1

Filed 1/27/14 Bedi v. Dhaliwal CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

MOHINDER BEDI,

Plaintiff and Respondent,

v.

HARVINDER DHALIWAL et al.,

Defendants and Appellants.

 A135784, A137061

 (Contra Costa County

 Super. Ct. No. CIVMSC08-02167)

Mohinder Bedi and Harvinder Dhaliwal were minority and majority shareholders, 

respectively, of a closely held corporation which owned and operated a gas station. 

Dhaliwal managed the station and maintained all of its books. Bedi sued Dhaliwal and 

other corporations controlled by Dhaliwal (Defendant Corporations) for fraud and breach 

of fiduciary duty, among other causes of action, when he discovered that the 

corporation’s books were in disarray and that substantial funds were missing from the 

company. A jury awarded Bedi compensatory and punitive damages. The trial court 

denied Bedi’s alter ego liability claims against the Defendant Corporations.

Dhaliwal challenges the verdict, arguing that Bedi’s claims were properly 

derivative corporate causes of action rather than individual claims, that the court 

erroneously instructed the jury that it could award Bedi additional distributions and 

missing corporate funds based on a 30 percent pro rata share, and that the trial court erred 
2

in not instructing the jury on Dhaliwal’s statute of limitations defense. The Defendant 

Corporations challenge the court’s denial of their cost bill.1 We affirm.

I. BACKGROUND

A. Formation and Management of Kismat

Dhaliwal was a shareholder in eight closely held corporations, six that owned and 

operated gas stations (the gas station corporations), one that owned hotel properties, and 

one that owned an office building. Dhaliwal personally or jointly managed the finances 

of all of the gas station corporations and signed the income tax returns for each.

Kismat Associates, Inc. (Kismat), was formed in 1998 by Dhaliwal, Bedi, and 

another investor, Surjit Chhatwal. Kismat owned and operated a Chevron gas station in 

Fremont, California that also included a convenience store and a carwash. Dhaliwal held

a 55 percent ownership interest in Kismat (having made a $550,000 initial capital 

contribution), Bedi held a 30 percent interest ($300,000), and Chhatwal held a 15 percent

interest ($150,000).2 In January 1999, Kismat filed a statement with the California 

Secretary of State identifying its principal executive office as Dhaliwal’s residence in 

Danville; its directors as Dhaliwal and his wife, Bedi and his wife, and Chhatwal; and its 

officers as Dhaliwal (chief executive and chief financial officer), Dhaliwal’s wife 

(secretary), and Bedi and Chhatwal (co-vice presidents). The corporation’s bylaws 

required annual noticed shareholder meetings or written shareholder consent in lieu of 

such meetings.

In September 1999, the shareholders met at Dhaliwal’s residence. Dhaliwal 

described his management duties—cash handling, office management, and accounting 

 

1 Dhaliwal and the Defendant Corporations filed two notices of appeal. The first 

(No. 135784) was filed on June 21, 2012, following an April 17, 2012 “Judgment” 

entered on the jury verdict. The second (No. A137061) was filed on November 8, 2012, 

after a “Final Judgment” was entered on October 12, 2012. We consolidated the two 

appeals by order on December 26, 2012.

2 After Chhatwal’s death in 2001, his shares were cancelled and reissued to the 

Savinder K. Chhatwal Trust, and Chhatwal’s wife took Chhatwal’s place on the board of 

directors. We refer to these shareholders and directors interchangeably as Chhatwal.
3

(with an assistant manager handling day-to-day operations)—and proposed that he 

receive 20 percent of net profits to compensate him for those services. The shareholders 

approved the following resolution: “Resolved that the compensation to the managing 

partner for managing and operating the corporation will be 20 percent of the net profit of 

the corporation. After this compensation is paid, the remainder will be divided among all 

the partners in proportion to their share(s).” There were no subsequent amendments to 

the resolution.

No other board meetings or annual shareholder meetings took place between 1999 

and 2009. Bedi had no involvement in management of the company, with the exception 

of taking an inventory of the station property on the day Kismat took ownership in 

February 1999. Bedi regularly asked Dhaliwal how business was going and offered to 

help with the business, and Dhaliwal consistently assured him the business was going 

well and declined his assistance.

B. Cessation of Distributions and Meetings Between Bedi and Dhaliwal

From February 1999 through January 2007, Bedi consistently received monthly 

dividend or distribution checks from Dhaliwal, always in round numbers (multiples of 

$1,000). At the end of the year, he would receive a tax statement that matched the total 

distributions he had received during the year.

3

 Dhaliwal never explained how he 

calculated the dividends. Bedi trusted Dhaliwal, and he never saw a profit and loss 

statement for the company confirming that he was receiving his proportional share of the 

company’s net profits. From 1999 to about 2003, Bedi received between $3,000 and 

$6,000 a month; thereafter, he received $3,000 a month. When Bedi and his wife asked 

Dhaliwal why the amount of the distributions had decreased, Dhaliwal said he was 

building up the company’s cash reserves.

 

3 Kismat was a subchapter S corporation under the Internal Revenue Code, which 

meant the corporation’s net income or loss was reported as income and loss to each 

shareholder in proportion to the shareholder’s stock holdings. (1 Ballantine & Sterling, 

Cal. Corporation Laws (4th ed. 2013) § 60.01[2][d], pp. 4-11 to 4-12 (rel. 119-6/2013) 

(Ballantine & Sterling).) Kismat sent Bedi a Schedule K-1 form stating his share of the 

company’s income or loss.
4

In March 2006, Dhaliwal called the Bedis to a meeting to discuss the station’s 

carwash. They met in a “very plush” office in Blackhawk Plaza with two or three 

secretaries. A large sign outside identified it as the office of Dhaliwal and Associates,

and the Bedis understood that the office was for another business owned by Dhaliwal.4 

At the meeting, Dhaliwal recommended an upgrade of the carwash to eliminate existing

high maintenance costs and bring in more business to the station, increasing overall sales 

and enhancing the business’s resale value. He asked Bedi to invest another $48,000 to 

finance the upgrade. Bedi expressed surprise because he thought Dhaliwal had been 

building up the company’s cash reserves, and Dhaliwal explained that he had spent all of 

the reserves on maintenance of the old car wash. Dhaliwal did not allege that Kismat was 

unprofitable. Bedi agreed to invest an additional $48,000 and he did so in 2006, which 

was at a time when Dhaliwal was expanding his business holdings (Dhaliwal Enterprises, 

Inc., purchased two hotels in 2006 & 2007; Sidhwal Associates, Inc., purchased an office 

building in 2006).

