Judge Daniel S. Murphy, Case BC661332 2023-04-14 Tentative Ruling

Judge: Daniel S. Murphy, Case: BC661332, Date: 2023-04-14 Tentative Ruling

Case Number: BC661332 Hearing Date: April 14, 2023 Dept: 32

EFD USA, INC., et al.,

Plaintiffs,

BAND PRO FILM AND DIGITAL, INC., et al.,

Defendants.

Case No.: BC661332

Hearing Date: April 14, 2023

[TENTATIVE] order RE:

plaintiffs’ motions for new trial

BACKGROUND

On May 15, 2017, Plaintiffs EFD USA Inc. (EFD) and Georgina Teran (Teran) filed this action against Band Pro Film and Digital, Inc. (Band Pro), Direct Video Warehouse, Inc. (DVWI), Maxpro Leasing, LLC (Maxpro), AKT Enterprises, LLC (AKT), Technijan, Inc. (Technijan), Brandon Brooks (Brooks), Greg Bisel (Bisel), and Amnon Band. EFD is a supplier of motion picture equipment and services to film and television productions. Teran is the founder of EFD. This dispute stems from EFD’s allegations about fraudulent and other improper charges by its major supplier and others regarding equipment financing transactions. The operative First Amended Complaint (FAC) was filed November 21, 2017.

Plaintiffs settled the matter with Bisel and his related entities Maxpro, AKT, and Technijan (collectively, Bisel Defendants). The settlement addressed: EFD’s claims; AKT’s cross-claim for breach of contract; and a separate lawsuit filed by Bisel regarding an illegally recorded phone call. The matter went to trial before a jury on three claims asserted by EFD against Band Pro, Amnon Band, and Brandon Brooks: (1) fraud; (2) aiding and abetting fraud; and (3) money had and received. According to the verdict rendered on October 19, 2022, the jury found Band Pro and Brooks liable on all three claims, and Amnon Band liable for aiding and abetting fraud. As for damages, the jury attributed $49,481 to Band Pro, $49,481 to Brooks, and $10,995 to Amnon Band, for a total of $109,958. EFD also asserted UCL claims against Band Pro, Amnon Band, Brooks, and DVWI, which were heard as a bench trial.

On January 30, 2023, the Court issued a statement of decision finding, among other things, that the Bisel settlement completely offset Plaintiff’s trial damages and UCL restitution. Judgment was entered on February 22, 2023, wherein Plaintiffs took nothing on their First Amended Complaint.

Plaintiffs presently move for a new trial as to Defendants Band Pro, Amnon Band, DVWI, and Brandon Brooks, primarily on the grounds of inadequate damages due to the offset. Relatedly, Plaintiffs also move for a new trial as to the default against Defendant GroundSeven Ventures, Inc., arguing that the damages against GroundSeven should be increased and included in the overall damages, such that the overall damages exceed the offset. The Court addresses these motions herein.

LEGAL STANDARD

A court decision may be modified or vacated, and a new trial granted on some or all issues, for any of the following reasons to the extent they materially affect the substantial rights of the party seeking a new trial: (1) irregularity in the proceedings; (2) jury misconduct; (3) accident or surprise; (4) newly discovered evidence; (5) excessive or inadequate damages; (6) insufficiency of evidence; or (7) error in law. (Code Civ. Proc., § 657.)

“A new trial shall not be granted upon the ground of insufficiency of the evidence to justify the verdict or other decision, nor upon the ground of excessive or inadequate damages, unless after weighing the evidence the court is convinced from the entire record, including reasonable inferences therefrom, that the court or jury clearly should have reached a different verdict or decision.” (Code Civ. Proc., § 657.)

DISCUSSION

I. GroundSeven Default

GroundSeven Ventures, Inc. is a defendant who defaulted. On January 30, 2023, the Court entered a default judgment against GroundSeven in the total amount of $91,328.37, representing $49,481 in damages and $41,847.37 in prejudgment interest.

