Filed 3/13/14 Site Management Services v. Cingular Wireless CA4/1 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS 

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT 

DIVISION ONE 

STATE OF CALIFORNIA 

SITE MANAGEMENT SERVICES, INC. 

et al., 

 Plaintiffs, Cross-complainants, 

 Cross-defendants and Appellants, 

 v. 

CINGULAR WIRELESS LLC et al., 

 Defendants, Cross-complainants, 

 Cross-defendants and Appellants. 

 

 D057106 

 (Super. Ct. No. GIC852215) 

APPEALS from a judgment and appeal from a postjudgment order of the Superior 

Court of San Diego County, Kevin A. Enright, Michael M. Anello, Joan M. Lewis, 

Frederic L. Link, Judges. Judgment on jury verdict reversed with directions; 

prejudgment orders affirmed; postjudgment order reversed and vacated. 

 Lewis Brisbois Bisgaard & Smith, Jeffry A. Miller, Kenneth D. Watnick and 

David E. Reynolds for Plaintiffs, Cross-complainants, Cross-defendants and Appellants 

Site Management Services, Inc., Site Management Solutions, Inc., and Michael P. Flynn. 
2 

 Proskauer Rose LLP, Michael H. Weiss, Bradley I. Ruskin and Kevin J. Perra for 

Cross-Complainant, Cross-defendant and Appellant TMO CA/NV, LLC. 

 McKenna Long & Aldridge LLP, Robert A. Cocchia and Gary K. Brucker, Jr. and 

David L. Balser; Reed Smith LLP and Margaret Anne Grignon for Defendants, 

Respondents and Cross-appellants Cingular Wireless, LLC, GSM Facilities, LLC, 

CA/NV Tower Holdings, LLC, SBC Wireless, LLC, and SBC Communications, Inc. 

INTRODUCTION 

This action involves multiple claims and cross-claims alleging breach of contract 

and fraud, among other wrongs, by and against plaintiff Michael Flynn (Flynn), two 

companies partly or wholly owned and controlled by Flynn, plaintiffs Site Management 

Services, Inc. (Services) and Site Management Solutions, Inc. (Solutions), and defendants 

Cingular Wireless, LLC (Cingular) and TMO CA/NV, LLC (TMO), successor companies 

to Pacific Bell Wireless LLC (Pacbell) (collectively, defendants). In 1999, Solutions and 

Pacbell entered into three agreements under which Solutions would provide wireless 

telecommunications site acquisition and management services for Pacbell. Flynn, then an 

employee of Pacbell, signed all three agreements on behalf of his employer. 

Defendants contend that when Flynn signed the agreements, he had an undisclosed 

financial and ownership interest in Solutions, a company he allegedly started with an old 

friend, Charles O'Neal (O'Neal) and personally sought to profit from that venture in 

violation of his fiduciary duties to Pacbell. Flynn eventually left Pacbell and took over 

Solutions and started another company, Services, which acquired certain rights under the 

agreements from Solutions. After Flynn, Solutions, and Services sued Pacbell and its 
3 

successors for breach of two of the agreements, defendants filed cross-complaints for 

fraud and breach of fiduciary duty, among other causes of action. Defendants claimed 

the agreements were voidable for fraud in the inducement, and affirmatively sought to 

rescind the agreements and recover damages. 

The parties, on their respective appeals, ask us to review numerous asserted errors 

by three different trial court judges who presided over various stages of this litigation. 

Among other contentions, plaintiffs contend that the trial court erred in granting 

defendants' motions for summary judgment on plaintiffs' operative fourth amended 

complaint on the ground the subject agreements were unenforceable because they were 

fraudulently induced. TMO contends, among other things, that the judgment after jury 

verdict must be reversed for insufficiency of the evidence to support the jury's findings 

on the issues of ratification and waiver of fraud, and for prejudicial error in jury 

instructions on waiver and ratification. TMO also contends the court erred in ordering 

that certain interpleaded funds be returned to Solutions. Cingular contends the trial court 

erred in failing to designate it and related entities in the judgment as prevailing parties 

entitled to costs. 

We reverse the judgment on the jury verdict, affirm the order granting defendants' 

motion for summary judgment on the fourth amended complaint, and vacate the order 
4 

regarding the interpleaded funds. We review various other assignments of error as 

discussed below.1

FACTUAL BACKGROUND2

I. 

Flynn's Alleged Conflict of Interest Regarding the Agreements at Issue

 During the mid-to-late 1990's, defendant Pacific Bell Mobile Services (PBMS), 

doing business as Pacbell, was in the process of setting up the infrastructure, or network, 

required to provide its customers in the greater Los Angeles region with cellular phone 

service. Pacbell had been using a consultant (SBA) for the location, acquisition and 

development of network sites, but sought to pay lower fees. In late 1998, after SBA 

declined to lower its prices, Pacbell issued a Request for Proposal (RFP) to find a 

replacement. 

At that time, Flynn was Director of Network Deployment at PBMS for the Costa 

Mesa/Los Angeles market. His responsibilities included finding, leasing and developing 

network sites. Sensing a lucrative business opportunity, Flynn asked his supervisor at 

 

1 The only final judgment entered in this case is the judgment on the jury verdict. 

The orders and rulings preceding that judgment that we address in this opinion are 

reviewable on appeal from that final judgment. (County of San Diego v. Arzaga (2007) 

152 Cal.App.4th 1336, 1343-1344.) We view the minute order directing return of 

interpleaded monies to Solutions as an appealable postjudgment order under Code of 

Civil Procedure section 904.1, subdivision (a)(2). The minute order was entered on the 

same day as the judgment (March 12, 2010) and states that counsel were provided a 

conformed copy of the judgment along with the order for return of the interpleaded funds. 

2 We summarize here the evidence before the court during the 2007 summary 

judgment proceedings, which are the subject of the first portion of our opinion. We will 

discuss evidence presented at the 2009 trial later in the opinion, as needed. 
5 

Pacbell if he could participate in the RFP, i.e., submit a bid as a vendor, independent 

from Pacbell. His supervisor, Charles Vranek (Vranek), informed him he would not be 

able to do so. 

Flynn devised another way by which he could profit from this opportunity. He 

contacted O'Neal, an old school friend, about bidding on the Pacbell site acquisition 

contract, even though O'Neal had no experience in the wireless industry. According to 

his deposition testimony in this case, Flynn's intention was to help O'Neal set up a site 

acquisition business to make a bid under the RFP and then, when Flynn left Pacbell, he 

(Flynn) would "receive ownership" of the new venture. During their initial negotiations 

in 1998, Flynn and O'Neal discussed forming a company in which Flynn would receive a 

70 percent ownership stake. Flynn intended from the beginning to "actually have the 

ownership of the company" once he left Pacbell, because he was "the one who knows the 

industry." He believed that if he left Pacbell he "would come over, take over running the 

company, and be the owner." 

In accordance with their plan, O'Neal formed O'Neal & Associates to bid on the 

RFP. Flynn helped O'Neal by giving him advice on how to "model" his RFP proposal as 

a "temp agency," using experienced SBA employees to hold down costs. Flynn provided 

no such assistance to any other bidders. O'Neal was awarded the site acquisition contract 

in October 1998. In deposition testimony, Flynn admitted that O'Neal obtained a 

business relationship with Pacbell in part because of Flynn's efforts. 

In December 1998, O'Neal incorporated O'Neal Communications Group, Inc. 

(OCG) which later became The Consulting Group (TCG). OCG assumed the consulting 
6 

contract Pacbell had awarded O'Neal & Associates under the RFP. In 1999, Pacbell 

entered into three other agreements with a different company formed by O'Neal ─

plaintiff Solutions. These agreements are at the center of the parties' disputes in this 

litigation. 

On February 25, 1999, Solutions and Pacbell entered into a contract whereby 

Solutions would act as sublicensor with respect to cellular transmission equipment used 

by Pacbell on property licensed from Caltrans in Southern California, for which Solutions 

would receive a sublicense fee (the Caltrans Agreement). In May 1999, Solutions and 

Pacbell entered into the Sublicense Agreement (SLA), which was similar to the Caltrans 

Agreement in that Solutions would act as a contractual intermediary between Pacbell and 

municipalities and public agencies other than Caltrans, and would charge a sublicensing 

fee. In July 1999, Solutions and Pacbell entered into the Site Management Agreement 

(SMA), which retroactively commenced in December 1998. The SMA made Solutions 

the exclusive manager of Pacbell's "colocations" in the Los Angeles region, whereby 

Pacbell subleased or sublicensed space on its cellular sites to other carriers. Under the 

SMA, Solutions was given authority to collect all colocation rents for that region and 

retain 25 percent of the rents for its fee. The SMA also provided that Solutions would 

share in any cost savings resulting from n agreements. On all three agreements, O'Neal 

signed for Solutions, and Flynn signed for Pacbell. 

Solutions was incorporated just two days before the Caltrans Agreement was 

executed specifically for the purpose of giving Pacbell a means of subleasing space on 

Caltrans rights-of-way. O'Neal testified that Solutions had no employees of its own; 
7 

rather, it utilized OCG employees, and the companies had the same address. Pacbell was 

Solutions's only client. O'Neal testified that Solutions did not enter into contracts with 

any other wireless carriers. 

Flynn testified in deposition that he believed he had a "gentleman's agreement" 

with O'Neal from the time of their initial discussions in August 1998 that once he left 

Pacbell he would come over to OCG and eventually run and own that company. Flynn 

came to believe, however, that O'Neal would not honor that agreement, testifying, "There 

[were] times when I felt that I wasn't sure if I did move over, that one, he even wanted me 

to move over; and then, two, whether he would, you know, give me ownership in it." 

Ultimately, Flynn told O'Neal that he would go into a competing business on his own if 

O'Neal did not "strike a deal" with him. Flynn and O'Neal thereafter reached an 

agreement, and on September 21, 1999, they executed an Agreement of Understanding 

(AOU) memorializing the evenly-shared ownership structure of both OCG and Solutions. 

The AOU provided: "Michael Flynn has received a 50% ownership position in [OCG], 

equal to 1250 shares of the outstanding shares," and "has received a 50% ownership 

position in [Solutions] equal to 1250 shares of the current outstanding shares." 

Notwithstanding the language of the AOU indicating that Flynn already was an 

owner of both OCG and Solutions, Flynn testified at his deposition that he did not have 

an ownership interest Solutions from the time the company was formed. Rather, he 

claimed that O'Neal started that company at the behest of Pacbell, and he (Flynn) did not 

acquire ownership until he discussed the AOU with O'Neal later in 1999. Flynn did not 

dispute, however, that he never disclosed his financial interest in OCG and Solutions to 
8 

Pacbell. Although Pacbell management apparently knew about Flynn's friendship with 

O'Neal, Flynn admitted that before he left Pacbell he never told anyone there about his 

"gentleman's agreement" with O'Neal, his ownership interest in OCG and Solutions, or 

the AOU. Before leaving Pacbell, Flynn received compensation worth at least $2.7 

million (including a residence) and a $160,000 "signing bonus," attributable to his 

ownership interest in OCG and Solutions. Additionally, in late December 1999, 

Solutions issued 2,500 shares of stock to Flynn and entered into a stock purchase 

agreement with him. 

II. 

Pacbell's Initial Investigation of Flynn 

 Kelly King became Pacbell's Vice President of Network Operations in early 1999 

and became aware that there was a personal relationship between Flynn and O'Neal. In 

August 1999, King began receiving anonymous e-mails that used the name of a Pacbell 

employee without that person's permission. The e-mails accused Flynn of defrauding 

Pacbell in his dealings with O'Neal and claimed Flynn was "a pathological liar" and had 

set up his friend O'Neal in the telecom industry for Flynn's personal profit, even though 

O'Neal had no prior experience in that area. The e-mails also asserted that the exclusive 

deals with O'Neal's companies were harming Pacbell's competitiveness. One e-mail 

asked, "When are you guys going to catch on[?]" The e-mail further stated, "Every other 

[office] knows about Flynn/O'Neal fraud ─ it is about time you guys did too." 

King asked Pacbell security "to conduct a complete investigation of the matter." 

A report on this investigation was issued in November 1999. The report concluded that 
9 

the RFP process for finding a replacement site acquisition company was "followed and 

verified by procurement;" that Flynn and O'Neal told Pacbell of their relationship; that 

"Flynn denies giving O'Neal inside competitive bid information so OCG would be 

awarded the [Caltrans] contract;" that "Flynn denies receiving any compensation from 

O'Neal, for the award of the contract;" and that "O'Neal denies receiving or giving 

compensation to anyone for the award of the contract." Pacbell security did not ask more 

specific questions during the investigation about the SMA and SLA, or about Flynn's 

relationship with Solutions at the time he executed those agreements. In a written 

statement requested by security, King stated that he never witnessed anything other than 

professional behavior by Flynn and O'Neal in their business dealings. 

III. 

Flynn Leaves Pacbell and Acquires Solutions 

 On December 20, 1999, Flynn informed King he intended to resign from Pacbell, 

effective February 4, 2000. Flynn testified he decided to stay on at Pacbell until the 

investigation was concluded, and then continued to work through the end of 1999 at 

King's request to "wrap[] up the loose ends" on a particular project. In April 2000, 

shortly after officially beginning his new job at OCG and Solutions, Flynn, but not 

O'Neal, attended a meeting with Pacbell representatives. At that meeting, William 

Cumbie, a Pacbell vice-president, asked Flynn "about the whereabouts of O'Neal." Flynn 

told Cumbie that O'Neal had left OCG for personal reasons and that he (Flynn) would 

thereafter be responsible for meeting the "deliverables" under the contract. Cumbie was 

concerned about O'Neal's absence and Flynn's unexpected claim of being in charge at that 
10 

point. Notwithstanding Cumbie's concerns, Pacbell continued to do business under its 

agreements with OCG and Solutions. 

 In October 2000, SBC Communications, Inc. (SBC), Pacbell's parent company, 

contributed Pacbell and other assets to a new joint venture with BellSouth Corporation, 

which became defendant Cingular. The next month, Flynn met with Cingular and SBC 

representatives to discuss their concerns about whether the SMA would interfere with 

SBC's tower lease and management agreement with another company called SpectraSite. 

According to a letter from Flynn to SBC, at those meetings Flynn learned for the first 

time that [Pacbell] desired to terminate the entire agreement. As reflected in Flynn's 

letter, Pacbell was concerned that Flynn "exceeded [his] authority in executing the 

agreement on behalf of [Pacbell] while [he] was employed at [Pacbell] and that, as a 

result, [Pacbell] believed the contract was potentially invalid." Flynn testified that he was 

accused of having a "conflict of interest" and "violat[ing] his signing authority . . . in an 

attempt to get these agreements in place." In a letter, William R. Schlecht, senior counsel 

of SBC, explained that as a "property manager" at the time the SMA was executed, Flynn 

did not have the authority to obligate Pacbell under that agreement, and it appeared no 

other Pacbell employee had approved the agreement. Schlecht further observed that after 

executing the SMA, Flynn left Pacbell "and became president of [Solutions], the other 

party to the [SMA]." After the meetings, SBC wrote to SpectraSite, stating that SBC and 

Pacbell "question the validity of the [SMA] and intend to challenge any obligations 

purportedly incurred thereunder." 
11 

The parties have not identified any evidence in the summary judgment record 

showing how, if at all, SBC/Pacbell resolved what it perceived to be Flynn's alleged 

misuse of his signing authority. However, Cumbie testified he did not recall specific 

discussions about Flynn's relationship with OCG/TCG or Solutions after the November 

meeting. Another person who was present at the November 2000 meetings testified that, 

notwithstanding the concerns raised by Schlecht, Cingular/Pacbell "continued 

performing" under the SMA. According to Services, over the course of the next year, 

Cingular/Pacbell entered into numerous colocation agreements subject to the SMA. 

IV. 

Flynn Forms Services and Is Investigated 

In September 2000, Flynn formed Services. In August 2001, Solutions assigned to 

Services "all of [Solutions's] duties, obligations of performance, and benefits of the 

[SLA], except as to the City of Riverside." Cingular/Pacbell consented to the 

assignment. In July 2002, as part of a comprehensive settlement of various disputes 

between Flynn and O'Neal (the 2002 Flynn/O'Neal Settlement), Solutions agreed to 

transfer certain assets to Services. The settlement, which was made effective as of 

December 31, 2001 allocated Solutions's business activities between "Retained 

Activities" and "Discontinued Activities." The parties agreed that the Retained Activities 

would remain an asset of Solutions. The Discontinued Activities, which included future 

business under the SMA, would be assigned to Services. Based on these assignments, 

Services alleged that it had the right to assert all the claims it ultimately alleged in this 

action. 
12 

In early 2002, SBC received an anonymous letter suggesting that contracts had 

been awarded to OCG and TCG ─ which Flynn had taken over after O'Neal left ─

"without competitive bidding." An investigation ensued and concluded that "a 

competitive bid RFP process was followed" with respect to the TCG contract. The 

investigation report noted the 1999 investigation previously had "indicated [Flynn] 

followed the RFP process." 

V. 

Flynn's 2002 and 2003 Testimony In Unrelated Litigation 

In 2002 and 2003, Flynn and O'Neal were engaged in litigation concerning their 

ownership and control of OCG and TCG. During those proceedings (to which none of 

the defendants in this case were parties), Flynn gave incriminating testimony that, 

according to defendants in this case, showed he had at least a conditional, if not actual 

ownership, interest in both OCG and Solutions at the time he executed the subject 

agreements on behalf of Pacbell but, in violation of his fiduciary duties, did not disclose 

that interest to Pacbell. 

During a 2002 arbitration proceeding to resolve a dispute over their respective 

ownership shares of OCG, Flynn testified that he had wanted to participate in Pacbell's 

1998 RFP process because he knew he "could bring value to the Los Angeles market" 

and "at the same time [he] would have the opportunity to make the money that a lot of 

other vendors were making." He therefore devised a plan to "make that happen" ─ i.e., 

helping his friend O'Neal win the Pacbell contract. But from the outset, it was Flynn's 

intention and understanding that he would ultimately own and control the business he 
13 

would set up with O'Neal. He testified: "I wanted control of the company that I 

perceived. I wanted to do the things that I thought I could do as an independent 

contractor and compete with, you know, companies that I had worked with prior." Flynn 

admitted that he provided extensive "expertise to [O'Neal] on how to respond [to the 

RFP]," including on the "key elements when it comes to staffing, when it comes to 

pricing, when it comes to what I perceived as the right profit margin compared to what I 

knew the margins were of the existing vendors." 

Flynn further acknowledged during the 2002 arbitration that after the formation of 

OCG, "I was wearing two hats. I was the client and I was the customer." While 

continuing to work at Pacbell, Flynn spent "a couple days a week" at OCG, working with 

O'Neal to "make strategic decisions together, staffing, hiring, you know, setting up the 

colocation department," and also "worked on agreements [for] Solutions to memorialize 

and to put in place contractual relationships." Although he was "getting a little 

antsy . . . to leave [Pacbell] so that [he] could devote . . . a hundred percent of [his] time 

to" the new business venture, Flynn stayed on at Pacbell through 1999 because he and 

Flynn recognized that doing so would enable him to "better [his and O'Neal's] interest" 

and "entrench" the relationship between Pacbell and the new ventures. However, Flynn 

"started feeling that there was potential that the deal [with O'Neal regarding ownership of 

the new company] was being forgotten." 

For that reason, Flynn drafted the AOU to memorialize his shared ownership of 

OCG and Solutions. He testified in 2002 that the recitation in the AOU that he "has 

received" 50 percent ownership position in both OCG and Solutions was consistent with 
14 

his understanding after the initial 1998 negotiations with O'Neal ─ i.e., that he (Flynn) 

"was an owner the whole time." When asked about the 1999 investigation instigated by 

King, Flynn acknowledged at the 2002 arbitration that he was "cleared" of having a 

conflict of interest because he did not tell Pacbell about his ownership interest in OCG. 

He testified that he and O'Neal "kept our relationship and the business confidential." 

Flynn described the hiatus between his departure from Pacbell in early 2000 and 

his official start at OCG and Solutions in April 2000 as a "cooling off" period. Flynn 

discussed business with O'Neal during this period, but saw it as "a time for [him] to lay 

low." Shortly after Flynn began his new job, O'Neal left the companies and Flynn 

assumed complete control. Although Flynn told others that O'Neal's departure was for 

personal reasons, Flynn testified in 2002 that this was a pretext: "That was a reason that 

we gave to try to soften the impact of Cingular seeing the transition of the company from 

O'Neal to myself." In fact, Flynn acknowledged he "had taken over the daily operations 

of the company." 

 During a subsequent lawsuit between Flynn and O'Neal entitled The Consulting 

Group, Inc. v. Charles D. O'Neal, No. 02CC15070 (Orange Co. Super. Ct.) (TCG v. 

O'Neal), Flynn testified in 2003 that he had concealed his conflict of interest in OCG 

from Pacbell. Under questioning from O'Neal's attorney, Flynn challenged O'Neal's 

assertion that he (O'Neal) had started Solutions, stating: "That . . . argument would put 

him in perjury . . . .So how we started the company is an issue that O'Neal and I have – 

it's very delicate . . . . 
15 

VI. 

The TCG v. Cingular Action 

 In a federal action commenced in 2003 and entitled The Consulting Group, Inc. v. 

Cingular Wireless, LLC., No. SACV 03-109 DOC (MLGx) (U.S. Dist. Ct., C.D. Ca.) 

(TCG v. Cingular), TCG sued Cingular based on its alleged failure to pay TCG's invoices 

under a site acquisition agreement the parties entered into in June 2001; the same 

agreement, apparently, that had been a subject of the anonymous e-mails leading to the 

2002 investigation of Flynn. In a counterclaim it filed in that action, Cingular alleged 

that TCG committed fraud and fraud in the inducement with respect to the 2001 

agreement by, among other things, charging Cingular inflated prices on its invoices, 

submitting duplicate invoices, and charging for unauthorized services. 

 In November 2004, Cingular and TCG reached a settlement. Although he was not 

a party to the action, Flynn was expressly made a party to the settlement agreement, 

which provided, in part, that in exchange for consideration Cingular would "fully and 

forever release and discharge Flynn and TCG . . . from any and all claims . . . that have 

been made or could have been made at anytime" before the settlement. For their part, 

Flynn and TCG released Cingular "and its . . . employees, . . . representatives, attorneys, 

parent companies, subsidiaries, divisions, assigns, predecessors, and successors" from 

"any and all claims . . . that have been made or could have been made" before the 

settlement. 
16 

PROCEDURAL HISTORY 

I. 

