Filed 3/3/ 20 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

SIRY INVESTMENT, L.P.

,

Plaintiff and Appellant

,

v.

SAEED FARKHONDEHPOUR et al.

,

Defendants and Appellants. B 277750 ( C onsolidated with B279009 and B285904 )

(Los Angeles County Super. Ct. No. BC 372362 )

APPEAL from a judgment of the Superior Court of Los Angeles County. Stephanie M. Bowick , Judge ; and Edward B. Moreton, Judge

. Affirmed as modifi ed

.

Wilson, Elser, Moskowitz, Edelman & Dicker, Gregory D. Hagen, and Robert Cooper for Plaintiff and Appellant

.

Richard L. Knickerbocker for Defendants and Appellants Saeed Farkhondehpour, individually and as trustee of the 1994 Farkhondehpour Famil y Trust, and 41 6 South Wall Street, Inc.

Fisher & Wolfe and David Fisher for Defendant and Appellant Morad Neman, individually and as former trustee of2

the Neman Family Irrevocable Trust and the Yedidia
I nvestments Defined Benefit Plan.

Greines Martin Stein & Richland, Robert A. Olson, and
Edward L. Xanders for Defendant and Appellant Morad Neman, individually and as former trustee of the Neman Family
Irrevocable Trust and the Yedidia Investments Defined Benefit
Plan.
* * * * * * This is the fourth app eal in this longstanding lawsuit, and challenges a $7 million default judgment entered after the trial court issued terminating sanctions. Among the many issues raised by the parties on appeal, three present significant legal questions : (1) May a trial c ourt issue terminating sanctions when the discovery a party contumaciously refuses to provide

encompasses fewer than all the issues in a case; (2) May a party in default file a motion for new trial raising “[e]rror [ s ] in law,” including the inapplicability of certain remedies under the allegations as pled ; and (3) May a trial court award treble damages and attorney fees under Penal Code section 496, subdivision (c) , in a case involving the fraudulent diversion of business funds rather than trafficking in st olen goods? On the first question, we conclude that a trial court is not foreclosed from issuing terminating sanctions just because the underlying discovery encompasses only a subset of the issues in the case. On the second question, we conclude that a party against whom a default has been entered may file a motion for new trial attacking the default judgment as containing “error[s] in law.” And on the third question, we conclude that Penal Code

s ection 496, subdivision (c) only authorizes an award of treble damages or attorney fees when the underlying conduct involves3

trafficking in stolen goods; in so doing, we respectfully part ways
with Switzer v. Wood (2019) 35 Cal.App.5th 116 ( Switzer ), which holds to the contrary. After considering all of the pa rties’ arguments in these
consolidated cross

- appeals , we affirm the entry of terminating sanctions but modify the judgment to eliminate the awards of treble damages and attorney fees.

FACTS AND PROCEDURAL HISTORY

I. Facts 1
In 1998, Moe Siry, Saeed Farkh ondehpour ( Farkhondehpour ), and Morad Neman (Neman) formed a limited partnership to renovate and lease space in a mixed

- use building in downtown Los Angeles. The partnership agreement named one general partner (namely, 416 South Wall Street , Inc. (416
Sou th Wall Street) , of which Farkhondehpour was president ) and four limited partners (namely, Siry Investment, L.P. (Siry), the
1993 Farkhondehpour Family Trust (of which Farkhondehpour was trustee), the Neman Family Irrevocable Trust (of which
Neman was trus tee), and the Yedidia Investment Defined Benefit
Plan Trust (of which Neman was also trustee) )

. The agreement divvied up the partnership’s cash distributions as follows: Siry was to receive 39.60 percent; the Farkhondehpour Family Trust, 29.70 percent; t he Neman Family Irrevocable Trust, 19.80 percent; and the Yedidia plan, 9. 9 0 percent. A separate entity

—

1 As is appropriate on review of a default judgment, we draw these facts from the allegations of the operative f ifth a mended

c omplaint

, as well as documents subject to judicial notice. ( Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 392

- 393 ( Los Defensores ) ; Evans v. City of Berkeley ( 2006) 38 Cal.4th 1, 6 ( Evans ).)4

namely, Investment Consultants, LLC (Investment Consultants)

— was responsible for acting as property manager,
for making the required cash distributions

, and for managing the
renovations.
In 2 003, Farkhondehpour , Neman, and 416 South Wall
Street created an entity named DTLA, required the building’s tenants to pay their rent to DTLA, and through these means

start ed to “improperly divert rental income awa y from the . . . [limited] partnership and into DTLA.” Farkhondehpour and
Neman also began to charge personal and other non

- partnership expenses to the partnership. The net effect of these actions was

to direct Investment Consultants to under pay Siry its cash
distributions. What is more, Farkhondehpour and Neman
ensured that Siry remained unaware of the underpayments by misrepresenting to Siry the building’s rental income and the partnership’s expenses, effectively lying to Siry about what it s cash distributions should have been.
II. Procedural Background
A. Siry’s lawsuit, first trial and reversal In June 2007, Siry sued Neman, Farkhondehpour , 416 South Wall Street, and the trusts over which they were trustees (collectively, defendants) f or underpaying Siry and improperly diverting the partnership’s rental income to their own coffers. 2

2 Siry also sued the limited partnership, but it was not dismissed as part of the terminating sanctions. The partnership had since been dissolved, and Siry’s prosecution of the action presumed that the partnership was eff ectively dismissed

. We presume the same. This was the second lawsuit arising out of the partnership. In 2003, Farkhondehpour and Neman sued Siry for breach of a5 The matter proceeded to a jury trial in October 2009. At that time, Siry’s operative second amended complaint sought (1) dissolution and winding up of th e limited partnership, (2) an accounting, (3) damages for breach of the agreement, and (4) damages for breach of fiduciary duty. The jury found for Siry, awarding actual damages of $242, 9 75 and punitive damages of $1.1 million against Farkhondehpour and $ 2 million against
Neman. The trial court denied a subsequent motion for a new trial, but reduced the punitive damages awards to $728,925 against each Farkhondehpour and Neman. In December 2012, we reversed the jury’s verdict. ( Siry
Inv

. , L.P. v. Farkho ndehpour (Dec. 12, 2012, B223100, B234655) 2012 Cal.App.Unpub.LEXIS 9014 [nonpub opn.]. ) We did so
because the special verdict form submitted to the jury did not require the jury to specify whether Farkhondehpour and Neman were liable to Siry individually or as trustee s of the various trusts. This defect rendered the verdict “hopelessly ambiguous” and, because “who is liable [was] key,” necessitated a remand for

a re

- trial. ( Id. , at * 2 , *4, *6

- *7 , *11 .)
B. Issuance of terminating sanctions on remand
On remand, Siry propounded two rounds of discovery on
defendants

— a first round in October 2013 and a second in January 2014. As discussed in more detail below, defendants did

not compliantly r espond to the discovery or to the trial court’s subsequent orders to respond to that discovery without objection.

different agreement, and Siry cross

- claimed for underpayment of cash distributions from the p artnership

. After an arbitrator rejected Farkhondehpou r ’s and Neman’s claims, Siry settled its remaining cross

- claims in 2007, with the requirement that Farkhondehpour and Neman provide an accounting (and, if warranted, a redistribution) of the partnershi p’s profits.6 In late June 2015, Siry moved for terminating sanctions due to defendants’ steadfast refusal to respond to Siry’s discovery requests or to obey the court’s multiple orders compelling

response s

. At that ti me, Siry’s operative f ifth a mend ed c omplaint sought (1) compensatory damages for breach of the partnership agreement, breach of an oral contract, breach of fiduciary duty,
aiding and abetting breach of fiduciary duty, and fraud; 3 (2) punitive damages; (3) treble damages pursuant to Penal Code section 496, subdivision (c); and (4) attorney fees under Penal
Code section 496 as well as Code of Civil Procedure section

1029.8 4 (on the ground that defendants were acting as unlicensed
contractors and unlicensed br oker

- dealers). Siry had not sought treble damages or attorney fees prior to the first trial. Mere weeks before filing its motion for terminating sanctions, Siry
served defendants with notice s that it was seeking $4 million in punitive damages against eac h of them

. Defendants opposed the motion with a brief and nearly 1,700 pages of exhibits

. The court held two hearings and issued a written order striking defendants’ answers and entering their
default.
C. Default prove

- up and entry of judgment Siry filed over 2,000 pages of documents in anticipation of
the hearing at which it would prove up its damages. After reviewing the documentation, the court in July 2016
issu ed an order finding that Siry had “met its evidentiary burden

3 Siry later dismissed its breach of contract and aiding and abetting claims

.

4 All further statutory references are to the Code of Civil Procedure unless otherwise indicated.7

as to all claims.” The court went on to enter default j udgment against defendants awarding Siry (1) actual compensatory damages of $956,487, comprised of $534,118 in actual damages plus $422,369 in pre

- judgment interest; (2) treble damages of $2,869,461 pursuant to Penal Code s ection 496, subdivision (c); (3) punitive damages of $4 million (plus $1 against only 416 South Wall Street) ; (4) attorney fees totaling $4,010,008.97; and (5) costs of $187,109.13. The total came to $12,023,06 7 .10.
D. Reduction of damages upon a new tr ial motion In August 2016, defendants filed a motion for new trial on several grounds. Among other things (and as pertinent to this appeal) , defendants argued that the trial court had awarded excessive damages and committed errors in law by (1) awarding treble damages under Penal Code section 496, subdivision (c); ( 2 )
mis calculating the treble damages award; ( 3 ) awarding a constitutionally excessive amount of punitive damages; ( 4 ) allowing Siry to collect both treble damages and punitive damages, rather t han requiring Siry to elect between them; and ( 5 ) awarding Siry attorney fees under Penal Code section 496, subdivision (c) and s ection 1029.8. After Siry opposed the motion, the trial court in September 2016 partially denied and partially granted the mo tion. As a threshold matter, the court ruled that defendants had standing to make a new trial motion notwithstanding the entry of default. On the merits, the court ruled that (1) treble damages were properly awarded under Penal Code section 496, subdivis ion (c),
but ( 2 ) it had miscalculated the treble damages award (and reduced them to $1,912,974); ( 3 ) its award of $4 million in punitive damages was constitutionally excessive (and reduced the damages to $1 million each against Farkhondehpour and8

Neman); ( 4 ) Siry would have to elect between treble damages and punitive damages; and ( 5 ) attorney fees were properly awarded
under Penal Code section 496, subdivision (c) and s ection 1029.8

. In early October 2016, Siry filed a notice electing to collect
treble d amages (rather than punitive damages). In late October 2016, the court entered an amended judg ment against defendants, jointly and severally, awarding Siry (1) actual compensatory damages of $956,487, comprised of $534,118 in actual damages plus $422,369 in pre

- judgment interest; (2) treble damages of $1,912,974 pursuant to Penal Code section 496, subdivision (c); (3) attorney fees totaling $4,010,008.97; and (4) costs of $187,109.13. The total came to $7,066,579.10.
E. Appeals
Defendants filed a timel y appeal from the original default judgment, and from the amended judgment

