Sacramento Sikh Society Bradshaw Temple v. Tatla , 219 Cal. App. 4th 1224 ( 2013 )

Filed 9/24/13
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
SACRAMENTO SIKH SOCIETY BRADSHAW C064277
TEMPLE,
(Super. Ct. No. 04AS02448)
Plaintiff and Respondent,
v.
SATNAM SINGH TATLA et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Sacramento County, Alan G.
Perkins, Judge. Affirmed.
Downey Brand, Janlynn R. Fleener, Ramaah Sadasivam, Kevin McKinley and
Katie Konz for Defendants and Appellants.
Donahue Blakemore & Mackey and Stephen J. Mackey; and Christopher A. Lee
for Plaintiff and Respondent.
* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of parts I, III, IV, V, and VI of the Discussion.
1
Several founding members of the Sacramento Sikh Society (the Society), a
nonprofit religious corporation, donated to the Society a parcel of real property in Elk
Grove. The Society later obtained a second, adjacent parcel on which it erected a temple.
Sometime later, other individuals took control of the Society from the founders through
the election process.
The founders and others took various steps to gain control of the Society‟s real
property, including recording two transfer deeds purportedly from the Society to some of
them. When the Society learned of this conduct, it initiated this action for slander of title
against those purportedly responsible, to wit, defendants Satnam Tatla, Vichitra Sandhu,
Kehar Singh, Kamal Gill, Gian Gill, Harinder Singh, Hakam Singh, Avtar Dosanjh,
Sarban Singh, Mohinder Dosanjh, Manjit Dosanjh (the named defendants). Some of the
named defendants in turn filed a cross-complaint against the Society and those who were
running it.
Resolution of this dispute turned in part on whether bylaws adopted for the
Society in 1996 superseded those adopted earlier. The named defendants claimed they
remained in control of the Society by virtue of the earlier bylaws and, therefore, retained
the power to transfer the two parcels. In a bench trial, the court concluded otherwise and
nullified the two transfer deeds. The court also rejected the named defendants‟ claim that
they are “life members” of the Society and, because they otherwise failed to maintain
membership in the Society, the court concluded the named defendants have no standing
to pursue their cross-complaint. In a subsequent proceeding, a jury found against all of
the named defendants except Gian Gill and Manjit Dosanjh on the Society‟s claim for
slander of title and awarded both consequential and punitive damages.
Satnam Tatla, Vichitra Sandhu, Kehar Singh, Kamal Gill, Gian Gill, Harinder
Singh, Hakam Singh and Avtar Dosanjh (hereafter collectively defendants) appeal,
challenging the judgment and each of the foregoing determinations. They contend the
trial court erred in concluding the 1996 bylaws were properly adopted, setting aside the
2
two grant deeds, and finding that they lack standing to pursue their cross-complaint.
They also contend there is insufficient evidence to support the jury‟s verdict on the
slander of title claim, the jury was not properly instructed on the punitive damages issue,
and there is insufficient evidence to support the punitive damages award.
We reject each of defendants‟ contentions and affirm the judgment.
FACTS AND PROCEEDINGS
Because defendants raise various challenges to the sufficiency of the evidence, we
recount the evidence in the light most favorable to the judgment below. (Bunch v.
Hoffinger Industries, Inc. (2004) 123 Cal.App.4th 1278, 1303.)
In October 1988, Kamal S. Gill, Vichitra Singh Sandhu, Kehar Singh Shonky and
Avtar Singh Dosanjh filed articles of incorporation with the California Secretary of State
for the Society, a nonprofit religious organization. In early 1989, a Statement by
Domestic Nonprofit Corporation was filed for the Society, listing as officers Vichitra
Sandhu (chief executive officer), Kehar Singh (secretary), and Avtar Dosanjh (chief
financial officer). The principal office of the Society was listed as 5600 Lerner Way in
Sacramento, which was a home owned by Vichitra Sandhu.
In December 1989, Kamal Gill, Avtar Dosanjh and Vichitra Sandhu donated to the
Society a 13-acre parcel of property on Gerber Road in Elk Grove for the express purpose
of building and maintaining a “Sikh Gurdwara” (temple) and associated facilities.
In October 1992, the board of directors of the Society adopted the first restated
bylaws (the 1992 bylaws) to govern the Society. The 1992 bylaws provided that the
Society would be governed by a board of directors, whose members would be elected by
the “Voting Members.” The 1992 bylaws established a maximum of 100 “Voting
Members,” all of whom must be approved by the board and who alone may be selected as
directors. The board in turn would select the officers of the Society.
3
In 1993, the officers of the Society were Kamal Gill (chief executive officer),
Makham Singh (secretary), and Avtar Dosanjh (chief financial officer).
The Society later discovered it could not build a temple on the 13-acre parcel. It
purchased an adjacent, 10-acre parcel fronting on Bradshaw Road that contained an old
house and garage. The official address of the Society was moved to this Bradshaw Road
location. Because the Society could not obtain a loan for the purchase in its own name,
the property was placed in the names of Kamal and Gian Gill, Jaswant and Mohinder
Hundal, Mohinder and Manjit Dosanjh, and Vichitra Sandhu. After the mortgage was
paid off, those individuals signed a grant deed transferring the property to the Society.
In 1995, a dispute arose over governance of the Society. On April 17, 1995, the
Society, Makham Singh, Kamal Gill, Darshan Dhaliwal, Jaswant Hundal, and Amrik
Kaile filed suit in Sacramento County Superior Court against Vichitra Sandhu, Avtar
Dosanjh, Tara Ratenda, Ajit Randhawa, Pargan Bains, Rulda Shekhon, Ajit Grewal,
Ranjit Singh, Balwant Virk, Gurbux Singh, Gurdee Singh, Sewa Singh, Pilem Mandi, and
Sarwan Mathwalu for declaratory relief, an injunction and an accounting. The complaint
alleged the plaintiffs are all member-directors of the Society or otherwise persons who
have contributed time, money and/or personal property to the Society and the defendants
“were or are purported member-directors of the Society and/or have taken control of the
books, records, and assets of the Society . . . .” It further alleged the defendants had
“improperly dealt with assets of the Society” in violation of the bylaws, had deprived
plaintiffs of access to the books, records, minutes, membership lists, and receipt books of
the Society, and had improperly acted as officers and directors of the Society.
A receiver was appointed to run the Society during the pendency of this litigation.
In 1996, at the behest of the Society‟s congregation, the Council of Five, or Punj Pyara,
of the Society approached the parties to the litigation about settling the matter.
On July 10, 1996, in open court, the parties to the pending action entered into a
stipulation for settlement. The settlement provided that “[a]ll of the matters that have
4
been placed at issue as a result of this combined litigation shall be ultimately in the
domain and be resolved by the [Punj Pyara] selected by the congregation of the
[Society].” The settlement also created two advisory committees: an audit committee
and a bylaws committee. The audit committee was tasked with investigating alleged
financial irregularities within the Society and reporting to the congregation. The function
of the bylaws committee was “to make recommendations relating to what type of
guidelines would be appropriate and what type of language, if this temple ultimately
modifies its by-laws, would be appropriate in those by-laws.” The settlement further
provided that any recommendations of the bylaw committee “may or may not be dealt
with directly by the [Punj Pyara].”
