1 Filed 9/10/14 Brown v. Leckrone CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SIXTH APPELLATE DISTRICT
CHESTER A. BROWN, JR., et al., Plaintiffs and Appellants,

v. DANIEL E. LECKRONE, Defendant and Respondent. H039389 (Santa Clara County Super. Ct. No. 1-09-CV-159452)

Plaintiffs Chester and Marcie Brown a ppeal from a judgment after a bifurcated trial in which the trial court determined that defendant and respondent Daniel Leckrone was not the alter ego of his wholly owned company, Technology Properties Limited, LLC (TPL). Plaintiffs contend that the trial court ignored substantial undisputed evidence that supported a finding of alter ego liability. Plainti ffs further argue that they should have been granted a new trial beca use (1) they had newl y discovered evidence supporting their alter ego theory ; and (2) at trial the court had improperly accepted expert testimony from a lay witness. As an additiona l ground for a new trial and for reversal of the judgment plaintiffs contend that the cour t erroneously refused to impose sanctions on defendants for their failure to produce documents during disc overy. We find no basis for reversal and must therefore affirm the judgment. Background Leckrone, an attorney, fo unded TPL in 1988 and was its chairman, chief executive officer (CEO), and sole owner. His objective was to assist in developing technologies2 and products by contributing fundi ng in exchange for “rights to use the result.” Chester A. Brown, Jr. (Brown) was at various times a consultant to and an employee of TPL, as well as an investor in patent portfolios wh ich TPL had the right to commercialize. In 1999 Leckrone was seeking funding fo r the commercialization of a portfolio of “Hearing Health Care” (HHC) patents. Brow n and his wife, Marcie Brown, invested $50,000 in the HHC portfolio, in exchange for one percent of the gross proceeds of any licensing of the portfolio. Plaintiffs invested another $50,000 in 2000 and then again in
2001. In 2003 Brown became a consultant to TP L, serving as Chief Operating Officer on a project to commercialize the AsyncArray De vices (AAD) technology. The AAD entity was later renamed IntellaSys Corporation (Int ellaSys). By 2006 Brown was functioning as the CEO of IntellaSys. In August 2003 pl aintiffs agreed to contribute another $25,000 for the HHC portfolio. This time the consideration was 3.5 percent of the gross proceeds of the licensing of both the HHC portfolio and another portfolio consisting of Moore Microprocessor Patents, based on technolo gy developed by Charle s Moore and Russell Fish. Leckrone drafted the resulting contra ct, the Assignment Agreement, which TPL and both plaintiffs executed in early 2004, but which was backdated to August 4, 2003. In February 2006 everyone associated with TPL, including Brown, became a TPL employee. Later that year In tellaSys was merged into TPL. Plaintiffs received payments from TPL under the Assignment Agreement through May 10, 2007. When Brown in quired about the fa ilure to make further payments, no one denied that TPL owed him money. It was understood that TPL was unable to pay anyone who was entitled to payment. According to Dwayne Hannah, TP L’s Chief Financial Officer (CFO), by the end of th e second quarter of 2009 TP L’s books showed that the company owed plaintiffs $1.801 million.3 On December 15, 2009, plaintiffs br ought this action against both TPL and Leckrone, primarily alleging breach of the Assignment Agreement. In November 2010 the court held a bench tria l limited to interpretation of the “gross proceeds” and modification terms of the Assignment Agre ement, and in July 2011 it agreed with plaintiffs’ interpretation. Meanwhile, the superior court addressed a first amended cross-complaint TPL had filed against plaintiffs. On Se ptember 27, 2011, the court issu ed an order granting in part plaintiffs’ anti-SLAPP motion u nder Code of Civil Procedure section 425.16. This court affirmed that order on Ju ly 1, 2013. (H037664.) TPL filed a second amended cross-complaint on October 7, 2011. The superior court bifurcated the causes of action against Leckrone, and the claims against TPL were tried before a jury. On Ap ril 18, 2012 the jury found TPL liable for breach of the Assignment Agreement and awarded plaintiffs $8,887,732.00. TPL received nothing on its cross-complaint. Af ter calculating prejudgm ent interest, costs, and attorney fees, the court entered judg ment for plaintiffs in the amount of $10,129,741.77. On May 7, 8, and 21, 2012, the court took up the remain ing issue, whether Leckrone could be held individually liable unde r an alter ego theory. On December 27, 2012, the court issued its st atement of decision and judgment, finding that Leckrone was not the alter ego of TPL. After their motions to vacate the judgment and for a new trial were denied, plaintiffs brought this appeal.
Discussion
1

