Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from an order of the Superior Court of Los Angeles County Super. Ct. No. BC328811, George H. Wu, Judge. Affirmed.
Charles M. Farano, Thomas G. Kieviet, and Shonn Galassini for Defendants and Appellants.
No appearance for Plaintiff and Respondent.
Defendants Lollicup USA Inc., Alan Yu, and Marvin Cheng (defendants) appeal the grant of a partial new trial to plaintiff William K. K. Ng, doing business as Global Foods (plaintiff). We conclude that the partial new trial was properly granted, and we affirm.
SUZUKAWA, J.
FACTS AND PROCEDURAL HISTORY
I. The Present Action
Plaintiff filed a five-count complaint, alleging breach of contract, fraud, breach of the implied covenant of good faith and fair dealing, indemnification, and tortious interference with contractual and business relations against defendants on February 15, 2005. The operative second amended complaint, which added a sixth cause of action for unfair business practices, was filed September 30, 2005. It alleged that the parties entered into franchise agreements in January 2000 and thereafter, but that defendants breached the franchise agreements, made false and misleading representations to induce plaintiff to enter the franchise agreements, interfered with plaintiff’s intended sale of the franchise to a third party, and improperly terminated the franchise agreements.
Defendants denied the allegations of the complaint and filed a cross-complaint for breach of contract, fraudulent misrepresentation, unfair business practices, contractual indemnity, and professional negligence.
II. Trial and Verdict
The case was tried to a jury from July 27 to August 3, 2006. On August 2, the jury retired to begin deliberating, guided by a special verdict form prepared by the parties and approved by the court. The special verdict form contained a significant error of which neither counsel nor the court apparently was aware: It instructed that if the jury found that plaintiff’s contractual performance was not excused, it should not make any further findings with regard to plaintiff’s breach of contract claim—even if the jury found that the plaintiff had performed all or substantially all of its obligations under the contract. The relevant section of the special verdict form is as follows, with the erroneous language reprinted in bold:
“A. Breach of Contract
“1. Did Plaintiff and Defendant enter into [] any of the three contracts (Convoy, Indonesia, and San Diego Master)?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 1 is yes as to any contract, then answer question 2 for that contract. If you answered no as to any contract, stop here, answer no further questions with regard to that contract.
“2. Did Plaintiff do all, or substantially all, of the significant things that the contract required Plaintiff to do?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 2 is yes as to any contract, then answer question 3 for that contract. If you answered no as to any contract, stop here, answer no further questions with regard to that contract.
“3. Was Plaintiff excused from having to do all, or substantially all, of the significant things that the contract required Plaintiff to do?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 3 is yes as to any contract, then answer question 4 for that contract. If you answered no as to any contract, stop here, answer no further questions with regard to that contract.
“4. Did all the conditions occur that were required for Defendant’s performance?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 4 is yes as to any contract, then answer question 5 for that contract. If you answered no as to any contract, stop here, answer no further questions with regard to that contract.
“5. Did Defendant fail to do something that the contract required it to do?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 5 is yes as to any contract, then answer question 6 for that contract. If you answered no as to any contract, stop here, answer no further questions with regard to that contract.
“6. Was Plaintiff harmed by that failure?
“Convoy Agreement ___ Yes ___ No
“Indonesia Agreement ___ Yes ___ No
“San Diego Master Agreement ___ Yes ___ No
“If your answer to question 6 is yes as to any contract, then answer question 7 as to that contract.
“7. What were Plaintiff’s damages?
“Convoy Agreement $__________
“Indonesia Agreement $__________
“San Diego Master Agreement $__________”
On August 3, the jury returned a special verdict. It found for defendants on plaintiff’s claims for breach of the implied promise of good faith and fair dealing, fraud, interference with contract and indemnity; further, it found that defendants were entitled to contractual indemnity and awarded them $95,000. With regard to plaintiff’s claim for breach of contract, the jury answered questions 1-3, finding that plaintiff and defendants had entered into three separate contracts (question 1); that plaintiff did all or substantially all of the significant things that the Convoy and Indonesia contracts required him to do (question 2); and that plaintiff’s performance was not excused with regard to any of the three contracts (question 3). However, because of the error in the special verdict form, the jury did not answer questions 4-7, and thus it did not decide whether defendants breached the contracts or plaintiff suffered damages as a result.
