Switzer appeals from the judgment, as a partial appeal only, arguing that the trial court erred in failing to award treble damages as required under the clear terms of section 496(c). Switzer further argues the trial court or jury erred in calculating the amount of prejudgment interest, which he asserts should be corrected at this time. Finally, Switzer claims the trial court erred in denying the portion of his motion for attorney fees premised on section 496(c), and additionally erred in denying his motion to modify the judgment to add an alleged successor entity as an additional judgment debtor.
In the published portion of this opinion, we conclude that Switzer is entitled to treble damages under section 496(c). That statute is clear and unambiguous, and its remedial provisions should be applied where, as here, a clear violation of section 496(a) has been found. Accordingly, the judgment is reversed, in part, and the matter is remanded to the trial court to enter a modified judgment that includes treble damages on the section 496 causes of action. Furthermore, in the unpublished portion of this opinion, we reverse the trial court's denial of Switzer's motion for attorney fees premised on section 496(c), and the matter is remanded to the trial court for further proceedings to determine the appropriate amount of attorney fees to be awarded pursuant to section 496(c), after which a new order shall be entered awarding the amount of section 496(c) attorney fees so determined. In all other respects, the judgment and orders of the trial court are affirmed.
The Pleadings
For purposes of the present appeal, the relevant pleading is Switzer's cross-complaint, which was filed on June 3, 2013. In that cross-complaint, Switzer alleged direct claims against Wood and Access Medical for, among other things, breach of contract, fraud, breach of fiduciary duty/constructive fraud, conversion, negligence, and for the civil remedies provided by section 496(c). In addition to the direct claims described above, Switzer's cross-complaint also alleged several derivative claims on behalf of the two-member limited liability company, Flournoy Management, LLC (Flournoy), of which Switzer was the non-managing member and Wood was the managing member. Switzer's derivative claims on behalf of Flournoy included causes of action against Wood and Access Medical for breach of manager's duty, fraud, conversion, negligence, and for the civil remedies provided by section 496(c).
In both his direct and derivative claims under section 496, Switzer's cross-complaint asserted, based on relevant foundational allegations referred to in the pleading, that "[t]he acts of Mr. Wood constitute a violation of Penal Code § 496(a), thus entitling Mr. Switzer to recover from Mr. Wood treble the amount of actual damages sustained by Mr. Switzer, along with Mr. Switzer's costs of suit and reasonable attorney's fees ...."
The Trial and Verdict
The case was tried before a jury for a period of 21 days, beginning on August 22, 2017. The jury began its deliberations on October 3, 2017, and finally returned a special verdict on October 11, 2017. In the jury's special verdict, it found in favor of Switzer and against Wood and Access Medical on Switzer's direct claims in his cross-complaint for breach of contract, intentional misrepresentation, concealment, breach of fiduciary duty, conversion, negligence, and the civil claim for violation of Penal Code section 496. A second part of the special verdict form addressed Switzer's derivative claims on behalf of Flournoy. There, the jury found in favor of Switzer and against Wood and Access Medical on Switzer's derivative claims in the cross-complaint for concealment, breach of manager's duty, negligence, and the civil claim for violation of Penal Code section 496. The jury also specifically
Where called upon to do so on the special verdict form, the jury made specific findings on the amount of actual damages sustained by Switzer on his causes of action. For example, on Switzer's conversion cause of action, the
The jury also inserted, where requested to do so on the special verdict form, amounts of prejudgment interest. In particular, the jury awarded prejudgment interest of $64,732 on Switzer's conversion causes of action, and $77,283 on Switzer's non-conversion claims. As to Switzer's derivative causes of action on behalf of Flournoy, the jury awarded prejudgment interest of $50,620.
The jury's special findings of fact concerning the section 496 causes of action were clear, definite and complete, answering in the affirmative each of the following specific questions covering the elements of a section 496(a) violation: "1. Did Mr. Wood obtain by theft property belonging to Mr. Switzer or conceal or withhold or aid in concealing or withholding such property from Mr. Switzer? [¶] ... [¶] 2. Did Mr. Wood know the property was obtained by theft at the time he received, withheld, concealed, aided in concealing or withholding the property from Mr. Switzer? [¶] ... [¶] 3. Did Mr. Wood's violation of Penal Code section 496, subdivision (a), cause Mr. Switzer to suffer injury, damage, loss or harm?" The fourth question to the jury concerning this claim was "[w]hat is the amount of Mr. Switzer's actual damages caused by Mr. Wood's violation of Penal Code section 496, subdivision (a) ?" to which the jury responded by inserting the following amount: "$1,289,165.00." We note the jury made identical findings of fact on Switzer's derivative claim under section 496 on behalf of Flournoy, with the only difference being that the amount of actual damages was $401,232. On both the direct and derivative claims under section 496, the same findings of fact were made against both Wood and Access Medical.
