Liu v. Sun CA2/3

Filed 3/4/13 Liu v. Sun CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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
SECOND APPELLATE DISTRICT
DIVISION THREE
JUNWEI LIU, B236305
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. KC053835)
v.
ORDER MODIFYING OPINION
JING SUN et al., [NO CHANGE IN JUDGMENT]
Defendants and Respondents.
THE COURT:
It is ordered that the opinion filed herein on February 15, 2013, be modified as
follows:
On page 13, the first paragraph, beginning “Liu argues that” is deleted and the
following paragraph is inserted in its place:
Liu argues that Unity and Sun “ratified” his conversion of these funds by
issuing 1099-MISC tax forms which listed payments to Liu as “Non-
Employee Compensation.” Liu, however, did not introduce these tax forms
into evidence or make this argument at trial. Although Liu attached the
forms to declarations supporting (1) a pre-trial motion regarding
miscellaneous accounting and tax issues he filed in March of 2010 and
(2) his motion for new trial, he did not make his ratification argument in
either motion. Liu thus forfeited the argument on appeal. (Kaufman v.
1
Broad communities, Inc. v. Performance Plastering, Inc. (2006)
136 Cal. App. 4th 212, 226 (Kaufman).) Moreover, even assuming the
argument was not forfeited, we reject it on the merits. Liu cites no legal
authority—and we have found none—to support his argument. The issue is
whether at the time Liu took the money, he committed conversion.
However Sun, Unity or their accountant subsequently classified Liu‟s
withdrawals for tax purposes makes no difference with respect to whether
Liu committed conversion.
There is no change in the judgment.
2
Filed 2/15/13 Liu v. Sun CA2/3 (unmodifed version)
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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
SECOND APPELLATE DISTRICT
DIVISION THREE
JUNWEI LIU, B236305
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. KC053835)
v.
JING SUN et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County,
Robert A. Dukes, Judge. Affirmed.
Jeanne Collachia for Plaintiff and Appellant.
King, Cheng & Miller, Katharine A. Miller and David P. King for Defendants and
Respondents.
_____________________
1
INTRODUCTION
Plaintiff and cross-defendant Junwei Liu appeals a judgment entered against him
and in favor of defendants and cross-complainants Jing Sun and Unity Professional
Insurance Services, Inc. (Unity) after a bench trial. Liu and Sun formed JSL Insurance
Solutions, Inc. (JSL) as a company engaged in the insurance sales business.
Unfortunately, Liu and Sun had many disputes regarding the operation of JSL and Unity,
Sun‟s wholly owned company. In their pleadings, both sides asserted numerous direct
claims against each other, as well as derivative claims on behalf of JSL.1
At trial the two sides presented evidence regarding two very different versions of
events which led to this action. The trial court found Liu‟s testimony not credible and
Sun‟s testimony credible, and then entered a statement of decision and judgment in favor
of Sun and Unity. We affirm.
FACTUTAL AND PROCEDURAL BACKGROUND
1. The Formation of JSL
In February 2007, Liu and Sun met at a seminar where Sun was a speaker. At the
time, Liu was working as a manager at Prudential Financial Planning Services
(Prudential). Sun operated Unity. Both Liu and Sun were licensed insurance brokers and
agents.
According to Sun, Liu solicited her to go into business with him. Sun and Liu
discussed the matter numerous times in the spring and summer of 2007. Liu repeatedly
told Sun that he had many high-net-worth clients at Prudential, that he managed 30 or 40
agents there, and that he had extensive experience recruiting and training agents. Sun
was interested in going into business with Liu because of the clients and agents he could
bring with him from Prudential and because he was an experienced recruiter and trainer.
1
JSL was named as a nominal defendant in both Liu’s second amended complaint and the verified cross-
complaint of Sun and Unity. The company is not a party to this appeal.
2
Sun offered to sell 50 percent of Unity for $125,000. Liu, however, declined this offer
because he did not have sufficient resources.
Eventually Sun and Liu decided to form a new company. They contemplated their
new company would be general agent, that is, an insurance wholesaler which has
contracts directly with insurers and “downline” agents. Unity, by contrast, was an
insurance retailer, which sold insurance directly to customers but did not have contracts
with insurers. As a general agent, a company can make commissions by selling insurance
directly to customers, as well as “overrides” on commissions earned by its downline
agents.
In August or September 2007, Sun and Liu entered into an oral agreement
regarding their contemplated company. While Sun and Liu do not dispute many of the
terms of this agreement, they do dispute the terms relating to Unity. Liu contends Sun
agreed to “close down” Unity. Sun contends the parties agreed Unity could keep its
existing clients and downline agents, and that all new clients and agents would belong to
the newly formed company.
On September 11, 2007, Liu and Sun incorporated JSL and appointed themselves
the officers and directors of the company. At about the time JSL was formed, Liu and
Sun each contributed $20,000 in cash to the company, which was placed in a bank
account held by JSL. Both Liu and Sun were 50 percent shareholders of JSL.
