Court Opinion

ID: 2670926
Source: CourtListenerOpinion
Date Created: 2014-04-22 21:12:17.755722+00
Date Added: 2024-06-11T12:37:22.001044
License: Public Domain

Filed 4/22/14 Mobasser v. Yermian CA2/7
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                DIVISION SEVEN

AMIR HOUSHANG MOBASSER,                                               B247269

         Plaintiff and Respondent,                                    (Los Angeles County
                                                                      Super. Ct. No. BC448253)
         v.

JOHN PAUL YERMIAN,

         Defendant and Appellant.

                   APPEAL from a judgment of the Superior Court of Los Angeles County,
Gregory W. Alarcon, Judge. Reversed and remanded.

                   Horvitz & Levy, Daniel J. Gonzalez and Curt Cutting; Robinson DiLando,
Michael C. Robinson and Joshua A. Najemy for Defendant and Appellant.

                   The Ehrlich Law Firm and Jeffery Isaac Ehrlich for Plaintiff and
Respondent.

                             ______________________________________
       John Paul Yermian appeals from the judgment entered upon jury verdicts in favor
of respondent Amir Houshang Mobasser on his complaint against appellant alleging
causes of action for breach of contract, fraud and breach of fiduciary duty arising out of
an oral partnership agreement to remodel and sell a convenience store. In addition,
appellant also appeals from the post-judgment order denying him fees and costs.
Appellant asserts several errors on appeal. Specifically he claims that (1) the evidence
presented in support of the emotional distress and punitive damages was legally
insufficient and the awards were excessive; (2) the court erred in denying his cross-
complaint for an accounting; and (3) the court erred in denying his post-judgment motion
for fees under Code of Civil Procedure section 2033.420 (allowing for costs incurred in
proving a matter not admitted by opposing party in request for admission). As we shall
explain, sufficient evidence did not support the award of emotional distress damages. In
addition, appellant’s argument on the punitive damage award has merit; respondent failed
to present sufficient evidence of appellant’s ability to pay the award. Appellant has also
demonstrated that he was entitled to an accounting. Finally, the matter must be remanded
for the trial court to determine whether appellant is entitled to fees under Code of Civil
Procedure section 2033.420. Accordingly, we reverse and remand for further
proceedings.
                        FACTUAL AND PROCEDURAL BACKGROUND1
       1. The Parties
       Appellant and respondent both emigrated from Iran. They are also close
relatives—respondent is appellant’s uncle.2 Respondent testified that since appellant was
a child, respondent cared for and treated appellant like a son. Respondent was a
successful businessman in Iran. He supported appellant’s family when appellant’s

1
      The Factual and Procedural Background describes only those facts and
circumstances that are relevant to the issues on appeal.
2
       Both parties are also in poor health. Appellant is 60 years old and is terminally ill
with bladder cancer. Respondent is in his eighties and has a cardiac condition.

                                             2
mother struggled financially. Eventually appellant moved to the United States with his
mother, while respondent stayed in Iran.
       Appellant attended UCLA and in the mid-1980s he obtained his M.D. from UC
Irvine. Appellant went into private practice as a cosmetic surgeon in Van Nuys,
California. Appellant opened an outpatient-surgery center called Plaza Medical Clinic
located in a multi-tenant commercial building. A 7-Eleven market was one of the
building’s tenants.
       In 1989, respondent immigrated to the United States and opened a clothing
business. He renewed his relationship with appellant, helping appellant when he
underwent a divorce in the mid-1990s.3 In 2002, respondent retired from the clothing
business and became financially dependent on his children.
       2.      The Property
       The commercial building where appellant’s medical practice was located was owned
by MacJay, a partnership between appellant and his father-in-law. Appellant testified at trial
that he owned a 25 percent interest in MacJay. When the 7-Eleven’s lease was about to end,
appellant consulted with respondent about whether the lease should be renewed. Appellant
wanted to increase 7-Eleven’s rent for the new lease term, but the store’s owners had
threatened to vacate the premises at the end of the term if the rent were significantly increased.
       At trial the parties told different versions of the advice respondent gave to appellant
about the situation. According to respondent, he urged appellant to renew the lease even if that
meant collecting less rent than appellant wanted because the store attracted walk-in customers
for the other tenants and was therefore important to the property’s overall value. Respondent
testified that he warned his nephew that if 7-Eleven left, the other businesses in the building
would also vacate. According to appellant, respondent urged him to reject the offer from 7-
Eleven so they could start their own convenience store in the same location. Ultimately, 7-

3
       Respondent testified that when appellant was seeking a divorce respondent helped him
conceal his acquisition of a residential property. Appellant apparently sought to hide the
transaction from any potential creditors, so he purchased the property in respondent’s name.

                                                3
Eleven and MacJay could not agree on the lease terms, and as a result 7-Eleven closed the
store and vacated the premises.
       3.      The Partnership
       The space that the 7-Eleven had occupied in the building was left in poor condition; it
required repairs and remodeling before it could be leased to a new tenant. Appellant consulted
respondent for advice about the situation and they agreed that it would be easier to attract a
new tenant if they remodeled the space and proved that a replacement convenience store could
operate there. They planned to open the store after a few months of set-up and then sell it as
soon as possible. They consulted with a real estate broker who advised them that they could
sell a convenience store for about $600,000. Appellant and respondent orally agreed to form a
partnership4 to open and thereafter sell the convenience store.
       Appellant had the funds to execute the plan, but he was too busy to carry them out
because of his medical practice. Respondent agreed to oversee the remodel and manage the
convenience store until it could be sold.
       Appellant told the jury that he and respondent had a “garden-variety” partnership –
a 50/50 partnership, in which appellant would pay the expenses, respondent would act as
manager, and they would share the net proceeds from the sale, which he projected at a
total of $400,000, so they could each receive $200,000 from the sale.5
       According to respondent, however, the agreement was not a “garden variety” 50/50
partnership. As respondent described the partnership, appellant agreed to provide the capital

4
        In his initial complaint and throughout the trial respondent claimed he was an
employee with no ownership interest in the partnership. However, shortly before closing
arguments at the end of the first phase of the trial, respondent stipulated that he and
appellant were partners. He also amended his complaint to delete all allegations that he
was an employee as well as his causes of action alleging Labor Code violations based on
his status as an employee.
5
        Appellant testified that he agreed, on behalf of MacJay, not to charge the store for
rent during the initial startup period, and that he and respondent agreed the store would
start paying rent to MacJay if they could not sell the market within four or five months.