Not all parties to the litigation were present in court the day the settlement
agreement was announced. The agreement provided that counsel for the parties would
undertake to obtain signatures on the settlement agreement for those not present and the
court would retain jurisdiction to effectuate the settlement. However, signatures were not
obtained from all the parties to the litigation. Nevertheless, on September 5, 1996, the
trial court dismissed the action.
New bylaws for the Society were prepared pursuant to the settlement agreement
(the 1996 bylaws) and were approved by the Punj Pyara. They were thereafter adopted at
a meeting of the congregation by a show of hands.
Several of the defendants in the present matter, some of whom had been involved
in the Society since its inception, ceased attending services at the Society‟s Bradshaw
Road location after resolution of the 1995-1996 litigation. One defendant, Satnam Tatla,
who lived more than 40 miles away from the Bradshaw Road facility, discontinued
attendance even before the lawsuit was filed.
A 15-member board of directors was elected by the Society pursuant to the 1996
bylaws. Another board election was held in 1999-2000, also pursuant to the 1996
bylaws.
5
Construction of a temple on the Bradshaw Road property was completed in 1999.
In 2002, a new dispute arose over failure of the Society to hold a board election.
Suit was filed based on the election provisions of the 1996 bylaws and the court ordered
an election for June 2002. However, because of violence that erupted over eligibility to
vote, the election did not occur as scheduled. The court ordered a new registration period
for membership between November and December 2002 and a new election for January
5, 2003. All those who signed up to vote agreed to be bound by the 1996 bylaws.
Two of the named defendants, Hakam Singh and Mohinder Dosanjh, were on the
ballot for the January 2003 election. All of the named defendants except Tatla and Avtar
Dosanjh signed up to vote and voted in the election.
Neither Hakam Singh nor Mohinder Dosanjh was elected to the Society‟s board of
directors.
After the 2003 election, the original defendants began meeting at the Lerner Way
address to devise a scheme for reclaiming the two parcels of real property held by the
Society. Around this same time, they allegedly discovered a letter purportedly written in
1997 by Morey Fuqua, attorney for the defendants in the 1995-1996 litigation. In that
letter, Fuqua opined the 1996 bylaws are of no legal effect because the 1996 settlement
agreement was never fully executed. Fuqua indicated a “tentative” settlement was
reached in open court that was later signed by all the defendants but not all the plaintiffs.
According to Fuqua: “Because the tentative Settlement Agreement negotiated in open
court was never signed by the plaintiffs, the Court, on September 5, 1996, dismissed the
litigation.” Fuqua opined that this dismissal placed the Society back in the same position
it had been in before the lawsuit was filed, i.e., under the governance of the 1992 bylaws.
And, since the 1996 bylaws were not adopted pursuant to the terms of the 1992 bylaws,
they never came into legal effect.
The named defendants declared themselves to be the true representatives of the
Society and elected Tatla to serve as their president. Tatla, acting as president of the
6
Society, later signed grant deeds transferring ownership of one of the parcels to Vichitra
Sandhu, Kamal Gill, Gian Gill, Mohinder Dosanjh and Manjit Dosanjh, and the other
parcel to Vichitra Sandhu, Kamal Gill and Avtar Dosanjh. Tatla gave the grant deeds to
Hakam Singh, who filed them in the county recorder‟s office.
The named defendants then hired attorney Richard Corbin to file a quiet title
action on the two parcels. Suit was filed, naming as the sole defendant Bhagat Singh,
who was purportedly residing on the premises at the time. A default judgment was
eventually obtained against Singh.
Thereafter, the named defendants sent letters to the IRS and the Franchise Tax
Board claiming to be in charge of the Society. In 2004, the Society received notice that
SMUD was about to turn off power at the Bradshaw Road facility. They investigated and
discovered a document in the county building department dated May 10, 2004, asserting
that there had been unauthorized construction on the Bradshaw Road site. The letter was
signed by Vichitra Sandhu and claimed the property was owned by those to whom it had
purportedly been transferred by Tatla. Around this same time, the Society also
discovered the two deeds executed by Tatla.
The foregoing actions of the named defendants placed a cloud on the title of the
two Society parcels and delayed efforts by the Society to construct a new temple. The
Society also incurred substantial legal fees in attempting to establish its title to the real
property and had difficulty raising funds for the construction project.
On June 17, 2004, the Society filed suit against the named defendants for slander
of title. In November, all the named defendants except Sarban Singh and Hakam Singh,
filed a cross-complaint against the Society, Balwant Virk, Amrik Kaile, Kashmira Atwal,
Amarjit Bassi, and Surinder Dhadda for breach of fiduciary duty, breach of the covenant
of quiet enjoyment, declaratory relief, accounting and conversion.
The trial court bifurcated the issues for trial. Following a bench trial, the court
concluded the settlement agreement reached in the 1996 litigation was effective and the
7
1996 bylaws, adopted pursuant to that agreement, governed the Society thereafter.
Consequently, the election that occurred in January 2003 pursuant to the 1996 bylaws
was valid and the named defendants had no authority to transfer ownership of the two
parcels. The court therefore nullified the 2004 grant deeds executed by Tatla. The court
also rejected the named defendants‟ claim that they are life members of the Society and,
therefore, concluded they have no standing to pursue their cross-complaint.
In a subsequent proceeding, a jury found against all of the named defendants
except Manjit Dosanjh and Gian Gill on the Society‟s claim for slander of title. The jury
concluded those defendants acted with malice in their dealings with the Society‟s
property and awarded damages in the amount of $359,021.22. The jury also awarded
punitive damages in various amounts from $60,000 to $167,500 against each of those
defendants.
DISCUSSION
I
The Operative Bylaws
Defendants contend the trial court erred in concluding the 1996 bylaws were
properly adopted and supersede the 1992 bylaws as the governing document for the
Society. As explained hereafter, that finding is the foundation for most of the
conclusions reached by the court and the jury in this matter.
Defendants acknowledge the trial court concluded the 1996 settlement placed
authority in the Punj Pyara to prepare new bylaws and those bylaws were later approved
by a show of hands of the congregation. However, defendants argue, the 1996 settlement
was not effective because it was not signed by all the parties to the 1995 litigation.
Further, they argue, the 1992 bylaws contained specific provisions for amendment, and
those provisions were not followed in adopting the 1996 bylaws. Hence, according to
defendants, the 1992 bylaws continue to govern the Society.
