Court Opinion

ID: 2785956
Source: CourtListenerOpinion
Date Created: 2015-03-13 00:02:49.494413+00
Date Added: 2024-06-11T09:12:10.909378
License: Public Domain

Filed 3/12/15 Henry v. CATS Communication CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

DONALD L. HENRY,

     Plaintiff and Appellant,                                          G049520

         v.                                                            (Super. Ct. No. 07CC04970)

CATS COMMUNICATION, INC., et al.,                                      OPINION

     Defendants;

JOSEPH DAWSON et al.,

     Defendants and Respondents.

                   Appeal from a judgment of the Superior Court of Orange County,
Derek W. Hunt, Judge. Affirmed in part, reversed in part, and remanded. Motion for
sanctions. Denied.
                   Richard V. McMillan for Plaintiff and Appellant.
                   Joseph H. Dawson, in pro. per., for Defendant and Respondent.
                   Steve Rogala, in pro. per., for Defendant and Respondent.
                                          *                  *                  *
                                    INTRODUCTION
              Plaintiff Donald L. Henry filed a fourth amended complaint which
contained claims for (1) relief under Corporations Code section 800 et seq. against CATS
Communication, Inc. (CATS), Russ McCullough, and Mike Harrell; (2) breach of
contract against CATS and McCullough; (3) fraud and misrepresentation (fraud) against
McCullough, Jonathan Kudla, and Scott MacKay; and (4) breach of fiduciary duty
against, inter alia, Harrell, Joseph Dawson, and Steve Rogala. Henry’s claims for relief
under Corporations Code section 800 et seq. and breach of fiduciary duty were severed
by the trial court from the claims for breach of contract and fraud. Following the close of
Henry’s case-in-chief during a bench trial of Henry’s claims under the Corporations Code
and breach of fiduciary duty, the court granted Harrell’s, Dawson’s, and Rogala’s
motions for judgment under Code of Civil Procedure section 631.8 as to the claims
against them. Henry’s trial counsel asked if the court would issue a statement of
decision. The trial court responded that it had issued a statement of decision by stating its
reasons for granting the motions orally on the record; the court did not issue a written
statement of decision.
              Judgment was entered in favor Harrell as to the relief under Corporations
Code section 800 et seq. claim, and in favor of Harrell, Dawson, and Rogala on the
breach of fiduciary duty claim. The judgment also stated Henry had proven his
shareholder derivative claim for relief under Corporations Code section 800 et seq.
against McCullough by showing that, as an officer of CATS, McCullough had committed
ultra vires activities; the judgment awarded CATS $1,195,550 against McCullough on
that claim. Finally, the judgment stated Henry failed to prove his cause of action for
breach of contract against McCullough or CATS and awarded Henry the amount of $0 on
that claim.
              Henry contends the trial court erred by (1) failing to issue a statement of
decision upon his timely request when the court granted the motions for judgment at the

                                             2
bench trial of Henry’s claims for relief under Corporations Code section 800 et seq. and
breach of fiduciary duty; and (2) entering judgment as to the breach of contract cause of
action because that claim had neither been tried before a jury (as was Henry’s right) nor
before the court. Henry also contends the court erred by granting Harrell’s, Dawson’s,
and Rogala’s motions for judgment.
              Henry does not challenge the judgment as to the award of $1,195,550 in
favor of CATS and against McCullough on the claim for relief under Corporations Code
section 800 et seq. We therefore affirm that portion of the judgment. We reverse the
judgment in all other respects and remand to the trial court.
              For the reasons we will explain, the trial court’s refusal to issue a written
statement of decision following the bench trial of the claims for relief under Corporations
Code section 800 et seq. and breach of fiduciary duty constitutes reversible error under
Code of Civil Procedure sections 631.8 and 632. Because we reverse the judgment for
lack of a statement decision, we do not reach Henry’s argument the trial court also erred
by granting the motions for judgment.
              We also reverse the judgment as to the breach of contract claim. Our
record shows the breach of contract cause of action was not tried to the bench but was
slated to be tried before a jury; but that trial never occurred. The judgment, however,
inconsistently stated the breach of contract claim had been tried to the bench. The record
does not show Henry ever waived a jury trial as to that claim.
                                     BACKGROUND
                                              I.
                           THE FOURTH AMENDED COMPLAINT
                                                                             1
              In December 2011, Henry filed a fourth amended complaint alleging
claims for “[r]elief under Corporations Code, § 800 et seq.,” against CATS, McCullough,
       1
       Henry previously appealed from judgments entered after the trial court sustained
Dawson’s and the then defendants Nancy Edgell’s and Samir Shakfeh’s demurrers to the

