Court Opinion

ID: 9894400
Source: CourtListenerOpinion
Date Created: 2023-11-01 18:04:18.086511+00
Date Added: 2024-06-11T09:08:41.082449
License: Public Domain

Filed 11/1/23 Young v. Hill CA2/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                      DIVISION THREE

SERENA YOUNG,                                                     B306769

     Plaintiff, Cross-defendant                                   Los Angeles County
and Appellant,                                                    Super. Ct. No. NC061797

         v.

PHILIP E. HILL,

     Defendant, Cross-complainant
and Appellant;

PHILIP E. HILL, M.D., INC.,

         Defendant and Appellant.

      APPEALS from a judgment of the Superior Court of
Los Angeles County, Mark C. Kim, Judge. Reversed in part
and remanded.

      Tredway Lumsdaine & Doyle, Roy J. Jimenez and Brandon
L. Fieldsted for Plaintiff, Cross-defendant and Appellant Serena
Young.
     Daniel E. Park Law Corporation, Daniel E. Park
and Samuel F. Izzo for Defendants, Cross-complainant and
Appellants Philip E. Hill and Philip E. Hill, M.D., Inc.
                   _________________________

       Serena Young and Philip Hill jointly own an orthopedic
surgery practice called Long Beach Advanced Orthopedic Medical
Center, Inc. (LBAO). After nearly two decades working together,
Young discovered that Hill had been depositing checks into his
own account, which she believed belonged to the practice. Young
sued Hill and his corporation for, among other things, breach
of contract, breach of fiduciary duty, fraud, and conspiracy.
Hill, in turn, filed a cross-complaint against Young and her
corporation, alleging Young failed to contribute an equal share
to the partnership.
       The case proceeded to trial, but before submitting it to
the jury, the court granted a directed verdict for Hill on Young’s
fraud and conspiracy claims, as well as her request for punitive
damages. On the remaining claims, the jury found in Young’s
favor and awarded her more than $1 million in damages. The
jury’s award included damages for lost profits, the loss in value
of Young’s ownership interest in LBAO, and interest. After trial,
the court eliminated the jury’s award of interest and reduced
the damages related to the value of LBAO. Both Hill and Young
appealed.
       On appeal, Hill argues Young was not entitled to any
damages related to her ownership interest in LBAO. He also
challenges the sufficiency of the evidence supporting the jury’s
verdict. We reject each of Hill’s arguments.
       In her cross-appeal, Young argues the court erred by
granting directed verdicts for Hill, eliminating the jury’s interest

                                 2
award, and reducing her damages by $150,000. We agree with
Young in part, concluding the court erred in granting a directed
verdict on her fraud claim and request for punitive damages,
eliminating the jury’s award of interest, and reducing the jury’s
award of loss-of-value damages. Accordingly, we reverse the
judgment in part and remand the case for further proceedings.
       FACTUAL AND PROCEDURAL BACKGROUND
1.    The LBAO agreement
      Young and Hill are orthopedic surgeons who met while
they were both employed by Harriman Jones Medical Group
(Harriman Jones). When Harriman Jones closed its orthopedic
department, Young and Hill decided to go into private practice
together.1
      In 1999, Hill and Young incorporated a business for the
purpose of practicing orthopedic medicine, which later became
LBAO. Young and Hill were the directors of LBAO, and they
each owned 50 percent of its shares. Young was LBAO’s CEO
and performed all administrative duties until 2016. Young
and Hill also set up individual corporations—Serena Young,
M.D., A Professional Corporation (Young, APC) and Philip E.
Hill, M.D., Inc. (Hill, Inc.)—to receive payment from LBAO. They
created the individual corporations solely for “tax efficiencies.”
      Young and Hill made an oral agreement concerning the
operation of LBAO. According to Young, she and Hill agreed to
a “50/50 partnership,” under which all the money they generated
from their practice would go into LBAO, they would pay LBAO’s

1     Most of the issues on appeal require that we view the
evidence in the light most favorable to Young. Accordingly,
we summarize the record in that light.

                                3
overhead expenses from those funds, and then they would evenly
divide the profits.
       At first, the bulk of LBAO’s business came from a contract
with Harriman Jones to provide orthopedic services for its
patients. At some point, HealthCare Partners Affiliates Medical
Group (HealthCare Partners) purchased Harriman Jones
and assumed its contract with LBAO. Over the years, LBAO
contracted with other insurance companies as well. As of 2008,
HealthCare Partners accounted for about half of LBAO’s total
business.
2.     The HealthCare Partners contract
       Sometime around 2008, HealthCare Partners decided it
did not want Young to treat any of its patients because it had
concerns over her “complication rate.” Accordingly, HealthCare
Partners entered into a new contract solely with Hill, which
we refer to as the HealthCare Partners contract. The contract
identified LBAO’s office as the “primary service location” and
the “remittance address,” and it listed as “hospital locations”
the surgery centers out of which LBAO operated. Young and Hill
never discussed how to treat the income from the HealthCare
Partners contract. Young believed that, because Hill would
continue to service the HealthCare Partners patients through
LBAO, income received under the contract would be governed
by the parties’ oral partnership agreement.
       LBAO treated HealthCare Partners patients the same
as any other patient of the practice. The patients came to
LBAO’s office for appointments, checked in with LBAO’s
receptionist, were attended to by LBAO nurses and medical
assistants, consulted with LBAO’s orthopedic tech, and scheduled
their surgeries with LBAO’s scheduler. LBAO paid for all the

                                4
overhead associated with treating the patients, including rent,
staffing, equipment, taxes, billing, and collections.
3.     Young reduces her hours
       In 2014, Young began suffering complications from a
childhood polio infection, and she told Hill she was considering
reducing her work schedule. Hill told her that was fine with him.
The next year, Young stopped taking emergency room calls,
which had required that she stay up the entire night. She
otherwise continued to perform the same work for LBAO.
Hill did not raise any concerns with Young about her reduced
work schedule.
4.     Young discovers Hill is diverting income
       For many years, LBAO handled its billing internally.
An LBAO employee would collect checks from the insurance
companies and fill out corresponding bank deposit slips. The
employee then gave the checks to Hill, who would deposit them
at LBAO’s bank on his way home from work.
       In 2016, LBAO hired an outside company to take over
its billing. As compensation, the outside company would keep
a percentage of the total income it processed on LBAO’s behalf.
Young started noticing discrepancies between the company’s fees
and the reported income for LBAO; each month, the company
based its fee on $15,000 to $20,000 more income than Hill had
deposited into LBAO’s account.
       Young thought this discrepancy might correct itself over
time, so she waited several months to investigate it further.
When the issue had not resolved itself by the summer of 2017,
Young asked an LBAO employee to try to reconcile the numbers
with LBAO’s bank statements. After reviewing the documents,
the employee told Young the discrepancies matched the income