JSL operated out of an office leased by Unity. It also used the furniture and
equipment owned by Unity. According to Sun, Liu agreed that JSL would pay Unity
$28,800 for the furniture and equipment once it had the revenues to make this payment.
Liu contends that they agreed JSL could purchase Unity in its entirety for $28,800.
2. Liu’s Termination from His Position at Prudential
From June to October 2007, Liu‟s boss at Prudential, Jay Skolnick, wrote a series
of letters to him regarding his alleged poor work performance and failure to address
Prudential‟s concerns. In the final letter, dated October 4, 2007, Skolnick advised
Liu he
3
was terminated immediately. According to Sun, she did not know of Prudential‟s
concerns about Liu‟s performance before she agreed to form JSL with him.
3. JSL’s AIG and ING Contracts
Beginning in October 2007, JSL sought to obtain general agency contracts with
two large insurers, AIG and ING. These contracts were critical for JSL because it could
not do any business in its own name without them. While JSL was negotiating with AIG
and ING, JSL made sales “through” Unity. Sun contends that the commissions Unity
earned were paid to JSL. In January 2008, JSL obtained general agency contracts with
AIG and ING.
4. Liu’s Withdrawal of $39,000 in April 2008
At the end of March 2008, Liu submitted an application on behalf of a customer
named Zhou to purchase an AIG life insurance policy. Sun met Zhou before Zhou‟s
application was submitted. Although she thought Zhou was trustworthy because she was
introduced to Zhou by Liu, she was struck by how few questions Zhou asked about the
insurance policy and how little attention Zhou seemed to pay to the matter.
On April 2, 2008, AIG transferred $39,070.24 into JSL‟s bank account. This
payment was for the $38,366.77 commission JSL earned on Zhou‟s policy, plus
commissions for a number of other much smaller sales. Within hours after JSL received
the payment from AIG, Liu withdrew $39,000 from the JSL account.
Liu did not inform Sun of this withdrawal. Sun nevertheless learned about the
withdrawal on the same day because she checked the JSL account balance on line. Sun
was “shocked” by the withdrawal. She was also concerned that JSL could not pay its
bills because there was not enough money in its account. Sun called Liu about the
matter, and he admitted to taking the money.
5. The Second Agreement
Both Sun and Liu agree that they entered into a new oral agreement regarding their
business in April 2008. They tell, however, different tales about that agreement.
4
Under Sun‟s version, she and Liu had meetings regarding Liu‟s withdrawal of
$39,000 and the future of JSL on or about April 3 and 7, 2008. During those meetings,
Sun indicated she did not want to do business with Liu anymore. Liu accused Sun of
wrongfully diverting commissions belonging to JSL to Unity. After Sun reviewed with
Liu the records regarding the commissions, however, Liu conceded that she had not done
so. Liu also admitted he was “wrong” to pay himself $39,000, and promised he would
return the money as soon as possible. However, because Liu stated he needed the money
to take care of his family, Sun didn‟t insist that Liu return the money immediately. 2
Liu convinced Sun to stay in business with him. He also agreed to purchase a
50 percent interest in Unity from Sun for $150,000. Liu persuaded Sun to maintain her
business relationship with him by, inter alia, stating it was “very likely” JSL would earn a
multi-million dollar commission from the sale of a $50 million AIG life insurance policy
to Frank Hu. Hu was a friend of Liu and a former Prudential customer. In April of 2008,
Hu‟s application was still pending. If JSL earned the large commission from Hu‟s policy,
Liu could easily purchase 50 percent of Unity with his share of the commission.
Liu‟s contentions regarding the parties‟ second oral agreement are very different.
He denies that he had a meeting with Sun regarding his $39,000 withdrawal, which he
claims was legitimate. Rather, Liu contends, he and Sun had a meeting to discuss his
discovery that Sun had not closed down Unity. Liu also contends Sun admitted she and
Unity wrongfully took commissions, overrides and bonuses that belonged to JSL. Sun
allegedly agreed to close down Unity and to repay the funds she and Unity wrongfully
took.
It is undisputed that pursuant to the parties‟ second oral agreement, Liu was added
as a signatory to several of Unity‟s bank accounts. Sun contends Liu was not an “owner”
of the accounts.
2
Sun testified that Liu said he need the money “for the families and stuff. So I *Sun+ didn’t really push that
hard. I say, you know, you *Liu+ have to return the money, but I didn’t say the second day or third day.”
5
6. Unity’s and Sun’s Loans to JSL
After Liu‟s withdrawal of $39,000, there was only $100 left in JSL‟s bank
account. Unity thus paid JSL‟s expenses that were due in April 2008. These payments
constituted a “loan” to JSL. Because JSL had a negative cash flow, Sun also made loans
to JSL in May, June and July 2008. According to Sun, she authorized these loans in
reliance on Liu‟s promise to purchase 50 percent of Unity.
