Street v. Greer CA4/3 ( 2020 )

Filed 8/19/20 Street v. Greer CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CHRISS W. STREET,
Plaintiff and Respondent, G055418
v. (Super. Ct. No. 30-2011-005125738)
PHILLIP B. GREER, OPINION
Defendant and Appellant.
Appeal from a judgment of the Superior Court of Orange County, Hugh
Michael Brenner, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief
Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed in part and reversed in part.
Phillip B. Greer, in pro. per., for Defendant and Appellant.
The RDM Legal Group and Russel D. Myrick for Plaintiff and Respondent.
* * *
A jury determined Phillip B. Greer was liable (for over $10 million) for
fraud and professional negligence, based on his conduct representing Chriss W. Street in
a bankruptcy proceeding. On appeal, Greer asserts there was insufficient evidence to
support the jury’s verdict on the fraud claim. He does not challenge the professional
negligence judgment, or the corresponding $7,583,589.70 damages award.
We conclude that although there was evidence of fraudulent concealment,
we read the jury’s poorly drafted special verdict form as asking only if there was
evidence of an intentional misrepresentation about a specific deed before trial. After
carefully reviewing the record, we found no evidence of this specific affirmative
intentional misrepresentation. Accordingly, we cannot uphold a fraud verdict for which
there is an essential element missing. We reverse the judgment as to the fraud claim and
reduce the award of damages by $2,416,410.30. In all other respects, we affirm the
judgment.
FACTUAL BACKGROUND
I. Prior Bankruptcy Action
In 1996, the Fruehauf Trailer Corporation filed for bankruptcy. The
resulting reorganization plan included the creation of a liquidating trust, which was
intended to sell off all the corporation’s assets to repay creditors. Street was named
Trustee of the resulting liquidating trust, aptly named “The End of the Road Trust” (the
Trust). Its express purpose was “conserving and liquidating the Trust Estate [ . . . ] with
no objective to engage in the conduct of a trade or business.”
II. Prior Lawsuit Against Street
Over 10 years later (2008), Daniel Harrow, in his capacity as the Trust’s
successor trustee, brought an action against Street alleging Street misused trust funds,
violated his fiduciary duty, and engaged in direct self-dealing as trustee. Specifically,
Harrow alleged Street overcompensated himself, used the Trust’s funds for personal
credit card expenses, and acquired and operated a new entity, American Trailer. Street
hired Greer as his attorney in the adversary proceedings before the bankruptcy court.
We need not provide a detailed summary of the entire case because Greer
does not dispute he acted negligently in representing Street. Suffice it to say, Greer failed
to present expert testimony, evidence, and exhibits, or identify and argue for a favorable
2
legal standard for his client. We focus our summary of facts on evidence related to the
challenged fraud claim.
In August 2009, Harrow sent Street a proposed list of stipulated facts,
requesting Street’s responses to each fact. Street forwarded the list to Greer, along with
detailed contentions refuting over 53 of the 81 facts. Greer passed along Street’s list of
disputed facts to Harrow, but then declined to contest any of the 81 facts before trial
started. In March 2010, the court ruled in Harrow’s favor, awarding over $7 million in
damages.
III. The Underlying Action
The following year, Street filed a complaint against Greer and his law
1
firm. He alleged Greer was liable for professional negligence and fraud (intentional
2
misrepresentation).
The second cause of action for fraud specifically pleaded the following
misconduct: “Contrary to [Street’s] numerous instructions to not agree to any false or
misleading [s]tipulated [f]acts; [Greer] apparently signed or allowed to become approved
without material (or perhaps any) changes false and misleading [s]tipulated [f]acts to
[opposing counsel’s] draft pre-trial order. . . . [¶] [Greer] continued to falsely and
dishonestly assure [Street] that no [s]tipulated [f]acts had been approved before trial. It
was not until trial had begun, that [Street] realized [Greer] had approved or allowed to be
approved the pre-trial order that contained the false and misleading [p]roposed
[s]tipulated [f]acts. [¶] Judgment at trial was entered against [Street] based on false and
misleading [s]tipulated [f]acts approved in the pre-trial order.”
Because Greer maintained the professional negligence claim was barred by
the one-year statute of limitations, the trial court agreed to bifurcate the action and
1
The law firm is not party to this action.
2
During trial, Street voluntarily dismissed the third cause of action asserting
violations of Business and Professional Code section 17200.
3
consider the limitations defense separately from the merits of the case. After considering
arguments from both parties, the court ruled in Street’s favor, explaining, “Greer
provided no credible testimony or other evidence at trial that established that he in fact
ceased representing Street” and “[Greer’s] purported conclusion that the attorney-client
relationship had ended was based only on his own ‘inference.”’ The case proceeded to a
jury trial on the merits.