. Siry filed a timely

cross

- appeal from the amended judgment. 5

5 Siry and Neman also filed timely appeal s from the trial

co urt’s October 2017 order reducing the amended judgment by the amount of costs defendants were awarded for prevailing in the appeal of the jury’s verdict. However, none of the parties
contests the merits of th e offset in this consolidated appeal. As Siry conceded at oral argument, it argued for the first time in its cross

- reply brief that the offset order to the amended judgment effectively constitutes a second amended judgment and that the failure of Farkhondehpour, the Farkhondehpour Trust

, and 416 Sout h Wall Street to file notices of appeal from the offset order precludes them from raising any challenges in these consolidated cross

- appeals. Apart from being waived ( Garcia v. McCutchen (1997) 16 Cal.4th 469, 482, fn. 10 ( Garcia ) [arguments raised for th e first time in a reply brief are waived]), this argument lacks merit : A further notice of appeal is required9 DISCUSSION The issues raised in this appeal and cross

- appeal fall into two broad categories

— namely, (1) defendants’ challenge to the entry of terminating sanctions, and (2) the parties’ various challenges to the amount of the default judgment. We will address each separately.
I. Terminating Sanctions Defendants argue that the trial court erred in issuing terminating s anctions.
A. Pertinent facts

1. Siry’s discovery requests and the trial court ’s orders compelling responses to those requests Following remand from this c ourt’s ruling overturning the 2009 jury verdict, Siry propounded two rounds of discovery
relevant to this appeal.

a. October 2013 request s for document production regarding liability In mid

- October 2013, Siry issued each of the defendants requests to produce documents relating to, among other things, (1) their “ interest in ” the partnership, the p roperty, 416 South Wall Street, DT L A, and Investment Consultants ; (2) the “compensation [each defendant] received from ” the partnership,
416 South Wall Street, DTLA, and Investment Consultants ; (3)
the partnership agreements, operating agreements , and

only when an amendment to a judgment “results in a substantial modification of [the] judgment” ( Dakota Payphone, LLC v. Alcaraz (20 1 1) 192 Cal.Ap p.4th 493, 504 ( Dakota )) ; an “amend [ ment ] to add costs” is not a “substantial modification” ( id. , at pp. 504

- 505; Sanchez v. Strickland (2011) 200 Cal.App.4th 758, 76 5 ) ; and the offset order merely offset costs. Neither logic nor policy warrants treat ing an amendment subtracting costs differently from one adding them.10

diss olution documents for the partnership and 416 South Wall
Street ; (4 ) the partnership’s operating expenses, profits, losses, income, assets, expenditures and distributions ; and (5) any payments and transfers of assets to/from Investment Consultants, DTLA

, a nd 416 South Wall Street. Siry requested documents created between January 1, 2002 and December 31,
2010. Defendants did not respond to these requests by the production deadline.
The trial court issued four separate orders compelling defendants to resp ond to these requests and to do so without any objections. First, on Valentine’s Day 2014, the court granted Siry’s motion to compel and ordered defendants to produce responsive documents by St. Patrick’s Day 2014. Second, on April 4, 2014, the trial cou rt confirmed that its first order required the production to be without objections and set a new deadline of April 23, 2014. Third, on July 15, 2014, the court once again ordered defendants to produce documents without objections. And, fourth, on October 9, 2014, the court refused to reconsider its third order and adopted a discovery referee’s recommendation that defendants produce responsive documents without objection. The court also imposed monetary sanctions of $10,000 against Farkhondehpour and his counsel (who, at that time, was representing all of the defendants) for their intransigence in not complying with the court’s prior orders. 6

6 We affirmed that order in Siry Inv

. , L.P. v. Farkhondehpour ( Sept. 5, 2017, amended Sept. 13, 2017, B260560) 201 7 Cal.App.Unpub.LEXIS 6325 [nonpub. opn.]

.11 b. January 2014 request s for document production and special interrogatories regarding financial condition In mid

- January 2014, Siry issued each of the defendant s (1)
a second set of request s for document production, and (2) special interrogatories. The document requests sought, among other things, “[a]ll documents that relate, refer or pertain to ” each
defendant ’s financial accounts

, tangible personal property

, intangible personal property

, retirement accounts

, assets
, transfer of assets

, liabilities

, compensation received and owed

, tax records

, real property interests

, financial records

, interest
and dividends

, and monies owed

. The special interrogatories paralleled the document request s , seeking answers regarding
each of the above listed categories of documents. Siry request ed information from January 1, 2010 to mid

- January 2014. Prior to propounding this dis covery on defendants’ financ ial condition

, Siry sought and obtained an order authorizing such discovery pursuant to Civil Code section 3295, subdivision (c), and mak ing all responses due on February 15, 2014

. At the hearing on Valentine’s Day 2014, Siry v oluntarily narrowed the scope of its document request s and special interrogatories to only those
“financial [ documents ] presented to third parties.” Defendants did not respond to the narrowed requests by
the due date.
The trial court issued two separat e orders compelling defendants to respond to these requests and to do so without any objections. First, on April 4, 2014, the court ordered defendants to “produce responsive documents” and answer the interrogatories without objections by April 23, 2014. Second, on October 9, 2014, the court adopted the discovery referee’s12

recommendation that defendants respond to this discovery without objection.

2. Defendants ’ non

- compliance with the trial court’s orders Notwithstanding the trial court’s express warn ing that
continued non

- compliance “ may result in

. . . terminating
sanctions

, ” defendants never complied with any of the court’s
orders because, to this day, defendants have never produced responsive documents or answered the interrogatories without object ions. Instead, defendants responded to the court’s orders (1) by serving multiple “responses” that consisted entirely of objections or non

- compli a nt answers (such as “not applicable”) without the disclosure of any documents or information, some of
which r eached nearly 400 pages in length ; (2) by repeatedly challenging the court’s orders through motions for clarification, reconsideration, relief from waiver , and a stay of di s covery ; or, as
to Farkhondehpour , (3) by making a last

- minute offer to come down to Farkhonde h pour’s or Investment Consultants’ s office to

search for documents

. Worse yet , defendants’ counsel below 7
engaged in tactics that can only be characterized as underhanded: He on July 3, 2014, filed an ex parte motion for
clarification of whethe r the court’s earlier April 4, 2014 order required disclosure without objections , but the motion only cited the portion of the court’s April 4 minute order setting forth its
tentative ruling (which said objections could be made) rather than
its actual, fin al ruling (which said they could not); Siry was not present at the hearing on the ex parte motion (and thus unable to point out this misrepresentation) because counsel had not

7 Neman has been represented by new counsel since the terminating sanctions were e ntered.13

properly give n Siry notice of the ex parte filing; and, after the court granted relief based on the representations in the ex parte filing and Siry subsequently moved the court to reconsider that
relief in light of the falsity of those representations, counsel opposed Siry’s motion

.

3. Entry of terminating sanctions In its July 201 5 oral ruling and August 2015 written order, the trial court granted Siry’s June 2015 motion for terminating sanctions against defendants. Defendants’ “18 months of lack of compliance” with the [discovery] requests and the multiple court orders compelling responses to those requests, the court found, constituted a “history” of “willful,” “flagrant,” “persistent [] ” and “deliberate” discovery “abuse.” In the court’s view, defendants’ practice of responding to Siry’s requests and the court’s orders
with “doc ument dump [ s ] ” and Farkhondehpour’s last

- minute
offer to look in his and Investment Consultants’ s warehouse for responsive documents constituted “gamesmanship,” not compliance. What is more, defendants’ “stall tactics” as to discovery of “significance” to the merits of Siry’s claims and of defendants’ financial wherewithal (as relevant to punitive damages) “severely prejudiced” Siry “in [its] ability to properly prepare for trial” within the statutory deadline for retrial following remand. In light of thi s history of non

- compliance, the looming deadline for retrial, and ineffectiveness of the prior monetary sanction and threat of terminating sanctions, the court found that “a less severe sanction will clearly not now yield compliance” because defendants’ “ stall tactics would continue even if the court were to come up with some type of lesser
sanction.”
B. Analysis14 The Civil Discovery Act ( s ection 2016.010 et seq

. ) imbues
trial courts with “broad” discretion to sanction the “misuse of the discovery proces s.” ( Lopez v. Watchtower Bible & Tract Society of
New York (2016) 246 Cal.App.4th 566, 604 ( Lopez ); § 2023.030.) As pertinent here, “misuse of the discovery process” includes (1) “[f]ailing to respond [ to ] or to submit to an authorized method of
discover y, (2) “[m]aking an evasive response to discovery,” and ( 3 ) “[d]isobeying a court order to provide discovery.” (§ 2023.010, subds. (d) , (f) & (g).) When confronted with such misuse, a court may impose (1) monetary sanctions (§ 2023.030, subd. (a)), (2)

s anctions that deem specified issues to be “established” or that “prohibit” the non

- compliant party from raising “opposing

. . . claims or defenses” (so

- called “issue sanctions”) ( id ., subd. (b)), (3) sanctions that preclude the admission of evi dence (so

- called “eviden [ tiary ] sanction [ s ] ”) ( id. , subd. (c)), or (4) “terminating
sanction [ s ] ,” which include “striking [a defendant’s] answer” ( id.

, subd. (d)). We review an order granting terminating sanctions for an abuse of discretion. ( Lopez

, at p . 604.) Critically, our task is to assess “whether the trial court abused its discretion in ordering dismissal as a sanction” ( Laguna Auto Body v. Farmers Ins. Exchange (1991) 231 Cal.App.3d 481, 491)

, rather than assess “ ‘ whether the trial court should h ave imposed a lesser
sanction ’ ” ( Liberty Mutual Fire Ins. Co. v. LcL Administrators,
Inc. (2008) 163 Cal.App.4th 1093, 1105). We review any subsidiary factual findings for substantial evidence

. ( Department of Forestry & Fire Protection v. Howell (2017) 1 8 Cal.App.5th 154,
192 ( Howell ) .)
When faced with a party’s misuse of the discovery process, a trial court “should” impose “[t]he penalty . . . appropriate to the dereliction.” ( Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 79315

( Deyo ) ; Reedy v. Bussell (20 07) 148 Cal.App.4th 1272, 1293 ( Reedy ) .) That is because the purpose of discovery sanctions is to “protect the interests of the party entitled to[,] but denied[,] discovery,” not to “punish[]” the non

- compliant party or to “put the prevailing party in a b etter position than he would have had
if he had obtained the discovery sought

. ” ( Deyo , at p. 793 ; Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152,
1163 ( Sherman ) ; Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 992

. ) Proportionali ty is critical when it comes to terminating sanctions because they altogether deny the non

compliant party a hearing on the merits and thus implicate due process. ( Lopez

, supra , 246 Cal.App.4th at p. 604.) To ensure proportionality, trial courts should generally take an “incremental” approach

— that is, they should “attempt [] less severe alternative[ sanctions ] ” unless the “record clearly shows lesser sanctions would be ineffective.” ( Lopez

, supra , 246 Cal.App.4th at p. 604; Howell

, supra , 18 Cal.App.5th at pp. 191

- 192.) In calibrating the sanction that is appropriate for the dereliction, trial courts must make a “meaningful effort to determine whether . . . alternative[, lesser sanctions] would be effective” at inducing the non

- compliant party to produc e the discovery, thereby “protect[ing] the interests of the party entitled to . . . discovery.” ( Lopez