. Substantial Evidence of Alter-Ego Liability Plaintiffs first contend that the “undisputed, substantia l evidence show ed that Dan Leckrone is the alter ego of TPL.” They mention the fa miliar substantial evidence rule, which requires the appellate c ourt to view all factual matters in the light most favorable to the prevailing party and dr aw all reasonable inferences to uphold th e verdict if4 possible. The reviewing court may not rewe igh the evidence, rede termine the credibility of the witnesses, or resolve conflicts in the testimony. ( Munoz v

. Olin (1979) 24 Cal.3d 629, 635-36; Associated Builders and Contractors , Inc

. v

. San Francisco Airports Com

. (1999) 21 Cal.4th 352, 374.) “But this test is typically implicated when a defendant contends that the plaintiff succeeded at trial in spite of in sufficient evidence. In the case where the trier of fact has expressly or implicitly conclude d that the party with the burde n of proof did not carry the burden and that party appeals, it is misleading to characterize the failure-of-proof issue as whether substantial evidence supports the judgment. This follows because such a characterization is conceptually one that allows an attack on (1) the evidence supporting the party who had no burden of proof, and (2) the trier of fact’s unassailable conclusion that the party with the burden di d not prove one or more elemen ts of the case . . . . [¶] Thus, where the issue on appeal turns on a failure of proof at trial, the question for a reviewing court becomes whether the evid ence compels a finding in favor of the appellant as a matter of law. [Citations.] Specifically, the question becomes whether the appellant’s evidence was (1) ‘uncontradict ed and unimpeached’ and (2) ‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to suppo rt a finding.’ ” ( In re I

. W . (2009) 180 Cal.App.4th 1517, 1528; accord, Valero v

. Board of Retirement of Tulare County Employees ’ Retirement Assn

. (2012) 205 Cal.App.4th 960, 966.) To the extent that plaintiffs’ argument revisits the trial ev idence to show that “substantial undisputed evidence” supports a finding of alter ego lia bility, we must apply the principle articulated in In re I

. W ., quoted above. We will not indulge in a reweighing of the evidence to determine whether we would have found the facts in plaintiffs’ favor. On the other hand, to the extent that plainti ffs are contending that their alter-ego evidence was uncontradicted, unimpeached, and “ ‘of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding,’ ” we5 address the issue to determine whether a judgme nt in plaintiffs’ favor was compelled as a matter of law. ( Ibid ; see Roesch v

. De Mota (1944) 24 Cal.2d 563, 571 [even if plaintiffs’ evidence was “uncontradicted an d unimpeached . . . it would not necessarily follow that it was of such a character and weight as to leav e no room for a judicial determination that it was insufficient to support a finding in favor of [pla intiffs]”].) “ ‘Alter ego is a limited doctrine, invoke d only where recognitio n of the corporate form would work an injustice to a third person.’ [Citation.] ‘The essence of the alter ego doctrine is that justice be done . . . . Thus the corporate form will be disregarded only in narrowly defined circumstan ces and only when the ends of justice so require.’ [Citation.]” ( Zoran Corp. v

. Chen (2010) 185 Cal.App.4th 799, 810; see also Sonora Diamond Corp

. v

. Superior Court (2000) 83 Cal.App.4th 523 , 539 [alter ego is “an extreme remedy, sparingly used”].) “The conditions under whic h the corporate entity may be disregarded, or the corporation be regarded as the alter ego of the stockholders, necessarily vary according to the circumstances in each case inasmuch as the doctrine is essentially an equitable one and for that reason is particularly with in the province of the trial court.” ( Stark v

. Coker (1942) 20 Cal.2d 839, 846.) Neverthele ss, courts have generally applied two requirements for application of this doctrine: (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow. ( Misik v. D ’ Arco (2011) 197 Cal.App.4th 1065, 1072, citing Webber

v

. Inland Empire Investments , Inc . (1999) 74 Cal.Ap p.4th 884, 900; Automotriz Del Golfo De California S

. A

. De C

. V

. v

. Resnick (1957) 47 Cal.2d 792, 796.) “ ‘Both of these requirements must be found to exist before the corporate existence will be disregarded, and since this determination is primarily one for the trial c ourt and is not a question of law, the conclusion of the trier of fact will not be disturbed if it is supported by substantial evidence.’ [Citation.]” ( Misik v