                                              3
and Harrell; breach of contract against CATS and McCullough; fraud and
misrepresentation against McCullough, Kudla, and MacKay; and breach of fiduciary duty
against Edgell, Harrell, Chris Houchin, MacKay, Dawson, Rogala, Shakfeh, and Puniak.
The following is a brief summary of the allegations contained in the fourth amended
complaint.
              CATS is a Nevada corporation that was formed on May 3, 2004. From
May 3 through September 2005, McCullough was CATS’s president, sole director, and
majority shareholder. Henry was a CATS shareholder, owning 400,000 shares of CATS
common stock, and a creditor, having loaned CATS $315,000 since May 2006.
              Henry became aware that McCullough, without the board of directors’
knowledge or approval, took in excess of $2 million of CATS’s funds and used them to
purchase three cars held in his name, pay his gambling debts in excess of $1 million, pay
for his living expenses in addition to the money that he was paid as salary or received in
loans, and sent his mother at least $22,000. In late 2006 and early 2007, Henry had
“numerous discussions” with McCullough, during which Henry demanded that
McCullough “account for the monies he was misappropriating from CATS” and cease
taking the funds of CATS. McCullough refused to provide Henry an accounting and
denied any wrongdoing. On February 17, 2007, McCullough appointed Harrell as a
director of CATS, without informing Henry.
              After Henry filed his original complaint in this action against CATS and
McCullough in April 2007, at an “unnoticed/unofficial meeting,” McCullough appointed

third amended complaint without leave to amend. Rogala and the then defendant
Michael Puniak joined in Dawson’s demurrer, and judgment was entered in Rogala’s
favor, but the appellate record did not contain a judgment as to Puniak. In an
unpublished opinion, we affirmed the judgment of dismissal in favor of Edgell, but
reversed the judgments in favor of Dawson, Rogala, and Shakfeh. (Henry v. Edgell
(Aug. 23, 2011, G043639.) We dismissed the appeal as to Puniak for lack of appellate
jurisdiction. As discussed post, Edgell, Shakfeh, and Puniak were dismissed from this
case before trial.

                                             4
MacKay, Houchin, and Edgell as additional members of the CATS board of directors;
each accepted the appointment. Later, during that same meeting, Henry discussed with
MacKay, Houchin, and Edgell the lawsuit he had filed and “explained the facts upon
which the suit was based.”
              On April 24, 2007, “the first noticed meeting” of the CATS board of
directors was held, at which time McCullough tendered his resignation as president of
CATS and the board accepted his resignation. Houchin was appointed as the new
president. McCullough, Harrell, MacKay, Edgell, and Houchin were informed by
CATS’s legal counsel of Henry’s lawsuit and of McCullough’s alleged misappropriation
of CATS’s assets. At that same meeting, the board of directors voted to form a
committee to investigate Henry’s claims; that special committee never met to investigate
Henry’s allegations of wrongdoing by McCullough.
              In July 2007, Houchin resigned as president of CATS and McCullough
took over the day-to-day operations without having been appointed by the board of
directors. The board of directors failed to stop McCullough from continuing to
misappropriate CATS’s assets.
              In 2008, a new board of directors of CATS was elected. It was comprised
of McCullough, Harrell, Edgell, Dawson, Rogala, Shakfeh, and Puniak; Dawson was the
chairman of the board. The board formed a committee to investigate Henry’s claims,
consisting of Dawson, Rogala, Shakfeh, and Puniak. Dawson fully participated in the
investigation of McCullough but did not disclose his past relationship with McCullough.
              Between June 22, 2007 and December 30, 2008, the governing boards of
directors allowed McCullough to (1) sell CATS’s assets outside the ordinary course of
business without a prior court order; (2) take salary payments without board approval;
and (3) continue to dissipate CATS’s funds to the detriment of the corporation, its
shareholders, and creditors. CATS was rendered insolvent and no longer had sufficient
funds to meet its obligations as they came due. It eventually went out of business.