8
The fact that not all the parties to the 1995 litigation signed the settlement
agreement or were present in court at the time the settlement agreement was announced,
as defendants assert, does not mean it was not an enforceable agreement. Code of Civil
Procedure section 664.6 is an expedited procedure for enforcement of settlements. It
requires the signature or presence by all the parties. (See Levy v. Superior Court (1995)
10 Cal.4th 578, 585-586.) However, that does not mean a settlement agreement by fewer
than all the parties is not otherwise enforceable. “The statutory procedure for enforcing
settlement agreements under [Code of Civil Procedure] section 664.6 is not exclusive. It
is merely an expeditious, valid alternative statutorily created. [Citation.] Settlement
agreements may also be enforced by motion for summary judgment, by a separate suit in
equity or by amendment of the pleadings to raise the settlement as an affirmative defense.
Settlement agreements not enforceable under Code of Civil Procedure section 664.6 are
governed by the legal principles applicable to contracts in general.” (Nicholson v. Barab
(1991) 233 Cal.App.3d 1671, 1681.)
Under general principles of law, an agreement entered into by a party‟s attorney of
record is enforceable against that party, although not by way of Code of Civil Procedure
section 664.6. (See Levy v. Superior Court, supra, 10 Cal.4th at p. 587 (dis. opn. of
Werdeger, J.).) In this instance, the settlement agreement was executed by the Society,
through its attorney of record, as well as most of the other parties. Furthermore, even as
to the absent parties, the settlement was agreed to by their attorneys of record.
Defendants nevertheless argue the directors of the Society, who were the parties to
the 1995 litigation, had no authority to enter into the settlement agreement on behalf of
the Society because the Society was being run, at the time, by a receiver. However, that
argument proves too much. Defendants assert the receiver essentially displaced the board
in the management of the Society. But, taken to its logical conclusion, that would mean
the receiver could, unilaterally, amend the bylaws of the Society. In other words, the
receiver could have done anything the Society‟s directors could do. Obviously, the
9
receiver did not have such power. The power to run the day-to-day operations of the
Society is not the same as the power to govern the Society. Furthermore, to the extent the
receiver had such expansive powers, the receiver‟s authorized agent, the attorney for the
Society, agreed to the settlement on behalf of the Society.
Defendants argue there was no settlement agreement reached in July 1996 but only
a settlement “in principle.” Thus, they argue, there was never an enforceable agreement.
However, this is belied by the terms of the court‟s minute order, which states that “[t]he
matter was agreed to orally and put on the record as stipulated.” The terms of that
agreement are then set forth in the order. This was not merely an agreement to agree, as
defendants suggest.
Defendants contend “it is beyond dispute” that the Society‟s board never
consented to the settlement agreement. However, as support, defendants cite nothing
more than the Fuqua letter purportedly written in 1997, in which the attorney for the
defendants in the 1995 litigation asserted that while all of the defendants in that action
signed the settlement agreement, not all of the plaintiffs did so. The Fuqua letter is
hearsay and its authenticity was never established by defendants at trial. Furthermore,
the fact that one or more of the plaintiffs in the 1995 action did not sign the settlement
agreement, as defendants assert, does not prove the board of the Society did not approve
it. The complaint in the 1995 action alleged the parties were directors of the Society or
persons otherwise involved in the affairs of the Society. At least the majority of those
parties agreed to the settlement. Based on the record before us, we cannot say those who
agreed to the settlement did not encompass the board as a whole.
Defendants nevertheless argue that, even if there was an enforceable agreement
and it gave power to the Punj Pyara to prepare amended bylaws, that did not include a
power to approve the amended bylaws unilaterally. However, assuming that is true, the
evidence presented at trial established that the 1996 bylaws were ultimately approved by
the congregation.
10
Defendants argue such approval by the congregation was ineffective, because the
1992 bylaws contained their own rules for amendment, and those rules were not
followed. Article XIV, section 1 of the 1992 bylaws reads: “New bylaws may be
adopted or these Bylaws may be amended or repealed by approval of the Voting
Members at a meeting of the Voting Members following any action by the Board in
which these Bylaws were amended or other [sic] changed.” Article XIV, section 2, in
turn provides: “Subject to the right of the Voting Members under Section 1 of this
ARTICLE, these Bylaws, other than a bylaw fixing or changing the authorized number of
the directors, may be adopted, amended or repealed by the Board. . . .” Defendants assert
the 1996 bylaws were neither adopted by the board in existence at the time nor approved
by the “Voting Members,” who were limited to 100 individuals.
The problem with defendants‟ argument is that it essentially vitiates the 1995
litigation and the 1996 settlement agreement. The 1995 litigation was filed because of
problems regarding the governance of the Society. The litigation was apparently filed by
one group of directors against another group of directors and others. Prior to that
litigation, the parties already had the power to amend the 1992 bylaws according to their
terms. Defendants‟ argument assumes that, as a result of the 1995 litigation and the
settlement reached, the parties were still required to follow the terms of the 1992 bylaws
in order to amend them. In other words, according to defendants, even if the 1996
settlement agreement was properly executed, that settlement agreement had no legal
effect. This cannot possibly be what the parties to the settlement agreement intended
when they gave power to the Punj Pyara to deal with any recommendations on bylaws
changes made by the bylaws committee.
Furthermore, the trial court interpreted Article XIV of the 1992 bylaws as granting
the voting members the power to override a decision of the board to amend the bylaws.
However, the voting members are not required to exercise that power, and did not do so
in this instance.
11
We agree with this interpretation. As noted above, section 1 of Article XIV of the
1992 bylaws provided that the bylaws “may be” amended by the voting members
“following any action by the Board” to amend them. Section 2 in turn provided that,
subject to the foregoing “right of the Voting Members,” the bylaws may be amended by
the board. Read together, these sections provide that the board may amend the bylaws
subject to a right in the voting members to reject such amendment.
Defendants argue that the fact the voting members failed to reject the 1996 bylaws
is significant only if those bylaws were first properly adopted by the board pursuant to
the 1992 bylaws. However, this argument again assumes the 1996 settlement agreement
had no force or effect and the Society remained subject to the 1992 bylaws as if the 1995
litigation had never occurred. However, the trial court correctly concluded the settlement
agreement transferred authority to amend the bylaws from the board to the Punj Pyara.
Defendants argue the fact that the voting members did not override the adoption of
the 1996 bylaws by the Punj Pyara is of no import, because the voting members had no
opportunity to object. According to defendants, the voting members had been
“disenfranchised” by the Punj Pyara and many of them had been banned from the
premises and were “living in fear” of the Punj Pyara. However, defendants cite nothing
to support their claim of disenfranchisement, and their assertion that many voting
members were banned and living in fear is supported only by a statement in their trial
brief, which itself does not cite any actual evidence.
Defendants nevertheless argue the voting members did object to the 1996 bylaws
by way of the 1997 Fuqua letter. However, even assuming the authenticity of that letter,
it does not amount to an objection by the voting members but only a legal opinion by a
single attorney.
Defendants contend the 1996 settlement agreement could not effectively grant
power to the Punj Pyara to amend the bylaws. They cite as support Corporations Code
section 9210 (unspecified section references that follow are to this code), which reads:
12
“Subject to the provisions of this part and any provision in the articles or bylaws: [¶] (a)
Each corporation shall have a board of directors. The activities and affairs of a
corporation shall be conducted and all corporate powers shall be exercised by or under
the direction of the board. [¶] (b) The board may delegate the management of the
activities of the corporation to any person or persons provided that the activities and
affairs of the corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the board.” Defendants argue the settlement agreement
was invalid because it contained no provision for oversight of the Punj Pyara by the
board.
