Andrews v. Marcum CA4/3 ( 2022 )

Filed 2/15/22 Andrews v. Marcum CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
LESLIE A. ANDREWS et al.,
Plaintiffs, Cross-defendants and G059222
Respondents,
(Super. Ct. No. 30-2016-00830847)
v.
OPINION
MARCUM LLP, et al.,
Defendants, Cross-complainants and
Appellants.
Appeal from an order of the Superior Court of Orange County, Robert J.
Moss, Judge. Affirmed.
Lewis Brisbois Bisgaard & Smith and Roy G. Weatherup; Zukerman Gore
Brandeis & Crossman and Frank C. Welzer; Hamilton Law Offices and John M.
Hamilton for Defendants and Appellants.
Manatt, Phelps & Phillips, Kenneth B. Julian and Benjamin G. Shatz; Law
Offices of Sherri S. Shafizadeh and Sherri S. Shafizadeh for Plaintiffs and Respondents.
This is an appeal from an order granting a new trial following a jury verdict
in favor of defendants Marcum LLP and Stan Lam (the accountants) and, cross-
complainant, Marcum LLP. Plaintiff and respondent Leslie A. Andrews (Andrews) filed
the underlying complaint against the accountants alleging a number of causes of action
generally sounding in breach of fiduciary duty and fraudulent concealment. Marcum
LLP filed a cross-complaint for fees owed under the accounting contract. The matter
proceeded to a jury trial, and the jury returned general verdicts finding in favor of the
accountants on the complaint and in favor of Marcum LLP on the cross-complaint.
Afterward, Andrews filed a motion for new trial on the ground of juror
misconduct. Andrews presented declarations from four jurors supporting two grounds for
a new trial. First, a juror who dominated the deliberations said words to the effect of, “I
have a lot of experience in contracts,” and “I have an education in legal contracts.”
Second, the jury decided the accountants’ breach of contract claim but then signed both
general verdict forms (corresponding to the complaint and cross complaint) without
deliberating on Andrews’ claim for breach of fiduciary duty. The accountants opposed
the motion but did not present any juror declarations of their own. The trial court agreed
with Andrews on both grounds and granted the motion for new trial.
We affirm. We must defer to the trial court’s factual findings and as a
result the lower court’s finding that the jury failed to deliberate on an entire cause of
action supports the new trial order.
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FACTS
Andrews filed the underlying complaint alleging 12 causes of action,
though only three survived for trial: financial abuse of a dependent adult, breach of
fiduciary duty, and fraud. Marcum LLP filed a cross-complaint for breach of contract
and common counts against Andrews and various entities that she controls. 1
Trial began on January 29, 2020, and finished on March 4, 2020, resulting
in a 10-volume reporter’s transcript spanning over 2,000 pages. Appellants have
provided us with a short, one-sided summary of the evidence at trial, and respondents
have not bothered to summarize the trial evidence at all. Additionally, the trial
incorporated dozens of documentary exhibits, none of which are in our record. In light of
the state of the record, and the briefing on appeal, our focus is necessarily on the evidence
submitted in connection with the posttrial motion. To briefly summarize the parties’
positions at trial, the accountants contended the evidence showed that the financial
records of Andrews and the entities she controlled were complex and in disarray,
resulting in large bills for accounting work that Andrews ultimately refused to pay.
Andrews contended the evidence showed that the accountants grossly overbilled for the
work they performed, lied about the reasons for the high bills, and billed Andrews for
work outside the scope of the accounting contract.
The jury returned general verdicts in favor of the accountants on the
complaint by a vote of nine-three, and on the cross-complaint by a vote of 10-two. The
verdicts simply stated, “We the jury find in favor of the defendants Stan Lam and
Marcum LLP on the complaint,” and “We the jury find in favor of the cross-complainant
1
Those entities include: Andrews Marital Trust; Andrews Exemption Trust;
Mary G. Andrews Trust; Andrews Development Co.; Mark Barkley & Associates; Tustin
Construction Co., Inc.; Bunya-Bunya, LLC; J.A. Andrews Co.; Laurel Homes
Associates; North Coast Associates; and Sunset Ranch, Ltd.
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Marcum LLP on the cross-complaint and award damages against Leslie A. Andrews in
the amount of $4,347.44 and against the Andrews entities in the amount of $105,643.87.”
Afterward, Andrews and her entities moved for a new trial on the ground of
juror misconduct. In connection with the motion, Andrews submitted four juror
declarations. Although the four declarations had some minor variations, they essentially
communicated the same facts. One of the jurors, whose declaration is representative of
the other three, declared, “During deliberation, one of the jurors (Robert) said ‘I have a
lot of experience in contracts,’ and that ‘I have an education in legal contracts,’ or words
to that effect. He also said he was a businessman. [¶] The jury voted 9-3 before
deliberating on breach of fiduciary duty, and did not deliberate on this claim.”