The court entered a judgment on special verdict on August 25, 2006. Notice of entry of judgment was served the same day. The judgment recited that the jury “deliberated and thereafter returned into court with its verdict of $95,000.00 in favor of the defendant and cross-complainant LOLLICUP USA, INC. against the plaintiff and cross-defendant, WILLIAM K. K. NG, DBA GLOBAL FOOD and GLOBAL FOODS,” and it ordered that “defendant and cross-complainant LOLLICUP USA, INC., have judgment, against plaintiff and cross-defendant, WILLIAM K. K. NG, DBA GLOBAL FOOD and GLOBAL FOODS in the sum of $95,000.00.”
III. Plaintiff’s Motion for New Trial
Plaintiff timely filed a notice of intent to move for new trial (notice of intent) on September 14, 2006. The notice of intent stated that plaintiff would seek a new trial of his claims for breach of contract and fraud on two separate grounds: (1) “[t]he evidence presented at trial was insufficient to justify the verdict”; and (2) “[t]he verdict is against law.” Subsequently, on September 22, 2006, plaintiff filed a memorandum of points and authorities that contended, in relevant part, that as a result of the error in the special verdict form, “the jury never reached or resolved the issue of whether Defendant breached any of the three contracts, and the jury never reached or resolved the issue of damages if in fact a breach or breaches had been found.”
The trial court granted the motion for new trial as to plaintiff’s breach of contract claim on October 17, 2006. It explained the basis for the new trial order as follows: “The problem really is . . . that there can’t be a verdict because the questions that are asked of the . . . jury lead[] up to a point, but it doesn’t resolve the dispute. So therefore there can’t be a verdict. In other words, it found that there was a contract, and it found that as to two of those contracts that the plaintiff did everything that the plaintiff was supposed to do, the significant things, and then it just kind of like stopped. So how can I reach a verdict on those?” However, the court purported to ground the new trial order on a statutory ground (“irregularity in the proceedings”) not included in plaintiff’s notice of intent: “The error in the special verdict form constituted an irregularity in the proceedings pursuant to Code Civ. Proc. § 657, [subdivision] 1, which is sufficient grounds for granting a new trial on those claims.”
All further undesignated statutory references are to the Code of Civil Procedure.
Defendants filed a motion for reconsideration on November 2, 2006, contending that the court lacked the power to grant a new trial on a ground not specified in plaintiff’s notice of intent. The court denied the motion. It explained: “[W]hile the plaintiff[] reference[s] as grounds the insufficiency of the evidence and [the] verdict being against the law, which is basically C.C.P. section 657, subpart (6) and this court felt that the situation fell more into subpart (1) of 657, which is irregularity in the proceedings, the factual basis for the motion was clearly articulated.” Further, the court said, “[F]rankly, I probably could have ruled it on the basis of subpart (6) anyway, and I would be affirmed on that basis. But I think it’s cleaner, at least to me, to view it as a [sic] irregularity in the proceeding rather than a verdict against the law. But, ostensibly, one could make the argument that the verdict is against the law because the verdict form itself had a fault or defect in it.”
Defendants filed a timely notice of appeal from the order granting a partial new trial on January 8, 2007.