, at p. 606; Deyo

, supra , 84 Cal.App.3d at p. 793.) In undertaking this effort, trial courts should examine the “totality of the circumstances,” includi ng: (1) whether the party’s non

- complian ce is the latest chapter in a longer “history of abuse,” which looks to “the number of formal and informal attempts to obtain the discovery” as well as whether prior court orders compelling discovery have gone unheed ed ( Mileikowsky v. Tenet Healthsystem (2005) 128 Cal.App.4th 262, 279

- 28016

( Mileikowsky ) ; Lang v. Hochman (2000) 77 Cal.App.4th 1225,
1246 ( Lang

) ) ; (2) whether the party’s non

- compliance was “willful” ( McGinty v. Superior Court (1994) 26 Cal.App.4th 204,

21 2; Parker v. Wolters Klu w er United States, Inc. (2007) 149 Cal.App.4th 285, 297 ( Parker ) ) ; (3) whether the non

- compliance persisted despite warnings from the court that greater sanctions might follow ( Electronic Funds Solutions, LLC v. Murphy (2005)
134 Ca l.App.4th 1161, 1184 ( Electronic Funds )) ; (4) whether the

non

- compliance encompasses all or only some of the issues in the case ( Reedy

, supra , 148 Cal.App.4th at p. 1293) ; and (5) the extent of the “detriment to the propounding party” that flows
from the i nability to obtain the discovery at issue ( Lang , at p. 1246). Because terminating sanctions are the most “drastic” penalty, they are typically a “last resort” to be “used sparingly.” ( Howell, supra , 18 Cal.App.5th at p. 191; Lopez

, supra , 246 Cal.App.4th at p. 604; Deyo

, supra , 8 4 Cal.App.3d at p. 793.) However, they may still be appropriate “as a first measure” in
“extreme cases” where a litigant violates a court order and “persists in the outright refusal to comply with [its] discovery obligations.” ( Deyo , at pp. 793, 795; Howell , at pp. 191

- 192; Fred Howland Co. v. Superior Court of Los Angeles (1966) 244 Cal.App.2d 605, 612 ( Fred Howland ) .) Put differently, the imposition of lesser sanctions is “not an absolute prerequisite” to the imposition of ter minating sanctions for violation of a court
order

. ( Alliance Bank v. Murray (1984) 161 Cal.App.3d 1, 10 ; Deyo , at p. 787

. )
The trial court in this case did not abuse its discretion in coming to the conclusion, after examining the totality of the
circum stances , that terminating sanctions were the appropriate17

sanction for defendants’ non

- compliance. Defendants have a
fulsome history of discovery abuse : T hey ignored Siry’s two rounds of post

- remand discovery and then flouted multiple court
orders to prov ide documents and responses without objection

, preferring instead to ma k e multiple motions for clarification and reconsideration, to bury Siry and the court with “document dump [ s ] ,” and then to try to avoid the consequences of their discovery misconduct by making feckless , last

- minute offer s to rummage through their files for responsive documents.
Defendants’ conduct was both willful and, worse yet,
calculated : They frankly admitted, when opposing Siry’s motion
for leave to file a f

ifth a mended c omplaint , that they had been “evaluat[ing] the risk” that their willful non

- compliance might ripen into terminating sanctions vis

- à

- vis their maximum exposure under the prior complaint (s)

. “[A] litigant’s conscious decision to deliberately” “evade the discovery p rocess” “based on the perception [ that ] damages are limited to a particular amount” is inimical to the orderly litigation of disputes. ( Behm v. Clear View Technologies (2015) 241 Cal.App.4th 1, 1 0 ; Electronic
Funds

, supra , 134 Cal.App.4th at p. 1178.) Fo r this reason,
Farkh ondehpour’s argument that the terminating sanctions are invalid because Siry ’s otherwise timely notice fixing the amount of punitive damages was not filed until just before Siry sought

t erminating sanctions necessarily fails. Further, d efendants persisted in their non

- complian ce despite express warning from the trial court that terminating sanctions were on the horizon. As discussed more fully below, the discovery that d efendants steadfastly refused to provide covered a broad swath of issues central to defendants’ liability and the measure of damages. And Siry’s inability to obtain this discovery for the 18

- plus months18

between its propounding and the court’s terminati ng sanctions
order not only deprived Siry of that information, but al so left Siry
with almost no time on the clock before the three

- year period for retrial following remand expired ( § 583.310, subd. (a)(3) ). As this analysis indicates, defendants “persist[ed] in [an] outright refusal to comply with [their] discovery obliga tions,” making this one of the “extreme cases” where terminati ng sanctions were appropriate in the first instance for violation of a
court order because issue and evidentiary sanctions would have
been ineffectual. ( Deyo

, supra , 84 Cal.App.3d at pp. 793, 7 95;
Howell

, supra , 18 Cal.App.5th at pp. 191

- 192; Fred Howland

, supra , 244 Cal.App.2d at p. 612; see also Collisson & Kaplan v.
Hartunian (1994) 21 Cal.App.4th 1611, 1617

- 1622 [imposing terminating sanctions as a first penalty].) Defendants’ assertion

on appeal that the trial court made only a “conclusory,”
“nominal [] ,” “casual

, ” un

- “genuine[],” and “ [in] sincere ” effort to evaluate lesser sanctions flatly mischaracterizes the record,
which shows that the court considered all of the circumstances
set forth above. D efendants’ further observation that the only defendant previously subject to monetary sanctions was Farkhondehpour overlooks that all defendants had engaged in the same underlying discovery misconduct and that misconduct
had all been orchestrated by the same attorney; the court thus had ample reason to find that the ineffectiveness of the monetary sanction against Farkhondehpour (and defendants’ counsel) applied with equal force to all defendants. And
Farkhonde h pour’s contention that Siry’s motion for terminating sanctions was defective because it, and the underlying discovery orders he violated, were unaccompanied by a separate statement

or any due date for responses lacks merit because it ignores that19

a separate statement is not required for a mo tion for terminating sanctions (Cal

. Rules of Court, rule 3.1345(a)) or for a motion to compel when there has been no response ( id. , rule 3.1345(b)) , that
the trial court’s init ial orders to compel set forth du e dates

, and
that its later orders without due dates merely denied defendants’ seemingly endless stream of motions fo r reconsideration and
confirm ed the earlier orders that defendants had already
violated.
C. Defendants’ arguments

1. Are terminating sanctions available when the underlying discover

y requests do not encompass all issues in the case? D efendants argue that a trial court may issue terminating
sanctions against a defendant only if the discovery t hat a defendant refuses to provide encompasses all of the issues to be
tried. When a defend ant’s non

- compliance involves anything less than all the issues, they reason, sanctions that terminate the entire proceeding put the propounding party “in a better position
than [it] would have [been]

. . . had [it] obtained [that] discovery.” ( Deyo

, supr a , 84 Cal.App.3d at p. 793; Sherman

, supra , 67 Cal.App.4th at p. 1163.) Thus, they conclude, the trial court in this case abused its discretion in issuing terminating sanctions because the discovery Siry sought reached only the discrete
issues of “alter e go” and defendants’ “financial condition ,” and not every issue in Siry’s affirmative case or defendants’ proffered affirmative defenses of res judicata and the statute of limitations. Farkhondehpour elaborates on this argument in his reply brief on appeal by asserting that Siry has failed to prove its case was prejudiced by defendants’ non

- compliance. This argument lacks merit legally and factually.
Defendants’ argument is legally flawed for three reasons.20 First and foremost, it is inconsistent with th e law governing discovery sanctions. That law grants trial courts “broad” discretion to consider “the totality of the circumstances” in making the sanction fit the violation. ( Parker

, supra , 149 Cal.App.4th at p. 297; Lang

, supra , 77 Cal.App.4th at p. 12 46.) Defendants’ proffered rule would trade this flexibility for ossification by converting one factor

— namely, the breadth of issues involved in the discovery

— from a relevant circumstance into a dispositive one. ( Reedy

, supra , 148 Cal.App.4th at p. 1293. ) It would also require courts to endure “defiant disobedience” of their orders compelling discovery if those orders pertain ed to discovery addressing fewer than all the issues in a case , even though trial courts are “not required to allow . . . abuse to continue ad infinitum.” ( Mileikowsky

, supra , 128 Cal.App.4th at p. 280; Miranda v. 21st Century Ins. Co. (2004) 117 Cal.App.4th 913, 929 ( Miranda ).) Not surprisingly, courts have rejected defendants’ rule. (E.g., Miranda , at pp. 928

- 929 [affirming
termi nating sanctions against a plaintiff for non

- compliance with order compelling discovery pertaining to causation alone].) To be sure, some cases contain language that arguably supports the issue

- based limitation on discovery sanctions urged by defendants. In Caryl Richards, Inc. v. Superior Court (1961) 188 Cal.App.2d 300 ( Caryl Richards ) , the court stated that a trial court “abuses its discretion” “when its [sanctions] order . . . denies a party any right to defen d the action or to present evidence upon issues of fact which are entirely unaffected by the discovery procedure before it.” ( Id. at p. 305.) But the non

- complying party
in Caryl Richards had complied with every discovery request and order except an order to disclose the chemical formula of its hairspray, which it asserted was a trade secret ( id. at pp. 301

-21

305); on those facts, Caryl Richards held, a terminating sanction
went too far. Caryl Richards d id not speak to parties, like defendants here, who have steadfastly refused to comply with
mul tiple discovery requests or order s

. Nor do any of the other cases cited by defendants. (E.g., McArthur v. Bockman (1989) 208 Cal.App.3d 1076, 1080

- 1081 [party ’s non

- compliance limited to information regarding its wealth; terminating sanctions held

excess ive]; Wilson v. Jefferson (1985) 163 Cal.App.3d 952, 958

- 959 [party’s non

- compliance limited to discovery regarding affirmative defense; terminating sanctions held excessive]; Lopez

, supra , 246 Cal.App.4th at p. 606 [party’s non

- compliance limited
to infor mation regarding other victims of sexual abuse not involved in the case; terminating sanctions held excessive]; Thomas v. Luong (1986) 187 Cal.App.3d 76, 81

- 82 [party’s non

compliance limited to failure to appear for deposition, but party offered to stipul ate to liability; terminating sanctions held excessive].) Second, a rule prohibiting trial courts from issuing terminating sanctions unless the discovery in question

encompasses every issue in a case would incentivize litigants to engage in behavior that is inimical to the Civil Discovery Act’s

purpose s of “‘enhanc [ing] the truth

- seeking function’” of litigation
and “‘eliminat [ing] trial strategies that focus on gamesmanship and surprise.’ [Citation.]” ( Jaurez v. Boy Scouts of America , Inc. (2000) 81 Cal .App.4th 377, 389.) On the one hand, l itigants served with discovery requests encompassing fewer than every issue would be immune from terminating sanctions, and thus freer to ignore those requests

— or orders compelling compliance
with them

— because the max imum sanction would be an issue or evidentiary sanction. But selective lawlessness is still22

lawlessness , and is something our system of justice does not tolerate. ( Electronic Funds

, supra , 134 Cal.App.4th at p. 1178 [“[I]f a [litigant] chooses to partici pate [in litigation], he or she must play by the rules.”].) This is just as true for a rule that
would enable