Plaintiffs argue that the Court should increase the GroundSeven damages and include them as part of the overall damages caused by the defendants in this case, thereby increasing the total damages to more than the Bisel settlement and netting Plaintiffs some recovery despite the offset. In its statement of decision, the Court had held that due to the default, GroundSeven “cannot assert the affirmative defense for unclean hands, nor can [GroundSeven] request an offset.” (Jan. 30, 2023 Stmnt. of Decision 20:12-14.)

Plaintiffs argue that because all of the defendants were treated as joint tortfeasors for purposes of the offset, the offset should be against EFD’s entire recovery, which includes the GroundSeven default. However, “[a] party's default does not bind nondefaulting codefendants . . . .” (Western Heritage Ins. Co. v. Superior Court (2011) 199 Cal.App.4th 1196, 1211.) The non-defaulting defendants duly answered the complaint and contested their liability, ultimately resulting in a $109k verdict for Plaintiffs. Defendants then successfully argued for an offset, reducing Plaintiffs’ recovery to $0. GroundSeven, on the other hand, did not bother to answer the complaint or participate in the litigation. EFD cannot use this as a backdoor to inflate its damages and obtain a net recovery against the other defendants where there would otherwise have been none. In other words, GroundSeven’s default cannot be used to prejudice the remaining Defendants.

II. Evidence of Allocation

In its statement of decision, the Court found that EFD failed to meet its burden of proving that the parties to the Bisel settlement intended to allocate the consideration. Therefore, the settlement amount served to offset the damages awarded against the other defendants even though Plaintiffs only settled with the Bisel defendants. (See Code Civ. Proc., § 877.)

Plaintiffs now argue that “circumstantial evidence supports Plaintiffs’ position that the Bisel settlement should be interpreted as treating all claims as separate, distinct and divisible and either not intended to cover the Band Pro transactions at all or as supporting only a pro rata allocation of the Bisel Settlement.” (Mtn. 4:21-23.) Plaintiffs also contend that Judge Stone, the mediator, “should be given the opportunity to decide whether the mediation agreement inherently included an allocation and what the nature and extent of that allocation should be.” (Mtn. 5:11-13.)

However, Section 657 “restricts the use of newly discovered evidence as a ground for new trial to those instances where the evidence could not ‘with reasonable diligence, have [been] discovered and produced at trial.’” (Hoffman-Haag v. Transamerica Ins. Co. (1991) 1 Cal.App.4th 10, 14.) Plaintiffs do not explain why they could not present this additional evidence of allocation earlier. Furthermore, the issue of offset was properly before this Court, not Judge Stone. Therefore, it is for this Court, not Judge Stone, to decide whether the settling parties agreed to an allocation for purposes of determining the offset amount.

III. Equitable Balancing

Plaintiffs argue that a new trial is warranted because the Court did not apply an equitable balancing to reduce the offset and increase the damages awarded to EFD. Plaintiffs contend that “no equitable basis exists for permitting Defendants to keep all fraudulently obtained funds for 18 transactions (the 16 at trial plus the 2 DVWI), just because EFD’s damages for the approximately 40 separate Bisel transactions was greater.” (Mtn. 6:25-27.)

This assumes that the settlement was allocated to solely the 40 Bisel transactions, which again, EFD failed to prove. Because all of the defendants were jointly responsible for defrauding EFD, the Bisel settlement accounted for EFD’s overall damages, making the offset equitable. On the other hand, it would have been inequitable for EFD to recover its damages through settlement and then recover again at trial.