7. The Cancellation of Zhou’s Life Insurance Policy and AIG’s Termination of
Its Contract with JSL
Under AIG‟s policy terms, customers have a 10-day “free look” period during
which they can cancel their policy and receive a full refund of premium. According to
Sun, Zhou‟s AIG life insurance policy was never “delivered” to Zhou by Liu. Instead,
during the free look period, Zhou cancelled the policy. AIG thus demanded JSL return
its $38,366.77 commission. Under its contract with AIG, JSL was required to
immediately do so. JSL, however, did not have sufficient funds to pay back the entire
amount at once. AIG thus ultimately terminated its general agency contract with JSL.
8. The Deterioration in the Relationship Between Liu and Sun, and Liu’s
Withdrawals from JSL and Unity Bank Accounts in August 2008
After entering into a second oral agreement with Liu, Sun worked with Hu on his
pending life insurance application. One issue was obtaining a $3.4 million loan to fund
the premium on the policy In order to obtain the loan, Hu needed to produce certain
financial documents. He also needed to obtain a letter from a certified public accountant
(CPA) regarding his financial condition. Unfortunately, there were many delays.
Hu never obtained the necessary letter from a CPA. By June 2008, Sun suspected there
were serious problems with Hu‟s case. Hu‟s application was apparently never approved.
6
Sun was also frustrated by Liu‟s failure to pay her $150,000 for 50 percent of
Unity, as he allegedly promised. At some point, she advised Liu that he needed to pay
the full amount due by the end of July 2008. On August 6, 2008, Sun advised Liu that
she was going to end her business relationship with him as of August 7, 2008. According
to Sun, Liu was “very, very mad” about this development. On August 7, 2008, Sun paid
JSL‟s employee and told the employee not to come back to work.
On August 14, 2008, within a few hours, Liu withdrew all of the funds from five
different bank accounts. First, he withdrew $512.24 out of JSL‟s Bank of America
account, leaving a zero balance. Next, he made withdrawals in the amounts of $128.16
and $3,745.12, for a total of $3,873.28, from Sun‟s two Citibank accounts, closing out
both accounts. Finally, he withdrew $10,275.23 from Unity‟s Comerica Bank account
and $77.12 from JSL‟s Comerica Bank account, leaving a zero balance in both accounts.
Shortly thereafter, on the same day, Liu charged $112.18 on JSL‟s American Express
card to pay for food and alcoholic beverages at a restaurant in Malibu.
Sun also contends that in August 2008, Liu misappropriated two computers from
JSL. Additionally, Sun contends Liu received $500 in cash from a broker-dealer named
Wei Luo, which belonged to JSL. Liu allegedly never paid that money to JSL.
9. Dissolution of JSL
On August 14, 2008—the same day Liu was cleaning out JSL‟s and Unity‟s bank
accounts and apparently celebrating in Malibu—Sun went to an attorney seeking
assistance drafting a notice to Liu of a special shareholders‟ meeting of JSL. The next
day, August 15, 2008, Sun personally served the notice on Liu.
The meeting occurred on August 26, 2008. Liu did not attend. At the meeting,
Sun voted to dissolve JSL.
7
10. Pleadings
In September 2008, Liu filed his initial complaint in this action. Liu‟s operative
pleading, the second amended complaint (SAC), set forth causes of action for breach of
contract, conversion, breach of fiduciary duty, fraud, constructive trust and unfair
competition against Sun and Unity. The SAC set forth claims on behalf of Liu
individually, as well as derivative claims on behalf of JSL. The gravamen of the SAC is
that Sun breached her contract with Liu, and Sun and Unity committed various torts by
transferring new agents recruited by JSL to Unity and by diverting commissions from
JSL to Unity.
Sun and Unity filed a verified cross-complaint against Liu, wherein they pursued
individual and derivative claims on behalf of JSL. The cross-complaint set forth causes
of action for breach of oral contract, fraudulent inducement into contractual relationship,
conversion, and breach of fiduciary duty. In addition to compensatory and punitive
damages, the cross-complaint prayed for injunctive relief, the involuntary dissolution of
JSL, an accounting and a constructive trust.
11. Trial
The superior court held a bench trial on the SAC and cross-complaint in late
August and early September 2010. At the end of the trial, the court orally announced its
findings, most of which were in favor of Sun and Unity. The court also asked the parties
to meet and confer regarding the appointment of a person to conduct an accounting of
JSL‟s finances so that the corporation could be dissolved and wound up.
12. Statement of Decision
Shortly after trial, Liu requested a written statement of decision from the court.
Pursuant to the court‟s order, Sun and Unity prepared a proposed statement of decision.
Liu filed objections to the proposed statement. On November 29, 2010, the trial court
entered the statement of decision proposed by Sun and Unity.
8
The statement of decision provided as follows. For numerous reasons, the court
found Liu was not credible and Sun was credible. The court ruled against Liu on all of
his causes of action. It also found that under the agreement between the parties, Unity
could continue operating with its preexisting business.
Although the court found that Liu did not breach his contract with Sun, it also
found that Liu fraudulently induced Sun to enter into a second agreement with him.