— and hence encourage

— such lawlessness by
defendants alone , for whom terminating sanctions mean an adverse damages award

. And where, as here, disc overy is propounded on remand, terminating sanctions are likely never to be available because any post

- remand discovery, to avoid being duplicati ve of the discovery propounded prior to trial and appeal

, is likely to be more lim ited in scope (in terms of ti me or subject

matter ). This impermissibly rewrites the Civil Discovery Act by deleting terminatin g sanctions as an option after a remand. (See Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 250

- 251 [noting that Civil Discovery Act applies pos t

- remand].) On the other hand, under defendants’ proposed rule, litigants seeking to keep terminating sanctions as an available remedy would have every incentive to propound overly broad discovery requests, a result also at odds with the efficient exchang e of information. We decline to construe the Civil Discovery Act in a way that creates such perverse incentives. (E.g., Pacific Sunwear of California, Inc. v. Olaes Enterprises, Inc. (2008) 167 Cal.App.4th 466, 480.) Third, a party seeking terminating s anctions for another party’s discovery misconduct need not prove prejudice where, as here, the misconduct relates to discovery the moving party propounded. ( Electronic Funds

, supra , 134 C al.App.4th at p. 1184 [rejecting argument that, absent a showing of prejudice, terminating sanctions constitute a “windfall”]; cf. Parker

, supra , 1 49 Cal.App.4th at p. 301 [“n onpro pounding party” may obtain23

terminating sanctions “only if . . . [it] sho w s it suffered a
detriment as the result of the sanctioned party’s misus e of the discovery process”].) This rule makes sense. A prejudice requirement would be “difficult,” if not “impossible,” for a propounding party to meet because a showing of prejudice would likely turn on the significance of the information that the non

compliant party is refusing to disclose. ( Electronic Funds , at p. 1184.) A prejudice requirement would also empower intra nsigent parties to continue their intransigence on the ground that the documents they were withholding are not that important. As we noted above, such selective lawlessness is still lawlessness. Defendants’ argument is also factually flawed. Contrary to
what defendants represent in their briefs, Siry’s discovery encompassed far more than the issues of alter ego and
defendants’ fin ancial condition. The mid

- October 2013 request s sought documents involving the workings and finances of

— as well as each defendant ’ s interests in

— the various entities ( 416
South Wall Street, DTLA and Investment Consultants) used to effectuate the allegedly improper diversion of the partnership’s cash distributions. The January 2014 request s sought documents and answers to special interrogatories regarding each defendants’
finances. Together, these requests sought more recent documents
relevant to show whe ther defendants had, in fact, improperly diverted the partnership’s cash distributions; to show which
defendants had done so , which, as we noted in the prior appeal, was “key” ; and to show what assets each defendant had available to satisfy any verdict for punitive damages. Thus, these requests spanned a broad swath of subjects that went to the heart of the
retrial that Siry, in late 2013 and early 2014, expected to prosecute. (Accord, Rawnsley v. Superior Court (1986) 18324

Cal.App.3d 86, 91 [discovery see king documents that would show that “assets have been converted and diverted” are “fundamental to [a plaintiff’s] case”]; In re Marriage of Michaely (2007) 150 Cal.App.4th 802, 810 [discovery seeking more updated information is appropriate].)

2. Did the trial court err in issuing terminating sanctions notwithstanding Neman’s assertion of the privilege against self

- incrimination? Neman alone argues that the trial court lacked the authority to issue terminating sanctions against him once he
asserted the pr ivilege against self

- incrimination.

a. Additional facts On September 19, 2014, a federal grand jury in Los Angeles indicted Neman, in his capacity as Chief Executive Officer of a company called Pacific Eurotex, for evading federal currency reporting re quirements while laundering drug trafficking proceeds. Although the indictment occurred long after Siry had propounded its discovery requests

, after Neman had violated numerous court orders compelling product ion without objection s , and after the court’s penultimate pre

- terminating sanctions discovery order of October 9, 2014

, Neman o n October 22
, 2014 invoked the privilege against self

- incrimination in seeking a stay
of this case pending resolution of the criminal case, which the
trial court denied but th en grant ed a continuance of the trial date to account for Neman’s unavailability as a witness

. Neman also served on October 27, 2014 supplemental discovery response s objecting to every request “based on his Fifth Amendment privilege rights.” The trial co urt overruled that objection in its terminating sanctions order, finding that it was “not going to25

relitigate the basis or validity of [its pre

- assertion] orders [compelling production].”

b. Analysis The Fifth Amendment’s guarantee that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself” operates as a defense to civil discovery, if timely asserted. (U.S. Const., 5th Amend. ; Cal. Const., art. I, § 15; § 2017.010 [discovery reaches “any matter

, not privileged ”], italics added; Fuller v. Superior Court (2001) 87 Cal.App.4th 299, 305 ( Fuller ) [“Privileged matters . . . lie beyond the reach of discovery . . .”].) This privilege against self

- incrimination reaches only
those communications that are (1) compelled, (2) testimonial, and (3) incriminating. ( United States v. Doe (1984) 465 U.S. 605, 611 ( Doe ) .) In assessing whether the privilege applies to excuse compliance with the Civil Discovery Act, courts ask two questions. First, is the requ ested disclosure protected by the privilege?
Because the responses to Siry’s discovery requests would “‘disclose the contents of [Neman’s] mind’” and therefore are testimonial ( Pa

. v. Muniz (1990) 496 U.S. 582, 594, quoting
Curcio v. United States (1957) 354 U.S. 118, 128), the applicability of the privilege here turns on whether the discovery sought is “incriminating” and “compelled.” As a general matter, a
communication is “incriminating” if it “furnish [ es ] a link in the chain of evidence needed to pros ecute the claimant for a . . . crime.” ( Hoffman v. United States (1951) 341 U .S. 479, 486 ( Hoffman ) .) And because a litigant’s “say

- so does not of itself
establish the hazard of incrimination ” ( i bid

. ), the litigant bears the burden of “obj ect[ing] with specificity,” which triggers the26

trial court’s duty to “‘conduct[] “ a particularized inquiry, deciding, in connection with each specific area that the [propounding] party seeks to explo r e, whether or not the privilege is well

- founded.’ ” [Cit ation.]” ( Warford v. Medeiros (1984) 160 Cal.App.3d 1035, 1045 ( Warford ) , italics omitted ; In re Marriage of Sachs (2002) 95 Cal.App.4th 1144, 1151 ( Sachs ) ; Alpha Media Resort Investment
Cases (2019) 39 Cal.App.5th 1121, 1133 .) In assessing whether the sp ecial interrogatories are privileged in this case

, Neman’s answers would be compelled ( because he was being compelled by the court to respond to
them ), but would be incriminating only if it is “evident from the implications of the question, in the setting in which it is asked, that a responsive answer to the question or an explanation of why it cannot be answered might be dangerous beca use injurious disclosure could result.” ( Hoffman

, supra , 341 U.S. at pp. 486

- 487; People v. Seijas (2005) 36 Cal.4th 291, 304.) In assessing whether the production of documents is privileged in this case

, Neman’s creation of the documents to be produced was not compelled because he voluntarily created th ose documents ( Doe

, supra , 465 U.S. at p. 612), but his act of productio n would be compelled (again, because he was being compelled by the court to produce them ). However, his act of production would be incriminating only if that act “ ‘ admit[ted] ’ ” facts previously unknown to Siry

— namely, “‘ that the [responsive documents]
exi sted, were in his possession or control, and were authentic.’ [Citation.]” ( United States v. Hubbell (2000) 530 U.S. 27, 36.) Second, if the requested discovery responses are found to be covered by the privilege

, what should the court do about it? Because a pending criminal indictment does not give a person “ ‘ a blank check to block all civil litigation on the same or related27

underlying subject matter, ’ ” the trial court must “assess [] ” “ ‘ the nature and substantiality of the injustices claimed ’ ” by th e propounding and responding parties, and seek to “fairly balance” their interests, preferably by “ accommodat[ ing ] ” those “competing interests.” ( Fuller

, supra , 87 Cal.App.4th at p p

. 306

- 307; Pacers, Inc. v. Superior Court (1 984) 162 Cal.App.3d 686, 690; Avant! Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 882.) The trial court did not err in overruling Neman’s assertion of the privilege against self

- incrimination for three reasons. First, Neman never “object [ed] with specificity.” Instead, he resp onded with a blanket objection to all discovery without any attempt to explain how any answers he would provide to the special interrogatories or how his act of producing the requested
documents would incriminate him for crimes involving Pacific
Eurotex , a company nowhere mentioned in this litigation . Such a “blanket refusal to testify [or provide discovery responses] is unacceptable” and insufficient to constitute an assertion of the privilege. ( Sachs

, supra , 95 Cal.App.4th at p. 1151; Warford

, supra , 16 0 Cal.App.3d at p. 1044 [“ ‘[ T ] here is no blanket Fifth Amendment right to refuse to answer questions. ’ ”].) Neman responds that he never made a “ ‘ blanket refusal ’ ” because he repeated the same boilerplate refusal for each individual discovery request, but Neman’s mastery of the cut

- and

- paste feature to refuse to answer each individual request is functionally indistinguishable from a blanket refusal. Neman also faults Siry for not filing a further motion to compel in order to flesh out
Neman’s defective inv ocation of the privilege, but the burden of invoking the privilege is on its holder ( Sachs , at pp. 1151

- 1152) and we decline to adopt a rule shifting the burden onto the opposing party to remedy a defective invocation.28 Second, even if we ignored Neman’s defective assertion of the privilege, Neman has not carried his burden of showing that an “injurious disclosure could result” ( Hoffman

, supra , 341 U.S. at pp. 486

- 487) by “ demonstrat[ ing ] some ‘nexus’ between the information requested [by Siry] and the ri sk of criminal prosecution and conviction.” ( Troy v. Superior Court (1986) 186 Cal.App.3d 1006, 1012.) Neman was indicted for various currency transactions involving Pacific Eurotex from 2012 through 2014; the discovery sought in this case involves the
d ealings of several corporations and a limited partnership

— none of which Neman contends has any associat ions with Pacific
Eurotex

— between 200 2 and 2010, as well as Neman’s financial data from January 2010 through January 2014. The requisite
nexus is absen t. Neman points to his attorney’s declarati on , filed with a motion to stay or continue the trial, that a nexus exists because Neman was charged with money laundering and the discovery in this case would require him to respond to questions
about his financ ial holdings. However, this explanation

— namely, any question about money is privileged whenever someone is charged with money laundering

— is at far too high a level of generality to establish the requisite showing of a “danger” of “injurious disclosure,” e specially where, as here, Neman operates numerous entities that may or may not have intertwined financial dealings. This argument also provides no basis for extending the privilege to the non

- financial discovery sought by Siry’s October 2013 requests for production of
documents regarding liability

. Neman asserts that he need not establish any nexus
because (1) his attorneys in the criminal matter recommended that he assert the Fifth Amendment privilege in this case

, ( 2 ) the29

trial court has yet to conclude there is no nexus , ( 3 ) the trial court already determined that there was a nexus because it briefly continued the trial on the basis of his Fifth Amendment objection