                                5
received under the HealthCare Partners contract, so it appeared
that Hill had been pocketing those funds.
       As Young was preparing to confront Hill about the issue,
he came up to her and said, “ ‘I’m tired of taking care of you and
supporting you. This is my money.’ ” Young told Hill he “ ‘didn’t
pay overhead on that. That wasn’t the deal.’ ” Hill responded,
“ ‘That’s my money.’ ” Young was shocked and hurt because she
considered Hill to be her friend. She hoped she and Hill could
work out their issues, but he refused to contribute to LBAO
any income from the HealthCare Partners contract.
5.     The complaints
       In May 2018, Young filed a complaint against Hill and
Hill, Inc. for breach of contract, breach of the implied covenant
of good faith and fair dealing, fraud by concealment, breach
of fiduciary duty, dissolution of corporation, conspiracy,
and an accounting. Her claims were premised primarily on
allegations that Hill and his corporation had been diverting funds
that belonged to LBAO. In relief, Young sought compensatory
and punitive damages.
       Hill responded by filing a cross-complaint against Young
and Young, APC for breach of contract, breach of the implied
covenant of good faith and fair dealing, and breach of fiduciary
duty. According to the cross-complaint, the parties had agreed
to contribute to LBAO equally, which Young breached by working
fewer hours and seeing fewer patients than Hill. Hill also alleged
that Young “pilfer[ed] LBAO’s bank account, writing herself
checks in amounts above and beyond her profit entitlement
(which was to be even, 50-50, with Dr. Hill) . . . .” Like Young,
Hill sought compensatory and punitive damages.

                                6
6.    Young leaves LBAO
      Without the income from the HealthCare Partners
contract, Young struggled to cover LBAO’s overhead expenses
and was not able to pay herself much income. Therefore, when
LBAO’s lease ended in July 2019, Young decided to leave the
practice. Young explained she was not willing to enter into a new
lease with Hill, so she accepted a position with another practice.
Young, however, maintained her shares in LBAO and continued
to monitor its account. Hill continued working at the practice.
7.    The trial
      The case proceeded to trial, and Young presented evidence
establishing the facts summarized above. She also presented
expert testimony that Hill had diverted $535,570 in profits
that otherwise would have been paid to her. Young’s expert
additionally opined that, as of July 2019, LBAO had been worth
$674,741.
      Hill testified at trial that the terms of his oral agreement
with Young were somewhat different than what Young had
asserted. According to Hill, the parties had agreed to “[e]qual
contribution and equal distribution,” meaning each party was
required to contribute an equal amount to be entitled to an equal
share of profits.
      According to Hill, he initially deposited all the income from
the HealthCare Partners contract into LBAO’s account because
he thought it was necessary to “keep the business running.”
In 2011, he started “guesstimat[ing]” how much he owed to LBAO
to compensate it for overhead expenses, and he would deposit
the rest of the income from the HealthCare Partners contract into
his corporation’s account. Hill did not discuss this practice with
Young.

                                7
       In 2017, Hill took a closer look at LBAO’s finances and
discovered he had over-contributed to the practice by a significant
amount. After this discovery, he stopped contributing any money
from the HealthCare Partners contract into LBAO’s account.
       One of Hill’s experts testified that, after subtracting
overhead costs, Hill had contributed approximately $600,000
more to LBAO than Young had. Another expert testified to
the loss in value of LBAO caused by Young’s decision to leave
the practice. The expert used three different methods to value
the company before Young left, and he calculated the weighted
average to be $856,000. The expert explained that, without
Young, the business’s value was “shockingly low,” and it would
go bankrupt within a year.
       Before submitting the case to the jury, the court granted
a directed verdict for Hill on Young’s fraudulent concealment and
conspiracy claims, as well as her request for punitive damages.
On Young’s remaining claims—breach of contract, breach of
the implied covenant of good faith and fair dealing, and breach
of fiduciary duty—the jury found in her favor and awarded her
$1,057,737 in damages. The jury’s award consisted of $535,570
for profits taken by Hill, $222,167 in interest on those profits,
and $300,000 for the “[v]alue of half of [the] business.” The jury
found Hill had not proven any of his claims against Young.
8.     Hill’s post-trial motions
       After the trial, Hill moved for a new trial and for judgment
notwithstanding the verdict (JNOV). The court found Young was
not entitled to interest and the jury had awarded her excessive
damages related to her loss of interest in LBAO. According to
the court, because Young was no longer working at the practice,
its value should be reduced by one half. The court gave Young

                                8
the option of a new trial or a reduction in her damages. Young
selected the reduction in damages, and the court entered
judgment.
       Both parties timely appealed.
                            DISCUSSION
1.     There was no prejudicial instructional error
       Hill argues the court erred by instructing the jury that,
in connection with Young’s breach of contract claim, she sought
compensation for “the loss of her half interest in [LBAO].”
He contends Young was not entitled to such damages because
she admitted she retained her interest in LBAO as of the date
of trial. Young does not contest that point. Nevertheless, she
argues the court did not err because she never sought damages
for the loss of her interest in LBAO. Instead, according to Young,
she sought compensation for the loss in value of her interest
in LBAO, which was a proper category of damages.
       a.    Background
       Young urged the court to instruct the jury that, in
connection with her breach of contract claim, she sought damages
for the “loss of her half interest” in LBAO. Hill objected, arguing
Young should not be allowed to pursue such damages given she
admitted she still owned her entire interest in LBAO. According
to Hill, Young might be entitled to compensation for her interest
in connection with the dissolution of the business, but she could
not seek it as a form of damages.
       Young explained her theory of damages was that, had Hill
not breached the contract, “they would have continued to work
together and the value of the business would have continued.”
According to Young, because Hill refused to share income
from the HealthCare Partners contract, she struggled to pay