. D ’ Arco , supra , 197 Cal.App.4th at p. 1072.)6 Determining the first requirement fo r applying the alter ego doctrine—a “sufficient unity of interest and ownership that the separate personalities of the individual and the corporation no longer ex ist”— involves consideration of a variety of factors, none of which is necessarily conclusive. ( Misik v

. D ’ Arco , supra , 197 Cal.App.4th at p. 1073; Associated Vendors , Inc

. v

. Oakland Meat Co . (1962) 210 Cal. App.2d 825, 840 ( Associated Vendors ).) 1 The list, though extensive, is not exhaustive; “these enumerated factors may be considered with others under the particular circumstances of each case.” ( Misik v

. D ’ Arco , supra , 197 Cal.App.4th at p. 1073, citing Zoran Corp

. v

. Chen, supra, 185 Cal.App.4th at p. 812; Associated Vendors , supra , 210 Cal.App.2d at p. 840.)

1 Many of these were listed in Associated Vendors , supra , 210 Cal.App.2d at pp. 839-40: “Commingling of funds and other assets, failu re to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses [citations]; the treatment by an individual of the assets of the corporation as his own [citations] . . . the failure to main tain minutes or adequate corporate records, and the confusion of the records of the separa te entities [citations]; th e identical equitable ownership in the two entities; the identificati on of the equitable owners thereof with the domination and control of the two entities; iden tification of the direct ors and officers of the two entities in the responsi ble supervision and managemen t; sole ownership of all of the stock in a corporation by one individual or the members of a family [citations]; the use of the same office or business locati on; the employment of the same employees and/or attorney [citations]; th e failure to adequately capita lize a corporation; the total absence of corporate assets, and undercapitali zation [citations]; the use of a corporation as a mere shell, instrumentality or condu it for a single venture or the business of an individual or another corporation [citations]; the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities [c itations]; the disregard of legal formalities and the failure to maintain arm’s length re lationships among related entities [citations]; the use of the corporate entity to procure labor, services or merchandise for another person or entity [citations]; th e diversion of assets from a corporation by or to a stockholder or other person or entity, to the de triment of creditors, or the manipulation of assets and liabilities between en tities so as to concentrate the assets in one and the liabilities in another [citations]; the contract ing with another with intent to avoid performance by use of a corpor ate entity as a shield agains t personal liability, or the use of a corporation as a subterfuge of illegal tr ansactions [citations]; and the formation and use of a corporation to transfer to it the existing liability of anot her person or entity.”7 Plaintiffs contend that “[s]ubstantial, undisputed evidence” demonstrated that “at least ten” of these factors were present here , particularly the commingling of assets and the disregard of corporate formalities. They first maintain that Leckrone commingled TPL’s assets with his own, by directing TPL to pay hi m large amounts which were recorded as payment to his adult children but which they had not authorized, and which were made pursuant to unsigned contracts th at had not been seen by Dwayne Hannah, TPL’s CFO. In plaintiffs’ view, “[t]his tran saction alone is the essence of commingling funds, as Dan Leckrone simply treated TPL’s bank account as his personal bank account.” Plaintiffs further emphasize the pa yments TPL made in order for Leckrone to acquire three companies (OnSpec, Chipscale, and Indigita) and TPL’s payment of the operating expenses of those companies along w ith those of Alliacense, also Leckrone’s wholly owned company. 2
The evidence on this point, however, was not undisputed. Susan Anhalt, Leckrone’s daughter and a TPL employee, not only served as vice president of TPL’s law department, but also handled Leckrone’s pe rsonal bank accounts and his one investment account. She testified that there had been no commingli ng of her father’s personal accounts with any account of TPL or of any other “ope rating entity.” And Hannah testified that when he joined TPL in September 2005 he in stituted procedures to make sure that the company was keeping its books and records in accord ance with “accounting policies.” He had never foun d a transfer of funds from TP L to Leckrone “for a purely personal reason” or without a “proper, thor ough explanation of the purpose for those