, ( 4) a trial court in a different case stayed that case against
Neman

, and ( 5 ) this c ourt has already determined that there was a nexus because we issued an alternative writ in 2017 directing
the trial court to sustain Neman’s Fifth Amendment objection to six document requests (for the period starting January 1, 2015

, as limited by the trial c ourt ) posed during a 2017 debtor’s

examination. 8

Each of these assertions is meritless. A trial court is required to assess for itself whether a “nexus” exists, not just take the word of a party’s lawyer on that issue. The trial court
never ruled on whe ther there is a nexus between the indictment and Siry’s discovery because Neman never asserted a specific objection; his assertion of an ineffectual, blanket objection does
not somehow excuse him from having to pro ve that his interrogatory answers and act of producing documents posed a danger of incriminati ng him . The trial court’s grant of a brief continuance of trial was due to Neman’s unavailability as a witness, not because responding to Siry’s pending discovery requests might prove incriminating. (Se e, e.g., Evid. Code, § 240 [defining unavailability of a witness].) Whether a nexus exists between the pending charges and the allegations of a different case says nothing about whether such a nexus exists in this case.
And our issuance of an alternative writ with regard to specific

8 We grant Neman’s motion to augment the record and for judicial notice of documents related to the debtor’s examination and writ proceedings. (Evid. Code, §§ 452, subd. (d), & 459

, subd. (a) .)30

objections Neman made to different document request s covering a different time period cannot cure the deficiency of his blanket assertion of privilege to Siry’s discovery, particularly when Neman ultimately withdrew his writ p etition. Lastly , even if we ignored Neman’s defective assertion of the privilege and the absence of any nexus, Neman did not assert his Fifth Amendment privilege until October 2014, long after Siry propounded its discovery and the trial court repeatedly o rdered Neman to respond. In arguing that his October 2014 assertion of
the privilege renders the trial court’s terminating sanctions ruling improper, Neman is effectively arguing that a litigant’s assertion of the privilege against self

- incrimination retr oactively excuses prior misuse of the discovery process. This argument is legally unfounded. (Cf. Brown v. Superior Court (1986) 180 Cal.App.3d 701, 712 [“privilege against self

- incrimination” may be “waived by a failure to make a timely objection”].) I t is also factually unfounded, as the trial court’s terminating sanctions order was based upon Neman’s contumacious conduct in ignoring the court’s orders, and not upon any assertion of the privilege against self

- incrimination after those orders were issue d . (Cf.
Alvarez v. Sanchez (1984) 158 Cal.App.3d 709, 712

- 713 [noting that “striking of the defendant’s answer and the resultant default procedure are too harsh a sanction for exercising” the privilege against self

- incrimination].) Contrary to what Neman suggests, it also does not matter that Siry amended its operative complaint to allege specific damages demands after he (defectively) asserted the privilege. He had proper notice of those allegations by the
time his answer was struck and default was ente red (§ 580, subd. (a)); more to the point, Neman had the power to assert the31

privilege more specifically after Siry amended its complaint but nonetheless chose to rest on his defective, blanket objection.

3. Is the trial court’s finding that Farkhondeh pour never complied with its orders supported by substantial evidence? Farkhondehpour alone argues that he did, in fact, comply with the trial court’s multiple orders compelling responses, without objection, to Siry’s October 2013 and January 2014
discove ry requests. Farkhondehpour certainly responded to Siry’s discovery requests. In response to Siry’s October 2013 request s for production

, Farkhondehpour filed (1) untimely response s with objections in February 2014 explaining why he was not going to

pr ovide any responsive documents because the documents sought (a) pertained to non

- compensable damages (that is, damages waived when the prior lawsuit between the parties was settled in 2007), (b) had already been produced prior to remand (but additional cop ies would be made available at Farkhondehpour’s office) , or (c) did not exist ; and ( 2 ) supplemental response s in June 2015 that (a) preserved objections, and (b) explained why he was still not going to provide any responsive documents because
the documents sought ( i ) had already been produced or were otherwise in Siry’s possession , ( ii ) never existed, or ( iii ) were “available” for inspection at Investment Consultants ’s offices. In response to Siry’s January 2014 request s , Farkhondehpour filed (1) a single blanket objection in April 2014 explaining that he was not going to provide any responsive documents or answer any interrogatories because the discovery sought was “unnecessarily burdensome, harassing and overbroad” ; and (2) supplemental

response s in June 2015 that (a) preserved objections , (b) explain ed that any documents responsive to the production requests did not exist or were “available” for inspection at32

Investment Consultants’ s office, ( c ) provided answers to the vast majority of the special interro gatories ( 54 out of the 65 posed to Farkhondehpour individually and 80 out of the 1 1 2 posed to Farkhondehpour as trustee) that the interrogator y was “not applicable,” had no response, or was duplicative

, and ( c ) provided answers to the remaining interrogat or ies and attached eight pages of spreadsheets

. Substantial evidence supports the trial court’s finding that these responses did not constitute compliance. Farkhondehpour was ordered to produce every document requested and answer every special interroga tory posed without objection. Farkhondehpour never did so. Farkhondehpour points to his offers to open up the doors to his (or Investment Consultants’ s ) warehouse for Siry to come in and hunt for documents. But this
is not what the trial court ordered. To treat Farkhondehpour ’s “[l]ast

- minute tender of documents” as wiping away the prior 16 to 20 months of intransigence would impermissibly “reward . . . brinksmanship.” ( Sauer v. Superior Court (1987) 195 Cal.App.3d 213, 230.) Farkhondehpour s ays that he provided Siry with financial documents pertaining to four different companies during settlement negot iations, but those documents
constitute d an infinitesimal portion of the requested discovery. Farkhondehpour lastly asserts that Siry judicial ly admitted that it had received satisfactory responses to its discovery responses ; this is a flat

- out misrepresentation of the record.
II. Amount of the Default Judgment Defendants challenge the trial court’s award of (1) treble damages under Penal Code section 496, subdivision (c), and (2) attorney fees. In its cross

- appeal, Siry challenges the trial court’s recalculation of treble damages, its reduction in punitive33

damages, and its requirement that Siry elect between treble and punitive damages on the ground that defendants lacked standing to make the motion for new trial that prompted the court to
reduce the amount of the default judgment. 9 We will address the
second issue first.
A. Standing t o m ove for a n ew t rial Siry argues the trial court erred in amending the default judgment in response to defendants’ motion for new trial not because the amendments were incorrect, but because defendants, as parties in default, did not have standing to make such a
motion at all . Because this argument requires u s to construe the new trial statute and resolve other questions of law, our review is de novo. ( John v. Superior Court (2016) 63 Cal.4th 91, 95 ( John ) ; Greene v. Marin County Flood Control & Water Conservation
Dist. (2010) 49 Cal.4th 277, 287.) An “aggri eved party” may move the trial court to “vacate [] ” a “verdict” or “other decision” and “grant[]” “a new or further trial” if, among other reasons, that party can show an “[e]rror in law, occurring at the trial and excepted to by the party making the applic ation” if that error “materially affect[ed] [its] substantial rights.” (§ 657, subd. (7).) But may a “party” in

9 Defendants do not challenge the trial court’s calculation of actual damages, and Siry does not challenge the court’s requirement that Siry elect between treble and punitive damages, the reduction in the punitive damages award

, or the offset for costs defendants incurred during the prior appeal. And although Siry suggests that the trial court’s calculation of treble damages was incorrect, we decline to entertain that suggestion because Siry waited until its reply brief to raise it. ( Garcia

, supra , 16 Cal.4th at p. 482, fn. 10.)34

default move for a new trial when, by virtue of the default, there
was no trial in the first place ? We conclude that the answer is “yes,” at least when the party is seeking to move for a new trial on the ground that the
court made an “error in law” in calculating damages. Although the entry of default precludes the defaulting defendant from further participation in the proceedings (and thus fr om “except[ing] to” the error during the prove

- up hearing) ( Devlin v. Kearny Mesa AM C /Jeep/Renault (1984) 155 Cal.App.3d 381, 385 ( Devlin ) ; Forbes v. Cameron Petroluems, Inc. (1978) 83 Cal.App.3d 257, 262; Christer s on v. French (1919) 180 Cal. 523, 525), t he plaintiff still bears the burden of proving i ts entitlement

to damages to the court . ( Barragan v. Banco B ch (1986) 188 Cal.App.3d 283, 302; § 585, subd. (b).) More to the point, the entry of default does not entirely render a defaulting defendant per sona non grata. Even a defaulting defendant may appeal the resulting default judgment on the grounds that the damages award (1) “is so disproportionate to the evidence as to suggest that the verdict was the result of passion, prejudice or corruption ” ( Uva v. Evans (1978) 83 Cal.App.3d 356

, 363 ( Uva ) ), (2) “is so out of proportion to the evidence that it shocks the conscience of the appellate court” ( ibid. ), or (3) is “contrary to law” ( see Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 139 [defaulting party m ay appeal refusal to set aside verdict on these grounds]). Because a defaulting defendant can appeal a default judgment on these grounds, “[w]e see no reason to preclude [that defendant] from seeking a new trial (or, more precisely, a new judgment heari ng) on th[ose] ground [ s ] . . .” ( Don v. Cruz (1982) 131 Cal.App.3d 695, 704 ( Don ); Jacuzzi v. Jacuzzi Bros. (1966)35

243 Cal.App.2d 1, 23

- 24; Misic v. Segars (1995) 37 Cal.App.4th 1149, 1154.) Allowing a defaulting party to bring excessive damages based on errors in law to the trial court’s attention in a new trial motion puts those potential errors before the court with greater familiarity with the case, does so in a manner likely to yield a faster result, and may thereby a ltogether obviate the need
for an appeal. (Accord, Don , at p. 705.) Our Supreme Court has held that parties may not “challenge [a] damage award on appeal[] without [first making] a motion for a new trial”; to do otherwise is to “unnecessarily burden the appellate courts with
issues whic h can and should be resolved at the trial level.” ( Shroeder v. Auto Driveway Co. (1974) 11 Cal.3d 908, 919.) That logic applies with equal force here. Siry resists this conclusion with four arguments

. First, it cites language from Howard Greer Custom
O riginals v. Capritti (1950) 35 Cal.2d 886 ( Howard Greer ) , where our Supreme Court stated that a defaulting defendant “cannot
. . . move for a new trial” because it “is out of court and is not entitled to take any further steps in the” case. ( Id. at pp . 888

- 889.) Seven years later, however, the Supreme Court in Carney
v. Simmonds (1957) 49 Cal.2d 84 ( Carney ) , retreated from
Howard Greer ’s sweeping language when it held that a new trial motion is appropriate in many different situations “e xcept possibly in the case of default judgments . . . where there may be the question of the right of the moving party to make any objection to the judgment.” ( Id. at p. 90.) Because defaulting defendants may appeal the damages award of a default judgment
in the three circumstances delineated above, they have the “right . . . to make an[] object ion to the judgment” and thus, under36

Carney , may also move for a new trial in those same
circumstances. Second, Siry urges that a close reading of the cases allowing defaulti ng defendants to move for a new trial reveals a
four

- part classification scheme, and that under that scheme, only defendants who challenge damages as being excessive due to insufficiency of the evidence (rather than due to legal errors) may
file a motion f

or new trial. This makes sense, Siry continues,
because the plaintiff at a default prove

- up hearing can be faulted only for presenting insufficient evidence but not for error s in law made by the court. None of the cases Siry cites even hints at the
rule Siry purports to draw from them; indeed, some have nothing to do with excessive damages at all. More to the point, Siry’s proffered rule is wholly inconsistent with the judicial economy

based rationale for allowing defaulting defendants to file a
motion f or new trial as to legal errors they can challenge on appeal because Siry’s rule would preclude new trial motions for issues that are clearly subject to challenge on appeal. What is more, Siry’s proffered blame

- based rationale for its rule is a fiction, a s the facts of this case vividly illustrate. Siry is the party who urged the trial court to award quadruple damages on top of punitive damages and who then offered a spirited defense of that position in opposing defendants’ motion for new trial

, rendering hollow its claim on appeal that plaintiffs are invariably
blameless for a trial court’s legal errors. Third, Siry contends that a defaulting party’s right to challenge disproportionate or legally erroneous damages awards on appeal should, at best, author ize that party to file a motion for
relief under s ection 473, but not a motion for new trial. But

s ection 473 provides relief for mistakes made by a party or its37

counsel (§ 473, subd. (b)) and for void judgments ( id. , subd. (d)),
and provides no relief fo r errors of law by a court in awarding “damages which are excessive as a matter of law.” ( Don

, supra , 131 Cal.App.3d at p p. 702

- 703.) The proper vehicle for getting
such issues before the trial court that entered the default judgment is a motion for new trial.
Fourth , Siry cites cases holding that a defaulting defendant may not file a motion for new trial under any circumstances. (E.g.