Specifically, the court found that Liu fraudulently promised he would purchase Unity
“without expecting or intending to perform, with the intention instead of gaining access
to funds in accounts that belonged to Sun and Unity and that Liu did indeed thereby gain
access and raided those accounts.” The court further found that “Hu was an illusory
insured and the process of applying for insurance for Hu was a set-up by Liu for the
purpose of Liu being able to raid JSL‟s accounts.” However, the court did not find this
fraudulent inducement by clear and convincing evidence, and thus concluded that
punitive damages were not awardable to Sun.
The court found in Sun‟s favor on her three conversion causes of action. It found
that each of Liu‟s withdrawals on August 14, 2008 and his payment to himself of $39,000
in April 2008, constituted conversion. The court also found that Zhou was an illusory
insured Liu used to set-up his misappropriation of $39,000 in commissions, and that this
was the same scheme “as he was setting up and acting upon with respect to Hu.”
Additionally, the court found that Liu breached his fiduciary duties to both JSL
and Sun by, inter alia, converting JSL‟s funds. This forced Sun and Unity to loan JSL
funds which they did not recover.
The court concluded by stating JSL shall be dissolved “upon the winding up and
an accounting of its assets and liabilities”; that JSL‟s liabilities included a loan from Sun
in the amount of $19,743.67 and a loan from Unity in the amount of $20,583.01; that Liu
personally is holding a trust in the amount of $39,512.24 for the benefit of JSL,
$10,275.53 for the benefit of Unity, and $3,950.28 for the benefit of Sun.
9
13. Motion for New Trial
On April 29, 2011, Liu filed a motion for a new trial on the grounds that (1) there
was an irregularity of the proceedings, (2) newly discovered evidence justified a new
trial, (3) damages were excessive, (4) there was insufficient evidence to support the
court‟s findings, and (5) the court‟s decision was contrary to law. This motion was based
on Code of Civil Procedure section 657, subdivisions 1, 4, 5, 6 and 7. The motion was
not based on an alleged “accident or surprise” pursuant to Code of Civil Procedure
section 657, subdivision 3. On June 13, 2011, the trial court denied the motion on the
merits.
14. Report by Accountant-Referee
Pursuant to Code of Civil Procedure sections 638 and 639, the court appointed
Timothy Thompson as an accountant and referee to perform the final accounting of JSL,
and to prepare the company‟s tax returns. In June 2011, Thompson filed a report on JSL,
as well as draft tax returns. In July 2011, the trial court approved the report.
15. Second Motion for New Trial
On August 2, 2011, Liu filed a notice of motion and motion for new trial. This
second motion for new trial was based on numerous grounds, including Liu‟s contention
that there was an “accident or surprise” within the meaning of Code of Civil Procedure
section 657, subdivision 3. On August 30, 2011, the trial court denied the motion.
16. Judgment and Appeal
On August 30, 2011, the trial court entered judgment in favor of Sun and Unity
and against Liu. Based on the statement of decision and Thompson‟s accounting, the
judgment awarded the cross-complainants damages and constructive trusts against Liu,
dissolved JSL, and required Sun and Liu to make certain payments to third-party
creditors of JSL. Liu filed a timely notice of appeal of the judgment.
10
DISCUSSION
1. Sun Did Not “Ratify” Liu’s Conversion of $39,000
“ „The elements of a conversion are the plaintiff‟s ownership or right to possession
of the property at the time of the conversion; the defendant‟s conversion by a wrongful
act or disposition of property rights; and damages.‟ ” (Farmers Ins. Exchange v. Zerin
(1997) 53 Cal. App. 4th 445, 451.) “Money can be the subject of an action for conversion
if a specific sum capable of identification is involved.” (Id. at p. 452.)
Here, the trial court ruled in Sun‟s favor on her derivative claim for conversion
against Liu. The court expressly and impliedly found that on April 2, 2008, Liu withdrew
$39,000 from JSL‟s Bank of America account without Sun‟s consent or knowledge,
leaving JSL without funds to pay its expenses and liabilities. There was substantial
evidence to support these findings, namely documents relating to the Bank of America
account, including the actual check Liu wrote to himself, and the testimony of Sun and
Liu. Based on its factual findings, the trial court could have reasonably concluded that
each of the elements of conversion were satisfied.
Liu contends that Sun “ratified” his wrongful taking of $39,000 of JSL funds
during conversations she had with him shortly after he took the money. The testimony
Liu cites, however, does not support his argument. Sun testified that she told Liu he had
to “return the money,” but he did not have to do so immediately. This testimony does not
show that Sun gave her consent to Liu‟s conversion before or after he misappropriated
$39,000 from JSL. It merely shows that Sun granted Liu leniency in making amends for
his tortious conduct.