A. Professional Negligence
With respect to the professional negligence cause of action, Street
demonstrated how Greer’s multiple acts of misconduct led to an adverse ruling at the
bankruptcy trial. For example, Street provided evidence of the following actions:
(1) Greer’s failure to dispute facts created an unfavorable and misleading foundation at
trial; (2) Greer’s ability to present a robust defense was eliminated by admission of
stipulated facts; (3) Greer failed to present evidence and call certain witnesses essential to
Street’s defense; and (4) Greer underprepared his one expert witness. After a few
questions, Greer withdrew the witness’s testimony and, consequently, the court refused to
accept into evidence the expert’s report. Two experts testified Greer’s conduct fell below
the standard of care of a bankruptcy attorney and his conduct was the primary reason for
the adverse judgment in the proceeding.
Greer’s defense to the professional negligence claim was that Street was
indisputably guilty of violating his trustee obligations and breaching his fiduciary duties.
Greer asserted his conduct had no bearing on the bankruptcy court’s decision. He blamed
Street for some of the questionable trial tactics, such as insisting they hire an ineffectual
expert witness who may have been intoxicated.
B. Intentional Misrepresentation
In contrast to his negligence claim, Street’s fraud cause of action focused
on only one facet of the bankruptcy case, i.e., Greer’s misconduct regarding the proposed
stipulated facts. Specifically, Street testified that as part of the underlying bankruptcy
proceeding, Harrow sent him the draft of proposed stipulated facts. Street responded to
4
each “fact” individually in an e-mail sent to Greer. Street recalled that Greer
acknowledged receiving the e-mail and responded as follows: “‘This is great. This is all
the information we need, and I’m going to send it off to [the opposing counsel].’”
Street’s e-mail was then forwarded to Harrow, further cementing Street’s expectation the
defense plan was to contest 53 of the 81 proposed facts.
Later at trial, Street learned that, without his consent, Greer stipulated to the
facts as they were. Street presented evidence Greer missed a crucial pretrial conference
where he could have contested the proposed stipulated facts. In Greer’s absence, the
bankruptcy judge accepted Harrow’s version of the facts as being the controlling
stipulated facts.
In his defense, Greer offered no clear explanation as to how the facts were
stipulated to. He maintained that missing the pretrial conference had no negative
consequences in the case. He claimed to have never affirmatively stipulated to any of the
facts. Alternatively, he asserted the facts were indisputable, and therefore, it did not
matter he did not contest them.
Furthermore, Greer argued he never misrepresented his intentions but
conceded he failed to discuss changes to the defense plan with Street. Greer also tried to
establish the unimportance of the stipulated facts by showing the bankruptcy court
considered evidence outside of the stipulated facts.
At the close of Street’s case, Greer moved for nonsuit on the grounds there
had been “no evidence introduced [of] any of the elements for fraud being a
representation of a material fact that was knowingly false.” When the court noted there
were other types of fraud such as concealment, Greer’s counsel noted the complaint
alleged a specific intentional misrepresentation. Street’s counsel seemed to agree the
fraud claim was based on an intentional misrepresentation and not on a concealment
theory. He asserted, “the evidence was very clear and overwhelming that the affirmative
statement made by . . . Greer to . . . Street was that he intended to provide an appropriate
5
legal representation to defend . . . Street in bankruptcy court, and he knowingly . . . failed
to do that.” The court denied the motion.
During closing argument, the parties primarily focused on the professional
negligence cause of action. With respect to the fraud claim, the entirety of Street’s
argument was as follows: “Did . . . Greer make a misrepresentation to . . . Street about
the stipulated facts? You heard . . . Street’s testimony. He thinks so. Are you going to
believe . . . Greer over . . . Street? You heard all the testimony in the case. You’re the
jury. You’re the finder of the facts. It’s up to you.”
Greer’s closing argument on this claim was slightly longer. He made the
following argument: “I have a simple question to ask on [the intentional
misrepresentation claim]. When did you ever hear a statement attributed to . . . Greer that
was false that he said to . . . Street? [Street] didn’t stand up and say, . . . Greer told me
that, and it was false. Because what you have to find is, did . . . Greer represent to . . .
Street that . . . Greer had not stipulated to any facts before trial?” Greer argued a
stipulation requires an agreement between the parties that becomes binding in a lawsuit
and there was no evidence Greer agreed to any fact. Rather, counsel noted Street merely
presented evidence Greer missed a hearing and “the judge imposed the facts on the
parties” and, therefore, Greer’s statement he did not stipulate to any facts before trial was
true. Counsel concluded, if Greer had made a statement suggesting he did not agree to
stipulate to any facts, that would be true.