2 Hannah explained the function of Alliacense: “A. Alliacense is prim arily the entity that manages the [TPL] portfolio. They seek to ga in value from the portfolio by analyzing portfolio, technical analysis, [and] business an alysis and they have a sales force which works with entities th at are using the technology. I mean they are the entity that really drives the revenue for the company. . . . I mean withou t Alliacense there would be-- there probably would not be any moneys coming into the organization.”8 funds”; and he had never found any indicati on that any of Leckrone’s family members had improperly used TPL funds. Hannah was asked whether Leckrone had ever commingled his personal funds with those of TPL, whether Leckrone had instructed him to do anything in his job that he thou ght was improper, and wh ether Leckrone had directed him to transfer money in an improp er way or improperly account for a transfer of money. Hannah answered “no” to que stions about all of these circumstances. As the trier of fact, the superior court was entitled to credit these witnesses’ testimony and consider it in determining the issue of commingling; it is not for us to decide on appeal that we would have drawn a different conclusion on the evidence presented. As discussed earlier, that substa ntial evidence supported plaintiffs’ position does not mean that the verdict must be overt urned, because this is a case in which plaintiffs simply failed to meet their burden of proof at trial. Because we cannot say that on this record the court below was compelled to find comminglin g of assets as a matter of law, reversal is not warranted on this ground. Plaintiffs devote a significant part of thei r appellate briefs to the argument that the “unity of interest and owne rship” condition was met by “und isputed evidence” that TPL distributed “tens of millions of dollars to Dan Leckrone at a time when TPL was not able to pay its debts, such as funds owed to the Browns.” According to plaintiffs, TPL thus violated both its own corporate rules and se ctions 501 and 17254 of the Corporations Code. 3 The superior court acknowledged that “ it can be presumed that Leckrone made

3 Corporations Code section 501 states, “Neither a corporati on nor any of its subsidiaries shall make any distribution to the corpora tion’s shareholders (Section 166) if the corporation or the subsidiary making the dist ribution is, or as a result thereof would be, likely to be unable to meet its liabilities (except those whose pa yment is otherwise adequately provided fo r) as they mature.” Before its repeal in 2013, former Corporations Code section 17254, subdivision (a), the provision cited by plaintiffs , stated, “(a) No distribution shall be made if, after giving effect to the distribution, either of the following occurs: [¶] (1 ) The limited liability9 the major decisions relating to the organi zation including distributions to himself, assignees, operating companies and others.” The court viewed Le ckrone’s ownership and control as insufficient alone to deem hi m the alter ego of TPL. It also found no evidence that the challenged distributions amounted to a violation of either the Corporations Code or TPL’ s own bylaws and operating agreement. Addressing the distributions themselves, the court found th at Leckrone’s family members who were employed by TPL were not disp roportionately compensated. Distributions to Leckrone himself fo r acquisition and operating expenses of companies he owned were also explained by the court. Those payments to purchase OnSpec, Chipscale, and Indigita were made di rectly to the companie s, with distributions credited to Leckrone. It was significant to th e court that TPL held exclusive licenses with each of these companies; thus, all aspect s of ownership and us e were under TPL’s control, though “naked legal title lies with an LLC owned by Leckrone.” The acquisition of these licenses “was compl[e]mentary with [IntellaSy s], the chip division of TPL headed by Chester Brown [a nd was] commercially pruden t and provided operational flexibility. . . . At best [their acquisition] resu lted in a gain to the company; at worst the acquisition may have been a failure or, so far, unproductive but that simply leaves it as a business judgment issue and not a misdirection of funds. Plaintiff[s] introduced no evidence to suggest that the amounts actually paid for th e patent rights owned by these several companies was out of line or untoward regardless of distribution or ownership.” Thus, the court saw no actionable conduct involv ing these licenses, even if Leckrone was in charge of directing TPL to make the purchases.

company would not be able to pay its debts as they become due in the usual course of business. [¶] (2) The limited lia bility company’s total assets would be less than the sum of its total liabilities plus, unless the operati ng agreement provides otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights of other members upon dissolution that are superior to the rights of the member receiving the distribution.”10 Likewise, the court found no evidence that TPL’s payments to Alliacense were improper, whether they were payments under th eir service contract or loans made to cover Alliacense’s operating expenses. 4 We cannot impose on the judgment our independent view of the evidence by reweig hing the testimony and exhibits presented at trial. We reach the same conclusion regarding pl aintiffs’ claim that distributions of at least $3.2 million to Leckrone family memb ers were improper, as they were made without signed assignment contracts and at a time when TPL was experiencing a “ ‘cash crisis’ ” in 2007 and 2008. In rejecting this contention the cour t apparently credited Hannah’s testimony that he found no improper use or accounting of funds by Leckrone or any of his family members. The court also heard, and apparently believed, Anhalt’s testimony that she paid $154,000 in cash and stock for a percentage interest in the disputed assignment contract. The court conc luded that similar assignment contracts with Leckrone’s other two children were, like Anha lt’s, “valid and enfo rceable” even though none of the three was signed by the assignee. 5
In short, the trial court, after heari ng several days of te stimony and receiving numerous exhibits into evidence, applied the Associated Vendors criteria and found that plaintiffs had not shown a unity of interest and ownership between Leckrone and TPL. The standard by which this court has review ed the trial evidence does not permit us to reweigh the testimony and exhib its and revisit conflicts in the evidence that the lower

4 Alliacense was paid 15 percent of li censing revenues plus additional amounts for operating expenses. Alliacense also received financial assistance from TPL, which was reflected as an obligation to TPL on Alliacense’s books. Hannah described some payments that were accounted for as distribu tions to Leckrone and then a contribution by him to Alliacense.