                                            5
                After completing its investigation of McCullough and finding he had
misappropriated over $1 million from CATS’s accounts for his personal use, on
December 30, 2008, Dawson, Rogala, Shakfeh, and Puniak agreed, on behalf of CATS,
to enter into a written executive termination agreement with McCullough (the
            2
agreement); Henry did not know about or consent to the agreement. The agreement
provided that CATS would not pursue (1) criminal litigation or take any direct or indirect
action to cause criminal charges or litigation to be brought against McCullough; (2) civil
litigation against him; or (3) shareholder derivative litigation against him. In exchange,
McCullough agreed, inter alia, to resign from his employment with CATS, to surrender
his shares of CATS, and to transfer CATS’s “shell company” to Dawson, Rogala,
Shakfeh, and Puniak personally.

                                               II.

  THE TRIAL COURT CONDUCTS A BENCH TRIAL ON THE CLAIMS FOR RELIEF UNDER
    CORPORATIONS CODE SECTION 800 ET SEQ. AND BREACH OF FIDUCIARY DUTY;
FOLLOWING HENRY’S CASE-IN-CHIEF, THE COURT GRANTS HARRELL’S, DAWSON’S, AND
 ROGALA’S MOTIONS FOR JUDGMENT AND SCHEDULES A DAMAGES PROVE-UP HEARING
  ON THE RELIEF UNDER CORPORATIONS CODE SECTION 800 ET SEQ. CLAIM AGAINST
   MCCULLOUGH AND A JURY TRIAL FOR HENRY’S BREACH OF CONTRACT CLAIM.
                By the time the case was ready for trial in May 2013, MacKay, Edgell,
Houchin, Shakfeh, and Puniak had been dismissed from the case. Due to a family
tragedy suffered by Kudla, the trial court granted a motion to sever the case and try the
fraud claim, the only claim alleged against Kudla, on a later date.
                Before trial, the court informed the parties that the claim for relief under
Corporations Code section 800 et seq. alleged against CATS, McCullough, and Harrell,
and the breach of fiduciary duty claim against Harrell, Dawson, and Rogala, were

       2
        Although the fourth amended complaint does not specifically allege the date
CATS became insolvent, a fair reading shows CATS had become insolvent before the
execution of the agreement.

                                                6
equitable in nature and thus would be tried to the bench, followed by a jury trial on the
legal issues in the case. Henry’s counsel responded to the court: “You’re absolutely
correct that you have the right to do a bench trial” as to those two causes of action.
              At the commencement of the bench trial on the equitable claims,
McCullough “failed to appear and did not defend the case against him.” The record
reflects there was also no appearance by “nominal defendant CATS Communications,
Inc.”
              Following the completion of Henry’s case-in-chief during the bench trial of
his claims for relief under Corporations Code section 800 et seq. and breach of fiduciary
duty, Harrell, Dawson, and Rogala each moved for judgment in their favor under Code of
Civil Procedure section 631.8 as to the claims alleged against them. After entertaining
argument on Harrell’s motion for judgment as to the claim for relief under Corporations
Code section 800 et seq. alleged against him, the court granted the motion. Henry’s
counsel then asked the court: “Will you prepare a statement of decision?” The court
responded: “Hold it—what? Excuse me?” Henry’s counsel re-asked: “Will you prepare
a statement—” and the court responded: “I just gave you my statement of decision. I
told you what my findings were.”
              The court proceeded to entertain argument regarding the motions for
judgment as to the breach of fiduciary duty claim. The court ultimately granted the
motions for judgment as to that claim alleged against Dawson, Rogala, and Harrell,
stating “for the reasons that I’ve already stated.”
              The court then stated, “[w]here does this leave us? It leaves us with two
causes of action which we didn’t litigate; . . . the second cause of action is for breach of
contract, and it’s against CATS and Mr. McCullough. And the third cause of action is
against—is fraud against Mr. McCullough[ and] Mr. Kudla.” The court found that Henry
had proven up his case against McCullough as to the claim seeking relief under
Corporations Code section 800 et seq., and further stated, “the other thing that remains