Services's Operative Fourth Amended Complaint 

 This litigation began in August 2005, when Solutions, Services, TCG and Flynn 

(as both an individual and in his capacity as a Solutions shareholder) filed their initial 

complaint against Cingular, alleging, among other causes of action, breach of contract, 

intentional interference with contractual relations, fraudulent concealment and 

defamation. After the court sustained a series of demurrers, Solutions, Services and 

Flynn (in his capacity as a Solutions shareholder) remained as plaintiffs.3 TCG and 

Flynn (in his individual capacity) were dismissed as parties by stipulation. Services filed 

a fourth amended complaint in November 2006.4 

The defendants named in the fourth amended complaint were Cingular; Pacbell; 

PBMS; GSM Facilities, LLC; CA/NV Tower Holdings, LLC; SBC Wireless, LLC; and 

 

3 These demurrer rulings are not part of this appeal. 

4 Although the fourth amended complaint named Services, Solutions, and Flynn as 

plaintiffs,, only Services asserted causes of action against the defendants in that 

complaint. 
17 

SBC Tower Holdings, LLC.5 In the first cause of action, Services charged defendants 

with breaching the SMA as to Solutions's rights thereunder, which allegedly were 

assigned to Services pursuant to the 2002 Flynn/O'Neal Settlement. Specifically, 

Services alleged that defendants failed to pay rent, management, and cost sharing fees 

owed to Services under the colocation terms of the SMA, particularly those generated by 

the GSMF Joint Venture. The second cause of action alleged that all defendants 

breached the SLA by, among other things, negotiating directly with third parties for rightof-way licenses and by failing to pay sublicensor fees to Services as Solutions's assignee. 

The third cause of action alleged that Cingular violated California's Cartwright Act (Bus. 

& Prof. Code, § 16700 et seq.) by secretly agreeing with other carriers to refrain from 

doing business with Solutions, Services, or any company affiliated with Flynn, thereby 

hindering competition in the development of wireless facilities and creating higher costs 

for cell phone users in the Southern California region. 

 

5 GSM Facilities, LLC, was a joint venture in existence from November 2001 to 

January 2005 between Cingular and Voicestream Wireless (later, T-Mobile), whereby 

those companies would share their existing network infrastructures in California/Nevada 

(SBC/Pacbell's infrastructure) and the New York City Metropolitan area (Voicestream's 

Omnipoint Facilities Network 2 infrastructure) (hereinafter, the GSMF Joint Venture). 

Services alleged that CA/NV Tower Holdings, LLC, along with SBC Wireless, LLC 

(SBC Wireless) and SBC Tower Holdings, LLC (SBC Holdings), were "assigned, 

without notice to Plaintiffs, ownership interest and control over sites in the Los Angeles 

region, including any liabilities relating to those sites." 
18 

II. 

Defendants' Cross-Complaints 

 In December 2006, TMO6 filed a cross-complaint, asserting five causes of action 

against Solutions and Services for breach of contract and fraud and seeking an accounting 

and declaratory relief. TMO's cross-complaint alleged Services was not entitled to 

enforce the SMA and SLA because of Flynn's breach of loyalty, conflicts of interest, and 

self-dealing in that he "had been promised an ownership interest in Solutions" while still 

employed at Pacbell and caused Pacbell to enter into "one-sided, exclusive 'services' 

contracts for the purpose of enriching Solutions at the expense of [Pacbell]." TMO 

alleged, however, that if it was determined Services could enforce TMO's obligations 

under those agreements, then Solutions and Services were liable for breaching their 

obligations under the agreements. Specifically, TMO alleged that Services and Solutions 

repeatedly failed to pay TMO its share of the rents collected by Solutions on colocation 

agreements, and instead "offset" against the amounts payable to TMO those rents 

Services claimed were improperly paid directly to TMO and the management fees 

Services alleged it was entitled to under the SMA. In June 2007, TMO filed its first 

amended cross-complaint, adding Flynn and TCG as cross-defendants, as well as claims 

seeking damages for fraud, declaratory relief, and rescission of the SLA and SMA based 

 

6 In January 2005, SBC/Cingular sold various assets to T-Mobile, including the 

SMA and SLA and Cingular's subsidiary, Pacbell. T-Mobile then changed Pacbell's 

name to TMO CA/NV LLC, or TMO. 
19 

on Flynn's alleged fraudulent execution of those agreements on Pacbell's behalf while 

also possessing an undisclosed ownership interest in Solutions. 

In December 2006, Cingular filed its own cross-complaint against Solutions and 

Services for breach of contract, tortious interference with contract, and declaratory relief. 

Cingular alleged that Solutions, in violation of the SMA, failed to provide notice of 

assignment of its rights to Services under that agreement and that Cingular never 

consented to any such assignment. Cingular alleged it was damaged by Services's 

wrongful attempts to enforce the SMA. Cingular also alleged that PacBell properly 

served Solutions with notice of nonrenewal of the SMA in August 2003, and that 

Services's attempts to enforce obligations under the SMA after December 1, 2003 were 

therefore improper and constituted tortious interference with Cingular's agreement with 

Solutions. In March 2007, Cingular filed a first amended cross-complaint, which added a 

fourth cause of action for fraud seeking damages and rescission of the SLA and SMA 

based on Flynn's alleged concealment of his ownership interest in Solutions. 

III. 

Plaintiffs' Cross-Complaints 

In June 2007, Services filed a cross-complaint against the original defendants, plus 

SBC and affiliates, for fraud, breach of contract, and contractual indemnity. The first 

cause of action for fraud was based on Services's allegations that Pacbell and SBC 

represented that it had assigned its interests in the sites subject to the SMA to Southern 

Towers, Inc., and that SpectraSite, the purported parent of Southern Towers, Inc., had 

purchased all of Pacbell's and SBC Holdings's interests in the listed sites, thereby 
20 

invoking the "escape" clause of the SMA. These representations were allegedly false 

because the purported assignment was in fact a lease that deprived Services of 

management fees and colocation opportunities to which it was entitled under the SMA. 

In the breach of contract claim, Services alleged that Cingular's cross-complaint against it 

improperly asserted causes of action that Cingular released as part of its settlement with 

TCG in the TCG v. Cingular litigation, which explicitly had preserved the rights of 

Services and Solutions. Services alleged that it was a "third-party beneficiary" of that 

settlement, and thus was entitled to enforce the release of any claims that Cingular and/or 

Pacbell may have had against Services. 

In August 2007 Solutions filed its own cross-complaint against TMO, alleging 

causes of action for breach the Caltrans Agreement and SMA, an accounting, and goods 

and services rendered, based on TMO's alleged failure to pay all the fees due to Solutions 

for services rendered. Finally, Flynn, in his individual capacity, filed a cross-complaint 

against Cingular in November 2007, asserting a single cause of action for "breach of 

settlement agreement." Flynn's cross-complaint was directed at TMO's cross-complaint 

against him, alleging that any claims TMO had against Flynn were released in the TCG v. 

Cingular settlement agreement. 
21 

IV. 

The Parties 2007 Motions for Summary Judgment 

And Summary Adjudication 

A. Defendants' motions addressed to the fourth amended complaint 

 In March 2007 TMO, as successor to Pacbell, filed its motion for summary 

judgment, or alternatively, for summary adjudication, of the first and second causes of 

action for breach of the SMA and SLA, respectively, as alleged against TMO in the 

fourth amended complaint. TMO asserted that the 2002 and 2003 transcripts from the 

proceedings between Flynn and O'Neal, which TMO claimed it had received only 

through discovery in this case, revealed Flynn's self-dealing and conflicts of interest that 

rendered the SMA and SLA voidable and unenforceable. Cingular joined in TMO's 

motion. 

Cingular and related entities7 filed their own motion for summary judgment or, 

alternatively, summary adjudication, as to all causes of action in the fourth amended 

complaint. Cingular challenged Services's first cause of action on the ground the GSMF 

Joint Venture was not covered by the SMA because it was not a colocation agreement 

within the meaning of the SMA – i.e., it did not involve the physical placement of a third 

party's equipment on Pacbell/Cingular's wireless sites. Additionally, Cingular argued that 

Services's claim under the SLA was barred by prelitigation settlement payments Cingular 

 

7 The moving parties were Cingular; SBC Tower Holdings, LLC; CA/NV Tower 

Holdings, LLC; GSM Facilities, LLC; and New Cingular Wireless PCS, LLC as 

successor by merger to SBC Wireless. We will refer to them collectively in this section 

as Cingular. 
22 

already had made to Services for fees allegedly owed under the SLA. Finally, Cingular 

asserted that Services had failed to produce any evidence supporting its Cartwright Act 

claim. TMO joined in Cingular's motion. 

 In response to TMO's motion, Services disputed that Flynn had been an owner of 

Solutions at the time the SLA and SMA were executed, but also argued that even if that 

were the case, defendants had ratified the agreements with knowledge of Flynn's alleged 

conflict of interest, and thus waived any fraud defense. Services responded to Cingular's 

motion directed at Services' first breach of contract claim by arguing, first, that Cingular 

improperly sought piecemeal adjudication of that claim in focusing their arguments on 

particular transactions rather than challenging the claim as a whole. Second, Services 

argued the GSMF Joint Venture was a colocation agreement entitling Services to a share 

of the cost savings obtained. Third, Services argued that its acceptance of Cingular's 

payment under the SLA was not an accord and satisfaction so as to bar Services's claim 

for unpaid fees. Finally, Services contended that substantial evidence supported its 

Cartwright Act claim. 

B. Defendants' motions for summary adjudication on their cross-claims 

for declaratory relief 

 Contemporaneously with its motion addressed to Services's claims, Cingular filed 

a motion for summary adjudication of its own cause of action for declaratory relief, 

seeking a judicial declaration that Services lacked standing to sue under the SMA and, 

further, could not seek damages under that agreement for any period after Cingular gave 

notice of its nonrenewal. Cingular argued that Services was neither a signatory to the 
23 

SMA nor a valid assignee of Solutions's rights under the SMA, and that Services had 

affirmatively admitted, or at least did not challenge, the validity and efficacy of Pacbell's 

nonrenewal of the SMA, effective December 1, 2003. TMO moved for summary 

adjudication of its own third and fourth "cross-claims" for declaratory relief against 

Services (third), and against both Services and Solutions (fourth), incorporating by 

reference the arguments in Cingular's motion for summary adjudication. 

C. Services's and Solutions's motions for summary adjudication

 Also in March 2007, Services filed a motion for summary adjudication of 

Cingular's twelfth affirmative defense, which alleged that Services's claims were released 

as part of the settlement in the TCG v. Cingular action, and Cingular's and Pacbell's 

seventh affirmative defenses, which alleged fraud in the inducement with respect to the 

SMA and SLA. Services argued that it was not a party to the settlement of the TCG v. 

Cingular action and, further, that the settlement agreement expressly provided it did not 

affect the rights of Solutions or Services. Services contended that defendants' fraudbased affirmative defenses were barred by the doctrines of ratification and estoppel 

because Pacbell had inquiry notice of the alleged fraud by 1999, but had ratified and 

affirmed the terms of the SMA and SLA repeatedly since then. Services also argued that 

defendants had not presented evidence creating a triable issue of fact as to whether the 

agreements were invalid because of Flynn's alleged conflicts of interest. 

 Additionally, Services filed a motion for summary adjudication of TMO's fifth 

cause of action for fraud in its cross-complaint. In that motion, Services argued that 

TMO's fraud claim was barred by the statute of limitations because its predecessor, 
24 

Pacbell, had been on notice of the alleged fraud since 1999. Services also argued that 

there was no triable issue as to fraud by Flynn and, even if such fraud had occurred, 

Pacbell had ratified and amended the SMA and SLA notwithstanding having notice of the 

fraud. 

V. 

The 2007 Summary Judgment/Adjudication Rulings and Subsequent Events 

 The hearing on the summary judgment and summary adjudication motions was 

held on June 15, 2007 and July 3, 2007 before the Honorable Kevin A. Enright. Just 

before the second day of the hearing, Services filed an ex parte application to 

"supplement the record" with new evidence indicating that Cingular learned in 2003 

about Flynn's incriminating testimony regarding his conflicts of interest as to the SMA 

and SLA, and thus had actual knowledge of Flynn's alleged fraud but nevertheless did not 

seek to void those agreements. Judge Enright denied the application, indicating he did 

not want to delay the litigation further and no good cause had been shown. 

In an order issued on August 21, 2007, Judge Enright granted in their entirety 

Cingular's and TMO's motions for summary judgment on plaintiffs' fourth amended 

complaint. The trial court first found that the GSMF Joint Venture, which was the 

subject of plaintiffs' breach of contract claims, was not a colocation agreement within the 

meaning of the SMA. The court also found that both the SLA and the SMA were void 

for fraud in the inducement based on the "undisputed fact . . . that [Flynn] concealed his 

conflict based on his [] ownership role with O'Neal's companies," and that Flynn violated 

his duty to Pacbell to disclose such conflicts of interests. The court further concluded 
25 

that Services had "not shown sufficient admissible evidence that a material issue of fact 

exists that Cingular and/or TMO knew of such conflict and ratified Mr. Flynn's actions." 

With respect to Services's Cartwright Act claim, Judge Enright found there was no 

evidence of a conspiracy to restrain trade or of any antitrust injury to Services. 

The foregoing rulings mooted defendants' motions for summary adjudication as to 

their own cross-claims. The court further ruled that Services's motion for summary 

adjudication of the fifth cause of action in TMO's cross-complaint was moot because 

TMO had filed a first amended cross-complaint, and that Services's motion for summary 

adjudication directed at Cingular's and PacBell's seventh and Cingular's twelfth 

affirmative defenses was mooted by the court's summary judgment ruling on the fourth 

amended complaint. 

VI. 

Defendants' Demurrers to Services's Cross-Complaint and Services's 

Motion for Reconsideration of the Summary Judgment Ruling 

 Shortly after the trial court's August 21, 2007 ruling, both Cingular and TMO filed 

demurrers to Services's cross-complaint. They argued that Services's cross-complaint 

was procedurally improper and untimely, that its two claims based on defendants' alleged 

misrepresentations could not be maintained in light of the trial court's finding that the 

SMA was unenforceable as a matter of law, and that Services lacked standing to pursue 

its breach of contract claim because it was not a party or intended beneficiary of the TCG 

v. Cingular settlement agreement. 
26 

 In September 2007, Services filed a motion for reconsideration of the summary 

judgment order based on newly discovered evidence that Cingular learned in 2003 about 

Flynn's testimony regarding his conflicts of interest as to the SMA and SLA, and thus 

knew of Flynn's alleged fraud but did not seek to void those agreements. While this 

motion was pending, Judge Enright was elevated to the position of Assistant Presiding 

Judge of the San Diego Superior Court, and this case was reassigned to the Honorable 

Michael Anello. 

Judge Anello denied Services's motion for reconsideration in November 2007, 

arguing that the evidence presented was not "new," and did not establish that Cingular 

had actual knowledge of Flynn's alleged fraud. Further, the court found there was no 

evidence that Cingular affirmatively ratified the agreements after it supposedly learned of 

Flynn's conflict of interest. In December 2007, Judge Anello sustained TMO's and 

Cingular's demurrers to Services's cross-complaint, based in part on the trial court's prior 

ruling that the SMA was voidable for fraud in the inducement as a matter of law, and that 

Services had no standing under the TCG v. Cingular settlement agreement. 

 In March 2008, Judge Anello sua sponte recused himself under Code of Civil 

Procedure section 170.1, subd. (a)(6)(iii), which requires disqualification when facts have 

come to light that may cause a person to reasonably entertain doubts as to the judge's 

impartiality. Judge Anello provided no details regarding the factual basis for the recusal. 

The case was reassigned to the Honorable Joan Lewis, who granted Services's motion to 

vacate Judge Anello's rulings on Services's motion for reconsideration and defendants' 
27 

demurrers, citing as good cause the lack of information regarding Judge Anello's reasons 

for recusing himself. 

 Judge Lewis held a new hearing on the demurrers and motion for reconsideration 

in January 2009. On January 22, 2009, she issued an order denying Services' motion for 

reconsideration once again, finding that Services was already in the process of attempting 

to obtain the purported new evidence before it filed its opposition to the summary 

judgment motions and could have sought a statutory continuance of the summary 

judgment hearing, but failed to do so. Judge Lewis sustained defendants' demurrers to 

the fraud and indemnity claims in Services's cross-complaint without leave to amend 

based on Judge Enright's earlier summary judgment ruling and her own decision not to 

reconsider that ruling. She overruled the demurrer to the cause of action arising from the 

TCG v. Cingular settlement agreement as to Cingular and TMO only, because it could 

"not be determined, as a matter of law and at the pleading stage, the respective rights and 

obligations of the parties pursuant to the settlement agreement." However, Judge Lewis 

sustained the demurrer to that cause of action without leave to amend as to defendants 

SBC, SBC Wireless, and SBC Holdings, concluding those parties were not properly 

subject to that claim. 

VII. 

The 2009 Summary Judgment/Adjudication Motions 

A. Plaintiffs' motions

 In March 2009, Flynn moved for summary judgment or, alternatively, summary 

adjudication of the seventh, eighth, and ninth causes of action in TMO's first amended 
28 

cross-complaint charging him with fraud and breach of fiduciary duty. Flynn argued 

those claims were without merit because TMO's predecessor, Pacbell, was on inquiry 

notice of Flynn's alleged fraud and conflict of interest as far back as 1999. Flynn also 

argued that (1) there was no evidence TMO incurred any damages as a result of the 

alleged fraud; (2) TMO had no standing to allege fraud; and (3) Flynn was released in the 

TCG v. Cingular settlement agreement from all claims. 

Also in March 2009, Solutions and Services filed their motion for summary 

judgment, or in the alternative, summary adjudication, as to each of the four causes of 

action in Cingular's first amended cross-complaint, arguing, among other things, that 

(1) Cingular lacked standing; (2) the claims were time-barred due to Pacbell's notice of 

the alleged fraud; and (3) Cingular waived the right to seek rescission of the agreements 

by not acting promptly upon its suspicions of Flynn's fraud. On similar grounds, 

Solutions and Services also moved for summary judgment or summary adjudication as to 

the fraud and rescission claims alleged against them in the fifth, sixth and seventh causes 

of action of TMO's first amended cross-complaint. 

B. Defendants' motions

 In April 2009, TMO filed two motions for summary judgment or summary 

adjudication. The first was directed against Solutions's cross-complaint. Relying on part 

of Judge Enright's 2007 summary judgment ruling, TMO argued Solutions's claims were 

barred because the Caltrans Agreement and SMA were both procured by fraud. Based on 

similar arguments and evidence, TMO also sought summary adjudication of the fifth 

through ninth causes of action of its own first amended cross-complaint. These claims 
29 

set forth TMO's allegations of fraud and breach of fiduciary duty arising from Flynn's 

concealment of its alleged conflict of interest. 

 In May 2009, Cingular moved for summary adjudication of its fourth cause of 

action for fraud against Solutions and Services in its first amended cross-complaint. 

Cingular relied on Judge Enright's earlier findings that voided the SMA and SLA, and 

argued that the statute of limitations was tolled because it could not have discovered 

Flynn's fraud earlier. Additionally, Cingular moved for summary judgment on Flynn's 

cross-complaint, arguing that Pacbell/TMO ─ the only party to assert a cross-claim 

against Flynn ─ was not a party to the TCG v. Cingular settlement agreement and the 

release contained therein that formed the basis for Flynn's cross claim, and Flynn could 

not allege or prove any act by Cingular constituting a breach of that agreement. 

C. The trial court's rulings

 On May 22, 2009, the trial court issued its order on plaintiffs' motions. The court 

denied Flynn's motion for summary judgment or adjudication directed at TMO's first 

amended cross-complaint. With respect to Services and Solutions's motion directed at 

Cingular's first amended cross-complaint, the court granted summary adjudication of the 

second cause of action against Services for tortious interference with contract based on 

Cingular's statement that it would not pursue that claim, as well as the fraud cause of 

action as against Services for lack of evidence that Services itself made any 

misrepresentations. The court declined to grant summary adjudication of Cingular's 

fourth cause of action for fraud against Solutions, concluding Solutions had not met its 

burden of proving that Cingular was on inquiry notice of Flynn's fraud at a point in time 
30 

that would render its fraud claim untimely. The court also ruled that plaintiffs failed to 

demonstrate that Cingular did not suffer its own damages arising from the alleged 

improper assignment of the SMA and SLA to Services, and from Services's attempt to 

enforce those agreements after the effective date of their nonrenewal. The court's ruling 

left standing Cingular's first and third causes of action for breach of contract and 

declaratory relief, respectively. Finally, the court denied Services's and Solutions's 

motion for summary judgment on TMO's first amended cross-complaint. However, it 

granted summary adjudication of the fraud claim against Services because there was no 

evidence Services itself made any misrepresentations. 

 On August 21, 2009, the trial court issued its rulings on Cingular's and TMO's 

motions. The court first addressed TMO's motion for summary judgment on Solutions's 

cross-complaint. At the outset, it observed that with respect to this and all other pending 

motions, it was not bound by Judge Enright's 2007 summary judgment ruling barring 

Services's affirmative claims, but rather, the resolution of the motions was "dependent on 

the law and evidence as presented at this time." The court then denied the motion, ruling 

that "[e]ven if the evidence supports an affirmative finding that [Flynn's] conduct renders 

the subject agreements null and void, the Court finds that triable issues of fact exist as to 

whether TMO and/or its predecessors, ratified the agreements after knowledge of the 

purported fraud." On the same ground, among others, the trial court also denied in its 

entirety TMO's motion for summary adjudication of the fifth through ninth causes of 

action in its first amended cross-complaint. Finally, the trial court granted judgment in 

TMO's favor on Services's cross-claim for breach of the TCG v. Cingular settlement 
31 

agreement, which was Services's only remaining cross-claim. The court found that 

Services presented no evidence other than its own subjective intent that the release in that 

agreement was intended to benefit Services or otherwise entitle it to enforce its terms. 

For the same reason, the trial court granted summary judgment in Cingular's favor on 

Services' sole remaining cross-claim. 

 The trial court also granted Cingular's motion for summary judgment on Flynn's 

cross-complaint on the ground that because TMO acquired Pacbell in January 2005 and 

there was no evidence that Cingular exerted any control over Pacbell after that time, 

Cingular could not be held accountable for Pacbell/TMO's decision to sue Flynn. Finally, 

the court ruled that as to Services, Cingular's motion for summary adjudication of its 

fourth cause of action for fraud was mooted by the court's May 22, 2009 order. The court 

denied the motion as to Solutions on the ground Cingular failed to establish its 

entitlement to the claimed damages as a matter of law. 

VIII. 

The Trial of Remaining Claims, the Jury's Special Verdict, 

and the Final Judgment 

In August 2009, Cingular voluntarily dismissed its sole remaining cross-claim for 

fraud in its first amended cross-complaint and extricated itself from the litigation. In 

September 2009, TMO dismissed the first, second and third causes of action in its first 

amended cross-complaint, and also dismissed the fourth and fifth causes of action as to 

Services only. As a result of the extensive pretrial motion practice and these voluntary 

dismissals, the only claims remaining for trial were those that Solutions alleged in its 
32 

cross-complaint against TMO, and the causes of action in TMO's first amended crosscomplaint for (1) rescission of the Caltrans Agreement, SLA, and SMA (against 

Solutions and Services); (2) fraud (against Solutions and Flynn); (3) breach of fiduciary 

duty (against Flynn); and (4) declaratory relief to establish the SMA was terminated 

effective December 1, 2003 (against Solutions and Services). 