5 All three assignment contracts were dated January 5, 2003 and si gned by Leckrone as chairman of TPL. No assignee si gnatures were on the three documents.11 court resolved as trier of fact. In this case we cannot say that th e evidence of unity of interest and ownership was “ ‘of such a charac ter and weight as to leave no room for a judicial determination’ ” that Leckr one was not the alter ego of TPL. ( In re I.W. , supra , 180 Cal.App.4th at p. 1528.) Because plainti ffs failed to meet th eir burden of proof on this prong of the alter ego test, it is unnece ssary to address the tr ial court’s additional finding that the evidence was “i nsufficient to establish . . . that an inequitable result would occur if the acts in question were treated as those of TPL alone.” 6
2. Expert Testimony In its statement of decision the court observed that the testimony of CFO Dwayne Hannah, the only witness with “accounting expertise,” 7 was uncontradicted, thus demonstrating to the court that “strict acc ounting and financial policies were established and followed consistent with generally accepted accounting principles.” One of the grounds on which plaintiffs moved for a ne w trial was that the court had improperly treated Hannah as an expert witness without his being designated and qualified as such. In their motion plaintiffs contended that in a new trial they would produce the testimony of their own experts, and they submitted those experts’ declarations, in which one stated that “characterizing a payment of $2.2 million as a payment to Daniel E. Leckrone’s adult children was inconsistent with the principles underlying Generally Accepted Accounting Policies (GAAP).” On appeal, plaintiffs assert error in the court’s refusal to grant a new trial “to allow them to litigate fairly.” We examine this issue in accordance with the abuse-of-discretion

6 It is also unnecessary to address Leckrone ’s assertion that, based on the evidence at trial, plaintiffs are estopped to pursu e alter ego liability against Leckrone.

7 Hannah held an MBA and was a certified pu blic accountant. When he joined TPL he tried to improve the accounting procedures so that the books and records were kept “in accord with accounting policies.”12 standard of review. Addressing questions ca lling for lay opinion testimony, the Supreme Court explained nearly 100 hundre d years ago, “The true rule is simple and, so far as this state is concerned, well established: to permit, or to refuse to perm it, such questions is a matter resting largely in the discretion of the trial court, which discretion will not here be reviewed unless it is made plain that the court’s ruling in adm itting the evidence has worked an injury. Generally speaking, the admission of the [testimony] cannot work an injury where a fair latitude upon cross-examination is allowed, for under such cross-examination the facts are certain to be adduced. It w ill be found frequently that an appellate tribunal upholds the ru lings of the trial court in sustaining an objection to such questions, but the cases are far less numerous where it has felt compelled to reverse the inferior tribunal for permitting them.” ( Nolan v

