletcher).) A plaintiff must establish a " 'prima facie case' or 'substantial probability' of causation [as] a condition precedent to a shift in the burden of proof." (Thomas v. Lusk (1994) 27 Cal.App.4th 1709, 1719.) Moreover, before shifting the burden, it must be shown that the defendant's negligence makes it impossible as a practical matter for the plaintiffs to prove causation. (Ibid.) The exceptions to the normal burden of proof allocation "are few, and narrow." (Sargent Fletcher, supra, 110 Cal.App.4th at p. 1670.)

Fullerton has demonstrated no reason to veer from the customary burdens that operate in an attorney malpractice case. Fullerton has established neither a prima facie case nor substantial probability of causation, nor has it shown that Sideman's alleged negligence made it impossible for it to prove causation. On this issue, Fullerton claims it "can and has with an extensive evidentiary record sustained the normal burden of proof." Fullerton purports to provide facts it views as critical to justify burden shifting; it contends that documents lost by Sideman contained facts its expert relied upon to give his antitrust opinion to the trial court, including signed nondisclosure agreements, independent contractor agreements, and critical financial documents to name a few. However, in arguing these points, Fullerton fails to support any of its proffered facts with citations to the record. There is not a single citation to the record in its three-page, fact-intensive discussion on how it proved its antitrust claim. These defects are fatal to Fullerton's appeal.

The rules of court require litigants to support each point by citation to authority, and to "[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears." (Cal. Rules of Court, rule 8.204(a)(1)(B), (C).) "Each and every statement in a brief regarding matters that are in the record on appeal, whether factual or procedural, must be supported by a citation to the record. This rule applies regardless of where the reference occurs in the brief." (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 96, fn. 2 (Lona).) When a litigant repeatedly provides no citations to the record, the rule violation is egregious (Evans v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 166-167), and the appellate court has the discretion to disregard the litigant's unsupported assertions. (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1037 (Paiva).) "It is not the task of the reviewing court to search the record for evidence that supports the party's statement; it is for the party to cite the court to those references. Upon the party's failure to do so, the appellate court need not consider or may disregard the matter." (Regents of University of California v. Sheily (2004) 122 Cal.App.4th 824, 826, fn. 1.)

Fullerton's failure to provide adequate citations to the record on the burden of proof issue is even more egregious in light of the size of the record and Fullerton's opportunity to correct this very deficiency. We struck Fullerton's original opening brief for its failure to "adequately support factual assertions with citations to the record." In response to Fullerton's request, we granted additional time to amend its opening brief to correct these omissions. Moreover, Fullerton's request for an extension of time recognized that "the record in this matter is very lengthy," the facts from the underlying dispute against the business competitors arose almost 20 years ago, and the malpractice case from which the appeal arises was filed over a decade ago. Given the scope and complexity of the record, Fullerton persisted in its failure to include the required record citations in the argument section of its only appellate brief. Thus, we disregard Fullerton's unsupported factual assertions and conclude there was no error in the trial court's decision to decline Fullerton's proposed burden-shifting instruction as to its malpractice claim.

B. Fullerton Has Not Shown the Trial Court Erred in Using the "Rule of Reason" Instruction

Fullerton also claims the court erred in instructing the jury under the "rule of reason" standard as to its antitrust claim, rather than the "per se" standard it urged on the court. There was no error here.

Under the per se instruction, the jury would have considered whether Fullerton's business competitors "agreed to refuse to deal" with Fullerton, and thereby caused it harm. For this instruction, the trial court would have had to determine that evidence showed Fullerton's competitors' actions so " 'lack[ed] redeeming virtue [that they were] conclusively presumed to be unreasonable and illegal,' and constituted a per se illegal practice. For example, a horizontal combination (an anticompetitive agreement among competitors who are at the same level of distribution) is ordinarily illegal per se. [Citation.] Likewise, . . . 'certain types of group boycotts are unlawful per se.' " (Marsh v. Anesthesia Services Medical Group, Inc. (2011) 200 Cal.App.4th 480, 493, italics in original.) Fullerton contends its competitors' activities constituted a horizontal restraint on trade or a boycott, and thus merited the per se instruction.