In February 2007, Bedi did not receive a distribution check. When he called 

Dhaliwal to inquire, Dhaliwal was abrupt and rude and told him never to call him again 

about missing dividends. Dhaliwal said that he would call Bedi if he was not going to 

send dividends. Bedi received a check in March, but not in April. He did not call 

Dhaliwal because he did not want to upset him again. Payments resumed in May, but he 

received no check in November and again did not call. He received a check in 

December. When Bedi again received no payment in January 2008, he called Dhaliwal, 

who said business was down because the rains were very heavy. Bedi again offered to 

help manage the business, but Dhaliwal declined. After Bedi did not receive payments in 

 

4 Dhaliwal testified that he moved the administrative operations of all of the gas 

station corporations to the Blackhawk Plaza office in 2001. The official lessee of the 

office was Dhaliwal and Associates, which was why that corporation’s name was on the 

office nameplate. He did not formally notify the shareholders of the relocation of 

Kismat’s office until November 2011, and he did not ask them to approve the move. He 

took money from Kismat’s account to pay part of the rent without informing the Kismat 

board or getting its approval.
5

February or March, he called Dhaliwal again. Dhaliwal “immediately came up on the 

phone and . . . said, Chevron is not going to do [environmental] upgrades of the station, 

and . . . they will not renew the lease of the station, and the value of our business is zero.” 

Dhaliwal did not provide any other details and did not respond to Bedi’s request to 

review the Chevron letter.5 Bedi asked for a meeting, but the meeting did not occur until 

May due to Dhaliwal’s claimed scheduling conflicts.

The May 2008 meeting between the Bedis and Dhaliwal again took place in the 

Dhaliwal and Associates office in Blackhawk Plaza. Dhaliwal immediately informed 

Bedi that Kismat had borrowed $43,000 from Dhaliwal’s son, Baghdeep Dhaliwal 

(Baghdeep).

6 When Bedi asked why a loan was necessary, Dhaliwal said the company 

had lost $43,000 in 2006. Bedi objected to the fact that Dhaliwal took out a loan without 

informing him, and Dhaliwal responded that Bedi should not complain because he had 

recouped his original investment. Dhaliwal handed Bedi two documents, a spreadsheet 

purporting to show Kismat’s annual income and expenses from 2001 to 2007, and a 

Service Station Computer Systems, Inc. (SSCS)7income and expense statement for 2006. 

Dhaliwal handwrote a notation on the 2006 SSCS statement indicating that the $150,000 

distributed to shareholders in 2006 was an overdistribution, which needed to be repaid to 

the company.

Following the meeting, Bedi examined the spreadsheet and noted that it included 

the $182,000 cost incurred, but not the $175,000 capital investment made, for the 

carwash upgrade. At a June 2008 meeting, Dhaliwal acknowledged the error and added 

handwritten notations to the 2006 SSCS statement showing that the company made a net 

profit in 2006 of more than $131,000. However, he never corrected his prior assertion

that there had been a $150,000 overdistribution in 2006. Dhaliwal did not respond to 

Bedi’s requests for a corrected spreadsheet, for details and documentation of the loan, or 

 

5 Chevron actually continued to renew the lease through 2010.

6 At trial, Dhaliwal testified that the loan was from MB Enterprises, Inc., a 

Dhaliwal corporation whose majority shareholder was Bhagdeep.

7

SSCS is a Chevron-provided computerized accounting system.
6

for the company’s financial records. Bedi testified, “It was not a happy meeting because 

when I would ask him a question, he would abruptly stop me and . . . sometimes yell at 

me or again [ask] why I am asking these questions.”

At a second meeting in June 2008, Dhaliwal handed Bedi a document but 

immediately interrupted Bedi when he tried to look at it. Bedi said that Dhaliwal came 

up behind him, yelling “[Y]ou are going senile. You need to . . . see a doctor. . . . You 

don’t understand these documents. Your mathematics is worse than grade three.” 

Dhaliwal said that he would charge Bedi $500 an hour if Bedi asked him for more 

information. He then asked Bedi for an additional $50,000 investment in the business, 

purportedly because it was operating at a loss. Bedi refused unless he received

information about the loan and the financial condition of the company.

During the spring and summer of 2008, Bedi sent Dhaliwal many letters or emails

asking for Kismat financial records and offering to participate in management of the 

company. Dhaliwal repeatedly told Bedi to come by the office to review the records, but 

Bedi asked that records be mailed to him because of the abuse and obfuscation he 

experienced at the office. Bedi eventually received some financial statements, but they 

did not explain why the company was losing money. In correspondence, Bedi also

objected to Kismat’s payment of certain management costs, which he insisted should 

been covered by Dhaliwal’s 20 percent management fee. Bedi further objected to 

Kismat’s repayment of the alleged loan until the reason for the loan was clarified, and 

objected to Kismat’s paying a share of the Dhaliwal and Associates office expenses 

(which were shared by all of the gas station corporations), all to no avail.

Bedi sought legal advice and filed this lawsuit in 2008. He received no dividends 

for the entire year of 2008. Kismat paid monthly dividends of $3,000 from June to 

December 2009, a total of $7,500 in dividends in 2010, and no dividends in 2011 or 

thereafter until the time of trial in March 2012.
7

C. Kismat’s Financial Records

Through the discovery process, Bedi finally gained access to Kismat’s records.8 

He discovered that the recordkeeping system, controlled by Dhaliwal, incorporated few if 

any reconciliations or double checks to ensure that the information was accurate and that 

all funds were accounted for, even though the station was a cash business with about 

$44 million in gross revenues for the relevant time period. All company checks were 

written by Dhaliwal or at his direction and were recorded in a journal rather than a check 

ledger. The journal was a simple list of the check numbers, dates, payees and amounts 

that was not reconciled with the company’s bank statements or cross-referenced with 

invoices being paid. A clerical worker entered data from the station’s cash register 

receipts, invoices, and the check journal into the SSCS, and Dhaliwal personally entered 

expenses such as payroll and rent. Notations in SSCS indicated when expenses had been 

paid, but usually did not include cross-references to check or invoice numbers. Kismat 

did not use any other computerized or handwritten accounting system that produced 

balance sheets, nor did it employ or engage an accountant or bookkeeper. In contrast, 

Dhaliwal Enterprises, Inc. retained an accountant and maintained complete and balanced 

records.