Accepting defendants‟ argument would mean the trial court in the 1995 action was
powerless to provide relief to the parties. As explained earlier, that dispute was among
the directors of the Society over governance. Obviously, the directors could not work out
their differences on their own and sought the assistance of the court. The settlement
agreement transferred power over amendment of the bylaws from the board to the Punj
Pyara in order to clear that logjam.
Furthermore, and more importantly, the fact that the settlement agreement might
have provided relief that violated section 9210 has no bearing on this matter. There is
nothing in the record to suggest any of the parties objected to the settlement agreement on
that basis. Since no party appealed the decision of the court approving the settlement
agreement in 1996, any error in the settlement agreement and order thereon has been
forfeited.
The same goes for defendants‟ argument that adoption of the 1996 bylaws violated
sections 9150 and 9151. Section 9150, subdivision (c), reads: “Subject to any provision
in the articles or bylaws, the power of the board to adopt, amend or repeal bylaws is
subject to the powers of members set forth in Section 9151.” Section 9151, subdivision
(b), in turn provides: “Except as otherwise provided in the articles or bylaws, once
members have been admitted, a bylaw specifying or changing a fixed number of directors
13
or the maximum or minimum number or changing from a fixed to a variable board or
vice versa may only be adopted by approval of the members . . . .” Defendants argue the
1996 bylaws changed the number of directors from 13 to 11 but, because the 1992 bylaws
contained their own rules for changing the number of directors, it controlled. According
to defendants, the 1992 bylaws required a vote of the voting members in order to change
the number of directors. But, here again, the settlement agreement transferred to the Punj
Pyara the power to change the bylaws and any claim now that this violated sections 9150
and 9151 has been forfeited.
Defendants cite Concord Christian Center v. Open Bible Standard Churches
(2005) 132 Cal.App.4th 1396, at page 1417, for the proposition that “the church
leadership was „not entitled, simply by majority vote at an unnoticed meeting of the
handpicked membership, to override the mandatory provisions . . . found in the national
church‟s constitution and bylaws.‟ ” According to defendants, “[t]hat is precisely what
occurred here.”
Defendants are mistaken. The meeting of the congregation to approve the 1996
bylaws was preceded by notice, and there is nothing in the record to suggest the voters
were handpicked by the Punj Pyara. Furthermore, as explained above, the settlement
agreement specifically overrode the provisions in the 1992 bylaws on the process for
making amendments.
Based on the totality of the evidence presented at trial, we conclude substantial
evidence supports the trial court‟s conclusion that the 1996 bylaws supplanted the 1992
bylaws by virtue of the 1996 settlement agreement and the actions of the Punj Pyara and
the congregation thereafter.
14
II
Standing
Defendants contend the trial court erred in concluding they lack standing to pursue
their cross-complaint. That cross-complaint contains a claim for declaratory relief in
which defendants, as cross-complainants, contend the cross-defendants have improperly
assumed control of the Society and its assets and have attempted to adopt new bylaws in
derogation of the 1992 bylaws. The cross-complaint also contains a claim that the cross-
defendants have breached their fiduciary duty by taking control of the Society, a claim
for an accounting of Society funds allegedly misappropriated by the cross-defendants, a
claim for breach of the covenant of quiet enjoyment of the Society‟s real property, and a
claim for conversion of the Society‟s assets.
It is undisputed that defendants failed to maintain membership in the Society
within the terms of the 1996 bylaws. Defendants claim they were life members by virtue
of having contributed property and services to the Society and being its founders. The
trial court concluded defendants failed to prove they are life members of the Society.
Hence, according to the court, defendants lack standing to assert claims against the cross-
defendants on behalf of the Society.
Defendants contend on appeal that, by so ruling, the trial court crossed the line
between resolving property disputes and resolving ecclesiastical issues reserved to the
church under the First Amendment to the United States Constitution. According to
defendants, the question of who is and who is not a member of a religious organization
impacts matters of religious freedom and is reserved to the organization itself.
Defendants argue the determination of their membership status with the Society “was
based on the informal traditions, customs, and practices of the organization,” which is
“precisely the sort of sectarian dispute over membership that the courts of this State are
precluded from deciding.”
15
In Episcopal Church Cases (2009) 45 Cal.4th 467, the California Supreme Court
described the following principles for adjudicating disputes within a religious
organization: “The high court has approved two methods for adjudicating church
property disputes. The first approach is one the court itself adopted in the 19th century.
(Watson v. Jones [(1871) 80 U.S. 679 [20 L.Ed. 666]].) This approach is often called the
„principle of government‟ approach. [Citation.] The Watson v. Jones court distinguished
between two types of church disputes. One „has reference to the case of a church of a
strictly congregational or independent organization, governed solely within itself . . .; and
to property held by such a church, either by way of purchase or donation, with no other
specific trust attached to it in the hands of the church than that it is for the use of that
congregation as a religious society.‟ [Citation.] „In such cases,‟ the court explained,
„where there is a schism which leads to a separation into distinct and conflicting bodies,
the rights of such bodies to the use of the property must be determined by the ordinary
principles which govern voluntary associations.‟ [Citation.] Another type, which the
court said „is the one which is oftenest found in the courts,‟ involves a hierarchical
structure, i.e., a „religious congregation which is itself part of a large and general
organization of some religious denomination, with which it is more or less intimately
connected by religious views and ecclesiastical government.‟ [Citation.] In the latter
case, the court said, „we are bound to look at the fact that the local congregation is itself
but a member of a much larger and more important religious organization, and is under
its government and control, and is bound by its orders and judgments.‟ [Citation.]”
(Episcopal Church Cases, supra, at p. 480; fn. omitted.)
In Korean United Presbyterian Church v. Presbytery of the Pacific (1991) 230
Cal.App.3d 480 (Korean United), disapproved on other grounds in Morehart v. County of
Santa Barbara (1994) 7 Cal.4th 725, 743 and footnote 11, Reverend Woo persuaded a
majority of the local church that they should leave the denomination and the higher
authority of the denomination responded by appointing new leaders for the local church.
16
This higher authority then determined that the minority of the local church, represented
by the denomination‟s self-appointed leaders, represented the true church and was
entitled to control the local church‟s property. (Korean United, at pp. 487, 494.) The
trial court entered judgment for Reverend Woo and the majority, thereby giving them
control of the property.
The Court of Appeal reversed. Among other things, the appellate court concluded
the trial court‟s decision violated the First Amendment by substituting the court‟s
judgment for that of the church hierarchy regarding the identity of the local church.
According to the court, the question of which group is the “true” church is “ „clearly
ecclesiastical‟ ” and, therefore, the ecclesiastical authorities‟ determination on the issue is
controlling. (Korean United, supra, 230 Cal.App.3d at p. 501; see id. at pp. 500-503;
accord, Metropolitan Philip v. Steiger (2000) 82 Cal.App.4th 923, 930-931.)