                                                4
and respondent would perform all management functions. In respondent’s view appellant
would make a profit from the partnership even if they did not make money on the sale of the
new store because his commercial property value would increase as a result of the remodel and
replacement of the convenience store and because once sold the new owners would become a
long-term tenant of the building. In contrast, respondent’s contribution to the partnership was
his expertise as a businessman. According to respondent, splitting the net profits from the sale
50/50 would have produced illogical and unfair results by assigning zero value to respondent’s
donation of time to the partnership. Therefore, according to respondent, they agreed to split
the gross proceeds from the sale of the convenience store. Appellant offered to treat
respondent’s labor as equal in value to his own financial contribution. In addition, because of
respondent’s age and poor health, appellant offered him a $16 hourly wage while working
towards the sale of the store.
        4.      The Store
        Respondent supervised the remodeling work for the new convenience store, which took
about eight weeks to complete. Appellant paid a total of $185,000 in expenses to complete the
project. In the spring of 2008, the store, called Citi Market Place, opened for business.
Respondent acted as its handyman and manager; he testified that he worked seven days a
week, for at least 60 hours a week, and never took a day off.6
        Respondent had only planned to work for a few months, because he and appellant
believed they would be able to sell the store quickly. However, the economic downturn made
it difficult to turn a profit and difficult to find a buyer for the store. Finally, after a year and
half, in September 2009, they received and accepted an offer to purchase the market for

6
       Respondent was never paid the $16 an hour wages under the partnership
agreement. Appellant, however, paid him lump sums of $5,000 at the outset of the
project and another $5,600 shortly before the store was sold.

                                                   5
$165,000.7 Based on their partnership agreement, respondent believed he was entitled to
receive $82,500 from the sale, plus his hourly wages.
       5.      The Escrow and Release of the Funds
       The $165,000 proceeds from the sale of the store were deposited into an escrow
account. In September 2009, respondent and his son visited the escrow company so that he
could obtain the release of the sale proceeds. The escrow agent asked respondent to sign a
letter that said all funds should be released to appellant. According to respondent, he refused to
sign the document and left the escrow office. Respondent then confronted appellant about the
document, and according to respondent, appellant refused to honor the terms of the partnership
agreement that they share in the gross proceeds of the sale. Appellant claimed that he was
entitled to retain all $165,000 to reimburse himself for his $185,000 investment in the store.
       Respondent also learned that the close of escrow was being delayed by a number of
outstanding liens against him. Respondent and his son worked to resolve the issues with the
liens.8 In the spring of 2010, respondent’s son contacted the escrow company to explain that
he now owned the only outstanding lien. The escrow company apprised him that the funds
held in the escrow account had already been released to appellant.
       Apparently, a letter was sent to the escrow company on September 11, 2009,
purportedly containing respondent’s signature, directing the escrow company to release all the
funds to appellant. At trial respondent denied that he wrote or signed that letter, and appellant
also denied that he wrote the letter or forged respondent’s signature on the letter. Nonetheless,
the escrow company did not release the funds because of the judgment lien against respondent.

7
        The new owners signed a 20-year lease for higher rent than 7-Eleven had been paying.
The buyers of the store agreed to pay MacJay a monthly rent of $5,700 for the first two years
with a rent to increase to $6,700 in year three, $7,200 in years four and five, and $7,700 in year
six. For the next four years the rent would increase 3 to 5 percent per year, and in the final 10
years of the 20-year lease the rent would be at market rates, subject to negotiation.

8
      In April 2010, respondent’s son purchased one of the liens from the holder (Wells
Fargo) and was able to get the others released.

                                                6
Thereafter, in November 2009, the escrow company also received a letter that purported to be
from the general counsel of the holder (Wells Fargo) of the remaining outstanding judgment
lien that indicated that the lien had been released. Based on the letter, the escrow company
issued a check for $162,983.85, dated February 25, 2010, in appellant’s name.9
       On February 26, 2010, a day after the check was issued, but a few days before appellant
went to pick it up on March 1, 2010, appellant faxed a fake partnership agreement to the
escrow company. The partnership agreement stated that appellant owned 99 percent of the
partnership and respondent owned one percent. At trial, appellant acknowledged that the
written partnership agreement did not represent the actual terms of the partnership; he claimed
however that respondent had concocted a scheme of preparing a sham partnership agreement
and submitting it to the escrow company to persuade the escrow company to release the funds
despite the liens. Respondent denied having anything to do with the sham agreement and his
handwriting expert opined that his signature on that document was probably not authentic.
       6.      The Litigation
       In October 2010, respondent filed the instant action against appellant asserting causes
of action for breach of oral contract, breach of the implied covenant of good faith and fair
dealing, and various tort claims including fraud. Appellant filed a cross-complaint asserting
various causes of action including an accounting.
       During discovery, appellant served respondent with requests for admission, including a
request that respondent admit that he was not an employee of the Citi Market Place or of
appellant. Respondent denied the request. Respondent also amended the complaint twice;
when the case went to trial respondent’s causes of action were: breach of oral contract, fraud,
breach of fiduciary duty, and violation of California Labor Code sections 201-203, 226.
Respondent’s Labor Code claims were based on his allegation that he was appellant’s
employee and that appellant failed to pay him wages during the term of his employment.
Respondent also sought an award of attorney’s fees based on the Labor Code claims.

9
       This letter was not genuine. The lien described in the letter was not released by Wells
Fargo until April 2010 when it was purchased by respondent’s son.