There were other questionable accounting practices. Cash to supply the ATM 

machine was disbursed via corporate checks made out to “cash,” and only Dhaliwal and 

Bhagdeep replenished the machine. Checks for ATM cash replenishment were not 

reconciled with reports of amounts the ATM machine dispensed to customers. Until late 

2004, gas station cash receipts were deposited at the bank by Dhaliwal or Bhagdeep. 

 

8 Dhaliwal apparently resisted producing discovery until May 2010, when he 

produced voluminous documents. In January 2011, Bedi filed a second amended 

complaint that asserted personal and derivative claims (including claims for fraud and 

breach of fiduciary duty) against Dhaliwal and the seven other corporations he controlled, 

excluding Kismat. In March 2012, the court granted a defense motion for summary 

adjudication of the derivative claims on the ground that Bedi failed to make a 

prelitigation demand on the Kismat board of directors or establish that such a demand 

was futile. Bedi appealed that order, but later dismissed his appeal. (Bedi v. Dhaliwal 

(July 13, 2012, A135397).)
8

Notations of these “safe drops” were handwritten on cash register reports and then 

transferred to daily reports for Dhaliwal, not all of which were retained. Kismat made 

and received loans to and from Dhaliwal’s other corporations by check until 2006 and 

thereafter by online banking transfer among the companies’ accounts. The only record of 

these loans (aside from the bank statements showing the transfers) was the cash journal 

until 2006 and thereafter Dhaliwal’s handwritten notations on loose sheets of paper, not 

all of which were retained. These notations were not linked to identified accounts where 

evidence of the loans could be found. There also were no formal corporate approvals for 

the loans. Similarly, there was no corporate approval for the relocation of the Kismat 

office from Dhaliwal’s home to the Blackhawk Plaza office or for payment of shared 

office and other management expenses. Kismat’s tax returns were prepared by a firm 

that did not employ accountants or conduct any review of Kismat’s financial records. 

The firm simply took summary income and expense information provided by Dhaliwal 

(without backup documentation) and “plug[ged] them into the tax returns.” At times, 

Dhaliwal directed the firm not to use certain data on the income and expense statement he 

had provided.

Bedi’s experts testified that there were multiple discrepancies in the financial 

records. The check journal was not always accurate, i.e., it did not match the cancelled 

checks attached to the bank statements. Dhaliwal’s handwritten notations of safe drops 

frequently did not match (within a $25 human error allowance) the point-of-sale receipt 

printed out from the cash register, the SSCS month-to-date (MTD) report, or deposits 

listed on the bank statements. Total checks written for cash to be deposited in the ATM 

machine substantially exceeded the total cash dispensed from the machines as reflected in

the ATM company’s reports. Dhaliwal reported that the intercompany loans had stopped 

in 2008, but a Bedi expert discovered they had continued by way of different bank 

accounts. There was no documentation of how office expenses were allocated among the 

companies, and Bedi’s expert could not deduce a consistent allocation pattern from the 

companies’ financial records. One of Bedi’s experts testified it would take a team of five 

auditors about two years to fully audit Kismat’s financial records. To answer many of the 
9

questions he had about the corporation’s finances, the expert would have had to create 

from scratch detailed financial documents such as ledgers or balance sheets from the 300 

to 400 boxes of papers Dhaliwal produced in discovery.

Another Bedi expert testified that all three signs of accounting fraud (as described 

by the Financial Accounting Standards Board) were present in this case: motivation (a 

need to commit the fraud), opportunity (complete control over a business and its financial 

records), and rationale (self-justification for the fraud). The motivation was Dhaliwal’s

substantial financial obligations incurred in managing multiple businesses and buying 

large properties during the relevant time period. The opportunity was Dhaliwal’s 

complete control over the business and the accounting process, with few or no 

reconciliations or double checks. The rationale was Dhaliwal’s apparent view that the 

companies were in essence a single proprietorship in which all the money was at his 

disposal to use as he saw fit to keep the companies operating with minimal reserves of 

operating capital.

D. Damages Evidence

Bedi’s experts provided testimony and opinions relevant to the issue of damages. 

First, from 1999 through 2010, shareholder distributions were paid in ratios of 64, 24 and 

12 percent rather than 55, 30 and 15 percent. The payment percentages resulted from the

initial deduction of 20 percent of net profits as Dhaliwal’s management fee and 

distribution of only the 80 percent remainder according to the shareholders’ percentage 

holdings. In light of the disarray and improprieties discovered in management of the 

companies, it was opined that Dhaliwal had not earned the 20 percent management fee

and distributions therefore should have been made in the equity ratios of 55, 30 and 

15 percent. Applying those ratios to past distributions actually made by Kismat, the 

expert opined that Bedi should have received an additional $93,840. Second, $84,750 to 

$96,200 was missing from purported deposits to the ATM machine, and it was opined 

that Bedi should receive 30 percent of these missing funds, or $25,425 to $28,860. Third,

$303,306 to $435,000 was missing from the purported safe drops (bank deposits of cash 

receipts at the station); Bedi’s 30 percent share would be $90,992 to $130,717. Fourth,
10

Kismat’s cash flow (“proof of cash”) from 1999 to 2010 was analyzed by taking income 

and expense information from the tax returns, adjusting for noncash deductions 

(depreciation and amortization), and comparing the result to the end-of-the-year cash 

balances reported on the bank statements. Tax returns indicated that a cumulative 

$83,870 in cash should be in the bank accounts but was not; Bedi’s 30 percent share of 

this amount would be $25,161. Finally, three alternative estimates were made of net 

income from the Kismat station not reported by Dhaliwal: (a) a comparison of all of the 

net income (difference between income and expenses) reported on two SSCS reports and 

the net income reported on the SSCS profit and loss statements from 1999 to 2010,9

which showed an apparent understatement of net income of $1,654,248 (30 percent of 

which is $496,274); (b) an adjustment of the prior figure based on Dhaliwal’s 

unconfirmed assertion that sales tax was included in SSCS reports before 2006 and 

excluded thereafter, which resulted in an understatement of net income of $350,694 (30

percent of which is $105,208); and (c) a comparison of the performance of the Kismat 

station to the performance of comparable Chevron stations operated by other Dhaliwal 

gas station corporations,

10 which suggested that Kismat’s earnings before income taxes, 

depreciation and amortization (or EBITDA) was understated by $677,100 (30 percent of 

which is $203,130).11 Bedi’s counsel asked the jury to award Bedi a total of $774,852 in 

compensatory damages with prejudgment interest.