Liu‟s reliance on French v. Smith Booth Usher Co. (1942) 56 Cal. App. 2d 23(French) is misplaced. In French, the plaintiff purchased equipment from the defendant
pursuant to an installment contract. Under the terms of the agreement, the defendant
could take the equipment back if the plaintiff failed to make the payments due. When the
plaintiff advised the defendant he could not make a scheduled payment, the defendant‟s
representative said, “ „Then, according to our agreement, it will be necessary for us to
come and get the equipment,‟ to which plaintiff responded „All right.‟ ” (Id. at p. 27.)
11
The present case is distinguishable from French because Sun did not expressly authorize
Liu to take JSL‟s funds before he did so.
Liu also cites Farrington v. A. Teichert & Son (1943) 59 Cal. App. 2d 468(Farrington) to support his position. In Farrington, the defendant was removing rock,
sand and gravel from a remote area it believed belonged to the City of Los Angeles,
which gave the defendant permission to do so. When the plaintiff first noticed the
defendant‟s operations, he did not object. (Id. at p. 471.) At some point, the plaintiff
suspected that the defendant was removing some materials from plaintiff‟s property.
When the plaintiff and defendant discussed the matter, the plaintiff stated he wanted to be
compensated the reasonable value of any material removed from his land. At no time,
however, did the plaintiff ask the defendant to cease excavating from the gravel pit in
question. (Id. at p. 472.) The present case is clearly distinguishable from Farrington.
Sun never gave Liu her tacit or express permission to withdraw $39,000 from JSL‟s Bank
of America account.
2. Liu Did Not Show That Sun and Unity Ratified His Conversion of Money
in Their Bank Accounts
The trial court found that Liu converted $10,275.53 from Unity‟s Comerica Bank
account and $3,950.283 from Sun‟s accounts at Citibank and Comerica Bank by
withdrawing all of the funds in those accounts on August 14, 2008, without Unity‟s or
Sun‟s permission. There was substantial evidence to support these findings, including
bank statements and related documents and the testimony of Sun and Liu.
3
This sum is apparently based on Liu’s withdrawals of $128.16 and $3745.12 from Sun’s Citibank accounts,
plus his withdrawal of $77.12 from Sun’s Comerica Bank account. The court apparently underestimated the total
by about $0.12.
12
Liu argues that Unity and Sun “ratified” his conversion of these funds by issuing
1099-MISC tax forms which listed payments to Liu as “Non-Employee Compensation.”
Liu, however, did not introduce these tax forms into evidence or make this argument at
trial. Instead, Liu attached the forms to a declaration supporting a pre-trial motion
regarding miscellaneous accounting and tax issues he filed in March of 2010 (tax
motion)4 and to a declaration supporting the second motion for new trial he filed in
August 2011. We cannot, however, consider the 1099-MISC form filed with the tax
motion because Liu did not raise his ratification argument in that motion, and thus
forfeited the argument on appeal. (Kaufman & Broad Communities, Inc. v. Performance
Plastering, Inc. (2006) 136 Cal. App. 4th 212, 226 (Kaufman).) We also cannot consider
the 1099-MISC form filed with the second motion for new trial because, as we explain
post, the trial court did not have jurisdiction to consider the motion. Liu thus did not
meet his burden of showing that Unity and Sun “ratified” his conversion of funds in their
bank accounts by issuing tax forms.
3. The Trial Court Was Not Required to Reject Sun’s Fraudulent Inducement
Claim as a Matter of Law
Liu argues that as a matter of law he did not fraudulently induce Sun into entering
into the second oral agreement. He first contends that the finding in the written statement
of decision that Frank Hu was a “straw man” was not in conformity with the oral
statements the court made at the end of trial, and thus should be disregarded. Liu cites no
legal authority to support his position because there is none. The trial court‟s oral
statements during trial were superseded by its statement of decision, and cannot be
considered as the basis for an appeal. (In re Marriage of Ackerman (2006)
4
This motion was for an order directing Sun, by April 30, 2010, to “(1) File Statement of Information for JSL
Insurance Solutions, Inc. and Pay $663.00 to California Franchise Tax Board; (2) Cooperate with Plaintiff to File Tax
Returns for JSL Insurance Solutions, Inc. for the Years 2008 and 2009;[ and] (3) To Correct/Cancel Form 1099s
Defendant Issued to JSL Solutions, Inc. and Plaintiff Junwei Liu.” The trial court denied this motion on or about
April 28, 2010.
13
146 Cal. App. 4th 191, 203 [“We review the result, not the trial court‟s reasoning, and do
not consider comments by the trial judge”]; Whyte v. Schlage Lock Co. (2002)
101 Cal. App. 4th 1443, 1451 [“Because we review the correctness of the order, and not
the court‟s reasons, we will not consider the court‟s oral comments or use them to
undermine the order ultimately entered”]; Selfridge v. Carnation Co. (1962)
200 Cal. App. 2d 245, 249 [“oral opinions or statements of the court may not be
considered to reverse or impeach the final decision of the court which is conclusively
merged in its findings and judgment”]; Birch v. Mahaney (1955) 137 Cal. App. 2d 584,
588 [“remarks made by a trial judge during a trial or argument, or even an opinion filed
by him, cannot be used to impeach a formal decision, order or judgment later made or
entered”].)