                                                7
       The court ordered the trial bifurcated--the first phase dealt with liability and
compensatory damages, and the second phase dealt with punitive damages.
       At the outset of the first phase, respondent’s counsel told the jury that respondent did
not believe a partnership existed. Respondent’s counsel sought to prove through his
questioning of appellant that respondent was his employee, but appellant insisted that
respondent was a partner, not an employee. However, after the close of evidence in the first
phase, and just before closing arguments, respondent stipulated that he had a 50/50 partnership
with appellant. Respondent also amended his complaint, deleting all allegations that he was an
employee and abandoning his Labor Code violation claims. Instead he alleged that a
partnership existed and that appellant breached the partnership agreement and breached his
fiduciary duties as a partner.
       The jury reached verdicts in favor of respondent on his claims for breach of contract,
breach of fiduciary duty and fraud (“false representation” and “concealment”), and awarded
him $126,291.93 in economic damages. That amount included 50 percent of the gross income
from the sale of the store, plus $44,800 for lost wages. The jury also awarded $92,640 for
emotional distress on the breach of fiduciary duty cause of action. The jury also answered
“yes” to the question whether appellant had acted with fraud, oppression, or malice.
       In the second phase of the trial, respondent called appellant as a witness regarding his
own financial condition. The jury awarded $481,068.07 in punitive damages for the
respondent.
       Respondent submitted a proposed judgment. Appellant objected, asserting that the
court had not yet ruled on the cross-complaint for an accounting. The court held a hearing and
accepted briefing on the issue. The court then ruled that appellant was not entitled to an
accounting because he never sought dissolution of the partnership and because the jury’s
verdict resolved all the outstanding issues.
       Thereafter, the court entered judgment for respondent.
       7.      Post-Judgment Proceedings
       On March 1, 2013, appellant filed timely motions for new trial and for judgment
notwithstanding the verdict (JNOV). The court denied both motions.

                                                 8
           Appellant also filed a motion under Code of Civil Procedure section 2033.420 for the
$23,408 fees he incurred as a result of respondent’s failure to admit, in response to a request
for admissions, that he was not an employee of Citi Market Place. The court denied the
motion.
           Appellant timely appealed from the judgment and the post-judgment order denying his
motion for the fees and costs. This court consolidated the appeals upon stipulation of the
parties.
                                          DISCUSSION
           Before this court, appellant asserts that the evidence presented in support of the
emotional distress and punitive damages was legally insufficient and that the awards were
excessive. He also argues that the trial court erred in denying his cross-complaint for an
accounting; and erred in denying his post-judgment motion for fees and costs under Code
of Civil Procedure section 2033.420. We address his assertions in turn.
I.         The Award for Emotional Distress Damages
           Appellant argues that as a matter of law the evidence presented did not support the
damages for emotional distress awarded as non-economic damages on the breach of
fiduciary duty cause of action. Appellant asserts that emotional distress evidence did not
show “serious” or “severe” emotional distress as required by the relevant case law. In the
alternative, appellant asserts that the award is excessive.
           A.     Respondent’s Evidence of Emotional Distress
           Respondent sought an award of emotional distress damages in connection with his
cause of action for breach of the partnership fiduciary duties. Respondent’s testimony
supplied the only evidence on the issue of emotional distress. He testified as follows:

                  “[Counsel]: Did this situation you have with your nephew, has this
                  affected your health and emotional life, if you will?

                  “[Respondent]: Unfortunately, yes.

                  “[Counsel]: And could you please tell me how it has affected you?

                                                  9
“[Respondent]: He make [sic] betray to me.

“[Counsel]: What—how has it affected your health and your
emotions? You’ve been sad, sleepy, sick?

“[Respondent]: He made me—never I was expecting to he do it
something with me. All of life I help his parents, when they was
broken. I was helping everybody of his family all the time.
Whatever he wanted I did for him. And he never answered this
much that I help him even one penny.

“[Counsel]: Have you lost sleep over this?

“[Respondent]: Yes. This is more than two years that I’m not good.

“[Counsel]: Tell me a little bit more on how you’re not good.

“[Respondent]: He didn’t think the situation well. You don’t know
about my honor, you don't know my feeling. You don’t know
anything about me. In all of my life I was a person that didn’t do
anything wrong. And I never expect something like this.

“[Counsel]: Did Dr. Yermian ever tell you one time that he was
sorry?

“[Respondent]: Never. He has nothing in here and here.

“[Counsel]: Have you had to go to any doctors because of how your
health or emotions—

“[Respondent]: Yes. This is almost three years or more. I’m going
to doctor. The medicine that I use is more than several kilos.

“[Counsel]: Several what?

“[Respondent]: Pounds.

“[Counsel]: Of what?

“[Respondent]: Because I was sick. I had too many doctor to give
me prescription.

“[Counsel]: Is it easy for you to sleep at night?

                              10
              “[Respondent]: No, this is long time I didn’t sleep good.

              “[Counsel]: As you sit here today, are you still devastated by this?

              “[Respondent]: I’m sorry, I don’t know the meaning devastated.

              “[Counsel]: Are you brokenhearted—

              “[Respondent]: Yes.

              “[Counsel]: —about this?

              “[Respondent]: Yes, this is long time.”

       The jury awarded $92,640 in non-economic emotional distress damages based on
breach of fiduciary duty cause of action.
       B.     Legal Standard for Emotional Distress Damages
       In general, if a plaintiff is seeking emotional distress damages the law requires proof
that the emotional distress must be “serious and severe and enduring,” rather than trivial and
transitory. (See Molien v. Kaiser Foundation Hospitals (1980) 27 Cal. 3d 916, 927-930
[holding that to recover damages for emotional distress on a claim of negligence where
there is no accompanying personal, physical injury, the plaintiff must show that the
emotional distress was “serious”]; Fletcher v. Western National Life Insurance Company
(1970) 10 Cal. App. 3d 376, 396-397 [providing that although “emotional distress may
consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation,
embarrassment, anger, chagrin, disappointment or worry” to make out a claim of
intentional infliction of emotional distress, the plaintiff must prove that emotional distress
was severe and not trivial or transient].)
       Respondent claims this standard does not apply to his case and urges this court to
adopt a lesser standard of severity applied in insurance cases. In the context of bad faith
insurance claims some courts have found that no heightened showing of extreme distress or