                                 9
LBAO’s overhead expenses and was forced to leave the practice,
which essentially destroyed the business. She pointed out
that Hill sought essentially the same category of damages;
the only difference was that Hill blamed Young for destroying
the practice, while Young blamed Hill. Young also argued
this was an issue for the jury to decide because, by the time
the company is dissolved, there will be no value left for her
to recover.
      The court overruled Hill’s objection, explaining it was up
to the jury to decide whether Young still had an interest in the
business and, if so, its value. With respect to Young’s breach
of contract claim, the court told the jury she was seeking several
categories of damages, including damages for “the loss of her half
interest in [LBAO].” The court separately instructed the jury on
the categories of damages Young sought for breach of fiduciary
duty, which included “loss of value of her half interest in LBAO.”
The court also instructed the jury it could award each item of
damages only once, regardless of the number of legal theories
alleged. The court then listed the categories of damages subject
to that rule, which included “loss of value of [Young’s] half
interest in LBAO.” Finally, the court provided a special verdict
form that informed the jury it could award Young several
categories of damages, including the “[v]alue of half of [the]
business.”
      Young briefly addressed the damages issue in her closing
argument, telling the jury “we want the value of half of the
business of $300,000. There’s been testimony the business
is worth somewhere between 600 to 800, $900,000, and there’s
been testimony that it’s at a very small reduced value now.
We attribute that loss of value to Dr. Hill. But for his conduct,

                                10
they would still have a thriving practice, and they would be able
to either go their separate ways and sell the practice or continue
making money as they did.”
        Hill, in turn, urged the jury not to award Young any
damages for the loss of her interest because she had voluntarily
abandoned the practice. Hill instead urged the jury to award
him $428,404 for the loss of value to his ownership interest.
According to Hill, the practice had been worth twice that amount,
but after Young left the practice, “[t]he value of the business now,
as our expert testified, is zero prebankruptcy.”
        During deliberations, the jury submitted the following
questions to the court: “What is going to happen to Dr. Young’s
shares after this? Is Dr. Young selling her shares back to
Dr. Hill? . . . Will Dr. Young retain her shares after the trial?”
The court responded that the jury’s questions were “not relevant.”
        After receiving the court’s response, the jury returned
a special verdict awarding Young $300,000 for the “[v]alue of
half of [the] business.”
        b.     Analysis
        We review challenges to jury instructions under the
de novo standard of review. (Sander/Moses Productions, Inc.
v. NBC Studios, Inc. (2006) 142 Cal.App.4th 1086, 1094–1095.)
“ ‘ “In determining whether error has been committed in giving
or not giving jury instructions, we must consider the instructions
as a whole . . . [and] assume that the jurors are intelligent
persons and capable of understanding and correlating all
jury instructions which are given.” [Citation]’ [Citation.]
‘Instructions should be interpreted, if possible, so as to support
the judgment rather than defeat it if they are reasonably

                                11
susceptible to such interpretation.’ ” (People v. Ramos (2008)
163 Cal.App.4th 1082, 1088.)
       Despite Young’s insistence that she did not seek
compensation for the loss of her interest in LBAO, the court
plainly told the jury that she did. Indeed, the court explicitly
instructed the jury she sought damages for the “loss of her half
interest in [LBAO]” in connection with her breach of contract
claim. Neither the instruction nor the verdict form clarified that
Young sought damages for the loss in value of her ownership
interest, rather than for the loss of the interest itself. Whether
or not this was intentional, it was error.
       Although the court gave an erroneous instruction, “there
is no rule of automatic reversal or ‘inherent’ prejudice applicable
to any category of civil instructional error, whether of commission
or omission. A judgment may not be reversed for instructional
error in a civil case ‘unless, after an examination of the entire
cause, including the evidence, the court shall be of the opinion
that the error complained of has resulted in a miscarriage of
justice.’ ” (Soule v. General Motors Corp. (1994) 8 Cal.4th 548,
580.) “ ‘[A] “miscarriage of justice” should be declared only
when the court, “after an examination of the entire cause,
including the evidence,” is of the “opinion” that it is reasonably
probable that a result more favorable to the appealing party
would have been reached in the absence of the error.’ ” (Strouse
v. Webcor Construction, L.P. (2019) 34 Cal.App.5th 703, 713–714,
quoting People v. Watson (1956) 46 Cal.2d 818, 836; see Collins
v. County of San Diego (2021) 60 Cal.App.5th 1035, 1055
[“an appellant must demonstrate that any alleged error in the
jury instructions was prejudicial, i.e., that it was probable the
appellant would have achieved a more favorable result without

                                12
the error”].) To determine whether an instructional error was
prejudicial, we may consider the degree of conflict in the evidence
on critical issues, whether argument to the jury may have
contributed to the instruction’s misleading effect, whether
the jury requested a rereading of the erroneous instruction
or related evidence, the closeness of the jury’s verdict, and the
effect of other instructions in remedying the error. (LeMons v.
Regents of University of California (1978) 21 Cal.3d 869, 876.)
       Here, it is not reasonably probable Hill would have
achieved a more favorable result had the court properly
instructed the jury. Despite the erroneous instruction related
to damages for breach of contract, the court correctly instructed
the jury on damages for breach of fiduciary duty. Specifically,
it told the jury Young sought damages for the “loss of value of
her half interest in LBAO,” which was nearly identical to the
jury instructions for Hill’s claims. In another instruction related
to economic damages, the court again told the jury Young sought
damages for the “loss of value of her half interest in LBAO.”
It also instructed the jury it could award Young damages only
once for the “loss of value” to the company. Consistent with those
instructions, Young argued to the jury that Hill’s conduct had
caused the value of LBAO to decrease significantly. She never
asserted Hill had caused her to lose her interest in the business.
       It is also apparent the jury’s $300,000 award was not
intended to compensate Young for the loss of her entire interest
in LBAO. Neither party’s expert testified that Young’s interest
had been worth $300,000. Young’s expert opined that, as of
July 2019, LBAO was worth $674,741. Hill’s expert valued
the business significantly higher—$856,000—during the same
time period. Had the jury intended to compensate Young for

