Personalized Workout of La Jolla v. Ravet CA4/1 ( 2014 )

Filed 1/9/14 Personalized Workout of La Jolla v. Ravet CA4/1
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PERSONALIZED WORKOUT OF LA D060244
JOLLA, INC., et al.,
Plaintiffs and Respondents
(Super. Ct. No. 37-2009-00099074-
v. CU-FR-CTL)
GARY RAVET, et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of San Diego County, Ronald L.
Styn, Judge. Affirmed as modified.
Wirtz Law, Richard M. Wirtz; Law Offices of Mary A. Lehman and Mary A.
Lehman for Defendants and Appellants.
Boudreau Williams and Jon R. Williams for Plaintiffs and Respondents.
This case is the latest chapter in the bitter saga between Personalized Workout of
La Jolla, Inc. and Nathan Poole (together plaintiffs) on the one hand, and Gary Ravet
(Ravet) on the other. The conflict began as a dispute over membership fees to a health
club. After Ravet's suit based on the health club fees disagreement proved unsuccessful,
plaintiffs sued Ravet for malicious prosecution and received a judgment for money
damages. Believing Ravet was hiding his assets to thwart their ability to collect that
judgment, plaintiffs filed suit, under the Uniform Fraudulent Transfer Act (Civ. Code,1
§ 3439, et seq. (UFTA)), against Ravet, his parents, his two sons, his former girlfriend,
and three trusts.
The fraudulent transfers involved certain real property commonly known as 1441
Cottontail Lane, La Jolla (Cottontail), which Ravet and his parents purchased. After they
purchased the property, they immediately transferred it to the Gary K. Ravet Children's
Trust2 (Children's Trust), and then Ravet, as trustee of the Children's Trust, placed
successive liens on Cottontail. In addition, plaintiffs made two additional claims under
the UFTA involving the transfer of Ravet's ownership interest in Degalopa LLC
(Degalopa).
The case proceeded to a jury trial where the jury agreed with plaintiffs and
awarded them compensatory and punitive damages against several of the defendants.
The court ultimately entered judgment based on the jury's verdict, confirming the jury's
award of compensatory and punitive damages against Shirley Ravet (Ravet's mother), the
estate of Emanuel Ravet (Ravet's father), Dorota Pearson (Ravet's former girlfriend), and
1 Statutory references are to the Civil Code unless otherwise specified.
2 The proper name of the trust contains an apostrophe in Children's. Although the
apostrophe is omitted in material in the record, we use the correct name in this opinion.
2
the Children's Trust. Although the jury found Ravet liable for the compensatory damages
awarded, the judgment did not include compensatory damages as to Ravet, but it did
provide for punitive damages against him. Ravet,3 Shirley, and Pearson timely
appealed.4
Ravet individually, as well as in his capacity as trustee of the Children's Trust and
trustee of the Separate Property Trust, contends the judgment must be reversed because
the Children's Trust cannot be sued or be liable for a fraudulent conveyance as a matter of
law, and therefore, its presence as a defendant "poisoned" the rest of the trial. He also
asserts the trial court improperly instructed the jury to allow it to find Ravet liable as the
transferee of his own debt. In addition, Ravet maintains the trial court committed
prejudicial error by failing to admit evidence that plaintiffs' dispute with Ravet began
over an $867 claim. Finally, he insists that the punitive damages awarded against him
were excessive and the judgment should be reversed because of jury misconduct.
We agree with Ravet that a judgment against a trust is unenforceable. (Portico
Management Group, LLC v. Harrison (2011) 202 Cal. App. 4th 464, 473 (Portico).)
However, Ravet concedes and the record reflects that the Children's Trust only acted
3 Ravet appeals on behalf of himself individually as well as in his capacity as trustee
of the Children's Trust and the Gary K. Ravet Separate Property Trust (the Separate
Property Trust).
4 During the course of this appeal, Shirley Ravet passed away. Barry C. Fitzpatrick,
trustee of the Northern Trustee Company and trustee of the Northern Trust Company of
Delaware became the substitute appellants for Shirley. These substitute appellants as
well as Pearson stipulated with plaintiffs to dismiss their appeals. As such, we dismissed
their appeals on October 16, 2013. Ravet, individually and as trustee of the two trusts,
remains the only appellant.
3
through its trustee, Ravet. Therefore, the evidence plaintiffs offered at trial to show
wrongdoing by the trust is the very same that showed Ravet, as trustee, was engaging in
improper conduct. We thus modify the judgment to award damages against Ravet in his
capacity as trustee of the Children's Trust instead of leaving the judgment unenforceable
against the Children's Trust.
We reject Ravet's remaining contentions and affirm the judgment as modified.
FACTUAL AND PROCEDURAL HISTORY
A. The Underlying Malicious Prosecution Claim
Plaintiffs filed a malicious prosecution action against Ravet in 2003. Trial
commenced in March 2007, and on April 2, 2007, resulted in a compensatory and
punitive damages verdict in favor of plaintiffs against Ravet. Judgment for $383,654 was
entered against Ravet on February 26, 2008.
B. The Operative Complaint
Plaintiffs' operative complaint alleges a single cause of action involving
allegations of fraudulent conveyance, conspiracy to engage in fraudulent conveyance, and
aiding and abetting in fraudulent conveyance. In the body of the complaint, plaintiffs
include allegations against the following defendants: Ravet, the Children's Trust, the
Separate Property Trust, Shirley, Emanuel,5 the Ravet Family Trust dated 10/25/02
5 Emanuel passed away and plaintiffs proceeded against Emanuel's estate.
4
(Ravet Family Trust),6 Brandon Ravet (Brandon), Stephen Ravet (Stephen),7 and
Pearson. Although not clear in the body of the operative complaint, the caption indicates
that plaintiffs are suing Ravet individually and as trustee of the Children's Trust. The
complaint also includes allegations that the Children's Trust and the Separate Property
Trust are the alter egos of Ravet and that both trusts are mere shells that allow Ravet to
avoid his debts.
At trial, plaintiffs did not proceed against Ravet as the trustee of the Children's
Trust, but instead, tried the case against the Children's Trust itself. In addition, plaintiffs
did not ask the trial court or the jury to make any determination regarding the alter ego
allegations.
C. Transactions Relating to Cottontail
1. Ravet Family Transactions
Ravet had a romantic relationship with Deborah Ford. Ford owned Cottontail.
Ravet moved into the Cottontail house with Ford in late November 2004. He contributed
at least $500,000 to remodeling Cottontail, but was never put on record title with Ford.
After Ford and Ravet ended their relationship, Ford sold Cottontail to Ravet and
his parents for $3.395 million. Toward that purchase price, Ravet was credited with
6 The Ravet Family Trust was a revocable trust settled by Emanuel and Shirley for
their own benefit. Emanuel and Shirley were the settlors, beneficiaries, and cotrustees of
this revocable trust during the transactions at issue here. Thus, the distinction among the
Ravet Family Trust, Emanuel and Shirley as cotrustees of that trust, and Emanuel and
Shirley as individuals does not matter for purposes of our analysis here. (Cf. Galdjie v.
Darwish (2003) 113 Cal. App. 4th 1331, 1349-1350 (Galdjie).)
7 Brandon and Stephen are Ravet's sons.
5
$500,000 for funds paid for construction on the home. Shirley and Emanuel applied for a
loan from a commercial lender, the proceeds of which, $2.5 million, were used to pay
part of the purchase price.
The remainder of the purchase price (plus settlement costs) was paid with the
senior Ravets' cash deposit of $445,000. Ravet and his parents received a deed to
Cottontail from Ford recorded July 10, 2006. The commercial lender received a deed of
trust encumbering the property to secure repayment of its $2.5 million loan.
On July 11, 2006, the three Ravets quitclaimed Cottontail to "Gary K. Ravet as
trustee of the Gary K. Ravet Children's Trust dated January 4, 1998." The Children's
Trust is an irrevocable trust established by Shirley and Emanuel with Ravet as trustee and
Stephen and Brandon as the beneficiaries. There was no evidence that Ravet received
any consideration for transferring his interest in Cottontail to the Children's Trust.