On the other hand, the rule of reason instruction given by the trial court required the jury to assess the effect of a restraint on competition and weigh it against any benefit or justification for the restraint. (Marin County Bd. v of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 935.) To determine whether certain practices are reasonable, courts " 'ordinarily consider the acts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be obtained, are all relevant facts.' " (Corwin v. L.A. Newspaper Services Bureau, Inc. (1971) 4 Cal.3d 842, 854.) In giving the rule of reason instruction, the trial court directed the jury to consider a variety of these factors in determining whether the actions of Fullerton's competitors had an impermissible anticompetitive effect.

Fullerton explains how its competitors colluded horizontally to justify the per se instruction but again fails to cite the record in support of any of its points in violation of the rules of court. (Cal. Rules of Court, rule 8.204(a)(1)(B), (C).) Given Fullerton's contention that the per se instruction was warranted based on these unsupported assertions of a horizontal combination between its competitors, its failure to cite the record in support of these facts precludes us from considering these statements. (See Paiva, supra, 168 Cal.App.4th at p. 1037; Lona, supra, 202 Cal.App.4th at p. 97, fn. 2.)

Further, even had Fullerton included record references, we need not reach the merits of Fullerton's argument because even if the rule of reason instruction was erroneous, Fullerton has not carried its burden on appeal to show any error was prejudicial. "In order to persuade an appellate court to overturn a jury verdict because of instructional error, an appellant must demonstrate that 'the error was prejudicial [citation] and resulted in a "miscarriage of justice." ' [Citations.] Instructional error ordinarily is considered prejudicial only when it appears probable that the improper instruction misled the jury and affected the verdict. [Citation.]" (Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1213.) "Prejudice from an erroneous instruction is never presumed; it must be affirmatively demonstrated by the appellant." (Kostecky v. Henry (1980) 113 Cal.App.3d 362, 374.) We determine the denial of a proposed jury instruction is prejudicial by analyzing (1) the state of the evidence, (2) the effect of other instructions, (3) the effect of counsel's arguments, and (4) any indications by the jury itself that it was misled. (Rutherford v. Owens-Illinois (1977) 16 Cal.4th 953, 983.)

Fullerton has not made the necessary showing of prejudice because the rule of reason instruction was given. In its sole brief on appeal, Fullerton provides no analysis and makes no argument to indicate a reasonable probability the jury would have reached a different verdict but for the rule of reason instruction. Although it analyzes the factors for prejudice on the shifting of burden of proof instruction (but without record citations as discussed earlier), it sets forth no similar analysis for the trial court's rule of reason instruction. "[T]he appellant bears the duty of spelling out in his brief exactly how the error caused a miscarriage of justice." (Paterno v. State of California (1999) 74 Cal.App.4th 68, 106.) Accordingly, there was no error in the trial court's decision to provide the jury with the rule of reason instruction on the underlying antitrust claim.

C. Fullerton Has Not Shown the Trial Court Erred in Allowing Out-of-Sequence Responses to the Special Verdict Form

Fullerton next contends the trial court erred in instructing the jury it could answer the 12-question special verdict form out of sequence. Again, we disagree.

"[A] special verdict is one where the jury finds the facts, and leaves the judgment to the court. (Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1347, fn. 7; Code Civ. Proc., § 624.) "The [trial] court . . . has discretion to direct the jury to find a special verdict upon all, or any of the issues." (Valentine v. Baxter Healthcare Corp. (1999) 68 Cal.App.4th 1467, 1476; Code Civ. Proc. § 625.) "A special verdict presents to the jury each ultimate fact in the case, so that 'nothing shall remain to the Court but to draw from them conclusions of law.' " (Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 285.) The special verdict must allow the jury to resolve all of the ultimate facts presented to it on "every controverted issue necessary to dispose of liability." (Contreras v. Goldrich (1992) 10 Cal.App.4th 1431, 1434, italics in original (Contreras).) "[A] special verdict's correctness is analyzed as a matter of law and therefore subject to de novo review." (Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1092.)

