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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or or dered published for purposes of rule 8.1115.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

. D haliwal 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, w hen he discovered that the

corpor ation’s books were in disarray and that substantial fund s were missing from the

company. A jury awarded Bedi compensatory and punitive damages. The trial court denied Bedi’s alter ego liability claims again st the Defendant Corporations.
Dhaliwal challen ges 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 i t could award Bedi additional distributions and missing corporate funds base d on a 30 percent pro rata share , and that the trial court erred2

in not instructing the jury on Dhaliwal’s statute of limitations defense. T he Defendant Corporations challenge the court’s denial of their cost bill. 1 We affirm.
I. B ACKGROUND A. F ormation and Management of Kismat
Dhaliwal wa s a shareholder in eight closely held corporations , six that own ed and operate d gas stations (the gas station corporations)
, one that owned hotel properties , and
one that owned an office building

. Dhaliwal personally o r 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 Ch h atwal . Kismat own ed and operate d a Chevron gas station in
Fremont , California that also included a convenience store and a carwash . Dhaliwal h eld
a 55 percent ownership interest in Kismat ( having made a $550,000 initial capital contribution), Bedi held a 30 percent interest ($3 00,000), and Chhatwal held a 15 percent interest ($150,000). 2 In January 199 9, 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 writ ten s hareholder consent in lieu of
such meeting s

. In September 1999, the shareholders met at Dhaliwal’s residence . Dhaliwal
describ ed 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 assistan t 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 th e 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 n o subsequent amendments to
the r esolution.
No othe r board meetings or annual shareholder meetings took place between 1999
and 2009

. Bedi had no involvement in manag ement of the company, with the exception of taking an inventory of the station property on the day Kismat took ownership in February 1999

. B edi 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
distr ibutions 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
buildin g 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 an d 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 meet ing 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 offic e of Dhaliwal and Associates
, and the Bedi s 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 t he station, increas ing overall sales
and enhanc ing 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 ex panding his business holdings ( Dhaliwa l Enterprises, Inc., purchased two hotel s 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 inqui re , 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 . H e did not call
Dhaliwal becaus e 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 d own 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

o ffice 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 b oard 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 detail s 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 claim ed scheduling conflicts.
The May 2008 meeting between the Bedi s 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, Bagh deep Dhaliwal (Baghdeep)

. 6 When Bedi asked why a loan was necessary, Dhaliwal said the company
had lost $43,000 in 2006. Bedi objected to t he fact that Dhaliwal took out a loan without informing him, and Dhaliwal responded tha t 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) 7 income and expense statement for 2006

. Dhaliwal ha ndwrote a notation on the 2006 SSCS s tatement indicating that the $150,000
distributed to shareholders in 2006 was an ov erdistribution , 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 me eting
, Dhaliwal acknowledged the error and added
handwritten notations to the 2006 S SCS s tatement 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 meet ing 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 ch arge 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 fin ancial 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 of fice 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 pay ment of certain management costs, which he insisted should been covered by Dhaliwal’s 20 percent management fee

. Bedi further objected to Kismat’s repay ment of the alleged loan until the re ason 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 n o 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 Record s 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 an d 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 t han 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 statement s or cross

- referenced with invoices being paid. A clerical worker entered data from the station’s c ash 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 o r 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. C ash to supply the ATM
machine was disbursed via corpo rate c hecks 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 c ash 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 derivat ive 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 report s for Dhaliwal , not all of which were retained

. Kismat made
and received loans to and from Dhaliw al’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 tran s fers ) was the cash journal
until 2006 and thereafter Dhali wal’s handwritten notations on loose sheets of paper , not all of which were retained

. The se notations were not linked to identified account s where
evidence of the loans could be found. There also were no formal corporate approvals for
the loans. Similarly, t here 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 manag ement expenses. Kismat’s tax returns were prepared by a firm
that did no t 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 direct ed 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. T he check journal was not always accurate, i.e., it did not match the cance lled
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

. T otal 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. T here 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 expert s testified it would take a team of five auditors about two years to fully audit Kismat’s financial records. To answer many of the9

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.
A nother Bedi expert testified that all three signs of accounting fraud (as de scrib ed 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 mot ivation was Dhaliwal ’s substantial financial obligations in curred 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, wi th 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 minim al 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
, 3 0 and 15 percent . The payment percentages result ed 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 sh areholders’ percentage holdings

. I n light of the disarray and improprieties discovered in management of the companies, it was opined that Dhaliwal had not earn ed the 20 percent management fee
and distributions therefore should have be en made in the equity ratios of 55 , 30 and
15 percent

. Applying tho se 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 purporte d deposits to the ATM machine , and it was opi ned
that Bedi sho uld receive 30 percent of the se 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

Kis mat’s cash flow (“proof of cash”) from 1999 to 2010 was analyzed by taking income and expense information from the tax returns, adjusting for non cash 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 fro m 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 per cent 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 the reafter, 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 corporation s , 10 which suggested that Kismat’s earnings before in come tax es , 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

compen satory 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 o f 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 disre garded 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 t hat Bedi was entitled to 30 percent of that amount, $48 1,708, 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 C orporations. T he final judgment against Dhaliwal

wa s for $1,575,885.00, together wit h costs of $88,285.07, and post judg ment interest of
10 percent per annum. II. D ISCUSSION 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 d istributions 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 b ill . We affirm the judgment in its e ntirety.
A. Individual Cause s 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.) W e 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 i ts 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 a ction is derivative, i .e., in the corporate right, if the gravamen of the complaint is inj ury 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 realizat i on 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 stockhol der 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 no t 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 o f 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 i ndependent 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 circumsta nces, 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 ha s 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. at13