. Nolan (1909) 155 Cal. 476, 480-481; see Evid. Code, § 800 [lay opinion testimony must be rationally based on the perception of the witness and helpful to a clear understanding of his testimony].) Leckrone dismisses plaintiffs’ conten tion as meritless because plaintiffs themselves “elicited the only testimony from Mr. Hannah on whether TPL complied with generally accepted accounting principles.” That statement misrepresents the record. It is true that plaintiffs’ counsel asked Hannah to explain his “understanding under generally accepted accounting principles of what the term ‘contribution’ means.” But that question was confined to the definition of a term c ontained in the Corporations Code, and it was posed to Hannah after the witness had mentioned GAAP under questioning by defense counsel. On that prior occasion Hannah was asked about the procedural changes he had made when he took over the books and re cords of TPL in September 2005. Hannah explained that he had found it necessary to “institute some policies to formalize certain procedures within the finance accounting group . . . to make sure that we clearly kept the books and records in accordance . . . with accounting policies.[Q ]: Generally accepted accounting principles, is that – [A.] Yes, that’s correct.”13 This line of questioning, however, wa s not met with a timely objection by plaintiffs. They did not complain about th e witness’s “expert opinion” in relation to GAAP until after both sides ha d submitted their posttrial brie fs and after the court had issued its tentative decision. Had they obj ected when GAAP was fi rst mentioned in the course of Hannah’s testimony, they could have requested an opportun ity to present their own rebuttal experts. In any event, what ever reliance the court placed on Hannah’s opinion regarding GAAP was at most harmle ss error, because Hannah’s testimony in this vein was confined to his effo rts to “clean things up” in TPL’s books and records-- and later, in response to questioni ng by plaintiffs’ counsel, hi s understanding of the term “contribution.” In testifying that no impropr iety had occurred with regard to improper transfers, accounting, and personal use of funds, Hannah did not state that his opinion was based on GAAP. Conseque ntly, even if their objec tion was not forfeited, the reference to GAAP was a relatively insignifi cant part of Hannah’s testimony. Moreover, reopening the trial to present plaintiffs’ own experts w ould have perm itted them to introduce testimony on different subjects than those on which Hannah had been questioned in relation to the GAAP. The court did not err in denying plaintiffs that opportunity to belatedly introduce new evidence. 3. Newly Discovered Evidence Another ground of plaintiffs’ Janu ary 2013 motion for new trial (and a concomitant motion to vacate j udgment) was their discovery th at in July 2 012, after the close of the alter ego trial, TPL submitted a co mplaint to the Court of International Trade for the United States International Trad e Commission (ITC) which, according to plaintiffs, demonstrated that Leckrone was the alter ego of TPL. In that verified pleading TPL and two other complainan ts accused numerous companies of patent infringement.14 One of the paragraphs stated that TPL had “teams of empl oyees” for licensing and never mentioned Alliacense. 8
Plaintiffs noted that this description re presented TPL, rather than Alliacense, as the entity that was “conducting TPL’ s licensi ng activities.” It assertedly contradicted testimony by Leckrone’s son “Mac” Leckrone, president of Alliacense, that Alliacense did the licensing for TPL and no longer relied on any of TPL’s employees for assistance. In his opposition Leckrone pointed out th at the identical allegations had been made in a prior ITC complain t filed on August 24, 2011 a nd in another filed on March 27, 2012. 9 Consequently, Leckrone argued, this evidence was not newly discovered, nor was it material within the me aning of the governing statute, Code of Civil Procedure section 657. That provision permits the c ourt to grant a new trial for newly discovered evidence “material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial.” “Applications for new trials upon the gr ound of newly discovered evidence must be looked upon with suspicion and disfavo r, because the temptation to make a favorable showing after having sustained a defeat is great. A party who relies upon that ground must make a strong case, both in respect to dilig ence on his part in preparing for the trial, and as to the truth and materia lity of the newly discovered ev idence, and that, too, by the best evidence which can be obtained. If he fa ils in either respect, his motion must be denied.” ( Arnold v

. Skaggs (1868) 35 Cal. 684, 688.) “[T] he party seeking relief has the

8 The complaint included the following statement: “TPL also employs teams of many other specialists to: (a) procure products of potential licensees; (b) deconstruct and ‘tear down’ products of potential licensees (incl uding detailed photograph y of the products); (c) analyze ‘tear down’ reports and prepare claim charts; (d) corre spond with potential licensees; ( e) make in-person presentati ons and negotiate licenses, and (f) ensure licensee compliance with royalty and reporting obligations.”

9 Defense counsel advised the trial court that he had found copies of these publicly available complaints by entering “tpl” and “itc” in a Google search.15 burden to prove that he ex ercised reasonable diligence to discover and produce the evidence at trial. If he does not make this showing, the motion must be denied.” ( In re Marriage of Liu (1987) 197 Cal.App.3d 143, 153-154; see also Slemons v

. Paterson (1939) 14 Cal.2d 612, 616 [“It is a matter of public interest that there be an end to litigation and that a new trial should not be granted for the purpose of enabling a party to produce further evidence unless he has shown some legally justifia ble excuse for not having produced such eviden ce at the former trial.”]) Even if we were to disa gree with Leckrone that the evidence was immaterial, we would not find reversal appr opriate. A motion for new tr ial based on newly discovered evidence is a matter wi thin the trial court’s broad discre tion, and its ruling on the motion “will not be disturbed unless an abuse of discretion is clearly shown.” ( Maloof v. Maloof (1917) 175 Cal. 571, 574; Plancarte v