Postverdict Briefing
After the verdict, Switzer submitted to the trial court a proposed judgment premised on the special verdict which recapitulated the special verdict and, pursuant to section 496(c), included an award of three times the amount of actual damages found by the jury to have been suffered by Switzer and Flournoy as a result of Wood's and Access Medical's violations of section 496.
On November 27, 2017, the trial court issued its tentative statement of decision and proposed judgment on special verdict. In that document, the trial court agreed with the analysis provided by Wood and Access Medical that section 496(c) was inapplicable. The tentative statement of decision and proposed judgment did not include treble damages or attorney fees under section 496(c). The trial court explained that application of the treble damages provision of section 496"in standard breach of contract, fraud, conversion, and misrepresentation claims ... would [lead][
Switzer filed objections to the trial court's tentative statement of decision and proposed judgment. Wood and Access Medical thereafter filed a response to the objections, to which Switzer filed a reply.
The Judgment
On January 12, 2018, the trial court entered its final statement of decision and judgment on special verdict (the judgment). The portions of the judgment
Switzer's Motion to Amend Judgment to Name Additional Judgment Debtor
On February 1, 2018, Switzer filed a motion to amend the judgment to, among other things, add as a judgment debtor Alpine Medical Management Group, LLC, aka Alpine Surgical Group (Alpine), which was allegedly the successor company to Access Medical at one or more of the hospitals from which Wood and Access Medical stole Flournoy's business and profits. Wood and Access Medical opposed
Switzer's Motion for Attorney Fees
On February 1, 2018, Switzer filed a motion for attorney fees seeking, among other things, an award of attorney fees against Wood and Access Medical based on section 496(c). The attorney fees sought by the motion related to three different or severable parts of the overall litigation: (1) attorney fees on "the Flournoy cross-complaint" pursuant to a provision in the parties' operating agreement relating to Flournoy; (2) attorney fees on "the Switzer's records inspection complaint" as authorized by former Corporations Code section 17106, subdivision (g) ; and (3) attorney fees on "the Switzer Cross-Complaint" as authorized by section 496(c). The trial court acknowledged all three aspects of the attorney fee motion, but it only granted attorney fees relating to the Flournoy cross-complaint and Switzer's records inspection complaint. Therefore, implicitly, the trial court denied the attorney fee motion under section 496(c) relating to Switzer's cross-complaint.
Notices of Appeal
Switzer filed two notices of appeal; one relating to his appeal from the judgment and from the order denying his motion to amend the judgment
DISCUSSION
I. Standard of Review
"Questions of statutory interpretation, and the applicability of a statutory standard to undisputed facts, present questions of law, which we review de novo." ( Jenkins v. County of Riverside (2006)
Where there is a clear error of law in the calculation of damages, an appellate court has the power to modify the judgment to correct that error. ( Maughan v. Correia (2012)
Finally, as to the motion to amend the judgment to name an additional judgment debtor, we review the trial court's ruling under the abuse of discretion standard, with any factual findings relied upon by the trial court reviewed for substantial evidence. ( Wolf Metals Inc. v. Rand Pacific Sales Inc . (2016)
Switzer argues the trial court erred in failing to apply the treble damage remedy specified in section 496(c). We agree.
We begin with the express terms and structure of the statute. Section 496(a) defines the criminal offense of what is commonly referred to as receiving
The language of section 496(c) is clear and unambiguous. ( Bell v. Feibush (2013)
A violation of section 496(a) may, by its own terms, relate to property that has been "stolen" or "that has been obtained in any manner constituting theft or extortion." ( § 496(a), italics added.) As reflected in Bell v. Feibush , supra ,
In Bell v. Feibush , supra ,
In the present case, it is undisputed that the jury specifically and unequivocally found all the factual elements necessary to establish that Wood and Access Medical had engaged in conduct constituting a violation of section 496(a). As to Switzer's direct claim under section 496 in his cross-complaint, the findings made by the jury on the special verdict form included that (i) Wood and Access Medical obtained by theft property belonging to Switzer, and concealed or withheld such property and/or aided in concealing or withholding such property from Switzer; (ii) Wood and Access Medical knew the property was obtained by theft at the time they received, withheld, concealed, or aided in concealing or withholding the property from Switzer; and (iii) Wood's and Access Medical's violation of section 496(a) caused
That being the case, under the plain and literal terms of section 496(c), Switzer was entitled to an award of three times his actual damages that were found by the jury on both the direct and derivative section 496 causes of action.