, Devlin

, supra , 155 Cal.App.3d at pp. 385

- 386; Brooks v.
Nelson (1928) 95 Cal.App. 144, 147

- 148.) We respectfully par t ways with these decision s , which did not consider the rationale we adopt

— namely, that there is no reason to deprive the trial court of the power to consider challenges to the excessiveness or legal propriety of damages when those very same issues can
und oubtedly be raised on appeal. In this case, defendants’ challenges to the damages awarded in the original default judgment all constitute “error [ s ]
in law” properly subject to a motion for a new trial. The court’s recalculation of treble damages reduce d what was effectively quadrupled damages down to treble damages; the court’s reduction of the punitive damages award was grounded in the constitutional law defining when such damages become so excessive as a matter of law as to deny a defendant due proces s; and the court’s ruling that Siry must elect between treble and punitive damages involved construction of the law

. (Cf. Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 507 [only trial38

court may sit as a “thirteenth juror” in evaluating the am ount of
damages].) 10

10 Because these reasons for granting a new trial all involve

“ error [ s ] in law ” cognizable under subdivision (7) of s ection 657 rather than any reweighing of the evidence ( Glendale Fed

. Sav

. & Loan Ass n . v. Marina View Heights D ev

. Co. (1977) 66 Cal.App.3d 101, 122 [distinguishing challenges to the excessive ness of damages based on the evidence presented from a court’s “failure to apply the proper legal measure of damages”]; Gober v. Ralph’s Grocery Co. (2006) 137 Cal.App.4th 204 , 214 [“in deciding the constitutional maximum [for punitive damages], a court does not decide whether the verdict is unreasonable based on the facts”]), Siry’s belatedly developed argument that the trial court’s new trial order is void because it cites su bdivision (5) of s ection 657 is not well taken. To be sure, the court cited only subdivision (5) and that subdivision requires a trial court to “weigh[] the evidence” (§ 657, second paragraph). But it is clear from the trial court’s reasons for granting a new trial that the court cited the wrong statutory ground for relief. A court’s failure to state the

proper ground for relief under s ection 657 does not abrogate its

reasons for granting that relief

. ( Oakland Raiders v. National Football League (2007) 41 Cal.4th 624, 634 [“ ‘ the words “ ground ” and “ reason ” have different meanings, ’ ” and “[t]he word ‘ground’ refers to any of the seven grounds listed in section 657”]; Previte v. Lincolnwood, Inc. (1975) 48 Cal.App.3d 976, 988 [reviewing court is “confined” “to the specific reason or reasons given by the trial court for [its new trial] order”], italics added.) More to the point, it does not void the new trial order ( Sandoval v. Qualcomm Inc. (2018) 28 Cal.App.5th 381, 421

- 424 [trial court’s citation to the “wrong subdivision” of s ection 657 does not void new trial order when its reason was valid under a different subdivision], review granted on other grounds

, Jan. 16, 2019, S252796; see also Sanchez

- Corea v. Bank of America (1985) 38 Cal.3d 892, 906 [trial c ourt’s failure to specify ground for relief does not void its new trial order]), at least where, as here, a new trial was sought39 B. Propriety of certain damages awards Defendants argue that the trial court erred in awarding treble damages under Penal Code section 496, subd ivision (c) and in awarding attorney fees. When entering judgment against a defaulting defendant, a trial court acts as a “gatekeeper

, ” not a rubber stamp. (

Kim v. Westmo o re Partners, Inc. (2011) 201 Cal.App.4th 267, 272 ( Kim ); Electronic Funds

, supra , 134 Cal.App.4th at p. 1179.) This is a “serious” and sober responsibility ( Kim , at pp. 2 72

- 273), requiring the court to assure itself that the plaintiff has made a “prima facie case” showing entitlement to each type of damages under (1) the relevant statute, contract, or legal doctrine, and (2) the well

- pled allegations in its operative compl aint. ( Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 361

- 362; Los Defensores

, supra , 223 Cal.App.4th at pp. 392

- 393.) In undertaking this task, the court must accept as true all “well

- pled [] allegations” in the operative complaint, but need not accept “contentions, deductions or conclusions of fact or law.” ( Evans

, supra , 38 Cal.4th at p. 6.) Where, as here, the relief challenged on appeal ha s “penal attributes” (as both treble damages and attorney fees do ( Rony v.
Costa (2012) 210 Cal.App.4th 746, 75 7 ( Rony ) )), the trial court must also require the plaintiff to “strict[ly] compl [ y ] ” with all statutory prerequisites for that relief ( Baker v. San Francisco Gas
& Electric Co. (1904) 141 Cal. 710, 712). W e independently review a trial court’s ruling that the complaint entitles a plaintiff

on the ground corresponding with the trial court’s reasons ( Collins v. Sutter Memorial Hospital (2011) 196 Cal.App.4th 1, 16

- 17 [“A new trial order ‘can be granted only on a ground specified in the motion.’”], citation omitted).40

to damages where, as here, that ruling rests on questions of statutory interpretation and the application of undisputed facts
to the law. ( John

, supra , 63 Cal.4th at p. 95; Martinez v.
Brownco Construction Co. (2013) 56 Cal.4th 1014, 1018.)

1. Treble damages and attorney fees under Penal Code section 496, subdivision (c) Penal Code section 496 is entitled “Receiving or concealing stolen property.” (Pen. Code, § 496.) Subdivision (a) makes it a
crime to (1) “buy[] or receive[] any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained ,” or (2) “conceal[], sell[], [or] withhold[] any property from the owner, knowing the p roperty to be so stolen or obtained.” ( Id. , subd. (a).) Subdivision (c) empowers “[a]ny person who has been injured by a violation of subdivision (a)” to “bring an action for three times the amount of actual damages [he has ] . . . sustain[ed]” as well a s for “costs of suit[] and reasonable attorney’s fees.” ( Id. , subd. (c).) This case presents the question: Does Penal Code section 496, subdivision (c) authorize Siry to obtain treble damages where the underlying conduct did not involve tra ffi cking in stolen property, but rather the improper diversion of a limited partnership’s cash distributions through fraud

, misrepresentation , and breach of fiduciary duty ? The courts have taken different approaches to the issue. Siry urges that we follow Switzer

, supra , 35 Cal.App.5th 116, Bell v. Feibush (2013) 212 Cal.App.4th 1041 ( Bell ), Worldwide Travel, Inc. v. Travelmate US, Inc. (S.D. Cal. 2016) 2016 U.S. Dist. LEXIS 43942 ( Worldwide Travel ) , and Allure Labs, Inc. v. Markushevska (N.D. Cal. 2019) 606 B.R. 51 , 63

- 66 ( Allure Labs ) . These cases hold that treble damages are available whenever the defendant’s underlying conduct involves any type of41

fraudulent conduct or misrepresentation. ( Switzer , at p p . 119

- 120 [fraud, conversion of property; treble damages av ailable];
Bell , at p. 1043 [theft by false pretense; treble damages available]; Worldwide Travel , at * 18

- 23 [conversion, theft by false pretenses; treble damages available] ; Allure Labs

, at pp. 57

- 58 [embezzlement; treble damages available] .) Their holdin gs rest on a literal reading of the Penal Code: Section 496, subdivision (a) reaches the “recei[pt of] . . . property . . . that has been obtained in any manner constituting theft ” (Pen. Code, § 496, subd. (a), italics add ed ) , and “theft” is elsewhere def ined to include “fraudulently appropriat[ing] property which has been entrusted to him or her” or “knowingly and designedly, by any false or fraudulent representation or pretense, defraud[ing] any other person of money, labor or real or personal property” ( id.

, § 484, subd. (a)) , so Penal Code section 496, subdivision (c) must authorize treble damages for any type of conduct qualifying as “theft,” including fraud, conversion, and theft by false pretenses. ( Switzer , at pp. 126

- 131; Bell , at pp. 1045

- 104 9.)
Defendants urge that we follow Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955 ( Lacagnina ), Grouse River Outfitters Ltd. v. Net S uite, Inc. (N.D. Cal. 2016) 2016 U.S. Dist. LEXIS 141478 ( Grouse River ), and Agape Family Worsh i p Ctr

. , Inc . v. Gridiron (C.D. Cal. 2018) 2018 U.S. Dist. LEXIS 91338 ( Agape Family ). For various reasons, each of these cases has rejected Bell’s declaration that “[a]nything that could be the subject of a theft can also be property under Penal Code section 496” ( B ell

, supra , 212 Cal.App.4th at p. 1049). Lacagnina viewed
Bell’s declaration as “broad dictum,” and went on to reject the plaintiff’s argument that Penal Code s ection 496 applied to a theft of labor; “that labor may be the object of a ‘theft,’”42

Lacagnina reasoned, “does not transform it into ‘stolen property.’” ( Id. at pp. 969

- 970.) Grouse River and Agape Family both rejected treble damages because, in their view, the civil
defendant’s initial “ theft ” of the property through fraud precluded treble damage s for the simultaneous act of receivi ng that “stolen” property. ( Grouse River , at * 38

- 40; Agape Family , at * 1

- 2, 14

- 15.) We chart yet a different path in ruling that treble damages
are not available under Penal Code s ection 496, subdivision (c) in

cases where the plaintiff merely alleges and proves conduct involving fraud, misrepresentation, conversion, or some other type of theft that does not involve “stolen” property

. The “first task” of any court “in construing a statute is to
ascertain the intent of the Legislature so as to effectuate the purpose of the law.” ( Dyna

- Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386 .) Although “the words of [a] statute” “[o]rdinarily” “provide the most reliable indication of legislative intent ” ( People v. Vidana (2016) 1 Cal.5th 632, 638), this “‘plain meaning’ rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose.” ( Lungren v. Duekmejian (1988) 45 Cal.3d 727, 735). Time and again, our Supreme Court has r efused to “‘presume that the Legislature intends, when it enacts a statute, to overthrow long