A medical malpractice case, Contreras, supra, 10 Cal.App.4th 1431, not cited in the briefs, is squarely on point. There, a negligence cause of action was submitted to the jury by special verdict. (Id. at p. 1432.) The jury was unable to agree whether the defendant doctor had been negligent in providing prenatal care to the plaintiff. (Id. at pp. 1432-1433.) However, nine jurors agreed that the doctor's negligence was not the cause of the plaintiff's injury. (Id. at p. 1433.) The court entered judgment for the defendant doctor based on the jury's answer to the causation question. (Ibid.) The plaintiff argued that the jury's failure to answer a question regarding the doctor's negligence rendered the verdict incomplete and fatally deficient to support entry of judgment. (Ibid.) The court disagreed and explained: "A cause of action in tort for professional negligence requires as a necessary element a proximate causal connection between the negligent conduct and the resulting injury. [Citations.] Therefore, when the jury specially found that [the doctor's] alleged negligence was not a legal cause of [the plaintiff's] injury, nothing remained for the court but to draw the conclusion of law that [the doctor was] not liable to [the plaintiff]." (Ibid.) Judgment in favor of the doctor was affirmed. (Id. at p. 1435.)

So too, here. Our facts are strikingly similar to Contreras. Here, the jury was unable to agree on its answer to question 9, which asked whether Sideman had been negligent in rendering legal services to Fullerton and breached the standard of care. However, nine jurors agreed on the answer to question 10, responding that Sideman did not cause injury to Fullerton. Like Contreras, the trial court recognized causation to be a necessary element for Fullerton's malpractice claims. Based on the jury's special verdict finding that Sideman did not cause Fullerton's injury, the trial court concluded Sideman was not liable to Fullerton and entered judgment in Sideman's favor. As in Contreras, the trial court committed no error in drawing this conclusion.

Fullerton argues the trial court's modified instruction was inconsistent with its original instruction directing the jury to answer the questions in order. However, this disregards the trial court's later directive that out-of-sequence responses were acceptable and the earlier instruction was superseded. With this clarification, there was no inconsistency in the trial court's instructions to the jury.

Fullerton also contends the trial court's instruction allowing the jury to answer the question on causation without stating whether there was a breach of duty was error because it resulted in an inconsistent verdict. According to Fullerton, the jury's failure to answer question 9 regarding breach was inconsistent with its "no" response to question 10 regarding causation. Fullerton argues without a response to question 9, there is no way to determine how the jury's response to question 10 was reached. The argument is an exercise in futility. In asking about causation "[b]ut for [Sideman's] breach of the standard of care," question 10 and the jurors could assume Sideman breached its duty. A "yes" or "no" response from the jury to question 9 on breach of duty would not have changed the jury's finding on causation. The absence of causation dispositively established Sideman's non-liability and properly rendered the verdict in Sideman's favor.

Finally, even if the court's instruction on sequence was error, it was harmless. "[A] defective special verdict form is subject to harmless error analysis." (Taylor v. Nabors Drilling USA, LP (2014) 222 Cal.App.4th 1228, 1244.) Under this standard, the trial court's judgment may be overturned only if "it is reasonably probable that a result more favorable to the [appellant] would have been reached in the absence of the error." (People v. Watson (1956) 46 Cal.2d 818, 836.) Fullerton fails to make the required showing. While it acknowledges an error requires reversal only when it "is more probably than not harmless," it provides no analysis and makes no argument that the jury would have reached a different verdict but for the alleged error. Again, "the appellant bears the duty of spelling out in his brief exactly how the error caused a miscarriage of justice." (Paterno, supra, 74 Cal.App.4th at p. 106.) Fullerton made no effort to meet this burden.