                                13
the total loss of her 50 percent interest in the company, it likely
would have awarded her half of one of those valuations. Instead,
it awarded her less than half, indicating it determined her
interest in the business retained some value. This makes
sense only if the jury intended to compensate Young for the
loss of value of her interest in LBAO, rather than the loss of
the interest itself.
       We acknowledge the jury’s questions suggest it may have
been confused about the nature of the damages Young sought.
Young’s plans for her shares after the trial would be relevant
only if the jury were to award her compensation for the total loss
of her ownership interest. The court, however, instructed the
jury its questions were irrelevant, which implicitly conveyed that
Young was not, in fact, seeking such compensation. Considered
with the other instructions and the amount of the jury’s eventual
award, we do not think it is reasonably probable the jury
continued to be confused after receiving the court’s response.
       On this record, Hill has not shown the court’s instructional
error was prejudicial. Accordingly, the error does not warrant
reversal of the judgment.
2.     The jury did not erroneously reject Hill’s
       abandonment defense
       Hill argued at trial that Young was not entitled to damages
for the loss in value of LBAO because she had abandoned her
ownership interest in the company. The jury implicitly rejected
this defense and, instead, awarded Young $300,000 in damages.
       On appeal, Hill argues the jury erred because the
undisputed evidence compels a finding that Young abandoned
her interest in LBAO. In support, he points to evidence that,
in July 2019, Young stopped working at LBAO, accepted a

                                14
position with a competing orthopedic surgery practice, stopped
using LBAO’s facilities, and stopped depositing funds into
LBAO’s account. According to Hill, this evidence “clearly
showcases [Young’s] intent to abandon LBAO.”
       Generally, we review a jury’s factual findings for
substantial evidence. (Mathews v. Happy Valley Conference
Center, Inc. (2019) 43 Cal.App.5th 236, 251.) In this case,
however, Hill raised the abandonment issue as an affirmative
defense, meaning he had the burden of proof at trial. (See Peal v.
Gulf Red Cedar Co. of California (1936) 15 Cal.App.2d 196, 199
[describing abandonment argument as an affirmative defense].)
Where “the trier of fact has expressly or implicitly concluded
that the party with the burden 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.” (Sonic Manufacturing Technologies, Inc. v. AAE
Systems, Inc. (2011) 196 Cal.App.4th 456, 465.) Instead, we must
determine “ ‘whether the evidence 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) “uncontradicted and unimpeached” and (2) “of such
a character and weight as to leave no room for a judicial
determination that it was insufficient to support a finding.” ’ ”
(Id. at p. 466.)
       The record in this case does not compel, as a matter of law,
a finding that Young abandoned her ownership interest in LBAO.
“Before an abandonment may be found it is necessary to establish
nonuse[ ] accompanied by unequivocal and decisive acts showing
an intent to abandon.” (Pacific Gas & Electric Co. v. Zuckerman
(1987) 189 Cal.App.3d 1113, 1145.) Young presented evidence

                                15
refuting both elements. She testified that, through the date of
trial, she continuously claimed an ownership interest in LBAO,
maintained her shares of the company, held onto her position
as CEO, and monitored the company’s books. Those actions
do not reflect an intent to abandon her ownership interest.
       That Young left the practice in July 2019 is not
determinative. (See O’Flaherty v. Belgum (2004) 115 Cal.App.4th
1044, 1059 [an ownership interest in a partnership “ ‘is derived
from the formation of the partnership and is not dependent upon
a partner’s performance of duties and obligations under the
agreement’ ”].) Young testified she accepted a different position
because, without the income from the HealthCare Partners
contract, she struggled to cover LBAO’s overhead and was not
able to pay herself much income. The jury reasonably could have
found this explanation was plausible and did not reflect an intent
to abandon her ownership interest. On this record, the jury
reasonably could have rejected Hill’s abandonment defense.
       Hill’s reliance on Quinn v. Quinn (1889) 81 Cal. 14,
is misplaced. In Quinn, our state’s high court held sufficient
evidence supported a trial court’s finding that a plaintiff
abandoned his ownership interest in a quarry after he left
the area for several months and told several people “that he
had no interest in the quarry.” (Id. at pp. 17–18.) Unlike in
Quinn, the question here is not whether there is sufficient
evidence that Young abandoned her interest in LBAO; instead,
it is whether the evidence compels such a finding. Plainly, for
the reasons discussed above, it does not.2

2    Even if Young had the burden of proof on the issue, for the
same reasons, we would conclude substantial evidence supports

                               16
3.     The court did not err by failing to instruct the jury
       on the date of valuation
       During a discussion outside the jury’s presence, the trial
court noted it would not allow the jury to award Young damages
based on a valuation of LBAO from before she left the practice.
Instead, the court ruled, the jury must use a valuation of the
company as of the time of trial. Despite this ruling, the court
did not instruct the jury on which date to use to value LBAO.
Hill argues the court’s failure to do so warrants reversal.
       Young contends Hill is barred from raising this issue on
appeal because he did not timely raise it below. We agree. When
“ ‘the court gives an instruction correct in law, but the party
complains that it is too general, lacks clarity, or is incomplete,
he must request the additional or qualifying instruction in
order to have the error reviewed.’ ” (Conservatorship of Gregory
(2000) 80 Cal.App.4th 514, 520; see People v. Franco (2009) 180
Cal.App.4th 713, 719 [“a party forfeits any challenge to a jury
instruction that was correct in law and responsive to the evidence
if the party fails to object in the trial court”].) Hill never
requested the court specifically instruct the jury on the date
of valuation. His failure to do so forfeits the issue on appeal.
       Even if we were to overlook the forfeiture, we would reject
Hill’s argument on the merits. While discussing the issue with
the parties, it appears the court erroneously believed Young was
seeking compensation for the loss of her ownership interest in
LBAO. As discussed above, it is apparent Young instead sought

the jury’s implicit finding that Young did not abandon her
ownership interest in LBAO.