Liu also argues that his alleged misrepresentations about Hu were not actionable
because they related to future events, not existing or past facts. He further argues that
Sun could not have justifiably relied on Liu‟s promise that JSL would obtain a large
commission if Hu obtained a life insurance policy because she knew of facts that reduced
the probability that Hu would obtain such a policy. Both of these arguments miss the
mark.
Liu‟s arguments assume the trial court‟s ruling on Sun‟s fraudulent inducement
cause of action was based solely on its findings regarding Liu‟s misrepresentations
concerning Hu‟s policy. This is simply not true. The trial court also found that Liu never
intended to keep his promise to pay Sun $150,000 for a 50 percent interest in Unity, and
that Sun spent money in reliance on this false promise. There was ample circumstantial
evidence to support these findings, including Sun‟s testimony regarding Liu‟s statements
and conduct, both before and after the second oral agreement, and her expenditures after
Liu‟s false promise. Moreover, the trial court‟s factual findings regarding Liu‟s false
promise to pay Sun $150,000 support a fraud cause of action. (Tarmann v. State Farm
Mut. Auto. Ins. Co. (1991) 2 Cal. App. 4th 153, 158-159 [A false promise to perform in the
future is actionable fraud].)
14
4. Liu Did Not Meet His Burden of Showing the Citibank Accounts Were
Jointly Owned by Liu and Sun
In its statement of decision, the trial court found that Liu converted $3,950.28 in
“Sun‟s [Citibank] accounts.” Although Liu‟s argument is difficult to follow, it appears
he contends that the trial court erroneously found that these accounts were solely owned
by Sun, and that the trial court should have concluded that the accounts were jointly
owned by Sun and Liu.
Liu argues that the “Citibank account” was held jointly by Sun and Liu because it
is the “account where Fortune Securities commission checks were deposited.” JSL and
Fortune Securities, Inc. (Fortune Securities) had a referral agreement whereby Fortune
Securities would pay JSL commissions on the sale of Fortune Securities‟ financial
products to third-party customers. Liu contends that the trial court erroneously concluded
that Sun owned the “Citibank account” based on its erroneous determination that the
agreement between Fortune Securities and JSL was “illegal.”5
We reject Liu‟s argument. The portion of the statement of decision relating to
conversion does not make any findings regarding Fortune Securities, or even mention the
company or its agreement with JSL. Thus there is no basis for Liu‟s assumption that the
trial court made some sort of erroneous finding regarding the legality of the referral
agreement.
Moreover, the only evidence Liu cited to support his argument are documents that
show deposits made into Citibank account number 40045256720 by Liu and Sun. This
was the account from which Liu converted $128.16. The documents do not show any
deposits in Citibank account number 40045256738, which was the account from which
Liu converted $3,745.12. Further, the documents do not show that the deposits were
Fortune Securities commission checks, as Liu contends. Liu therefore cited no evidence
in the record to support his argument that he was a joint owner of the Citibank accounts.
5
Sun testified at trial that she believed the referral agreement was “illegal” because JSL had no broker-
dealer license.
15
5. The Trial Court’s Alleged Erroneous Admission of Character Evidence
Liu contends that the trial court erroneously admitted evidence regarding his
alleged failure at Prudential to properly train and supervise agents who violated the
company‟s policy against money laundering. This evidence, Liu argues, was character
evidence barred by Evidence Code section 1101, subdivision (a).6 We shall analyze
Liu‟s argument by reviewing the evidence regarding money laundering and the context of
its admission.
Liu called himself as the first witness at trial. He testified extensively about his
numerous professional achievements at Prudential and other companies, including the
many awards he received. Several times the court asked why this information was
relevant, to which Liu‟s counsel responded he wanted to prove Liu‟s “background.”
Sun‟s counsel agreed that the testimony was relevant because Sun alleged that Liu
defrauded her by lying about his credentials at Prudential.7
During cross-examination, Sun‟s counsel David King asked Liu questions about a
series of letters Liu received in 2007 from Jay Skolnick, his boss at Prudential. The
letters were dated June 12, July 19, September 14, August 27 and October 4, 2007. King
first asked Liu questions about the letter dated July 19, 2007, which dealt mainly with
Liu‟s alleged poor performance at Prudential. This letter did not state anything about
alleged money laundering, and King‟s questions regarding the letter did not concern the
issue of money laundering.
6
Evidence Code section 1101, subdivision (a) provides: “Except as provided in this section and in Sections
1102, 1103, 1108, and 1109, evidence of a person’s character or a trait of his or her character (whether in the form
of an opinion, evidence of reputation, or evidence of specific instances of his or her conduct) is inadmissible when
offered to prove his or her conduct on a specified occasion.”
7
Sun alleged in her cross-complaint that Liu had no intention of keeping his promise to bring clients and
agents from Prudential and that Liu knew he could not keep this promise.