 

9

SSCS reports were only available for 2003 on, so the expert extrapolated figures 

for the prior years.

10 Another expert similarly opined that the Kismat station underperformed as 

compared to the other Dhaliwal gas stations (with one exception), based on his 

comparison of each station’s profit per gallon of gasoline sold as stated on SSCS reports.

11 Bedi’s counsel noted in closing argument that an expert’s “gross margin” 

analysis resulted in damages figures that overlapped with his EBITDA analysis and thus 

should be disregarded by the jury if it awarded the EBITDA damages. Therefore, we do 

not discuss the gross margin analysis here.
11

E. Judgment

The jury found Dhaliwal liable for breach of fiduciary duty and fraud (both 

concealment and intentional misrepresentation). It specifically found Dhaliwal took 

$1,605,695 that belonged to Kismat and that Bedi was entitled to 30 percent of that 

amount, $481,708, with prejudgment interest. The jury also found that Dhaliwal acted 

with malice, oppression or fraud and awarded Bedi $875,000 in punitive damages.

In a later brief bench trial, the court denied Bedi’s attempt to impose alter ego 

liability on the Defendant Corporations. The court awarded costs to Bedi and denied 

costs to Dhaliwal and the Defendant Corporations. The final judgment against Dhaliwal 

was for $1,575,885.00, together with costs of $88,285.07, and postjudgment interest of 

10 percent per annum.

II. DISCUSSION

Dhaliwal does not challenge the sufficiency of the evidence to support the jury 

findings or damage awards.12 Rather, he raises three legal challenges to the verdict: he

argues that Bedi’s claims were derivative in nature and not properly brought as individual

causes of action, that the court erroneously instructed the jury that it could award Bedi 

additional distributions and missing corporate funds based on a 30 percent pro rata share,

and that the trial court erred in not instructing the jury on Dhaliwal’s statute of limitations 

defense. The Defendant Corporations challenge the court’s denial of their cost bill. We 

affirm the judgment in its entirety.

A. Individual Causes of Action

Dhaliwal first argues that Bedi’s claims were not properly brought as individual

claims. The court ruled on this issue in the context of a motion for judgment on the 

pleadings, which we review de novo. (Pang v. Beverly Hospital, Inc. (2000) 

79 Cal.App.4th 986, 989.) We conclude the trial court did not err in allowing the 

individual causes of action to proceed.

 

12 Dhaliwal does not separately challenge the award of punitive damages, but only 

contends that the punitive damage award cannot be sustained if the award of 

compensatory damages was erroneous.
12

The leading case on the distinction between derivative and individual causes of 

action is Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93 (Jones). Jones explains: “A 

shareholder’s derivative suit seeks to recover for the benefit of the corporation and its 

whole body of shareholders when injury is caused to the corporation that may not 

otherwise be redressed because of failure of the corporation to act. Thus, ‘the action is 

derivative, i.e., in the corporate right, if the gravamen of the complaint is injury to the 

corporation, or to the whole body of its stock or property without any severance or 

distribution among individual holders, or if it seeks to recover assets for the corporation 

or to prevent the dissipation of its assets.’ [Citations.] . . . ‘[A]lthough the corporation is 

made a defendant in a derivative suit, the corporation nevertheless is the real plaintiff and 

it alone benefits from the decree; the stockholders derive no benefit therefrom except the 

indirect benefit resulting from a realization upon the corporation’s assets. The 

stockholder’s individual suit, on the other hand, is a suit to enforce a right against the 

corporation which the stockholder possesses as an individual.’ [Citation.]” (Id. at 

pp. 106–107.) Jones clarified that “[t]he individual wrong necessary to support a suit by 

a shareholder need not be unique to that plaintiff. The same injury may affect a 

substantial number of shareholders. If the injury is not incidental to an injury to the 

corporation, an individual cause of action exists.” (Id. at p. 107.)

These generally articulated principles were not difficult to apply on the facts 

presented in Jones. The plaintiff alleged that the majority shareholders of the corporation 

breached their fiduciary duty by creating an independent holding company to which they 

transferred their control block of shares, making their own interests more marketable and 

destroying the market value of the shares held by the minority. (Jones, supra, 1 Cal.3d at 

pp. 102–105.) In these circumstances, the court explained, the plaintiff “does not seek to 

recover on behalf of the corporation for injury done to the corporation by defendants.

Although she does allege that the value of her stock has been diminished by defendants’

actions, she does not contend that the diminished value reflects an injury to the 

corporation and resultant depreciation in the value of the stock. Thus the gravamen of 

her cause of action is injury to herself and the other minority stockholders.” (Id. at 
13

p. 107; see also Smith v. Tele-Communication, Inc. (1982) 134 Cal.App.3d 338, 341–343

[minority shareholder’s suit to share in tax savings payment to majority shareholder was 

properly brought as individual action because corporation was unaffected]; Sheppard v. 

Wilcox (1962) 210 Cal.App.2d 53, 55–56, 64 [minority shareholder’s suit challenging 

directors’ decision to issue additional common stock, which caused them to become 

majority shareholders, was properly brought as individual action because corporation 

unaffected].)

It has been less obvious how to apply these principles where a majority 

shareholder who is also a manager of the corporation allegedly obtains a disproportionate 

share of the corporation’s earnings, and deprives the plaintiff of his/her proper share,

through abuse of management authority. As Jones explains, majority shareholders have a 

fiduciary duty not only to the corporation but also directly to the minority shareholders: 

“[M]ajority shareholders, either singly or acting in concert to accomplish a joint purpose, 

have a fiduciary responsibility to the minority and to the corporation to use their ability to 

control the corporation in a fair, just, and equitable manner. Majority shareholders may 

not use their power to control corporate activities to benefit themselves alone or in a 

manner detrimental to the minority. Any use to which they put the corporation or their 

power to control the corporation must benefit all shareholders proportionately and must 

not conflict with the proper conduct of the corporation’s business. [Citations.]” (Jones, 

supra, 1 Cal.3d at p. 108.) In sum, there is a “comprehensive rule of good faith and 

inherent fairness to the minority in any transaction where control of the corporation is 

material.” (Id. at p. 112.)