                               17
damages for the loss in value of her interest. To calculate those
damages, the jury had to consider two valuations: a valuation
without the wrongdoing and a valuation with the wrongdoing.
The difference between the two is the loss of value. It would
have been error, therefore, for the court to have instructed the
jury to use only the value as of the date of trial.
      We also reject Hill’s argument that the jury improperly
assumed LBAO had lost all its value as of the date of trial. As
noted above, it appears the jury did not conclude the company
had lost all its value. Even if it had, during his closing argument,
Hill urged the jury to find LBAO’s current value “is zero.” Hill
cannot complain on appeal that the jury ultimately agreed with
him.
4.    There is a sufficient nexus between Hill’s misconduct
      and the loss in value to LBAO
      Hill argues there is an insufficient causal connection
between his wrongdoing—failing to deposit into LBAO’s account
the income he received under the HealthCare Partners contract—
and the loss in value of Young’s interest in LBAO. He argues
the undisputed evidence shows the loss was the result of
Young’s voluntary decision to leave the practice, rather than
any wrongdoing on his part.
      The test for causation in a breach of contract action is
whether the breach was a substantial factor in causing the
damages. (Jenni Rivera Enterprises, LLC v. Latin World
Entertainment Holdings, Inc. (2019) 36 Cal.App.5th 766, 792.)
At trial, Young testified she left the practice in July 2019
because, without the income from the HealthCare Partners
contract, she was struggling to cover the company’s overhead
expenses and pay herself sufficient income. She also explained

                                18
that LBAO’s lease was expiring at the time, and she was not
willing to enter into a new lease with Hill while he was in
breach of their partnership agreement. On this record, the jury
reasonably could have concluded Hill’s diversion of funds was
a substantial factor in Young seeking alternative employment,
which effectively destroyed the practice. Indeed, it would be
unreasonable to expect Young to continue to work with Hill
while he essentially was embezzling funds from the practice.
Accordingly, we reject Hill’s argument that there is not a
sufficient causal connection between his wrongdoing and
the loss in value to Young’s ownership interest in LBAO.
5.     Substantial evidence supports the jury’s finding
       that Hill breached a contract with Young
       Hill argues there is insufficient evidence to support the
jury’s finding that he agreed to deposit into LBAO’s account all
the income from the HealthCare Partners contract. According
to Hill, the record shows he and Young disagreed about whether
the income belonged to LBAO. Therefore, he argues, there
was a “fundamental lack of mutual consent” concerning how to
handle the income, which precluded the jury from finding he was
contractually obligated to deposit the funds into LBAO’s account.3

3     Young urges us not to consider Hill’s arguments to the
extent they concern the court’s denial of his motion for JNOV,
including his challenge to the sufficiency of the evidence
supporting the jury’s finding that he breached a contract. She
argues that, because the denial of a JNOV motion is directly
appealable, Hill was required to identify it specifically in his
notice of appeal. Hill, however, identified only the amended
judgment in his notice. We need not decide the issue because,
even if we lack jurisdiction to review the court’s denial of

                                19
       “Contract formation requires mutual consent, which cannot
exist unless the parties ‘agree upon the same thing in the same
sense.’ (Civ. Code, § 1580; see also §§ 1550, 1565.)” (Bustamante
v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208.) “[T]he consent
of the parties to a contract must be communicated by each party
to the other. (Civ. Code, § 1565, subd. 3.) ‘Mutual assent is
determined under an objective standard applied to the outward
manifestations or expressions of the parties, i.e., the reasonable
meaning of their words and acts, and not their unexpressed
intentions or understandings.’ [Citation.]” (Serafin v. Balco
Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173.) “If there
is no evidence establishing a manifestation of assent to the ‘same
thing’ by both parties, then there is no mutual consent to contract
and no contract formation.” (Weddington Productions, Inc. v.
Flick (1998) 60 Cal.App.4th 793, 811.)
       Whether mutual consent existed is a question of fact, which
we review for substantial evidence. (Martinez v. BaronHR, Inc.
(2020) 51 Cal.App.5th 962, 966.) In doing so, we presume the
jury found every fact and drew every permissible inference
necessary to support its verdict, and we defer to the jury’s
determination of the credibility of witnesses and weight of
the evidence. (Ibid.)
       Based on Young’s testimony at trial, the jury reasonably
could have found she and Hill orally agreed to deposit all the
money generated from their partnership into LBAO. The jury
also reasonably could have found this oral agreement governed

Hill’s JNOV motion, we have jurisdiction to consider the same
arguments in connection with our review of the final judgment
and the denial of Hill’s motion for new trial.

                                20
the income Hill received under the HealthCare Partners contract.
Young presented evidence that—although Hill was the only
party to the HealthCare Partners contract—he treated patients
under the contract the same as any other LBAO patient. Because
Hill was using LBAO’s resources to care for those patients, it
is reasonable to assume the parties would have wanted some
agreement about how to handle the revenue and costs associated
with the HealthCare Partners contract. It is undisputed,
however, that the parties never specifically discussed those
issues. This strongly suggests Hill and Young both understood
the HealthCare Partners contract was to be governed by
their preexisting agreement to contribute all income to LBAO.
Consistent with such an understanding—and contrary to Hill’s
current claim that he believed the income belonged to him
personally—Hill initially deposited into LBAO’s account all
the income he received under the HealthCare Partners contract.
       On this record, the jury reasonably could have found
Young and Hill implicitly agreed the income from the HealthCare
Partners contract was subject to their 1999 oral agreement.
The jury also reasonably could have found that, under the terms
of the oral agreement, the income belonged to LBAO. That
the record might support alternative findings is irrelevant.
(See Claussen v. First American Title Guaranty Co. (1986)
186 Cal.App.3d 429, 431 [“We review the evidence on appeal
in favor of the prevailing party, resolving conflicts and drawing
reasonable inferences in support of the judgment.”].)
6.     The trial court did not err in granting Hill’s motion
       for directed verdict on Young’s conspiracy claim
       During a break in the trial, the court noted it had a
problem with Young’s conspiracy claim because “[y]ou can’t have