We recently summarized some of the fundamental rules of statutory construction in the case of California State University, Fresno Assn., Inc. v. County of Fresno (2017)
Under the plain meaning rule, when the language of a statute is clear, we need go no further. ( Nolan v. City of Anaheim (2004)
An exception exists to the plain meaning rule. A court is not required to follow the plain meaning of a statute when to do so would frustrate the manifest purpose of the legislation as a whole or otherwise lead to absurd results. (
In the present case, we do not find the plain meaning of section 496(c) to be absurd at all, much less so absurd in its results that we would be permitted to disregard its literal wording. Section 496(c) clearly and simply requires, as a prerequisite for treble damages, that a "violation" of the criminal offense described in the statute has been shown and that such violation has caused actual damage. The wording of the statute makes no exception for cases involving preexisting business relationships, nor does it
Based on the plain wording of section 496(c), the Legislature apparently believed that any violation of section 496(a) (or of subdivision (b)), if proven, would warrant the availability of treble damages. The creation of an enhanced civil remedy for any person injured by the theft-related criminal offenses defined in the statute is certainly not absurd or unreasonable. Considering the nature of the offense described by the statute and the apparent goal of deterring such theft-related conduct, the provision as literally written of an enhanced civil remedy to "any person" injured by that particular offense constituted a reasonable legislative policy decision. The fact that the treble damage remedy may come into play where (as here) the parties were in a preexisting business relationship in which the remedies at law have traditionally been limited (e.g., for fraud, conversion or breach of contract)-while arguably a valid policy argument-manifestly falls short of establishing the absurdity exception. In the final analysis, we are unable to conclude that the results produced by a literal reading of the statute would be "so unreasonable the Legislature could not have intended them." ( In re D.B. , supra ,
As was appropriately stated by the Court of Appeal in Bell v. Feibush , supra ,
Section 496 was amended in 1972 by Senate Bill No. 1068, which added the civil remedy provision currently set forth in subdivision (c). ( Citizens of Humanity, LLC v. Costco Wholesale Corp . (2009)
Finally, while deterrence of theft was one of the goals of Senate Bill No. 1068, another purpose for the proposed legislation was expressly stated in the analysis provided by the Senate Committee on the Judiciary, under the heading "Purpose," which expressed that the bill's basic
As the above outline of the legislative history makes clear, although Senate Bill No. 1068 may have been briefly amended during the legislative committee process to have a narrower remedial focus (i.e., for-hire carriers), the Legislature ultimately restored the wording giving a treble damage remedy to "any person" who was injured by a violation of section 496. Therefore, because the Legislature clearly approved and endorsed the broader scope of the civil remedy as provided in current section 496(c), we conclude the legislative history does not support respondents' contention that section 496(c) was intended to have a narrow focus that would apply only to common carriers or to situations involving theft in the cargo industry.
In conclusion, because the language of section 496(c) is clear and unambiguous, we are required to apply its plain meaning in this case. Under that plain meaning, because violations of section 496(a) were determined by the jury to have occurred, Switzer was entitled to an award of three times his actual damages that were found by the jury on both the direct and derivative section 496 causes of action against Wood and Access Medical.
III.-V.
DISPOSITION
The judgment of the trial court is reversed, in part, due to the trial court's failure to award treble damages under section 496(c), and the matter is remanded to the trial court to enter a modified judgment that includes treble damages under section 496 on Switzer's direct and derivative section 496 causes of action. Additionally, the trial court's denial of Switzer's motion for attorney fees premised on section 496(c) is reversed, and that matter is remanded to the trial court for further proceedings to determine the appropriate amount of attorney fees to be awarded pursuant to section 496(c), after
WE CONCUR:
HILL, P.J.
PEÑA, J.
Notes
Unless otherwise indicated, all further statutory references are to the Penal Code.
The actual wording used in the tentative statement of decision and proposed judgment was that applying section 496 to cases such as this one would "lend to an unreasonable result." We assume that was a typographical error and the trial court intended to say "lead" to an unreasonable result.
See footnote *, ante .