. Guardsmark (2004) 118 Ca l.App.4th 640, 645-46.) In this case, beca use the evidence was publicly accessible before trial on the alter ego allegations, the superior court co uld have concluded tP hat with reasonable diligence TPL’s representations to the ITC could have been discovered earlier and produced at trial. Thus, on this record we cannot say that the court clearly abused its discretion by denying plaintiffs’ motion. 4. Discovery Sanctions Plaintiffs further challenge the trial cour t’s denial of their request for a new trial and sanctions against Leckr one based on TPL’s failure to produce certain documents during discovery. For example, plaintiffs had requested contracts between TPL and companies in which Leckrone had a financial or ownership interest. On May 4, 2012, the Friday before the alter ego portion of the trial, TPL belatedly produced an “Agreement and Plan or Merger betwee n Dan Leckrone , TPL, Oban Acquisitio n Corp. and OnSpec Electronic, Inc.” The first day of the alter ego portion of the trial, plaintiffs moved for16 “terminating sanctions or issue precl usion sanctions” against Leckrone. 10 In opposition to the sanctions motion Susan Anhalt, Leckrone ’s daughter and TPL’s attorney, declared that “TPL’s only involvement in the agre ement was to provide representations and warranties and guarantee to the OnSpec selling shareholders.” Anhalt also stated that “the OnSpec Merger Agreement was well known to Mr. Brown as early as April 2006.” In the ITC pleading, however, TPL alle ged that it had “participated in the acquisition of OnSpec in April 2006.” Plaint iffs highlighted this statement in their motion for new trial, claiming that it contradi cted their statements in opposition to the sanctions motion. Plaintiffs take the sa me position on appeal. Had TPL produced the agreement before the discovery cutoff on December 29, 2011, plaintiffs “could have retained an expert witness to discuss the wa y in which the OnSpec agreement was further evidence of commingling of Dan Leckrone’s a nd TPL’s funds.” Plaintiffs thus contend that the court erred in denying its motion for discovery sanctions. Like an order denying a new trial, an order denying sanctions for discovery abuse is within the court’s broad discretion. (Cf. Colgate-Palmolive Co. v

. Franchise Tax Bd

. (1992) 10 Cal.App.4th 17 68, 1788 aff’d sub nom. Barclays Bank PLC v

. Franchise Tax Bd

. of California (1994) 512 U.S. 298.) “An abuse of discretion occurs only where it is shown that the trial court exceed ed the bounds of reason. [Cita tion.] It is a deferential standard of review that requires us to uphold the trial court’s determination, even if we disagree with it, so long as it is reasonable.” ( Stull v

. Sparrow (2001) 92 Cal.App.4th 860, 864.) We cannot find such abuse here. This case is not comparable to Sherman v

. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1163, on which plai ntiffs rely. There

10 On June 13, 2012, by stipulation of the pa rties, the court reset the hearing on the sanctions motion to August 3, 2012. Leckrone’s written op position and plai ntiffs’ reply were filed on July 23 and 27, 2012, respectively.17 the trial court denied the motion for sanctions in the belief that it was not authorized to grant relief after the conclusion of the trial; consequently, it di d not consider the merits of the request. Given the multiple instances of the defendant’s admitted deception and intentional concealment of ma terial evidence dur ing discovery, the a ppellate court held that the lower court “should have reached the merits and found monetary sanctions absolutely mandated.” ( Id . at p. 1163, italics omitted.) In this case, the trial court could have determined that TPL and Leckrone ha d not engaged in a material abuse of the discovery process because TPL’s opposition to the sanctions motion had not “directly contradicted” the ITC filing. In the ITC pleading TPL clai med only that it “participated” in the acquisition of OnSpec, which the court could have found was consistent with its more detailed assertion that it provided “certain representations and warranties and a guarantee to the selling shareholders of OnSpec .” An abuse of discretion is not clearly evident in this instance. Our conclusion is the same with respec t to Exhibit 1583, a summary of TPL’s distributions to various recipients (including plaintiffs and Leckro ne) between July 2004 and February 2012. During discovery plai ntiffs had requested all documents “that discuss, refer, or relate to any distributio ns” from TPL to Leckrone. On December 19, 2011, the trial court ordered TPL and Leckrone to provide documents responsive to this and other document requests. On ly on May 7, 2012, the first day of the alter ego trial, did TPL provide plaintiffs a copy of Exhibit 1583. During Hannah’s testimony the court admitted Exhibit 1583 over plai ntiffs’ objection. Plaintif fs’ motion for “terminating sanctions or issue preclusion sanctions” asserted that the failure to provide this and other documents was a willful act of disobeying the court’s orde r and justified a finding that Leckrone was the alter ego of TPL. On appeal, plaintiffs contend that th e denial of their sanctions motion was prejudicial error, because Exhi bit 1583 was “a summary of other documents that TPL never produced. Had TPL produced Trial Exhi bit 1583 and the underlying support, the18 Browns would have been able to examine witnesses on this key issue of the tens of millions of dollars that TPL diverted to Dan Le ckrone.” Defenda nts established, however, that the challenged exhibit could not have been produc ed during discovery, because it was a document prepared by Hann ah on May 2, 2012, at the direction of defense counsel. This fact, derived from Hannah’s declaration in opposition to the motion, suggested an absence of bad faith or willfulness and thus constituted a sufficient ground for the trial court’s implied findin g that the requested sanctions were not warranted. (Cf. Bookout v

