Judge Holly J. Fujie, Case Number: BC702531, Date: 2023-07-21 Tentative Ruling

RESPONDING PARTY: Cross-Complainants Michael B. Schwab, Big Sky Venture Capital III, LLC, and Big Sky Real Estate, LLC (“collectively, “Cross-Complainants”)

This action arises out of a business relationship. Cross-Complainants’ cross-complaint (the “CX”) alleges: (1) breach of contract; (2) breach of contract; (3) breach of contract; (4) fraud; (5) fraud; (6) breach of fiduciary duty; (7) accounting; (8) declaratory relief; and (9) fraudulent transfer.

On April 7, 2023, following a jury trial on the fourth through sixth causes of action alleged in the XC, a jury found in favor of Cross-Complainants. On May 4, 2023, a judgment (the “Judgment”) was entered on Cross-Defendants’ first amended complaint (the “FAC”) and Cross-Complainants’ XC in favor of Cross-Complainants. The Judgment sets forth the amounts of compensatory and punitive damages owed by each Cross-Defendant to each Cross-Complainant.

On June 5, 2023, Behunin filed a motion for new trial (the “Motion”) on the grounds of: (1) irregularity in the proceedings; (2) excessive damages; (3) insufficient evidence; and (4) error in law.

Under California Code of Civil Procedure (“CCP”) section 657, a court has the power to vacate a verdict in whole or in part and grant a new trial if the court determines any of the following: (1) irregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial; (2) misconduct of the jury; and whenever any one or more of the jurors have been induced to assent to any general or special verdict, or to a finding on any question submitted to them by the court, by a resort to the determination of chance, such misconduct may be proved by the affidavit of any one of the jurors; (3) accident or surprise, which ordinary prudence could not have guarded against; (4) newly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial; (5) excessive or inadequate damages; (6) insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law; and (7) error in law, occurring at the trial and excepted to by the party making the application. (CCP § 657, subds. (1)-(7).) When the court grants a new trial pursuant to CCP section 657, it must state the grounds for granting the new trial and its reasons for granting the new trial upon each ground stated. (Estes v. Eaton Corporation (2020) 51 Cal.App.5th 636, 642.)

An irregularity in the proceedings is a catchall phrase referring to any act that: (1) violates the right of a party to a fair trial; and (2) which a party cannot fully present by exceptions taken during the progress of the trial, and which must therefore appear by affidavits. (Montoya v. Barragan (2013) 220 Cal.App.4th 1215, 1229-30.)

The Motion contends that Behunin was denied a fair trial as a result of Behunin being denied the opportunity to present certain items of evidence while Cross-Complainants were allowed to present duplicative evidence. (See Declaration of Nicholas Behunin (“Behunin Decl.”) ¶¶ 3-7.) Behunin fails to cite to portions of the record where he raised objections to Cross-Complainants’ evidence. Behunin also does not explain how the Court’s rulings that barred him from pursuing certain lines of questioning had a prejudicial effect on the jury’s decision.[1] The Court therefore finds that Behunin has not demonstrated that there were irregularities in the proceedings that warrant a new trial. (See Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 932.)

A judge may grant a new trial under on the issue of damages only when the evidence was too speculative to support the award of damages. (Toscano v Greene Music) (2004) 124 Cal.App.4th 685, 695-97.) A judge may reduce an excessive punitive damages award by granting a defendant's motion for a new trial under CCP section 657, subdivision (5) or by issuing a conditional order granting a new trial unless the plaintiff consents to a reduction of the amount of the award to an amount the judge finds fair and reasonable under the remittitur process set forth in CCP section 622.5. (ENA North Beach Inc. v. 524 Union Street (2019) 43 Cal.App.5th 195, 213.) The United States Supreme Court has articulated a set of substantive guideposts that reviewing courts must consider in evaluating the size of punitive damages awards: (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. (Contreras-Velazquez v. Family Health Centers of San Diego, Inc. (2021) 62 Cal.App.5th 88, 104.) Of these three guideposts, the most important is the degree of reprehensibility of the defendant's conduct. (Fernandes v. Singh (2017) 16 Cal.App.5th 932, 941.) On this issue, the U.S. Supreme Court instructed courts to consider whether: (1) the harm caused was physical as opposed to economic; (2) the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; (3) the target of the conduct had financial vulnerability; (4) the conduct involved repeated actions or was an isolated incident; and (5) the harm was the result of intentional malice, trickery, or deceit, or mere accident. (Id.)

The Motion argues that the Court allowed the Judgment to be entered with excessive punitive damages without considering the propriety of the award under the U.S. Supreme Court’s analysis. The Court observes that the Motion does not cite authority that states that the Court was required to analyze the propriety of the punitive damages award before Behunin filed the Motion. Behunin summarily argues that the punitive damages imposed against him are unconstitutionally excessive, but does not cite to any specific evidence that would justify reducing the award. Relatedly, Behunin contends that the 4.91-to-1 ratio of punitive to compensatory damages renders the punitive damages award constitutionally suspect, but does not cite to evidence to support the position that this ratio was impermissible under the circumstances. The Court therefore does not find that the punitive damages that the jury awarded are excessive.

Noncompliance with a court order to disclose financial condition precludes a defendant from challenging the sufficiency of the evidence of a punitive damages award on appeal. (Fernandes v. Singh (2017) 16 Cal.App.5th 932, 942.) A defendant may be estopped from arguing that the evidence of his financial condition was insufficient to support a punitive damage award because he failed to comply with a subpoena requiring him to produce records of his financial condition at trial. (Garcia v. Myllyla (2019) 40 Cal.App.5th 990, 995.)

Behunin argues that the evidence to support the punitive damages award was insufficient because Cross-Complainants failed to present evidence of his financial condition. The Court is not persuaded by this argument, as the record demonstrates that Behunin failed to bring financial records to the trial as requested by Cross-Complainants’ subpoena. (See Declaration of Alexander J. Doherty ¶ 6, Exhibit 5.)

The trial court may not grant a new trial for error of law unless such error is prejudicial. (Bristow v. Ferguson (1981) 121 Cal.App.3d 823, 826.)

The Motion’s arguments regarding error in law restate Behunin’s positions regarding irregularities in the proceeding and issues with the punitive damages award. Behunin fails to show that any alleged irregularities were prejudicial, and the arguments regarding errors in law fail for the reasons discussed above.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

[1] The Court additionally observes that while the Behunin Declaration recounts Behunin’s perception of the events during trial, the document is replete with legal conclusions that are not reinforced with citations to the record for the Court to review.