16
At one point during King‟s questioning regarding the July 19, 2007, letter, Liu‟s
counsel made the following objection: “Objection on the ground that this whole line of
questioning is trying to elicit the information about the witness‟s character . . . .” The
court overruled this objection.
Subsequently, King asked Liu a series of questions about Skolnick‟s letter dated
August 27, 2007. This letter also primarily dealt with Liu‟s alleged poor performance at
Prudential. The letter discussed, inter alia, Liu‟s alleged failure to properly train and
supervise former agents concerning Prudential‟s policies to prevent money laundering.
King asked Liu several questions about the money laundering allegations. Liu‟s counsel,
however, did not object to any of these questions, or the admission into evidence of the
August 27, 2007, letter.
We cannot reverse a judgment on appeal based on the erroneous admission of
evidence unless a timely objection was made to the evidence. (Evid. Code, § 353, subd.
(a).) In this case, Liu did not make a timely objection to the evidence concerning money
laundering. He thus forfeited on appeal any claim of error regarding the admission of
such evidence. 8 (SCI California Funeral Services, Inc. v. Five Bridges Foundation
(2012) 203 Cal. App. 4th 549, 563.)
To the extent Liu relies on his objection to the “line of questioning” regarding the
letter dated July 19, 2007, we review the court‟s ruling for abuse of discretion. (People v.
Jablonski (2006) 37 Cal. 4th 774, 805.) The line of questioning related to Liu‟s alleged
poor performance at Prudential. This evidence was admissible to impeach Liu‟s own
testimony regarding his work performance, as well as Liu‟s credibility. (Evid. Code,
§ 785 [credibility of a witnesses may be attacked], § 1101, subd. (c) [Evidence Code
8
We also cannot reverse a judgment based on the erroneous admission of
evidence unless there was a miscarriage of justice. (Evid. Code, § 353, subd. (b).) In its
statement of decision, the court stated that one of the many reasons it did not find Liu
credible was that he was terminated from Prudential “under allegations of money
laundering . . . .” Because we conclude Liu failed to preserve his objection on appeal, we
do not reach the issue of whether there was a miscarriage of justice.
17
section 1101 does not affect the admissibility of evidence to attack the credibility of a
witness].) We therefore conclude the trial court did not abuse its discretion in overruling
Liu‟s objection to the line of questioning regarding the July 19, 2007, letter.
6. The Trial Court’s Denial of Liu’s Motions for New Trial
a. Standard of Review
Liu argues that the trial court erroneously denied his motions for new trial.
Generally, we review an order denying a motion for new trial for abuse of discretion. 9
(Sandoval v. Los Angeles County Dept. of Public Social Services (2008) 169 Cal. App. 4th
1167, 1176, fn. 6.) “To the extent that the trial court confronted conflicting declarations
in denying the new trial motion, we affirm the trial court‟s factual determinations,
whether express or implied, if supported by substantial evidence.” (Ibid.) If we find the
trial court abused its discretion in denying the motion, we independently review whether
the court‟s error was prejudicial. (Ibid.; accord, Nazari v. Ayrapetyan (2009)
171 Cal. App. 4th 690, 694.)
b. Liu’s Second Motion for New Trial
A trial court does not have jurisdiction to vacate a final order denying a motion for
new trial, regularly made, except for clerical error or to grant relief under Code of Civil
Procedure section 473. (Wenzoski v. Central Banking System, Inc. (1987) 43 Cal. 3d 539,
542; Bloomquist v. Haley (1928) 204 Cal. 258, 260; Uzyel v. Kadisha (2010)
188 Cal. App. 4th 866, 901.) Here, there is no evidence in the record that the trial court‟s
order denying Liu‟s first motion for new trial was the result of clerical error, and there
were no grounds under which to vacate the order pursuant to Code of Civil Procedure
section 473. Indeed, in the trial court, Liu did not attempt to vacate the order and did not
argue there was any clerical error or mistake. Accordingly, regardless of the merits of
Liu‟s second motion for new trial, the trial court did not abuse its discretion in denying it.
9
An order denying a motion for new trial is not independently appealable but may be reviewed on appeal
from the underlying judgment. (Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35
Cal. 4th 15, 19.)
18
c. Accident or Surprise
Liu argues that the trial court should have granted him a new trial because there
was an “[a]ccident or surprise, which ordinary prudence could not have guarded against.”
(Code Civ. Proc., § 657, subd. 3.) According to Liu, this accident or surprise consisted of
two categories of evidence admitted at trial: (1) evidence regarding Liu‟s alleged failure
to properly supervise and train agents regarding money laundering; and (2) evidence
regarding payments Sun claimed were loans to JSL. Liu, however, did not make this
argument in his first motion for new trial, and thus forfeited the claim of error on appeal.
(Kaufman, supra, 136 Cal.App.4th at p. 226.)