                                              7
unadjudicated is the dollar amount to be proved up against Mr. McCullough” under that
cause of action. The court and Henry’s counsel agreed to postpone that damages
prove-up hearing.
              The court proposed that the damages prove-up hearing against McCullough
be scheduled when the breach of contract claim against CATS and McCullough was to be
tried, as neither involved Kudla who remained unavailable. Henry’s counsel agreed to
the court’s proposal. The court scheduled trial for June 3, 2013.

                                             III.

         THE JURY TRIAL ON THE BREACH OF CONTRACT CAUSE OF ACTION IS
        POSTPONED; THE COURT ORDERS THE FRAUD CLAIM SEVERED FROM THE
      BREACH OF CONTRACT CLAIM, BUT DENIES HENRY’S REQUEST TO SPECIALLY
               SET JURY TRIAL ON THE BREACH OF CONTRACT CLAIM.
              The record shows the jury trial was rescheduled for August 27, 2013. In a
minute order dated August 30, the trial court granted Henry’s motion to sever the claim
against Kudla from the remaining issues in the case. The minute order stated, “[t]he
Default Prove-Up Hearing is scheduled for 10/04/2013 . . . as to CATS Communication
and Russ McCullough on damages portion of first trial.”
              On October 31, 2013, Henry filed an ex parte application for an order
specially setting the jury trial on the breach of contract cause of action against
McCullough and CATS. The court denied the application.
              A minute order, dated November 4, 2013, states: “The court has reviewed
the secondary material submitted this date by plaintiff Donald Henry in support of his
prove-up of the claims against defendants Russ McCullough and CATS Communications
respecting both the first and second causes of action of the fourth amended complaint.
[¶] The court now finds that plaintiff Henry, as a Corp. C § 800 representative of nominal
defendant CATS Communications, has proved up CATS’ damages against said defendant
under the 1st cause of action in the sum of $1,195,550. [¶] By contrast, plaintiff’s

                                              8
evidence respecting the 2nd cause of action, which was a personal breach of contract
claim by plaintiff Henry against both defendants McCullough and CATS, was inadequate
by a preponderance of the evidence (a) on liability against defendant CATS and (b) on
damages against defendant McCullough, and accordingly said defendants shall have
judgment on the 2nd cause of action and plaintiff shall take nothing against said
defendants thereon.”
              The record shows that Henry had filed a declaration that he executed on
October 16, 2013, which appears to address the damages claimed pursuant to the claim
for relief under Corporations Code section 800 et seq. The declaration concludes:
“Based upon my review of the books and records set forth above, it is my belief that
defendant McCullough misappropriated the sum of $2,021,576.00 from CATS and on
behalf of myself, and the other shareholders in CATS, request that a judgment be entered
in favor of CATS and against Defendant McCullough in the sum of $2,021,576.00 plus
costs.” The declaration addresses instances of misappropriation of CATS’s assets by
McCullough, but does not address any contractual relationship between Henry on the one
hand, and CATS or McCullough on the other. Our record does not show Henry agreed to
have the breach of contract cause of action tried to the trial court.

                                              IV.

        JUDGMENT IS ENTERED ON NOT ONLY THE CLAIMS FOR RELIEF UNDER
     CORPORATIONS CODE SECTION 800 ET SEQ. AND BREACH OF FIDUCIARY DUTY,
      BUT ALSO THE BREACH OF CONTRACT CAUSE OF ACTION; HENRY APPEALS.

