Court Opinion

ID: 3216201
Source: CourtListenerOpinion
Date Created: 2016-06-22 21:06:45.452399+00
Date Added: 2024-06-11T14:30:17.575382
License: Public Domain

Filed 6/22/16 Goldberg v. Stelmach CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE

SHLOMO GOLDBERG,                                                     B250524

         Plaintiff and Respondent,                                   (Los Angeles County
                                                                     Super. Ct. No. LC075563)
         v.

YUVAL STELMACH et al.,

         Defendants and Appellants.

         APPEAL from a judgment of the Superior Court of Los Angeles County,
Russell Kussman, Judge. Affirmed.
         Law Offices of Ronald Richards & Associates, Ronald N. Richards and
Nicholas A. Bravo for Defendants and Appellants.
         Law Offices of Leon Small and Leon Small for Plaintiff and Respondent.
                                ___________________________________
       Plaintiff and respondent Shlomo Goldberg sued defendants and appellants Yuval
Stelmach, Rem LLC, and Tul Investments, Inc. (collectively, the Stelmach defendants)
for breach of fiduciary duty. After finding that the action was one in equity for which
there was no constitutional right to a jury trial, the court held a bench trial and found in
Goldberg’s favor. Defendants appeal, contending they were denied their constitutional
right to a jury trial. We reject that contention and affirm the judgment.
                                     BACKGROUND
       Lea and Shlomo Goldberg invested in various business ventures with their
daughter, Taly Stelmach, and her husband, Yuval Stelmach. Problems in the Goldbergs’
marriage created problems in the “family enterprise,” culminating in Shlomo Goldberg
suing the Stelmachs and various business entities in 2003. (Goldberg v. Stelmach
(Super. Ct. L.A. County, 2006, No. LC066042) (Goldberg I.).) In that prior suit,
Goldberg contended that investments belonged to him, to the exclusion of his wife.
Goldberg I rejected that contention and held that Goldberg and Lea each had a one-half
interest in their investments with the Stelmachs. Thus, for example, the Goldbergs had a
15 percent interest in Tul Investments, which owned a property in Glendora. The
Goldbergs’ 15 percent interest from the sale of the Glendora property, $418,779, was
therefore to be divided equally between the Goldbergs.
       But, after Goldberg I concluded, Sholmo Goldberg filed this lawsuit in August
2006. He alleged, for example, that the Stelmach defendants violated their fiduciary
duties by failing to distribute Goldberg’s interest to him. For reasons irrelevant to this
appeal, demurrers were sustained without leave to amend, but this court reversed that
judgment in a nonpublished opinion. (Goldberg v. Stelmach (Oct. 2, 2008, B199830).)
       On remand, Goldberg filed, in December 2008, the operative third amended
complaint, which alleged a single cause of action for breach of fiduciary duties.
According to that pleading, Goldberg “began a course of investments” with Stelmach in
“various real property ventures” in Los Angeles. For each venture, a new partnership or

                                              2
corporation was formed,1 with Stelmach as the majority shareholder or managing partner
and Goldberg as the minority partner. The Stelmach defendants breached their fiduciary
duties by failing to distribute $210,000 from the sale of property in Glendora, submitting
false tax documents, and failing to distribute rental proceeds. Goldberg prayed for
general, special and punitive damages.
       In April 2011, the Stelmach defendants posted jury fees.2 The matter was
transferred to Judge Kussman, before whom Goldberg filed, in January 2013, a motion in
limine to preclude a jury trial. Although the court acknowledged that the motion
technically violated court rules regarding timing, the court nonetheless thought the issue
should be decided on the merits. The court found that the “gist” of the action was breach
of fiduciary duty, for which there was no right to a jury trial. Judge Kussman therefore
conducted a bench trial, after which he found in Goldberg’s favor in the amount of
$362,788.50 plus $184,233.76 in prejudgment interest. Judgment was entered on
June 26, 2013.
                                      CONTENTIONS
       The Stelmach defendants raise two contentions on appeal: I. they were denied
their constitutional right to a jury trial, and II. the court improperly awarded prejudgment
interest.
                                        DISCUSSION
I.     The Stelmach defendants were not denied their right to a jury trial.
       Article I, section 16 of the California Constitution guarantees a civil litigant the
right to a jury trial on legal claims. (See also Code Civ. Proc., § 631, subd. (a);
Interactive Multimedia Artists, Inc. v. Superior Court (1998) 62 Cal.App.4th 1546, 1551
(Interactive).) This right to a jury trial exists when the “gist” of the action is legal but not
when it is equitable. (C & K Engineering Contractors v. Amber Steel Co. (1978)