The jury trial on these claims commenced on October 20, 2009, presided over by 

the Honorable Frederic L. Link. On November 20, 2009, the jury rendered its special 

verdict. On Solutions's breach of contract cross-claim, the jury found that the Caltrans 

Agreement was procured by fraud, but TMO ratified the agreement notwithstanding the 

fraud and breached the agreement when it failed to pay amounts owed under it to 

Solutions. The jury awarded damages to Solutions in the amount of $114,400.96 on that 

claim. The jury found that Solutions was entitled to an accounting under the SMA. In 

connection with the accounting claim, the jury found the SMA was terminated as of 

December 1, 2003. The jury awarded Solutions $1,780,613.35 on its "goods and/or 

services rendered" claim, which the jury found had not been the subject of fraud. The 

jury found against TMO on its claims for rescission of the Caltrans Agreement, the SMA, 

and the SLA, finding that even though TMO was entitled to rescind those agreements, it 

had waived its right to do so. Additionally, the jury found that Solutions made false 

representations to TMO, but TMO's reliance on the representations did not cause it harm. 

Finally, the jury found Flynn breached his fiduciary duties and committed fraud, but 

TMO waived its right to seek damages based on that conduct. 
33 

TMO filed a motion for judgment notwithstanding the verdict (JNOV), 

challenging the damages awarded for goods delivered and services rendered and the 

award of an accounting. On March 12, 2012, the trial court entered a judgment that, over 

the objections of the parties, reflected only the jury's verdict and not the earlier rulings 

issued by Judges Enright and Lewis. In response to TMO's JNOV motion, the trial court 

struck the jury's award of an accounting on the ground that it would amount to a double 

recovery, but left untouched the damages awarded to Solutions on its goods and services 

claim. 

DISCUSSION 

SERVICES'S AND FLYNN'S APPEALS

I. 

The 2007 Summary Judgment/Adjudication Rulings 

 Services contends the trial court's 2007 summary judgment order was improper 

because it relied on factual findings and violated due process. 

A. Summary judgment standards

 The standards by which we review the trial court's order granting summary 

judgment, or alternatively, summary adjudication, are well established. Under Code of 

Civil Procedure section 437c, subdivision (c), summary judgment shall be granted only 

"if all the papers submitted show that there is no triable issue as to any material fact and 

that the moving party is entitled to judgment as a matter of law." A motion for summary 

adjudication as to any cause of action, affirmative defense or claim for damages shall 

"proceed in all procedural respects as a motion for summary judgment," and shall be 
34 

evaluated according to the same legal principles. (Code Civ. Proc., § 437c, subd. (f)(2); 

see Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, 1370 ["the 

principles governing summary judgment also apply to summary adjudication"].) 

 In Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar), the 

California Supreme Court clarified the standards governing motions for summary 

judgment and summary adjudication: "First, and generally, from commencement to 

conclusion, the party moving for summary judgment bears the burden of persuasion that 

there is no triable issue of material fact and that he is entitled to judgment as a matter of 

law. . . .There is a triable issue of material fact if, and only if, the evidence would allow a 

reasonable trier of the fact to find the underlying fact in favor of the party opposing the 

motion in accordance with the applicable standard of proof." (Aguilar, supra, 25 Cal.4th 

at p. 850.) The moving party bears the initial burden of production to show the 

nonexistence of any material triable issue, and if he does so, the burden switches to the 

opposing party to make a prima facie showing of such a triable issue. (Ibid.) "[H]ow the 

parties moving for, and opposing, summary judgment may each carry their burden of 

persuasion and/or production depends on which would bear what burden of proof at 

trial." (Id. at p. 851.) Thus, a defendant moving for summary judgment against a 

plaintiff who has the burden of proof by, say, a preponderance of the evidence, "must 

present evidence that would require a reasonable trier of fact not to find any underlying 

material fact more likely than not ─ otherwise, he would not be entitled to judgment as a 

matter of law, but would have to present his evidence to a trier of fact." (Ibid.) 
35 

In ruling on a summary judgment motion, the trial court determines only whether 

triable issues of fact exist; it does not resolve those issues. (EHP Glendale, LLC v. 

County of Los Angeles (2011) 193 Cal.App.4th 262, 270.) The court must consider all of 

the evidence and inferences to be drawn from it, and determine "what any evidence or 

inference could show or imply to a reasonable trier of fact." (Aguilar, supra, 25 Cal.4th 

at p. 856.) Therefore, "if any evidence or inference therefrom shows or implies the 

existence of the required element(s) of a cause of action [or defense], the court must deny 

[a] motion for summary judgment or summary adjudication because a reasonable trier of 

fact could find for the [opposing party]." (Smith v. Wells Fargo Bank, N.A. (2005) 135 

Cal.App.4th 1463, 1474 (Smith).) 

 A trial court's order granting a motion for summary judgment or summary 

adjudication is reviewed de novo. (Smith, supra, 135 Cal.App.4th at p. 1471.) 

We " 'exercise "an independent assessment of the correctness of the trial court's ruling, 

applying the same legal standard as the trial court in determining whether there are any 

genuine issues of material fact . . . ." ' " (Id. at p. 1474.) " ' "The appellate court must 

examine only papers before the trial court when it considered the motion, and not 

documents filed later. . . ." ' " (Ibid.; Code Civ. Proc., § 437c, subds. (b), (c) [supporting 

and opposing papers must be supported by affidavits, declarations, admissions and other 

evidence, and the motion must be decided on "the papers submitted"]; see also Guz v. 

Bechtel National, Inc. (2000) 24 Cal.4th 317, 334 [on review, appellate court "consider[s] 

all the evidence set forth in the moving and opposition papers except that to which 

objections have been made and sustained."]; L&B Real Estate v. Superior Court (1998) 
36 

67 Cal.App.4th 1342, 1346 ["we will consider only the facts properly before the trial 

court at the time it ruled on the motion"].)8

B. The trial court properly admitted Flynn's prior testimony

Services contends that in connection with the 2007 summary judgment motions, 

the trial court improperly admitted, over Services's objection, certain testimony of Flynn 

from the 2002 arbitration between Flynn and O'Neal, during which Flynn admitted 

(according to defendants) to having an ownership and financial interest in both OCG and 

Solutions at the time the SMA and SLA were executed, and also acknowledged 

concealing those interests from Pacbell.9 Services argues that the court should have 

excluded Flynn's prior testimony because it did not satisfy the requirements of Evidence 

Code section 1292.10 However, the trial court admitted the testimony under sections 

1221 and 1222, as adoptive and authorized admissions, respectively. We review 

independently the trial court's decision to apply the hearsay exceptions for admissions, 

rather than those addressing prior testimony, to the facts presented (see Gatton v. A.P. 

 

8 For this reason, we restrict our review on this appeal to the record before Judge 

Kevin Enright at the time of the 2007 summary judgment motions, and reject Services's 

suggestion that we consider evidence been submitted on later summary judgment motions 

or adduced at trial, as well as the rulings and remarks of subsequent trial judges who 

presided over later phases of the case but did not act as triers of fact, which statements, in 

any event, do not constitute "evidence." 

9 In the trial court, Services also objected to the admission of Flynn's prior 

testimony in the 2003 TCG v. O'Neal litigation – a proceeding to which Services 

acknowledged it was a party. However, Services does not explicitly challenge the 

admission of the 2003 testimony on appeal. 

10 For purposes of the discussion in this section only, all further statutory references 

are to the Evidence Code. 
37 

Green Services, Inc. (1998) 64 Cal.App.4th 688, 692), and conclude the court properly 

admitted Flynn's prior testimony. 

Section 1292 concerns the admissibility of statements made by a declarant at the 

former proceeding "against a stranger to that prior action." (1 Witkin, California 

Evidence (5th ed. 2012) Hearsay § 266, p. 1136 (Witkin Evidence).) It provides that 

such testimony is not inadmissible if the declarant is unavailable in the current civil 

proceeding, and the party against whom the testimony previously was offered "had the 

right and opportunity to cross-examine the declarant with an interest and motive similar 

to that which the party against whom the testimony is [currently] offered has at the 

hearing." (§ 1292, subd. (a)(3).) There is no dispute that Flynn was not "unavailable" 

during the current proceedings and, thus, an essential prerequisite to the application of 

section 1292 was not met here. Regarding the trial court's determination that Flynn's 

2002 testimony was independently admissible against Services under sections 1221 

(adoptive admissions) and 1222 (authorized admissions), Services argues, in effect, that 

prior testimony is admissible only if it satisfies the requirements of sections 1291 or 

1292, which, it contends, are more specific than the hearsay exceptions for admissions. 

To hold otherwise, Services maintains, would be to nullify sections 1291 and 1292. 

Services's arguments have no merit. First, neither section 1291 nor 1292 purports 

to be the exclusive means by which former testimony may be admitted, i.e., they do not 

provide that prior testimony of a declarant is admissible only in the circumstances 

described in those specific provisions, regardless of whether that evidence may satisfy 

another hearsay exception. Moreover, Services cites no authority for the proposition that 
38 

evidence that is inadmissible under one hearsay exception must be excluded even if it 

satisfies another hearsay exception. To the contrary, it is hornbook law that hearsay is 

inadmissible "[u]nless it comes within one of the established exceptions to the hearsay 

rule . . . ." (Witkin Evidence, supra, § 1, p. 783; italics added.) 

We conclude Flynn's testimony statements in question were admissible as 

authorized admissions under section 1222.11 Services was not a party to the 2002 

arbitration. However, Services was in existence during the 2002 arbitration, and it was a 

party to the 2002 Flynn/O'Neal Settlement (made effective as of December 31, 2001) 

which was designed, in part, to resolve the claims at issue during the arbitration, and 

pursuant to which Services purportedly was assigned various of Solutions' rights under 

the SMA. It is also undisputed that at the time of the arbitration, Flynn was the president 

and a principal owner of Services and was authorized to speak on its behalf, including on 

the subject matter that is the focus of this action, i.e., the validity of the agreements on 

which Services bases its claims. 

Because of his ownership and control of Services, Flynn's 2002 statements 

constitute authorized admissions. Significantly, Services does not dispute this on appeal, 

and did not dispute it in the trial court. For this additional reason, we uphold the 

admission of his 2002 arbitration testimony under section 1222 as authorized admissions. 

 

11 Section 1222 provides: "Evidence of a statement offered against a party is not 

made inadmissible by the hearsay rule if: [¶] (a) The statement was made by a person 

authorized by the party to make a statement or statements for him concerning the subject 

matter of the statement; and [¶] (b) The evidence is offered either after admission of 

evidence sufficient to sustain finding of such authority or, in the court's discretion as to 

the order of proof, subject to the admission of such evidence." 
39 

(See, e.g., Cahill v. San Diego Gas & Elec. Co. (2011) 194 Cal.App.4th 939, 956 

[" ' "When an appellant fails to raise a point, or asserts it but fails to support it with 

reasoned argument and citations to authority, we treat the point as waived." ' "].) 

C. Services's other evidentiary challenges to the 2007 summary judgment 

ruling fail for lack of a showing of prejudice 

Services contends the trial court erred in permitting TMO and Cingular to submit 

additional evidence with their reply papers in support of their 2007 summary judgment 

motions without granting a continuance and providing Services an opportunity to respond 

to the "new" evidence. TMO and Cingular both argue that the trial court had discretion 

to allow the additional evidence. They note that Services did not ask the trial court for a 

continuance and has not demonstrated on appeal how it was prejudiced by the trial court's 

ruling. 

Code of Civil Procedure section 437c "does not expressly or impliedly prohibit the 

inclusion of evidentiary matter with the reply." (Weiss v. Chevron, U.S.A., Inc. (1988) 

204 Cal.App.3d 1094, 1098 (Weiss), italics added.) Indeed, the statute instructs that 

when determining whether there are triable issues of fact, the trial court should "consider 

all the evidence set forth in the papers," except that to which objections have been 

sustained. (Code Civ. Proc., § 437c, subd. (c).) On the other hand, the statute makes no 

explicit "allowance for submitting additional evidence or filing a supplemental separate 

statement" with the reply. (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 

102 Cal.App.4th 308, 313, italics added (San Diego Watercrafts, Inc.) In the absence of 

a firm rule prohibiting or allowing the submission of new material with the reply papers, 
40 

whether to consider such evidence "rests with the sound discretion of the trial court, and 

we review the decision to consider or not consider this evidence for an abuse of that 

discretion." (Id. at p. 316.) 

In exercising that discretion, the trial court should consider due process 

implications. (San Diego Watercrafts, Inc., supra, 102 Cal.App.4th at p. 316.) " 'The 

due process aspect of the separate statement requirement is self-evident ─ to inform the 

opposing party of the evidence to be disputed to defeat the motion.' [Citation.]" (Ibid.) 

Courts generally have held that "consideration of such additional evidence is not an abuse 

of discretion so long as the party opposing the motion for summary judgment has notice 

and an opportunity to respond to the new material." (See, e.g., Plenger v. Alza Corp.

(1992) 11 Cal.App.4th 349, 362, fn. 8.) Contrary to Services' apparent contention, the 

trial court is not required in all instances to disallow the additional evidence absent a 

further response from the opposing party. For example, the opposing party may 

effectively waive any challenge to the admission of such evidence if it does not object to 

it, does not request a continuance or opportunity to respond, or does not suggest that it 

could respond to the additional evidence. (Ibid.) 

Additionally, we do not believe a trial court abuses its discretion in allowing 

additional evidence in reply if the opposing party chooses only to interpose a technical 

procedural objection to the evidence without requesting a continuance to allow a response 

or otherwise suggesting it would actually be prejudiced by its admission. (See Weiss, 

supra, 204 Cal.App.3d at p. 1099 [no abuse of discretion where opposing party 

"remain[ed] fast to a technical procedural objection" and did not avail itself of the 
41 

opportunity to counter the evidence].) We believe this case presents such a scenario. 

Services made only a procedural objection to defendants' submission of additional 

evidence with the reply papers and asked that the evidence be stricken. It did not request 

a continuance or an opportunity to respond, and it made no argument that it would be 

prejudiced by the court's consideration of the evidence. Like the plaintiff in Weiss, 

Services decided to rest on its technical objection alone and "gamble against an 

unfavorable ruling." (Weiss, supra, 204 Cal.App.3d at pp. 1100-1101.) Services lost that 

gamble. 

On appeal, Services makes no real effort to refute defendants' arguments that the 

evidence was not new and, in any event, was not prejudicial. Services responds that the 

mere fact the evidence was not new to Services or the case because it was the subject of 

discovery does not in itself eliminate the due process concerns associated with the 

submission of additional evidence with summary judgment reply papers. Although that 

may be true as a general proposition, Services's assertion does nothing to show that it was 

actually prejudiced by the allowance of the additional evidence on reply. Its failure to 

show any such prejudice compels us to uphold the trial court's ruling. (See, e.g., Red 

Mountain, LLC v. Fallbrook Public Utility District (2006) 143 Cal.App.4th 333, 347 

(Red Mountain) ["[A]n appellant has the burden to show not only that the trial court erred 

but also that the error was prejudicial."]; Cal. Const., art. VI, § 13; Code Civ. Proc., § 475 

["No judgment, decision or decree shall be reversed or affected by reason of any 

error . . . unless it shall appear from the record that such error . . . was prejudicial"].) 
42 

For the same reason, we reject Services' contention that in its ruling granting 

defendants' summary judgment motions, the trial court erred in citing certain 

demonstrative evidence that defendants used at the hearing. The court permitted 

defendants to lodge the demonstrative evidence with court and overruled Services's 

objection to its introduction, but stated it was "not taking evidence" and the 

demonstrative evidence "would not be evidence." It is unclear why the trial court 

referenced this material, since it did not constitute evidence, but rather included, among 

other things, enlargements of certain portions of one of the agreements at issue, as well as 

flow charts of the parties' respective claims. However, because Services identifies no 

prejudice resulting from this single citation in the trial court's summary judgment order, 

the citation provides no basis for reversal. (Red Mountain, supra, 143 Cal.App.4th at 

p. 347.) 

D. The trial court correctly ruled as a matter of law that the SMA and SLA 

were unenforceable because they were fraudulently induced 

 In its 2007 summary judgment ruling, the trial court determined that both the SLA 

and the SMA had been procured by fraud due to Flynn's undisclosed conflict of interest, 

and thus were voidable and unenforceable by Services. The court ruled that the SLA 

was void "due to the undisputed fact . . . that [Flynn] concealed his conflict based on his 

[] ownership role with O'Neal's companies[,] which bid on a [Pacbell] contract to manage 

cell tower leases, at the time he worked for [Pacbell]." The court further ruled that 

"TMO's entitlement to grant of summary judgment is supported by Mr. Flynn's 

deposition admission . . . where he adopted his testimony from the earlier Arbitration 
43 

proceeding, that such testimony was truthful and under oath. His [deposition and 

arbitration testimony] support that although he had a duty to disclose his conflicting 

interests in companies that bid on [Pacbell] contracts to provide cell tower site award and 

management duties, he did not. This fraud in the inducement supports [defendants] 

voiding the SMA and SLA. Moreover, [Services] has not shown sufficient admissible 

evidence that a material issue of fact exists that Cingular and/or TMO knew of such 

conflict and ratified Mr. Flynn's actions." Services contends the court's summary 

judgment order was improper because there were triable issues of fact as to whether 

defendants ratified and waived the right to rescind the SMA and SLA.12 We disagree. 

We note that at various points in this litigation the parties tended to view the legal 

standards governing waiver and ratification as indistinguishable, and TMO expressly 

states they are indistinguishable in its respondent's brief. Waiver and ratification are 

overlapping concepts in contract law because ratification is a form of waiver, as 

illustrated by the principle that "one who, after discovery of an alleged fraud, ratifies the 

original contract by entering into a new agreement granting him substantial benefits with 

respect to the same subject matter, is deemed to have waived his right to claim damages 

for fraudulent inducement." (Oakland Raiders v. Oakland-Alameda County Coliseum, 

Inc. (2006) 144 Cal.App.4th 1175, 1186 (Oakland Raiders); Channell v. Anthony (1976) 

58 Cal.App.3d 290, 304 [claim for damages for fraud may be waived by acquiescence or 

ratification of the transaction].) The Oakland Raiders court referred to such ratification 

 

12 At oral argument before this court, plaintiffs' counsel conceded there is no triable 

issue of fact as to Flynn's conflict of interest and fraud. 
44 

by conduct as "implied waiver" of the right to sue for fraud. (Oakland Raiders, supra,

144 Cal.App.4th at pp. 1191-1194.) 

1. Ratification 

An inherent element of ratification or implied waiver of the right to sue for fraud 

is that the defrauded party must have full and actual knowledge of the essential facts of 

the claimed fraud. (Oakland Raiders, supra, 144 Cal.App.4th at pp. 1192-1193; Fergus 

v. Songer (2007) 150 Cal.App.4th 552, 571.) Whether the defrauded party has ratified 

the fraudulent transaction "depends primarily on the intention of the party defrauded as 

shown by his declarations, acts, and conduct. [Citation.] It is necessary that ratification 

be with full knowledge of the party's rights and be clearly shown. Even in the case of 

deliberate election after discovery of fraud, equity may give relief against ratification by 

conduct that is merely thoughtless or inadvertent." (Chung v. Johnston (1954) 128 

Cal.App.2d 157, 164.) 

Although ratification or implied waiver of fraud is ordinarily a question of fact to 

be determined in connection with the circumstances of each case (ibid.), the issue "may 

be determined as a matter of law where the underlying facts are undisputed [citation], or 

the evidence is susceptible of only one reasonable conclusion[.]" (Oakland Raiders, 

supra, 144 Cal.App.4th at p. 1191.) The burden is on the party claiming a waiver of a 

right to prove it by clear and convincing evidence that does not leave the matter to 

speculation. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.) Doubtful 

cases will be decided against a waiver. (Ibid.) 
45 

Services contends that knowledge of Flynn's fraud may be imputed to defendants 

because they were on "inquiry notice" of the fraud and failed to properly investigate the 

"red flags" suggesting his misconduct. A finding of ratification or waiver of fraud, 

however, requires evidence that the defrauded party had actual and full knowledge of the 

fraud; mere inquiry notice is not enough. (Oakland Raiders, supra, 144 Cal.App.4th at 

pp. 1192-1193; Gabriel Technologies Corp. v. Qualcomm Inc. (S.D. Cal 2009) 2009 U.S. 

Dist. LEXIS 98379, at *23 ["notice and a duty to investigate do not satisfy Oakland 

Raiders' requirement of actual knowledge of fraud"].) 

 Services relies on inapposite cases involving the issue of whether a principal may 

be deemed to have ratified an agent's fraudulent acts, and thus be held liable for a thirdparty victim's damages arising from the fraud. In that scenario, "the law [ordinarily] 

requires that a principal be apprised of all the facts surrounding a transaction before he 

will be held to have ratified the unauthorized acts of an agent. However, where 

ignorance of the facts arises from the principal's own failure to investigate and the 

circumstances are such as to put a reasonable man upon inquiry, he may be held to have 

ratified despite lack of full knowledge." (Volandri v. Hlobil (1959) 170 Cal.App.2d 656, 

659; see also Reusche v. California Pacific Title Ins. Co. (1965) 231 Cal.App.2d 731, 

737.) Services cites no case applying these principles to the situation in the present case, 

where the principal (here TMO), rather than a third party, is the alleged victim of the 

fraud. 
46 

2. Waiver of right to rescind 

 Although the requirements for proving waiver of the right to rescind overlap with 

the requirements for proving ratification of contract induced by fraud, waiver of the right 

to rescind and ratification are different mechanisms for avoiding a fraud in the 

inducement claim. A party who has been induced by fraud to enter into a contract has a 

choice of remedies. That party may either rescind the agreement, or it may affirm it and 

sue for damages. (See 27 Williston on Contracts (4th ed. 2003) Fraud and 

Misrepresentation, § 69.47, pp. 99-100; Schmidt v. Mesmer (1897) 116 Cal. 267, 270; 

Akin v. Certain Underwriters at Lloyd's of London (2006) 140 Cal.App.4th 291, 296; City 

of Vista v. Robert Thomas Securities, Inc. (2000) 84 Cal.App.4th 882, 889.) The 

aggrieved party may also assert the fraud as a defense to an action for breach of the 

fraudulently induced contract. (Filet Menu, Inc. v. C.C.L. & G., Inc. (2000) 

79 Cal.App.4th 852, 861 [aggrieved party may either seek to rescind the contract or 

affirm the contract and sue for damages or set up the fraud as a defense]; J.B. Colt Co. v. 

Freitas (1926) 76 Cal.App. 278, 287 [fraud may be proved as a defense to an action to 

enforce a contract and neither the statute of limitations nor the doctrine of laches will bar 

the defense]; see also Gordon v. Beck (1925) 196 Cal. 768, 771-772 [a principal who 

lacks knowledge of the duplicity of its agent may be relieved of the obligations of a 

contract with the opposing principal either by affirmative action to rescind the contract or 

by asserting the dual agency as a defense in an action to enforce the contract].) 

 Conduct on the part of the injured party may amount to a waiver of the right to 

rescind. "Where a party has full knowledge of facts which would warrant his rescinding 
47 

an agreement but nevertheless accepts and receives benefits accruing thereunder, waiver 

of the right to rescind will be presumed." (Palmquist v. Palmquist (1963) 212 

Cal.App.2d 322, 331 (Palmquist), italics added; see also Union P.R. Co. v. Zimmer

(1948) 87 Cal.App.2d 524, 532 (Union Pacific)].) "[M]ere uncertainty is not 

knowledge." (Union Pacific, supra, at p. 532.) "Courts of equity will not withhold relief 

from [defrauded] parties . . . upon the ground that there were circumstances calculated to 

arouse their suspicion and cause an investigation whereby they might have discovered the 

swindle." (Eichelberger v. Mills Land & Water Co. (1908) 9 Cal.App. 628, 638.)13 

Thus, waiver of the right to rescind a fraudulently induced contract and ratification of the 

contract both require full and actual knowledge of the fraud that would entitle the injured 

party to rescind. 

