Opinion
B195568.
6-9-2008
CUMIS INSURANCE SERVICES, INC., Plaintiff and Respondent, v. JOHNNY CIAURI, Defendant and Appellant.
Law Offices of Ray Wang and Ray Wang for Defendant and Appellant. Law Offices of David R. Bence and David R. Bence for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Defendant and appellant Johnny Ciauri appeals the judgment entered in favor of plaintiff and respondent Cumis Insurance Services, Inc. ("Cumis") on the latters claim for conversion. We affirm the compensatory damage award and reverse the punitive damage award.
FACTS AND PROCEDURAL HISTORY
Appellant Ciauri fabricates custom-built motorcycles out of his shop, L.A. Choppers, in Azusa. In 2002, he manufactured the motorcycle at issue in this litigation (the "Motorcycle"). Ciauri built the Motorcycle for Chris Madsen, who borrowed money from Beehive Credit ("Beehive"), a credit union in Utah, to purchase it. Following Madsens default, Beehive foreclosed on the loan and obtained title to the Motorcycle. Pursuant to an agreement between Beehive and defendant Cumis, the latter assumed the loan and obtained title to the Motorcycle.
Ciauri had possession of the Motorcycle at the time that Beehive obtained title. He also had a repairmans lien, representing $ 8,500 which he was owed by Chris Madsen on account of work done on and improvements made to the Motorcycle. In February 2004, Ciauri agreed to act as Beehives agent in the sale of the Motorcycle. Pursuant to the terms of this agreement, upon the sale of the Motorcycle, Ciauri was to receive $8,500 in satisfaction of his repairmans lien, and a sales commission equal to seven percent of the sales price. Ciauri also agreed to maintain the vehicle in a secure location with general liability insurance coverage, including loss on account of theft and fire.
Ciauri was unable to promptly sell the Motorcycle. Beehive notified Ciauri that it had assigned its interest in the Motorcycle to Phoenix-based attorney Patrick Collins, who represented Cumis. Collins notified Ciauri that he had located a buyer willing to pay $28,000, net of shipping costs, for the Motorcycle. Collins was unable to obtain Ciauris cooperation in the sale of the vehicle, and so retained Dan Despirito, a Los Angeles area investigator, to assist with the logistics of the sale and delivery of the Motorcycle. Collins tendered a check made payable to Ciauri in the amount of $12,500, representing the $ 8,500 mechanics lien and $4,000 in storage charges. Ciauri was concerned about the payment arrangements; he did not want to surrender possession of the vehicle before he received cleared funds. He first refused to accept a check in payment of the $12,500 because it was made payable to him individually, and refused a second check because it was drawn on an out-of-state bank. He requested that he be paid by wire transfer, but was refused.
During these negotiations, Ciauri initiated a lien sale. After being notified that the notice of lien sale was defective because it was not mailed to Collins, Ciauri re-noticed the lien sale. Pursuant to that second notice, Ciauri sold the Motorcycle for $15,000, although he had no bill of sale or other documentation for this transaction.
Cumis brought this lawsuit against Ciauri, alleging breach of contract and conversion, and seeking compensatory damages, imposition of a constructive trust, and declaratory and injunctive relief.
Trial was to the court, which entered judgment for Cumis. After finding that Ciauri was Cumiss agent and therefore its fiduciary, and that the fair market value of the Motorcycle was $28,000, the court ordered "that the fair market value is to be tripled because the failure of Defendant to return the bike to the Plaintiffs constitutes an act of conversion."
Ciauri appeals the judgment on three grounds: He maintains that the trial court
(1) abused its discretion when it cut off his testimony and thereby prevented him from presenting a full defense; (2) erred in failing to deduct his mechanics lien from the Motorcycles $ 28,000 value; and (3) erred in awarding treble damages.