DISCUSSION
“The authority of a trial court in this state to grant a new trial is established and circumscribed by statute. (See Diamond v. Superior Court (1922) 189 Cal. 732, 736.)” (Oakland Raiders v. National Football League (2007) 41 Cal.4th 624, 633.) Section 657 sets out seven grounds for such a motion: (1) “Irregularity in the proceedings”; (2) “Misconduct of the jury”; (3) “Accident or surprise”; (4) “Newly discovered evidence”; (5) “Excessive or inadequate damages”; (6) “Insufficiency of the evidence . . . or the verdict or other decision is against law”; and (7) “Error in law.” When a new trial is granted on all or some of the issues, the court is required to specify the ground or grounds upon which it is granted and the court’s reason or reasons for granting the new trial. (§ 657.)
Defendants correctly contend that a court lacks jurisdiction to grant a new trial on a statutory ground not specified in the moving party’s notice of intent. (Wagner v. Singleton (1982) 133 Cal.App.3d 69, 71 [“Appellant contends that a trial court has no power to rule on a ground not specified in the notice of intention to move for a new trial. We agree . . . .”]; Malkasian v. Irwin (1964) 61 Cal.2d 738, 745 [new trial “can be granted only on a ground specified in the motion”].) Thus, because plaintiff did not specify “irregularity in the proceedings” in his September 14, 2006 notice of intent, we cannot affirm the trial court’s grant of a new trial on that basis.
However, the fact that an order granting a new trial cannot be sustained on the ground specified by the trial court “is not . . . necessarily fatal to that order.” (Malkasian v. Irwin, supra, 61 Cal.2d at p. 745.) Rather, with two exceptions—insufficiency of the evidence or excessive or inadequate damages—on appeal from an order granting a new trial, “the order shall be affirmed if it should have been granted upon any ground stated in the motion, whether or not specified in the order or specification of reasons.” (Code Civ. Proc., § 657, italics added; Oakland Raiders v. National Football League, supra, 41 Cal.4th at p. 633.)
As we have noted, plaintiff’s notice of intent specified two statutory grounds on which the motion for new trial would be based: (1) “[t]he evidence presented at trial was insufficient to justify the verdict”; and (2) “[t]he verdict is against law.” Because the trial court did not base its new trial order on “insufficiency of the evidence,” we cannot affirm on that basis. (Oakland Raiders v. National Football League, supra, 41 Cal.4th at p. 634 [“Orders may not be affirmed on the ground of insufficiency of the evidence . . . unless that ground is specified in the order”].) However, for the reasons that follow, we conclude that the judgment is “against law” and, thus, that a new trial is proper.
“The authorities indicate that a decision is against law when there is a failure to find on a material issue . . . . [¶] . . . ‘The phrase “‘against law’ refers to a situation furnishing a reason ‘for a re-examination of an issue of fact.’” (Estate of Keating, 162 Cal. 406, 410.) If the court fails to find on material issues made by the pleadings—issues as to which a finding would have the effect to countervail or destroy the effect of the other findings—and as to which evidence was introduced, the decision is “against law.” In such a case, a reexamination of the facts is necessary in order that the issues of fact may be determined. (Swift v. Occidental Mining etc. Co., 141 Cal. 161, 167; Kaiser v. Dalto, 140 Cal. 167, 169-170.)’” (Schmeltzer v. Gregory (1968) 266 Cal.App.2d 420, 422-423; see also Tagney v. Hoy (1968) 260 Cal.App.2d 372, 375-376 [“‘A decision can be said to be “against law” . . . where there is a failure to find on a material issue’”]; Kralyevich v. Magrini (1959) 172 Cal.App.2d 784, 789 [same]; Clark v. Hewitt (1902) 136 Cal. 77, 79 [“[W]here there is a failure to find upon a material issue, ‘the decision is against law, and may be reviewed on appeal from an order granting or refusing a new trial’”].)