The actual knowledge standard for waiver and ratification is illustrated by 

Warfield v. Richey (1959) 167 Cal.App.2d 93, in which plaintiffs leased a hotel and motel 

from defendant, allegedly based on defendant's representation regarding the prior year's 

gross income of the properties, which proved to be false. (Id. at p. 95.) Defendant 

argued, among other things, that plaintiffs waived their right to rescind the lease 

agreement and seek damages for the misrepresentation. The court disagreed, stating: "It 

 

13 The rule that " 'means of knowledge is equivalent to knowledge, and that a party 

who has the opportunity of knowing the facts constituting the fraud of which he 

complains cannot be supine and inactive and afterward allege a want of knowledge that 

arose by reason of his own laches or negligence' " applies to whether an action has been 

brought within the applicable statute of limitations; it does not apply to a determination of 

whether a party has the right to rescind a contract based on fraud. (Eichelberger v. Mills 

Land & Water Co., supra, 9 Cal.App. at pp. 637-638.) 
48 

must further be noted that before an offended party in a fraud case may be effectively 

charged with waiver or estoppel, there must be full knowledge on the part of the offended 

part of all the facts relating to the fraud. It is apparent in the case at bar that the facts in 

their total effect were coming to the plaintiffs piecemeal, and the full disclosure of 

defendant's false representation respecting the prior year's income did not actually arrive 

until the trial of this cause." (Id. at p. 98, italics added.) Similarly, in Schaub v. Schaub

(1945) 71 Cal.App.2d 467, the defendant wife in a proceeding to annul a marriage 

contract asserted that her husband had ratified the marriage with knowledge of his wife's 

infidelity. The court concluded, however, that "[n]otwithstanding plaintiff's testimony 

that he believed his wife was carrying on illicit relations . . . , it appears his belief was 

founded upon suspicion and not upon knowledge of the facts. . . . Suspicion or a belief 

founded upon inconclusive circumstances is not the 'full knowledge of the facts 

constituting the fraud' which constitutes ratification . . . . (Id. at p. 480.) 

Thus, to establish that defendants ratified or waived the right to rescind the subject 

agreements, plaintiffs were required to prove by clear and convincing evidence both that 

defendants had full knowledge of Flynn's conflict of interest (i.e., fraud) and, with that 

knowledge, engaged in unequivocal conduct demonstrating their intention to affirm the 

agreement and waive their right to sue for fraud. (Oakland Raiders, supra, 144 

Cal.App.4th at pp. 1185-1186; Waller v. Truck Ins. Exchange, Inc., supra, 11 Cal.4th at 

p. 31.) " ' "[W]here a party, with full knowledge, declines to repudiate a transaction 

known to him to be fraudulent, and fully and expressly ratifies it, he can neither rescind 

nor maintain an action for damages." ' " (Oakland Raiders, supra, 144 Cal.App.4th at 
49 

pp. 1192-1193.) Applying the full-knowledge standard, we conclude the trial court 

properly found the evidence before it on the 2007 summary judgment motions was 

insufficient to raise a triable issue of fact as to whether defendants waived the right to 

rescind or ratified the subject contracts. We will address the evidence that Services cites 

on appeal as raising a triable issue of fact as to ratification and waiver. 

3. The 1999 investigation 

 In its opening brief, Services contends that Pacbell was on inquiry notice of the 

fraud in 1999 when it received an anonymous e-mail accusing Flynn of having set up 

O'Neal at "yet ANOTHER company." However, as we discussed, a finding of 

ratification or waiver of fraud requires evidence that the defrauded party had actual and 

full knowledge of the fraud; mere inquiry notice is not enough. (Oakland Raiders, supra, 

144 Cal.App.4th at pp. 1192-1193; (Eichelberger v. Mills Land & Water Co., supra, 9 

Cal.App. at pp. 637-638.) 

 Citing the written report of the 1999 investigation by Pacbell security personnel, 

and King's deposition testimony regarding his concerns about the business relationship 

between Flynn and O'Neal in 1999 that caused him to request the investigation, Services 

contends King became aware of Flynn's conflict of interest based on the anonymous emails he received and other communications that raised questions about Flynn and 

O'Neal's relationship. Services argues that a trier of fact could infer ratification or waiver 

from the fact that the investigators did not ask questions about the SLA and SMA even 

though Flynn signed those agreements, and the fact that King sent a written statement to 
50 

the investigators that emphasized the benefits of the agreements and did not mention any 

concerns about Flynn's conflict of interest. 

The evidence that Services cites does not show King had actual knowledge of 

Flynn's conflict of interest. King's deposition testimony showed that in 1999 he had 

"concerns," which he described as "red flags or indicators that there might be some things 

going on that would cause us to be concerned about [Flynn and O'Neal's] business 

relationship." The anonymous information he received suggested to him that "there 

might be something deeper." King's testimony at most shows that he had suspicions 

about Flynn's relationship with O'Neal; it does not raise a reasonable inference that he 

had full knowledge of Flynn's conflict of interest and fraud. As noted, suspicion or a 

belief founded on inconclusive circumstances does not constitute full knowledge of all 

facts relating to a fraud and therefore is insufficient to charge an offended party with 

ratification of the fraud. (Schaub v. Schaub, supra, 71 Cal.App.2d at p. 480.) 

Nor does the report of the 1999 investigation evidence full knowledge of Flynn's 

conflict of interest. The report states that "[t]he anonymous e-mails indicated Flynn was 

a close personal friend of Charles O'Neal, O'Neal Communications Group, Inc., which is 

a contract company to [Pacbell]. The e-mails also allege that Flynn directly awarded a 

contract bid to O'Neal and was receiving 'kick backs' by way of money, an automobile, 

and real property . . . ." However, as noted, the report cleared Flynn of any wrongdoing, 

concluding that the RFP process for finding a replacement site acquisition company was 

"followed and verified by procurement;" that Flynn and O'Neal informed Pacbell of their 

relationship; that "Flynn denies giving O'Neal inside competitive bid information so OCG 
51 

would be awarded [the Caltrans contract];" that "Flynn denies receiving any 

compensation from O'Neal, for the award of the contract;" and that "O'Neal denies 

receiving or giving any compensation to anyone for the award of the contract." 

Flynn admitted in the 2002 arbitration that the 1999 investigation "cleared" him of 

having a conflict of interest because he lied to Pacbell. Thus, Pacbell's continuing to 

perform the subject agreements in reliance on Flynn's intentional misrepresentations and 

concealment cannot be deemed ratification of the agreements procured by Flynn's fraud. 

"[T]here is no waiver of fraud when the acts constituting the waiver have themselves 

been induced by fraud." (Channell v. Anthony, supra, 58 Cal.App.3d at p. 304.) The 

evidence concerning the 1999 investigation of Flynn does not raise a triable issue of fact 

as to whether defendants ratified or waived the right to rescind the SLA and SMA. 

4. April 2000 meeting 

Services contends there is evidence that in April 2000, Pacbell's representatives 

believed Flynn had an ownership interest in Solutions before he left Pacbell. Services 

cites the deposition testimony of former Pacbell vice president Shawn O'Connor that 

Cumbie and Vranek were concerned about the fact Flynn became president of OCG 

shortly after he left Pacbell. At a meeting between representatives of Pacbell and OCG 

that Flynn, but not O'Neal, attended on behalf of OCG, Cumbie asked Flynn "about the 

whereabouts of O'Neal." Flynn told Cumbie that O'Neal had left OCG for personal 

reasons and that he (Flynn) would thereafter be responsible for meeting the "deliverables" 

under the contract. O'Connor believed Cumbie was concerned that Flynn potentially had 

a conflict of interest. O'Connor's testimony regarding Vranek and Cumbie's concerns 
52 

about Flynn's involvement with OCG and possible conflict of interest is not evidence that 

Pacbell's representatives had actual knowledge that Flynn had an ownership interest in 

Solutions before he left Pacbell. 

 5. Events of November 2000 

 Services contends a reasonable inference of waiver or ratification can be drawn 

from evidence regarding events that occurred in November 2000. Services first contends 

waiver or ratification can be inferred from the facts that Rick Quist, in-house counsel for 

Pacbell's parent company SBC, advised Pacbell's in-house counsel Alejandro Jimenez to 

challenge the validity of the agreements with Solutions, and Pacbell disregarded that 

advice. However, in support of that contention, Services cites Quist's deposition 

testimony that he shared with Jimenez his concerns about whether the agreements had 

been properly authorized; the testimony does not show that Quist advised Jimenez to 

challenge the validity of the agreements. Quist testified: "I recall asking whether or not 

the agreements were initialed or had some other transmittal authorizing their execution, 

and in the absence of those documents, I would question the validity of the those 

agreements." 

 Services next contends that during and after a meeting on November 27, 2000 

between Flynn, Schlecht, and Cumbie to discuss Pacbell/SBC's concerns about the effect 

of the SMA on SBC's tower lease and management agreement with SpectraSite, Pacbell 

accused Flynn of a conflict of interest in executing the SMA on behalf of Pacbell. The 

evidence that Services cites includes a letter from Flynn to Schlecht the day after the 

November 27 meeting in which Flynn states: "I was accused [at the November 27 
53 

meeting] of having exceeded my authority in executing the [SMA] on behalf of [Pacbell] 

while I was employed at [Pacbell] and that, as a result, [Pacbell] believed the contract 

was potentially invalid." Flynn further noted that Schlecht and Jimenez "threatened 

[Solutions] with burdensome litigation, as well as threatening me personally with 

ongoing and extensive litigation." The evidence also includes Flynn's 2007 deposition 

testimony that Schlecht told him at the November 27 meeting "that these [agreements] 

were entered into fraudulently, I had a conflict of interest, that I ended up . . . at Solutions 

even though I had signed agreements at [Pacbell], I had violated my signing 

authority . . . in an attempt to get these agreements in place, and that he was going to sue 

me personally, sue Solutions, and rescind the agreements." Services cites Cumbie's 

deposition testimony that "the fact that Mr. Flynn signed the [Solutions] agreement on 

behalf of [Pacbell and] then became an employee and/or principal of TCG and 

[Solutions] was a cause of concern." 

 Services also cites a December 1, 2000 letter from Schlecht to O'Neal questioning 

Flynn's authority to sign the SMA on behalf of Pacbell. Schlecht's letter disputed Flynn's 

contention that at the time he signed the SMA, he had signing authority from [Pacbell] of 

up to $1 million. Schlecht asserted that Flynn lacked authority to obligate Pacbell for 

more than $10,000 per year, and that Flynn was now claiming that the SMA "creates an 

obligation to [Pacbell] of $4 million!" Thus, Schlecht concluded it was "entirely 

appropriate for [SBC/Pacbell] to raise questions about the validity of the [SMA]." 

Schlecht testified at his deposition that the SMA "seemed suspicious" and there were "red 
54 

flags," including that Flynn may have exceeded his authority in signing the SMA on 

behalf of Pacbell. 

Finally, Services cites a joint defense agreement in which Pacbell and SBC 

informed SpectraSite that "SBC intends to either (i) terminate the purported [SMA] and 

negotiate a settlement with [Solutions] or (ii) obtain a final judicial or arbitral 

determination of either the invalidity of the [SMA] or of SBC's liability thereunder." 

Services argues that Pacbell/Cingular ratified the Solutions agreements by, among other 

conduct, continuing to perform the agreements and signing amendments to them in which 

they expressly "ratified and affirmed" them. 

 None of this evidence raises a reasonable inference that defendants had actual and 

full knowledge that Flynn had an ownership interest in Solutions when he signed the 

agreements with Solutions on behalf of Pacbell. Rather, it shows that the suspicions and 

red flags that caused defendants to question the validity of those agreements concerned 

Flynn's authority to sign the agreements on behalf of Pacbell. Quist testified that he 

would question the validity of the agreements if there was no documentation "authorizing 

their execution." In Flynn's letter to Schlecht regarding the November 27 meeting, Flynn 

stated, "I was accused of having exceeded my authority in executing the [SMA] on behalf 

of [Pacbell] while I was employed at [Pacbell.]" Although Flynn testified in his 

deposition that Schlecht accused him of having a conflict of interest and entering the 

agreements fraudulently, he added that the alleged conflict of interest concerned his 

violating his "signing authority . . . in an attempt to get these agreements in place . . . ." 

Similarly, Schlecht's December 1, 2000 to O'Neal challenged Flynn's authority to sign the 
55 

SMA on behalf of Pacbell, taking the position that Flynn's signing authority from Pacbell 

was limited to obligations of $10,000 per year. The evidence of defendants' concerns in 

November 2000 about Flynn's authority to sign the subject agreements on behalf of 

Pacbell does not raise a reasonable inference that defendants had full knowledge of 

Flynn's fraud. 

6. March 2002 investigation 

 Services contends that in March 2002, Pacbell received further allegations of 

Flynn's fraud but made a strategic decision not to investigate the Solutions agreements. 

The March 2002 investigation by Pacbell (then doing business as Cingular Wireless) 

concerned an anonymous letter alleging that Flynn and O'Conner had each awarded a 

contract without competitive bidding as a vice president of Pacbell. The letter alleged 

Flynn awarded a contract to OCG in 1995 or 1996, and O'Connor awarded a contract to 

TCG in 2002. O'Connor then resigned from Pacbell and became an employee of TCG, 

where, according to the anonymous letter, he managed the contract he had awarded. 

Cingular's investigation concluded the following: OCG was operating as TCG; 

O'Connor had left Cingular and January 2002 and was working for TCG; O'Connor's title 

at Cingular was operations manager, not vice president; O'Connor and Flynn were close 

associates outside of work; TCG was awarded a contract in 2001 after a competitive bid 

process was followed and approved; Cingular did not enter any new contracts with TCG 

in 2002; and Cumbie approved the purchase orders for TCG in January 2002. The 

investigation was limited to the allegations in the anonymous letter; it did not involve 

suspicions concerning Flynn's conflict of interest or interest in Solutions when he was an 
56 

employee of Pacbell. There is no evidence that Cingular's limiting the investigation to 

the anonymous allegations involved a "strategic decision" to not investigate the Solutions 

agreements. 

7. April 2003 trial 

 Services argues that Pacbell gained full knowledge of Flynn's fraud and conflict of 

interest in April 2003 when attorney Stephanie Hess, representing Cingular, attended the 

trial in TCG v. O'Neal and heard Flynn give testimony indicating that he and O'Neal 

started Solutions together. O'Neal's counsel asked Flynn to admit that he signed a 

declaration saying he did not have a conflict of interest between his employment with 

Pacbell and his "ownership interest in, or lack thereof, in [TCG] . . . ." Flynn answered 

that he "would have to see the document, but that was one issue that both O'Neal and I 

did not discuss." Counsel then asked Flynn to admit that in the 2002 arbitration between 

him and O'Neal, "you signed a declaration saying you didn't have an interest when in fact 

you did?" Flynn answered, "That's probably true, correct." After being asked a couple 

more questions, Flynn gave the following statement that was nonresponsive to any 

question posed by O'Neal's counsel: "I want to step back one second since you raised the 

issue about the ownership interest, how these companies were started. [O'Neal] testified 

yesterday that he started Site Management Solutions. That own argument would put him 

in perjury of yesterday. So how we started the company is an issue that O'Neal and I 
57 

have ─ it's very delicate and he testified yesterday, so I guess . . . it's an area that is very 

delicate. But all the rest of the testimony I think we need to be aware of."14 

Services does not directly contend that Flynn's testimony at the 2003 trial gave 

Cingular full knowledge of the fraud. Rather, it argues that "according to Defendants, 

Flynn admitted to the alleged fraud involving the SMA and SLA." (Italics added.) 

Services is referring to the fact that in its 2007 motion for summary judgment, TMO cited 

Flynn's 2003 testimony as establishing his fraud and conflict of interest, stating: "And, in 

a lawsuit between Flynn and O'Neal in 2003, Flynn testified that O'Neal had 'perjured 

himself' by testifying that O'Neal started Solutions himself, maintaining instead that 'we 

started the company' together." In this appeal, TMO submits that in its 2007 motion for 

summary judgment, it argued "that Flynn's testimony in [the 2003 trial] was a second 

admission of his conflict of interest. Having just received Flynn's detailed and 

incriminating 2002 Arbitration testimony in early 2007, Flynn's subsequent testimony in 

2003 . . . was another admission of his conflict of interest. However, TMO did not argue 

that Flynn's 2003 testimony provided full knowledge of Flynn's fraud and conflict of 

interest." TMO further asserts that "[o]nly with Flynn's testimony from the 2002 

Arbitration, which TMO obtained just before it moved for summary judgment, could 

Flynn's [2003 trial] testimony be understood as an admission of Flynn's conflict of 

interest." 

 

14 O'Neal's counsel moved to strike Flynn's unsolicited testimony as "nonresponsive 

to anything." The court denied the motion but admonished Flynn to "just stick to the 

questions here." 
58 

Notwithstanding the spin TMO put on Flynn's 2003 testimony in its zeal to 

establish Flynn's fraud as an undisputed fact entitling it to summary judgment on the 

fourth amended complaint, Flynn's testimony was borderline incoherent. Regarding 

O'Neal's testimony that he (O'Neal) had started Solutions, Flynn cryptically asserted: 

"That own argument would put him in perjury of yesterday." Flynn did not then testify 

that "we started [Solutions] company together," as TMO suggested in its 2007 summary 

judgment motion; he said, "So how we started the company is an issue that O'Neal and I 

have ─ it's very delicate and he testified yesterday, so I guess . . . it's an area that is very 

delicate." This testimony is not a clear admission that Flynn owned an interest in 

Solutions from its beginning. Accordingly, Cingular's counsel who observed the 2003 

trial cannot be deemed to have obtained full and actual knowledge of Flynn's fraud and 

conflict of interest from Flynn's testimony in the trial.15

The evidence before the court ruling on the 2007 summary judgment/adjudication 

motions does not support a reasonable inference that Pacbell's suspicions and "red flags" 

concerning Flynn and its agreements with Solutions related to the specific fraud at issue – 

i.e., Flynn's role in creating OCG and Solutions and his ownership interest in them from 

their inception. The evidence shows that Pacbell's ability to investigate any suspicions 

 

15 Services also notes that in the federal TCG v. Cingular action, defendants sued 

TCG and "claimed that Flynn and his companies were submitting fraudulent billings 

relating to sham companies created by Flynn." However, that counterclaim does not 

concern Flynn's fraud and conflict of interest in creating and contracting with Solutions. 

Cingular's counterclaim alleged that TCG and its principals schemed "to defraud Cingular 

by deliberately invoicing and collecting monies from Cingular that were not lawfully due 

and owing to TCG." 
59 

was hindered by Flynn's purposeful efforts at concealment and failure to volunteer 

information that he was under a fiduciary duty to disclose. The evidence does not raise 

triable issue of fact as to whether TMO and its predecessors had full knowledge of 

Flynn's actual interest in Solutions before 2007 and, with that knowledge, continued to 

perform under the terms of the original agreements or sought additional concessions or 

benefits that would clearly manifest an intention to affirm a fraudulently-induced 

contract. Accordingly, the court properly granted TMO's motion for summary 

judgment.16

E. The trial court did not err in denying Services's ex parte application 

to supplement the record 

Services contends the court erroneously denied its ex parte application to 

supplement the record with new evidence that showed Cingular had actual knowledge in 

2003 of Flynn's alleged conflict of interest when its former counsel Hess attended the 

TCG v. O'Neal trial and heard Flynn give testimony indicating that he and O'Neal started 

Solutions together. The new evidence included Hess's time sheet showing she attended 

the trial and the transcript of her June 18, 2007 deposition, in which she testified that she 

had no recollection of Flynn's 2003 trial testimony. As noted, Judge Enright denied the 

application, indicating he did not want to delay the litigation further and no good cause 

had been shown. We note that although the new evidence that Hess attended the TCG v. 

 

16 In light of plaintiffs' concession at oral argument that there is no triable issue of 

fact as to Flynn's conflict of interest and fraud, we decline to address Services's argument 

in its opening brief that there are triable issues of fact as to fraud – in particular, as to 

whether Flynn was an owner of Solutions when the SMA and SLA were executed. 
60 

O'Neal trial in April 2003 (Hess's time sheet and deposition transcript) was not before the 

trial court when it ruled on the 2007 motions for summary judgment and summary 

adjudication, both Services and TMO incorporate the fact that Hess attended the TCG v. 

O'Neal trial into their arguments on appeal regarding whether the court should have 

denied TMO's 2007 summary judgment motion on the ground there were triable issues of 

fact as to whether defendants ratified or waived the right to rescind the SMA and SLA. 

We conclude that the trial court did not abuse its discretion in denying Services's 

application to supplement the record. The record shows Services knew that counsel for 

Cingular attended the TCG v. O'Neal before it brought its July 2007 ex parte application 

to supplement the summary judgment record and even before the 2007 summary 

judgment/adjudication motions were filed. In opposition to Services's motion for 

reconsideration of the 2007 summary judgment order, defendants cited multiple 

interrogatory responses served in January 2007 in which Services stated its understanding 

"that representatives of Mitchell Silberg & Krupp and/or Cingular attended judicial 

proceedings in a declaratory relief action during which these issues [concerning whether 

Solutions could pursue claims under the SMA despite having assigned rights under the 

SMA to Services] were discussed." In a memorandum of points and authorities dated 

May 4, 2007 regarding opposing requests for monetary sanctions, Services stated that it 

was "undisputed that Cingular's counsel, Stephanie Hess of the Mitchell Silberg law firm, 

attended the trial in the action entitled TCG v. O'Neal . . . , during which Mr. Flynn 

testified about the [2002] arbitration transcripts and his testimony given in that 

proceeding." Thus, the evidence that Hess attended the trial was not new. In any event, 
61 

to the extent the court erred by refusing to consider the evidence presented with Services 

ex parte application to supplement the record, the error was not prejudicial because, as we 

discussed above, Flynn's testimony at the 2003 TCG v. O'Neal trial did not raise triable 

issue of fact as to whether TMO and its predecessors had full knowledge of Flynn's actual 

interest in Solutions before 2007 and, with that knowledge, continued to perform under 

the terms of the original agreements or sought additional concessions or benefits that 

would clearly manifest an intention to affirm a fraudulently-induced contract. 

F. The trial court did not err in denying Services's motion for reconsideration 

of the 2007 summary judgment order 

Services contends the court erred in denying its motion for reconsideration, which 

was based on the same "recently discovered evidence" of Hess's attendance at the 2003 

TCG v. O'Neal trial that it sought to present in its unsuccessful ex parte application to 

supplement its opposition to defendants' motions for summary judgment. 

Under Code of Civil Procedure section 1008, " '[a] motion for reconsideration 

must be based on new or different facts, circumstances or law [citation], and facts of 

which the party seeking reconsideration was aware at the time of the original ruling are 

not "new or different." [Citation.] In addition, a party must provide a satisfactory 

explanation for failing to offer the evidence in the first instance. [Citation.]' [Citation.] 

'An order denying a motion for reconsideration is interpreted as a determination that the 

application does not meet the requirements of section 1008. . . . We review a trial court's 

ruling on a motion for reconsideration under the abuse of discretion standard." (Gaines v. 