              On November 4, 2013, the “Severed Judgment on 1st, 2nd, and 4th Causes
of Action” (the judgment) was filed. The judgment reiterates that the trial court had
severed the fraud cause of action from the case, to be tried on a later date (still to be
determined as of the date of the judgment), because of a family tragedy suffered by
Kudla. The judgment states: “As thus bifurcated, the action was thereupon tried to the

                                               9
court on (a) the 1st [(relief under Corporations Code section 800 et seq.)], 2nd [(breach of
contract)], and 4th [(breach of fiduciary duty)] causes of action of plaintiff’s fourth
amended complaint and (b) said appearing defendants’ answers thereto. Before evidence
was taken, the court also announced that, given defendant McCullough’s failure to appear
and defend the case, all evidence to be offered by plaintiff at trial would be accepted and
evaluated by the court as to defendant McCullough on plaintiff’s case in chief on both
liability and, if appropriate, damages, regardless of the outcome against the other said
defendants.”
               The judgment recounts that after Henry rested his case, Dawson, Rogala,
and Harrell, each moved for judgment on the causes of action stated against them,
respectively. The judgment states: “The said motions having been argued, the court then
granted each motion for each of said moving defendants and defendant CATS on the 2nd
cause of action, but also announced that plaintiff had succeeded in proving up liability on
the 1st and 2nd causes of action against defendant McCullough. [¶] All issues and causes
of action having therefore been resolved except for (a) damages as to defendant
McCullough on the 1st and 2nd causes of action and (b) both liability and damages on the
severed 3rd cause of action against both defendants McCullough and Kudla, the court
then scheduled a later prove-up of damages against defendant McCullough. (The court
has also scheduled a status conference for February 21, 2014 in respect to Mr. Kudla’s
medical condition and a potential date to try the said severed 3rd cause of action.)”
(Italics added.)
               The judgment concludes:
               “1. Plaintiff Donald Henry, as a Corp C § 800 representative of CATS
Communications having proved defendant Russ McCullough, an officer of CATS
Communications, committed ultra vires activities (use of corporate funds to purchase
automobiles, the discharge of gambling debts, and the purchase of personal goods and

                                             10
services), the court decrees that CATS . . . shall have judgment against said defendant
McCullough in the sum of $1,195,550.
              “2. Plaintiff Henry, although having made a prima facie personal case of
contract liability against defendant McCullough on the second cause of action, failed to
prove by a preponderance of the evidence any damages against said defendant and will
therefore take judgment against said defendant in the amount of $0. Similarly, plaintiff
Henry failed to make a prima facie personal case of contract liability against defendant
CATS on the second cause of action and plaintiff will therefore take judgment against
said defendant in the amount of $0.
              “3. Defendant Mike Harrell shall have and is hereby awarded a judgment
against plaintiff Donald Henry on the 1st and 4th causes of action of plaintiff’s 4th
amended complaint and plaintiff shall accordingly take nothing against him. Likewise
defendants Joseph Dawson and Steve Rogala shall have and are hereby awarded a
judgment against plaintiff Donald Henry on the 4th cause of action of plaintiff’s fourth
amended complaint and plaintiff shall accordingly take nothing against them or either of
them. Each of said defendants Harrell, Dawson, and Rogala may recover their individual
costs upon timely filing of a memorandum of costs.”
              Henry filed a motion for a new trial and motion for a jury trial. In a minute
order, the court denied Henry’s motions but invited Henry’s counsel “to submit proposed
language to amend the judgment of November 4, 2013.”
              Henry appealed from the judgment. Dawson is the only defendant who
filed a respondent’s brief in this appeal. Rogala has filed a motion to join the argument
set forth in Dawson’s brief. Dawson also filed a motion for sanctions against Henry on
the ground he has pursued a frivolous appeal. Rogala filed a motion to join Dawson’s
motion for sanctions.

                                            11
                                       DISCUSSION
                                              I.

THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY FAILING TO ISSUE A STATEMENT
         OF DECISION FOLLOWING HENRY’S COUNSEL’S TIMELY REQUEST.