IV. Indivisible Injury

EFD reiterates its argument that each of the fraudulent transactions should be considered a distinct injury. (Mtn. 8:15-10:3.) The Court has already rejected this argument and found that the defendants are joint tortfeasors under the broad application of Section 877. (Jan. 30, 2023 Stmnt. of Decision 6:7-7:23.) For purposes of Section 877, joint tortfeasor status attaches “generally to all tortfeasors joined in a single action whose acts or omissions concurred to produce the sum total of the injuries to the plaintiff.” (Gackstetter v. Frawley (2006) 135 Cal.App.4th 1257, 1272.) It applies not just to those who act in concert, but also to concurrent and successive tortfeasors. (Ibid.) This principal applies here, where the defendants were alleged by EFD to be collectively responsible for fraud and improper charges. (See FAC ¶¶ 69-80, 87-91, 121-124.) In other words, Defendants’ acts combined to “produce the sum total of the injuries” to EFD, even though they did so through multiple separate transactions.

V. Jury’s Allocation of Liability

EFD argues that “[b]ecause the jury effectively allocated fault by allocating different amounts of damages among the defendants, the Bisel settlement should be subject to allocation during the trial.” (Mtn. 10:8-10.) EFD cites no authority for this proposition. As addressed previously, the burden is on the party seeking an allocation to prove that the settling parties intended to allocate the consideration. (Jan. 30, 2023 Stmnt. of Decision 8:1-12.) The jury’s apportionment of liability between various defendants has no bearing on whether Plaintiff and the Bisel defendants incorporated an allocation into their settlement agreement.

VI. Adequate Restitution

EFD argues a new trial is warranted because the Court did not reach the merits of the UCL claim but instead dismissed it as an improper attempt to recover damages. It was clear from the plain language of EFD’s brief that it sought to recover damages, rather than the restitution provided by the UCL. (See Stmnt. of Decision 10:22-23 [“EFD directly ‘requests that the award be for the full amount of EFD’s damages requested at trial: $109,958.17’”].) EFD now argues that in its reply brief regarding the UCL claim, it had accepted Band Pro’s alternative formula for calculating restitution, which would have resulted in a different number than the amount awarded at the jury trial. The fact that EFD was willing to settle for a different number does not change the underlying character of its UCL claim, which was still an improper attempt at recovering damages.

VII. Prejudgment Interest

EFD argues that prejudgment interest should have been added to the underlying damages before the sum was offset by the settlement. EFD cites no authority for the proposition that an offset is applied against the sum of damages and prejudgment interest. Nor does EFD explain why a new trial is warranted, as this appears to have no effect on EFD’s ultimate recovery. (See Mtn. 11:18-19 [acknowledging that the sum would still be entirely offset by the Bisel settlement].) A new trial is warranted only on issues “materially affecting the substantial rights” of a party. (Code Civ. Proc., § 657.)

VIII. Unclean Hands and Credibility Findings

EFD contends that the Court’s findings on unclean hands were erroneous and irrelevant because the Court ultimately concluded that the unclean hands defense did not apply. However, the Court’s analysis leading to that conclusion is relevant and necessary. The parties raised and disputed the unclean hands theory, therefore the Court was required to address it. This is also not an issue “materially affecting the substantial rights” of a party. (Code Civ. Proc., § 657.) The ultimate result does not change regardless of whether the discussion on unclean hands remains.

CONCLUSION

Plaintiffs’ motions for new trial are DENIED.

EFD USA, INC., et al.,

Plaintiffs,

BAND PRO FILM AND DIGITAL, INC., et al.,

Defendants.

Case No.: BC661332

Hearing Date: April 14, 2023

[TENTATIVE] order RE:

plaintiffs’ motion to vacate judgment

BACKGROUND

Plaintiffs presently move to vacate the February 22, 2023 judgment on various grounds. The Court addresses them herein.

DISCUSSION

A judgment may be set aside and vacated for the following reasons: (1) incorrect or erroneous legal basis for the decision, not consistent with or not supported by the facts; or (2) a judgment or decree not consistent with or not supported by the special verdict. (Code Civ. Proc., § 663.)