Fidelity National Title Ins. Co. (2013) 222 Cal.App.4th 25, 47.) 
62 

In its order denying the motion for reconsideration, the court noted the papers 

submitted on the motion included "discovery responses confirming that in January of 

2007, five months prior to the summary judgment hearing, Services believed that 

representatives of the Mitchell Silberg firm may have attended the [TCG v. O'Neal] 

trial. . . ." The court acknowledged Services's argument that it was not aware of Hess's 

identity as the attorney who attended the trial "until after the summary judgment motion 

was filed and that it was not until three days after the first oral argument on the motion 

that Services was able to depose Ms. Hess." However, the court noted that Services 

began its efforts to depose Hess weeks before the summary judgment hearing and that 

despite its expectation that Hess's testimony would confirm her attendance at the TCG v. 

O'Neal trial, Services did not request a continuance of the summary judgment motion 

before its opposition was due or before the initial oral argument on the motion. Based on 

the fact that Services was aware of Hess's identity and her expected testimony well in 

advance of the hearing on the summary judgment motion, the court concluded that 

Services failed to show that Hess's deposition testimony constituted new facts for 

purposes of Code of Civil Procedure section 1008. 

In accordance with our discussion in the preceding section regarding Service's ex 

parte application to supplement the summary judgment record, we conclude the trial 

court correctly ruled that Services's motion for reconsideration was not based on new 

facts as required by Code of Civil Procedure section 1008. Therefore, the court did not 

abuse its discretion in denying the motion. 
63 

G. The trial court correctly ruled as a matter of law that the GSMF joint 

venture was not a colocation agreement within the meaning of the SMA

In the first cause of action of its fourth amended complaint, Services alleged that 

defendants violated the SMA by failing to pay Services $400 million it was owed as its 

share of the rents and cost savings resulting from the GSMF Joint Venture formed by 

Cingular and Voicestream (later, T-Mobile). In granting Cingular's and TMO's motions 

for summary judgment, the trial court ruled that "[t]he Joint Venture is not covered by the 

SMA's express terms as it does not constitute a [colocation] agreement."17 On appeal, 

Services contends, first, that the trial court's decision violates Code of Civil Procedure 

section 437c, subdivision (f)(1), which prohibits piecemeal adjudication of causes of 

action, and second, that there were triable issues as to whether the GSMF Joint Venture 

was a colocation agreement within the meaning of the SMA. We conclude there was no 

error, either procedurally or substantively. 

1. Defendants' motion did not seek improper piecemeal adjudication of 

Services's claims under the SMA 

Services argues that defendants sought, and the trial court improperly granted, 

piecemeal summary adjudication of the first cause of action, in that defendants' 

 

17 Having ruled that the SLA and SMA were void (or voidable) and unenforceable 

because Flynn fraudulently induced them, the court could have deemed moot the contract 

interpretation issue of whether the GSMF Joint Venture was a colocation agreement 

within the meaning of the SMA and declined to address that issue. However, the court 

exercised its discretion to decide the contract interpretation issue as an additional ground 

for granting Cingular's motion for summary judgment, and we exercise our discretion to 

review the court's ruling on the issue. 
64 

arguments were directed at only one component of Services's claim alleging that 

defendants breached the SMA, rather than at the entire cause of action. We disagree. 

The Code of Civil Procedure authorizes a party to "move for summary 

adjudication as to one or more causes of action within an action, one or more affirmative 

defenses, one or more claims for damages, or one of more issues of duty. . . .A motion for 

summary adjudication shall be granted only if it completely disposes of a cause of 

action . . . ." (Code Civ. Proc. § 437c, subd.(f)(1), italics added.) The parties' dispute 

here turns on the meaning of the phrase "cause of action." In Lilienthal & Fowler v. 

Superior Court (1993) 12 Cal.App.4th 1848 (Lilienthal), a legal malpractice action, the 

court of appeal held that the trial court properly could rule on a summary adjudication 

motion directed at the claims pertinent to services rendered on one legal matter, which 

claims had been combined in the same cause of action with the claims arising from 

services performed on another legal matter. (Id. at pp. 1854-1855.) Reviewing an earlier 

(but not substantively different) version of the statute,18 the court observed that the term 

"cause of action" in a broad sense means " 'the invasion of a primary right (e.g. injury to 

person, injury to property, etc.). . . . However, in more common usage, "cause of action" 

means a group of related paragraphs in the complaint reflecting a separate theory of 

liability. . . . [¶] As used in [Code Civ. Proc.] [section] 437c(f), "cause of action" should 

 

18 The current version of section 437c, subdivision (f)(1), differs in nonsubstantive 

ways from the version reviewed in Lilienthal. For example, the Legislature changed the 

order of the wording and added the final sentence expressly stating that the motion must 

dispose of the entire cause of action or claim for damages. (See Stats. 1993, ch.276 (A.B. 

498), § 1, p. 1971.) 
65 

be interpreted in the latter sense (theory of liability).' " (Lilienthal, supra, at p. 1853.) 

The court determined that the Legislature's intent is best effectuated "by applying the 

section in a manner which would provide for the determination on the merits of summary 

adjudication motions involving separate and distinct wrongful acts which are combined 

in the same cause of action."19 (Id. at p. 1854, italics added.) In Lilienthal, defendants' 

motion was proper because plaintiffs sought "to recover damages based on two separate 

and distinct obligations" having "no relation to each other and involv[ing] legal services 

performed at different times, with different and distinct obligations, and distinct and 

separate alleged damages." (Ibid.) 

The same reasoning applies here. Services alleged that defendants violated the 

SMA in various ways. In a separate section of the "Preliminary Allegations" portion of 

the fourth amended complaint, under the heading reading, in part, "Defendants Owe 

Services In Excess of $400 Million for Rent and Cost Savings," Services alleged the 

factual basis for its assertion that the GSMF Joint Venture (or what Services calls the 

"Voicestream Agreement") was a colocation agreement within the meaning of the SMA 

and that, pursuant to the SMA, Services was entitled to a share of the cost savings and 

 

19 Many other courts have reached a similar conclusion. (See, e.g., Mann v. Quality 

Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 106 [party can move for summary 

adjudication of any distinct claim within a cause of action]; Edward Fineman Co. v. 

Superior Court (1998) 66 Cal.App.4th 1110, 1118 ["a party may present a motion for 

summary adjudication challenging a separate and distinct wrongful act even though 

combined with other wrongful acts alleged in the same cause of action"]; Exxon Corp. v. 

Superior Court (1997) 51 Cal.App.4th 1672, 1688, fn. 11 [Exxon was "entitled to present 

summary adjudication motions that dispose of allegations which would have formed a 

single cause of action if properly pleaded"].) 
66 

rents generated by that Joint Venture. As Services itself acknowledges, elsewhere in the 

fourth amended complaint, and under different headings, Services alleged the factual 

basis for other claimed violations of the SMA and the different damages owed for each, 

including "that Defendants owed management fees that were unrelated to the fees owed 

in connection with the Voicestream Agreement, that Defendants had breached the SMA 

by failing to advise Services of colocation opportunities and not allowing Services to 

negotiate colocation agreements with other carriers, and that Defendants breached the 

SMA by failing to ensure that assignees of the SMA had complied with their 

obligations." In its first cause of action, Services generally alleged that defendants 

violated the SMA in all the foregoing respects. 

The only common thread among these allegations is that they purport to set forth 

defendants' breaches of the SMA.20 Services's own description of these claims and the 

structure of the fourth amended complaint demonstrate they are separate and independent 

breaches of the same instrument, each based on a separate theory of liability (or breach), 

and each giving rise to distinct claims for damages. Accordingly, each is a "separate and 

 

20 The various breaches of the SMA alleged by Services also all purportedly involve 

the GSMF Joint Venture, but in different ways. The particular issue considered by the 

trial court on summary judgment was whether the agreements by which the GSMF Joint 

Venture was formed and funded themselves created the type of "colocation" arrangement 

contemplated by the SMA. The other alleged breaches concerned sites that were 

excluded from the GSMF Joint Venture because they had been assigned by Cingular to a 

third party (SpectraSite, and then later, CA/NV Tower Holdings, LLC). Those entities 

then allegedly entered in colocation agreements for those sites with the GSMF Joint 

Venture, among others. With respect to these latter agreements, Services alleged 

Cingular was obligated to ensure that the third party complied with the terms of the SMA 

as it impacted Services. 
67 

distinct wrongful act" (Lilienthal, supra, 12 Cal.App.4th at p. 1854) that may be 

adjudicated separately without running afoul of the principal purpose underlying the 

statute─" 'to stop the practice of adjudication of facts or adjudication of issues that do not 

completely dispose of a cause of action or a defense.' " (Id. at p. 1853.) 

Decastro W. Chodorow & Burns v. Superior Court (1996) 47 Cal.App.4th 410 

(Decastro), cited by Services, does not compel a different conclusion. At issue in that 

case was whether summary adjudication could be granted as to only one component of 

plaintiffs' alleged legal malpractice damages, namely "lost opportunity" damages. Unlike 

Lilienthal, however, the Decastro action involved a legal malpractice claim arising from 

a single matter, and defendants sought summary adjudication as to only one item of their 

compensatory damages arising from that incident. (Id. at pp. 415-416.) The Decastro

court distinguished Lilienthal on that basis. (Decastro, supra, at pp. 421-422.) Contrary 

to Services' contention, defendants here did not challenge one component of damages 

arising from a single alleged wrongful act. Rather, they challenged a breach of contract 

claim based on one of several allegedly wrongful acts, each of which was alleged to be a 

breach of the SMA, and each of which gave rise to an independent claim for damages. 

We conclude defendants properly sought summary adjudication of the breach of 

contract claim based on Services's allegations that the GSMF Joint Venture agreement 

was a colocation agreement within the meaning of the SMA, and the trial court did not 

err in summarily adjudicating that claim. 
68 

2. Legal standards applicable to interpreting the SMA 

"The fundamental goal of contractual interpretation is to give effect to the mutual 

intention of the parties." (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 

1264 (Bank of the West); Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.) 

" 'Such intent is to be inferred, if possible, solely from the written provisions of the 

contract.' [Citations.]" (State of California v. Continental Insurance Co. (2012) 

55 Cal.4th 186, 195 (State of California).) If contractual language is clear and explicit, 

and does not involve an absurdity, it governs. (Civ. Code, § 1638; see State of 

California, supra, 55 Cal.4th at p. 195.) 

Contract interpretation is solely a judicial function "when it is based on the words 

of the instrument alone, when there is no conflict in the extrinsic evidence, or when a 

determination was made based on incompetent evidence." (City of Hope National 

Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 (City of Hope); see also 

Home Federal Savings & Loan Assn. v. Ramos (1991) 229 Cal.App.3d 1609, 1613 

[where parties presented little or no conflicting extrinsic evidence, "the trial court 

properly refused to submit the interpretation of the written guaranty to the jury"].) A jury 

may interpret an agreement when a contractual provision is ambiguous and determining 

the intent of the parties depends on "the credibility of extrinsic evidence." (City of Hope, 

supra, at p. 395.) "A policy provision will be considered ambiguous when it is capable of 

two or more constructions, both of which are reasonable." (Waller v. Truck Ins. 

Exchange, Inc., supra, 11 Cal.4th at p. 18.) A contract is not ambiguous, however, 

merely because the parties disagree on the meaning of a phrase, or because " ' "a word or 
69 

phrase isolated from its context is susceptible of more than one meaning." ' [Citation.]" 

(State of California, supra, 55 Cal.4th at p. 195.) Rather, the "language in a contract 

must be construed in the context of that instrument as a whole, and in the circumstances 

of that case, and cannot be found to be ambiguous in the abstract." (Bank of the West, 

supra, 2 Cal.4th at p. 1265, italics omitted.) The trial court may resort to extrinsic 

evidence to determine the parties' intent only where it is " 'relevant to prove a meaning to 

which the language is "reasonably susceptible." ' " (PV Little Italy, LLC v. MetroWork 

Condominium Assn. (2012) 210 Cal.App.4th 132, 156 (PV Little Italy, LLC), citing Winet 

v. Price (1992) 4 Cal.App.4th 1159, 1165 (Winet).) 

Our review of the trial court's interpretation of the contract is de novo if the 

contract's meaning can be determined from the language alone, or when the extrinsic 

evidence, if any, is not in conflict. (Steiner v. Thexton (2010) 48 Cal.4th 411, 417, fn. 7; 

Winet, supra, 4 Cal.App.4th at pp. 1165-1166; PV Little Italy, LLC, supra, 210 

Cal.App.4th at pp. 144-145 [appellate court independently interprets the meaning of an 

instrument if the trial court's interpretation does not turn on the credibility of extrinsic 

evidence].) 

3. Meaning of the term "colocation agreement" in the SMA 

The SMA provided that Solutions (and later, by alleged assignment, Services) 

would be Pacbell's "sole and exclusive representative to sublease, license and manage 

Sites for use by Other Carriers for mobile/wireless telecommunications purposes and, in 

that regard, [Pacbell] shall refer all Other Carriers with offers or inquiries regarding the 
70 

use of Sites for the placement of an Other Carrier's Facilities to [Solutions]."21 In return 

for performing various colocation services with respect to these sites, Solutions was to 

receive for each colocation agreement entered into with another carrier certain designated 

management fees, as well as a share of monies collected from other carriers under "cost 

sharing arrangements" included within colocation agreements. 

The parties' dispute over the proper interpretation of the SMA focuses on what the 

parties meant by "colocation agreement." That term is defined in Recital B of the SMA, 

as follows: 

"[Pacbell] has entered into, or will enter into, certain colocation 

agreements or cost sharing agreements for the shared use or 

codevelopment of common facilities (each a 'Colocation 

Agreement') with other mobile/wireless communications companies 

(each an 'Other Carrier') whereby [Pacbell] is subleasing or 

sublicensing space on its tower, and in some cases space on the 

ground, and/or the use of [Pacbell's] facilities for the Other Carrier to 

place its communications facilities ('Other Carrier's Facilities')." 

Cingular asserts that the language following the word "whereby" in this provision 

makes clear that a colocation agreement entitling Services to any monies is only one in 

which another carrier has subleased or sublicensed space on Pacbell's facilities in order to 

 

21 Services alleged that Solutions assigned certain of its rights under the SMA to 

Services as part of the 2002 Flynn/O'Neal Settlement, and that defendants acknowledged 

that assignment. In the trial court, Cingular challenged Services's standing to pursue 

claims under the SMA when it moved for summary adjudication on its claim for 

declaratory relief in its cross-complaint, but the standing challenge was mooted by the 

trial court's ruling on the fraud issue. On appeal, defendants refer to the 2002 transaction 

as the "alleged" assignment, but do not argue specifically that Services lacks standing to 

seek relief under the SMA. Therefore, we assume for purposes of this appeal that 

Services has standing to enforce the rights specified in the SMA and alleged in its fourth 

amended complaint. 
71 

physically place its own wireless communications equipment there. Services, on the 

other hand, contends that any "cost sharing agreements for the shared use or 

codevelopment of common facilities" entitles Services to payments under the SMA, 

regardless of whether the other carrier has subleased or sublicensed space on Pacbell sites 

for the placement its own equipment. We conclude Cingular is correct. 

 We first examine the disputed language of the contract to determine whether the 

parties' intent may be gleaned solely from the words used. (State of California, supra, 

55 Cal.4th at p. 195.) The thrust of Services's argument is that the placement of the 

phrase "(each a 'Colocation Agreement')" directly after the words "[Pacbell] has entered 

into, or will enter into, certain colocation agreements or cost sharing agreements for the 

shared use or codevelopment of common facilities," means that the definition of 

"Colocation Agreement" is limited to what precedes the parenthetical, suggesting the 

"whereby" clause that follows the parenthetical is irrelevant to determining what is or is 

not a colocation agreement. We reject this construction. 

First, a fundamental tenet of contract interpretation is that "[t]he whole of the 

contract is to be taken together, so as to give effect to every part, if reasonably 

practicable, each clause helping to interpret the other." (Civ. Code, § 1641.) "The rule's 

effect, among other things, is to disfavor constructions of contractual provisions that 

would render other provisions surplusage." (Boghos v. Certain Underwriters at Lloyd's 

of London (2005) 36 Cal.4th 495, 503; see Advanced Network, Inc. v. Peerless Insurance 

Co. (2010) 190 Cal.App.4th 1054, 1063 (Advanced Network, Inc.) [" 'We must give 

significance to every word of a contract, when possible, and avoid an interpretation that 
72 

renders a word surplusage.' "].) Services's interpretation would require us to read an 

entire clause out of the SMA, which we may not do. Services fails to explain why the 

parties would include the "whereby" clause in the contract if it was to have no relevance 

at all to the definition of colocation agreement.22 

Second, although, as Services notes, it may be common for contracting parties to 

set forth the definition of a term, followed by a short form of that term in parentheses and 

quotation marks, it cites no authority or rule that a particular term in a contract may be 

defined only by what precedes it, and not by what follows it. In fact, what immediately 

follows the first parenthetical in Recital B is "with other mobile/wireless communications 

companies (each an 'Other Carrier')," which is inherently part of the definition of 

colocation agreement, since an agreement involves at least two parties. Services does not 

contend otherwise. In this case, Recital B contains a number of defined terms, and the 

parties may have placed the parenthetical "(each a Colocation Agreement)" where they 

did simply to avoid crowding several defined terms together in one sentence. 

Services erroneously relies on Board of Port Commissioners v. Williams (1937) 

9 Cal.2d 381, as support for its assertion that "[l]anguage following a specifically defined 

term . . . cannot be used to modify the term." That is not, however, what the California 

 

22 We also reject Services's argument in its reply brief that we should ignore the 

"whereby" clause in Recital B because "[r]ecitals only reflect the background of a 

contract," and "do not have the force of contractual stipulations." Of course, Services 

itself acknowledges that Recital B contains the controlling definition of "colocation 

agreement." It cites no authority that would allow it to pick and choose which terms 

within Recital B (which consists of a single sentence) have significance and which do 

not. 
73 

Supreme Court held in that case. Rather, in construing how a particular phrase modified 

other language in a statute, the court applied the so-called "last antecedent rule," which 

generally provides that " 'qualifying words, phrases and clauses are to be applied to the 

words or phrases immediately preceding and are not to be construed as extending to or 

including others more remote.' " (Id. at p. 389; see Costco Wholesale Corp. v. Workers' 

Comp. Appeals Bd. (2007) 151 Cal.App.4th 148, 153 (Costco) [setting forth rule].) The 

rule applies to the construction of both statutes and contracts. (People ex rel. Lockyer v. 

R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th 516, 529.) However, a number of 

courts have cautioned that the rule " 'is not immutable' and should not be 'rigidly applied' 

in all cases." (Id. at p. 530.) All rules of construction " 'are but tools, "guides to help 

courts determine likely legislative [or contractual] intent. [Citations.] And that intent is 

critical. Those who write statutes [and contracts] seek to solve human problems. Fidelity 

to their aims requires us to approach an interpretive problem not as if it were a purely 

logical game, like a Rubik's Cube, but as an effort to divine the human intent that 

underlies the statute [or contract]." ' " (Costco, supra, at pp. 153-154, quoting Burris v. 

Superior Court (2005) 34 Cal.4th 1012, 1017; accord, Orthopedic Systems, Inc. v. Schlein

(2012) 202 Cal.App.4th 529, 545-546.) To the extent we apply the "last antecedent rule" 

here, we do so not reflexively, but in a reasonable manner that gives meaning to all the 

terms of the parties' agreement, if reasonably possible, and with a view to discerning the 

parties' true intent. 

Recital B is a long sentence comprised of several conjunctives and disjunctives, a 

number of commas, and three defined terms. The first half of the sentence ending with 
74 

"(each an 'Other Carrier')," refers disjunctively to two different types of instruments: 

colocation agreements and cost sharing agreements. (See, e.g., White v. County of 

Sacramento (1982) 31 Cal.3d 676, 680 (White) ["use of the word 'or' . . . indicates an 

intention to use it disjunctively so as to designate alternative or separate categories].) 

The use of the word "each" in the parenthetical indicates the parties' intent that, for 

purposes of the SMA, the defined term "colocation agreement" includes both types of 

agreements, and suggests these are two different kinds of agreements. Put another way, 

if all colocation agreements necessarily must provide for the colocation of another 

carrier's equipment, as defendants insist they must, arguably there would appear to be no 

reason to specifically include both colocation agreements (which inherently involve the 

placement of one carrier's equipment on another's sites) and cost sharing agreements 

within the definition. (See Advanced Network, Inc., supra, 190 Cal.App.4th at p. 1063 

[" 'We must give significance to every word of a contract, when possible, and avoid an 

interpretation that renders a word surplusage.' "].)23 Furthermore, there appears to be no 

dispute that the modifying phrase "for the shared used or codevelopment of common 

 

23 Cingular cites section 5, subdivision (c) of the SMA, which specifies that 

Solutions was to be compensated with a portion of payments made "under cost sharing 

arrangements in Colocation Agreements and any one-time cost sharing for 

codevelopment due under any Colocation Agreement." Based on this language, Cingular 

argues that cost sharing compensation under the SMA was allowed only "if it was also 

pursuant to a colocation agreement." That is not what this provision says. It specifies 

the compensation derived from cost sharing arrangements in "Colocation Agreements" 

(i.e., the capitalized defined term, which separately includes cost sharing agreements), not 

"colocation agreements," (the uncapitalized, undefined term, which is just one form of 

"Colocation Agreement" under the SMA.) Accordingly, this provision does not in itself 

compel the conclusion that a cost sharing agreement must also include an agreement for 

the physical placement of another carrier's equipment on Pacbell's sites. 
75 

facilities" applies equally to both colocation agreements and cost sharing agreements. 

(See White, supra, 31 Cal.3d. at pp. 680-681 [" ' "[when] several words are followed by a 

clause which is applicable as much to the first and other words as to the last, the natural 

construction of the language demands that the clause be read as applicable to all." ' "].) 

If we were to end our analysis here, we might well conclude that the parties 

intended the defined term "colocation agreements" to include two different types of 

agreements (colocation and cost sharing agreements) and that, as Services contends, a 

colocation agreement need not necessarily be one that includes the physical placement of 

another carrier's equipment on Pacbell's sites. However, as noted, we must consider all

the language of Recital B, so we now turn to the principal disputed language in Recital B, 

the "whereby" clause, to determine whether and how that language impacts the 

interpretation of the defined term, "Colocation Agreement." 

That portion of Recital B reads: " . . . whereby [Pacbell] is subleasing or 

sublicensing space on its tower, and in some cases space on the ground, and/or the use of 

[Pacbell's] facilities for the Other Carrier to place its communications facilities ('Other 

Carrier's Facilities')." We observe first that there is no comma between the parenthetical 

containing the defined term "(each an 'Other Carrier')" and the "whereby" clause. A strict 

application of the last antecedent rule would have us apply the "whereby" clause only to 

that defined term and the immediately preceding phrase, "with other mobile/wireless 

communications companies." (See White, supra, 31 Cal.3d at p. 680 ["Evidence that a 

qualifying phrase is supposed to apply to all antecedents instead of only to the 

immediately preceding one may be found in the fact that it is separated from the 
76 

antecedents by a comma.".) But in this instance, such an application would make no 

sense. The "whereby" clause on its face does not modify the type of companies involved 

in colocation agreements, but the nature of those agreements. Accordingly, we conclude 

that the "whereby" clause, contrary to Services's argument, was intended to further 

qualify what types of colocation agreements were contemplated by the SMA. 