                               21
[a] conspiracy between one person and his corporation. It has
to be two separate individuals.” The court gave the parties
citations to several cases standing for that proposition. The court
said it would “go over that [at a later time], but I’m just letting
you know that legally, as alleged, it’s not possible.” Young said
she would address the issue.
       During a later discussion, the court noted it would not
instruct the jury on conspiracy for the reasons it had explained
earlier. The court remarked: “[Y]our whole theory is . . . that the
conspiring party is Dr. Hill and his corporation. That is legally
impossible. . . . [I]n order to have a conspiracy, you need two
separate entities where there has to be a meeting of mind[s]
to conspire. That’s not the case here.” Young did not respond.
       On appeal, Young acknowledges the general rule that
an agent of a corporation cannot conspire with the corporation.
(See Kerr v. Rose (1990) 216 Cal.App.3d 1551, 1564 [a
“corporation cannot conspire with its agents”]; Black v. Bank
of America (1994) 30 Cal.App.4th 1, 4 [same].) Nevertheless,
she argues the court erred because this case falls within several
exceptions to that general rule. (See, e.g., Black, at p. 4.)
However, Young did not make this argument in the trial court.
Indeed, she did not even object when the court indicated it was
inclined to grant a directed verdict in Hill’s favor. Her failure
to make a timely objection and advance these arguments below
forfeits the issue on appeal. (See Tudor Ranches, Inc. v. State
Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1433 [“if an
appellant wishes to argue a point on appeal, it must first make
a record by raising the point in the trial court”].)
       Even if we were to overlook the forfeiture, we would reject
Young’s arguments on the merits. A civil conspiracy requires

                                22
an express or tacit agreement to commit a civil wrong or tort.
(Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1293.) As best
we can tell, Hill is the sole shareholder, principal, and employee
of Hill, Inc. Therefore, in order to have conspired with the
corporation, Hill must have reached an agreement with himself,
albeit while operating in a different capacity. Young fails to
present any authority that a civil conspiracy may be premised
on an individual forming an agreement with himself in different
capacities. Absent such authority, she has not met her burden
to demonstrate reversible error.
7.      The trial court erred in granting Hill’s motion
       for directed verdict on Young’s concealment claim
       and request for punitive damages
       After Young presented her case, the court granted a
directed verdict for Hill on her fraudulent concealment claim,
apparently on the basis that Hill had no duty to disclose his
diversion of funds if the information was otherwise available
to Young. The court explained the evidence showed that,
once Young started looking at LBAO’s financial records in
2017, it took her only a few days to discover Hill had not been
contributing all the income from the HealthCare Partners
contract. The court also granted a directed verdict for Hill
with regard to Young’s request for punitive damages, noting
this was “simply a contract dispute” that lacked any evidence
of oppression, malice, or fraud. Young argues the court erred
because she presented sufficient evidence to support her
concealment claim and request for punitive damages.
       “A directed verdict is . . . subjected to de novo appellate
review. . . . ‘A motion for a directed verdict “is in the nature
of a demurrer to the evidence, and is governed by practically

                                23
the same rules, and concedes as true the evidence on behalf
of the adverse party, with all fair and reasonable inferences to
be deduced therefrom.” ’ ” (Brassinga v. City of Mountain View
(1998) 66 Cal.App.4th 195, 210, fn. omitted.) “ ‘A defendant
is entitled to a [directed verdict] if the trial court determines
that, as a matter of law, the evidence presented by plaintiff
is insufficient to permit a jury to find in his favor. [Citation.]
“In determining whether plaintiff’s evidence is sufficient,
the court may not weigh the evidence or consider the credibility
of witnesses. Instead, the evidence most favorable to plaintiff
must be accepted as true and conflicting evidence must be
disregarded. . . .” ’ ” (Colbaugh v. Hartline (1994) 29 Cal.App.4th
1516, 1521.)
       “ ‘ “The elements of fraud, which give rise to the tort action
for deceit, are (a) misrepresentation (false representation,
concealment, or nondisclosure); (b) knowledge of falsity
(or ‘scienter’); (c) intent to defraud, i.e., to induce reliance;
(d) justifiable reliance; and (e) resulting damage.” ’ ” (Thrifty
Payless, Inc. v. The Americana at Brand, LLC (2013) 218
Cal.App.4th 1230, 1239.) “Concealment is a term of art which
includes mere nondisclosure when a party has a duty to disclose.”
(Reed v. King (1983) 145 Cal.App.3d 261, 265.) There are four
circumstances under which a defendant’s nondisclosure may
amount to actionable fraud: “(1) when the defendant is in a
fiduciary relationship with the plaintiff; (2) when the defendant
had exclusive knowledge of material facts not known to the
plaintiff; (3) when the defendant actively conceals a material fact
from the plaintiff; and (4) when the defendant makes partial
representations but also suppresses some material facts.”
(Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.)

                                 24
       Here, there is sufficient evidence from which the jury
reasonably could have found all the elements of a fraudulent
concealment claim. As to the first element, given the jury’s
finding that Hill was in a fiduciary relationship with Young—
a finding Hill does not meaningfully challenge on appeal—
the jury could have found he had a duty to disclose to Young
any diversion of LBAO’s funds. It is undisputed, however, that
Hill waited several years to reveal to Young that he had been
depositing checks from the HealthCare Partners contract into
his own account.
       There is also sufficient evidence from which the jury could
have found Hill had the requisite knowledge. As discussed above,
Young presented evidence that she and Hill entered into an
oral agreement under which they agreed to share all income
from the practice. The jury could have found Hill was aware
this agreement governed the HealthCare Partners contract
and required that he deposit all the income he received into
LBAO’s account. Indeed, he did precisely that for several years.
For the same reasons, the jury could have found Hill knew he
had a duty to disclose to Young his diversion of funds, yet he
knowingly declined to do so.
       Young also presented sufficient evidence to prove Hill
acted with a fraudulent intent. It is reasonable to infer from the
circumstances that Hill knew Young would be upset that he was
diverting LBAO funds into his own account. It is also reasonable
to infer Hill concealed that information from Young so she would
not seek the money owed to her and would continue contributing
to the practice.
       Finally, there is sufficient evidence of the two remaining
elements: justifiable reliance and resulting damages. The jury