The accountants opposed the motion and interposed objections to the juror
declarations, but they presented no counter declarations from other jurors.
The court ultimately granted the motion for new trial, stating, “It is with
great reluctance that I grant the motion for new trial after all the work that everybody put
into it. But I think I got to play the cards, not the money, as they say in poker, and I think
there was misconduct by juror [Robert]. And he wasn’t supposed to talk about his special
knowledge in contract law. He did. I think there is a presumption of prejudice. And
there was no declaration from other jurors who contradicted what the plaintiff submitted,
but that’s no real rebuttal of that presumption. And I think there was evidence in the
form of the declarations from plaintiff that there was no deliberation on the fiduciary duty
count. [¶] And I think both of which tell me to reluctantly grant the motion for new
trial.”
The accountants appealed.
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DISCUSSION
1. Standard of Review
Code of Civil Procedure section 657 permits a trial court to order a new
trial on the ground of “[m]isconduct of the jury.” (Id., subd. (2).) “When a new trial is
granted, on all or part of the issues, the court shall specify the ground or grounds upon
which it is granted and the court’s reason or reasons for granting the new trial upon each
ground stated.” (Id., subd. (7).) This statute requires the court to both specify the
statutory ground for the ruling (i.e., misconduct of the jury) and the reasons for that ruling
— i.e., why the evidence supports a ruling on that ground. “When the trial court provides
a statement of reasons as required by section 657, the appropriate standard of judicial
review is one that defers to the trial court’s resolution of conflicts in the evidence and
inquires only whether the court’s decision was an abuse of discretion.” (Oakland Raiders
v. National Football League (2007) 41 Cal.4th 624, 636.) On the other hand, where a
trial court does not issue a statement of reasons that complies with section 657, “the
effect . . . is to shift the burden of persuasion to the party seeking to uphold the trial
court’s order.” (Oakland Raiders, at p. 641.) A threshold question in this appeal,
therefore, is whether the court issued a compliant statement of reasons.
A statement of reasons “will be sufficient if the judge who grants a new
trial furnishes a concise but clear statement of the reasons why he finds one or more of
the grounds of the motion to be applicable to the case before him.” (Mercer v.
Perez (1968) 68 Cal.2d 104, 115.) Although “[n]o hard and fast rule can be laid down as
to the content of such a specification” (ibid.), the statement must be sufficiently specific
to facilitate meaningful appellate review (id. at p. 113).
We conclude the court’s minute order satisfied this requirement. The
court’s minute order granting a new trial said, “Motion granted, based upon juror
misconduct.” That statement satisfies the court’s duty to specify the statutory ground for
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the order. The court then specified two reasons for the ruling: “Plaintiffs’ evidence
establishes that juror ‘Robert’ stated to the other jurors that he had a lot of experience
with contracts, and that he had specific education in contracts. [Citations.] This evidence
establishes that juror ‘Robert’ advised the other jurors that he had ‘. . . special personal
knowledge or experience . . .’ as to the issues to be deliberated by the jury.” The court
went on to specify another reason: “Refusal to deliberate also constitutes jury
misconduct. [Citation.] Plaintiffs present evidence establishing that the entire jury failed
or refused to deliberate on Plaintiffs’ cause of action for fiduciary duty.”
The accountants contend this statement was inadequate, arguing, “To find
that there was jury misconduct because one juror revealed his knowledge and experience
with contracts in general, because a juror supposedly dominated deliberations, and
because the jury did not deliberate sufficiently on the claim of breach of fiduciary duty, is
to indulge in making determinations concerning ultimate facts, resting on nothing but
inference and speculation.”
The court’s finding that “Robert” made statements about his experience to
the jury, however, is plainly an evidentiary fact, not an ultimate fact. The finding that the
jury failed to deliberate on an entire cause of action is likewise an evidentiary fact,
though it leads inexorably to an ultimate fact. When the juror declarations say the jury
entirely shirked its duty to resolve a cause of action, there is not much to say by way of
evidentiary facts other than the jury did not deliberate on the cause of action. The court
even specified the declarations it was relying on to reach these evidentiary facts. We fail
to see how the court’s order could have been any more specific. Accordingly, because
the court issued a compliant statement of reasons, we will review the court’s factual
findings for substantial evidence, and its ultimate findings for abuse of discretion.