              After the trial court stated its ruling on the motion for judgment as to the
claim for relief under Corporations Code section 800 et seq. as alleged against Harrell,
but before the court entertained argument and ruled on the motions for judgment as to the
breach of fiduciary duty claim, Henry’s counsel asked the court, “[w]ill you prepare a
statement of decision?” The court responded it had already provided a statement of
decision having told the parties what the court’s findings were. The court therefore
granted Harrell’s, Dawson’s and Rogala’s motions for judgment as to the breach of
fiduciary duty claim, “for the reasons that I’ve already stated.” For the reasons we will
explain, the trial court’s refusal to issue a written statement of decision constitutes
reversible error.
              Section 631.8, subdivision (a) of the Code of Civil Procedure provides:
“After a party has completed his presentation of evidence in a trial by the court, the other
party, without waiving his right to offer evidence in support of his defense or in rebuttal
in the event the motion is not granted, may move for a judgment. The court as trier of the
facts shall weigh the evidence and may render a judgment in favor of the moving party,
in which case the court shall make a statement of decision as provided in Sections 632
and 634, or may decline to render any judgment until the close of all the evidence. The
court may consider all evidence received, provided, however, that the party against whom
the motion for judgment has been made shall have had an opportunity to present
additional evidence to rebut evidence received during the presentation of evidence
deemed by the presenting party to have been adverse to him, and to rehabilitate the
testimony of a witness whose credibility has been attacked by the moving party. Such
motion may also be made and granted as to any cross-complaint.” (Italics added.)

                                              12
              Section 632 of the Code of Civil Procedure provides: “In superior courts,
upon the trial of a question of fact by the court, written findings of fact and conclusions
of law shall not be required. The court shall issue a statement of decision explaining the
factual and legal basis for its decision as to each of the principal controverted issues at
trial upon the request of any party appearing at the trial. The request must be made
within 10 days after the court announces a tentative decision unless the trial is concluded
within one calendar day or in less than eight hours over more than one day in which event
the request must be made prior to the submission of the matter for decision. The request
for a statement of decision shall specify those controverted issues as to which the party is
requesting a statement of decision. After a party has requested the statement, any party
may make proposals as to the content of the statement of decision. [¶] The statement of
decision shall be in writing, unless the parties appearing at trial agree otherwise;
however, when the trial is concluded within one calendar day or in less than 8 hours over
more than one day, the statement of decision may be made orally on the record in the
presence of the parties.” (Italics added.)
              Here, Henry’s counsel made a timely request for a statement of decision by
immediately making the request after the court announced its ruling on Harrell’s motion
for judgment as to the relief under Corporations Code section 800 et seq. claim. The
court made its position clear that it had already satisfied its obligation of explaining its
reasons orally on the record. It was therefore unnecessary and futile for Henry’s counsel
to again request a proper statement of decision in compliance with Code of Civil
Procedure sections 631.8, subdivision (a) and 632 after the court entertained argument
and granted Harrell’s, Dawson’s and Rogala’s motions for judgment as to the breach of
fiduciary duty claim.
              A written statement of decision was required because the trial did not
conclude within one calendar day or in less than eight hours over more than one day. The
bench trial began on May 7, 2013, continued all day on May 8, and concluded on May 9.

                                              13
On our own motion, and pursuant to California Rules of Court, rule 8.155(a)(1)(A), we
augment the record with the trial court’s minute orders from those days which confirm
trial consumed more than eight hours. (In re Marriage of Gray (2002) 103 Cal.App.4th
974, 980 [The amount of time spent in trial is calculated based on “the time that the court
is in session, in open court, and also includes ordinary morning and afternoon recesses
when the parties remain at the courthouse,” but excludes “time spent by the judge off the
bench without the parties present—lunch, for example—except for such routine recesses
as occur during the day.”].)
               The trial court’s failure here to issue a written statement of decision is fatal
to the judgment. (See Karlsen v. Superior Court (2006) 139 Cal.App.4th 1526,
1530-1531 [the trial court’s failure to prepare a statement of decision on factual issues,
when timely and correctly requested, is reversible error]; In re Marriage of Sellers (2003)
110 Cal.App.4th 1007, 1010 [it is reversible error for a trial court to refuse to issue a
statement of decision when one it timely and properly requested]; Miramar Hotel Corp.
v. Frank B. Hall & Co. (1985) 163 Cal.App.3d 1126, 1129 [“[T]he issuance of a
statement of decision upon timely request therefor is mandatory. Because the trial court
failed to issue such a statement despite a timely request therefor, reversal is required.”].)
               We therefore reverse the judgment as to the claims for relief under
Corporations Code section 800 et seq. and breach of fiduciary duty, and remand the
matter to the trial court.

