Judge: Armen Tamzarian, Case: BC704060, Date: 2023-04-03 Tentative Ruling

Case Number: BC704060    Hearing Date: April 3, 2023    Dept: 52

Plaintiff/Cross-Defendant St. Denis Homeowners Association’s Motion to Bifurcate Trial on Punitive Damages

            Plaintiff/cross-defendant St. Denis Homeowners Association moves to bifurcate trial on the issue of punitive damages under Civil Code section 3295(d).  “The court shall, on application of any defendant, preclude the admission of evidence of that defendant’s profits and financial condition until after the trier of fact returns a verdict for plaintiff awarding actual damages and finds that a defendant is guilty of malice, oppression, or fraud.”  (Civ. Code, § 3295(d).)

This provision “requires a court, upon application of any defendant, to bifurcate a trial so that the trier of fact is not presented with evidence of the defendant’s wealth and profits until after the issues of liability, compensatory damages, and malice, oppression, or fraud have been resolved against the defendant.”  (Torres v. Automobile Club of So. California (1997) 15 Cal.4th 771, 777–778.)  

Defendant/cross-complainant Patricia Ward Kelly argues the court should not bifurcate the trial because evidence of St. Denis Homeowners Association’s finances is relevant to its liability.  Kelly makes a colorable argument that some evidence of St. Denis’ finances will be relevant to her allegations.  But Kelly’s reliance on Notrica v. State Compensation Ins. Fund (1999) 70 Cal.App.4th 911, 939 (Notrica) is misplaced.  There, the Court of Appeal stated “such evidence [of defendant’s wealth and profits] is not to be excluded on the basis of prejudice when the information is relevant to liability.”  (Ibid.)  That case, however, does not stand for the proposition that a court may deny a motion to bifurcate trial under Civil Code section 3295(d).  In Notrica, the court did bifurcate the trial.  (Id. at p. 936.)  The issue was whether specific financial evidence should have been excluded in the first trial when the defendant objected to it under section 3295. 

Kelly also cites Rawnsley v. Superior Court (1986) 183 Cal.App.3d 86, 91-92 (Rawnsley).  In Rawnsley, the court reached a similar conclusion that Civil Code section 3295 does not apply to evidence of financial condition when it is relevant to liability.  But the court did not consider the issue of bifurcating trial under section 3295(d).  The appeal instead concerned a defendant’s objections to discovery under section 3295(a) and (c). Rawnsley is distinguishable from the present case.      

Whether financial evidence is relevant to liability cannot be neatly determined in the abstract.  Kelly cites no authority for the proposition that the court may deny in its entirety a motion to bifurcate trial when evidence of defendant’s wealth is relevant to liability.  Instead, when a plaintiff seeks to introduce evidence of a defendant’s financial condition in the first phase of a bifurcated trial, the defendant can object under section 3295.  The court must then determine whether that specific evidence is admissible as relevant to liability.   

Disposition

Cross-defendant St. Denis Homeowners Association’s motion to bifurcate trial is granted.  The court hereby bifurcates the trial into: (1) a first phase on plaintiff’s complaint and, on the first amended cross-complaint, cross-defendant’s liability, cross-complainant’s compensatory damages, and cross-defendant’s liability for punitive damages under Civil Code § 3294; and (2) if the jury finds cross-defendant liable for punitive damages, a second phase to determine the amount of punitive damages. 

The court hereby precludes admission of evidence of cross-defendant’s profits or financial condition until the second phase of trial—unless such evidence is relevant to cross-defendant’s liability.  Cross-complainant may seek to introduce such evidence, and cross-defendant may object to specific evidence under Civil Code section 3295.