On July 25, 2006, Ravet as trustee of the Children's Trust encumbered the property
with a deed of trust to the Ravet Family Trust securing $850,000. At the time, the Ravet
Family Trust was a revocable trust of which Shirley and Emanuel were trustees and
beneficiaries. Ravet explained the Ravet Family Trust transaction as documenting the
Children's Trust's assumption of his personal liability to his parents, and his parents'
$415,000 cash contribution to the purchase from Ford.8
On the same day, Ravet as trustee of the Children's Trust, encumbered Cottontail
with two deeds of trust to his sons, Brandon and Stephen, each securing $50,000. When
8 At trial, evidence was presented that the Children's Trust contributed $30,000 of
the $445,000 cash the senior Ravets provided to purchase Cottontail.
6
the Ravet Family transactions occurred in July 2006, plaintiffs' malicious prosecution
trial against Ravet was set for July 28, 2006.
The Children's Trust made the loan payments for Cottontail from December 2006
to June 2008. Ravet, Brandon, and Stephen lived in the Cottontail home during this time.
2. Pearson Transactions
After the Ford buyout, Pearson and Ravet developed a romantic relationship and
saw one another often, with Pearson sometimes spending the night at the Cottontail house
but not living there. Pearson wrote and delivered several checks to Ravet and the
Children's Trust, which were deposited in the account of the Children's Trust. The total
amount of the checks was $254,750. Ravet as trustee of the Children's Trust granted
Pearson a deed of trust (Pearson deed of trust) on Cottontail recorded April 11, 2007.
The deed of trust recites it secures four separate promissory notes for a total amount of
$230,000. Because Pearson is no longer an appellant in this action, we omit any further
discussion of her interactions with Ravet or the Children's Trust.
D. Cottontail's Value and Repayment of the Loans
The lawsuit giving rise to the primary judgment at issue in this case resulted in a
judgment against Ravet in the amount of $381,480.24 entered on February 26, 2008. As
such, plaintiffs could commence collection efforts on the 2008 judgment as of
February 26, 2008. An abstract of judgment was recorded July 20, 2009. Up to the time
of trial, plaintiffs' sole efforts to collect their judgment against Ravet consisted of
recording the abstract, defending the judgment on appeal, and prosecuting the UFTA
case.
7
Cottontail was appraised at a value of $4 million as of November 18, 2005. Ford
thought it was still worth more than the purchase price when she sold it, and others
thought it was worth the $3.395 million purchase price. Thus, the property's value
exceeded the $2.5 million loan against it by $895,000 to $1.5 million.
As owner of Cottontail, Ravet gave an opinion Cottontail's value declined at least
$1 million between the July 2006 purchase and the February 2008 judgment. As of trial,
in his opinion, Cottontail was worth less than the first priority loan. The assessed value
of Cottontail in 2009 was $2.5 million.
Ravet testified that the Children's Trust made several payments to Brandon, but
failed to provide any documentation of the payments. Ravet also claimed to have made
about $100,000 in payments on the $850,000 note in favor of the Ravet Family Trust, but
again, produced no documentation of the payments.9
C. Degalopa
Degalopa is a limited liability company created by Emanuel and Shirley in 1998
primarily as a real estate investment company. Degalopa is named after the first two
letters of the names of Emanuel and Shirley's four children. Emanuel and Shirley were
financially well off and generous with giving and/or loaning money to their children. In
9 In his opening brief, Ravet claims that the Children's Trust paid $100,000 on the
$850,000 note. As support for this proposition, Ravet cites to trial exhibit 111, which
purports to be proof of a wire transfer of $100,000. Ravet, however, fails to indicate
where this exhibit was discussed in the record or if the exhibit was entered into evidence.
Exhibit 111 is unclear if it actually indicates that the Children's Trust made a payment on
the subject note. We have no obligation to scour the record to find support for Ravet's
arguments. (See Nous v. Cuba (2004) 122 Cal. App. 4th 1229, 1246.)
8
1998, Emanuel and Shirley gave all their children, including Ravet, a 10 percent interest
in Degalopa.
In July 2006, Gary assigned his 10 percent interest to the Children's Trust. About
a month later, in August 2006, Shirley and Emanuel gave all of their children an
additional interest in Degalopa, including another 10 percent interest to Gary. This 10
percent interest was appraised for gift tax purposes at $332,800. In late 2007, Emanuel
and Shirley, through the Ravet Family Trust, agreed to buy back the 20 percent interest in
Degalopa they had given to Ravet. All parties apparently believed the Children's Trust
owned the entire 20 percent of Degalopa that had been transferred to Ravet. The
evidence at trial showed, however, that Ravet had never transferred his second gift of 10
percent in Degalopa to the Children's Trust, although he thought he had. Accordingly,
Emanuel and Shirley believed, by the terms of the transaction, they were purchasing 20
percent of Degalopa from the Children's Trust for $665,600, the full appraised value of
20 percent. Instead of paying cash, the parties agreed the Children's Trust would get a
credit of $665,600 towards the $850,000 Cottontail note it owed to the Ravet Family
Trust.
E. The Trial
Plaintiffs filed their fraudulent conveyance action on September 24, 2009.
Although their original complaint named several trusts themselves as defendants, the
complaint was subsequently amended multiple times and named the trustees of the
subject trusts as defendants.
9
After numerous challenges to the pleadings, the matter proceeded to trial. The
jury was asked to complete a special verdict form consisting of seven questions
concerning liability and one question related to punitive damages. Both the jury
instructions and the special verdict did not refer to any trustees as defendants, but instead
listed three different trusts as defendants. In answering the first seven questions of the
special verdict form, the jury found that: (1) Ravet's transfer of his interest in Cottontail
to the Children's Trust was a fraudulent conveyance and that the Children's Trust both
aided and abetted Ravet and conspired with Ravet to make the fraudulent conveyance; (2)
the encumbrance by the Children's Trust of Cottontail with the $850,000 deed of trust in
favor of the Ravet Family Trust was a fraudulent conveyance and Ravet, the Children's
Trust, Emanuel, and the Ravet Family Trust all aided and abetted the conveyance as well
as conspired to make the conveyance; (3) the encumbrances of the Children's Trust of
Cottontail with two $50,000 deeds of trust in favor of Brandon and Stephen respectively
were fraudulent conveyances and Ravet and the Children's Trust both aided and abetted
the conveyances and conspired to make the conveyances; (4) the encumbrance by the
Children's Trust of Cottontail with the $230,000 deed of trust in favor of Pearson was a
fraudulent conveyance and Ravet, the Children's Trust, and Pearson aided and abetted the
conveyance and conspired to make the conveyance; (5) Ravet's and/or the Gary Ravet
Separate Property Trust's transfer of the interest in Degalopa to the Children's Trust was a
fraudulent conveyance and Ravet and the Children's Trust both aided and abetted the
conveyance and conspired to make the conveyance; and (6) the Children's Trust's transfer
of its interest in Degalopa to the Ravet Family Trust was a fraudulent conveyance and
10
Ravet, the Children's Trust, Shirley, Emanuel, and the Ravet Family Trust all aided and
abetted the conveyance and conspired to make the conveyance. The jury found plaintiffs
were damaged in the amount of $383,654 plus interest of $105 per day beginning
February 26, 2008.
The jury also found that Ravet, the Children's Trust, Emanuel, the Ravet Family
Trust, the Separate Property Trust, and Pearson acted with malice. After hearing
additional evidence, the jury awarded punitive damages against Ravet and the Children's
Trust in the amount of $500,000 and against Pearson in the amount of $250,000.
F. Judgment and Postjudgment Motions
The court entered judgment incorporating the special verdict, but the judgment
eliminated awards against the Children's Trust. Shirley, Emanuel's estate, the Ravet
Family Trust, Ravet, and Pearson brought posttrial motions.
While the posttrial motions were pending, plaintiffs moved to amend the judgment
nunc pro tunc based on clerical error. The ground for the motion was the court clerically
erred in striking all relief against the Children's Trust. As determined at a prior ex parte
hearing, only the phrase "Gary Ravet, as Trustee of the" should have been eliminated.
The court granted the motion. Its order expressly memorialized a decision to enter
judgment against the Children's Trust (i.e., as a named entity in its own right), not against
Ravet as trustee of that trust. An amended judgment was entered providing for the relief
against the Children's Trust awarded in the special verdict.
11
The court denied the various posttrial motions. On the same day, it conditionally
granted Pearson's motion for a new trial unless plaintiffs accepted reduction of
compensatory damages to $230,000. Plaintiffs consented to the reduction in damages.