The present matter does not involve a church hierarchical structure and a dispute
between the local authorities and a higher authority. It instead involves the first situation
identified in Episcopal Church Cases--a dispute among factions in an independent
organization. There is nothing in this record to suggest the Society is part of some larger
organization. The dispute must therefore be determined by “ „the ordinary principles
which govern voluntary associations.‟ ” (Episcopal Church Cases, supra, 45 Cal.4th at
p. 480.) In other words, the dispute must be resolved without reference to ecclesiastical
principles. If this cannot be done, the issue is not properly before the courts.
Defendants contend issues of membership are strictly within the purview of
church authorities. They cite as support New v. Kroger (2008) 167 Cal.App.4th 800, at
page 815, where the court said: “The prohibition against civil court participation in
sectarian disputes extends to issues involving membership, clergy credentials and
discipline, as well as religious entity governance and administration.” They also cite
Iglesia Evangelica Latina, Inc. v. Southern Pacific Latin American Dist. of Assemblies of
God (2009) 173 Cal.App.4th 420, at page 437, where the court asserted “ „ecclesiastical
17
matters include not only issues of religious doctrine per se, but also issues of
membership, clergy credentials and discipline, and church polity and administration.‟ ”
The fact that issues of church membership may fall within the purview of church
authorities does not mean that is always the case. The question is whether resolution of
the membership issue requires reference to church doctrine rather than neutral legal
principles. In New v. Kroger, despite indicating issues of membership fall outside the
scope of court authority, the court went on to rule that certain parties who had resigned
their membership in the church were no longer empowered to act on behalf of the church.
(New v. Kroger, supra, 167 Cal.App.4th at p. 822.) In effect, the court ruled that the
individuals in question were no longer members because they had resigned. That ruling
was based on basic legal principles rather than church doctrine.
In the present matter, the issue presented to the trial court was whether defendants
were life members of the Society. They assert their membership status “was based on the
informal traditions, customs, and practices of the [Society].”
We disagree. There was no evidence presented at trial that life membership was a
status conferred on members of the congregation due to ecclesiastical matters. Rather,
defendants‟ claim of life membership was simply one of fact based on evidence as to
whether the Society as a whole recognized that status and, if so, whether it had been
conferred on defendants. This was no more an ecclesiastical matter than the question
whether certain parties in New v. Kroger had resigned their membership. A trial court is
well equipped to resolve such factual disputes.
Although there was evidence presented by defendants by way of their own
testimony that they had been made life members, there was no evidence the Society even
recognized such status. Neither the 1992 bylaws nor any other governing document
contained any provision for life membership. Defendants could provide no
documentation to that effect. Thus, based on the evidence as a whole, the trial court‟s
18
determination that defendants failed to prove they were life members is supported by
substantial evidence.
Defendants nevertheless contend they have standing to pursue their cross-
complaint because, as voting members and directors of the Society under the 1992
bylaws, they have a beneficial interest in the outcome of the claims. However, to the
extent the claims in the cross-complaint are premised on the continued validity of the
1992 bylaws, those claims are without merit and any error by the trial court in finding a
lack of standing was harmless. As for any other claims in the cross-complaint, these
were claims on behalf of the Society. Since defendants are not members of the Society,
they have no standing to pursue such claims.
Finally, defendants contend they have standing under section 9418 to pursue
claims relating to the validity of the 2003 election. Subdivision (a) of that section reads:
“Upon the filing of an action therefor by any director or member, or by any person who
had the right to vote in the election at issue after such director, member, or person has
exhausted any remedies provided in the articles or bylaws, the superior court of the
proper county shall determine the validity of any election or appointment of any director
of any corporation.” Defendants again contend that, because the 1996 bylaws were
invalid, the 1992 bylaws control and, under those bylaws, they are directors and voting
members of the Society. However, as previously explained, because defendants are
wrong about the continued validity of the 1992 bylaws, their claim of director and voting
member status is without merit. And although at least some of defendants signed up for
membership in 2003 and participated in the January 2003 vote, that 2003 membership
lapsed before this case was filed.
19
III
Validity of 2004 Deeds
The trial court concluded the two grant deeds were improper for three separate and
independent reasons: (1) failure to comply with sections 9630 to 9633; (2) lack of power
in defendants to make the transfers because the 1992 bylaws were superseded by the
1996 bylaws; and (3) self-dealing. Defendants contend the court erred as to each.
As previously explained, the trial court did not err in concluding the 1996 bylaws
supplanted the 1992 bylaws as the governing document for the Society. Hence, the
second basis for the court‟s conclusion was sound. And while we need not consider the
other bases for the court‟s conclusion, we shall do so briefly for the sake of completeness.
Under section 9631, a nonprofit corporation may dispose of “all or substantially
all of its assets” when approved by the board and, unless in the ordinary course of
business, approved by the members. (§ 9631, subd. (a).) Section 9633 provides: “A
corporation must give written notice to the Attorney General 20 days before it sells,
leases, conveys, exchanges, transfers or otherwise disposes of all or substantially all of its
assets . . . .”
It is undisputed the 2004 deeds were not approved by either the board or the
members of the Society and notice was not given to the Attorney General. Defendants
nevertheless contend the Society failed to prove the transfers of the two parcels of real
property constituted a transfer of all or substantially all of its assets and, hence, that the
transfers were subject to the foregoing provisions. However, as the trial court concluded,
there was no dispute that the two parcels constituted all or substantially all of the assets of
the Society. There was no evidence presented of any other meaningful assets held by the
Society, and no argument was raised by defendants at trial to the contrary. Thus, the trial
court could properly find the issue was undisputed.
20
On the issue of self-dealing, section 9243 provides for remedies in the case of a
transaction in which a religious corporation is a party “and in which one or more of its
directors has a material financial interest.” (§ 9243, subd. (a).) There are, however,
several exceptions, including where:
“(A) The corporation entered into the transaction for its own benefit or the benefit
of the religious organization;
“(B) The transaction was fair and reasonable as to the corporation or was in
furtherance of its religious purposes at the time the corporation entered into the
transaction;
“(C) Prior to consummating the transaction . . ., the board authorized or approved
the transaction in good faith by a vote of a majority of the directors then in office without
counting the vote of the interested director or directors, and with knowledge of the
material facts concerning the transaction and the director‟s interest in the transaction. . .;
and
“(D) (i) Prior to authorizing or approving the transaction, the board considered
and in good faith determined after reasonable investigation under the circumstances that
either the corporation could not have obtained a more advantageous arrangement with
reasonable effort under the circumstances or the transaction was in furtherance of the
corporation‟s religious purposes or (ii) in fact, either the corporation could not have
obtained a more advantageous arrangement with reasonable effort under the
circumstances or the transaction was in furtherance of the corporation‟s religious
purposes.” (§ 9243, subd. (d)(3).)