. State ex rel

. Dept

. of Transportation (2010) 186 Cal.App.4th 1478, 1485 [no abuse of discretion in refu sing to impose discovery sanctions where failure to produce documents was not in bad faith.])
5

. Motion for Judicial Notice Plaintiffs have moved in this court for j udicial notice of two documents filed in the United States Bankruptcy Court, TPL’s “Summary of Schedules” and its “Summary of Financial Status,” in order to provide furthe r evidence of the following facts. First, plaintiffs contend that the Summary of Sche dules demonstrates that TPL concealed the entire OnSpec agreement, which showed that, contrary to A nhalt’s declaration, “TPL not only paid for and guaranteed th e personal purchase by [Leckrone], but . . . also provided a security interest in TPL’s asse ts for the purchase.” Plainti ffs specifically seek “to show that the On[S]pec selling shareholders have f iled a claim for that debt as one secured by TPL’s assets, and that TPL has not disputed that debt. This information is further evidence of Respondent’ s commingling.” Second, plaintiffs contend, the Summary of Schedules lists claims made by Leckrone’s adult children, t hus contradicting Leckrone’s argument that TPL’s payments of $3.2 million to Leckrone u nder alleged contracts with the children were valid and enforceable. In plaintiffs’ view, these claims, which are listed in the schedule as “disputed,” reveal th e transactions as fraudulent. The Summary of Schedules also lists Leckrone’s ow n claim for $3,845,000, which TPL has not disputed. According to plaintiffs, “this secur ity interest shows that [Leckrone] has placed19 his debts above the debts of ot her unsecured creditors, includin g . . . Appellants, and thus this document is further evidence of the inequity that results if the Court fails to find that Respondent is the alter ego of TPL.” Finally, the Summary of Schedules lists an undisputed claim of Alliacense of only $1,708,641. The schedule did not list the debt of $15 million that Hannah had testified was owed to TPL by Alliacense. Plaintiffs cite this discrepa ncy as “further evidence that Respondent has commingled funds by instructing TPL to pay Alliacense tens of millions of dollars without a signed, written contra ct and by paying $15 million in operating expenses listed as a debt that mysteriously disappeared after the alter ego trial.” We will take judicial notice of the existe nce of those pleadings in the Bankruptcy Court (Evid. Code, § 45 2, subd. (d)(2)), but we decline to take new evidence on appeal in the form of the facts stated or suggested in those documents. It is beyond question that “[t]he truth of any factual ma tters that might be deduced fro m official records is not the proper subject of judicial notice.” ( Lockley v

. Law Office of Cantrell , Green , Pekich , Cruz & McCort (2001) 91 Cal.App.4th 875, 885.) That statement is all the more applicable to statements made by debtors in bankruptcy. “The circumstances under which an appellate court ca n receive new evidence after judgment . . . are very rare. . . The power to take evidence in the C ourt of Appeal is never used where there is conflicting evidence in the reco rd and substantial evidence supports the trial court’s findings. [Citations.] Plainly the above-descri bed evidence does no t meet these tests.” ( Philippine Export & Foreig n Loan Guarantee Corp. v

. Chuidian (1990) 218 Cal.App.3d 1058, 1090.) In summary, the trial court performed its duty as factfinder in determining that plaintiffs had not met their burden to prove Leckrone’s status as alter ego of TPL. Whether this court would have reached the same conclusion is immaterial, because the established standard of review does not perm it us to reweigh the evidence presented at20 trial. We further find no abuse of discreti on in the court’s rulings on plaintiffs’ motions for new trial and discovery sanctions . Reversal is not required. Disposition The judgment is affirmed._______ _______________ ___________ ELIA, J.

WE CONCUR:

________________ _______________ RUSHING, P. J.

________________ _______________ PREMO, J.