Additionally, before the trial commenced Sun argued in her trial brief that Liu
“was found . . . to have violated Prudential‟s policies against money laundering.” Sun
also argued in her trial brief that after Liu converted $39,000 of JSL‟s funds, she and
Unity were compelled to cover JSL‟s obligations, “and their doing so became loans to
JSL.” Thus evidence regarding money laundering and loans from Sun to JSL was not
admitted by “accident.” Further, Liu did not argue before or during trial that he was
surprised by such evidence, or that he needed a continuance of the trial in order to
respond to it. “It is well settled that a party‟s right to a new trial upon the ground of
surprise is waived if the alleged surprise is not called to the court‟s attention by a motion
for a continuance or other relief.” (Noble v. Tweedy (1949) 90 Cal. App. 2d 738, 742.)
d. Newly Discovered Evidence
A motion for new trial can be granted if there is “[n]ewly discovered evidence,
material for the party making the application, which he could not, with reasonable
diligence, have discovered and produced at the trial.” (Code Civ. Proc., § 657, subd. 4.)
Liu contends that he presented such evidence in his first motion for new trial. This
evidence consisted of a U5 form filed by Prudential with the Financial Industry
Regulatory Authority after Liu‟s termination. Liu contends that the U5 form indicates he
was terminated for poor performance, and not for money laundering.
19
The trial court rejected Liu‟s argument for two main reasons. First, Liu admitted
in his deposition that he obtained the U5 form 30 days after his termination by Prudential,
long before the commencement of the trial. Second, the trial court stated that the U5
form “would not have altered the court‟s opinion about Liu‟s credibility. Liu[‟]s acts of
bleeding the JSL accounts indicate that he is less than trustworthy, and he was
continually impeached, both in trial and based upon his inconsistent deposition
testimony. Nothing in the „U5‟ notice alters the court‟s findings and the underlying
rational of the court as the trier of fact.”
We hold that the trial court did not abuse its discretion in denying Liu‟s motion for
new trial on the ground of newly discovered evidence. Liu‟s deposition testimony
indicates that the evidence was not, in fact, “newly discovered.”10 Further, even if the
trial court had considered the U5 form at trial, it would have reached the same conclusion
regarding Liu‟s credibility based on numerous other factors. The evidence therefore was
not sufficiently “material” to compel the trial court to grant Liu‟s motion.
e. Insufficiency of the Evidence
Liu argues that the trial court should have granted his motion for new trial because
there was insufficient evidence to support its decision. (Code Civ. Proc., § 657, subd. 6.)
He first contends that Sun‟s “[c]laim to ownership of 100% of commission checks from
Fortune Securities is not supported by substantial evidence.” Liu does not cite, however,
anything in the record indicating that the trial court made a finding regarding the
ownership of Fortune Securities commission checks, or that it based its judgment on such
a finding. Liu thus fails to make a coherent legal argument for reversing the judgment
based on Sun‟s alleged claim regarding these checks.
10
Liu did not include the transcript of his deposition testimony in the appellant’s appendix on the ground
that it was “not relevant to the issues on appeal.” The pages of the transcript cited by the trial court, however,
were included in the respondents’ appendix.
20
Liu also argues that there was no substantial evidence supporting the trial court‟s
findings that Sun and Unity made loans to JSL. “When a trial court‟s factual
determination is attacked on the ground that there is no substantial evidence to sustain it,
the power of an appellate court begins and ends with the determination as to whether, on
the entire record, there is substantial evidence, contradicted or uncontradicted, which will
support the determination, and when two or more inferences can reasonably be deduced
from the facts, a reviewing court is without power to substitute its deductions for those of
the trial court. If such substantial evidence be found, it is of no consequence that the trial
court believing other evidence, or drawing other reasonable inferences, might have
reached a contrary conclusion.” (Bowers v. Bernards (1984) 150 Cal. App. 3d 870, 873-
874.)
Turning to the evidence of defendants‟ loans to JSL, Liu admits that Sun testified
regarding these loans, but claims that this testimony was insufficient as a matter of law
because she did not provide “backup documentation” for her testimony. Liu does not cite
any legal authority to support this argument because there is none. The trial court, as the
trier of fact, was free to believe or disbelieve Sun‟s testimony, whether or not she
provided any “backup documentation.”
Moreover, Sun and Unity produced documentary evidence of their loans,
including written summaries of payments they made on behalf of JSL and copies of
checks, bank statements, invoices and other documents indicating the payments were
made. Liu‟s argument that there was no substantial evidence to support the trial court‟s
findings regarding Sun‟s and Unity‟s loans to JSL is totally without merit.
21
7. Objections to the Referee’s Report
Liu argues that there were “serious accounting issues” presented by Thompson‟s
accounting report on JSL. After reviewing these issues in great detail over almost five
pages of his opening brief, Liu accused Thompson of “merely rubber stamp[ing]” Sun‟s
position. Liu does not, however, present a coherent legal argument as to why the trial
court committed reversible error in connection with Thompson‟s report. He thus does not
meet his burden of showing such error.
DISPOSITION
The judgment is affirmed. Respondents Jing Sun and Unity Professional
Insurance Services, Inc. are awarded costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KITCHING, J.
We concur:
KLEIN, P. J.
ALDRICH, J.
22