DISCUSSION
1. Limitation on Ciauris presentation of evidence
Ciauri complains that the trial court cut short his trial testimony. The facts are these: After his counsel questioned Ciauri on direct examination, and Cumiss counsel conducted his cross-examination, Ciauri was again questioned by his own counsel about whether he had ever conducted a lien sale. The trial court cut in, stating that it had allowed the defendant to argue his case "for over an hour." The court then indicated that rather than hearing Ciauris assessment of the law of lien sales, he wished counsel to brief the law of agents and fiduciaries. Ciauri argues: "If the court felt that the questioning from defense counsel was straying outside the scope of reasonable limits, it should have admonished counsel of the problem and allowed him to continue, but the court did not do this. Not once did the court warn defense counsel that the testimony was irrelevant, repetitious, or taking too long. What the court chose to do was to sit in silence, then without warning, and moving sua sponte, interrupted the testimony and ordered
Mr. Ciauri to step down from the stand."
Ciauri argues that he was prevented from presenting a full defense by reason of the trial courts cutting short his testimony. However, his counsel did not object to the trial courts dismissal of his client from the witness stand, nor does Ciauri tell this court what additional evidence he would have presented had he been given the opportunity. Indeed, this was a re-direct examination, and thus limited to matters raised on cross-examination. However precipitously his testimony was concluded, Ciauri has not established an abuse of discretion, or reversible error.
2. Failure to offset mechanics lien
Ciauri argues that the Motorcycles $28,000 fair market value should have been reduced by $12,500, the amount of his mechanics lien. He bases this argument on Civil Code section 3358, which states, "Except as expressly provided by statute, no person can recover a greater amount in damages for the breach of an obligation, than he could have gained by the full performance thereof on both sides." The argument lacks merit.
According to Ciauri, he sold the Motorcycle at a properly noticed lien sale for a sales price in excess of the amount of the lien. Ciaris lien was therefore paid in full.
It is true that Cumis would only have received $15,500 (the $ 28,000 value of the Motorcycle less Ciauris $12,500 lien) had Ciauri honored his agreement with Cumis to deliver the Motorcycle. Unfortunately for Ciauri, he chose to breach the agreement and proceed with the lien sale. In so doing, Ciauri vindicated his lien rights, and the lien was extinguished.
Cumis did not prevail at trial based on a breach of contrary theory. Had it done so, it would only have been able to recover the amount it would have received had Ciauri not breached the agreement. (Civ. Code, § 3358.) Cumis prevailed at trial on its cause of action for conversion. "Where the property is taken, and the action is brought for conversion, the basic recovery is for the value of the property with interest." (6 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 1722, p. 1256.)
In sum, Cumis presented evidence that the value of the Motorcycle was $28,000, which supports the judgment for conversion in that amount. Having satisfied his repairmans lien by way of the lien sale, there is no factual or legal basis to support Ciauris argument that he was entitled to a judgment in a lesser amount than the Motorcycles fair market value.
3. Punitive damages award
Civil Code section 3294, subdivision (a) provides: "In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant." Thus punitive damages may be awarded in an action for conversion upon a showing, by clear and convincing evidence, that the defendants conduct amounted to oppression, fraud or malice. (Ferraro v. Pacific Fin. Corp. (1970) 8 Cal.App.3d 339, 351.)
In this case, Cumis did not seek punitive damages in its complaint, nor allege that Ciauri had been guilty of oppression, fraud or malice. Rather, the trial court raised the issue of punitive damages on its own after all the evidence had been presented. After dismissing Ciauri from the witness stand, the court ordered the attorneys to prepare a "trial brief" on "the law regarding treble damages for conversion." In its briefing of that issue, Cumis cited no authority supporting an award of treble damages for conversion. Rather, it simply cited Ferraro v. Pacific Fin. Corp., supra, for the proposition that, upon a proper showing of oppression, fraud or malice, punitive damages may be awarded for conversion, and then quoted the Civil Codes definition of "malice."
Under these circumstances, punitive damages were not available. Ciauri was not on notice that punitive damages would be an issue in the case, and thus had no opportunity to present evidence on the matter; there was no evidence of Ciauris financial condition, a requirement for the imposition of punitive damages (Adams v. Murakami (1991) 54 Cal.3d 105); and the record is devoid of evidence of Ciauris oppression, fraud or malice. The trial court therefore erred in awarding punitive damages.
DISPOSITION
The award of punitive damages is reversed; judgment in the amount of $28,000 is affirmed; the parties are to bear their own costs on appeal.
We concur:
MOSK, J.
KRIEGLER, J.