                                               II.

          WE REVERSE THE JUDGMENT AS TO THE BREACH OF CONTRACT CLAIM
              BECAUSE THE TRIAL COURT DENIED HENRY A JURY TRIAL.
               Henry argues the trial court erred by failing to set the jury trial on the
breach of contract and fraud causes of action, thereby denying him the right to have a
jury decide the factual issues raised in those claims. Our record shows the trial court

                                              14
severed the fraud cause of action from all the other causes of action and, as of the date of
the judgment, the jury trial on that claim had yet to be set, pending Kudla’s availability.
The judgment entered in this case thus did not resolve the severed fraud cause of action
against Kudla and McCullough.
               The record is inconsistent, however, with regard to the trial court’s
resolution of the breach of contract cause of action. The reporter’s transcript shows that
at the conclusion of the bench trial, the court stated that a jury trial on the breach of
contract and fraud causes of action remained. A jury trial date was set and rescheduled.
After the fraud cause of action was severed from the breach of contract cause of action
due to Kudla’s unavailability, Henry unsuccessfully sought to have a jury trial specially
set on the breach of contract claim against CATS and McCullough. The judgment,
however, states that not only were the claims for relief under Corporations Code
section 800 et seq. and breach of fiduciary duty tried to the bench in May 2013, but the
breach of contract claim was tried to the bench at that time as well. The judgment’s
reference to and purported disposition of the breach of contract cause of action is
inconsistent with the trial court’s statements at the conclusion of the bench trial and thus
is in error.
               The error constitutes reversible error because it effectively denied Henry a
jury trial on the breach of contract claim. Article I, section 16 of the California
Constitution guarantees a civil litigant the right to a jury trial on legal claims. (Code Civ.
Proc., § 631, subd. (a) [“The right to a trial by jury as declared by Section 16 of Article I
of the California Constitution shall be preserved to the parties inviolate.”]; Entin v.
Superior Court (2012) 208 Cal.App.4th 770, 776-777; DiPirro v. Bond Corp. (2007) 153
Cal.App.4th 150, 184-185 [“the right to a jury trial may not be abrogated by the trial
court’s severance of equitable claims from legal claims that have been joined in the same
action”].)

                                              15
              The extent of the constitutional civil jury trial right is set forth in Code of
Civil Procedure section 592, which provides in relevant part: “In actions for the recovery
of specific, real, or personal property, with or without damages, or for money claimed as
due upon contract, or as damages for breach of contract, or for injuries, an issue of fact
must be tried by a jury, unless a jury trial is waived, or a reference is ordered, as provided
in this Code.” (Italics added; see Corder v. Corder (2007) 41 Cal.4th 644, 656 [“Like the
constitutional provision (Cal. Const., art. I, § 16), section 592 is historically based and
does not expand the jury trial right beyond its common law scope.”].) “The denial of the
right to jury trial is reversible error per se. [Citations.] No showing of actual prejudice is
required.” (Martin v. County of Los Angeles (1996) 51 Cal.App.4th 688, 698; see
Conservatorship of Maria B. (2013) 218 Cal.App.4th 514, 534 [“Structural errors
requiring automatic reversal include denying a party’s request for a jury trial.”].)

                                             III.
                      DAWSON’S MOTION FOR SANCTIONS IS DENIED.
              Dawson filed a motion for sanctions against Henry (which Rogala moved
to join) on the ground this appeal is frivolous. In light of our holding reversing the
judgment in favor of Dawson, we deny Dawson’s motion.

                                       DISPOSITION
              The portion of the judgment entered against McCullough on the first cause
of action for relief under Corporations Code section 800 et seq., awarding CATS

                                              16
$1,195,550, is affirmed. The judgment is otherwise reversed and we remand to the trial
court. Appellant shall recover costs on appeal.

                                                  FYBEL, J.

WE CONCUR:

O’LEARY, P. J.

MOORE, J.

                                           17