The final interpretive question is precisely how the "whereby" clause modifies 

colocation agreement. Because there is no comma between the phrase "and/or the use of 

[Pacbell's] facilities" and the qualifier "for the Other Carrier to place its communications 

facilities," the last antecedent rule would have us apply that final qualifier only to the 

immediately preceding phrase (White, supra, 31 Cal.3d at p. 680), resulting in the 

following interpretation: A colocation agreement involves either (a) the subleasing or 

sublicensing of space on Pacbell towers or ground, or (b) the subleasing or sublicensing 

of the use of Pacbell facilities for the placement of another carrier's equipment. Under 

this interpretation, a cost sharing agreement conceivably could be a colocation agreement 

if it involves the subleasing or sublicensing of space from Pacbell, but it does not 

necessarily have to involve the physical placement of the other carrier's communications 

facilities on a Pacbell site. This interpretation seems strained, however, because it is 

unlikely another carrier would sublease or sublicense space on Pacbell's towers or ground 

unless it was for the purpose of placing its own equipment there. 

Reading Recital B in its entirety, as we must, we conclude the only reasonable 

interpretation is that a colocation agreement is an agreement between Pacbell and another 

carrier (1) for the shared use or codevelopment of wireless facilities (2) that involves
77 

Pacbell's subleasing or sublicensing of space on a Pacbell tower or ground, and/or the use 

of Pacbell wireless facilities, (3) for the purpose of allowing the other carrier to place its 

own equipment. This interpretation gives effect to the specific reference to cost sharing 

agreements as one type of covered agreement, in that it contemplates agreements that 

may be principally cost sharing in nature but brings such agreements within the SMA 

only if they have a colocation component. 

We acknowledge that Recital B is not a model of clarity, particularly given the 

placement of commas, the use of the term "and/or," and the fact that cost sharing 

agreements are separately included as colocation agreements. No other interpretation, 

however, gives substance to each of the provisions terms. We note that other provisions 

in the SMA support our interpretation. For example, section 3 of the SMA sets forth the 

colocation services Solutions was to perform under the agreement. It states that Solutions 

"shall be [Pacbell's] sole and exclusive representative to sublease, license and manage 

Sites for use by Other Carriers for mobile/wireless telecommunications purposes and, in 

that regard, [Pacbell] shall refer all Other Carriers with offers or inquiries regarding the 

use of Sites for the placement of an Other Carrier's Facilities to Manager." (Italics 

added.) Additionally, the services Solutions was to provide included "[r]eceiv[ing] 

proposed plans and specifications from Other Carriers for the installation and 

maintenance of the Other Carrier's Facilities." 

Similarly, the SMA provides that Pacbell would have the "right to approve in its 

sole discretion (i) all Colocation Agreements; (ii) the specific location of Other Carrier's 

Facilities; and (iii) to the extent provided in the Colocation Agreement, the plans and 
78 

specifications for the construction, installation or modification of the Other Carrier's 

Facilities or common facilities." The SMA also called for each party to "cooperate to 

effectuate the purposes of this Agreement," including requiring Pacbell to "provide to 

[Solutions] and Other Carriers interested in locating facilities on a Site reasonable access 

to the Site to facilitate the performance of Colocation Services." This language supports 

defendants' interpretation, as it strongly indicates the principal focus of colocation 

agreements, as defined in the SMA, is to allow other carriers to colocate their wireless 

communications facilities on Pacbell sites. 

 Because we are able to interpret the definition of colocation agreement based on 

the SMA's language alone, we need not examine the parties' extrinsic evidence. (See, e.g., 

City of Hope, supra, 43 Cal.4th at p. 395.) We observe, however, that the extrinsic 

evidence the parties cite is not particularly useful. In particular, O'Neal's testimony (cited 

by Cingular) regarding his subjective understanding of the SMA as a signatory to the 

agreement is irrelevant. "California recognizes the objective theory of contracts 

[citation], under which '[i]t is the objective intent, as evidenced by the words of the 

contract, rather than the subjective intent of one of the parties, that controls 

interpretation.' [Citation.]" (Founding Members of the Newport Beach Country Club v. 

Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 956.). 

As additional extrinsic evidence, Cingular points to the fact that Services never 

claimed prior to this lawsuit that the particular cost sharing agreement at issue, the GSMF 

Joint Venture, was a colocation agreement under the SMA, even though it sought to 

collect other payments it believed it was entitled to receive under that agreement. This 
79 

could be somewhat probative because it suggests that if Services in fact believed it was 

entitled to payment as a result of the GSMF Joint Venture, especially in the amount of 

$400 million, it would have asserted that at the same time it sought other outstanding 

payments under the SMA. On the other hand, Services was under no legal compulsion to 

ever assert any claim it might have under the SMA, and defendants identify no evidence 

that Flynn knew all the details of the structure of the GSMF Joint Venture when it was 

formed, which could explain a delay in asserting Services's rights, if any, under the Joint 

Venture. 

The only extrinsic evidence relied on by Services consists of a number of 

agreements Services contends Pacbell entered into with other carriers that "provided for 

the payment of fees to Services in connection with cost sharing agreements which did not 

involve 'the placement of another carrier's equipment' on [Pacbell] sites." These 

agreements arose because Pacbell and another wireless carrier had entered into separate 

agreements to lease premises from the same landlord for the construction and operation 

of a communications facility. To provide for an equitable sharing of costs incurred with 

the installation and maintenance of so-called "common facilities," Pacbell and the other 

carrier entered into these cost sharing agreements. The term "common facilities" was 

generally defined in these agreements as "equipment, facilities, structures and 

improvements located on Landlord's Property which both [Pacbell] and the [the other 

carrier] will use or benefit from, such as, but not limited to, access roads, screening, 

conduits and similar facilities." Under these agreements, Cingular generally was 

responsible for installing, maintaining and repairing the common facilities, and the other 
80 

parties were granted the right to use these common facilities for the term of the 

agreement, in exchange for paying their percentage share of the shared costs to Pacbell's 

designated payee. Solutions was named in the agreements as the "payee" to whom the 

licensees would remit their payments under these agreements. 

These agreements do not heavily favor one interpretation of Recital B or the other. 

Various provisions in these agreements anticipate the other wireless carrier would 

perform "construction activities" pursuant to its own agreement with the landlord, and 

install its own property "within the common facilities." However, nothing in these 

agreements required the placement of wireless communications equipment on Pacbell 

sites. Notably, these agreements were entitled "Cost sharing Agreement," rather than 

"Colocation Agreement," as one might reasonably expect they would be if they were 

intended as such within the meaning of the SMA. Additionally, the SMA gave Pacbell 

the authority "to engage [Solutions], or [Solutions's] affiliates, to provide other services 

outside the scope of [the SMA]." Thus, contrary to Services's contention, any payments 

to which Solutions (and later, Services) may have been entitled under these cost sharing 

agreements might well have been authorized not by the SMA itself, but by virtue of a 

separate engagement by Pacbell. Services points us to no evidence that any fees it 

received under these agreements were actually paid pursuant to the SMA, or calculated 

according to the formulas set forth in the SMA (which might be indirect evidence that the 

cost sharing agreements were covered by the SMA). Absent some explanation from the 

parties regarding the circumstances surrounding the making of these cost sharing 

agreements and how the parties operated under them, these agreements, either standing 
81 

alone or viewed in the context of the larger record, do not compel us to adopt either 

party's proffered interpretation of the meaning of "colocation agreement." 

Although the extrinsic evidence specifically relied on by the parties does not, in 

our view, conclusively favor either party's interpretation, we note that there are other 

documents in the 2007 summary judgment record, not cited by either party, that provide 

some objective (and apparently, undisputed) evidence of what the parties intended by the 

term "Colocation Agreement." These documents, unlike the cost sharing agreements 

referenced by Services, are entitled "Colocation Sublease Agreement," or something 

similar , and generally provide that another carrier will sublease space on a Pacbell tower 

or site for the construction and installation of its own facilities (such as antenna arrays or 

other equipment), in exchange for a rental payment. Some of these agreements include 

cost sharing provisions. Solutions was the designated payee for rental payments. In our 

view, these agreements most consistently track the language of Recital B of the SMA, as 

we have interpreted it here. They all provide for the placement of the other carrier's 

equipment on Pacbell sites, but they also demonstrate that colocation agreements can 

have a cost sharing component. 

4. The GSMF Joint Venture was not a colocation agreement

We now turn to the issue of whether the GSMF Joint Venture was a colocation 

agreement within the meaning of the SMA. We conclude it was not. Even if Recital B 

did not require the physical placement of another carrier's equipment on a Pacbell site, 

the GSMF Joint Venture was not a colocation agreement because it did not meet the first 
82 

prong of the "whereby" clause; specifically, it was not an agreement whereby another 

carrier subleased or sublicensed space or the use of facilities from Pacbell. 

The GSMF Joint Venture was structured very differently from a colocation 

agreement contemplated by the SMA. The Joint Venture's purpose was to enable 

Cingular's customers to use T-Mobile's existing New York network and T-Mobile's 

customers to use Cingular's existing networks in California and Nevada without each 

provider having to build a new network in the other's locations or place their own 

equipment on the other's sites. This was accomplished through Cingular's and T-Mobile's 

contribution to a new entity, the GSMF Joint Venture, of their respective existing 

wireless communication network structures in those geographic regions. The GSMF 

Joint Venture was the holding company for the contributed assets ─ Pacbell from 

Cingular, and Omnipoint Facilities Network (OFN) from T-Mobil ─ and acted 

exclusively as an infrastructure provider. It sold network services to T-Mobile and 

Cingular, and the amounts charged to each were based on the monthly operating expenses 

of the Joint Venture, which were allocated among Cingular and T-Mobile based on their 

spectrum ownership. 

The GSMF Joint Venture did not own, hold or control any licenses. Instead, 

Cingular and T-Mobile continued to hold the licenses to their wireless communications 

spectrum outside of GSMF. Through newly-formed subsidiaries, Cingular and T-Mobile 

each owned 50 percent of the voting interests in GSMF. The Joint Venture was 

implemented through a series of agreements pursuant to which, among other things, 

Cingular and T-Mobile each made capital contributions to the Joint Venture, and each 
83 

was made responsible for providing operational, maintenance, construction, repair and 

other technical services to its respective systems. 

Thus, the GSMF Joint Venture did not entail the placement of another carrier's 

equipment on Pacbell sites. It also did not involve Pacbell "subleasing or sublicensing [to 

another carrier] space on its tower, [or] . . . space on the ground, and/or the use of its 

facilities." Services does not contend otherwise. Rather, Services's principal contention 

is that the GSMF Joint Venture was a cost sharing and codevelopment arrangement, and 

that alone is sufficient to bring it within the SMA. We concluded otherwise in our earlier 

analysis of Recital B of the SMA. Services alternatively argues that T-Mobile and 

Cingular "jointly owned" the shared networks, made capital contributions for the 

expansion and codevelopment of the networks, and each took a depreciation expense on 

the cost of equipment purchased for the other's sites that were part of the Joint Venture. 

Cingular disputes Services's characterization of the depreciation expense. In our view, 

the details of the parties' complex accounting techniques are beside the point. We have 

determined that a colocation agreement can only be one whereby Pacbell sublicenses or 

subleases space on its site or the use of its facilities to another carrier. Services makes no 

argument that Pacbell or Cingular subleased or sublicensed space on its sites or the use of 

its facilities to OFN, T-Mobile, or any other entity. To the extent T-Mobile contributed 

network equipment to the GSMF Joint Venture that it "owned," Services makes no 

argument, and provided no evidence, that any such contribution was by way of a 

sublicense or sublease of space or facilities from Pacbell or Cingular, let alone that the 

purpose of any such contribution was to enable T-Mobile to physically place its own 
84 

wireless communications equipment (such as an antenna) on any Pacbell tower or site, or 

that T-Mobile paid rent or licensing fees to Pacbell or Cingular in exchange for the use of 

its sites pursuant to the Joint Venture. 

Accordingly, Services's attempt to shoehorn the GSMF Joint Venture into the 

definition of "colocation agreement" in the SMA is unavailing. The trial court correctly 

ruled that the GSMF Joint Venture was not a colocation agreement within the meaning of 

the SMA. 

II. 

The Trial Court Properly Sustained the 2009 Demurrer to 

Services's Fraud Claim in its Cross-Complaint

Services contends that if we reverse that 2007 order granting TMO's motion for 

summary judgment, we must also reverse Judge Lewis's January 2009 order sustaining, 

without leave to amend, defendants' demurrer to the first cause of action for fraud in 

Services's cross-complaint. Because we are affirming the 2007 summary judgment order, 

we need not address Services's challenge to the 2009 demurrer order.24

 

24 Cingular filed a request for judicial notice of a December 14, 2000 letter from 

Pacbell to Solutions containing certain representations that formed the basis for the fraud 

cause of action in Services's cross-complaint. We deny the request for judicial notice 

because the letter is unnecessary to our resolution of the issues raised in this appeal. 

(County of San Diego v. State of California (2008) 164 Cal.App.4th 580, 613, fn. 29.) 
85 

III. 

The Trial Court Properly Granted Summary Judgment 

on Flynn's Cross-Complaint for Fraud 

In June 2007, TMO filed its first amended cross-complaint, alleging causes of 

action against Flynn for fraud by misrepresentation or concealment, breach of fiduciary 

duty, and constructive fraud. Cingular has asserted no claims against Flynn in this 

lawsuit. Nevertheless, in response to TMO's cross-complaint, Flynn filed a crosscomplaint against Cingular in November 2007 for breach of the 2004 TCG v. Cingular

settlement agreement, in which Cingular released all claims it may have had against 

Flynn. In his cross-complaint, Flynn alleged that the settlement agreement was binding 

on Cingular's subsidiaries, which at that time included Pacbell. He further alleged that in 

2005, T-Mobile acquired Pacbell from Cingular and renamed it TMO. Flynn in essence 

contends that Cingular breached its obligations under the TCG v. Cingular settlement 

agreement by failing to prevent its former subsidiary, Pacbell, from suing Flynn once 

Pacbell became TMO. 

Cingular moved for summary judgment on Flynn's cross-complaint, contending, 

among other things, that even if Pacbell was bound by the TCG v. Cingular settlement 

agreement (which Cingular disputed), there was no evidence that Cingular had any ability 

to control Pacbell at the time TMO's cross-complaint was filed, and thus Cingular could 

not be held liable for breaching, or preventing Pacbell's breach of, the settlement 

agreement. The trial court agreed, and granted summary judgment in favor of Cingular 

on Flynn's cross-complaint. We conclude the court ruled correctly. 
86 

Flynn's attempts to demonstrate issues of fact as to whether Pacbell was bound by 

the TCG v. Cingular settlement agreement are beside the point. According to Flynn's 

own allegations, in 2005 T-Mobile acquired Pacbell, which thereafter became TMO. It 

was TMO, not Cingular, that filed cross-claims against Flynn for fraud. As the trial court 

concluded, Flynn alleged no facts in his cross-complaint, and produced no evidence in 

response to Cingular's summary judgment motion, that Cingular had any ability to exert 

control over Pacbell after its acquisition by T-Mobile such that it could be held liable for 

TMO's decision to assert fraud claims against Flynn. Flynn does not dispute this on 

appeal. The trial court properly granted summary judgment in favor Cingular on Flynn's 

cross-complaint. 

TMO'S APPEAL 

I. 

There Is Insufficient Evidence to Support the Jury's 

Findings of Ratification and Waiver 

 As we discussed in connection with the 2007 summary judgment order, a finding 

of ratification or waiver of fraud, requires clear and convincing evidence that the 

defrauded party had actual and full knowledge of the fraud; mere inquiry notice is not 

enough. (Oakland Raiders, supra, 144 Cal.App.4th at pp. 1192-1193; Eichelberger v. 

Mills Land & Water Co., supra, 9 Cal.App. at pp. 637-638; Waller v. Truck Ins. 

Exchange, Inc., supra, 11 Cal.4th at p. 31.) However, as we discuss below, the court 

gave the jury an erroneous instruction that allowed it to find TMO ratified and waived the 

right to rescind the subject contracts based on a finding that TMO's predecessor Pacbell 
87 

was on inquiry notice of Flynn's conflict of interest and fraud. Applying the correct fullknowledge standard, we conclude there was insufficient evidence to support a finding by 

clear and convincing evidence that TMO and its predecessors had full knowledge of 

Flynn's fraud before 2007 and, with that knowledge, unequivocally indicated the 

intention to stand on the fraudulently procured agreements. 

 The clear and convincing standard requires a finding of high probability. (Shale 

Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 

891.) To meet that standard, the evidence must so clear as to leave no substantial doubt – 

i.e., it must be " ' "sufficiently strong to command the unhesitating assent of every 

reasonable mind." ' " (Ibid.) In reviewing the sufficiency of the evidence "we are bound 

to 'consider the evidence in the light most favorable to the prevailing party, giving [that 

party] the benefit of every reasonable inference, and resolving conflicts in support of the 

judgment. [Citation.] But since the jury's findings were subject to a heightened burden of 

proof, we must review the record in support of these findings in light of that burden. In 

other words, we must inquire whether the record contains 'substantial evidence to support 

a determination by clear and convincing evidence . . . .' " (Ibid., italics omitted.) 

 The evidence presented at trial on the issue of waiver or ratification was largely 

the same evidence presented in support of and opposition to TMO's successful 2007 

summary judgment motion, with additional witness testimony about that evidence. 

Regarding Pacbell's 1999 investigation, King testified at trial, as he did in his deposition, 

that at the time of the investigation he was concerned "that there might be some potential 

conflicts of interest . . . with [Flynn] and his relationships." In particular, he was 
88 

concerned about a conflict of interest between Flynn and O'Neal based on their close 

relationship. 

Plaintiffs again argue that a trier of fact could infer ratification or waiver from the 

facts that the 1999 investigators did not ask questions about the SLA and SMA even 

though Flynn signed those agreements; the agreements were one-sided and served no 

legitimate business purpose; King sent a written statement to the investigators 

emphasizing the benefits of the agreements and did not mention his concerns about 

Flynn's conflict of interest; and one day after Flynn was interviewed by the investigators, 

King recommended he receive an ad hoc bonus. Plaintiffs also cite Flynn's trial 

testimony that King told him to answer the questions he was asked when interviewed by 

the investigators. However, it is not reasonable to infer ratification or waiver from these 

facts absent evidence that Pacbell management had full knowledge of Flynn's fraud (i.e., 

his interest in Solutions) when they occurred. 

Regarding the April 2000 meeting, plaintiffs assert that Pacbell did not object 

when Flynn appeared at Pacbell as Solutions's (or OCG's) owner but instead "elected to 

ratify, amend, perform, and accept the benefits of the agreements for the ensuing seven 

years." However, the fact that Pacbell management did not object to Flynn's attending 

the meeting on behalf of OCG and continued to perform the subject agreements is not 

evidence that defendants then had actual knowledge that Flynn had an ownership interest 

in Solutions before he left Pacbell. 

Plaintiffs cite no additional facts adduced at trial regarding the events of 

November 2000 that show defendants had full knowledge of Flynn's fraud and conflict of 
89 

interest. As in his deposition testimony that was before Judge Enright in ruling on 

TMO's 2007 summary judgment motion, Flynn testified at trial that Schlecht accused him 

of having a conflict of interest that rendered the SMA void "because of my lack of 

signing authority with executing [the SMA]." Additionally, plaintiffs cite the evidence 

that SBC's in-house counsel Quist advised Pacbell's in-house counsel Jimenez to 

challenge the validity of the agreements (based on Flynn's lack of signing authority); 

Pacbell threatened to bring "burdensome litigation" against Solutions and Flynn; Flynn's 

signing the SMA on behalf of Pacbell and then becoming an employee or principal of 

TCG and Solutions was "a cause of concern;" Schlecht asserted in a letter to O'Neal that 

it was "entirely appropriate for [SBC/Pacbell] to raise questions about the validity of the 

[SMA]" because after Flynn signed the agreement on behalf of Pacbell and left Pacbell 

he claimed the agreement created "an obligation to [Pacbell] of $4 million;" and Pacbell 

and SBC assured SpectraSite that "SBC intends to either (i) terminate the purported 

[SMA] and negotiate a settlement with [Solutions] or (ii) obtain a final judicial or arbitral 

determination of either the invalidity of the [SMA] or of SBC's liability thereunder." 

Plaintiffs reiterate that Pacbell/Cingular ratified the Solutions agreements by, among 

other conduct, continuing to perform the agreements and signing amendments to them in 

which they expressly "ratified and affirmed" them. As we observed in connection with 

TMO's 2007 summary judgment motion, this evidence shows that Pacbell questioned the 

validity of the Solutions agreements based on suspicions and "red flags" concerning 

Flynn's authority to sign them on behalf of Pacbell, but does not raise a reasonable 
90 

inference that Pacbell actually knew Flynn had an ownership interest in Solutions when 

he signed the agreements on behalf of Pacbell. 

Plaintiffs argue that a trier of fact could infer waiver in 2002 from Flynn's trial 

testimony that during a conversation in Las Vegas that, according to plaintiffs, "coincided 

with [Pacbell's] March 2002 investigation of Flynn's fraud," Cumbie expressed anger at 

Flynn and called him a "crook" in front of his wife. When Services's counsel asked 

Flynn what Cumbie meant by calling him a crook, Flynn stated, "He felt that what I had 

done with O'Neal . . . was wrong." When asked what Cumbie was specifically 

referencing, Flynn testified, "He basically knew that I had been involved in the company 

from the start." Flynn was not asked how he knew that Cumbie possessed that 

knowledge. However, when he was questioned further on cross-examination about this 

conversation with Cumbie, which counsel noted "you are telling us about now for the 

first time this afternoon[,]" Flynn acknowledged, "I can't speculate for Mr. Cumbie." 

Flynn's unfounded testimony that in 2002, Cumbie knew Flynn had been 

"involved in the company from the start" is not substantial evidence that Cumbie or 

anyone else at Pacbell had actual knowledge in 2002 of Flynn's ownership interest in 

Solutions. Bearing in mind that waiver must be proved by clear and convincing 

evidence, we observe that saying Cumbie knew Flynn was "involved in the company" 

(i.e., OCG or Solutions) is not equivalent to saying Cumbie knew Flynn had an 

ownership interest in the company. It was undisputed that Flynn had a close friendship 

with O'Neal and was involved with Solutions as the representative of Pacbell who signed 

the SMA on behalf of Pacbell. Even viewing Flynn's trial testimony about Cumbie's 
91 

conversation as credible, despite the fact his deposition testimony about the same 

conversation included no reference to Cumbie's knowledge about his involvement with 

"the company," Flynn's trial testimony about Cumbie's state of mind is too vague and 

lacking in foundation to constitute substantial evidence that Pacbell had full knowledge 

of Flynn's fraud in 2002. 

 Finally, plaintiffs contend that Pacbell gained full knowledge of Flynn's fraud and 

conflict of interest in April 2003 when attorney Hess, representing Cingular, attended the 

TCG v. O'Neal trial and heard testimony by Flynn indicating he and O'Neal started 

Solutions together. As we discussed regarding the 2007 summary judgment order, the 

somewhat muddled testimony in question was not a clear admission by Flynn that he 

owned an interest in Solutions from its beginning. Thus, the testimony cannot be deemed 

to have imparted full and actual knowledge of Flynn's fraud and conflict of interest to 

Cingular. 