The court subsequently entered an amended judgment, which restored awards
against the Children's Trust and reduced the amount of damages against Pearson. In all
other respects, the amended judgment was the same as the judgment the court previously
entered.
Ravet timely appealed.
DISCUSSION
I
THE UFTA AND TRUSTS
A. The UFTA
The gravamen of plaintiffs' operative complaint was that the defendants violated
the UFTA. "The UFTA was enacted in 1986; it is the most recent in a line of statutes
dating to the reign of Queen Elizabeth I." (Mejia v. Reed (2003) 31 Cal. 4th 657, 664
(Mejia).) The statute was "designed . . . for the protection of creditors." (Lewis v.
Superior Court (1994) 30 Cal. App. 4th 1850, 1873, italics omitted; accord Mejia, supra,
at p. 668 ["The California Legislature has a general policy of protecting creditors from
fraudulent transfers."].) The statute " 'is remedial and as such should be liberally
construed.' " (Cortez v. Vogt (1997) 52 Cal. App. 4th 917, 937 (Cortez).)
The UFTA "permits defrauded creditors to reach property in the hands of a
transferee." (Mejia, supra, 31 Cal.4th at p. 663.) A fraudulent transfer under the UFTA
12
involves " ' "a transfer by the debtor of property to a third person undertaken with the
intent to prevent a creditor from reaching that interest to satisfy its claim." ' [Citation.]"
(Filip v. Bucurenciu (2005) 129 Cal. App. 4th 825, 829 (Filip).) The transferee "holds
only an apparent title [to the transferred property], a mere cloak under which is hidden
the hideous skeleton of deceit, the real owner being the scheming and shifty judgment
debtor . . . ." (Cortez, supra, 52 Cal.App.4th at p. 936.)
"Under the Fraudulent Transfer Act (Civ. Code, §§ 3439-3439.12), a transfer of
assets made by a debtor is fraudulent as to a creditor, whether the creditor's claim arose
before or after the transfer, if the debtor made the transfer (1) with an actual intent to
hinder, delay or defraud any creditor, or (2) without receiving reasonably equivalent
value in return, and either (a) was engaged in or about to engage in a business or
transaction for which the debtor's assets were unreasonably small, or (b) intended to, or
reasonably believed, or reasonably should have believed, that he or she would incur debts
beyond his or her ability to pay as they became due." (Monastra v. Konica Business
Machines, U.S.A., Inc. (1996) 43 Cal. App. 4th 1628, 1635 (Monastra).)10 A creditor
seeking to set aside a transfer as fraudulent under section 3439.04 may satisfy either
subdivision (a)(1) by showing actual intent, or subdivision (a)(2) by showing constructive
fraud. (Monastra, supra, 43 Cal.App.4th at p. 1635; Annod Corp. v. Hamilton & Samuels
(2002) 100 Cal. App. 4th 1286, 1294; see Reddy v. Gonzalez (1992) 8 Cal. App. 4th 118,
10 In 2004, after Monastra, supra, 43 Cal. App. 4th 1628, the Legislature rewrote
section 3439.04. The amendment changed the numbering and lettering, but not the
wording, of what is now subdivision (a)(1) and (a)(2). (Stats. 2004, ch. 50, § 1, p. 204.)
13
122-123.) "Hence, subd[ivision] (a)[(1)] is independent of subd[ivision (a)(2)], and does
not require proof of anything more than an actual intent to defraud." (2 Miller & Starr,
Cal. Real Estate Digest 3d (2013) Fraudulent Conveyances and Transfers, § 5.) It is
sufficient to demonstrate that the transfer was made with the " 'actual intent to hinder,
delay, or defraud any creditor of the debtor.' (§ 3439.04, subd. (a)(1).)" (Filip, supra,
129 Cal.App.4th at p. 834.)
To the extent a transfer is voidable in an action by a creditor under the UFTA, the
creditor may recover judgment for the value of the asset transferred11 or the amount
necessary to satisfy the creditor's claim, whichever is less. (§ 3439.08, subd. (b).) The
UFTA allows a judgment to be entered against the first transferee of the asset, the person
for whose benefit the transfer was made, and any subsequent transferee other than a good
faith transferee who took for value or from any subsequent transferee. (§ 3439.08,
subd. (b)(1) & (2).)
B. The Fraudulent Transfers
The UFTA broadly and inclusively defines a "transfer" as follows: " 'Transfer'
means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of
disposing of or parting with an asset or an interest in an asset, and includes payment of
money, release, lease, and creation of a lien or other encumbrance." (§ 3439.01,
subd. (i).)
11 "If the judgment . . . is based upon the value of the asset transferred, the judgment
shall be for an amount equal to the value of the asset at the time of the transfer, subject to
adjustment as the equities may require." (§ 3439.08, subd. (c).)
14
At trial, plaintiffs challenged seven transactions as fraudulent transfers: (1) the
transfer of Cottontail from Ravet and his parents to the Children's Trust; (2) the
encumbrance of Cottontail with a $850,000 lien secured by a deed of trust signed by
Ravet as trustee of the Children's Trust in favor of the Ravet Family Trust; (3) the
encumbrance of Cottontail with a $50,000 lien secured by a deed of trust signed by Ravet
as trustee of the Children's Trust in favor of Stephen; (4) the encumbrance of Cottontail
with a $50,000 lien secured by a deed of trust signed by Ravet as trustee of the Children's
Trust in favor of Brandon; (5) the encumbrance of Cottontail with a $230,000 lien
secured by a deed of trust signed by Ravet as trustee of the Children's Trust in favor of
Pearson; (6) the transfer of an interest in Degalopa from Ravet to the Children's Trust;
and (7) the transfer of an interest in Degalopa from the Children's Trust to the Ravet
Family Trust.
C. The Children's Trust as a Defendant
Ravet contends that the trial court erred in providing jury instructions and a special
verdict form that named the Children's Trust as a defendant. Ravet further argues these
errors were prejudicial because they "poisoned the entire case" and it is reasonably
probable a different result might have been reached in the absence of those errors. At the
heart of Ravet's argument is the principle that a trust may not be a party in a lawsuit. He
is correct.
Our colleagues in the Third District recently noted:
"In contrast to a corporation, which the law often deems a person, a
trust is not a person but rather ' "a fiduciary relationship with respect
to property." [Citations.]' [Citation.] 'Legal title to property owned
15
by a trust is held by the trustee. . . . A trust . . . "is simply a
collection of assets and liabilities." ' [Citation.] '[A]n ordinary
express trust is not an entity separate from its trustees.' [Citation.]
[¶] A trust itself cannot sue or be sued. [Citation.] 'As a general
rule, the trustee is the real party in interest with standing to sue and
defend on the trust's behalf. [Citations.]' [Citation.] 'A claim based
on a contract entered into by a trustee in the trustee's representative
capacity, . . . may be asserted against the trust by proceeding against
the trustee in the trustee's representative capacity . . . .' [Citation.]"
(Portico, supra, 202 Cal.App.4th at p. 473, italics omitted.)
Plaintiffs do not address Ravet's point that a trust cannot be sued. Instead,
plaintiffs argue we should not reach the merits of this issue because Ravet invited the
error. (See Norgart v. Upjohn Co. (1999) 21 Cal. 4th 383, 403 (Norgart) [" 'Where a
party by his conduct induces the commission of error, he is estopped from asserting it as
a ground for reversal' on appeal."]; K.C. Multimedia, Inc. v. Bank of America Technology
& Operations, Inc. (2009) 171 Cal. App. 4th 939, 950.) We agree with plaintiffs that
Ravet "invited the error" as to the special verdict form.
The special verdict form given to the jury refers to the Children's Trust as a
defendant. It asks the jury to determine if the Children's Trust aided and abetted and/or
conspired to engage in certain fraudulent transfers. Ravet now claims this special verdict
was improper because it lists the Children's Trust as a defendant. Ravet, however,
committed the same mistake in his proposed special verdict. Ravet's proposed special
verdict consisted of 56 pages and included over 200 questions. However, nowhere did it
refer to the trustee of the Children's Trust as a defendant. It too focused on the trust not
the trustee in asking the jury to decide if the conduct of the Children's Trust was a
substantial factor in causing the harm to plaintiffs. As such, the special verdict provided
16
to the jury and the proposed special verdict Ravet offered suffered from the same defect:
treating the Children's Trust as an entity capable of being sued. In other words, Ravet
asked the trial court to make the very mistake he now challenges. Thus, he invited the
error and is estopped from challenging it here. (Norgart, supra, 21 Cal.4th at p. 403.)