Defendants contend the foregoing exception applies here. They argue “[t]he
evidence presented in the trial court demonstrates that the property transfers were
permissible under Corporations Code section 9243[, subdivision] (d)(3) because
[defendants] were attempting to reclaim property from the Punj Pyare [sic], a militant
group that had forcibly occupied the Sacramento Sikh Society and unlawfully taken over
21
the organization.” Defendants further argue their use of the 2004 deeds “was done in
pursuit of the Specific Purpose in the 1992 Bylaws . . . and to protect the Society from the
unwelcome and improper radicalization of the corporation by the Punj Pyare [sic].”
Finally, defendants contend the 2004 transfers “were authorized by a majority vote of the
Board of Directors in office pursuant to the 1992 Bylaws . . . .”
It is readily obvious defendants‟ arguments are based on a self-serving view of the
evidence presented to the trial court. However, on appeal from a judgment on the merits,
we view the evidence in the light most favorable to the judgment. (Winograd v.
American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.)
Although defendants certainly claimed in their testimony that the Punj Pyara had
taken control of the Society through violence and intimidation, other evidence presented
to the trial court established that the Punj Pyara was given control of the Society in 1996
pursuant to agreement of the parties and at the instigation of the congregation as a whole,
the Punj Pyara adopted new bylaws, the congregation approved the new bylaws, and
several elections for the board were held thereafter pursuant to the new bylaws. There is
no indication the Punj Pyara had any further involvement in the operation of the Society
after the election of the first new directors. When viewed in the light most favorable to
the judgment, the evidence shows the property was being held by those in charge of the
Society in furtherance of the wishes of the congregation as a whole. Hence, the trial
court could reasonably have concluded the 2004 deeds were not fair and reasonable or in
furtherance of the Society‟s purposes. (See § 9243, subd. (d)(3)(B).)
And even if we assume the 1996 bylaws were not valid, and thus the directors
elected pursuant to the 1992 bylaws were still in charge of the Society, defendants do not
show how return of the two parcels to the original donors would have benefited the
Society. On the contrary, those transfers would have benefited those to whom the
property was transferred, who obtained improved property, at the expense of the Society
as a whole. And while two of the defendants testified that the group planned to give the
22
property back to the Society after they regained control, this self-serving testimony could
reasonably have been discounted by the trial court and, in any event, only established that
the transaction was neither beneficial nor detrimental to the Society. Furthermore, under
defendants‟ theory, they were already in charge of the Society and thus had no reason to
transfer the property to themselves. The trial court‟s finding that the 2004 deeds
amounted to self-dealing is therefore supported by substantial evidence.
IV
Slander of Title
Defendants contend that, if we conclude the trial court erred in determining the
1996 bylaws supplanted the 1992 bylaws, the basis for concluding the 2004 deeds were
invalid would disappear. Hence, the jury‟s subsequent verdict against them for slander of
title must be reversed. However, because we conclude the trial court did not err, we
reject this argument.
Defendants also contend there is no substantial evidence to support the jury‟s
verdict on the slander of title claim. According to defendants: “The substantial evidence
introduced at the trial below shows that, at [the] time they created and recorded the two
deeds to transfer the Society‟s real property back to the original donors, [defendants]
believed that the 1992 Bylaws were never superseded by the 1996 Bylaws.” Thus,
defendants argue, they genuinely believed they were acting on behalf of the Society
under the 1992 bylaws and could not have been acting with malice, as required for a
slander of title claim.
Despite defendants‟ assertion that there is insufficient evidence to support the
verdict, their arguments in support misperceive the applicable standard of review. The
question here is not whether substantial evidence supports a finding that defendants
believed the 1992 bylaws were operative and their transfer of the property was lawful but
whether substantial evidence supports the opposite conclusion. As noted earlier, we
23
review the evidence in the light most favorable to the judgment and determine whether
the evidence is sufficient to support that judgment. It is possible that substantial evidence
supports both a finding that the 1992 bylaws remained operative and the opposite finding
that they did not. In such case, the issue is for the finder of fact to decide.
“Slander of title is the false and unprivileged disparagement of title to real
property resulting in pecuniary damage. [Citation.] The recording of a deed which casts
doubt upon the title is basis for an action in slander of title.” (Cavin Memorial Corp. v.
Requa (1970) 5 Cal.App.3d 345, 361) The elements of a claim for slander of title are
“(1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct
pecuniary loss.” (Sumner Hill Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC
(2012) 205 Cal.App.4th 999, 1030.) In addition, a claim for slander of title will not lie in
the absence of malice, either express or implied. (Gudger v. Manton (1943) 21 Cal.2d
537, 544, disapproved on other grounds in Albertson v. Raboff (1956) 46 Cal.2d 375,
381.)
Defendants contend the elements of lack of privilege or justification and malice
are absent here. They assert substantial evidence shows that, at the time the two deeds
were created and recorded, they believed the 1992 bylaws were still controlling.
Therefore, they considered themselves to be the authorized leaders of the Society with the
power to handle its day-to-day operations, including the transfer of Society property.
According to defendants, they transferred the property in order to protect it from the Punj
Pyara.
Assuming defendants are correct that substantial evidence supports a finding that
they believed the 1992 bylaws were still in effect and they transferred the property in
order to protect it from the Punj Pyara, there is substantial evidence to the contrary as
well. For example, despite defendants‟ assertion that they believed the 1992 bylaws were
still in effect, they proceeded for years after adoption of the 1996 bylaws as if those later
bylaws were controlling. It was not until 2003, after defendants were unsuccessful in
24
regaining control of the Society through the election process, that they purportedly
discovered the 1997 Fuqua letter and chose a different course of action.
Tatla testified that, when defendants began meeting at Lerner Way after the
election, they immediately discussed embarking on a plan to get the property back from
the people then in charge of the Society. Avtar Dosanjh testified that the purpose of the
meetings at Lerner Way was to take back the property from the Society and give it to the
original donors. Maahan Singh testified that, at those meetings, the participants put
together a plan to get the property back to the original temple members. There is no
mention here of taking control of the property for the sake of the Society.
Defendants‟ assertion that they first learned they were still in charge of the Society
after discovering the Fuqua letter is belied by the nature of their actions. One of
defendants‟ first acts was to file a quiet title action on the property. However, rather than
name as the defendants in that action all those who might have a claim on the property,
defendants chose to name as the sole defendant an individual who was purportedly living
at the temple but had no such claim. Defendants did not name as defendants the obvious
parties, i.e., those claiming to represent the Society by virtue of the 2003 election. It may
reasonably be concluded from this that defendants did not want those claiming to
represent the Society to discover the quiet title action and defend against it by asserting
their superior claims on the property. These are not the normal actions of a party who
believes he has a legitimate claim to real property.
Furthermore, if defendants truly believed the 1992 bylaws remained in force and
they were in control of the Society, there was no reason for them to transfer ownership of
the property away from the Society in order to protect the Society‟s interests. They
already had control of the property. All they needed was a court to enforce that right.