 Like the evidence before the court ruling on the 2007 summary 

judgment/adjudication motions, the evidence presented at trial does not support a 

reasonable inference that Pacbell's suspicions and "red flags" concerning Flynn and its 

agreements with Solutions related to Flynn's ownership interest in OCG and Solutions 

from their inception. Accordingly, we conclude there was no substantial evidence to 

support the jury's finding of ratification and waiver under the correct full-knowledge 

standard – i.e., there was no substantial evidence that TMO and its predecessors had 

actual and full knowledge of Flynn's interest in Solutions before 2007 and, with that 

knowledge, manifested an intention to affirm any of the fraudulently-induced contracts 
92 

by continuing to perform under the terms of the original contract or seeking additional 

concessions or benefits. As we discuss below, our conclusion that there is insufficient 

evidence to support findings of ratification and waiver requires entry of judgment against 

Solutions and in favor of TMO on Solutions's affirmative claims. 

II. 

The Trial Court Erred in Instructing the Jury on Waiver and Ratification 

TMO25 contends the trial court gave the jury erroneous instructions on waiver and 

ratification. Solutions alleged and presented to the jury different theories of waiver and 

ratification to overcome TMO's fraud defense to Solutions's affirmative claims, and to bar 

TMO from recovering on its own claims for rescission and fraud damages. Although 

TMO proposed multiple instructions and the special verdict form asked multiple 

questions generally consistent with these various theories, the trial court gave only one

instruction on waiver that essentially was a hybrid of those proposed by the parties and 

did not clearly and accurately set forth the standards for any of the relevant theories. The 

jury found in plaintiffs' favor, concluding that, although the subject agreements had been 

induced by fraud, TMO either waived or ratified Flynn's fraud, thus allowing Solutions to 

recover for breach of contract and precluding TMO from rescinding the agreements or 

recovering any damages. 

 

25 For ease of reference, and unless otherwise noted, throughout this portion of our 

opinion we will refer to Pacbell and its successors collectively as TMO, even if the events 

discussed did occurred before T-Mobile's acquisition of Pacbell. 
93 

We conclude that the trial court's hybrid waiver instruction was erroneous because 

the jury was likely was confused as to the proper legal standards it was required to apply 

to the proven facts under each of the waiver and ratification theories raised and reflected 

in the special verdict form. The instructional error was prejudicial to TMO in light of our 

conclusion that there is no substantial evidence to support the jury's findings of waiver 

and ratification. 

A. Applicable legal principles regarding instructional error 

"A party is entitled upon request to correct, nonargumentative instructions on 

every theory of the case advanced by him which is supported by substantial evidence. 

The trial court may not force the litigant to rely on abstract generalities, but must instruct 

in specific terms that relate the party's theory to the particular case." (Soule v. General 

Motors Corp. (1994) 8 Cal.4th 548, 572 (Soule).) Correspondingly, "[a] civil litigant 

must propose complete instructions in accordance with his or her theory of the litigation 

and a trial court is not 'obligated to seek out theories [a party] might have advanced, or to 

articulate for him that which he has left unspoken.' [Citations.]" (Mesecher v. County of 

San Diego (1992) 9 Cal.App.4th 1677, 1686.) Further, it is settled that a party is not 

entitled to have the jury instructed in any particular phraseology and "may not complain 

on the ground that his requested instruction is refused if the court correctly gives the 

substance of the law applicable to the case. [Citation.]" (Hyatt v. Sierra Boat Co. (1978) 

79 Cal.App.3d 325, 335 (Hyatt).) 

Instructional error in a civil case is not ground for reversal unless it is reasonably 

probable the error prejudicially affected the verdict. (Soule, supra, 8 Cal.4th at p. 580.) 
94 

"A 'reasonable probability' in this context 'does not mean more likely than not, but merely 

a reasonable chance, more than an abstract possibility.' [Citation.]" (Kinsman v. Unocal 

Corp. (2005) 37 Cal.4th 659, 682, italics omitted.) In determining whether instructional 

error was prejudicial, a reviewing court must evaluate "(1) the state of the evidence, 

(2) the effect of other instructions, (3) the effect of counsel's arguments, and (4) any 

indications by the jury itself that it was misled." (Soule, supra, at pp. 580-581, 

fn. omitted.) 

"Instructions by a court should always be clear and simple in order to avoid 

misleading the jury." (Hyatt, supra, 79 Cal.App.3d at p. 342.) If a jury instruction 

challenged on appeal is ambiguous, the reviewing court must consider "whether there is a 

reasonable likelihood that the jury misunderstood and misapplied the instruction." 

(People v. Young (2005) 34 Cal.4th 1149, 1202.) "[I]t is settled that the instructions must 

be considered in their entirety, and if, as so considered, they state the law of the case 

fairly and clearly, then they are, as a whole, unobjectionable, even though by selecting 

isolated passages from single instructions, they may in some respects be amenable to 

criticism." (Waller v. Southern Pacific Co. (1967) 66 Cal.2d 201, 213; Sprague v. 

Equifax, Inc. (1985) 166 Cal.App.3d 1012, 1047-1048.) " 'Instructions should be 

interpreted, if possible, so as to support the judgment rather than defeat it if they are 

reasonably susceptible to such interpretation.' [Citation.]" (People v. Martin (2000) 

78 Cal.App.4th 1107, 1112.) 

Generally, we are required to presume that the judgment of the trial court is 

correct and that all reasonable inferences were drawn in the prevailing party's favor. 
95 

(Mock v. Michigan Millers Mutual Insurance Co. (1992) 4 Cal.App.4th 306, 322.) In 

reviewing the jury instructions and the question of their prejudicial impact, however, "we 

are not required to make such inferences in [the prevailing party's] favor. To the 

contrary, we must assume that the jury, had it been given proper instructions, might have 

drawn different inferences more favorable to the [appellant] and rendered a verdict in its 

favor on the issues as to which it was misinstructed." (Ibid.) 

B. The instructions proposed and given

Consistent with the parties' various theories and respective claims, TMO proposed 

different instructions relating to the issues of waiver and ratification. As to the latter, it 

proffered the following instruction, in relevant part: "In order to find that [TMO] ratified 

Flynn's and/or Solutions' fraud in procuring the agreements with Solutions, Solutions and 

Flynn must prove by clear and convincing evidence: [¶] 1. That [TMO] had full 

knowledge of the essential facts constituting the fraud; and [¶] 2. That [TMO] engaged in 

some unequivocal act such as accepting substantial benefits not required by the original 

contract that indicated its intention to stand on the contract, and to give up or waive any 

claim for fraud." 

With respect to the statute of limitations, TMO asked the trial judge to instruct the 

jury that it could find the statutory period began running when TMO was on inquiry 

notice of the facts, meaning "1. 'That [TMO] had knowledge of circumstances that would 

have made a reasonable person suspicious of the acts and conduct of Michael Flynn and 

Solutions; and [¶] "1. That inquiry thereon, if followed, would have led to knowledge of 

the essential facts giving rise to [TMO's] claims. . . . When you decide whether a 
96 

reasonable person would have been suspicious of the acts and conduct of Michael Flynn 

or Solutions, you must take into account the relationship between [TMO] and Michael 

Flynn. If you find that Michael Flynn owed a fiduciary obligation to [TMO] then [TMO] 

had the right to rely on the representations of Michael Flynn and to place trust and 

confidence in Michael Flynn to disclose all important facts with regard to the transactions 

with Solutions within his knowledge." TMO also proposed the following instruction: 

"Even if you conclude that [TMO] had suspicions, or reasonably should have had 

suspicions of Michael Flynn's alleged conflict of interest, . . . the statute of limitations 

did not commence at such time if you find that Michael Flynn and/or Solutions hindered 

[TMO's] discovery of essential facts giving rise to [TMO's] claims by misrepresenting or 

concealing important facts." 

Finally, with respect to its rescission claims, TMO proposed the following 

instruction: 

"A party may waive a right to cancel a contract if, after full 

discovery of the facts giving rise to the right to cancel, that party 

takes steps to affirm the contract. The party's words and acts must 

indicate that the party has made a definite choice to affirm the 

contract in spite of knowing all the facts on which he or she might be 

entitled to cancel the contract. [¶] Waiver does not necessarily 

follow from the fact that plaintiff continued to make contract 

payments to defendant after discovering the facts giving rise to 

plaintiff's claim. You must consider the duration of the payments 

and the circumstances under which they were made. [¶] Waiver may 

not occur if the acts of waiver are themselves caused by fraud or 

other improper conduct. [¶] If you find that Flynn or Solutions owed 

[TMO] a fiduciary duty, you may not find that [TMO] waived the 

right to cancel the contract if Michael Flynn or Solutions improperly 

induced [TMO] to waive the right to cancel the contract against 

[TMO's] better judgment. Michael Flynn and Solutions must have 

fully disclosed all important facts before obtaining [TMO's] waiver, 
97 

and Michael Flynn and Solutions must not have used [TMO's] trust 

and confidence in them to cause [TMO] to waive [TMO's] rights." 

 Plaintiff's proposed instruction regarding ratification reads, in relevant part: 

"Ratification of a voidable contract is to be determined by 

consideration of the party's declarations, acts, and/or his conduct. If 

a party is on notice of circumstances that would put a reasonable 

man on notice that he has grounds to void a contract, and the party 

intentionally fails to investigate these grounds, he or it is charged 

with having ratified the contract. [¶] If a party amends the original 

contract after it claims to have discovered an alleged fraud, the 

affirmance of the original contract by amendment is equivalent to a 

ratification." 

 Plaintiffs also proffered the following instruction on rescission: "A party waives 

its right to rescind a fraudulent contract if he acts in [] such a way as to indicate an intent 

to abide by the contract. Such acts include, but are not limited to: [¶] 1.) accepting 

payments under the contract; [¶] 2.) making payments under the contract; [¶] 3.) 

continuing to perform under the contract; [¶] 4.) continuing to accept the benefits under 

the contract; and/or [¶] 5) entering into new arrangements or engagements concerning the 

subject matter of the contract to which the fraud applies[.] [¶] If a party is on notice of 

circumstances that would put a reasonable man on notice that he has grounds to void a 

contract, and the party intentionally fails to investigate these grounds, he or it is charged 

with having waived the right to rescind the contract." 

 Ultimately, the trial court gave the jury only one instruction pertinent to waiver 

and ratification, entitled "Waiver of Right to Cancel, Effect of Confidential Relationship 

on Waiver." This instruction essentially was a hybrid of the parties' proposed instructions 

on waiver of the right to rescind and ratification. The court instructed the jury as follows: 
98 

"A party may waive a right to cancel a contract if, after full 

discovery of the facts giving rise to the right to cancel, that party 

takes steps to affirm the contract. The party's words and acts must 

indicate that the party has made a definite choice to affirm the 

contract in spite of knowing all the facts on which he or she might be 

entitled to cancel the contract. [¶] Waiver does not necessarily 

follow from the fact that plaintiff continued to make contract 

payments to defendant after discovering the facts giving rise to 

plaintiff's claim. You must consider the duration of the payments 

and the circumstances under which they were made. [¶] Waiver may 

not occur if the acts of waiver are themselves caused by fraud or 

other improper conduct. [¶] A party waives its right to rescind a 

fraudulent contract if it acts in such a way as to indicate an intent to 

abide by the contract. If a party is on notice of circumstances that 

would put a reasonable man on notice that he has grounds to void a 

contract, and the party intentionally fails to investigate these 

grounds, he or it is charged with having waived his right to rescind 

the contract." 

The court gave additional instructions on rescission, including an instruction 

setting forth the general discovery rule as applied to the time limits for filing a rescission 

claim. The court also provided instructions regarding the statute of limitations on TMO's 

fraud claims against Solutions and Flynn, and breach of fiduciary duty claim against 

Flynn, including the statement that even if those claims were filed outside the time set by 

law, they were "still filed on time, if TMO proves that before that date, it did not discover 

facts constituting the fraud, and with reasonable diligence could not have discovered 

those facts." The court gave no separate instruction, however, on ratification, except to 

remind the jury that both ratification and waiver must be proved by clear and convincing 

evidence. The trial court also refused to give TMO's separate proposed instruction 

regarding inquiry notice, as well as its proposed instructions regarding the impact of 

Flynn's fiduciary duties or his concealment of the fraud on the accrual or waiver of 
99 

TMO's claims. TMO objected to the court's refusal to give these proposed instructions, 

as well as to the absence of a separate ratification instruction and the manner in which the 

court modified the proposed instruction regarding waiver of the right the rescind.26

 The special verdict form asked the jury to make separate findings on the parties' 

various claims as follows. In connection with Solutions's affirmative claim under the 

Caltrans Agreement, the verdict form required the jury to determine whether (1) TMO 

breached that agreement; (2) Solutions was harmed by that breach; (3) the agreement was 

procured by fraud; and (4) TMO ratified the agreement. In connection with Solutions's 

affirmative claims under the SMA for an accounting the verdict form required the jury to 

determine whether (1) Solutions was entitled to an accounting; (2) the SMA was 

procured by fraud; and (3) TMO ratified the SMA. 

In connection with TMO's affirmative claims for rescission of the SMA, SLA and 

Caltrans Agreement, the verdict form required the jury to determine whether (1) TMO 

was entitled to rescind those agreements; (2) TMO waived its right to rescind those 

agreements; (3) TMO ratified those agreements; and (4) TMO's claims for rescission 

were barred by the statute of limitations. In connection with TMO's affirmative claims 

for fraud against Flynn and Solutions, the verdict form required the jury to determine 

 

26 In view of TMO's objections and the instructions it proposed, which we have 

summarized here, we reject plaintiffs' assertion that TMO invited the instructional error 

of which it now complains. Contrary to plaintiffs' argument, TMO proposed a specific 

instruction on ratification that included the necessity of finding some affirmative conduct 

indicating affirmance of the fraudulent contract. Additionally, although the trial court 

used some of the language proposed by TMO in its principal "waiver" instruction, there 

is no support for plaintiffs' contention that TMO "invited" the trial court to use that 

language in the way it ultimately used it and presented it to the jury. 
100 

whether (1) Flynn and Solutions made false representations that were reasonably relied 

on by TMO; (2) reliance was a substantial factor in causing harm to TMO; (3) TMO 

waived its claim for fraud; (4) TMO ratified the fraud; and (5) the fraud claims were 

barred by the statute of limitations. Finally, in connection with TMO's affirmative 

constructive fraud and breach of fiduciary duty claims against Flynn, the jury was 

directed to determine whether (1) Flynn owed TMO or its predecessors a fiduciary duty; 

(2) he violated that duty; (3) TMO was harmed by Flynn's "misleading conduct;" 

(4) TMO waived its claims or ratified Flynn's breach; and (5) TMO's claims were barred 

by the statute of limitations. 

C. The court's hybrid instruction on waiver and ratification was 

erroneous and prejudicial 

 Once the jury concluded that the subject agreements had been procured by fraud, 

Solutions could recover on its affirmative claims only if it proved that TMO or its 

predecessors ratified that fraud.27 As we discussed above, ratification required proof that 

(1) TMO had full knowledge of the essential facts of the fraud; and (2) that it engaged in 

some unequivocal conduct (such as obtaining concessions or additional benefits from 

Solutions) demonstrating an intention to stand on the contract. (Oakland Raiders, supra, 

144 Cal.App.4th at pp. 1192-1193.), citing Schmidt v. Mesmer, supra, 116 Cal. at p. 271.) 

 

27 TMO's fraud defense, if successful, would itself prevent Solutions from enforcing 

the agreements. No statute of limitation or laches doctrine bars the assertion of fraud 

purely as a defense to a breach of contract action. (Styne v. Stevens (2001) 26 Cal.4th 42, 

51 ["Under well-established authority, a defense may be raised at any time, even if the 

matter alleged would be barred by a statute of limitations if asserted as the basis for 

affirmative relief."].) 
101 

The trial court, however, did not so instruct the jury. Instead, it incorrectly instructed the 

jury that it could find ratification based not on TMO's' full knowledge of the relevant 

facts, as the law requires, but merely on evidence that it had inquiry notice of fraud. 

 Furthermore, the trial court failed to include a specific instruction that, in addition, 

to full knowledge, there must be evidence that TMO or its predecessors engaged in some 

conduct that unequivocally demonstrated an intent to stand on the agreements. The key 

inquiry is whether the defrauded party's actions after discovery of the fraud (e.g., making 

concessions or granting additional benefits) induced the other party to change its position 

to its detriment. (Oakland Raiders, supra, 144 Cal.App.4th at p. 1190.) We recognize 

that the court's hybrid instruction included the statement that "[t]he party's words and acts 

must indicate that the party has made a definite choice to affirm the contract in spite of 

knowing all the facts on which he or she might be entitled to cancel the contract." This 

statement, standing alone, arguably was sufficient to convey the necessity of finding that 

TMO engaged in conduct indicating a definitive choice to affirm the contract. (See, e.g., 

Hyatt, supra, 79 Cal.App.3d at p. 335 [instruction is sufficient if it "correctly gives the 

substance of the law"].) The problem, however, is that the court's hybrid instruction also 

inconsistently and incorrectly informed the jury that it could find ratification based on 

evidence of inquiry notice, stating: "If a party is on notice of circumstances that would 

put a reasonable man on notice that he has grounds to void a contract, and the party 

intentionally fails to investigate these grounds, he or it is charged with having ratified the 

contract." The instruction, viewed as a whole, did not clearly and separately lay out the 

requirements for ratification and waiver of the right to rescind. 
102 

The trial court is obligated to provide "correct, nonargumentative instructions on 

every theory of the case" advanced by the litigants which are supported by substantial 

evidence. (Soule, supra, 8 Cal.4th at p. 572.) In this case, there were multiple theories of 

liability implicating varying concepts of ratification and waiver, and the special verdict 

form asked separate questions regarding each one. The trial court, however, provided the 

jury with only one instruction that was, in essence, an amalgam of these concepts. The 

instruction was not an accurate statement of the law regarding waiver of the right to 

rescind because it permitted the jury to find that if TMO merely had notice of facts 

raising suspicions about Flynn and failed to investigate, it waived its right to rescind, 

rather than expressly and clearly stating that only a party who continues to perform under 

and accept the benefits of a contract with full knowledge of the essential facts giving rise 

to the fraud claim may be deemed to have waived the right to rescind. (See Palmquist, 

supra, 212 Cal.App.2d at p. 331.) Additionally, the trial court failed to provide a 

separate, correct instruction regarding the two critical elements of ratification, namely, 

full knowledge of the fraud, and unequivocal acts demonstrating an intent to abide by the 

original contract. (Oakland Raiders, supra, 144 Cal.App.4th at p. 1186.) 

As we discussed, the court's instructional error was prejudicial because it allowed 

the jury to find TMO ratified the fraud and waived the right to rescind the subject 

contracts despite there being no substantial evidence that TMO's predecessors had the 

necessary full and actual knowledge of Flynn's fraud to support those findings. The jury's 

findings of waiver and ratification prejudiced both TMO's defense against Solutions's 

affirmative claims and its prosecution of its own affirmative claims. 
103 

Our review of the factors to be considered in determining whether instructional 

error is prejudicial – other instructions, the arguments of counsel, and the state of the 

evidence (Soule, supra, 8 Cal.4th at p. 580-581) – provides no comfort that the 

misleading effect of the erroneous instruction in this case was mitigated. The fact that the 

instruction, which included the "inquiry notice" standard, also used the phrase "in spite of 

knowing all the facts", did not cure the problem. We agree with TMO that a reasonable 

jury, having found sufficient evidence to support the more lenient "inquiry" standard, 

would not then deem it necessary to determine whether the "full knowledge" standard 

was also met. Indeed, because no separate ratification instruction was provided, the jury 

had no reason to consider whether the evidence showed TMO had full knowledge of the 

essential facts of the fraud and whether, with that knowledge, it engaged in some 

unequivocal act indicating its intent to affirm the agreements. 

Plaintiffs contend that any error in failing to give an instruction on ratification was 

harmless because TMO's counsel emphasized during closing argument the lack of 

evidence that TMO had full knowledge of Flynn's fraud. However, plaintiffs' counsel, in 

his closing remarks, argued that both ratification and waiver could be found simply on 

the basis of evidence that TMO was on notice of the fraud. At best, these contrasting 

arguments canceled each other out and left the jury with the court's instruction, which 

was both internally inconsistent and erroneous as to the legal theory it nominally was 

intended to address – i.e., waiver of the right to rescind. 
104 

III. 

Solutions's Master Site Files Claim Was Untimely Filed 

 TMO contends the trial court abused its discretion in allowing Solutions to assert a 

new claim on the eve of trial for the value of certain master site files that TCG had 

delivered to TMO. In the third cause of action of its cross-complaint, Solutions alleged 

that it had "delivered . . . goods and/or services to [TMO]," which TMO refused to pay 

for, "so as to entitle Solutions to recovery of the agreed-upon value of the unpaid goods 

and/or services." This cause of action incorporated by reference allegations that TMO 

had failed to remit fees under the Caltrans Agreement, and that it also owed Solutions 

management fees under the SMA for various colocation sites involving SpectraSite. In 

its October 2009 trial brief, however, Solutions added another theory of recovery. In 

addition to seeking $2.665 million in unpaid rent and management fees, Solutions alleged 

it was entitled to be paid for the value of master site files that TCG had delivered to TMO 

after TMO's acquisition of various assets from Cingular. Those files, Solutions asserted, 

were critical to the operation of the newly acquired network, and as consideration for 

their delivery to TMO, it was understood that TMO would retain TCG to do site 

acquisition work for TMO. TMO assigned little or no work to TCG, and never returned 

the master site files. Solutions claimed the files had a value of $5 million. It is 

undisputed that Solutions formally propounded this theory of recovery for the first time 

in its October 2009 trial brief, although the record indicates that TMO had been on notice 

of this potential claim at least as of January 2007. 
105 

At trial, Solutions presented evidence that it was owed $1,280,613.35 in unpaid 

management fees under the SMA. It also argued that the site files were valued at 

between $8 million and $15 million. The jury ultimately awarded Solutions a total of 

$1,780,613.35 on its goods and services claim. Based on this verdict, TMO argues the 

jury awarded Solutions exactly $500,000 for the master site files.28 TMO raises a 

number of challenges to this jury award, including that the trial court abused its discretion 

in permitting Solutions to belatedly amend its goods and services cause of action to 

include this claim, that Solutions has no standing to assert the claim, and that the 

applicable statute of limitations bars the claim. 

 We agree with TMO's contention that the site files claim is untimely. A claim in 

quantum meruit for goods delivered or services rendered, not founded upon a written 

contract, must be brought within two years.29 (Code Civ. Proc. § 339 [action upon an 

"obligation . . . not founded upon an instrument of writing"]; see Maglica v. Maglica

(1998) 66 Cal.App.4th 442, 453.) Solutions's cause of action accrued upon TMO's 

alleged breach in failing to provide the consideration agreed upon for the files, which was 

TMO's assigning site acquisition work to Services (or TCG). (See Spear v. California 

 

28 Although Solutions's goods and/or services cause of action ostensibly included 

rents amounts owed under the Caltrans Agreement, the jury separately awarded Solutions 

$114,400.96 for its claim under the Caltrans Agreement. At trial, Solutions's counsel 

asked the jury to award "$1,159,865.19 for Solutions' damages under the [SMA] plus its 

current damages for a total of $1,280,613.35. . . . And that would be part of the . . . goods 

and services sold and delivered cause of action." 