                                               11
severe emotional injury is required to obtain damages for mental suffering that ensues
from the breach of the implied covenant of good faith and fair dealing in insurance
contracts. (See Gruenberg v. Aetna Insurance Company (1973) 9 Cal. 3d 566, 579-581;
Gourley v. State Farm Mutual Automobile Insurance Company (1991) 53 Cal. 3d 121, 128
[following Gruenberg]; Clayton v. United Services Automobile (1997) 54 Cal. App. 4th 1158,
1162 [observing that for insurance bad faith actions the California Supreme Court has rejected
any requirement that to be compensable the emotional distress suffered must be “severe,
substantial or enduring”].) However, none of the cases respondent cites for this rule concerns
the tort claim at issue here—breach of fiduciary duties arising from a partnership—and in fact
all of the published case law concerns insurance cases where emotional distress damages were
awarded on an insurance claim. Respondent has offered no convincing argument to this court
to extend the application of the lower standard beyond the context of bad faith claims to this
case.
        Accordingly here, respondent was required to prove that his emotional distress
was “severe” or “serious,” “non-trivial” and enduring. Even applying the deferential
sufficiency of the evidence standard of review to our assessment of respondent’s
evidence, we conclude respondent did not establish that he suffered severe or enduring
emotional distress as a result of appellant’s conduct. Respondent testified that he felt
betrayed, dishonored and heartbroken because of the situation. He also testified that he
“lost sleep” and that for two years “I’m not good.” He told the jury that he had been sick,
sought medical treatment and had to take medication. Other than respondent’s feelings of
betrayal and having lost sleep, his testimony did not attribute any of his emotional or
physical injuries directly to appellant’s conduct. Respondent’s testimony does not show
a causal connection between these injuries and appellant’s conduct . Moreover,
respondent’s complaints about sickness, medical treatment, medication and even loss of
sleep are vague and lack the necessary specificity to support a finding that these injuries
were enduring. Furthermore, respondent’s failure to corroborate the injuries with any
other evidence, including medical evidence or records or eyewitness accounts,
undermines finding that his emotional distress was severe or serious. In short, the

                                              12
evidence respondent adduced at trial was not sufficient as a matter of law to satisfy the
standard of severity to support a recovery for emotional distress. Accordingly, the jury’s
award of non-economic emotional distress damages must be reversed.10
II.    The Punitive Damages Award
       Appellant also contends the evidence presented during the trial was insufficient to
support the jury’s award of $481,068.07 in punitive damages against him. Specifically,
he challenges the sufficiency of the evidentiary showing regarding his financial
condition; appellant argues his conduct does not support the punitive damage award; and
finally, he claims that the award is excessive in relation to his ability to pay. As we shall
explain, respondent failed to present sufficient evidence of appellant’s financial
condition.
       A.     Evidence Presented at the Punitive Damage Phase of the Trial
       At the end of the first phase of the trial the jury returned a verdict finding that on
the fraud claim, appellant had engaged in “fraud, oppression or malice.” Based on this
finding the matter proceeded to the second phase of the trial for the presentation of
evidence and argument concerning the punitive damages. At the outset of the punitive
damage phase of the trial, respondent called appellant as a witness and asked him about
documents he had produced in response to respondent’s request for “financial
documents.” Appellant brought five pages of documents, showing the balances in his
checking accounts of approximately $9,000. Respondent asked whether appellant
brought copies of his tax returns, “brokerage accounts,” “copies of titles of real property”
and “evidence” of motor vehicles that appellant owned. Appellant responded that he did
not bring those documents.
       Respondent proceeded to ask appellant about his “annual salary.” Appellant
testified that he was no longer working, but that his personal salary from his medical
practice had been $66,000. Asked about other sources of income, appellant stated he

10
      In view of our conclusion we do not reach appellant’s argument that the award of
emotional distress damages is excessive.

                                              13
earned about $30,000 to $40,000 from his partial ownership interest in MacJay.
Appellant further testified that, in addition to the approximately $9,000 in his checking
accounts, he had $18,000 in stocks. He also told the jury that his wife’s annual salary
was approximately $120,000. Appellant testified that he owned two homes with
combined equity of $150,000; and appellant volunteered that he had a $700,000 mortgage
on one home and $250,000 mortgage on his second home Appellant disclosed that he
had a medical practice, 25 percent ownership interest in MacJay and two cars, but was
not asked about the value of those assets or about any liabilities, liens or encumbrances
with respect to them. He was also asked about his “monthly expenses” to which he
estimated at about $10,000 a month. He testified that he had been diagnosed with
terminal bladder cancer five months before trial and had paid $28,406.93 in medical bills
for his treatment. Appellant stated that he had other outstanding bills he had not paid.
       At the conclusion of the punitive damage phase of the trial, the jury returned a
verdict awarding respondent $481,068.07 in punitive damages on respondent’s fraud cause
of action.
       B.     Law Governing Punitive Damages and Analysis
       “In a civil case not arising from the breach of a contractual obligation, the jury
may award punitive damages ‘where it is proven by clear and convincing evidence that
the defendant has been guilty of oppression, fraud, or malice.’ (Civ .Code, § 3294, subd.
(a).)” (Roby v. McKesson Corp. (2009) 47 Cal. 4th 686, 712.) In reviewing a challenge to
an award of punitive damages, courts traditionally “determine whether the award is
excessive as a matter of law or raises a presumption that it is the product of passion or
prejudice.” (Adams v. Murakami (1991) 54 Cal. 3d 105, 109-110.) To make this
determination, courts consider three factors: (1) the degree of reprehensibility of the
defendant’s conduct; (2) the amount of compensatory damages awarded; and (3) the
defendant’s financial condition or wealth. (Neal v. Farmers Ins. Exchange (1978) 21
Cal. 3d 910, 928; Bullock v. Philip Morris USA, Inc. (2008) 159 Cal. App. 4th 655, 690, fn.
18.)