- established principles of law unless such intention is clearly expressed or necessarily implied.’” ( Brodie v. Workers’ Comp. Appeals Bd. ( 2007) 40 Cal.4th 1313, 1325, quoting People v. Superior Court ( Zamudio ) (2000) 23 Cal.4th 183, 199); Van Horn v. Watson (2008) 45 Cal.4th 322, 333

, superseded by statute on another ground as stated in Ennabe v.
Manosa (2014) 58 Cal.4 th 697, 719 .) The reas on for this refusal43

is a pragmatic one

— namely, that “[i]t is doubtful that the Legislature would . . . institute[] . . . significant change through silence.” ( Riverside County Sheriff’s Dept. v. Stiglitz (2014) 60 Cal.4th 624, 646

- 647; see also In re Chri stian S. (1994) 7 Cal.4th 768, 782 [“reject[ing] the view that the Legislature silently enacts major social policy”].) In our view, reading Penal Code s ection 496 to authorize an award of treble damages whenever a plaintiff proves (or, in the
case of a de fault, sufficiently alleges) any type of theft

— whether it be fraud, misrepresentation, conversion, or breach of fiduciary duty

— by which the defendant obtains money or property would
institute a “significant change” for two reasons. First, it would trans mogrify the law of remedies for those

torts. Until now , the damages remedy for these torts has been
limited to the amount of damages actually caused by the fraud, misrepresentation, conversion or breach of fiduciary duty . (Civ. Code, § 3333 [ defining dam ages “ [ f ] or the breach of an obligation not arising from contract” as “the amount which will compensate for all the detriment proximately caused thereby . . .”]; Fragale v.
Faulkner (2003) 110 Cal.App.4th 229, 236 [applying this measure of damages to tort of fraud not involving real property]; Benson v. Southern California Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, 1208 [applying this measure of damages to tort of misrepresentation]; Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1 5 83 [applying this mea sure of damages to tort of breach of fiduciary duty]; Per s son v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1165 [“fraud damages are [ calculated ] under
the out

- of

- pocket loss rule”]; Civ. Code, § 3336 [damages for wrongful conversion is the “value of the property at the time of
the conversion” plus “fair compensation for the time and money44

properly expended” in its pursuit].) T reble damages under Penal
Code s ection 496, if held applicable to these torts, would all but eclipse these traditional dam ages remedies. (Accord, Lacagnina

, supra , 25 Cal.App.5th at p. 972 [“If every plaintiff in an employment or contract dispute could also seek treble damages”
under Penal Code s ection 496, “such claims would become the rule rather than the exception”].) Second, reading Penal Code s ection 496 to apply in theft

related tort cases would effectively repeal the punitive damages statutes. ( California Cannabis Coalition v. City of Upland (2017) 3 Cal.5th 924, 945 [noting “strong presumption” against “implied

re peal”].) Until now, a plaintiff seeking greater than compensatory damages had to prove, by clear and convincing evidence, that the defendant was “guilty of oppression, fraud

, or malice.” (Civ. Code, § 3294, subd. (a).) I f Penal Code s ection 496 applied to these torts, a plaintiff could obtain treble damages merely by proving the tort itself by a preponderance of the evidence. (Evid. Code, § § 500 , 115 [preponderance of the evidence is the default burden in civil cases].) 11 What is more, our Legislature h as not shouted, stated, or even whispered anything about Penal Code s ection 496 e ffect ing such a “significant change” to the universe of tort remedies. Rather, the Legislature had a far more targeted goal in mind

11 Because Penal Code s ection 496, subdivision (c) authorizes an award of attorney fees along with treble damages, extending its reach beyond the contex t of stolen property would have a third significant effect: It would authorize fee shifting in nearly every tort cause involving fraud, misrepresentation, or breach of fiduciary duty, thereby creating a gaping exception to the general rule against such fe e shifting

. (§ 1021)

.45

when it enacted Penal Code s ection 496’s t reble damages remedy

— namely, “to d ry up the market for stolen goods.” ( Bell

, supra , 212 Cal.App.4th at p. 1047.) Penal Code s ection 496’s
focus on stolen goods is reflected in the statute’s title, which specifies that it deals with “Receiving stolen prop erty.” ( People v.
Hull (1991) 1 Cal.4th 266, 272 [“‘ “ section headings ” ’” “‘are entitled to considerable weight’” “‘ “ in determining legislative
intent ” ’”], citation omitted.) It is reflected in the traditional understanding of the crime defined in Penal C ode s ection 496, subdivision (a), which requires proof that “(1) the property was stolen; (2) the defendant knew the property was stolen; and, (3) the defendant had possession of the stolen property.” ( People v.
Land (1994) 30 Cal.App.4th 220, 223.) And it is reflected in
Penal Code s ection 496, subdivision (c)’ s legislative history, which is replete with discussions about how best to achieve the “goal of eliminating markets for stolen property

, in order to substantially reduce the incentive to hijack car go from common carriers.” ( Citizens of Humanity, LLC v. Costco Wholesale Corp. (2009) 171 Cal.App.4th 1, 17

- 18, overruled on other grounds as stated in Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310 , 337 ( Kwikset ) .) Although the Legislature ultima tely opted not to limit the treble damages remedy to actions against “public carriers,” its focus never strayed from drying up the market for stolen goods. ( Ibid. , italics omitted ) Because imposing treble damages in cases alleging fraud, misrepresentatio n, breach of fiduciary duty and other torts outside the context of stolen property does nothing to “advance the legislative purpose to ‘dry up the market for stolen goods,’” we cannot even infer any legislative intent to affect this significant change.46 Th e Legislature’s silence is even more deafening when
contrasted with other statutes that speak with a much clearer voice in creating the extraordinary remedy of treble damages. (E.g., Bus. & Prof. Code, § 16750, subd. (a) [treble damages
available for viol ations of the Cartwright Act setting state antitrust laws]; id. , § 17082 [treble damages available for
violations of the U nfair C ompetition L aw]; Civ. Code, §§ 52, subd. (a) & 54.3, subd. (a) [treble damages available for violations of the Unruh Civil Righ ts Act]; id. , § 1719, subd. (a)(2) [treble damages available to payee for passing checks with insufficient funds]; id.

, § 3345 [treble damages available “ in actions brought by, on behalf of, or for the benefit of senior citizens or disabled persons . . . t o redress unfair or deceptive acts or practices or unfair methods of competition ” ]; Gov. Code, § 12651, subd. (b) [treble damages available for violations of the False Claims Act]; Lab. Code, § 230.8, subd. (d) [treble damages available for denyin g employees’ wages “ to engage in child

- related activities ” protected by statute]; see also 18 U.S.C. § 1964(c) [treble damages available under the federal Racketeer Influenced and Corrupt Organizations Act].) Because we cannot presume that our Legislature intended to so significantly alter the universe of tort remedies without saying anything about its desire to do so, we conclude that Penal
Code s ection 496’s language sweeps more broadly than its intent and hold that it does not provide the remedy of treb le damages for torts not involving stolen property. We recognize that
Switzer , and to a lesser extent, Bell , came to the contrary
conclusion based on their view that Penal Code s ection 496’s language was controlling. Switzer took an additional step, noti ng that legislative intent can sometimes trump a statute’s plain47

language, but cho o s ing to focus on whether extending treble damages to all tort cases involving “theft” was such an outlandish

outcome as to be deemed “absurd.” ( Switzer

, supra , 35 Cal.App.5 th at pp. 129

- 131.) As explained above, we take the path Switzer chose not to take and conclude that Penal Code

s ection 496’s language diverges from the Legislature’s intent and that its narrower intent is controlling. Siry’s final salvo is to assert t hat it properly alleged a
violation of Penal Code s ection 496 in its operative complaint. That may be true, but it is irrelevant because, as we now hold,
Penal Code s ection 496

— no matter how well it is pled

— does not provide the remedy of treble damages ba sed on the underlying allegations in this case. In light of the unavailability of treble damages under Penal
Code s ection 496, Siry’s election to receive treble damages over punitive damages is a nullity; in its place, Siry is entitled to receive the $1 m illion in punitive damages assessed against each Farkhondehpour and Neman.

2. Attorney fees As a general rule, California follows the so

- called “American rule” when it comes to attorney fees: Parties in civil litigation bear their own unless a statute or contract provides otherwise. (§ 1021; Eden Township Healthcare Dist. v. Eden
Medical Center (2013) 220 Cal.App.4th 418, 425.) The trial court awarded Siry attorney fees under two statutes

— namely, Penal Code section 496, subdivision (c), and s ection 10 29.8. The fee award under Penal Code section 496 was in error because, as we hold above, that statute does not reach the type of conduct
involved in this case.48 This leaves s ection 1029.8 as the sole basis for attorney fees. That statute empowers a tri al court to award “all costs and attorney’s fees” against “[a]ny unlicensed person who causes injury or damage to another person as a result of providing goods or performing services for which a license is required.” (§ 1029.8, subd. (a).) The court foun d a fee award under s ection 1029.8 to
be appropriate because defendants acted as (1) unlicensed
construction contractors , and (2) unlicensed broker

- dealers. We separately consider each basis for the award.

a. Did defendants act as unlicensed
contractor s involved in construction activity ? California requires “person[s] engaged in the business or acting in the capacity of a contractor” to be licensed. (Bus. & Prof. Code, § 7031.) For these purposes, and as pertinent here, a “contractor” is “any person who [(1a)] undertakes to or [(1b)] offers to undertake to, or [(1c)] purports to have the capacity to undertake to, or [(1d)] submits a bid to, or [(1e)] does himself or herself or by or through others [(2)] construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building . . .” ( Id. , § 7026.) Requiring contractors to be licensed “provide[s] minimal assurance that all persons offering such services in California have the requisite skill and character, understand applicable

. . . laws and codes, and know the rudiments of administering a contracting business.” ( Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 995.) As construed by the courts, a “contractor” is only a person or entity who (1) actually perform s c onstruction services ( Contractors Labor Pool, Inc. v. Westway Contractors (1997) 53 Cal.App.4th 152, 165 ( Westway ); WSS Industrial Construction, Inc. v. Great West Contractors, Inc. (2008) 162 Cal.App.4th 581,
587

- 593 ( WSS Industrial ); (2) “supervise [s] th e performance of49

construction services” ( Westway

, at p. 165; WSS Industrial , at p. 593 [“overseeing” construction work]); or (3) agree s by contract to
be “ ‘ solely responsible ’ ” for construction services ( Vallejo Development Co v. Beck Development Co. (1994 ) 24 Cal.App.4th 929, 935

- 936, 939

- 940 ( Vallejo Development )). In the last two scenarios, a license is required even if the construction work is actually performed by someone else . ( Bus. & Prof. Code, § 7026 [reaching work “by or through others”]; Vallej o Development , at p. 941.) However, a license is not required if a person or entity merely coordinates construction services performed by others ( The Fifth Day, LLC v. Bolotin (2009) 172 Cal.App.4th 939, 947