Our Supreme Court has twice applied this principle to cases similar to the present one, where trial courts entered judgments on incomplete jury verdicts. In Stewart v. Taylor (1885) 68 Cal. 5, the jury returned an incomplete verdict, on which the trial court entered judgment. The defendant made a motion for a new trial, which the trial court denied. (Ibid.) The Supreme Court reversed. It explained: “The judgment is . . . erroneous, because it is founded upon an informal and incomplete verdict. [¶] The verdict was informal and insufficient in that it did not find the value of the property. . . . The court had the power to have it corrected; for the law made it his duty to call the attention of the jury to the fact that their verdict was insufficient, and to advise them in what it needed to be corrected. The correction could then have been made by the jury in the presence of the court, or they could have retired to further consider their verdict and put it in proper form. That was not done; and the court, in accepting the verdict in its defective form and pronouncing judgment upon it, assumed as a fact what the verdict did not express, and in doing so, invaded the province of the jury; for the jury alone could find the value of the property. [¶] A verdict to serve as a basis for a judgment must be complete and certain, otherwise both the verdict and judgment entered thereon are erroneous and reversible.” (Id. at pp. 6-7.)
The court reached a similar result in Garlick v. Bower (1882) 62 Cal. 65. There, the jury rendered an incomplete verdict; on the defendant’s motion, the trial court set the verdict aside and granted a new trial. The plaintiff appealed, and the Supreme Court affirmed: “The verdict did not cover the issues submitted to the jury. . . . The verdict was therefore against law and the evidence, and there was no error committed in setting it aside. When the verdict was rendered by the jury it would have been proper for the Court to have called their attention to the fact that it was incomplete, and remanded them to put it in proper form; but having omitted to do that it was not error afterwards to set it aside, on the motion for a new trial made by the defendant.” (Id. at pp. 66-67; see also Byrum v. Brand (1990) 219 Cal.App.3d 926, 938-939 [reversing judgment where jury verdict was based on erroneous special verdict form: “Our examination of the verdict forms in their entirety convinces us the only proper disposition of this matter is an open reversal on the breach of fiduciary duty theory . . . [because] the fiduciary duty verdict does not give any clear indication of what the jury would have decided had a correct verdict form been supplied to them on this issue”].)
Although these cases are not of recent vintage, we are not aware of any authority suggesting that the principles they espouse do not remain good law. As applied to the present case, they compel the conclusion that the judgment entered on plaintiff’s breach of contract claim was “against law” and, thus, a new trial properly was granted as to that claim. As in Stewart and Garlick, the verdict in the present case was incomplete because, although the jury found that plaintiff substantially performed his obligations under the contracts, it did not decide whether defendants breached the contracts or plaintiff was harmed as a result. The trial court thus had no basis on which to enter judgment on the breach of contract claim. Indeed, in the words of the Stewart court, by entering judgment on the breach of contract claim, the trial court “assumed as a fact what the verdict did not express”—that is, that defendant did not breach the contracts or that plaintiff did not suffer damages—and “in doing so, invaded the province of the jury.” (Stewart v. Taylor, supra, 68 Cal. at pp. 6-7.)
Citing Sanchez-Corea v. Bank of America (1985) 38 Cal.3d 892, 906, defendants submit “a jury’s verdict is ‘against law’ only if it is unsupported by any substantial evidence, that is, if the entire evidence was such as would justify a directed verdict against the party in whose favor the verdict was returned.” They contend plaintiff failed to meet that burden. However, that case is distinguishable. The jury verdict in our case is not “against law” because its findings are not supported by the evidence. The verdict is fatally flawed due to the jury’s failure to make a finding on the critical question whether plaintiff breached the contract.
Appellants filed a letter brief in response to our Government Code section 68081 letter that asked: May the trial court’s grant of plaintiff’s motion for new trial be sustained because the jury’s verdict was “against law,” a ground stated in plaintiff’s notice of intent to move for new trial?
For these reasons, we conclude that the trial court properly granted a new trial as to plaintiff’s breach of contract claim. Accordingly, we affirm.
DISPOSITION
The order granting a partial new trial of plaintiff’s cause of action for breach of contract is affirmed.
We concur: EPSTEIN, P. J. MANELLA, J.