                               25
reasonably could have found that, based on their past work
history and personal friendship, Young trusted Hill and did
not suspect he was diverting funds from the practice. Young,
moreover, testified that, shortly after discovering Hill’s actions,
she confronted him and demanded he repay her. Based on this
evidence, it is reasonable to infer that, had Hill disclosed his
diversion of funds earlier, Young immediately would have taken
action to recover her share of the funds. The jury also reasonably
could have found Young suffered damages by continuing to
contribute to the practice while receiving significantly less
compensation than she was owed.
      Viewing this evidence in the light most favorable to
Young—as we must—the jury reasonably could have found she
proved all the elements of a claim for fraudulent concealment.
      Based on the same evidence, the jury also reasonably could
have found Hill was “guilty of . . . fraud,” which would warrant
an award of punitive damages. (See Civ. Code, § 3294, subd. (a)
[a jury may award punitive damages where there is clear and
convincing evidence of fraud].) Indeed, we see no meaningful
distinction between Hill’s alleged misconduct and theft by
embezzlement, which is a type of fraud. (See Pen. Code, § 503
[“Embezzlement is the fraudulent appropriation of property by
a person to whom it has been intrusted.”]; CALCRIM No. 1806
[restating the elements of theft by embezzlement].) The court,
therefore, erred by entering a directed verdict in favor of Hill on
Young’s concealment claim and request for punitive damages.
      Hill argues he could not be found liable for fraudulent
concealment because the record shows Young would have
discovered his diversion of funds had she exercised reasonable
diligence. Hill, however, overlooks that the jury could have

                                26
found—and did, in fact, find—he and Young were in a fiduciary
relationship, which would excuse any diligence requirement.
As the California Supreme Court has explained, when parties are
in a fiduciary relationship, “ ‘ “there is no duty of inquiry until
the relationship is repudiated. The nature of the relationship
is such as to cause the plaintiff to rely on the fiduciary, and
awareness of facts which would ordinarily call for investigation
does not excite suspicion under these circumstances.” ’ ” (Alliance
Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1240; see
Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 559–560 [“where
a fiduciary relationship exists, facts which would ordinarily
require investigation may not excite suspicion”]; see also Hobbs
v. Bateman Eichler, Hill Richards, Inc. (1985) 164 Cal.App.3d
174, 202 [“[w]here there is a fiduciary relationship, the usual
duty of diligence to discover facts does not exist”].) Whether
Young easily could have discovered Hill’s misconduct might be
relevant to the issue of justifiable reliance, but it does not present
a complete bar to her claim.
       Mesmer v. White (1953) 121 Cal.App.2d 665 is
distinguishable. The parties in that case were not in a
confidential relationship, so the party accused of fraudulent
concealment did not have a special duty of disclosure. (Id. at
pp. 669–670.) Absent a special duty, the fact that the other party
could have discovered the truth “had diligent inquiry been made”
was enough to defeat his fraud claim. (Id. at p. 674.) Here, in
contrast, the jury reasonably could have concluded Young and
Hill were in a fiduciary relationship, which imposed on Hill a
duty to disclose his diversion of funds and relieved Young of any
inquiry obligation. Mesmer, therefore, is inapposite and no help
to Hill.

                                 27
8.     The court erred in eliminating the jury’s award
       of prejudgment interest
       Young argues the court erred by eliminating the jury’s
award of prejudgment interest. She contends the court
erroneously believed the jury awarded her interest under
Civil Code section 3287, rather than Civil Code section 3288.
       a.    Background
       The court instructed the jury it had discretion to award
prejudgment interest on any damages it awarded to either party.
The court also instructed the jury with CACI No. 3935, which
is a standard jury instruction concerning prejudgment interest
under Civil Code section 3288. The jury, in turn, awarded Young
$222,167 for “[i]nterest on profits taken by Defendants.” The
special verdict form did not indicate whether the jury awarded
the interest on the damages for the breach of contract, the breach
of the implied covenant of good faith and fair dealing, or the
breach of fiduciary duty.
       In his post-trial motions, Hill argued the jury’s interest
award was excessive and legally impermissible. He asserted
the court had improperly instructed the jury it could award
Young interest under Civil Code section 3288, which applies
only to non-contractual claims. According to Hill, Young was
not entitled to interest under that statute because the court had
dismissed her fraudulent concealment claim, which was her only
non-contractual claim. Hill alternatively argued the jury used
an excessive interest rate to calculate the award.
       In opposing Hill’s motions, Young focused her argument on
his contention that the jury had used an excessive interest rate.
In passing, she also noted that, even if she were not entitled to
non-contractual interest, the award “need not fall under Civil

                                28
Code section 3288.” Young did not specify on what other basis
the jury could have awarded her interest.
       The court agreed with Hill and eliminated the jury’s award
of prejudgment interest. Although not entirely clear, the court
seemed to base its decision on its belief that the jury awarded
Young interest under Civil Code section 3287, rather than Civil
Code section 3288. The court determined this was error because
a plaintiff’s entitlement to interest under Civil Code section 3287
presents a legal question for the court to decide. The court then
determined Young was not entitled to such an award because
her damages were not certain or readily calculable, as required
under Civil Code section 3287, subdivision (a).
       b.     Analysis
       Whether a plaintiff is entitled to prejudgment interest
depends on the nature of the claim and the type of damages
sought. Under Civil Code section 3287, a plaintiff is entitled
to interest on “damages certain, or capable of being made certain
by calculation . . . .” (Civ. Code, § 3287, subd. (a).) Alternatively,
under Civil Code section 3288, a jury has discretion to award
interest in “an action for the breach of an obligation not
arising from contract, and in every case of oppression, fraud,
or malice . . . .” A jury may award interest under Civil Code
section 3288 “[w]hen, by virtue of the fraud or breach of fiduciary
duty of the defendant, a plaintiff has been deprived of the use of
his money or property and is obliged to resort to litigation to
recover it,” such that the inclusion of interest is necessary to
make the plaintiff whole. (Nordahl v. Department of Real Estate
(1975) 48 Cal.App.3d 657, 665.)
       Young contends that, because she prevailed on her
breach of fiduciary duty claim—which was premised on a