The jury instructions also indentified the Children's Trust as a defendant. There is
nothing in the record that indicates Ravet objected to the naming of the Children's Trust
as a defendant in the jury instructions. He does not argue that he did so. As such, we
determine that he has forfeited this claim on appeal by failing to object to the jury
instructions to the extent they named the Children's Trust as a defendant. (See Sperber v.
Robinson (1994) 26 Cal. App. 4th 736, 742-743.)
In an effort to refute plaintiffs' claim that he invited the error, Ravet contends that
he and the Children's Trust argued and brought motions prior to trial and during trial
asserting the Children's Trust was not a proper party and could not be liable for Ravet's
debts. None of Ravet's citations to the record support his position. The pleadings and
arguments do not contain the assertion Ravet advances here, namely the Children's Trust
cannot be a defendant. The first instance in the record where he raises such an argument
is after the jury found the Children's Trust liable when Ravet objected to the proposed
judgment on special verdict.
Plaintiffs assert that the Children's Trust was "properly included in the Special
Verdict and Final Amended Judgment." They, however, fail to provide any authority for
their position. Our independent research uncovered none. To the contrary, it is
abundantly clear under California law that "[a] judgment against a trust, rather than
17
against its trustees, is not enforceable." (Portico, supra, 202 Cal.App.4th at p. 476.)
Nothing in this opinion should be read to alter this rule in any way. Thus, the judgment
in its current form is unenforceable as to the Children's Trust.
On the record before us, we are puzzled why plaintiffs chose to proceed against
the Children's Trust instead of the trustee of that trust. Although the Court of Appeal had
not issued its opinion in Portico, supra, 202 Cal. App. 4th 464 at the time this matter went
to trial, there existed several cases indicating that a trust is not a proper defendant. (See
Presta v. Tepper (2009) 179 Cal. App. 4th 909, 914; Estate of Bowles (2008) 169
Cal. App. 4th 684, 691; cf. Galdjie, supra, 113 Cal.App.4th at pp. 1343-1344; Powers v.
Ashton (1975) 45 Cal. App. 3d 783, 787.) Despite these cases, plaintiffs proceeded against
the Children's Trust itself.
No party here offers a sufficient explanation why plaintiffs pursued this strategy.
There is some reference in the record regarding the parties wanting to avoid confusing the
jury if Ravet was a defendant as both an individual and in his capacity as the trustee of
the Children's Trust. It appears all the parties agreed (at least tacitly) that the matter
would proceed against the Children's Trust and not the trustee. However, the fact that all
the parties in the underlying trial agreed to a special verdict and jury instruction
identifying the Children's Trust as a defendant does not change the law. (Cf. Portico,
supra, 202 Cal.App.4th at p. 476 [The arbitrator improperly made an award against a
trust and the court noted that "[t]he arbitrator did not have the power to change the
law."].)
18
Although Ravet has either invited the error or forfeited his claims as to the error of
including the Children's Trust as a defendant and plaintiffs maintain the judgment is
proper, we see little value in leaving the judgment in its current, unenforceable form as to
the Children's Trust. Such a result would be unfair and a waste of judicial resources as
well as the valuable time and effort of the jury. To this end, we requested supplemental
briefing from the parties regarding whether we could modify the judgment to award
damages against Ravet, as trustee of the Children's Trust, in place of the Children's Trust.
Ravet, on behalf of himself individually and as trustee of the Children's Trust,
answered our question in the negative. Ravet's response, however, was conclusory and
simply reiterated many of the points he made in his opening and reply briefs here.
Plaintiffs' supplemental letter brief was curious. Plaintiffs informed us that there
was no need to modify the judgment because the superior court had already done so when
it amended the judgment on April 11, 2012 (the second amended judgment).12 Plaintiffs
then faulted Ravet for failing to bring the second amended judgment to our attention
because it was entered prior to Ravet filing his opening brief. Plaintiffs, however,
conveniently gloss over the fact that their respondents' brief also was filed after the
second amended judgment was entered, and they neglected to alert us to it as well.
Plaintiffs' omission is troubling for two reasons. First, the thrust of Ravet's appeal
was that a judgment against a trust is improper and requires reversal. Plaintiffs merely
argue that Ravet had invited the error or forfeited any objection to the error. Further,
12 Not surprisingly, Ravet appealed the second amended judgment. That matter is
pending before us as case no. D064300.
19
plaintiffs maintain, without authority, that the judgment against the Children's Trust was
proper. Nowhere in their respondents' brief did plaintiffs inform us that the judgment
they claimed was proper had been amended to correct an error they represent to us did
not exist.
Second, although plaintiffs were aware that Ravet had appealed a final judgment
against Children's Trust, plaintiffs applied ex parte to the superior court to modify the
very judgment that was on appeal. In other words, the superior court amended the
judgment at plaintiffs' request while this appeal was pending.13 With these two factors
in mind, we struggle to comprehend why plaintiffs would not inform us of their efforts
and the amendment prior to our request for supplemental briefing.
Although plaintiffs do not explain their failure to provide us with notice of the
second amended judgment, they now request that we take judicial notice of it under
Evidence Code sections 452, subdivision (d) and 459. We take judicial notice of the fact
that the superior court entered a second amended judgment. In doing so, however, it is
beyond dispute that the superior court lacked jurisdiction to amend the judgment because:
(1) that judgment was already on appeal; and (2) the amendment addressed the crux of
Ravet's instant appeal.
13 During oral argument, we asked plaintiffs' counsel for further explanation
regarding the second amended judgment. Plaintiffs' counsel proved unable to provide
any cogent answers.
20
Under Code of Civil Procedure section 916, subdivision (a),14 " '[a]s a general
rule, a duly perfected appeal divests the trial court of further jurisdiction in the cause
except with respect to collateral matters [such as a motion for new trial].' [Citations.]
After perfection of an appeal, the trial court 'may not vacate or amend a judgment or
order valid on its face, or do any other act which would affect the rights of the parties or
the condition of the subject matter.' [Citation.]" (Laidlaw Waste Systems, Inc. v. Bay
Cities Services, Inc. (1996) 43 Cal. App. 4th 630, 641, fn. omitted.) "The purpose of the
rule depriving the trial court of jurisdiction in a case during a pending appeal is to protect
the appellate court's jurisdiction by preserving the status quo until the appeal is decided.
The rule prevents the trial court from rendering an appeal futile by altering the appealed
judgment or order by conducting other proceedings that may affect it." (Betz v. Pankow
(1993) 16 Cal. App. 4th 931, 938.) In People v. Johnson (1992) 3 Cal. 4th 1183, the
Supreme Court stated: "[D]uring the pendency of an appeal, the trial court loses
jurisdiction to do anything in connection with the cause that may affect the judgment, but
retains certain powers over the parties and incidental aspects of the cause, such as
procedural steps in connection with preparation and correction of the record." (Id. at p.
1257.) "The trial court's power to enforce, vacate or modify an appealed judgment or
order is suspended while the appeal is pending." (Elsea v. Saberi (1992) 4 Cal. App. 4th
14 Code of Civil Procedure section 916, subdivision (a) provides: "Except as
provided in [Code of Civil Procedure] Sections 917.1 to 917.9, inclusive, and in [Code of
Civil Procedure] Section 116.810, the perfecting of an appeal stays proceedings in the
trial court upon the judgment or order appealed from or upon the matters embraced
therein or affected thereby, including enforcement of the judgment or order, but the trial
court may proceed upon any other matter embraced in the action and not affected by the
judgment or order."
21
625, 629.) "And any 'proceedings taken after the notice of appeal was filed are a nullity.'
[Citations.] This is true even if the subsequent proceedings cure any purported defect in
the judgment or order appealed from.' [Citations.]" (Varian Medical Systems, Inc. v.
Delfino (2005) 35 Cal. 4th 180, 197-198 (Varian).)
Here, plaintiffs applied ex parte for the court to amend the judgment to address the
primary issue raised in Ravet's instant appeal. Clearly, plaintiffs sought to substantially
alter the final judgment after that final judgment was appealed. Thus, when the superior
court acted on the application, it lacked jurisdiction to enter the second amended
judgment. (Cf. Elsea v. Saberi, supra, 4 Cal.App.4th at p. 629.) And the second
amended judgment therefore is void. (Varian, supra, 35 Cal.4th at p. 198.)