29 Notwithstanding Solutions's assertion that the site-files dispute stems from a 

written agreement between TMO, Services and TCG , Solutions does not purport to base 

its goods and services claim on that written document. 
106 

State Automobile Assn. (1992) 2 Cal.4th 1035, 1040 [statute of limitations does not begin 

to run until " 'the last element essential to the cause of action' " occurs].) The parties set 

no time limits for TMO's completed performance under the alleged May 2005 agreement. 

However, the evidence shows that Flynn knew by July 2005 that the "work and payment 

for the files . . . has not been forthcoming." Thereafter, he attempted to negotiate a 

resolution by proposing that Services perform alternative site development work for 

TMO. Those discussions eventually broke down and Solutions contends this occurred 

"sometime after September 14, 2005," but no specific date has been identified. 

 We conclude that the statute of limitations on any goods and services claim related 

to the master site files began running in July 2005, when it became clear that TMO was 

not complying with the parties' original understanding. After that point, the parties began 

discussing a different arrangement, but there is no evidence that Flynn or any of his 

companies obtained a tolling agreement from TMO regarding any claim it might have for 

the value of the files it already had delivered. In these circumstances, the time period for 

filing any such claim would have expired sometime in July 2007, or two years from 

Flynn's discovery of TMO's breach. (Code Civ. Proc. § 339, subd. (1).) Even if we were 

to give Solutions the benefit of the doubt and conclude that the statute did not begin 

running until the parties' subsequent negotiations broke down, the time for filing the site 

files claim would have expired in late 2007 or early 2008. 

 Solutions filed its cross-complaint in August 2007. Even if the statute of 

limitations applicable to the site files claim had not run by then, the claim is time-barred 

because Solutions's cross-complaint did not mention the master site files dispute and 
107 

cannot be deemed to even remotely encompass that claim. The facts underlying the 

goods and services claim in Solutions's cross-complaint concern solely unpaid rents and 

management fees allegedly due under the Caltrans Agreement and the SMA. Solutions 

does not dispute this. It first asserted its master site files claim on the eve of trial in 

October 2009, well beyond the two-year limitation period even by Solutions's reckoning. 

Over TMO's objections, the trial court, in its discretion, allowed this claim to go to the 

jury, effectively permitting Solutions to amend its cross-complaint to conform to the 

evidence. (See Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1378 [the " 'allowance 

of amendments to conform to the proof rests largely in the discretion of the trial court' "].) 

However, Solutions cites no authority for the proposition that the court may allow 

such an amendment to add a new theory of recovery arising from entirely new facts, 

when that claim, had it been brought in the normal course at that juncture, would be 

barred by the statute of limitations. The question arises whether the site files claim 

related back to the original pleading ─ i.e., Solutions's cross-complaint. " 'The relationback doctrine requires that the amended complaint must (1) rest on the same general set 

of facts, (2) involve the same injury, and (3) refer to the same instrumentality, as the 

original one. [Citations.]' " (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 

235, 244.) Solutions's master site files claim meets none of these criteria. The only 

common thread between the original cross-complaint and the amended claim allowed at 

trial is that the latter was characterized as a claim for "goods delivered and/or services 

rendered." We conclude that Solutions's claim for recovery of the value of the master site 

files is barred by the statute of limitations and therefore not subject to retrial. 
108 

IV. 

Solutions Is Not Entitled to Quantum Meruit Recovery for 

Goods and Services Rendered Under the SMA 

Our conclusion that Solutions's master site files claim in time barred requires 

reversal of the entire award to Solutions on its goods and services claim. Apart from its 

time-barred master site files claim, the only recovery Solutions sought at trial under its 

goods and services claim was $1,280,613.35 in unpaid management fees under the 

SMA.30 The jury awarded that precise amount plus $500,000 (attributable to the master 

site files claim), for a total of $1,780,613.35 on Solutions's goods and services claim. 

The portion of the goods and services award attributable to the SMA is subject to reversal 

because it is tainted by the same fraud that renders the SMA void. 

The purpose of quantum meruit recovery through a common count for goods and 

services provided is to prevent unjust enrichment.31 (See Jogani v. Superior Court 

(2008) 165 Cal.App.4th 901, 906-907, 911; Hedging Concepts, Inc. v. First Alliance 

Mortgage Co. (1996) 41 Cal.App.4th 1410, 1419 ["A quantum meruit or quasicontractual recovery rests upon the equitable theory that a contract to pay for services 

rendered is implied by law for reasons of justice."]; Palmer v. Phillips (1954) 123 

 

30 Solutions did not sue TMO for breach of the SMA; it sought recovery against 

TMO under the SMA solely through its common count (quantum meruit) cause of action 

for goods and services delivered. 

31 Unjust enrichment, which is synonymous with restitution, is a general 

principle that underlies various legal doctrines and remedies, including 

quantum meruit. (McBride v. Boughton (2004) 123 Cal.App.4th 379, 387-388, 

388 fn. 6.) 
109 

Cal.App.2d 291, 295.) However, a party on whom a benefit is conferred because of 

another's wrongful conduct is not "unjustly" enriched at the wrongdoer's expense and, 

therefore, is not required to make restitution. (Stein v. Simpson (1951) 37 Cal.2d 79, 86.) 

To be entitled to restitution, a plaintiff must not only show it conferred a benefit on the 

defendant but also that it would be unjust for the defendant to retain the benefit. 

(California Federal Bank v. Matreyek (1992) 8 Cal.App.4th 125, 131.) It is not unjust for 

the innocent party to a fraudulently induced contract to retain benefits conferred by the 

fraudulent party. (Ibid. [" '[A] person is entitled to the benefit of a bargain made by him 

without fraud or duress.' " (Italics added.).] 

The jury expressly found that the SMA was procured by fraud. However, in 

awarding Solutions the damages it sought under the SMA on its goods and services 

claim, the jury found that the goods and services rendered by Solutions were not "the 

subject of fraud[.]" The latter finding is irreconcilably inconsistent with the former and 

presumably is related to the jury's finding that TMO ratified the SMA, which finding, as 

we discussed, is the result of an erroneous jury instruction and is not supported by 

substantial evidence. In any event, we conclude the portion of the goods and services 

award attributable to the SMA must be reversed based on (1) the jury's finding that the 

SMA was procured by fraud, (2) the trial court's 2007 ruling that the SMA is void for 

fraud in the inducement, (3) the lack of substantial evidence that TMO waived or ratified 

the fraud, and (4) the fact that Solutions sought $1,280,613.35 under the SMA and the 

jury awarded that amount (plus $500,000 on Solutions's time-barred site files claim) on 

Solutions's goods and services cause of action. Solutions is not entitled to recover in 
110 

quantum meruit for goods and services provided as a result of Flynn's fraud. (Stein v. 

Simpson, supra, 37 Cal.2d at p. 86; California Federal Bank v. Matreyek, supra, 8 

Cal.App.4th at p. 131.) 

V. 

The Trial Court's Order Regarding the Interpleaded Funds 

 During the pendency of this action, Solutions filed two cross-complaints in 

interpleader, alleging that it was in possession of certain funds to which Services, 

Cingular and TMO all laid claim, and that except for offsets to which it may be entitled, 

Solutions disavowed any interest in these funds. The interpleaded funds, totaling almost 

$563,000, represented fees collected by Solutions under the SMA for so-called 

"Discontinued Activities." These funds were deposited with the court pending further 

proceedings. After conclusion of the trial, the trial court ordered, over TMO's objection, 

that the funds be returned to Solutions. On appeal, TMO contends it is entitled to the 

funds because they represent rents paid by tenants under colocation agreements that 

would have been paid to TMO but for Services's invalid claim to management fees under 

the SMA. Solutions did not respond to TMO's contention. 

 From the outset, Solutions disavowed any interest in these funds except for any 

offsets to which it might be entitled, and it does not argue here that it was entitled to any. 

Solutions also admitted during the course of the litigation that the interpleaded funds 

represented monies it collected for "Discontinued Activities," which were those activities 

allocated to Services, not Solutions, under the 2002 Flynn/O'Neal Settlement. At trial, 

Solutions was allowed to prove, and the jury was permitted to consider, only those 
111 

damages Solutions might have incurred in connection with its "Retained Activities," as 

the trial court had granted TMO's motion in limine to preclude any attempt by Solutions 

to seek damages relating to "Discontinued Activities." 

On this record, we see no legal justification or factual support for releasing the 

interpleaded funds to Solutions. The proper course is for the trial court to retain the 

interpleaded funds pending resolution of TMO's affirmative claims, in particular, its 

cause of action against Services and Solutions for rescission of the SMA. The trial court 

will then have to determine whether those funds should be released in whole or part to 

TMO as restitution or make some other appropriate order as the circumstances warrant. 

Accordingly, we will reverse and vacate the trial court's order releasing the interpleaded 

funds to Solutions and order that those funds be redeposited with and held by the trial 

court pending further proceedings. 

VI. 

TMO's Other Contentions 

 TMO contends that the trial court erred by not including certain prior dispositions 

and the jury's declaratory relief finding (that the SMA was terminated as of December 1, 

2003) in the judgment, and by issuing a judgment that was unclear as to the disposition of 

Services's claims. These issues are moot in light of our reversal of the judgment on the 

jury's verdict. After the disposition of TMO's remaining affirmative claims, the trial 

court must enter a judgment that is final as between TMO and Services, Solutions, and 

Flynn. TMO may propose a judgment that accurately reflects the disposition of all of the 

claims between the parties. 
112 

 TMO also contends that court erred in determining that Solutions, Services, and 

Flynn were prevailing parties entitled to costs and abused its discretion in awarding costs 

for video exhibits and deposition testimony. This issue is also moot because our reversal 

of the judgment in favor of Solutions, Services, and Flynn includes reversal of the cost 

award. The issues of prevailing party status, entitlement to costs, and the amount of costs 

will have to await further proceedings in the trial court. 

VII. 

Effect of Reversal of the Judgment on the Jury Verdict

 Generally, "[t]he effect of an unqualified reversal is to vacate the judgment and 

leave the case 'at large' for further proceedings, including retrial, as if it had never been 

tried and no judgment had been entered." (Saller v. Crown Cork & Seal Co., Inc. (2010) 

187 Cal.App.4th 1220, 1237-1238.) However, because as to Solutions's affirmative 

claims, our reversal of the judgment on the jury's verdict is based on insufficiency of the 

evidence to support the verdict, we will direct the trial court to enter judgment against 

Solutions and in favor of TMO on those claims. As the Court of Appeal stated in McCoy 

v. Hearst (1991) 227 Cal.App.3d 1657, "when the plaintiff has had a full and fair 

opportunity to present his or her case, a reversal of a judgment for the plaintiff based on 

insufficiency of the evidence should place the parties, at most, in the position they were 

in after all the evidence was in and both sides had rested. A judgment for the defendant 

would then be entered, and a new trial permitted only for newly discovered evidence. 

[Citation.] A new trial under such circumstances is governed by the law of the case 

doctrine . . . , and the law of the case doctrine applies to an appellate decision on the 
113 

sufficiency of the evidence. [Citation.] 'The question whether the evidence in the record 

in a defamation case is sufficient to support a finding of actual malice is a question of 

law.' [Citations.] Consequently, retrying the case on the same evidence is a needless 

exercise, since the law of the case would compel another decision for the defense." 

(McCoy v. Hearst Corp., supra, 227 Cal.App.3d at pp. 1661-1662.) 

In Cardinal Health 301, Inc. v. Tyco Electronics Corp. (2008) 169 Cal.App.4th 

116, this court similarly held that where "the plaintiff had a 'full and fair opportunity' to 

present the supporting evidence, and the evidence was insufficient as a matter of law to 

support a damage award, a reviewing court may strike the award without ordering a 

retrial." (Id. at p. 153; accord, Frank v. County of Los Angeles (2007) 149 Cal.App.4th 

805, 833-834 [judgment for plaintiffs reversed for insufficiency of the evidence with 

direction that judgment be entered in favor of defendant].) In Kelly v. Haag (2006) 145 

Cal.App.4th 910, this court reversed a punitive damages award based on insufficiency of 

the evidence and concluded that remand for a retrial on the issue of punitive damages was 

not warranted because the plaintiff had a full and fair opportunity to present his case for 

punitive damages. (Id. at pp. 919-920.) 

 Likewise, in the present case we conclude that a new trial on Solutions's 

affirmative claims is not warranted because Solutions a full opportunity to present its 

evidence. Accordingly, we will direct entry of judgment in favor of TMO on those 

claims. 
114 

CINGULAR'S APPEAL 

Cingular and its co-appellant related entities CA/NV Tower Holdings, LLC; GSM 

Facilities, LLC; SBC (i.e., SBC Communications, Inc.); SBC Holdings; and SBC 

Wireless (collectively, the Cingular entities) contend the trial court erred in failing to 

determine that they are prevailing parties and thus entitled to costs under Code of Civil 

Procedure section 1032, subdivision (a)(4). We agree. 

Cingular was initially sued by Solutions, Services, Infrastructure Solutions, LLC., 

TCG, and Flynn (the Flynn entities). The Cingular entities, except SBC, were named as 

defendants in the Flynn entities' first amended complaint, along with TMO's Pacific Bell 

predecessors.32 The Cingular defendants demurred to the first amended complaint and 

the court sustained the demurrer without leave to amend as to the seventh cause of action 

for defamation asserted by Services, Flynn, and TCG against Cingular. That ruling 

eliminated claims by Flynn and TCG against any Cingular entities until Flynn filed his 

unsuccessful cross-complaint against Cingular.33

 

32 The Pacific Bell entities named in the amended complaints were Pacific Bell 

Mobile Services and Pacific Bell Wireless, LLC. Plaintiffs alleged those entities were 

controlled by Cingular and that Cingular was their alter ego. 

33 Although Infrastructure Solutions, LLC is named in the caption of the first 

amended complaint, it is not identified as a plaintiff in any of the causes of action in the 

body of the pleading. 
115 

Solutions and Services filed a second amended complaint against the Cingular 

entities, except SBC, and Pacific Bell entities.34 The court sustained Cingular's demurrer 

to the second amended complaint without leave to amend as to causes of action for 

intentional interference with contractual relations (third and fourth causes of action) and 

intentional interference with prospective economic advantage (fifth and sixth causes of 

action). The court overruled Cingular's demurrer as to the second cause of action for 

breach of the SLA, and sustained the demurrer with leave to amend as to the seventh 

cause of action for violation of the Cartrwright Act. 

Solutions and Services filed a third amended complaint against TMO, the Cingular 

entities (except SBC), and Pacific Bell entities that included a first cause of action by 

Solutions for breach of the SMA against all defendants, a second cause of action for 

breach of the SLA by Services against all defendants, and a third cause of action for 

violation of the Cartwright Act by Services against Cingular. The court sustained TMO's 

demurrer to the first cause of action with leave to amend and overruled Cingular's 

demurrer to the third cause of action. 

 

34 Only Solutions and Services asserted causes of action in the second amended 

complaint. 
116 

 As noted, only Services asserted causes of action against the defendants named in 

the fourth amended complaint, who included the Cingular entities (except SBC), Pacbell, 

and PBMS. Services alleged the following causes of action: a first cause of action 

against all defendants for breach of the SMA as to Solutions's rights thereunder, which 

allegedly were assigned to Services; second cause of action against all defendants for 

breach of the SLA; and third cause of action against Cingular for violation of the 

Cartwright Act. The trial court (Judge Enright) granted Cingular's and TMO's motions 

for summary judgment on the entire fourth amended complaint and we are affirming that 

ruling.35

Cingular filed a first amended cross-complaint that included a cause of action 

against Solutions for breach of the SMA, a cause of action against Services for tortuous 

interference with the SMA, and causes of action against both Solutions and Services for 

declaratory relief regarding the SMA, and fraud. As noted, the court granted Solutions 

and Services's motion for motion for summary adjudication of the second cause of action 

against Services for tortious interference with contract, based on Cingular's statement that 

it would not pursue that claim. The court summarily adjudicated Cingular's fraud cause 

of action in favor of Services for lack of evidence that Services itself made any 

misrepresentations. Cingular's claims for breach of the SMA and declaratory relief were 

rendered moot by the court's 2007 order granting summary judgment against Services's 

 

35 As noted, Cingular's motion was brought by all of the Cingular entities except 

SBC. (Fn. 8, ante.) 
117 

on its fourth amended complaint. Before trial, Cingular dismissed its sole remaining 

cause of action against Solutions and, consequently, was not a party at trial. 

Services filed a cross-complaint against Cingular, the three SBC entities (SBC, 

SBC Holdings, and SBC Wireless), and TMO for fraud, breach of contract (the 

settlement agreement in the TCG v. Cingular action), and contractual indemnity. 

Cingular and the SBC entities filed a demurrer to Services's cross-complaint. As to the 

SBC entities, the court sustained the demurrer without leave to amend. As to Cingular, 

the court sustained the demurrer without leave to amend as to the first and third causes of 

action and overruled the demurrer as to the second cause of action for breach of the 

settlement agreement. The court later granted Cingular's motion for summary judgment 

on the remaining second cause of action, thereby disposing of Services's cross-complaint 

entirely as to Cingular. Flynn filed a cross-complaint against Cingular asserting a single 

cause of action for "breach of settlement agreement," and the court granted Cingular's 

motion for summary judgment on that cross-complaint. Thus, the Flynn entities obtained 

no relief through any of their complaints or cross-complaints against any of the Cingular 

entities, and Cingular obtained no relief through its cross-complaints. 

By law, "a prevailing party is entitled as a matter of right to recover costs in any 

action or proceeding." (Code of Civ. Proc., § 1032, subd. (b), italics added.) A 

"prevailing party" is one: (1) "with a net monetary recovery;" (2) "a defendant in whose 

favor a dismissal is entered;" (3) "a defendant where neither plaintiff nor defendant 

obtains any relief;" or (4) "a defendant as against those plaintiffs who do not recover any 

relief against that defendant." (Code Civ. Proc., § 1032, subd. (a)(4).) When cross-
118 

complaints are filed, either the cross-complainant or the cross-defendant may be deemed 

the "prevailing party" depending on the outcome of the main claims and cross-claims 

involving those parties. (See 7 Witkin, California Procedure (5th ed. 2008) Judgment 

§ 90, p. 627; see also id., § 93, p. 633 (Witkin Procedure); Schrader v. Neville (1949) 

34 Cal.2d 112, 115 ["Although the defendant did not recover on her cross-complaint, she 

was the prevailing party in the court below because plaintiff was denied recovery against 

her."]; accord, Cussler v. Crusader Entertainment, LLC (2012) 212 Cal.App.4th 356, 

371-372.) 

The statute clearly provides that the court must award costs to a party that falls 

within one of the foregoing categories. The court's discretion does not come into play 

unless the case involves the award of nonmonetary relief, or presents a "situation[] other 

than those specified." (Code Civ. Proc., § 1032, subd. (a)(4).) "If a party fits into one of 

the definitions of 'prevailing' . . . that party is entitled as a matter of right to recover costs. 

[Citation.] In other situations, the prevailing party is determined by the court and the 

award of costs is discretionary." (Witkin Procedure, supra, § 88, p. 626; accord, Acosta 

v. SI Corp. (2005) 129 Cal.App.4th 1370, 1375-1376.) We therefore reject plaintiffs' 

suggestion that a trial court may use its discretion to determine the "prevailing party" 

without first determining that costs may not be awarded as a matter of right. 
119 

Here, the Cingular entities were prevailing parties under Code of Civil Procedure 

section 1032, subdivision (a)(4) because each was a defendant or cross-defendant in 

whose favor a dismissal is entered,36 a defendant where neither plaintiff nor defendant 

obtains any relief, or a defendant as against those plaintiffs who do not recover any relief 

against that defendant. (Code Civ. Proc., § 1032, subd. (a)(4).) Consequently, they are 

entitled to costs under the statute. (Code Civ. Proc., § 1032, subd. (b).) 

Cingular suggests that the court's failure to designate the Cingular entities as 

prevailing parties is due in part to its decision to omit any reference to them in the final 

judgment. We note, however, that the trial court has discretion to enter a separate 

judgment in favor of the Cingular entities before disposition of all issues between TMO 

and the other parties and entry of a final judgment as to those parties. " 'It is well settled 

that where . . . there is a judgment resolving all issues between a plaintiff and one 

defendant, then either party may appeal from an adverse judgment, even though the 

action remains pending between the plaintiff and other defendants.' " (Oakland Raiders v. 

National Football League (2001) 93 Cal.App.4th 572, 578.) "[T]he trial court, in its 

discretion, may enter judgment in favor of one or more defendants when all issues 

between those defendants and the plaintiff have been adjudicated, even though the action 

remains pending against those defendants who have not obtained adjudication of all 

 

36 SBC appeared only as a cross-defendant in Services's cross-complaint and 

successfully demurred to the cross-complaint. Under Code of Civil Procedure section 

1032, subdivision (a)(2), the term "defendant" includes a cross-defendant. 
120 

issues." (Ibid.; Code Civ. Proc., § 579; see also Hydrotech Systems, Ltd. v. Oasis 

Waterpark (1991) 52 Cal.3d 988, 993, fn. 3; Nguyen v. Calhoun (2003) 105 Cal.App.4th 

428, 437; Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 430; Tinsley v. 

Palo Alto Unified School Dist. (1979) 91 Cal.App.3d 871, 880.) Thus, the Cingular 

entities may prepare and submit their own judgment that reflects the disposition of the 

various claims between them and plaintiffs, and the trial court has discretion to enter that 

separate judgment before the final disposition of TMO's affirmative claims against the 

plaintiffs. In whatever judgment the court ultimately enters to reflect the disposition of 

the claims between the Cingular entities and the Flynn entities, the court is directed to 

designate the Cingular entities as prevailing parties entitled to costs under Code of Civil 

Procedure section 1032. 

DISPOSITION 

The judgment on the jury verdict is reversed. In the judgment ultimately entered 

as between TMO and plaintiffs after disposition of TMO's affirmative claims, the court is 

directed to enter judgment against Solutions and in favor of TMO on Solutions's 

affirmative claims that were tried to the jury. The court is further directed to enter a 

judgment reflecting the disposition of the claims between the Cingular entities and the 

Flynn entities and designating the Cingular entities as prevailing parties entitled to costs 

under Code of Civil Procedure section 1032. The court's August 21, 2007 order granting 

TMO's and Cingular's motions for summary judgment on the plaintiffs' fourth amended 

complaint is affirmed. The trial court's January 21, 2009 order sustaining 
121 

defendants/cross-defendants' demurrer to the first cause of action for fraud in Services's 

cross-complaint without leave to amend is affirmed. The trial court's August 21, 2009 

order granting Cingular's motion for summary judgment on Flynn's cross-complaint is 

affirmed. The trial court's order directing that the interpleaded funds be returned to 

Solutions is reversed and vacated. The Cingular entities and TMO are awarded their 

costs on appeal. 

BENKE, Acting P. J. 

WE CONCUR: 

HUFFMAN, J. 

McINTYRE, J.