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2. Evidentiary Objections
Before we address the merits of the new trial motion, we first consider the
accountants’ argument that the juror declarations were inadmissible under Evidence Code
section 1150. That section provides, “Upon an inquiry as to the validity of a verdict, any
otherwise admissible evidence may be received as to statements made, or conduct,
conditions, or events occurring, either within or without the jury room, of such a
character as is likely to have influenced the verdict improperly. No evidence is
admissible to show the effect of such statement, conduct, condition, or event upon a juror
either in influencing him to assent to or dissent from the verdict or concerning the mental
processes by which it was determined.” (Id., subd. (a).)
The accountants’ argument, which is largely underdeveloped in the opening
brief, and completely ignored in their reply brief, rests almost entirely on Sanchez-Corea
v. Bank of America (1985) 38 Cal.3d 892 (Sanchez-Corea). There, a jury returned a tort
verdict against a bank. (Id. at pp. 897-898.) The bank successfully moved for a new trial
on the ground of insufficiency of the evidence, but the trial court did not issue a proper
statement of reasons. (Id. at p. 898.) As a result, the court’s review was not deferential,
but instead asked whether any of the grounds stated in the motion (other than sufficiency
of the evidence or excessive damages) “legally requires a new trial.” (Id. at p. 905.) In a
brief analysis, the court considered the following claim of juror misconduct: “The
Bank’s remaining jury contentions center around a declaration claimed to invalidate the
vote of one juror, Ms. Bonnell. Though when polled in open court, she voted for the
general verdict for the [plaintiffs], and specifically for compensatory damages, she
subsequently declared that no jury vote was taken on the Bank’s liability and she did not
agree to liability, but that she voted for damages as a compromise because she thought
that liability had been decided and she felt pressured by her employer to return to work.
The applicable rule is explained in People v. Hutchinson (1969) 71 Cal.2d 342 [citation],
holding that Evidence Code section 1150 ‘prevents one juror from upsetting a verdict of
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the whole jury by impugning his own or his fellow jurors’ mental processes or reasons
for assent or dissent. The only improper influences that may be proved under section
1150 to impeach a verdict, therefore, are those open to sight, hearing, and the other
senses and thus subject to corroboration.’ (Ibid. at p. 350.) Ms. Bonnell's declaration
dealt only with jurors’ mental processes and reasons for assent or dissent and was
inadmissible for purposes of undermining the verdict.” (Id. at pp. 909-910).)
Without any actual analysis, the accountants simply state, “The juror
declarations offered in this case should have been excluded for the same reason as in
Sanchez-Corea.” We disagree. Whether a particular statement was made, and whether
the jurors deliberated on an entire cause of action, is plainly open to sight and hearing and
is thus admissible under Evidence Code section 1150. The court’s focus in Sanchez-
Corea was on “one juror” — Ms. Bonnell — and her reasons for voting in favor of the
verdict. Those were inadmissible. No such evidence was presented in the juror
declarations here. Moreover, because the court’s review was not deferential, it was not
compelled to accept Ms. Bonnell’s claim that no vote was taken on the bank’s liability.
The trial court here, by contrast, was free to give the evidence that there was no
deliberation on the fiduciary duty claim as much or as little weight as it deemed
appropriate, and we are compelled to accept that determination. Accordingly, Sanchez-
Corea did not compel the trial court to sustain objections to the juror declarations in this
case.
3. The Court’s Order Was Supported by Substantial Evidence
Turning to the merits, we begin with the court’s finding that the jury failed
to deliberate. “A refusal to deliberate constitutes misconduct; the parties are entitled to
the participation of all 12 jurors.” (Andrews v. County of Orange (1982) 130 Cal.App.3d
944, 959, disapproved on other grounds by People v. Nesler (1997) 16 Cal.4th 561, 582
fn. 5.) “The jury is to determine all questions submitted to it . . . .” (Resch v. Volkswagen
of America, Inc. (1984) 36 Cal.3d 676, 682; see Juarez v. Superior Court (1982) 31
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Cal.3d 759, 768 [parties have “the right to a jury of 12 persons deliberating on all
issues”].) The failure to deliberate on an entire cause of action is plainly misconduct.
The standard of review in this case dictates that we must defer to the court’s
factual finding that the jury failed to deliberate on the fiduciary duty cause of action.