Plaintiffs also contend in the alternative that we have the authority to modify the
judgment if we "conclude that [we] must look only to some prior version of the
judgment" other than the second amended judgment. Although plaintiffs provide some
authority to support their position, their analysis is superficial. We thus address the issue
with little guidance from any of the supplemental letter briefs filed.
"Whenever an appellate court may make a final determination of the rights of the
parties from the record on appeal, it may, in order to avoid subjecting the parties to any
further delay or expense, modify the judgment and affirm it, rather than remand for a new
determination." (Sagadin v. Ripper (1985) 175 Cal. App. 3d 1141, 1170.) The record here
is sufficiently definite to allow us to modify the judgment as it relates to the Children's
Trust.
22
A trust can only act through its trustee. (Cf. Galdjie, supra, 113 Cal.App.4th. at
pp. 1343-1345.) Here, the Children's Trust was an irrevocable trust. Ravet was the
trustee and his sons, Brandon and Stephen, were the beneficiaries. There is no indication
in the record that anyone but Ravet acted on behalf of the Children's Trust. Indeed, in his
opening brief, Ravet concedes "[t]he Children's Trust could only act through him." In
proving any action on behalf of the Children's Trust, plaintiffs offered evidence relating
to Ravet's actions, in his role as trustee of the Children's Trust. For example, for all the
transactions involving the Children's Trust, it was Ravet, as the trustee, who executed the
required documents.15
We are not concerned by Ravet's argument that the failure to try this case against
Ravet as trustee of the Children's Trust was prejudicial error because "[t]he proper
distinction would undoubtedly have made the findings against [Ravet], as an individual,
different." In support of his argument, Ravet contends, without sufficient legal or factual
support, "[i]t is probable the result here would have been different if the correct entity
that can be liable for the Children's Trust had been named as defendant and the jury so
correctly instructed." We disagree.
15 It is apparent from the record that Ravet used the Children's Trust for his personal
benefit. He lived in the Cottontail house that was an asset of the Children's Trust while
the Children's Trust made loan payments. He apparently had the trust assume his debts
when it gave a lien on Cottontail to the Ravet Family Trust. The operative complaint
includes allegations that the Children's Trust was an alter ego of Ravet and/or the
Children's Trust was a sham that allowed Ravet to avoid paying his debts. The record
provided evidence to support this allegation, but neither the trial court nor the jury ever
made any determination on this issue. We do not need to reach this issue to modify the
judgment here.
23
It is abundantly clear that plaintiffs were attempting to prove, and did prove, at
trial that the Children's Trust was involved in numerous fraudulent transfers. As Ravet
admits, the Children's Trust can only act through him as its trustee. The evidence offered
at trial to show the Children's Trust acted improperly consisted of Ravet's acts as trustee.
Put differently, plaintiffs could only show the trust violated the UFTA through the acts of
its trustee, Ravet. This same evidence shows Ravet, in his capacity as trustee of the
Children's Trust, violated the UFTA. As such, we modify the judgment to replace the
damages awarded against the Children's Trust with those same damages awarded against
Ravet in his capacity as trustee of the Children's Trust.
We emphasize that neither Ravet in his individual capacity nor as trustee of the
Children's Trust is prejudiced by this modification. We view this modification akin to
amending a judgment to properly designate the real defendant. (See Hall, Goodhue,
Haisley & Baker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal. App. 4th 1551, 1555 [a
superior court may amend a judgment confirming an arbitration award to name the
correct defendant]; see also Carr v. Barnabey's Hotel Corp. (1994) 23 Cal. App. 4th 14,
21-22 ["Amendment of a judgment to add an alter ego 'is an equitable procedure based on
the theory that the court is not amending the judgment to add a new defendant but is
merely inserting the correct name of the real defendant. [Citations.] "Such a procedure is
an appropriate and complete method by which to bind new . . . defendants where it can be
demonstrated that in their capacity as alter ego of the corporation they in fact had control
of the previous litigation, and thus were virtually represented in the lawsuit." ' "].) Here,
there is no distinction between the acts of the Children's Trust and the acts of Ravet in his
24
capacity of the trustee of that trust. They are one in the same, and the trust can only act
through its trustee.16 (Cf. Galdjie, supra, 113 Cal.App.4th. at pp. 1343-1345.)
In addition to modifying the judgment, we also order the superior court to strike
the second amended judgment. While this may be unnecessary because the second
amended judgment is void (Varian, supra, 35 Cal.4th at p. 198), we order the court to
strike the second amended judgment to avoid any confusion that may arise from the
modified judgment resulting from this opinion.
II
JURY INSTRUCTIONS
Ravet also contends he was prejudiced by a jury instruction that allowed the jury
to find him liable as the transferee of his own debt. We disagree.
A. Background
At trial, the jury instructions were not reported. Instead, we refer to the
instructions contained in the appellate appendix. Ravet takes issue with the instructions
relating to fraudulent transfers (CACI Nos. 4200, 4201, 4202, & 4203).
As provided in the appellate appendix, the relevant instructions read as follows:
"CACI 4200 [¶] Plaintiff's [sic] claim they were harmed because
Gary Ravet fraudulently transferred property to one or more of the
Defendants in order to avoid paying a debt to Plaintiffs. This is
called 'actual fraud.' To establish this claim against any Defendants,
Plaintiffs must prove all of the following: [¶] 1. That Plaintiffs have
a right to payment from Gary Ravet; [¶] 2. That Gary Ravet
16 There is no argument on the record before us that the Children's Trust acted
independently from its trustee. And, in representing the rights of the Children's Trust,
Ravet, as trustee of the Children's Trust, is a party to this appeal further alleviating any
concern that our modification somehow prejudices the trustee.
25
transferred property to any of Defendants; [¶] 3. That Gary Ravet
transferred the property with the intent to hinder, delay, or defraud
one or more of his creditors; [¶] 4. That Plaintiff's [sic] were
harmed; and [¶] 5. That Gary Ravet's conduct was a substantial
factor in causing Plaintiffs' harm. [¶] To prove intent to hinder,
delay, or defraud creditors, it is not necessary to show that Gary
Ravet had a desire to harm his creditors. Plaintiffs need only show
that Gary Ravet intended to remove or conceal assets to make it
more difficult for his creditors to collect payment.
"CACI 4201 [¶] In determining whether Gary Ravet intended to
hinder, delay, or defraud any creditors by transferring
property/incurring an obligation to any of Defendants, you may
consider, among other factors, the following: [¶] (a) Whether the
transfer was to a relative, someone close to Mr. Ravet, or an entity
controlled by him; [¶] (b) Whether Gary Ravet retained possession
or control of the property after it was transferred; [¶] (c) Whether the
transfer was disclosed or concealed; [¶] (d) Whether before the
transfer was made Gary Ravet had been sued or threatened with suit;
[¶] (e) Whether the transfer was of substantially all of Gary Ravet's
assets; [¶] (f) Whether Gary Ravet fled; [¶] (g) Whether Gary Ravet
removed or concealed assets; [¶] (h) Whether the value received by
Gary Ravet was not reasonably equivalent to the value of the asset
transferred; [¶] (i) Whether Gary Ravet was insolvent or became
insolvent shortly after the transfer was made; [¶] (j) Whether the
transfer occurred shortly before or shortly after a substantial debt
was incurred. [¶] Evidence of one or more factors does not
automatically require a finding that any of Defendants acted with the
intent to hinder, delay, or defraud creditors. The presence of one or
more of these factors is evidence that may suggest the intent to
delay, hinder, or defraud.
"CACI 4202 [¶] Plaintiffs claim they were harmed because Gary
Ravet transferred property or incurred an obligation to some or all of
the Defendants and, as a result, was unable to pay Plaintiffs money
that was owed. This is called 'constructive fraud.' To establish this
claim against any of the Defendants, Plaintiffs must prove all of the
following: [¶] 1. That Plaintiffs had a right to payment from Gary
Ravet; [¶] 2. That Gary Ravet transferred property or incurred an
obligation to any of the Defendants; [¶] 3. That Gary Ravet did not
receive a reasonably equivalent value in exchange for the transfer or
obligation; [¶] 4. That Gary Ravet was in business or about to start a
business or enter a transaction when his remaining assets were
26
unreasonably small for the business or transactions; or [¶] That
Gary Ravet intended to incur debts beyond his ability to pay as they
became due; or [¶] That Gary Ravet believed or reasonably should
have believed that he would incur debts beyond his ability to pay as
they became due; [¶] 5. That Plaintiffs was harmed; and [¶]
6. That Gary Ravet's conduct was a substantial factor in causing
Plaintiffs' harm. [¶] If you decide that Plaintiffs have proved all of
the above, they do not have to prove that Gary Ravet intended to
defraud any creditors. [¶] It does not matter whether Plaintiffs' right
to payment arose before or after Gary Ravet transferred property or
incurred an obligation.