D. Fullerton Has Not Shown the Trial Court Abused Its Discretion By Excluding Evidence Related to the St. Luke's Litigation

Finally, Fullerton contends the trial court erred in granting Sideman's motion in limine excluding any reference to the litigation between St. Luke's Hospital and California Pacific Medical Center. Fullerton contends this excluded evidence would have demonstrated its competitors engaged in a pattern of similar conduct intended to reduce competition in their dealings with another physician group at another hospital. Not so.

We review evidentiary rulings made in limine or during a trial for abuse of discretion. (Pannu v. Land Rover North America, Inc. (2011) 191 Cal.App.4th 1298, 1317.) "This standard is not met by merely arguing that a different ruling would have been better. Discretion is abused only when in its exercise, the trial court 'exceeds the bounds of reason, all of the circumstances before it being considered.' " (Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 281 (Shaw).) Moreover, "[i]t is for the trial court, in its discretion, to determine whether the probative value of relevant evidence is outweighed by a substantial danger of undue prejudice. The appellate court may not interfere with the trial court's determination . . . unless the trial court's determination was beyond the bounds of reason and resulted in a manifest miscarriage of justice." (Rufo v. Simpson (2001) 86 Cal.App.4th 573, 596.) "[I]t is the appellant's burden to establish an abuse of discretion." (Shaw, supra, 170 Cal.App.4th at p. 281.) Fullerton has not established such an abuse.

As an initial matter, Fullerton has not even attempted to address the applicable standard of review for this evidentiary ruling. "Failure to acknowledge the proper scope of review is a concession of lack of merit." (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 465.) An appellant's failure to discuss a trial court ruling excluding evidence in light of the applicable standard of review constitutes a failure to show abuse or an error in judgment. (Gombiner v. Swartz (2008) 167 Cal.App.4th 1365, 1374.) Fullerton never addresses the applicable abuse of discretion standard of review, nor does it offer any analysis that articulates its evidentiary claims within the context of this standard.

Also, although Fullerton describes a number of apparently pertinent aspects of the St. Luke's case, it again fails to include citations to the record in support of any of these points in violation of the rules of court. (Cal. Rules of Court, rule 8.204(a)(1)(B), (C).) The absence of record citations again prevents us from considering these unsupported assertions. (See Paiva, supra, 168 Cal.App.4th at p. 1037; Lona, supra, 202 Cal.App.4th at p. 96, fn. 2.)

Moreover, even if Fullerton had properly presented this claim of error in its brief, this issue would nonetheless be forfeited because no specific offer of proof was ever made. "The failure to make a specific offer of proof constitutes waiver of the contention that the court erroneously excluded evidence." (Austin V. v. Escondido Union School District (2007) 149 Cal.App.4th 860, 886.) Fullerton's contention the trial court "excluded any reference to the St. Lukes [sic] litigation during trial," is not accurate. Rather, the trial court "provisionally granted" Sideman's motion to exclude St. Luke's-related evidence "without a further specific offer of proof." An offer of proof would have allowed the trial court to further assess the proffered evidence and decide on its admissibility in context. (People v. Schmies (1996) 44 Cal.App.4th 38, 53.) Fullerton does not identify or cite specific evidence it offered and which the trial court excluded. Fullerton's failure to make the specific offer of evidence it sought to introduce bars consideration of its claim that the trial court abused its discretion in excluding that evidence. We see no abuse of discretion in the trial court's decision to provisionally exclude St. Luke's evidence subject to an offer of proof that Fullerton never pursued.

DISPOSITION

The judgment is affirmed.

/s/_________

Siggins, J. We concur: /s/_________
Pollak, Acting P.J. /s/_________
Jenkins, J.