The accountants’ only response is that the failure was not prejudicial. Code
of Civil Procedure, section 657 permits a new trial only where misconduct “materially
affect[ed] the substantial rights” of the moving party. Consequently, a new trial may be
granted only where there is misconduct that was prejudicial. (Ovando v. County of Los
Angeles (2008) 159 Cal.App.4th 42, 57.) However, “‘[a] showing of misconduct creates
a presumption of prejudice . . . .’ [Citation.] This presumption may be rebutted by ‘“an
affirmative evidentiary showing that prejudice does not exist”’ based upon a
consideration of such factors as ‘“the strength of the evidence that misconduct occurred,
the nature and seriousness of the misconduct, and the probability that actual prejudice
may have ensued.” [Citation.]’ [Citation.] . . . [T]he Supreme Court has made clear that
on review of an order granting a new trial, the standard of review with respect to
prejudice is abuse of discretion. [Citation.] Further, ‘[s]ince the trial judge had all the
evidence before him on the merits of the case, and as well the . . . affidavits, he [or she]
was in the best position to evaluate the prejudicial effect of the alleged misconduct.”’
(Whitlock v. Foster Wheeler, LLC (2008) 160 Cal.App.4th 149, 162.)
The accountants contend that any misconduct was not prejudicial because
the jury’s verdict on the contract claim (the cross-complaint) necessarily doomed the
fiduciary duty claim: “If there was no overbilling, then there was no cause of action for
breach of fiduciary duty. This claim thus failed.........Without damage, there is no cause
of action in tort.”
But this argument rests on two critical assumptions not supported by the
record.
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First: that if the jury had actually considered the fiduciary duty claim, and
its attendant evidence, it would not have changed its mind on the contract claim. We
simply do not know what a jury would have done had it properly considered all of the
claims and evidence before it. In the give and take of deliberation, some jurors may well
have changed their minds about the contract claim. Given the close votes on the general
verdicts, this seems quite plausible. Accordingly, we cannot conclude that the contract
verdict would have stood if the jury had considered all of the claims and evidence.
The second critical assumption is this: that the fees claimed in the contract
claim were co-extensive with the allegedly overbilled hours. In other words, the
accountants assume the damages awarded by the jury on the contract claim are
inconsistent with awarding damages on the tort claims. But the accountants have not
presented a record that would permit us to reach that conclusion, and it is not compelled
as a matter of logic. We can imagine a plausible scenario where the jury would deem the
fees sought by Marcum LLP in the cross-complaint as reasonable, but deem other fees
actually paid by Andrews to be a violation of Lam’s fiduciary duty. As a result, the jury
could have both awarded damages to Marcum LLP on the cross-complaint and awarded
damages to Andrews on the complaint. Accordingly, based on a review of the general
verdict form, we cannot determine as a matter of law that the jury’s actual verdict on the
contract claim negated an element of the fiduciary duty claim. And since the accountants
did not present any evidence (i.e., counter declarations) to rebut the presumption of
prejudice, we conclude the court did not abuse its discretion in determining that the
failure to deliberate on the fiduciary duty cause of action was prejudicial.
The other ground the court relied on in granting a new trial motion was
juror “Robert” interjecting his experience with contracts into the jury’s deliberation. The
parties vigorously debate whether this was misconduct and, if so, whether it was
prejudicial. “‘It is not improper for a juror, regardless of his or her educational or
employment background, to express an opinion on a technical subject, so long as the
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opinion is based on the evidence at trial. Jurors’ views of the evidence, moreover, are
necessarily informed by their life experiences, including their education and professional
work. A juror, however, should not discuss an opinion explicitly based on specialized
information obtained from outside sources. Such injection of external information in the
form of a juror’s own claim to expertise or specialized knowledge of a matter at issue is
misconduct.’” (People v. Steele (2002) 27 Cal.4th 1230, 1265.)
Whether “Robert’s” comments satisfy this standard is a close call. Clearly,
it was improper for him to be discussing his specialized experience. On the other hand,
the terse juror declarations leave it open to debate whether “Robert” interjected a specific
opinion or evidence outside the record or steered the deliberations in a particular
direction. Ultimately, however, because the failure to deliberate on the fiduciary duty
claim is a sufficient basis to uphold the new trial order, we need not resolve this issue. At
minimum, “Robert’s” comments partially corroborate the finding that the jury focused
exclusively on the contract claim and not the tort claims.
Although the parties did not brief the issue, we also considered whether our
holding should result in a complete new trial, or whether to order a partial new trial on
the tort claims. The trial court considered this issue and concluded the claims were
“inextricably intertwined” and thus ordered a complete new trial. Given the limited
record and summary of facts we received, and the trial court’s greater experience with the
case, we will defer to the trial court’s finding in this regard and affirm the court’s order in
its entirety.
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DISPOSITION
The order is affirmed. Respondents shall recover their costs incurred on
appeal.
MARKS, J.*
WE CONCUR:
O’LEARY, P. J.
GOETHALS, J.
*Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
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