"CACI 4203 [¶] Plaintiffs claim they were harmed because Gary
Ravet transferred property to one or more of Defendants and was
unable to pay Plaintiffs money that was owed. This is called
'constructive fraud.' To establish this claim against any of
Defendants, Plaintiffs must prove all of the following: [¶] 1. That
Plaintiffs have a right to payment from Gary Ravet; [¶] 2. That Gary
Ravet transferred property to any of Defendants; [¶] 3. That Gary
Ravet did not receive a reasonably equivalent value in exchange for
the transfer; [¶] 4. That Plaintiffs' right to payment from Gary Ravet
arose before Gary Ravet transferred property; [¶] 5. That Gary
Ravet was insolvent at that time or became insolvent as a result of
the transfer or obligation; [¶] 6. That Plaintiffs were harmed; and [¶]
7. That Gary Ravet's conduct was a substantial factor in causing
Plaintiffs' harm. [¶] If you decide that Plaintiffs have proved all of
the above, they do not have to prove that Gary Ravet intended to
defraud creditors."
The jury instructions also identified the following entities as defendants: "Gary
Ravet, the Gary K. Ravet Children's Trust dated 1/4/88, the Gary K. Ravet Separate
Property Trust, Shirley Ravet, the Estate of Emanuel Ravet, the Ravet Family Trust dated
10/25/02, Stephen Ravet, Brandon Ravet and Dorota Pearson."17
17 In the record, the Children's Trust is shown with the date January 4, 1998 and
January 4, 1988. No party argues there were two different Children's Trust. The
discrepancy appears to be a typographical error.
27
B. Law
"A judgment may not be reversed for instructional error in a civil case 'unless,
after an examination of the entire cause, including the evidence, the court shall be of the
opinion that the error complained of has resulted in a miscarriage of justice.' [Citation.]"
(Soule v. General Motors Corp. (1994) 8 Cal. 4th 548, 580.) Thus, when the jury receives
an improper instruction in a civil case, prejudice will generally be found only " '[w]here it
seems probable that the jury's verdict may have been based on the erroneous
instruction . . . .' " (LeMons v. Regents of University of California (1978) 21 Cal. 3d 869,
875 (LeMons), quoting Robinson v. Cable (1961) 55 Cal. 2d 425, 428.) That assessment,
in turn, requires evaluation of several factors, including the evidence, counsel's
arguments, the effect of other instructions, and any indication by the jury itself that it was
misled. (Pool v. City of Oakland (1986) 42 Cal. 3d 1051, 1069-1070 (Pool).)
Instructional error in a civil case is prejudicial "where it seems probable" that the
error "prejudicially affected the verdict." (See Pool, supra, 42 Cal.3d at p. 1069;
LeMons, supra, 21 Cal.3d at p. 875.) Of course, that determination depends heavily on
the particular nature of the error, including its natural and probable effect on a party's
ability to place his full case before the jury.
But the analysis cannot stop there. Actual prejudice must be assessed in the
context of the individual trial record. For this purpose, the multifactor test set forth in
such cases as LeMons, supra, 21 Cal. 3d 869 and Pool, supra, 42 Cal. 3d 1051, is as
pertinent in cases of instructional omission as in cases where instructions were
erroneously given. Thus, when deciding whether an error of instructional omission was
28
prejudicial, the court must also evaluate (1) the state of the evidence, (2) the effect of
other instructions, (3) the effect of counsel's arguments, and (4) any indications by the
jury itself that it was misled.
When a trial court gives a jury instruction, which is correct as far as it goes but
which is too general or is incomplete for the state of the evidence, a failure to request an
additional or a qualifying instruction will waive a party's right to later complain on appeal
about the instruction that was given. (Mock v. Michigan Millers Mutual Ins. Co. (1992)
4 Cal. App. 4th 306, 333-334 (Mock).) However, when a trial court gives a jury
instruction which is prejudicially erroneous as given, i.e., which is an incorrect statement
of law, the party harmed by that instruction need not have objected to the instruction or
proposed a correct instruction of his own in order to preserve the right to complain of the
erroneous instruction on appeal. (Ibid.) Thus, if the court's instructions prejudicially
misstate the law, Ravet rightfully complains about them in this appeal. (Suman v. BMW
of North America, Inc. (1994) 23 Cal. App. 4th 1, 9.)
C. Analysis
Ravet contends the instructions regarding fraudulent transfer (CACI Nos. 4200-
4203) misstate the law because they allowed the jury to find him liable as both the debtor
and the transferee when he cannot be the transferee of his own debt. In response,
plaintiffs argue Ravet forfeited this argument by failing to object to the now challenged
instructions because Ravet's contention actually hinges on the claim that the subject
instructions are too general. Plaintiffs have the better argument.
29
Ravet does not argue that the fraudulent transfer instructions incorrectly state the
law as it relates to Ravet as the debtor and the other defendants as transferees. His
complaint is that the instructions do not differentiate between Ravet and the other
defendants, but instead, merely lump all the defendants together. In other words, the
instructions were too general because they did not distinguish between defendants.
Because Ravet did not object to these instructions at trial or ask for a clarifying
instruction, he forfeited this claim on appeal. (Mock, supra, 4 Cal.App.4th at pp. 333-
334.)
Moreover, even if we were to determine that the fraudulent transfer instructions
misstated the law, Ravet failed to show he was prejudiced by the instructions. Ravet
asserts the instructions allowed the jury to find him liable as both the debtor and
transferee involving the same transfer. Otherwise stated, Ravet claims the jury could find
him liable for transferring his assets to himself. This argument lacks merit for two
reasons.
First, if the jury found that Ravet had transferred his assets to himself, putting
aside whether this would actually constitute a transfer, it could not have found him liable
for a fraudulent transfer. A fraudulent transfer under the UFTA involves " ' "a transfer by
the debtor of property to a third person undertaken with the intent to prevent a creditor
from reaching that interest to satisfy its claim." ' [Citation.]" (Filip, supra, 129
Cal.App.4th at p. 829.) Thus, if the jury believed Ravet was both the transferor and
transferee of the same asset, Ravet fails to explain how the jury would have found this
"transfer" prevented plaintiffs from reaching the asset to satisfy their claim. In short,
30
Ravet would still possess the asset and would have that asset to pay his creditors. There
would have been no fraudulent transfer. The jury was instructed as such, specifically that
a fraudulent transfer can only occur if the debtor (Ravet) transferred his property to "any
of the Defendants" and was unable to pay plaintiffs. (See CACI Nos. 4202, 4203.) "The
crucial assumption underlying our constitutional system of trial by jury is that jurors
generally understand and faithfully follow instructions." (People v. Mickey (1991) 54
Cal. 3d 612, 689, fn. 17.) Here, the instructions would not have allowed the jury to find
Ravet liable as both the debtor/transferor and the transferee. If he had transferred an asset
to himself, that asset would remain available to creditors. As such, Ravet would not be
unable to pay plaintiffs based on the "transfer" of the asset to himself. A jury therefore
could not find liability under the UFTA if Ravet was both the debtor and the transferee.
Second, Ravet's argument fails because there is no indication in the record that the
jury actually found that Ravet was both the debtor who transferred the asset and the
transferee who received that asset. Ravet provides no citation to the record to support his
position. Further, the special verdict form provided to the jury did not ask them if Ravet
transferred either Cottontail or Degalopa to himself. Accordingly, Ravet's contention is
without merit for this reason as well.
III
EVIDENTIARY ISSUES
Generally, we review the trial court's rulings regarding the admissibility of
evidence under the deferential abuse of discretion standard. (City of Ripon v. Sweetin
(2002) 100 Cal. App. 4th 887, 900.) "[T]he appropriate test of abuse of discretion is
31
whether or not the trial court exceeded the bounds of reason, all of the circumstances
before it being considered." (In re Marriage of Connolly (1979) 23 Cal. 3d 590, 598.)