                                             14
        “We review the trial court’s award of punitive damages for substantial evidence.”
(Baxter v. Peterson (2007) 150 Cal. App. 4th 673, 679.) A punitive damages award cannot
be sustained absent meaningful evidence of the defendant’s financial condition. (Adams
v. Murakami, supra, 54 Cal.3d at p. 109; Baxter v. Peterson (2007) 150 Cal. App. 4th 673,
680.) Indeed, “[b]ecause the important question is whether the punitive damages will
have the deterrent effect without being excessive, an award that is reasonable in light of
the first two factors, reprehensibility of the defendant’s conduct and injury to the victims,
may nevertheless ‘be so disproportionate to the defendant’s ability to pay that the award
is excessive’ for that reason alone. [Citation.]” (Rufo v. Simpson (2001) 86 Cal. App. 4th
573, 620.) The plaintiff has the burden of presenting evidence and the burden of proof
regarding the defendant’s financial condition. (Adams v. Murakami, supra, 54 Cal.3d at
p. 123; Bankhead v. ArvinMeritor, Inc. (2012) 205 Cal. App. 4th 68, 83, fn. 9.)
        The evaluation of a defendant’s financial condition must be considered in light of
the purposes of punitive damages: to punish the defendant and deter the commission of
wrongful acts. (Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928, fn. 13.)
These policies are not served if the defendant’s wealth allows him to absorb the award
with little or no discomfort. (Id. at p. 928.) The “‘wealthier the wrongdoing defendant,
the larger the award of exemplary damages need be in order to accomplish the statutory
objective.’ [Citation.]” (Adams v. Murakami, supra, 54 Cal.3d at p. 110.) Conversely,
“‘the function of punitive damages is not served by an award which, in light of the
defendant’s wealth and the gravity of the particular act, exceeds the level necessary to
properly punish and deter.’” (Ibid.; see also Rufo v. Simpson, supra, 86 Cal.App.4th at p.
620.)
        There is no established method or standard for determining a defendant’s financial
condition when evaluating an award of punitive damages. (Bankhead v. ArvinMeritor,
Inc., supra, 205 Cal.App.4th at p. 79.) Although the defendant’s net worth is commonly
used in assessing punitive damages, it is not the exclusive measure. (Rufo v. Simpson,
supra, 86 Cal.App.4th at p. 621.) Standing alone, neither net worth, nor assets, nor
income is sufficient to support punitive damages. (See Zaxis Wireless Communications,

                                             15
Inc. v. Motor Sound Corp. (2001) 89 Cal. App. 4th 577, 582 [net worth too easily
manipulated to be the sole standard for ability to pay]; Lara v. Cadag (1993) 13
Cal. App. 4th 1061, 1065 [evidence of earnings is not by itself sufficient].) Moreover,
absent other measures of ability to pay, evidence of profits wrongfully obtained by the
defendant is also inadequate. (Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69
Cal. App. 4th 1141, 1152.) To obtain a meaningful understanding of the defendant’s
wealth, evidence of liabilities should normally accompany evidence of assets, and
evidence of expenses should accompany evidence of income. (Baxter v. Peterson, supra,
150 Cal.App.4th at p. 680; see also Kenly v. Ukegawa (1993) 16 Cal. App. 4th 49, 57.)
Ultimately, “‘[w]hat is required is evidence of the defendant’s ability to pay the damage
award.’” (Baxter v. Peterson, supra, 150 Cal.App.4th at p. 680; see also Adams v.
Murakami, supra, 54 Cal.3d at p. 112.) In addition, the defendant’s wealth is to be
measured as of the time of the trial on punitive damages. (Washington v. Farlice (1991)
1 Cal. App. 4th 766, 777; Zhadan v. Downtown Los Angeles Motor Distributors, Inc.
(1979) 100 Cal. App. 3d 821, 839.)
       In our view, respondent did not carry his burden to prove appellant’s financial
condition during the trial. The evidence in the record is insufficient to demonstrate
appellant’s overall ability to pay the punitive damage award. Although the substantial
evidence standard is deferential to the fact finder, “this does not mean we must blindly
seize any evidence in support of the respondent in order to affirm the judgment. . . . ‘[I]f
the word “substantial” [is to mean] anything at all, it clearly implies that such evidence
must be of ponderable legal significance. Obviously the word cannot be deemed
synonymous with “any” evidence. It must be reasonable . . . , credible, and of solid
value. . . .’ [Citation.]” (Kuhn v. Department of General Services (1994) 22 Cal. App. 4th
1627, 1633.)
       The evidence presented constitutes an incomplete picture of appellant’s financial
condition as of the time of trial. The evidence elicited at trial presented only a limited
picture of appellant’s assets, and revealed almost nothing about his liabilities. There was
no evidence of the value of his medical practice, the value of his interest in MacJay or his

                                             16
vehicles, or other current assets, if any. Respondent did not present evidence or even
inquire about any liabilities or indebtedness (or equity) attached to these assets. (See
Kelly v. Haag (2006) 145 Cal. App. 4th 916, 917 [even if defendant currently owned
properties, absence of evidence of encumbrances or other liabilities on them defeats
punitive damages award].) Respondent did ask appellant about his “monthly expenses,”
and appellant volunteered that he had mortgages on his two homes. Nonetheless,
respondent did not inquire whether those expenses and mortgages represented the full
extent of his liabilities.
       In short, even viewing the record in the light most favorable to the judgment, there
was insufficient evidence from which the trier of fact—or this court on appeal—could
determine whether appellant would be able to pay the award of $481,068.07 in punitive
damages at the time of trial. (See, e.g., Baxter v. Peterson, supra, 150 Cal. App. 4th 673,
681 [“In sum, although the record shows that [defendant] owns substantial assets, it is
silent with respect to her liabilities. The record is thus insufficient for a reviewing court to
evaluate [defendant’s] ability to pay $75,000 in punitive damages.”]; Kelly v. Haag,
supra, 145 Cal.App.4th at p. 917 [“[W]ithout any evidence [defendant] still held the
assets, or of the amounts of his liabilities, the $75,000 award is unsupported by
substantial evidence and excessive.”].) “Without such evidence, a reviewing court can
only speculate as to whether the award is appropriate or excessive.” (Adams v.
Murakami, supra, 54 Cal.3d at p. 112.) Respondent’s counsel did not ask enough
questions during the punitive damage phase of the trial relating to appellant’s liabilities or
financial obligations to prove appellant’s net worth (assets minus liabilities).
       Before this court, respondent does not claim that he presented a full or adequate
picture of appellant’s financial liabilities at trial. Instead, he claims that appellant
“thwarted” respondent’s attempt to obtain proof of his financial condition, and therefore
is in no position to complain about the sufficiency of the evidence (or lack thereof) of his
net worth. Respondent asserts that appellant failed to produce documents and financial
information he requested pursuant to a notice to produce financial documents for trial,