1
      Those entities included Tul Investments, Golden West, Tul Reseda, La Puente,
Glendora Plaza, Stelmach Trust, and a strip mall in Granada Hills.
2
       At this time, the matter was pending before Judge Michael Harwin.

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23 Cal.3d 1, 9 (C & K Engineering); Interactive, at pp. 1551, 1554-1555.) To ascertain
the gist of an action, consideration must be given to the nature of the rights involved as
disclosed by the pleadings and the facts. (Fowler v. Ross (1983) 142 Cal.App.3d 472,
478.) “ ‘ “If the action has to deal with ordinary common-law rights cognizable in courts
of law, it is to that extent an action at law. In determining whether the action was one
triable by a jury at common law, the court is not bound by the form of the action but
rather by the nature of the rights involved and the facts of the particular case—the gist of
the action. A jury trial must be granted where the gist of the action is legal, where the
action is in reality cognizable at law.” ’ [Citation.] On the other hand, if the action is
essentially one in equity and the relief sought ‘depends upon the application of equitable
doctrines,’ the parties are not entitled to a jury trial.” (C & K Engineering, at p. 9.) The
prayer for relief in a particular case is not conclusive, and a request for damages as one of
a full range of possible remedies does not guarantee the right to a jury trial. (Id. at pp. 9,
11; see also American Motorists Ins. Co. v. Superior Court (1998) 68 Cal.App.4th 864,
871.)3
         Here, Goldberg, a minority shareholder, sued the Stelmach defendants for breach
of fiduciary duty. Such an action by a minority shareholder for breach of fiduciary duty
against directors of a corporation and the corporation is one grounded in equitable
principles: “The fiduciary duty of a controlling shareholder or director to a minority
shareholder is based on ‘powers in trust.’ ” “Trust relationships are premised on
equitable principles.” (Interactive, supra, 62 Cal.App.4th at p. 1555; see also Jones v.
H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 108 [majority shareholders have a fiduciary
duty to act in a “fair, just, and equitable manner”].) Where fiduciary principles are
violated, equity will undo the wrong or intervene. (Jones, at p. 109.)

3
       Whether there is a constitutional right to a jury trial is a question of law subject to
de novo review (Caira v. Offner (2005) 126 Cal.App.4th 12, 23), and denial of that right
is reversible error per se, requiring no showing of actual prejudice (Martin v. County of
Los Angeles (1996) 51 Cal.App.4th 688, 698).

                                               4
        In Interactive, for example, Interactive had a 15 percent interest in the corporate
defendant. (Interactive, supra, 62 Cal.App.4th at p. 1549.) Interactive sued corporate
directors, among others, for breach of fiduciary duty and seeking exemplary damages.
(Id. at p. 1550.) The court disagreed that the gist of the action was legal simply because
Interactive sought only damages. Interactive noted that although some cases (including
Mortimer v. Loynes (1946) 74 Cal.App.2d 160, cited by defendants) emphasized the
relief sought when characterizing an action as one in law or equity, our California
Supreme Court in C & K Engineering deemphasized the relief sought as conclusive on
that issue. (Interactive, at pp. 1554-1555.) “The fact that the plaintiff sought damages
did not alter the court’s conclusion since ‘[a]n action is one in equity where the only
manner in which the legal remedy of damages is available is by application of equitable
principles.’ ” (Id. at p. 1555.) Because “[t]he sole method of obtaining damages” was by
“application of equitable principles,” the action was one in equity to which there was no
right to a jury trial. (Id. at p. 1556; accord, Nelson v. Anderson (1999) 72 Cal.App.4th
111, 122.)
        Similarly, the “gist” of Goldberg’s action is equitable. Goldberg, the minority
shareholder, sued Stelmach, the majority shareholder and/or director of the corporate
defendants, for breach of fiduciary duty for failing to distribute Goldberg’s share of, for
example, the Glendora fund. Goldberg I had ordered the fund to be divided equally
between Goldberg and his ex-wife. Stelmach, however, distributed $218,998.50 to Lea
but did not distribute an equal amount to Goldberg. By his cause of action, Goldberg
primarily sought a sum certain, i.e., $218,998.50 plus interest. But, as Judge Kussman
said, “you have to look at the relationship.” Stated otherwise, what was the relationship
between the parties giving rise to a duty to make that distribution? That relationship was
a fiduciary one. As in Interactive, the action sounds in equity, and there was no right to a
jury trial.
        Defendants, however, cite Bainbridge v. Stoner (1940) 16 Cal.2d 423, as authority
for the notion that “majority shareholders are not fiduciaries.” That is not what