However, instead of making a realistic attempt to obtain court relief, defendants simply
transferred ownership and announced to the world that they were the true owners, thereby
placing a cloud on the Society‟s ownership.
25
The question here is not whether substantial evidence supports defendants‟ theory
of the case, but whether substantial evidence supports the findings of the jury. Based on
the totality of the evidence presented at trial, we conclude the jury‟s verdict on the
slander of title claim is supported by substantial evidence.
V
Punitive Damages Instruction
Defendants contend the trial court erred in instructing the jury on punitive
damages and, therefore, the punitive damages award must be reversed.
Civil Code section 3294 reads in relevant part: “(a) In an action for the breach of
an obligation not arising from contract, where it is proven by clear and convincing
evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff,
in addition to the actual damages, may recover damages for the sake of example and by
way of punishing the defendant. [¶] . . . [¶] (c) As used in this section, the following
definitions shall apply: [¶] (1) „Malice‟ means conduct which is intended by the
defendant to cause injury to the plaintiff or despicable conduct which is carried on by the
defendant with a willful and conscious disregard of the rights or safety of others. [¶] (2)
„Oppression‟ means despicable conduct that subjects a person to cruel and unjust
hardship in conscious disregard of the person‟s rights. [¶] (3) „Fraud‟ means an
intentional misrepresentation, deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant of thereby depriving a person of
property or legal rights or otherwise causing injury.”
In College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704 (College
Hospital), the state high court suggested use of the word “despicable” in the definition of
malice “seems to represent a new substantive limitation on punitive damage awards.”
(Id. at p. 725.) According to the court, “the adjective „despicable‟ is a powerful term that
refers to circumstances that are „base,‟ „vile,‟ or „contemptible.‟ (4 Oxford English Dict.
26
(2d ed. 1989) p. 529.) As amended to include this word, the statute plainly indicates that
absent an intent to injure the plaintiff, „malice‟ requires more than a „willful and
conscious‟ disregard of the plaintiffs‟ interests. The additional component of „despicable
conduct‟ must be found.” (Ibid.)
In line with Civil Code section 3294 and College Hospital, the pattern jury
instruction, CACI No. 3941, reads: “If you decide that [name of defendant]‟s conduct
caused [name of plaintiff] harm, you must decide whether that conduct justifies an award
of punitive damages. At this time, you must decide whether [name of plaintiff] has
proved by clear and convincing evidence that [name of defendant] engaged in that
conduct with malice, oppression, or fraud. The amount of punitive damages, if any, will
be decided later.
“ „Malice‟ means that [name of defendant] acted with intent to cause injury or that
[name of defendant]‟s conduct was despicable and was done with a willful and knowing
disregard of the rights or safety of another. A person acts with knowing disregard when
he or she is aware of the probable dangerous consequences of his or her conduct and
deliberately fails to avoid those consequences.
“ „Oppression‟ means that [name of defendant]‟s conduct was despicable and
subjected [name of plaintiff] to cruel and unjust hardship in knowing disregard of
[his/her] rights.
“ „Despicable conduct‟ is conduct that is so vile, base, or contemptible that it
would be looked down on and despised by reasonable people.
“ „Fraud‟ means that [name of defendant] intentionally misrepresented or
concealed a material fact and did so intending to harm [name of plaintiff].” (CACI No.
3941.)
The instruction given in this case was somewhat different. In the first paragraph
of the instruction, the second sentence read: “At this time, you must decide whether the
Sacramento Sikh Society has proved by clear and convincing evidence that defendants
27
conspired to engage and/or engaged in that conduct with malice, oppression, or fraud.”
(Italics added.) In addition, the instruction given by the court defined despicable as
follows: “Despicable conduct is conduct that is so mean, vile, base or contemptible that
it would be looked down upon and despised by reasonable people.” (Italics added.)
Defendants argue the foregoing modifications to the standard instruction reduced
the Society‟s burden of proof by permitting a finding of liability based solely on a
conspiracy to engage in malicious conduct and based on conduct that is merely “mean.”
Defendants argue “[t]he law does not allow for recovery of punitive damages based on
„conspiring‟ to engage in wrongful conduct.” Defendants further assert “[t]he word
„mean‟ is defined as „selfish in a petty way; unkind.‟ ” According to defendants, “[p]etty
and unkind conduct is not synonymous with the type of despicable conduct required
under the law for an award of punitive damages.”
The Society contends defendants failed to object to the foregoing instruction and,
therefore, have forfeited the issue for purposes of review. By stipulation, the discussion
of instructions was not reported. On the record, the court asked if there was any
objection to CACI No. 3941. The following colloquy ensued:
“MR. ORTIZ [defense counsel]: No. Other than --
“THE COURT: Other than on the substance.
“MR. ORTIZ: -- the objection that I had earlier.”
The Society argues an objection based “on the substance” is not a specific objection to
use of the word “mean” or the inclusion of conspiracy liability.
It was, of course, incumbent on defendants to place on the record their objection to
the instruction in order to preserve it for appeal. Although it is clear defendants had some
objection to the instruction, we are left to guess what that might have been. But even
assuming defendants did not forfeit the objection in this instance, we do not agree with
them on the merits.
28
On the issue of conspiracy liability, defendants provide no legal authority for their
assertion that the law does not permit recovery of punitive damages based on a
conspiracy to engage in prohibited conduct. A legal point that is raised but not argued in
any detail or supported by citation to legal authority is forfeited. (Kim v. Sumitomo Bank
(1993) 17 Cal.App.4th 974, 979.) In this instance, the fact that a given defendant
conspired with the others to harm the Society but then left it to the others to do the dirty
work and put the plan into action is hardly a reason to deny an award of punitive damages
against that defendant. In this instance, the jury was instructed that a given defendant
may be held liable for slander of title only if that defendant agreed with the others to
prepare the false deeds and prepare and send the false letters and intended that the slander
of title be committed. The jury was also instructed that it must determine if that
defendant acted with malice, oppression or fraud. Nothing more is required.
As for addition of the word “mean” to the definition of “despicable,” the Society
contends that change did not lessen their burden of proof because the word “is also
defined as „contemptible,‟ „base,‟ and generally „below the normal standards of human
decency and dignity.‟ ” The Society further argues that, in any event, a finding of malice
can be based on either intentional conduct or despicable conduct, and the evidence
presented at trial shows defendants‟ conduct was intended to cause harm to the Society.
Because we agree with the Society that addition of the word “mean” in the
instruction did not lessen its burden of proof in this matter, we need not consider the
Society‟s alternate argument that any instructional error was vitiated by evidence of
intentional misconduct. Even accepting defendants‟ definition of the word “mean,” i.e.,
“ „selfish in a petty way; unkind,‟ ” the remainder of the instruction required a finding of
more serious misconduct. “It is well established in California that the correctness of jury
instructions is to be determined from the entire charge of the court, not from a
consideration of parts of an instruction or from a particular instruction.” (People v.