III. The Verdict
Greer drafted a special verdict form for the jury, and Street approved the
language. Relevant to this appeal, the first question regarding the fraud cause of action
asked the jury if there was evidence of an affirmative misrepresentation. Specifically, the
verdict form asked if “Mr. Greer represent[ed] to Mr. Street that Mr. Greer, ‘had not
stipulated to any facts before trial?’” The jury responded “yes,” to this question and the
follow up questions addressing the other necessary elements of a fraud claim. The jury
determined Greer was liable for fraud and owed Street $2,416,410.30. The jury also
6
answered the professional negligence special verdict questions, concluding Greer was
liable for $7,583,589.70.
Greer filed a motion for judgment notwithstanding the verdict, a motion for
a new trial, and a motion for a directed verdict. The court denied all three motions.
DISCUSSION
Greer maintains the “jury’s verdict” on the intentional misrepresentation
claim is “not supported by the evidence.” Specifically, he asserts there was no evidence
of three necessary elements: false representation, reliance, and damages. In response,
Street asserts there was ample evidence of fraudulent misconduct. In making these
arguments, both parties acknowledge the jury used a special verdict form, but neither
focused their briefing on how the jury’s specific factual findings frame our review of the
evidence. As we will explain, while there may have been evidence of fraudulent
concealment, we read the poorly drafted special verdict as asking the jury about a specific
affirmative false statement. We found no evidence to support this factual finding and,
therefore, the fraud verdict must be reversed.
In reviewing jury verdicts, generally the standard for review is whether any
substantial evidence, contradicted or uncontradicted, supports the verdict or decision.
(Wolf v. Walt Disney Pictures & Television (2008) 162 Cal. App. 4th 1107, 1138.)
Substantial evidence is evidence which has “ponderable legal significance” and is
“reasonable, credible, and of solid value.” (Jorge v. Culinary Institute of America (2016)
3 Cal. App. 5th 382, 396.)
When a special verdict is used, it must “present the conclusions of fact as
established by the evidence, and not the evidence to prove them; and those conclusions of
fact must be so presented as that nothing shall remain to the [c]ourt but to draw from
them conclusions of law.” (Code Civ. Proc., § 624.) “‘Unlike a general verdict (which
merely implies findings on all issues in favor of the plaintiff or defendant), a special
verdict presents to the jury each ultimate fact in the case. The jury must resolve all of the
ultimate facts presented to it in the special verdict, so that “nothing shall remain to the
7
court but to draw from them conclusions of law.” (Code Civ. Proc., § 624.) [¶] The
requirement that the jury must resolve every controverted issue is one of the recognized
pitfalls of special verdicts. “[T]he possibility of a defective or incomplete special verdict,
or possibly no verdict at all, is much greater than with a general verdict that is tested by
special findings . . . .” [Citation.]’ [Citation.]” (Myers Building Industries, Ltd. v.
Interface Technology, Inc. (1993) 13 Cal. App. 4th 949, 959-960, original italics.)
Consequently, “When a special verdict is used and there is no general
verdict, we will not imply findings in favor of the prevailing party. [Citation.] If a fact
necessary to support a cause of action is not included in such a special verdict, judgment
on that cause of action cannot stand. [Citation.]” (Behr v. Redmond (2011)
193 Cal. App. 4th 517, 531 (Behr).) We note, “[Street,] as the plaintiff, had responsibility
for submitting a verdict form sufficient to support [his] causes of action. [Citation.] If
[he] chose not to include a proposed factual finding essential to one of [his] claims, it is
not incumbent on [Greer], as the defendant, to make sure the omission is cured.” (Ibid.,
fn. omitted.)
Generally, “‘“[t]he elements of fraud, which give[] rise to the tort action for
deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure);
(b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance;
(d) justifiable reliance; and (e) resulting damage.”’ [Citation.]” (Small v. Fritz
3
Companies, Inc. (2003) 30 Cal. 4th 167, 173; Civ. Code, §§ 1709, 1710.) The first
element, misrepresentation, is broadly defined as including “[t]he assertion” of an untrue
fact (§ 1710, subd. (2) [false representation]), a suppression of a fact by “one who is
bound to disclose it” (§ 1710, subd. (3) [concealment]), or a promise made without any
intention to perform (§ 1710, subd. (4)).
However, in this case, the special verdict form was narrowly focused and
only asked the jury if there was evidence of a single affirmative false statement. The jury
3
All further statutory references are to the Civil Code, unless otherwise
indicated.
