Simon v. San Paolo US Holding Co. 12/2/03 CA2/4

SUPREME COURT CASES

Laws-info.com » Cases » California » Court of Appeal » 2003 » Simon v. San Paolo US Holding Co. 12/2/03 CA2/4

State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B121917B

Case Date: 12/02/2003

Preview:Filed 12/2/03 Opinion following second remand from U.S. Supreme Court

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FOUR LIONEL SIMON, Plaintiff and Appellant, v. SAN PAOLO U.S. HOLDING COMPANY, INC., Defendant and Appellant. B121917 (Los Angeles County Super. Ct. No. BC152431)

APPEAL from a judgment of the Superior Court of Los Angeles County, Richard P. Kalustian, Judge. Affirmed. Epport & Richman, Beth Ann R. Young, Steven N. Richman and Lawrence A. Abelson for Defendant and Appellant. Knapp, Petersen & Clarke, Andre E. Jardini, Kevin J. Stack and Mitchell B. Ludwig for Plaintiff and Appellant.

The United States Supreme Court, which previously remanded this case for further consideration in light of Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (2001) 532 U.S. 424 (Leatherman), has remanded a second time, this time for further consideration in light of State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. ____, 123 S.Ct. 1513 (State Farm). We have reconsidered the matter in light of State Farm, and we again affirm the judgment. BACKGROUND On June 21, 1996, cross-appellant, Lionel Simon, commenced this action against San Paolo Bank (hereinafter "the bank") and appellant, San Paolo U.S. Holding Company, Inc. ("San Paolo"). Simon sought specific performance of an alleged contract to purchase real property, located at 816 Figueroa Street in Los Angeles. He also sought damages for breach of the contract, as well as damages for fraud, consisting of a false promise to sell the property to Simon under certain terms and conditions.
3 2 1

1

San Paolo U.S. Holding Co., Inc. v. Simon (No. 00-1457, May 29, 2001) 121 S.Ct.

2190. San Paolo U. S. Holding Co., Inc. v. Simon (No. 01-1722, April 21, 2003) 123 S.Ct. 1828. San Paolo Bank, the parent company of San Paolo U.S. Holding Company, was eliminated as a defendant after its motion for summary judgment was granted. We affirmed the judgment entered in its favor in case No. B113208, filed May 21, 1998.
3 2

2

The issues of liability and punitive damages were tried separately by jury, beginning on August 1, 1997. By special verdict rendered on August 12, 1997, the jury found that there was no enforceable contract between the parties, but the jury found in favor of Simon on the fraud cause of action, awarding him $5000 in compensatory damages and $2,500,000 in punitive damages. San Paolo brought motions for a new trial, a reduction in punitive damages, and judgment notwithstanding the verdict. Simon brought a motion for new trial on damages. The trial court denied Simon's motion, as well as San Paolo's motion for judgment notwithstanding the verdict. The trial court granted San Paolo's motion for new trial, subject to Simon's acceptance of a reduction in punitive damages to $250,000. Simon refused to accept the remittitur, and the issue of punitive damages was tried to a new jury, beginning March 6, 1998. The second jury assessed punitive damages in the amount of $1,700,000, and San Paolo's motion for new trial was denied. On April 8, 1998, judgment was entered against San Paolo in the amount of $1,705,000. San Paolo filed a timely notice of appeal from the judgment, and Simon filed a timely notice of cross-appeal. The matter was briefed and argued, and we affirmed the Superior Court's judgment after finding, among other things, that the punitive damages assessed against appellant San Paolo U.S. Holding Company, Inc. (hereinafter, "San Paolo") did not violate its right of due process under the United States Constitution.
4

4

San Paolo states in its opening brief that a pretrial summary adjudication eliminated the specific performance count and one of two contract counts. Simon responds that the summary judgment eliminated a cause of action for tortious breach of the covenant of good faith and fair dealing, not a contract claim. However, neither the motion nor the order granting it has been made a part of the record on appeal. 3

Our original judgment was entered on August 28, 2000, and the California Supreme Court denied review. Thereafter, the United States Supreme Court announced its decision in Leatherman, supra, 532 U.S. 424, which held that appellate courts must apply a de novo standard of review when passing on determinations of the constitutionality of punitive damage awards. On May 29, 2001, the Supreme Court granted San Paolo's petition for writ of certiorari, vacated our original judgment, and remanded the cause to this court for further consideration in light of Leatherman. After further briefing and argument, we undertook a de novo review of appellant's due process claim with regard to the amount of punitive damages awarded, applying the guidelines set forth in BMW of North America v. Gore (1996) 517 U.S. 559, 568 (BMW), and we independently concluded that the amount did not offend the United States Constitution. On November 7, 2001, we again affirmed the judgment, and the California Supreme Court denied review. The United States Supreme Court again granted certiorari, and remanded for further consideration in light of State Farm, supra, 538 U.S. ____, 123 S.Ct. 1513. Upon receipt of the mandate of the Supreme Court, we issued an order permitting the parties to file supplemental briefs addressing only the application of State Farm to this matter. We now reconsider the matter again, applying a de novo review to determine whether the award of punitive damages violated the defendant's right to due process under the federal Constitution, and applying the additional factors set forth in State Farm.

4

DISCUSSION I. San Paolo's Appeal A. The First Trial We leave our summary of the evidence adduced at the first trial to our discussion of Simon's cross-appeal because, although San Paolo contends that there was no substantial evidence to support any of the elements of fraud, it refers only to evidence presented during the second trial, which involved just the issue of punitive damages. San Paolo's opening brief and reply brief have set forth none of the evidence presented at that first trial. It is presumed that the record contains evidence to sustain every finding of fact, and it is the appellant's burden to demonstrate the absence of substantial evidence to support a challenged finding, by setting forth all the material evidence on the point. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; Cal. Rules of Court, rule 13.) Since San Paolo has failed to do so, we presume the evidence was sufficient to support the verdict, and deem the point waived. (See Foreman & Clark Corp. v. Fallon, supra, 3 Cal.3d at p. 881.) San Paolo also contends that there was no liability for fraud as a matter of law, because the jury found there was no contract. San Paolo's contention appears to be based entirely upon its interpretation of the special verdict finding that there was no "binding and enforceable agreement" between the parties. San Paolo infers that the jury found that no contract had been formed in the first instance. Thus, it reasons, Simon was not induced to enter into a transaction, and cannot be said to have relied upon the false promise. San Paolo's reasoning is flawed, because the jury was not asked to determine whether a contract had been formed. Instead, it was asked to make the legal conclusion whether an enforceable contract existed. Further, the use of "and" instead of "or" to connect the words "binding" and "enforceable" indicates the jury
5

may have found that a contract had been formed but was not enforceable, or that no contract had been formed at all. It is impossible to discern from the special verdict which conclusion the jury made. A special verdict must determine ultimate facts, not conclusions of law. (Code Civ. Proc.,

Download Simon v. San Paolo US Holding Co. 12/2/03 CA2/4.pdf