Burgener (1986) 41 Cal.3d 505, 538-539.) The entire definition given here read:
29
“Despicable conduct is conduct that is so mean, vile, base or contemptible that it would
be looked down upon and despised by reasonable people.” In order to satisfy the
instruction, conduct that is merely selfish in a petty way or unkind would also have to be
the type that reasonable people would normally look down upon and despise. Hence,
while we would discourage efforts by the parties or the trial court to modify or clarify the
pattern jury instructions, we find the addition of the word “mean” in this instance did not
lessen the Society‟s burden of proof.
VI
Sufficiency of the Evidence on Punitive Damages
At the end of the punitive damages phase, defendants moved for a directed verdict,
claiming the Society failed to present sufficient evidence of their financial condition. In
particular, defendants argued there was no evidence of their living expenses and none of
the Society‟s document requests concerned such expenses. The trial court disagreed,
pointing out that some requests, such as those for bank records, would have covered
expense evidence. The court indicated punitive damages may be awarded against a
defendant who fails to produce requested financial documents, and concluded this is such
a case. The court therefore denied the motion for directed verdict.
Defendants contend there was insufficient evidence presented at trial regarding
their net worth and other financial condition to warrant an award of punitive damages.
Defendants argue a punitive damages award must bear a reasonable relationship to a
given defendant‟s financial condition and such determination cannot be made in the
absence of evidence of that condition. Defendants argue that, in this instance, the trial
court absolved the Society of the obligation to present such financial evidence because of
defendants‟ failure to produce sufficient financial evidence in response to discovery
requests. Defendants further argue the Society relied solely on limited evidence of
30
defendants‟ assets and ignored evidence of their liabilities, but it is the combination of the
two that the jury must consider.
On a challenge to the amount of a punitive damages award, our function is to
determine if the award “is excessive as a matter of law or raises a presumption that it is
the product of passion or prejudice.” (Adams v. Murakami (1991) 54 Cal.3d 105, 109-
110.) The underlying purpose of punitive damages is to punish wrongdoing and thereby
protect the public from future misconduct either by the defendant or by some other
potential wrongdoer. (Id. at p. 110.) “The essential question therefore in every case must
be whether the amount of damages awarded substantially serves the societal interest.”
(Ibid.) Three factors to be considered in answering that question are: (1) the nature of
the defendant‟s wrongdoing; (2) the amount of compensatory damages awarded; and (3)
the wealth of the defendant. (Ibid.) In Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d
910, the state high court observed: “[T]he function of deterrence [citation] will not be
served if the wealth of the defendant allows him to absorb the award with little or no
discomfort. [Citations.] By the same token, of course, the function of punitive damages
is not served by an award which, in light of the defendant‟s wealth and the gravity of the
particular act, exceeds the level necessary to properly punish and deter.” (Id. at p. 928.)
Thus, “the wealthier the wrongdoing defendant, the larger the award of exemplary
damages need be in order to accomplish the statutory objective.” (Bertero v. National
General Corp. (1974) 13 Cal.3d 43, 65.) “A reviewing court cannot make a fully
informed determination of whether an award of punitive damages is excessive unless the
record contains evidence of the defendant‟s financial condition.” (Adams v. Murakami,
supra, 54 Cal.3d at p. 110.)
Defendants contend the present record does not contain sufficient evidence to
permit informed review. However, in making that argument, defendants fail to provide
any summary of the evidence that was presented at trial or any explanation as to how that
evidence is inadequate. A party challenging sufficiency of the evidence must summarize
31
the evidence on the point, both favorable and unfavorable. (Roemer v. Pappas (1988)
203 Cal.App.3d 201, 208.) Failure to do so may be considered a forfeiture. (Oliver v.
Board of Trustees (1986) 181 Cal.App.3d 824, 832.) Opposing counsel is not required to
set forth the evidence supporting the judgment of the trial court. Nor is it the obligation
of this court to comb through the record looking for evidence supporting the judgment.
In their reply brief, under the heading, “Appellants Fairly Summarized the
Evidence,” defendants acknowledge that the Society argues the foregoing point.
However, according to defendants, the Society “fails to identify the evidence which was
purportedly omitted or unfairly characterized.” Thus, defendants argue, we should
disregard the argument. However, defendants again misunderstand the respective
appellate burdens of the parties. It is defendants who are required to summarize the
evidence. It was not the Society‟s burden to point out all the evidence defendants‟ failed
to summarize.
In Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597 (Davidov), the court
found the defendant liable for fraud and then ordered him to produce records regarding
his net worth and turn them over to the plaintiff‟s counsel. After the defendant failed to
comply, the court entered an award of punitive damages notwithstanding the absence of
evidence of the defendant‟s financial condition. (Id. at p. 603.) The Court of Appeal
rejected the defendant‟s argument that the absence of financial evidence precluded an
award of punitive damages, explaining: The “defendant was ordered to produce his
financial records so that the trial court could make an evaluation of whether any
particular punitive damage award would have the required deterrent effect without being
overly burdensome. This order was never rescinded, nor has defendant argued on appeal
that it was improper. Therefore, by failing to bring in any records which would reflect
his financial condition, despite being ordered to do so, and by failing to challenge that
ruling on appeal, defendant has waived any right to complain of the lack of such
evidence.” (Id. at pp. 608-609.)
32
Defendants contend Davidov is inapplicable to the present matter because, in that
case, no financial records were produced in response to a court order. According to
defendants, in the present matter it was plaintiff who issued the notice to produce and
four of the defendants in fact did produce all documents available to them.
But the fact that the document production here was pursuant to a notice from
plaintiff rather than a court order, as defendants assert, is of no importance. Defense
counsel agreed to produce the requested documents and the trial court ordered such
production by a particular date and time. Thus, there was an order to produce, and
defendants were required to comply.
As for defendants‟ assertion that some of them did in fact produce financial
documents, that does not distinguish the present matter from Davidov. It is clear from the
testimony of the four individuals that their production of financial documents was
extremely limited. Defendants argue they repeatedly testified that they produced all
documents in their possession that were requested. However, given the questionable
nature of that testimony as a whole, including Tatla‟s shifting story about whether he was
still farming and how much land he owned, Gill‟s claim that he does not own any
property because his property is instead in a family trust, and Harinder Singh‟s testimony
that he could not find any documentation whatsoever regarding the home he owns with
his father, the court was free to discount these claims of compliance.
To the extent defendants‟ limited production of documents precluded plaintiff
from presenting sufficient evidence of their net worth, this matter is comparable to
Davidov. A defendant who fails to comply with a document request has forfeited any
right to complain of the lack of such evidence. This applies equally to a defendant who
simply fails to make an appearance at trial. And to the extent any defendant did comply
with the document request, as defendants assert, defendants have failed to summarize the
evidence relating to that defendant or explain how it is inadequate. Defendants have
therefore forfeited their substantial evidence claim.
33
DISPOSITION
The judgment is affirmed. The Society is awarded its costs on appeal. (Cal. Rules
of Court, rule 8.278(a)(1).)
HULL , J.
We concur:
NICHOLSON , Acting P. J.
ROBIE , J.
34