In cases involving sale of a corporation or of corporate assets that are allegedly 

designed to disproportionately benefit the majority shareholders, courts have held that 

minority shareholders’ claims are individual. (See Low v. Wheeler (1962) 

207 Cal.App.2d 477, 481–482 [where majority shareholder caused plaintiff’s stock to be 

sold first at lower price, withholding information that he was negotiating higher price for 

his own stock, “the wrong . . . was one to plaintiff as an individual, because the 

corporation was about to be dissolved”]; Crain v. Electronic Memories & Magnetics 
14

Corp. (1975) 50 Cal.App.3d 509, 515–516, 521–522 [where majority shareholders sold 

corporation’s assets, made unsecured loan of sale proceeds to themselves, and purchased 

all minority shares except the founders’ promotional shares, leaving those shares in the 

“ ‘shell’ corporation” worthless, the founders had individual causes of action]; see also 

Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411, 415–416, 428–429

[where general partner caused merger and cash-out of limited partners’ interest in a 

partnership, then sold partnership assets to third party for more than they were valued for 

purposes of the cash-out, limited partners’ claims were individual causes of action].)

In cases of alleged mismanagement by majority shareholders leading to the 

corporation’s demise, courts have held that minority shareholders’ claims are derivative 

only, even if the majority shareholders are accused of “wrongfully obtaining [the 

corporation’s] assets” for themselves. (Avikian v. WTC Financial Corp. (2002) 

98 Cal.App.4th 1108, 1111–1113, 1115–1116; see Nelson v. Anderson (1999) 

72 Cal.App.4th 111, 125–126 [claim of mismanagement by majority shareholder with 

complete authority over corporation was derivative only where alleged damages were lost 

future profits of corporation]; Schuster v. Gardner (2005) 127 Cal.App.4th 305, 313–315

(Schuster) [claim of mismanagement is derivative only, even though majority 

shareholders responsible for mismanagement sold stock while concealing financial state 

of company, leading minority shareholders to hold onto stock that lost value]; see also

Rankin v. Frebank Co. (1975) 47 Cal.App.3d 75, 80–82, 95 [claim that majority 

shareholders diverted corporate assets was derivative only].)

There is a split of authority on whether claims that managing majority 

shareholders paid themselves excessive compensation are derivative or individual claims. 

In a pre-Jones decision, a minority shareholder in a closely held corporation alleged that 

the majority shareholders (who were also managers) paid themselves excessive salaries 

and converted corporate assets to their own use, causing the corporation to go into 

receivership and its stock to become worthless. (Shenberg v. DeGarmo (1943) 

61 Cal.App.2d 326, 328–329.) The court held the claim was derivative only: “the 

wrongful and malicious appointment of a receiver, the conversion and dissipation of the 
15

assets of the corporation and the payment of excessive salaries to the managing directors

. . . are wrongs to the corporation itself.” (Id. at p. 331; see also Thompson v. Price

(1967) 251 Cal.App.2d 182, 188–189 (Thompson) [excessive compensation award made 

in favor of corporation but without discussion of whether it could only be brought as a 

derivative action].) On the other hand, a division of this District has held that excessive

compensation claims alone, brought by a minority shareholder of a closely held

corporation against majority shareholders/managers, were properly brought as individual 

causes of action. (Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th 1238, 1245–

1248, 1258 (Jara); see also De Martini v. Scavenger’s Protec. Assn. (1935) 3 Cal.App.2d 

691, 692–695, 697–699 [affirming award in minority shareholders’ individual suit for 

excessive compensation of majority shareholders who were also employees, without 

discussing whether it was properly brought as individual cause of action].) The Jara 

court held that “[t]he gravamen of [the minority shareholder’s] complaint is that he was 

deprived of a fair share of the corporation’s profits as a result of defendants’ generous 

payment of executive compensation to themselves.” (Jara, at p. 1258.)

Significantly, in Jara, the minority shareholder made no claim of mismanagement 

or dissipation of corporate assets; on the contrary, he was pleased with the way the 

majority shareholders ran the business. “He does not claim that the company would have 

experienced still greater prosperity and growth if the salaries had been smaller but rather 

maintains that the payment of generous executive compensation was a device to 

distribute a disproportionate share of the profits to the two officer shareholders during a 

period of business success.” (Jara, supra,121 Cal.App.4th at p. 1258) The court held 

that the particular circumstances before it did not implicate the policies behind the rule 

requiring suits alleging injury to a corporation to be brought by the corporation itself or in 

a derivate action. “The objective of preventing a multiplicity of lawsuits and assuring 

equal treatment for all aggrieved shareholders does not arise at all when there is only one 

minority shareholder. The objective of encouraging intracorporate resolution of disputes 

and protecting managerial freedom is entirely meaningless where the defendants 

constitute the entire complement of the board of directors and all the corporate officers.
16

And the policy of preserving corporate assets for the benefit of creditors has, at best, a 

very weak application where the corporation remains a viable business.” (Id. at p. 1259.)

The parties disagree on application of these precedents to the instant case. 

Dhaliwal argues that the gravamen of Bedi’s claim is misappropriation of corporate 

assets and thus mandate that the claims be brought as a derivative action only. He 

distinguishes Jara on two grounds. First, he notes that the Jara majority shareholders 

allegedly used their majority status to cause the corporation to take action (i.e., approved 

excessive compensation) that disadvantaged the minority shareholder, whereas Bedi 

alleged that Dhaliwal took funds without corporate action (i.e., essentially stole from the 

corporation and caused corporate losses). Second, he notes that the Jara court 

emphasized the absence of alleged harm to the corporation, and counters that Bedi 

alleged Kismat underperformed relative to the other gas station corporations due to 

Dhaliwal’s mismanagement. Bedi argues, and the trial court ruled, that Jara controls 

here and under Jara Bedi properly brought his claims as individual causes of action.

We agree that the gravamen of Bedi’s claims was the damage he suffered 

personally, rather than injury to the corporation, and that he was entitled to maintain his 

claims individually.

First, Bedi’s fraud claims are individual and not derivative causes of action. 