                                               17
and as a result has “waived” any right to complain by failing to be more forthcoming with
evidence of his financial condition.
       Respondent’s argument is not persuasive. Although at the outset of the punitive
damages trial respondent’s counsel referred appellant to a “request” he had made to
appellant for “financial documents,” respondent’s notice to produce documents was never
presented to the trial court, and has not been included in the record on appeal. Thus, this
court cannot assess the scope of the request or determine whether appellant failed to
comply with it. References made by respondent’s counsel suggest that the request may
have sought documents and information including appellant’s tax returns11 and evidence
of “brokerage accounts,” “titles to real property,” and “evidence” of motor vehicles that
he “owned.” However, because the actual request is not in the record before this court,
we cannot discern if these items were requested or whether the request sought
information which would have revealed appellant’s encumbrances, liens or obligations, if
any. Respondent has pointed to no evidence in the record to show that he asked for
anything that appellant failed to produce relating to his liabilities.12 Appellant cannot be
penalized for failing to produce items or information which was never requested of him.
Likewise because respondent never sought a court order compelling appellant to produce
financial records based on any request to produce documents, respondent is not entitled to
the benefit of any favorable evidentiary inference or legal argument based on appellant’s

11
      Individual tax returns are privileged under California law. Under certain
circumstances, including where a party is seeking punitive damages, a trial court may
determine that privilege gives way to the need for disclosure. (See Weingarten v.
Superior Court (2002) 102 Cal. App. 4th 268, 274-277.) Here, however, it does not
appear that the court was asked to make that determination.
12
         Although respondent asked appellant whether the documents he brought with him
to trial showed “the universe of all money you have,” that question is fairly interpreted to
seek only to inquire about assets, and in fact, appellant’s response: “I have also
stocks…” underscores the view that respondent was attempting to determine the scope of
appellant’s assets. Respondent did not follow-up with questions seeking to determine the
extent of appellant’s liabilities.

                                             18
failure to produce the documents he requested. (See Mike Davidov Co. v. Issod (2000) 78
Cal. App. 4th 597, 608–609 [holding that defendant who fails to comply with a court order
to produce records of his or her financial condition may be estopped from challenging a
punitive damage award based on lack of evidence of financial condition to support the
award]; Corenbaum v. Lampkin (2013) 215 Cal. App. 4th 1308, 1338 [ holding that a
defendant’s failure to comply with the subpoena for financial records in the punitive
phase of the trial, precludes the defendant from challenging the punitive damage awards
based on lack of evidence of his financial condition or insufficiency of the evidence to
establish his ability to pay the amount awarded].) That said, respondent has not
demonstrated that the cases he cites, in which the court determined that a party’s failure
to comply with discovery requests and court-ordered production waived any challenges
to sufficiency of the evidence, apply under the facts of this case.
       In view of the foregoing, we conclude that the award of punitive damages cannot
stand.13 Finally, because our reversal is based solely on insufficiency of the evidence, we
conclude that we must strike the punitive damages award from the judgment, and that no
retrial of the punitive damages issue is warranted. “‘When the plaintiff has had full and
fair opportunity to present the case, and the evidence is insufficient as a matter of law to
support plaintiff's cause of action, a judgment for defendant is required and no new trial
is ordinarily allowed, save for newly discovered evidence. . . . Certainly, where the
plaintiff's evidence is insufficient as a matter of law to support a judgment for plaintiff, a
reversal with directions to enter judgment for the defendant is proper . . . . [¶] . . . [A]
reversal of a judgment for the plaintiff based on insufficiency of the evidence should
place the parties, at most, in the position they were in after all the evidence was in and
both sides had rested.’ (McCoy v. Hearst Corp. (1991) 227 Cal. App. 3d 1657, 1661;
accord, Bank of America v. Superior Court (1990) 220 Cal. App. 3d 613, 626-627.) In
another context, our Supreme Court explained in Silberg v. Anderson (1990) 50 Cal. 3d
13
      In light of our conclusion, we do not determine the merits of appellant’s other
arguments assailing the punitive damages award.

                                              19
205, 214, that ‘[f]or our justice system to function, it is necessary that litigants assume
responsibility for the complete litigation of their cause during the proceedings.’” (Kelly
v. Haag, supra, 145 Cal.App.4th at p. 919.)
       Here, as in Baxter v. Peterson supra, 150 Cal.App.4th at page 681, respondent had
“‘a full and fair opportunity to present his case for punitive damages.” (Kelly v. Haag,
supra, 145 Cal.App.4th at p. 919.) When a punitive damage award is reversed based on
the insufficiency of the evidence, no retrial of the issue is required. Likewise in Robert L.
Cloud & Associates, Inc. v. Mikesell, supra, 69 Cal.App.4th at p. 1154, the court reversed
a punitive damages award because there was no evidence of the defendant’s financial
condition, and it did not remand for retrial. In view of this case law, we strike the
punitive damages from the judgment without ordering retrial.
III.   Appellant’s Cross-Complaint for An Accounting
       Appellant argues that the trial court erred in ruling on his cross-complaint in which
the court refused appellant’s claim for an accounting.
       A.      Background
       After the verdict was entered for the second phase of the trial, appellant filed a
motion requesting the court to make a determination on his cross-complaint seeking an
accounting. Respondent opposed the request arguing that appellant was not entitled to an
accounting because: (1) an accounting is a derivative action rather than a stand-alone
claim; and (2) the claim was unnecessary in light of the jury’s verdicts which, in
respondent’s view, had resolved all of the issues between the partners with respect to the
partnership. The trial court denied appellant’s request for an accounting and entered
judgment on the cross-complaint in favor of respondent. The court concluded that an
accounting was unnecessary in view of the jury’s verdicts, and that appellant could not
seek an accounting because he had not filed an action for the dissolution of the
partnership.
       B.      Analysis
       Pursuant to statute each partner is entitled to an accounting of partnership accounts
and business at the end of a partnership. (Corp. Code, § 16807, subd. (b) and Corp.