We will disturb discretionary trial court rulings only upon a showing of a clear case of
abuse and a miscarriage of justice. (Blank v. Kirwan (1985) 39 Cal. 3d 311, 331.)
Ravet challenges the trial court's exclusion of evidence that plaintiffs' original
claim against him was only $867. We determine there is no merit in Ravet's challenge.
The $867 claim arose from an August 23, 2002 order awarding plaintiffs costs in a
lawsuit brought by Ravet against plaintiffs regarding health club membership fees.18
Ravet argues it was prejudicial error for the trial court not to allow him to produce
evidence of the $867 claim because it is relevant to show his lack of motivation to engage
in fraudulent transfers to avoid paying such a meager claim. He also contends if the jury
heard about the $867 claim, it would not have awarded $500,000 in punitive damages
"merely for avoiding an $867 debt."
In response, plaintiffs point out that the $867 claim was reduced to a judgment,
which then served as the basis for the subsequent malicious prosecution action filed by
plaintiffs against Ravet in October 2003. Plaintiffs further assert that it would have been
error to allow Ravet to reargue the nature and value of the underlying claim after a jury
found in their favor in the malicious prosecution action and this court affirmed that
judgment. Although plaintiffs are incorrect that the $867 claim was reduced to a
judgment, overall, they have the better argument.
18 Additional background information regarding the $867 claim can be found in our
unpublished opinion Personalized Workout of La Jolla, Inc. v. Ravet (Nov. 25, 2011,
D051315, D052586).
32
Here, the trial court made the sound decision that the parties could not discuss the
details of $867 claim (including the amount) as well as the details of the malicious
prosecution action. Although neither Ravet nor plaintiffs indicate any part of the record
explaining the trial court's reasoning, we agree with plaintiffs that the trial court properly
exercised its discretion under Evidence Code section 35219 to prevent the parties from
relitigating issues already decided in a previous case, especially when these issues might
have inflamed the jury here and wasted considerable trial time on issues that had already
been decided. In sum, on the record before us, we cannot say the trial court acted in an
arbitrary, capricious, or patently absurd manner in excluding evidence of the $867 claim.
(See San Lorenzo Valley Community Advocates for Responsible Education v. San
Lorenzo Valley Unified School Dist. (2006) 139 Cal. App. 4th 1356, 1419.) The trial court
did not abuse its discretion.20
V
PUNITIVE DAMAGES
Ravet challenges the amount of punitive damages the jury awarded against him.
He claims the punitive damages awarded against him are excessive as a matter of law.
We disagree.
19 Evidence Code section 352 provides: "The court in its discretion may exclude
evidence if its probative value is substantially outweighed by the probability that its
admission will (a) necessitate undue consumption of time or (b) create substantial danger
of undue prejudice, of confusing the issues, or of misleading the jury."
20 In addition, the trial court ruled that the $867 cost award could not be an element
of damages for the jury to consider because it was never reduced to a judgment.
33
The jury awarded $500,000 of punitive damages against Ravet. Ravet argues the
punitive damages are excessive because the jury did not award any compensatory
damages against him. In response, plaintiffs contend Ravet agreed that compensatory
damages were unnecessary to support a punitive damages award and punitive damages
awarded here could be based on the damages against Ravet in the underlying malicious
prosecution action. During oral argument, plaintiffs' counsel, however, clarified
plaintiffs' position on this issue. Counsel maintained that the jury did award
compensatory damages against Ravet, but, based on an agreement between the parties,
the court did not include the compensatory damages against Ravet in the judgment to
avoid a "double recovery." We asked for supplemental briefing on this issue to indicate
where in the record the parties agreed there would be no judgment against Ravet for
compensatory damages and to address the impact of that agreement on the award of
punitive damages in light of relevant case law.
In their supplemental letter brief, plaintiffs emphasize that the jury did indeed
award compensatory damages against Ravet. We agree. The special verdict form does
not explicitly award damages against any specific defendant, but instead, allows the jury
to indicate which defendant is liable for certain conduct and then includes a total amount
of damages attributable to the conduct. The jury found Ravet liable for aiding and
abetting and conspiring to make a fraudulent conveyance in encumbering Cottontail with
the $850,000 deed of trust in favor of the Ravet Family Trust, the $50,000 deed of trust in
favor of Brandon, the $50,000 deed of trust in favor of Stephen, and the $230,000 deed of
trust in favor of Pearson. The jury also found Ravet liable for aiding and abetting as well
34
as conspiring to make a fraudulent transfer in connection with Ravet's interest in
Degalopa. For each of these fraudulent transfers, the jury found that the plaintiffs were
damaged in the amount of $383,654 plus interest of $105 per day beginning February 26,
2008.
However, the trial court did not award plaintiffs compensatory damages against
Ravet in the judgment because it wanted to avoid a double recovery against Ravet. In
discussing the form of the special verdict, the parties and trial court agreed that a finding
of aiding and abetting would make any damages awarded joint and several as to all those
defendants. And following trial, counsel for the Children's Trust asked the trial court not
to enter judgment against Ravet for compensatory damages because any such award
would be "duplicative" of the malicious prosecution judgment. Ravet argued that this
issue was raised at the beginning of trial. The trial court stressed that it did not want to
have two judgments against Ravet for the same amount. Thus, it stated that the judgment
should only include costs and punitive damages as to Ravet. Plaintiffs acquiesced.
In response to plaintiffs' supplemental brief on the punitive damages issue, Ravet
repeats his argument that the jury did not award compensatory damages against him, and
thus, punitive damages are not proper. The record does not support Ravet's position.
Instead, it is clear the jury included Ravet with other defendants who had damaged
plaintiffs in the various fraudulent transactions. The trial court, however, did not award
any compensatory damages against Ravet in the judgment. At that time, Ravet agreed
with the court that it would be improper for the compensatory damages to be awarded
against him. We find it significant that neither Ravet nor any other defendant argued that
35
punitive damages would be improper because the jury did not award compensatory
damages against Ravet in the first instance. Instead, the crux of the argument was to omit
any award of compensatory damages against Ravet to avoid double recovery.
Ravet also stresses that the parties never entered into any agreement regarding
compensatory damages as to him. He points out that plaintiffs argued before, during, and
after trial that compensatory damages should be awarded against Ravet. We agree that
plaintiffs attempted to convince the trial court that compensatory damages were
appropriate against Ravet. However, in the end, plaintiffs relented when the court
explained it believed two judgments in the same amount against Ravet would be
inappropriate, but still believed that it could award punitive damages. Although we agree
with Ravet that the record does not disclose that plaintiffs entered into an agreement with
him that compensatory damages should not be awarded, we determine the lack of an
agreement inconsequential to our analysis. The facts remain that the jury awarded
compensatory damages against all defendants it found liable, and the trial court did not
award compensatory damages against Ravet to avoid a double recovery.
With these facts in mind, we evaluate the award of punitive damages against Ravet
in light of existing case law. It is well established that "[i]n California, as at common
law, actual damages are an absolute predicate for an award of exemplary or punitive
damages." (Kizer v. County of San Mateo (1991) 53 Cal. 3d 139, 147.) This rule has
been interpreted to mean that "[a]n award of actual damages, even if nominal, is required
to recover punitive damages." (Sole Energy Co. v. Petrominerals Corp. (2005) 128
Cal. App. 4th 212, 238.)
36
Other cases have clarified, however, that "an actual award of compensatory
damages is not necessary; rather the plaintiff need only prove that he or she suffered
damages or injury." (Gagnon v. Continental Casualty Co. (1989) 211 Cal. App. 3d 1598,
1603, fn. 5, italics omitted.) Thus, an award of punitive damages may be upheld where
the plaintiff does not recover a compensatory damage award but is awarded "its
equivalent, such as restitution [citation], an offset [citation], damages conclusively
presumed by law [citations], or nominal damages [citation]." (Cheung v. Daley (1995)
35 Cal. App. 4th 1673, 1677-1678, fn. 8 (Cheung); see also Douglas v. Ostermeier (1991)
1 Cal. App. 4th 729, 750, fn. 3.)
In his supplemental letter brief, Ravet also contends that the holding of Cheung,
supra, 35 Cal. App. 4th 1673 supports his position that the punitive damages award against
him is improper. In Cheung, the court addressed the question "whether a jury can award
exemplary damages when it has expressly determined that the plaintiffs were entitled to
'0.00' compensatory damages." It answered the question in the negative. (Id. at p. 1674.)