Claims of fraud by minority shareholders against managers who are also majority 

shareholders are individual causes of action even if the alleged harm is loss in the 

minority shareholders’ stock value. (See Small v. Fritz Companies, Inc. (2003) 

30 Cal.4th 167, 170–171, 184 (Small) [false or misleading statements by majority 

shareholders who were also directors, which induced minority shareholders to retain

stock that later lost value, is an individual cause of action if personal reliance on 

statements is adequately alleged]; Schuster, supra, 127 Cal.App.4th at pp. 314–315

[same]; Smith v. Tele-Communication, Inc., supra, 134 Cal.App.3d at p. 343 [allegation 

that majority shareholder’s payment of all tax savings to itself without informing 

minority shareholder constituted fraud was properly brought as an individual cause of 

action]; Sheppard v. Wilcox, supra, 210 Cal.App.2d at p. 64 [essence of suit challenging 
17

increase in amount of common stock was fraud on minority shareholders, an individual 

cause of action]; Campbell v. Clark (1958) 159 Cal.App.2d 439, 440–441, 443 [essence 

of minority shareholder’s claim was fraudulent inducement to sell shares at low price, an 

individual cause of action].) In Small and Schuster, the minority shareholders’ individual 

fraud claims were nevertheless dismissed because of a failure to plead personal reliance

on the allegedly false and misleading statements. (Small, at p. 185; see also Schuster, at 

pp. 314–315.) Here, however, Bedi alleged reliance on Dhaliwal’s false statements and 

concealment and the jury found Dhaliwal liable on those causes of action. Because the 

jury awarded the same damages on all of Bedi’s successful causes of action, we would

affirm the judgment on this ground alone.

Second, Bedi’s breach of fiduciary duty claim, reasonably construed, alleges

misappropriation of his shareholder distributions rather than looting of corporate assets. 

Significantly here, Kismat is a subchapter S corporation, meaning that for tax purposes its 

profits are treated as personal income of the shareholders in proportion to the 

shareholders’ interests. (1 Ballantine & Sterling, supra, § 60.01[2][d], pp. 4-11 to 4-12

(rel. 119-6/2013).) In this context, there was no meaningful distinction between Kismat

profits at the corporate level and the shareholders’ personal pro rata interest in the profit 

distributions.

13

Moreover, the Supreme Court has suggested that certain claims can be brought 

either as derivative or individual causes of action. (Sutter v. General Petroleum Corp.

(1946) 28 Cal.2d 525, 531 [where both corporation and individual who was induced to 

form and buy stock in the corporation were injured, “the dual nature of the injury does 

not necessarily preclude an action by the stockholder as an individual”]; see also Rankin 

v. Frebank Co., supra, 47 Cal.App.3d at p. 96 [“shareholders’ derivative suits cannot all 

 

13 To ensure that corporate creditors remain protected, closely held corporations 

must still take formal corporate action to make an actual distribution of profits.

(2 Ballantine & Sterling, supra, § 141.03[2][a], pp. 8-10 to 8-12 (rel. 115-7/2012).) It is 

undisputed, however, that corporate formalities were generally not followed by Kismat, 

and Kismat never required shareholder approval prior to any shareholder distributions.
18

be pressed into a single mold”]; but see Schuster, supra, 127 Cal.App.4th at pp. 311–312

[derivative and individual causes of action “ ‘are mutually exclusive’ ”].) Whether or not 

Kismat may have also had claims against Dhaliwal, we conclude, as the court did in 

Sutter v. General Petroleum Corp., that Bedi’s prosecution of the claims as individual 

causes of action was permissible.

B. Damages

Dhaliwal argues the trial court erred in instructing the jury that Bedi could recover 

the difference between the distributions Bedi actually received between 1999 and 2012 

(about 24 percent of total distributions) and 30 percent of those total distributions.14 

Dhaliwal also argues that it was error to allow recovery of 30 percent (rather than 

24 percent) of missing corporate funds. Dhaliwal contends Bedi was entitled at most to 

only 24 percent of both the distributions and any missing corporate funds because he and 

the other shareholders had agreed to pay Dhaliwal 20 percent of total net profits as a 

management fee. At bottom, Dhaliwal objects to the implication in the instruction that he 

was not entitled to receive his 20 percent management fee.

Dhaliwal first suggests the trial court committed legal error. We review questions 

of law de novo. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 800–801.) He argues “the 

remedy for a defaulting employee or manager is to require that employee or manager to 

pay back the money that he allegedly misappropriated or lost through incompetence; it is 

not recovery of the salary already paid to that manager.” However, he cites no authority 

for that proposition, and Thompson, supra, 251 Cal.App.2d 182 holds to the contrary. In 

Thompson, a manager who was also a majority shareholder “performed fraudulently in 

his own interest and in violation of his fiduciary duties.” (Id. at p. 189.) The appellate 

court held that the trial court should have required the manager to repay all of his 

managerial salary rather than the portion the trial court deemed excessive compensation. 

Thompson first held that it was the defendant manager/fiduciary who had the burden to 

 

14 Although Dhaliwal does not demonstrate that he raised this argument in the trial 

court, we have exercised our discretion to address the issue on the merits. (Ward v. 

Taggart (1959) 51 Cal.2d 736, 742.)
19

prove that “the drawings he manipulated were fair and reasonable.” (Thompson, supra,

251 Cal.App.2d at p. 188.) The court further held that, having fraudulently kept the 

corporate books and records for personal advantage, the corporation “should not 

compensate [the manager] for fraudulent mismanagement” and “should not pay [the 

manager] for services, whether valuable or not, performed fraudulently in his own 

interest and in violation of his fiduciary duties.” (Id. at pp. 188–189.)

Dhaliwal also argues the instruction was not supported by substantial evidence. 

Substantial evidence to support a jury instruction is evidence that a reasonable jury could 

find persuasive. (People v. Kanawyer (2003) 113 Cal.App.4th 1233, 1243.) Dhaliwal 

argues the only evidence that Dhaliwal did not earn his management fee was the bare 

opinion of a Bedi expert that the fee was “unwarranted.” We disagree. There was ample 

evidence in the record that, as a manager, Dhaliwal performed “fraudulently in his own 

interest and in violation of his fiduciary duties.” (See Thompson, supra, 251 Cal.App.2d 

at p. 189.) Substantial evidence supports findings that Dhaliwal increased the company’s 

overhead expenses (office rental and supplies and payroll for office personnel and a joint 

operations manager) to his benefit without board approval; siphoned off cash from the

company’s ATM machine and bank deposits of cash receipts; loaned Kismat funds to 

other corporations without interest; failed to perform his duty of maintaining complete 

and accurate corporate records; failed to observe corporate formalities; and caused the 

company to underperform as compared to his other gas station corporations.

Finally, Dhaliwal argues the instruction allowed Bedi to recover excessive 

damages. Dhaliwal argues the corporation would have had to hire a manager even if 

Dhaliwal had been fired, so the true measure of Bedi’s damages was still 30 percent of 

profits after a management fee had been paid to someone. We disagree. First, Thompson

held that a corporation should not be required to pay a manager for fraudulently 

performed services that breached his fiduciary duties “whether valuable or not.” 