                                              20
Code, § 16401.) Partnerships are dissolved, among other occurrences by operation of
law, when the partnership’s particular undertaking is complete. (See Corp. Code,
§ 16801, subd. (b)(2)(c).) A partner need not file an action to seek formal dissolution of
the partnership in order to obtain an accounting. (See Goldstein v. Burstein (1960) 185
Cal. App. 2d 725, 727 [a claim for an accounting brought after voluntary dissolution of the
partnership].) In addition, because a partner’s right to an accounting derives from the
Uniform Partnership Act, a claim for an accounting brought by a partner can be a stand-
alone claim. (Cf. Janis v. California State Lottery (1998) 68 Cal. App. 4th 824, 833
[holding cause of action for an accounting was derivative and must be based on other
claims in a case where accounting is brought by third-party, non-partner].)
       Furthermore, an accounting is an equitable remedy to be decided by the court, not
the jury; the court’s factual determinations are subject to the abuse of discretion standard
of review. (See Philip Heller v. Pillsbury, Madison & Sutro (1996) 50 Cal. App. 4th 1367,
1392 [equitable principles apply to the court’s determination of the rights of the parties in
an action for an accounting between partners, in the dissolution of the partnership, and
settlement of its affairs; the court’s decision on these matters is reviewed for an abuse of
discretion].)
       In view of these principles, the trial court erred in denying the request based on the
conclusion that appellant had to sue for dissolution of the partnership to obtain an
accounting of partnership assets. Here the partnership had been dissolved as a matter of
law when the undertaking of the partnership—to remodel and sell the convenience
store—was complete. Appellant did not repudiate the partnership. Instead, the jury’s
verdict supported a finding that he breached the partnership agreement after the
partnership ended when appellant failed to compensate respondent pursuant to the terms
of their agreement. “A breach of the partnership agreement does not necessarily result in
a forfeiture of the partner’s interest or deprive him of his right to an accounting.” (B.K.K.

                                             21
v. Schultz (1970) 7 Cal.App.3d, 786, 797.) Thus, an accounting request was still viable.
This case falls within the general rule that a partner is entitled to an accounting.14
       We are also not convinced that the jury’s verdict eliminated the need for an
accounting. The jury did not assess any debits to respondent’s partnership account,
which included the cost of his salary to the partnership and other partnership expenses.
The jury was not asked to examine all of the matters contained in Corporations Code
section 16401 that a court sitting in equity would consider when deciding a party’s
entitlement to an accounting.
       Accordingly, the court erred in entering judgment for respondent on the claim for
an accounting without considering those matters included in Corporations Code sections
16807 and 16401 pertaining to an accounting of the partnership assets and obligations.
The judgment must be reversed and remanded for further proceedings on appellant’s
cross-complaint for an accounting. On remand, in determining the accounting the trial
court is bound by the express and implied findings of the jury. The accounting
proceedings should be limited in scope to determine the amount of offset, if any, to
respondent’s award of economic damages reflecting the costs of respondent’s salary to
the partnership and other partnership expenses and relevant matters contained in
Corporations Code section 16401, in view of each party’s share of the partnership.
IV.    Appellant’s Post-Trial Motion for Fees
       Appellant complains that the court erred in denying his post-trial motion for fees
under Code of Civil Procedure section 2033.420.

14
        In reaching this conclusion, we reject respondent’s argument he had the right to
elect a remedy, and thus, that appellant could not seek an accounting because appellant
terminated the partnership by wrongfully destroying it and converting the assets to his
own use. Appellant’s actions which deprived respondent of the partnership assets
occurred after the partnership had ended as a matter of law, i.e., after the purpose of the
partnership had been completed—after the remodel and sale of the store. Therefore, the
cases cited by respondent, such as Gherman v. Colburn (1977) 72 Cal. App. 3d 544, 564-
566, which hold that the victim, (here respondent) has an election of remedies—to seek a
dissolution of the partnership and accounting or submit to the repudiation and sue for
damages—are inapplicable here.

                                              22
        A.      Background
        During discovery appellant propounded requests for admission. One such request
asked respondent to admit that he was not appellant’s employee or an employee of the
business. Respondent denied the request. Thereafter, throughout the litigation and most
of the trial, respondent maintained that he was an “employee” of appellant. However, at
the end of the trial respondent stipulated that he and appellant were partners. At the same
time, respondent also amended his complaint, deleting all references to his alleged status
as an employee and his cause of action for Labor Code violations based on claims that he
was an employee. Respondent also changed his theory of recovery to a breach of the
partnership agreement and breach of fiduciary duties.
        Thereafter, appellant sought fees under Code of Civil Procedure section 2033.420
because according to appellant, he proved respondent was not an employee when at the
end of the trial, respondent “stipulated” that he was a “partner.” Appellant argued that as
a matter of law, appellant was entitled to fees and expenses based on respondent’s failure
to admit that he was not an employee. The trial court denied the appellant’s motion,
concluding that because respondent stipulated to the partnership before the issue was
submitted to the jury, appellant did not actually “prove” the existence of the partnership
to the trier of fact.
        B.      Analysis
        Code of Civil Procedure section 2033.420 provides:

                “(a) If a party fails to admit the genuineness of any document
                or the truth of any matter when requested to do so under this
                chapter, and if the party requesting that admission thereafter
                proves the genuineness of that document or the truth of that
                matter, the party requesting the admission may move the court
                for an order requiring the party to whom the request was
                directed to pay the reasonable expenses incurred in making that
                proof, including reasonable attorney’s fees.

                “(b) The court shall make this order unless it finds any of the
                following:

                                             23
              “(1) An objection to the request was sustained or a response to
              it was waived . . . .

              “(2) The admission sought was of no substantial importance.

              “(3) The party failing to make the admission had reasonable
              ground to believe that that party would prevail on the matter
              [or]

              “(4) There was other good reason for the failure to admit.”