                                  29
non-contractual obligation—the jury had discretion to award her
interest under Civil Code section 3288. Hill concedes the point.
Nevertheless, he contends Young forfeited the issue by failing
to raise it in opposition to his post-trial motions.
       Although the forfeiture rule generally precludes a party
from making a new argument on appeal, it is not absolute.
A reviewing court may consider a new argument on appeal if
it involves a legal issue based on undisputed facts. (Krechuniak
v. Noorzoy (2017) 11 Cal.App.5th 713, 725.) Here, whether the
court erred by reducing the jury’s award of interest is a pure
question of law, and it does not turn on any disputed facts.
Indeed, Hill essentially concedes that, had Young made
the argument below, the trial court would have (or at least
should have) ruled in her favor. We decline to apply the
forfeiture rule under these circumstances.
       Hill alternatively contends Young forfeited the issue by
failing to file her own motion for a new trial seeking interest
under Civil Code section 3288. We are at a loss to understand
why she would have been required to do so. After all, the jury
awarded Young interest under Civil Code section 3288, so there
was no reason for her to move for a new trial.
       Hill next argues Young cannot recover prejudgment
interest because she failed to request that the jury identify for
which claim it made the award. Therefore, he argues, there is
no way to tell whether the jury awarded interest on the damages
for breach of contract—which would be improper—or on the
damages for breach of fiduciary duty—which is permitted under
Civil Code section 3288.
       We acknowledge Young should have requested that the
special verdict form ask the jury to determine damages for each

                               30
of her claims separately. Indeed, the court brought the potential
issue to her attention, but she declined to heed its advice.
However, Hill approved a similar verdict form for his request for
interest, which also did not ask the jury to differentiate between
his contractual and non-contractual claims. We highly doubt
that, had the jury found in Hill’s favor and awarded him interest,
he would have conceded the verdict form was fatally defective.
       In any event, the ambiguity in the verdict form does not
warrant overturning the jury’s award. Young’s contractual and
fiduciary duty claims were premised on essentially the same
facts—Hill’s diversion of income from the HealthCare Partners
contract—and she sought identical damages for each—the profits
she would have earned on that income and the loss in value
of her interest in LBAO. The jury found Young proved all her
claims, and we can conceive no reasonable basis for it to have
determined she suffered different damages for each. For
the same reason, we can conceive of no plausible reason why
the jury would have awarded Young prejudgment interest for
the contractual claims, but not the same interest for the breach
of fiduciary duty claim, especially given the court instructed
the jury to use the same standard to determine whether to award
interest for both types of claims. It is apparent, therefore, that
had the court instructed the jury to calculate damages for each
claim separately, the jury would have awarded Young $222,167
of interest on the damages for the breach of fiduciary duty.
Accordingly, any ambiguity in the special verdict form does
not warrant invalidating the jury’s award.

                                31
9.     The court erred in reducing the jury’s award of
       loss-of-value damages
       In his post-trial motions, Hill argued the evidence did
not support the jury’s decision to award Young $300,000 for
loss-of-value damages. According to Hill, neither expert testified
to that amount, and Young’s expert erroneously assumed Young
would continue to work at the practice. Hill also argued the jury
should have awarded damages based on LBAO’s value as of the
date of trial, when the business was at a “ ‘pre-bankruptcy’ ”
and “ ‘pre-liquidation’ ” level.
       The court agreed with Hill in part, finding the jury’s award
was excessive. The court reasoned, “Plaintiff’s expert valued
the practice on the assumption that two physicians would be
working in the practice, and that assumption was incorrect.
It is undisputed that Plaintiff left the practice and had not
been working there since July 19, 2019 well before the date
of valuation. The court believes that one physician working
should reduce Plaintiff’s damages by half.” The court, therefore,
conditioned the denial of Hill’s motion for new trial on Young
agreeing to a reduction in her loss-of-value damages from
$300,000 to $150,000.
        “[W]hen a trial court grants a new trial on the issue of
excessive damages, whether or not such order is conditioned
by a demand for reduction, the presumption of correctness
normally accorded on appeal to the jury’s verdict is replaced
by a presumption in favor of the order.” (Neal v. Farmers Ins.
Exchange (1978) 21 Cal.3d 910, 932.) Therefore, we will reverse
an order reducing damages on the ground that they were
excessive only if the trial court abused its discretion. (Id.
at pp. 932–933; see Pearl v. City of Los Angeles (2019) 36

                                32
Cal.App.5th 475, 486 [“We review the trial court’s use of its
power of remittitur to reduce excessive damages for abuse of
discretion.”].) A court abuses its discretion when, considering the
law and all the relevant circumstances, its decision “ ‘ “exceeds
the bounds of reason and results in a miscarriage of justice.” ’ ”
(Espejo v. The Copley Press, Inc. (2017) 13 Cal.App.5th 329, 378.)
       Here, it appears the trial court reduced Young’s damages
based on a misunderstanding of the basis for the jury’s award.
Although not entirely clear, it seems the court erroneously
believed the jury was compensating Young for the loss of her
interest in LBAO. In fact, the jury was compensating Young for
the loss in value of that interest. To calculate those damages,
the jury had to consider LBAO’s value without the wrongdoing
and its value with the wrongdoing. The parties agreed LBAO
was worth more than $600,000 when they both were working
at the practice, and its value decreased significantly—to a
pre-bankruptcy level—after Young left the practice. Given
those valuations, the jury reasonably could have determined
Hill’s wrongdoing caused LBAO’s value to decrease by $600,000.
Because Young owned 50 percent of the business, her share of
the loss would be $300,000.
       The jury’s award was reasonable, and there was no basis
for the trial court to reduce it by half. The court, therefore,
abused its discretion by conditioning the denial of Hill’s
motion for new trial on Young’s agreement to a reduction
in her damages.

                                33
                          DISPOSITION
      We reverse the judgment on Young’s fraudulent
concealment claim and request for punitive damages, and we
remand the case for a new trial on these issues. On remand,
the court shall reinstate the jury’s damages award, including the
award of interest. We affirm the judgment in all other respects.
Serena Young shall recover her costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                    EGERTON, J.

We concur:

             EDMON, P. J.

             LAVIN, J.

                               34