(Thompson, supra, 251 Cal.App.2d at p. 189, italics added.) The implication in 

Thompson is that the repayment requirement is justified on equitable grounds. Second, 

the jury could reasonably conclude that any necessary management expenses were 
20

already being paid by Kismat separate and apart from Dhaliwal’s 20 percent charge, 

including Kismat’s share of the office expenses and the salaries or expenses of Bhagdeep 

and an assistant manager who oversaw the gas station’s day-to-day operations.

C. Statute of Limitations Defense

Dhaliwal argues the trial court erred in refusing to instruct the jury on his statute 

of limitations defense. We believe Dhaliwal has forfeited this argument, but we in any 

event reject the claim on the merits.

Dhaliwal pled the statute of limitations as an affirmative defense, and presented a 

motion in limine seeking to preclude introduction of any evidence relating to recovery of 

Dhaliwal’s management fee and for nonpayment or underpayment of distributions for 

any period more than four years before Bedi filed suit in 2008. The court denied the in 

limine motion, finding that there were factual disputes regarding when Bedi was put on 

notice of his claims. Dhaliwal then submitted proposed instructions on the statute of 

limitations defenses to fraud and breach of fiduciary duty claims, and the late discovery 

rule (CACI Nos. 1925, 4120).

Both prior to and following closing argument, the court expressed concern about 

the issue. After closing argument, and prior to instruction of the jury, the court observed

that the defense had presented no argument on the question and consequently “nobody on 

that jury is going to have any foggy idea what you’re talking about.” Defense counsel 

took the position that the jury could itself tie the instruction to the evidence and conclude 

that Bedi knew about the management fee and knew or had reason to know of issues with 

Bhagdeep’s role as operations manager as early as 1999. The court noted, however, that 

the critical issue on application of the statue of limitations was when Bedi knew or should 

have known about Dhaliwal’s wrongdoing. The court ultimately declined to instruct the 

jury on the defense: “[E]ven if . . . there was insufficient evidence for . . . defendant to 

sustain his burden of proof on the statute of limitations[,] [i]t wasn’t argued. It’s not a 

question included in the verdict form. . . . You didn’t mention it in your opening 

statement. You didn’t specifically present any evidence except there were some dates 

given. You didn’t give anybody an opportunity to talk about late discovery.” Dhaliwal’s 
21

motion for a new trial based on to the failure to give the statute of limitations instruction 

was also denied.

Dhaliwal selectively quotes from the trial court’s ruling and suggests the 

instructions were not given only because the court concluded they were not supported by 

substantial evidence. This is a distortion of the record. The court articulated several 

reasons for its decision, most of which Dhalwal does not challenge. Because he fails to 

address the alternative grounds for the court’s ruling (and thereby show the alleged 

substantial evidence error caused him prejudice), his argument is forfeited. (See Hoffman 

Street, LLC v. City of West Hollywood (2009) 179 Cal.App.4th 754, 772 [appellant bears 

burden to show prejudice from trial court’s error].) In any event, we agree with the trial 

court that the instruction was not supported by substantial evidence in the trial record.

In reviewing a claim that the court erred in refusing to give an instruction because 

it was not supported by substantial evidence, we review the evidence in the light most 

favorable to the party who sought the instruction. (Ayala v. Arroyo Vista Family Health 

Center (2008) 160 Cal.App.4th 1350, 1358.) Dhaliwal argues that there was evidence 

that Bedi became aware that Dhaliwal had moved the operations of Kismat to a site other

than his home as early as 1999 and that Bedi knew that Dhaliwal’s son Bhagdeep was 

acting as operations manager for Kismat as early as 1999. He insists that “[i]f the jury 

credited this testimony, it could conclude that Bedi was aware of circumstances that 

should have put him on inquiry notice about purported fraud or concealment with respect 

to Dhaliwal’s entitlement to a management fee. If the jury reached such a conclusion, it 

could well determine that the statute of limitations barred recovery for at least part of the

damages that Bedi claimed.”

But, Dhaliwal does not explain here, and he did not even attempt to explain to the 

jury in the trial court, how an informal meeting about Kismat at a “Dhaliwal & 

Associates” office put Bedi on notice that Dhaliwal had relocated the Kismat office, 

paying the expenses of that office from Kismat funds, much less suggest that Dhaliwal

was mismanaging the company or siphoning off corporate funds, the core claims of 

Bedi’s lawsuit. Similarly, Dhaliwal does not and did not explain why evidence that Bedi 
22

might have known as early as 1999 that Bhagdeep was working part-time as an 

operations manager at Kismat’s gas station would have put Bedi on notice that Dhaliwal 

was paying Bhagdeep from Kismat funds rather than the 20 percent management fee, or 

that Dhaliwal was otherwise diverting money from the company.

There was no error.

D. Costs

The Defendant Corporations argue the trial court erred in failing to award them 

costs. They contend that they were “prevailing part[ies]” as a matter of law pursuant to 

Code of Civil Procedure section 1032, subdivision (a)(4) (section 1032(a)(4)),15 because 

they were defendants against whom Bedi (both suing individually and suing on behalf of 

Kismat) did “not recover any relief.” The general rule under this portion of section 1032

is that “ ‘One defendant who prevails may recover costs even though the plaintiff 

recovers against another defendant.’ [Citation.] [¶] . . . [H]owever, there is an exception: 

‘In those instances in which several defendants are united in interest or join in making the 

same defenses in the same answer, the prevailing defendant definition in [section]

1032(a)(4) does not apply and the defendant against whom the plaintiff does not recover 

is not entitled to costs as a matter of right. Instead the allowance or disallowance of costs 

to the prevailing defendant lies within the sound discretion of the court, as does the 

apportionment of those costs, if allowed.’ [Citation.] Put another way, ‘where one of 

multiple, jointly represented defendants presenting a unified defense prevails in an action, 

the trial court has discretion to award or deny costs to that party.’ [Citation.]” (Wakefield 

v. Bohlin (2006) 145 Cal.App.4th 963, 984 (Wakefield), disapproved on other grounds by 

Goodman v. Lozano (2010) 47 Cal.4th 1327, 1330.) After extensive written and oral 

argument on the issue, the trial court denied the Defendant Corporations’ cost bill in its 

entirety. We affirm.