- 950), or supplies labor for those services ( Wes tway , at pp. 164

- 165). In its operative complaint, S iry allege d the following in support of its entitlement to attorney fees by virtue of defendants’
status as unlicensed contractors :

“ Although the construction done at the 241 property was performed by a third party, companies controlled by the defendants, including Investment Consultants, received construction management fees even though none of the defendants or their companies had a contractor’s license. As a result, defendants deprived Siry of its sh are of the partnership funds based on defendants’ payment of partnership funds (as construction management fees)
t o entities controlled by them. By doing so, defendants obtained the benefits of construction work at Siry’s expense because Siry had no owner ship interest in the entities controlled by defendants. In addition, without a license, defendants, by themselves and through others, engaged in, or managed, construction activities, thus meeting the definition of a contractor under Bus

. & Prof. Code50 § 7026. For example, defendant Saeed Farkhondehpour performed construction management activities without a license by supervising the work. Finally, by entering into a construction contract with an unlicensed contractor and/or by making payments to an u nlicensed contractor, defendants aided and abetted unlicensed construction. ” These allegations do not entitle Siry to attorney fees under

s ection 1029.8 for two reasons. First, as to every defendant but Farkhondehpour , Siry has not sufficiently alleged t hat they qualify as “contractors” in the first place. Siry’s conclusory allegation that defendants “meet[]
the definition of a contractor” is a “conclusion of fact or law” that we must disregard. ( Evans

, supra , 38 Cal.4th at p. 6.) And Siry’s more speci fic allegations fare no better because they do not allege that these defendants actually performed any construction services, supervised any construction services, or agreed by contract to be solely responsible for construction services.
Without such alle gations, these defendants are not themselves “contractors.” They also cannot be held liable for attorney fees
under section 1029.8 because the statute imposes liability against
those who are unlicensed contractors, not those who use unlicensed contractors . ( Rony

, supra , 210 Cal.App.4th at p. 757 [noting that section 1029.8 “contains no language . . . extending its reach to those who ‘use’ the services of unlicensed persons” ].) Second, and as to all defendants, Siry has not alleged that it suffered “inj ury or damage . . . as a result of ” defendants’ “perform[ance of services] for which a license is required.” (§ 1029.8, subd. (a), italics added.) As set forth above, Siry’s sole allegation in this regard is that it was harmed by “defendants’

p ayment of partnership funds (as construction management fees)51

to entities controlled by [defendants] .” However, the harm occasioned by this diversion of partnership funds would have
occurred

— and, under defendant s ’ theories for recovery, would
have been im proper

— even if each defendant had a contractor’s license. Where an “injury ‘ “ would have happened anyway,
whether or not the defendant ”’ ” engaged in tortious behavior,
then that tort “ ‘“ was not a cause in fact, and of course cannot be the legal or responsi ble cause ”’ ” of that injury. ( Grotheer v. Escape Adventures, Inc. (2017) 14 Cal.App.5th 1283, 1303; Toste
v. CalPortland Construction (2016) 245 Cal.App.4th 362, 370.) Because Siry failed to allege that defendants’ unlicensed status is
what caused its in

jury, Siry failed to show that its injury was “as
a result of

” that unlicensed status , as required by s ection 1029.8. (See Kwikset

, supra , 51 Cal.4th at p. 326 [“‘The phrase ‘as a result of’ in its plain and ordinary sense means ‘caused by’ and requires a showing of a causal connection or reliance on the alleged misrepresentation.’ [Citation.]”].) Siry’s sole rejoinder is to argue that defendants’ deprivation of Siry’s “share of partnership funds . . . based on their construction

- related shenanigans . . . trigger[ed] attorney’s fees under section 1029.8. End of story.” This argument labors under the same misconception as Siry’s complaint

— namely, that awarding attorney fees under s ection 1029.8 requires no causal link
between the lack of a license and ha rm to the plaintiff. Section
1029.8’s plain language forecloses this argument.

b. Did defendants act as unlicensed broker

dealers selling securities? California law prohibits any “broker

- dealer” from “effect[ing] any transaction in, or induc [ing] or a ttempt [ing] to induce the purchase or sale of, any security . . . unless the broker

dealer” is licensed. (Corp. Code, § 25210.) A “broker

- dealer” is52

“any person engaged in the business of effecting transactions in
securities in this state for the account of others or for [ his ] own account.” ( Id. , § 25004, subd. (a).) And a “security” is defined by
reference to a l ong list of investment vehicles ( id. , § 250 1 9), although that list is meant to be “illustrative” rather than exhaustive ( People v. Graham (198 5) 163 Cal.App.3d 1159, 1164 ( Graham )). Given this approach, “ t he ‘ critical question’ . . . is whether [the] transaction [at issue] falls within the regulatory purpose of the law regardless of whether it involves an instrument [or vehicle] which comes wit hin the literal language of the definition.” ( People v. Figu e roa (1986) 41 Cal.3d 714, 735.) The purpose of this licensing law is “ ‘ to protect the public against the imposition of unsubstantial, unlawful and fraudulent stock
and investment schemes and th e securities based thereon. ’ [Citation.]” ( Id. at p. 736.) As construed by the courts, an investment vehicle constitutes a security if it satisfies one of two tests: (1) the “risk

capital test” first articulated in Silver Hills Country Club v.
Sobies ki (1961) 55 Cal.2d 811 ( Silver Hills ), or (2) the “federal
test” first articulated in SEC v. W.J. Howey Co. (1946) 328 U.S. 293 ( Howey ). (See generally, People v. Black (2017) 8 Cal.App.5th 889, 900 .) In its operative complaint, Siry alleges the follow ing in support of its entitlement to attorney fees by virtue of defendants’
status as unlicensed broker

- dealers selling securities:

“ The creation/sale of the limited partnership interest at issue here qualifies as a security (i.e., an investment contract) as defined by Corporations Code section 25019

. [Siry] was damaged as a result of defendants’ unlicensed activities in violation of Corpo r ation s Code section 25004 [governing broker53 dealers]

. Specifically, defendants sold securities to others (e.g., [ Sir y’s ] limited partnership interest) in the capacity of a broker

- dealer without a license. ” These allegations do not entitle Siry to attorney fees under
section 1029 .8 because Siry has not sufficiently alleged strict compliance with the prerequisites neces sary for its partnership
interest to qualify as a “security.” To begin, Siry’s conclusory allegation that its “limited partnership interest

. . . qualifies as a security” is a “ ‘“ conclusion
of

. . . law ”’ ” entitled to no weight whatsoever. ( Evans

, supr a , 38 Cal.4th at p. 6.) The same is true of its companion allegation that the interest qualifies as “an investment contract”

— both because it is conclusory and because the term “investment contract” is “so broad as to give little more guidance than the ter m ‘security’” ( Graham

, supra , 163 Cal.App.3d at p. 1165

, fn. 4).
A lthough a limited partnership interest can constitute a “securit y ” “under appropriate circumstances” ( Graham

, supra , 163 Cal.App

. 3d at p. 1166; People v. Simon (1995) 9 Cal.4th 493, 499), S iry has not alleged that those circumstances exist here because it has not alleged that its limited partnership interest
satisfies either the risk

- capital or federal tests. A limited partnership interest qualifies as a “security”
under the risk

- capital test only if it involves “ [(1)] an attempt by an issuer to raise funds for a business venture or enterprise; [(2)] an indiscriminate offering to the public at large where the persons solicited are selected at random; [(3)] a passive position on the part of the investor; and [(4)] the conduct of the enterprise by the issuer with other people’s money.” ( Silver Hills

, supra , 55 Cal.2d at p. 815.) Siry never alleged that it was solicited “at
random” ; to the contrary, Siry submitted declarations indicating54

tha t it was solicited due to the long

- time friendship between its principal and Farkhondehpour and Neman. A limited partnership interest qualifies as a “security” under the federal test only if it “involves an investment of money in a common enterprise with profits to come solely from the efforts of others.” ( Howey

, supra , 328 U.S. at p. 301.) Although
the terms of the limited partnership agreement appended to the operative complaint indicate that the limited partners were to have no manage ment or control over the limited partnership and that the general partner was to have “ exclusive control

, ” Siry repeatedly alleges in its operative complaint that these contractual limitations were “disregarded” and that Farkhondehpour and Neman, despite being limited par tners, “control[led], dominate[d], manage[d] and operate[d]” the limited partnership. Because Siry’s allegations that the limited partnership agreement was being ignored preclude reliance on that agreement in lieu of a well

- pled allegation that Siry was

m erely a passive investor, Siry needed to affirmatively plead its passivity. But there is no such allegation in Siry’s operative complaint, and its absence is fatal. Siry’s sole remaining contention is that two provisions in the limited partnership agreem ent otherwise suggest that the parties’ limited partnership interests were securities. Siry points to (1) the general partner’s power to refuse to consent to a limited partner’s transfer of its partnership interest “if such transfer
would constitute a vio lation of any rule, law, or securities regulation

, ” and (2) the prohibition against a limited partner assigning its interest “if, in the opinion of counsel to the Partnership, such assignment may not be effectuated without registration under the Securities Act of 1933, as amended, or55

would result in the violation of . . . federal or state securities
laws

. ” Rather than constituting proof that the limited partners definitively viewed their interests as securities, these provisions reflect uncertainty on that question and a marked desire not to engage in transactions that would subject them to securities
laws

— an odd result if the parties already viewed the limited partnership interest as a security

.

c. Are the attorney fees awards invalid for other reasons? In light of our conclusion that there is no statutory basis for the court’s award of attorney fees, we have no occasion to consider defendants’ remaining arguments that the trial court also erred in (1) awarding fees for litigation prior to the
settlemen t of the initial lawsuit between the parties, (2) awarding fees for litigation prior to the filing of the t hird

a mended c omplaint when Siry first sought attorney fees in this

case , or (3) awarding fees when Siry never gave notice of a
maximum amount of att orney fees.

* * * Where, as here, “a trial court erroneously award [ ed ] [one type of damages

, ] a reviewing court may, instead of reversing the entire judgment, make an order of modification striking that portion relating to [the erroneously awarded] damage s and affirm the judgment as so modified.” ( Crogan v. Metz (1956) 47 Cal.2d 398, 405; accord, Mega RV Corp. v. HWH Corp. (2014) 225 Cal.App.4th 1318, 1344; cf. Van Sickle v. Gilbert (2011) 196 Cal.App.4th 1495, 1521

- 1522 [“when a judgment is vacated on
th e ground [ that ] the damages awarded exceeded those pled,” the reviewing court ordinarily affirms and modifies the judgment to reduce the damages, but may allow the trial court to decide whether to vacate the default to allow further amendment].)56 DISPOSITIO N The amended judgment is affirmed as modified. We order that the amended judgment be modified to (1) strike the $1,912,974 treble damages award in its entirety and substitut e in
its place the $2 million punitive damages award, with Farkhondehpour (

joint ly and severally as an individual and as a

trustee ) and Neman (

jointly and severally as an individual and as

a trustee ) severally liable for $1 million each

, and (2) strike the $4,010,008.97 attorney fees award in its entirety. The parties are
to bear the ir own costs on appeal.
CERTIFIED FOR PUBLICATION

.

______________________, J. HOFFSTADT

We concur:

_________________________, P. J. LUI

_________________________, J. CHAVEZ