                                              5
Bainbridge held. Rather, Bainbridge confirmed that a director of a corporation “acts in a
fiduciary capacity.” (Id. at p. 427.) That fiduciary relationship, Bainbridge found, is
more properly characterized as one of agency, “not one of trust.” (Id. at p. 428.) That
finding was made in the context of the minority shareholder’s attempt to have the
corporate director and others declared trustees of certain mining claims. (Id. at p. 425.)
The director, “having no title to the property in his charge,” “was not an express trustee
of it as a director or officer of the corporation,” hence, the relationship between the
parties was not one of trust. (Id. at p. 428.) Bainbridge therefore does not hold that
equitable principles are inapplicable to the fiduciary relationship between majority and
minority shareholders.
II.    The trial court did not err by awarding Goldberg prejudgment interest.
       Although Goldberg requested prejudgment interest under Civil Code section
3288,4 the trial court, according to what may simply be a typographical error in its minute
order, awarded prejudgment interest in the amount of $184,233.76 under Civil Code
section 3287.5 The Stelmach defendants contend that prejudgment interest could not be
awarded under Civil Code section 3287. Whether the trial court awarded prejudgment
interest under Civil Code section 3287 or section 3288, we discern no prejudicial error.
       First, Civil Code section 3287, subdivision (a), provides that a party may recover
prejudgment interest on an amount awarded as damages from the date that the amount
was both (1) due and owing, and (2) certain or capable of being made certain by
calculation. (Koyer v. Detroit F. & M. Ins. Co. (1937) 9 Cal.2d 336, 345; KGM

4
       “In an action for the breach of an obligation not arising from contract, and in every
case of oppression, fraud, or malice, interest may be given, in the discretion of the jury.”
(Civ. Code, § 3288.)
5
       “A person who is entitled to recover damages certain, or capable of being made
certain by calculation, . . . is entitled also to recover interest thereon . . . .” (Civ. Code,
§ 3287, subd. (a).) Subdivision (b) of Civil Code section 3287 provides, “Every person
who is entitled under any judgment to receive damages based upon a cause of action in
contract where the claim was unliquidated, may also recover interest thereon . . . .”

                                                6
Harvesting Co. v. Fresh Network (1995) 36 Cal.App.4th 376, 391.) Although it does
appear that prejudgment interest could not be awarded under subdivision (b) of Civil
Code section 3287, the Stelmach defendants make no argument why prejudgment interest
could not be awarded under subdivision (a). Second, even assuming that prejudgment
interest could not be awarded under Civil Code section 3287, it was properly awarded
under Civil Code section 3288. The Stelmach defendants’ only argument about Civil
Code section 3288 is the section gives the jury discretion to award interest, and they were
deprived their right to a jury trial. Because we have found that the Stelmach defendants
were not entitled to a jury trial, whether prejudgment interest should be awarded under
Civil Code section 3288 was a matter left to the trier of fact’s discretion, here, the trial
court. (Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1586-1587 [trier of fact,
whether jury or court, decides the issue of prejudgment interest under § 3288]; Bullis v.
Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 814.)

                                               7
                                    DISPOSITION
      The judgment is affirmed. Plaintiff and respondent may recover his costs on
appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                ALDRICH, J.

We concur:

             EDMON, P. J.

             HOGUE, J.

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

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