In reaching this conclusion, the court relied on the Supreme Court's opinion in Mother
Cobb's Chicken T., Inc. v. Fox (1937) 10 Cal. 2d 203. There, the Supreme Court stated:
" 'The foundation for the recovery of punitive or exemplary damages rests upon the fact
that substantial damages have been sustained by the plaintiff. Punitive damages are not
given as a matter of right, nor can they be made the basis of recovery independent of a
showing which would entitle the plaintiff to an award of actual damages. Actual
damages must be found as a predicate for exemplary damages.' . . . [¶] . . . [T]he rule
applicable is, as declared frequently, that punitive damages are never more than an
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incident to a cause of action for actual damages. . . . [¶] . . . Evil thoughts or acts, barren
of result, are not the subject of exemplary damages.' " (Id. at pp. 205-206; Cheung,
supra, 35 Cal.App.4th at p. 1675.)
The court in Cheung noted that since the Supreme Court's opinion in Mother
Cobb's Chicken T., Inc. v. Fox, supra, 10 Cal. 2d 203, Courts of Appeal have upheld
punitive damages in the absence of compensatory damages as long as the record showed
that the defendant tortiously harmed the plaintiff. (Cheung, supra, 35 Cal.App.4th at
pp. 1675-1676.) But our high court has more recently affirmed that "actual damages are
an absolute predicate for an award of exemplary or punitive damages." (Kizer v. County
of San Mateo, supra, 53 Cal.3d at p. 147; accord, Potter v. Firestone Tire & Rubber Co.
(1993) 6 Cal. 4th 965, 1004.) Based on these opinions, the court in Cheung "conclude[d]
that the rule of Mother Cobb's Chicken--that an award of exemplary damages must be
accompanied by an award of compensatory damages--is still sound. That rule cannot be
deemed satisfied where the jury has made an express determination not to award
compensatory damages." (Cheung, supra, at p. 1677, fn. omitted.)
Cheung, supra, 35 Cal. App. 4th 1673 is distinguishable from the instant matter.
The plaintiffs in Cheung sued a defendant for a fraudulent transfer. In Cheung, the
plaintiffs had obtained a judgment against Ron Daley in the amount of $59,000 consisting
of both compensatory and punitive damages in an underlying nuisance suit. They then
sued Daley and his mother under the UFTA. (Id. at p. 1674.) The jury did not award the
plaintiffs any compensatory damages, but awarded them $92,000 in punitive damages.
The Court of Appeal reversed the trial court's judgment, concluding that punitive
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damages must be accompanied by "an express award of compensatory damages." (Id. at
p. 1677.)
Here, plaintiffs obtained a money judgment against Ravet in the underlying
malicious prosecution action consisting of both compensatory and punitive damages. In
the UFTA action, no compensatory damages were awarded against Ravet in the
judgment. However, unlike the jury in Cheung, supra, 35 Cal. App. 4th 1673, the jury
here did find that Ravet was liable, jointly and severally with other defendants, in the
amount of $383,654 plus interest. Thus, the jury did award plaintiffs compensatory
damages against Ravet. However, to avoid confusion and/or a double recovery against
Ravet (the damages from the underlying malicious prosecution action and the fraudulent
transfer action were the same amount), the trial court omitted any compensatory damages
against Ravet in the judgment.
In summary, the jury in Cheung, supra, 35 Cal. App. 4th 1673 explicitly found that
the plaintiffs were not entitled to any compensatory damages, and thus, the judgment did
not include any compensatory damages. Here, the jury found Ravet liable for
compensatory damages, yet the trial court did not include the compensatory damages in
the judgment, not because it believed the jury's verdict was not supported by the
evidence, but because it did not want the judgment to provide for a "double recovery" for
plaintiffs. Under these circumstances, we find no compelling reason that Ravet should be
immune from punitive damages merely because the court fashioned the judgment to
avoid confusion and prevent a double recovery. Both objectives were for Ravet's benefit.
Further, on the record before us, it is clear that Ravet was the mastermind behind the
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numerous fraudulent transfers and is deserving of punitive damages for his fraudulent
acts.21 (See § 3294, subd. (a).)
VII
JUROR MISCONDUCT
Ravet claims the court erred in denying a motion for new trial because of juror
misconduct. Without any citation to the record to support this claim, Ravet baldly asserts
misconduct exists as well as a presumption of prejudice. (See Banada Trading Co., Inc.
v. Quality Infusion Care, Inc. (2008) 164 Cal. App. 4th 1440, 1445.) We are not
persuaded.
Ravet claims a juror failed to disclose a relationship during voir dire with a listed
witness in the case who was not called at trial, but mentioned several times during trial.
Specifically, the subject juror (an attorney) had worked with a potential witness on a
21 For the first time during this appeal, in his supplemental letter brief, Ravet raises
the contention that punitive damages are not available under the UFTA as a matter of
law. Generally, we will consider only the points raised in the trial court. (Perez v.
Grajales (2008) 169 Cal. App. 4th 580, 591-592 [arguments raised for the first time on
appeal are deemed forfeited].) Although this court can use its discretion to consider an
argument for the first time on appeal, the argument must involve a pure question of law
determinable from uncontroverted facts. (Phillips v. TLC Plumbing, Inc. (2009) 172
Cal. App. 4th 1133, 1141.) Here, Ravet raises a question of law. However, we note that
Ravet failed to raise this issue with the trial court by way of a dispositive motion
attacking the complaint or a motion in limine prior to trial. He did not raise this issue in
his opening brief or reply brief. He did not discuss this issue at oral argument. He only
raises the issue in his second supplemental letter brief, which was submitted in response
to plaintiffs' supplemental letter brief and after oral argument. Also, Ravet's argument
that punitive damages are not permitted under the UFTA is not directly responsive to the
three questions we requested the letter brief to address or any of the arguments raised in
plaintiffs' supplemental brief. Under these circumstances, we decline to exercise our
discretion, and we deem Ravet's new argument forfeited. (See City of Scotts Valley v.
County of Santa Cruz (2011) 201 Cal. App. 4th 1, 29.)
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previous appeal. The potential witness was Mary Lehman, one of Ravet's attorneys on
this appeal. It is this relationship that Ravet contends the juror did not disclose and
constitutes the misconduct.
The juror's statements, or lack thereof, during voir dire form the basis of Ravet's
argument. However, voir dire was not recorded; thus, there is nothing in the record that
shows what the juror actually said. An appellant has the burden to provide an adequate
record and affirmatively show reversible error. (Denham v. Superior Court (1970)
2 Cal. 3d 557, 564.) Further, it is the appellant's duty to support arguments in his or her
briefs by references to the record on appeal, including citations to specific pages in the
record. (Duarte v. Chino Community Hospital (1999) 72 Cal. App. 4th 849, 856.) Here,
without a record of voir dire, we have no basis to determine what the juror actually said
or if any misconduct occurred.
In addition, when Ravet brought the possibility of juror misconduct to the trial
court's attention (after the jury had already returned its verdict of liability), the court
questioned the subject juror and allowed the attorneys to question him as well. The juror
stated that he disclosed during voir dire that he had worked on an appellate matter with
Lehman. He stated he had met Lehman, but characterized their relationship as
"superficial" and "purely a professional relationship." The trial court, based on the juror's
statements, stated the relationship between the juror and Lehman "sound[ed] like it was
professional and minimal." None of the attorneys could recall if the juror had mentioned
Lehman during voir dire.
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In summary, there is nothing in the record that leads us to believe there was any
misconduct. The trial court did not err in denying the motion for new trial based on jury
misconduct.
DISPOSITION
The judgment is modified to substitute "Gary Ravet, as trustee of the Children's
Trust," in place of the Children's Trust so that the judgment awards compensatory and
punitive damages against Ravet in his capacity as trustee of the Children's Trust instead
of against the Children's Trust itself. In all other respects, the judgment is affirmed. In
addition, the second amended judgment is void, and we order the superior court to strike
the second amended judgment to avoid confusion in connection with the modified
judgment in this matter.
Plaintiffs are awarded their costs for this appeal.
HUFFMAN, J.
WE CONCUR:
BENKE, Acting P. J.
HALLER, J.
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