DISCUSSION

I. Judgment for Defendants

Plaintiffs argue that the judgment was improperly entered in favor of Defendants. Plaintiffs contend that the reduction of their recovery to $0 does not negate their success at trial in proving Defendants’ liability. Plaintiffs rely on Goodman v. Lozano (2010) 47 Cal.4th 1327, 1330, where an “award [was] entirely offset, resulting in a zero judgment.” The court held that “the plaintiffs here, ordered to take nothing against the nonsettling defendants due to the settlement offset, did not obtain a ‘net monetary recovery’” for purposes of recovering costs as the prevailing parties. (Ibid.)

If anything, Goodman supports judgment in favor of Defendants in this case, as Plaintiffs here similarly obtained no net recovery. Under Goodman, Plaintiffs would not be considered prevailing parties. By contrast, Defendants could be considered prevailing parties because “prevailing party” includes “a defendant as against those plaintiffs who do not recover any relief against that defendant.” (Code Civ. Proc., § 1032(a)(4).) Plaintiffs recovered no relief against Defendants because the judgment was entirely offset. Plaintiffs cite no authority requiring judgment to be entered in favor of a plaintiff who recovers nothing on their complaint. Therefore, the Court did not err in entering judgment for Defendants.

II. Credibility Findings

Plaintiffs argue that the judgment should be vacated because it includes the phrase, “[t]he Court did not find Georgina Teran to be credible.” Plaintiffs cite no authority for the proposition that this justifies vacating the judgment. “A judgment is the final determination of the rights of the parties in an action or proceeding.” (Code Civ. Proc., § 577.) “[T]here is no prescribed form for a judgment. Its sufficiency depends on whether it shows distinctly that the issues have been adjudicated.” (7 Witkin, Cal. Proc. 6th Judgm § 29 (2022).) Here, the judgment adequately determines the rights of the parties notwithstanding the phrase about Teran’s credibility.

III. Amnon Band’s Liability

Plaintiffs argue that the judgment incorrectly states that the jury found Amnon Band liable for money had and received. The judgment states that “[t]he jury found in favor of EFD and against Band Pro, Band and defendant Brandon Brooks (‘Brooks’) on causes of action for money had and received and aiding and abetting fraud, and found in favor of EFD and against Brooks and Band Pro on a cause of action for fraud.” (Feb. 22, 2022 Judgment 2:9-12.) The language in question simply indicates that the jury found in favor of EFD and against Defendants on multiple claims. It does not single out Amnon Band as being liable for money had and received. It is undisputed that Band was not found liable for that claim.

IV. Jury Verdict

Plaintiffs argue that the judgment should be vacated because it does not attach the jury verdict. Plaintiffs cite no authority requiring a verdict to be attached to the judgment. “It is well settled that the test of the sufficiency of a judgment rests in its substance rather than in its form.” (Berris & Seaton v. Meyers (1984) 163 Cal.App.3d Supp. 54, 60.) Here, the judgment adequately sets forth the substance of the jury’s verdict even if it does not include the actual verdict form.

V. Prejudgment Interest

“Plaintiffs maintain that the Judgment should include a calculation of the prejudgment interest, even though the Court is offsetting all of it by the Bisel Settlement.” (Mtn. 5:13-14.) Plaintiffs cite no authority requiring a judgment to include a calculation of prejudgment interest. Nor do Plaintiffs cite any authority requiring a settlement offset to be applied to the sum of underlying damages and prejudgment interest.

VI. Costs Award

Plaintiffs argue that Georgina Teran cannot be liable for costs beyond August 2020, when she was dismissed as a plaintiff. To the extent this is an issue, it should be addressed in a separate motion to tax costs. It is not grounds for vacating the judgment.

VII. Caption

Plaintiffs argue that the judgment should be vacated because it is titled “Amended Judgment.” There is no authority for this proposition. There is no ambiguity as to the operative judgment despite its caption.

CONCLUSION

Plaintiffs’ motion to vacate judgment is DENIED.