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]; She ppard 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 corporat ion
unaffected ] .) It has been less obvious how to apply the se 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 manage ment authority. As Jones explains, m ajority 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 t o 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 shar eholders proportionately and must not conflict with the pr oper 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 tra nsaction 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 s hareholders’ 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 & Magnetics14

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 In vestors 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

purpo ses of the cash

- out, limited partners’ claims we re 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 majori ty 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 misman agement 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 indivi dual claims.
In a pre

- Jones decision, a minority shareholder in a close ly 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 corp oration 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: “t he wrongful and malicious appointment of a receiver, the conversion and dissipati on of the15

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 discussi on of whether it could only be brought as a derivative action] .) On the other hand, a division of this D istrict has held that excessive compensation claims alone, brought by a minority shareholder of a close ly held corporation against majority s hareholders / 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. Sca venger’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 i ndividual 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 t hemselves.” ( Jara , at p. 1258.) Significantly, i n 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 cla im 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 t he 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 sharehol der. 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 poli cy 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. Dhaliwa l argues th at 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 allegedl y 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 t he 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
Dhaliwa l’s mismanagement. Bedi argues, and the trial court ruled, that Jara controls
here and under Jara Bedi properly brought his claims a s individual causes of action. We agree that the gravamen of Bedi’s claims was the damage he suffered personally, rather t han 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

. C laims of fraud by minority shareholders against managers who are also majority
shareholders are individual causes of action even if the alleged harm i s loss in the minority shareholders’ stock value . ( See Small v. Fritz Companies, Inc. (2003)
30 Cal.4th 167, 170

– 171, 18 4 ( 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
minorit y shareholder constituted fr aud was properly brought as an individual cause of action]; Sheppard v. Wilcox , supra, 210 Cal.App.2d at p. 64 [essence of suit challenging17

increase in amount of common stock was fraud on minority shareholders, an individual cause of action]; Campbell v. C lark (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 fail ure to plead personal reliance on the alleged ly 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 damage s on all of Bedi’s successful causes of action, we would affirm the judgment on this grou nd alone. Second, Bedi’s breach of fiduciary duty claim
, reasonably construed , alleges misappropriation of his shareholder distributions rather tha n looting of corporate assets. Significantly here , Kismat is a s ub c hapter S corporation, meaning that for t ax 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], p p

. 4

- 11 to 4

- 12 (rel. 119

- 6/2013) .) In this context, t here was no meaningful distinc tion between Kismat profits at the corporate level and the shareholders ’ personal pro rata interest in the profit
distribution s. 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 th e 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 ensur e 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 S chuster , 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 c ourt did in
Sutter v. General Petroleum Corp. , that Bedi’s prosecution of the claims as individual

cau ses of action was permissible.
B. Damages Dhaliwal argues the trial court erred in instructing the jury that Bedi could recover
the differe nce 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 miss ing 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 empl oyee 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.” H owever, 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 requi red the manager to repay all of his managerial salary rather than the portion the trial court deemed excessive compensation. Thompson first h eld 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, h aving fraudulently kept the corporate books and records for personal advantage, the corporation “should not compensate [the manage r] for fraudulent mismanag ement” 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

. ” ( I d. at p p

. 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 fi duciary 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 p ersonnel 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 corporat e 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 corporat ion 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 b e 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 were20

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 aff irmative 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 cou rt 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 di scovery 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 sh ould 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 lat e discovery.” Dhaliwal’s21

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 th e 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 (20 09) 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 su pported 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 conclusi on, 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 me eting 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 corp orate funds, the core claims of Bedi’s lawsuit. Similarly, Dhaliwal does not and did not explain why evidence that Bedi22

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 B edi 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 com pany. 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 aga inst 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 ano ther 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 prevai ling 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 d oes 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

. ’ [C itation.] ” ( 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 C orporations’ 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 c ourt’s discretion because Dhaliwal and the Defendant Corporations shared a unity of interest in the litigation. Dhaliwal argues that Wakefield and similar cases apply ing the unity of interest exception are wrongly decided

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

– 801 .) Shortly after the parties briefed the cost issue in the trial court, the Second District published an opinion question ing, in dicta, whether the Wakefield line of cases were correctly dec ided. ( 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
Wake field 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 q ualify as prevailing parties ( [ § 1032(a)(4) ] ) [,] provided an
award of costs m

ust be made to those litigants ‘ [e]xcept as otherwise ex pressly provided by statute’ (§ 1032, subd. (b)), and eli minated the language in the prior version of section 1032 upon which the unity of interest principle w as 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

nonpreva iling 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

– 7 26.) 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 Wa kefield, 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 on24

contrary, and the Legislature has not amended the statute to overr ule 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

. . . c ontinues 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 ’ part icipation 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 p arty 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 par ties

. D enial of costs wa s 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 is sue 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 refu te 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 Inves tments, 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. The25

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 be nch trial.
III. D ISPOSITION The judgment is affirmed in its entirety. Dhaliwal sh all pay Bedi’s costs on appeal.

Defendant Corporations argue on appeal that the March 2 012 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 co st 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, t he 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 tri al 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, rule s 3.1700(a)(1), 3.1702(b)(1) [ time requireme nts 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.