Although the court’s written order is terse, it appears the court accepted Bedi’s 

argument that the prevailing party determination and related issue of allocating costs 

 

15 All further statutory references are to the Code of Civil Procedure.
23

were committed to the court’s discretion because Dhaliwal and the Defendant 

Corporations shared a unity of interest in the litigation. Dhaliwal argues that Wakefield

and similar cases applying the unity of interest exception are wrongly decided. We 

review this question of law de novo. (Ghirardo v. Antonioli, supra, 8 Cal.4th at pp. 800–

801.) Shortly after the parties briefed the cost issue in the trial court, the Second District 

published an opinion questioning, in dicta, whether the Wakefield line of cases were 

correctly decided. (Zintel Holdings, LLC v. McLean (2012) 209 Cal.App.4th 431, 440–

443 (Zintel).) Zintel notes that the Legislature eliminated “united in interest” language 

from section 1032(a)(4) when it rewrote the statute in 1986 and observes that none of the 

Wakefield line of cases “fully addresses the change in the underlying statutory language.” 

(Zintel, at pp. 441–442.) The court comments: “Whether the Legislature intended the 

continued use of that doctrine seems doubtful, . . . since it created four categories of 

litigants who automatically qualify as prevailing parties ([§ 1032(a)(4)])[,] provided an 

award of costs must be made to those litigants ‘[e]xcept as otherwise expressly provided 

by statute’ (§ 1032, subd. (b)), and eliminated the language in the prior version of section 

1032 upon which the unity of interest principle was based.” However, the court declined 

to expressly rule on the issue, which was not directly before it in the case. (Zintel, at 

p. 442.) 

We are not persuaded that the Wakefield line of cases is incorrect. Zintel fails to 

address the rationale of Slavin v. Fink (1994) 25 Cal.App.4th 722 (Slavin), the earliest of 

these cases, which reasons that a situation in which a prevailing defendant and a 

nonprevailing defendant shared a unity of interest in the litigation was a “situation[] other 

than as specified” under the revised statute. The current law expressly states that such 

situations are committed to the trial court’s discretion. (Slavin, at pp. 725–726.) Slavin’s 

construction of the statute is reasonable, and in the 19 years since Slavin was decided at 

least three other courts have agreed with its conclusion,

16 no court has held to the 

 

16 See Wakefield, supra, 145 Cal.App.4th at pp. 984–985; Textron Financial Corp. 

v. National Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, 1075, disapproved on 
24

contrary, and the Legislature has not amended the statute to overrule Slavin. The 

defendants here do not present us with legislative history or any other material that might 

persuade us that Slavin’s interpretation was wrong. We agree with the Wakefield court 

that “[a]lthough the statutory language has changed, the underlying precept . . . continues 

to apply.” (Wakefield, supra, 145 Cal.App.4th at p. 985.) Therefore, we find no reason 

in this case to disagree with the weight of authority that the unity of interest exception 

survives the 1986 revision of the statute.

The evidence supports the trial court’s implied ruling that Dhaliwal and the 

Defendant Corporations shared a unity of interest in the litigation. They were represented 

by the same counsel,

17 they filed joint motions, and the Defendant Corporations’ 

participation in pretrial proceedings (including the summary adjudication of the 

derivative claims), the jury trial, and the post-jury trial proceedings (including the bench 

trial on alter ego liability) was indistinguishable from Dhaliwal’s. The prevailing party 

determination, therefore, was committed to the trial court’s discretion (§ 1032(a)(4); 

Wakefield, supra, 145 Cal.App.4th at p. 977), and we see no abuse of discretion in the 

court’s determination that the Defendant Corporations were not prevailing parties.

Denial of costs was further justified as an exercise of the court’s discretion to 

allocate costs among prevailing and nonprevailing defendants that share a unity of 

interest. (§ 1032(a)(4).) As suggested above, the three phases of litigation at issue in the 

cost proceedings were pretrial, trial, and posttrial. Bedi argued below that the Defendant 

Corporations had forfeited their claims to costs in the first and third phases of the 

proceeding, and the Defendant Corporations do not persuasively refute those arguments 

on appeal.18 The only remaining cost claim is for costs incurred for the jury trial, and the 

 

other grounds by Zhang v. Superior Court (2013) 57 Cal.4th 364, 382; and Webber v. 

Inland Empire Investments, Inc. (1999) 74 Cal.App.4th 884, 920.

17 Dhaliwal and the Defendant Corporations also share counsel on appeal.

18 As to the pretrial phase of litigation, Bedi argued below that the defense cost bill 

filed in March 2012, which was the only cost bill to seek recovery of pretrial costs 

(including costs for the summary adjudication of Bedi’s derivative claims), was filed on 

behalf of Dhaliwal alone and not on behalf of the Defendant Corporations. The 
25

trial court acted well within its discretion in allocating all of those costs to Dhaliwal. The 

jury trial focused exclusively on Dhaliwal’s personal wrongdoing, the Defendant 

Corporations were not even mentioned on the jury verdict, and the parties were directed 

by the court to defer alter ego issues (which directly affected the Defendant Corporations) 

to a later bench trial.

III. DISPOSITION

The judgment is affirmed in its entirety. Dhaliwal shall pay Bedi’s costs on 

appeal.

 

Defendant Corporations argue on appeal that the March 2012 cost bill was filed on behalf 

of both Dhaliwal and the Defendant Corporations because it was filed in the name of 

“Dhaliwal, an individual, et al.” In the final trial court hearing on the cost issue, 

however, defense counsel conceded that the first cost bill was “filed by Mr. Dhaliwal, 

based on his [section] 998 [settlement offer]. That included all the derivative claims 

costs. . . . [¶] But after trial, . . . the Dhaliwal entities filed another memorandum of costs 

. . . .” In a supplemental brief, the defendants again conceded that only Dhaliwal filed the 

first cost bill seeking pretrial litigation costs, and it referred to Bedi’s argument that the 

Defendant Corporations forfeited their claims to such costs as a “hypertechnicality.” We 

infer the trial court agreed with Bedi and denied pretrial costs to the Defendant 

Corporations because they never filed a cost bill seeking those costs. The ruling is 

supported by court rules. (See Cal. Rules of Court, rules 3.1700(a)(1), 3.1702(b)(1) [time 

requirements for filing of cost bill and motion to claim attorney fees].)

As to the post-jury trial phase of the litigation, Bedi argued below that the defense 

cost bill filed in June 2012, filed on behalf of the Defendant Corporations, sought only 

costs that were related to the jury trial, and that costs related to a brief bench trial on alter 

ego liability (at which the Defendant Corporations prevailed) were in any event 

de minimis. On appeal, the Defendant Corporations do not dispute these representations, 

which are supported by substantial evidence in the record.
26

_________________________

Bruiniers, J.

We concur:

_________________________

Jones, P. J.

_________________________

Needham, J.