       Requests for admissions differ fundamentally from other forms of discovery.
Rather than seeking to uncover information, they seek to eliminate the need for proof.
(Demyer v. Costa Mesa Mobile Home Estates (1995) 36 Cal. App. 4th 393, 401 [also
observing that elimination of need for proof can be achieved by stipulation at any time
before trial], disapproved of on other grounds in Wilcox v. Birtwhistle (1999) 21 Cal. 4th
973, 983, fn. 12.) The main purpose for requests for admission is to set triable issues to
rest, so that they need not be tried. They are aimed at expediting the trial. (Brooks v.
American Broadcasting Co. (1986) 179 Cal. App. 3d 500, 509; Stull v. Sparrow (2001) 92
Cal. App. 4th 860, 865.) The basis for imposing sanctions is directly related to that
purpose. (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.) Unlike other discovery
sanctions, an award of expenses under section under section 2033.420 is not a penalty.
Instead, it is designed to reimburse reasonable expenses incurred by a party in proving
the truth of a requested admission when any trial would have been expedited or shortened
if the request had been admitted. (See ibid.; Brooks v. American Broadcasting Co.,
supra, 179 Cal.App.3d at p. 509; see also Wimberly v. Derby Cycle Corp. (1997) 56
Cal. App. 4th 618, 634.)
       In Wagy v. Brown (1994) 24 Cal. App. 4th 1, the appellate court recognized this
primary purpose of the sanctions provision in the predecessor section of Code of Civil
Procedure section 2033.420, former Code of Civil Procedure section 2033. In Wagy the
plaintiffs had served a request that the defendants admit negligence in causing the
automobile accident that was the subject of the litigation. The defendants refused to make

                                             24
that admission. Nevertheless, before the arbitration began, the defendants admitted their
negligence, thus ending the need for plaintiffs to submit any proof on that issue. Neither
party requested a trial de novo and the arbitrator's award was entered as a judgment in
favor of the plaintiffs. (Wagy v. Brown, supra, 24 Cal.App.4th at p. 4.) The court held
that based on the definition of “proof” in Evidence Code section 190,15 and the
defendants’ concession, the plaintiffs had not “proved” the truth of the matter contained
in their request for admission as required for an award of expenses under former Code of
Civil Procedure section 2033, subdivision (o). Rather, plaintiffs had merely prepared to
submit proof on this issue. Therefore, they were not entitled to recover under former
Code of Civil Procedure section 2033, subdivision (o). (Wagy v. Brown, supra, 24
Cal.App.4th at p. 6.)
       In Stull, the defendants also admitted liability before trial, thus obviating the need
for the plaintiff to produce any proof on that element of her case, and, in fact, plaintiff put
on no evidence of liability. The appellate court concluded plaintiff was not entitled to an
award of expenses under former Code of Civil Procedure section 2033, subdivision (o),
noting that “[p]roof is something more than just evidence. It is the establishment of a fact
in the mind of a judge or jury by way of evidence. [Citation.] Until a trier of fact is
exposed to evidence and concludes that the evidence supports a position, it cannot be said
that anything has been proved.” (Stull v. Sparrow Stull, supra, 92 Cal.App.4th at pp.
865-866.) The reviewing court also noted that “[b]ecause proof was unnecessary and the
purposes of [former Code of Civil Procedure] section 2033 were served, the trial court
did not abuse its discretion in determining that [plaintiff] was not entitled to an order of
costs and fees under [former Code of Civil Procedure] section 2033, subdivision (o) on
the ground that the issue had not been proved.”
       In our view, the trial court erred in concluding that appellant did not “prove” the
various facts which it had asked respondent to admit. In both Wagy or Stull – the two

15
        “‘Proof’ is the establishment by evidence of a requisite degree of belief concerning
a fact in the mind of the trier of fact or the court.” (Evid.Code, § 190.)

                                              25
cases relied upon by the trial court here in denying the request for fees – the admission of
liability by the defendants occurred prior to trial, so the plaintiffs were not required to
submit proof on those matters during the trial. Unlike the situation in either Wagy or
Stull the facts in question here (i.e. whether respondent was an employee or a partner)
were actually litigated and appellant submitted proof on those matters to the jury during
the trial. As noted above, a stipulation, presented to a jury, is a form of proof. (Wagy v.
Brown, supra, 24 Cal.App.4th at p. 6.) In addition, allowing fees under Code of Civil
Procedure section 2033.420 in this instance serves the purposes underlying the statute: to
reimburse reasonable expenses incurred by a party in proving the truth of a requested
admission when any trial would have been expedited or shortened if the request had been
admitted. (Stull v. Sparrow, supra, 92 Cal.App.4th at p. 865.) Respondent’s last minute
stipulation did not obviate the need to present evidence to the jury or shorten the trial;
appellant was required to present its proof to the jury that respondent did not have the
status of an employee. Denying him those fees simply because the jury did not reach a
verdict on this question, undermines the statute.
       Before this court, respondent does not seek to specifically defend the court’s
rationale for denying the fee request, but instead he contends that the request was
properly denied for another reason—that the admission that he was a “partner” did not
prove he was not an employee. In other words the stipulation did not contradict the
earlier denial of his employee status in the request for admission. Respondent points out
that a person can be both a partner and an employee.
       In theory, respondent is correct. However, the parties litigated this case as if
respondent’s employee status and partner status were mutually exclusive. Appellant
defended against the Labor Code claims and the claim that respondent was an employee
by proving that they were partners. Most significantly, when respondent stipulated he
was a partner, he also amended his complaint, deleting his Labor Code violations cause
of action and all of the allegations that he was an employee. Here in the unique context
of this case, respondent was either an employee or a partner; he could not be both. He
did not simultaneously seek redress for Labor Code violations as an employee and a

                                              26
breach of fiduciary duty that existed based on the parties’ partnership. Thus by
implication, his stipulation that he and appellant were partners was a tacit admission that
he was not an employee.
       In view of this analysis, we conclude the court erred in denying the post-judgment
motion for fees under Code of Civil Procedure section 2033.420, and this matter must be
remanded for further proceedings. It appears that the trial court denied the motion based
solely on Code of Civil Procedure section 2033.420, subdivision (a) of the statute and
thus the court did not assess the possible application of any of the statutory exceptions
contained in subdivision (b). Consequently, on remand the court should consider whether
an award of fees is appropriate in light Code of Civil Procedure section 2033.420,
subdivision (b).
                                      DISPOSITION
       The judgment is reversed and the matter is remanded. On remand, the trial court
is directed to strike the award of emotional distress damages and punitive damages from
the judgment. In addition, in accord with the views expressed in this opinion, the court is
directed to conduct further proceedings on appellant’s cross-complaint for an accounting.
       The post-judgment order is reversed and the matter remanded. On remand the
court is directed to conduct further proceedings on appellant’s motion for fees pursuant to
Code of Civil Procedure section 2033.420.
       Appellant is entitled to costs on appeal.

                                                                WOODS, Acting P. J.
We concur:

              ZELON, J.                                         SEGAL, J.*

*
 Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                             27