8
was asked the question, “Did Mr. Greer represent to Mr. Street that Mr. Greer, ‘had not
stipulated to any facts before trial?’” This question limited Street’s fraud claim to a very
specific affirmative misrepresentation. The jury was not asked if there was evidence of
an intentional concealment or failure to perform a promise. (§ 1710, subds. (3) & (4).)
This is puzzling, especially because it appears Street relied on a theory of concealment,
i.e., “intentionally concealing his failure to act in the manner promised and intentionally
concealing his failure to comply with a court order to respond to [the proposed facts]
before trial.”
As mentioned, a special verdict presents to the jury each ultimate fact in the
case. (Code Civ. Proc., § 624.) Thus, to prevail on Greer’s sufficiency of the evidence
challenge, Street needed to direct us to evidence that before trial Greer told Street that he
had not stipulated to the facts knowing this statement was false. (Behr, supra,
193 Cal.App.4th at p. 531 [when special verdict used we cannot imply findings].) In his
briefing, Street fails to cite to any place in the record where Greer declared he filed an
opposition to the proposed stipulated facts. Rather, Street’s briefing discusses case law
holding fraud can be based on concealment when there is a duty to disclose. It contains a
lengthy discussion of the evidence supporting the theory there was an intentional
concealment. To briefly summarize, Street points to evidence Greer did not keep his
promise to contest the proposed stipulation, had a duty to disclose this information to his
client, and then took steps to intentionally conceal his negligence. Street’s briefing
completely ignores the significance of the special verdict form asking the jury to make a
specific factual finding about an affirmative misstatement about the status of the
proposed stipulated facts.
For example, Street contends Greer represented his intention to contest the
facts when he confirmed the receipt of Street’s opposition to the draft stipulated facts. At
best this evidence shows Greer promised not to stipulate. Nonperformance on a promise
will only constitute fraud if it was made with no intent to perform. (§ 1710, subd. (4).)
While there was certainly evidence Greer was professionally negligent in handling the
9
case, there was nothing to suggest Greer sent the e-mail as a deliberate lie or false
promise. Thus, while Greer’s promise may have been misleading, the evidence does not
support the jury’s finding of an intentional misrepresentation. And as mentioned, the
special verdict form did not ask the jury to decide if there was a failure to perform a
promise. (§ 1710, subd. (4).)
Street also argues Greer misrepresented the defense strategy, including
misrepresenting his stipulation to the facts, through more implicit statements. For
example, Greer repeatedly told Street “that the defenses to his case were strong, they just
needed to be presented in a comprehensive and coherent fashion.” Street argues these
assertions communicated Greer’s intentions to contest the facts. Again, statements
promising or indicating a particular action are not evidence of an intentional
misrepresentation. To the extent this evidence suggests Greer concealed his stipulation to
the facts when he had a duty to disclose this information, the jury was not asked to
determine if there was an intentional concealment.
In assessing special verdicts, we must look to exactly what the jury was
asked: “If a fact necessary to support a cause of action is not included in such a special
verdict, judgment on that cause of action cannot stand. [Citation.]” (Behr, supra,
193 Cal.App.4th at p. 531.) Here, because the special verdict did not require findings
about failure to perform a promise or fraudulent concealment, finding fraud in this case
“is like a puzzle with pieces missing; the picture is not complete.” (Falls v. Superior
Court (1987) 194 Cal. App. 3d 851, 855, fn. omitted.) We cannot uphold the jury’s verdict
because the record does not contain any evidence Greer affirmatively represented he “had
not stipulated to any facts before trial.”
We note the record shows both parties had ample opportunity at trial to
offer input on the special verdict form, and it was each party’s responsibility to highlight
deficiencies in the verdict form. (Behr, supra, 193 Cal.App.4th at p. 531.) Street
declined to do so, instead accepting Greer’s special verdict form with no objections.
10
In conclusion, while we agree evidence exists which may support a finding
of intentional concealment, the jury was never presented with an opportunity to make a
factual decision on the matter. We cannot uphold a verdict for which there is an essential
4
element missing.
DISPOSITION
The judgment is reversed as to the second cause of action for fraud by
misrepresentation. The award of damages is reduced by $2,416,410.30. In all other
respects, the judgment is affirmed. In the interests of justice, each party shall bear their
own costs on appeal.
O’LEARY, P. J.
WE CONCUR:
MOORE, J.
THOMPSON, J.
4
Both Greer and Street discuss the other elements of fraud, including
justifiable reliance and damages. “All of these elements must be present if actionable
fraud is found; one element absent is fatal to recovery.” (Ach v. Finkelstein (1968)
264 Cal. App. 2d 667, 674.) Based on our ruling the first element is missing, there is no
need to address the other factors.
11